HomeMy WebLinkAbout2002-2597 - Ordinance - 12/05/2002ORDINANCE NO. 2597
PROVIDING FOR THE ISSUANCE OF $1,000,000 CITY OF COLLEGE
STATION, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2003; AND
ORDAINING OTHER MATTERS RELATING TO THE SUBJECT, INCLUDING
IMMEDIATE EFFECTIVENESS
WHEREAS, on the 7th day of November, 2002, the City Council of the City of College Station
(the "City" or the "Issuer") passed a resolution authorizing and directing notice of its intention to issue the
Certificates of Obligation herein authorized to be issued on February 28, 2002, to be published in a
newspaper as required by Section 271.049 of the Texas Local Government Code; and
WHEREAS, said notice was published in theBryan-College Station Eagle, a "newspaper" of the
type described in Section 2051.044, Texas Government Code, as required by said Section 271.049 of
the Texas Local Government Code, on November 20, 2002 and November 27, 2002; and
WHEREAS, no petition, signed by at least 5% of the qualified electors of said City as permitted
by said Section 271.049 of the Texas Local Govemment Code protesting the issuance of such Certificates
of Obligation, has been filed; and
WHEREAS, the Certificates of Obligation hereina/~ authorized are to be issued and delivered
pursuant to Subehapter C of Chapter 271 of the Texas Local Government Code;
THEREFORE, BE 1T ORDAINED BY THE crrY COUNCIL OF THE CITY OF COLLEGE
STATION, TEXAS:
Section 1. AUTHORIZATION OF CERTIFICATES OF OBLIGATION. That said City's
Certificates of Obligation, to be desiglmted the "City of College Station, Texas Certificates of Obligation,
Series 2003", are hereby authorized to be issued and delivered in the principal amount of $1,000,000 for
the purpose of paying conWactual obligations to be incun'ed by the City, to-wit,
1)
acquisition of equipment (an excavator, brash Ixucks, a trailer, a motor grader, a
compactor and a roll off sanitation container) for use by various municipal deparmaents;
and
2) the payment of fiscal, engineering and legal fees incurred in connection therewith.
Section 2. DATE, DENOMINATIONS, NUMBERS AND MATURITIES. That said
Certificates of Obligation shall initially be issued, sold and delivered ~der as fully registered
certificates, without interest coupons, dated December l, 2002, in the respective denominations and
principal amounts hereinafter stated, numbered consecutively from R- 1 upward, payable to the respective
initial registered owners thereof, or to the registered assignee or assignees of said certificates or any portion
or portions thereof(in each case, the "Registered Owner"), and said Certificates of Obligation shall mature
and be payable on February 15 in each of the years and in the principal amounts as follows:
PRINCIPAL
2004 180,000
2005 190,000
2006 200,000
2007 210,000
2008 220,000
The term "Certificates" as used in this Ordinance shall mean and include collectivdy the Certificates of
Obligation inia,ny ~ and delivered pursuant to this Ordinance and all substitute C, erfificates of Obli-
gation exchanged therefor, as well as all other substitute Certificates of Obligation and replacement Certif-
icates of Obligation issued pursuant hereto, and the term "Certificate" shall mean any of the Certificates.
Section 3. REDEMPTION. The Certificates are not subject to redemption prior to their
scheduled maturities.
Section 4. INTEREST. The Certificates scheduled to mature during the years, respectively, set
forth below shall bear interest at the following rotes per annum:
maturities 2004, %
maturities 2005, %
maturities 2006, %
maturities 2007, %
maturities 2008, %
Said interest shall be payable to the t~gistered owner of any such Certificate in the manner provided and
on the dates stated in the FORM OF CERTIFICATE.
Section 5. CHARACTERISTICS OF THE CERTIFICATES. (a) Thc Issuer shall keep or cause
to be k~pt at the corporate trust office in Dallas, Texas (the "Designated Trust Office") of ~PMorgan Chase
Bank, or such other bank, trust company, financial institution, or other agency named in accoxdance with
Ihe provisions of(g) below (the "Paying Agent/Regislrar"), books or records for the registration and Wansfer
oflhe Certificates (the "Regislration Books"), and the Issuer hereby appoints the Paying Agent/Regislrar
as its regislrar and transfer agent to keep such books or records and make such transfers and registrations
under such reasonable regulations as the Issuer and Paying AgentfRegislrar may prescribe; and the Paying
Agenl/Registrar shall make such Iransfers and registrations as herein provided. It shall be the duty of the
Paying Agent/Registrar to obtain from the registered owner and record in the Registration Books the
address of the registered owner of each Certificate to which payments with respect to the Certificates shall
be mailed, as herein provided. The Issuer or its designee shall have the right to inspect the Registration
Books during regular business hours of the Paying Agent/Regislrar at its Designated Trust Office, but
otherwise the Paying AgentJRegistrar shall keep the Registration Books confidential and, unless otherwise
required by law, shall not permit their inspection by any other entity. Regislration of each Certificate may
be trans fenvxi in the Regislration Books only upon presentation and surrender thereof to the Paying Agent/-
Registrar at its Designated Trust Office for transfer of registration and cancellation, together with proper
written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying
Agent/Registrar, evidencing the assignment of such Certificate, or any portion thereof in any integral multiple
of $5,000, to the assignee or assignees thereof, and the right of such assignee or assignees to have such
Certificate or any such portion thereof registered in the name of such assignee or assignees. Upon the
assignment and transfer of any CeRificate or any portion thereof, a new substitute certificate or certificates
shall be issued in exchange therefor in the manner herein provided.
(b) The entity in whose name any Certificate shall be t,~istered in the Registration Books at any
time shall be treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such
certificate shall be overdue, and the City and the Paying Agent/Registrar shall not be affected by any notice
to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such
certificate shall be made only to such registered owner. All such payments shall be valid and effectual to
satisfy and discharge the liability upon such certificate to the extent of the sum or sums so paid.
(c) The City hereby further appoints the Paying AgentfRegistrar to act as the paying agent for
paying the principal of and interest on the Certificates, and to act as its agent to exchange or replace
Certificates, all as provided in this Ordinance. The Paying Agent/Regislrar shall keep proper records of
all payments made by the City and the Paying AgenffRegistmr with ~ to the ~cates, and of all
exchanges thereof, and all replacements thereof, as pwvided in this Ordinance.
(d) Each Certificate may be exchanged for fully registered certificates in the manner set forth
herein. Each Certificate issued and delivered pursuant to this Ordinance may, upon surrender thereof at
the Designated Trust Office of the Paying Agent/Registrar, together with a written request therefor duly
executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized
atlomeys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, at the
option of the registered owner or such assignee or assignees, as appropriate, be exchanged for fully regis-
tered certificates, without interest coupons, in the form prescribed in the FORM OF CERTIFICATE, in
the denomination of $5,000, or any integral multiple thereof (subject to the requirement hereinafter slated
that each substitute certificate shall have a single stated maturity date), as requested in writing by such
registered owner or such assignee or assignees, in an aggregate principal amount equal to the principal
amount of any Certificate or Certificates so surrendered, and payable to the appropriate registered owner,
assignee, or assignees, as the case may be. If any Certificate or portion thereof is assigned and transferred,
each certificate issued in exchange therefor shall have the same principal maturity date and bear interest at
the same rote as the certificate for which it is being exchanged. Each substitute certificate shall bear a letter
and/or number to distinguish it from each other certificate. The Paying Agent/Registrar shall exchange or
replace Certificates as provided herein, and each fully registered certificate or certificates delivevxl in
exchange for or replacement of any Certificate or portion thereof as permitted or required by any provision
ofthis Ordinance shall constitute one of the Certificates for all purposes of this Ordinance, and may again
be exchanged or replaced. It is specifically provided, however, that any Certificate delivered in exchange
for or replacement of another Certificate prior to the first scheduled interest payment date on the
Certificates (as stated on the face thereof) shall be dated the same date as such Certificate, but each
substitute certificate so delivered on or ~er such first scheduled interest payment date shall be dated as
of the interest payment date preceding the date on which such substitute certificate is delivered, unless such
substitute certificate is delivered on an interest payment date, in which case it shall be dated as of such date
of delivery; provided, however, that if at the time ofdeliveay of any substitute certificate the interest on the
certificate for which it is being exchanged has not been paid, then such substitute certificate shall be dated
as of the date to which such interest has been paid in full. On each substitute certificate issued in exchange
for or rephcement of any Certificate or Certificates issued under this Ordinance there shall be printed
thereon a Paying Agent/Registrars Authentication Certificate, in the form bereinaRer set forth in the FORM
O F CERTIFICATE. An authorized representative of the Paying Agent/Registrar shall, before the delivery
ofany such substitute certificate, date such substitute certificate in the manner set foRh above, and manually
sign and date such Authentication Certificate, and no such substitute certificate shall be deemed to be issued
or outstanding unless such Authentication Certificate is so executed. The Paying Agent/Registrar promptly
shall cancel all Certificates surrendered for exchange or replacement. No additional ordinances, orders,
or resolutions need be passed or adopted by the City Council or any other body or person so as to
accomplish the foregoing exchange or rephcement of any Certificates or portion thereof, and the Paying
Agent/Registrar shall provide for the prin~ing, execution, and delivery of the substitute certificates in the
manner prescribed herein. Pursuant to Chapter 1206, Texas Government Code, the duty of exchange or
replacement of any Certificates as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon
the execution of said Paying Agent/Registrar's Authentication Certificate, the exchanged or replaced
certificate shall be valid, incontestable, and enforceable in the same manner and with the same effect as the
Certificates which originally were delivered pummnt to this Ordinance, approved by the Attorney General,
and registered by the Comptroller of Public Accounts.
(e) All Certificates issued in exchange or replacement of any other Certificate or portion thereof,
(i) shall be issued in fully registered roma, without interest coupons, with the principal of and interest on such
Certificates to be payable only to the registered owners thereof, (ii) may be redeemed prior to their sched-
uled maturities, (iff) may be Wansferred and assigned, (iv) may be exchanged for other Certificates, (v) shall
have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the
Certificates shall be payable, all as provided, and in the manner required or indicated, in the FORM OF
CERTIFICATE.
(f) The City shall pay the Paying Agent/Regis~ar's reasonable and customary fees and charges for
making transfers of Certificates, but the registered owner of any Certificates requesting such lransfer shall
pay any taxes or other governmental charges required to be paid with respect thereto. The registered
owner of any Certificates requesting any exchange shall pay the Paying Agent/Regis~ar's reasonable and
standard or ctk~mary fees and charges for exchanging any such certificate or portion thereof, together with
any taxes or govemmental charges required to be paid with respect thereto, all as a condition precedent
to the exercise of such privilege of exchange, except, however, that in the case of the exchange of an
assigned and transferred certificate or certificates or any portion or portions thereof in any integral multiple
of $5,000, as provided in this Ordinance, such fees and charges will be paid by the City. In addition, the
City hereby covenants with the registered owners of the Certificates that it will (i) pay the reasonable and
standard or customary fees and chaxges of the Paying Agent/Registrar for its services with respect to the
payment of the principal of and interest on Certificates, when due, and (ii) pay the fees and charges of the
Paying Agent/Registrar for services with respect to the transfer or registration of Certificates solely to the
extent above provided, and with respect to the exchange of Certificates solely to the extent above pro-
vided.
(g) The City covenants with the registered owners of the Certificates that at all times while the
Certificates are outstanding the City will provide a c~petent and legally qualified bank, trust company,
financial institution, or other agency to act as and perform the services of Paying Agent/Regislxar for the
Certificates under this Ordinance, and that the Paying Agent/Registrar will be one entity. The City reserves
the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 60 days written
notice to the Paying Agent/Registrar. In the event that the entity at any time acting as Paying
Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or othenvise cease
to act as such, the City covenants that promptly it will appoint a competent and legally qualified national
or state banking institution which shall be a corporation organized and doing business under the laws of the
United States of America or of any state, authorized under such laws to exercise trust powers, subject to
supervision or examinan~n by federal or state authority, and whose qualifications substmafially are similar
to the previous Paying Agent/Registrar to act as Paying Agent/Registrar under this Ordinance. Upon any
change in the Paying Agent/Re~, the previous Paying Agent/Registrar promptly shall transfer and
deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating
to the Certificates, to the new Paying Agent/Registrar designated and appointed by the City. Upon any
change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by
the new Paying Agent/Regislxar to each registered owner of the Certificates, by United States Mail,
postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting
the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the
provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying
Agent/Registrar.
Section 6. FORM OF CERTIFICATES. The form of the Certificates, including the form of
Paying Agent/l~gistrar's Authentication Certificate, the form of Assignment and the form of Registration
Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Certificates
initially issued and delivered pursuant to this Ordinance, shall be in substantially the form as set forth in
Exh~it A to this Ordinance, with such appropriate variations, omissions, or insertions as are permitted or
required by this Ordinance. The printer of the Certificates is hereby authorized to print on the Certificates
(i) the form of bond counsel's opinion relating to the Certificates, and (ii) an appropriate statement of
insurance fi.u~i~hed by a municipal bond insurance company providing municipal bond insmance, if any,
covering all or any part of the Certificates.
Section 7. DEFINITIONS. That the terms "Cenifica~s" and "Certificates of Obligation" shall
mean the City of College Station, Texas Certificates of Obligation, Series 2003, authorized to be issued
and delivered by this Ordinance; and the ~ "Surplus Revenues" shall mean those revenues from the
operation of the City's combined municipal electric light and power, waterworks and sewer system
remsinin~ after payment of all operation and rosintenance expe~es thereof and other obligations heretofore
or hereafter incmred to which such revenues have been or shall be encumbered by a lien on and pledge
of such revenues superior to the lien on and pledge of such revenues to the Certificates.
Section 8. INTEREST AND SINKING FUND. That a special fund or account, to be designated
fl~e "City of College Station, Texas Series 2003 Certificate of Obligation Interest and Sinking Fund" is
hereby created and shrill be established and maintained by the Issuer. Said Interest and Sinking Fund shall
be kept separate and apart from all other funds and accounts of said Issuer, and shall be used only for
paying ~ interest on and principal of said Certificates. All ad valorem taxes levied and collected for and
on account of said Certificates shall be deposited, as collected, to the credit of said Interest and Sinking
Fund. During each year while any of said Certificai~s are o~g and unpaid, the governing body of
said Issuer shall compute and as~ the rate and amount of ad valorem ~ based on the latest
approved tax roils of said Issuer, with full allowances being made for tax delinquencies and the cost of tax
collections, which will be sufficient to raise and produce the money required to pay the interest on said
Certificates as such interest comes due, and to provide a sinking fund to pay the principal (including
mandatory sinking fired redemption payments, if any) of said Certificates as such principal matures or
comes due through operation of the mandatory sinking fired redemption, if any, but never less ;hart 2% of
the original amount of said Certifi~ as a sinking fund each year. Said ra~ and amount of ad valorem
tax is hereby ordered to be levied against all taxable ~ in said Issuer for each year while any of said
year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes
necessary to pay the interest on and princ~ of said Certificates, as such interest comes due and such
principal matures, are hereby pledged for such payment, within the limit prescribed by law. There shall be
appropriated from the General Fund offl~ City for deposit into the Interest and Sinking Fund moneys as
may be necessary to pay the principal and in,rest payments on the Certificates of Obligation scheduled
to occur on or before August 15, 2003.
Section 9. REVENUES. That ~ Certificat~ of Obligation are additionally secured by and shall
be payable from the Surplus Revenues. The Surplus Revenues are pledged by the City pursuant to
authorityofChapter 1502, Texas Government Code, specifically Section 1502.058 thereof. The City shall
promptly deposit the Surplus Revenues upon their receipt to the credit of the lnlm-est and Sinking Fund
created pursuant to Section 8, to pay the princi~ and interest on the Certificates of Obligation. The
amount of Surplus Revenues pledged to the payment of the Certificates of Obligation shall not exceed
$1,000.
Section 10. TRANSFER. That the City shall do any and ail things necessary to accomplish the
transfer of monies to the Interest and Sinking Fund ofthis issue in ample time to pay such items ofprincipal
and interest due on the Certificates of Obligation.
Section 11. SECURYrY FOR FUNDS. That the Interest and Sinking Fund created by this
Ordinance shall be secured in the manner and to the fullest extent permitted or required by law for the
security of public funds, and such Fund shall be used only for the purposes and in the manner permitted or
required by this Ordinance.
Section 12. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES.
(a) Replacement Certificates. That in the event any out~mnding Cer~/ficate is damaged, mutilated, lost,
stolen, or destroyed, the Paying Agent/Regislrar shall cause to be printed, executed, and delive~i, a new
cetqificate of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen,
or destroyed Cerlificate, in replacement for such Certificate in the manner hereina~er provided.
(b) Application for Replacement Certificates. That application for replacement of damaged,
mutilated, lost, stolen, or destroyed Certificates shall be made by the registered owner thereof to the Paying
Agent/Registrar. In every case of loss, theft, or destruction ora Certificate, the registered owner applying
for a replacement certificate shall furnish to the City and to the Paying AgenVRegisWar such security or
indemnity as may be required by them to save each of them harmless from any loss or damage with respect
thereto. Also, in every case of loss, theR, or destruction ofa Cer~cate, the registered owner shall furnish
to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction
of such Certificate, as the case may be. In every case of damage or mutilation of a Certificate, the
t~-'gistered owner shall surrender to the Paying Agent/RegisWar for cancellation the Certificate so damaged
or mutilated.
(c) No Default Occurred. That notwithstanding the foregoing provisions of this Section, in the
event any such Certificate shall have matured, and no default has occurred which is then con~ning in the
payment of the principal of, redemption pmnium, if any, or in, ia-est on the Certificate, the City may
authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated
Certificate) inslmd of issuing a replacement cerl/ficate, provided security or indemnity is furnished as above
provided in this Sect/on.
(d) Charge for lssuing Replacement Certificates. That prior to the issuance ofany replacement
certificate, the Paying AgenVRegistrar shall charge the regis~ed owner of such Cer'dfica~ with all legal,
provisions of this Section by virtue of the fact that any Certificate is lost, stolen, or destroyed shall constitute
a conWactual obligation of the City whether or not the lost, stolen, or destroyed Certificate shall be found
at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally
and proIx)rtiona~ly with any and all other Certificates duly issued under this Ordinance.
( e ) A uthori tyfor lssuing Replacement Certificates. ThatinaccordancewithSection 1201.067,
Texas Government Code, this Section of this Ordinance shall constitute authority for the issuance of any
such replacement certificate without necessity of further action by the City or any other body or person,
and the duty of the replacement of such certificates is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/RegisUar shall authenticate and deliver such Certificates in the form
and manner and with the effect, as provided in Section 5(a) of this Ordinance for Certificates issued in
conversion and exchange of other Certificates.
Section 13. FEDERAL INCOME TAX MATTERS. That the City covenants to refrain from
any action which would adversely affect, or to take such action as to ensure, the treatment of the
Certificates of Obligation as obligations described in Section 103 of the Code, the interest on which is not
includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance there=
of, the City covenants as follows:
(a) to take any action to assta'e that no more than 10 percent oft.he proceeds of the
Cexfificates of Obligation (less amounts deposited to a reserve fund, if any) are used for any
"private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of
the proceeds are so used, that amounts, whether or not received by the City, with respect to such
private business use, do not, under the terms of this Ordinance or any underlying arrangement,
directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service
on the Certificates of Obligation, in contravention of Section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Certificates of
Obligation (less amounts deposited into a reserve fund, if any) then the amount in excess of 5
percent is used for a "private business use" which is "related" and not "disproporl/onate", within the
meaning of Section 141COX3) of the Code, to the governmental use;
(c) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or five percent of the proceeds of the Certificates of Obligation (less amounts
deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other
than state or local governmental units, in contravention of Section 141(c) of the Code;
(d) to refiain from taking any action which would otherwise result in the Certificates
of Obligation being treated as "private activity bends" within the meaning of Section 141(b) of the
Code;
(e) to refrain fi'om taking any action that would result in the Certificates of Obligation
being "federally guaranteed" within the meaning of section 149Co) of the Code;
(f) to refiain from ming any portion of the proceeds of the Certificates of Obligation,
directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to
acquire investment property (as defined in Section 148(b)(2) of the Code) which produces a
materially higher yield over the term of the Certificates of Obligation, other than inves~ent property
acquired with -
(1) proceeds of the Certificates of Obligation invested for a reasonable
temporary period of three years or less or, in the case of a refunding bond, for a period of
30 days or less until such proceeds are needed for the purpose for which the certificates
of obligation are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning of
Section 1.148-1CO)of the Treasury Regulations, and
(3) amounts deposited in any reasonably reqnired reserve or replacement fund
to the extent such amounts do not exceed 10 percent of the proceeds of the Certificates
of Obligation;
(g) to othensise res~ct the use of the proceeds of the Certificates of Obligation or
amounts treated as proceeds of the Certificates of Obligation, as may be necessary, so that the
Certificates of Obligation do not otherwise contravene the requirements of Section 148 of the
Code (relating to arbitrage) and, to the extent applicable, Section 149(d) of the Code (relating to
(h) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Certificates of Obligation) an amount that is at least equal
to 90 percent of the "Excess Earnings," within the meanin~ of Section 148(0 of the Code and to
pay to the United States of America, not later than 60 days a/~ the Certificates of Obligation have
beenpaid in fifll, 100 percent ofthe amount then required to be paid as a result of Excess Earnings
under Section 148(f) of the Code.
For purposes of the foregoing (a) and Co), the Issuer understands that the term "proceeds" includes
"disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds,
transfen'ed proceeds (if any) and p~ of the refunded bonds expended prior to the date of issuance
of the Certificates of Obligation. It is the understanding of the City that the covenants contained herein are
intended to assure compliance with the Code and any p~ulatiom or rulings promulgated by the U.S.
Department of the Treasury pursuant thereto. In the event that regulations or ruling are ~
l~omulga~ which modify or expand provisions of the Code, as applicable to the Certificates of
Obligation, the City will not be required to comply with any covenant contained bev~ to the extent that
such failure to comply, in the opinion of nationally-recognized bond counsel, will not adversely affect the
exemption from federal income taxation of interest on the Certificates of Obligation under Section 103 of
the Code. In the event that xegulations or rulings are hereatL~ promulgated which impose additional
reqnirements which are applicable to the Ca. cares of Obligation, the City agrees to comply with the
additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to
preserve the exemption from federal income taxation of interest on the Certificates of Obligation under
Section 103 of the Code. In furtherance of such intention, the City hereby authorizes and directs the
Mayor, the City Manager, any Assistant City Manager and the Director of Fiscal Services to execute any
documents, certificates or ~g~rts required by the Code, and to make such electiom on behalf of abe City
which may be permitted by the Code as are consistent with the purpose for the issuance of the Certificates
of Obligation.
In order to facilitate compliance with clause (h) above, a "Rebate Fund" is hereby established by
the City for the sole benefit of the United States of America, and such Fund shall not be subject to the claim
of any other person, including without limitation the bondholders. The Rebate Fund is established for the
additional purpose of compliance with Section 148 of the Code.
Section 14. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE
PROJECT. That the Issuer covenants to account for the expenditure of proceeds fi'om the sale of the
Certificates and any invesUnent earnings thereon to be used for the purposes described in Section I of this
Ordinance (such purpose referred to herein and Section 15 hereof as a "Project") on its books and records
by allocating proceeds to expenditures within 18 months of the later of the date that (a) the expenditure on
a Project is made or Co) such Project is completed. The foregoing notwithstanding, the Issuer shall not
expend such proceeds or investment earnings more than 60 days at~ the earlier of (a) the fifth anniversary
ofthe date of delivery of the Ceafificates or (b) the date the Certificates are retired, unless the Issuer obtains
an opinion of nationally-recognized bond counsel substantially to the effect that such expenditure will not
adversely affect the tax-exempt status of the Certifi~. For purposes hereof, the Issuer shall not be
obligated to c,a~ly with this covenant if it obmirr~ an opinion that such failure to comply will not adversely
affect the excludability for federal income tax purposes from gross income of the interest.
Section 15. DISPOSITION OF PROJECT. That the Issuer covenants that the property
constituting a Project will not be sold or othawise disposed in a transaction resull/ng in the receipt by the
Issuer of cash or oflm' compensation, unless the ~ obtains an opinion of nalionany-recogni:,ecl bond
counsel substantially to the effect that such sale or other disposition will not adversely affect the tax-exempt
status of the Certificates. For purposes of the foregoing, the portion of the property comprising pemonal
property and disposed in the ordinary course shall not be treated as a Wansaction resulting in the receipt
of cash or other compensation. For purposes hereof~ the Issuer shall not be obligated to comply with this
covemnt if it obtains an opinion that such failure to comply will not adversely affect the excludability for
federal income tax purposes from gross income of the interest.
Section 16. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES. That
the City Manager of fl~e City is hereby authorized to have control of the Cer6fica~ initially issued and
delivery and their investigation, examination, and approval by the Attorney C. mmal of the State of Texas,
and their reg/slration by the Comptroller of Public Accounts of the State of Texas. Upon regislration of
the Certificates said Comptroller of Public Accounts (or a deputy designated in writing to act for said
and the seal of said Complroller shall be impressed, or placed in facsimile, on such certificate.
Section 17. DTC REGISTRATION. That the Certificates of Obligation initially shall be issued and
delivered in such manner that no physical distribution of the Certificates of Obligation will be rna& to the
10
public, and The Depository Trust Company CDTC"), New York, New York, initially will act as depository
for the Certificates of Obligation. DTC has represented that it is a limited purpose uust company
incorporated under the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered under Section 17A of the Securities Exchange Act of 1934, as amended, and the City
accepts, but in no way verifies, such representations. The Certificates of Obligation initially authorized by
this Ordinance shall be delivered to and registered in the name of CEDE & CO., the nominee of DTC.
It is expected that DTC will hold the Certificates of Obligation on behalf of the Purchaser (as defined in
Section 19 of this Ordinance) and its participants. So long as each Certificate of Obligation is registered
in the name of CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC the same in all
respects as if it were the actual and beneficial owner thereof. It is expected that DTC will mainlain a book-
entry system which will identify ownemhip of the Certificates of Obligation in integral amounts of $5,000,
with transfers of ownership being effected on the records of DTC and its participants pursuant to roles and
regulations established by them, and that the Certificates of Obligation initially deposited with DTC shall
be immobilized and not be further exchanged for substitute Certificates of Obligation except as hereinafter
provided. The City is not responsible or liable for any functions of DTC, will not be respons~le for paying
any fees or charges with respect to its services, will not be responsible or liable for maintaining, supervising,
or reviewing the records of DTC or its participants, or protecting any interests or fights of the beneficial
owners of the Certificates of Obligation. It shall be the duty of the DTC Participants, as defined in the
Official Statement herein approved, to make all arrangements with DTC to establish this book-entry
system, the beneficial ownership of the CeRificates of Obligation, and the method of paying the fees and
charges of DTC. The City does not represent, nor does it in any way covenant that the initial book-entry
system established with DFC will be maintained in the future. Notwithslanding the initial establishment of
the foregoing book-enlry system with DTC, if for any reason any of the originally delivered Cerlificates of
Obligation is duly filed with the Paying Agent/Registrar with proper request for transfer and substitution,
as provided for in this Ordinance, substitute Certificates of Obligation will be duly delivered as provided
in this Ordinance, and there will be no assurance or representation that any book-entry system will be
maintained for such Certificates of Obligation. In connection with the initial establishment of the foregoing
book-entry system with DTC, the City heretofore has executed a "Blanket Letter of Representations"
prepared by DTC in order to implement the book-entry system described above.
Section 18. CONTINUING DISCLOSURE OBLIGATION. (a) Definitions. That as used
in this Section, the following terms have the meanings ascribed to such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staffhas determined to be a nationally
recognized municipal securities information repository within the meaning of the Rule from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
11
"SID" means any person designated by the State of Texas or an authorized department,
officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository
within the meaning of the Rule fi'om time to time.
(b) Annual Reports. (i) The City shall provide annually to each NRMSIR and any SID, within
six months afln' the end of each fiscal year ending in or after 2002, financial information and operating data
with respect to the City of the general type included in the final Official Statement authorized by Section 20
of this Ordinance, being the information described in Exhibit A hereto. Any financial statements so to be
provided shall be (1) prepared in accordance with the accounting principles described in Exhibit A hereto,
or such other accounting principles as the City may be mquinxl to employ from time to time pursuant to
state law or regulation, and (2) audited, if the City commissions an audit of such statements and the audit
is completed within the period during which they must be provided. If the audit of such financial statements
is not complete within such period, then the City shall provide unaudited financial staements by the nxluired
time, and shall provide audited finandal statements for the applicable fiscal year to each NRMSIR and any
SID, when and if the audit report on such statements become available.
(ii) I. fthe City changes its fiscal year, it will nofify each NRMSIR and any SIDoftheehange(and
of the date of the new fiscal year end) prior to the next date by which the City othenvise would be required
to provide financial information and operating data pursuant to this Section. The financial information and
operating data to be provided pursuant to ~s Section may be set forth in full in one or more documents
or may be included by specific reference to any document (including an official statement or other offering
doemnmt, if it is available from the MSRB) that thexctofore has been provided to each NRMSIR and any
SID or filed with the SEC.
(c) Material Event Notices. The City shall notify any SID and either each NRMSIR or the
MSRB, in a timely mariner, of any of the following events with respect to the Certificates of Obligation, if
such event is material within the meaning of the fedaal securities laws:
2.
3.
4.
5.
6.
8.
9.
10.
11.
Principal and interest payment delinquendes;
Non-payment related defaults;
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the Certificates
of Obligation;
Modifications to fights of holders of the Certificates of Obligation;
Certificates of Obligation calls;
Defeasances;
Release, substitution, or sale of property securing repayment of the Ca-fifieates of
Obligation; and
Rating changes.
12
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely mmmer, of any failure
by the City to provide financial information or operating data in accordance with subsection Co) of this
Section by the time required by such subsection.
(d) Limitations. Disclaimers. and,4mendments. (7 The City shall be obligated to observe and
perform the covenants specified in this Section for so long as, but only for so long as, the City remains an
"obligated person" with respect to the Certificates of Obligation within the meaning of the Rule, except that
the City in any event will give notice ofany deposit made in accordance with this Ordinance or applicable
hw that causes Certificates of Obligation no longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and beneficial
owners of the Certificates of Obligation, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable fight, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financ~ information, operating data, financial statements, and notices which
it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any
other information that may be relevant or material to a complete presentation of the City's financial results,
condition, or prospects or hereby undertake to update any information provided in accordance with this
Section or otherwise, except as expressly provided herein. The City does not make any representation
or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates of
Obligation at any future date.
(',ii) UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OF OBLIGATION
OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN
WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR
WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT
EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR
ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE.
(iv) No default by the City in observing or performing its obligations under this Section shall
comprise a breach of or default under the Ordinance for purposes of any other provision ofmi~ Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or othenvise limit the duties of the City
under federal and slate securities laws.
(v) The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requivement~ a change in law, or a change in the
identity, nature, status, or type of operations of the City, but only if (1) the provisions of this Section, as so
amended, would have permitted an underwriter to purchase or sell Certificates of Obligation in the primary
offering of the Certificates of Obligation in compliance with the Rule, taking into account any amendments
or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a)
13
the registered owners of a majority in aggregate principal amount (or any greater amount required by any
other provision of this Ordinance that authorizes such an amendment) of the outstanding Ce~ficates of
Obligation consent to such amendment or Co) a person that is unaffiliated with the City (such as nationally
recognized bond counsel) determined that such amendment will not materially impair the interest of the
registered owners and beneficial owners of the Certificates of Obligation. If the City so amends the
provisions of this Section, it shall include with any amended finamial information or operating data next
provided in accordance with subsection Co) of this Section an explanation, in narrative form, of the reason
for the amendment and of the impact of any change in the type of financial information or operating data
so provided. The City may also amend or repeal the provisions of this continuing disclosure agreement if
the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters
judgment that such provisions of the Rule are invalid, but only if and to the extent that the pwvisions of this
sentence would not prevent an underwriter fi'om lawfully purchasing or selling Certificates of Obligation in
the primary offering of the Certificates of Obligation.
Section 19. DEFEASANCE. (a) Deemed Paid. Any Certificate of Obligation and the interest
thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Certificate") within the
meaning of this Ordinance, except to the extent pwvided in subsection (e) of this Section, when payment
of the principal of such Certificate of Obligation, plus interest thereon to the due date (whether such due
date be by reason of maturity or otherwise) either (i) shall have been made or caused to be made in
accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by
irrevocably depositing with or making available to the Paying Agent/Regismu' in accordance with an escrow
agreement or other instrument (the "Future Escrow Agreememe') for such payment (1) lawful money of the
Unitnd States of America sufficient to make such payment or (2) Defeasance Securities that mature as to
principal and interest in such amounts and at such times as will insure the availability, without reinvesm~ent,
of sufficient money to provide for such payment, and when proper arrangements have been made by the
City with the Paying Agent/Registrar for the payment of its services until all Defeased Cet~ca~ shall have
become due and payable. At such time as a Certificate of Obligation shall be deemed to be a Defeased
Certificate hereunder, as aforesaid, such Certificate of Obligation and the interest tben~n shall no longer
be secured by, payable from, or entitled to the benefits of, the ad valorem taxes or revenues herein levied
and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such
money or Defeasance Securities.
Co) Investments. Any moneys so deposited with the Paying Agent/Registrar may at the written
direction of the City be invested in Defeasance Securities, maturing in the amounts and times as
hereinbefore set forth, and all income from such Defeasance Securities received by the Paying
Agent/Registrar that is not required for the payment of the Certificates of Obligation and interest thereon,
with respect to which such money has been so deposited, shall be mined over to the City, or deposited as
directed in writing by the City. Any Future Escrow ~ment pursuant to which the money and/or
Defeasance Securities are held for the payment of Defeased Certifies may contain provisions permitting
the inves~nent or reinvesUnent of such moneys in Defeasance Securities or the substitution of other
Defeasance Securities upon the satisfaction of the requirements specified in subsection (a)(i) or (ii) above.
All income from such Defeasance Securities received by the Paying Agent/Registrar which is not required
14
for the payment of the Defeased Securities, with respect to which such money has been so deposited, shall
be remitted to the City or deposited as directed in writing by the City.
(c) Selection of Defeased Certificates. In the event that the City elects to defease less than all
of the principal amount of Certificates of Obligations of a maturity, the Paying Agent/Registrar shall select,
or cause to be selected, such amount of Certificates of Obligations by such random method as it deems fair
and appropriate.
(d) Defeasance Obligations. The term "Defeasance Securities" means (i) direct, noncallable
obligations ofthe United States of Americ~ including obligations that are unconditionally guaranteed by the
United States of America, (ii) noneallable obligations of an agency or instrumentality of the United States
of America, including obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date of the purchase thereof are rated as to investment quality by a nationally
recognized investment ratng furn not less ~ AAA or its equivalent, and ('fii) noneallable obligations of a
state or an agency or a county, municipality, or other political subdivision of a state that have been refunded
and that, on the date the governing body of the City adopts or approves the proceedings authorizing the
financial awangements are rated as to investment quality by a nationally recognized investment rating firm
not less than AAA or its equivalent.
(e) Continuing Duty of Paying Agent/Registrar. Until all Cafificates of Obligation defeased
under this Section of this Ordinance shall become due and payable, the Paying Agent/Registrar for such
Certificates of Obligation shall perform the services of Paying Agent/Registrar for such Certificates of
Obligation the same as if they had not been defeased, and the City shall make proper arrangements to
provide and pay for such services.
Section 20. SALE OF CERTIFICATES. (a) Sale to Underwriter. That the sale of the
Certificates to Coastal Securities, as representative for the underwriters named in the Bond Purchase
Agnmmm (the "Purchase Agreement") between the City and the underwriters named therein (the
"Uuderwfiters"), at the ptuchase price described in the Purchase Agreement, is hereby authorized, ratified
and confirmed. One Certifica~ in the principal amount maturing on each maturity date as set for& in
Section 2 hereof shall be delivered to the Underwriters, and the Underwriters shall have the right to
exchange such certificates as provided in Section 5 hereof without cost.
(b) Execution of Purchase Agreement. That the Purchase Agreement setting forth the terms of
the sale of the Certificates to the Underwriters, in substantially the form attached to this Ordinance, is
hereby accepted, approved and authorized to be delivered in executed form to the Underwriters.
(c) Official Statement. That the "Official Statement" prepared in connection with the sale of the
Bonds, in substantially the form attached to this Ordinance, is hereby accepted, approved and authorized
to be delivered in executed form to the Underwriters. The use of the "Preliminavj Official Statement"
prepared in connection with the sale of the Bonds is hereby ratified.
15
Section 21. APPROVAL AND REGISTRATION OF CERTIFICATES. That the Director of
Fiscal Services is hereby authorized to have control of the Certificates and all necessary records and
proceedings perlaini~ to the Certificates pending their delivery and their investigation, examination and
approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public
Accounts of the State of Texas. Upon regiswation of the Certificates, the Comptroller of Public Accounts
(or a deputy designated in writing to act therefor) shall manually sign the Comp~oller's Registration
Certificate. The Certificates thus registered shall remain in the custody of the City Manager (or the
designee thereof) until delivemcl to the Initial Purchasers.
Section22. FURTHER PROCEDURES. That the Mayor, the City Secretary, the City Manager,
the Director of Fiscal Services, any Assistant City Manager, and all other officers, employees, and agents
ofthe City, and each of them, shall be and they are hereby expressly authorized, empowered, and directed
fi-om time to time and at any time to do and perform all such acts and things and to execute, acknowledge,
and deliver in the name and under tbe corporate seal and on behalf of the City all such instruments, whether
or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions
ofthis Ordinance, and the sale and delive~ of the Certificates and fixing all details in connection the~0vith.
Section 23. USE OF PROCEEDS. That the proceeds from the sale of the Certificates shall be
as follows: (i) accrued interest and premium on the Certificates shall be deposited to the credit of the
Interest and Sinking Fund and (ii) the balance of the proceeds shall be deposited to a construction fund (the
"Construction Fund") held at the City's depository bank and used for the purposes described in Section
1 hereof. Any amounts remaining in the Construction Fund alter completion of the improvements described
in Section 1 hereof shall be transferred FIRST to the Rebate Fund, to the extent required by Section 13
hereof, and THEREAFTER to the Certificate Fund.
Section 24. IKrEREST EARNINGS. That the interest earnings derived from the invesmaent of
proceeds from the sale of the Certificates may be used along with other proceeds for the construction of
the pemnnent improvements set for& in Section 1 hereof for which the Certificates are issued; In'ovided
that after completion of such permanent improvements, if any of such interest earnings ~iialn on hand, such
interest earnings shall be deposited in the Interest and Sinking Funct It is fur&er provided, however, that
any interest earnings on proceeds which are required to be rebated to the United States of America
pursuant to this Ordinance hereof in order to prevent the Certificates from being arbilrage bonds shall be
so rebated and not considered as interest earnings for the purposes of this Section.
Section 25. PREAMBLE. That the preamble to this Ordinance is incorporated by reference and
made a part hereof for all purposes.
Section 26. MISCELLANEOUS PROVISIONS. (a) Titles Not Restrictive. That the titles
assigned to the various sections of this Ordinance are for convenience only and shall not be considered
restrictive of the subject matter of any section or of any part of this Ordinance.
16
(b) Rules of Construction. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Ordinance as a whole and not to any particular Section or other subdivision.
Except where the context otherwise requires, terms defined in this Ordinance to impart the singular number
shall he considered to include the plural number and vice versa. References to any named person means
that party and ill successors and assigns. References to any constitutional, statutory or regulatory provision
means such provision as it exists on the date this Ordinance is adopted by the City and any future
amendments thereto or successor provisions thereof. Any reference to "FORM OF CERTIFICATE" shall
refer to the form of the Certificates set forth in Exhibit A to this Ordinance. Any reference to the payment
of principal in this Ordinance shall he deemed to include the payment of any mandatory sinki-.g fund
redemption payments as may he described herein.
(c) Inconsistent Provisions. All orders and resolutions, or parts thereof, which are in conflict or
inconsistent with any provision of this Ordinance are hereby repealed and declared to he inapplicable, and
the provisions of this Ordinance shall he and remain controlling as to the matters prescribed herein.
(d) Severability. If any word, phrase, clause, paragraph, sentence, part, portion, or provision of
his Ordinance or the application thereof to any person or circumstance shall he held to be invalid, the
mm,tinder of this Ordinance shall nevertheless he valid and the City hereby declares that this Ordinance
would have been enacted without such invalid word, phrase, clause, paragraph, sentence, part, portion,
or provisions.
(e) Governing Law. This Ordinance shall be construed and enforced in accordance with the laws
of the State of Texas.
(f) Open Meeting. The City officially finds and de,mines ha. at the meeting at which this Ordinance
is adopted was open to the public; and that public notice of the time, place, and purpose of such meeting
was given, all as required by Chapter 551, Texas Government Code.
(g) ,4pplication of Chapter 1208, Government Code. Chapter 1208, Texas Government Code,
applies to the issuance of the Certificates and the pledge of ad valorem taxes and the Pledged Revenues
granted by the City under Sections 8 and 9, and such pledge is therefore valid, effective, and perfected.
If Texas law is amended at any time while the Certificates are outstanding and unpaid such flint the pledge
of the ad valorem taxes and Pledged Revenues granted by the City is to be subject to the filing requirements
of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the Registered Owners of
the Certificates the perfection ofthe security interest in said pledge, the City agrees to take such measures
as it determines are reasonable and necessary under Texas law to comply with the applicable provisions
of Chapter 9, Texas Business & Commerce Code and enable a filing to perfect the security interest in said
pledge to occur.
(h) Immediate Effect. In accordance with the provisions of Section 1201.028, Texas Government
Code, this Ordinance shall be effective immediately upon its adoption by the City Council.
17
PASSED AND APPROVED this December 5, 2002.
City Secretary, City ~f Colleg~ ~ati0n, Texas Mayor, City ~C(~llege Station, Texas
(CITY SEAL)
APPROVED:
Bond Counsel
18
Exhibit A
to
Ordinance
FORM OF CERTIFICATF,
NO.
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF BRAZOS
CITY OF COLLEGE STATION, TEXAS
CERTIFICATES OF OBLIGATION
SERIES 2003
MATURrFY DATF~ INTEREST RATE ORIGINAL ISSUE DA'IF, CUSIP
% DECEMBER 1, 2002
ON THE MATURITY DATE SPECIFIED ABOVE, THE CITY OF COLLEGE
STATION, TEXAS, in Brazos County (the "City" orthe "Issuer"), being a political subdivision of the State
of Texas, hereby promises to pay to , or to the
registered assignee hereof (either being bereknaf~ called the "registered owner") the principal amount of
DOLLARS
and to pay interest thereon, from the Original Issue Date specified above, to the Maturity Date specified
above, at the interest rate per annum specified above, with said interest payable on February 15, 2003,
and semiannually on each August 15 and Februaxy 15 thereafl~, except that ifthi.n Certificate is required
to be authenticated and the date of its authentication is later than February 15, 2003, such interest is
payable semiannually on each August 15 and February 15 following such date.
THE PRIN~ OF AND INTEREST ON this Certificate are payable in hwful mimey oftbe
United States of America, without exchange or collection charges. At malxn/ty, the principal of this
Certificate shall be paid to the registered owner hereofupon presentation and surrender of this Certificate
at the designated corporate trust office in Dallas, Texas (the "Designated Trust Office") of JPMorgan Chase
Bank, which is the "Paying AgentJRegi~' for this Certificate. The paymem of interest on this Certificate
shall be made by the Paying AgentJRegislrar to the regisl~-a-ed owner hereof on each interest payment date
by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable
solely from, funds of the Issuer required by the ordinance autho~ the issuance of this Certificate (the
"Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as berdmfler
provided; and such check shall be sent by the Paying Agent/Registrar by United States mai[ first-class
postage prepaid, on each such interest payment date, to the registered owner hereof, at its address as it
appeared on the last business day of the month preceding each such date (the "Record Date") on the
Regis~a-ationBooks kept by the Paying Agent/Registrar, as hereinatter described. Any accrued interest due
at maturity as provided herein shall be paid to the registered owner upon presentation and sunender of this
Certificate for payment at the Designated Trust Office of the Paying Agent/Registrar. The Issuer covenants
with the registered owner of this Certificate that on or before each principal and interest payment date for
this Certificate it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund"
created by the Certificate Ordinance, the amounts required to provide for the payment, in immediately
available funds, of all principal of and interest on the Certificates, when due.
IN THE EVENT OF NON-PAYMENT of interest on a scheduled payment date, and for 30 days
thereafter, a new record date for such interest payment (a "Special Record Date") will be established by
the Paying AgenffRegis~ar, if and when fimds for the payment of such interest have been received from the
Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest
("Special Payment Date", which shall be 15 days af~ the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the
address of each registered owner of a Certificate appearing on the Regislration Books kept by the Paying
Agent/RegisUar at the close of business on the last business day next preceding the date of mailing of such
notice.
IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the city where the Designated Trust Office
of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date
for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or
day on which banking institutions are authorized to close; and payment on such date shall have the same
force and effect as if made on the original date payment was due.
THIS CERTIFICATE is one of a Series of Certificates dated as of the Original Issue Date stated
above, authorized in accordance with the Constitution and laws of the State of Texas in the principal
amount ors 1,000,000, for the purpose of paying contractual obligations to be inctm~ by the City, to-wit,
the acquisition of equipment, as described in the Certificate Ordinance, and the payment of fiscal,
engineering and legal fees inctcmxl in connection therewith.
ALL CERTIFICATES OF THIS SERIES are issuable solely as fully registered certificates,
without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the
Certificate Ordinance, this Certificate may, at the request of the registered owner or the assignee or
assignees hereof, be assigned, transf~ed, and exchanged for a like aggregate principal amount of fully
registered certificates, without interest coupons, payable to the appropriate registered owner, assignee, or
assignees, as the case may be, having the same maturity date, and bearing interest at the same rote, in any
deno 'mmationor denominations in any integral multiple of $5,000 as requested in writing by the appropriate
registered owner, assignee, or assignees, as the case may be, upon surrender of this Certificate to the
Paying Agent/Registrar at its Designated Trust Office for cancellation, all in accordance with the form and
procedures set forth in the Certificate Ordinance. Among other requirements for such assignment and
transfer, this Certificate must be presented and surrendered to the Paying Agent/Registrar at its Designated
Trust Office, together with proper insmanents of assignment, in form and with guarantee of signatures
satisfactory to the Paying Agent/RegisWar, evidencing assignment of this Certificate or any portion or
portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this
Certificate or any such portion or portions hereof is or are to be transferred and registered. The form of
Assignment printed or endorsed on this Certificate may be executed by the registered owner to evidence
the assignment hereof, but such method is not exclusive, and other instruments of assigmnent satisfactory
to the Paying Agent/Regislrar may be used to evidence the assignment of this Certificate or any portion or
portions hereof from time to time by the registered owner. The foregoing notwithstanding, in the case of
the exchange of an assigned and transferred Certificate or Certificates or any portion or portions thereof,
such fees and charges of the Paying Agent/Registrar will be paid by the Issuer. The one requesting such
exchange shall pay the Paying AgentJRegistrar's reasonable standard or customary fees and charges for
exchanging any Certificate or portion thereof. In any circumstance, any taxes or governmental charges
required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer, or
exchange as a condition precedent to the exercise of such privilege.
WHENEVER the beneficial ownership of this Certificate is determined by a book entry at a
securities depository for the Certificates, the foregoing requirements of holding, delivering or Wansfening
Ibis Certificate shall be modified to require the appropriate person or entity to meet the requirements of the
securities depository as to registering or transferring the book entry to produce the same effect.
IN THE EVENT any Paying Agent/Registrar for the Certificates is changed by the Issuer, resigns,
or otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance that it promptly
will appoint a competent and legally qualified substitme therefor, and promptly will cause written nofce
thereof to be mailed to the registered owners of the Certificates.
IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly
authorized, issued, and deliveretl; that all acts, conditions, and things required or proper to be performed,
exist, and be done precedent to or in the authorization, issuance, and delivery of this Certificate have been
performed, existed, and been done in accordance with law; that this Certificate is a direct obligation of said
Issuer, issued on the full faith and credit thereof} and that annual ad valorem taxes sufficient to provide for
the payment of the interest on and principal of this Certificate, as such interest comes due and such principal
matures, have been levied and ordered to be levied against all taxable property in said Issuer, and have
been pledged for such payment, within the limit prescribed by law; and that a limited pledge (not to exceed
$1,000) of the surplus revenues from the operation of the City's combined municipal electric light and
power, waterworks and sewer system remaining after payment of all operation and maintenance expenses
thereofand any other obligations heretofore or hereafter incun'ed to which such revenues have been or shall
be encumbered by a lien on and pledge of such revenues superior to the lien on and pledge of such
revenues to the Certificates, have been pledged as additional security for the Certificates.
BY BECOMING the registered owner of this Certificate, the registered owner thereby
acknowledges all of the terms and provisions of the Certificate Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Certificate Ordinance is duly recorded and available for
ins~tion in the official minutes and records of the Issuer, and agrees that the terms and provisions of this
Certificate and the Certificate Ordinance constitute a contract between each registered owner hereof and
the Issuer.
IN WITNESS WHEREOF, this Certificate has been signed with the manual or facsimile signature
ofthe Mayor of the City, attested by the manual or facsimile signature of the City Secretary, and the official
seal of the Issuer has been duly mefixed to, or impressed, or placed in facsimile, on this Certificate.
City Secretary
City of College Station, Texas
xxx~
Mayor
City of College Station, Texas
(SEAL)
FORM OF PAYING AGENT/REGIST~'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Cerfifica~ of Obligation has been issued under the provisions of the
proceedings adopted by the City as described in the ~xt of this C. ertificate of Obligation; and that this
C_,egdficate of Obligation has been issued in exchange for or replacement of a certificate of obligation of an
issue which originally was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
Dated
SPMORGAN CHASE BANK,
Paying AgenVRegis~
By.
Authorized Representative
"FORM OF COMPTROLLER'S CERTIFICATE ATrACHED TO
THE CERTIFICATES UPON INITIAL DELIVERY TI-IEREOF
OFFICE OF COMPTROLLER
STATE OF TEXAS
REGISTER NO.
I hereby certify that there is on file and of record in my office a certificate of the Attomey General
of the State of Texas to the effect that this Certificate has been examined by him as required by law, and
that he finds that it has been issued in confom~ty with the Constitution and laws of the State of Texas, and
that it is a valid and binding obligation of the City of College Station, Texas, payable in the manner provided
by and in the ordinance authorizing same, and said Certificate has this day been registered by me.
WITNESS MY HAND and seal of office at Austin, Texas this
(SEAL)
NOTE:*~ to accompany initial certificates only
Comptroller of Public Accounts of
the State of Texas
FORM OF ASSIGNMENT;
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Please insert Social Security or Taxpayer Identification Number of Transferee)
/ /
(Please print or typewrite name and address, including zip code of Transferee)
the within Certificate of Obligation and all fights thereunder, and hereby irrevocably eomfitutes
and appoints attorney to
register the transfer of the within Certificate of Obligation on books kept for registration thereof,
wi~h full power of substitution in the ~.
Dated:
NOTICE: Signature(s) must be guaranteed by
a member fn'm of the New York Slx~ck
Exchange or a commercial bank or txust
company.
NOTICE: The signature above must
correspond with the name of the Registered
Owner as it appears upon the fi'ont of this
Ceflifieme in every particular, without alteration
or enlargement or any change whatsoever.
Exhibit B
to
Ordinance
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following hfformafion is referred to in Section 18 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided anr,~lly in
accordance with such Section are as specified below (and included in the Appendix or under ~he headings
of the Official Statement referred to):
1. The "Audit Report" for the most recently concluded fiscal year.
2. The informatkm included in the Official Statement under the following captions, but for the most
recently concluded rise. al y~. Tables I through 9 and Appendix B.
Accounting Principles
The accounting principles mfen'~ to in ~ Section are lhe accounting principles desaibed in fl,,e
notes to lhe financial statements referred ~o in paragraph l described above, as such principles may be
changed from time to time to comply with stale hw or l~3ulafion.
PRELIMINARY OFFICIAL STATEMENT
Dated November 21, 2002
Ratings:
Moody's:" "
S&P:"
See ("OTHER INFORMATION -
NEW ISSUE - Book-Entry-Only RATINC_~' herein)
In the opinion of Bond Counsel. interest on the Certificate~ will be excludable from gross income for federal income tax purposes
under existing Im~; subject to the matters descrtbed under "T..LY MATTERS" herein, including the alternative minimum too: on
corporattons
$1,000,000
CITY OF COLLEGE STATION, TEXAS
(a Home-Rule City located in Brazos County, Texas)
CERTIFICATES OF OBLIGATION, SERIES 2003
Dated Date: December I, 2002
Due: February !$, as shown on the inside cover
The City of College Station, Texas, Certificates of Obligation, Series 2003 (the "Certificates") is being issued by the City of College
Station, Texas (the "City") pursuant to the terms of an ordinance adopted by the governing body of the City.
The Certificates are issuablc only in fully registered form in the denomination of $5,000 principal amount or integral multiples
thereof, initially registered solely in the name of Cede & Co., as registered owner and nominee for The Deposxtory Trust Company
("DTC"), New York, New York, acting as securities depository for the Certificates, until DTC resigns or is discharged. The
Certificates initially will be available to purchasers in book-entry-form only. So long ns Cede & Co is the registered owner of the
Certificates, as nominee for DTC, the Paying Agem/Registrar, initially J'PMorgan Chase Bank, Dallas, Texas, will pay the principal
of and interest on the Certificates to Cede & Co., which will, in turn, remit such amounts to DTC participants for subsequent
disbursement to the beneficial owners of the Certificates.
Interest on the Certificates will accrue from the dated date as shown above and will be payable on August I 5, 2003, and on each
February 15 and August 15 thereafter until maturity.
The Certificates are issued purmant to the legal authority and for the purposes described herein (see "THE CERTIFICATES -
AUTHORITY FOR ISSUANCE").
The Certificates are not subject to redemption prior to maturity.
Due
February 15
2OO4
2005
2006
MATURITY SCHEDULE, INTEREST RATES, AND INTEREST YIELDS
Interest Due Interest
Pfincinal RBte Yield Febmarvl5 PrinciPal Rate
$ 180,000 2007 $ 210,000
190,000 2008 220,000
200,000
Yield
(Accrued Interest from December I, 2002 to be added)
The Certificates are payable from ad valorem taxes levied against all taxable property in the City, within the legal limits. The
Certificates are additionally payable from a pledge of $1,000 of the surplus revenues of the City's combined utility system revenues
(see "THE CERTIFICATES - SECURITY AND SOURCE OF PAYMENT," and ''TAX RATE LIMITATIONS").
Thc Certificates arc offered for delivery, when issued, subject to the opinion of the Attorney General of the State of Texas and the
opinion of McCall, Parkhurst & Honon L.L.P., Dallas, Texas, Bond Counsel for thc City. Certain legal matters will be passed upon
for the Underwriters by Fulbright & Jaworski L.L.P., counsel for thc Underwriters. It is expcctcd that thc Certificates will bc
available for delivery through the services of DTC on or about January 9, 2003.
A.G. EDWARDS & SONS, INC.
COASTAL SECURITIES
RBC DAIN RAUSCHER INC.
SALOMON SMITH BARNEY
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, as amended and in effect on the date
hereof, this document constitutes a Preliminary O~cial Statement of the CiO, with respect to the Certificates that has been deemed
"final" by the Ct.tv as of its date except for the omission of no more than the informatton permitted by Rule I$c2-12
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the
solicitation of an offer to buy in anyjurisdtction to any person to whom it is unlawful to malo~ such offer, solicitation or sale.
No dealer, broker, salesperson or other person has been authorized to give tnformation or to make an)' representation other than
those contained in this O. ffictal Statement, and, if given or made, such other information or representations must not be relied
upon
The ,nformation set forth hereto has been obtained from the Cto' and other sources believed to be rehable, but such information
is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial
Advisor or the Underwriter. This Official Statement contains, in part, estimates antimatters of opinion which are not intended
as statements of fact, and no representation ts made as to the correctness of such estimates and opinions, or that they will be
realized.
The information and expresstons of opinion contained herein are subject to change without notice, and neither the delivery of
this Official Statement nor any sale made hereunder will, under an)' circumstances, create any tmplication th~ there has been no
change in the affairs of the CiO, or other matters described.
TABLE OFCONTENTS
CITY OFFICIALS, STAFF AND CONSULTANTS .... v
ELECTED OFFICIALS ...................................................... V
SELECTED ADMINISTRATIVE STAFF ............................... V
CONSULTANTS AND ADVISOP~ ...................................... V
INTRODUCTION ............................................................ 1
PLAN OF FINANCING .................................................. !
THE CERTIFICATES .................................................... 1
TAX INFORMATION .................................................... 4
TABLE I - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEnT .................................................. 7
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY
CATECd3RY ............................................................. 8
TABLE 3 - VALUATION AND GENERAL OBLIGATION
DEBT HISTORY ....................................................... 9
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY9
TABLE 5 - TEN LARGEST TAXPAYERS ........................... 9
TABLE 6 - TAX ADEQUACY ........................................ 10
TABLE 7 - ESTIMATED OVERLAPPING DEBT ................ 10
DEBT INFORMATION ................................................ 11
TABLE 8 - PRo-FORMA AD VALOREM TAX DEBT
SERVICE REQUIREMEN?S ...................................... 11
TABLE 9 = INTEREST AND SINKING FUND BUDGET
PROJECTION .......................................................... 11
TABLE I 0 - AUTHORIZED BUT UNISSUED TAX BONDS 12
FINANCIAL INFORMATION ..................................... 13
TABLE I I - GENERAL FUND REVENUES AND
EXP£~DITURE HISTORY ..................................... 13
TABLE 12 - MUNICIPAL SALE~ TAX HISTORY ............. 14
INVESTMENTS .............................................................
TABLE 13 - CURRENT INVESTMENTS ............................ 16
TAX MA'I'rERS .......................................................... 16
OPINION ...................................................................... 16
FEDERAL INCOME TAX ACCOUWrINO TREATMENT OF
ORIGINAL ISSUE DISCOUNT ................................... 17
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES.. 17
STATE, LOCAL AND FOREIGN TAXES ............................ 18
CONTINUING DISCLOSURE OF INFORMATION 18
OTHER INFORMATION ....................................... 19
RATINGS ...................................................................... 19
LITIGATION ................................................................. 19
REGISTRATION AND QUALIFICATION OF CERTIFICATES
FOR SALE ..............................................................20
LEGAL I~VESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS ....................................... 20
LEOAL OPINIONS ......................................................... 20
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION ....................................................... 20
FINANCIAL ADVISOR .................................................... 20
UNDERWRITER ............................................................. 21
CERTIFICATION OF THE OFFICIAL STATEMENT .............. 21
APPENDICES
GENERAL INFORMATION RE~ARDING THE CITY ............ A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT ...... B
FORM OF OPINIONS OF BOND COUNSEL .................... C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto,
are part of*he Official Statement.
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete informauon and definitions contained or incorporated in this Official
Statement. The offering of the Certificates to potential Investors is made only by means of this entire Official Statement. No
person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official
Statement.
THE CITY ............................ The City of College Station, Texas (the "City") is a political subdivision and a home-role city of the
State, located in Brazos County, Texas. The City covers approximately 41 square miles (see
"INTRODUCTION - DESCRIPTION OF CITY").
THE CERTIFICATES ........ The Certificates are issued as $1,000,000 Certificates of Obligation, Series 2003. The Certificates
are issued as serial certificates mamnng in the years 2004 through 2008 (see "THE CERTIFICATES
- GENERAL DESCRIPTION").
PAYMKNTOF INTEREST ...... Interest on the Certificates accrues from December 1, 2002, and is payable August 15, 2003, and
each February 15 and August 15 thereafter until maturity (see "THE CERTIFICATES- GENERAL
DESCRIPTION").
AUTHORITY FOR ISSUANCE. The Certificates are issued pursuant to the general laws of the State, particularly Subehapter C of
Chapter 271, Texas Local Government Code, as amended; and the Ordinance passed by the City
Council of the City (see "THE CERTIFICATES - AUTHOiUTV FOR ISSUANCE").
SECURITY FOR THE
CERTIFICATES .....................
OPTIONAL REDEMPTION .....
TAX EXEMPTION ...................
USEOF PROCEEDS ...............
The Certificates constitute direct obligations of the City, payable from a combination of(i) the levy and
collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable
property located within the City and (ii) a subordinate lien on and pledge of $1,000 of the surplus
revenues derived from the City's combined utility system revenues (see "THE CERTIFICATES -
SECURITY AND SOURCE OF PAYMENT").
The Certificates are not subject to optional redemption prior to maturity (see "THE
CERTIFICATES - OPTIONAL REOEMrTION").
In the opinion of Bond Counsel, the interest on the Certificates will be excludable from gross income for
federal income tax purposes under existing law and the Certificates are not private activity bonds. See
"TAX MATTERS" for a discussion of the opinion of Bond Counsel, including a description of the
alternative minimum tax consequences for corporations.
Proceeds from the sale of the Certificates will be used for the acquisition of equipment and to pay the
costs incurred in connection with the issuance of the Certificates (see "PLAN OF FINANCING - USE
OF CERTIFICATE PROCEEDS").
RATINGS ............................. The presently outstanding tax suppor~ debt of the City is rated "Aa3" by Moody's Investors
Service ("Moody's") and "AA-" by Standard & Pooffs Ratings Services, A Division of The McGraw=
Hill Companies, Inc. ("S&P"). The City also has other issues outstanding which are rated "Aaa" by
Moody's and "AAA" by S&P through insurance by various commercial insurance companies.
Applications for contract ratings on this issue have been made to Moody's and S&P (see "OTHER
INFORMATION - RA'rmos").
BOOK=ENTRY-ONLY
SYSTEM ..............................
PAVMENTRECORD ...........
The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee
of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the
Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical
delivery of the Certificates will be made to the beneficial owners thereof. Principal of and interest on
the Certificates will be payable by the Paying Agent/Regislrar to Cede & Co., which will make
distribution of the amounts so paid to the participating members of DTC for subsequent payment to
the beneficial owners of the Certificates (see "THE CERTIFICATES - BOOK-ENTRY-ONLY
SYSTEM").
The City has never defaulted in payment of its general obligation tax debt.
Ill
SELECTED FINANCIAL INFORMATION
Fiscal Estimated
YearEnded City
9/30 Pooulafion(I)
1998 63,130
1999 66,200
2000 67,890
2001 70,075
2002 70,308
2003 72,500
Per Capita Per
Taxable Taxable Capita
Assessed Assessed Ad Valorem Ad Valorem
Valuationc~) Valuation Tax Debt°} Tax Debt
$ 1,820,048,058 $ 28,830 $ 35,270,000 $ 559
1,928,97~462 29,139 39,505,000 597
2,194,620,399 32,326 56,655,000 835
2,315,362,362 33,041 59,970,000 856
2,489,560,083 35309 74,945,000 1,066
2,723,565,453 37,566 70,125,000 ~) 967
Ratio Tax
Debt to
Taxable
Assessed
Valuation
1.94%
2.05%
2.58%
2.59%
3.01%
2.57%
Percent
Total
Collection(3)
99.74%
99.17%
98.31%
100.10%
100.03%
(I) Source: Th-.
(2) As ~-ported by five Brazos County Appraisal Disl~ict; subject to change during the ensuing year.
(3) Payable from ad valorem taxes.
(4} Projected, includes the Certificates.
(5) In process of collection.
GENERAL FUND CONSOLIDATED STATEMENT SUMMARY
For Fiscal Year Ended September 30
Unaudited
2002°) 2001 2000 1999 1998 1997
Beginning Balance $ 9,432,700 $ 8,428,183 $ 7,809,532 $ 7,259,196 $ 7,661,268 c~) $ 6,570,332
Total Revenue 26,175,662 24,355,204 22,732,090 20,733,466 19,433,566 17,601,986
Total Expenditures 3 !,065,866 28,806,157 26,977,251 24,849,1 04 22,786,596 2 i,882,040
Other Financing Sources (Uses) 5.786.093 5.455.470 4,~63.812 4.665.973 2.950.958 5.320.132
Ending Balance $10.328.589 $ 9.432.700 $ 8.4=~28.183 $ 7,809.531 $ 7.259.196 $ 7.610.410
(I) The City's financial policies are for a General Fund balance of I~% of budg~ed appmpriatiom at year end. To the extent duu the C-eneral
Fund balance exceeds this amount, this surplus may be expended in future years for one t~me expendttures such as capflal items and short term
projects.
(2) ~ October 1, 1997 beginning balance has been restated as a result of the City's implem~lafion of GASB Statement #31, Acemmtmg and
Financial Reporting for certain investments and for external investment pools.
UTILITY SYSTEM CONDENSED STATEMENT OF OPERATIONS
Unaudited For Fiscal Year Ended Sentember 30
2002 2001 2000 1999 1998
Revenues:
Electric $ 43,479,619 S 42,290,635 $ 35.295,718 S 32,561,234 $ 33,257,006
Water and Wastewater 15,825,329 15,118,463 15,696,095 14,276,533 14,198,325
Interest 1,8 i 9,970 2,787,779 2,467,905 i,568,912 2,032,895
Other 1,865,381 1,734,798 1,940,771 2,263~337 2,510,885
Total Revenues $ 62,990,299 $ 61,931,675 $ 55,400,489 $ 50,670,016 $ 51,999,111
Expenses:
Total Expenses $ 44.623.788 $ 45.465.778 $ 37.149.229 $ 30.080.145
Net Available for Debt Service $ 18,366,511 $ 16,465,897 $ 18,251,260 $ 20,589,871
27.885.854
24.113.257
iv
CiTY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
City Council
Ron Silvia
James Massey
John Happ
Winnie Garner
Scott Mears
Dennis Maloney
Anne Hazen
Length of
Position Service Term Expires
Mayor 5 Years* 5/04
Mayor Pro-Tem 4 Years 5/04
Councilmember I Years 5/03
Councilmember 4 Years 5/03
Councilmember I Year 5/04
Councilmember 4 Years 5/03
Councilmember 5 Years 5/04
Occupation
Retired
Director of Facility Coordination
Airport Director
Banking
Director of Support Services
Painting Contractor
Retired R.N.
* Elected Mayor m May 2002
SELECTED ADMINISTRATIVE STAFF
Name
Thomas E. Brymer
Glen Brown
John C. Woody
Charles Cryan
Jeff Kersten
Conme L. Hooks
(1) City Manager since September 1999.
Position
Lenl~th of
Service to City
City Manager 15 Yearsm
Assistant City Manager 3 Years
Director of Public Utilities 16 Years
Director of Fiscal Services 12 Years
Budget Manager I I Years
City Secretary 16 Years
CONSULTANTS AND ADVISORS
Auditors .................................................................................................................................................. Ingram, Wallis & Company
Bryan, Texas
Bond Counsel .............................................................................................................................. McCall, Park, hum & Hor~on L.L.P.
Dallas, Texas
Financial Advisor ....................................................................................................................................... First Southwest Company
Houston, Texas
For additional information regarding the City, please contact:
Charles Cryan
Director of Fiscal Services
City of College Station
I I 01 Texas Avenue
College Station, Texas 77840
(979) 764-3552 Phone
(979) 764-3899 Fax
or
Drew Masterson
Anthea Moran
First Southwest Company
1021 Main Street, Suite 2200
Houston, Texas 77002
(713) 651-9850 Phone
(713) 6548658 Fax
PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$1,000,000
CITY OF COLLEGE STATION, TEXAS
CERTIFICATES OF OBLIGATION, SERIES 2003
INTRODUCTION
This Official Statement, which includes the cover pages and Appendices hereto, provides certain information regarding the issuance of
$1,000,000 City of College Station, Texas Certificates of Obligation, Series 2003 (the "Certificates"). Capitalized terms used in this
Official Statement have the same meanings assigned to such t~fls in the ordinance (the 'Ordinance") to be adopted on the date of sale of
the Certificates, except as otherwise indicated herein.
There follows in this Official Statement descriptions of the Certificates nnd certain information regarding the City and its finances. All
descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document.
Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Houston, Texas.
DESCRfl'rlON OF TIlE CITY ... The City is a political subdivision and municipal corporation of the State, duly organized and existing
under the laws ofth¢ State, including the City's Home Rule Charter. The City was incorporated in October 1938, and first adopted its
Home Rule Chaffer in October 1938, which was last amended in May 1992. The City operates under a Council/City Manager form of
government with a City Council comprised of the Mayor and six Councilmembers. Some of the services that the City provides are: public
safety (police and fire protection), highways and streets, electric, water and sanitary sewer utilities, health and social services,
culture-recreation, public transportation, public improvements, planning and zoning, and general administrative services. The 1990 Census
population for ~he City was 52,456 and the 2000 Census population was 67,890. The City covers approximately 40.8 square miles.
PLAN OF FINANCING
PURPOSE... Proceeds from the sale of the Certificates will be used for the acquisition of equipment and to pay the costs incurred in
connection with the issuance of the Certificates.
USE OF CERTIFICATE PROCEEDS... The proceeds from the sale of the Certificates will be applied approximately as follows:
Deposit to Project Fund
Deposit to Interest and Sinking Fund
Total Uses of Funds
$ 0
$ 0
THE CERTIFICATES
GENERAL DESClUFHON... The Certificates are dated December 1, 2002, and mature on February 15 in each of the years and in the
amounts shown on the cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be
payable on August 15, 2003 and on each February 15 and August 15 thereat~r until maturity. The det'mitive Certificates will be issued
only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to
Cede & CO., the nominee of The Depository Trust Company, New York, New York ("DTC") pursuant to the Book-Entry-Only System
described herein. No physical delivery of the Certificates will be made to the owners thereof. Principal of and interest on the
Certificates will be payable by the Paying Agent/Registrar to Cede & CO., which will make distribution of the amounts so paid to the
pnrticipadng members of DTC for subsequent payment to the beneficial owners of the Certificates (see "BooK-~,m~¥-O~c¥
AUTHORITY FOR ISSUANCE:...The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, pm'ticularly
Subchapter C of Chapter 271, Texas Local Government Code, as amended; and the Ordluance passed by the City Council.
SECURITY AND SOURCE OF PAYMENT... Ail taxable properly within the City is subject to a continuing direct annual ad valorem tax levied by
the City sufficient to provide for the payment of principal of and into'est on fill obligations (such as the Ceflificates) payable in whole or in pm
from ad valorem taxes, which mx must be levied within limits prescribed by hw.
The City intends to pay the Certificates from ad valorem t~x proceeds; however, the Certificates are also payable from and secured by a pledge
of $1,000 of Ibe surplus revenues derived from the City's combined utility system revenues, as pwvided in the Ordinance, in order to meet the
legal requirements for the sale thereof for cash.
TAX RATE LIMITATION ... All taxable property within the City is subject to the assessment, levy and collection by the City of a
continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within
thc limits prescribed by law. Article XI, Section 5, of the Texas Constitution Is applicable to the City, and limits its maximum ad valorem
tax rate to $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the
consDtutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. Administratively, the Attorney General of
the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all debt service for obligations payable from ad
valorem taxes, as calculated at the time of issuance.
OPTIONAL REDEMPTION... The Certificates are not subject to redemption prior to maturity.
BOOK-ENTRSs-ONLY SYSTEM . .. DTC will act as securities depository for the Certificates The Certificates w, II be issued as full,,-
registered securities in the name of Cede & Co. (DTC's pannership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully-registered certificate for each maturity will be issued for the Certificates, m the aggregate principal
amount of such issue, and will be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System. a "clearing corporation"
within the meaning of the New York Uniform Commercial Code. and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non U.S. equity
issues, corporate and municipal debt issues, and money market instruments from over 55 countries that DTC's participants ("Direct
Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of certificates. Direct Participants include both U.S. and non-U.S, securities
brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of
The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and
Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation. and
Emerging Markets Cleanng Corporation, (NSCC, OSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York
Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as both U.S. and non-U.S, securities brokers and dealers, banks, trust compames, and clearing
corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect
Participams"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the
Securities and Exchange Commission. More information about DTC can be found at www.dtcc com.
Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will recetve a credit for the
Certificates on DTC's records. The ownership interest of each actual purchaser of each Certificate ("Beneficial Owner") is in mm to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction as well as
periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Certificates are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficml Owners. Beneficial Owners will not receive certtficates representing their ownership interests
in Certificates, except in the event that use of the bcok-emry system for the Certificates ~s discontinued.
To facilitate subsequent transfers, all Certificates deposiled by Direct Participants with DTC are registered in the name of DTC's
parmership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of
Certificates with DTC and thetr registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificatesi DTC's records reflec~ only the identity of the
D~rect Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and
Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take certain steps to
augment the transmission to them of notices of significant events with respect to the Certificates, such as redemptions, tenders, defaults,
and proposed amendments to the Certificate documents. For example. Beneficial Owners of Certificates may wish to ascertain that the
nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners In the alternative,
Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to
them
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consem or vote wtth respect to Certificates unless authorized by a Direct
Participant in accordance with DTC's Procedures Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as
possible after the record date The Omnibus Proxy assigns Cede & Co's consenting or voting rights to those Direcl Participants to whose
accounts Cemficates are credited on the record date (identified in a listing attached to the Omnibus Proxy}.
Payments on the Certificates will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of
DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail informauon from the
C~ty and the Paying Agent/Registrar, on payable date in accordance wtth their respective holdings shown on DTC's records. Payments by
Participants to Beneficial Owners will be governed by standmg instructions and customary practices, as is the case wtth securities held for
the accounts of customers in bearer form or registered tn ~street name," and will be the responsibd~ty of such Participant and not of DTC
nor its nominee, Agent, or the. subject to any statutory or regulatory requirements as may be in effect from ttme to time. Payment of
redemption proceeds, distfibut~ons, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibihty of the City and the Paying Agent/Registrar. Disbursement of such payments to Direct
Participants will be the responstbihty of DTC, and reimbursement of such payments to the Beneficial Owners wtll be the responsibility of
Direct and lndtrect Participants.
DTC may d~scontmue providing ~ts servtces as deposttory with respect to the Certificates at any t~me by gtwng reasonable no/ice to thc
City and the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtamed, certtficates are
required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that
event, certificates will be printed and del.vered.
The information in thts section concerning DTC and DTC's book-entry system has been obtatned from sources that the Ci/y believes to be
reliable, but the City takes no respons~ility for the accuracy thereof.
Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the
Certificates are in the Book-Entty-Only System, references in other sections of this Official Statement to registered owners should be read
to include the person for which the Parttcipant acquires an interest in the Certificates, but (i) all fights of ownershtp must be exercised
through DTC and the Book-Entry-Only System. and (ii) except as described above, notices that are to be given to registered owners under
the Ordinance will be given only to DTC.
Information concerning DTC and the Book-Entty System has been obtained from DTC and is not guaranteed as to accuracy or
completeness by, and is not to be construed as a representation by the City or the Underwriters.
PAYING AGENT/P-,EGISTRAR ... The initial Paying Agent/Registrar for the Certificates ts JPMorgan Chase Bank, Dallas, Texas. In the
Ordinance, the City retains the right to replace thc Paying Agent/Registrar. The Ctty covenants to maintain and provide a Paying
Agent/Registrar at all times until the Certificates are duly paid and any successor Paying Agent/Registrar must be a bank, trust company,
financial institution, or other entity duly qualified and legally authorized to serve as and perform the duties and servtccs of Paying
Agent/Registrar for the Certificates. Upon any change in the Paying Agent/Registrar for the Certificates, the City will promptly cause a
written notice thereof to be sent to each registered owner of the Certificates by United States mail, first-class, postage prepaid, which
notice will also include the address of the new Paying Agent/Registrar.
TRANSFERs EXCHANGE AND REGISTRATION... In the event the Book-Entry-Only System should be discontinued, the Certificates may be
transferred and exchanged on thc registration books of the Paying Agent/Registrar only upon presentation and surrender thereof to the
Paying Agent/Registrar and such transfer or exchange will be without expense or service charge to thc registered owner, except for any tax
or other governmental charges required to be paid with respect to such registration, exchange and transfer. Certificates may be assigned by
the execution of an assignment form on the respective Certificates or by other instalment of transfer and assignment acceptable to thc
Paying Agent/Registrar. New Certificates will be delivered by the Paying Agent/Registrar, in lieu of the Certificates being transferred or
exchanged, at the corporate trust office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new
registered owner or his designee. To thc extent possible, new Certificates issued in an exchange or transfer of Certificates will be delivered
to the registered owner or assignee of the registered owner in not more than three business days after the reeetpt of the Certificates to be
canceled, and the written Instrument of transfer or request for exchange duly executed by thc registered owner or his duly authorized agent,
in form satisfactory to the Paying Agent/Registrar. New Certificates registered and delivered m an exchange or transfer will be in any
integral muluple of $5,000 for any one maturity and for a like aggregate principal amount as the Certificates surrendered for exchange or
transfer. See "Booz-Es'rRv-C~t.Y SYSTEM" herein for a description of the system to be utdtzed initially in regard to ownership and
transferability of the Certificates. Neither the City nor the Paying Agent/Registrar will be required to transfer or exchange any Certificate
called for redempuon, tn whole or in part, within 30 days of the date fixed for redemption; provided, however, such hmitation of transfer
will not be applicable to an exchange by thc registered owner of the uncalled balance ora Certsficate.
RECORD DATE, FOR INTEREST PAYMENT... Thc record date ("Record Date") for determining the person to whom the interest ts payable
on thc Certificates on any interest payment date means thc close of business on the last day of the preceding month.
in the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest
payment (a "Special Record Date") will be estabhshed by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Nouce of thc Special Record Date and of thc scheduled payment date of the past due interest (a
"Special Payment Date," which wdl be 15 days a~er the Special Record Date) will be sent at least five days prior to thc Special Record
Date by Umted S~atcs mail, first class postage prepatd, to thc address of each Holder of a Certificate appeanng on the registration books of
the Paying Agent/Registrar at the close of business on thc day next preceding the date of mailing of such nouce.
DEFEASANCE... The Ordinance provides for the defeasance of the Certificates when the payment of the principal of and premium, tf any,
on the Certificates, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise),
is provided by irrevocably depositing with a paying agency, in trust (l) money sufficient to make such payment or {2) Defeasance
Secumles, certified by an independent public accounting finn of national reputation to mature as to principal and interest in such amounts
and at such times to insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper
fees, compensation and expenses of the paying agent for the Certificates. The Ordinance provides that "Defeasance Securities" means (a)
direct, noncallable obligauons of the United States of America, including obligations that are unconditionally guaranteed by the United
States of America, lb) noncallable obligations of an agency or mstromentahty of the United States of America, including obhgattons that
are unconditionally guaranteed or insured by the agency or insu'umentahty and that are rated as to investment quality by a nationally
recognized investment rating firm not less than AAA or its cqmvnlent, and (c) noncallable obligations ora state or an agency or a county,
municipality, or other political subdivision of a state that have been refi~nded and that rated as to investment quahty by a nationally
recognized investment rating firm not less than AAA or its eqmvalent. The City has additionally reserved the right, subject to satisfyp~g
the requirement of(i) and (2) above, to substitute other Defeasance Seeurmes for the Defeasance Securities originally deposited, to
reinvestment the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the City moneys in excess of the
amount required for such defeasance.
Upon such deposit as described above, such Certificates shall no longer be regarded to be outstanding or unpaid The City has reserved the
option, however, to be exercised at the time of the defeasance of either series of the Certificates, to call for redemption, at an earlier date,
those Certificates which have been defeased to their maturity date, if the City: (i) in the proceedings providing for the firm banking and
financial arrangements, expressly reserves the right to call the Certificates for redemption; (it) gives notice of the reservation of that right
to the owners oftbe Certificates immediately following the making of the firm banking and financial arrangements: and (iii) directs that
notice of the reservation be included in any redemption notices that tt authorizes
REMEDIES OF HOLDERS OF CERTIFICATES... The Ordinance does not establish specific events of default with respect to the Certificates,
and there is no right to the acceleration of maturity of the Certificates upon the failure of the City to observe any covenant under the
Ordinance. Although a registered owner of the Certificates could presumably obtain a judgment against the City if a default occurred tn
the payment of principal of or interest on any such Certificates, such judgment could not be satisfied by execution against any property of
the City. Such registered owner's only practical remedy, if a default occurs, ts a mandamus proceeding to compel the City to levy, assess
and collect an annual ad valorem tax sufficient to pay principal of and interest on the Certificates as it becomes due. The enforcement of
any such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic
basis. The Ordinance do not provide for the appointment ora trustee to represent the interests of the bondholders upon any failure oftbe
City to perform in accordance with the terms of the Ordinance. or upon any other condition Furthermore. the City is eligible to seek relief
from its et~litors under Chapter 9 of the U.S. Bankruptcy Code. Although Chapter 9 provides for the recognition of a security interest
represented by a specifically pledged source of special revenues, the pledge of taxes and other general revenue in support of a general
obligation ora bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic
stay provision that would prohibit, without Bankroptey Court approval, the prosecution of any other legal action by creditors or
bondholders of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from
creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in
Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a
Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to
the enforceabihty of the Ordinance and the Certificates are qualified with respect to the customary rights of debtors relative to their
creditors.
TAX INFORMATION
Ao VALOREM TAX LAW... The appraisal of properW within the City is the responsibility of the Brazos County Appraisal District (the
"Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal
District is reqmred under Title I, Texas Tax Code (referred ua herein as the "Property Tax Cede") to appraise all property within the Appraisal
District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. The value placed upon property within
the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of
the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years.
The City may require annual review at its own expense, and is entitled to challenge the determination of apprsised value of property within the
City by petition filed with the Appraisal Review Board.
Reference is made to thc Property Tax Code. tbr identification of property subject to taxation, properly exempt or which may be exempted
from taxation, if claimed; the appraisal of property for ad valorem taxanon purposes; and the procedures and limitations applicable to the levy
and collection of ad valorem taxes.
Article VIII of the State Constitution ("Article VIII") and State law provide for certain exempuons from property taxes, the valuation of
agricultural and open-space lands at productivity value, and the exempuon of certain personal property bom ad valorem taxation.
Under Sect,oq I -b. Amclc VIII. and State lax~. the governing body of a political subd,v~s~on, at its option, may grant (I) An exempuon of not
less than $3.000 of the market value of the residence homestead of persons 65 years of age or older, {2) An exemption to the disabled from all
ad valorem taxes thereafter levied by the pohtical subdivision; and (3) An exemption of up to 20% of the market value of residence homesteads.
The mtramum exemption under this provision is $:5,000.
In the case of residence homestead exemptions granted under Section l-b, Article VIII, ad valorem taxes may continue to be levied against
the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy
would impair the obligation of the contract by which the debt was created.
State law and Section 2, Article VIII, mandate an additional property tax exempuon for disabled veterans or the surviving spouse or chddren of
a deceased veteran who died while on active duty in the armed forces; the exemption applies to either rea[ or persona[ property with the amount
of assessed valuation exempted ranging fwm $5,000 to n maximum of $12,000.
Arucle VIII provides that eligible owners of both agricultural land (Section I-d) and open=space land (Section I=d=l), including open=space
land devoted to thnn or ranch purposes or open-space land devoted to timber production, may elect to have such pmperty appraised for
property taxation on the basis of liS productive capacity. The same land may not be qualified under both Section [-d and I-d-I.
Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body of a
political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation.
Amcle VIIi, Section i-j, provides for "freeport property" to be exempted fwm ad valorem taxation. Freeport property is defined as goods
detained in Texas for 175 days or less for the puq~ose of assembly, storage, manufacturing, processing or fabrication. Decisions to continue to
tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal.
The City and the other taxing bodies within its territory may agree to jointly create lax increment financing zones within the City, under which
the ~x values on prope~y m the zone are "frozen" at the value of the property at the time of creation of the zone. The City also may enter into
tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to consttuct certain
improvements on its property. The City in turn agrees not to levy a tax on all or pan of thc increased value attributable to the improvements
until the expiration of the agreement. The abatement ag~ement could last for a period of up to 10 years.
EFFECTIVE T~X RATE AND ROLLBACK TAX RATE... By each September I or as soon thereafter as practicable, the City Council adopts a
tax rate per SI00 taxable value for the current year. The tax rate consists of two components: (I) a rate for funding of maintenance and
operation expenditures, and (2) a rate for debt service.
Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". The City
Council may not adopt a tax rate that provides more revenue than the previous year's tax rate until it has held a public hearing on the
proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds
the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce
the tax rate adopted for the current year to the rollback tax rate.
"Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values
(adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the
anticipated tax collection rate.
The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an
additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax
rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation
of the various defined tax rates.
PROeERTY ASSESSMENT AND TAX PAVM£NT... Property within the City is generally assessed as of January I of each year. Business
inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on the basis of a valuation
process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October I of the same year, and
become delinquent on February 15 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on
homesteads in four installments with the first due before February 15 of each year and the final installment due before August 15.
[~ENALTIES AND INTEREST... Charges for penalties and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative Cumulative
Month Penalty Interest Total
February 6% 1% 7%
March 7 2 9
April 8 3 I I
May 9 4 13
June I 0 5 I $
July 12 6 18
After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent tn July, a
15% attorney's collection fee is added to the total tax penalty and interest charge Under certain circumstances, taxes which become
delinquent on the homestead ora taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest
assessed. In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts
due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides
that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition
in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petuion taxes
from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the
bankruptcy court. In many cases post-petition taxes are paid as an admlnislrative expense of the estate in bankruptcy or by order of the
bankruptcy courL
CITY APPLICATION OF PROPERTY TAX CODE.. The City grants an exemption to the market value of the residence homestead of persons
65 years of age or older of $30,000. The City has not granted an additional exemption of 20% of the market value of residence
homesteads. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The
City does not tax nonbusiness personal property. The City does not permit split payments, and discounts are not allowed. The City does
collect the additional one-half cent sales tax for reduction of ad valorem taxes. The City has adopted a tax abatement policy (see "TAX
INFORMATION - TAX ABATEMENT POLICY"). Brazos County collects the taxes for the City.
TAX ABATEMENT POLICY ... The City has estabhshed a tax abatement program to encourage economic development. In order to be
considered for tax abatement, a project must meet several criteria pertaining to job creation and property value enhancement. Thc value of
property subject to abatement is shown in Table I below.
All applications must meet the following general criteria before being considered for tax abatement.
I. The proJect expands the local tax base.
2. The project creates permanent full time employment
3. The project would not otherwise be developed.
4. The project makes a contribution to enhancing furd~cr economic development.
5. The project must remain in good standing to all aesthetic and environmental concerns.
6. The project has not been started and no construction has commenced at the time the application is approved.
7. The project must not have any of the following objections.
I. there would be substantial adverse affect on the provision of government service or tax base,
11. the applicant has insufficient financial capacity,
III. planned or potential use of the property would constitute a hazard to public safety,
IV. planned or potential use of the property would give adverse impacts to adjacent properties, or
V. any violation of laws of the United States or State of Texas or ordinances of the City of College Station would result.
lftbe project in the application meets the general criteria, is a facility of a targeted enterprise, and has a capital cost that exceeds $250,000,
then abatement of any or all of the increased value will be considered. In no case would tax abatement exceed the maximum allowed by
State law, presently 100% for ten years. Factors to consider in determining the portion oftbe increased value to be abated and the duration
of the abatement agreement include, but are not limited to:
Total amount of the increased value;
Total number of jobs created:
Type of jobs created;
Dollar value of payroll created; and
Other municipal costs and revenues assocmted with the application.
TABLE I -¥ ALUATION, EXEMFrlONS AND GENERAL OBLIGATION DEBT
2002/03 Market Valuation Established by Brazos County Appraisal District
(excluding exempt property)
Less Exemptions/Reductions at 100% Market Value:
Over 65 Homestead and Veterans Exemptions
Homestead Cap Adjustment
House Bill 366(o
Agricultural Land Use/Timber Productivity Loss
Abatements
Proration
Freeport
2002/03 Taxable Assessed Valuation
Debt Payable from Ad Valorem Taxes (as of 11-15-02) General Obligation and Refunding Bonds, Series 1991
Public Improvement and Refunding General Obligation Bonds, Series 1994
General Obligation Bonds, Series 1995
General Obligation and Refunding Bonds, Series 1996
Combination Tax and Revenue Certificates of Obligation, Series 1998
General Obligation Improvement Bonds, Series 1998
General Obligation Improvement Bonds, Series 1999
Combination Tax and Revenue Certificates of Obligation, Series 2000
General Obligation Improvement Bonds, Series 2000
Combination Tax and Revenue Certificates of Obligation, Series 2000A
Certificates of Obligation, Series 2001
General Obligation Improvement Bonds, Series 200 I
Certificates of Obligation, Series 2002
General Obligation Improvement Bonds, Series 2002
The Certificates
Less: Interest and Sinking Fund as of 9-30-01
Net Debt Payable from Ad Valorem Taxes
Ratio of Ad Valorem Tax Debt to Taxable Assessed Valuation
$ 42,890,060
861,812
95,873
32,451,400
28,600,746
167,053
6,531,511
975,000
3,350,000
3,500,000
6,275,000
4,890,000
5,515,000
5,595,000
3,445,000
7,210,000
7,300,000
3,165,000
2,800,000
14,480,000
6,445,000
1.000.000
$ 2,835,163,908
I ! 1~598,455
$ 2,723,565,453
75.945.000
2,384,403
$ 73.560.597
2.70%
2003 ~ted Population - 72,500
Per Capita Taxable Assessed Valuation - $37,566
Per Capita Funded Debt - $1,015
(I) HB 366 was ImS~t by the 74~ Legislature and exempts personal property and minerals that have ~n aggregate value of less than S500.
TABLE 2 -TAXABLE ASSESSED VALUATIONS IrY CA'IT, GORY
Taxable Appraised Value, Fiscal Year Ending Seotember 30
2003 2002 2001
CateRorY Amount
Real, Residential, Single-Family 46.03%
Real, Residential, Multi-Family 19.18%
Real, Vacant Lots/Tracts 2.17%
Real, Acreage (Land Only) 2.05%
Real, Farm and Ranch Improvements 0.20%
Real, Commercial/Industrial 20.02%
Real, Oil, Gas & Other Mineral Reserves 0.10%
Real and Tangible Personal, Utilities 1.57%
Tangible Personal, Business 8.10%
Tangible Personal, Other 0.13%
Real Property Inventory 0.25%
Special Inventory 0.21%
Total Appraised Value Before Exemptions $ 2,835,163,908 100.00%
Less: Total Exemptions/Reductions I I 1.598.455
Taxable Assessed Value $ 2,723~565,453
% of % of % of
Total Amount Total Amount Total
$ 1,305,123,758 $ 1,165,793,808 44.85%
543,671,950 498,169,190 19.16%
61,488,980 57,943,080 2.23%
58,043,010 54,600,810 2.10%
5,627,110 5,276,590 0.20%
567,471,371 532,716,948 20.49%
2,889,430 3,973,620 0.15%
44,621,630 52,024,755 2.00%
229,678,206 218,475,628 8.40%
3,589,940 3,637,130 0.14%
7,051,743 1,627,310 0.06%
5.906.780 5.349.810 0.21%
$ 2,599,588,679 100.00%
110.028.596
$ 2~89,560,083
$ 1,054,789,945 43.52%
456,684,815 18.84%
62,976,900 2.60%
50,447,630 2.08%
4,980,990 0.21%
507,145,636 20.92%
2,793,790 0.12%
53,962,443 2.23%
220,180,971 9.08%
3,378,370 0.14%
i,149,470 0.05%
5,328.370 0.22%
$ 2,423,819,330 100.00%
108.456.968
$ 2,315,362,362
Category
Real, Residential, Single-Family
Real, Residential, Multi-Family
Real, Vacant Lots/Tracts
Real, Acreage (Land Only)
Real, Farm and Ranch Improvements
Real, Commercial/Industrial
Real, Oil, Gas & Other Mineral Reserves
Real and Tangible Personal, Utilities
Tangible Personal, Business
Tangible Personal, Mobile Home
Tangible Personal, Other
Real Property Inventory
Taxable Appraised Value, Fsscal Year Endim, Seotember 30
2000 1999
%of %of
Amount Total Amount Total
$ 981,497,987 43.11% $ 875,401,055 44.01%
405,119,446 17.79% 355,913,511 17.89%
42,899,010 !.88% 43,467,460 2.19%
87,589,705 3.85% 49,488,875 2.49%
4,930,640 0.22% 5,705~30 0.29%
483,242,890 21.22% 415,066,553 20.87%
2,234,980 0.10% 4,869,590 0.24%
55,736,000 2.45% 44,954,780 2.26%
208,786,573 9.17% 190,348,447 9.57%
3,007,110 0.13% 2,630,420 0.13%
1,848,780 0.08% 1,365,330 0.07%
0.00% 0.00%
Total Appraised Value Before Exemptions $ 2,276,893,121
Less: Total Exemptions/Reductions 82.272.722
Taxable Assessed Value $ 2,194,620,399
100.00% $ 1,989,211,451 100.00%
60,240,989
$ 1.928.970.462
NOTE: Valuations shown are certified taxable assessed values reported by the Brazos County Appraisal District to the State Comptroller
of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District
updates records.
TABLE 3 -VALUATION AND (~ENEBAL OBLIGATION DEBT HISTORY
(1)
(2)
(3)
G.O.
Fiscal Taxable Tax Debt
Year Taxable Assessed Outstanding
Ended Estimated Assessed Valuation at End
9/30 PooulationO) Valuation(2) Per Canita of Year
1998 63,130 $ 1,820,048,058 28,830 $ 35,270,000
1999 66,200 1,928,970,462 29,139 39,505,000
2000 67,890 2,194,620,399 32,326 56,655,000
2001 70,075 2,315,362,362 33,04 1 59,970,000
2002 70,308 2,489,560,083 35,409 74,945,000
2003 72,500 2,723,565,453 37,566 70,125,000 ¢3)
Source: The City.
As reported by the Brazos County Appraisal Dis~ict; subject to change during the emuing year.
ProJected, include~ the Certificates.
TABLE4 -T AX RAT~ LEVY AND COLLECTION HISTORY
Ratio of
O.O. Tax Debt
to Taxable
Assessed
Valuation
1.94%
2.05%
2.58%
2.59%
3.01%
2.57% (3)
G.O.
Tax Debt
Per Canita
559
597
835
856
1,066
967
Fiscal Year
Ended 9/30
1998
1999
2000
2001
2002
2003
In process of collection.
General Interest and % Current % Total
Tax Rate Fund Sinking, Fund Tax Levy Collections Collections
0.4293 $ 0.1516 $ 0.2777 $ 7,758,131 99.10% 99.74%
0.4293 0.1618 0.2675 8,292,212 98.46% 99.17%
0.4293 0.1631 0.2662 9,068,352 97.78% 98.31%
0.4293 0.1662 0.2631 9,939,951 99.00% 100.10%
0.4777 0.1846 0.2931 11,892,629 99.36% 100.03%
0.4777 0.1946 0.2831 13,010,472 o) o~
TAaL~ S -TEN I.u~RGI~ST TAXPAYERS
Name of Taxnaver
CBL & Associates
W9/JP-M Real Estate Ltd.
Verizon Communications, Inc.
Universal Computer Services Inc.
Alkosser, David
College Station Hospital L.P.
Melrose Apartments
Wal-Mart Stores East Inc.
College Station Exchange, LP
301 Church Avenue L.P.
2002/03 % of Total
Taxable Taxable
Assessed Assessed
Nature of Pmnertv Valuation Valuation
Retail Mall $ 48,629,050 1.79%
Housing 39,.372,000 1.45%
Telephone Utility 35,913,250 1.32%
Computer Hardware/Software 31,665,535 I. 16%
Housing 30,961,300 l. 14%
Medical 25,402,560 0.93%
Housing 21,799,500 0.80%
Retail 21,412,710 0.79%
Housing 18,800,000 0.69%
Housing 17~000,000 0.62%
$ 290.955.905 10.68%
GD~ERAL OBLIGATION DEBT LIMITATION... NO general obligation debt limitation is imposed on the City under current State law or the
City's Home Rule Chatter (see "THE CERTIFICATES - TAX RAT~ LI~rrAT~ON'~.
TABLE 6 -T mc ADEQUACY
(!)
Maximum Principal and Interest Re~lmrements (2003) ......................................................... $ 9,487,430.00
$0.39288 Tax Rate at 97% Collection Produces .............................................................. 9,487,454.15
Average Principal and Interest Re~luirements (2003-2017) ..................................................... $ 6,590,459.92
$0.27291 Tax Rate at 97% Collection Produces ............................................................... 6,590,484.06
AvemRe Principal and Interest Recluirements {'2018-2021 } .................................................... $ 1.949,942.8 I
$0.08075 Tax Rate at 97% Collection Produces ............................................................... 1,949,966.96
Includes the Certificates. Interest on the Cemficates has been estimated for the purpose of illustration.
TABLE 7 -ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the City are paid out of nd valorem taxes levied by such entities on
properties w~thin the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This
statement of direct and estimated overlapping nd valorem tax debt ("Tax Debt") was developed by thc City from information obtained
from the Brnzos County Appraisal District. Except for the amounts relating to the City, the City has not independently verified the
accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete.
Furthermore, certain of the entities listed may have issued additional debt since the date hereof, and such entities may have prognuns
requiting the issuance of substantial amounts of additional debt, the amount of which cannot bc determined. The following table reflects
the estimated share of overlapping Tax Debt of the City.
C~ty's Authorized
Total Estimated Overlapping But Unissued
2001/02 Taxable 2001/02 Tax % Tax Debt as Tax Debt as
Assessed Value Tax Rate Debt Ai}olicable of I 1-! 5-02 of 11-15-02
City of College Station $ 2,723,565,453 $ 0.4777 $ 75,945,000 0} 100.00% $ 75,945,000 $ 6,845,000
Brazos County 5,804,583,559 0.4146 26,015,000 46.21% 12,021,532 10,510,000
Bryan ISD 2,545,489,736 1.6680 66,022,357 5.17% 3,413,356 0
College Station ISD 2,747,371,751 1.7900 61,922,353 83.48% 51,692,780 14,000,000
Total Direct and Overlapping Funded Tax Debt
Ratio of Direct and Overlapping Funded Tax Debt to Taxable Assessed Valuation
Per Capita Overlapping Funded Tax Debt
Source: Municipal Advisory Council of Texas.
(I) Projected, includes the Certif.,eat__~_.
$ ! 43,072,668
5.25%
2,107
I0
DEBT INFORMATION
TABLE 8 -P Ro-FORMA AD VALOREM TAX DEBT SERVICE REQUIREMENTS
Year Total
End Outstanding The Certificates
9/30 Debt Principal Interest
Total
2003 $ 9,448,055 $ 0 $ 39,375 $ 39,375
2004 8,809,034 180,000 47,775 227,775
2005 8,214,511 190,000 38,063 228,063
2006 7,269,528 200,000 27,825 227,825
2007 6,833,368 210,000 17,063 227,063
2008 6,541,624 220,000 5,775 225,775
2009 6,137,490
2010 6,155,449
201 ! 6,122,48 I
2012 6,078,890
2013 5,805,994
2014 5,445,966
2015 5,177,851
2016 4,813,624
2017 4,827,159
2018 3,058.378
2019 2,126,163
2020 2,122,93 I
2021 492,300
$ 105.480.795 $ 1,000.000 $ 175.875 S 1.175.875
Total
Debt Service
Reouirements
$ 9,487,430
9,036,809
8,442,574
7,497,353
7,060,430
6,767,399
6,137,490
6,155,449
6,122,48 i
6,078,890
5,805,994
5,445,966
5,177,85 !
4,813,624
4,827,159
3,058,378
2,126,163
2,122,931
492,300
$106,656.670
(1) Inte~st on the Certificates has been estimated at 5.25% for purpose of illustration.
TAnt~ 9 =i t~rrEg~T AND SINKING FUND BUDGET PRO. W. CHON
Ad Valorem Tax Debt Service Requirements, Fiscal Year Ending September 30, 2003
Interest and Sinking Fund, September 30, 2002
lnter~t and Sinking Fund Tax Levy ~ 98% Collection
Budged Investment Earnings
Budgeted Transfers
Estimnted Balance, September 30, 2003
$ 2,384,403
7,556,206
100,000
958.000
9,487,430
10.998.609
1,511,179
I1
TABLE 10 -AUTHORIZED BUT UNISSUED TAX BONDS
Date of Amount Issued Amount
Authorization Purpose Authorized To Date This Issue Unissued
1/24/1984 Fire Substation Budding o) $ 700.000 $ 0
1/24/1984 St~ct lnmrovements 0~ 6,325.000 5,825.000
1 i/3/1998 Street Improvements 8.539,000 3,785,000
1 I/3/1998 Traffic Management 2,980,000 1.540,000
I I/3/1998 Fire Station Improvements 2,477,000 910.000
1 I/3/1998 C~ty Facilities 1,835.000 275.000
1 I/3/1998 Park Improvements 4,769,000 4,640,000
I I/3/1998 Drainage Improvements 3.640.000 I ~000,000
$ 31.265,000 $ 17,975,000
$ 0 $ 700.000
0 500.000
3,781,000 973,000
720,000 720,000
250,000 1.317,000
780,000 780,000
129,000 0
785,000 1,855~000
$ 6.445,000 $ 6,845,000
(I) Contain projects whsch may have been completed or abandoned; therefore, these Bonds an: not hkely ever to be ~ssued.
ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT... The City does anticipate the issuance of additional obligations payable from
ad valorem taxes within the next 12 months.
OTHER OBLIGATIONS... As of September 30, 2002, the City has no outstanding capital leases or loans.
PENSION FUND... The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System
("TMRS"), a State-wide administered pension plan. The C~ty makes annual contributions to the plan equal to the amounts accrued for
pension expense. (For more detailed information concerning the retirement plaa, see "APPENDIX B - EXCERPTS FROM THE CITY OF
COLLEGE STATION, TEXAS ANNUAL FINANCIAL REPORT" = Note E.)
12
FINANCIAL INFORMATION
TABLE ! 1 -GENERAL FUND REVENUES AND EXPENDITURE HISTORY
Unaudited
2002
Revenues:
Ad Valorem Taxes $ 4.555,346
C~ty Sales Tax 13.648.835
Franchise Fees 1.714.24 I
Court Fines 2.324,073
Licenses. Permits. Certificates & Grants 870,636
Charges for Services 1,839,767
Other I ~222~764
Total Revenues $ 26.175.662
11)
$
For Fsseal Year Ended September 30
2001 2000 1999 1998 1997
3.813.167 $ 3.420.720 $ 3.139.361 $ 2.737.905
13.031.079 12.759.591 11.662.546 10.912.466
1.644.625 1.577.815 1.523.736 1.610.444
1.796.203 1.393.505 1.208399 1.233.604
779.159 680.776 643.968 577.032
1.892.964 1.681.877 1.463.432 1.368.883
1,398~007 1~217,806 1~091~924 993,232
24.355.204 $ 22.732.090 $ 20,733,466 $ 19.433.566
2.733,016
9.775.888
1.241.618
1.177.057
487.300
1.250.952
936.155
17,601,986
Expenditures:
General Govemment $ 3,258,999 $
Fiscal Services 2,092,053
Police Department 8,828.090
Fire Department 6,360,340
Economic and Community Developmant(')
Development Services 1,869,605
Parks and Recreation 5.871.817
Office of Technology & Information 2.295.795
Public Works 5346.269
Libra~ Sarvtces 734.082
Reimbursed Admlmstrative (5,875,968)
Pubhc Agency Fundsng 208.485
Other 76,299
Capital Outlay
Total Expenditures $ 31,065,866 $
2.909.436 $ 1.775.494 $ 1.735.592 $ 1.623.784 $ 1.629.871
1.889.611 1.967.135 1.783.602 1.533.228 1.433.501
8.273.632 7.567.620 6.903.838 6.289.005 5.860.586
5,702,804 5,179,104 4,841,832 4,195,334 3,898,305
41.623 773,703 594,417 582,200 584,076
1.712.993 1.536.141 1.432.792 1.298.243 1.659.760
5.185.737 5.168.231 4.592.990 4.263.428 4.146.567
2.229.600 1.760.19 ! 1.498.635 1.226.991 1.698.349
4.583.796 4.353.073 3.923.009 3.821.635 3.142.284
581.768 600.776 571.742 546.437 367.545
(5.287.928) (4.645.701 ) (4.034.541) (3.683.731 ) (3.240.805)
290.644 519.712 334.932 188.534
316. I 13 24.458 10.403 448.263 147.876
376~328 397,312 659~861 641~779 365~:
28.806.157 $ 26.977.251 $ 24.849.104 $ 22.786.596 $ 21.882.G
Other Financing Sources (Uses):
Sale of General Fixed Assets $ 30,106
Return on Investment 0
Operating Transfers In 6,236,793
Operating Transfers Out 1480,806)
Total Other Financing Sources (Uses) $ 5,786,093
$ 24.329 $ 55.403 $ 22.082 $ 32.375 S 22.365
0 0 0 0 0
6,198,14 i 5,923,785 5,400,175 5,396,700 5,387,075
(767,000) (1,115,376) (756,284) (2,478,117) (89,308)
$ 5.455.470 S 4.863.812 $ 4.665.973 $ 2.950.958 $ 5.320.132
Excess (Defileney of Revenues and
Other Financing sources Over (Under)
Expenditures and Other Financing Uses
Fund Balance, Beginning of Year
Fund Balance. End of Year
$ 895.889 $ 1.004.517 $ 618.651 $ 550.335 $ (402.072)
9~432,700 8~428,183 7,809~532 7~259~196 7,661,268
$ 10~328,589 $ 9~432~700 $ 8~428~183 $ 7~809~532 $ 7~259~196
$ 1.040.078
6~570~332
$ 7~610~410
(I) The City's financial policies are for a General Fund balance of 15% of budgeted apprepnatlons at year end. To the extent thai the General Fund
balance exceeds this amount, this surplus may be expended m future years for one lime expendsmres such as capstal items and short term proJects. The
budgeted drawdown of General Fund Balance of approxsmately $1.3 million for fiscal year 2002 is in conformance wflh thss pohcy
(2) Economsc and Community Development ns sncluded with General Government for the 2002 audit.
(3) The October I, 1997 beginning balance has been restated as a result of the City's implementation of GASB Statement #31, Accounung and Financial
Reporting for certain investments and for external investment pools.
Source: C~ty's audited financial statements for fiscal years 1997 through 2001 and the C~ty's unaudited financial statement for fiscal year 2002.
13
TABLE 1:2 -MUNICIPAL SALES TAX HISTORY
The City has adopted the Mumcipal Sales and Use Tax Act, VATCS, Tax Code, Chapter 321, which grants the City the power to impose and
levy a I% Local Sales and Use Tax within the City; the proceeds are crethted to the General Fund and are not pledged to the payment of the
Certificates. Collections and enforcements are effected through the offices of the Comptroller of Pubhc Accounts, State of Texas, who remits
the proceeds of the tax, aRer deduction of a 2% service fee, to the City monthly. In May 1990, the voters of the City approved the imposition
of an additional sales and use tax of one-half ofone percent ('/2% of I%)
Fiscal
Year
Ended
9-30
1998
1999
2000
2001
2002
o o of Eqmvalent of
Total Ad Valo~m Ad Valorem Per
Collected Tax Le~ Tax Rate Capitat.)
$10,912,466 140.66% 0.60 173
11,662,546 140.64% 0.60 176
12,759,591 140.70% 0.60 188
13,031,079 131.10% 0.56 186
13,648,835 114.77% 0 55 194
(I) Based on population estimates provided by the Csty.
FINANCIAL POLICIES
Basis o£,4c'c'ountine...The accounts of the City are organized and operated on the basis of funds and account groups. A fund is an
independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounung segregates funds according to their
intended purpose and ~s used to aid management tn demonstrating comphance with finance-related legal and contractual provisions. The
minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device to
account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Government funds are used to
account for the City's general govemment activities. Governmental fund types use the flow of current financial resources measurement
focus and the mothfied accrual basis of accounting.
General Fired...The General Fund is the City's primary operating fund. It ts used to account for all activities typically considered
governmental functions of the City. These include Public Safety, Public Works, Parks and Recreation, Economic and Development
Services, the support functions for these areas, and the administrative functions for the City.
The General Fund for the 2002-03 fiscal year is influenced by current policies and any approved policy changes. The policies include
inter-fund equity; maintaining a balance between revenues and expenditures; and maintaining the level of service currently provided as the
City experiences residential and commercial growth.
The City's financral policies are for a General Fund balance of 15% of budgeted appropriations at year end. To the extent that the General
Fund balance exceeds this amount, this surplus is to be expended in future years for one time expenditures such as capital items and short
mrrn projects.
f~¢bt Service Fund...The Debt Service Fund accounts for the servicing of general long-term debt not being financed by proprietary or
nonexpendable trust funds. It is the City's policy to maintain at least 15% of annual appropriated expenditures for debt service and any
associated fees as the Debt Service Fund balance at fiscal year end. The fund is in compliance with that policy.
Budeetarv Procedures...Prior to September 1, the City Manager submits to the City Council a proposed operating budget for thc rise, al
year commencing the following October I. The operating budget includes proposed expenditures and the means of financing them. All
budget requests are compiled by the Finance Department and presented with comparative and supporting data to the Mayor and City
Council for review. Public hearings are properly advertised and conducted at City Hall for taxpayer comments. Prior to September 27, the
budget is legally enacted through passage of an ordinance. The City Council must approve all transfers of budgeted amounts between
departments w~thm any fund and any revision that alters the total expenditure of any fund. An amount is also budgeted each year for
contingencies which may arise.
14
INVESTMENTS
The City invests its investable funds in ~nvestments authorized by Texas law in accordance with investment policies approved by the City
Council. Both state law and the City's investment policies are subject to change.
L~-~A~. l~ret.vr~£~rs ... Under Texas law, the City is authorized to invest in (1) obligations of the United States or its agencies and
insmimentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collateralized mortgage obligations
directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or
instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally guaranteed or insured
by, or hacked by the full faith and credit of, the State of Texns or the United States or their respective agencies and instrumentalities, (5)
obligations of states, agencies, counties, cities, and other political subdivisions of any state rated ns to investment quality by a nationally
recognized investment rating firm not less than A or its equivalent, (6) cemficates of deposit that are guaranteed or insured by the Federal
Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and
amount provided by law for City deposits, (7) certificates of deposit nnd share certificates issued by a state or federal credit union
domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union
Share Insurance Fund, or are secured ns to principal by obligations described in the clauses (I) through (5) or in any other manner and
amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully
secured by obligations described in clause (I), and are placed through a primary government securities dealer or a financial institution
doing business in the State of Texas, (9) bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of
the accepting bank or its parent are rated at least A-I or P-I or the equivalent by at least one nationally recoguized credit rating agency,
(10) commeroial paper that is rated at least A-I or P-I or the equivalent by either (a) two nationally recognized credit rating agencies or
one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank,
(1 I) no-load money merket mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average
portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each
share, (I 2) no-load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less
than two ysnra; invests exclusively in obligations described in the preceding clauses; and nrc continuously rated as to investment quality by
at least one nationally recognized investment rating firm of not less thnn AAA or its equivalent, and (13) bonds, notes or other obligations,
issued by the State of Israel. In addition, the City may invest bond proceeds in accordance with the terms of a gnaran~ed investment
contract, consistent with the provisions of Chapter 2256, Texas Government Code (the "PFIA").
The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided
that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service. The City is
specifically prohibited from investing in: (I) obligations whose payment represents the coupon payments on the outstanding principal
balance of the underlying mongage-bncked security collateral and pays no principal; (2) obligations whose payment represents the
principal stream of cash flow from the underlying mortgage-backed secmity and bears no interest; (3) colinteralizad mortgage obligations
that have a stated final maturity of greater than 10 years; and (4) collateralizad mongegu obligations the interest rate of which is
determined by an index that adjusts opposite to the changes in a market index.
INVF..qTMENT POLICIES ... Under Texas law, the City is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity; that address inveslment diversification, yield, maturity, and the quality and capability of
inveslment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any
individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be
invested consistent with a formally adopted "Investment Strategy Statement*' flint specifically adckcsscs each funds' in~. Each
investment Strategy Statement will desto'be its objectives concerning: (I) suitability of investment type, (2) presel~ttion and safety of pt~cipal,
(3) liquidity, (4) marketability of each investment, ($) diversification of the portfolio, and (6) yield.
Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence,
discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment,
considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City
will submit an investment report detailing: (1) the investment position of the City, (2) that all invesm~",nt officers jointly prepared and
signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund
group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity
date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired,
and (7) the complinnce of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person
may invest City funds w~thout express written authority from the City Council.
15
ADDITIONAL PROVISIONS... Under Texas law the City IS additionally required to: ( i } annually review its adopted policies and su'ategies; (2)
require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to
disclose the relationship and file a statement with the Texas Ethics Commission and the City Council, (3) require the registered principal of
firms seeking to sell securities to the City to: (a) receive and review thc City's investment policy, (b) acknowledge that reasonable controls
and procedures have been implemented to preclude imprudctu investment activities, and (c) deliver a wrmen statement attesting to these
requirements: (4) perform an annual audit of the management controls on investments and adherence to the City's investment policy; (5)
provide specific investment tmimng for the Treasurer, Chief Financial Officer and investment officers; (6) restrict reverse repurchase
agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than thc term of the
reverse repurchase agreement: (7) restrict the investment In non-money market mutual funds of any portion of bond proceeds, reserves
and funds held for debt service and to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and
reserves and other funds held for debt service: and (8) require local government investment pools to conform to the new disclosure, ratmg,
net asset value, yield calculation, and advisory board requirements.
Under Texas law, the City may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15
U.S.C. Section 80b-I et seq ) or with the State Securities Board to provide for the investment and management of its public funds or other
funds under its control for a term up to two years, but the City retains ultimate responsibility as fiduciary of its assets. In order to renew or
extend such a contract, the City must do so by order, ordinance or resolution. The City has not contracted with, and has no present
intention of contracting with, any such investment management firm or the State Securities Board to provide such services.
CITY'S INVESTMENT POLICY...The Director of Fiscal Services will promptly invest all City funds with the Bank Depository in accordance
with the provisions of the current Bank Depository Agreement or in any negotiable instrument that the City Council has authorized under
the provisions of the PFIA, as amended, and in accordance with the City Council approved Investment Policies.
At the end of each fiscal year, a report on investment performance will be provided to the City Council. In conjunction with the monthly
financial report, the Director of Fiscal Services will prepare and provide a written recapitulation of the City's investment portfolio to the
Council, detailing each City investment instrument with its rate of return and maturity date
TABLE 13-CURRENT INVESTMENTS
As of September 30, 2002, the City's investable funds were invested in the following categories:
Investment Type
Demand Bank Accounts
Pooled Cash (Texpool)
Money Market Mutual Fund (Fidelity)
Flexible Repurchase Agreements
U.S. Treasury Notes and Bonds
Subtotal
Book Market
Value Value
$ 1,662,939 $ 1,662,939
41,040,499 4 i,040,499
10,055,536 10,055,536
22,310,636 22,310,636
2~012,188 2,040,000
$ 77,081,798 $ 77,109,610
Agencies:
Federal National Mortgage Association (FNMA) $ 20,015,594 $ 20,246,250
Federal Farm Credit Bank (FFCB) 4,005,880 4,046,875
Federal Home Loan Mortgage Corporation (FH LMC) 11,055,340 I 1,163,649
Federal Home Loan Bank (FHLB) 24.040.763 24,360.312
Subtotal $ 59, I 17~577 $ 59~817,086
Total $ 136,199.375 $ 136.926.696
TAX MATTERS
OPINION
On the date of initial delivery of thc Ccmficates. McCall. Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel. will render its opinion
that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"), (I)
interest on the Certificates for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2) the
Certificates will not be treated as "specified private act~wty bonds" the interest on which would be included as an alternative minimum tax
preference item under section 57(a)(5) of the internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel wdl
express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Certificates.
See "APPENDIX C -- FORM OF OPINIONS OF BOND COUNSEL"
16
In rendering its opinion, Bond Counsel will rely upon (a) certain information and representations of the C,ty, including information and
representations contained m the City's federal tax certificate, and lb) covenants of the City relating to certain matters, including arbitrage
and the use of the proceeds of the Certificates and the property financed or refinanced therew,th. Although ,t is expected that the
Cemficates wdl quah~, as tax-exempt obhgations for federal income tax purposes as of the date of,ssuance, the tax-exempt status of the
Certificates could be affected by future events. However, future events beyond the control ofthe City, as well as the failure to observe the
aforementioned representations or covenants, could cause the interest on the Certificates to become taxable ret~x~actively to the date of
issuance.
Bond Counsel's op,nion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned
infurmat,on, representations and covenants. Bond Counsel's opinion ,s not a guarantee ora result. The Ex,st,ng Law is subject to change
by the Congress and to subsequent judicial and admm,strat,ve mterpretat,on by the courts and the Department of the Treasury. There can
be no assurance that such Existing Law or the mterpretat,on thereof wdl not be changed in a manner which would adversely affect the tax
treatment of the purchase, ownership or disposition of the Certificates.
Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the representations of the City that it
deems relevant to render such opinion and is not a guarantee of a result. No assurances can be given as to whether the Internal Revenue
Service will commence an audit of the Certificates, or as to whether the Internal Revenue Service would agree with the opinion of Bond
Counsel. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is likely to treat the
City as the taxpayer and the holders of the Certificates may have no right to participate in such procedure. No additional interest will be
paid upon any detenmnation of taxabihty.
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT
The initial public offering price to be paid for one or more maturit,es of the Certificates (the "Original Issue Discount Certificates") may be
less than the princ,pal amount thereof or one or more periods for the payment of interest on the Certificates may not be equal to the accrual
period or be in excess of one year. In such event, the difference between fi) the "stated redemption price at maturity" of each Original
Issue Discount Certificate, and (ii) the initial offering price to the public of such Original Issue Discount Certificate would constitute
original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the certificates less the
amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during
any unequal period if it ts the initial or final period) and which are made during accrual periods which do not exceed one year.
Under Existing Law, any owner who has purchased such Original Issue Discount Cert,ficate tn the m,tlal public offenng is entitled to
exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount
Certificate equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain
collateral federal tax consequences, see discussion set forth below.
In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Certificate prior to stated maturity,
however, the amount realized by such owner in excess of the basts of such Original Issue Discount Certificate in the hands of such owner
(adjusl~d upward by the portion of the original issue d,scount allocable to the period for which such Original Issue Discount Certificate
was held by such initial owner) is includable in gross income.
Under Existing Law, the original issue discount on each Original Issue Discount Certificate is accrued daily to the stated maturity thereof
(in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the
date of the Certificates and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such
Original Issue Discount Certificate for purposes of determining the amount of gain or loss recognized by such owner upon the redemption,
sale or other disposition thereof. The amount to be added to bas,s for each accrual period is equal to (a) the sum of the issue price and the
amount of original issue discount accrued in prior periods mult,plied by the yield to stated maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as
current interest during such accrual period on such Original Issue Discount Certificate.
The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount
Certificates which are not purchased m the init,al offering at the initial offering price may be determined according to rules which differ
from those described above. All owners of Original Issue Discount Cemficates should consult their own tax advisors with respect to the
determmauon fur federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other
d.sposltion of such Original Issue Discount Certificates and w,th respect to the federal, state, local and fore,gn tax consequences of the
purchase, ownership, redemption, sale or other d,sposition of such Original Issue D~scount Certificates.
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES
The following d~scuss~on is a summary of certain collateral federal Income tax consequences resulting from the purchase, ownersh,p or
d,~posmon ofthc Certificates. Th~s d~scusslon ~s based on existing statutes, regu]at~ons, pubhshed rulings and court deckS,OhS, all of which
are subject to change or mod,ficauon, retroactively.
17
The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial
institutions, property and casualty insurance companies, life insurance companies, owners of interests in a FASIT, individual recipients of
Social Security or Railroad Retirement benefits, individnals allowed an earned income credit, certain S corporations with Subehapter C
earnings and profits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations.
THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT
TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT
WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT
CERTIFICATES BEFORE DETERMINING WHETHER TO PURCHASE THE CERTIFICATES.
Interest on the Certificates will be includable as an adjustment for "adjus~d current earnings" to calculate the alternative mimmum tax
imposed on corporations by section 55 of the Code. Section 55 of the Code imposes a tax equal to 20 percent for corporations, or 26
percent for noncorporate taxpayers (28 percent for t~xablc income exceeding $175,000), of the taxpayer's ~alternativc minimum taxable
income," if the amount of such alternative minimum twt is greater than the taxpayer's regular income tax for the taxable year.
Interest on the Certificates may be subject to the "branch profits tax" imposed by section 884 of thc Code on the effectively-connected
earnings and profits ora foreign corporation doing business in the United States.
Under section 6012 of the Code, holders of tax-exempt obligations, such as the Certificates, may be required to disclose interest received
or accrued during each taxable year on their returns of federal income taxation.
Section 1276 of the Code provides for ordinnry income tax l~'eatment of gain recognized upon the disposition of a tax-exempt obligation,
such as the Certificates, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or
exceeds, one year fi.om the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the
accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount
bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of
a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The
"accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder
holds the obligation bears to the number of days between the ecquisition date and the final maturity date.
STATE~ LOCAL AND FOREIGN TAXKS
Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of Ibc Certificates
under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to
investors who are not United Slates persons.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Certificates. The
City is required to observe the agreement for so long as it remains obligated to advance funds to pay thc Certificates. Under the
agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of
specified material events, to certain information vendors. This information will be available to securities brokers and others who subserve
to receive the information from the vendors.
ANNUAL REPORTS ... The City will provide certain updated financial information and operating data to certain information vendors
annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the
general t~A~e included in this Official Statement under Tables numbered I through 6 and 8 through 13 and in Appendix B. The City will
update and provide this information within six months aider the end of each fiscal year. The City will provide the updated information to
each nationally recognized municipal securities information repository ("NRMSIR") and to any state information depository ("SID") that
is designated by the State of Texas and approved by the State of Texas and approved by the staff of the United States Securities ~nd
Exchange Commission (the "SEC").
The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as
permitted by SEC Rule 15c2-12 (the "Rule"). The updated information will include audited financial statements, if the City commissions
an audit and it is completed by the required time. if audited financial statements are not available by the required time, the City w~ll
provide audited financial statements when and if the audit report becomes available. Any such financial statements will be prepared in
accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to
employ from time to time pursuant to state law or regulation.
The C~ty's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the
City changes its fiscal year. If the City changes its fiscal year, it will nottfy each NRMSIR and the SID of the change.
18
MATERIAL EVENT NOTICES... The City will also provide timely notices of certain events to certain information vendors. The City will
provide notice of any of the following events with respect to the Certificates, if such event is material to a decision to purchase or sell
Certificates. (I) principal and interest payment delinquencies: (2) non-payment related defaults: (3) unscheduled draws on debt service
reserves reflecting financial difficulties, (4) unscheduled draws on credit enhancements reflecting financial difficulties: (5) substitution of
credit or liquidity providers, or their failure to perform: (6) adverse tax opinions or events affecting the tax-exempt status of the
Certificatesl (7) modifications to rights of holders of either series of the Certificates; (8) Obligation calls, (9) defeasancesl (10) release,
substitution, or sale of property securing repayment of the Certificates; and (I I) rating changes. (Neither the Certificates nor the
Ordinance make any provision for debt service reserves or liquidity enhancement.) In addition, the City will provide timely notice of any
failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "ANNUAL
R£PORTS." The City will provide each not~ce described m this paragraph to the SID and to either each NRMSIR or the Municipal
Securities Rulemaking Board {"MSRB")
AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID ... The City has agreed to provide the foregoing information only to
NRMSIRs and the SID. The information will be available to holders of Certificates only if the holders comply with the procedures and
pay the charges established by such information vendors or obtain the information through securities brokers who do so.
The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID.
The address of the Municipal Advisory Council is 600 West 8th Street, P.O. Box 2177, Austin, Texas 78768-2177, and its telephone
number is 512/476-6947.
LIMITATIONS AND AMENDMENTS.. The City has agreed to update information and to provide notices of material events only as described
above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial
results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City
makes no representation or warranty concerning such information or concerning its usefulness to n decision to invest in or sell Certificates
at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its
continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Certificates may seek a writ of
mandamus to compel the City to comply with its agreement.
The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in
legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i) the agreement, as
amended, would have permitted an underwriter to purchase or sell Certificates in the offering described herein in compliance with the
Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, ns well as such changed
circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Certificates consent to the
amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will
not materially impair the interests of the holders and beneficial owners of the Certificates. If the City so amends the agreement, it has
agreed to include with the next financial information and operating data provided in accordance with its agreement described above under
'SANNUAL REPORTS" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of
financial information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS... The City has complied in all materml respects with all continuing disclosure agreements
made by it in accordance with the Rule.
OTHER INFORMATION
RATINGS
The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's and "AA-" by S&P. The City also has other issues
outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies.
Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the significance of such ratings
may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the City
makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period
of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of
either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may
have an adverse effect on the market pace of the Certificates.
LITIGATION
It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse
financial impact upon the City or its operations.
19
REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE
The sale of the Certificates has not been registered under the federal Securities Act of 1933, as amended, in reliance upon the exemption
provided thereunder by Section 3(aX2); and the Certificates have not been qualified under the Securities Act of Texas in rel,ance upon
various exemptions contained therein, nor have the Certificates been qualified under the securities acts of any .lurisdlctlon. The City
assumes no responsibility for qualification of the Certificates under the securities laws of any jurisdiction in which the Certificates may be
sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for quallficatmn for sale or other
disposition of the Certificates must not be construed as an interpretation of any kind with regard to the availability of any exemption from
securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILIT~ TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Certificates are
negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for
insurance companies, fiduciaries, and trustees, and for the sinking funds of municipahties or other political subdivisions or public agencies
of the State of Texas. With respect to investment in the Certificates by municipalities or other political subdivisions or public agencies of
the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Certificates be assigned a
rating of"A" or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION - R~?ls~as" herein. In
addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Certificates are legal
investments for state banks, savings banks, trust companies with at capital of one million dollars or more, and savings and loan
associations. The Certificates are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and
are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to
determine whether the Certificates are legal investments for various insftutions in those states.
LEGAL OPINIONS
The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Certificates, including the
unqualified approving legal opinion of the Attorney General of Texas approving the Certificates and to the effect that the Certificates are
valid and legally binding obligations oftbe City, and based upon examination of such mmscript of proceedings, the legal opinion of Bond
Counsel, to like effect and to the effect that the interest on the Certificates will be excludable from gross income for federal income tax
purposes under section 103(a) of the Code, subject to the matters described under "TAX MATTERS" herein, including the alternative
minimum tax on corporations. Bond Counsel has reviewed the information relating to the Certificates and the Ordinance to determine that
such information conforms to the Ordinance. The legal fee to be paid to Bond Counsel for services rendered in connection with the
issuance of the Certificates is contingent on the sale and delivery of the Certificates. The legal opinion will accompany the Certificates
deposited with DTC or will be printed on the Certificates in the event of the discontinuance of the Book-Enuy-Only System. In
connection with the ~xansactions described in the Official Statement, Bond Counsel represents only the City.
The various legal opinions to be delivered concurrently with the delivery of the Certificates express the professional judgment of the
attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not
become an insurer or guarantor of that expression of professional judgement, of the transaction opined upon, or of the future performance
of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome ofany legal dispute that may arise out of the
transaction.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from City records, audited financial statements and other
sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized.
All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the
pro~nsions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and
reference is made to such documents for further information. Reference is made to original documents in all respects.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates The Financial
Advisor's fee for services rendered ~ith respect to the sale of the Certificates is contingent upon the issuance and delivery of the
Certificates. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not
verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents
with respect to the federal income tax status of the Certificates, or the possible impact of any present, pending or future actions taken by
any legislative or judicial bodies.
The Financial Advisor has reviewed the mformat~on in this Official Statement m accordance with, and as part of, Its responsibilities to the
City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the
Financial Advisor does not guarantee the accuracy or completeness of such information.
2O
UNDERWRITER
The Underwriters have agreed, subJect to certain condmons, to purchase the Certificates from the City, at an underwriting discount of
The Underwriters will be obligated to purchase all of the Certificates ff any Certificates are purchased. The Certificates to
be offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Certificates
into investment trusts} at prices lower than the public offenng prices of such Certificates, and such public offering prices may be changed,
from time to time, by the Underwriters.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the
information in this Official Statement m accordance w~th, and as part of, ~ts responsibilities to the C~ty and, as applicable, to investors
under the federal securities laws as applied to the facts and c~rcumstances of this transaction, but the Underwriter does not guarantee the
accuracy or completeness of such information.
CERTIFICATION OF THE OFFICIAL STATEMENT
The Ordinance authorizing the issuance of the Cemficatcs will also approve the form and content of this Official Statement, and any
addenda or amendment thereto, and authorize its further use in thc reoffering of the Certificates by the Underwriter.
ATTEST:
Mayor
City of College Station. Texas
City Secretary
21
APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
22
THE CITY
The City. located in Brazos County, ts sttuated tn the middle of a triangle bounded by Dallas/Ft. Worth, Houston, and San
Antonio and Austin. Approximately 80% of the Texas population ts located wtthin a 200 mile radtus of the City. The Ctty is
prmctpally a restdenttal commumty tbr faculty, students and other personnel of Texas A&M Universtty. The City periodically
accesses technical reformation and assistance made available by Texas A&M Umverslty.
The City was incorporated in 1938 and has a Councd-City Manager form of government with City employees totaling 805
currently.
The Ctty adopted and enforces comprehensive zonmg and buddtng restrictions aimed at assuring orderly growth and
development. The Ctty's ordinances require all subdxvtders, at thetr own expense and without provision for refund, to mstall
sweets and water and wastewater lines tn any planned subdivision. These facilities are constructed under the City's
specifications and inspection and when completed are deeded to the City free and clear. All areas within the City are now
adequately served with water, wastewater and electric service.
CITY OWNED FACILITIES
The City has constructed a major pan of its present facilities out of current revenues. Approximately 711 lane miles of streets
(99.8%) within the City are hard surface. The City has a complete water distribuuon, wastewater collection and treatment
system with 470 miles of wastewater and water lines. The City owns the electrical disl~'ibution system with 256 mdes of
dismbution lines, and purchases its electricity from Texas Utilities.
The City has a fully equipped pohce department with 98 full time police officers and 44.5 support personnel and fire department
with 100 full-time equivalents The C~ty has 18 police patrol cars and one jail facility with a capacity of 20.
EDUCATIONAL FACILITIES
The College Station Independent School District ts a fully accredil~l system offering educational facilities for kindergarten
through high school. The School District has a student enrollment in excess of :5,200 and employs over 600 people. The School
District's facilities are also used by Blinn College, offering two years of college level courses.
Texas A&M Universxty provides higher educational facilities, offering both four year college programs and graduate degree
programs.
HEALTH CARE
The Brazos Valley Medical Center is located on 25 acres within the City. The I00,000 square foot facility is a full care hospital
containing 100 beds and employing 340 people. Other area health care providers include: Care Plus Medical Center, College
Station Medical Center, St. Joseph Regional Health Care Center, and Scott & White Clinic.
TRANSPORTATION
U.S. Highway 190/State Highway 21 links the City to Interstate 45 which is located approximately 35 miles to the east. State
Highway 21 via U.S. Highway 290 also links the City to Austin, located approximately 110 miles to the west. State Highway 6
links the City to Waco (100 miles) and Interstate 35 to the north, and Houston (90 miles) to the south. Also, State Highway 30
links the City to Huntsville (45 miles) and Interstate 45 to the east.
Airlines
Bus Lines
Railroads
Commercial, corporate and private airport facilities are provided by Easterwood Airport, which is located
on the City's west side and is owned and operated by Texas A&M University. American Eagle Airlines
provides daily flights to and from Dallas-Fort Worth Airport out of Easterwood.
Coulter Field ~s located north of the City of Bryan and provides a recently completed 4,000 foot lighted
runway. Coulter Field offers all types of services for the private a~rcraft
Two bus hnes serve the City with daily service connecting the City with Houston and Dallas.
Rail f~eight service is provided by the Union Pacific Railroad. Union Pacific Railroad operates a main
freight line from Houston through Bryan=College Station to Dallas-Fort Worth and beyond.
RECREATION
The College Station park system presently includes 33 parks encompassing 913 acres, mcludmg a $15 acre wilderness park
Collectively, these parks contain 24 playgrounds, 17 soccer fields, 15 basketball courts, 14 softball/baseball diamonds, 3
swimming pools, n gymnasium, and a number of picnic shelters. The Parks Department sponsors a variety of organized athletic
and aquatic programs as well as many special events throughout the year.
A-I
POPULATION
1940
official U.S. Census
1950 1960 1970 1980 1990 2000
City of College Station 2,184 7,925 11,396 17,676 37,272 52,456 67,890
Brazos County 26,977 38,390 44,895 57,978 93,588 121,862 152,415
]~CONOMIC BACKGROUND
Texas A&M University and System
Of major importance to the City is Texas A&M University which bas a 5,200 acre campus located within the City. The City is
principally a residential community for faculty, students and other personnel of the University. Texas A&M University and its
System are the largest employer in Brszos County and a major contributor to the local economy. Texas A&M has a significant
economic impact on the City, contributing an estimated $766.5 million annually to the local economy. Texas A&M has
consistently ranked in the top ten nationally among public institutions of higher education in both enrollment and research grants.
Research dollars totaled approximately $394 million for 2000. The University has approximately 25,680 permanent and part-
time employees with a payroll of $679 million and has a physical plant valued in excess of $1.5 billion.
Texas A&M had an enrollment of 44,026 students, the 3rd largest in the nation, during the fall semester of 2000. There are
currently over 700 National Merit Scholars enrolled at Texas A&M University, ranking in the nation's top 10 universities for
National Merit Scholar enrollment.
Student Rec Center
The Student Rec Center is a 286,000 square foot building located on the Texas A&M University campus. The Center includes
multi-purpose gyms with badminton, basketball and volleyball courts, indoor soccer courts with dasher boards, 14
racquetball/bandball courts, and two squash courts with glass backwalis. The Center is home to a 14,000-square foot area with
machine weights, free weights, cardio-vascular equipment, and a cardio=theater; five activity rooms for aerobics, dance and
martial arts; and a quarter-mile four-lane walking/jogging track. It features a 42=foot indoor rock climbing facility with
interchangeable hand and footholds, an outdoor activity area with a six=lane lap, and a free-form pool with a cool water spa. The
building also houses a natatorium that seats 2,500 with a 50-meter, eight-lane Olympic-size pool, a five-lane instructional pool, a
diving well with one and three meter springboards and competitive platforms, and hot tubs.
Oeome Bush Presidential Library and Museum
The City is the site of the George Bush Presidential Library and Museum, located on the campus of Texas A&M University.
Texas A&lVl provides programs and facilities such as research and insuuctional programs related to the library and museum, a
conference center, connnunications center, educational museum/librsty center, and family-oriented facilities such as a park
surrounding the presidential library and museum.
During 2000, the presidential libmy and related facilities attracted more than 150,000 visitors to the community. As a result, the
room occupancy rate for 2000 was in excess of 70%. The increase in tourism has spurred the construction of several new hotels.
In addition, the City is currently under contract for a public/private venture to construct n 300-room full service hotel to be
associated with a City owned 45,000 square foot conference center. This project is scheduled to be completed in the 3rd quarter
of 2004.
A-2
MAJOR AREA EMPLOYERS
Number of
Finn Name Product Employees
Texas A&M University and System Education/Research 19,971
Bryan ISD Education 1,868
St. Joseph's Regional Hospital Hospital 1,170
Reliant Building Prodt~'ts Aluminum Windows 1,100
Sanderson Farms, Inc. Poultry Processing I, 100
City of Bryan Municipal 859
City of College Station Municipal 805
College Station lSD Education 800
Brazos County Government '/96
Wal-Mart Supercenter - Bryan Retail 600
UCS/Rentsys Computer Hardware and Soft, rare 550
Hamilton State School Education 500
Young Contractors, Inc. Construction 500
Scott & White Clinic Clinic 375
College Station Medical Center Medical 327
First American Bank SSB Bank 300
Blinn College College 293
Britt Rice Electric Electrical Contractor 200
Kent Moore Cabinets Cabinet Manufacturer 200
Source: Bryan-College Station Economic Development Corporation
In ~dditinn to the University, employment is provided by more than 85 manufacturing induslries located in, or adjacent to, the
City which produce such products as aluminum windows, furniture, chemicals, dai~ products, f~eds n.vd fertilizers, modular
homes, bronze castings, and geophysical survey sensors. A growing research park is located within the Texas A&M campus.
Major tenants include the Offshore Technology Research Center and thc Food Safety Inspection School National Training
Center. Automated Management systems provides a major automated accounting service for independent property and casualty
insurance agents. Thc City has also developed the College Station Business Center, a 200-acre business park. Tenants within
the park include (or will include) United Computer Systems ("UCS"), which will eventually employ approximately 800 people;
Cabletime, a ~raphics advcrtisin~ business; Prodigene, a biotechnology research business; and Stat~ Corporation, a software
research business. Businesses either unde~ construction or in place account for spproxirnately 300,000 square feet of buildings
and employ approximately !,000 people.
LABOR STATISTICS
College Station
Labor ToUd
Yeor Force ~ Rate
1997 28,051 27,42 ! 630 2.2%
1998 29,371 28,846 525 1.8%
1999 30,059 29,506 553 !.8%
2000 30,538 30,051 487 1.6%
2001 30,881 30,349 532 1.7%
2002 (~) 31,667 31,088 579 1.8%
Brazos County
Labor Total
Year Force ~ Uncmnlovment Rate
1997 70,429 68,925 i ,504 2.1%
1998 73,761 72,508 i,253 1.7%
1999 75,486 74,166 1,320 1.7%
2000 76,699 75,537 1,162 1.5%
2001 77,554 76,285 1,269 1.6%
2002 (~) 79,524 78,143 1,381 1.7%
Source: Texas Workforce Commission.
(1) Average throngh October.
A-3
SALES AND EFFECTIVE BUYING INCOME
College Station
Medina Household Total Household
Calendar Estimated Total Effective Effective
YearO) Pcoulation Retail Sales Buvine Income Bu in Income
1997 60,300 713,118,000 18,919 715,456,000
1998 66,000 792,531,000 19,481 820,064,000
1999 65,400 626,034,000 21,456 873,068,000
2000 67,200 987,041,000 23,260 976,163,000
2001 70,400 974,869,000 25,661 1,007,953,000
Brazos County
Median Household Total Household
Calendar Estimated Total Effective Effective
Year (0 Population Retail Sales Buyin~ Income Buyin~ Income
1997 132,600 1,356,737,000 26,271 1,843,501,000
1998 142,400 1,487,107,000 26,651 2,084,009,000
1999 145,000 2,066,179,000 27,925 2,230,843,000
2000 154,700 2,307,670,000 29,418 2,441,456,000
2001 158,600 2,225,738,000 30,992 2,534,254,000
(!) Calendar year 2002 was not available at t~me of printing.
Source: Sales & Marketing Management.
BUILDING PERMITS
College Station has grown rapidly over the past 26 years as evidenced by an increase in population from 17,676 in 1970 to
67,890 in 2000. The following table sets forth the number and value of consm~ction permils issued by the City over the past
several years.
Residential Construction
Commercial Consuuction
Total
Number Number Number
Year of Permits Value of Permits Value of Permits Value
1997 590 $ 53,435,022 212 $ 47,682,555 802 $101,117,577
1998 655 69,831,880 150 57,439,865 805 127,271,745
1999 1,020 87,917,466 138 26,665,024 !,158 114,582,490
2000 639 85,278,855 i 62 46,094,230 801 ! 31,373,085
2001 782 79,340,756 19 ! 40,194,722 973 I 19,535,478
Source: The City.
COUNTY CHARACTERISTICS
Brazos County was created in 1841 from Robertson and Washington Counties. Thc economy is diversified pr/madly by
agdbusineas, computer manufacturing, research and development, and education. The Texas Almanac designates cattle, hogs,
sorghums, corn, cotton, wheat, oats and pecans ns the principal sources of agricultural income.
Thc County had a 2000 population of 152,415, an increase of 25.07% since 1990. Minerals produced in the County include sand
and gravel, lignite, gas and oil.
A-4
APPENDIX B
EXCERPTS FROM THE
CITY OF COLLEGE STATION, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2001
The information contained in this Appendix consists of excerpts fi'om thc City of College
Station, Texas Annual Financial Report for thc Year Ended September 30, 2001, and is not
intended to be a complete mtemeat of ~he City's financial condition. Reference is made to
thc complete Report for fur&cr information.
APPENDIX C
FORM OF OPINION OF BOND COUNSEL