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HomeMy WebLinkAbout2013-3504 - Ordinance - 06/13/2013 Ordinance No. 2013 -3504 CERTIFICATE FOR ORDINANCE THE STATE OF TEXAS COUNTY OF BRAZOS CITY OF COLLEGE STATION We, the undersigned officers of the City of College Station, Texas (the "City "), hereby certify as follows: 1. The City Council of the City convened in a regular meeting on June 13, 2013, at the designated meeting place, and the roll was called of the duly constituted officers and members of said City Council, to wit: Nancy Berry, • Mayor Karl Mooney, Mayor Pro Tem Blanche Brick, • Councilmember Jess Fields, • Councilmember John Nichols, • Councilmember James Benham, • Councilmember Julie M. Schultz, • Councilmember and all of said persons were present, thus constituting a quorum. Whereupon, among other business, the following was transacted at said Meeting: a written ORDINANCE AUTHORIZING THE ISSUANCE OF UP TO $23,000,000 IN PRINCIPAL AMOUNT OF "CITY OF COLLEGE STATION, TEXAS GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS, SERIES 2013 "; DELEGATING THE AUTHORITY TO CERTAIN CITY OFFICIALS TO EXECUTE CERTAIN DOCUMENTS RELATING TO THE SALE OF THE BONDS; APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID BONDS; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT was duly introduced for the consideration of said City Council. It was then duly moved and seconded that said Ordinance; and, after due discussion, said motion prevailed and carried by the following vote: AYES : 7 NOES : 0 2. That a true, full and correct copy of the aforesaid Ordinance described in the above and foregoing paragraph is attached to and follows this Certificate; that said Ordinance has been duly recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true, full and correct excerpt from said City Council's minutes of said Meeting pertaining to the passage of said Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of said City Council as indicated therein; that each of the officers and members of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered at said Meeting, and each of said officers and members consented, in advance, to the holding of said Meeting for such purpose, and that said Meeting was open to the public and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. SIGNED AND SEALED ON JUNE 13, 2013. A ' Sher- ashburn Nancy Berry City Secretary Mayor (SEAL) ) rti CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE OF UP TO $23,000,000 IN PRINCIPAL AMOUNT OF "CITY OF COLLEGE STATION, TEXAS GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS, SERIES 2013 "; DELEGATING THE AUTHORITY TO CERTAIN CITY OFFICIALS TO EXECUTE CERTAIN DOCUMENTS RELATING TO THE SALE OF THE BONDS; APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID BONDS; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT ORDINANCE NO. 2013 -3504 AUTHORIZING THE ISSUANCE OF UP TO $23,000,000 IN PRINCIPAL AMOUNT OF "CITY OF COLLEGE STATION, TEXAS GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BONDS, SERIES 2013 "; DELEGATING THE AUTHORITY TO CERTAIN CITY OFFICIALS TO EXECUTE CERTAIN DOCUMENTS RELATING TO THE SALE OF THE BONDS; APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID BONDS; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, it is deemed advisable and to be in the best interest of the City of College Station (the "City ") that certain bonds authorized at elections previously held in the City be combined in a single issue and sold at this time, the dates of election, amount of bonds authorized thereat, purpose, amount of bonds previously sold, and the amount now to be sold being as follows as may be modified by the Pricing Officer (defined below): AMOUNT AMOUNT DATE OF AMOUNT PREVIOUSLY ISSUED ELECTION AUTHORIZED PURPOSE SOLD HEREIN November 4, 2003 $17,980,000 Street & transportation improvements $17,980,000 $0 November 4, 2003 $7,610,000 Municipal complex improvements $3,955,000 $0 November 4, 2008 $48,785,000 Street & transportation improvements $16,360,000 $_ November 4, 2008 $8,385,000 City library improvements $0 $0 November 4, 2008 $12,790,000 Park & recreation improvements $3,840,000 $_ Total $95,550,000 $42,135,000 $_ WHEREAS, this City Council finds and determines that it is necessary and proper to order the issuance, sale and delivery of such voted bonds; WHEREAS, the City has previously issued, and there are presently outstanding, revenue bonds of the City secured by a pledge of revenues derived by the City from the ownership and operation of the City's Utility System (consisting of the City's combined municipal electric light and power, waterworks and sewer system), and general obligation bonds and certificates of obligation which are secured by the full faith and credit of the City and a pledge by the City to levy ad valorem taxes sufficient to pay principal of and interest on the bonds and certificates of obligation as they become due and a pledge of surplus revenues of the Utility System to further secure the certificates of obligation; WHEREAS, the City now desires to refund all or part of the outstanding revenue bonds, general obligation bonds and certificates of obligation described in Schedule I attached hereto and incorporated herein (collectively, the "Eligible Obligations "), and those Eligible Obligations designated by the Pricing Officer, as defined below, to be refunded are herein referred to as the "Refunded Obligations "; WHEREAS, Chapter 1207, Texas Government Code, authorizes the City to issue refunding bonds and to deposit the proceeds from the sale thereof, together with any other available funds or resources, directly with a paying agent for the Refunded Obligations or a trust company or commercial bank that does not act as a depository for the City and is named in these proceedings, and such deposit, if made before the payment dates of the Refunded Obligations, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Obligations; WHEREAS, Chapter 1207, Texas Government Code, further authorizes the City to enter into an escrow or similar agreement with such paying agent for the Refunded Obligations or trust company or commercial bank with respect to the safekeeping, investment, reinvestment, administration and disposition of any such deposit, upon such terms and conditions as the City and such paying agent or trust company or commercial bank may agree; WHEREAS, the City Council hereby finds and declares a public purpose and it is in the best interests of the City to refund the Refunded Obligations in order to achieve a debt service savings, with such savings, among other information and terms to be included in the Purchase Agreement described in Section 18 of this Ordinance to be executed by the Pricing Officer (hereinafter designated), all in accordance with the provisions of Section 1207.007, Texas Government Code; WHEREAS, all the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; WHEREAS, the City is an "Issuer" within the meaning of Section 1371.001(4)(P), Texas Government Code, having (i) a principal amount of at least $100 million in outstanding long- term indebtedness, in long -term indebtedness proposed to be issued, or in a combination of outstanding or proposed long -term indebtedness and (ii) some amount of long -term indebtedness outstanding or proposed to be issued that is rated in one of the four highest rating categories for long -term debt instruments by a nationally recognized rating agency for municipal securities, without regard to the effect of any credit agreement or other form of credit enhancement entered into in connection with the obligation; WHEREAS, the bonds hereinafter authorized to be issued were voted and are to be issued, sold and delivered pursuant to the general laws of the State of Texas, including Texas Government Code Chapters 1207, 1331 and 1371, as amended, and the City's Home Rule Charter; and WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time, place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by the applicable provisions of Texas Government Code Chapter 551; THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEGE STATION, TEXAS: Section 1. AUTHORIZATION OF BONDS. That said City's General Obligation Improvement and Refunding Bonds, to be designated the "City of College Station, Texas General Obligation Improvement and Refunding Bonds, Series 2013 ", are hereby authorized to 2 be issued and delivered in the principal amount not to exceed $23,000,000 for the public purpose of (i) refunding the Refunded Obligations; (ii) construction of street and transportation improvements throughout the City including traffic signals, sidewalks, hike and bike trails and pedestrian improvements; (iii) construction of park and park facilities improvements; (iv) the payment of fiscal, engineering and legal fees incurred in connection with such projects; and (v) to pay the costs incurred in connection with the issuance of the Bonds (collectively, the "Projects "). Section 2. DELEGATION TO PRICING OFFICER. (a) As authorized by Sections 1207.007 and 1371.053, Texas Government Code, as amended, the Mayor, the Interim City Manager and the Executive Director of Business Services of the City (each the "Pricing Officer ") are each hereby authorized to act severally on behalf of the City in selling and delivering the Bonds, carrying out the other procedures specified in this Ordinance, including, determining the date of the Bonds, any additional or different designation or title by which the Bonds shall be known, whether the Bond shall be sold and delivered in one or more series and the date and sale and delivery of each such series, the price at which the Bonds will be sold, the years in which the Bonds will mature, the principal amount to mature in each of such years, the rate of interest to be borne by each such maturity, the interest payment and record dates, the price and terms upon and at which the Bonds shall be subject to redemption prior to maturity at the option of the City, as well as any mandatory sinking fund redemption provisions, and all other matters relating to the issuance, sale, and delivery of the Bonds and obtaining municipal insurance for all or any portion of the Bonds and providing for the terms and provisions thereof applicable to the Bonds, all of which shall be specified in the Purchase Agreement; provided that: (i) the aggregate original principal amount of the Bonds shall not exceed $23,000,000, with no more than $13,500,000 of such amount to be issued for the purposes described in Section 1(i) and Section 1(v), and no more than $9,500,000 of such amount issued for the construction of improvements described in Sections 1(ii) through 1(v) hereof; (ii) the true interest cost of the Bonds shall not exceed 4.500% per annum; (iii) the refunding must produce present value debt service savings of at least 5.000 %, net of any City contribution; (iv) the net effective interest rate on the Bonds shall not exceed the maximum rate set forth in Chapter 1204, Texas Government Code, as amended; (v) the final maturity of the Bonds shall not exceed February 15, 2033; (vi) the delegation made hereby shall expire if not exercised by the Pricing Officer on or prior to December 13, 2013; and (vii) on or prior to delivery, the Bonds shall be rated by a nationally recognized rating agency for municipal securities in one of the four highest categories for long -term obligations. 3 (b) In establishing the aggregate principal amount of the Bonds, the Pricing Officer shall establish an amount that, when combined with premium used for purposes other than the payment of costs of issuance, does not exceed the amount authorized in Subsection (a) hereof, which shall be sufficient in amount to provide for the purposes for which the Bonds are authorized and to pay costs of issuing the Bonds. The Bonds shall be sold with and subject to such terms as set forth in the Purchase Agreement as described in Section 18 herein. Section 3. CHARACTERISTICS OF THE BONDS. (a) The City shall keep or cause to be kept at the corporate trust office in Dallas, Texas (the "Designated Trust Office ") of The Bank of New York Mellon Trust Company, N.A., or such other bank, trust company, financial institution, or other agency named in accordance with the provisions of (g) below (the "Paying Agent/Registrar "), books or records for the registration and transfer of the Bonds (the "Registration Books "), and the City hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the City and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers 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 Bond to which payments with respect to the Bonds shall be mailed, as herein provided. The City or its designee shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar at its Designated Trust Office, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration 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 Bond, or any portion thereof in any Authorized Denomination, to the assignee or assignees thereof, and the right of such assignee or assignees to have such Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in exchange therefor in the manner herein provided. (b) The entity in whose name any Bond shall be registered 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 Bond 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 Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (c) The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds, and of all exchanges thereof, and all replacements thereof, as provided in this Ordinance. 4 (d) Each Bond may be exchanged for fully registered Bonds in the manner set forth herein. Each Bond 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 attorneys 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 registered Bonds, without interest coupons, in the form prescribed in the FORM OF BOND, in an Authorized Denomination (subject to the requirement hereinafter stated that each substitute Bond 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 Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If any Bond or portion thereof is assigned and transferred, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying Agent/Registrar shall exchange or replace Bonds as provided herein, and each fully registered Bond or Bonds delivered in exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be exchanged or replaced. It is specifically provided, however, that any Bond delivered in exchange for or replacement of another Bond prior to the first scheduled interest payment date on the Bonds (as stated on the face thereof) shall be dated the same date as such Bond, but each substitute Bond so delivered on or after such first scheduled interest payment date shall be dated as of the interest payment date preceding the date on which such substitute Bond is delivered, unless such substitute Bond 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 of delivery of any substitute Bond the interest on the Bond for which it is being exchanged has not been paid, then such substitute Bond shall be dated as of the date to which such interest has been paid in full. On each substitute Bond issued in exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed thereon a Paying Agent/Registrar's Authentication Certificate, in the form hereinafter set forth in the FORM OF BOND (the "Authentication Certificate "). An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such substitute Bond, date such substitute Bond in the manner set forth above, and manually sign and date the Authentication Certificate, and no such substitute Bond shall be deemed to be issued or outstanding unless the Authentication Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds 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 replacement of any Bonds or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bond in the manner prescribed herein. Pursuant to Chapter 1206, Texas Government Code, the duty of exchange or replacement of any Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of Authentication Certificate, the exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which originally were delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond so selected for 5 redemption, in whole or in part, within 45 calendar days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled principal of a Bond. (e) All Bonds issued in exchange or replacement of any other Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF BOND. (f) The City shall pay the Paying Agent/Registrar's reasonable and customary fees and charges for making transfers of Bonds, but the registered owner of any Bond requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The registered owner of any Bonds requesting any exchange shall pay the Paying Agent/Registrar's reasonable and standard or customary fees and charges for exchanging any such Bond or portion thereof, together with any taxes or governmental 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 Bond or Bonds or any portion or portions thereof in an Authorized Denomination, 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 Bonds that it will (i) pay the reasonable and standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on Bonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer or registration of Bonds solely to the extent above provided, and with respect to the exchange of Bonds solely to the extent above provided. (g) The City covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the City will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds 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 otherwise cease to act as such, the City covenants that it will promptly 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 examination by federal or state authority, and whose qualifications substantially are similar to the previous Paying Agent/Registrar to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, 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 Bonds, 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 6 Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first -class 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 4. FORM OF BONDS. The form of the Bonds, including the form of the 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 Bonds initially issued and delivered pursuant to this Ordinance, shall be in substantially the form as set forth in Exhibit A to this Ordinance, shall be numbered consecutively from R -1 upward, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance, and with the FORM OF BOND to be modified pursuant to, and completed with information set forth in the Purchase Agreement. The printer of the Bonds is hereby authorized to print on the Bonds (i) the form of bond counsel's opinion relating to the Bonds, and (ii) an appropriate statement of insurance furnished by a municipal bond insurance company providing municipal bond insurance, if any, covering all or any part of the Bonds. Section 5. DEFINITIONS. That the term "Authorized Denomination" shall mean a denomination of $5,000 of principal amount of a Bond or any integral multiple thereof; the term "Bonds" shall mean the City of College Station, Texas General Obligation Improvement and Refunding Bonds, Series 2013; the term "Business Day" means a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City are authorized by law or executive order to close; the term "MSRB" means the Municipal Securities Rulemaking Board; the term "Rule" means SEC Rule 15c2 12, as amended from time to time; and the term "SEC' means the United States Securities and Exchange Commission. Section 6. LEVY OF TAX; INTEREST AND SINKING FUND. (a) That a special fund or account, to be designated the "City of College Station, Texas Series 2013 Improvement and Refunding Bond Interest and Sinking Fund" (the "Interest and Sinking Fund ") is hereby created and shall be established and maintained by the City. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the City, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds are outstanding and unpaid, the governing body of the City shall compute and ascertain the rate and amount of ad valorem tax, based on the latest approved tax rolls of the City, 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 the Bonds as such interest comes due, and to provide a sinking fund to pay the principal (including mandatory sinking fund redemption payments, if any) of the Bonds as such principal matures or comes due through operation of the mandatory sinking fund redemption, if any, but never less than 2% of the original amount of the Bonds as a sinking fund each year. The rate and amount of ad valorem tax is hereby ordered to be levied against all taxable property in the City for each year while any of the Bonds is outstanding and unpaid, and the ad valorem tax shall be assessed and collected each such year and deposited to the credit of the Interest and Sinking Fund. Ad 7 valorem taxes necessary to pay the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. Section 7. TRANSFER. That the City shall do any and all things necessary to accomplish the transfer of monies to the Interest and Sinking Fund of this issue in ample time to pay such items of principal and interest due on the Bonds. Section 8. SECURITY 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 Interest and Sinking Fund shall be used only for the purposes and in the manner permitted or required by this Ordinance. Section 9. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. That in the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new Bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. That application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement Bond shall furnish to the City and to the Paying Agent/Registrar 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, theft, or destruction of a Bond, 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 Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. That notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. That prior to the issuance of any replacement Bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement Bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. 8 (e) Authority for Issuing Replacement Bonds. That in accordance with Section 1201.067, Texas Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such replacement Bond without necessity of further action by the City or any other body or person, and the duty of the replacement of such Bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 5(d) of this Ordinance for Bonds issued in conversion and exchange of other Bonds. Section 10. 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 Bonds 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 thereof, the City covenants as follows: (a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds (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 Bonds, 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 five percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of five percent is used for a "private business use" which is "related" and not "disproportionate ", within the meaning of section 141(b)(3) 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 Bonds (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 refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (f) to refrain from using any portion of the proceeds of the Bonds, 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 Bonds, other than investment property acquired with — (1) proceeds of the Bonds invested for a reasonable temporary period of three years or less until such proceeds are needed for the purpose for which the Bonds are issued, 9 (2) amounts invested in a bona fide debt service fund, within the meaning of section 1.148 -1(b) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds 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 advance refundings); and (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 Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(0 of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(0 of the Code. For purposes of the foregoing (a) and (b), the City understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein 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 Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, 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 Bonds under section 103 of the Code. In furtherance of such intention, the City hereby authorizes and directs the Mayor, the Interim City Manager, any Assistant City Manager and the Executive Director of Business Services, severally, to execute any documents, certificates or reports required by the Code, and to make such elections on behalf of the City which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. 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 11. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT. That the City covenants to account for the expenditure of proceeds from the sale of 10 the Bonds and any investment earnings thereon to be used for the purposes described in Section 1 of this Ordinance (such purpose referred to in this Section and Section 12 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 (b) such Project is completed. The foregoing notwithstanding, the City shall not expend such proceeds or investment earnings more than 60 days after the earlier of (a) the fifth anniversary of the date of delivery of the Bonds or (b) the date the Bonds are retired, unless the City 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 Bonds. For purposes hereof, the City shall not be obligated to comply with this covenant 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 12. DISPOSITION OF PROJECT. That the City covenants that the property constituting a Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other compensation, unless the City obtains an opinion of nationally - recognized bond counsel substantially to the effect that such sale or other disposition will not adversely affect the tax - exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the City shall not be obligated to comply with this covenant 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 13. PROCEDURES TO MONITOR COMPLIANCE WITH TAX COVENANTS. The City hereby adopts the procedures attached hereto as Exhibit B as a means of monitoring compliance with the federal tax covenants made by the City herein. Section 14. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS. That the Executive Director of Business Services of the City is hereby authorized to have control of the Bonds initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Bonds 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 registration of the Bonds said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such certificate. The Bonds thus registered shall remain in the custody of the Executive Director of Business Services (or the designee thereof) until delivered to the Underwriter (as defined in Section 18 of this Ordinance). Section 15. DTC REGISTRATION. That the Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and The Depository Trust Company ( "DTC "), New York, New York, initially will act as depository for the Bonds. DTC has represented that it is a limited purpose trust 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 Bonds initially 11 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 Bonds on behalf of the Underwriter and its participants. So long as each Bond 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 maintain a book -entry system which will identify ownership of the Bonds in Authorized Denominations, with transfers of ownership being effected on the records of DTC and its participants pursuant to rules and regulations established by them, and that the Bonds initially deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter provided. The City is not responsible or liable for any functions of DTC, will not be responsible 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 rights of the beneficial owners of the Bonds. 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 Bonds, 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 DTC will be maintained in the future. Notwithstanding the initial establishment of the foregoing book -entry system with DTC, if for any reason any of the originally delivered Bonds is duly filed with the Paying Agent/Registrar with proper request for transfer and substitution, as provided for in this Ordinance, substitute Bonds 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 Bonds. 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 16. CONTINUING DISCLOSURE OBLIGATION. (a) Annual Reports. (i) The City shall provide annually to the MSRB, in an electronic format as prescribed by the MSRB, within six months after the end of each fiscal year ending in or after 2013, financial information and operating data with respect to the City of the general type included in the final Official Statement authorized by Section 18 of this Ordinance, being the information described in Exhibit C hereto. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit C, or such other accounting principles as the City may be required 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 statements by the required time, and shall provide audited financial statements for the applicable fiscal year to the MSRB, when and if the audit report on such statements become available. (ii) If the City changes its fiscal year, it will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise 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 this Section may be set forth in full in one or more documents or may be included by 12 specific reference to any document that is available to the public on the MSRB's internet website or filed with the SEC. All documents provided to the MSRB pursuant to this Section shall be accompanied by identifying information as prescribed by the MSRB. (b) Event Notices. The City shall notify the MSRB in an electronic format as prescribed by the MSRB, in a timely manner (but not in excess of ten Business Days after the occurrence of the event) of any of the following events with respect to the Bonds: 1. Principal and interest payment delinquencies; 2. Non - payment related defaults, if material; 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 the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 —TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; 7. Modifications to rights of Bondholders, if material; 8. Bond calls, if material, and tender offers; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds, if material; 11. Rating changes; 12. Bankruptcy, insolvency, receivership or similar event of an obligated person (which is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, 13 or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City); 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. The City shall notify the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such subsection. (c) Limitations, Disclaimers, and Amendments. (i) 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 Bonds within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with this Ordinance or applicable law that causes Bonds 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 Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial 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 Bonds at any future date. (iii) UNDER NO CIRCUMSTANCE SHALL THE CITY BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND 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 this Ordinance for purposes of 14 any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. (v) Should the Rule be amended to obligate the City to make filings with or provide notices to entities other than the MSRB, the City hereby agrees to undertake such obligation with respect to the Bonds in accordance with the Rule as amended. 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 requirements, 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 Bonds in the primary offering of the Bonds 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) 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 Bonds consent to such amendment or (b) 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 Bonds. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection (b) 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 provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. (d) Procedures to Monitor Compliance with Continuing Disclosure Covenants. The City hereby adopts the procedures attached hereto as Exhibit B as a means of monitoring compliance with the continuing disclosure covenants made by the City herein. Section 17. DEFEASANCE. (a) Deemed Paid. Any Bond and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Bond ") within the meaning of this Ordinance, except to the extent provided in subsection (e) of this Section, when payment of the principal of such Bond, 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/Registrar in accordance with an escrow agreement or other instrument (the "Future Escrow Agreement ") for such payment (1) lawful money of the United 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 reinvestment, 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 Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as 15 aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Defeasance Securities. (b) 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 Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing by the City. Any Future Escrow Agreement pursuant to which the money and /or Defeasance Securities are held for the payment of Defeased Bonds may contain provisions permitting the investment or reinvestment 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 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 Bonds. In the event that the City elects to defease less than all of the principal amount of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount of Bonds by such random method as it deems fair and appropriate. (d) Defeasance Securities. The term "Defeasance Securities" means (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the City adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent; (iii) noncallable 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 issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (iv) any securities and obligations now or hereafter authorized by State law that are eligible to refund, retire or otherwise discharge obligations such as the Bonds. (e) Continuing Duty of Paying Agent /Registrar. Until all Bonds defeased under this Section of this Ordinance shall become due and payable, the Paying Agent/Registrar for such Bonds shall perform the services of Paying Agent/Registrar for such Bonds the same as if they had not been defeased, and the City shall make proper arrangements to provide and pay for such services. Section 18. SALE OF BONDS; OFFICIAL STATEMENT. (a) The Bonds shall be sold and delivered subject to the provisions of Section 1 and Section 2 hereof through a negotiated 16 sale and pursuant to the terms and provisions of a purchase contract (the "Purchase Agreement "), the terms and provisions of which are to be determined by the Pricing Officer in accordance with Section 2 hereof, and in which the purchasers of the Bonds, Raymond James & Associates, Inc., RBC Capital Markets LLC and BOSC, Inc. (collectively, the "Underwriter ") are designated. The Pricing Officer is hereby authorized to execute and deliver the Purchase Agreement for an on behalf of the City. The Bonds shall initially be registered in the name of the Underwriter or its designee. (b) The City hereby approves the form and content of the draft preliminary official statement relating to the Bonds in the form attached hereto as Exhibit D and any addenda, supplement or amendment thereto, and approves the distribution of such preliminary official statement in the reoffering of the Bonds by the Underwriter in final form, with such changes therein or additions thereto as the Pricing Officer executing the same may deem advisable. The Pricing Officer is hereby authorized, in the name and on behalf of the City, to approve, distribute, and deliver a final preliminary official statement and a final official statement relating to the Bonds to be used by the Underwriter in the marketing of the Bonds. (c) The Pricing Officer is authorized, in connection with effecting the sale of the Bonds, to obtain from a municipal bond insurance company so designated in the Purchase Agreement (the "Insurer ") a municipal bond insurance policy (the "Insurance Policy ") in support of the Bonds. To that end, should the Pricing Officer exercise such authority and commit the City to obtain a municipal bond insurance policy, for so long as the Insurance Policy is in effect, the requirements of the Insurer relating to the issuance of the Insurance Policy are incorporated by reference into this Ordinance and made a part hereof for all purposes, notwithstanding any other provision of this Ordinance to the contrary. The Pricing Officer shall have the authority to execute any documents to effect the issuance of the Insurance Policy by the Insurer. (d) The Mayor and Mayor Pro Tem, the Interim City Manager, the Executive Director of Business Services and City Secretary, shall be and they are hereby expressly authorized, empowered and directed from 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 the corporate seal and on behalf of the City a Paying Agent/Registrar Agreement, in the form presented at the meeting at which this Ordinance is adopted, with the Paying Agent/Registrar and all other instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bonds, the sale of the Bonds, any Purchase Agreement and the Official Statement. In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 19. FURTHER PROCEDURES. That the Mayor, the City Secretary, the Interim City Manager, the Executive Director of Business Services of the City, any Assistant City Manager, and all other officers, employees, and agents of the City, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from 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 the 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 17 of this Ordinance, and the sale and delivery of the Bonds and fixing all details in connection therewith. The City Council hereby authorizes the payment of the fee of the Office of the Attorney General of the State of Texas for the examination of the proceedings relating to the issuance of the Bonds, in the amount determined in accordance with the provisions of Section 1202.004, Texas Government Code. Section 20. CONSTRUCTION FUND; USE OF PROCEEDS. (a) The City hereby creates and establishes and shall maintain on the books of the City a separate fund to be entitled the "Series 2013 Bond Construction Fund" (the "Construction Fund ") for use by the City for payment of all lawful costs associated with the acquisition and construction of the projects described in the preambles to this Ordinance. (b) The proceeds from the sale of the Bonds shall be deposited, on the date of closing, in the manner described in a letter of instructions prepared by the City or on behalf of the City by the City's financial advisor. The foregoing notwithstanding, proceeds representing accrued interest on the Bonds shall be deposited to the credit of the Interest and Sinking Fund. Any amounts remaining after completion of the improvements described in Section 1 hereof shall be transferred FIRST to the Rebate Fund, to the extent required by Section 10 hereof, and THEREAFTER to the Interest and Sinking Fund. Section 21. INTEREST EARNINGS. That the interest earnings derived from the investment of proceeds from the sale of the Bonds may be used along with other proceeds for the construction of the permanent improvements set forth in Section 1 hereof for which the Bonds are issued; provided that after completion of such permanent improvements, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further 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 Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. Section 22. APPROVAL OF ESCROW AGREEMENT AND TRANSFER OF FUNDS. In furtherance of authority granted by Section 1207.007(b), Texas Government Code, the Mayor or the Pricing Officer is further authorized to enter into and execute on behalf of the City with the escrow agent named therein, an escrow or similar agreement, in the form and substance as presented at the meeting at which this Ordinance was adopted, which agreement will provide for the payment in full of the Refunded Obligations. In addition, the Pricing Officer is authorized to purchase such securities, to execute such subscriptions for the purchase of the Escrowed Securities, (as defined in the agreement), if any, and to authorize such contributions to the escrow fund as provided in the agreement. Section 23. REDEMPTION OF REFUNDED OBLIGATIONS. (a) The City hereby directs that certain of the Refunded Obligations be called for redemption on the dates and as set forth in the Escrow Agreement. Each of such Refunded Obligations shall be redeemed at the redemption price of par plus accrued interest. The Pricing 18 Officer is hereby authorized and directed to issue or cause to be issued the Notices of Redemption of the Refunded Obligations. (b) In addition, the paying agent/registrars for the Refunded Obligations are hereby directed to provide the appropriate notices of redemption and defeasance as specified by the ordinances authorizing the issuance of the Refunded Obligations and are hereby directed to make appropriate arrangements so that the Refunded Obligations may be redeemed on their redemption dates. The Refunded Obligations shall be presented for redemption at the paying agent/registrars therefore, and shall not bear interest after the date fixed for redemption. (c) The source of funds for payment of the principal of and interest on the Refunded Obligations on their redemption date shall be from the funds placed in escrow with the Escrow Agent, pursuant to the Escrow Agreement approved in Section 22 of this Ordinance. Section 24. DEFAULT AND REMEDIES. (a) Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Bonds when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the City, the failure to perform which materially, adversely affects the rights of the registered owners of the Bonds, including, but not limited to, their prospect or ability to be repaid in accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any registered owner to the City. (b) Remedies for Default. (i) Upon the happening of any Event of Default, then and in every case, any registered owner or an authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may proceed against the City, or any official, officer or employee of the City in their official capacity, for the purpose of protecting and enforcing the rights of the registered owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the registered owners hereunder or any combination of such remedies. (ii) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all registered owners of Bonds then outstanding. (c) Remedies Not Exclusive. 19 (i) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds shall not be available as a remedy under this Ordinance. (ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. (iii) By accepting the delivery of a Bond authorized under this Ordinance, such registered owner agrees that the certifications required to effectuate any covenants or representations contained in this Ordinance do not and shall never constitute or give rise to a personal or pecuniary liability or charge against the officers, employees or members of the City or the City Council. (iv) None of the members of the City Council, nor any other official or officer, agent, or employee of the City, shall be charged personally by the registered owners with any liability, or be held personally liable to the registered owners under any term or provision of this Ordinance, or because of any Event of Default or alleged Event of Default under this Ordinance. Section 25. MISCELLANEOUS PROVISIONS. (a) Preamble. The preamble to this Ordinance is incorporated by reference and made a part hereof for all purposes. (b) 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. (c) 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 be considered to include the plural number and vice versa. References to any named person means that party and its 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 BOND" shall refer to the form of the Bonds set forth in Exhibit A to this Ordinance. Any reference to the payment of principal in this Ordinance shall be deemed to include the payment of any mandatory sinking fund redemption payments as may be described herein. (d) Inconsistent Provisions. All ordinances, orders and resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed and declared to be inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the matters prescribed herein. (e) Severability. If any word, phrase, clause, paragraph, sentence, part, portion, or provision of this Ordinance or the application thereof to any person or circumstance shall be held 20 to be invalid, the remainder of this Ordinance shall nevertheless be 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. (0 Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas. (g) Open Meeting. The City officially finds and determines that 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. (h) Application of Chapter 1208, Government Code. Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and the pledge of ad valorem taxes granted by the City under Section 6, and such pledge is therefore valid, effective, and perfected. If Texas law is amended at any time while the Bonds are outstanding and unpaid such that the pledge of the ad valorem taxes 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 Bonds the perfection of the 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. (i) 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. [Remainder of page intentionally left blank.] 21 • PASSED, APPROVED AND EFFECTIVE THIS ) (),J 2 1 3 , 2013. City Secret .t , City of College Station, Texas Mayor, Cit y of"Colle g e Station, Texas (CITY, AL) • APPROVED: McCall, Parkhurst & Horton L.L.P., Dallas, Texas Bond Counsel , Ordinance City of College Station, Texas General Obligation Improvement and Refunding Bonds, Series 2013 SIGNATURE PAGE SCHEDULE I ELIGIBLE OBLIGATIONS City of College Station, Texas Certificates of Obligation, Series 2005 Maturity Redemption Redemption Date Principal Coupon CUSIP Date Price 02/15/2015 230,000.00 4.000% 194468ZW7 02/15/2014 100% 02/15/2016 160,000.00 4.000% 194468ZX5 02/15/2014 100% 02/15/2017 170,000.00 4.000% 194468ZY3 02/15/2014 100% 02/15/2018 180,000.00 4.125% 194468ZZ0 02/15/2014 100% 02/15/2019 190,000.00 4.125% 194468A20 02/15/2014 100% 02/15/2020 200,000.00 4.250% 194468A38 02/15/2014 100% 02/15/2021 215,000.00 4.250% 194468A46 02/15/2014 100% 02/15/2022 225,000.00 4.375% 194468A53 02/15/2014 100% 02/15/2023 235,000.00 4.375% 194468A61 02/15/2014 100% 02/15/2024 250,000.00 4.500% 194468A79 02/15/2014 100% 02/15/2025 265,000.00 4.500% 194468A87 02/15/2014 100% City of College Station, Texas General Obligation Improvement Bonds, Series 2005 Maturity Redemption Redemption Date Principal Coupon CUSIP Date Price 02/15/2015 245,000.00 4.000% 194468ZA5 02/15/2014 100% 02/15/2016 255,000.00 4.000% 194468ZB3 02/15/2014 100% 02/15/2017 270,000.00 4.000% 194468ZC1 02/15/2014 100% 02/15/2018 285,000.00 4.125% 194468ZD9 02/15/2014 100% 02/15/2019 305,000.00 4.125% 194468ZE7 02/15/2014 100% 02/15/2020 320,000.00 4.250% 194468ZF4 02/15/2014 100% 02/15/2021 340,000.00 4.250% 194468ZG2 02/15/2014 100% 02/15/2022 360,000.00 4.375% 194468ZH0 02/15/2014 100% 02/15/2023 380,000.00 4.375% 194468ZJ6 02/15/2014 100% 02/15/2024 400,000.00 4.500% 194468ZK3 02/15/2014 100% 02/15/2025 420,000.00 4.500% 194468ZL1 02/15/2014 100% Schedule I -1 SCHEDULE I - CONTINUED ELIGIBLE OBLIGATIONS City of College Station, Texas Utility System Revenue Bonds, Series 2005 Maturity Redemption Redemption Date Principal Coupon CUSIP Date Price 02/01/2015 375,000.00 4.000% 194493RD6 02/01/2014 100% 02/01/2016 395,000.00 4.000% 194493RE4 02/01/2014 100% 02/01/2017 420,000.00 4.000% 194493RF1 02/01/2014 100% 02/01/2018 445,000.00 4.000% 194493RG9 02/01/2014 100% 02/01/2019 470,000.00 4.125% 194493RH7 02/01/2014 100% 02/01/2020 495,000.00 4.125% 194493RJ3 02/01/2014 100% 02/01/2021 525,000.00 4.250% 194493RK0 02/01/2014 100% 02/01/2022 555,000.00 4.375% 194493RL8 02/01/2014 100% 02/01/2023 585,000.00 4.375% 194493RM6 02/01/2014 100% 02/01/2024 615,000.00 4.500% 194493RN4 02/01/2014 100% 02/01/2025 650,000.00 4.500% 194493RP9 02/01/2014 100% City of College Station, Texas Utility System Revenue Refunding Bonds, Series 2005A Maturity Redemption Redemption Date Principal Coupon CUSIP Date Price 02/01/2015 1,755,000.00 5.250% 194493RZ7 02/01/2014 100.00 02/01/2016 1,830,000.00 5.000% 194493SA1 02/01/2014 100.00 02/01/2017 1,615,000.00 5.000% 194493SB9 02/01/2014 100.00 02/01/2018 840,000.00 4.000% 194493SC7 02/01/2014 100.00 Schedule I -2 EXHIBIT A FORM OF BOND NO. UNITED STATES OF AMERICA $ STATE OF TEXAS COUNTY OF BRAZOS CITY OF COLLEGE STATION, TEXAS GENERAL OBLIGATION IMPROVEMENT AND REFUNDING BOND, SERIES 2013 MATURITY DATE INTEREST RATE DELIVERY DATE CUSIP , 2013 REGISTERED OWNER: PRINCIPAL AMOUNT: ON THE MATURITY DATE SPECIFIED ABOVE, THE CITY OF COLLEGE STATION, TEXAS, in Brazos County (the "City "), being a political subdivision of the State of Texas, hereby promises to pay to the Registered Owner specified above or to the registered assignee hereof (either being hereinafter called the "registered owner ") the Principal Amount specified above, and to pay interest thereon (calculated on the basis of a 360 -day year of twelve 30 -day months), from the Delivery Date specified above, to the Maturity Date specified above, or the date of its redemption prior to scheduled maturity, at the interest rate per annum specified above, with said interest payable on February 15, 2014, and semiannually on each August 15 and February 15 thereafter until maturity or prior redemption; except that if this Bond is required to be authenticated and the date of its authentication is later than February 15, 2014, such interest is payable semiannually on each August 15 and February 15 following such date. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. At maturity or redemption prior to maturity, the principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at the designated corporate trust office in Dallas, Texas (the "Designated Trust Office ") of The Bank of New York Mellon Trust Company, N.A., which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered 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 City required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance ") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the A -1 Paying Agent/Registrar by United States mail, 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 Registration Books kept by the Paying Agent/Registrar, as hereinafter described. Any accrued interest due at maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for payment at the Designated Trust Office of the Paying Agent/Registrar. The City covenants with the registered owner of this Bond that on or before each principal and interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, 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 Agent/Registrar, if and when funds for the payment of such interest have been received from the City. 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 after 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 Bond appearing on the Registration Books kept by the Paying Agent/Registrar 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 Bond 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 BOND is one of a Series of Bonds dated as of July 15, 2013, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $ , for the purpose of (i) refunding the Refunded Obligations, as defined in the Ordinance; (ii) construction of street and transportation improvements throughout the City including traffic signals, sidewalks, hike and bike trails and pedestrian improvements; (iii) construction of park and park facilities improvements; (iv) the payment of fiscal, engineering and legal fees incurred in connection with such projects; and (v) to pay the costs incurred in connection with the issuance of the Bonds. THE BONDS OF THIS SERIES maturing on are subject to mandatory redemption prior to maturity in part at random, by lot or other customary method selected by the Paying Agent/Registrar, at par plus accrued interest to the redemption date, and without premium, with funds on deposit in the Interest and Sinking Fund. Such Bonds shall be redeemed by the Paying Agent/Registrar on February 15 in each of the years and in the principal amounts, respectively, as are set forth in the following schedule: Term Bonds due February 15, 20 : A -2 Mandatory Redemption Date: 2/15/ Principal Amount: $ Mandatory Redemption Date: 2/15/_ Principal Amount: $ * Maturity The principal amount of the Bonds required to be redeemed pursuant to the operation of such mandatory sinking fund shall be reduced by the principal amount of any Bond which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been purchased by the Issuer and delivered to the Paying Agent/Registrar for cancellation or (ii) redeemed pursuant to the optional redemption provision described below and not theretofore credited against a mandatory sinking fund requirement. ON FEBRUARY 15, , or on any date thereafter, the Bonds of this Series maturing on February 15, and thereafter may be redeemed prior to their scheduled maturities, at the option of the City, in whole, or in part, at par and accrued interest to the date fixed for redemption. The years of maturity of the Bonds called for redemption at the option of the City prior to stated maturity shall be selected by the City. The Bonds or portions thereof redeemed within a maturity shall be selected by lot or other method by the Paying Agent/Registrar; provided, that during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the City and the securities depository. AT LEAST THIRTY days prior to the date fixed for any such redemption, a written notice of such redemption shall be given to the registered owner of each Bond or a portion thereof being called for redemption by depositing such notice in the United States mail, first - class postage prepaid, addressed to each such registered owner at his address shown on the Registration Books of the Paying Agent/Registrar. By the date fixed for any such redemption due provision shall be made by the City with the Paying Agent/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion hereof which is to be so redeemed, thereby automatically shall be redeemed prior to its scheduled maturity, and shall not bear interest after the date fixed for its redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such redemptions of principal of this Bond or any portion hereof. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in Authorized Denominations, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the City, all as provided in the Ordinance. IF AT THE TIME OF MAILING of notice of optional redemption there shall not have either been deposited with the Paying Agent/Registrar or legally authorized escrow agent immediately available funds sufficient to redeem all the Bonds called for redemption, such notice A -3 must state that it is conditional, and is subject to the deposit of the redemption moneys with the Paying Agent/Registrar or legally authorized escrow agent at or prior to the redemption date, and such notice shall be of no effect unless such moneys are so deposited on or prior to the redemption date. If such redemption is not effectuated, the Paying Agent/Registrar shall, within five days thereafter, give notice in the manner in which the notice of redemption was given that such moneys were not so received and shall rescind the redemption. ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in Authorized Denominations. As provided in the Bond Ordinance, this Bond may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered Bonds, 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 rate, in Authorized Denominations as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar at its Designated Trust Office for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar at its Designated Trust Office, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in an Authorized Denomination to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond may be executed by the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond 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 Bond or Bonds or any portion or portions thereof, such fees and charges of the Paying Agent/Registrar will be paid by the City. The one requesting such exchange shall pay the Paying Agent/Registrar's reasonable standard or customary fees and charges for exchanging any Bond 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. In any circumstance, neither the City nor the Paying Agent/Registrar shall be required (1) to make any transfer or exchange during a period beginning at the opening of business 30 days before the day of the first mailing of a notice of redemption of Bonds and ending at the close of business on the day of such mailing, or (2) to transfer or exchange any Bonds so selected for redemption when such redemption is scheduled to occur within 45 calendar days. WHENEVER the beneficial ownership of this Bond is determined by a book entry at a securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring this Bond 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 Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Bond Ordinance that it A -4 promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly authorized, issued, and delivered; 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 Bond have been performed, existed, and been done in accordance with law; that this Bond is a direct obligation of said City, issued on the full faith and credit thereof; and that in accordance with the terms of the Bond Ordinance, annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in said City, and have been pledged for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the City, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the City. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor of the City, attested by the manual or facsimile signature of the City Secretary, and the official seal of the City has been duly affixed to, or impressed, or placed in facsimile, on this Bond. xxxxx xxxxx City Secretary, City of College Station, Texas Mayor, City of College Station, Texas (SEAL) A -5 FORM OF PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the proceedings adopted by the City as described in the text of this Bond; and that this Bond has been issued in exchange for or replacement of a Bond 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: The Bank of New York Mellon Trust Company, N.A. Paying Agent/Registrar By: Authorized Representative *FORM OF COMPTROLLER'S CERTIFICATE ATTACHED TO THE BONDS UPON INITIAL DELIVERY THEREOF COMPTROLLER'S CERTIFICATE OFFICE OF COMPTROLLER § REGISTER NO. STATE OF TEXAS § I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond has been examined by him as required by law, and that he finds that it has been issued in conformity 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 Bond has this day been registered by me. WITNESS MY HAND and seal of office at Austin, Texas this . Comptroller of Public Accounts of the State of Texas (SEAL) NOTE: *to accompany initial Bonds only. A -6 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 type name and address, including zip code of Transferee the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints: , attorney, to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed NOTICE: The signature above must by an eligible guarantor institution correspond with the name of the registered participating in a securities transfer owner as it appears upon the front of this association recognized signature guarantee Bond in every particular, without alteration program. or enlargement or any change whatsoever. A -7 EXHIBIT B . PROCEDURES REGARDING COMPLIANCE WITH FEDERAL TAX AND CONTINUING DISCLOSURE COVENANTS This Exhibit is intended to assist the City of College Station (the "City ") in complying with the federal income tax covenants and securities disclosure covenants as they apply to the issuance of tax - exempt debt securities such as the General Obligation Improvement and Refunding Bonds (the "Obligations "). These procedures should be read together with any federal tax certifications, bond covenants, letters or memoranda from bond counsel and any attachments thereto (collectively, the "Closing Documents "). Failure to comply with federal guidelines could have serious consequences for investors, the City and its officials. These procedures shall apply to the Obligations, until they are superseded by a change in circumstances at which time the City's bond counsel will propose new procedures to be adopted. I. FEDERAL TAX LAW 1. Arbitrage Compliance. Arbitrage refers to the difference between the interest paid on tax - exempt Obligations and the interest earned by investing the proceeds of tax - exempt Obligations in higher - yielding investments. Such higher - yielding investments could take the form of loans, securities, real property, personal property, or other investments that could yield a profit to the City. Federal income tax laws generally restrict the ability to earn arbitrage utilizing the proceeds of tax - exempt Obligations. Generally, any profit from investing Obligation proceeds at a yield above the yield paid on the Obligations belongs to the federal government and must be rebated to the federal government. If the City fails to comply federal tax guidelines, Obligations could be deemed to be "arbitrage bonds" by the Internal Revenue Service (the "IRS "), which would expose the City to monetary liability from the City's investors. The arbitrage yield on the Obligations is set forth on the IRS Form 8038 -G. The Executive Director of Business Services and the City Treasurer (including such other employees of the City who report to such officers) (collectively, the "Responsible Person ") will review the Closing Documents periodically (at least once a year) to ascertain if an exception to arbitrage compliance applies. a. Procedures applicable to the Obligation. The Responsible Person shall undertake the following procedures. B -1 i. If the City plans to spend funds currently on hand for a future project with the intent to later repay such funds from a debt issue, the Responsible Person shall contact Bond Counsel to obtain advice regarding a reimbursement resolution. The Responsible Person shall maintain any official action of the City (such as a reimbursement resolution) stating the City's intent to reimburse with the proceeds of the Obligations any amount expended prior to the Issue Date for the acquisition, renovation or construction of the Project. ii. The Responsible Person shall ensure that the applicable information return (e.g., U.S. Internal Revenue Service ( "IRS ") Form 8038 -G, 8038 -GC, or any successor forms) is timely filed with the IRS. iii. If proceeds of the Obligations are to be invested in interest - earning investments, assure that, unless excepted from rebate and yield restriction under section 148(0 of the Code, excess investment earnings are computed and paid to the U.S. government at such time and in such manner as directed by the IRS (i) at least every 5 years after the Issue Date and (ii) within 30 days after the date the Obligations are retired. If proceeds of the Obligations are to be invested in interest - earning investments, the Responsible Person should contact the City's arbitrage consultant regarding such matters. iv. The Responsible Person shall monitor all amounts deposited into a sinking fund or funds pledged (directly or indirectly) to the payment of the Obligations, such as the Interest and Sinking Fund (the "I &S Fund "), to assure that the maximum amount invested within such applicable fund at a yield higher than the yield on the Obligations does not exceed an amount equal to the debt service on the Obligations in the succeeding 12 month period plus a carryover amount equal to one - twelfth of the principal and interest payable on the Obligations for the immediately preceding 12- month period. NOTE: the purpose of the I &S Fund is to achieve a proper matching of revenues with principal and interest payments within each fiscal year. The I&S Fund should be used a mechanism for payment of current debt service and not as a long -term investment fund for debt service many years in the future. v. The Responsible Person shall ensure that no more than 50% of the proceeds of the Obligations are invested in an investment with a guaranteed yield for 4 years or more. b. With respect to the investment and expenditure of the proceeds of the Obligations that are issued to finance public improvements or to acquire land or personal property, the Responsible Person shall undertake the following. B -2 i. The Responsible Person shall instruct the persons who are primarily responsible for the construction, renovation or acquisition of the facilities financed with Obligations (the "Project ") that the Project must (i) proceed with due diligence toward completion and that (ii) binding contracts for the expenditure of at least 5% of the proceeds of the Obligations will be entered into within six (6) months of the date of closing of the Obligations (the "Issue Date "). The Responsible Person shall monitor that the above requirements are satisfied. ii. The Responsible Person shall monitor that at least 85% of the proceeds of the Obligations to be used for the construction, renovation or acquisition of the Project are expended within three years of the Issue Date. iii. The Responsible Person shall monitor investment of proceeds of the Obligations and restrict the yield of the investments to the yield on the Obligations after three years of the Issue Date. iv. To the extent that there are any unspent proceeds of the Obligations at the time the Obligations are later refunded, or if there are unspent proceeds of the Obligations that are being refunded by a new issuance of Obligations, the Responsible Person shall continue monitoring the expenditure of such unspent proceeds to ensure compliance with federal tax law with respect to both the refunded Obligations and any Obligations being issued for refunding purposes, and shall contact Bond Counsel as necessary. c. Procedures applicable to Escrow Accounts for the Obligations. In addition to the foregoing, with respect to the proceeds of the Obligations deposited to the escrow fund to be administered pursuant to the terms of an escrow agreement, the Responsible Person shall undertake the following. i. The Responsible Person shall review invoices, reports and other notifications from the escrow agent to ensure compliance with the applicable provisions of the escrow agreement, including with respect to reinvestment of cash balances. ii. The Responsible Person shall contact the escrow agent on the date of redemption of obligations being refunded to ensure that they were redeemed. iii. The Responsible Person shall monitor any unspent proceeds of the refunded obligations to ensure that the yield on any investments applicable to such proceeds are invested at the yield on the applicable obligations or otherwise applied (see Closing Documents). B -3 B. Private Business Use. Generally, the proceeds of tax - exempt Obligations may not inure to the benefit of entities other than state or local governments ( "private business use "). Private business use occurs whenever Obligation proceeds are used to benefit any entity other than a state or local government, including nonprofit corporations and the federal government. A series of Obligations may lose their tax - exempt status if: (i) more than 10% of the proceeds of the Obligations are to be used for any private business use and the payment of the principal or interest on more than 10% of the proceeds of the Obligations is secured by or payable from property used for a private business use, or (ii) the amount of proceeds of the Obligations used to make loans to borrowers other than state and local governments exceeds the lesser of 5% of the proceeds or $15 million. With respect to the use of the facilities financed or refinanced with the proceeds of the Obligations, the Responsible Person shall undertake the following to ensure the Obligations do not violate private business use tests. a. The Responsible Person shall develop procedures or a "tracking system" to identify, log and record all property financed with tax - exempt debt and identify the issue of Obligations used to finance such property. b. The Responsible Person shall monitor and record the date on which the Project is substantially complete and available to be used for the purpose intended. c. The Responsible Person shall monitor and record whether, at any time the Obligations are outstanding, any person, other than the City, the employees of the City, the agents of the City or members of the general public has any contractual right (such as a lease, research contract, naming rights agreement, purchase contract, management agreement or other service agreement) with respect to any portion of the Project. d. Before entering into any private business use arrangement that involves the use of the Project, the Responsible Person must obtain a description of the proposed private business use arrangement and determine whether such arrangement, if put into effect, will be consistent with the restrictions on private business use of the Project. In connection with the evaluation of any proposed private business use arrangement, the Responsible Person should consult with Bond Counsel to discuss whether such arrangement, if put into effect, will be consistent with the restrictions on private business use of the Project, and, if not, whether any "remedial action" permitted under federal guidelines may be taken as a means of enabling such private business use without adversely affecting the tax- exempt status of the Obligations. e. The Responsible Person shall monitor and record whether, at any time the Obligations are outstanding, any person, other than the City, the employees of the B -4 City, the agents of the City or members of the general public has a right to use the output of the Project (e.g., water, gas, electricity, capacity) on any basis other than standard rates and charges. f. The Responsible Person shall monitor and record whether, at any time the Obligations are outstanding, any person, other than the City, has a naming right for the Project or any other contractual right granting an intangible benefit. g. Prior to any sale of property owned by the City (real or personal), the Responsible Person must confirm whether such property was financed with tax- exempt debt, and if so, determine whether the proposed disposition of the property could impact the tax- exempt status of the series of Obligations that financed the acquisition of such property. h. The Responsible Person shall take any action necessary to remediate any failure to maintain compliance with the covenants contained in the ordinance authorizing the issuance of the applicable series of Obligations. C. Record Retention. The Responsible Person will maintain or cause to be maintained all records relating to the investment and expenditure of the proceeds of the Obligations and the use of the Project financed or refinanced thereby for a period ending three (3) years after the complete extinguishment of the Obligations. If any portion of the Obligations is refunded with the proceeds of another series of Obligations, such records shall be maintained until the three (3) years after the refunding Obligations mature or are otherwise paid off. Such records can be maintained in paper or electronic format. For purposes of these procedures, the Memorandum of Bond Counsel dated December 1, 2011 styled "Certain Federal Income Tax Considerations for Record Retention — Record Management Program and Periodic Compliance Review" in incorporated herein and should be reviewed periodically, at least once per year, by the Responsible Person. D. Responsible Person & Continuity. Each Responsible Person shall receive appropriate training regarding the City's accounting system, contract intake system, facilities management and other systems necessary to track the investment and expenditure of the proceeds and the use of the facilities financed with the proceeds of the Obligations. The foregoing notwithstanding, the Responsible Person is authorized and instructed to retain such experienced advisors and agents as may be necessary to carry out the purposes of these instructions. Prior to cessation of employment with the City, the Responsible Person should identify their successor to maintain compliance with these procedures. B -5 II. FEDERAL SECURITIES LAW Obligations, whether taxable or tax - exempt, sold in a public offering in an amount of $1 million or more are subject to Rule 15c2 -12 (the "Rule ") of the United States Securities and Exchange Commission (the "SEC "). Additionally, the City may have covenanted to comply with the Rule even with respect to Obligations that would otherwise be exempt from the Rule (e.g., Obligations sold in a private placement or Obligations sold in an amount less than $1 million). Pursuant to the Rule, the City is required to make annual filings of certain information, as well as make filings upon the occurrence of certain specified events. All filings must be made with the Municipal Securities Rulemaking Board (the "MSRB ") through its Electronic Municipal Market Access System ( "EMMA ") at emma.msrb.org. A. Annual Filings. The City must file the information listed below with EMMA within six (6) months of each fiscal year end for so long as the respective series of Obligations remains outstanding. The City's fiscal year ends on September 30 of each year. Therefore, the City must provide updated information by March 31 of the subsequent year. If audited financial statements are not available by March 31, the City must provide unaudited financial information by such date and provide audited financial statements when such statements become available. The City must file each of the following items with EMMA: (1) The City's audited financial statements; and (2) An update of the financial tables included in the Official Statement used in connection with the Obligations as described under the caption "Continuing Disclosure of Information ". The information should be from the most recent fiscal year end. The Responsible Person must compile, prepare and make such filings within the required time, or, alternatively, contract with a third -party, such as the City's financial advisor, to make such filings on the City's behalf. B. Notices of Specified Events. The City must provide notice of any of the following events with respect to the Obligations to the MSRB in a timely manner (but not in excess of ten business days after the occurrence of the event): (1) Principal and interest payment delinquencies; (2) Non - payment related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; B -6 (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 —TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other material events affecting the tax status of the Obligations; (7) Modifications to rights of Obligation holders, if material; (8) Obligations calls (includes redemptions and other early payments), if material, and tender offers; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the Obligations, if material; (11) Rating changes; (12) Bankruptcy, insolvency, receivership or similar event of the City; (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) Appointment of a successor or additional paying agent or the change of name of a paying agent, if material; and (15) In a timely manner, notice of a failure of the City to make the required annual filings listed in Subsection II(A) above. The Responsible Person should review this list at regular intervals to determine whether any event has occurred that may require a filing with EMMA. B -7 EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 16 of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified below (and included in the Appendix or under the headings of the Official Statement referred to): 1. The "Annual Financial Report" for the most recently concluded fiscal year. 2. The information included in the Official Statement under the following tables, but for the most recently concluded fiscal year: Tables 1 through 6 and 8 through 20. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in paragraph 1 described above, as such principles may be changed from time to time to comply with state law or regulation. C -1 EXHIBIT D PRELIMINARY OFFICIAL STATEMENT D -1 C : n PRELIMINARY OFFICIA1. STATEMENT • ; ; DATED , 2013 • Ratings: t. c Moody's: Applied For ' S &P: Applied For (See "OTHER INFORMATION — NEW ISSUE - Book -Entry -Only RATINGS" herein •m In the opinion of Bond Counsel, interest on the Obligations will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof subject to the matters described under "TAX s �; MATTERS" herein, including the alternative minimum tax on corporations. .. 5. • • CITY OF COLLEGE STATION, TEXAS (a Home -Rule City located in Brazos County, Texas) Ul $19,920,000* GENERAL OBLIGATION $9,610,000* IMPROVEMENT AND CERTIFICATES OF OBLIGATION REFUNDLNG BONDS SERIES 2013 SERIES 2013 Dated Date: July 15, 2013 Due: February 15, as shown on inside cover Interest Accrual Date: Date of Delivery The $19,920,000* City of College Station, Texas General Obligation Improvement and Refunding Bonds, Series 2013 (the "Bonds ") and the $9,610,000* City of College Station, Texas Certificates of Obligation, Series 2013 (the "Certificates ") are being issued by the City of College S, Station, Texas (the "City ") pursuant to the terms of two separate ordinances adopted by the governing body of the City. In each of the ordinances, the City Council of the City delegated to certain authorized officials of the City to finalize the pricing of the Obligations. The := 2 Bonds and the Certificates are referred to herein collectively as the "Obligations." The Obligations are issuable only in fully registered form in the denomination of $5,000 principal amount or integral multiples thereof, 4: bli at u ' Y e y Y Y !n gi T P Company ("DTC"), P initially registered solel • in the name of Cede & Co., as registered owner and nominee for The Depository Trust Com an New York, New York, acting as securities depository for the Obligations. The Obligations initially will be available to purchasers in book-entry- ,. ..., t .2 4 , = form only. So long as Cede & Co. is the registered owner of the Obligations, as nominee for DTC, the Paying Agent/Registrar, initially The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the "Paying Agent/Registrar") will pay the principal of and interest on the Obligations to Cede & Co., which will, in turn, remit such amounts to DTC participants for subsequent disbursement to the beneficial owners ro .` of the Obligations. is ■ r Interest on the Obligations will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. Interest on the Obligations will accrue from the date of delivery, and will be payable on February 15, 2014, and on each August 15 and February 15 thereafter until J � maturity or prior redemption. a The City reserves the right, at its option, to redeem Obligations of either series having stated maturities on and after February 15, 2023, in :r 3 iz whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2022, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. (see "THE OBLIGATIONS — OPTIONAL REDEMPTION "). '' SEE MATURITY SCHEDULE, INTEREST RATES A.'s'D YIELDS ON INSIDE COVER w . y iE r, The Obligations are payable from annual ad valorem taxes levied against all taxable property in the City, within the legal limits prescribed by law. The Certificates are additionally payable from a subordinate lien on and pledge of $1,000 of the surplus revenues of the City's c. ; combined utility system (see "THE OBLIGATIONS — SEc:uR1TY AND SOURCE OF PAYMEN'T," and "— TAX RATE LIMrrATIONs "). _ ?u a The Bonds and the Certificates are being offered by the City concurrently, under a common Official Statement. The Bonds and the a1 Certificates are separate and distinct securities being issued and sold independently except for the Official Statement, and, while the Bonds and Certificates share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, ' including without limitation the date of accrual and payment of interest for each series of the securities being offered, the redemption T f' provisions and the tax treatment of interest for federal income tax purposes. The Obligations of each series are offered for delivery, when issued, and received by the underwriters listed below (the "Underwriters ") r s thereof and subject to the opinion of the Attomey General of the State of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel for the City (see "APPENDIX C — FORM OF OPINIONS OF BOND COUNSEL "). Certain legal matters will be passed upon for the Underwriters by , Houston, Texas, counsel for the Underwriters. It is 7 ` expected that the Obligations will be available for delivery through the services of DTC on or about July 25, 2013. E = TBD .y' • Preliminary, subject to change. P 4 a MATURITY SCHEDULES* $19,920,000* General Obligation Improvement and Refunding Bonds, Series 2013 Due Interest Due Interest Feb. 15 Principal Rate Yield CUSIP ' Feb. 15 Principal Rate Yield CUSIP ") 2014 S 275,0110 % ° 2024 S 1,580,000 % °,0 2015 1,390,000 2025 02) 1,665,000 2016 1,350,000 2026 (2) 480,000 2017 1,360,000 2027 505,000 2018 1,280,000 2028 (2) 520,000 2019 1,195,000 2029 (2) 530,000 2020 1,255,000 2030 (2) 550,000 2021 1,330,000 2031 ' 565,000 2022 1,410,000 2032 (2) 580,000 2023 1,495.000 2033 (2) 605,000 $9,610,000* Certificates of Obligation, Series 2013 Due Interest Due Interest Feb. 15 Principal Rate Yield CUSIP n) Feb. 15 Principal Rate Yield CUSIP tU 2014 $ 305,000 46 0/ 2024 S 485,000 04, 0% 2015 330,000 2025 (2) 510,000 2016 335,000 2026' 535,000 2017 350,000 2027 02) 560,000 2018 365,000 2028 (2) 575,000 2019 385,000 2029 (2) 590,000 2020 405,000 2030 6)0,000 2021 420.000 2031 (2) 630,000 2022 440,000 2032' 650,000 2023 (2) 460,000 2033 ' 670,000 Preliminary, subject to change. (1j) CUSIP numbers have been assigned to the Obligations by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of the American Bankers Association, and are included solely for the convenience of the purchasers of the Obligations. Neither the City, the Financial Advisor nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. (2) The City reserves the right, at its option, to redeem Obligations of either series having stated maturities on and after February 15, 2023. in whole or in put in principal amounts of $5,000 or any integral multiple thereof, on Febntary 15, 2022, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. ii For purposes of compliance with Rule 15c2 -12 of the United States Securities and Exchange Commission, as amended and in effect on the data hereof (the Rule'), this document constitutes a Preliminary Official Statement of the City with respect to the Obligations that has been deemed "final" by the City as of its date a ceps for the omission of no more than the information permitted by the Rule. 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 any jurisdiction to any person to whom it is unlawl4d to Hake such offer, solicitation or sale. No dealer broker. salesperson or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations n not be relied upon. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Finoncial .4dvisor. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. CUSIP numbers have been assigned to this issue by CUSIP Global Services, and are included solely fir the convenience of the owners of the Obligations. Neither the City, the Financial Advisor nor the Underwriters shall he responsible for the selection or correctness of the CUSIP numbers shown on the inside coyer page. The information and expressions 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 any circumstances, create any implication that there has been no change in the affairs of the City or other matters described. In connection with this offering, the Underwriters may over -allot or effect transactions which stabilize the market price of the issue at a level above that which might otherwise prevail in the open market. Such stabilizing. if commenced, may be discontinued at any time. The Obligations are exempt from registration with the Securities and Exchange Commission and consequently have not been registered therewith. The registration, qualification, or exemption of the Obligations in accordance with applicable securities law provisions of the jurisdiction in which these securities have been registered or exempted should not be regarded as a recommendation thereof iii TABLE OF CONTENTS MATURITY SCHEDULES ii THE COMBINED UTILITY SYSTEM 22 OFFICIAL STATEMENT SUMMARY iv WATERWORKS SYSTEM 22 ELECTED OFFICIALS vii WASTEWATER SYSTEM 23 SELECTED ADMINISTRATIVE STAFF vii ELECTRIC SUPPLY SOURCE 23 CONSULTANTS AND ADVISORS vii WIND WATT RATES 24 INTRODUCTION 1 TABLE 14 - HISTORICAL UTILITY USERS 24 PLAN OF FINANCING 1 TABLE 15 - TEN LARGEST UTILITY CUSTOMERS 24 PURPOSE 1 TABLE 16 - CONDENSED STATEMENT OF OPERATIONS 25 REFUNDED OBLIGATIONS 1 TABLE 17 - VALUE OF THE SYSTEM 25 SOURCES AND USES OF PROCEEDS 2 TABLE 18 - CITY'S EQUITY LN THE SYSTEM 25 THE OBLIGATIONS 2 TABLE 19 - UTILITY REVENUE BOND AND SYSTEM GENERAL DESCRIPTION 2 SUPPORTED CERTIFICATE DEBT SERVICE 26 AUTHORITY FOR ISSUANCE OF THE BONDS 2 INVESTMENTS 26 AUTHORITY FOR ISSUANCE OF THE CERTIFICATES 3 LEGAL INvEsm EN 26 SECURITY AND SOURCE OF PAYMENT 3 INVESTMENT POLICIES 27 TAX RATE LIMITATION 3 ADDITIONAL PROVISIONS 28 OPTIONAL REDEMPTION 3 CITY'S INVESTMENT POLICY 28 NOTICE OF REDEMPTION 3 TABLE 20 - CURRENT INVESTMENTS 28 BOOK -ENTRY -ONLY SYSTEM 3 TAX MATTERS 28 PAYING AGENT/REGISTRAR 5 OPINION 28 TRANSFER, EXCHANGE AND REGISTRATION 5 FEDERAL INCOME TAX ACCOUNTING TREATMENT OF RECORD DATE FOR INTEREST PAYMENT 5 ORIGINAL ISSUE DISCOUNT 29 DEFEASANCE 6 COLLATERAL FEDERAL INCOME TAX CONSEQUENCES 30 REMEDIES OF HOLDERS OF OBLIGATIONS 6 STATE, LOCAL AND FOREIGN TAXES 30 TAX INFORMATION 7 FUTURE AND PROPOSED LEGISLATION 30 AD VALOREM TAX LAW 7 CONTINUING DISCLOSURE OF INFORMATION 30 CONSTITUTIONAL AMENDMENT 8 ANNUAL REPORTS 30 EFFECTIVE TAX RATE AND ROLLBACK TAX RATE 8 EVENT NOTICES 31 PROPERTY ASSESSMENT AND TAX PAYMENT 9 LIMITATIONS AND AMENDMENTS 31 PENALTIES AND INTEREST 9 COMPLIANCE WITH PRIOR UNDERTAKINGS 31 CITY APPLICATION OF PROPERTY TAX CODE 9 OTHER INFORMATION 32 TAX ABATEMENT POLICY 9 RATINGS 32 ECONOMIC DEVELOPMENT PROGRAMS 10 LIITGATION 32 TABLE 1 - VALUATION. EXEMPTIONS AND GENERAL REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR OBLIGATION DEBT 1 1 SALE 32 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY 12 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT FUNDS IN TEXAS 32 HISTORY 13 LEGAL OPINIONS 32 TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY 13 AUTHENTICITY OF FINANCIAL DATA AND OTHER TABLE 5 - TEN LARGEST TAXPAYERS 13 INFORMATION 33 TABLE 6 - TAX ADEQUACY 14 FINANCIAL ADVISOR 33 TABLE 7 - ESTIMATED OVERLAPPING DEBT 14 VERIFICATION OF ARITHMETICAL AND MATHEMATICAL DEBT INFORMATION 15 COMPUTATIONS 33 TABLE 8 - PRO -FORMA AD VALOREM TAX DEBT SERVICE UNDERWRITERS 33 REQUIREMENTS 15 MISCELLANEOUS 14 TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION 16 SCHEDULE OF REFUNDED TABLE 10 - SELF - SUPPORTING DEBT 16 OBLIGATIONS SCHEDULE I TABLE 11 - AUTHORIZED BUT UNISSUED TAX BONDS 17 APPENDICES ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT 17 GENERAL INFORMATION REGARDING THE CITY A OTHER OBLIGATIONS 17 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT B PENSION FUND 17 FORMS OF OPINIONS OF BOND COUNSEL C OTHER POST EMPLOYMENT BENEFITS 17 The cover page hereof, this page, the appendices included herein and any FINANCIAL INFORMATION 20 addenda, supplement or amendment hereto, are part of the Official TABLE 12 - GENERAL FUND REVENUES AND EXPENDITURE Statement. HISTORY 20 TABLE 13 - MUNICIPAL SALES TAX HISTORY 21 FINANCIAL PouciEs 21 iv OFFICIAL STATEMENT SUMMARY This sununary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Obligations 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 -rule city of the State, located in Brazos County, Texas. The City covers approximately 50.6 square miles (see "INTRODUCTION - DESCRIPTION OF THE CITY"). THE BONDS The Bonds are issued as $19,920,000* City of College Station, Texas General Obligation Improvement and Refunding Bonds. Series 2013. The Bonds are issued as serial bonds maturing on February 15 in each of the years 2014 -2033 (see "THE OBLIGATIONS - GENERAL DESCRIPTION"). THE CERTIFICATES The Certificates are issued as $9,610,000* City of College Station, Texas Certificates of Obligation. Series 2013. The Certificates are issued as serial certificates maturing on February 15 in each of the years 2014- 2033 (see "THE OBLIGATIONS - GENERAL DESCRIPTION "). PAYMENT OF INTEREST Interest on the Obligations will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. Interest on the Obligations will accrue from the date of delivery, and will be payable on February 15, 2014, and on each August 15 and February 15 thereafter until maturity or prior redemption (see "THE OBLIGATIONS - GENERAL DESCRIPTION "). AUTHORTTY FOR ISSUANCE OF THE BONDS The Bonds are issued pursuant to the general laws of the State, particularly Chapters 1207, 1251. 1331 and 1371, Texas Government Code, an ordinance passed by the City Council of the City, and an election held November 4, 2003 and November 4, 2008 (see "THE OBLIGATIONS - Aumop.rry FOR ISSUANCE OF THE BONDS "). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES The Certificates are issued pursuant to the general laws of the State, particularly Chapter 1371, Texas Government Code and Subchapter C of Chapter 271, Texas Local Goverment Code, as amended: and an ordinance passed by the City Council of the City (see "THE OBLIGATIONS - AUTHORITY FOR ISSUANCE OF THE CERTIFICATES "). SECURITY FOR THE BoNDs The Bonds constitute direct obligations of the City, secured by and payable from 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 (see "THE OBLIGATIONS - SECURITY AND SOURCE OF PAYMENT "). 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 constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. SEC LI TTY FOR THE CERTIFICATES The Certificates constitute direct obligations of the City, secured by and payable from a combination of (i) the levy and collection of an annual direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the City. and (u) a subordinate lien on and pledge of $1,000 of the sutplus revenues derived from the City's combined utility system (see "THE OBLIGATIONS - SECURITY AND SOURCE OF PAYMENT "). 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 constitutionally authorized rnaxintuin tax rate of $2.50 per $100 Taxable Assessed Valuation. REDEMPTION The City reserves the right, at its option, to redeem Obligations of either series having stated maturities on and after February 15, 2023, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2022, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — OPTIONAL REDEMPTION "). TAX ExEMPlION ..... In the opinion of Bond Counsel, the interest on the Obligations will be excludable from gross income for federal income tax purposes under existing law, including the alternative minimum tax on corporations. See "TAX MATTERS" for a discussion of the opinion of Bond Counsel and Exhibit C. USE OF BONI) PROCEEDS Proceeds from the sale of the Bonds will be used to (i) pay for the costs of construction, acquisition and improvements to City streets, (ii) pay for certain parks and park facilities improvements, (iii) refund certain obligations of the City described in Schedule I to this Official Statement (the "Refunded Obligations ") and (iv) pay the costs incurred in connection with the issuance of the Bonds. (see "PLAN OF FINANCING - SOU RCES AND USE OF PROCEEDS "). v USE OF CERTIFICATE PROCEEDS Proceeds from the sale of the Certificates will be used (i) to pay for the cost of construction of improvements to the City's combined electric, waterworks and sewer system and (ii) to pay the costs incurred in connection with the issuance of the Certificates (see "PLAN OF FINANCING — SOURCES AND USE OF PROCEEDS "). RATINGS The presently outstanding tax supported debt of the City is rated "Aa2" by Moody's Investors Service, Inc. ( "Moody's ") and "AA" by Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P "), without regard to credit enhancement. In addition, applications for contract ratings have been made to S &P and Moody's (see "OTHER INFORMATION — RATINGS"). BOOK -ENTRY -ONLY SYSTEM The definitive Obligations will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book- Entry-Only System described herein. Beneficial ownership of the Obligations may be acquired in denominations of S5,000 or integral multiples thereon: No physical delivery of the Obligations will be made to the beneficial owners thereof. Principal of and interest on the Obligations will be payable by the Paying Agent/Registrar 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 Obligations (see THE OBLIGATIONS - BOOK -ENTRY -ONLY SYSTEM "). PAYMENT RECORD The City has never defaulted in payment of its general obligation tax debt. * Preliminary, subject to change. vi SELECTED FINANCIAL INFORMATION Ratio Tax Fiscal Per Capita Per Capita Debt to Year Estimated Taxable Taxable Net Net Taxable Percent Ended City Assessed Assessed Ad Valorem Ad Valorem Assessed Total 9/30 Populat ion O Valuation 2) Valuation Tax Debtt Tax Debt Valuation Collection 2008 89,140 $ 4,477,073.139 $ 50,225 $ 100,660.000 $ 1,129 2.25% 98.99% 2009 91,298 5,024,154,213 55,030 97,720,000 1,070 1.95% 99.93% 2010 93,991 5,390,791,001 57,354 107,570,000 1,144 2.00% 98.49% 2011 94,669 5,455,432,461 57,626 99,140,000 1,047 1.82% 99.76% 2012 97,888 5,738,615,002 58,624 121,560,000 1,242 2.12% 99.83% 2013 97,982 5,944,312,987 60,667 96,272,520 (4) 983 t4) 1.62% (4) 89.47% (3) (I) Source: The City. (2) As reported by the Brazos Central Appraisal District; subject to change during the ensuing year. (3) Payable from ad valorem taxes. Does not include self - supporting debt. (4) Projected. includes the Obligations and excludes the Refunded Obligations. (5) Collections as of April 30, 2013. GENERAL FCNT) CONSOLIDATED STATEMENT SUMMARY For Fiscal Year Ended September 30 2012 2011 2010 2009 2008 Beginning Balance $ 14,393.057 $ 13,815,881 $ 11,274,207 (4) $ 11.177,933 (2) $ 12,932,589 Total Revenue 46,560,274 44,034,999 43,729,324 41,074,252 40,296,142 Total Expenditures 55.670,118 56,171,633 56,980,061 57,916,764 51,903.767 Other Financing Sources 11,209,504 12,713,810 15.792,411 15,043,008 (3) 10,660,425 Ending Balance $ 16,492,717 S 14.393.057 $ 13,815,881 5 9,378.429 $ 11.985,389 (1) The City's tinancial policies require 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 may be expended in future years for one time expenditures such as capital items and short term projects. (2 ) Amount lower than Fiscal Year 2008 ending balance due to prior period adjustment. (3) Increase due to higher return on investment from revenues of the City's utility system and a change in how General and Administrative transfers are recorded. (4) Restated. UTILITY SYSTEM CONDENSED STATEMENT OF OPERATIONS For Fiscal Year Ended September 30, 2012 2011 2010 2009 2008 Revenues: Electric $ 94,396,234 $ 98,737,655 $ 89,126,259 $ 80,676,212 $ 74,975,691 Water and Wastewater 27,652,449 29,248,180 23,772,503 25,229,487 22,294,720 Interest 136,974 142,700 129,691 579,520 1,263,129 Other 2,857,223 2,584,985 2,531,326 2,461,853 2,726,652 Total Revenues $ 125,042,880 $ 130,713,520 $ 115,559,779 5 108,947,072 $ 101,260,192 Expenses: Total Expenses $ 88,927,662 5 96,938,864 5 91,551,106 5 80,848,570 S 73,195,783 Net Available for Debt Service $ 36,115,218 $ 33,774,656 5 24,008,673 $ 28,098,502 S 28,064,409 Water (Units Served) 39,338 37,565 37,596 37,344 37,075 Wastewater (Units Served) 36,908 35,563 35,853 34,743 34,743 Electric (Units Served) 39,123 37,829 38,255 37,818 37,777 vii CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Length of Tenn Name Position Service Expiration Occupation Nancy Berry Mayor 3 Years (I) 11/13 Full -time Volunteer Blanche Brick Council Member 2 Years (2) 11/14 Professor Jess Fields Council Member 3 Years (3) 11/13 Business Owner Karl M ooney Council Member 2 Years (2) 11/14 Texas A &M University Director John Nichols Council Member 6 Mouths (4) 11/12 Retired Professor Julie Schultz Council Member 2 Years (2) 11/14 Business Owner Jaynes Benham Council Member 6 Months (4) 11/12 Business Owner (1) Elected Mayor in May 2010; former City of College Station Council Member 2004 -2006. (2) Elected May 2011. (3) Elected May 2010. (4) Elected November 2012. (5) On December 8, 2011 Council approved changes to the City's Election Ordinance to move the City's general election day to the first Tuesday after the ftrst Monday in November. This change is pursuant to Senate Bill 100, Eighty - Second Regular Legislature. SELECTED ADMIMSTRATI\ E STAFF Length of Service Name Position to the City Kathy Merrill Interim City Manager 6.5 Years (t) Carla Robinson City Attorney 11 Years (2) Sherry Mashburn City Secretary 2.5 Years Ty Elliott Internal Auditor 5.5 Years David Coleman Director of Water Services 7.5 Years Timothy Crabb Director of Electric Utility 6.5 Years (3) Jeff Kersten Executive Director of Business Services 21.5 Years (4) Ben Roper Director of Information Technology 8.5 Years David Schmitz Director of Parks and Recreation 4.5 Years (5) Bob Cowell Executive Director of Development Services 5.5 Years (6) Chuck Gilman Director of Public Works and CIP 5 Years (7) Alison Pond Director of Human Resources 4 Years Jay Socol Public Communications Director 3 Years (1) Interim City Manager since May 2013; previously served as Deputy City Manager. (2) City Attorney since February 2011; previously served as Assistant City. Attorney. (3) Director of Electric utility since December 2012; previously served as Assistant Director of Electric Utility. (4) Executive Director of Business Services since July 2011; previously served as Chief Financial Officer. (5) Director of Parks and Recreation since May 2011; previously served as Assistant Director of Parks and Recreation. (6) Executive Director of Development Services since July 2011: previously served as Director of Planning and Development Services. (7) Director of Public Works since October 2010. CONSULTANTS AND ADVISORS Auditors Ingram, Wallis & Cornpany Bryan, Texas Bond Counsel McCall, Parkhurst & Horton L.L.P. Dallas, Texas Financial Advisor First Southwest Company Houston. Texas For additional information regarding the City, please contact: Jeff Kersten Drew Masterson Executive Director of Business Services First Southwest Company City of College Station or 700 Milan Street, Suite 500 1101 Texas Avenue Houston, Texas 77002 College Station, Texas 77840 (713) 651 -9850 Phone (979) 764 -3552 Phone viii PRELIMINARY OFFICIAL STATEMENT RELATING TO CITY OF COLLEGE STATION, TEXAS (a Home -Rule City located in Brazos County, Texas) $ 19,920,000* GENERAL OBLIGATION S9,610,000* IMPROVEMENT AND CERTIFICATES OF OBLIGATION REFUNDING BONDS SERIES 2013 SERIES 2013 INTRODUCTION This Official Statement, which includes the cover pages and Appendices hereto, provides certain information regarding the issuance of the $19,920,000* City of College Station, Texas General Obligation Improvement and Refunding Bonds, Series 2013 (the "Bonds ") and the $9,610,000'" City of College Station, Texas Certificates of Obligation, Series 2013 (the "Certificates "). The Bonds and the Certificates are referred to herein collectively as the "Obligations." Capitalized terms used in this Official Statement. except as otherwise indicated herein, have the same meanings assigned to such terms in the ordinances authorizing the issuance of the Bonds (the "Bond Ordinance ") and the Certificates (the "Certificate Ordinance "), respectively. The Bond Ordinance and the Certificate Ordinance are collectively referred to herein as the "Ordinances." In the Ordinances, the City Council delegated to certain officers of the City the authority to finalize the pricing of the Obligations. There follows in this Official Statement descriptions of the Obligations and 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. DESCRIPTION OF THE CITY The City is a political subdivision and municipal corporation of the State of Texas (the "State "), duly organized and existing under the laws of the State, including the City's Horne Rule Charter. The City was incorporated in October 1938, and first adopted its Home -Rule Charter in October 1938, which was last amended in November 2012. The City operates under a Council/City Manager fonn of government with a City Council comprised of the Mayor and six Council members. 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 2010 Census population was 93,857 and the current estimated population of the City is 97,982. The City covers approximately 50.6 square miles. PLAN OF FINANCING PURPOSE Proceeds from the sale of the Bonds will be used to (i) pay for the costs of construction and acquisition of and improvements to City streets, (ii) pay for certain parks and park facilities improvements, (iii) refund certain obligations of the City described in SCHEDULE I to this Official Statement (the "Refunded Obligations ") and (iv) pay the costs incurred in connection with the issuance of the Bonds. (see "PLAN OF FINANCING — SOURCES ANT) USE OF PROCEEDS "). Proceeds from the sale of the Certificates will be used (i) to pay for the cost of construction of improvements to the City's combined electric, waterworks and sewer system and (ii) to pay the costs incurred in connection with the issuance of the Certificates (see "PLAN OF FINANCING — SOURCES AND USE OF PROCEEDS "). REFUNDED OBLIGATIONS The principal of and interest due on the Refunded Obligations are to be paid on the respective interest payment dates and redemption dates of such Refunded Obligations, from funds to be deposited pursuant to a certain Escrow Agreement (the "Escrow Agreement ") between the City and The Bank of New York Mellon Trust Company, National Association, Dallas, Texas (the "Escrow Agent "). The Ordinance authorizing the Bonds provides that from the proceeds of the sale of the Bonds and other available moneys of the City, if any, the City will deposit with the Escrow Agent the amount necessary to accomplish the discharge and final payment of the Refunded Obligations on their respective redemption dates. Such funds will be held by the Escrow Agent in a special escrow account (the "Escrow Fund") and used [RIDE; ']. Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of the principal of and interest on the Refunded Obligations. 1 Grant Thornton LLP, a nationally recognized accounting firm, will verify at the time of delivery of the Bonds to the underwriters listed on the cover page hereof (the "Underwriters") thereof the mathematical accuracy of the schedules that demonstrate the Federal Securities will mature and pay interest in such amounts which, together with uninvested funds, if any, in the Escrow Fund, will be sufficient to pay, when due. the principal of and interest on the Refunded Obligations. Such maturing principal of and interest on the Federal Securities will not be available to make debt service payments on the Bonds (see "OTHER INFORMATION - VERIFICATION OF ARrTILVIETICAL AND MATHEMATICAL COMPUTATIONS "). By the deposit of the Federal Securities and cash, if necessary, with the Escrow Agent pursuant to the Escrow Agreement sufficient to pay the redemption price of the Refunded Obligations on their respective redemption dates, the City will have effected the defeasance of all of the Refunded Obligations in accordance with State law. As a result of such defeasance, the Refunded Obligations will be outstanding only for the purpose of receiving payments from the Federal Securities and any cash held for such purpose by the Escrow Agent and such Refunded Obligations will not be deemed as being outstanding obligations of the City payable from taxes or revenues nor for the purpose of applying any limitation on the issuance of debt. The City has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund, from lawfully available funds, of any additional amounts required to pay the principal of and interest on the Refunded Obligations, if for any reason, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund are insufficient to make such payment. SOURCES AND USES OF PROCEEDS The proceeds from the sale of the Obligations will be applied approximately as follows: THE BONDS THE CERTIFICATES Sources of Funds Par Amount Sources of Funds Original Issue Premium Par Amount $ - Transfer from Debt Service Fund Original Issue Premium - Total Uses of Funds $ - Additional Proceeds - Total Uses ofFunds $ - Use of Funds Deposit to Project Fund Use of Funds Deposit to Escrow Fund Deposit to Project Fund $ - Deposit to Interest and Sinking Fund Deposit to Interest and Sinking Fund - Underwriters' Discount Underwriters' Discount - Cost of Issuance Cost of Issuance - Total Uses of Funds $ - Total Uses of Funds $ - THE OBLIGATIONS GENERAL DESCRIPTION The Obligations will bear interest from the date of delivery to the Underwriters, and mature on February 15 in each of the years and in the amounts shown on the inside cover page hereof. Interest on the Obligations will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. Interest on the Obligations will accrue from the date of delivery, and will be payable on February 15, 2014, and on each August 15 and February 15 thereafter until maturity or prior redemption. The definitive Obligations 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 Obligations will be made to the beneficial owners thereof. Principal of and interest on the Obligations will be payable by the Paying Agent/Registrar 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 Obligations (see "BOOK - ENTRY -ONLY SYSTEM "). AUTHORITY FOR ISSUANCE OF THE BONDS The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Chapters 1251, 1207, 1331 and 1371, Texas Government Code, as amended; an election held November 4, 2008 passed by a majority of the participating voters; and the Bond Ordinance. 2 AUTHORITY FOR ISSUANCE OF THE CERTIFICATES The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Chapter 1371, Texas Government Code and Subchapter C of Chapter 271, Texas Local Govemment Code (the Certificate of Obligation Act of 1971), as amended; and the Certificate Ordinance. SECURITY AND SOURCE OF PAYMENT All taxable property within the City is subject to an annual continuing direct annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on all obligations (including the Obligations) payable in whole or in part from ad valorem taxes, which tax must be levied within limits prescribed by law. The Obligations are secured by and payable from an annual continuing ad valorem taxes levied against all taxable property in the City, within the legal limits prescribed by law. The Certificates are additionally payable from a subordinate lien on and pledge of $1,000 of the surplus revenues of the City's combined utility system. 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 the 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 constitutionally 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 annual ad valorem property taxes, as calculated at the time of issuance. OPTIONAL. REDEMPTION The City reserves the right, at its option, to redeem Obligations of either series having stated maturities on and after February 15, 2023, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2022, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Obligations are to be redeemed, the City shall determine the Obligations, or portions thereof, within such maturity to be redeemed. If Obligations (or any portion of the principal sum thereot) shall have been called for redemption and notice of such redemption shall have been given. such Obligations (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION Not less than 30 days prior to a redemption date for the Obligations, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Obligations to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE OBLIGATIONS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY OBLIGATION OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Obligations, unless certain prerequisites to such redemption required by the Ordinances have been met and moneys sufficient to pay the principal of and premium, if any, and interest on the Obligations to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice shall state that said redemption may, at the option of the City, be conditional upon the satisfaction of such prerequisites and receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption and sufficient moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Obligations and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Obligations have not been redeemed. BOOK-ENTRY-ONLY SYSTEM This section describes how ownership of the Obligations is to be transferred and how the principal of and interest on the Obligations are to be paid to and credited by the DTC while the Obligations are registered in its nominee name. The information in this section concerning DTC and the Book -Entry -Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The City, the Financial Advisor and the Underwriters believe the source of such information to be reliable, but take no responsibility jar the accuracy or completeness thereof. 3 The City, the Financial Advisor and the Underwriters cannot and do not give any assurance that (1) DTC will distribute payments of debt .service on the Obligations, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Obligations), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC' are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will at as securities depository for the Obligations. The Obligations will be issued as fully- registered securities in the name of Cede & Co. (DTC's partnership nominee) or such other name as may he requested by an authorized representative of DTC. One fully- registered certificate for each maturity will be issued for the Obligations, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities 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 3.5 million issues of U.S. and non -U.S. equity, corporate and municipal debt issues, and money market instrument from over 100 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 securities 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 is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, hanks. trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). Direct Participants and Indirect Participants are referred to collectively herein as "Participants ". DTC is rated AA+ by Standard and Poor's. 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 Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Obligation ("Beneficial Owner ") is in turn to be recorded on the 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 Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Obligations, except in the event that use of the hook -entry system described herein is discontinued. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their 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 Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not he the Beneficial Owners. The 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 Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations 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. Redemption notices shall be sent to DTC. If less than all of the Obligations within a maturity in the series are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations 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 Direct Participants to whose accounts Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). 4 Payments on the Obligations 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 information from the City and the Paying Agent/Registrar, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent/Regisrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to tine. Payment of redemption proceeds, principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City and the Paying Agent/Registrar. Disbursement of such payments to Direct Participants will be the responsibility of DTC, and reimbursement of such payments to the Beneficial Owners will he the responsibility of Participants. DTC may discontinue providing its services as depository with respect to the Obligations at any time by giving reasonable notice to the City and the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Obligations 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, Obligations will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Obligations are in the Book- Entry -Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Obligations, but (i) all rights of ownership rust 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 Ordinances will be given only to DTC. Information concerning DTC and the Book -Entry System has been obtained from DTC and is not guaranteed as to accuracy or completeness hy, and is not to be construed as a representation by the City or the Underwriters. PAYING AGENT /REGISTRAR The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas. In each Ordinance, the City, retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying Agent/Registrar at all tunes until the Obligations of either series 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 services of Paying Agent/Registrar for the Obligations of either series. Upon any change in the Paying Agent/Registrar for the Obligations, the City will promptly cause a written notice thereof to be sent to each registered owner of the Obligations by United States mail, first class, postage prepaid, which notice will also include the address of the new Paying Agent/Registrar. TRANSFER, EXCHANGE AND REGISTRATION In the event the Book - Entry -Only System should he discontinued, the Obligations may be transferred and exchanged on the 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 the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Obligations may be assigned by the execution of an assignment form on the respective Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Obligations will be delivered by the Paying Agent/Registrar, in lieu of the Obligations 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 the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Obligations to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Bonds or Certificates registered and delivered in an exchange or transfer will be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Obligations surrendered for exchange or transfer. See "BOOK-ENTRY -ONLY SYSTEM" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Obligations. Neither the City nor the Paying Agent/Registrar will be required to transfer or exchange any Obligation called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer will not be applicable to an exchange by the registered owner of the uncalled balance of an Obligation. RECORD DATE FOR INTEREST PAYMENT The record date ( "Record Date ") for determining the person to whom the interest is payable on the Obligations on any interest payment date means the close of business on the last business day of the preceding month. 5 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 established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (a "Special Payment Date," which will be 15 days after the Special Record Date) will be sent at least five days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each Holder of a Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the day next preceding the date of mailing of such notice. DEFEA.S 1NCE The Ordinances provide for the defeasance of the Obligations when the payment of the principal of and premium, if any, on the Obligations, plus interest thereon to the due date thereof (whether such due date he by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agency, in trust (1) money sufficient to make such payment or (2) Defeasance Securities, certified by an independent public accounting firm 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 Obligations. The Ordinances provides that "Defeasance Securities" means (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable 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 are rated as to investment quality by a nationally recognized investment rating firnn not less than AAA or its equivalent, (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refimded and that rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (d) any securities and obligations now or hereafter authorized by Texas law that are eligible to refund, retire or otherwise discharge obligations such as the Obligations. The City has additionally reserved the right, subject to satisfying the requirement of (1) and (2) above, to substitute other Defeasance Securities for the Defeasance Securities originally deposited, to reinvesunent 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. REMEDIES OF HOLDERS OF OBLIGATIONS The Ordinances establish specific events of default with respect to the Obligations. If the City defaults in the payment of the principal of or interest on the Obligations when due or the City defaults in the observance or performance of any of the covenants, conditions, or obligations of the City, the failure to perform which materially, adversely affects the rights of the owners of the Obligations including but not limited to, their prospect or ability to he repaid in accordance with the Ordinances, and the continuation thereof for a period of 60 days after notice of such default is given by any owner to the City, the Ordinances provide that any registered owner is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the City to make such payment or observe and perform such covenants, obligations, or conditions. The issuance of a writ of mandamus may be sought if there is no other available remedy at law to compel performance of the Obligations or the Ordinances and the City's obligations are not uncertain or disputed. The issuance of a writ of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Ordinances do not provide for the appoinunent of a trustee to represent the interest of the holders of either series of the Obligations upon any failure of the City to perform in accordance with the terms of the Ordinances, or upon any other condition and accordingly all legal actions to enforce such remedies would have to undertaken of the initiative of, and be financed by. the registered owners of the Obligations. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. Ciry ofMexia, 197 S.W.3d325 (Tex. 2006) that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, registered owners of either series of the Obligations may not be able to bring such a suit against City for breach of the Obligations of covenants contained in either Ordinance. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Obligations. The City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ( "Chapter 9 "). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a 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 Bankruptcy Court approval, the prosecution of any other legal action by creditors or registered owners of the Obligations 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 hear 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 enforceability of the Obligations are qualified with respect to the customary rights of debtors relative to their creditors. 6 TAX INFORMATION AD VALOREM TAX LAW The appraisal of property within the City is the responsibility of the Brazos Central 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 required under Title 1, Texas Tax Code (referred to herein as the "Property Tax Code ") 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. In determining the market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and the market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of (1) the property's market value in the most recent tax year in which the market value was determined by the Appraisal District or (2) the sum of (a) 10% of the property's appraised value for the preceding tax year, (b) the appraised value of the property for the preceding tax year and (c) the market value of all new improvements to the property. 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 appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the Property Tax Code, for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation 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 exemptions from property taxes, the valuation of agricultural and open -space lands at productivity value. and the exemption of certain personal property from ad valorem taxation. Under Section 1 -b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An exemption 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 political subdivision; and (3) An exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,000. In addition State law mandates a complete exemption for the residential homestead of disabled veterans determined to be 100% disabled by the U.S. Department of Veterans Affairs. Further, effective January 1. 2012, the surviving spouse of a deceased veteran who had received a disability rating of 100% is entitled to receive a residential homestead exemption equal to the exemption received by the deceased spouse until such surviving spouse remarries. In the case of residence homestead exemptions granted under Section 1 -h, 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 exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces: the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. Article VIII provides that eligible owners of both agricultural land (Section 1 -d) and open -space land (Section 1 -d -1), including open -space land devoted to farm or ranch purposes or open -space land devoted to timber production, may elect to have such property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section I -d and 1 -d -1. Article VIII, Section 1 -n of the Texas Constitution provides for an exemption from taxation for " goods -in- transit," which are defined as (i) personal property acquired or imported into the State and transported to another location inside or outside the State, (ii) stored under a contract for bailment in public warehouses not in any way owned or controlled by the owner of the stored goods, and (iii) transported to another location inside or outside the State within 175 days of the date the property was acquired or imported into the State. The exemption excludes oil, natural gas, petroleum products, aircraft and special inventory, including motor vehicle, vessel and out -board motor, heavy equipment and manufactured housing inventory. Pursuant to changes enacted in 2011, all taxing units, including those that have previously taken official action to tax goods - in- transit, may not tax goods -in- transit in the 2012 tax year or thereafter, unless the governing body of the taxing unit holds a public hearing and takes action on or after October 1, 2011, to provide for the taxation of the goods -in- transit. After holding a public hearing, a taxing unit may take official action prior to January 1 of the first tax year in which the governing body proposes to tax goods -in- transit. After taking such official action. the goods -in- transit remain subject to taxation by the taxing unit until the governing body of the taxing unit rescinds or repeals its previous action to tax goods-in-transit. If. however, a taxing unit took official action prior to October 1, 2011 to tax goods -in- transit and pledged the taxes imposed on the goods -in- transit for the payment of a debt, taxes may continue to be imposed on goods -in- transit until the debt is discharged, if cessation of the imposition of the tax would impair the obligation of the contract by which the debt was created. On December 8, 2011, the Council passed an ordinance approving taxation on certain goods -in- transit. 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. 7 Article VIII, Section 1 -j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose 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 tax increment financing zones within the City, under which the tax values on property in the zone are "frozen" at the value of the property at the nine 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 constrict certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. CONSTITUTIONAL AMENDMENT In a statewide election held on September 13, 2003, voters approved an amendment to Section 1 -b, Article VIII of the Texas Constitution, that would authorize a county, city, town or junior college district to establish an ad valorem tax freeze on residence homesteads of the disabled and of the elderly and their spouses. The City is now authorized to freeze ad valorem taxes on residence homesteads of persons who are disabled or sixty-five years of age or older. If the City Council does not take action to establish the tax limitation, voters within the City may submit a petition signed by five percent of the registered voters of the City requiring the City Council to call an election to determine by majority vote whether to establish the tax limitation. A petition was submitted and an election was held on May 10, 2008. The voters of College Station voted to approve the ad valorem tax freeze. The City can provide no assurances of the impact, if any, implementation of this ad valorem tax freeze may have on the City's finances. If the tax limitation is established, the total amount of ad valorem taxes imposed by the City on a homestead that receives the exemption inay not be increased while it remains the residence homestead of that person or that person's spouse who is disabled or sixty-five years of age or older, except to the extent the value of the homestead is increased by improvements other than repairs. If a disabled or elderly person dies in a year in which the person received a residence homestead exemption, the total amount of ad valorem taxes imposed on the homestead by the taxing unit may not be increased while it remains the residence homestead of that person's surviving spouse if the spouse is fifty-five years of age or older at the time of the person's death. In addition, the Texas Legislature by general law may provide for the transfer of all or a proportionate amount of the tax limitation applicable to a person's homestead to be transferred to the new homestead of such person if the person moves to a different residence within the taxing unit. Once established, the governing body of the taxing unit may not repeal or rescind the tax limitation. EFFECTIVE TAX RATE AND ROLLBACK Tax RATE By the later of September 30 or 60 days after the certified appraisal roll is delivered to the City, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) 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 ". A tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or the effective tax rate until two public hearings are held on the proposed tax rate following a notice of such public hearing (including the requirement that notice be posted on the City's website if City owns, operates or controls an intemet website and public notice be given by television if the City has a free access to a television channel) and the City Council has otherwise complied with the legal requirements for the adoption of such tax rate. 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. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in the year's taxable values. "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. 8 PROPERTY ASSESSMENT AND Tax PAYMENT Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer. be assessed as of September. Effective January 1, 2012, oil and gas reserves are assessed on the basis of a valuation process that uses pricing information contained in the most recent published Early Release Overview of the Annual Energy Outlook published by the United States Energy Information Administration, as well as appraisal formulas developed by the State Comptroller of Public Accounts. Taxes become due October 1 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. PENALTIES 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 11 May 9 4 13 June 10 5 15 July 12 6 18 After July, penalty remains at 12 %, and interest increases at the rate of 1% each month. hi addition, if an account is delinquent in July, an amount up to 20% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, taxes which become delinquent on the homestead of a 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 - petition 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 administrative expense of the estate in bankruptcy or by order of the bankruptcy court. 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 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 "). An election was held on May 10. 2008 and the voters of College Station approved the ad valorem tax freeze for residential homesteads for disabled and age 65 or older persons. Brazos County collects the taxes for the City. TAX ABATEMENT POLICY The City has established tax abatement guidelines and criteria for economic development prospects in the City of College Station. In order to be eligible for designation as a Reinvestment Zone and receive tax abatement, the planned improvement: 1. Must be expected to have an increased appraised ad valorem tax value of at least $1,000,000 based upon the Brazos Central Appraisal District's assessment of the eligible property. 2. Must be expected to prevent the loss of payroll or retain, increase or create a payroll on a permanent basis in College Station, Texas. 9 The following factors among others should be considered in determining whether to grant tax abatement and, if so, the percentage of value to be abated and the duration of the tax abatement: 1. Value of land and existing improvements, if any: 2. Type and value of proposed improvements; 3. Productive life of proposed improvements; 4. Number of existing jobs to be retained by proposed improvements; 5. Number of type of new jobs to be created by proposed improvements; 6. Amount of local payroll to be created; 7. Whether persons residing or projected to reside within the City will have the opportunity to fill the new jobs being created; 8. Amount of local taxes to be generated directly; 9. Amount of property tax base valuation which will be increased during term of abatement and after abatement, which shall include a definitive commitment that such valuation shall not, in any case, be less than $1,000,000; 10. The costs to be incurred by the City to provide facilities or services directly resulting from the new improvements; 11. The amount of ad valorem taxes to be paid to the City during the abatement period considering (a) the existing values, (b) the percentage of new value abated, (c) the abatement period, and (d) the value after expiration of the abatement period; 12. The population growth of the City that occurs directly as result of new improvements; 13. The types of public improvements, if any, to be made by the applicant seeking abatement; 14. Whether the proposed improvements compete with existing businesses to the detriment of the local economy; 15. The impact on the business opportunities of existing businesses; 16. The attraction of other new businesses to the area: 17. The overall compatibility with the zoning ordinances and comprehensive plan for the area; and /or 18. Whether the project is environmentally compatible with no negative impact on quality of life perceptions. Neither a Reinvestment Zone nor abatement agreement shall be authorized if it is determined that: 1. There would be substantial adverse affect on the provision of government service or tax base; 2. The applicant has insufficient financial capacity; 3. Planned or potential use of the property would constitute a hazard to public safety, health or morals: 4. Violation of other code or laws; 5. The agreement was signed after the commencement of construction, alteration or installation of improvements related to the project; or 6. Any other reason deemed appropriate by the City Council ECONOMIC DEVELOPMENT PROGRAMS The City has exercised the authority granted to Texas cities by Article III, Section 52 -a of the State Constitution and Chapter 380, Texas Local Government Code, to establish a program to loan or grant public funds for the purpose of stimulating business and commercial activity in the City. The City and the City of Bryan, Texas have entered into an "Interlocal Cooperation and Joint Development Agreement" (the "Interlocal Agreement ") in connection with implementing a joint economic development program known as the Joint Research Valley BioCorridor Development Project (the "Project"). Under the terms of the Interlocal Agreement, the City will snake funds available to the City of Bryan, and the City of Bryan will make funds available to the City, for certain defined public infrastructure projects that are intended to enhance development of the Project. The obligations of each city under the Interlocal Agreement shall not constitute a debt for purposes of any provision of the State Constitution, and are intended to be paid from the general revenues of each city. [Remainder of Page Intentionally Left Blank] 10 TABLE 1 - VALUATION, EXEM TIONS AND GENERAL OBLIGATION DEBT 2012/2013 Market Valuation Established by Brazos Central Appraisal District $ 6,168,789.302 (excluding exempt property) Less Exemptions/Reductions at 100% M arket Value: Productivity Loss $ 112,516,988 Over 65 Homestead Exemptions 72,872,635 Community Housing Development Organization 4,651,299 House Bill 366 164,493 Freeport 10,308,992 Homestead Cap Adjustment 10,992,194 Disabled Veteran 12.675,737 Proration 293,977 224,476,315 2012/2013 Taxable Assessed Valuation 5 5,944,312,987 Debt Payable from Ad Valorem Taxes (as of 6/1/2013) Certificates of Obligation, Series 2005W* 215,000 General Obligation Improvement Bonds, Series 2005 230,000 General Obligation Refunding Bonds, Series 2006 6,575,000 Certificates of Obligation, Series 2006 5,460,000 General Obligation Improvement Bonds, Series 2006 5,175,000 Certificates of Obligation, Series 2007 2.310,000 General Obligation Improvement Bonds, Series 2007 2,295,000 Certificates of Obligation, Series 2008 21,010,000 General Obligation Improvement Bonds, Series 2008 7,000,000 General Obligation Refunding Bonds. Series 2009 4,870,000 Certificates of Obligation. Series 2009 22,790.000 General Obligation Improvement Bonds, Series 2009 2,905,000 General Obligation Refunding Bonds. Series 2010 31,420,000 Certificates of Obligation. Series 2010 2,870.000 General Obligation Improvement Bonds, Series 2010 17,315,000 Certificates of Obligation, Series 2011 7,375,000 General Obligation Improvement Bonds, Series 2011 1,030,000 Certificates of Obligation, Series 2012 15,925,000 General Obligation Improvement and Refunding Bonds, Series 2012 19,365.000 The Bonds* 19,920,000 The Certificates * ( 2) 9,610,000 205,665,000 Less: Self Supporting Debt' 1)(3) $ 109,392.480 Less: Interest and Sinking Fund as of 9/30/2012 3,802,443 Net Debt Payable from Ad Valorem Taxes 8 92.470.077 Ratio of Ad Valorem Net Tax Debt to Taxable Assessed Valuation 2013 Estirnated Population - 97,982 Per Capita Taxable Assessed Valuation - 560,667 Per Capita net Funded Debt - 5944 • Preliminary, subject to change. (1) Excludes the Refunded Obligations. (2) A portion of the Certificates will be internally allocated by the City as being payable from the surplus revenues from the respective enterprise funds. Approximately $7,735,000 of the proceeds of the Certificates will pay for improvements to the City's electric system and approximately S1,875,000 will pay for improvements in the City's wastewater system. The debt service on this portion of the Certificates will be internally allocated by the City as being payable from the surplus revenues from the respective enterprise funds. Although the City expects to pay for this portion of the Certificates with surplus enterprise funds. the Certificates are secured solely by a pledge of ad valorem taxes and by a pledge of combined utility system surplus net revenues limited to $1.000. See "THE OBLIGATIONS- SECURITY AND SOURCE of PAYMENT " There is no guarantee that payments from these enterprise funds will be made. If payments are not made from the enterprise funds, the City will be required to levy ad valorem taxes in amounts sufficient to make such payments. (3) In the past. the City has sold certificates of obligation to finance projects for the City's water and sewer system, and electric system and has internally allocated portions of this debt as payable from the respective enterprise funds. The self- supporting amounts listed above are projections of debt that is expected to be retired by the City based on actual historical payments from these funds to pay for debt service the outstanding certificates of obligation. There is no guarantee that payments from these funds will continue in the future. Includes a portion of the Obligations See "DEBT INFORMATION - TABLE 10 - SELF SUPPORTING DEBT." 11 TABLE 2 - TAXABLE ASSESSED VALCATTONs BY CATEGORY Taxable Appraised Value. Fiscal Year Ending September 30. 2013 2012 2011 %of %of %of Category Amount Total Amount Total Amount Total Real, Residential, Single- Family $ 3,277,087,380 53.12% $ 3,169,329,494 53.29% $ 3,008,625,229 53.27% Real, Residential, Multi - Family 1,070,207,772 17.35% 996,353,707 16.75% 965,909,631 17.10% ReaL Vacant Lots/Tracts 118,939,480 1.93% 115,085,384 1.93% 113,005,459 2.00% Real. Acreage (Land Only) 171,879,670 2.79% 183,146,931 3.08% 152,872,161 2.71% Real, Farm and Ranch Improvements 22,726,592 0.37 % 18,078,677 0.30% 17,561,011 0.31% Real, Commercial/Industrial 1,121,943,869 18.19% 1,088,046,209 18.29% 1.032,016,904 18.27% ReaL Oil, Gas & Other M ineral Reserves 5,391,913 0.09% 5,982,912 0.10% 6,676,457 0.12% Real and Tangible Personal, Utilities 35,139,050 0.57% 39,148,700 0.66% 39,468,220 0.70% Tangible Personal, Business 309,881,970 5.02% 298,432,950 5.02% 281,551,650 4.98% Tangible Personal, Other 2,217,020 0.04 % 2,232,990 0.04% 2,264,960 0.04% Real Property Inventory 23,728,660 0.38% 23,307,800 0.39% 21,258,188 0.38% Special Inventory 8,851,423 0.14% 8,004,300 0.13 ° /o 7,113,630 0.13% Exempt Property Adjustment 794,503 0.01% 449,950 0.01% - 0.00% Total Appraised Value Before Exemptions $ 6,168,789,302 100.00% $ 5,947,600,004 100.00% $ 5,648,323,500 100.00% Less: Total Exemptions/Reductions 224,476,315 208,985,002 192,891.039 Taxable Assessed Value $ 5,944,312,987 $ 5,738.615,002 $ 5,455.432,461 Taxable Appraised Value, Fiscal Year Ending September 30, 2010 2009 %of %of Category Amount Total Amount Total Real, Residential, Single- Family $ 2,887,801,921 51.63% $ 2,659,452,105 51.18% Real, Residential, Multi- Family 953,349,494 17.05% 853,608,672 16.43% Real, Vacant Lots/Tracts 99,960,600 1.79% 93,840,960 1.81% Real, Acreage (Land Only) 153,251,021 2.74% 132,853,830 2.56% Real, Farm and Ranch Improvements 19,005,291 0.34% 14,230,530 0.27% Real, Commercial/Industrial 1,058,340,988 18.92% 1,039,652,110 20.01% Real, Oil, Gas & Other Mineral Reserves 5,595,938 0.10% 5,238,059 0.10% Real and Tangible Personal, Utilities 37,016,190 0.66 % 40,912,980 0.79% Tangible Personal, Business 336,024,109 6.01% 333,340,802 6.41% Tangible Personal, Other 2,341,500 0.04% 2,397,820 0.05% Real Property Inventory 31,792,970 0.57% 12,556,380 0.24% Special Inventory 8,270,790 0.15% 8,615,640 0.17 °ro Exempt Property Adjustment - 0.00% - 0.00% Total Appraised Value Before Exemptions $ 5,592,750,812 100.00% $ 5,196,699,888 100.00% Less: Total Exemptioas/Reductions 201,959,811 172,545,675 Taxable Assessed Value $ 5.390,791.001 $ 5,0 a NOTE: Valuations shown are certified taxable assessed values reported by the Brazos Central 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. 12 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY Ratio of Net Fiscal Taxable G.O. Tax Debt Year Taxable Assessed to Taxable Net G.O. Ended Estimated Assessed Valuation Net G.O. Assessed Tax Debt 9/30 Population Valuation Per Capita TaxDebt'' Valuation Per Capita 2008 89,140 $ 4.477,073,139 $ 50,225 $ 100,660,000 2.25 °ro $ 1,129 2009 91,298 5,024,154,213 55,030 97,720,000 1.95% 1,070 2010 93,991 5,390,791,001 57,354 107,570,000 2.00% 1,144 2011 94,669 5,455,432,461 57,626 99,140.000 1.82% 1,047 2012 97,888 5,738,615,002 58,624 121,560,000 2.12% 1,242 2013 97,982 5,944,312,987 60,667 96,272,520 (4) 1.62% (4) 983 (4) (1) Source: The City. (2) As reported by the Brazos Central Appraisal District; subject to change during the ensuing year. (3) Payable from ad valorem taxes. Does not include self - supporting debt. (4) Projected, includes the Obligations and excludes the Refunded Obligations. Preliminary, subject to change. TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Year General Interest and % Current % Total Ended 9/30 Tax Rate Fund Sinking Fund Tax Levy Collections Collections 2008 $ 0.4394 $ 0.1933 $ 0.2461 $ 19,973,882 98.99% 98.99% 2009 0.4394 0.1934 0.2460 22,076,134 98.73% 99.93% 2010 0.4394 0.2100 0.2294 23,623,086 97.93% 98.49% 2011 0.4475 0.2273 0.2202 24,304,840 99.31% 99.76% 2012 0.4380 0.2365 0.2015 25,043,183 99.10% 99.83% 2013 0.4380 0.2351 0.1956 25,518,199 88.94% (t) 89.47% (0) (1) Collections as of April 30, 2013. TABLE 5 - TEN LARGEST TAXPAYIRS 2012/2013 % of Total Taxable Taxable Nature Assessed Assessed Name of Taxpayer of Property Valuation Valuation Post Oak Mall - College Station, LLC Retail $ 57,025,440 0.96% College Station Hospital L.P. Medical 56,167,890 0.94% SHP - The Callaway House LP Apartments 48,525,670 0.82% BVP 2818 Place LP Apart ments 41,197,320 0.69% Wal -Mart Real Estate Business Trust Retail 40,765,700 0.69% SW Meadows Point LP Apartments 40,102,200 0.67% Woodlands of College Station LP Apartments 39,816,500 0.67% Jefferson Enclave LP Apartments 39,607,120 0.67 % Jamespoint Management Housing 39,165,800 0.669 Weinberg Isreal & David Alkosser Housing 38,103,080 0.64% $ 440,476.720 7.41% GENERAL OBLIGATION DEBT LIMITATION ... No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "THE OBLIGATIONS - TAX RATE LIMrrATloN "). 13 TABLE 6 - TAX ADEQUACY Net Maximum Tax Supported Principal and Interest Requirements (2013) $ 11,862,388 (r) $0.20158 Tax Rate at 99% Collection Produces $ 11,862,721 Net Average Tax Supported Principal and Interest Requirements (2013 -2033) $ 6,517,706 (I) $0.11076 Tax Rate at 99% Collection Produces $ 6,518,082 (1) Includes the Obligations and excludes the Refunded Obligations and self supporting debt. Interest has been estimated for the purpose of illustration. Preliminary, subject to change. TABLE 7 - ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax debt ( "Tax Debt ") was developed by the City from information obtained from the Brazos Central 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 programs requiring the issuance of substantial amounts of additional debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. City's Total Estimated Overlapping 2012/2013 Taxable 2012 Tax Debt as °io Tax Debt as Assessed Value Tax Rate of 6/1/2013 Applicable of 6/1/2013 City of College Station $ 5,944,312,987 0.4380 $ 205,665,000 (r) 100.00% $ 205,665,000 Brazos County 11,950,789,417 0.4850 98,640,000 52.82% 52,101,648 Bryan ISD 5,449,763,905 1.2900 143,545,000 2.08% 2,985,736 College Station ISD 6,027,417,818 1.3350 217,865,000 87.91% 191,525,122 Total Direct and Overlapping Funded Tax Debt $ 452,277,506 Ratio of Direct and Overlapping Funded Tax Debt to Taxable Assessed Valuation 7.609% Per Capita Overlapping Funded Tax Debt $ 4,616 Source: Municipal Advisory Council of Texas. (1) Projected, includes self supporting debt and the Obligations. Preliminary, subject to change. 14 0 M .n, 00 00 O - .0 N 00 v1 ut O M O+ N ' a p '+� r` vl 0' A ; �] . D v1 y O V 00 07 7 ] 07 P. O. N N r) c • rr ; el N 'l P 'ri ''.G N cal , r1 N „ el 00 M 7 -- I� 00 G's. I'. 00 Z - ! 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N r4 fl r] Cl (i N N N N fl N N (i N N N Cl fl el (] Q F . - 1 TABLE 9 - INTEREST A ND SINx1 \G FUND BUDGET PROJECTION Total Net Tax Supported Debt Service Requirements, Fiscal Year Ending September 30, 2013 $ 11,862,388 (t) Interest and Sinking Fund, September 30, 2012 $ 3,802,443 Calcuated Interest and Sinking Fund Tax Levy @ 99% Collection 11,979,931 Budgeted Investment Earnings 50,000 15,832,374 Estimated Balance, September 30, 2013 $ 3,969,985 (I) Includes the Obligations and excludes self - supporting debt. Preliminary, subject to change. TABLE 10 - SELF - SUPPORTING DEBT* Year Total End Electric Wastewater Water Convention Parking Self- Supporting 9/30 Fund.° Fund (`) Fund Center Landfill 4) Garage Debt Service (6) 2013 $ 3,573,133 $ 2,910,882 $ 2,782,611 $ 30,419 $ 397,710 $ 466,300 $ 10,161.055 2014 4,378,185 2,976,640 2,946,765 30,419 400,960 462,463 11,195,431 2015 4,341,496 2,634,867 3,254,481 35,344 403,910 466,375 11,136,473 2016 4,362,190 2,646,296 3,260.936 35,194 406,560 463,925 11,175,100 2017 4,235,706 2,644,602 3,164,500 69,419 359.135 470,475 10,943,836 2018 4,212,211 2,572,352 3,115,929 68,019 361,610 224,738 10,554,857 2019 4,197,257 2,519,085 3,093,331 71,475 363,448 222,475 10,467,071 2020 4.202,254 2.530,944 3,109,019 74,631 364,335 224,400 10,505,584 2021 4,221,350 2,483,915 3,067,950 67.731 364,535 - 10,205,481 2022 4,175,363 1,586,854 2,054,317 70.831 364,335 - 8,251,700 2023 3,935,647 1,236,645 1,634,333 73,697 363,566 - 7,243,888 2024 3,588,049 1,227,435 1,640,101 71,394 366,941 - 6,893,920 2025 3,275,592 959,768 1,657,324 73,725 368,385 - 6,334,793 2026 3,024,784 962.238 1,306,208 75,763 368.798 - 5,737,789 2027 3,047,873 964,189 1,311,649 72,838 369,285 - 5,765,834 2028 3,059,484 960,701 1,324,026 69,913 364,210 - 5,778,334 2029 2.537,820 794,744 776,236 76,725 368,280 - 4,553,805 2030 1,644,330 796,324 207,506 - - - 2.648,160 2031 1,452,612 778,724 204,750 - - - 2,436,086 2032 1,099,128 541,178 205,000 - - - 1,845,306 $ 68.564,464 S 34.728,382 $ 40,116,970 S 1,007,534 S 6.356,003 $ 3,001.. J S 1 53.834,503 • Preliminary, subject to change. (1) Includes a portion of the City's Certificates of Obligation, Series 2004, Series 2008. Series 2009, Series 2010, Series 2011, Series 2012, a portion of the General Obligation Refunding Bonds, Series 2010. General Obligation Improvement and Refunding Bonds, Series 2012 and a portion of the Obligations. (2) Includes a portion of the City's Certificates of Obligation, Series 2004, Series 2008, Series 2010, Series 2011, Series 2012 a portion of the General Obligation Refunding Bonds, Series 2010, General Obligation Improvement and Refunding Bonds, Series 2012 and a portion of the Obligations. (3) Includes a portion of the City's Certificates of Obligation, Series 2008, Series 2008. Series 2009, Series 2012 a portion of the General Obligation Refunding Bonds, Series 2010, General Obligation Improvement and Refunding Bonds, Series 2012 and a portion of' the Obligations. (4) Includes a portion of the City's Certificates of Obligation, Series 2009. S2,305,000 of the Certificates of Obligation, Series 2009 was defeased from the Convention Center portion on December 1, 2011. (5) Includes the Fiscal Year 2010 debt service payrnent of the City's Certificates of Obligation, Series 2000A and a portion of the City's General Obligation Refunding Bonds, Series 2009. (6) The debt service described in this table is general obligation debt for which repayment is provided from revenues from other sources. It is the City's current policy to provide these payments from such sources. There is no assurance that the use of these sources to make these payments will continue in the future. If payments are not made from such sources in the future, the difference will be paid for with ad valorem taxes 16 TABLE 11 AUTHORIZED BUT UNISSUED TAY BONDS Date of Amount Issued Authorization Pu ose Authorized To Date The Bonds Unissued rp su d 1/24/1984 (n) Fire Substation Building $ 700,000 $ - $ - $ 700,000 1/24/1984 (II Street Improvements 6,325,000 5,825.000 - 500,000 11/4/2003 Street Improvements 17,980,000 17,980,000 - - 11/4/2003 Traffic M anagement 3,000.000 3,000,000 - - 11/4/2003 Park Improvements 8,105,000 8,105,000 - 11/4/2003 M unicip al Comp lex Imp rovements 7,610,000 3,955.000 - 3,655,000 11/4/2003 Fire Station Improvements 1,710,000 1,710,000 - - 11/4/2008 Street Itprovements 48,785.000 16,360,000 6,525.000 25,900,000 11/4/2008 Library Improvements 8,385,000 - - 8,385,000 11/4/2008 Fire Substation Building 6,990,000 6,990,000 - - 11/4/2008 Park Improvements 12,790,000 3,840,000 2,725,000 6,225.000 $ 122,380,000 $ 67,765.000 S 9.250,000 $ 45,365,000 (1) Contains projects which may have been completed or abandoned; therefore, the remaining authorized but unissued bonds are not likely to ever be issued. A.'�TIC1PATED ISSUANCE OF GENERAL OBLIGATION DEBT The City has no firm plans for the issuance of additional general obligation debt payable from ad valorem taxes within the next twelve months. OTHER OBLIGATIONS Currently, 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 City makes annual contributions to the plan equal to the amounts accrued for pension expense. (For more detailed information concerning the retirement plan, see "APPENDIX B - EXCERPTS FROM THE CITY OF COLLEGE STATION, TEXAS ANNUAL FINANCIAL REPORT" - Section V - Note D.) The City Y determined received the contribution rates for Plan Year 2012 from TMRS as deterned by the December 31, 2010 actuarial valuation. The City's monthly phase -in contributions rate of 16.25% became effective January 1, 2011. The funding status as of December 31, 2011 is as follows: 12:31'2011 Actuarial Value of Assets $ 159,366,251 Actuarial Accrued Liability (AAL) 203,122,476 Percent of Pension Benefit Obligation 78.46% Unfunded Actuarial Accrued Liability (UAAL) $ 43.756 225 Annual Covered Payroll 41,553,358 Percent of Covered Payroll 105.30% Estimated Employer Contribution $ 7,506,378 OTHER POST EMPLOYMENT BENEFITS PROGRAM DESCRIPTION ... In addition to pension benefits, as required by state laws and defined by City policy, the City makes available postretirement medical, dental, vision, drug and life insurance benefits to all employees who meet TMRS retirement qualifications, retire from the City and who enroll themselves and their eligible dependent(s) on or before the effective date of their retirement through the City's single - employer defined benefit other post - employment benefit (OPEB) plan. The life insurance plan provides a $10,000 fully insured death benefit coverage upon retirement which ceases upon attainment of age 65 for retirees. So long as monthly premium payments are made, the healthcare plan pmvides lifetime insurance to eligible retirees, their spouses and dependents through the City's group health insurance plan, which covers both active and retired members. Benefit provisions as well as retiree premium contributions are established by management. 17 The City determines the employer and participant contribution rates annually based on recommendations of City staff and the City's consultant. All medical, dental, vision and drug care benefits are provided through the City's self - insured health plan. The benefit levels are the same as those afforded to active employees. Life insurance for eligible retirees is paid entirely by the City. During fiscal year 2012, 29 former employees were covered under this arrangement, with claims totaling S141,585. ANNUAL OPEB COST AND NET OPEB OBLIGATION ...The City's annual OPEB cost is based on the annual required contribution (ARC) of the City, an amount actuarially determined in accordance with the parameters of GASB Statement 45. Despite the apparent implications of the term ARC, the Ciry is not required to contribute the ARC to the plan each year, Instead, the ARC provides a basis for evaluating whether the City's contributions for OPEB are adequate to fund the benefits during the working lifetime of current employees (i.e., the normal cost) and to amortize existing unfunded obligations (i.e., the obligations for cun retirees plus that portion of the current employees' obligations that are attributed to past service) in a systematic manner over the amortization period prescribed by GASB. The annual OPEB cost is the annual accounting expense recorded on the City's Statement of Revenues, Expenses and Changes in Net Assets and on the City's Statement of Activities. The annual OPEB cost is equal to (1) the ARC for the current fiscal year, plus (2) interest on the Net OPEB Obligation at the beginning of the year, reduced by (3) an adjustment to the ARC which is equal to an amortization of the beginning of the year Net OPEB Obligation. The City terminated its Borrowed Employee Agreement with BVSWMA, Inc. Therefore, the related OPEB obligation of $134,385 was removed. 2010 2011 2012 Annual Required Contribution (ARC) $ 2,438,554 $ 1,850,510 $ 1,360,907 Interest on Net OPEB Obligations 131,799 211,750 276,044 Adjusted to the ARC (150,551) (262,374) (342,039) Annual OPEB Cost 2,419,802 1,799,886 1,294,912 Contributions M ade (381,459) (513,998) (141.585) Increase in net OPEB obligation $ 2,038,343 $ 1,285,888 $ 1,153,327 Net OPEB Obligation, beginning of year 2,196,647 4,234,990 5,520,878 Net OPEB Obligation, end of year $ 4,234,990 $ 5,520,878 S 6. 674.205 Three -Year Trend Information Percentage Fiscal Annual Actual of Annual Year OPEB Contribution OPEB Cost Net OPEB Ended 9/30 Costs Made Contribution Obligation 2009 $2,241,140 $ 44,493 1.99% $2,196,647 2010 2,419,802 381,459 15.76% 4,234,990 2011 1,799,886 513,998 28.56% 5,520,878 2012 1,294,912 141,585 10.93% 6,674,205 Generally, the Net OPEB Obligation is the ctnnulative difference since the effective date of GASB 45 between the annual OPEB cost and the employer's contributions to the plan including the OPEB liability/(asset) at transition, if any. Because the City did not have an OPEB liability/(asset) at transition, the Net OPEB Obligation as of October 1, 2008 is zero. Whenever the City contributes an amount less than the annual OPEB cost, this shortfall will increase the City's Net OPEB Obligation. ACTUARIAL METHODS 4ND ASSUMPTIONS ... Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are trade about the future. The required schedule of funding progress immediately following the notes to the financial statements presents multi -year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. GASB No. 45 calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattem of sharing of costs between the employer and plan participants to that point. In addition, the projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan participants in the future. 18 Actuarial calculations reflect a long -term perspective. In addition, consistent with that perspective, actuarial methods and assumptions used in developing the amounts in this report include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities. The required contribution rates were determined as part of the October 1, 2010 actuarial valuation. Significant methods and assumptions follow: Actuarial valuation date 10 /1 /2010 Actuarial Cost Method: Projected Unit Credit Amortization Method: Level dollar Remaining Amortization Period: 30 year open period Amortization Period for New Gains /Losses 30 years Asset Valuation Method: Market Actuarial Assumption: Investment Rate of Return* 5.00% *Includes Inflation at: 4.00% Projected Salary Increases N/A Annual Healthcare Trend Rates: 8.50% in FYE 2011 declining to 5.00% in FYE 2018 FI NDLNG STATUS AND FUNDING PROGRESS ... The Schedule of Funding Progress presents information as of the current valuation date and the two preceding valuation dates. As of the date of this financial statement. the City has had two valuations, that for the fiscal year beginning October 1, 2008, and one for the fiscal year beginning October 1, 2010. Unfunded Annual UAAL as Actuarial Actuarial Actuarial Actuarial Covered Percentage of Valuation Value of Accrued Liability Funded Accrued Payroll Covered Date Assets (AAL) Ratio Liability (AAL) (Fiscal Year) Payroll 10/1/2008 $ - $ 15,244,888 0.00% $ 15,244,888 $41.019,952 37.16% 10/1/2010 - 13,868,768 0.00% 13,868,768 43.000,000 32.25% 10/1/2010 9.356,116 0.00% 9,356,116 43,000,000 21.76% (1) The plan was changed effective January 1, 2012 to eliminate post -65 medical coverage and was changed effective January 1, 2013 to eliminate one of the PPO benefit options. While the plan typically undergoes a biennial valuation, pursuant to paragraph 12 of GASB 45, a new valuation must he performed if there are significant changes to the plan since the previous valuation. For the fiscal year ending September 30, 2012, a new actuarial valuation incorporating these changes to the plan provisions was performed using October 1, 2010 valuation date. There are factors that affect the ability to compare amounts reported from one actuarial valuation date to the next. The assumptions that have been changed since the previous valuation are: - the Discount Rate has been updated to reflect changes in the allocation of assets of the employer and the expected return on such assets; - the Assumed Per Capita Health Benefit Costs and Assumed Expenses for retirees and dependents have been updated to reflect changes in claims and expense expectations: and - the Health Benefit Cost Trend and Expense Trend have been updated to reflect changes in short -term expectations of the annual rate of increase of the Assumed Per Capita Health Benefit Costs. Two separate valuations, each of which used the October 1. 2010 valuation date, were used to develop results for the fiscal years ending September 30, 2011 and September 30, 2012. At September 30, 2012, the City's actuarial accrued liability for OPEB benefits was S9,356,116. all of which was unfunded. 19 FINANCIAL INFORMATION T.413LE 12 - GENERAL FuND REVENUES ar' I EXPENDITURE HISTORY Fiscal Year Ended September 30. 2012 2011 2010 2009 2008 Revenues: Takes $ 37,527,211 $ 35,236,521 $ 33.134,813 $ 31,662.441 $ 30,984,741 Licenses & Permits 1,496,424 1,054,986 964,344 1,007.151 1,154,902 Intergovernmental 520,948 589,326 795,750 829,506 536,215 Charges for Services 2,296.105 2,539,881 4,043,200 2,922,495 3,149,076 Fines, Forfeits and Penalties 3,636,209 3,823,406 3,817,193 3,589,478 3,412,827 Spectral Assessments - - - - 914 Investment Income 88,684 92,017 69,379 235,181 593,514 Rents & Royalties 686,729 589,528 749,635 292,660 279,004 Contributions 20,168 33,995 15,366 22.725 25,046 Reimbursed Expenditures - - - 358,756 426 Other 287,796 75,339 139,644 153,859 159,477 Total Revenues $ 46,560,274 $ 44,034,999 $ 43,729,324 $ 41,074,252 $ 40,296,142 Expenditures: General Government $ 4,189,987 $ 5,021,221 $ 4,098,364 $ 4,763,622 $ 6,187,469 Fiscal Services 2,871,677 2,997,993 3,086,275 3,161,357 3,411,717 Police Department 15,465,837 14,890,520 13.724,355 14,083,071 13.219,117 Fire Department 12,578,396 11,444,702 11,414,188 11,754,088 11,251,400 Planning &Development Services 3,523,742 3,298,725 2,456,322 2,803,512 2,281,747 Parks and Recreation 4,329,869 6,602,097 8,295,138 8,785,858 8,985,860 Information Technology 3,844,107 648,589 3,886.102 3,298,479 3,366,764 Public Works 5,884,577 5,021,642 6,099,189 6,495,104 7,157,121 Library Services 1,072,551 3,901,721 1,080,030 1,119,771 993,102 Claims - 1,061,581 1,600,000 - - Reimbursed Administrative - (u - (r) - ti) - (1) (6,497,466) Contributions 937.813 - 783,883 790,262 657,592 Other 183,530 736,192 327,210 385,178 173,637 Capital Improvement Projects 788,032 129,005 476,462 715,707 Total Expenditures $ 55,670,118 $ 56,171,633 $ 56,980.061 $ 57,916,764 $ 51,903,767 Other Financing Sources (Uses): Sale of General Fixed Assets - 8,690 $ 5,615 $ 5,606 $ 10,981 Operating Transfers In 15,539,293 16,065,942 15,786,796 15,047,102 11,591,668 Operating Transfers Out (4,329,789) (3,360,822) - (9,700) (942.224) Total Other Financing Sources (Uses) $ 11,209,504 $ 12,713,810 $ 15,792,411 $ 15,043,008 $ 10,660,425 Net Change in Fund Balance $ 2,099,660 $ 577,176 $ 2.541,674 $ (1,799,504) $ (947,200) Fund Balance, Beginning of Year 14,393,057 13,815,881 11,274,207 (3) 11,177,933 (2) 12,932,589 Fund Balance, End of Year S 16.492,717 $ 14.393.057 $ 13,815.881 $ 9,378,429 $ 11,985.389 Source: The City's audited financial statements. (1) Reimbursed Administrative expenses are now being taken against the appropriate department expenditures. (2) Beginning Fund Balance differ from Fiscal Year 2008 Ending Fund Balance due to the reclassification of the Court Security Fund, Efficiency Time Payment Fund and Police Seizure as Special Revenue Fund. The funds are considered special revenue funds since they are restricted by specific legislation. (3) Restated. 20 TABLE 13 - MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, Texas, Tax Code, Chapter 321, which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged to the payment of the Obligations. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after 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 of one percent ( %of 1 %) for property tax reduction. The total sales tax rate for the City is 1.5 %. Fiscal Year % of Equivalent of Ended Total Ad Valorem Ad Valorem Per 9/30 Collected (1) Tax Levy Tax Rate Capitat'i 2008 $ 19,822,906 99.24% $ 0.44 $ 222 2009 19,438,179 88.05 °.o 0.39 213 2010 19.328,578 81.82% 0.36 206 2011 20,292,871 83.49% 0.37 214 2012 21,498,319 85.84% 0.38 220 2013 13,545,493 t2; 53.08% 0.23 138 (1) Provided by the City. (2) As of April 30, 2013. (3) Based on population estimates provided by the City. FINANCLIL POLICIES Basis of Accounting .. .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 accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance- related legal and contractual provisions. The minimum number of funds is 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 government activities. Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. General Fund ... The General Fund is the City's primary operating fund. I[ is used to account for all activities typically considered governmental functions of the City. These include Public Safety, Public Works, Parks and Recreation, Economic and Planning and Development Services, the support functions for these areas, and the administrative functions for the City. The General Fund for the 2012 -2013 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 financial 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 rP P Y P P tern projects. Debt 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 8 1/3% of annual appropriated expenditures for debt service and any associated fees as the Debt Service Fund balance at fiscal year end. The City is in compliance with that policy. Budeetarr Procedures .. .Prior to September 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year comtnencing the following October 1. The operating budget includes proposed expendinues 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 within 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. 21 THE COMBINED UTILITY SYSTEM WATERWORKS SYSTEM Since December 1981, the City has had the capability to produce and deliver 100% of its water. The system has been expanded to a system of nine wells, with a combined capacity of 29 million gallons per day. The water is delivered to the distribution system by 14 miles of 30 -inch diameter and 36 inch diameter pipeline and two pumping stations. These pipelines will be fully redundant once TxDoT completes the Villa Maria / 2818 overpass and the City completes the pipeline re- routing necessary to accommodate the overpass. Two of the wells mentioned above are shallow wells, less than 1,500 feet, drilled into the Carrizo and Sparta aquifers. The remaining six are deep wells, approximately 3,000 feet, drilled in the Simsboro Sand formation of the Carrizo -Wilcox aquifer. This is a very prolific aquifer of high quality water that has the capacity to provide an adequate water supply for the City and surrounding communities through the year 2060, and well beyond, if managed properly. However, the Simsboro Sand formation is now regulated by the Brazos Valley Groundwater Conservation District, and new permitting requirements have made it very difficult to drill new deep wells. The City has recently completed drilling Simsboro Well #8, which was placed in service before the high demand summer season of 2011. A Drilling/Operating Permit application has been tiled with the Groundwater District for the City to drill Simsboro Wells #9 and #10. Well #9 is planned for completion in 2017 to meet projected demands for water. Well #10 would be constructed later, depending upon the growth of water demands. The City has completed a Water Reclamation project, which pumps effluent from the wastewater treatment plant up to Veteran's Park for irrigation of playing fields, reducing the demand on the potable water system by approximately 350.000 gallons per day.. Additional phases of the reclaimed water system are in the planning stages. The City also has stand by generators at strategic locations sufficient to provide adequate potable water for health and safety during and extended electrical power outage. Water rates were established by ordinance, passed and approved by the City Council, and became effective October 1, 2010. The Residential rates are inclined block rates to encourage water conservation. Meter Type of Customer Usage Charge (per 1.000 gallons) Service Charge Size Residential, Commercial and Industrial $ 10.19 per mo. 5/8" 10.19 per mo. 3/4" 12.78 per mo. 1" 19.03 per mo. 1 1/2" 30.05 per mo. 2" 94.84 per mo. 3" 140.90 per rno. 4" 171.53 per rno. 6" Residential $2.26 for usage from 0- 10,000 gallons $2.94 for usage from 11,000 - 15,000 gallons $3.61 for usage from 16,000- 20,000 gallons $4.28 for usage from 21,000- 25,000 gallons $4.96 for usage from 26,000 gallons and more Commercial and Industrial 2.49 per 1,000 $ P gallons g Commercial Irrigation Usage Charge $2.68 per 1,000 gallons 22 WA:STER'ATER SYSTEM The City's waste water is treated by three City-owned wastewater treatment plants, Carter Creek Treatment Plant, Lick Creek Treannent Plant, and Carter's Lake Treatment Plant located within the City limits. The three plants have a combined treatment capacity of 11.5 mgd as compared to average current daily demand of 6.5mgd. The treatment plant's capacity is adequate to serve a population estimated at 122,000. Sewer rates were established by ordinance, passed and approved by the City Council, and became effective on October 1, 2012. Residential (metered water) $18.78 including 4,000 gallons of metered water Usage Charge $3.76 per 1,000 gallons of additional metered water $41.34 maximum per month Residential (without meter to each unit) $23.89 per unit per month Commercial and Industrial $16.11 per month Usage Charge ... $4.44 per 1,000 gallons of metered water usage ELECTRIC SUPPLY SOURCE The City began purchasing power from American Electric Power (AEP) Energy Partners, Inc. on February I, 2003. The City's contracts provide for base load power through 2027 and for intermediate load power through the end of 2014. The variable components for purchased power are the costs for additional power needed above the contracted load shape, congestion charges through the transmission grid, and ancillary charges from the ERCOT System. The City continues to pay transmission charges to a number of outside utility systems at current Public Utility Commission of Texas defined rates. The City is served thmugh the Electric Reliability Council of Texas (ERCOT) transmission grid, and owns 20 miles of I38kV transmission lines, six substations, and 400 miles of distribution lines. The current electric rates were established by ordinance passed and approved by the City Council and became effective on October 1, 2010. The electric rates are subject to a transmission delivery adjustment (TDA) charge which requires that the net energy charge per kilowatt hour must be increased or decreased by an amount per kilowatt hour equal to additional transmission charges above those accounted for in the wholesale rate. The TDA had been set at zero prior to March 1, 2007. It is currently set at $0.005 per kilowatt hour of energy consumed. In January 2009, College Station Utilities began offering residential electric customers renewable wind energy. In February 2010, the renewable wind energy program was expanded to include commercial customers. Wind energy is generated from the South Trent Mesa Wind Project located west of Abilene, Texas. Single Family Residential Service Charge $7.00 per month plus: kwhrs (May through October) $0.1181 per kwhr kwhr (November through April) $0.1134 per ks hr Tax 1.50% Transmission Delivery Adjustment (TDA) Calculated as needed Master Metered Multiple Dwelling Units..... Service Charge $100.00 per month per master meter plus: kwhrs (May through October) $0.1181 per kwhr kwhr (November through April) $0.1134 per kwhr Tax 1.50% TDA Calculated as needed Small Commercial (1 -10 KW demand) Service Charge $9.00 per month plus: First 1,000 kwhrs $0.1358 per kwhr Over 1,000 kwhrs $0.1038 per kwhr Tax 8.25% TDA Calculated as needed 23 Medium Commercial (15 -300 KW) Service Charge $25.00 per month plus: Demand Charge (Per KW) $10.40 per KW Energy Charge All kwhrs $0.0736 per KW Minimum Monthly Charge $181.00 Tax 8.25% TDA Calculated as needed Large Commercial (300 — 1,500 KW) Service Charge $75.00 per month plus: Demand Charge (Per KW) $10.40 per KW Energy Charge All kwhrs $0.0710 per KW Minimum Monthly Charge $3,195.00 Tax 8.25% TDA Calculated as needed Industrial (1,500 KW and over) Service Charge $250.00 per month plus: Demand Charge (Per KW) $9.85 Energy Charge (first 500,000 kwhrs) $0.0689 per KW Minimum Monthly $15,034.85 Tax 8.25% TDA Calculated as needed WIND WATT RATES Participation Level: Residential & Commercial 10% $0.0020 per KW 50 °/o $0.0100 per KW 100% $0.0200 per KW TABLE 14 - HISTORICAL UTILITY USERS (UNITS SERVED) Fiscal Year Ended September 30, 2012 2011 2010 2009 2008 Water 39,338 37,565 37,596 37,344 37,075 Wastewater 36,908 35,563 35,853 34,743 34,743 Electric 39,123 37,829 38,255 37,818 37,777 TABLE 15 - TEN LARGEST IJTD.ITY CUSTOMERS Total Percent FY 2012 KWH of KWH Utility Customer Type of Business Consumption Consumed City of College Station Municipality 22,474,964 2.87% CSISD School 15,917,174 2.03% CBL & Associates Retail Mall 11,752,740 1.50% Texas A &M University 11,190,122 1.43% College Station Medical Center Hospital 9.011,789 1.15% Kroger Retail Grocery 6,177,120 0.79% Scott & White Clinic Clinic 5,531,341 0.71% Wal -Mart Retail 5,429,720 0.69% EH College Station LP Hotel 5,013,900 0.64% Dealer Computer Services, Inc. Retail 4,816,400 0.61% 97.315,270 12.43% 24 TABLE 16 - CONDENSED STATEMENT OF OPERATIONS For Fiscal Year Ended September 30, 2012 2011 2010 2009 2008 Revenues: Electric $ 94,396,234 $ 98,737,655 $ 89,126,259 $ 80,676,212 $ 74,975,691 Water and Wastewater 27,652,449 29,248,180 23,772,503 25,229,487 22,294,720 Interest 136,974 142,700 129,691 579,520 1,263,129 Other 2,857,223 2,584,985 2,531,326 2,461,853 2,726,652 Total Revenues $ 125,042,880 $ 130,713,520 $ 115.559,779 $ 108,947,072 $ 101,260,192 Expenses: Total Expenses $ 88,927,662 $ 96,938,864 $ 91,551,106 $ 80,848,570 $ 73,195,783 Net Available for Debt Service $ 36,115,218 $ 33.774.656 $ 24,008,673 8 28.098,502 $ 28,064.409 Water (Units Served) 39,338 37,565 37,596 37,344 37,075 Wastewater (Units Served) 36,908 35,563 35,853 34,743 34,743 Electric (Units Served) 39,123 37,829 38,255 37,818 37,777 TABLE 17 -VALUE OF THE SYSTEM Fiscal Year Ended September 30, 2012 2011 2010 2009 2008 Utility Systems $ 435,064,838 $ 366,563,463 $ 348,347,759 $ 318,485,023 $ 293,094,037 Construction in Progress 20,430,326 69,987,787 69,448,456 69,561,781 67,833,091 $ 455,495,164 $ 436,551,250 $ 417,796.215 $ 388,046,804 $ 360,927,128 Less: Accumulated Depreciation 158,428.406 142,344.667 131,366.712 120.579,498 107,679,617 Net System Value $ 297,066. 754 $ 294,206.583 $ 286.429,503 $ 267.467,306 $ 253,247,511 TABLE 18 - CTTY'S EQUITY LN THE SYSTEM Fiscal Year Ended September 30, Resources 2012 2011 2010 2009 2008 Net System Value $ 297,066,758 $ 294,206,583 $ 286,429,503 $ 267,467,306 $ 253,247,511 Current Assets 53,031,034 47,319,652 42,528,426 53,391,673 45,761.719 Restricted Assets 10,143,761 5,166,872 5,592,025 6,926,456 8.098,103 Other Resources 120,000 240,000 360,000 360,000 680,000 Deferred Charges 780,390 919,I83 842,458 869,924 859,979 Total $ 361,141,943 $ 347,852,290 $ 335,752,412 $ 329,015,359 $ 308,647,312 Obligations Current Liabilities $ 17,180,367 $ 20,308,090 $ 18,126,521 $ 15,418,179 $ 13,741,421 Current Liabilities Payable from Restricted Assets 13,474,895 11,049,949 10,735,762 9,942,046 9,066,763 General Obligation Debt 30,675,000 24,020,000 Certificates of Obligation 55,865,000 48,085,000 42,265,000 36,185,000 22,920,000 Revenue Bond Debt 41,505,001 49,845,002 81,525,000 87,745,000 93,724,997 Other Debt 4,561,927 (I) 3,249,873 (t) 1,551,658 (I) 152,262 180,630 Total Liabilities $ 163,262,190 $ 156,557,914 $ 154,203,941 $ 149,442,487 $ 139,633,811 City's Equity in System $ 197,879,753 $ 191,294,376 $ 181,548,471 $ 179,572,872 $ 169.013.501 Percentage of Equity in System 54.79% 54.99% 54.07% 54.58% 54.76% (1) Includes OPEB Net Pension Obligations. 25 TABLE 19 — UTILITY REVENUE BOND AND SYSTEMS SUPPORTED CERTIFICATE DEBT SERVICE Original Outstanding Principal Principal Series Amount as of 6/1/2013 2005 $ 8,035,000 $ 355,000 * 2005A 0 ' 12,995,000 6,510,000 * 2006 16,950,000 12,985,000 2007 18,665,000 14,915,000 2008 (2) 15,925,000 13,235,000 2009 (2) 19,490,000 21,825,000 2010 (2) 2,850,000 2,555,000 2010 01(3) 25,905,000 21,915,000 2011 ( �) 7,920.000 7,375,000 2012 (2' 16,415,000 15,925,000 2012 (11(31 9,570,000 8,760,000 2013 (2) 9,610,000 9,610,000 $ 154.720,000 $ 126,355.000 * Preliminary, subject to change. Excludes the Refunded Obligations. (1) Represents refunding bonds. (2) Certificates of Obligation supported in whole or in part by Utility System revenues. (3) General Obligation Improvement Bonds supported in part by the Utility System revenues. INVESTMENTS The City invests its investable fimds in investments 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. LEGAL LN VESTMENTS Under S I nder State law, the City is authorized to invest in: (1) obligations of the United ,fates or its agencies and instrumentalities, including letters of credit: (2) direct obligations of the State or its agencies and instrumentalities: (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the i.Inited 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 or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assurned, or guaranteed by the State of Israel; (7) certificates of deposit and share certificates (i) issued by a depository institution that has its main office or a branch office 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 as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for City deposits, or (ii) where (a) the funds are invested by the City through (I) a broker that has its main office or a branch office in the State of Texas and is selected from a list adopted, at least annually, by the City as required by law or (II) a depository institution that has its main office or a branch office in the State of Texas that is selected by the City; (b) the broker or the depository institution selected by the City arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the City; (c) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States, and (d) the City appoints the depository institution selected under (a) above, a custodian as described by Section 2257.041(d) of the Texas Government Code, or a clearing broker- dealer registered with the Securities and Exchange Conunission and operating pursuant to Securities and Exchange Commission Rule 15c3 -3 (17 C.F.R. Section 240.15c3 -3) as custodian for the City with respect to the certificates of deposit; (8) fully collateralized repurchase agreetnents that have a defined termination date, are fully secured by a combination of cash and obligations described in clause (1) which are pledged to the City, held in the City's name, and deposited at the time the investment is made with the City or with a third party selected and approved by the City and are placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in the State of Texas; (9) hankers' 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 -1" or "P -1" or the equivalent by at least one nationally recognized credit rating agency; (10) commercial paper that is rated at least "A -1" or "P -1" or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state; (11) no -load money market mutual funds regulated by the 26 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; (12) no -load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than "AAA" or its equivalent; provided, however, that the City is not authorized to invest in the aggregate more than 15% of its monthly average fund balance. excluding bond proceeds and reserves and other funds held for debt service, in such no -load mutual funds, and (13) for bond proceeds, guaranteed investment contracts that have a defined termination date, are secured by obligations of the United States or its agencies and instrumentalities in an amount equal to the amount invested under the contract, and are pledged to the City and deposited with the City or a third party selected and approved by the City. The City is also authorized to invest its funds through an eligible investment pool if the governing body of the City by rule, ordinance, or resolution, as appropriate, authorizes investment in the particular pool. To be eligible to receive funds from and invest funds on behalf of the City, an investment pool must furnish to the investment officer or other authorized representative of the City an offering circular or other similar disclosure instrument that contains, at a minimum, the following information: (1) the types of investments in which money is allowed to be invested; (2) the maximum average dollar- weighted maturity allowed, based on the stated maturity date, of the pool; (3) the maximum stated maturity date any investment security within the portfolio has; (4) the objectives of the pool; (5) the size of the pool; (6) the names of the members of the advisory board of the pool and the dates their terms expire; (7) the custodian bank that will safekeep the pool's assets; (8) whether the intent of the pool is to maintain a net asset value of one dollar and the risk of market price fluctuation; (9) whether the only source of payment is the assets of the pool at market value or whether there is a secondary source of payment, such as insurance or guarantees, and a description of the secondary source of payment; (10) the name and address of the independent auditor of the pool; (11) the requirements to be satisfied for an entity to deposit funds in and withdraw funds from the pool and any deadlines or other operating policies required for the entity to invest funds in and withdraw funds from the pool; and (12) the performance history of the pool, including yield, average dollar- weighted maturities, and expense ratios. Governmental bodies in the State are authorized to implement securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (i) through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (6) and (10) through (12) of the first paragraph under this subcaption, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body. held in the name of the governmental body and deposited at the time the investment is made with the City or a third party designated by the City; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less. 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: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage - backed security and bears no interest: (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is detemnined by an index that adjusts opposite to the changes in a market index. INvEsTmENT 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 investment diversification, yield, maturity, and the quality and capability of investrnent management; and that includes a list of authorized investments for City funds maximum allowable stated maturity of any individual investment and the maximum average avers Y tY 8 dollar- weighted maturity allowed for pooled fund groups, methods to monitor the market price of investments acquired with public finds, a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) 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 investment officers jointly prepared and signed the report, (3) the beginning market value and ending market value for each pooled fund group, (4) the book value and market value of each separately listed asset at the 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 compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. 27 ADDITIONAL. PROVISIONS Under Texas law the City is additionally required to: (1) annually review its adopted policies and strategies; (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 the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written 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 training 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 the tern of the reverse repurchase agreement; (7) restrict the invesunent 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; (8) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements and (9) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. Under Texas haw, the City may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b -1 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 rust 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 Executive Director of Business Services or his designee will promptly cause all City funds to be deposited with the bank depository and invested 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 quarterly financial report, the Chief Financial Officer or his designee will prepare and provide a written recapitulation of the City's invesunent portfolio to the Council, detailing each City investment instrument with its rate of return and maturity date. The City's adopted investment policy permits the City to invest its funds and funds under its control in all of the enumerated investments authorized by the PFIA. TABLE 20 - CURRENT INVESTMENTS As of April 30, 2013. the City's investable funds were invested in the following categories: Book M arket Investment Type Value Value Demand Bank Accounts $ 46,541,762 $ 46,541,762 Certificates of Deposit 15,038,335 15,038,335 Pooled Cash (T exp ool/TexSTAR) 30,995,273 30,995,273 Money Market Mutual Fund 20.397,666 20,397,666 $ 112,973,036 $ 112,973,036 TAX MATTERS OPINION On the date of initial delivery of each series of the Obligations, 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 "), (1) interest on the Obligations for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2) the Obligations will not be treated as "specified private activity 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 will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations. See Appendix C - FORM OF OPINIONS OF BOND COUNSEL. 28 In rendering its opinions, Bond Counsel will rely upon (a) certain information and representations of the City, including information and representations contained in the City's federal tax certificate, (b) the Verification Report prepared by Grant Thornton LLP with respect to the refunding of the Refunded Obligations and (c) covenants of the City contained in the respective Ordinances authorizing each series of the Obligations relating to certain matters, including arbitrage and the use of the proceeds of the Obligations and the property financed or refinanced therewith. Failure of the City to comply with these representations or covenants could cause the interest on the Bonds or Certificates, as the case may he, to become includable in gross income retroactively to their date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Obligations in order for interest on the Obligations to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Obligations to be included in gross income retroactively to the date of issuance of the Obligations. The opinions of Bond Counsel are rendered in reliance upon the compliance by the City with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Obligations. Bond Counsel's opinions are not a guarantee of a result, but represent its legal ,judgment based upon its review of Existing Law and reliance on the aforementioned information, representations and covenants. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Obligations. A ruling was not sought from the Internal Revenue Service by the Issuer with respect to the Obligations or the property financed or refinanced with proceeds of the Obligations. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Obligations, or as to whether the Intemal 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 Issuer as the taxpayer and the Obligation holders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. FEDERAL INCOME TAX ACCOUNrtNG TREATAwNT OF ORIGINAL ISSUE DISCOUNT The initial public offering price to be paid for one or more maturities of the Obligations may be less than the principal amount thereof or one or more periods for the payment of interest on the Obligations may not be equal to the accrual period or be in excess of one year (the "Original Issue Discount Obligations "). In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount Obligation, and (ii) the initial offering price to the public of such Original Issue Discount Obligation would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the Obligations 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 is 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 Obligation in the initial public offering 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 Obligation 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 Obligation prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Obligation in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Obligation was held by such initial owner) is includable in gross income. Under Existing Law, the original issue discount on each Original Issue Discount Obligation is accrued daily to the stated maturity thereof (in amounts calculated as described below for each accrual period within each accrual period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Obligation 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 basis 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 multiplied 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 Lssue Discount Obligation. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Obligations which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Obligations should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Obligations and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Obligations. 29 COLLATERAL FEDERAL LNCo w T.&x C ONSEQU;ENCES The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Obligations. This discussion is based on Existing Law, which is subject to change or modification, retroactively. 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, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium credit 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 OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE OBLIGATIONS. Interest on the Obligations will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Under section 6012 of the Code, holders of tax- exempt obligations, such as the Obligations. may he 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 ordinary income tax treannent of gain recognized upon the disposition of a tax - exempt obligation, such as the Obligations, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or exceeds, one year from 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 minitnis 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 acquisition date and the final maturity date. STATE, LOCAL AND FOREIGN TARES Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Obligations 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 States persons. FUTURE AND PROPOSED LEGISLATION Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the federal or state level, may adversely affect the tax - exempt status of interest on the Obligations under federal or state law, and could affect the market price or marketability of the Obligations. Any of the foregoing could limit the value of certain deductions and exclusions, including the exclusion for tax- exempt interest. The likelihood of any of the foregoing becoming effective cannot be predicted. Prospective purchasers of the Obligations should consult their own tax advisors regarding the foregoing matters. CONTINUING DISCLOSURE OF INFORMATION In the Ordinances, the City has made the following agreement for the benefit of the holders and beneficial owners of each series of Obligations. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Obligations. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified events, to the Municipal Securities Rulemaking Board (the "MSRB "). This information will be publicly available at no cost on the Electronic Municipal Market Access of the MSRB, with the web address www.emma.msrb.org ( "EMMA "). ANNUAL REPORTS The City will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 6, 8 through 20 and in Appendix B. The City will update and provide this information within six months after the end of each fiscal year ending in and after the City's 2012 -13 fiscal year. The City will provide the updated information to the MSRB through EMMA in accordance with recent amendments to Rule 15c2 -12 (the "Rule ") promulgated by the United States Securities and Exchange Commission (the "SEC "). 30 The financial information and operating data to be provided may be set forth in fill in one or more documents or may be included by specific reference to any document available to the public on the MSRB's Internet Web site or filed with the SEC, as permitted by the Rule. The updated infonnation will include audited financial statements, if the City conunissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial statements by the required time and audited financial statements when and if such audited financial statements become 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 City'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 notify the MSRB of the change. EVENT NOTICES The City will also provide timely notices of certain events to the MSRB. The City will provide notice of any of the following events with respect to the Obligations to the MSRB in a timely manner (but not in excess of ten business days after the occurrence of the event): (1) principal and interest payment delinquencies; (2) non- payment related defaults, if material; (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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB), or other material notices or determinations with respect to the tax status of the Obligations, or other material events affecting the tax status of the Obligations; (7) modifications to rights of holders of the Obligations, if material; (8) Obligation calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Obligations, if material; (11) rating changes: (12) bankruptcy. insolvency, receivership, or similar event of the City, which shall occur as described below; (13) the cnnsumrnation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of its assets, other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any suchactions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. In addition, the City will provide timely notice of any failure by the City to provide annual financial information in accordance with their agreement described above under "Annual Reports ". For these purposes, any event described in clause (12) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such ,jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization. arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. The City will provide each notice described in the previous paragraph to the MSRB through EMMA, in accordance with the Rule. LIMITATIONS AND AMENDMENTS The City has agreed to update information and to provide notices of specified 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 a decision to invest in or sell Obligations 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 Obligations 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 Obligations 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, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Obligations 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 Obligations. 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 "ANNUAL 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 a?ITTH PRIOR UNDERTAKINGS During the Last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. 31 OTHER INFORMATION RATINGS The presently outstanding tax supported debt of the City is rated "Aa2" by Moody's and "AA" by S &P, without regard to credit enhancement. Applications for contract ratings have been made to S &P and Moody's. 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 then, may have an adverse effect on the market price of the Obligations. LITIGATION The City is a party to legal proceedings, many of which occur in the normal course of operations. It is not possible at the present time to estimate ultimate outcome or liability, if any, of the city with respect to the various proceedings. The City's management believes that the ultimate outcome of the various lawsuits will not have a material adverse effect on the City's financial position. REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE The sale of the Obligations has not been registered under the federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Obligations have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Obligations been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Obligations under the securities laws of any jurisdiction in which the Obligations may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Obligations must not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AAD ELIGIBILITY TO SECURE PUBLIC FINDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Govermnent Code) provides that the Obligations are negotiable instruments, investment securities 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 municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Obligations by municipalities or other political subdivisions or public agencies of the State of Texas, the PFIA requires that the Obligations be assigned a rating of at least "A" or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION - RATINGS" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Obligations are legal investments for state banks, savings hanks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Obligations 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. The City has made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Obligations for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Obligations for such purposes. No review by the City has been made of the laws in other states to determine whether the Obligations are legal investments for various institutions in those states. LEGAL OPINIONS The City will furnish a complete transcript of proceedings incident to the authorization and issuance of the Obligations, including the unqualified approving legal opinion of the Attorney General of Texas approving the Obligations and to the effect that the Obligations are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the legal opinion of Bond Counsel, to like effect and to the effect that the interest on the Obligations 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 minimums tax on corporations. In its capacity as Bond Counsel, McCall, Parkhurst & Horton L.L.P. has reviewed the information under the captions "PLAN OF FINANCING" (except for the subsection "SOURCES AND USES OF PROCEEDS "), "THE OBLIGATIONS," "TAX MATTERS," "OTHER INFORMATION — LEGAL INtiESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS," "OTHER INFORMATION — REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE," "OTHER INFORMATION — LEGAL OPINIONS," and "CONTINUING DISCLOSURE OF INFORMATION" (except under the subheading "COMPLIANCE WITH PRIOR UNDERTAKINGS ", as to which no opinion is expressed) in the Official Statement and Bond Counsel is of the opinion that the information relating to the Obligations and the Ordinances contained under such captions is a fair and accurate summary of the information purported to be shown. The legal fee to be paid to Bond Counsel for services rendered in connection with the issuance of the Obligations is contingent on the sale and delivery of the Obligations. The legal opinion will accompany the Obligations deposited with DTC or will be printed on the Obligations in the event of the discontinuance of the Book - Entry -Only System. In connection with the transactions described in the Official Statement, Bond Counsel represents only the City. Certain legal matters will be passed upon for the Underwriters by 32 The various legal opinions to be delivered concurrently with the delivery of the Obligations 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 judgment, 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 of any legal dispute that may arise out of the transaction. AUTHEN'TICTIY OF FLNANCLuL 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 statues, documents and resolutions contained in this Official Statement are made subject to all of the provisions 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 Obligations. The Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and delivery of the Obligations. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinions 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 Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor has reviewed the information in this Official Statement in 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 accur cy or completeness of such information. VERIFICATION OF ARITILMETICAL AND MATHEMATICAL COMPUTATIONS The arithmetical accuracy of certain computations included in the schedules provided by First Southwest Company on behalf of the City relating to (a) computation of forecasted receipts of principal and interest on the Federal Securities and the forecasted payments of principal and interest to redeem the Refunded Obligations and (b) computation of the yields of the Bonds and the restricted Federal Securities were verified by Grant Thornton, LLP, certified public accountants. Such computations were based solely on assumptions and information supplied by First Southwest Company on behalf of the City. Grant Thornton, LLP has restricted its procedures to verifying the arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions and infomtation on which the computations are based and, accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. UNDERWRITERS , (the "Underwriters "), have agreed, subject to certain customary conditions precedent to closing, to purchase the Bonds from the City. The purchase price for the Bonds is $ (representing the par amount of the Bonds, plus a premium of $ and less an underwriters' discount of $ ) plus accrued interest on the Bonds. The Underwriters will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Bonds into investment trusts) at prices lower than the public offering prices of such Bonds, and such public offering prices may be changed, from time to tine, by the Underwriters. The Underwriters, have agreed, subject to certain customary conditions precedent to closing, to purchase the Certificates from the City. The purchase price for the Certificates is $ (representing the par amount of the Certificates, plus a premium of $ and less an underwriters' discount of $ ) plus accrued interest on the Certificates. The Underwriters will be obligated to purchase all of the Certificates if 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 offering prices of such Certificates, and such public offering prices may be changed, from time to time, by the Underwriters. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their 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 Underwriters do not guarantee the accuracy or completeness of such information. 33 MISCELLANEOUS The Ordinances authorizing the issuance of the Obligations will also approve the form and content of this Official Statement, and any addenda or amendment thereto, and authorize its further use in the reoffering of the Obligations by the Underwriters. Mayor City of College Station, Texas ATTEST: City Secretary City of College Station, Texas 34 Schedule I SCHEDULE OF REFUNDED OBLIGATIONS* General Obligation Debt Certificates of Obligation, Series 2005 General Obligation Improvement Bonds, Series 2005 Maturity Interest Par Amount Call Call Maturity Interest Par Amount Call Call February 15 Rate to be Refunded* Date Price February 15 Rate to be Refunded* Date Price 2015 4.000% $ 230,000 2115.'2014 100.00 2015 4.000% $ 245,000 2/15/2014 100.00 2016 4.000% 160,000 2/15.2014 100.00 2016 4.000% 255,000 245.2014 100.00 2017 4.000% 170,000 21152014 100.00 2017 4.000% 270,000 2/15/2014 100.00 2018 4.125% 180,000 2/1512014 100.00 2018 4.125% 285,000 2/15/2014 100.00 2019 4.125% 190,000 2115.2014 100.00 2019 4.125% 305,000 2/15/2014 100.00 2020 4.250% 200,000 2/15.2014 100.00 2020 4.250% 320,000 2452014 100.00 2021 4.250% 215.000 2115.2014 100.00 2021 4.250% 340,000 2/15/2014 100.00 2022 4.375% 225,000 2/152014 100.00 2022 4.375% 360,000 24512014 100.00 2023 4.375% 235,000 2/152014 100.00 2023 4.375% 380,000 2/15/2014 100.00 2024 4.500% 250,000 2/15.2014 100.00 2024 4.500% 400,000 2/152014 100.00 2025 4.500% 265,000 2115.x2014 100.00 2025 4.500% 420,000 2/15/2014 100.00 $ 2,320,000 $ 3,580,000 Utility System Revenue Debt Utility System Revenue Refunding Bonds, Series 2005A Utility System Revenue Bonds, Series 2005 Maturity Interest Par Amount Call Call Maturity Interest Par Amount Call Call February 1 Rate to he Refunded* Date Price February 1 Rate to be Refunded* Date Price 2015 5.250% 5 350,000 (r) 2/1.2014 100.00 2015 4.000% $ 375,000 2.'1/2014 100.00 2016 5.000% 365,000 (I) 2/1/2014 100.00 2016 4.000% 395,000 2/1.2014 100.00 2017 5.000% 325,000 (t) 211.2014 100.00 2017 4.000% 420,000 2/112014 100.00 2018 4.000% 170,000 (1) 2/1/2014 100.00 2018 4.000% 445,000 2/1+2014 100.00 S 1,210,000 2019 4.125% 470,000 2112014 100.00 2020 4.125% 495,000 2/12014 100.00 2021 4.250% 525,000 2/1/2014 100.00 2022 4.375% 555,000 2/1/2014 100.00 2023 4.375% 585,000 2/12014 100.00 2024 4.500% 615,000 2412014 100.00 2025 4.500% 650,000 211,1014 100.00 $ 5,530,000 * Preliminary, subject to change. (1) Par amount refunded is less than entire maturity. S -1 I APPENDIX A GENERAL INFORMATION REGARDING THE CITY THE CITY The City, located in Brazos County, is situated in the middle of a triangle bounded by Dallas /Fort Worth, Houston, and San Antonio /Austin. Approximately 80% of the Texas population is located within a 200 mile radius of the City. In addition to being a residential community for faculty, students and other personnel of Texas A &M University, the City also serves as a regional manufacturing, retail and health care hub. The City was incorporated in 1938 and has a Council -City Manager form of government with City employees totaling 895 currently. The City adopted and enforces comprehensive zoning and building restrictions aimed at assuring orderly growth and development. The City's ordinances require all subdividers, at their own expense and without provision for refund, to install streets and water and wastewater lines in 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. In March 2013 Forbes magazine named College Station one of the nation's 25 best places to retire. College -town cultural amenities, low cost of living, median home price, warm climate and low crime rate help land the City on Forbes list. CITY OWNED FACILITIES The City owns many facilities including. streets, utilities, parks, public buildings, and other infrastructures. Approximately 482 miles of streets (99 %) within the City are hard surface. The City has a complete water distribution, wastewater collection and treatment system with 734 miles of wastewater and water lines. The City owns the electrical distribution system with approximately 444 miles of distribution lines, and purchases its electricity from American Electric Power. The City has a fully equipped police department with 132 full time police officers and 62 support personnel. The department has 31 police patrol cars and one holding facility with a capacity of 17. The fire department consists of 132 full time fire fighters and 7 support personnel. There are six stations and a total of 8 engines, 6 ambulances, 2 command vehicles, 1 rescue truck, 2 ladder trucks. 1 tanker truck, and 1 grass fire truck. Fire Station #6 opened in December 2012. EDUCATIONAL FACILITIES The College Station Independent School District (the "School District ") is a fully accredited system offering 14 educational campuses for pre - kindergarten through high school. The School District has a student enrollment in excess of 10,600 and employs over 1,450 people. The School District opened a second high school, College Station High School, in August 2012. The School District's facilities are also used by Blinn College, a community college offering two years of college level courses. Texas A &M University provides higher educational facilities, offering both four year college programs and graduate degree programs. HEALTH CARE The College Station Medical Center "The MED" is located on 25 acres within the City. The 200,000 square foot facility is a full care hospital containing 167 beds and employing more than 500 people. The MED recently completed a $23 million hospital expansion. The MED is a Trauma Level III facility, Cycle III accredited Chest Pain Center, Certified Primary Stroke Center and was the region's first Sleep Center to be accredited by the American Academy of Sleep Medicine. On March 30, 2011, Scott and White broke ground on a 403,000 square foot, 5 -story 143 bed hospital. Construction is near completion and is scheduled to open in August 2013. Scott & White Hospital - College Station will house an emergency department, cardiac services including cath labs, neonatal intensive care unit, comprehensive cancer services, operating rooms, maternity services suites, endoscopic procedure suites, intra operative robotics and other specialty services, all supported by a pharmacy. comprehensive state -of -the -art imaging technology and other diagnostic capabilities Other area health care providers include: St. Joseph Regional Health Care Center, Scott & White Clinic, and The Physicians Centre. A -1 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 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. United Airlines provides daily flights to and from Houston Bush Intercontinental Airport out of Esterwood. Coulter Field is located north of the City of Bryan and provides a 4,000 foot lighted runway. Coulter Field offers all types of services for the private aircraft. Bus Lines Two bus lines serve the City with daily service connecting the City with Houston and Dallas. Railroads Rail freight 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 50 parks encompassing 1,330 acres, including a 515 acre wilderness park. Collectively, these parks contain 57 playgrounds, 30 soccer fields, 26 basketball courts, 36 softball/baseball di:unonds, 27 tennis courts, 3 swimming pools, a spray park, a 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. POPITLATION Official U.S. Census 1970 1980 1990 2000 2010 City of College Station 17.676 37,272 52,456 67,890 93,857 Brazos County 57,978 93,588 121,862 152.415 194,851 U) U.S. Census Bureau, American Community Survey ECONOMIC BAC'KGROLT D Texas A &M University and System The City of College Station's major asset is being the home of Texas A &M University (TAMLT). TAMU is located on an approximately 5,200 acre campus within the City. TAMU has a significant economic impact on the City, , contributing over S1.7 billion dollars annually to the local economy. TAMU has consistently ranked in the top 20 nationally among public institutions of higher education in both enrollment and research grants. Each year, TAMU's approximately 2,500 faculty members conduct an estimated $689 million worth of sponsored research projects. In 2012, U.S. News and World Report ranked Texas A &M second in the nation among public universities in the "great school, great prices" category. Kiplinger's 2013 "best value" ranks Texas A &M 1 in Texas and 18 among the nation's top public colleges. Texas A&M ranks as the nation's sixth largest university in enrollment, with close to _ 5 Q,000 students. Texas A &M ranks as one of the nation's top 10 university for National Merit Scholars having over 500 National Merit Scholars enrolled. TAMU and its System, combined with its system agencies, employs more than 27,000 full -time and part -time staff. George Bush Presidential Library and Museurn The City is the site of the George Bush Presidential Library and Museum. located on the campus of Texas A &M University. Texas A &M provides programs and facilities such as research and instructional programs related to the library and museum, a conference center, communications center, educational museum/library center, and family- oriented facilities such as a park surrounding the presidential library and museum. The Presidential Library and Museum is also part of the George Bush Presidential Library Center which is home to the prestigious Bush School of Governrnent and Public Service. A -2 One Health Plus Biocorridor College Station entered into an interlocal agreement for the One Health Plus Biocorridor with the City of Bryan. The 3,500 acre Biocorridor will be an international destination for education, research, development, commercialization and production of innovative technologies to improve global health. In March 2013, Texas A &M University announced a partnership with pharmaceutical giant GlaxoSmithKlune to create $91 million influenza- manufacturing facility. The facility is expected to bring 7,000 jobs to the area. Medical District The City recently amended its Comprehensive Plan to include the College Station Medical District Master Plan. The Master Plan establishes guiding principles for the development of approximately 1,700 acres in south College Station to accommodate medical facilities, walkable village centers, conunercial space, and a variety of residential unit types, all in close proximity to parks, open space, and trails. To ensure the Long -teen success of the District, the City has created two Tax Increment Reinvestment Zones to help fund the necessary infrastructure. The City is also in the process of establishing 2 Municipal Management Districts to be used as a tool for development of these areas as well. Athletics Athletics is an integral part of College Station. Texas A &M University, along with the City, hosts a multitude of athletic events. Texas A &M University is the home of Kyle Field, Reed Arena, Olsen Field at Bluebell Park, Aggie Softball Complex, George P. Mitchell Tennis Center and Gilliam Indoor Track Stadium. Several of Texas A &M teams have won both conference and national titles over the past five years which has positioned the University to host regional payoffs as well as national championship games. In the Fall of 2012, Texas A &M began playing in the Southeastern Conference. Texas A &M's move to the SEC has proved positive for the City. At the end of the 2013 football season, the University will begin a $450 million renovation to Kyle Field making it the largest college stadium in the SEC and Texas with a seating capacity of 102,500. The City's sport complex's as well as the ease to get around makes College Station attractive to several organizations. Over the past several years, the Amateur Softball Association and the Texas Amateur Athletic Federation have chosen College Station to host state tournaments and events. In addition, the City facilitates two major softball tournaments, a soccer tournament, a 7 on 7 flag football tournament and baseball tournaments throughout the year. The City is in the process of adding 2 additional synthetic athletic fields at Veterans Park and Athletic Complex. This is anticipated to allow additional tournaments to be held in this area. MAJOR AREA EMPLOYERS Number of Firm Name Product Employees Texas A &M University and System EducatiovResearch 18,000+ Bryan ISD Education 1000+ St. Joseph's Regional Hospital Health Service 1000+ Sanderson Farms, Inc. Poultry Processing 1000+ College Station ISD Education 1000+ Reynolds & Reynolds Computer Hardware and Software 1000+ City of College Station Government 500 -999 Brazos County Government 500 -999 City of Bryan Government 500 -999 Wal -M art /Sam's Retail 500 -999 HEB Grocery Retail 500 -999 College Station M edical Center Health Service 500 -999 Scott & White Clinic Health Service 500 -999 Kent Moore Cabinets Cabinets 400+ Blinn College - Bryan Campus Education 400+ Source: Research Valley Partnership Employment is provided by a variety of high growth industries located in, or adjacent to, the City which include ambulatory health care services; professional, scientific, and technical services; specialty trade contractors; food manufacnaring; administrative and support services as identified in the Local Employment Dynamics Data. Additionally College Station is also home to the 350 acre Research Park, located on the Texas A &M University campus, which houses 30 public- private tenants including the Research Valley Partnership, Schlumberger, Texas Transportation Institute, and Offshore Technology Research Center. The City also developed the 200 -acre, Class "A" Business Center at College Station (BCCS), tenants of which include Reynolds and Reynolds, SourceNet Solutions, Suddenlink Media, Stata Corporation, Heat Transfer Research, Inc. (HTRI), and the Texas A &M University System. In addition, the City has worked to develop a new Science Park at Research Valley, which houses Lymntech, Inc. and RBC Technologies. A -3 I LABOR STATISTICS College Station Labor Total Year Force Employment Unemployment Rate 2007 41,082 39,507 1,575 3.8% 2008 43,687 41,844 1,843 4.2% 2009 45,998 43,566 2,432 5.3% 2010 47,301 44,488 2,813 5.9% 2011 47,972 44,939 3,033 6.3% 2012 47,092 44,328 2,764 5.9% 2013 t 47,455 45,047 2,408 5.1% Brazos County Labor Total Year Force Employment Unemployment Rate 2007 88,010 84,788 3,222 3.7% 2008 91,440 87,805 3.635 4.0% 2009 96,669 91,418 5,251 5.4% 2010 99,119 93,101 6,018 6.1% 2011 100,643 94,245 6,398 6.4% 2012 98,755 92,963 5,792 5.9% 2013 (r) 99,639 94,526 5,113 5.1% Source: Texas Workforce Commission. (1) As of April 30, 2013 BUILDING PERMITS College Station has grown rapidly over the past 30 years as evidenced by an increase in population from 37,272 in 1980 to 93,857 in 2010. As of 2013, the estimated population of College Station was 97,982. The following table sets forth the number and value of construction permits issued by the City over the past several years. Residential Construction Commercial Construction Total Calendar Number Number Number Year of Permits Value of Permits Value of Permits Value 2007 990 $ 161,466,990 413 $ 74,683,795 1,403 $ 236,150,785 2008 1,131 164,494,779 346 154,313,994 1,477 318,808,773 2009 792 82,316,558 243 46,947,099 1,035 129,263,657 2010 860 93,158,066 309 162,053,510 1,169 255,211,576 2011 971 124,132,135 359 123,779,052 1,330 247,911,187 2012 1,208 149,737,218 325 67,478,910 1,533 217,216,128 2013 421 44,952,570 116 39,410,254 537 84,362,824 (1) Source: The City. (1) Represents permits issued through April 30, 2013. COUNTY CHARACTERISTICS ACTERISTICS Brazos County was created in 1841 from Robertson and Washington Counties. The economy is diversified primarily by agribusiness, computer manufacturing, research and development, and education. The Texas Almanac designates cattle, hogs, sorghums, corn, cotton, wheat, oats and pecans as the principal sources of agricultural income. The County had a 2010 population of 194,851, an increase of 27.8% since 2000. Minerals produced in the County include sand and gravel, lignite, gas and oil. A -4 1 APPENDIX B EXCERPTS FROM THE CITY OF COLLEGE STATION, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2012 The information contained in this Appendix consists of excerpts from the City of College Station, Texas Annual Financial Report for the Year Ended September 30, 2012, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. APPENDLX C FORMS OF OPINIONS OF BOND COUNSEL