HomeMy WebLinkAbout10/09/2017 - Special Minutes - Rock Prairie Management District No. 2 (2)ROCK PRAIRIE MANAGEMENT DISTRICT NO.2
MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS
October 9,2017
The Board of Directors (the "Board")of Rock Prairie Management District No.2 (the
"District")met in special session,open to the public on October 9,2017,at 4121 State Highway
6 South,College Station,Brazos County,Texas 77845,in accordance with the duly posted notice
of special meeting,and the roll was called of the duly constituted members of said Board of
Directors,as follows:
Uri Geva -President
Hays Glover —Vice President
Kamal Ariss —Assistant Vice President
Jonathan Stark -Secretary
Randall G.Rother —Assistant Secretary
and all of said persons were present,except Directors Geva and Rother,thus constituting a
quorum.
Also present were James Murr of College Station Town Center,Inc.("CSTC");Cynthia
Colondres of Municipal Accounts k Consulting,L.P.("MAC");Avik Bonnerjee of BECCA
Municipal Tax Service,LLC;Blake McGregor of EHRA Engineering ("EHRA");David M.
Coleman,P.E.,Natalie Ruiz,City Council member Jerome Rektorik and Mayor Karl Mooney of
the City of College Station (the "City");and Howard Cohen of Schwartz,Page &Harding,
L.L.P.("SPH").
In the absence of the President,the Vice President called the meeting to order and
declared same open for such business as might properly come before it.
APPROVAL OF MINUTES
As the first order of business,the Board considered approval of the minutes of its
meeting held on June 29,2017.After review and discussion,Director Glover moved that the
minutes for said Board meeting be approved,as written.Director Stark seconded said motion,
which unanimously carried.
BOOKKEEPING REPORT
Ms.Colondres presented to and reviewed with the Board a Bookkeeping Report,a copy
of which report is attached hereto as Exhibit A,including checks presented for payment.
Following discussion,Director Glover moved that said Bookkeeping Report be approved and
that the checks identified in the report be approved for payment.Director Stark seconded the
motion,which unanimously carried.
ANNUAL REVIEW OF ORDER ESTABLISHING POLICY FOR INVESTMENT OF
DISTRICT FUNDS AND APPOINTING INVESTMENT OFFICER
The Board considered the review of its Order Establishing Policy for Investment of
District Funds and Appointing Investment Officer ("Investment Policy"),and the adoption of a
Resolution in connection therewith.Mr.Cohen presented for the Board's review an amended
Investment Policy,a Resolution Regarding Review of Order Establishing Policy for Investment
of District Funds and Appointing Investment Officer ("Resolution"),and a memorandum to the
Board from SPH regarding the proposed amendments to the Investment Policy.The
memorandum to the Board,the Resolution,and the Investment Policy,are attached hereto as
Exhibit B,Mr.Cohen discussed the proposed amendments to the District's Investment Policy as
outlined in the memorandum.Following discussion,Director Ariss moved that the amended
Investment Policy be approved to reflect the proposed changes noted in the memorandum,that
the Board adopt the Resolution and that the Vice President and Secretary be authorized to
execute the Investment Policy and the Resolution on behalf of the Board and the District.
Director Stark seconded said motion,which unanimously carried.
TAX ASSESSOR/COLLECTOR'S REPORT
Mr.Bonnerjee advised the Board that the current certified value of property within the
District is approximately $5,000,000.He noted that portions of the property in the Disuict are
subject to agricultural exemptions,and he discussed the timing of removing the agricultural
exemptions from those properties.
TAX RATE RECOMMENDATION
Mr.Cohen then advised the Board that the District is authorized to levy a maintenance
tax on taxable property situated within the boundaries of the District at a rate not to exceed $1.00
per $100 of assessed valuation.He also presented a recommendation prepared by
FirstSouthwest,a division of Hilltop Securities,Inc.,the District's financial advisors,for the
District to levy a 2017 tax rate of $0.50 per $100 of assessed valuation.A copy of such
recommendation is attached hereto as Exhibit C.
There next followed a discussion concerning the requirements for notice of the District's
intention to adopt a 2017 tax rate.Mr.Cohen advised that,pursuant to Section 49.236 of the
Texas Water Code,the District is required to provide a notice containing certain tax-related
information in connection with each meeting at which the adoption of a tax rate will be
considered,Mr.Cohen further advised that the information to be included in the notice is set
forth in the Water Code and includes the proposed tax rate to be adopted.He advised that the
District must provide the notice by either (I)publishing it at least once in a newspaper having
general circulation in the District at least seven days before the date of the meeting at which the
tax rate will be adopted,or (2)mailing it to each owner of taxable property in the Disuict,at the
address shown on the most recently certified tax roll of the District,at least ten days before the
date of the meeting.Following discussion,Director Glover moved that the District's tax
assessor-collector be authorized to provide written notice by mail to each landowner of taxable
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property in the District of the District's intention to adopt a 2017 tax rate at a meeting of the
Board to be held on November 10,2017,at 2:00 p.m.,in the form and at the time required by
law.Director Ariss seconded said motion,which unanimously carried.
PARTIAL PAYMENTS FROM TAXPAYERS
The Board next considered the acceptance of partial payments from taxpayers not eligible
for pre-delinquency installment or split payment agreements.Mr.Bonnerjee advised the Board
that B&A recommends that the District accept partial payments from taxpayers not eligible for
pre-delinquency installment agreements.Following discussion,upon motion by Director Glover,
seconded by Director Ariss and unanimously carried,the Board instructed B&A to accept partial
payments &om taxpayers who are not eligible for a pre-delinquency installment agreement
unless otherwise instructed by the Board.
ENGINEERING REPORT
Mr.McGregor presented and reviewed with the Board an Engineering Report dated
October 2017.Following review and discussion,Director Ariss moved to authorize EHRA to
proceed with the design of the on-site sanitary sewer trunk line to serve the property within the
District.The motion was seconded by Director Glover and carried by unanimous vote.A
discussion next ensued regarding advertisement for bids for construction of water,sewer,
drainage and paving facilities for construction of Bird Pond Road and for construction of on-site
and off-site sanitary sewer trunk line.After discussion,Director Ariss moved that EHRA be
authorized to advertise for bids for construction of water,sewer,drainage and paving facilities
for Bird Pond Road and the on-site and off-site sanitary sewer trunk line to serve property within
the Dish ict.The motion was seconded by Director Stark and carried by unanimous vote.
DEVELOPER'S REPORT
The Board considered the Developer's Report.Mr.Murr provided a brief update on the
development within the District.
PARTICIPATION AGREEMENT FOR CONSTRUCTING AND OVERSIZING PUBLIC
INFRASTRUCTURE
Mr.Cohen presented to and reviewed with the Board a memorandum prepared by SPH
relative to the Participation Agreement for Constructing and Oversizing Public Infrastructure
among the City of College Station,CSTC and the District ("Participation Agreement")to be
considered by the Board at this meeting.A copy of such memorandum is attached hereto as
Exhibit D.
Mr.Cohen noted that the City Council of the City is scheduled to consider approval of
the Participation Agreement at its October 24,2017 meeting,and requested that the Board
consider approving and authorizing execution of same.Following discussion,Director Stark
moved that the Participation Agreement be approved and that the Vice President be authorized to
execute same,subject to final review by SPH and approval by the City.The motion was
seconded by Director Ariss and carried by unanimous vote.
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REGULAR MEETING DATE AND TIME
The Board next discussed establishing a regular meeting date and time for the Board,
Following discussion,it was the consensus of the Board that the regular meeting date and time
be established for the second Thursday of each month at 2:00 p.m.Mr.Cohen noted that
although the next meeting of the Board would be held on November 10,2017,at 2:00 p.m.,
beginning with the December meeting of the Board on December 14,2017,at 2:00 p.m.,the
regular meeting schedule will commence.
ATTORNEY'S REPORT
The Board considered the Attorney's Report.Mr.Cohen advised the Board that he had
nothing of a legal nature to discuss with the Board that was not already covered under previous
agenda items.
FUTURE AGENDA ITEMS
The Board considered items for placement on future agendas.No specific agenda items,
other than routine and ongoing matters were requested to be placed on a future agenda.
AD JOURNMENT
There being no further business to come before the Board,on motion made by Director
Glover,seconded by Director Stark,and unanimously carried,the meeting was adjourned.
Sechdary
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LIST OF ATTACHMENTS
Rock Prairie Management District No.2
Minutes of Meeting of October 9,2017
Exhibit A —Bookkeeping Report
Exhibit B —Memorandum to the Board,Resolution,and Investment Policy
Exhibit C —2017 Tax Rate Recommendation
Exhibit D —Memorandum from Schwartz,Page k Harding,L.L.P.,dated October 9,2017
Regarding Participation Agreement for Constructing and Oversizing Public
Infrastructure
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EXHIBIT "A"
MUNICIPa4I.ACCQUNT$
t»CGNSUITING;LP
Rock Prairie Management
District No.2
Bookkeeper's Report
October 9,2017
1281 Bntttnoore Road 'ouston,Texas 77043 'hone 713.6234539 ~Fax.713.629.6859
Rock Prairie MD No.2 —GOF
Cash Flow Report -Checking Account
As of October 9,2017
Num Name Memo Amount Balance
BALANCE AS OF 06/30/2017 ($2,277 84)
Receipts
Interest on Chechng
Developer Advance
Interest on Checlong
Interest on Checlong
I'otal Receipts
018
3,000 00
0 22
016
3,000 56
Drsbursements
1012 B&A Mumopal Tax Setvtce
1013 MumopaIAccounts sr.Consulung,LP
FEE Compass Bank
FEE Compass Bank
FEE Compass Bank
Total Dtsbursements
BALANCE AS OF 10/09/2017
Tax Assessor/Collector Fees
Bookkeepmg Fee
Sermce Fee
Servtce Fee
Sersnce Fee
(1,905 91)
P32 32)
(0 18)
(0 22)
(0 16)
(2,638 79)
($1,916.07)
COMPASS BANK-PREMIER -¹XXXX0276
Rock Prelate MD No.2 -GOF
Actual vs.Budget Comparison
September 2017
September 2017
Actual Budget Over/(Under)
June 2017 —September 2017
Actual Budget Over/(Under)
Annual
Budget
Revenues
14100 Developer Advance
14380 Other Income
Total Revenues
3,000
1
3,001
3,000
0
3,000
62,885
0
62,885
Expendttures
16330 Legal Fees
16430 Boohheepmg Fees
16460 Pontmg &O(Bce Supphes
16470 Fdmg Fees
16480 Dehver7 Expense
16520 Postage
16530 Insurance dc Smety Bond
16550 TAC Fees
16560 Ivhscellaneous Expense
Total Expenditures
0
88
0
0
0
0
0
568
0
656
4,167
250
4
8
2
1
0
500
25
4,957
(4,167)
(163)
(4)
(8)
(2)
(1)
0
68
(25)
(4,301)
0
738
26
0
0
1
0
2,61'I
1
3,377
16,667
1,000
17
33
7
5
0
2,000
100
19,828
(16,667)
(263)
10
(33)
(7)
(4)
0
611
(99)
(16,452)
50,000
3,000
50
100
20
15
3,400
6,000
300
62,885
Excess Revenues (Expenthtures)($656)($4,957)$4,301 ($376)($16,828)$16,452 $0
Rock Prairie MD No.2 -GOF
Balance Sheet
As of September 30,2017
ASSETS
Cmrent Assets
Checlung/Savage
11100 Cash m Bank
Total Checkmg/Sasmgs
Total Current Assets
TOTAL ASSETS
Sep 30,17
722
722
LIABILITIES &EQUITY
Ltabihttes
Current Ltabdtnes
Accounts Payable
12000 Accounts Payable
Total Accounts Payable
Total Current Lmbdttres
Total Lnbthnes
Eqmty
13010 Unagocated Fund Balance
Net Income
Total Eqmty
TOTAL LIABILITIES &EQUITY
2,138
2,138
2,138
2,138
(1,040)
(376)
(1,416)
EXHIBIT "g"
MEMORANDUM
TO:Board of Directors
Rock Prairie Management District No.2
PROM:Schwartz,Page &Harding,L.L.P.
DATE:October 9,2017
REi Proposed revisions to Investment Policy and form of Collateral Security Agreement
Several bills were passed in the 85 Texas Legislature relating to invesnnent of public
funds that require revisions to the District's Order Establishing Policy for Investment of District
Funds and Appointing Investment Office (the "Investment Policy")and the form of Public Funds
Depositor Collateral Security Agreement ("Collateral Security Agreement")specified by the
Investment Policy.This memorandum provides a summary of the proposed changes.
~The passage of House Bill 2647 effectuated changes to Section 2256.009(a),expanding
the list of authorized investments of public funds under the Public Funds Invesnnent Act
("PFIA")to specifically include interest-bearing banking deposits.The added language
to the PFIA permits both:(i)interest-bearing banking deposits held directly by a federally
insured bank or other financial institution and (ii)interest-bearing banking deposits
placed through a bank or broker at a number of different federally insured banks or other
financial institutions (called IDC deposits,which is analogous to the CDARS program for
certificates of deposit).Directly held deposits ensure District funds will be held only at
banks or financial institutions with a home or branch office in the State of Texas aud
included on the District's List of Qualified Brokers;the IDC deposit option would not.It
is recommended that Section 6.E.of the Investment Policy be added to includeinterest-
bearing banking deposits held directly by the federally insured institution at which they
are deposited.
~House Bill 2928 also amended Section 2256.009(a)of the PFIA to clarify that the Federal
Home Loan Banks are instrumentalities of the United States for purposes of their
obligations,including letters of credit,being eligible investments.It is recommended
that Section 6M of the Investment Policy be revised to include language clarifying that
FHLB obligations are authorizedinvestments.
~House Bill 1003 adds "hedging transactions"to the list of authorized investments under
the PFIA,but only for political subdivisions with at least $250 Million in proposed and/or
outstanding long term indebtedness and whose outstanding indebtedness is rated in one of
the four highest categories by a nationally recognized rating agency.The bill also adds
interest-bearing banking deposits directly held by a federally insured bank (see above)to
the list of authorized investments.Thirdly,it allows public entities to waive sovereign
immunity in repurchase agreements and guaranteed investment contracts.Finally,it
conforms requirements regarding no-load mutual funds (including money market mutual
funds)to federal Securities and Exchange Commission rules.Ifthe District 's Investment
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Policy currently permits investment in mutual funds or money market mutual fu&zds,it
is recommended that the subsections of Section 6.of the Policy relative to same be
revised to conform with the changes in the PFIA.See above regarding
recommendations relative to addition of interest-bearing banking deposits to the list of
authorized investments permitted by the Investment Policy.Unless the District's
Financial Advisor determines hedging transactions are an appropriate investment for
the District,no further changes to the Investment Policy are recommended with respect
to HB 1003.
~The PFIA previously required that a copy of the District's Investment Policy be provided
to any financial institution with which the District's investment office proposed to place
District funds and that the financial institution execute and return a certificate confirming
receipt and familiarity with the Policy,as well as affirming it would not take any actions
inconsistent with the Policy with respect to the District's funds it is holding House Bill
1701 revises the PFIA to only require that investment pools and other business
organizations that exercise investment discretion over the District's funds are required to
be provided with a copy of the District's Investment Policy and execute a Certificate of
Compliance relative to same.It is recommended that Section 4.J.of the Investment
Policy be revised to comply with the new requirements relative to those entities tliat
must receive a copy of the Investment Policy and sign a Certificate of Compliance prior
to accepting District funds for investment.It is also recommended tliat the Certificate
of Compliance be revised accordingly,and that the acknowledgements and
representations contained in the Certificate of Compliance relative to the District
holding certain funds in its bond fund on behalf of bond holders to qualify for separate
FDIC insurance on those accounts also be incorporated in the form of Collateral
Security Agreement to ensure all entities holding District fu&ids in excess of FDIC
insurance limits make the appropriate acknowledgment.
~Senate Bill 253 amends the PFIA to prohibit investment of public funds in publically
traded securities of companies doing business with Sudan,Iran or foreign terrorist
organizations (as determined by the State Comptroller),and requires divestment of
existing investments in securities of such scrutinized companies.The new law also
requires an annual report be filed by the District with both chambers of the Texas
Legislature and the United States presidential special envoy to Sudan identifying any
investments covered by the new law and divestments thereof.It is recommended that
Subsections M.and N.be added to the Investment Policy requiring the Investment
Officer to abide by these restrictions and divestment requirements,as well as prepare
and file the annual report to the State Legislature and presidential envoy to Sudan on
behalf of the District.
~House Bill 89 requires that any contract for goods and services that the District enters
into contain a representation by the counterparty that they will not discriminate against
Israel during the duration of the contract.It is recommended that language Ee added to
the form of Collateral Security Agreement whereby the bank and custodian make the
appropriate representatio~.
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RESOLUTION REGARDING REVIEW OF
ORDER ESTABLISHING POLICY FOR INVESTMENT
OF DISTRICT FUNDS AND APPOINTING INVESTMENT OFFICER
WHEREAS,Rock Prairie Management District No.2 ("District"),adopted its Order
Establishing Policy For Investment of District Funds and Appointing Investment Officer,dated
June 29,2017 ("Order"),pursuant to Chapter 2256,Texas Government Code and Section
375.096(4),Texas Local Government Code;and
WHEREAS,Chapter 2256,Texas Government Code,requires the District to perform an
annual review of its investment policy and investment strategies included within the Order;and
WHEREAS,the District has,on the date hereof,performed said review.
NOW,THEREFORE,IT IS HEREBY RESOLVED by the Board of Directors of Rock
Prairie Management District No.2,that the policies,procedures,provisions and investment
strategies set forth in the Order are hereby revoked and the attached Order Establishing Policy
For Investment of District Funds and Appointing Investment Officer be adopted.
PASSED AND ADOPTED ON THIS 9th day of October,2017.
ATTEST:
ROCK PRAIRIE MANAGEMENT
DISTRICT NO.2
Sacr tary,Board of Directors
auunlrr/
Z
rrnnailaiii
By:
Vice President,Board
/Directors
466036 3
ORDER ESTABLISHING POLICY FOR
INVESTMENT OF DISTRICT FUNDS
AND APPOINTING INVESTMENT OFFICER
WHEREAS,ROCK PRAIRIE MANAGEMENT DISTRICT NO.2 (the "District")is a
body politic and corporate and a governmental agency of the State of Texas,operating under and
governed by the provisions of Chapter 3909,Texas Special District Local Laws Code,and
Sections 52 and 52-a of Article Ill and Section 59 of Article XVI of the Texas Constitution;and
WHEREAS,Chapter 2256,Texas Government Code (sometimes referred to herein as the
"Public Funds Investment Act"),and Section 375.096(4),Texas Local Government Code,
require that the Board of Directors of the Disnict adopt rules,regulations and policies governing
the investment of District funds and designate one or more of its officers or employees to be
responsible for the investment of such funds.
NOW,THEREFORE,IT IS ORDERED BY THE BOARD OF DIRECTORS OF ROCK
PRAIRIE MANAGEMENT DISTRICT NO.2 THAT the policies,procedures and provisions set
forth herein be and are hereby ADOPTED,and that any order,and every amendment thereto,
heretofore adopted by the Board of directors establishing policies for the investment of District
funds and appointing an investment officer shall be and are hereby revoked and superseded
effective as of October 9,2017,the effective date of this Order.
Section 1.Purnose.The purpose of this Order Establishing Policy for Investment of
District Funds and Appointing Investment Officer (the "Investment Policy")is to adopt rules and
regulations which set forth the District's policies with regard to the investment and security of
District funds or funds under the District's control.It is further the purpose of this Invesnnent
Policy to ensure that purchases and sales of District investments are initiated by authorized
individuals,conform to investment objectives and regulations,and are properly documented and
approved,and to provide for the periodic review of District investments to evaluate investment
performance and security,all as required by applicable law.
Section 2.Annointment of Investment Officer:Standard of Care.Mark M.Burton and
Ghia Lewis of Municipal Accounts &Consulting,L.P.,the District's bookkeeper,shall be and
are each hereby individually designated the Investment Officer of the District,responsible for the
supervision of investment of District funds pursuant to this Investment Policy.In the
administration of their duties hereunder,the District's Investment Officer shall exercise the
judgment and care,under prevailing circumstances,that a person of prudence,discretion and
intelligence would exercise in the management of his or her own affairs,not for speculation,but
for investment,considering the probable safety of capital and the probable income to be derived;
however,the District's Board of Directors shall retain ultimate responsibility as fiduciaries of the
District's assets.The District's Board of Directors,Tax Assessor-Collector,Financial Advisor
and other consultants shall be authorized to assist the Investment Officer in the carrying out of
the duties of Investment Officer.
Section 3.Appointment of Investment Officer and Tax Assessor-Collector for
Investment of District Funds.Pursuant to Section 49.157(b),Texas Water Code,the Board of
Directors hereby designates the District's Investment Officer as the authorized representative of
the District to (a)invest and reinvest the funds of the District;(b)withdraw District funds from
appropriate accounts of the District for the investment of same in accordance with the terms of
this Investment Policy;and (c)arrange for adequate security for uninsured deposits or funds of
the Disirict pursuant to and in compliance with a Public Funds Depositor Collateral Security
Agreement which shall be substantially in the form attached hereto as Exhibit "B"or such other
form that has been approved through formal action of the Board of Directors,and to execute said
Agreement(s)and any documentation required in connection therewith on behalf of the District.
To the extent that the District's Tax Assessor-Collector is required to perform any of the
functions set forth in (a),(b)or (c)above,the Tax Assessor-Collector shall do so in accordance
with the provisions of the Public Funds Investment Act and this Investment Policy,and under the
supervision of and in consultation with the Dish ict's Investment Officer.
Section 4.Authoritv and Duties of Investment Officer.The following rules shall apply
to the District's Investment Officer:
A.The Board of Directors hereby instructs the Investment Officer for the
District to maintain the investments of the District in a manner consistent with the rules
and regulations set forth in this Investment Policy and the Public Funds Investment Act,
as amended.
B.No persons,other than those designated in Section 3 above,may deposit,
invest,transfer,withdraw or otherwise manage District funds without express written
authority of the District's Board of Directors.
C.The Investment Officer for the Disuict shall invest and reinvest District
funds only in those investments authorized under this Investment Policy or by the Board,
and only in the name of and solely for the account of "Rock Prairie Management District
No.2."The Bookkeeper and Investment Officer for the District shall be authorized to
wire transfer funds of the District only (I)for the purchase of investments solely in the
name of"Rock Prairie Management District No.2,"(2)for the transfer of all or any
portion of the principal of or interest earnings or profits or gains on any investment of the
District to one or more previously authorized and established accounts of "Rock Prairie
Management District No.2,"(3)for the transfer of District funds to any paying agent of
the Disirict for the payment of principal and semiannual interest payments on any
outstanding bonds of the District and for the payment of paying agent fees relative to
same,or (4)for other purposes,such as the payment of District bills,pursuant to a
resolution or other express written instructions of the District's Board of Directors.
D.The Investment Officer for the District shall,not later than the first
anniversary of the date the Investment Officer takes office or assumes such duties,attend
a training session of at least six (6)hours of instruction relating to the Investment
Officer's responsibilities under the Public Funds Investment Act,as amended,from an
independent source approved by the Board of Directors of the District or the Board's
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Investment Committee,and thereafter shall attend at least four (4)hours of additional
investment training within each two-year period that begins on the first day of the
District's fiscal year and consists of the two consecutive fiscal years after that date.Such
investment training must include education in investment controls,security risks,
diversification of investment portfolio,strategy risks,market risks,and compliance with
the provisions of the Public Funds Investment Act,as amended.
E.Not less frequently than each fiscal quarter,the Investment Officer shall
prepare and submit to the Board of Directors of the District a written report of investment
transactions for all invested funds of the District for the preceding reporting period.Such
report must (I)describe in detail the investment position of the Disnict on the date of the
report;(2)be prepared Investment Officer for the District;(3)be signed by the
Investment Officer of the District;(4)contain a summary statement of each pooled fund
group,if any has been created by the District,that states the beginning market value for
the reporting period,ending market value for the period,and fully accrued interest for the
reporting period;(5)state the book value and market value of each separately invested
asset of the District at the end of the reporting period by the type of asset and fund type
invested;(6)state the maturity date of each separately invested asset that has a maturity
date;(7)state the current rating assigned to each investment,investment vehicle,or
investment security by a nationally recognized investment rating firm,nationally
recognized credit rating agency or nationally recognized rating service,as appropriate;
(8)state the account or fund or pooled group fund,if the Disn'ict has any,for which each
individual inveslment was acquired;and (9)state the compliance of the District's
investment portfolio as it relates to the investment strategy for each account of the
District as set forth in this Investment Policy and relevant provisions of the Public Funds
Investment Act,as amended.Such report must be presented to the Board of Directors of
the District within a reasonable period of time after the end of each fiscal quarter,If the
District invests in other than (i)money market mutual funds,(ii)investment pools,or
(iii)accounts offered by its depository bank in the form of certificates of deposit,or
money market accounts or similar accounts,all of the type authorized under Section 6 of
this Investment Policy,the reports prepared under this Section 4.E.shall be formally
reviewed at least annually by an independent auditor,and the result of such review shall
be reported to the District's Board of Directors by that auditor.
F.In the event an investment or investment vehicle in which the District has
placed funds,or the security therefor,is required to maintain a minimum rating pursuant
to the Public Funds Investment Act fails to maintain the minimum required rating,the
Investment Officer shall take all prudent measures consistent with this Order to liquidate
the investment and reinvest such funds in a conforming investment,if appropriate.
G.In the event District funds are invested or reinvested in Certificates of
Deposit,the Investment Officer or Tax Assessor-Collector,as applicable,shall solicit
bids from at least two (2)bidders,either orally,in writing,electronically or in any
combination of those methods,for each such investment.
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H.All purchases of investments,except investments in investment pools or in
mutual funds,shall be made on a delivery versus payment basis.
I.Not less frequently than each fiscal quarter,and as close as practicable to
the end of such reporting period,the District's Investment Officer shall determine the
market value of each District investment.Such market values shall be included in the
written reports submitted to the District's Board of Directors pursuant to Section 4.E
hereinabove.The following methods shall be used:
(I)Certificates of deposit shall be valued at their face value plus any accrued
but unpaid interest.
(2)Shares in money market mutual funds and investment pools,if any,shall
be valued at par plus any accrued but unpaid interest.
(3)Other investment securities may be valued in any of the following ways:
(a)the lower of two bids for such security obtained from qualified
securities brokers/dealers with whom the District may engage in
investment transactions;
(b)the average of the bid and asked prices for such security as
published in The Wall Street Journal or The New York Times;
(c)the bid price for such security published by any nationally
recognized security pricing service;or
(d)the market value quoted by the seller of the security.
J.A written copy of the District's Investment Policy must be presented to
any business organization offering to engage in an investment transaction with the
District.For purposes of this section J.,the term "business organization"means an
investment pool or an investment management firm under contract with the District to
invest or manage the District's investment portfolio that has accepted authority from the
District to exercise investment discretion in regard to the District's funds.The "qualified
representative"of the business organization offering to engage in an investment
transaction with the District shall execute a written instrument in a form acceptable to the
District substantially to the effect that the business organization has received and
reviewed the Investment Policy of the District and acknowledges that such business
organization has implemented reasonable procedures and controls in an effort to preclude
investment transactions conducted between the District and such organization or firm that
are not authorized by the District's Investment Policy,except to the extent that such
authorization is dependent on an analysis of the makeup of the District's entire investment
portfolio,requires an interpretation of subjective investment standards,or relates to
investment transactions of the District that are not made through accounts or other
contractual arrangements over which the business organization has accepted discretionary
3s6299 4
investment authority.The District's Investment Officer may not acquire or otherwise
obtain any authorized investment described in Section 6 hereof from a business
organization that has not delivered to the District the written statement acknowledging
receipt of this Investment Policy in a form substantially similar to that attached hereto as
Exhibit "A"(the "Certificate of Compliance").For purposes of this Section 4.J.,the
"qualified representative"of a business organization offering to engage in an investment
transaction with the District means a person who holds a position with a business
organization,who is authorized to act on behalf of the business organization,and who is
one of the following:
(1)for a business organization doing business that is regulated by or
registered with a securities commission,a person who is registered under the rules
of the National Association of Securities Dealers;
(2)for a state or federal bank,a savings bank,or a state or federal
credit union,a member of the loan committee for the bank or branch of the bank
or a person authorized by corporate resolution to act on behalf of and bind the
banking institution;or
(3)for an investment pool,the person authorized to sign the written
instrument on behalf of the investment pool by the elected official or board with
authority to administer the activities of the investment pooL
The "qualified representative"of an investment management firm under contract with the
District for the investment and management of its public funds is a person who is an
officer or principal of such firm.
K.The Investment Officer for the District shall disclose in writing to the
Board of Directors any (i)"personal business relationship"that they may have with a
business organization offering to engage in an investment transaction with the District,or
(ii)any relationship within the second degree by affinity or consanguinity,as determined
by Chapter 573,Texas Government Code,as amended,to any individual seeking to sell
an investment to the District.Any written disclosure statement filed with the Board of
Directors by the Investment Officer pursuant to this section must also be filed with the
Texas Ethics Commission.For purposes of this Section 4.K.,the Investment Officer has
a "personal business relationship"with a business organization if:
(1)the Investment Officer owns ten percent (10%)or more of the
voting stock or shares of the business organization or owns $5,000 or more of the
fair market value of the business organization;
(2)funds received by the Investment Officer &om the business
organization exceed ten percent (10%)of the Investment Officer's gross income
for the previous year;or
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(3)the Investment Officer has acquired from the business organization
during the previous year investments with a book value of $2,500 or more for
their personal account.
L.In conjunction with the District's annual financial audit,a compliance
audit of management controls on investments and adherence to this Investment Policy
must be performed.In connection with said compliance audit,the Board of Directors
shall review on an annual basis this Investment Policy and its investment strategies.In
connection with said annual review,the District's Board of Directors shall adopt a written
resolution stating that it has reviewed this Investment Policy and the investment strategies
set forth herein,and shall indicate in said resolution either the continuance of this
Investment Policy without amendment or the changes made to the Investment Policy
and/or the investment strategies herein.
M.In addition to all other requirements set forth herein,the Investment Officer for
the District shall invest and reinvest District funds in a manner consistent with Chapter 2270,
Texas Government Code,relative to prohibition of investment or reinvestment of public
funds in publically traded securities of scrutinized companies,as determined by the Texas
State Comptroller,engaging in scrutinized business operations in the Sudan,Iran,or with
a designated foreign terrorist organization.In the event an investment or investment
vehicle in which the District has placed funds,or the security therefor,requires
divestment in accordance with the requirements of Chapter 2270,Texas Government
Code,the Investment Officer for the District shall sell,redeem,divest,or withdraw all
publically traded securities of the company engaging in scrutinized business operations,all
in accordance with Chapter 2270.
N.Not later than December 31 of each year,the Investment Officer shall
prepare and file on behalf of the District;(i)a publicly available report with the presiding
officer of each chamber of the State Legislature and the State Attorney General
identifying:(a)all investments sold,redeemed,divested,or withdrawn in compliance
with Section 2270.0206,Texas Government Code;(b)all prohibited investments under
Section 2270.0209,Texas Government Code;and (c)summarizing any changes made
with respect to investments of the District exempted from divestment pursuant to Section
2270.0207,Texas Government Code;and (ii)a report with the United States presidential
special envoy to Sudan that identifies investments in Sudan identified in the report filed
with the State Legislature and Attorney General and any changes made under Section
2270.0207 related to those investments.Prior to December 31 of each year,the
Investment Officer shall provide the District with a copy of both reports required by this
subsection,along with evidence of filing same with the required entities.
Section 5.General Investment Princinles and Obiectives.All investments of District
funds or funds under the District's control shall be made in accordance with the following
general rules,regulations and policies:
A.Any moneys in any fund of the District or in any fund established by the
Board of Directors in connection with the authorization of the District's bonds,including,
but not limited to,proceeds from the sale of such bonds,which funds are not required for
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386299 4
the payment of obligations due or to become due iimnediately,shall be invested and
reinvested,from time to time,only in the authorized investments specified in Section 6
hereunder;provided,however,that all such investments shall be secured in the manner
provided for the security of the funds of municipal utility districts of the State of Texas
(The Public Funds Collateral Act,Chapter 2257,Texas Government Code,as amended)
or in such other manner as may be authorized by law from time to time and otherwise
suitable for the District's needs.
B.The policy of the District is to invest District funds only in instruments which
further the following investment objectives of the District stated in order of impoitance:
(I)preservation and safety of principal;(2)liquidity;and (3)yield.The District will
continuously attempt to diversify its portfolio to reduce risks.The type,conditions and
maturity date of District investments shall be consistent with the cash flow needs and
operating requirements of the District,as determined from time to time by the Board of
Directors,and consistent with the investment strategy for each District account as set
forth in Section 7 hereunder;provided,however,that in no event shall the maximum
allowable stated maturity of any individual investment owned by the District exceed two
(2)years,unless otherwise specifically set forth in this Investment Policy.
C.If invested in certificates of deposits,the District's funds shall be secured,to
the extent that such funds are not insured by the Federal Deposit Insurance Corporation
or the National Credit Union Share Insurance Fund,by the pledge to the District of
certain types of securities,as determined in the sole discretion of the District,which
under the laws of the State of Texas may be used to secure the deposits of municipal
utility districts,pursuant to and in compliance with a Public Funds Depositor Collateral
Security Agreement which shall be substantially in the form attached hereto as
Exhibit "B",the terms and conditions of which are incorporated herein by reference (the
"Public Funds Depositor Collateral Security Agreement").
D.Securities pledged to the District shall be pledged pursuant to and in
compliance with a Public Funds Depositor Collateral Security Agreement to be entered
into by and between the District and the institution(s)pledging such securities.Securities
pledged to the District shall either be deposited and held in safekeeping at the trust or
safekeeping department of a commercial banking institution located in the State of Texas
not affiliated with the pledging institution(s)or a federal home loan bank,or shall be held
in a restricted securities account,joint safekeeping account or other similar account in a
branch of the Federal Reserve Bank pursuant to any and all applicable regulations,
operating circulars,bulletins and policies of the Federal Reserve Bank,including the
terms and conditions of any applicable forms or agreements,as may exist now or
hereafter be enacted,promulgated or issued by the Federal Reserve Bank.The District's
Investment Officer and Tax Assessor-Collector shall,within the limits of business
practicality and consistent with the Federal Deposit Insurance Corporation Statement of
Policy dated March 23,1993,(or any subsequent applicable Statement of Policy issued
by the FDIC)relative to the securing of public funds,ensure that the Disnict's uninsured
funds are at all times secured as required by the Public Funds Collateral Act (Chapter
2257,Texas Government Code,as amended)and in the manner set forth in the Public
386299 4
Funds Depositor Collateral Security Agreement.The District's Investment Officer and
Tax Assessor-Collector are hereby authorized to execute Public Funds Depositor
Collateral Security Agreements and any agreements,documents or forms required by the
Federal Reserve Bank on behalf of the District,as and when required,and to approve the
substitution of securities pledged to the District as collateral pursuant to and in the
manner set forth in any Public Funds Depositor Collateral Security Agreement entered
into by the District.
E.The Board of Directors recognizes that,within the framework of the above
rules,decisions must be made concerning the type and duration of each investment tran-
saction,and that such decisions are best made by the person responsible for implementing
the transaction,based upon the facts and circumstances prevailing at the time.As a guide
to making such decisions,it is hereby declared the policy of the Board of Directors that
priority should be given to proper security of the District's funds over maximizing the
yield on investments.Furthermore,in cases where the rate of return on an investment
security offered by competing banking institutions are substantially equivalent,the
District's Investment Officer shall give preference to those investments and invesnnent
institutions offering the greatest degree of administrative convenience and proximity,
flexibility of investment arrangements and/or similar intangible benefits and community
goodwill.
F.Except as herein provided,nothing herein shall be deemed or construed to
authorize the withdrawal,expenditure or appropriation of funds of the District except by
check or draft signed by three (3)members of the Board of Directors,or as otherwise
provided by applicable statutes or the resolutions,rules,regulations,policies,orders or
proceedings of the Board of Directors.Furthermore,the Board of Directors shall retain
sole responsibility for establishing and implementing,from time to time,this Investment
Policy,and all investment transactions to be undertaken by the District's Investment
Officer pursuant to the Investment Policy shall be subject to the further or more specific
directions,instructions,orders,resolutions or actions of the Board of Directors.
Section 6.Authorized Investments.Subject to the limitations,restrictions and
prohibitions set forth in Chapter 2270,Texas Government Code,the following categories of
investment are authorized for investment of District funds:
A.Obligations,including letters of credit,of the United States or its agencies
and instrumentalities (including the Federal Home Loan Banks);
B.Direct obligations of the State of Texas or its agencies and
instrumentalities;
C.Other obligations,the principal and interest of which are unconditionally
guaranteed or insured by,or backed by the full faith and credit of,the State of Texas,or
the United States or any of their respective agencies and instrumentalities,including
obligations that are fully guaranteed or insured by the Federal Deposit Insurance
Corporation or by the explicit full faith and cre&ht of the United States;
386299 4
D.Obligations of states,agencies,counties,cities,and other political
subdivisions of any state rated as to investment quality by a nationally recognized
investment rating firm not less than A or its equivalent;provided,however,the District
shall not own or invest in any obligations which it has issued;
E.Interest-bearing banking deposits that are guaranteed or insured by the
Federal Deposit Insurance Corporation or its successor or the National Credit Union
Share Insurance Fund or its successor;
F.(I)Certificates of deposit that are issued by a depository institution that
has its main office or a branch office in the State of Texas that are:
(i)guaranteed or insured by the Federal Deposit Insurance
Corporation or its successor or the National Credit Union Share Insurance Fund or
its successor;
(ii)secured by obligations of the type described in Section
2256.010(a)(2),Texas Government Code,as amended,or
(iii)secured in accordance with Chapter 2257,Texas Government
Code,as amended,or in any other manner and amount provided by law for
deposits of the District pursuant to a Public Funds Depositor Collateral Security
Agreement approved and executed by the District;and
(2)Certificates of deposit that are acquired in the manner described in
Section 2256.010(b),Texas Government Code,as amended;provided,however,that each
investment of District funds in the foregoing shall require specific prior approval by the
Board of Directors;
G.Commercial paper with a stated maturity of 270 days or fewer from the
date of issuance which meets the requirements set forth in Section 2256.013,Texas
Government Code,as amended;
H.No-load money market mutual funds that:
(1)are registered with and regulated by the Securities and Exchange
Commission;
(2)provide the District with a prospectus and other information
required by the Securities Exchange Act of 1934 (15 U.S.C.Section 78a et seq.)
or the Investment Company Act of 1940 (15 U.S.C.Section 80a-1 et seq.);
(3)comply with federal Securities and Exchange Commission Rule
2a-7 (17 C.F.R.Section 270.2a-7),promulgated under the Investment Company
Act of 1940 (15 U.S.C.Section 80a-I ct seq.);
386299 4
I.Investment pools which meet the requirements set forth in Section
2256.016 and Section 2256.019,Texas Government Code,as amended[.][;][;and]
Section 7.Investment Strategies.District investments shall be made upon the evaluation
of the specific investment objectives and strategies of each account of the District,with the
primary objective for the selection of any District investment being the understanding of the
suitability of such investment to the financial requirements of the District.The District's
investment strategy for each of its accounts is as follows:
A.Oneratinp/General Account.The operating/general account is used for all
operations and maintenance needs of the District and funds therein shall be invested to
meet the operating and cash flow requirements of the District as determined by the
District's Board of Directors.The highest priorities for this account are the liquidity and
marketability of an investment if the need arises to liquidate the investment before its
maturity.Of equal importance is the preservation and safety of the principal of
investments in the operating account.When these priorities are met,the yield on
investments held in the operating/general account will next be considered.
B.Debt Service/Bond Fund Account.The District's debt service/bond fund
account is used to pay the District's debt service on its outstanding bonds.The highest
priority for this account is the preservation and safety of principal.Since the District
knows the amount of its debt service requirements and when it becomes due,investments
for the debt service/bond fund account should be structured to coincide with the amount
and timing of the debt service requirements.When the preservation and safety of
principal and liquidity considerations for debt service purposes are assured,including the
marketability of debt service/bond fund account investments in the event the need arises
to liquidate an investment before its maturity,the yield on debt service/bond fund account
investments should be considered.Since the amount of District funds in the debt
service/bond fund account can be significant,diversification of the debt service/bond
fund account investment portfolio may be necessary.The District may easily liquidate
investments in an investment pool and therefore such investments may be appropriate in
combination with longer term investments in the debt service/bond fund account.
C.Camtal Proiects/Construction Fund Account.The capital
projects/construction fund account is used to pay for capital improvements of the District.
The highest priority for this account is the preservation and safety of principal.In the
event that funds held in the capital projects/construction fund account are for particular
improvement projects that have been previously identified by the District's Board of
Directors,the Board will have an idea of the approximate time when disbursements will
be required to be made from this account.In this situation,investments in the capital
projects/construction fund account should be structured so that they mature or can be
liquidated on or about the dates that disbursements are expected to be made.Once the
safety of principal and liquidity and marketability of capital projects/construction fund
account investments which are to match certain disbursement dates are assured,the yield
on such investments may be considered.Since District funds in the capital
386299 4
-10-
projects/construction fund account may not be needed for a year or more,longer term
insnuments should be considered to increase yield.However,if funds available in the
District's capital projects/construction fund account are surplus construction funds from
prior bond issues or interest earnings on such funds and are not earmarked for specific
improvement projects,but rather viewed by the District's Board of Directors as an
emergency reserve fund for major repairs or rehabilitation projects,investments in the
capital projects/construction fund account,at least to the extent that they are for
emergency reserve purposes,should be kept in relatively short term investments that can
be easily marketed and liquidated if necessary,such as investment pools.Alternatively,
bond proceeds that may be deposited in the District's capital projects/construcnon fund
account for reimbursement to a developer and which may be in the capital
projects/construction fund account for only one or two days,should be kept in the most
liquid investment available.Investment diversification for large amounts of District
funds that may be deposited into the capital projects/construction fund account for only
one or two days may be achieved through the use of an investment pooL Since
investment pools are short term in nature,they would normally be used for District funds
in this account only if the District knows that it will be dispersing funds in a relative short
period of time,However,on some occasions the yield on investment pools is higher than
on longer term investments,so their use may be optimal for funds in the capital
projects/construction fund account
Section 8.Miscellaneous.
A.In the event of any conflict or inconsistency between the terms of this
Investment Policy and applicable requirements of law,such conflict or inconsistency will
be resolved in favor of the more restrictive of this Investment Policy or the applicable
requirements of law.In the event of any ambiguity or uncertainty as to the intent and
application of any part,section,paragraph or provision hereof,a written request for
clarification or approval of a proposed action describing such circumstances shall be
submitted to the Board of Directors for a decision as to a proper course of action.
B.The rules,regulations and policies set forth herein shall be and remain in
full force and effect unless and until amended,revised,rescinded or repealed by action of
the Board of Directors.The Disnict's Board of Directors specifically reserves the right to
change,alter or amend any provision of this Investment Policy at any time.
C.The provisions of this Investment Policy are severable,and if any
provision or part of this Investment Policy or the application thereof to any person or
circumstances shall ever be held by any court of competent jurisdiction to be invalid or
unconstitutional for any reason,the remainder of this Investment Policy and the
application of such provision or part of this Investment Policy shall not be affected
thereby.
The President or Vice President is authorized to execute and the Secretary or Assistant
Secretary to attest this Investment Policy on behalf of the Board and the District.
386299 4
PASSED AND ADOPTED this the 9th day of October,2017.
ROCK PRAIRIE MANAGEMENT
DISTRICT NO.2
ATTEST:
SeQre ary,Board of Directors
9aIIIIIIIII////
j
P
"i~//~'ott ~oiio
///IIIIIIata
By:
VicMeresidentgog of Directors
386299 4
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EXHIBIT "A"
CERTIFICATE OF COMPLIANCE FROM SELLERS OF INVESTMENTS
AS REOUIRED BY THE PUBLIC FUNDS INVESTMENT ACT
TQ:Rock Prairie Management District No.2 (the "District")
From:
[Name of the person
offering or the "qualified
representative"of the business
organization offering to engage
in an investment transaction
with the District or of the
District's Investment Manager]
[Title of such person]
of (the "Business Organization")
[Name of financial institution,
business organization or
investment pool]
Date:,20
In accordance with the provisions of the Public Funds investment Act,Chapter 2256,
Texas Government Code,as amended,I hereby certify that:
l.I am an individual offering to enter into an investment transaction with the
District or a "qualified representative"of the Business Organization offering to enter into an
investment transaction with the District,as applicable,as such terms are used in the Public Funds
Investment Act,Chapter 2256,Texas Government Code,as amended (the "Seller"),and that
Seller meets all requirements under such Act to execute this Certificate.
2.The Business Organization is an investment pool or an investment management firm
under contract with the District to invest or manage the District's investment portfolio that has
accepted authority from the District to exercise investment discretion in regard to the District's funds.
3.Seller anticipates selling to the District investments that are authorized by the
District's Order Establishing Policy for Investment of District Funds and Appointing Investment
Officer,dated October 9,2017 (the "Investment Policy")and the Public Funds Investment Act
(collectively,the "Invesnnents").
4.I or a registered investment professional that services the District's account,as
applicable,have received and reviewed the District's Investment Policy now in full force and
effect.The District has further acknowledged that Seller may rely upon the Investment Policy
until the District provides Seller with any amendments to or any newly adopted form of the
Investment Policy.
5.Seller has implemented reasonable procedures and controls in an effort to
preclude investment transactions between the District and Seller that are not authorized by the
Investment Policy,except to the extent that this authorization is dependent upon an analysis of
the District's entire portfolio,requires an interpretation of subjective investment standards,or
relates to investment transactions of the District that are not made through accounts or other
contractual arrangements over which the Business Organization has accepted discretionary
investment authority.
6.Seller has reviewed or will review prior to sale,the terms,conditions and
characteristics of the investments to be sold to the District and has determined or will determine,
prior to sale,that (i)each of the Investments is an authorized investment for local governments
under the Public Funds Investment Act and (ii)each of the Investments is an authorized
investment under the District's Investment Policy.
7.Seller acknowledges that the District has disclosed and hereby discloses that
certain funds within the custody of the District which may be deposited or invested with Seller
are by law or under a bond indenture required to be set aside to discharge a debt owed to the
holder(s)of the District's outstanding notes and/or bonds.As such,these funds shall be deemed
to be a deposit by a trustee of trust funds of which the holder(s)are pro rata beneficiaries in
accordance with 12 C.F.R.$330.15(c).Such funds held in trust for the holder(s)of the District's
notes and bonds are deposited within the account(s)titled "Bond Fund","Bond Account","Debt
Service Fund","Debt Service Account","Interest and Sinking Fund","Interest and Sinking
Account",or other similar name sufficient to satisfy the requirements of 12 C.F.R.$330.5(b)
indicating that such funds are pledged towards the payment of principal and interest on the
District's bonds and notes.Seller further acknowledges that the District may be acting in a
fiduciary capacity on behalf of certain persons or entities who may,in turn,be acting in a
fiduciary capacity for subsequent purchasers and/or holders of the District's outstanding bonds
and notes.
g.Seller will continuously maintain an executed copy of this Certificate of
Compliance in its "deposit account records"(as defined in 12 C,F.R.$330.1(e))for so long as
Seller holds any funds of or within the custody of the District.
Name:
Title:
386299 4
EXHIBIT "B"
PUBLIC FUNDS DEPOSITOR
COLLATERAL SECURITY AGREEMENT
This Public Funds Depositor Collateral Security Agreement (this "Agreement")is made
and entered into as of the day of,20 by and between ROCK PRAIRIE
MANAGEMENT DISTRICT NO.2 (the "Depositor")and ("Bank"),
and any prior Agreement between Depositor and Bank relative to the subject matter hereof is
hereby terminated as of the date first written above.
RECITALS
Depositor,through action of its Board of Directors,has designated Bank as a depository
for Depositor's funds.Funds on deposit with Bank to the credit of Depositor in excess of federal
deposit insurance are required to be secured by eligible security as provided for by the Public
Funds Collateral Act,V.T.C.A.Government Code Section 2257.001 et seq.(the "Public Funds
Law").Depositor and Bank understand and acknowledge that the amount of Depositor's
uninsured deposits in Bank may vary substantially from time to time;that under the
circumstances permitted herein,the Bank may release,add to or substitute for the securities
pledged by Bank from time to time to secure such uninsured deposits of Depositor;and that it is
the intent of the parties that this Agreement be renewed and extended upon and at the time of
each permitted release,addition or substitution of collateral securities and thereafter remain in
force and effect for the full term thereof until terminated in the manner set forth herein.In order
to perfect Depositor's security interest in eligible securities pledged by Bank from time to time to
secure such uninsured deposits,the Board of Directors of the Bank (the "Bank Board")has
authorized the undersigned Bank officer to enter into this Agreement on behalf of Bank under
the terms of which Bank will [either (i)cause »a
[state or national bank ],which has its main office or a branch office in Texas and which has
been designated by the State Comptroller as a Texas State Depository to hold the collateral assets
in a custody account as bailee for the benefit of Depositor,or (ii)]cause the Federal Reserve
Bank or a federal home loan bank ("FHLB")to hold the collateral assets in a restricted securities
account,joint safekeeping account or other similar account as custodian/bailee for the benefit of
Depositor (such [bank or]FHLB or the Federal Reserve Bank,as the case may be,hereinafter
called the "Custodian").
AGREEMENT
Now,Therefore,in consideration of the mutual covenants in this Agreement,the parties
agree as follows:
1.Grant of Securitv Interest.To secure the uninsured deposits maintained by
Depositor with Bank from time to time„Bank hereby pledges and grants to Depositor a security
interest in its Eligible Securities (as defined in the Public Funds Law)which are held,now or
hereafter,by Custodian for the benefit of Depositor in accordance with the terms of this
Agreement (the "Collateral").At all times during the term of this Agreement,the Collateral shall
consist solely of the following:
general obligations of the United States of America or its agencies or instrumentalities
backed by its full faith and credit„
direct obligations of the State of Texas or Texas State agencies and instrumentalities;
collateralized mortgage obligations directly issued by a federal agency or instrumentality
of the United States of America,the underlying security for which is guaranteed by an
agency or instrumentality of the United States of America;
other obligations,the principal and interest on which are unconditionally guaranteed or
insured by,or backed by the full faith and credit of the State of Texas or the United States
of America or their respective agencies and instrumentalities;
obligations of states,agencies,counties,cities and other political subdivisions of any
state rated as to investment quality by a nationally recognized investment rating firm not
less than A or its equivalent;
fixed-rate collateralized mortgage obligations that have an expected weighted average life
of 10 years or less and which do not constitute a high-risk mortgage security as defined in
the Public Funds Law;
floating-rate collateralized mortgage obligations that do not constitute a high-risk
mortgage security as defined in the Public Funds Law;and
letters of credit issued by a federal home loan bank.
Bank shall cause Custodian to accept and hold the Collateral as bailee and/or custodian for
Depositor to secure Bank's obligation to repay the deposits.
2.Receipts.The Collateral held by Custodian for the benefit of Depositor,as of the
effective date of this Agreement,has been described on Trust Receipts (as defined in the Public
Funds Law)issued by Custodian,copies of which Custodian has forwarded to Depositor,and
such current Collateral is described on Exhibit "A"attached hereto and made a part hereof for all
purposes.With respect to additional or substitute Collateral hereafter delivered by Bank to
Custodian to hold for the benefit of Depositor,or any releases of securities previously held as
Collateral ("Releases"),as contemplated by this Agreement,Bank shall cause Custodian to issue
Trust Receipts or Releases describing such additional or substitute Collateral or released
securities and promptly forward copies of same to Depositor.Such Trust Receipts and Releases
which are furnished to Depositor by Custodian from time to time shall be deemed a part of this
Agreement without further action on the part of any paity hereto,and this Agreement shall apply
to such released,additional or substitute Collateral to the same extent as if it were described on
Exhibit "A"attached hereto.lf the Custodian is the Federal Reserve Bank,such Trust Receipts
386299 4
or Releases will consist of a written confirmation (the "Advice").Such Advice shall be subject
to the terms and conditions of all applicable regulations,operating circulars,bulletins and
policies of the Federal Reserve Bank,including the terms and conditions of any applicable forms
or agreements,as may now exist or hereafter be enacted,promulgated or issued by the Federal
Reserve Bank (collectively "Applicable Regulations").If the Custodian is the Federal Home
Loan Bank of Dallas ("FHLB Dallas"),notwithstanding the foregoing,such Tmst Receipts may
be forwarded to Bank with instructions for Bank to immediately forward the same to Depositor.
Bank hereby agrees to comply with Custochan's instructions and forward each Trust Receipt to
Depositor immediately upon receipt of same.Upon request of Depositor,Bank agrees to provide
or cause Custodian to provide a then-current list of all Collateral pledged by Bank to secure
Depositor's funds to update Exhibit "A"to this Agreement.If the Custodian is FHLB Dallas and
the Custodian is forwarding Trust Receipts to Bank,Depositor may,at any time and from time to
time,request that FHLB Dallas provide one or more Trust Receipts directly to Depositor,and
FHLB Dallas shall iriunediately so provide the requested Trust Receipts to the Depositor,at no
cost to the Depositor.
3.Reauired Collateral Value.Bank agrees with Depositor that the total market
value of the Collateral securing uninsured deposits maintained by Depositor with Bank will at all
times during the term of the Agreement be not less than (i)one hundred ten percent (110%)of
the amount of such uninsured deposits,if the determination of the market value of Collateral is
calculated less frequently than weekly by Bank,or (ii)one hundred five percent (105%)of the
amount of such uninsured deposits if the determination of the market value of Collateral is
calculated at least weekly by Bank (the "Required Collateral Value").To insure that the
Required Collateral Value is maintained,Bank will redetermine,on a daily basis,the amount of
Depositor's uninsured deposits (taking into account that day's deposits,accrued interest,
disbursements and withdrawals)held by Bank and (using the most recently determined market
value of the Collateral)promptly add any additional Collateral which may be necessary to
maintain the Required Collateral Value by either (i)depositing with Custodian for the purposes
of this Agreement any additional Collateral or (ii)if the Custodian is the Federal Reserve Bank,
transferring additional Collateral to a restricted securities account,joint safekeeping account or
other similar account maintained by the Federal Reserve Bank.Determination of the market
value of Collateral by Bank will be calculated periodically as indicated by Bank on the
signature page hereof or more frequently on Depositor's request;provided,however,the
foregoing shall not relieve Bank of its obligation to fully collateralize at all times the Depositor's
uninsured deposits with Bank.If upon the periodic determination of the Collateral's market
value as set forth herein,the Required Collateral Value is not then maintained,Bank will
promptly deposit with Custodian for the purposes of this Agreement additional Collateral
necessary to maintain the Required Collateral Value.
4.Release of Collateral.Custodian shall not release any part of the Collateral
without Depositor's written authorization.Depositor agrees to furnish such authorization
promptly upon Bank's request under the circumstances described in Sections 5,6,or 8 of this
Agreement.Depositor's authorization to Custodian to release from the Collateral only
designated Eligible Securities shall terminate the security interest granted by Bank in this
Agreement only with respect to such designated Eligible Securities.If the Custodian is the
Federal Reserve Bank,this section shall apply except to the extent it is in conflict with the
386299 4
provisions of the Applicable Regulations,in which event the provisions of the Applicable
Regulations shall govern the release of Collateral.
5.Substitution of Collateral.It is hereby agreed that upon obtaining the prior
written consent of the Depositor,which consent shall not be unreasonably withheld,substitutions
of the Collateral held hereunder may be made at any time so long as the fair market value of the
Eligible Securities being substituted is at least equal to the fair market value of the Eligible
Securities being removed.If the Custodian is the Federal Reserve Bank,this section shall apply
except to the extent it is in conflict with the provisions of the Applicable Regulations,in which
event the provisions of the Applicable Regulations shall govern the substitution of Collateral.
6.Excess Collateral.At such times as the aggregate market value of the Collateral
held by Custodian exceeds the Required Collateral Value,Depositor,upon request by Bank,shall
authorize Custodian to permit Bank to release the excess portion of the Collateral.Custodian
shall have no further liability to Depositor with respect to those Eligible Securities released upon
Depositor's authorization.
7.Additional Collateral.If at any time the aggregate market value of Collateral held
by Custodian is less than the Required Collateral Value,Bank shall immediately upon learning
of such circumstance,and without further action by Depositor,promptly either (i)deposit with
Custodian sufficient additional Eligible Securities of the type specified in Section I as may be
necessary to cause the aggregate market value of the Collateral to equal the Required Collateral
Value,or (ii)transfer additional Eligible Securities of the type specified in Section I to the
restricted securities account,joint safekeeping account or other similar account maintained by
the Federal Reserve Bank as may be necessary to cause the aggregate market value of the
Collateral to equal the Required Collateral Value and cause the Federal Reserve Bank to issue a
corresponding Advice (and Bank will deposit with the Federal Reserve Bank additional Eligible
Securities if and to the extent necessary to fulfill its obligations under this Agreement).
8.Earnings and Pavments on Collateral.Bank shall be entitled to the interest
income and earnings paid on the Collateral and Custodian may dispose of such interest income
and earnings as directed by Bank without approval of Depositor,so long as Depositor has not
notified Custodian of Bank's default under this Agreement.Bank shall not be entitled to and
Custodian shall not release to Bank any partial or full call of the Collateral without Depositor's
prior written authorization as described in Section 4 of this Agreement.If the Custodian is the
Federal Reserve Bank,this section shall apply except to the extent it is in conflict with the
provisions of the Applicable Regulations,in which event the provisions of the Applicable
Regulations shall govern the disposition of interest earnings and principal payments on the
Collateral.
9.Default and Remedies.If Bank fails at any time to pay and satisfy,when due,any
check,draft,or voucher lawfully drawn against any deposit or becomes insolvent or materially
breaches its contract with Depositor,a default shall exist under this Agreement and Depositor
shall give written notice of such default to Bank,and Bank shall have ten (10)days to cure same.
In the event Bank fails to do so,it shall be the duty of Custodian,upon written demand of
Depositor,to surrender or transfer the Collateral to Depositor or Depositor's nominee and Bank
386299 4
hereby irrevocably authorizes Custodian to surrender or transfer the Collateral upon the
conditions herein specified.Depositor may sell all or any part of such Collateral in a
commercially reasonable manner and out of the proceeds of the Collateral may pay Depositor all
damages and losses sustained by it,together with all expenses of any and every kind incurred by
it on account of such failure or insolvency sale.Depositor shall account to Bank for the
remainder,if any,of said proceeds or Collateral remaining unsold.Such sale may be either at
public or private sale;provided,however,Depositor shall give Bank ten (10)days'ritten notice
of the time and place where such sale shall take place,and such sale shall be to the highest bidder
for cash.Depositor and Bank shall have the right to bid at such sale.If the Custodian is the
Federal Reserve Bank,this section shall apply except to the extent it is in conflict with the
provisions of the Applicable Regulations,in which event the provisions of the Applicable
Regulations shall govern the Depositor's exercise of remedies against the Collateral.
10.Authorization and Records.The Bank Board has authorized the pledge of Bank
assets to collateralize uninsured deposits maintained by Depositor pursuant to resolutions
substantially in the form of Annex I attached to the form of Resolution Certificate and Certificate
of Incumbency attached hereto as Exhibit "B"(the "Resolution Certificate"),and has authorized
the undersigned Bank officer to enter into,execute and deliver to Depositor this Agreement on
behalf of Bank and to take all action which may be necessary or appropriate to create and perfect
the security interest in the Collateral contemplated hereunder.Bank shall deliver to Depositor a
fully executed Resolution Certificate as a condition precedent to the effectiveness of this
Agreement and shall advise Depositor immediately of any revocation,amendment or
modification thereof.Bank acknowledges that the District has disclosed and hereby discloses
that certain funds within the custody of the District which may be deposited or invested with
Bank are by law or under a bond indenture required to be set aside to discharge a debt owed to
the holder(s)of the District's outstanding notes and/or bonds.As such,these funds shall be
deemed to be a deposit by a trustee of trust funds of which the holder(s)are pro rata beneficiaries
in accordance with 12 C.F.R.$330.15(c).Such funds held in nust for the holder(s)of the
District's notes and bonds are deposited within the account(s)titled "Bond Fund","Bond
Account","Debt Service Fund","Debt Service Account","Interest and Sinking Fund","Interest
and Sinking Account",or other similar name sufficient to satisfy the requirements of 12 C.F.R.
$330.5(b)indicating that such funds are pledged towards the payment of principal and interest on
the District's bonds and notes.Bank further acknowledges that the District may be acting in a
fiduciary capacity on behalf of certain persons or entities who may,in turn,be acting in a
fiduciary capacity for subsequent purchasers and/or holders of the District's outstanding bonds
and notes.Bank shall continuously maintain an executed copy of this Agreement,its copies of
all Trust Receipts,Releases and Advices,and the Resolution Certificate among its official
"deposit account records"(as defined in 12 C.F.R.)330.1(e))until such time as this Agreement
is terminated and all uninsured deposits of Depositor have been properly and fully paid out.This
Agreement may be executed in one or more counterparts,each of which shall be an original.
11.Authorized Renresentative;Depositor Aareements.The Depositor hereby
confirms that it has previously authorized its Investment Officer and/or Tax Assessor-Collector
to execute this Agreement and any documentation required in connection therewith,including
specifically pursuant to the Applicable Regulations and documentation related thereto,and to
represent it and act on its behalf in any and all matters of every kind arising under this
386299 4
Agreement.During the term of this Agreement,the Depositor may further designate an
additional officer or officers to singly or jointly represent and act on behalf of Depositor in any
and all matters of every kind arising under this Agreement and,in such event,shall provide
written notice thereof to Bank.In the event of any conflict between the provisions of this
Agreement and any other agreement between the Depositor and the Bank relating to the deposits,
this Agreement will control,unless the conflict is with the Applicable Regulations,in which
event the Applicable Regulations will control.Bank and Depositor specifically agree that
Depositor's prior approval is required for any par-for-par Collateral substitutions.
12.Custodian as Bailee.Custodian will promptly identify the pledge by Bank to
Depositor of the Collateral on the Custodian's books and records and any additional or substitute
Collateral and issue to Bank and Depositor Trust Receipts covering the Collateral.Similarly,
Custodian will promptly remove from its books and records any securities released from the
pledge by Bank in compliance with the terms of this Agreement and issue to Bank and Depositor
appropriate Releases identifying the released securities.Custodian acknowledges that it is the
bailee of Depositor for purposes of Section 2257.044 of the Public Funds Law,and its custodial
capacity is deemed to be set forth on any Trust Receipt delivered to Bank and Depositor,whether
such capacity is expressly so noted or not.If the Custodian is the Federal Reserve Bank,this
section shall not apply,but Bank acknowledges the provisions of the Applicable Regulations
which provide that the Federal Reserve Bank is acting as custodian/bailee;that the Collateral
identified on the Advice is subject to the custodial provisions of the Applicable Regulations;and
that the disposition thereof is subject to Depositor's approval.
13.Financial Condition.Bank will provide a statement of its financial position to the
Depositor on at least a quarterly basis.Bank will provide to the Depositor an annual statement
audited by its outside auditors including a statement by its outside au&fitors as to its "fair
presentation."
14.Amendment.Modification.Renewal.Each permitted release of previously
pledged Collateral and each addition to or permitted substitution for Collateral shall be deemed
and considered,without further action by Bank or Depositor,as an amendment to Exhibit "A"
attached hereto and a contemporaneous renewal and extension of this Agreement for the term
hereinafter stated upon the same terms and containing the same provisions as set forth herein,
except as the Collateral subject to this Agreement may be modified or amended thereby;
provided,however,that any such renewal and extension shall not affect any transaction entered
into prior to such renewal and extension until Bank shall have properly and fully paid out all
uninsured deposits (including any uninsured time deposits)and Depositor shall have authorized
Custodian to redeliver to Bank's sole control all Collateral then in Custodian's possession.
Otherwise,this Agreement may not be amended or modified except by mutual written agreement
of the parties hereto.
15.Term.Unless sooner terminated as hereinafter provided,the term of this
Agreement,and any renewal or extension hereof resulting &om any release,addition to or
substitution of securities pledged as Collateral hereunder,shall commence on the date of this
Agreement,or the date of such release,addition or substitution,and continue for a term of ten
(10)years.
386299 4
16.Termination.Either Depositor,Bank or Custodian may terminate this Agreement
prior to the expiration of the term hereof upon thirty (30)days'dvance written notice to the
other parties or by entering into a new Public Funds Depositor Collateral Security Agreement
which is intended to supercede and replace this Agreement;provided,however,that the terms of
this Agreement shall continue to apply to all transactions entered into prior to such termination
and until Bank shall have properly and fully paid out all uninsured deposits (including any
uninsured time deposits)and Depositor shall have authorized Custodian to redeliver to Banlds
sole control all Collateral then in Custodian's possession.
17.Custodian Fees.Any and all fees associated with the Custodian's holding of
Collateral for the benefit of the Depositor will be paid by Bank and the Depositor will have no
liability therefor.
18.Representations.As required by Chapter 2270,Texas Government Code,Bank
and Custodian each hereby verify that it does not boycott Israel and will not boycott Israel
through the term of this Agreement.For purposes of this verification,"boycott Israel"means
refusing to deal with,terminating business activities vidth,or otherwise taking any action that is
intended to penalize,inflict economic harm on,or limit commercial relations specifically with
Israel,or with a person or entity doing business in Israel or in an Israeli-controlled territory,but
does not include an action made for ordinary business purposes.
In witness whereof,the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the day first above written.
DEPOSITOR:
ROCK PRAIRIE MANAGEMENT DISTRICT NO.2
By;
Name:
Title:
386299 4
Bank hereby agrees that it will periodically determine the market value of Collateral and
maintain the corresponding Required Collateral Value throughout the term of this Agreement as
indicated below (provided,however,that in the event no indication is made below,the Required
Collateral Value for all purposes of this Ayeement shall be 110%):
Less frequent than weekly
Weekly
No less than 110%
No less than 105%
BANK:
By:
Title:
The Custodian,if other than the Federal Reserve Bank,joins in the execution of this Agreement
for purposes of Sections 4,8,9,12,16,and 18,and if the Custodian is the Federal Reserve Bank,
such joinder is to be evidenced as set forth in the Applicable Regulations,the Advice and any
documentation related thereto.
CUSTODIAN:
By:
Name:
Title:
386299 4
EXHIBIT "A"
[Description of Eligible Securities Pledged]
EXHIBIT "B"
RESOLUTION CERTIFICATE
AND CERTIFICATE OF INCUMBENCY
OF (the "BANK")
The undersigned hereby certifies as follows:
l.I am the officer of the Bank holding the title designated on the signature line of
this Certificate.
2.Attached hereto as Annex I is a full,true and correct copy of resolutions (the
"Resolutions")duly adopted by the [Board of Directors][Loan Committee]of the Banlc in
conformity with the Articles of Association and By-laws of the Bank and in accordance with the
laws of the State of Texas.
3.The Resolutions have not been amended,modified or rescinded,and are in full
force and effect on the date hereof.
4.The Bank is duly organized and existing under the laws of
5.All franchise and other taxes required to maintain the Bank's existence have been
paid and none of such taxes are delinquent.
6.No proceedings are pending for the forfeiture of the Bank's authority to do
business or for its dissolution,voluntarily or involuntarily.
7.The Bank is qualified to do business in each state where the nature of its business
requires such qualification.
8.There is no provision in the Articles of Association,By-laws or any other
agreement,indenture or contract to which the Bank or its property is subject which limits the
Resolutions,and the Resolutions are in conformity with the provision of the Bank's Articles of
Association and By-laws and with proceedings of the Board of Directors.
9.This resolution is made in order to comply with requirements of the Financial
Institutions Reform,Recovery and Enforcement Act of 1989,as amended,and 12 U.S.C.
1823(e),and shall constitute a business record of the Bank and shall be continuously maintained
in the official business records of Bank.
10.The undersigned officers have been duly elected to the positions set opposite their
respective names below and are qualified to act in the present capacities in which they sign for
the Bank.
11.The signatures appearing opposite each of the undersigned officers is his or her
authentic signature and each of the undersigned holds the office designated for the same.
Name Office Sianature
EXECUTED the day of ,20
Name:
Title:[Secretary][Recording Officer]
386299 4
ANNEXI
RESOLUTIONS
RESOLVED,that this Bank shall secure all deposits of Rock Prairie Management
District No.2 (the "District")in excess of amounts insured by the Federal Deposit Insurance
Corporation ("Excess Funds")on deposit with the Bank at any time in whatever amount;and
further
RESOLVED,in regard to the above referenced deposits,that the Chairman of the Board
of Directors,President,any Executive Vice President,any Vice President,any Assistant Vice
President,or any other officer of the Bank is hereby authorized and directed to execute for and
on behalf of the Bank the following documents,it being further agreed that the execution of any
of the same prior to the adoption of these resolutions is hereby ratified,confirmed and adopted:
I.A Public Funds Depositor Collateral Security Agreement (the "Collateral Security
Agreement")in favor of the Disnict,covering the Collateral described therein;
2.Such other and further documents as may be deemed necessary or desirable by
such officer or as required by the District in regard to the securing of the Excess Funds;and
further
RESOLVED,that the officers executing any of the above described documents are
hereby authorized and empowered to do and perform any and all actions required by the terms
and provisions of same to execute the same in the name and on behalf of the Bank,in such
number of counterparts as the officer or officers executing the same shall deem necessary or
desirable,with such terms,conditions,modifications,changes and provisions as the officer or
officers executing the same may approve,the execution of such documents to evidence approval
of the terms thereof conclusively;and further
RESOLVED,that any and all instruments executed and delivered on behalf of the Bank
in connection with these resolutions by any person purporting to be an officer of the Bank shall
be deemed to be the act of the Bank and shall be in all respects binding against the Bank;and
further
RESOLVED,that all actions of all officers,agents or other representatives of the Bank
taken or performed up to the date hereof in respect to the preparation,execution and delivery of
the documents,certificates or other instruments contemplated hereby,and the taking prior to the
date hereof of any and all actions otherwise required by the terms and provisions of the above
referenced documents,be,and they hereby are,in all respects approved,ratified and confirmed;
and further
RESOLVED,that this approval is intended to comply in all respects with the
requirements of applicable statutory law relating to insurance of accounts including specifically,
but without limitation,the requirements of 12 U.S.C.A.)$1821(d)(9)(A)and 1823(e);and
further
RESOLVED,that any deposit agreements between Bank and District and/or the
Collateral Security Agreement are all intended to be,and shall be deemed to be,official records
of the Bank;and further
RESOLVED,that any deposit agreements between Bank and District,the Collateral
Security Agreement and these Resolutions shall be continuously maintained in the business
records ofthe Bank.
3 86299-2
EXHIBIT "C"
EHRA TBPE No.F-726
TBPLS No.10092300
ROCK PRAIRIE MANANGMENT DISTRICT NO.2
ENGINEERING REPORT
OCTOBER 2017
7.Engineering Report,Including:
a.Authorize the design,of facilities within the District,including;
1.Authorize design of onsite sanitary sewer trunk line
Board Action:Authorize design of onsite sanitary sewer trunk line.
b.Acceptance of site and/or easement conveyances for facilities construed or to be
constructed for the District,including
Board Action:None
c.Status of design and authorize advertisement for bids for construction and/or
award of construction contracts or concurrence in the award of construction
contracts including the approval of any pay estimates,change orders and authorize
acceptance of Texas Ethics Commissions ("TEC')Form 1295,including
2.Status of design and authorization for bids for construction of water,sewer
drainage and paving facilities for Bird Pond Road;and
The plans will be submitted for initial Gty of College Station.review on or by
October 13".
Board Action:Authorize advertisements for bids.
3.Status of design and authorization for bids for construction of offsite sanitary
sewer trunk line;and
Boanl Action:Authorize advertisements for bids for the onsite and
off-site sanitary sewer trunk line.
EXHIBIT "9"
MEMORANDUM
TO:Board of Directors (the "Board")
Rock Prairie Management District No.2 (the "District")
FROM:
DATE:
Schwartz,Page Ec Harding,L.L.P.
October 9,2017
Participation Agreement for Constructing and Oversizing Public Infrastructure
(the "Agreement")among the District,City of College Station,Texas ("City")and
College Station Town Center,Inc.("CSTC")
The purpose of this Memorandum is to briefly describe the terms and conditions of the
Agreement being considered for approval at the Board meeting today.On behalf of the District,
CSTC planned to construct an 18-inch sanitary sewer trunk line to serve the District.The City
requested that CSTC and the District allow the City to participate in the project to serve its
customers,and thus,oversize the proposed infrastructure to provide for a 48-inch sanitary sewer
trunk line from the southeastern comer of CSTC's property,running eastward to William D.
Fitch Parkway (the "Project").The Agreement sets forth the terms and conditions of the City'
participation in the Project,as follows:
~CSTC is required to design,bid,award and commence construction of the Project no later
than 120 days after the City awards a construction contract for Lakeway Drive.
~CSTC is required to complete the Project no later than 9 months after CSTC's award of
the construction contract for the Project.
~The City's participation in the Project is the lesser of:(i)72%of the Projects Costs;or
(ii)a maximum not-to-exceed amount of $2,300,000.00.Notwithstanding the foregoing,
if the construction contract for the Project results in the City's participation exceeding
$2,300,000.00,the City has the option to continue to participate in the Project.In
addition,if the City elects not to proceed with participation in the Project,CSTC is
granted additional time to design,bid,award and commence construction of the Project,
and the City shall pay a portion of the costs incurred by CSTC through the date of the
City's election not to proceed.
~Within 30 days of the effective date of the Agreement,the City and CSTC will provide
adequate financial assurance that it has sufficient funds dedicated to the Project.The
City provides said assurance by designating,appropriating and/or pledging sufficient
funds to pay its share of the Project.CSTC provides said assurance by (i)posting a
developer bond in favor of the City for its share of the Project;(ii)providing a set-aside
letter or letter of credit from an authorized financial institution;or (iii)depositing its
share of the Project to be held in escrow with the District.
~CSTC is required to advertise for bids and use the City's standard form of construction
contract for the Project.CSTC must obtain written approval of any change orders and
pay estimates from the City,and provide the City with inspection rights throughout the
entirety of the Project.
~CSTC will submit pay applications with a variety of required information to the City,
requesting the City's payment of each pay estimate.City will pay its share of the pay
applications within 30 days.
~The Agreement is considered a contract for goods and services,and the District and City
waive any right to sovereign or governmental immunity for CSTC to enforce the
Agreement,but only as to CSTC and the Agreement.
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