HomeMy WebLinkAbout7-12-2007-2e - Resolution - 07/12/2007Resolution Number 7-12-2007-2e
RESOLUTION APPROVING NOTICES OF SALE, PRELIMINARY OFFICIAL
STATEMENTS, AND RELATED MATERIALS FOR THE SALE OF "CITY OF
COLLEGE STATION, TEXAS GENERAL OBLIGATION IMPROVEMENT BONDS,
SERIES 2007", "CI'T'Y OF COLLEGE STATION, TEXAS CERTIFICATES OF
OBLIGATION, SERIES 2407", AND "CITY OF COLLEGE STATION, TEXAS
UTILITY SYSTEM REVENUE BONDS, SERIES 2007", INCLUDING SELECTION
OF A DATE FOR OPENING BIDS
WHEREAS, the City Council of the City of College Station, Texas (the "Council") has
determined that it is in the best interest of the City of College Station, Texas (the "City") to issue its
General Obligation Improvement Bonds, Series 2007 in the principal amount of $3,930,000, its
Certificates of Obligation, Series 2007 in the principal amount of $3,960,000, and its Utility System
Revenue Bonds, Series 2007 in the principal amount of $18,665,000 (collectively, the "Obligations") for
purposes described in the below described documents as soon as possible;
WHEREAS, the City's Chief Financial Officer, the City's Financial Advisor, and the City's Bond
Counsel are prepared to distribute necessary documents for such sale on a competitive bid basis;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
COLLEGE STATION, TEXAS THAT:
1. The Official Notices of Sale, including the Official Bid Forms, and the Preliminary Official
Statements for each series of Obligations, substantially in the forms attached hereto are hereby approved,
and the Chief Financial Officer of the City and the Financial Advisor are authorized to distribute same
among entities which would be interested in bidding on the Obligations and other interested persons.
2. The Chief Financial Officer of the City and the Financial Advisor are authorized to apply to
rating agencies for ratings on the Obligations and to bond insurance companies for possible insurance of
the payment of the Obligations and to make presentations to them and provide to such entities the
information reasonably requested by them.
3. The Council hereby deems the Preliminary Official Statements to be final in compliance with
Rule 15c2-12 of the Securities and Exchange Commission.
4. The Council hereby authorizes its advisors, the Chief Financial Officer of the City, and its
members to do all things necessary to sell the Obligati^*~~ ^n A„n„c+ ~ ~nm
PASSED AND APPROVED THIS 12TH DAY
~~.~-
Bin White, Mayor
Connie Hooks, City Secretary
(SEAL)
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APPROVED:
rst & Iiorton L.L.P., Bond Counsel
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EXHIBIT A
OFFICIAL NOTICES OF SALE
38
EXI-IIBIT B
PRELIMINARY OFFICIAL STATEMENTS
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PRI?,L.i(Vllf~.ilt1' i'-u~If•'I('IAL 51~;1`i'I'\IGN~I~
DATED JULY 12, 2007
NEW ISSUE -Book-Entry-Only
Ratings:
Moody's: "Applied for"
S&P: "Applied for"
(See "OTHER INFORMATION -
RATINGS" herein)
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 MATTERS" herein, including the alternative minimum tar on corporations.
THE OBLIGATIONS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
CITY OF COLLEGE STATION, TEXAS
(a Home-Rule City located in Brazos County, Texas)
- $3,930,000
GENERAL OBLIGATION
IMPROVEMENT BONDS
SERIES 2007
- ,
2; -
a~ -
c -- !,, i
v -
-- ri
$3,960,000
CERTIFICATES OF OBLIGATION
SERIES 2007
Dated Date: September 1, 2007 Due: February 15, as shown on inside cover
The $3,930,000 City of College Station, Texas General Obligation Improvement Bonds, Series 2007 (the "Bonds") and the $3,960,000
City of College Station, Texas Certificates of Obligation, Series 2007 (the "Certificates") are being issued by the City of College
Station, Texas (the "City") pursuant to the terms of two separate ordinances adopted by the governing body of the City. The 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,
initially registered solely in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company ("DTC"),
New York, New York, acting as securities depository for the Obligations, until DTC resigns or is discharged. The Obligations initially
will be available to purchasers in book-entry-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 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 of the Obligations.
Interest on the Obligations will accrue from the dated date as shown above and will be payable on February 15, 2008 and on each
August 15 and February 15 thereafter until maturity or early redemption. Interest on the Obligations will be calculated on the basis of
a 360 day year consisting of twelve 30-day months.
The City reserves the right, at its option, to redeem Obligations of either series having stated maturities on and after February 15, 2017,
in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2016, 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, AND YIELDS ON INSIDE COVER
The Obligations are payable from 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 (see "THE OBLIGATIONS -SECURITY AND SOURCE OF PAYMENT," and "- TAX RATE LIMITATIONS").
The Obligations of each series are offered for delivery, when issued, and received by the Initial Purchaser thereof and subject to the
opinion of the Attorney 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"). It is expected that the Obligations will be
available for delivery through the services of DTC on or about September 1 1, 2007.
BIDS WILL BE ACCEPTED UNTIL AND OPENED
MONDAY, AUGUST 6, 2007 AT 10:00 A.M. CDST
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MATURITY SCHEDULES, INTEREST RATES AND YIELDS
$3,930,000
General Obligation Improvement Bonds, Series 2007
Due Interest Due
Feb 15 Principal Rate Yield CUSIP t'~ Feb 15 Principal
2008 $ 1,150,000 % % 201812) $ 140,000
2009 90,000 201912r 150,000
2010 90,000 2020121 155,000
2011 95,000 202112r t65,000
2012 100,000 2022 ter ] 75,000
2013 110,000 2023 (z~ 185,000
2014 115,000 2024 ~~~ 190,000
2015 120,000 2025 2) 200,000
2016 125,000 2026 ~~~ 215,000
2017 121 135,000 2027 (zr 225,000
(Accrued Interest from September 1, 2007 to be added)
$3,960,000
Certificates of Obligation, Series 2007
Due Interest Due
Feb 15 Principal Rate Yield CUSIP ~~~ Feb ]5 Principal
2008 $ 1,150,000 % % 2018 ~''~ $ 140,000
2009 90,000 20191~~ 150,000
2010 95,000 20201~~ 155,000
2011 100,000 2021 (zl 165,000
2012 105,000 2022 121 175,000
2013 110,000 2023 ~'`~ 185,000
2014 115,000 2024 tzl 195,000
2015 120,000 2025 1~1 205,000
2016 130,000 2026 «~ 215,000
2017 «~ 135,000 2027 ~~~ 225,000
(Accrued Interest from September 1, 2007 to be added)
Interest
Rate Yield CUSIP ~~~
Interest
Rate Yield CUSIP o~
~o
(1) CUSIP Numbers have been assigned to the Obligations by the CUSIP Service Bureau and are included solely for the convenience of the
purchasers of the Obligations. Neither the City, the Financial Advisor nor the Initial Purchasers 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, 2017, in
whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February I5, 2016, or any date thereafter, at the par
value thereof plus accrued interest to the date of redemption.
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For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission, as amended and in effect on the
date hereof (the "Rule'), this document constitutes a Preliminary Official Statement of the City with respect to the Bonds that has been
deemed "final " by the City as of its date except 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 constitzrte an offer to sell or the solicitation
of an offer to buy in any jurisdiction to any person to whom it is unlawful to make 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
Off cial Statement, and, if'given or made, such other information or representations must 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 Financial Advisor. 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 the CUSIP Service Bureau, and are included solely for the convenience of the owners of the Obligations. Neither the City, the
Financial Advisor nor the Initial Pzrchasers shall be responsible for the selection or correctness of the CUSIP numbers shown on the
inside cover 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 Initial Purchasers 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.
TABLE OF CONTENTS
MATURITY SCHEDULES, INTEREST RATES AND
YIELDS ...........................................................................ii
INVESTMENTS ................................................................. 18
TABLE 14 -CURRENT INVESTMENTS ................................ 20
OFFICIAL STATEMENT SUMMARY ............................iv
CITY OFFICIALS, STAFF AND CONSULTANTS.........1
ELECTED OFFICIALS ........................................................... 1
SELECTED ADMINI STRATI V E STAFF .................................... 1
CONSULTANTS AND ADVISORS ........................................... 1
INTRODUCTION ................................................................2
PLAN OF FINANCING .......................................................2
USES OF PROCEEDS ............................................................2
THE OBLIGATIONS ...........................................................3
TAX INFORMATION .........................................................7
TABLE I -VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT .................................................... l O
TABLE 2 -TAXABLE ASSESSED VALUATIONS BY
CATECORY ................................................................ 11
TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT
HISTORY ................................................................... 12
TABLE 4 -TAX RATE, LEVY AND COLLECTION HISTORY. 12
TABLE $ -TEN LARGEST TAXPAYERS ............................. 12
TABLE 6 -TAX ADEQUACY ............................................. 13
TABLE 7 -ESTIMATED OVERLAPPING DEBT .................... I3
DEBT INFORMATION .....................................................14
TABLE 8 -PRO-FORMA AD VALOREM TAX DEBT SER VICE
REQU[REMENTS .................................................... ..... I4
TABLE 9 -INTEREST AND SINKING FUND BUDGET
PROJECTION ......................................................... ..... 14
TABLE I O -SELF-SUPPORTING DEBT ......................... ..... 1 S
TABLE I 1 -AUTHORIZED BUT UNISSUED TAX BONDS ..... 1 S
FINANCIAL INFORMATION ......................................... I6
TAHLE I2 -GENERAL FUND REVENUES AND EXPENDITURE
HISTORY ...................................................................16
TAHLE 13 -MUNICIPAL SALES TAX HISTORY ................. l7
TAX MATTERS ................................................................ 20
OPINION .......................................................................... 2 0
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF
ORIGINAL ISSUE DISCOUNT ....................................... 20
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES ..... 21
STATE, LOCAL AND FOREIGN TAXES ............................... 22
CONTINUING DISCLOSURE OF INFORMATION.... 22
OTHER INFORMATION ................................................. 23
RAT]NGS .................................................................. ....... 23
LITIGATION .............................................................. ....... 23
REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR
SALE .................................................................. ....... 23
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC
FUNDS IN TEXAS ................................................ ....... 23
LEGAL OPINIONS ...................................................... ....... 24
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION .................................................... ....... 24
FINANCIAL ADVISOR ................................................ ....... 24
INITIAL PURCHASER ................................................. ....... 24
CERTIFICATION OF THE OFFICIAL STATEMENT .......... ....... 25
APPENDICES
OENERAL INFORMATION REGARDING THE CITY ............ A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT...... B
FORM OF OPINIONS OF BOND COUNSEL ........................ C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto,
are part of the Official Statement.
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OFFICIAL STATEMENT SUMMARY
This summary 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 ahome-rule city of
the State, located in Brazos County, Texas. The City covers approximately 47 square miles (see
"INTRODUCTION - DESCRIPTION OF THE C[TY").
THE BONDS ......................... The Bonds are issued as $3,930,000 City of College Station, Texas General Obligation
Improvement Bonds, Series 2007. The Bonds are issued as serial bonds maturing February 15,
2008 through February 15, 2027 (see "THE OBLIGATIONS -GENERAL DESCRIPTION").
THE CERTIFICATES ............ The Certificates are issued as $3,960,000 City of College Station, Texas Certificates of Obligation,
Series 2007. The Certificates are issued as serial obligations maturing February 15, 2008 through
February 15, 2027 (see "THE OBLIGATIONS -GENERAL DESCRIPTION").
PAYMENT OF INTEREST ..... Interest on the Obligations accrues from September 1, 2007, and is payable February 15, 2008, and
each August 15 and February 15 thereafter until maturity or prior redemption (see "THE
OBLIGATIONS -GENERAL DESCRIPTION").
AUTHORITY FoR ISSUANCE. The Bonds are issued pursuant to the general laws of the State, particularly Chapter 1331, Texas
Government Code, and an ordinance passed by the City Council of the City. The Certificates are
issued pursuant to the general laws of the State, particularly Subchapter C of Chapter 271, Texas
Local Government Code, as amended; and an ordinance passed by the City Council of the City (see
"THE OBLIGATIONS -AUTHORITY FoR ISSUANCE").
SECURITY FOR THE
BONDS .................................. The Bonds constitute direct obligations of the City, 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").
SECURITY FOR THE
CERTIFICATES ..................... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy
and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all
taxable property located within the City, and (ii) a subordinate lien on and pledge of $1,000 of the
surplus revenues derived from the City's combined utility system (see "THE OBLIGATIONS -
SECURITY AND SOURCE OF PAYMENT").
OPTIONAL REDEMPTION .... The City reserves the right, at its option, to redeem Obligations of either series having stated
maturities on and after February 15, 2017, in whole or in part in principal amounts of $5,000 or any
integral multiple thereof, on February 15, 2016, or any date thereafter, at the par value thereof plus
accrued interest to the date of redemption (see "THE OBLIGATIONS -OPTIONAL REDEMPTION").
TAx EXEMPTION ................... 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 and the Obligations are not private activity bonds.
See "TAX MATTERS" for a discussion of the opinion of Bond Counsel, including a description of
the alternative minimum tax consequences for corporations.
UsE of BOND PROCEEDS .... 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) sidewalk improvements, (iii) traffic signals
and control systems, (iv) parks and park facilities, and (v) pay the costs incurred in connection
with the issuance of the Bonds (see "PLAN OF FINANCING - UsE of PROCEEDS").
USE OF
CERTIFICATE PROCEEDS ... Proceeds from the sale of the Certificates will be used to pay for the cost of (i) park projects, (ii)
design and construction of new City-owned cemetery, (iii) design and construction of and
improvements to public municipal facilities, (iv) technology projects, and (v) to pay the costs
incurred in connection with the issuance of the Certificates (see "PLAN OF FINANCING - UsE of
PROCEEDS").
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RATINGS ............................. The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's Investors
Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc. ("S&P"). The City also has other issues outstanding which are
rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance
companies. Applications for ratings on the Obligations have been made to Moody's and S&P (see
"OTHER INFORMATION -RATINGS").
BOOK-ENTRY-ONLY
SYSTEM ............................. The definitive Obligations will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership
of the Obligations may be acquired in denominations of $5,000 or integral multiples thereof. 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 - Boox-ENTRY-
ONLY SYSTEM").
PAYMENT RECORD ............. The City has never defaulted in payment of its general obligation tax debt.
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SELECTED FINANCIAL INFORMATION
Ratio Tax
Per Capita Per Debt to
Fiscal Estimated Taxable Taxable Capita Taxable
Year Ended City Assessed Assessed Ad Valorem Ad Valorem Assessed
9/30 Populationt~I ValuationtZl Valuation Tax Debtt3l Tax Debt Valuation
2002 72,500 $ 2,489,560,083 $ 34,339 $ 74,945,000 $ 1,034 3.01%
2003 75,763 2,723,565,453 35,948 75,695,000 999 2.78%
2004 80,219 3,028,907,414 37,758 81,790,000 1,020 2.70%
2005 81,699 3,291,131,442 40,284 88,905,000 1,088 2.70%
2006 81,930 3,645,484,581 44,495 97,390,000 1,189 2.67%
2007 82,750 4,055,]70,546 49,005 97,460,000 14> 1,178 t4) 2.40%t4l
(1) Source: The City.
(Z) As reported by the Brazos Coun ty Appraisal District; subject to change during the ensuing year.
(3) Payable from ad valorem taxes.
(4) Projected, includes the Obligations.
(5) In process of collection.
GENERAL FUND CONSOLIDATED STATEMENT SUMMARY
Percent
Total
Collectiont3~
97.97%
98.63%
98.75%
98.85%
98.74%
ts)
For Fiscal Year Ended September 30 (0
2006 2005 2004 2003 2002
Beginning Balance $ 10,170,525 $ 10,702,952 $ 11,250,335 $ 10,1 ] 1,225 $ 9,432,700
Total Revenue 34,999,755 32,308,882 30,504,824 28,157,582 26,269,679
Total Expenditures 42,167,579 39,519,178 37,500,080 33,676,271 31,675,353
Other Financing Sources (Uses) 7,969,307 6,677,869 6,447,873 6,657,799 6,084,199
Ending Balance $ 10,972,008 $ 10,170,525 $ 10,702,952 $ 11,250,335 $10,111,225
(1) 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 may be expended in future years for one time expenditures such as capital items and short
term projects.
UTILITY SYSTEM CONDENSED STATEMENT OF OPERATIONS
For Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
Revenues:
Electric $ 58,526,414 $ 50,446,608 $ 46,389,147 $ 45,480,173 $ 44,238,340
Water and Wastewater 20,217,030 18,490,794 16,536,666 16,552,584 16,024,595
Interest 1,765,422 917,192 627,060 1,076,079 1,858,545
Other 2,278,378 1,746,795 1,908,053 2,070,963 1,974,507
Total Revenues $ 82,787,244 $ 71,601,389 $ 65,460,926 $ 65,179,799 $ 64,095,987
Expenses:
Total Expenses $ 54,432,847 $ 51,125,745 $ 44,719,241 $ 47,785,550 $ 46,274,555
Net Available for Debt Service $ 28,354,397 $ 20,475,644 $ 20,741,685 $ 17,394,249 $ 17,821,432
Water Customer Count 37,590 32,266 31,038 29,358 23,210
Wastewater Customer Count 33,491 29,694 28,594 27,977 28,399
Electric Customer Count 31,051 31,185 30,641 29,700 28,678
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CITY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICL4LS
City Council
Ben White
James Massey
Ron Gay
Chris Scotti
Lynn McIlhaney
David Ruesink
John Crompton
Length of
Position Service Term Expires Occupation
Mayor lit 5/10 Retired
Councilmember iz1 5/10 Director of Facility Coordination
Councilmember 2 Years 5/08 Regional Marketing Director
Councilmember 2 Years 5/08 Consultant
Councilmember 1 Year (s1 5/09 Homemaker
Councilmember 1 Year 5/09 Retired
Councilmember 141 5/08 Professor
(1) Elected Mayor in May 2007.
(2) Elected May 2007; former City of College Station Councilmember 1999 -- 2005.
(3) Elected May 2006; former City of College Station Mayor 1996 - 2002; .former City of College Station Councilmember 1982 - 1986 and
1987 - 1996.
(4) Elected June 2007.
SELECTED ADMINISTRATIVE STAFF
Length of
Name Position Service to City
Glenn Brown City Manager 7 Years 111
Terry Childers Deputy City Manager 9 Months
Kathy Merrill Assistant City Manager 8 Months
Harvey Cargill, Jr. City Attorney 10 Years
David Coleman Interim Director of Water Services 2 Years
David Massey Director of Electric Utility 7 Years
Jeff Kersten Chief Financial Officer 16 Years 1z1
Connie L. Hooks City Secretary 21 Years
Mark Smith Director of Public Works 27 Years
Benjamin Roper Director of Information Technology 2 Years
Stephen Beachy Director of Parks and Recreation 29 Years
(1) City Manager since March 2006.
(2) Chief Financial Officer since August 2004.
CONSULTANTS AND ADVISORS
Auditors ................................................................................................................................................. Ingram, Wallis & Company
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
Chief Financial Officer
City of College Station
1101 Texas Avenue
College Station, Texas 77840
(979) 764-3552 Phone
(979) 764-3899 Fax
Drew Masterson
First Southwest Company
or 1021 Main Street, Suite 2200
Houston, Texas 77002
(713) 651-9850 Phone
(713) 654-8658 Fax
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PRELIMINARY OFFICIAL STATEMENT
RELATING TO
CITY OF COLLEGE STATION, TEXAS
(a Home-Rule City located in Brazos County, Texas)
$3,930,000 $3,960,000
GENERAL OBLIGATION CERTIFICATES OF OBLIGATION
IMPROVEMENT BONDS SERIES 2007
SERIES 2007
INTRODUCTION
This Official Statement, which includes the cover pages and Appendices hereto, provides certain information regarding the
issuance of the $3,930,000 City of College Station, Texas General Obligation Improvement Bonds, Series 2007 (the "Bonds")
and the $3,960,000 City of College Station, Texas Certificates of Obligation, Series 2007 (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, to be adopted on the date of sale
of the Obligations. The Bond Ordinance and the Certificate Ordinance are collectively referred to herein as the "Ordinances."
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.
DESCR-FTtorv of TeE CITY ...The City is a political subdivision and municipal corporation of the State, duly organized and
existing under the laws of the State, including the City's Home Rule Charter. The City was incorporated in October 1938, and
first adopted its Home Rule Charter in October 1938, which was last amended in May 2006. The City operates under a
Council/City Manager form 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 1990 Census population for the City was 52,456 and the 2000 Census population was
67,890. The City covers approximately 47 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) sidewalk improvements, (iii) traffic signals and control systems, (iv) parks and park facilities,
and (v) pay the costs incurred in connection with the issuance of the Bonds (see "PLAN OF FINANCING -USE of PROCEEDS").
Proceeds from the sale of the Certificates will be used to pay for the cost of (i) park projects, (ii) design and construction of new
City-owned cemetery, (iii) design and construction of and improvements to public municipal facilities, (iv) technology projects,
and (v) to pay the costs incurred in connection with the issuance of the Certificates (see "PLAN OF FINANCING -USE of
PROCEEDS").
USES OF PROCEEDS
The proceeds from the sale of the Bonds will be applied approximately as follows:
Uses of Funds
Deposit to Project Fund $ 0
Deposit to Interest and Sinking Fund
Costs of Issuance
Total Uses of Funds $ 0
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The proceeds from the sale of the Certificates will be applied approximately as follows:
Uses of Funds
Deposit to Project Fund $ 0
Deposit to Interest and Sinking Fund
Costs of Issuance
Total Uses of Funds $ 0
THE OBLIGATIONS
GENERAL DESCUIPTION... The Obligations are dated September 1, 2007, and mature on February 15 in each of the years and in
the amounts shown on the inside cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day
months, and will be payable on February I5, 2008 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 i:oR ISSUANCE of TxE BONDS... The Bonds are being issued pursuant to the Constitution and general laws of the
State of Texas, particularly Chapter 1331, Texas Government Code, as amended; an election held November 4, 2003, and passed
by a majority of the participating voters; and the Bond Ordinance.
AUTHORITY Folt ISSUANCE oP TeE CERTIPtCATES ...The Certificates are being issued pursuant to the Constitution and general
laws of the State of Texas, particularly Subchapter C of Chapter 271, Texas Local Government 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 a continuing direct annual ad valorem
tax levied by the City sufficient to provide for the payment of principal of and interest on all obligations (such as the
Obligations) payable in whole or in part from ad valorem taxes, which tax must be levied within limits prescribed by law.
The City intends to pay the Obligations from ad valorem tax proceeds; however, the Certificates are also payable from and
secured by a limited pledge of $1,000 of the surplus revenues derived from the City's combined utility system revenues, as
provided in the Certificate Ordinance, in order to meet the legal requirements for the sale thereof for cash.
TAx RATE LIMITATION ...All taxable property within the City is subject to the assessment, levy and collection by the City of a
continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax
debt within 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 ad valorem 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, 2017, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on
February 15, 2016, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all
of the Bonds are to be redeemed, the City shall determine the Obligations, or portions thereof, within such maturity to be
redeemed. If an Obligation (or any portion of the principal sum thereof) shall have been called for redemption and notice of such
redemption shall have been given, such Obligation (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.
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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 Depository Trust Company ("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 believes the source
of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof.
The City cannot and does 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 Offtcial 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 act 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 be 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 issue, and will be deposited with DTC.
DTC, the world's largest depository, is alimited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million
issues of U.S. and non U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 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 Obligations.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC").
DTCC, in tum, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing
Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, all of which are also subsidiaries
of DTCC, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers
and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The
DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about
DTC can be found at «~rw.dtcc.coin.
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
tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from
DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made
on the books of Direct and Indirect 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 book-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 be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 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.
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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).
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/Registrar, or the
City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds,
distributions, and dividend 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 be the responsibility of
Direct and Indirect 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.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City
believes to be reliable, but the City takes no responsibility for the accuracy thereof.
Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that
while the 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 must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are
to be given to registered owners under the 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 by, and is not to be construed as a representation by the City or the Initial Purchaser.
PAYING AGENT/REGISTRAR... The initial Paying Agent/Registrar is The Bank of New York Trust Company, N.A., Dallas,
Texas. In the Ordinances, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and
provide a Paying Agent/Registrar at all times until the Obligations 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. 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 AgenURegistrar.
TRANSFER, EXCHANGE AND RECISTRATION...In the event the Book-Entry-Only System should be 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 30 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 a Obligation.
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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.
In the event of anon-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.
DEFEASANCE... 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 be 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 firm not less than AAA or its equivalent, and (c) 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 rated as to investment quality by a
nationally recognized investment rating firm not less than AAA or its equivalent. 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 reinvestment the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the
City moneys in excess of the amount required for such defeasance.
REMEDIES of HOLDERS of OBLIGATIONS... If the City defaults in the payment of principal, interest, or redemption price on
either series of Obligations when due, or the City defaults in the observation or performance of any other covenants, conditions,
or obligations ser forth in either of the Ordinances, the registered owners may seek a writ of mandamus to compel the City or
City officials to carry out the legally imposed duties with respect to the Obligations if there is no other available remedy at law to
compel performance of the Obligations or the respective Ordinance authorizing the issuance of such Obligations, 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 Obligation 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 appointment 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 Ordnances, or upon any other condition accordingly al] legal actions to
enforce such remedies would have to undertaken of the initiative of, and be financed by, the beneficial owners of the
Obligations. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (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, beneficial 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.
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, such
provision is subject to judicial construction. 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 beneficial 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.
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TAX INFORMATION
An VALOREM Tax Law ...The appraisal of property within the City is the responsibility of the Brazos County Appraisal
District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive
capacity, the Appraisal District is 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. 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.
Artic]e 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 ]aw, the governing body of a political subdivision, at its option, may grant: (I) 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 the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be
levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt
if cessation of the levy would impair the obligation of the contract by which the debt was created.
State law and Section 2, Article VIII, mandate an additional property tax 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-]), 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 1-d and 1-d-1.
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.
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 time of creation of the
zone. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a
property owner agrees to construct 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.
RECENT 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 deterrnine by majority vote whether to
establish the tax limitation.
If the tax limitation is established, the total amount of ad valorem taxes imposed by the City on a homestead that receives the
exemption may 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
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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.
The City Council has not determined at this time what action, if any, it will take regarding this constitutional amendment. The
City can make no representations or predictions concerning the impact such a tax limitation would have on the taxing rates of the
City or its ability to make debt service payments.
EFFECTIVE Tax RATE AND ROLLBACK TAx RATE ... By the later of September 30`h 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 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 internet 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.
PROPERTY ASSESSMENT AND TAX PAYMENT ...Property Wlthin the Ctty is generally assessed as of January 1 of each year.
Business inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on the
basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October
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% I% 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. In 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
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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 not permit split payments, and discounts
are not allowed. The City does collect the additional one-half cent sales tax for reduction of ad valorem taxes. The City has
adopted a tax abatement policy (see "TAX INFORMATION -Tax ABATEMENT POLICY"). Brazos County collects the taxes for
the City.
TAx ABATEMENT PoLtCY ...The City has established a tax abatement program to encourage economic development. In order
to be considered for tax abatement, a project must meet several criteria pertaining to job creation and property value
enhancement. The value of property subject to abatement is shown in Table 1 on next page.
All applications must meet the following general criteria before being considered for tax abatement.
1. The project expands the local tax base.
2. The project creates permanent full time employment.
3. The project would not otherwise be developed.
4. The project makes a contribution to enhancing further economic development.
5. The project must remain in good standing to all aesthetic and environmental concerns.
6. The project has not been started and no construction has commenced at the time the application is approved.
7. The project must not have any of the following objections:
I. there would be substantial adverse affect on the provision of government service or tax base,
II. the applicant has insufficient financial capacity,
III. planned or potential use of the property would constitute a hazard to public safety,
IV. planned or potential use of the property would give adverse impacts to adjacent properties, or
V. any violation of laws of the United States or State of Texas or ordinances of the City of College Station would result.
If the project in the application meets the general criteria, is a facility of a targeted enterprise, and has a capital cost that exceeds
$250,000, then abatement of any or all of the increased value will be considered. In no case would tax abatement exceed the
maximum allowed by State law, presently 100% for ten years. Factors to consider in determining the portion of the increased
value to be abated and the duration of the abatement agreement include, but are not limited to:
Total amount of the increased value;
Total number of jobs created;
Type of jobs created;
Dollar value of payroll created; and
Other municipal costs and revenues associated with the application.
54
TABLE 1 -VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT
2006/07 Market Valuation Established by Brazos County Appraisal District $ 4,232,785,245
(excluding exempt property)
Less Exemptions/Reductions at 100% Market Value:
Productivity Loss $ 59,523,780
Over 65 Homestead Exemptions 52,205,360
Abatements 38,305,193
Freeport 14,050,533
Homestead Cap Adjustment 10,907,270
Disabled Veteran 2,263,000
Proration 242,464
House Bill 366t~~ 117,099 177,614,699
2006/07 Taxable Assessed Valuation $ 4,055,170,546
Debt Payable from Ad Valorem Taxes (as of 4-1-2007)
General Obligation and Refunding Bonds, Series 1996 $ 925,000
General Obligation Improvement Bonds, Series 1998 1,405,000
General Obligation Improvement Bonds, Series 1999 4,150,000
Certificates of Obligation, Series 2000 465,000
General Obligation Improvement Bonds, Series 2000 1,645,000
Certificates of Obligation, Series 2000A 5,100,000
Certificates of Obligation, Series 2001 1,265,000
General Obligation Improvement Bonds, Series 2001 2,105,000
Certificates of Obligation, Series 2002 9,240,000
General Obligation Improvement Bonds, Series 2002 4,895,000
Certificates of Obligation, Series 2003 210,000
Certificates of Obligation, Series 2003A 690,000
General Obligation Bonds, Series 2003 4,235,000
Certificates of Obligation, Series 2004 8,240,000
General Obligation Improvement and Refunding Bonds, Series 2004 10,650,000
General Obligation Improvement Bonds, Series 2005 5,175,000
Certificates of Obligation, Series 2005 4,955,000
Certificates of Obligation, Series 2006 7,395,000
General Obligation Improvement Bonds, Series 2006 6,570,000
General Obligation Refunding Bonds, Series 2006 10,255,000
The Bonds 3,930,000
The Certificates 3,960,000 97,460,000
Less: Self Supporting Debt Service $ 10,610,000
Less: Interest and Sinking Fund as of 4-1-2007 4,079,297 tz)
Net Debt Payable from Ad Valorem Taxes $ 82,770,703
Ratio of Ad Valorem Net Tax Debt to Taxable Assessed Valuation 2.04%
2007 Estimated Population - 82,750
Per Capita Taxable Assessed Valuation - $49,005
Per Capita Net Funded Debt - $1,000
(I) HB 366 was passed by the 74`h Legislature and exempts personal property and minerals that have an aggregate value of less than $500.
(2) Unaudited.
l0
55
TABLE 2 -TAXABLE ASSESSED VALUATIONS BY CATEGORY
Taxable Appraised Value, Fiscal Year Ending September 30,
2007 2006 2005
of % Of % Of
Category Amount Total Amount Total Amount Total
Real, Residential, Single-Family $ 2,107,098,264 49.78% $ 1,853,065,660 48.64% $ 1,693,764,730 49.12%
Real, Residential, Multi-Family 674,119,847 15.93% 602,594,233 15.82% 579,313,589 16.80%
Real, Vacant Lots/Tracts 68,339,995 1.61% 74,999,272 1.97% 66,205,810 1.92%
Real, Acreage (Land Only) 112,254,640 2.65% 97,944,690 2.57% 77,366,480 2.24%
Real, Farm and Ranch Improvements 12,438,960 0.29% l 1,695,000 0.31% 10,491,800 0.30%
Real, Commercial/Industrial 889,257,569 21.01% 816,798,231 21.44% 678,592,264 19.68%
Real, Oil, Gas & Other Mineral Reserves 6,291,183 0.15% 4,817,922 0.13% 3,743,710 0.11%
Real and Tangible Personal, Utilities 36,558,880 0.86% 42,265,280 1.11% 47,068,170 1.36%
Tangible Personal, Business 304,257,717 7.19% 284,214,050 7.46% 264,132,482 7.66%
Tangible Personal, Other 2,695,540 0.06% 2,816,130 0.07% 3,024,720 0.09%
Real Propertylnventory 11,769,640 0.28% 11,656,880 0.31% 18,496,425 0.54%
Special Inventory 7,703,010 0.18% 6,656,050 0.17% 6,256,900 0.18%
Total Appraised Value Before Exemptions $ 4,232,785,245 100.00% $ 3,809,523,398 100.00% $ 3,448,457,080 100.00%
Less: Total Exemptions/Reductions 177,614,699 164,038,817 157,325,638
Taxable Assessed Vahie $ 4,055,170,546 $ 3,645,484,581 $ 3,291,131,442
Taxable Appraised Value, Fiscal Year Ending Sep tember 30,
2004 2003
of % of
Category Amount Total Amount Total
Real, Residential, Single-Family $ 1,497,903,267 47.17% $ 1,305,123,758 46.03%
Real, Residential, Multi-Family 582,197,865 18.33% 543,671,950 19.18%
Real, Vacant Lots/Tracts 64,305,345 2.02% 61,488,980 2.17%
Real, Acreage (Land Only) 73,572,440 2.32% 58,043,010 2.05%
Real, Farm and Ranch Improvements 9,957,510 0.31% 5,627,110 0.20%
Real, Commercial/Industrial 636,939,757 20.06% 567,471,371 20.02%
Real, Oil, Gas & Other Mineral Reserves 3,417,620 0.11 % 2,889,430 0.10%
Real and Tangible Personal, Utilities 44,083,230 1.39% 44,62],630 1.57%
Tangible Personal, Business 239,851,270 7.55% 229,678,206 8.10%
Tangible Personal, Mobile Home 3,328,650 0.10% 3,589,940 0.13%
Tangible Personal, Other 14,117,150 0.44% 7,051,743 0.25%
Real Property Inventory 5,999,900 0.19% 5,906,780 0.21%
Total Appraised Value Before Exemptions $ 3,175,674,004 100.00% $ 2,835,163,908 100.00%
Less: Total Exemptions/Reductions 146,766,590 111,598,455
Taxable Assessed Value $ 3,028,907,414 $ 2,723,565,453
NOTE: Valuations shown are certified taxable assessed values reported by the Brazos County Appraisal District to the State
Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and
the Appraisal District updates records.
56
TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT HISTORY
G.O. Ratio of
Fiscal Taxable Tax Debt G.O. Tax Debt
Year Taxable Assessed Outstanding to Taxable G.O.
Ended Estimated Assessed Valuation at End Assessed Tax Debt
9/30 Population"' Valuation"' Per Capita of Year Valuation Per Capita
2002 72,500 $ 2,489,560,083 $ 34,339 $ 74,945,000 3.01% $ 1,034
2003 75,763 2,723,565,453 35,948 75,695,000 2.78% 999
2004 80,219 3,028,907,414 37,758 81,790,000 2.70% 1,020
2005 81,699 3,291,131,442 40,284 88,905,000 2.70% 1,088
2006 81,930 3,645,484,581 44,495 97,320,000 2.67% 1,188
2007 82,750 4,055,170,546 49,005 97,460,000 t3~ 2.40% t3~ 1 178 <3~
~t~ source: tnec~ry.
(2) As reported by the Brazos County Appraisal District; subject to change during the ensuing year.
(3) Projected, includes the Obligations.
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
2002 $ 0.4777 $ 0.1846 $ 0.2931 $ 11,892,629 97.29% 97.97%
2003 0.4777 0.1946 0.2831 13,010,508 96.81% 98.63%
2004 0.4653 0.1921 0.2732 14,092,814 97.86% 98.75%
2005 0.4640 0.1942 0.2698 15,270,852 98.04% 98.85%
2006 0.4394 0.1896 0.2498 16,018,259 98.26% 98.74%
2007 0.4394 0.1910 0.2484 17,818,419 to to
(l) In process of collection.
TABLE S -TEN LARGEST TAXPAYERS
2006/2007 % of Total
Taxable Taxable
Nature Assessed Assessed
Name of Taxpayer of Property Valuation Valuation
College Station Hospital L.P. Medical $ 63,611,280 1.57%
C B L & Associates Properties Retail 52,820,675 1.30%
Alkosser/Weinberg Housing 34,255,560 0.84%
Wal-Mart/Sam's Retail 26,849,675 0.66%
Verizon Communications, Inc. Utility 25,939,810 0.64%
Commonwealth Austin CH LP Apartments 25,710,420 0.63%
University Heights-College Station Housing 21,934,080 0.54%
HEB Pantry Foods Retail 20,220,035 0.50%
University Commons Apartments 19,305,630 0.48%
SCI Gateway Apartments 18,929,970 0.47%
$ 309,577,135 7.63%
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 LIMITATION").
12
57
TABLE 6 -TAX ADEQUACY
Net Maximum Principal and Interest Requirements (2008)
$0.29061 Tax Rate at 97% Collection Produces ..........
Net Average Principal and Interest Requirements (2007-2027)
$0.16503 Tax Rate at 97% Collection Produces ..............
................................... 11,431,123 ti)
.................................... 11,431,163
...................... 6,491,503 in
....................... 6,491,542
(1) Includes the Obligations. Excludes self supported debt.. Interest has been estimated for the purpose of illustration.
TABLE 7 -ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the City are paid out of 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 County Appraisal District. Except for the amounts relating to the City, the City has not
independently verified the accuracy or completeness of such information, and no person should rely upon such information as
being accurate or complete. Furthermore, certain of the entities listed may have issued additional debt since the date hereof, and
such entities may have 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.
Total Estimated
2006/07 Taxable 2006/07 Tax
Assessed Value t~l Tax Rate Debt Applicable
City of College Station $ 4,055,170,546 $ 0.4394 $ 97,460,000 tZl 100.00%
Brazos County 7,938,521,181 0.4550 48,920,000 48.94%
Bryan ISD 3,460,473,064 1.6300 91,240,000 5.39%
College Station ISD 4,221,946,987 1.4800 50,215,000 91.22%
Tota] Direct and Overlapping Funded Tax Debt
Ratio of Direct and Overlapping Funded Tax Debt to Taxable Assessed Valuation
Per Capita Overlapping Funded Tax Debt
Source: Municipal Advisory Council of Texas.
(1) Taxable Assessed Valuation for Fiscal Year 2007.
(2) Projected, includes the Obligations.
13
City's Authorized
Overlapping But Unissued
Tax Debt as Tax Debt as
of6-O1-07 of4-O1-07
$ 97,460,000 $ 16,485,000
23,941,448 10,000
4,917,836 54,25],947
45,806,123 0
$172,125,407
4.24%
2,080
58
DEBT INFORMATION
TABLE H -PRO-FORMA AD VALOREM TAX DEBT SERVICE REQUIREMENTS
Year
End
9/30
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Total Less:
Outstanding The Bonds The Certificates Self-Supported
Debt Principal Interestt~l Totat Principal Interestt~t Total Debt Servicet~l
$ 12,032,244 $ 1,773,445
10,493,888 $ 1,150,000 $ 184,161 $ 1,334,161 $ 1,150,000 $ 185,798 $ 1,335,798 1,732,723
9,355,976 90,000 143,588 233,588 90,000 145,163 235,163 694,663
9,371,299 90,000 138,863 228,863 95,000 140,306 235,306 692,564
8,972,051 95,000 134,006 229,006 100,000 135,188 235,188 693,870
8,924,443 100,000 128,888 228,888 105,000 129,806 234,806 693,65]
8,674,364 110,000 123,375 233,375 110,000 124,163 234,163 692,351
8,322,296 115,000 117,469 232,469 115,000 118,256 233,256 690,451
8,125,054 120,000 111,300 231,300 120,000 112,088 232,088 692,570
7,701,264 125,000 104,869 229,869 130,000 105,525 235,525 693,301
7,605,794 135,000 98,044 233,044 135,000 98,569 233,569 692,779
6,308,890 140,000 90,825 230,825 140,000 91,350 231,350 691,088
5,469,572 150,000 83,213 233,213 150,000 83,738 233,738 692,893
5,478,869 155,000 75,206 230,206 155,000 75,731 230,731 693,257
3,863,903 165,000 66,806 231,806 165,000 67,331 232,331 692,128
3,394,081 175,000 57,881 232,881 175,000 58,406 233,406 693,994
3,403,119 185,000 48,431 233,431 185,000 48,956 233,956 694,069
2,991,778 190,000 38,588 228,588 195,000 38,981 233,981 691,875
1,795,700 200,000 28,350 228,350 205,000 28,481 233,481
1,100,531 215,000 17,456 232,456 215,000 17,456 232,456
Total
Debt Service
Requirements
$ 10,258,799
11,431,123
9,130,063
9,142,904
8,742,375
8,694,485
8,449,551
8,097,570
7,895,871
7,473,357
7,379,627
6,079,977
5,243,629
5,246,549
3,635,912
3,]66,375
3,176,438
2,762,472
2,257,531
I ,565,444
$ 133,385,116 $ 3,930,000 $ 1,797,224 $ 5,727,224 $ 3,960,000 $ 1,811,198 $ 5,771,198 $ 14,591,672 $ 130,291,865
(1) Interest has been estimated at the rate of 5.50% per annum for purpose of illustration.
(2) See TABLE 10 -SELF SUPPORTING DEBT and the accompanying footnotes.
TABLE 9 -INTEREST AND SINKING FUND BUDGET PROJECTION
Ad Valorem Tax Net Debt Service Requirements, Fiscal Year Ending September 30, 2007
Interest and Sinking Fund, September 30, 2006 $ 3,072,775
Interest and Sinking Fund Tax Levy @ 97% Collection 9,770,852
Budgeted Investment Earnings 100,000
Budgeted Transfers 551,625
Estimated Balance, September 30, 2007
14
$ 10,258,799
13,495,252
$ 3,236,453
59
TABLE IO -SELF-SUPPORTING DEBT
Year
End Electric Wastewater
9/30 Fundt'1 Fund t'I
2007 $ 376,014 $ 318,656
2008 373,620 316,628
2009 376,010 318,653
2010 374,874 317,690
2011 375,581 318,289
2012 375,463 318,188
2013 374,759 317,592
2014 373,730 316,721
2015 374,877 317,693
2016 375,273 318,028
2017 374,990 317,789
2018 374,075 317,013
2019 375,052 317,841
2020 375,249 318,008
2021 374,638 317,490
2022 375,648 318,346
2023 375,688 318,381
2024 374,501 317,374
Wolf Pen Total
Creek Self-Supporting
TIF (~1 Debt Service (3)
$ 1,078,775
1,042,475
$ 6,750,042 $ 5,720,380 $ 2,121,250
$ 1,773,445
1,732,723
694,663
692,564
693,870
693,651
692,351
690,451
692,570
693,301
692,779
691,088
692,893
693,257
692,128
693,994
694,069
691,875
$ 14,591,672
(1) Includes a portion of the City's Combination Tax and Revenue Certificates of Obligation, Series 2004.
(2) Includes a portion of the City's Combination Tax and Revenue CertiScates of Obligation, Series 2002, and Combination Tax and Revenue
Certificates of Obligation, Series 2005.
(3) The debt service described in this table is general obligation debt for which repayment is provided from revenues from other sources. [t 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.
TABLE l I -AUTHORIZED BUT UNISSUED TAX BONDS
Date of
Authorization
Purpose
1/24/1984 Fire Substation Building t
1/24/1984 Street Improvements t't
11/4/2003 Street Improvements
11 /4/2003 Traffic Management
11/4/2003 Park Improvements
11/4/2003 Municipal Complex Improvements
11/4/2003 Fire Station Improvements
Amount Issued The
Authorized To Date Bonds Unissued
$ 700,000 $ 0 $ 0 $ 700,000
6,325,000 5,825,000 0 500,000
17,980,000 5,347,000 2,100,000 10,533,000
3,000,000 1,343,000 600,000 1,057,000
8,105,000 6,835,000 1,230,000 40,000
7,610,000 3,955,000 0 3,655,000
1,710,000 1,710,000 0 0
$ 45,430,000 $ 25,015,000 $ 3,930,000 $ ] 6,485,000
(1) Contain projects which tnay have been completed or abandoned; therefore, these bonds are not likely to ever be issued.
15
60
ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ...The City does not antlCtpate the 1SSUariCe of addttlOnal general
obligation debt payable from ad valorem taxes within the next 12 months.
OTHER OBLIGATIONS ... As of September 30, 2006, 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" -Note D.)
FINANCIAL INFORMATION
TABLE IZ -GENERAL FUND REVENUES AND EXPENDITURE HISTORY
Revenues:
Taxes
Licenses & Permits
Intergovernmental
Charges for Services
Fines, Forfeits and Penalties
Special Assessments
Investment Income
Rents & Royalties
Contributions
Reimbursed Expenditures
Other
Total Revenues
Expenditures:
General Government
Fiscal Services
Police Department
Fire Department
Development Services
Parks and Recreation
Office of Technology & Information
Public Works
Library Services
Reimbursed Administrative
Contributions
Other
Debt Service -Issuance Costs
Capital Outlay
Total Expenditures
Other Financing Sources (Uses):
Proceeds from Long-term Debt
Sale of General Fixed Assets
Operating Transfers In
Operating Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
For Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
$ 26,080,234 $ 23,889,473 $ 22,992,760 $ 20,994,078 $ 19,904,565
945,593 1,025,013 1,112,766 1,012,960 870,636
639,712 590,079 351,324 487,934 423,126
2,755,283 2,480,781 2,398,165 2,403,316 2,067,813
3,285,907 3,518,913 2,956,836 2,654,154 2,225,354
131,823 225 - - -
577,966 258,048 213,297 281,092 438,885
244,864 243,831 251,042 112,993 113,724
12,281 37,082 9,619 20,987 21,475
131,249 - 20,393 7,258 32,803
194,843 265,437 198,622 182,810 171,298
$ 34,999,755 $ 32,308,882 $ 30,504,824 $ 28,157,582 $ 26,269,679
$ 4,023,708 $ 4,063,802 $ 3,903,731 $ 3,477,648 $ 3,401,789
3,025,966 3,029,144 2,479,082 2,319,008 2,153,217
11,559,669 10,829,081 9,803,577 9,143,331 8,914,893
8,493,228 7,964,785 7,275,289 6,989,125 6,405,874
I ,877,732 1,962,603 I ,964,001 I ,935,277 l , 883,224
7,519,961 6,778,068 6,387,846 6,279,342 6,045,622
2,596,591 2,800,818 2,346,534 2,320,950 2,293,734
7,103,339 6,100,247 5,534,404 5,292,243 5,211,720
870,203 694,445 665,291 681,350 734,083
(6,035,345) (6,082,138) (5,486,919) (6,013,085) (5,823,852)
526,689 595,742 1,289,389 445,251 208,485
82,021 256,636 164,287 91,428 96,564
- - 195,000 41,098 -
523,817 796,245 978,568 673,305 150,000
$ 42,167,579 $ 39,519,178 $ 37,500,080 $ 33,676,271 $ 31,675,353
$ - $ 859,621 $ 8,915,000 $ 1,000,000 $ -
17,500 12,182 4,386 19,563 30,106
8,103,371 7,444,644 7,028,260 6,741,826 6,534,900
(15!,564) (1,638,578) (9,499,773) (1,103,590) (480,807)
$ 7,969,307 $ 6,677,869 $ 6,447,873 $ 6,657,799 $ 6,084,199
$ 801,483 $ (532,427) $ (547,383) $ 1,139,110 $ 678,525
10,17Q525 10,702,952 11,250,335 10,111,225 9,432,700
$ 10,972,008 $ 10,170,525 $ 10,702,952 $ 11,250,335 $ 10,111,225
1~1 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 may be expended in future years for one time expenditures
such as capital items and short term projects.
16
61
TABLE I3 -MUNICIPAL SALES TAX HISTORY
The City has adopted the Municipal Sales and Use Tax Act, VATCS, 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 ('/s% of 1%).
Fiscal
Year % of Equivalent of
Ended Total Ad Valorem Ad Valorem Per
9-30 Collected Tax Levy Tax Rate Capitat~~
2002 $ 13,400,054 112.68% $ 0.54 $ 185
2003 13,780,639 105.92% 0.51 182
2004 14,957,697 106.14% 0.49 186
2005 15,445,404 101.14% 0.47 189
2006 17,082,936 tz~ 106.65% 0.47 209
(1) Represents collections of 1 % %.
(2) Based on population estimates provided by the City.
FINANCIAL POLICIES
GASB 34 ...The City is a Phase II City which required GASB 34 implementation for the fiscal year ended September 30, 2003.
GASB 45 .The Governmental Accounting Standards Board ("GASB") Statement No. 45 establishes standards for the
measurement, recognition, and display of the OPEB expense and related liabilities, note disclosures, and required supplementary
information in the financial reports of the state and local governments. The City is considered a phase II government under
Statement No. 45 and is not required to implement the standard until fiscal year 2009. In order to take a proactive approach to
understanding and addressing the City's OPEB liability, on May 24, 2006, the City issued a request for proposals for an actuarial
analysis of future liabilities for Other Post Employment Benefits under GASB 45. The actuarial firm of Rudd and Wisdom, Inc.
was chosen to perform the study, and on December 14, 2006 they delivered a pro forma study to the City. This study: 1) outlines
actuarial cost methods and past-service liability actuarial amortization methods available to the City, 2) reviews the actuarial
assumptions and data used in the study, 3) discusses the effect of prefunding the annual required contribution, 4) discusses the
current plan structure, 5) discusses design options, and 6) outlines the steps the City needs to take prior to implementing GASB
45.
City staff has performed an initial review of the pro forma study and a preliminary discussion with actuary has taken place. At
this point the staff plans are to: 1) evaluate, with the assistance of the actuary and our benefits consultant, the impact of changes
to the current plan structure, 2) evaluate, with the assistance of the City's financial advisor, possible funding options, and 3)
prepare and present a comprehensive overview with recommendations and a funding strategy to the City Council.
The study included pro forma valuation results as of October 1, 2005. The present value of future benefits totaled $22,834,808.
The annual OPEB cost for FYE 9/30/2006 was calculated under the following 3 costs methods: 1)Aggregate Method =
$3,045,050, 2) PUC-ARFS Method = $2,338,410, and 3) FEAN-30 year Method = $1,953,445.
Basis o Accounti~ ...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 aself-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 are maintained consistent with legal and managerial requirements. Account groups
are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds.
Government funds are used to account for the City's general 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. It 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 2006-07 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.
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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 term 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.
Budgetary Procedures ...Prior to September 1, the City Manager submits to the City Council a proposed operating budget for
the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of
financing them. All budget requests are compiled by the Finance Department and presented with comparative and supporting
data to the Mayor and City Council for review. Public hearings are properly advertised and conducted at City Hall for taxpayer
comments. Prior to September 27, the budget is legally enacted through passage of an ordinance. The City Council must
approve all transfers of budgeted amounts between departments 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.
INVESTMENTS
The City invests its investable funds 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 INVESTMENTS ...Under Texas law, the City is authorized to invest in (1) obligations, including letters of credit, of the
United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and
instrumentalities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United
States, the underlying security for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations,
the principal of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the
State of Texas or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties,
cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating
firm not less than A or its equivalent, (6) certificates of deposit meeting the requirements of Chapter 2256, Texas Government
Code (the "PFIA") that are issued by an institution that has its main office or a branch office in the State of Texas and 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 the clauses (1) through (5) and clause (12), which are intended to include all
direct federal agency or instrumentality issues that have a market value of not less than the principal amount of the certificates or
in any other manner and amount provided by law for City deposits, (7) fully collateralized repurchase agreements that have a
defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government
securities dealer or a financial institution doing business in the State of Texas, (8) bankers' acceptances with the remaining term
of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-I or the equivalent
by at least one nationally recognized credit rating agency, (9) 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 U.S. or state bank, (10) no-load money market mutual funds registered
with and regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days
or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, (11) 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, (12) bonds, notes or other
obligations, issued by the State of Israel, and (13) public funds investment pools that have an advisory board which includes
participants in the pool 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 or no lower than investment grade with a weighted average maturity of no
greater than 90 days. In addition, the City may invest bond proceeds in accordance with the terms of a guaranteed investment
contract, consistent with the provisions of the PFIA.
A political subdivision such as the City may enter into securities lending programs if: (i) the securities loaned under the program
are 100% collateralized, aloan 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 (1) through (5) and clause (12) above, (b) irrevocable letters of
credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less
than A or its equivalent or (c) cash invested in obligations described in clauses (l) through (5) above, clauses (9) through (12)
above, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the City, held in the City's
name 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 of Texas; 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
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service. The City is specifically prohibited from investing in: (I) obligations whose payment represents the coupon payments on
the outstanding principal balance of the underlying 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 determined 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 investment management; and that includes a list of authorized investments for City funds, maximum allowable
stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund
groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" 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, any additions and changes to market value and
the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning
and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund
group for which each individual investment was acquired, and (7) the 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.
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 term of the reverse repurchase agreement; (7) restrict
the investment in non-money market muhial funds of any portion of bond proceeds, reserves and funds held for debt service and
to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held
for debt service; and (8) require local government investment pools to conform to the new disclosure, rating, net asset value,
yield calculation, and advisory board requirements.
Under Texas law, the City may contract with an investment management firm registered under the Investment Advisers Act of
1940 (15 U.S.C. Section 80b-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 teim up to two years, but the City retains ultimate responsibility as fiduciary of
its assets. In order to renew or extend such a contract, the City must do so by order, ordinance or resolution. The City has not
contracted with, and has no present intention of contracting with, any such investment management firm or the State Securities
Board to provide such services.
CITY'S INVESTMENT PoLICY...The Chief Financial Officer will promptly invest all City funds with the Bank Depository in
accordance with the provisions of the current Bank Depository Agreement or in any negotiable instrument that the City Council
has authorized under the provisions of the PFIA, as amended, and in accordance with the City Council approved Investment
Policies.
At the end of each fiscal year, a report on investment performance will be provided to the City Council. In conjunction with the
quarterly financial report, the Chief Financial Officer will prepare and provide a written recapitulation of the City's investment
portfolio to the Council, detailing each City investment instrument with its rate of return and maturity date.
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TABLE 14 -CURRENT INVESTMENTS
As of March 31, 2007, the City's investable funds were invested in the following categories:
Book Market
Investment Type Value Value
Demand Bank Accounts $ 4,725,149 $ 4,725,149
Pooled Cash (Texpool) 58,182,666 58,182,666
Money Market Mutual Fund (Fidelity) 1,899,957 1,899,957
Federal Agency Securities 52,888,100 52,684,028
Federal Treasury Securities 8,783,673 8,876,251
$ 126,479,545 $ 126,368,051
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 Intemal 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 BOND COUNSEL'S
OPINION.
In rendering its opinion, 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, and (b) 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 be, 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 opinion of Bond Counsel is 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 opinion is not a guarantee of a result, but represents its legal judgment based upon its review of Existing Law
and the representations and covenants of the City described above. 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.
No ruling has been sought from the Intemal Revenue Service (the "Service") with respect to the Obligations or the property
financed or refinanced with proceeds of the Obligations. No assurances can be given that the Service would agree with the
opinion of Bond Counsel, if the tax-exempt status of the interest on either series of the Obligations were the subject of an audit.
If an audit is commenced, under current procedures the Service is likely to treat the City as the "taxpayer", and the owners of the
Obligations may have no right to participate in the audit process. No additional interest will be paid upon any determination of
taxability
FEDERAL INCOME TAX ACCOUNTING TREATMENT 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.
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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.
1n 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 six-month period ending on the date before the semiannual
anniversary dates of the date of the Obligations and ratably within each such six-month period) and the accrued amount is added
to an initial owner's basis for such Original Issue Discount 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 Issue 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.
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES
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 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. Section 55 of the Code imposes a tax equal to 20 percent for
corporations, or 26 percent for noncorporate taxpayers (28 percent for taxable income exceeding $175,000), of the taxpayer's
"alternative minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular
income tax for the taxable year.
Under section 6012 of the Code, holders of tax-exempt obligations, such as the Obligations, may be required to disclose interest
received or accrued during each taxable year on their returns of federal income taxation.
Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of atax-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 minimis amount of
market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less
than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price"
(i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same
ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days
between the acquisition date and the final maturity date.
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STATE, LOCAL AND FOREIGN TAXES
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.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinances, the City has made the following agreement for the benefit of the holders and beneficial owners of the
respective 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 material events, to certain information vendors. This information will
be available to securities brokers and others who subscribe to receive the information from the vendors.
ANNUAL REPORTS ...The City will provide certain updated financial information and operating data to certain information
vendors annually. The information to be updated includes all quantitative financial information and operating data with respect
to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 14 and in
Appendix B. The City will update and provide this information within six months after the end of each fiscal year. The City will
provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") and to
any state information depository ("SID") that is designated by the State of Texas and approved by the State of Texas and
approved by the staff of the United States Securities and Exchange Commission (the "SEC").
The City may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by SEC Rule ISc2-12 (the "Rule"). The updated information will include audited financial statements,
if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the
required time, the City will provide audited financial statements when and if the audit report becomes available. Any such
financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other
accounting principles as the City may be required to employ from time to time pursuant to state law or regulation.
The 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 each NRMSIR and the SID of the change.
The Municipal Advisory Council of Texas (the "MAC") has been designated by the State of Texas and approved by the SEC
staff as a qualified SID. The address of the MAC is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768-2177, and its
telephone number is 512/476-6947.
MATER[AL EVENT NOTICES ...The City will also provide timely notices of certain events to certain information vendors. The
City will provide notice of any of the following events with respect to the Obligations, if such event is material to a decision to
purchase or sell Obligations: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled
draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events
affecting the tax-exempt status of the Obligations; (7) modifications to rights of holders of either series of the Obligations; (8)
Obligation calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Obligations; and (11)
rating changes. (Neither the Obligations nor the Ordinances make any provision for debt service reserves or liquidity
enhancement.) In addition, the City will provide timely notice of any failure by the City to provide information, data, or
financial statements in accordance with its agreement described above under "ANNUAL REPORTS." The City will provide each
notice described in this paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board
("MSRB"). The foregoing notwithstanding, notices may be made solely by transmitting such filing to the MAC as provided at
http://www.disclosureusa.org, unless the SEC has withdrawn the interpretive advice stated in its letter to the MAC dated
September 7, 2004.
AVAILABILITY of INFORMATION 6ROM NRMSIRS AND SID ...The City has agreed to provide the foregoing information only
to NRMSIRs and the SID. The information will be available to holders of Obligations only if the holders comply with the
procedures and pay the charges established by such information vendors or obtain the information through securities brokers who
do so.
LIMITATIONS AND AMENDMENTS ...The City has agreed to update information and to provide notices of material events only as
described above. The City has not agreed to provide other information that may be relevant or material to a complete
presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided,
except as described above. The City makes no representation or warranty concerning such information or concerning its
usefulness to 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.
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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 WITH PRIOR UNDERTAKINGS ... DUiing the last f Ve yeaiS, the City has complied in all material respects with all
continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12.
The City did not receive an invoice for debt service requirements due to the bondholders on August 15, 2003 for the Certificates
of Obligation, Series 2002, and thus did not make its payment timely. Upon notification of the error, the City wired the required
funds to the paying agent on August 22, 2003. A notice of material event was filed. The City has taken remedial steps to ensure
that the reasons for the delay would not occur in the future.
OTHER INFORMATION
RATINGS
The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's and "AA-" by S&P. The City also has
several issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial
insurance companies. Applications for ratings on the Obligations have been made to Moody's and S&P. The ratings reflect only
the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is
no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn
entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant.
Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of
the Obligations.
LITIGATION
It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material
adverse financial impact upon the City or its operations.
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 AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Obligations
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of 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 "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 pmdent investor standard, the Obligations are
legal investments for state banks, savings banks, trust companies with at capital of one million dollars or more, and savings and
loan associations. The 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. 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.
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LEGAL OPINIONS
The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Obligations,
including the unqualified approving legal opinion of the Attorney General of Texas approving each series of 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 each series of the
Obligations will be excludable from gross income for federal income tax purposes under section ]03(a) of the Code, subject to
the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. Bond Counsel
has reviewed the information relating to the Obligations and the Ordinances to determine that such information conforms to the
Ordinances. 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.
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.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from City records, audited financial statements and
other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein
will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made
subject to all of the 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 accuracy or completeness of such
information.
INITIAL PURCHASER
After requesting competitive bids for the Bonds, the City accepted the bid of (the "Initial Purchaser of
the Bonds") to purchase the Bonds at the interest rates shown on the inside front cover of this Official Statement at a purchase price
of % of the principal amount thereof plus a cash premium of $ The initial yield at which the Bonds will be
priced and reoffered will be established by and will be the responsibility of, the Initial Purchaser of the Bonds. The City has no
control over the price at which the Bonds are subsequently sold. The Initial Purchaser of the Bonds can give no assurance that any
trading market will be developed for the Bonds after their sale by the City to the Initial Purchaser of the Bonds.
After requesting competitive bids for the Certificates, the City accepted the bid of (the "Initial Purchaser
of the Certificates") to purchase the Certificates at the interest rates shown on the inside front cover of this Official Statement at a
purchase price of % of the principal amount thereof plus a cash premium of $ The initial yield at which the
Certificates will be priced and reoffered will be established by and will be the responsibility of, the Initial Purchaser of the
Certificates. The City has no control over the price at which the Certificates are subsequently sold. The Initial Purchaser of the
Certificates can give no assurance that any trading market will be developed for the Certificates after their sale by the City to the
Initial Purchaser of the Certificates. The Initial Purchaser of the Bonds and the Initial Purchaser of the Certificates are sometimes
referred to in this Official Statement collectively as the "Initial Purchasers."
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CERTIFICATION OF THE OFFICIAL STATEMENT
At the time of payment for and delivery of the Obligations, the City will furnish a certificate, executed by proper officers, acting
in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or
pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of
such Official Statement, on the date of sale of said Obligations and the acceptance of the best bid therefor, and on the date of the
delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial
affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to
entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data
have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue
in any material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of
the last audited financial statements of the City.
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 Initial Purchasers.
Mayor
City of College Station, Texas
ATTEST:
City Secretary
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APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
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THE CITY
The City, located in Brazos County, is situated in the middle of a triangle bounded by Dallas/Ft. Worth, Houston, and San
Antonio/Austin. Approximately 80% of the Texas population is located within a 200 mile radius of the City. The City is
principally a residential community for faculty, students and other personnel of Texas A&M University. The City periodically
accesses technical information and assistance made available by Texas A&M University.
The City was incorporated in 1938 and has aCouncil-City Manager form of government with City employees totaling 886
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.
CITY OWNED FACILITIES
The City has constructed a major part of its present facilities out of current revenues. Approximately 395 miles of streets (99%)
within the City are hard surface. The City has a complete water distribution, wastewater collection and treatment system with
644 miles of wastewater and water lines. The City owns the electrical distribution system with approximately 400 miles of
distribution lines, and purchases its electricity from American Electric Power.
The City has a fully equipped police department with 114 full time police officers and 51 support personnel. The department has
29 police patrol cars and one holding facility with a capacity of 17. The fire department consists of 116 full time units and 4 part
time units. There are five stations and a total of 6 engines, 1 quint, 5 ambulances, 1 command vehicle, 1 rescue truck, and 1
ladder truck.
EDUCATIONAL FACILITIES
The College Station Independent School District is a fully accredited system offering 11 educational campuses for pre-
kindergarten through high school. The School District has a student enrollment in excess of 8,700 and employs over 1,100
people. 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 is located on 25 acres within the City. The 200,000 square foot facility is a full care hospital
containing I50 beds and employing more than 400 people. Other area health care providers include: St. Joseph Regional Health
Care Center, Scott & White Clinic, and The Physicians Centre.
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. Continental Connection
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 recently completed 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.
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RECREATION
The College Station park system presently includes 46 parks encompassing 1,274 acres, including a 515 acre wilderness park.
Collectively, these parks contain 46 playgrounds, 31 soccer fields, 20 basketball courts, 32 softball/baseball diamonds, 3
swimming pools, 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.
POPULATION
1940 1950
City of College Station 2,184 7,925
Brazos County 26,977 38,390
Official U.S. Census
1960 1970 1980 1990 2000
11,396 17,676 37,272 52,456 67,890
44,895 57,978 93,588 121,862 152,415
ECONOMIC BACKGROUND
Texas A&M University and System
Of major importance to the City is Texas A&M University which has a 5,200 acre campus located within the City. The City is
principa]ly a residential community for faculty, students and other personnel of the University. Texas A&M University and its
System are the largest employer in Brazos County and a major contributor to the local economy. Texas A&M has a significant
economic impact on the City, contributing an estimated $1 billion annually to the local economy. Texas A&M has consistently
ranked in the top fifty nationally among public institutions of higher education in both enrollment and research grants. Research
dollars totaled approximately $569 million for 2006. The University has approximately 21,000 permanent and part-time
employees with a payroll of approximately $724.7 million and has a physical plant valued in excess of $1 billion.
Texas A&M had an enrollment of 45,380 students during the fall semester of 2006. There are currently over 600 National Merit
Scholars enrolled at Texas A&M University, ranking in the nation's top 20 universities for National Merit Scholar enrollment.
Student Rec Center
The Student Rec Center is a 286,000 square foot building located on the Texas A&M University campus. The Center includes
multi-purpose gyms with badminton, basketball and volleyball courts, indoor soccer courts with dasher boards, 14
racquetball/handball courts, and two squash courts with glass backwalls. The Center is home to a 14,000-square foot area with
machine weights, free weights, cardio-vascular equipment, and acardio-theater; five activity rooms for aerobics, dance and
martial arts; and aquarter-mile four-lane walking/jogging track. It features a 44-foot indoor rock climbing facility with
interchangeable hand and footholds, an outdoor activity area with asix-lane lap, and afree-form pool with a cool water spa. The
building also houses a natatorium that seats 2,500 with a 50-meter, eight-lane Olympic-size pool, afive-lane instructional pool, a
diving well with one and three meter springboards and competitive platforms, and hot tubs.
George Bush Presidential Library and Museum
The City is the site of the George Bush Presidential Library and Museum, located on the campus of Texas A&M University.
Texas A&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.
Reed Arena
Reed Arena is a special events center located on the Texas A&M University campus. The Arena seats up to 12,500 people and is
the largest such facility in the Brazos Valley area. The center attracts athletic events, concerts and exhibits.
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MAJOR AREA EMPLOYERS
Firm Name
Texas A&M University and System
Bryan ISD
St. Joseph's Regional Hospital
Sanderson Farms, Inc.
College Station ISD
Universal Computer Systems
City of Bryan
City of College Station
Brazos County
Walmart
Alenco
HEB Grocery
Scott & White Clinic
West Corporation
College Station Medical Center
Source: Research Valley Partnership.
Product Number of
Employees
Education/Research 16,000+
Education 1,949
Health Services 1,590
Poultry Processing 1,539
Education 1,400
Computer Hardware and Software 959
Government 889
Government 886
Government 751
Retail 650
Windows 61 I
Retail 590
Health Services 553
Telecommunication 550
Health Services 420
In addition to the University, employment is provided by more than 85 manufacturing industries located in, or adjacent to, the
City which produce such products as aluminum windows, furniture, chemicals, dairy products, feeds and fertilizers, modular
homes, bronze castings, and geophysical survey sensors. A growing research park is located within the Texas A&M campus.
Major tenants include the Offshore Technology Research Center and the Food Safety Inspection School National Training
Center. Automated Management systems provides a major automated accounting service for independent property and casualty
insurance agents. The City has also developed the College Station Business Center, a 200-acre business park. Tenants within
the park include Universal Computer Systems ("UCS"), which employs approximately 960 people; Cox Media, a graphics
advertising business; Prodigene, a biotechnology research business; and Stata Corporation, a software research business.
LABOR STATISTICS
College Station
Labor Total
Yeart~~ Force Employment Unemployment Rate
2002 31,667 31,088 579 1.8%
2003 33,005 32,210 795 2.4%
2004 33,372 32,669 703 2.1
2005 39,963 38,482 1,481 3.7%
2006 40,556 38,858 1,698 4.2%
2007 tZi 40,415 38,939 1,476 3.7%
Brazos County
Labor Total
Year~~l Force Employment Unemployment Rate
2002 79,524 78,143 1,381 1.7%
2003 82,861 80,965 1,896 2.3%
2004 86,095 82,433 3,662 4.3%
2005 87,489 84,035 3,454 3.9%
2006 88,190 84,627 3,563 4.0%
2007 «~ 87,961 84,803 3,158 3.6%
Source: Texas Workforce Commission.
(1) Because of methodology changes in geographical areas below the state level, data from 2004 or earlier is not considered comparable.
(2) Average through March.
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BUILDING PERMITS
College Station has grown rapidly over the past 30 years as evidenced by an increase in population from 17,676 in 1970 to
67,890 in 2000. The following table sets forth the number and value of construction permits issued by the City over the past
several years.
Residential Construction Commercial Construction Total
Number Number Number
Year of Permits Value of Permits Value of Permits Value
2002 1,207 $ 107,907,265 307 $ 38,926,808 1,514 $ 146,834,073
2003 1,127 138,484,780 315 49,408,634 1,442 187,893,414
2004 985 100,504,006 366 114,543,138 1,351 215,047,144
2005 (t) 1,991 127,265,816 419 31,169,195 2,410 158,435,011
2006 1,048 126,249,768 410 57,162,203 1,458 183,411,97]
(1) Overall in 2005, residential construction permits are higher in 2005 than 2004 because in 2005 there were 1195 roofing permits as the result of a
major hailstorm in College Station. The total numbers of permits issued for single family homes and multi-family units was 627 in 2005 as
compared to 644 in 2004.
COUNTY CHARACTERISTICS
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, com, cotton, wheat, oats and pecans as the principal sources of agricultural income.
The County had a 2000 population of 152,415, an increase of 25.07% since 1990. Minerals produced in the County include sand
and gravel, lignite, gas and oil.
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APPENDIX B
EXCERPTS FROM THE
CITY OF COLLEGE STATION, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2006
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, 2005, 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.
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APPENDIX C
FORM OF OPINIONS OF BOND COUNSEL
77
NOTICE OF SALE
AND
BIDDING INSTRUCTIONS
ON
$3,930,000
CITY OF COLLEGE STATION, TEXAS
(a Home Rule City located in Brazos County, Texas)
GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2007
SEALED BIDS DUE MONDAY, AUGUST 6, 2007, AT 10:00 A.M., CDST
THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS.
THE SALE
BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING
The City of College Station, Texas (the "City") is offering for sale its $3,930,000 General Obligation Improvement Bonds, Series
2007 (the "Bonds"). Bidders may submit bids for the Bonds by any of the following methods:
(1) Deliver bids directly to the City as described below in "Bids Delivered to the City;"
(2) Submit bids electronically as described below in "Electronic Bidding Procedures;" or
(3) Submit bids by telephone or facsimile as described below in "Bids by Telephone or Facsimile."
BIDS DELIVERED TO THE CITY
Sealed bids, plainly marked "Bid for Bonds," should be addressed to "Mayor and City Council, City of College Station, Texas,"
and delivered in care of Drew Masterson, First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas 77002, prior
to 10:00 A.M., CDST, on the date of the bid opening. All bids must be submitted on the Official Bid Form, without alteration or
interlineation.
ELECTRONIC BIDDING PROCEDURES
Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of the Parity
Electronic Bid Submission System ("PARITY"). Subscription to the i-Deal LLC's BIDCOMP Competitive Bidding System is
required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of
any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit Official Bid
Forms.
An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms
provided in this Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The
City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the
use of such facilities being the sole risk of the prospective bidder.
If any provisions of this Notice of Sale shall conflict with information provided by PARITY as the approved provider of
electronic bidding services, this Notice of Sale shall control. Further information about BIDCOMP/PARITY, including
any fee charged, may be obtained from BIDCOMP/PARITY Customer Support, 40 W. 23rd Street, Scn Floor, New York,
New York 10010, telephone: (212) 404-4102.
For purposes of both the written sealed bid process and the electronic bidding process, the time as maintained by i-Deal shall
constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true
interest cost to the City, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate
the provisions of this Notice of Sale and the Official Bid Form.
BIDS BY TELEPHONE OR FACSIMILE
Bidders must submit, on or before August 6, 2007, two signed Official Bid Forms plus an envelope marked as described above to
Drew Masterson, First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas 77002, and submit their bid by
telephone or facsimile on the date of the sale.
Telephone bids wilt be accepted at (713) 654-8654, between 9:00 A.M. and 9:45 A.M., CDST.
78
Facsimile bids must be received between 9:00 A.M. and 10:00 A.M., CDST on the date of the sale at (713) 654-8658, attention
Drew Masterson.
The City and First Southwest Company are not responsible if such telephone or facsimile numbers are busy which prevents a bid
or bids from being submitted on a timely basis. First Southwest Company will not be responsible for submitting any bids
received after the above deadlines. The City and First Southwest Company assume no responsibility or liability with respect to
any irregularities associated with the submission of bids if telephone or facsimile options are exercised.
PLACE AND TIME OF BID OPENING
The bids for the Bonds will be publicly opened and read in the office of First Southwest Company, Financial Advisor to the City,
1021 Main Street, Suite 2200, Houston, Texas 77002, at 10:00 A.M. CDST, Monday, August 6, 2007.
AWARD OF THE BONDS
The City Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to convene at 7:00 P.M., CDST,
on the date of the bid opening, and adopt an ordinance authorizing the Bonds and approving the Official Statement (the
"Ordinance").
THE BONDS
DESCRIPTION ...The Bonds will be dated September 1, 2007 (the "Dated Date"). Interest will accrue from the Dated Date and will
be due on February I5, 2008, and each August 15 and February 15 and thereafter until the earlier of maturity or prior redemption.
The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Bonds will
mature on February 15 in each year as follows:
MATURITY SCHEDULE
Principal Principal
Year Amount Year Amount
2008 $ 1,150,000 2018 $ 140,000
2009 90,000 2019 150,000
2010 90,000 2020 155,000
2011 95,000 2021 165,000
2012 100,000 2022 175,000
2013 110,000 2023 185,000
2014 115,000 2024 190,000
2015 120,000 2025 200,000
2016 125,000 2026 215,000
2017 135,000 2027 225,000
OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Bonds having stated maturities on and after
February I5, 2017, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2016, or
any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption.
SERIAL BONDS AND/oR TERM BONDS ...Bidders may provide that all of the Bonds be issued as serial bonds or may provide that
any two or more consecutive annual principal amounts be combined into one or more term bonds.
MANDATORY SINx[NG FtmD REDEMPTION ... If the successful bidder elects to alter the Maturity Schedule reflected above and
convert principal amounts of the Serial Bonds into "Term Bonds," such "Term Bonds" shall be subject to mandatory redemption on
the first February 15 next following the last maturity for Serial Bonds, and annually thereafter on each February 15 until the stated
maturity for the Term Bonds at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of
the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and
payable in the Maturity Schedule shown above had no designation of such maturities as Term Bonds occurred. At least thirty (30)
days prior to each mandatory date, the Paying Agent/Registrar shall select by ]ot the Term Bonds to be redeemed and cause a notice
of redemption to be given in the manner provided in the Official Statement.
The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption
provisions may be reduced, at the option of the City, by the principal amount of the Term Bonds of the same maturity which at least
fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City at a price not exceeding the principal
amount of such Term Bonds plus accrued interest to the date of purchase and delivered to the Paying Agent/Registrar for
cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a
mandatory redemption requirement.
~9
Boox-ENTRY-ONLY SYSTEM ...The City intends to utilize the Book-Entry-Only System of The Depository Trust Company
("DTC"). See "THE OBLIGATIONS - Boox-ENTRY-ONLY SvsTEM" in the Official Statement.
PAYING AGENT/REGtsTttAR ...The initial Paying Agent/Registrar shall be The Bank of New York Trust Company, N.A.,
Dallas, Texas. See "THE OBLIGATIONS -PAYING AGENT/1ZEG[STRAR" in the Official Statement.
SoueCE of PAYMENT ... The Bonds constitute direct obligations of the City, 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.
Further details regarding the Bonds are set forth in the Official Statement
CONDITIONS OF THE SALE
TYPE OF B[ns aNn INTEREST RATES ...The Bonds will be sold in one block on an "All or None" basis, and at a price of not less
than their par value plus accrued interest from date of the Bonds to the date of delivery of the Bonds. A premium bid in excess of
0.5% of the par amount of the Bonds will not be accepted. Bidders are invited to name the rate(s) of interest to be borne by the
Bonds, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/100 of 1% and the net effective interest rate must not
exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 2% in rate. Using the interest rate established
for the February 15, 2017 maturity as the base year, interest rates for successive maturities shall be structured in ascending order
such that for each succeeding maturity, rates shall be equal to or greater than the interest rate for the maturity of the preceding
year. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be
considered. Each bidder shall state in the bid the true interest cost which shall be considered informative only and not as a part of
the bid.
Bests Eott AwA1tD ...The sale of the Bonds will be awarded to the bidder making a bid that conforms to the specifications
herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when
used to compute the total present value as of the Dated Date of all debt service payments on the Bonds on the basis of semi-
annual compounding, produces an amount equal to the sum of the par value of the Bonds plus any premium bid, if any (but not
interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate
calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the intended bid.
Goon FAtrx DEPOSIT ... A Good Faith Deposit, payable to the "City of College Station, Texas," in the amount of $78,600.00 is
required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City
pending the Initial Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith
Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available
to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize
its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the
Initial Purchaser will be returned to the Initial Purchaser upon payment for the Bonds. No interest will be allowed on the
Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the
bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying
bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Bonds has been made.
DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS
CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Bonds, but neither the failure to print or
type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser
to accept delivery of and pay for the Bonds in accordance with the terms of this Notice of Sale and Bidding Instructions and the
terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by
the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of
and shall be paid for by the Initial Purchaser.
DELIVERY of BoNVS ... Initial delivery will be accomplished by the issuance of one bond for each maturity (also called the "Initial
Bonds"), either in typed or printed form, in the aggregate principal amount of $3,930,000, payable to the Initial Purchaser, signed by
the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public
Accounts. Upon delivery of the Initial Bonds, they shall be immediately cancelled and one definitive Bond for each maturity will be
registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book-Entry-Only System. Delivery
will be at the principal office of the Paying AgendRegistrar. Payment for the Bonds must be made in immediately available funds
for unconditional credit to the City, or as otherwise directed by the City. The Initial Purchaser will be given six business days' notice
of the time fixed for delivery of the Bonds. It is anticipated that delivery of the Bonds can be made on or about September l 1, 2007
and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Bonds by 10:00 A.M.,
CDST, on September 11, 2007, or thereafter on the date the Bonds are tendered for delivery, up to and including October 9, 2007. If
for any reason the City is unable to make delivery on or before October 9, 2007, the City shall immediately contact the Initial
Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not
elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Initial
8p
Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to
deliver the Bonds, provided such failure is due to circumstances beyond the City's reasonable control.
CONDITIONS To DELIVERY ...The obligation of the Initial Purchaser to take up and pay for the Bonds is subject to the Initial
Purchaser's receipt of (a) the legal opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, Dallas, Texas, Bond Counsel for
the City ("Bond Counsel"), (b) the no-litigation certificate, and (c) the certification as to the Official Statement, all as further
described in the Official Statement.
In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of
1986 relating to the exemption of interest on the Bonds from the gross income of their owners, the Initial Purchaser will be required
to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Bonds) a certification as to
their "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale and Bidding
Instructions. In the event the successful bidder will not reoffer the Bonds for sale, such bond may be modified in a manner approved
by the City. In no event will the City fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial
amount of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and
deliver such a bond by the date of delivery of the Bonds, if its bid is accepted by the City. It will be the responsibility of the Initial
Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary
to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to
Bond Counsel.
LEGAL OPINIONS ...The Bonds are offered when, as and if issued, subject to the approval of the Attorney General of the State
of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Initial Purchaser of opinions of Bond Counsel, to
the effect that the Bonds are valid and binding obligations of the City and that the interest on the Bonds will be excludable from
gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" in
the Official Statement, including the alternative minimum tax on corporations. With respect to the transactions described in the
Official Statement, Bond Counsel represents only the City.
CHANGE IN TAx ExEMrT STATUS ....At any time before the Bonds are tendered for delivery, the Initial Purchaser may
withdraw its bid if the interest received by private holders on obligations of the same type and character shall be declared to be
includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a
decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal
income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding
Instructions.
GENERAL
FINANCIAL ADVISOR ...First Southwest Company is employed as Financial Advisor to the City in connection with the issuance
of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the
issuance and delivery of the Bonds. First Southwest Company has agreed, in its Financial Advisory contract, not to bid for the
Bonds, either independently or as a member of a syndicate organized to submit a bid for the Bonds. First Southwest Company, in
its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any
responsibility for the information, covenants and representations contained in any of the legal documents with respect to the
federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or
judicial bodies.
BLUE S[cv LAWS ... By submission of its bid, the Initial Purchaser represents that the sale of the Bonds in states other than Texas
will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Bonds in
accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees to cooperate with the
Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from
registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a
general or special consent to service of process in any such jurisdiction.
NoT AN OFFER To SELL ...This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds, but
is merely notice of the sale of the Bonds. The offer to sell the Bonds is being made by means of the Notice of Sale and Bidding
Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine the Official
Statement to determine the investment quality of the Bonds.
ISSUANCE OF ADDITIONAL DEBT ... ConCUrreritly with the sale of the Bonds, the City is offering for sale its $3,960,000
Certificates of Obligation, Series 2007, which are secured in part by a pledge of ad valorem taxes. Thereafter, the City does not
anticipate the issuance of additional obligations payable from ad valorem taxes within the next 12 months. Concurrently with the
issuance of the sale of the Bonds, the City is offering for sale its $18,665,000 Utility System Revenue Bonds, Series 2007 which
are secured by a first lien on and pledge of the Net Revenues of the City's Utility System. The City has not covenanted nor
obligated itself to pay the Utility System Revenue Bonds from monies to be raised from taxation.
8A
RATINGS ...The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's Investors Service ("Moody's")
and "AA-" by Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. ("S&P"). The City also has
other issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial
insurance companies. Applications for contract ratings on this issue has been made to Moody's and S&P.
MUNICIPAL BOND INSURANCE ... In the event the Bonds are qualified for municipal bond insurance, and the Initial Purchaser
desires to purchase such insurance, the cost therefor will be Daid by the Initial Purchaser. Any fees to be paid to the rating
agencies as a result of said insurance will be Daid by the City. It will be the responsibility of the Initial Purchaser to disclose the
existence of insurance, its terms and the effect thereof with respect to the reoffering of the Bonds.
THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15C2-12 .. The City has prepared the accompanying Offtcial
Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its
date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City,
the Official Statement contains information, including financial information or operating data, concerning every entity,
enterprise, fund, account, or person that is material to an evaluation of the offering of the Bonds. Representations made and to be
made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed
elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement.
The City will furnish to t11e Initial Purchaser, or Initial Purchasers, acting through a designated senior representative, in
accordance with instructions received from the Initial Purchaser(s), within seven (7) business days from the sale date an
aggregate of 150 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the
Bonds. The cost of a reprinted Official Statement, if the Initial Purchaser(s) shall so elect, and the cost of any Official Statement
in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser(s). The Initial Purchaser(s)
shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the
close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the
distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject
securities.
CONTINUING DISCLOSURE AGREEMENT ...The City wilt agree in the Ordinance to provide certain periodic information and
notices of material events in accordance with SEC Rule 15c2-12, as described in the Official Statement under "Continuing
Disclosure of Information". The Initial Purchaser(s') obligation to accept and pay for the Bonds is conditioned upon delivery to
the Initial Purchaser(s) or (their) agent of a certified copy of the Ordinance containing the agreement described under such
heading.
COMPLIANCE WITH 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 SEC Rule 15c2-12.
The City did not receive an invoice for debt service requirements due to the bondholders on August 15, 2003 for the Certificates
of Obligation, Series 2002, and thus did not make its payment timely. Upon notification of the error, the City wired the required
funds to the paying agent on August 22, 2003. A notice of material event was filed. The City has taken remedial steps to ensure
that the reasons for the delay would not occur in the future.
ADDITIONAL COPIES OF NOTICE OF SALE, BID FORM AND OFFICIAL STATEMENT ... A limited number Of addltiottal COp1eS Of
this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the
normal mailing, may be obtained at the offices of First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas
77002, Financial Advisor to the City.
The City Council has approved the forth and content of the Notice of Sale and Bidding Instructions, the Official Bid Form and
Official Statement, and authorized the use thereof in its initial offering of the Bonds. On the date of the sale, the City Council
will, in the Ordinance authorizing the issuance of the Bonds, confirm its approval of the form and content of the Official
Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Bonds by the Initial
Purchaser.
Mayor
City of College Station, Texas
ATTEST:
City Secretary
8r?
OFFICIAL BID FORM
Honorable Mayor and City Council
City of College Station, Texas
Members of the City Council:
August 6, 2007
Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated July 12, 2007 of $3,930,000 CITY
OF COLLEGE STATION, TEXAS GENERAL OBLIGATION IMPROVEMENT BONDS, SERIES 2007 (the "Bonds"), both of
which constitute a part hereof.
For your legally issued Bonds, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you
par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ for Bonds maturing
and bearing interest as follows:
Maturity Interest Maturity Interest
Feb 15 Principal Rate Feb I S Principal Rate
2008 $ 1,150,000 % 2018 $ 140,000
2009 90,000 2019 150,000
2010 90,000 2020 155,000
2011 95,000 2021 165,000
2012 100,000 2022 175,000
2013 110,000 2023 185,000
2014 115,000 2024 190,000
2015 120,000 2025 200,000
2016 125,000 2026 215,000
2017 135,000 2027 225,000
Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which
may include multiple term bonds, one term bond or no term bond if none is indicated). For those years which have been
combined into a term bond, the principal amount shown in the table above shall be the mandatory sinking fund redemption
amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The
term bonds created are as follows:
Year of
Term Bond First Mandatory
Maturity Date Redemption
Principal
Amount of Interest
Term Bond Rate
Our calculation (which is not a part of this bid) of the interest cost from the above is:
TRUE INTEREST COST
We are having the Bonds of the following maturities insured by at a
premium of $ ,said premium to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies
as a result of said insurance will be paid by the City.
The Initial Bonds shall be registered in the name of ,which will, upon payment for the
Bonds, be cancelled by the Paying AgenbRegistrar. The Bonds will then be registered in the name of Cede & Co. (DTC's
partnership nominee), under the Book-Entry-Only System.
A bank cashier's check or certified check of the Bank, , in the amount of
$78,600.00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of
this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding
Instructions.
>3~3
We agree to accept delivery of the Bonds utilizing the Book-Entry-Only System through DTC and make payment for the Initial
Bond in immediately available funds at The Bank of New York Trust Company, N.A., Dallas, Texas, not later than 10:00 A.M.,
CDST, on September 11, 2007 or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the
Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Bonds to complete the DTC
Eligibility Questionnaire.
The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Bonds, a bond
relating to the "issue price" of the Bonds in the form and to the effect accompanying the Notice of Sale and Bidding Instructions,
with such changes thereto as may be acceptable to the City.
We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the
next business day after the award.
Respectfully submitted,
Name of Underwriter or Manager
Authorized Representative
Phone Number
Signature
Syndicate Members:
ACCEPTANCE CLAUSE
The above and foregoing bid is hereby in all things accepted by the City of College Station, Texas, subject to and in accordance with
the Notice of Sale and Bidding Instructions, this the day of , 2007.
ATTEST:
Mayor
City of College Station, Texas
City Secretary
8~k
ISSUE PRICE CERTIFICATE
The undersigned hereby certifies with respect to the sale of CITY OF COLLEGE STATION, TEXAS GENERAL
OBLIGATION IMPROVEMENT BONDS, SERIES 2007 (the "Bonds"), issued in aggregate principal amount of $3,930,000, as
follows:
1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Bonds from the
City of College Station, Texas (the "Issuer") at competitive sale.
2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to
the public of the Bonds of each maturity at the respective prices set forth below.
3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the
Bonds of each maturity at which a substantial amount of the Bonds of such maturity was sold to the public is as set forth
below:
Initial Initial
Due Offering Due Offering
Principal Feb 15 Price Principal Feb ] 5 Price
$ 1,150,000 2008 $ 140,000 2018
90,000 2009 150,000 2019
90,000 2010 155,000 2020
95,000 2011 165,000 2021
100,000 2012 175,000 2022
(10,000 2013 185,000 2023
115,000 2014 190,000 2024
120,000 2015 200,000 2025
125,000 2016 215,000 2026
135,000 2017 225,000 2027
4. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or
organizations acting in the capacity of underwriters or wholesalers.
5. The offering prices described above reflect current market prices at the time of such sales.
6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not)
purchased bond insurance for the Bonds. The bond insurance, if any, has been purchased from
(the "Insurer") for a premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The
amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the
Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by
guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor).
The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to
the yield on the Bonds which results after recovery of the insurance premium, exceeds the present value of the bond insurance
premium.
7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the
conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Bonds from the
gross income of their owners.
EXECUTED and DELIVERED this day of , 2007.
(Name of Underwriter or Manager)
By
(Title)
vui
85
NOTICE OF SALE
AND
BIDDING INSTRUCTIONS
ON
$3,960,000
CITY OF COLLEGE STATION, TEXAS
(a Home Rule City located in Brazos County, Texas)
CERTIFICATES OF OBLIGATION, SERIES 2007
SEALED BIDS DUE MONDAY, AUGUST 6, 2007, AT 10:00 A.M., CDST
THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
THE SALE
CERTIFICATES OFFERED FOR SALE AT COMPETITIVE BIDDING
The City of College Station, Texas (the "City") is offering for sale its $3,960,000 Certificates of Obligation, Series 2007 (the
"Certificates"). Bidders may submit bids for the Certificates by any of the following methods:
(1) Deliver bids directly to the City as described below in "Bids Delivered to the City;"
(2) Submit bids electronically as described below in "Electronic Bidding Procedures;" or
(3) Submit bids by telephone or facsimile as described below in "Bids by Telephone or Facsimile."
BIDS DELIVERED TO THE CITY
Sealed bids, plainly marked "Bid for Certificates," should be addressed to "Mayor and City Council, City of College Station,
Texas," and delivered in care of Drew Masterson, First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas
77002, prior to 10:00 A.M., CDST, on the date of the bid opening. All bids must be submitted on the Official Bid Form, without
alteration or interlineation.
ELECTRONIC BIDDING PROCEDURES
Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of the Parity
Electronic Bid Submission System ("PARITY"). Subscription to the i-Deal LLC's BIDCOMP Competitive Bidding System is
required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of
any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit Official Bid
Forms.
An electronic bid made through the facilities of PARITY shall be deemed an irzevocable offer to purchase the Certificates on the
terms provided in this Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the
City. The City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of,
PARITY, the use of such facilities being the sole risk of the prospective bidder.
If any provisions of this Notice of Sale shall conflict with information provided by PARITY as the approved provider of
electronic bidding services, this Notice of Sale shall control. Further information about BIDCOMP/PARITY, including
any fee charged, may be obtained from BIDCOMP/PARITY Customer Support, 40 W. 23rd Street, Srn Floor, New York,
New York 10010, telephone: (212) 404-4102.
For purposes of both the written sealed bid process and the electronic bidding process, the time as maintained by i-Deal shall
constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true
interest cost to the City, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate
the provisions of this Notice of Sale and the Official Bid Form.
BIDS BY TELEPHONE OR FACSIMILE
Bidders must submit, on or before August 6, 2007, two signed Official Bid Forms plus an envelope marked as described above to
Drew Masterson, First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas 77002, and submit their bid by
telephone or facsimile on the date of the sale.
86
Telephone bids will be accepted at (713) 654-8654, between 9:00 A.M. and 9:45 A.M., CDST.
Facsimile bids must be received between 9:00 A.M. and 10:00 A.M., CDST on the date of the sale at (713) 654-8658, attention
Drew Masterson.
The City and First Southwest Company are not responsible if such telephone or facsimile numbers are busy which prevents a bid
or bids from being submitted on a timely basis. First Southwest Company will not be responsible for submitting any bids
received after the above deadlines. The City and First Southwest Company assume no responsibility or liability with respect to
any irregularities associated with the submission of bids if telephone or facsimile options are exercised.
PLACE AND TIME OF BID OPENING
The bids for the Certificates will be publicly opened and read in the office of First Southwest Company, Financial Advisor to the
City, 1021 Main Street, Suite 2200, Houston, Texas 77002, at 10:00 A.M. CDST, Monday, August 6, 2007.
AWARD OF THE CERTIFICATES
The City Council will take action to award the Certificates (or reject all bids) at a meeting scheduled to convene at 7:00 P.M.,
CDST, on the date of the bid opening, and adopt an ordinance authorizing the Certificates and approving the Official Statement
(the "Ordinance").
THE CERTIFICATES
DESCRIPTION ...The Certificates will be dated September 1, 2007 (the "Dated Date"). Interest will accrue from the Dated Date and
will be due on Febmary 15, 2008, and each August 15 and February 15 and thereafter until the earlier of maturity or prior
redemption. The Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The
Certificates will mature on February 15 in each year as follows:
MATURITY SCHEDULE
Principal Principal
Year Amount Year Amount
2008 $ 1,150,000 2018 $ 140,000
2009 90,000 2019 150,000
2010 95,000 2020 155,000
2011 100,000 2021 165,000
2012 105,000 2022 175,000
2013 110,000 2023 185,000
2014 115,000 2024 195,000
2015 120,000 2025 205,000
2016 130,000 2026 215,000
2017 135,000 2027 225,000
OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and
after February 15, 2017, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2016,
or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption.
SERIAL CERTIFICATES AND/OR TERM CERTIFICATES ... BlddeiS may piOVide that all of the Certificates be issued as serial
certificates or may provide that any two or more consecutive annual principal amounts be combined into one or more term
certificates.
MANDATORY SINHING FUND REDEMPTION ... If the successful bidder elects to alter the Maturity Schedule reflected above and
convert principal amounts of the Serial Certificates into "Term Certificates," such "Term Certificates" shall be subject to mandatory
redemption on the first February 15 next following the last maturity for Serial Certificates, and annually thereafter on each February
15 until the stated maturity for the Term Certificates at the redemption price of par plus accrued interest to the date of redemption.
The principal amounts of the Term Certificates to be redeemed on each mandatory redemption date shall be the principal amounts
that would have been due and payable in the Maturity Schedule shown above had no designation of such maturities as Term
Certificates occurred. At least thirty (30) days prior to each mandatory date, the Paying Agent/Registrar shall select by lot the Term
Certificates to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement.
87
The principal amount of the Term Certificates required to be redeemed pursuant to the operation of such mandatory redemption
provisions may be reduced, at the option of the City, by the principal amount of the Term Certificates of the same maturity which at
least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City at a price not exceeding the
principal amount of such Term Certificates plus accrued interest to the date of purchase and delivered to the Paying Agent/Registrar
for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a
mandatory redemption requirement.
Boox-ENTRY-ONLY SYSTEM ...The City intends to utilize the Book-Entry-Only System of The Depository Trust Company
("DTC"). See "THE OBLIGATIONS -Boox-ENTRY-ONt.v SYSTrn-t" in the Official Statement.
PAYING AGENT/REGISTRAR ...The initial Paying AgenbRegistrar shall be The Bank of New York Trust Company, N.A,
Dallas, Texas. See "THE OBLIGATIONS - PAVtNC AGENT/REotsTaAtt" in the Official Statement.
SOURCE of PAYMENT ... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and
collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the
City, and (ii) a subordinate lien on and pledge of $1,000 of the surplus revenues derived from the City's combined utility system.
Further details regarding the Certificates are set forth in the Official Statement
CONDITIONS OF THE SALE
TYPE oP BIDS AND INTEREST RATES ...The Certificates will be sold in one block on an "All or None" basis, and at a price of
not less than their par value plus accrued interest from date of the Certificates to the date of delivery of the Certificates. A
premium bid in excess of 0.5% of the par amount of the Certificates will not be accepted. Bidders are invited to name the rate(s)
of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/100 of 1% and the
net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 2% in rate.
Using the interest rate established for the February 15, 2017 maturity as the base year, interest rates for successive maturities
shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest
rate for the maturity of the preceding year. All Certificates of one maturity must bear one and the same rate. No bids involving
supplemental interest rates will be considered. Each bidder shall state in the bid the true interest cost which shall be considered
informative only and not as a part of the bid.
BASIS FoR AWARD ...The sale of the Certificates will be awarded to the bidder making a bid that conforms to the specifications
herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when
used to compute the total present value as of the Dated Date of all debt service payments on the Certificates on the basis of semi-
annual compounding, produces an amount equal to the sum of the par value of the Certificates plus any premium bid, if any (but
not interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate
calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the intended bid.
Goon FArrH DEPOSIT ... A Good Faith Deposit, payable to the "City of College Station, Texas," in the amount of $79,200.00 is
required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City
pending the Initial Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith
Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available
to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize
its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the
Initial Purchaser will be returned to the Initial Purchaser upon payment for the Certificates. No interest will be allowed on
the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Certificates in accordance
with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks
accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the
Certificates has been made.
DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS
CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Certificates, but neither the failure to
print or type such number on any Certificate nor any error with respect thereto shall constitute cause for a failure or refusal by the
Initial Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Notice of Sale and Bidding
Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the
Certificates shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers
shall be the responsibility of and shall be paid for by the Initial Purchaser.
iii
88
DE[,tvEtty of CERTIFICATES ... Initial delivery will be accomplished by the issuance of one certificate for each maturity (also
called the "Initial Certificates"), either in typed or printed form, in the aggregate principal amount of $3,960,000, payable to the
Initial Purchaser, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by
the Comptroller of Public Accounts. Upon delivery of the Initial Certificates, they shall be immediately cancelled and one definitive
Certificate for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's
Book-Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Certificates must
be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Initial
Purchaser will be given six business days' notice of the time fixed for delivery of the Certificates. It is anticipated that delivery of the
Certificates can be made on or about September 11, 2007 and it is understood and agreed that the Initial Purchaser will accept
delivery and make payment for the Certificates by 10:00 A.M., CDST, on September l 1, 2007, or thereafter on the date the
Certificates are tendered for delivery, up to and including October 9, 2007. If for any reason the City is unable to make delivery on
or before October 9, 2007, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend
its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Good
Faith Deposit will be returned, and both the City and the Initial Purchaser shall be relieved of any further obligation. In no event
shall the City be liable for any damages by reason of its failure to deliver the Certificates, provided such failure is due to
circumstances beyond the City's reasonable control.
CONDITIONS TO DELIVERY ...The obligation of the Initial Purchaser to take up and pay for the Certificates is subject to the Initial
Purchaser's receipt of (a) the legal opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, Dallas, Texas, Bond Counsel for
the City ("Bond Counsel"), (b) the no-litigation certificate, and (c) the certification as to the Official Statement, all as further
described in the Official Statement.
In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of
1986 relating to the exemption of interest on the Certificates from the gross income of their owners, the Initial Purchaser will be
required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Certificates) a
certification as to their "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale
and Bidding Instructions. In the event the successful bidder will not reoffer the Certificates for sale, such certificate may be modified
in a manner approved by the City. In no event will the City fail to deliver the Certificates as a result of the Initial Purchaser's
inability to sell a substantial amount of the Certificates at a particular price prior to delivery. Each bidder, by submitting its
bid, agrees to complete, execute, and deliver such a certificate by the date of delivery of the Certificates, if its bid is accepted by the
City. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements to make such
investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any
questions concerning such certification should be directed to Bond Counsel.
LEGAL OrINtoNS ...The Certificates are offered when, as and if issued, subject to the approval of the Attorney General of the
State of Texas. Delivery of and payment for the Certificates is subject to the receipt by the Initial Purchaser of opinions of Bond
Counsel, to the effect that the Certificates are valid and binding obligations of the City and that the interest on the Certificates
will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under
"TAX MATTERS" in the Official Statement, including the alternative minimum tax on corporations. With respect to the
transactions described in the Official Statement, Bond Counsel represents only the City.
CHANGE tN TAx EXEMPT S'rnrus ....At any time before the Certificates are tendered for delivery, the Initial Purchaser may
withdraw its bid if the interest received by private holders on obligations of the same type and character shall be declared to be
includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a
decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal
income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding
Instructions.
GENERAL
F[NANCtAL ADVISOR ...First Southwest Company is employed as Financial Advisor to the City in connection with the issuance
of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent
upon the issuance and delivery of the Certificates. First Southwest Company has agreed, in its Financial Advisory contract, not
to bid for the Certificates, either independently or as a member of a syndicate organized to submit a bid for the Certificates. First
Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and
does not assume any responsibility for the information, covenants and representations contained in any of the legal documents
with respect to the federal income tax status of the Certificates, or the possible impact of any present, pending or future actions
taken by any legislative or judicial bodies.
BLUE Sxv Laws ... By submission of its bid, the Initial Purchaser represents that the sale of the Certificates in states other than
Texas wilt be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the
Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to
cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Certificates or
obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not
be obligated to execute a general or special consent to service of process in any such jurisdiction.
rv
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NOT AN OFFER TO SELL ... Th1S Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the
Certificates, but is merely notice of the sale of the Certificates. The offer to sell the Certificates is being made by means of the
Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to
carefully examine the Official Statement to determine the investment quality of the Certificates.
ISSUANCE OF ADDITIONAL DEBT ... COI1CUrreritly with the sale of the Certificates, the City is offering for sale its $3,930,000
General Obligation Improvement Bonds, Series 2007, which are secured by a pledge of ad valorem taxes. Thereafter, the City
does not anticipate the issuance of additional obligations payable from ad valorem taxes within the next 12 months. Concurrently
with the issuance of the sale of the Bonds, the City is offering for sale its $18,665,000 Utility System Revenue Bonds, Series
2007 which are secured by a first lien on and pledge of the Net Revenues of the City's Utility System. The City has not
covenanted nor obligated itself to pay the Utility System Revenue Bonds from monies to be raised from taxation.
RATINGS ...The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's Investors Service ("Moody's")
and "AA-" by Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. ("S&P"). The City also has
other issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial
insurance companies. Applications for contract ratings on this issue has been made to Moody's and S&P.
MUNICIPAL BOND INSURANCE ... In the event the Certificates are qualified for municipal bond insurance, and the Initial
Purchaser desires to purchase such insurance, the cost therefor will be paid by the Initial Purchaser. Any fees to be paid to the
rating agencies as a result of said insurance will be Daid by the City. It will be the responsibility of the Initial Purchaser to
disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the Certificates.
THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 1SC2-12 .. The City haS prepared the aCCOmpanying Official
Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its
date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City,
the Official Statement contains information, including financial information or operating data, concerning every entity,
enterprise, fund, account, or person that is material to an evaluation of the offering of the Certificates. Representations made and
to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed
elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement.
The City will furnish to the Initial Purchaser, or Initial Purchasers, acting through a designated senior representative, in
accordance with instructions received from the Initial Purchaser(s), within seven (7) business days from the sale date an
aggregate of 150 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the
Certificates. The cost of a reprinted Official Statement, if the Initial Purchaser(s) shall so elect, and the cost of any Official
Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser(s). The Initial
Purchaser(s) shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial
Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or
obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of
the subject securities.
CONTINUING DISCLOSURE AGREEMENT ...The City will agree in the Ordinance to provide certain periodic information and
notices of material events in accordance with SEC Rule 15c2-12, as described in the Official Statement under "Continuing
Disclosure of Information." The Initial Purchaser(s') obligation to accept and pay for the Certificates is conditioned upon
delivery to the Initial Purchaser(s) or (their) agent of a certified copy of the Ordinance containing the agreement described under
such heading.
COMPLIANCE WITH 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 SEC Rule 15c2-12.
The City did not receive an invoice for debt service requirements due to the bondholders on August 15, 2003 for the Certificates
of Obligation, Series 2002, and thus did not make its payment timely. Upon notification of the error, the City wired the required
funds to the paying agent on August 22, 2003. A notice of material event was filed. The City has taken remedial steps to ensure
that the reasons for the delay would not occur in the future.
ADDITIONAL COPIES OF NOTICE OF SALE, BID FORM AND OFFICIAL STATEMENT ... A limited number of additional copies of
this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the
normal mailing, may be obtained at the offices of First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas
77002, Financial Advisor to the City.
90
The City Council has approved the form and content of the Notice of Sale and Bidding Instructions, the Official Bid Forrn and
Official Statement, and authorized the use thereof in its initial offering of the Certificates. On the date of the sale, the City
Council will, in the Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the
Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Certificates
by the Initial Purchaser.
Mayor
City of College Station, Texas
ATTEST:
City Secretary
v~
91
OFFICIAL BID FORM
Honorable Mayor and City Council
City of College Station, Texas
Members of the City Council:
August 6, 2007
Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated July 12, 2007 of $3,960,000 CITY
OF COLLEGE STATION, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2007 (the "Certificates"), both of which
constitute a part hereof.
For your legally issued Certificates, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay
you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ for Certificates
maturing and bearing interest as follows:
Maturity Interest Maturity Interest
Feb 15 Principal Rate Feb I S Principal Rate
2008 $ 1,150,000 % 2018 $ 140,000
2009 90,000 2019 150,000
2010 95,000 2020 155,000
201 1 100,000 2021 165,000
2012 105,000 2022 175,000
2013 110,000 2023 185,000
2014 115,000 2024 195,000
2015 120,000 2025 205,000
2016 130,000 2026 215,000
2017 135,000 2027 225,000
Of the principal maturities set forth in the table above, term certificates have been created as indicated in the following table
(which may include multiple term certificates, one term certificate or no term certificate if none is indicated). For those years
which have been combined into a term certificate, the principal amount shown in the table above shall be the mandatory sinking
fund redemption amounts in such years except that the amount shown in the year of the term certificate maturity date shall
mature in such year. The term certificates created are as follows:
Term Certificate
Maturity Date
Year of Principal
First Mandatory Amount of
Redemption Term Certificate
$
$
$
Our calculation (which is not a part of this bid) of the interest cost from the above is:
TRUE INTEREST COST
Interest
Rate
o~
We are having the Certificates of the following maturities insured by _
at a premium of $ ,said premium to be paid by the Initial Purchaser
agencies as a result of said insurance will be paid by the City.
Any fees to be paid to the rating
The Initial Certificates shall be registered in the name of ,which will, upon payment for the
Certificates, be cancelled by the Paying AgentJRegistrar. The Certificates will then be registered in the name of Cede & Co. (DTC's
partnership nominee), under the Book-Entry-Only System.
92
A bank cashier's check or certified check of the Bank, , in the amount of
$79,200.00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of
this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding
Instructions.
We agree to accept delivery of the Certificates utilizing the Book-Entry-Only System through DTC and make payment for the Initial
Certificate in immediately available funds at The Bank of New York Trust Company, N.A., Dallas, Texas, not later than 10:00 A.M,
CDST, on September 11, 2007 or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in
the Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Certificates to complete the
DTC Eligibility Questionnaire.
The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Certificates, a
certificate relating to the "issue price" of the Certificates in the form and to the effect accompanying the Notice of Sale and Bidding
Instructions, with such changes thereto as may be acceptable to the City.
We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the
next business day after the award.
Respectfully submitted, Syndicate Members
Name of Underwriter or Manager
Authorized Representative
Phone Number
Signature
ACCEPTANCE CLAUSE
The above and foregoing bid is hereby in all things accepted by the City of College Station, Texas, subject to and in accordance with
the Notice of Sale and Bidding Instructions, this the day of , 2007.
ATTEST:
Mayor
City of College Station, Texas
City Secretary
93
ISSUE PRICE CERTIFICATE
The undersigned hereby certifies with respect to the sale of CITY OF COLLEGE STATION, TEXAS CERTIFICATES OF
OBLIGATION, SERIES 2007 (the "Certificates"), issued in aggregate principal amount of $3,960,000, as follows:
1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Certificates from
the City of College Station, Texas (the "Issuer") at competitive sale.
2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to
the public of the Certificates of each maturity at the respective prices set forth below.
3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the
Certificates of each maturity at which a substantial amount of the Certificates of such maturity was sold to the public is as set
forth below:
Initial Initial
Due Offering Due Offering
Principal Feb 15 Price Principal Feb 15 Price
$ 1,150,000 2008 $ 140,000 2018
90,000 2009 150,000 2019
95,000 2010 155,000 2020
100,000 2011 165,000 2021
105,000 2012 175,000 2022
110,000 2013 185,000 2023
115,000 2014 195,000 2024
120,000 2015 205,000 2025
130,000 2016 215,000 2026
135,000 2017 225,000 2027
4. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or
organizations acting in the capacity of underwriters or wholesalers.
5. The offering prices described above reflect current market prices at the time of such sates.
6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not)
purchased bond insurance for the Certificates. The bond insurance, if any, has been purchased from
(the "Insurer") for a premium cost of $ (net of any nonguarantee cost,
e.g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other
fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into
account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no
involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such
insurance, discounted at a rate equal to the yield on the Certificates which results after recovery of the insurance premium,
exceeds the present value of the bond insurance premium.
7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the
conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Certificates from
the gross income of their owners.
EXECUTED and DELIVERED this day of , 2007.
(Name of Underwriter or Manager)
By.
(Title)
94
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1'R(i.l.IN1[tV~.1R'4' OFk~ICIAL 4"1';4'i'1-.~~11?N"t'
DATED JULY 12, 2007
Ratings:
Moody's: "Applied for"
S&P: "Applied for"
(See "OTHER INFORMATION -
RATINGS" herein)
NEW ISSUE -Book-Entry-Only
In the opinion of Bond Counsel, interest on the Bonds 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
MATTERS" herein, including the alternative minimum tax on corporations.
THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$18,665,000
CITY OF COLLEGE STATION, TEXAS
(a Home Rule City located in Brazos County, Texas)
UTILITY SYSTEM REVENUE BONDS, SERIES 2007
Dated Date: September i, 2007
Due: February 1, as shown on the inside cover
PAYMENT TERMS ...Interest on the $18,665,000 City of College Station, Texas Utility System Revenue Bonds, Series 2007 (the
"Bonds") will accrue from September I, 2007 (the "Dated Date") and will be payable on February 1, 2008, and on each August 1 and
February 1 thereafter until maturity or prior redemption, and will be calculated on the basis of a 360-day year consisting of twelve 30-
day months. The definitive Bonds 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 Bonds may be acquired in
denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof.
Principal of, premium, if any, and interest on the Bonds will be payable by the Paying AgenURegistrar 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
Bonds. See "THE BONDS - Boox-ENTRY-ONLY SYSTEM" herein. The initial Paying AgenURegistrar is The Bank of New York Trust
Company, N.A., Dallas, Texas (see "THE BONDS - PAYtNC AGENT/REGISTRAR").
AUTHOR[TY FoR ISSUANCE ...The Bonds are issued pursuant to the general laws of the State of Texas, particularly Chapter 1502, Texas
Government Code, and an ordinance (the "Ordinance") passed by the City Council, and are special obligations of the City of College
Station (the "City"), payable, both as to principal and interest, solely from and secured by a first lien on and pledge of the Net Revenues of
the City's Utility System (the "System") The City has not covenanted nor obligated itself to pay the Bonds from monies raised or to
be raised from taxation (see "THE BONDS -AUTHORITY FoR ISSUANCE").
PURPOSE ...Proceeds from the sale of the Bonds will be used to (i) fund electric, water and wastewater system improvements, and (ii)
pay the costs associated with the issuance of the Bonds (see "PLAN OF FINANCING - UsE of BOND PROCEEDS").
SEE MATURITY SCHEDULE, INTEREST RATES, AND YIELDS ON INSIDE COVER
OPTIONAL REDEMPTION ...The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February
1, 2017, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 1, 2016, or any date thereafter,
at the par value thereof plus accrued interest to the date of redemption (see "THE BONDS -OPTIONAL REDEMPTION").
LEGALITY ...The Bonds are offered for delivery, when issued, and received by the Initial Purchasers and subject to the opinion of the
Attorney 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 BOND COUNSEL'S OPINION"). It is expected that the Bonds will be available for delivery
through the services of DTC on or about September 11, 2007.
BIDS WILL BE ACCEPTED UNTIL AND OPENED
MONDAY, AUGUST 6, 2007 AT 10:00 A.M. CDST
95
MATURITY SCHEDULE, INTEREST RATES AND YIELDS
Due Interest Due
Feb 1 Principal Rate Yield CUSP t~l Feb l Principal
2008 $ 575,000 % % 2018 tz) $ 915,000
2009 570,000 2019 tz~ 965,000
2010 600,000 2020 ts> 1,015,000
2011 635,000 2021 a~ 1,070,000
2012 665,000 2022 tz~ 1,125,000
2013 705,000 2023 t~> 1,190,000
2014 740,000 2024 Rt 1,250,000
2015 780,000 2025 t~1 1,320,000
2016 825,000 2026 t21 1,390,000
2017 tz~ 865,000 2027 ~~~ 1,465,000
(Accrued Interest from September 1, 2007 to be added)
Interest
Rate Yield CUSP to
~o °/a
(1) CUSIP Numbers have been assigned to the Bonds by the CUSIP Service Bureau and are included solely for the convenience of the
purchasers of the Bonds. Neither the City, the Financial Advisor nor the Initial Purchasers 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 Bonds having stated maturities on and after February 1, 2017, in whole or in part in
principal amounts of $5,000 or any integral multiple thereof, on February 1, 2016, or any date thereafter, at the par value thereof plus
accrued interest to the date of redemption.
ii
96
For purposes of compliance with Rule ISc2-12 of the United States Securities and Exchange Commission (the "Rule'), this document
constitutes a preliminary official statement of the City with respect to the Bonds that has been "deemed final " by the City as of its date
except for the omission oj'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 unlawful to make 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, ifgiven or made, such other information or representations must 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 Financial Advisor. 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 the
Bonds by the CUSIP Service Bureau for the convenience of the owners of the Bonds. Neither the City, the Financial Advisor nor the
Initial Purchasers shall be responsible for the selection or correctness of the CUSIP numbers shown on the inside cover 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 shall, 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 Initial Purchasers 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.
This Official Statement contains 'forward-looking" statements within the meaning of Section 21E of the Securities and Exchange Act of
1934, as amended. Such statements may involve known and unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements to be different from future results, performance and achievements expressed or implied by such
forward-Jooking statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward-
looking statements.
TABLE OF CONTENTS
MATURITY SCHEDULE, INTEREST RATES AND
YIELDS ......................... ..
........................................... I ~
OFFICIAL STATEMENT SUMMARY .........................1
CITY OFFICIALS, STAFF AND CONSULTANTS.....2
INTRODUCTION ............................................................3
PLAN OF FINANCING ...................................................3
THE BONDS .....................................................................3
ADDITIONAL PARITY BONDS .................................... 17
MAINTENANCE AND OPERATION; INSURANCE........... 18
RECORDS AND ACCOUNTS ........................................ 18
ADDITIONAL COVENANTS ........................................ I S
TAX MATTERS ............................................................. 19
OPINION ................................................................... 19
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF
ORIGINAL ISSUE DISCOUNT ............................. 19
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES2O
STATE, LOCAL AND FOREIGN TAXES ........................ 21
THE SYSTEM ..................................................................8
WATERWORKS SYSTEM ..............................................8
WASTEWATER SYSTEM ...............................................9
ELECTRIC SUPPLY SOURCE .........................................9
TABLE I -HISTORICAL UTILITY CUSTOMER COUNT .. 1 ~
TABLE 2 -TEN LARGEST ELECTRIC UTILITY
CUSTOMERS .................................................... 1 O
DEBT INFORMATION .................................................11
TABLE 3 -PRO-FORMA UTILITY SYSTEM REVENUE
DEBT SERVICE REQUIREMENTS ....................... 1 1
FINANCIAL INFORMATION .....................................12
TABLE 4 -CONDENSED STATEMENT OF OPERA TIONS. 12
TABLE S -COVERAGE ..................................... .......... 12
TABLE 6 -VALUE OF THE SYSTEM ................... .......... 12
TABLE 7 -CITY'S EQUITY M SYSTEM .............. .......... 13
CAPITAL IMPROVEMENT PROGRAM ................. .......... 13
FINANCIAL POLICIES ....................................... .......... 13
INVESTMENTS ................................................. .......... 14
TABLE 8 -CURRENT INVESTMENTS ................. .......... 1 E
SELECTED PROVISIONS OF THE BOND
ORDINANCE ........................................................16
DEFINITIONS ............................................................. 16
RATE COVENANT ...................................................... 17
FLOW OF FUNDS ....................................................... 17
OTHER INFORMATION ............................................. 21
RATINGS ............................................................... ... 21
LITIGATION ........................................................... ... 21
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS .............................. ... 21
LEGAL OPINIONS ................................................... ... 21
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFGRMATIGN .............................................. ... 22
CONTINUING DISCLOSURE OF INFORMATION .......... ... 22
INITIAL PURCHASERS ............................................ ... 23
FINANCIAL ADVISOR .............................................. .. 23
FORWARD-LOOKING STATEMENTS ......................... .. 23
MISCELLANEOUS .................................................... .. 24
CERTIFICATION OF THE OFFICIAL STATEMENT ....... ... 24
APPENDICES
GENERAL INFORMATION REGARDING THE CITY ........ A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B
FORM OF BOND COUNSEL'S OPINION ........................ C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto,
are part of the Official Statement.
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97
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Bonds 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 is a political subdivision and municipal corporation of the State,
located in Brazos County, Texas. The City encompasses approximately 47 square miles (see
"INTRODUCTION - DESCRIPTION of THE CITY").
THE BONDS ............................... ... The Bonds are issued as $18,665,000 Utility System Revenue Bonds, Series 2007. The
Bonds are issued as serial bonds maturing February 1, 2008 through February 1, 2027 (see
"THE BONDS -DESCRIPTION OF THE BONDS").
PAYMENT OF INTEREST ............ ... Interest on the Bonds accrues from September 1, 2007, and is payable on February 1, 2008,
and each August 1 and February 1 thereafter until maturity or prior redemption (see "THE
BONDS -DESCRIPTION OF THE BONDS" and "THE BONDS -OPTIONAL REDEMPTION").
AUTHORITY FOR ISSUANCE....... ... The Bonds are issued pursuant to the general laws of the State, particularly Chapter 1502,
Texas Government Code, and an Ordinance passed by the City Council of the City (see "THE
BONDS -AUTHORITY FOR ISSUANCE").
SECURITY FoR THE BONDS ....... ... The Bonds constitute special obligations of the City, payable, both as to principal and interest,
solely from and secured by a first lien on and pledge of the Net Revenues of the City's Utility
System. The City has not covenanted nor obligated itself to pay the Bonds from monies
raised or to be raised from taxation (see "THE BONDS -SECURITY AND SOURCE of
PAYMENT").
DEBT SERVICE RESERVE FUND ... SO long as the Bonds and the outstanding Parity Bonds are insured by a bond insurance
company that is rated "Aaa" by Moody's Investors Service, Inc. ("Moody's") or "AAA" by
Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc.
("S&P"), the City is not required to establish a debt service reserve fund or purchase a surety
bond as additional security for the Bonds (see "SELECTED PROVISIONS OF THE BOND
ORDINANCE -ADDITIONAL BONDS").
REDEMPTION ............................. .. The City reserves the right, at its option, to redeem Bonds having stated maturities on and
after February 1, 2017, in whole or in part in principal amounts of $5,000 or any integral
multiple thereof, on February 1, 2016, or any date thereafter, at the par value thereof plus
accrued interest to the date of redemption (see "THE BONDS -OPTIONAL REDEMPTION").
TAx EXEMPTION ........................ .. In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross
income for federal income tax purposes under existing law, subject to the matters described
under the caption "TAX MATTERS" herein, including the alternative minimum tax on
corporations. The Bonds will not be designated as qualified tax-exempt obligations. See
"TAX MATTERS" for a discussion of the opinion of Bond Counsel, including a description
of the alternative minimum tax consequences for corporations.
UsE of PROCEEDS ..................... .. Proceeds from the sale of the Bonds will be used to (i) fund electric, water and wastewater
system improvements and (ii) pay the costs associated with the issuance of the Bonds (see
"PLAN OF FINANCING - UsE of BOND PROCEEDS").
RATINGS .................................... .. All of the presently outstanding parity bonds of the System are rated "Aaa" by Moody's and
"AAA" by S&P through insurance by various commercial insurance companies (see "OTHER
INFORMATION -RATINGS"). The underlying ratings for the outstanding parity bonds are
"A1" by Moody's and "A+" S&P. The City will require that the Initial Purchasers of the
Bonds purchase bond insurance for the Bonds in accordance with the NOTICE OF SALE
AND BIDDING INSTRUCTIONS. The City has applied to Moody's and S&P for ratings on
the Bonds.
BOOK-ENTRY-ONLY
SYSTEM .................................... .. The definitive Bonds will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples
thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof.
Principal of, premium, if any, and interest on the Bonds 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 Bonds
(see "THE BONDS -BOOK-ENTRY-ONLY SYSTEM").
PAYMENT RECORD ..................... The City has never defaulted in payment of its bonds.
98
CITY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Length of
City Council Position Service Term Expires Occupation
Ben White Mayor t~l 5/10 Retired
James Massey Councilmember lz> 5/10 Director of Facility Coordination
Ron Gay Councilmember 2 Years 5/08 Regional Marketing Director
Chris Scotti Councilmember 2 Years 5/08 Consultant
Lynn Mc[lhaney Councilmember 1 Year l3) 5/09 Homemaker
David Ruesink Councilmember 1 Year 5/09 Retired
John Crompton Councilmember ca> 5/08 Professor
(1) Elec[ed Mayor in May 2007.
(2) Elected May 2007; former City of College Station Councilmember 1999 - 2005.
(3) Elected May 2006; former City of College Station Mayor 1996 - 2002; former City of College Station Councilmember 1982 - 1986 and
1987 - 1996.
(4) Elected June 2007.
SELECTED ADMINISTRATIVE STAFF
Name
Glenn Brown
Terry Childers
Kathy Merrill
Harvey Cargill, Jr
David Coleman
David Massey
Jeff Kersten
Connie L. Hooks
Mark Smith
Benjamin Roper
Stephen Beachy
Position
City Manager
Deputy City Manager
Assistant City Manager
City Attorney
Interim Director of Water Services
Director of Electric Utility
Chief Financial Officer
City Secretary
Director of Public Works
Director of Information Technology
Director of Parks and Recreation
Length of
Service to Ci
7 Years to
9 Months
8 Months
10 Years
2 Years
7 Years
16 Years (~)
21 Years
27 Years
2 Years
29 Years
(1) City Manager since March 2006.
(2) Chief Financial Officer since August 2004.
CONSULTANTS AND ADVISORS
Auditors ................................................................................................................................................. Ingram, Wallis & Company
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
Chief Financial Officer
City of College Station
1101 Texas Avenue
College Station, Texas 77840
(979)764-3552 Phone
(979)764-3899 Fax
Drew Masterson
First Southwest Company
or 1021 Main Street, Suite 2200
Houston, Texas 77002
(713)651-9850 Phone
(713)654-8658 Fax
2
99
PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$18,665,000
CITY OF COLLEGE STATION, TEXAS
UTILITY SYSTEM REVENUE BONDS, SERIES 2007
INTRODUCTION
This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of
$18,665,000 City of College Station, Texas Utility System Revenue Bonds, Series 2007 (the "Bonds"). Capitalized terms used
in this Official Statement have the same meanings assigned to such terms in the ordinance to be adopted by the City Council on
the date of sale of the Bonds which will authorize the issuance of the Bonds (the "Ordinance"), except as otherwise indicated
herein (see "SELECTED PROVISIONS OF THE BOND ORDINANCE").
There follows in this Official Statement descriptions of the Bonds 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 Clty is a political subdivision and municipal corporation of the State, duly organized and
existing under the laws of the State, including the City's Home Rule Charter. The City was incorporated in October 1938, and
first adopted its Home Rule Charter in October 1938, which was last amended in May 2006. The City operates under a
CouncillCity Manager form 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 1990 Census population for the City was 52,456 and the 2000 Census population was
67,890. The City covers approximately 47 square miles.
PLAN OF FINANCING
PURPOSE ...The Bonds are being issued to (i) fund electric, water and wastewater system improvements, and (ii) pay the costs
associated with the issuance of the Bonds.
THE BONDS
DESCRIPTION of THE BONns ...The Bonds are dated September I, 2007, and mature on February 1 in each of the years and in
the amounts shown on the inside cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day
months, and will be payable on February 1, 2008, and on each August t and February 1 thereafter until maturity or prior
redemption. The definitive Bonds 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 Bonds will
be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds 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 Bonds. See "Boole-ENTRY-ONLY SYSTEM" herein.
AUTHORITY FoR ISSUANCE ...The Bonds are issued pursuant to the general laws of the State of Texas, Chapter 1502, Texas
Government Code, and the Ordinance.
SECURITY ANn SouecE of PAYMENT ...The Bonds are special obligations of the City payable, both as to principal and interest,
solely from and, together with certain outstanding revenue bonds of the City (the "Previously Issued Bonds") and any additional
parity bonds which may be issued in the future, secured by a first lien on and pledge of the Net Revenues of the System after the
payment of maintenance and operating expenses. Maintenance and operating expenses include contractual payments which under
Texas laws and their provisions are established as operating expenses. The City has outstanding Previously Issued Bonds secured by
and payable from Net Revenues on parity with the Bonds. The following table lists the original principal amount of the Outstanding
Bonds and the currently outstanding principal amount of the Outstanding Bonds.
100
Original Principal
Principal Currently
Series
- Amount Outstanding
1996T5 $ 10,110,000 $ 360,000
1998 2,700,000 440,000
2000 10,500,000 2,920,000
2001 23,500,000 18,955,000
2002 18, 215, 000 15,275,000
2003~a~ 11,160,000 7,290,000
2003A 4,850,000 4,280,000
2005 8,035,000 7,650,000
2005A~a~ 12,995,000 12,900,000
2006 16,950,000 16,480,000
$ 119,015,000 $ 86,550,000
(a) Includes refunding bonds.
The Bonds are not a charge upon any other income or revenues of the City and will never constitute an indebtedness or pledge of
the general credit or taxing powers of the City. The Ordinance does not create a lien or mortgage on the System, except the Net
Revenues, and any judgment against the City may not be enforced by levy and execution against any property owned by the City.
As additional security, unless the Bonds are insured by a "AAA" or equivalent rated bond insurer, a Reserve Fund is required to be
maintained in an amount at least equal to the average annual debt service requirements of the outstanding Previously Issued Bonds,
the Bonds and any obligations issued on a parity with the Bonds ("Additional Bonds"). Any additional amount required to be
accumulated in the fund by reason of the issuance of the Bonds will be funded over a 60 month period in accordance with the
provisions of the Ordinance (see "SELECTED PROVISIONS OF THE BOND ORDINANCE"). It is anticipated that municipal
bond insurance will be obtained and that a Reserve Fund will not be funded as a result thereof.
PLEDGED REVENUES ...All of the Net Revenues of the System with the exception of those in excess of the amounts required to
establish and maintain the Reserve Fund and Interest and Sinking Fund are irrevocably pledged for the payment of the Bonds and
interest thereon. The Bonds, the Previously Issued Bonds, and any Additional Bonds are equaliy and ratably secured by a first lien
upon [he Net Revenues of the System.
PERFECTION OF SECURITY FOR THE BONDS ...Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and
the pledge of the Net Revenues, and such pledge is therefore, valid, effective and perfected. Should Texas law be amended while the
Bonds are outstanding and unpaid, the result of such amendment being that the pledge of the Net Revenues is to be subject to the
filing requirements of Chapter 9, Texas Business and Commerce Code, in order to preserve to the registered owners of the Bonds a
security interest in such pledge, the City agrees to take such measures as it determines is reasonable and necessary to enable a filing
of a security interest in said pledge to occur.
RATES ...The City has covenanted in the Ordinance that it will at all times charge and collect rates for services rendered by the
System sufficient to pay all operating, maintenance, replacement and improvement expenses and any other costs deductible in
determining Net Revenues. Additionally, the City has covenanted to generate in each year, Net Revenues equal to 1.25 times the
maximum annual requirement for the payment of the principal and interest on the Parity Bonds at the time outstanding and payable
from the revenues of the System, and maintain the funds provided for in the Ordinance. The City has further covenanted that, if the
System should become legally liable for any other indebtedness, it will fix and maintain rates and collect charges for the services of
the System sufficient to discharge such indebtedness (See "SELECTED PROVISIONS OF THE BOND ORDINANCE -RATE
COVENANT").
OPTIONAL REDEMPTION ...The City reserves the right, at its option, to redeem Bonds having stated maturities on and after
February 1, 2017, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 1, 2016, or any
date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bonds are to be
redeemed, the City may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be
redeemed, the Paying Agent/Registrar (or DTC (herein after defined), while the Bonds are in Book-Entry-Only form) will
determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. If a Bond (or any portion of the principal
sum thereof) has been called for redemption and notice of such redemption given, such Bond (or the principal amount thereof to
be redeemed) will become due and payable on such redemption date and interest thereon will 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.
101
NOTICE of REDEMPTION ...Not less than 30 days prior to a redemption date for the Bonds, the City must cause a notice of
redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds 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 at the
close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED WILL BE
CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER
RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION WILL
BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY
BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND OR
PORTION THEREOF WILL CEASE TO ACCRUE.
DEFEASANCE ... The Ordinance provides for the defeasance of the Bonds when the payment of the principal of and premium, if
any, on the Bonds, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or
otherwise), is provided by irrevocably depositing with a paying agency, in trust (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 Bonds. The Ordinance
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 firm not -ess
that AAA or its equivalent, and (c) 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 rated as to investment quality by a nationally recognized investment
rating firm not less than AAA or its equivalent. The City has additionally reserved the right, subject to satisfying the
requirements of (1) and (2) above, to substitute other Defeasance Securities for the Defeasance Securities originally deposited, to
reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the City moneys in excess of
the amount required for such defeasance.
Upon such deposit as described above, such Bonds shall no longer be regarded to be outstanding or unpaid. The City has
reserved the option, however, to be exercised at the time of the defeasance of the Bonds, to call for redemption, at an earlier date,
those Bonds which have been defeased to their maturity date, if the City: (i) in the proceedings providing for the firm banking
and financial arrangement, expressly reserves the right to call the Bonds for redemption; (ii) gives notice of the reservation of the
right to the owners of the Bonds immediately following the making of the firm banking and financial arrangements; and (iii)
directs that notice of the reservation be included in any redemption notices that it authorizes
ADDITIONAL Borvns ...The City may issue Additional Bonds which, together with the Previously Issued Bonds and the Bonds,
will be equally and ratably secured by a parity lien on and pledge of the Net Revenues of the System, subject, however, to
complying with certain conditions in the Ordinance. See "SELECTED PROVISIONS OF BOND ORDINANCE -ADDITIONAL
PARITY BONDS" for terms and conditions to be satisfied for the issuance of Additional Bonds.
BOOK ENTRY ONLY SYSTEM ...This section describes how ownership of the Bonds is to be transferred and how the principal of
and interest on the Bonds are to be paid to and credited by the Depository Trust Company ("DTC') while the Bonds 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 Ciry believes the source of such
information to be reliable, but takes no responsibility for the accuracy or completeness thereof.
The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, 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 Bonds), 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 act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will be issued for each maturity of the Bonds
in the aggregate principal amount of each such maturity and will be deposited with DTC.
DTC, the world's largest depository, is alimited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million
issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100
countries that DTC's participants ("Direct )Sarticipants") 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
102
certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is a wholly-owned subsidiary of the Depository Trust & Clearing
Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National
Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, all of which
are also subsidiaries of DTCC, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the
National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-
U.S. securities brokers and dealers, banks, trust companies, acid clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest
rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtcc.com.
Purchases of Bonds 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 Bond ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of
their purchase. Beneficial owners are, however, expected to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct
and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds 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 Bonds 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 Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions,
tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to
ascertain that the nominee holding the Bonds 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 Paying Agent/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 Bonds within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds 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 or 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/Registrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment
of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such nominee as may be requested by an
authorized representative of DTC) is the responsibility of the City or the Paying Agent/Registrar, disbursement of such payments
to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its Bond purchased or tendered, through its Participant, to the Paying
Agent/Registrar, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's interest in
the Bonds, on DTC's records, to the Paying AgenURegistrar. The requirement for physical delivery of Bonds in connection with
an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by
Direct Participants on DTC's records and followed by a book-entry credit of tendered Bonds to the Paying Agent/Registrar's
DTC account.
103
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to
the City or the Paying AgenURegistrar. Under such circumstances, in the event that a successor depository is not obtained, Bond
certificates 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, Bond certificates 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 Bonds 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 Bonds, but (i) all rights of ownership
must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be given
to registered owners under the Ordinance will be given only to DTC.
Information concerning DTC and the Book-Entry System has been obtained from DTC and is not guaranteed as to accuracy or
completeness by, and is not to be construed as a representation by the City or the Initial Purchasers.
PAYING AGENT/REG[STRAR ...The initial Paying Agent/Registrar is The Bank of New York Trust Company, N.A., Dallas,
Texas. In the Ordinance, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and
provide a Paying AgentRegistrar at all times until the Bonds are duly paid and any successor Paying AgentRegistrar shall be a
commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally
authorized to serve as and perform the duties and services of Paying AgenURegistrar for the Bonds. Upon any change in the
Paying AgenURegistrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each registered
owner of the Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying
AgenURegistrar.
TRANSFER, EXCHANGE AND REGISTRATION ... In the event the Book-Entry-Only System should be discontinued, the Bonds
may be transferred and exchanged on the registration books of the Paying AgenURegistrar only upon presentation and surrender
to the Paying AgenURegistrar and such transfer or exchange shall 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.
Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and
assignment acceptable to the Paying AgentRegistrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the
Bonds being transferred or exchanged, at the designated office of the Paying AgenURegistrar, or sent by United States mail, first
class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or
transfer of Bonds 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 Bonds 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 AgenURegistrar. New Bonds 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
designated amount as the Bonds 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 Bonds. Neither the City nor the
Paying AgenURegistrar are required to transfer or exchange any Bond called for redemption, in whole or in part, within 30 days
of the date fixed for redemption; provided, however, such limitation of transfer is not applicable to an exchange by the registered
owner of the uncalled balance of a Bond.
RECORD DATE FOR INTEREST PAYMENT ...The reCOid date ("Record Date") for the interest payable on the Bonds on any
interest payment date means the close of business on the 15th day of the preceding month.
In the event of anon-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 AgenURegistrar, 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 will be 15 days after the Special Record Date) will 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 Holder of a Bond
appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding
the date of mailing of such notice.
REMEDIES of HOLDERS of OBLIGATIONS... If the City defaults in the payment of principal, interest, or redemption price on
either series of Obligations when due, or the City defaults in the observation or performance of any other covenants, conditions,
or obligations ser forth in either of the Ordinances, the registered owners may seek a writ of mandamus to compel the City or
City officials to carry out the legally imposed duties with respect to the Obligations if there is no other available remedy at law to
compel performance of the Obligations or the respective Ordinance authorizing the issuance of such Obligations, 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 Obligation 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 appointment 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 Ordnances, or upon any other condition accordingly all legal actions to
104
enforce such remedies would have to undertaken of the initiative of, and be financed by, the beneficial owners of the
Obligations. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (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, beneficial 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.
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, such
provision is subject to judicial construction. 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 beneficial 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.
USE of Bohn PROCEEDS ...Proceeds from the sale of the Bonds are expected to be expended as follows:
Uses of Funds:
Deposit to Project Fund .............................................................................................................. $
Deposit to Interest and Sinking Fund ........................................................................................
Costs of Issuance ......................................................................................................................... _
Total Uses of Funds ................................................................................................................ $
THE SYSTEM
WATERWORKS SYSTEM
Since December 1981, the City has had the capability to produce and deliver 100% of its water with a system of eight wells, with a
combined capacity of 24 million gallons per day. The water is delivered to the distribution system by 14 miles of 30-inch diameter
pipeline and two pumping stations.
Six of the wells mentioned above are deep wells, approximately 3,000 feet, in the Simsboro Sand of the Wilcox Formation. 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 2050.
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 two new shallow wells
(less than 1,500 feet deep, one in the Camzo aquifer and one in the Sparta aquifer) to meet the short term increase in water demand.
A new deep well is currently under design, with easement acquisition underway, and should be constructed in the near future.
The following water rates were established by ordinance passed and approved by the City Council and became effective on October
1, 2006.
Type of Customer Usage Charge
Residential, Commercial and Industrial $2.22 per 1,000 gallons plus
Service Charge Meter Size
$ 9.08 per mo. 5/8"
9.08 per mo. 3/4"
11.39 per mo. 1"
16.96 per mo. 1 1 /2"
26.78 per mo. 2"
84.53 per mo. 3"
125.58 per mo. 4"
152.88 per mo. 6"
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WASTEWATER SYSTEM
The City's waste water is treated by two City-owned wastewater treatment plants, the Carter Creek Treatment Plant and Lick Creek
Treatment Plant, located within the City. The two plants have a combined treatment capacity of 11.5 mgd as compared to average
current daily demand of 6.5 mgd. The treatment plant's capacity is adequate to serve a population estimated at 122,000.
The following sewer rates were established by ordinance passed and approved by the City Council and became effective on October
1, 2006.
Residential (metered water) .......................................................... $16.54 including 4,000 gallons of metered water
Usage Charge ................................................................................ $3.31 per 1,000 gallons of additional metered water
$36.40 maximum per month
Residential (without meter to each unit) ....................................... $21.04 per unit per month
Commercial and Industrial ............................................................ $14.18 per month
Usage Charge ................................................................................ $3.94 per 1,000 gallons of metered water usage
ELECTRIC SUPPLY SOURCE
The City began purchasing power from American Electric Power (AEP) on February 1, 2003. The City's contract fixes the cost of
fuel for the length of the contract and eliminates any additional energy chazges for the period. The only variable component is a cost
for "congestion charges" through the transmission grid. The City continues to pay transmission charges to a number of outside utility
systems at current Public Utility Commission of Texas allowed rates.
The City is served through four 138 kV transmission lines, four substations, and 400 miles of distribution lines. The City is currently
constructing fifth substation to provide service to the City.
The electric rates were established by ordinance passed and approved by the City Council and became effective on October 1, 2006.
The following 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, 2006. It is currently set $0.005 per
kilowatt hour of energy consumed.
Single Family Residential ............................. Service Charge ...................................................... $7.00 per month
plus:
First 500 kwhrs ...................................................... $0.0886 per kwhr
Additional kwhr (May through October) .............. $0.0805 per kwhr
Additional kwhr (November through April) ........ $0.0731 per kwhr
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:
First 500 kwhrs ...................................................... $0.0886 per kwhr
Additional kwhr (May through October) .............. $0.0805 per kwhr
Additional kwhr (November through April) ........ $0.0731 per kwhr
Tax ......................................................................... 1.50%
TDA ....................................................................... Calculated as needed
Small Commercial (I-10 KW demand)........ Service Charge ...................................................... $9.00 per month
plus:
First 1,000 kwhrs ................................................... $0.0980 per kwhr
Over 1,000 kwhrs .................................................. $0.0749 per kwhr
Tax ......................................................................... 8.25%
TDA ....................................................................... Calculated as needed
Medium Commercial (15-300 KW) ............. Service Charge ...................................................... $25.00 per month
plus:
Demand Charge (Per KW) .................................... $9.46 per KW
Energy Charge All kwhrs ..................................... $0.0508 per KW
Minimum Monthly Charge ................................... $166.90
Tax ......................................................................... 8.25%
TDA ....................................................................... Calculated as needed
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Large Commercial (300 - 1,500 KW).......... Service Charge ...................................................... $75.00 per month
plus:
Demand Charge (Per KW) .................................... $9.46 per KW
Energy Charge All kwhrs ..................................... $0.0449 per KW
Minimum Monthly Charge ................................... $2,913.00
Tax ......................................................................... 8.25%
TDA ....................................................................... Calculated as needed
Industrial (1,500 KW and over) .................... Service Charge....................................................... $250.00 per month
plus:
Demand Charge (Per KW) .................................... $8.95
Energy Charge (first 500,000 kwhrs) .................... $0.0479 per KW
Minimum Monthly $13,675.00
Tax ......................................................................... 8.25%
TDA ....................................................................... Calculated as needed
TABLE I -HISTORICAL UTILITY CUSTOMER COUNT
Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
Water 37,590 32,266 31,038 29,358 23,210
Wastewater 33,491 29,694 28,594 27,977 28,399
Electric 31,051 31,185 30,641 29,700 28,678
TABLE 2 -TEN LARGEST ELECTRIC UTILITY CUSTOMERS
Utility Customer Type of Business
City of College Station Municipality
CSISD Schools
CBL & Associates Retail Mall
Texas A&M University
College Station Medical Ctr Hospital
Wal-Mart Retail
Kroger Retail Grocery
Albertsons Retail Grocery
Hilton Hotel
Scott & White Clinic
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Total Percent
FY 2006 KWH of KWH
Consumption Consumed
20,635,885 2.78%
18,152,733 2.44%
13,641,340 1.84%
9,838,765 1.32%
7,848,467 1.06%
7,091,200 0.95%
6,792,960 0.91%
6,362,048 0.86%
5,258,400 0.71
5,251,942 0.71
100,873,740 13.58%
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DEBT INFORMATION
TABLE 3 -PRO-FORMA UTILITY SYSTEM REVENUE DEBT SERVICE REQUIREMENTS
Year Total
End Outstanding The Bondst~~ Debt Service
9/30 Debt Principal Interest Total Requirements
2007 $ 9,163,574 $ 9,163,574
2008 9,040,131 $ 575,000 $ 964,819 $ 1,539,819 10,579,949
2009 8,967,901 570,000 934,763 1,504,763 10,472,664
2010 8,892,407 600,000 904,050 1,504,050 10,396,457
2011 8,794,707 635,000 871,631 1,506,631 10,301,338
2012 8,717,242 665,000 837,506 1,502,506 10,219,748
2013 8,648,319 705,000 801,544 1,506,544 10,154,863
2014 8,348,708 740,000 763,613 1,503,613 9,852,320
2015 7,588,427 780,000 723,713 1,503,713 9,092,139
2016 7,591,917 825,000 681,581 1,506,581 9,098,498
2017 7,320,476 865,000 637,219 1,502,219 8,822,694
2018 6,520,875 915,000 590,494 1,505,494 8,026,369
2019 5,697,731 965,000 541,144 1,506,144 7,203,875
2020 5,722,159 1,015,000 489,169 1,504,169 7,226,328
2021 5,757,763 1,070,000 434,438 (,504,438 7,262,200
2022 3,839,066 1,125,000 376,819 1,501,819 5,340,884
2023 2,391,250 1,190,000 316,050 1,506,050 3,897,300
2024 2,031,938 1,250,000 252,000 1,502,000 3,533,938
2025 2,044,744 1,320,000 184,538 1,504,538 3,549,281
2026 1,392,300 1,390,000 113,400 1,503,400 2,895,700
2027 1,465,000 38,456 1,503,456 1,503,456
$128,471,632 $18,665,000 $11,456,944 $30,121,944 $158,593,576
(1) The interest on the bonds is estimated at the rate of 5.25% per annum for purposes of illustration.
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ANTICIPATED ISSUANCE of REVENUE BONDS ...The City does not anticipate the issuance of additional revenue bonds within
the next 12 months.
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" -Note D.)
FINANCIAL INFORMATION
TABLE 4 -CONDENSED STATEMENT OF OPERATIONS
For Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
Revenues:
Electric $ 58,526,414 $ 50,446,608 $ 46,389,147 $ 45,480,173 $ 44,238,340
Water and Wastewater 20,217,030 18,490,794 16,536,666 16,552,584 16,024,595
Interest 1,765,422 917,192 627,060 1,076,079 1,858,545
Other 2,278,378 1,746,795 1,908,053 2,070,963 1,974,507
Total Revenues $ 82,787,244 $ 71,601,389 $ 65,460,926 $ 65,179,799 $ 64,095,987
Expenses:
Total Expenses $ 54,432,847 $ 51,125,745 $ 44,719,241 $ 47,785,550 $ 46,274,555
Net Available for Debt Service $ 28,354,397 $ 20,475,644 $ 20,741,685 $ 17,394,249 $ 17,821,432
Water Customer Count 37,590 32,266 31,038 29,358 23,210
Wastewater Customer Count 33,491 29,694 28,594 27,977 28,399
Electric Customer Count 31,051 3L,185 30,641 29,700 28,678
TABLE $ -COVERAGE (~)
Maximum Principal and Interest Requirements (2008) .................................................................... $ 10,579,949
Coverage of Maximum Requirements by 9/30/2006 Net Revenue Available for Debt Service....... 2.68 Times
Average Annual Principal and Interest Requirements (2008-2027) ................................................. $ 7,552,075
Coverage of Average Requirements by 9/30/2006 Net Revenue Available for Debt Service........... 3.75 Times
(l) Includes the Bonds.
TABLE 6 -VALUE OF THE SYSTEM
Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
Utility Systems $ 252,979,653 $ 242,372,615 $ 222,394,131 $ 201,578,213 $ 177,194,095
Construction in Progress 49,497,338 26,042,369 29,106,881 31,120,744 27,917,993
$ 302,476,991 $ 268,414,984 $ 251,501,012 $ 232,698,957 $ 205,112,088
Less: Accumulated Depreciation 90,932,582 83,001,170 75,518,040 69,677,733 50,697,928
Net System Value $ 211,544,409 $ 185,413,814 $ 175,982,972 $ 163,021,224 $ 154,414,160
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TABLE 7 -CITY'S EQUITY IN SYSTEM
Resources
Net System Value
Current Assets
Restricted Assets
Other Resources
Deferred Charges
Total
Obli ations
Current Liabilities
Current Liabilities Payable from
Restricted Assets
Revenue Bond Debt
Other Debt
Total Liabilities
City's Equity in System
Percentage of Equity in System
CAPITAL IMPROVEMENT PROGRAM
Fiscal Year Ended September 30,
2006 2005 2004 2003 2002
$ 211,544,409 $ 185,413,814 $ 175,982,972 $ 163,021,224 $ 154,414,160
42,580,177 38,6]9,551 32,841,782 29,261,583 35,404,701
14,072,285 17,180,595 19,599,585 23,440,862 21,929,685
200,000 200,000 200,000 200,000 200,000
759,282 721,754 776,780 809,961 762,602
$ 269,156,153 $ 242,(35,714 $ 229,401,119 $ 216,733,630 $ 212,711,148
$ 14,232,124 $ 11,612,107 $ 7,551,259 $ 8,676,967 $ 6,263,972
6,840,622 6,568,439 6,272,235 5,945,573 11,671,253
86,550,000 74,510,000 71,245,000 75,655,000 74,420,000
128,123 _ 102,191 (128,424) (204,969) 120,874
$ 107,750,869 $ 92,792,737 $ 84,940,070 $ 90,072,571 $ 92,476,099
$ 161,405,284 $ 149,342,977 $ 144,461,049 $ 126,661,059 $ 120,235,049
59.97% 61.68% 62.97% 58.44% 56.53%
The electric utility projects planned for the next few years include continued underground conversion of electric service along
major thoroughfares, line extensions, new customer connections, new substation facilities and other system improvements. The
City's Electric Utility uses revenues and current unobligated resources to pay for certain capital projects. The City anticipates
this practice will help to reduce future debt requirements and provide a more stable basis for future rate payers.
Current resources and revenues of the water system are used for certain types of capital projects similar to the electric system.
Capital projects for the water system include additional wells, additional transmission facilities, line extensions and line
replacements. Wastewater projects include outfall lines, service connections and line replacements.
In furthering the City Council's focus on utilization of current assets to meet capital requirements, the City created a Drainage
Utility in 1997. The revenues from the Drainage Utility are used in construction of drainage capital projects and support
increased operating costs anticipated with the implementation of Federal clean water laws and regulations. The revenues from
the Drainage Utility are not pledged to the Bonds.
FINANCIAL POLICIES
GASB 34 ...The City is a Phase II City which required GASB 34 implementation for the fiscal year ending September 30, 2003.
GASB 45 .The Governmental Accounting Standards Board ("GASB") Statement No. 45 establishes standards for the
measurement, recognition, and display of the OPEB expense and related liabilities, note disclosures, and required supplementary
information in the financial reports of the state and local governments. The City is considered a phase II government under
Statement No. 45 and is not required to implement the standard until fiscal year 2009. In order to take a proactive approach to
understanding and addressing the City's OPEB liability, on May 24, 2006, the City issued a request for proposals for an actuarial
analysis of future liabilities for Other Post Employment Benefits under GASB 45. The actuarial firm of Rudd and Wisdom, Inc.
was chosen to perform the study, and on December 14, 2006 they delivered a pro forma study to the City. This study: 1) outlines
actuarial cost methods and past-service liability actuarial amortization methods available to the City, 2) reviews the actuarial
assumptions and data used in the study, 3) discusses the effect of prefunding the annual required contribution, 4) discusses the
current plan structure, 5) discusses design options, and 6) outlines the steps the City needs to take prior to implementing GASB
45.
City staff has performed an initial review of the pro forma study and a preliminary discussion with actuary has taken place. At
this point the staff plans are to: 1) evaluate, with the assistance of the actuary and our benefits consultant, the impact of changes
to the current plan structure, 2) evaluate, with the assistance of the City's financial advisor, possible funding options, and 3)
prepare and present a comprehensive overview with recommendations and a funding strategy to the City Council.
The study included pro forma valuation results as of October 1, 2005. The present value of future benefits totaled $22,834,808.
The annual OPEB cost for FYE 9/30/2006 was calculated under the following 3 costs methods: 1)Aggregate Method =
$3,045,050, 2) PUC-ARFS Method = $2,338,410, and 3) FEAN-30 year Method = $1,953,445.
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Information on the City's current Post Retirement/Employment Benefits can be found in the Notes to the Financial Statements
(Note V. D.) of the City's 2006 Comprehensive Annual Financial Report.
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 aself-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 are maintained consistent with legal and managerial requirements. Account groups
are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds.
Government funds are used to account for the City's general 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. It 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
Development Services, the support functions for these areas, and the administrative functions for the City.
The General Fund for the 2006-2007 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 term 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.
Budgetary Procedures ...Prior to September 1, the City Manager submits to the City Council a proposed operating budget for
the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of
financing them. All budget requests are compiled by the office of Management and Budget 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.
INVESTMENTS
The City invests its investable funds 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 INVESTMENTS ...Under Texas law, the City is authorized to invest in (1) obligations, including letters of credit, of the United
States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3)
collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security
for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on
which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States
or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions
of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6)
certificates of deposit meeting the requirements of Chapter 2256, Texas Government Code (the "PFIA") that are issued by an
institution that has its main office or a branch office in the State of Texas and 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
the clauses (1) through (5) and clause (12) ,which are intended to include all direct federal agency or instrumentality issues that have
a market value of not less than the principal amount of the certificates, or in any other manner and amount provided by law for City
deposits, (7) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations
described in clause (I), and are placed through a primary government securities dealer or a financial institution doing business in the
State of Texas, (8) bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting
bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency, (9)
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 U.S. or
state bank, (10) no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that
have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a
stable net asset value of $1 for each share, (I1) 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, (12) bonds, notes or other obligations, issued by the State of Israel, and (13) public funds investment pools that have an
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advisory board which includes participants in the pool 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 or no lower than investment grade with a weighted average
maturity of no greater than 90 days. In addition, the City may invest bond proceeds in accordance with the terms of a guaranteed
investment contract, consistent with the provisions of the PFIA.
A political subdivision such as the City may enter into securities lending programs if: (i) the securities loaned under the program are
100% collateralized, aloan 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 (1) through (5) and clause (12) above, (b) irrevocable letters of credit issued
by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its
equivalent or (c) cash invested in obligations described in clauses (1) through (5) above, clauses (9) through (12) above, or an
authorized investment pool; (ii) securities held as collateral under a loan are pledged to the City, held in the City's name 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 deafer or a financial institution doing business in the State of Texas; 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 govemment 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 determined 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
investment management; and that include a list of authorized investments for City funds, maximum allowable stated maturity of any
individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be
invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each fund's investment. Each
Investment Strategy Statement will describe its objectives concerning (I) suitability of investment type, (2) preservation and safety of
principal, (3) liquidity, (4) marketability of each investment, (5) diversification ofthe 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 shall submit an investment report detailing (I) the investment position of the City, (2) that all investment officers
jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending
value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the
reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each
individual investment was acquired, and (7) the 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.
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 term of the reverse repurchase agreement; (7) restrict the investment in non-money
market mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the entity's
monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; and (8) require local
government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board
requirements.
Under Texas law, the City may contract with an investment management firm registered under the Investment Advisers Act of
1940 (l5 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 u]timate responsibility as fiduciary of
its assets. In order to renew or extend such a contract, the City must do so by order, ordinance or resolution. The City has not
contracted with, and has no present intention of contracting with, any such investment management firm or the State Securities
Board to provide such services.
CITY'S INVESTMENT PoLICY...The Chief Financial Officer shall promptly invest all City funds with the Bank Depository in
accordance with the provisions of the current Bank Depository Agreement or in any negotiable instrument that the Council has
authorized under the provisions of the PFIA, as amended, and in accordance with the City Council approved Investment Policies.
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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 shall prepare and provide a written recapitulation of the City's investment
portfolio to the Council, detailing each City investment instrument with its rate of return and maturity date.
TABLE H -CURRENT INVESTMENTS
As of March 31, 2007, the City's investable funds were invested in the following categories:
Book Market
Investment Type Value Value
Demand Bank Accounts $ 4,725,149 $ 4,725,149
Pooled Cash(Texpool) 58,182,666 58,182,666
Money Market Mutual Fund (Fidelity) 1,899,957 1,899,957
Federal Agency Securities 52,888,100 52,684,028
Federal Treasury Securities 8,783,673 8,876,251
$ 126,479,545 $ 126,368,051
SELECTED PROVISIONS OF THE BOND ORDINANCE
The Ordinance authorizing the Bonds is in substantially the same form as the ordinances authorizing the outstanding bonds,
selected provisions of which are shown below:
The Ordinance authorizes the issuance and sale of the Bonds and prescribes terms, conditions, and provisions for the payment of
the principal of and interest on the Bonds by the City. Set forth below is a summary of certain provisions of the Ordinance.
Paragraph headings are supplied for ease of reference and are not contained in the Ordinance. Such summary is not a complete
description of the entire Ordinance and is qualified by reference to the Ordinance.
DEFIMTIONS
The following terms have the respective meanings specified
(a) "Additional Bonds" means the additional parity bonds which the City reserves the right to issue.
(b) "Bond Fund" means the fund provided for in the Ordinances authorizing issuance of the Previously Issued Parity Bonds.
(c) "Bonds" means the Bonds to be issued by the Ordinance.
(d) "City" refers to the City of College Station, Texas, or where appropriate to the City Council thereof.
(e) "City Council" means the City Council of the City.
(f) "Net Revenues" means the gross revenues of the Systems less the reasonable expenses of operation and maintenance,
including all salaries, labor, materials, repairs, and extensions necessary to render efficient service; provided, however, that
only such repairs and extensions, as in the judgment of the City Council reasonably and fairly exercised, are necessary to
keep the plant or utility in operation and render adequate service to the City and the inhabitants thereof, or such as might be
necessary to meet some physical accident or condition which would otherwise impair the Parity Bonds shall be deducted in
determining "Net Revenues."
(g) "Parity Bonds" means collectively the Previously Issued Parity Bonds, the Bonds, and any Additional Bonds.
(h) "Paying Agent/Registrar" means, initially, The Bank of New York Trust Company, N.A., Dallas, Texas, or any successor
appointed in its capacity as such.
(i) "Systems" as used in the Ordinance means the City's combined waterworks system, wastewater system and electric light
and power system, including all present and future extensions, additions, replacements, and improvements thereto.
(j) "Systems Fund" means the fund provided for in the Ordinance.
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RATE COVENANT
The City covenants and agrees with the holders of the Parity Bonds, if and when issued, that it will:
1. Fix and maintain rates and collect charges for the facilities and services afforded by the Systems which will provide revenues
sufficient at all times:
a) To pay all operation, maintenance, depreciation, replacement, and betterment charges of the Systems;
b) To establish and maintain the Bond Fund;
c) To generate in each year Net Revenues equal to 1.25 times the maximum annual requirement for the payment of the
principal of and interest on the Parity Bonds at the time outstanding and payable from the revenues of the Systems
(although amounts shall be paid into the Bond Fund only in accordance with the Ordinance); and
d) To pay all indebtedness other than bonds outstanding against the Systems as and when the same become due; and
2. Deposit as collected all revenues derived from the operation of the Systems into the Systems Fund which shall be kept separate
and apart from all other funds of the City.
FLOW OF FUNDS
There has been created and established on the books of the City, and accounted for separate and apart from all other funds of the
City, a special Systems Fund. All gross revenues received from operation of the Systems are deposited into and credited to the
Systems Fund immediately upon receipt. The necessary and reasonable expenses of operation and maintenance of the Systems
are paid first from the Systems Fund. The City then makes substantially equal monthly payments into the Bond Fund
(commencing with respect to the Parity Bonds on the date of delivery to the initial purchaser thereof) during each year in which
any of the Parity Bonds are outstanding in an aggregate amount equal to 100% of the amounts required to meet the interest and
principal payments falling due on or before the next maturity date of the Parity Bonds. The City must, at least five days prior to
February I, 2008, and each August 1 and February 1 thereafter, deposit into the Bond Fund any additional Net Revenues
available in the Systems Fund which may be necessary to pay in full the interest on and principal, if any, coming due on the
Parity Bonds on such August 1 or February 1. In no event will an amount in excess of the amounts stated above be placed in the
Bond Fund for the payment of the interest on or principal of the Parity Bonds, and any amount so placed may be withdrawn by
the City and replaced in the Systems Fund. Any funds remaining in the Systems Fund, after provision for the reasonable cost of
operating and maintaining the Systems, and after paying the amounts required to be paid into the Bond Fund, may be used for
any lawful purpose.
ADDITIONAL PARITY BONDS
In addition to the inferior lien bonds authorized by law, the City expressly reserves the right hereafter to issue additional parity
bonds and other evidences of indebtedness now or hereafter authorized by the Legislature of Texas (collectively, the "Additional
Bonds"), and the Additional Bonds, when issued, may be secured by and payable from a first lien on and pledge of the Net
Revenues of the System in the same manner and to the same extent as are the Outstanding Parity Bonds but subject to the
provisions that follow, and the Previously Issued Parity Bonds, the Bonds, and the Additional Bonds may in all respects be of
equal dignity. It is provided, however, that no Additional Bonds may be issued unless:
1. As long as the Previously Issued Parity Bonds are outstanding and unpaid, all material conditions set forth in the Parity Bonds
Ordinances are satisfied;
2. As long as any of the Previously Issued Parity Bonds are outstanding, the "net earnings" of the System for the fiscal year next
preceding the month in which the ordinance authorizing such Additional Bonds is adopted were equal to each of the provisions
in items (a) and (b) below, determined independently and certified by an independent firm of certified public accountants, based
upon an annual audit of the books of the System;
3. An independent firm of certified public accountants, based upon an annual audit of the books of the Systems, certifies that the
net earnings of the System for the previous fiscal year or for any 12 consecutive month period ending not more than 90 days
prior to the date of the adoption of the ordinance authorizing such Additional Bonds or other evidence of indebtedness were
equal to each of the following determined independently:
(a) at least 1.40 times the average annual requirements for the payment of principal and interest on the then outstanding Parity
Bonds and other evidences of indebtedness payable from the revenues of the Systems and on said Additional Bonds or
other evidences of indebtedness, when issued, sold and delivered; and
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(b) at least 1.25 times the maximum annual requirement for the payment of principal and interest on the Parity Bonds then
outstanding and on such Additional Bonds, when issued, sold and delivered;
provided, however, should the certificate of the accountant certify that the net earnings of the Systems for the fiscal year
covered thereby were, in either case, less than required above, and a change in the rates and charges for services afforded by the
Systems became effective at least sixty (60) days prior to the scheduled date of adoption of the ordinance authorizing such
Additional Bonds, then such Additional Bonds may nevertheless be issued if an independent engineer or engineering firm
having a favorable reputation with respect to such matters certifies that, had such change in rates and charges been effective for
the fiscal year covered by the accountant's certificate, the net earnings for the Systems for the fiscal year covered by the
accountant's certificate would have met the tests specified in (a) and (b) above.
The term "net earnings" means all of the Net Revenues of the Systems, exclusive of income received specifically for capital
terms, after deduction of the reasonable expenses of operation and maintenance of the Systems excluding expenditures which
under standard accounting practice should be charged to capital expenditures or depreciation.
4. Said Additional Bonds are made to mature on February 1 in each of the years in which they are scheduled to mature; and
5. The entire issue of such Additional Bonds is insured in a manner similar to the Previously Issued Parity Bonds by an insurance
company or association of companies whose insured obligations are rated by either Moody's Investors Service, Inc. or Standard
& Poor's Public Finance Ratings in the same or a higher rating category than the insured obligations of the City (at the time
such Additional Bonds are to be issued) or the City shall establish a Reserve Fund for such Additional Bonds by any method or
combination of methods that the City deems reasonable and appropriate provided that (i) the amount of such Reserve Fund (or
coverage of any surety bond in lieu thereof) must at least equal the maximum annual debt service requirements of such
Additional Bonds, not to exceed the maximum then permitted by applicable regulations, procedures, or published rulings of the
Internal Revenue Service (the "Reserve Minimum"); (ii) if any cash reserve fund is funded by making transfers of Net Revenues
in the Systems Fund, such transfers must be made each month in an amount reasonably sufficient to reach the reserve minimum
within a period of not more than five years after such Additional Bonds are sold and delivered; and (iii) such Reserve Fund will
be for the equal benefit of the owners of (x) such Additional Bonds, (y) Parity Bonds theretofore issued which are not insured in
a manner similar to the Previously Issued Parity Bonds, and (z) any Additional Bonds thereafter issued which are not so insured.
MAINTENANCE AND OPERATION, INSURANCE
The City must maintain the Systems in good condition and operate the same in an efficient manner and at a reasonable cost. So
long as any of the Bonds are outstanding, the City agrees to maintain insurance on the Systems, for the benefit of the registered
owner or owners of the Bonds, of a kind and in an amount which usually would be carried by private companies engaged in a
similar type of business in the same area. The Ordinance is not being construed as requiring the City to expend any funds which
are derived from sources other than the operation of the Systems, but nothing herein will be construed as preventing the City
from doing so.
RECORDS AND ACCOUNTS
The City must keep proper books, records, and accounts, separate from all other books, records, and accounts, in which complete
and correct entries must be made of all transactions relating to the Systems. Upon written request made not more than 60 days
following the close of the fiscal year, the City must famish to any registered owner of any Parity Bonds, complete financial
statements of the Systems in reasonable detail covering such fiscal year, certified by the City's Auditor. Any registered owner or
owners of 25% of the Parity Bonds at the time outstanding have the right at all reasonable times to inspect the Systems and all
records, accounts, and data of the City relating thereto.
ADDITIONAL COVENANTS
The City further covenants that:
1. It has the lawful power to pledge the revenues supporting the Parity Bonds and has lawfully exercised said power under the
Constitution and laws of the State of Texas, that the Parity Bonds are ratably secured by said pledge of income, in such manner
that one Parity Bond has no preference over any other Bond.
2. Other than for the payment of the Parity Bonds, the rents, revenues, and income of the Systems have not in any manner been
pledged to the payment of any debtor obligations of the City or of the Systems.
3. So long as any of the Parity Bonds remain unpaid, the City will not sell or encumber the Systems or any substantial part thereof,
and that it will not encumber the revenues thereof unless such encumbrance is made pursuant to this Ordinance or is junior and
subordinate to all of the provisions of the Ordinance.
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4. No free service of the Systems is allowed, and should the City or any of its agencies or instrumentalities make use of the
services and facilities of the System, payment of the reasonable value thereof must be made by the City out of funds from
sources other than the revenues and income of the Systems.
5. To the extent that it legally may, so long as any of the Bonds or any interest thereon is outstanding, no franchise will be granted
for the installation or operation of any competing systems and that the City will prohibit the operation of any such systems other
than those owned by the City and the operation of any such systems by anyone other than the City is hereby prohibited.
TAX MATTERS
~PtN10N
On the date of initial delivery of the Bonds, 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 Bonds for federal income tax purposes will be excludable from the "gross income" of the
holders thereof and (2) the Bonds 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 Bonds. See "APPENDIX C - FORM OF OPINION of BOND COUNSEL."
In rendering its opinion, 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, and (b) covenants of the City contained in the
Bond documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the property
financed or refinanced therewith. Although it is expected that the Bonds will qualify as tax-exempt obligations for federal
income tax purposes as of the date of issuance, the tax-exempt status of the Bonds could be affected by future events. However,
future events beyond the control of the City, as well as the failure to observe the aforementioned representations or covenants,
could cause the interest on the Bonds to become taxable retroactively to the 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 Bonds in order for interest on the Bonds 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 Bonds to be included in gross income
retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel is 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 Bonds.
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 Bonds.
Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of Existing Law
and the representations and covenants of the City described above. No ruling has been sought from the Intemal Revenue Service
(the "Service") with respect to the matters addressed in the opinion of Bond Counsel, and no assurance can be given that the
Service would agree with the opinion of Bond Counsel, if the tax-exempt status of the interest on the Bonds were the subject of
an audit. If an audit is commenced, under current procedures the Service is likely to treat the City as the "taxpayer", and the
owners of the Bonds would have no right to participate in the audit process. In responding to or defending an audit of the tax-
exempt status of the interest on the Bonds, the City may have different or conflicting interests from the owners of the Bonds.
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT
The initial public offering price to be paid for one or more maturities of the Bonds may be less than the principal amount thereof
or one or more periods for the payment of interest on the bonds may not be equal to the accrual period or be in excess of one year
(the "Original Issue Discount Bonds"). In such event, the difference between (i) the "stated redemption price at maturity" of
each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would
constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the
bonds 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 Bond 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 Bond 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.
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In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity,
however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond 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 Bond was held by such initial owner) is includable in gross income.
Under Existing Law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity
thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual
anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an
initial owner's basis for such Original Issue Discount Bond 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 Issue
Discount Bond.
The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue
Discount Bonds 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 Bonds 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 Bonds 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
Bonds.
COLLATERAL FEDERAL. INCOME TAX CONSEQUENCES
The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase,
ownership or disposition of the Bonds. 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 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 BONDS.
Interest on the Bonds 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. Section 55 of the Code imposes a tax equal to 20 percent for corporations,
or 26 percent for noncorporate taxpayers (28 percent for taxable income exceeding $175,000), of the taxpayer's "alternative
minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for
the taxable year.
Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest
received or accrued during each taxable year on their returns of federal income taxation.
Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of atax-exempt
obligation, such as the Bonds, 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 minimis amount of market
discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the
stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the
issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the
market discount as the number of days during which the holder holds the obligation bears to the number of days between the
acquisition date and the final maturity date.
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STATE, LOCAL AND FOREIGN TAXES
Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the
Bonds 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.
RATINGS
OTHER INFORMATION
Ail of the presently outstanding parity bonds of the System are rated "Aaa" by Moody's and "AAA" by S&P through insurance
by various commercial insurance companies. The underlying ratings for the outstanding parity bonds are "A1" by Moody's and
"A+" S&P. The City will require that the Initial Purchasers of the Bonds purchase bond insurance for the Bonds in accordance
with the Notice of Sale and Bidding Instructions. The City has applied to Moody's and S&P for ratings on the Bonds.
An explanation of the significance of such ratings may be obtained from the company famishing the rating. The ratings reflect
only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings.
There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or
withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so
warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market
price of the Bonds.
LITIGATION
It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material
adverse financial impact upon the City or its operations.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 9 of the Bond Procedures Act provides that the Bonds "will constitute negotiable instruments, and are investment
securities governed by Chapter 8, Texas Uniform Commercial Code, notwithstanding any provisions of law or court decision to
the contrary, and are legal and authorized investments for banks, savings banks, trust companies, building and loan associations,
savings and loan associations, insurance companies, fiduciaries, and trustees, and for the sinking fund of cities, towns, villages,
school districts, and other political subdivisions or public agencies of the State of Texas". The Bonds are eligible to secure
deposits of any public funds of the state, its agencies and political subdivisions, and are legal security for those deposits to the
extent of their market value. For political subdivisions in Texas which have adopted investment policies and guidelines in
accordance with the PFIA, the Bonds may have to be assigned a rating of "A" or its equivalent as to investment quality by a
national rating agency before such obligations are eligible investments for sinking funds and other public funds. No review by
the City has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in
those states.
No representation is made that the Bonds will be acceptable to public entities to secure their deposits or acceptable to such
institutions for investment purposes. The City has made no investigation of other laws, rules, regulations or investment criteria
which might apply to any such persons or entities or which might otherwise limit the suitability of the Bonds for any of the
foregoing purposes or limit the authority of such persons or entities to purchase or invest in the Bonds for such purposes.
LEGAL OPINIONS
The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including
the unqualified approving legal opinion of the Attorney General of Texas approving the Bonds and to the effect that the Bonds
are valid and legally binding special 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 Bonds will be excludable from gross income
for federal income tax purposes under section 103(a) of the Code, subject to the matters described under "TAX MATTERS"
herein, including the alternative minimum tax on corporations. Bond Counsel has reviewed the information relating to the Bonds
and the Ordinance to determine that such information conforms to the Ordinance. The legal fee to be paid to Bond Counsel for
services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. The legal
opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of the discontinuance of the
Book-Entry-Only System. With respect to the transaction described in the Official Statement, Bond Counsel represents only the
City.
The various legal opinions to be delivered concurrently with the delivery of the Bonds 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.
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AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from City records, audited financial statements and
other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein
will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made
subject to all of the 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.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds.
The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the
agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely
notice of specified material events, to certain information vendors. This information will be available to securities brokers and
others who subscribe to receive the information from the vendors.
ANNUAL REPORTS ...The City will provide certain updated financial information and operating data to certain information
vendors annually. The information to be updated includes all quantitative financial information and operating data with respect
to the City of the general type included in this Official Statement under Tables numbered 1 through 8 and in Appendix B. The
City will update and provide this information within six months after the end of each fiscal year. The City will provide the
updated information to each nationally recognized municipal securities information repository ("NRMSIR") and to any state
information depository ("SID") that is designated by the State of Texas and approved by the State of Texas and approved by the
staff of the United States Securities and Exchange Commission (the "SEC").
The City may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by SEC Rule 15c2-12 (the "Rule"). The updated information will include audited financial statements,
if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the
required time, the City 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 each NRMSIR and the SID of the change.
The Municipal Advisory Council of Texas (the "MAC") has been designated by the State of Texas and approved by the SEC
staff as a qualified SID. The address of the MAC is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768-2177, and its
telephone number is 512/476-6947.
MATERIAL EVENT NOTICES ...The City will also provide timely notices of certain events to certain information vendors. The
City will provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to
purchase or sell Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled
draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events
affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls; (9) defeasances;
(10) release, substitution, or sale of property securing repayment of the Bonds; and (11) rating changes. (Neither the Bonds nor
the Ordinance make any provision for liquidity enhancement.) In addition, the City will provide timely notice of any failure by
the City to provide information, data, or financial statements in accordance with its agreement described above under "ANNUAL
REPORTS." The City will provide each notice described in this paragraph to the SID and to either each NRMSIR or the
Municipal Securities Rulemaking Board ("MSRB"). The foregoing notwithstanding, notices may be made solely by transmitting
such filing to the MAC as provided at http://www.disclosureusa.org, unless the SEC has withdrawn the interpretive advice stated
in its letter to the MAC dated September 7, 2004.
AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID ...The City has agreed to provide the foregoing information only
to NRMSIRs and the SID. The information will be available to holders of Bonds only if the holders comply with the procedures
and pay the charges established by such information vendors or obtain the information through securities brokers who do so.
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LIMITATIONS AND AMENDMENTS ...The City has agreed to update information and to provide notices of material events only as
described above. The City has not agreed to provide other information that may be relevant or material to a complete
presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided,
except as described above. The City makes no representation or warranty concerning such information or concerning its
usefulness to a decision to invest in or sell Bonds 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 Bonds 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 Bonds 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
Bonds 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 Bonds. The
City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the
applicable provisions 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. 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 WITH 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 SEC Rule 15c2-12.
The City did not receive an invoice for debt service requirements due to the bondholders on August I5, 2003 for the Certificates
of Obligation, Series 2002, and thus did not make its payment timely. Upon notification of the error, the City wired the required
funds to the paying agent on August 22, 2003. A notice of material event was filed. The City has taken remedial steps to ensure
that the reasons for the delay would not occur in the future.
INITIAL PURCHASERS
After requesting competitive bids for the Bonds, the City accepted the bid of (the "Initial
Purchasers") to purchase the Bonds at the interest rates shown on the inside front cover of this Official Statement at a purchase
price of % of the principal amount thereof plus a cash premium of $ The initial yield at which the Bonds
will be priced and reoffered will be established by and will be the responsibility of, the Initial Purchasers. The City has no
control over the price at which the Bonds are subsequently sold. The Initial Purchasers can give no assurance that any trading
market will be developed for the Bonds after their sale by the City to the Initial Purchasers.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The
Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of
the Bonds. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has
not verified and does not assume any responsibility for the information, covenants and representations contained in any of the
legal documents with respect to the federal income tax status of the Bonds, 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 accuracy or completeness of such
information.
FORWARD-LOOKING STATEMENTS
The statements contained in this Official Statement and in any other information provided by the City that are not purely
historical are forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies
regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements
included in this Official Statement are based on information available to the City on the date hereof, and the City assumes no
obligation to update any such forward-looking statements. It is important to note that the City's actual results could differ
materially from those in such forward-looking statements.
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The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers,
business partners, and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions
related to the foregoing involve judgments with respect to, among other things, future economic competitive, and market
conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are
beyond the control of the City. Any such assumptions could be inaccurate, and therefore there can be no assurance that the
forward-looking statements included in this Official Statement will prove to be accurate.
MISCELLANEOUS
The financial data and other information contained herein have been obtained from the City's records, audited financial statements
and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein
will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made
subject to all of the 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.
CERTIFICATION OF THE OFFICIAL STATEMENT
At the time of payment for and delivery of the Bonds, the City will furnish a certificate, executed by proper officers, acting in
their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or
pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of
such Official Statement, on the date of sale of said Bonds and the acceptance of the best bid therefor, and on the date of the
delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial
affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to
entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data
have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue
in any material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of
the last audited financial statements of the City.
The Ordinance authorizing the issuance of the Bonds 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 Bonds by the Initial Purchasers.
Mayor
City of College Station, Texas
ATTEST:
City Secretary
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APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
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THE CITY
The City, located in Brazos County, is situated in the middle of a triangle bounded by Dallas/Ft. Worth, Houston, and San
Antonio/Austin. Approximately 80% of the Texas population is located within a 200 mile radius of the City. The City is
principally a residential community for faculty, students and other personnel of Texas A&M University. The City periodically
accesses technical information and assistance made available by Texas A&M University.
The City was incorporated in 1938 and has aCouncil-City Manager form of government with City employees totaling 886
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.
CITY OWNED FACILITIES
The City has constructed a major part of its present facilities out of current revenues. Approximately 395 miles of streets (99%)
within the City are hard surface. The City has a complete water distribution, wastewater collection and treatment system with
644 miles of wastewater and water lines. The City owns the electrical distribution system with approximately 400 miles of
distribution lines, and purchases its electricity from American Electric Power.
The City has a fully equipped police department with 114 full time police officers and 51 support personnel. The department has
29 police patrol cars and one holding facility with a capacity of 17. The fire department consists of 116 full time units and 4 part
time units. There are five stations and a total of 6 engines, 1 quint, 5 ambulances, 1 command vehicle, 1 rescue truck, and 1
ladder truck.
EDUCATIONAL FACILITIES
The College Station Independent School District is a fully accredited system offering 11 educational campuses for pre-
kindergarten through high school. The School District has a student enrollment in excess of 8,700 and employs over 1,100
people. 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 is located on 25 acres within the City. The 200,000 square foot facility is a full care hospital
containing 150 beds and employing more than 400 people. Other area health care providers include: St. Joseph Regional Health
Care Center, Scott & White Clinic, and The Physicians Centre.
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. Continental Connection
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 recently completed 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.
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RECREATION
The College Station park system presently includes 46 parks encompassing 1,274 acres, including a S l5 acre wilderness park.
Collectively, these parks contain 46 playgrounds, 31 soccer fields, 20 basketball courts, 32 softball baseball diamonds, 3
swimming pools, 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.
POPULATION
Official U.S. Census
1940 1950 1960 1970 1980 1990 2000
City of College Station 2,184 7,925 11,396 17,676 37,272 52,456 67,890
Brazos County 26,977 38,390 44,895 57,978 93,588 121,862 152,415
ECONOMIC BACKGROUND
Texas A&M University and System
Of major importance to the City is Texas A&M University which has a 5,200 acre campus located within the City. The City is
principally a residential community for faculty, students and other personnel of the University. Texas A&M University and its
System are the largest employer in Brazos County and a major contributor to the local economy. Texas A&M has a significant
economic impact on the City, contributing an estimated $1 billion annually to the local economy. Texas A&M has consistently
ranked in the top fifty nationally among public institutions of higher education in both enrollment and research grants. Research
dollars totaled approximately $569 million for 2006. The University has approximately 21,000 permanent and part-time
employees with a payroll of approximately $724.7 million and has a physical plant valued in excess of $1 billion.
Texas A&M had an enrollment of 45,380 students during the fall semester of 2006. There are currently over 600 National Merit
Scholars enrolled at Texas A&M University, ranking in the nation's top 20 universities for National Merit Scholar enrollment.
Student Rec Center
The Student Rec Center is a 286,000 square foot building located on the Texas A&M University campus. The Center includes
multi-purpose gyms with badminton, basketball and volleyball courts, indoor soccer courts with dasher boards, 14
racquetballlhandball courts, and two squash courts with glass backwalls. The Center is home to a 14,000-square foot area with
machine weights, free weights, cardio-vascular equipment, and acardio-theater; five activity rooms for aerobics, dance and
martial arts; and aquarter-mile four-lane walking/jogging track. It features a 44-foot indoor rock climbing facility with
interchangeable hand and footholds, an outdoor activity area with asix-lane lap, and afree-form pool with a cool water spa. The
building also houses a natatorium that seats 2,500 with a 50-meter, eight-lane Olympic-size pool, afive-lane instructional pool, a
diving well with one and three meter springboards and competitive platforms, and hot tubs.
George Bush Presidential Library and Museum
The City is the site of the George Bush Presidential Library and Museum, located on the campus of Texas A&M University.
Texas A&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.
Reed Arena
Reed Arena is a special events center located on the Texas A&M University campus. The Arena seats up to 12,500 people and is
the largest such facility in the Brazos Valley area. The center attracts athletic events, concerts and exhibits.
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MAJOR AREA EMPLOYERS
Firm Name
Texas A&M University and System
Bryan ISD
St. Joseph's Regional Hospital
Sanderson Farms, Inc.
College Station ISD
Universal Computer Systems
City of Bryan
City of College Station
Brazos County
Walmart
Alenco
HEB Grocery
Scott & White Clinic
West Corporation
College Station Medical Center
Source: Research Valley Partnership.
Number of
Product Employees
Education/Research 16,000+
Education 1,949
Health Services 1,590
Poultry Processing 1,539
Education 1,400
Computer Hardware and Software 959
Government 889
Government 886
Govemment 751
Retail 650
Windows 61 I
Retail 590
Health Services 553
Telecommunication 550
Health Services 420
In addition to the University, employment is provided by more than 85 manufacturing industries located in, or adjacent to, the
City which produce such products as aluminum windows, furniture, chemicals, dairy products, feeds and fertilizers, modular
homes, bronze castings, and geophysical survey sensors. A growing research park is located within the Texas A&M campus.
Major tenants include the Offshore Technology Research Center and the Food Safety Inspection School National Training
Center. Automated Management Systems provides a major automated accounting service for independent property and casualty
insurance agents. The City has also developed the College Station Business Center, a 200-acre business park. Tenants within
the park include Universal Computer Systems ("UCS"), which employs approximately 960 people; Cox Media, a graphics
advertising business; Prodigene, a biotechnology research business; and Stata Corporation, a software research business.
BUILDING PERMITS
College Station has grown rapidly over the past 30 years as evidenced by an increase in population from 17,676 in 1970 to
67,890 in 2000. The following table sets forth the number and value of construction permits issued by the City over the past
several years.
Residential Construction Commercial Construction Total
Number Number Number
Year of Permits Value of Permits Value of Permits Value
2002 1,207 $ 107,907,265 307 $ 38,926,808 1,514 $ 146,834,073
2003 ],127 138,484,780 315 49,408,634 1,442 187,893,414
2004 985 100,504,006 366 114,543,138 1,35] 215,047,144
2005 a> 1,991 127,265,816 419 31,169,195 2,410 158,435,011
2006 1,048 126,249,768 410 57,162,203 1,458 183,411,971
Source: The City.
(1) Overall in 2005, residential construction permits are higher in 2005 than 2004 because in 2005 there were 1,142 roofing permits as the result
of a major hailstorm in College Station. The total numbers of permits issued for single family homes and multi-family units was 628 in 2005 as
compared to 644 in 2004.
COUNTY CHARACTERISTICS
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 2000 population of 152,415, an increase of 25.07% since 1990. Minerals produced in the County include sand
and gravel, lignite, gas and oil.
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LABOR STATISTICS
COLLEGE STATION
Labor Total
Year~~~ Force Employment Unemployment Rate
2002 31,667 31,088 579 1.8%
2003 33,005 32,210 795 2.4%
2004 33,372 32,669 703 2.1%
2005 39,963 38,482 1,481 3.7%
2006 40,556 38,858 1,698 4.2%
2007 «~ 40,415 38,939 1,476 3.7%
BRAZOSCOUNTY
Labor Total
Year (t) Force Employment Unemployment Rate
2002 79,524 78,143 1,381 1.7%
2003 82,861 80,965 1,896 2.3%
2004 86,095 82,433 3,662 4.3%
2005 87,489 84,035 3,454 3.9%
2006 88,190 84,627 3,563 4.0%
2007 ~Z~ 87,961 84,803 3,158 3.6%
Source: Texas Workforce Commission.
(]) Because of methodology changes in geographical areas below the state level, data from 2004 or earlier is not considered comparable.
(2) Average through March.
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APPENDIX B
EXCERPTS FROM THE
CITY OF COLLEGE STATION, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2006
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, 2006, 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.
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APPENDIX C
FORM OF BOND COUNSEL'S OPINION
128
NOTICE OF SALE
AND
BIDDING INSTRUCTIONS
ON
$18,665,000
CITY OF COLLEGE STATION, TEXAS
(Brazos County)
UTILITY SYSTEM REVENUE BONDS, SERIES 2007
SEALED BIDS DUE MONDAY, AUGUST 6, 2007 at 10:00 A.M., CDST
THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS.
THE SALE
BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING ...The Clty Of College Station, Texas (the "City") is offering for Sale its
$18,665,000 Utility System Revenue Bonds, Series 2007 (the "Bonds"). Bidders may submit bids for the Bonds by any of the
following methods:
(1) Deliver bids directly to the City as described below in "Bids Delivered to the City;"
(2) Submit bids electronically as described below in "Electronic Bidding Procedures;" or
(3) Submit bids by telephone or facsimile as described below in "Bids by Telephone or Facsimile."
BIDS DELIVERED TO THE CITY
Sealed bids, plainly marked "Bid for Bonds," should be addressed to "Mayor and City Council, City of College Station, Texas,"
and delivered in care of Drew Masterson, First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas 77002, prior
to 10:00 A.M., CDST, on the date of the bid opening. All bids must be submitted on the Official Bid Form, without alteration or
interlineation.
ELECTRONIC BIDDING PROCEDURES
Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of the Parity
Electronic Bid Submission System ("PARITY"). Subscription to the i-Deal LLC's BIDCOMP Competitive Bidding System is
required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of
any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit Official Bid
Forms.
An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms
provided in this Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The
City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the
use of such facilities being the sole risk of the prospective bidder.
If any provisions of this Notice of Sale shall conflict with information provided by PARITY as the approved provider of
electronic bidding services, this Notice of Sale shall control. Further information about BIDCOMP/PARITY, including
any fee charged, may be obtained from BIDCOMP/PARITY Customer Support, 40 W. 23rd Street, 5rn Floor, New York,
New York 10010, telephone: (212) 404-4102.
For purposes of both the written sealed bid process and the electronic bidding process, the time as maintained by i-Deal shall
constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true
interest cost to the City, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate
the provisions of this Notice of Sale and the Official Bid Form.
BIDS BY TELEPHONE OR FACSIMILE
Bidders must submit, on or before August 6, 2007, two signed Official Bid Forms plus an envelope marked as described above to
Drew Masterson, First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas 77002, and submit their bid by
telephone or facsimile on the date of the sale.
Telephone bids will be accepted at (713) 654-8654, between 9:00 A.M. and 9:45 A.M., CDST.
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Facsimile bids must be received between 9:00 A.M. and 10:00 A.M., CDST on the date of the sale at (713) 654-8658, attention
Drew Masterson.
The City and First Southwest Company are not responsible if such telephone or facsimile numbers are busy which prevents a bid
or bids from being submitted on a timely basis. First Southwest Company will not be responsible for submitting any bids
received after the above deadlines. The City and First Southwest Company assume no responsibility or liability with respect to
any irregularities associated with the submission of bids if telephone or facsimile options are exercised.
PLACE AND TImE of BID OPENING ...The bids for the Bonds will be publicly opened and read in the office of First Southwest
Company, Financial Advisor to the City, 1021 Main Street, Suite 2200, Houston, Texas 77002, at 10:00 A.M. CDST, Monday,
August 6, 2007.
AWARD of THE BONUS ...The City Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to
convene at 7:00 P.M., CDST, on the date of the bid opening, and adopt an ordinance authorizing the Bonds and approving the
Official Statement (the "Ordinance").
THE BONDS
DESCRIPTION ...The Bonds will be dated September 1, 2007 (the "Dated Date"). Interest will accrue from the Dated Date and
will be due on February 1, 2008, and each August I and February 1 thereafter until the earlier of maturity or prior redemption.
The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Bonds will
mature on February 1 in each year as follows:
MATURITY SCHEDULE
Principal Principal
Year Amount Year Amount
2008 $ 575,000 2018 $ 915,000
2009 570,000 2019 965,000
2010 600,000 2020 1,015,000
2011 635,000 2021 1,070,000
2012 665,000 2022 1,125,000
2013 705,000 2023 1,190,000
2014 740,000 2024 1,250,000
2015 780,000 2025 1,320,000
2016 825,000 2026 1,390,000
2017 865,000 2027 1,465,000
OPTIONAL REDEMPTION ...The City reserves the right, at its option, to redeem Bonds having stated maturities on and after
February 1, 2017, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 1, 2016, or any
date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption.
SERIAL BONDS AND/oR TERM Bonns ...Bidders may provide that all of the Bonds be issued as serial bonds or may provide that
any two or more consecutive annual principal amounts be combined into one or more term bonds.
1VIANDATORY SINKING FUND REDEMPTION ... If the successful bidder elects to alter the Maturity Schedule reflected above and
convert principal amounts of the Serial Bonds into "Term Bonds," such "Term Bonds" shall be subject to mandatory redemption on
the first February 1 next following the last maturity for Serial Bonds, and annually thereafter on each February 1 until the stated
maturity for the Term Bonds at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of
the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and
payable in the Maturity Schedule shown above had no designation of such maturities as Term Bonds occurred. At least thirty (30)
days prior to each mandatory date, the Paying Agent/Registrar (see "PAYING AcENT/REGtsTRAR" below) shall select by lot the Term
Bonds to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement.
The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption
provisions may be reduced, at the option of the City, by the principal amount of the Term Bonds of the same maturity which at least
fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City at a price not exceeding the principal
amount of such Term Bonds plus accrued interest to the date of purchase and delivered to the Paying AgentJRegistrar for
cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a
mandatory redemption requirement.
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BOOK-ENTRY-ONLY SYSTEM ...The City intends to utilize the Book-Entry-Only System of The Depository Trust Company
("DTC"). See "THE BONDS - BooK-ENTRY-ONLY SYSTEM" in the Official Statement.
PAYING AGENT/REGISTRAR ...The initial Paying Agent/Registrar shall be The Bank of New York Trust Company, N.A.,
Dallas, Texas. See "THE BONDS -PAYING AGENT/REGISTRAR" in the Official Statement.
SouRCE of PAYMENT ...The Bonds are payable, both as to principal and interest, solely from and secured by a first lien on and
a pledge of the Net Revenues of the System after payment of maintenance and operating expenses (see "THE BONDS -
SECURITY AND SOURCE OF PAYMENT" In the OffiClal Statement).
Further details regarding the Bonds are set forth in the Official Statement
CONDITIONS OF THE SALE
TYPE of BIDS AND INTEREST RATES ...The Bonds will be sold in one block on an "All or None" basis, and at a price of not less
than their par value plus accrued interest from date of the Bonds to the date of delivery of the Bonds. Bidders are invited to name
the rate(s) of interest to be borne by the Bonds, provided that each rate bid must be in a multiple of 1/8 of I% or 1/100 of 1% and
the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 2% in
rate. Using the interest rate established for the February 1, 2017 maturity as the base year, interest rates for successive maturities
shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest
rate for the maturity of the preceding year All Bonds of one maturity must bear one and the same rate. No bids involving
supplemental interest rates will be considered. Each bidder shall state in the bid the true interest cost which shall be considered
informative only and not as a part of the bid.
BASIS FOR AWARD ...Subject to the City's right to reject any or all bids and to waive any irregularities except time of filing, the
sale of the Bonds will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form
(the "Initial Purchaser") making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost
rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of
all debt service payments on the Bonds on the basis of semi-annual compounding, produces an amount equal to the sum of the par
value of the Bonds plus any premium bid, if any (but not interest accrued from the Dated Date to the date of their delivery). In the
event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Form
will be considered as the intended bid.
GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of College Station, Texas," in the amount of $373,300 is
required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the
City pending the Initial Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The
Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be
made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which
drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The
Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Bonds. No
interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for
the Bonds in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated
damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and
an award of the Bonds has been made.
DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS
CUSIP NUMBERS ... It is anticipated [hat CUSIP identification numbers will appear on the Bonds, but neither the failure to print
or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial
Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this Notice of Sale and Bidding
Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the
Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers
shall be the responsibility of and shall be paid for by the Initial Purchaser.
DELIVERY of BONDS ...Delivery will be accomplished by the issuance of one bond for each maturity (also called the "Initial
Bonds"), either in typed or printed form, in the aggregate principal amount of $18,665,000, payable to the Initial Purchaser,
signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the
Comptroller of Public Accounts. Upon delivery of the Initial Bonds, they shall be immediately cancelled and one definitive
Bond for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's
Book-Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Bonds must be
made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Initial
Purchaser will be given six business days' notice of the time fixed for delivery of the Bonds. It is anticipated that delivery of the
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Bonds can be made on or about September 11, 2007, and it is understood and agreed that the Initial Purchaser will accept
delivery and make payment for the Bonds by 10:00 AM, CDST, on September 11, 2007, or thereafter on the date the Bonds are
tendered for delivery, up to and including October 9, 2007. If for any reason the City is unable to make delivery on or before
October 9, 2007, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its
offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its
Good Faith Deposit will be returned, and both the City and the Initial Purchaser shall be relieved of any further obligation. In no
event shall the City be liable for any damages by reason of its failure to deliver the Bonds, provided such failure is due to
circumstances beyond the City's reasonable control.
CONDITIONS TO DELIVERY ...The obligation of the Initial Purchaser to take up and pay for the Bonds is subject to the Initial
Purchaser's receipt of (a) the legal opinion of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel for the City
("Bond Counsel"), (b) the no-litigation certificate, and (c) the certification as to the Official Statement, all as further described in
the Official Statement.
In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code
of 1986 relating to the exemption of interest on the Bonds from the gross income of their owners, the Initial Purchaser will be
required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Bonds) a
certification as to their "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of
Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Bonds for sale, such certificate may be
modified in a manner approved by the City. In no event will the City fail to deliver the Bonds as a result of the Initial
Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery. Each bidder, by
submitting its bid, agrees to complete, execute, and deliver such a certificate by the date of delivery of the Bonds, if its bid is
accepted by the City. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements to
make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable
certainty. Any questions concerning such certification should be directed to Bond Counsel.
LEGAL OPtNIOIVS ...The Bonds are offered when, as and if issued, subject to the approval of the Attorney General of the State
of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Initial Purchaser of opinions of Bond Counsel, to
the effect that the Bonds are valid and binding special obligations of the City and that the interest on the Bonds will be excludable
from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS"
in the Official Statement, including alternative minimum tax consequences for corporations. With respect to the transactions
described in the Official Statement, Bond Counsel represents only the City.
CERTIFICATION OF OFFtCtAt. STATEMENT ... At the time of payment foi and Inltlal Delivery of the BOndS, the City will execute
and deliver to the Initial Purchaser a certificate in the form set forth in the Official Statement.
Ci~nNGE tN T~ ExEntr'r S'rn'rus ... At any time before the Bonds are tendered for delivery, the Initial Purchaser may withdraw
its bid if the interest received by private holders on bonds of the same type and character shall be declared to be includable in
gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any
Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the
terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions.
GENERAL
FINANCIAL ADVISOR ...First Southwest Company is employed as Financial Advisor to the City in connection with the issuance
of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the
issuance and delivery of the Bonds. First Southwest Company has agreed, in its Financial Advisory contract, not to bid for the
Bonds, either independently or as a member of a syndicate organized to submit a bid for the Bonds. First Southwest Company, in
its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any
responsibility for the information, covenants and representations contained in any of the legal documents with respect to the
federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or
judicial bodies.
BLUE Sxv Lnws ... By submission of its bid, the Initia] Purchaser represents that the sale of the Bonds in states other than Texas
will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Bonds in
accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees to cooperate with the
Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from
registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a
general or special consent to service of process in any such jurisdiction.
NoT ntv OFFER ro SELL ...This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds, but
is merely notice of the sale of the Bonds. The offer to sell the Bonds is being made by means of the Notice of Sale and Bidding
Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine the Official
Statement to determine the investment quality of the Bonds.
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ISSUANCE OF ADDITIONAL DEBT ...The City does not anticipate the issuance of additional revenue debt within the next 12
months. Concurrently with the sale of the Bonds, the City is offering for sale its $3,930,000 General Obligation Improvement
Bonds, Series 2007 and its $3,960,000 Certificates of Obligation, Series 2007, both of which are secured by a pledge of ad
valorem taxes. The Certificates are also secured by a limited pledge (not to exceed $1,000) of surplus revenues of the System.
RATINGS ...All of the presently outstanding parity bonds of the System are rated "Aaa" by Moody's Investors Service, Inc.
("Moody's") and "AAA" by Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. ("S&P")
through insurance by various commercial insurance companies (see "OTHER INFORMATION -RATINGS"). The underlying
ratings for the outstanding parity bonds are "A1"by Moody's and "A+" S&P. Applications for contract ratings on this issue have
been made to Moody's and S&P.
MUNICIPAL BOND INSURANCE ...The Initial Purchaser is required to purchase municipal bond insurance for the Bonds from a
AAA-rated (or its equivalent) municipal bond insurance provider and the cost therefor will be paid by the Initial Purchaser.
Any fees to be paid to the rating agencies as a result of said insurance will be Daid by the City. It will be the responsibility of
the Initial Purchaser to disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the
Bonds.
THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE ISC2-I2 ... The City has piepaied the aCCOmpanying OffiClal
Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its
date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the
Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund,
account, or person that is material to an evaluation of the offering of the Bonds. Representations made and to be made by the City
concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice
of Sale and Bidding Instructions and in the Official Statement.
The City will furnish to the Initial Purchaser(s), acting through a designated senior representative, in accordance with instructions
received from the Initial Purchaser(s), within seven (7) business days from the sale date an aggregate of 150 copies of the Official
Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. The cost of any OY6cial Statement in
excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser(s). The Initial Purchaser(s) shall
be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the
next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or
delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities.
CONTINUING DISCLOSURE AGREEMENT ...The City will agree in the Ordinance to provide certain periodic information and
notices of material events in accordance with SEC Rule 15c2-12, as described in the Official Statement under "Continuing
Disclosure of Information". The Initial Purchaser(s') obligation to accept and pay for the Bonds is conditioned upon delivery to
the Initial Purchaser(s) or (their) agent of a certified copy of the Ordinance containing the agreement described under such
heading.
COMPLIANCE WITH PRIOR UNDERTAKINC$ ... Durlrig the last five years, the City has complied in all material respects with all
continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12.
The City did not receive an invoice for debt service requirements due to the bondholders on August l5, 2003 for the Certificates
of Obligation, Series 2002, and thus did not make its payment timely. Upon notification of the error, the City wired the required
funds to the paying agent on August 22, 2003. A notice of material event was filed. The City has taken remedial steps to ensure
that the reasons for the delay would not occur in the future.
ADDITIONAL COPIES OF NOTICE OF SALE, BID FORM AND OFFICIAL STATEMENT ... A hmlted numbe[ Of addltiorial copies Of
this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the
normal mailing, may be obtained at the offices of First Southwest Company, 1021 Main Street, Suite 2200, Houston, Texas
77002, Financial Advisor to the City.
The City Council has approved the form and content of the Notice of Sale and Bidding Instructions, the Official Bid Form and
Official Statement, and authorized the use thereof in its initial offering of the Bonds. On the date of the sale, the City Council
will, in the Ordinance authorizing the issuance of the Bonds, confirm its approval of the form and content of the Official
Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Bonds by the Initial
Purchaser.
Mayor
City of College Station, Texas
ATTEST:
City Secretary
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OFFICIAL BID FORM
Honorable Mayor and City Council
City of College Station, Texas
Members of the City Council:
August 6, 2007
Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated July 12, 2007, of $18,665,000,
CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 2007 (the "Bonds"), both of which
constitute a part hereof.
For your legally issued Bonds, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay
you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ for Bonds
maturing and bearing interest as follows:
Maturity Principal Interest Maturity Principal Interest
2/1 Amount Rate 2/1 Amount Rate
2008 $ 575,000 % 2018 $ 915,000
2009 570,000 % 2019 965,000
2010 600,000 % 2020 1,015,000
2011 635,000 % 2021 1,070,000
2012 665,000 % 2022 1,125,000
2013 705,000 % 2023 1,190,000
2014 740,000 % 2024 1,250,000
2015 780,000 % 2025 1,320,000
2016 825,000 % 2026 1,390,000
2017 865,000 % 2027 1,465,000
Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which
may include multiple term bonds, one term bond or no term bond if none is indicated). For those years which have been
combined into a term bond, the principal amount shown in the table above shall be the mandatory sinking fund redemption
amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The
term bonds created are as follows:
Year of
Term Bond First Mandatory
Maturity Date Redemption
Principal
Amount of Interest
Term Bond Rate
of
$
$ %
Our calculation (which is not a part of this bid) of the interest cost from the above is:
TRUE INTEREST COST %
We are having the Bonds insured by at a premium of $ ,said premium
to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the
City
The Initial Bonds shall be registered in the name of ,which will, upon
payment for the Bonds, be cancelled by the Paying Agent/Registrar. The Bonds will then be registered in the name of Cede &
Co. (DTC's partnership nominee), under the Book-Entry-Only System.
A bank cashier's check or certified check of the Bank, , in the amount
of $373,300 which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening
of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding
Instructions.
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We agree to accept delivery of the Bonds utilizing the Book-Entry-Only System through DTC and make payment for the Initial
Bond in immediately available funds at The Bank of New York Trust Company, N.A., Dallas, Texas, not later than 10:00 AM,
CDST, on September 11, 2007, or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the
Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Bonds to complete the DTC
Eligibility Questionnaire.
The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Bonds, a
certificate relating to the "issue price" of the Bonds in the form and to the effect accompanying the Notice of Sale and Bidding
Instructions, with such changes thereto as may be acceptable to the City.
We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of
the next business day after the award.
Respectfully submitted,
Name of Underwriter or Manager
Authorized Representative
Phone Number
Signature
Syndicate Members:
ACCEPTANCE CLAUSE
The above and foregoing bid is hereby in all things accepted by the City of College Station, Texas, subject to and in accordance
with the Notice of Sale and Bidding Instructions, this the day of , 2007.
ATTEST:
City Secretary
Mayor
City of College Station, Texas
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ISSUE PRICE CERTIFICATE
The undersigned hereby certifies with respect to the sale of CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM
REVENUE BONDS, SERIES 2007 (the "Bonds"), issued in aggregate principal amount of $18,665,000 as follows:
1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Bonds from the
City of College Station, Texas (the "Issuer") at competitive sale.
2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to
the public of the Bonds of each maturity at the respective prices set forth below.
3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the
Bonds of each maturity at which a substantial amount of the Bonds of such maturity was sold to the public is as set forth below:
Principal Initial Principal Initial
Amount Year of Offering Amount Year of Offering
Maturing Maturity Price Maturing Maturity Price
$ 575,000 2008 % $ 915,000 2018
570,000 2009 % 965,000 2019
600,000 2010 % 1,015,000 2020 %
635,000 2011 % 1,070,000 2021 %
665,000 2012 % 1,125,000 2022
705,000 2013 % 1,190,000 2023 %
740,000 2014 % 1,250,000 2024
780,000 20]5 % 1,320,000 2025 %
825,000 2016 % 1,390,000 2026 %
865,000 2017 % 1,465,000 2027 %
4. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or
organizations acting in the capacity of underwriters or wholesalers.
5. The offering prices described above reflect current market prices at the time of such sales.
6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, have purchased bond
insurance for the Bonds. The bond insurance has been purchased from (the "Insurer") for a
premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The amount of such cost is
set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium
does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in
comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present
value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on
the Bonds which results after recovery of the insurance premium, exceeds the present value of the bond insurance premium.
7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the
conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Bonds from the
gross income of their owners.
EXECUTED and DELIVERED this day of , 2007.
(Name of Underwriter or Manager)
By
(Title)
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