May 8, 2023 REGULAR MEETING OF THE CITY COUNCIL OF THE
CITY OF NEDERLAND
4:30 p.m. May 8, 2023
1. MEETING
The meeting was called to order at 4:30 p.m. by Mayor Albanese at the Nederland City
Office Building, 207 N. 12th Street, Nederland, Texas. See attached for quorum.
The fallowing statement was posted:
"PURSUANT TO SECTION 30.07, PENAL CODE (TRESPASS BY LICENSE HOLDER
WITH AN OPENLY CARRIED HANDGUN), A PERSON LICENSED UNDER
SUBCHAPTER H, CHAPTER 411, GOVERNMENT CODE (HANDGUN LICENSING
LAW), MAY NOT ENTER THIS PROPERTY WITH A HANDGUN THAT IS CARRIED
OPENLY."
2. INVOCATION AND PLEDGE OF ALLEGIANCE
The invocation and Pledge of Allegiance was led by Randy Sonnier, Councilmember
Ward III.
3. CONSENT AGENDA - All consent agenda items listed are considered to be routine by
'-" the City Council and will be enacted by one motion. There will be no separate
discussion of these items unless a councilmember so requests, in which event the item
will be removed from the Consent Agenda and considered separately.
A motion was made by Mayor Pro Tem Root and seconded by Councilmember Sonnier to
approve the Consent Agenda Item "a thru b" as presented. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
a. Minutes - April 10, 2023 and April 17, 2023 regular meetings
b. Consider action regarding a request from the Nederland Independent School
District for Hillcrest Elementary School to utilize Doornbos Park for a field trip for
the Milers' Club.
4. REGULAR AGENDA
a. A motion was made by Councilmember Guillot and seconded by Councilmember
Sonnier to approve a proclamation in regard to Taryn Brunet. MOTION
CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
b. A Public Hearing was held for the purpose of discussing and receiving comments
regarding the rehabilitation or condemnation and demolition of an abandoned
and/or dilapidated structure at the following address: 715 North 14th Street (Lot 16,
Block 11, Langham Addition).
The basic criteria utilized by Mr. Wheeler when determining whether a building
should be demolished involves the value of the necessary repairs versus the
appraised value of the structure; if the cost of the repairs exceeds 50% of the
appraised value, the building is considered eligible for demolition. The City Council,
Minutes continued, May 8, 2023
however, retains the ultimate authority to determine what action, if any, will be
taken with respect to the removal or repair of a structure.
Katrina Rodriguez, daughter of Rebecca Head (owner of the property), commented
that she is being.harassed by Clint Drummond. Mr. Drummond lives at 703 N. 14th
St. and he wants to buy this property. Katrina stated the house is not for sale and
since her mother had a stroke she has not had time to clean up the property. The
trees are overgrown and others have discarded debris/tires/rebar on this property
making it difficult to clean up. She thinks some of this debris is from Mr.
Drummond's house that he demolished next door. She stated she was not aware
of the September meeting that Mr. Wheeler held regarding this property. She did
speak to Mr. Wheeler and told him she is willing to clean up the property, her
daughters are interested in living in the house. In 2010 she had the house leveled,
siding repaired and a new roof installed. But the house has not had electricity since
2010. She is aware that the interior needs extensive renovations before the house
can be inhabited.
Dana Waldrep owns a rental house at 719 N. 14th and stated that Mrs. Head's
property should be demolished. She has had problems with rodents/feral cats
coming from this property. She has tried to contact Mrs. Head several times
regarding the rodents and debris in the front and backyard but has not been able
to.
Clint Drummond, 703 N. 14th St., stated that he does want to buy the property but
he did not put the debris in her yard. He also stated that he has not harassed Mrs.
Rodriguez.
c. Discussion was held regarding the rehabilitation or condemnation and demolition of
the abandoned and/or dilapidated structure at the following address: 715 North
14th Street (Langham T B Lot 16, Block 11).
A motion was made by Councilmember Sonnier and seconded by Mayor Pro Tern
Root to approve the condemnation and demolition of the abandoned and/or
dilapidated structure within 60 days at the following address: 715 North 14th Street
(Langham T B Lot 16, Block 11). MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
d. Anthony Vazquez has submitted a request in regard to the liens filed on 3412
Avenue E (Lot 8, Block 19 Airport #2). In April 2009, the condemnation process
resulted in the former residential structure on this lot being demolished. The value
of the demolition lien was $4,300. With interest, the lien has grown to $10,131.51.
Mr. Vazquez purchased the property in 2018 after the lot completed four other
transactions. Mr. Vazquez is seeking assistance on the lien amount to facilitate
development on the lot.
Mr. Vazquez has requested that the City waive the interest accrued on this lien in the
amount of$5,831.51. He would pay the demo lien of$4,300.00. He plans to build
a new home on this lot.
Councilmember Austin stated that we have already set a precedence in 2016 by
waiving one-half of the interest on property at 2003 Queens Ave and 1807 N. 19th St
(reduced the interest component in half).
A motion was made by Councilmember Sonnier and seconded by Councilmember
Austin to approve the waiver of 75% of the interest. Mr. Vazquez would pay
Minutes continued, May 8, 2023
$5,757.88, which is the demo lien of$4,300.00 plus 25% of the interest.
MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
e. A motion was made by Mayor Pro Tern Root and seconded by Councilmember
Guillot to receive the quarterly Hotel Occupancy Tax Fund financial report from the
Nederland Chamber of Commerce. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
f. A motion was made by Mayor Pro Tern Root and seconded by Councilmember
Sonnier to receive the Quarterly Investment Report from the Finance Department.
MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
g. A motion was made by Councilmember Sonnier and seconded by Mayor Pro Tern
Root to approve engaging Griffith, Moseley, Johnson & Associates, Inc. for grant
administrative services — Doornbos Park Pond project. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
h. 1820 North 31st Street has reported sewer issues. The home was built in the late
1960s per JCAD records; in the late 1960s or early 1970s, sewer service was
established by development of the homes along North 27th Street to North 31st
Street north of Canal up to Seattle Avenue. The sewer collection mains were
constructed during this time to serve the newly built homes in this area. The
private sewer lines were made by the property owner and were not under City
inspection. In 1997, this area was annexed into the City of Nederland. During the
investigation of the sewer issues at this location, it was determined that the sewer
service line was shared by multiple residences without any private utility easement
and that the service line is likely failing. It is important to note that a service line is
private, and its maintenance is the property owner's responsibility.
Resolving the sewer issue cannot be effectively done in the same area; re-routing
the sewer service line to a new clean-out is necessary unless the property owner
can get permission from the adjacent property owners to use the same route. The
Public Works staff recommends installing a new clean-out on the northeast corner
of the lot and connecting service to the 6" sewer line along Seattle Ave or if able to
get permission from the adjacent property owners to lay a new service line in the
location of the deteriorated private service line. The sewer tap fees equal $2,275.
The property owner will need to pay a plumber to run new sewer lines to this clean-
out. The property owner, Mr. Lowery has argued that the City should incur the
costs of all these repairs. If Mr. Lowery is agreeable to paying his costs, I
recommend the City waive the sewer tap fees due to the highly unusual
circumstance regarding this property. However, it is important to note that the
neighbors who had the shared sewer line have repaired their sewer line and did not
request the City waive any fees associated with the repairs.
"""" Shannon Lowery stated that he has had sewer issues at his home since November
of last year. He has had several plumbers out to repair and has been told that the
issue is on the City's side. He has received quotes to have new lines installed
totaling over $10,000. The City has been out to his house several times but since
this is a private line the City cannot repair. This private line services 3 residential
homes.
Minutes continued, May 8, 2023
Jesse Branick, City Attorney, stated that these are private sewer lines and the City
cannot legally spend government funds to repair/reroute private sewer lines.
Councilmember Austin asked about costs of repairing such a line.
Mayor Albanese asked if we could `diagnose' the issue. Chris Duque, City Manager,
stated that the City needs to be aware of the ramifications of diagnosing sewer
issues on private property. There could be a liability issue.
Councilmember Austin made a motion to send a City crew to diagnose the sewer
issue and repair. Councilmember Sonnier seconded the motion. Chris Duque
reiterated that the City Attorney has advised the Council that it is illegal to spend
public funds to repair or even diagnose private sewer lines. The City Manager said
that the City would need waivers signed by the Lowery's and the neighbors.
A motion was made by Councilmember Sonnier and seconded by Councilmember
Austin to authorize diagnosing and repairing the sewer line at 1820 North 31st
Street. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin and Sonnier. •
NOES: Mayor Pro Tern Root and Councilmember Guillot.
i. A motion was made by Councilmember Sonnier and seconded by Councilmember
Guillot to approve Change Order No. 3 - Wastewater Treatment Plant Phase 2
Improvements project. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
j. A motion was made by Councilmember Sonnier and seconded by Councilmember
Austin to approve final payment and release of retainage for the Wastewater
Treatment Plant Phase 2 Improvements project. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
k. A motion was made by Councilmember Sonnier and seconded by Mayor Pro Tern
Root to authorize the solicitation of bids for the 2023 City of Nederland HMAC
Street Program (hot mix overlay project). MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
I. A motion was made by Mayor Pro Tern Root and seconded by Councilmember
Austin to approve Ordinance No. 2023-12, authorizing the settlement of the
proposed rate increase of Entergy Texas, Inc. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
m. The City was allocated $4,304,289.72 for the Coronavirus Local Fiscal Recovery
Fund allocation. Thus far, the City has allocated funds for the Non-Profit
Partnership Grant Program; noted its intent to allocate $2.5M to waterline and
sewer line project (the Public Works Director is finalizing the terms of these
infrastructure projects with the greater focus on replacing old waterlines); allocated
$50,000 to reimburse Adaptive Sports for Kids for the installation of artificial turf at
the Babe Ruth Park baseball field; and allocated $325,000 for the purchase of an
inclusive playground at Doornbos Park. This leaves approximately $1.06M of funds
that have not been earmarked.
Minutes continued, May 8, 2023
Last summer as part of the Nederland Non-Profit Partnership Grant program,
$25,000 was awarded to Samaritan Counseling Center of Southeast Texas to
provide mental health services to NISD (enhanced the services already being
provided to NISD); previously, staff discussed the possibility of another round of
non-profit partnership funding with an emphasis on mental health services. NISD
reached out to my Office seeking financial assistance for the existing services
provided by Samaritan; these services were covered by grant funding that is
expiring. I propose utilizing $25,000 that shall be paid to Samaritan for mental
health services at NISD. Samaritan will be required to submit a program report
similar to what was submitted earlier this year.
A motion was made by Councilmember Sonnier and seconded by Councilmember
Austin to approve the allocation of Coronavirus Local Fiscal Recovery Funds to
Nederland Independent School District for providing mental health services.
MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
n. A motion was made by Councilmember Guillot and seconded by Mayor Pro Tern
Root to authorize the issuance of City of Nederland, Texas, Combination Tax and
Revenue Certificates of Obligation, Series 2023. MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
o. A motion was made by Mayor Pro Tern Root to approve Resolution No. 2023-09, in
regard to the City of Nederland's Rules of City Council. Councilmember Sonnier
made a motion to table this item and discuss it further before approving. Mayor
Pro Tern Root withdrew her motion to approve. Councilmember Guillot seconded
the motion to table the item at this time. MOTION CARRIED..
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
p. Employee Group Benefits:
The regular meeting was recessed at 6:33 p.m. by Mayor Albanese for the purpose
of conducting a City of Nederland Employees Benefits Trust meeting to award bids
for employee group benefits.
The regular meeting was reconvened at 6:43 p.m. by Mayor Albanese.
A motion was made by Councilmember Austin and seconded by Councilmember
Guillot to authorize the transfer of funds from the City of Nederland to the City of
Nederland Employee Benefits Trust to pay for employee-related benefits.
MOTION CARRIED.
AYES: Mayor Albanese, Councilmembers Austin, Root, Sonnier, and Guillot.
NOES: None.
S. EXECUTIVE SESSION
The regular meeting was recessed at 6:44 p.m. by Mayor Albanese for the purpose of
conducting an Executive Session as authorized by Texas Government Code,
Consultation with City Attorney - Texas Government Code, Chapter 551.071,
Personnel - Texas Government Code, Chapter 551.074, Discuss personnel -
Deliberation of the Appointment, Employment, and Duties of a Public Officer or
Employee - Finance Director.
Minutes continued, May 8, 2023
6. RECONVENE
The regular meeting was reconvened at 6:59 p.m. by Mayor Albanese.
7. COMMUNICATION
City Manager's Report:
a. Miscellaneous:
• The Chamber Coffee will be Tuesday, May 9th, at Ritter Lumber.
• The Mother of the Year event will be Thursday, May 11th, 6:00 p.m., at City
Hall.
• The Parks Department is planning a Memorial Day Program for May 26th, 10:00
a.m. at Veteran's Park.
8. ADJOURN
There being no further business a motion was made by Mayor Albanese to adjourn the'
meeting at 7:01 p.m.
71 dad
Don Albanese, Mayor
City of Nederland, Texas
ATTEST: •
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Jorti Underwood, City Clerk
City of Nederland, Texas
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CITY OF NEDERLAND
COUNCIL MEETING ATTENDANCE SHEET
NAME TITLE PRESENT ABSENT
Don Albanese Mayor
Talmadge Austin Council Member-Ward I I
Sylvia Root Council Member-Ward II
Randy Sonnier Council Member-Ward Ill
David Guillot Council Member-Ward IV
Chris Duque City Manager
Joni Underwood City Clerk 1
Jesse Branick City Attorney
Cheryl Dowden Director of Finance c/
Gary Porter Police Chief
Terry Morton Fire Chief
Robert Woods_ Director of Public Works
George Wheeler Building Official
Molli Hall Librarian
Holly Guidry Human Resources Director I
Angela Fanette Parks Director I
1)4V 0,19-Cal
Don Albanese,Mayor
r ci
Joni f nderwood, City Clerk
Date
0;..DINANCE NO. 2023-12
AN ORDINANCE BY THE CITY COUNCIL c• F THE
CITY OF NEDERLAND, TEXAS ("CITY")
AUTHORIZING THE SETTLEMENT OF. THE
PROPOSED RATE INCREASE OF ENTERGY
TEXAS, INC.; FINDING THAT THEMEETING
Cl MPLIES WITH THE OPEN MEETINGS ACT;
MAKING OTHER FINDINGS ',ND PROVISIONS
RELATED TO THE SUtJECT; A'D'D `DECLI RING
AN EFFECTIVE DATE
WHEREAS,on or about July 1,2022,Entergy Texas,Inc;("Eli"or the"Company")
filed a Statement of Intent and Application for Authority to Change Rates with the City of
Nederland ("City") and concurrently with the Public Utility Commission of Texas
("Commission")to increase electric rates in the Entergy Service Area by approximately
$131.4 million per year;and
WHEREAS,the City ended the Company's rate request and the Company appealed
the City's rate denial ordinance to the Commission;and
WHEREAS, ETI, Commission, Staff, and other intervening parties including the
Steering Committee of Cities participated in settlement discussions to resolve the rate
case issues without litigation;and
WHEREAS,ETI has agreed to settle the rate request at a rate increase level of$54 .
million per year;and
WHEREAS, the Lawton Law Firm and Commission staff have recommended
approval of the Settlement terms as a reasonable alternative to resolve the rate case
issues without litigation.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
NEDERLAND,TEXAS,THAT:
Section 1. That the statement and findings set out in the preamble to this
Ordinance are hereby in all things approved and adopted.
Section 2. The City of Nederland hereby authorizes the settlement of the ETI
rate case proceedings at the rate increase level of$54 million per
year.
Section 3. The meeting at which this ordinance was approved was in all things
conducted in strict compliance with the Texas Open Meetings Act,
Texas Government Code,Chapter 551.
Section 4. This ordinance shall become effective from and after its passage.
PASSED AND APPROVED this 8TH day of MAY,2023.
Mayor Don Albanese ° ''
APPROVED AS TO FORM AND LEGALITY:
Jesse Bran' k ity Attorney
City of Nederland,Texas
ATTEST: •
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Jo 'Underwood Ci Clerk - :04F '
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THE LAWTON LAW FIRM P C
12600 Hill Counity Blvd.,Suite R-275 •Austin,Texas 78738 • 512/322,0019
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April 25,2623. •
Sent via egnail . •
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Richard G.Baker *M„4. Sharae Reed
City Attorney City of Anahuac City Attorney City of Bean-ft-tont
P.0:Box 10066 • P.O..Box 827
Liberty,Texas:77575 ,•Beautiont,Teas 77704
, •
Mr.Chris Boone • Mr.Panl,Fukuda
interin).City•Manager—.City of Beaumont City Attorney—Bridge City
P.O,Box 3827 City Attorney Pine Forest
Beaganont,Texas 77704 260 Rad*13.ot Office Box 846
Bridge City,,Texas 77611
Mr.Scott Swigert •1\1§.Mary AMiPowell
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City Manager City of Cleveland City Attorney—ci..ty.qt Cleveland
90.7 E.Houston ' WOrthani Tower,Suite 600
Cleveland,Texas 77327 2727Allen Parkway
Texas 77019
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M:Terry Blackwell Mr.Gary Scott•
Interim City Secretary—City of Cleveland City Attorney—City of Conroe
907 E.Houston P.Q.Box 3066.
Cleveland,Texas 77327 Conroe,Texas..7736.5
Mayor Nyla Akin.Palhaus Amy L.Wade
City of Cut and Shoot City Secretary—City of Cut and Shoot
P.O.Box 7364 P.O.Box 7364
Cut and Shoot,Texas 77306 Cut and Shoet,Texas 77306
CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
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MINN%
Mayor Caroline Wadzeck Ms.kiniberly Judge
City of Dayton City Manager-City of Dayton
117 CoOk Street 117 Cook Street
1)aytOtr,TeXas 77535 Dayton,.TexaS 77535
•• .. ... .„ . . . : .
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Mr:Brandon Monk Mr:p..E.866a. •
City Attorney L City of Groves City Manager-City of Groves
. 4875 Parker Drive • P•A-).Box 320 . . .. .
Beaumont,TX 77705 Port Arthur,Texas 77643
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Ms..TinaPaez '. - Ms.YiiShan.Chang •
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CitY:ofHouStin Administration&Regulatory dity.Of Houston Legal Department
Affairs Department(ARA) .P.O.Box 368,Houston,Texas 77001-0368
611..Waiket, 13-03.Floor • dt0t106446i411T400r
Marston Texas.77002
.• . . , . OciOagi3y...-,. . • : . •
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Houston,Texas 77002
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Mr.Leonard Schneider Mr.Aron kulhavy
City Attorney 4:City'otHuhtSville City Manager-City of Huntsville
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City Attorney-City of Splendora 1212•AVe.M. .
Liles Parker PLLP Huntsville,Texas 77340
2261 Notthpark Dr.,'Suite 445
.. ...-. I•;ingwood,TX 77339
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Mr..Brandonii .41 - Mr.Tom Warner ..
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City Attorney-City of Liberty City Manager-City of Liberty
City Attorney-City Of Dayton 1829 Sam Houton
.151.7 Trinity Liberty,TeXas.77575
Liberty,texas 77575
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Mr:Alan P.,Petrov. Mr.Ridharc1•Tratun.
City Attorney,City of Montgomery City Adm in istrator L City of Montgomery
Johnson Petrov LLP 101 Old PlantersVille Road
2929 Allen Parkway, Suite 3150 Montgomery,TX 77316
1-lousfon,Texas 77019
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Mt.Cary Bovey Mr.Jason Weeks
City:Attorney-City of Navasota City Manager-:City of Navasota
BoVey& Cochran,PLLC 200 E.McAlpine Street
2251 Double.Creek Dr., Suite 204 Navasota,Texas 77868
Round Rock,Texas 78664 ..
Mr.Christopher Duque • Mr.Jesse Branick
City Manager-City of Nederland City Attorney-City of Nederland
•••••11, P.O.Box 967 21 Hwy. 69 South, Suite 100
Nederland,Texas 77627 Nederland,Texas 77627
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CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
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Ms.Elizabeth Harrell Ms.Heather Neeley.. .
City Secretary• •City of Oak Ridge North City Manager,..'q..-ty. of Oak Ridge North
27424 Robinson Road 27424 Robinson Road
Oak Ridge North,Texas 77385 *Oak Ridge North,Texas 77385 .
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Mr.Guy Goodson' Mr.Mike Kunst
City Attorne —.city of Orange City Manager-City of Orange -
GERMER 1311,C 812 North 16t4 Street
5 .0.Ffirriii;Spite 400 : P.O:Box 520 ::• - .•' .
Beaumont,Texas 77701 Orange;Texas 77630 *. .
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Mr.Rodney Price Mr.Jerry Flood .•
City Attorney—City of Rose City City.AkiiilistratOr—.City•of Pinehurst
P.Q.Box 310 2497 Martin tnther King Jr.Drive
Vidor,:Texas 77670 Orange,Texas.17.6 ()
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Mr..Tommy Oupn. Ms.Val 1-UOlip
City Attorney—City of Pinehurst City..Attorney z•-•City of Port Arthur •
202$.BOiciei,' P.O.Box 1089 -
Orange;Texas 77630 Pqrt Arthur,Texas 17641
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•M.r:Ronald.Burton Mt.iance Bradley
City MO•nager—City of Port Arthur City.Attorney.t City of Port Neches
P.O.B•4 10,89 •RO,la.ox 1148.: ' • L..i
Port Arthur;-Texas 77641 Pprti\TccileS,IT6ias.'7.76$1
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Mr.Andre' Wimer Mr.Larry L.F.OeTstei
City Manager—City of Port Neches City Attorney—City of Roman Forest
P.0,Box 758 City Attorney—City Of Panorsm a Village
Port Neches,Texas 77651 Darden,Fowler and Creighton,LLP
414 West Phillips, Suite 100
Conroe,Texas 773.01
Ms.Kathie Reyer Mr. Solomon Freimuth
City AdminIsttator—City of Shenandoah City.Attorney—City of Silsbee
1 29955 IH-45N. P.O.Box 186
Shenandoah,Texas 77381 Port Neches,Texas 77651
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Ms:DeeAnn Zimmerman Mr.Alex Stelly
City Manager—City of Silsbee City Attorney—City.of Sour Lake
105 Southrcl*Street 2615 Calder Ave.;Ste. 1070
Silsbee,Texas 77656 Beaumont,Texas 77702
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CONFIDENTIAL ATTORNEY CLIENT COMNIUNICATION
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Mr.Jack Provost Mayor Dorothy Welch
City Manager—City of Sour Lake City Attorney Leonard Schneider
625 Hwy 105V. . City of SplendOra
Sour Lake, X3:5 759 P.O.Box,.1087 .
• Splendora,Teas '17372
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Mr.Robbie 1-101 Mr.Chris Leavins
City Manager-City of Vidor City Attorney City of Vidor
1395 N.MainSt City Attorney—City of West Orange
Vidor,Texas 77662-3726 P.O.box.4915 • •
• BeapniOnt,Texas 77704-4915
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Mayor Randy Branch . Mr.Michael S...StellY-
Mayor•-jCity•.of West Orange City of West Orange,Texas
2700 Western Avenue 2700 Austin Avenue
West Oten-ge;11 77630 West Orange,TX 77630
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Ms.Marissa,Quintenilla
City Secretary City of Willis
200 N.Bell •
Willis,Texas 77378
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Re:Proposed Settlement of Entergy's 2022 Base Rate Case and Proposed Ordinance
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Dear Cities: • •
•
This letter is to update the *Cities on the status of Entergy Texas, Inc's ("ITI" or
"Company") 2022 base•rate case currently pending at the Public Utility Commission of Texas
("Commission") The Company,the Commission Stiff,and other intervening parties have reached
a final agreement regarding the Company's request for a base rate increase; including revenue
requirement, class allocation, and rate design. The one TemOining,issue to be decided by the
Commission is the Company's request to own and operate tiatl.§.pottatic:n electrification related
infrastructnre, including electric Vehicle charging facilities. AS we will describe further below,
customers stand to benefit from the terms of the settlement agreement,which we recommend that
the Cities approve. We have attached.a proposed ordinance..fOr Cities to approve the
settlement If your City takes no action,we will assume your City remains unopposed to the
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settlement.
The Company agreed to a 'revenue requirement increase of $54 million, which is
approximately 58.9%lower than their original requested revenue requirement increase Of$131.4
inillion, Other key coMpOnents of the proposed settlement include:
1111
CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
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® A.returnori:equity.of 9.57% as opposed to Ell's proposed 10.8% return. This
9.57%profit level is a slight decrease from the Company's current return on equity
of 965%.
a Several adjustments.to the Company's proposed depreciation rates,lowering the
Company's depreciation expense by approximately$23.7 million per year:
® Longer amortization periods for:.recovery of expenses related to the Company's
pension:accounts; self-insurance storm reserve accrual,bad debt recovery related
=1
to COVID9.costs,and.impacts, and its transition to AMS..or."Smart"'meters.
Lengthening the.Rmortization periods will.lower..costs to customers by about$6.5
million per year compared to.the Company's original proposal.... • •
s A reasonable:allocation of the revenue requirement between the various customer
classes. .The .breakdown of the settlement revenue requirement.between the
customer.classes:•can be Seen in Table 1,below. •• . .
6 A smaller.increase to the residential fixed monthly.customer charge thaan what was
proposed by ETI and pOrnirii804 Staff.In the past,the Corn>nission has approved
a gradualist approach to ratemaking Where,for instance,.monthly customer charges
could adjusted downward to prevent a dramatic rate.increase.Commission Staff
has recently shifted to setting customer charges strictly:according to cost basis,
regardless of the impact on customers. To support this,policy shift, Commission
Staff cited their:concern that g•radua•lism may result in improper cost-shifting
between rate classes.ETI calculated that'a cost-based:customer charge in this base
•
would be $16.33, but the parties ultimately settled on'$14..00 for the trimonthly
residential customer charge.The lower:customer charge reduces the risk of"rate
shock".atolls particularly beneficial for the lower-usage.customers. .. •
In addition, the reduced return on equity and depreciation rates will.continue to benefit
customers in expected future interim rate adjustment filings,such as Distribution Cost Recovery
Factor, Transmission'Cost Recovery Factor, and Generation Cost Recovery Rider proceedings.
The statutory formulas to calculate these rate adjustments utilize the:rate of return anddepreciation
rates.approved in the Company's=most recent'base tate case;therefore,keeping these components
ofbase rates as low as possible reduces future interim rate increases.
There were many contested issues in this case. Although.our consultants' recommended
adjustments to Entergy's proposed base rate increase wereall reasonable, the final litigated
outcome is not known on each contested issue.Given the cost of successfully'litigatiiig each issue
and litigation risk;a settlement at$54 million increase is reasonable.Settlementof the case reduces
the risk of au unanticipated or negative outcome and reduces litigation.expenses.
A detailed breakdown of the proposed settlement revenue requirement compared to present
rates is attached to this letter as Attachment 1:In addition,Table 1.below highlights the proposed
percentage increase to each customer class,with and without fuel costs included:
CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
5
•
. .. Table'1 . ,
• Proposed Settlement Base.Rate.Increase by Customer.Class . •
• Customer Class • Proposed.Settlement •Change in Non-Fuel Change*total
. •• . . . Ailocatioia'. • Revenues Revenues ...
Residential :$40;360,687 • : :-6:59%•' . •4.74%.
Snail General Service • •$875,244 1:85% . • 1.33% •
General Service. • $7,705,142 3:41%•• • 222% .
Large General Service : $683,493.. ..1.01% • . 0:58% : .
• .Large:Industrial • . . $3,553,240 • . • 1:74%•: '0373% . •
Lighting Service , • . . . •..$823,964. • 5.04% '• • 4.16%.. ..
• ': Total: $54,001,'770 . • 4:60% • 2:86%. :
.The:rate impact of°the proposed.settlement on:the.various customer classes,can be.seen
below on Table 2.The typical bill amounts shown include the base rate charge,fuel charges, and
all applicable riders: : : . . . • .•
•Table.2 .
Comparison of Average Monthly Bills for Entergy Texa.s;.Inc. •
•
Customer Class Typical Usage Entergy • Entergy Proposed
• Present Rates • Proposed Settlement Rates
•
Rates.•• .
Residential • 7.000 kWh • $140.81 $154.31 .• .$147.16
'Srriall General Service :1000 kWh • $135.97 $142:48 $$37,50
General Service 50kW • • $1,458:52 $1,532.86 $1;483:24
• 12,775 kWh. ' .
Large General Service. 1000 kW • $38;055.87 $39,480.20 $38,329.1:6
401,500 kWh
Industrial Service • 10,000 kW $347;283.54 $362,469.30 $352,188.66
5,840,000
kWh
The average residential customer (using 1000 kWh per month) is expected to see an
increase of approximately$6.35 per month, or 4.51%over current rates.
Given the above,I am recommending that Cities approve the settlement as detailed above.
I have attached a rate'ordinance for your consideration.In my opinion,a settlement on the terms I
discussed above will provide economic benefits to customers versus continued litigation of this
,..�. matter.
. CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
6
•
In'terms of timeline, we are asking each City to make a final decision at its next
available meeting. If your City does not take action regarding the proposed settlement,we will
assume your City remains unopposed to the settlement Please forward passed ordinances to us at
molly@ma.yhallvandervoort.coro.and'cls nlawtOnlawfirra@gmail.com.
If you have any questions or need any further information,please feel free to call.
•
Sincerely,
Is/Daniel J.Lawton
LJ•
CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
7
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CERT IS SCAT OF CITY CLERK
THE UNDERSIGNED HEREBY CERI'W[ES that:
1. On May 8, 2023, the City Council (the "Governing Body") of the City of
Nederland, Texas (the "City"), convened in regular session, open to the public, at City Hall,207
N. 12th Street,Nederland,Texas 77627. A roll call was taken of the duly constituted members of
the Governing Body being as follows:
Don Albanese Mayor
Talmadge Austin. Councilmember
Sylvia Root Counciltnember
Randy Sonnier Couricilinember
• •
David Guiliot Councilmember
and all of such persons were present at the Meeting, except the following: , thus constituting a
quorum. Among other business considered at the Meeting, the attached ordinance (the
"Ordinance")entitled:
AN ORDINANCE AUTHORIZING THE ISSUANCE OF"CITY OF
NEDERLAND, TEXAS, COMBINATION TAX AND REVENUE
CER I'IFICA TES OF OBLIGATION, SERIES 2023r; AND
LEVYING AD VALOREM TAX; PLEDGING CERTAIN NET
. REVENUES; AUTHORIZING THE EXECUTION OF A
• TRANSFER AND PAYING AGENCY AGREEMENT, AND
OTHER MATTERS IN CONNECTION THEREWITH. •
was introduced and submitted to the Governing Body for passage arid adoption. After presentation
and discussion of the Ordinance, a motion was made and seconded that the Ordinance be finally
passed and adopted. The motion was carried by the following vote:
G. voted"For" 0 vOted"Against" 0 abstained
all as shown in the official Minutes of the Governing Body for the Meeting.
2. The attached Ordinance is a true and correct copy of the original on file in the
o ff icial records of the City;the duly qualified and acting members of the Governing Body on the
date of the Meeting are those persons shown above, and, according to the records of nay office,
each member of the Governing Body was given actual notice of the time,place, and purpose of
the Meeting and had actual notice that the Ordinance would be considered; and the Meeting and
deliberation of the aforesaid public business, including the subject of the Ordinance, was posted
and given in advance thereof in compliance with the provisions of Texas Government Code
chapter 551, as amended.
56827794.1
•
•
0-th
IN WITNESS WHEREOF, I. have signed my name officially 011 this 4 day of
117/ , .
(61:
city aegc
City of Nederland,Texas
•
411=0.1.%
56827794.1
Ordinance Number 2023-13
AN ORDINANCE
AUTHORIZING THE ISSUANCE OF
CITY OF NEDERLAND,TEXAS,
COMBINATION TAX AND REVENUE CER I ICA1'ES OF OBLIGATION,
SERIES 2023;AND LEVYING AN AD VALOREM TAX;
PLEDGING CERTAIN NET REVENUES;AUTHORIZING
THE.EXECUTION OF A TRANSFER AND
PAYING AGENCY AGREEMENT;
AND OTHER MATTERS IN CONNECTION THEREWITH
CITY OF NEDERLAND,TEXAS
ADOPTED May 8,2023
56827794.1
•
TABLE OF CONTENTS
Page
ARTICLE ONE
THE CER'110.CATES
SECTION 1.1 Authorization and Terris;Purpose. -2
SECTION 1.2 Redemption - . - 3
SECTION 1.3 Execution,Registration,.Delivery,and Dating - 5
SECTION 1.4 Registration,Transfer,•and Exchange - • - • 6
SECTION 1.5 Mutilated,Destroyed;Lost,and Stolen Certificates 7
. SECTION 1.6 Persons Deemed Owners - 7
SECTION 1.7 Cancellation • 8
SECTION 1.8 Book-Entry Only - 8
•
ARTICLE TWO
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 2.1 Definitions • - • • - 9
SECTION 2.2 Notices - •- 12
SECTION 2.3 Effect of Headi-ngs and.Table of Contents;Recitals 13
SECTION 2.4 Ordinance a Contract;Amendments 13
SECTION 2.5 Benefits of Ordinance - 13
SECTION 2.6 Repealer - . 14
SECTION 2.7 Governing Law - 14
SECTION 2.8 Severability - . . . 14
SECTION 2.9 Public.Meeting - - 14
SECTION 2.10 Authority of Officers 14
ARTICLE THREE
•
FORMS
SECTION 3.1 Forms Generally .
. 15
SECTION 3.2 Form of Definitive Certificate _ 16
SECTION 3.3 Form of Registration Certificate of Comptroller of Public Accounts 21
SECTION 3.4 Form of Certificate of Paying Agent . 21
SECTION 3.5 Form.of Assignment . 22
SECTION 3.6 Form of Initial Certificate- 22
SECTION 3.7 Tnsurance Legend 23
ARTICLE FOUR
TAXES,REVENUES,AND FUNDS;INVESTMENTS
SECTION 4.1 Certificate Fund • _ 24
SECTION 4.2 Deposits to Certificate Fund;Excess Certificate Proceeds 24
SECTION 4.3 System Account - _ 24
SECTION 4.4 Construction Accounts- - _ 25
SECTION 4.5 Investments and Security For Funds _ 25
SECTION 4.6 Tax Levy _ 25
56827794.1 i
TABLE OF CONTENTS
Page
SECTION 4.7 Net Revenues 26
SECTION 4.8 Issuance ofAdditional Obligations 27
ARTICLE FIVE
COVENANTS
SECTION 5.1 To Mairitain Agency • • 28
SECTION 5.2 To Maintain and Operate the System and Insure Property • 28
SECTION 5.3 Rates and Charges 29
SECTION 5.4 Records.and Accounts,Annual Audit 29
SECTION 5.5 Special Covenants • • 29
SECTION 5.6 Covenants to Maintain Tax-Exempt Status 30
SECTION 5.7 Remedies in Event of Default 33
ARTICLE SIX
DE1 ASANCE
SECTION 6.1 Discharge of Obligations 34
ARTICLE SEVEN
SALE
•
SECTION 7.1 Sale of the Certificates 36
SECTION 7.2 Payment of Costs of Issuance;Engagement of Bond Counsel 36
SECTION 7.3 Official Statement 36
ARTICLE EIGHT
CONTINUING DISCLOSURE UNDERTAKING
SECTION 8.1 Definitions • 37
SECTION 8.2 Updated Tnformatioli and Data •
37
SECTION 8.3 Material Event Notices 38
SECTION 8.4 Limitations,Disclaimers, and Amendments 39
EXHIBIT A—ANNUAL FINANCIAL INFORMATION _....A-1
56827794.1 11
•
AN ORDINANCE
[11AUTHORIZING THE ISSUANCE OF
CITY OF`•NEDERLAND, 1EXAS,
COMBINATION TAX AND REVENUE CERni,ICATES OF OBLIGATION,
SERIES 2023;.AND LEVYING AN AD VALOREM TAX;
PLEDGING CERTAIN NET REVENUES;AUTHORIZING
THE EXECUTION.OF A TRANSFER AND
.PAYING AGENCY.AGREEMENT;
AND OTHER MATTERS IN.CONNECTION THEREWITH
•
RECITALS
•
1. The City Council (the "Governing Body") of the.City of-Nederland, Texas (the
"Issuer"), a home rule city, has givennotice of its intent to issue certificates of obligation (the
"Certificates") in the maximum principal amount.not to exceed $6,000,000 for the purpose of
paying contractual obligations to fund study, design, acquisition, construction, installation,
equipping,renovation,extension,and improvement of.(1)streets and for the purchase of materials,
supplies,machinery.,land, and rights-of-way related thereto, (2) drainage and detention facilities,
and for the purchase of Materials,supplies,machinery,land,and rights-of-way related thereto;and
(3) certain other costs related and incidental thereto and the issuance costs of the Certificates: The
notice was published once aweek for two consecutive weeks in a newspaper of general circulation
MIRA
in the Issuer,the first publication being before and not less than 45-days prior to the tentative date
stated in the notice for the passage of this ordinance..
2. No petition signed by at least 5%'of the qualified electors of the Issuer protesting
the issuance of the Certificates has been presented to or filed with the City Clerk of the Issuer prior
to the date.set in such notice for passage of this Ordinance,nor has any such petition been filed as
of this date.
•
3. The Governing Body has found and determined that $5,000,000 in aggregate
principal amount of the Certificates described in such notice should now be issued and sold, and
has adopted this ordinance authorizing issuance of such Certificates.
4. It is in the Issuer's best interest to issue the certificate of obligations under the terms
described herein.
NOW,THEREFORE,BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
NEDERLAND, 1'hXAS,THAT:
56827794.1 1
•
ARTICLE ONE
THE CERVI ICAIES
SECTION 1.1 Authorization and Terrns;Purpose.
•
A. Authorization, Title, Principal Amount, and Purpose. The Certificates are hereby
authorized to be issued in the aggregate principal amount.of $5,000,000, and are entitled the
Issuer's "COMBINATION TAX AND REVENUE CER4FTCA.(ES OF OBLIGATION,
SERIES 2023",to pay contractual obligations incurred to make permanent public improvements
and for other public purposes all as stated in Recital 1 hereto,pursuant to the authority conferred
by and in conformity with the laws of the State..of Texas,particularly Texas Governm-ent Code
section 1502.052, and the Certificate of Obligation Act of 1971, Texas.Local Government Code
sections 271.041 through 271.064, each as now in effect. The.Certificates have a Dated Date of
June 1,.2023 (which is'the"Dated Date"of the•Certificates and to be inserted below"Dated Date"
immediately below the title thereof). ` - •
B. Denominations, Maturities, Rates of Interest. The Stated Maturities of the
Certificates are September 1 of the years and the aggregate principal amounts set forth below in
this Subsection, and interest on the Certificates of each Stated Maturity accrues from sthe date of
delivery(anticipated June 8,2023,the"Delivery Date"),or the most recent Interest Payment Date
to which interest has been paid or duly provided for, until such Certificates are paid or due
provision therefor is made at or after the Maturity thereof,at the per annum rates set forth opposite
such Stated Maturity below, calculated on:the basis of a 360-day year of twelve.30-day Months
and payable semiannually•on each September 1 and March 1 commencing September.1, 2023:
.Year of Principal Interest Year of Principal Interest
Stated Maturity Amount Rate Stated Maturity Amount Rate
2024 $335,000 % 2032. $335,000
2025 335,000 2033 335,000
2026 335,000 2034 330,000
2027 335,000 2035 330,000
2028 335,000 2036 330;000
2029 335,000 2037 330,000
2030 335,000 2038 330;000
2031 335,000
C. Payment. The principal and Redemption Price of the Certificates is payable upon
surrender,and the interest on the Certificates is payable,at the corporate trust Office of BOKF,NA
(the`PayingAgent"),in Dallas,Texas,or at such other city as designated by the Issuer upon Notice
to the Registered Owners. Such place is herein referred to as the"Place of-Payment".
The Issuer shall transfer the principal and Redemption Price of the Certificates to the
Paying Agent on or prior to the date it is due.
If the specified date for any payment of principal (or Redemption Price) of or interest on
the Certificates is a Saturday, Sunday,or legal holiday or equivalent(other than a moratorium)for
56827794.1 2
ti
•
banking institutions generally in the city of the Place of Payment, such payment may be made on
the next succeeding day which is not one of the foregoing days without additional interest and with
the same force and effect as if made on the specified date for such payment.
D. Payment of Interest,: Interest Rights Preserved. Interest on any Certificate is
payable to the Registered Owner thereof as of the Record Date and is payable(i)by check sent by
United States Mail, first-class postage prepaid,'by the:Paying Agent, to the address of the
Registered Owner appearing in the Security Register, or(ii)by such other method acceptable to
the Paying Agent requested in writing by the Registered Owner at the Registered Owner's risk and
expense.'
•
. In the event of a non-payment of interest on a scheduled payment date, and for 10 days
thereafter; a new record date for such interest payment (a "Special.Record Date") will be
established by the Paying Agent,if and when funds for the payment of such interest have been
received from the Issuer: Notice of the Special Record Date and of the scheduled payment date of
the Past due interest.("Special Payment Date", which shall be 15 days after the Special Record
Date) shall be sent at least five business days prior to the Special Record Date by United States
mail,first class postage prepaid,to the address of each Registered Owner of a Certificateappearing
on the registration books of the Paying Agent at the close of business on the last business day next
preceding the date of mailing of such notice. Notice of the proposed payment'Of such Defaulted
Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted
--- Interest must be paid to the Persons in whose names the Certificates (or their respective
Predecessor Certificates) are registered on such Special Record Date •.
E. Legal Tender. The principal or Redemption Price of and interest on the Certificates
is payable in any coin or currency of the United States of America which at the time of payment
is'legal tender for the payment Of public and private debts,without exchange or collection charges
to the Registered Owner.
SECTION 1.2 Redemption.
A. Optional and Mandatory Redemption.The Certificates are subject to redemption at
the option of the Issuer and by mandatory redemption prior to Stated Maturity on the Redemption
Dates and Redemption Prices as provided in the Form of Certificate in Section 3.2.
B. Exercise of Redemption Option. At least 45 days prior to a date of redemption(the
"Redemption Date")(unless a shorter notification period shall be satisfactory to the Paying Agent),
the Issuer shall notify the Paying Agent of its decision.to exercise the right to optionally redeem
Certificates, the principal amount of each Stated Maturity to be redeemed, and the Redemption
Date. The decision Of the Issuer to exercise the right to redeem Certificate shall be entered in the
minutes of the Governing Body.
C. Selection of Certificates for Redemption. If less than all Outstanding Certificates
--� of the same Stated Maturity are to be redeemed on a Redemption Date, the Paying Agent shall
select at random and by lot the Certificates to be redeemed, provided that if less than the entire
principal amount of a Certificate is to be redeemed,the Paying Agent shall treat such Certificate
56827794.1 3
then subject to redemption as representing the number of Certificates Outstanding which is
obtained by dividing the principal amount of such Certificate by$5;000,
D. Notice of Redemption. Not less than 30 days prior to a Redemption Date,the Issuer
shall cause a notice of redemption to be sent by United States Mail;first-class postage prepaid,in
the name of the Issuer and at the Issuer's expense, by the Paying Agent to each Holder of a
Certificate to be redeemed in whole or in part at the address of the Holder appearing on the Security
Register at the close of business on the business day next preceding.the date of mailing such notice,
and.any notice of redemption so mailed shall be conclusively presumed to have been duly given
irrespective of whetherreceived by the Holder. All notices of redemption shall state:
(1) the Redemption Date,
(2) the redemption price(the"Redemption Price"),
(3) the principal amount and identification (by ISsiuer and Certificate name,
CUSIP number, Stated.Maturity, interest rate, Dated Date, and, in the case of partial
redemption,the Certificate numbers and respective principal amounts)of Certificates to be
redeemed,
(4) that on the Redemption Date the Redemption 'Price of each of the
Certificates to be redeemed will become due and payable and that interest thereon shall
cease to accrue from and after said date, and
(5) that the.Certificates to be redeemed are to be surrendered for payment of the --
Redemption Price at the Place of Payment, and the address of such Place of Payment.
E. Limitation on Transfer/Exchange of Certificates. Neither the Issuer not the Paying
Agent is required to transfer or exchange any Certificates selected for redemption within 45 days
ofthe Redemption Date,provided however,such.limitation,shall not be applicable to an exchange
by the Holder of the unredeemed balance of a Certificate which is subject to partial redemption.
F. Payment of the Redemption Price. If a Certificate is subject by its terms to
redemption and has been called for redemption and notice of redemption thereof has been duly
given as hereinabove provided, such Certificate(or the principal amount thereof to be redeemed)
so scalled for redemption shall become due and payable, and if money sufficient for the payment
of such Certificates (or of the principal amount thereof to be redeemed) at the then applicable
Redemption Price is held for the purpose of such payment by the Paying Agent, then on the
• Redemption Date, interest on the'Certificate (or the principal amount thereof to be redeemed)
called for redemption shall cease to accrue and such Certificates shall no longer be deemed
Outstanding hereunder.
If-any Certificate called for redemption shall not be so paid upon surrender thereof for
redemption,the same shall continue to bear interest from the Redemption Date therefore at the rate
borne by such Certificates.
56827794.1 4
SECTION 1.3 Execution, Registration, Delivery, and Dating.
The Mayor of the Issuer shall execute the Certificates on behalf of the Issuer and such
signature shall be attested by the City Clerk Of the Issuer. The signature Of either of said officers
on the Certificates may be:man sl or facsimile. Certificates bearing the manual.or facsimile
signatures of individuals who were at the time the proper officers of the:Issuer bind the Issuer,
notwithstanding that such individ»ais or either of them cease to hold such offices prior'to the
certification and delivery of such Certificates. The.seal of the Issuer may be reproduced,affixed,
or impressedthereon but isnot required except as otherwise required under Texas law.
•
The Mayor of the Issuer is authorized and directed to execute and the City Clerk of the
Issuer to attest the Initial Certificates in the name of Cede&Co. The Mayor of the Issuer is further
authorized and directed to submit the Initial Certificates, together :with the record of the
proceedings authorizing the:issuance.thereof and any and'all other necessary orders, Certificates,
and records, to the..Attorney General.of Texas for.approval: _ After the Attorney General.has
approved such Certificates,the Mayor of the Issuer shall cause such Certificates to be delivered to
the:Comptroller of Public Accounts of'the State'of Texas for registration. If requested,by the
Attorney General or its representatives,or if otherwise deemed necessary to properly evidence the
intent of the Issuer in the adoption of this Ordinance, the Mayor or Mayor the.Maycit.or Mayor pro tem of the.Issuer
may make such ministerial changes in the written text of this Ordinance.as such officer determines
are consistent with the intent and purposes of this Ordinance,which determination shall be*final. .
...., Upon registration of the,Certificates, the Comptroller is authorized and directed to deliver the
Certificates in accordance with instructions of the Mayor of the Issuer. At any time thereafter the
Issuer may deliver such Certificates to the PayingAgent together with definitive Certificates to be
issued in exchange therefor,.and the Paying Agent is directed,within not more than five business
day,, following receipt, of instructions from the payee named therein designating the Persons,
Stated Maturities, and denominations to and in which such Certificates are to be transferred,
register and.deliver such definitive.Certificates as provided in such instructions. The officers.or
acting officers of the Governing Body are authorized to 'execute and deliver on behalf of the
Governing Body such certificates and instruments as may be' necessary to accomplish or in
furtherance of the delivery of the Certificates to and payment therefor by the Purchasers.
All Certificates registered and delivered by the Paying Agent hereunder are to be dated by
the Paying Agent the date of their registration.
No Certificate is entitled to any right or_benefit under this Ordinance, or is valid or
obligatory for any purpose, unless there appears on such Certificate either a certificate of
registration substantially in the form provided in Section 3.3, executed by the Comptroller of
Public Accounts of the State of Texas or his duly authorized agent by manual signature, or a
certificate.of registration substantially in the form in Section 3.4;executed by the Paying
Agent by manual signature,and either such certificate upon any Certificate is conclusive evidence,
and the Only evidence,that such Certificate has been duly certified or registered and delivered.
"'"" Notwithstanding anything herein, the Initial Certificates authorized for delivery to the
initial purchasers shall have printed thereon both the Registration Certificates Of Comptroller of
Public Accounts appearing in Section 3.3 and the Certificate of Paying Agent appearing in
56827794.1 5
Section 3.4, and both such certifications shall be required to be manually executed in connection
with the initial delivery of the Initial'Certificates to the initial purchasers,and both such certificates
appearing on the Initial Certificates, duly signed, shall be conclusive evidence that such Initial —'
Certificates have been duly certified,registered and delivered.
SECTION 1.4 Registration, 'Transfer, and Exchange.
. The Issuer shall cause to be kept at the Place of Payment a register(herein referred to as
the"Security Register")in which,subject to such reasonable regulations as the Issuer or the Paying
Agent may prescribe,the Paying Agent shall provide for the registration of the Certificates and of
transfers of the.Certificates as herein provided.
Upon surrender for transfer of.any Certificate at the Place of Payment, the Issuer shall
execute,and the Paying Agent shall register and deliver,in the name of the designated transferee
or transferees, one or more.new Certificates of the same Stated Maturity, of'any authorized
denominations, 'and of a like 'aggregate. principal: amount. New Certificates registered, and
delivered in an exchange or transfer will be delivered by the Paying Agent at the Place of Payment
or sent by United States mail,at the.Registered Owner's written request,risk,and.expense. •
At the option of the Registered Owner,Certificates may be exchanged for other Certificates
Of the same. Stated Maturity, of any authorized denominations, and of.like aggregate principal
amount, upon surrender.of the Certificates to be'exchanged at the Place of Payment. Whenever
any Certificates are so surrendered for exchange,the Issuer shall.execute,and the.Paying Agent
shall register and deliver,the Certificates which the Registered Owner of Certificates making the
exchange is entitled to receive.
All Certificates issued in any transfef or exchange of Certificates shall be delivered to the
Registered Owners at the principal corporate trust office of the Paying Agent or sent by United
States Mail,first class, postage prepaid to the Registered Owners, and, upon the registration and
delivery thereof, the sarrie shall be the 'valid obligations of the Issuer; evidencing the same
obligation to pay, and entitled to the same benefits under this.Ordinance, as the Certificates
surrendered in such transfer or exchange.
Every Certificate presented or surrendered for transfer or exchange must be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to the Paying Agent
duly executed,by the Registered Owner thereof or his attorney duly authorized in writing.
No service charge may be made to the Registered Owner for any registration,transfer, or
exchange of Certificates, but the Issuer or the Paying Agent may require payment of'a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection with
any transfer or exchange of Certificates.
Neither the Issuer nor the Paying Agent is required (1) to transfer or exchange any
Certificate during a period beginning 45 days prior to a Redemption Date hereunder.and ending at
the close of business on the day of mailing of a notice of redemption or(2) thereafter to transfer
or exchange in whole or in part*any Certificate so selected for redemption provided,however,such
56827794.1 6
limitation or transfer will not be applicable to an exchange by the Registered Owner of the incalled
balance of a Certificate.
SECTION 1.5 Mutilated, Destroyed,.Lost, and Stolen Certificates.
•
If(1) any mutilated Certificate is surrendered to the Paying Agent, or the Issuer and the
Paying Agent receive evidence to their satisfaction of the destruction, loss; or theft of any
Certificate,and(2)there is delivered to the Issuer and the Paying Agent such security or indemnity
as they require to save each of them harmless,then, in the absence of_notice to the Issuer or the
Paying Agent that such'Certificate has been acquired by a bona fide purchaser,.the Issuer shall
execute and upon its request the Paying Agent shall register and deliver,in exchange*for or in lieu
of any such mutilated, destroyed, lost,..or stolen Certificate, a new Certificate.of the same Stated
Maturity, and of like tenor and principal amount, bearing a number not contemporaneously
outstanding. _
in case any such Mutilated, destroyed,lost,Or stolen Certificate has become or.is about to
become due and payable,the Issuer in'its discretion may pay such Certificate instead of issuing a
new Certificate.
•
Upon the issuance of any new Certificate under this Section,the Issuer or the Paying Agent
may require the payment.Of a sum sufficient to cover any'tax or other governmental charge that
,....,, may be imposed in relation thereto and any other expenses connected therewith.
•
Every new Certificate issued pursuant to this Section in lieu'ofany mutilated, destroyed,
. lost, or stolen Certificate constitutes an original additional contractual obligation-of-the e Issuer,
whether or not the mutilated, destroyed, lost, or stolen Certificate is at any time enforceable by
anyone,and the new Certificate is entitledto all the benefits of this Ordinance equally and ratably
with all other Outstanding.Certificates.
The provisions of this Section are exclusive and preclude (to the extent lawful). all other
rig)its and remedies with.respect to the replacement and payment of mutilated, destroyed, lost, or
stolen Certificates.
SECTION 1.6 Persons Deemed Owners.
The Issuer and the Paying Agent, and any agent of either,may treat the Registered Owner
as the owner of a Certificate for purposes of receiving payment of principal and kedemption Price
of and (subject to Section, 1.1) interest on the Certificate and for all other purposes whatsoever,
whether or not the Certificate is due or overdue, and neither the Issuer Or the Paying Agent, or
any agent of either, is affected by notice to the contrary. All payments Made to or duly provided
for the Bondholder in accordance withthis Ordinance will be valid and effectual and will discharge
the liability of the Issuer to the extent of the sums paid in or duly provided for.
SECTION 1.7 Cancellation.
All Certificates surrendered for payment,redemption,transfer, exchange, or replacement,
if surrendered to the Paying Agent, are to be promptly canceled by it and, if surrendered to the
56827794.1 7
Issuer, are to be delivered to the Paying Agent and, if not already canceled, are to promptly be
canceled by the Paying Agent. The.Issuer may at.any time deliver to the Paying.Agent for
cancellation any Certificates previously certified and delivered which the Issuer acquires in any
manner whatsoever; and all Certificates so delivered are to be promptly canceled by.the Paying
Agent. No Certificate-may be certified in lieu.of or in exchange for any Certificate canceled as
provided inthis Section,except as expressly provided by this Ordinance. All-canceled Certificates
held by the Paying Agent are to be disposed of in accordance with the standard docnm ent retention
• policies of the Issuer.
SECTION 1.8 Book-Entry Only.
Notwithstanding the provisions contained in Sections 1.3, 1.4, and 1.5 relating to the
payment, redemption.and transfer/exchange of the Certificates, the.Issuer hereby approves and
authorizes the use of "Book-Enfiry Only'' securities clearance, settlement and.transfer system
provided by The Depository Trust Company("DTC"),a limited purpose trust company organized
under the laws of the.State of New York,in.accordance with DTC's requirements and procedures,
and.authorizes the Issuer and the Paying Agent to take such as actions gas are necessary to qualify
the-Certificates with DTC and to deliver the Certificates through.DTC.
Pursuant to the rules and procedures of DTC now.in effect; the Certificates shall be
deposited with DTC(or with the Paying Agent on behalf of DTC)who shall hold said Certificates
for its participants (the "DTC Participants"). While the Certificates are so'held, the Registered
Owner of the Certificates on the Security Register for all purposes,including payment and notices,
shall be Cede&Co.,as nominee of DTC;notwithstanding the ownership of each actual purchaser
or owner of each:Certificate(the "Beneficial Owners")being recorded in the records of DTC and
DTC Participants.
If DTC determines to discontiinue serving as securities depository-for the Certificates or
otherwise ceases to provide. book-entry clearance and settlement'of.securities transactions in
general or the Issuer determines-that DTC is incapable of properly discharging its 'duties as
securities depository for the Certificates, the Issuer covenants and agrees with the Registered
Owners of the Certificates to cause Certificates to be printed in definitive form and provide for the
certificated certificates to be issued and delivered to DTC Participants and Beneficial Owners, as
the case may be. Thereafter,the Certificates in.definitive form shall be assigned,transferred,and
exchanged on the Security Register maintained by the Paying Agent and payment of such
Certificates shall be made in accordance with the provisions of Sections 1.3, 1.4, and 1.5.
56827794.1 8
OPER
ARTICLE TWO
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
•
SECTION 2.1 Definitions.
For all purposes of this Ordinance, except as otherwise expressly provided or unless the
context otherwise requires:
(1) The terms defined in this Section have the meanings assigned to them in
this Section.
(2) All terms defined herein include the plural as well as the singular.
(3) .All references in this Ordinance to designated "Articles", "Sections",
"Exhibits", and other subdivisions are to the designated Articles, Seotions, Exhibits, and
other subdivisions of this Ordinance asoriginally adopted.
(4) The words"herein", "hereof', and"hereunder"and other words of similar
import refer to this Ordinance as a whole and not to any particular Article,Section,Exhibit,
or other subdivision.
"Certificate.Fund" means the special fund of the Issuer created and established by the
provisions of Section 4.1.
•
"Certificates"means any obligation of the Issuer authorized to be issued by Article One,
whether initially delivered or issued in exchange for or upon transfer.or in lieu of any Predecessor
Certificate.
"Collection Date"means,for any year,the date that annual ad valorem taxes levied by the
Issuer in that year become delinquent.
"Debt Service Requirement"has the meaning stated in Section 4.6.
"Fiscal Year" means the annual financial accounting period for the Issuer as established
by the Issuer on or prior to the date of this Ordinance; provided, however, the Governing Body
may change such annual financial accounting period to end on another date if such change is found
and determined to be necessary for accounting purposes or is required by applicable law_
"Governing Body"means the City Council of the Issuer.
"Governmental Obligations" means (1) direct obligations of, or obligations the timely
payment of the principal of and interest on which are fully and unconditionally guaranteed by,the
United States of America,or(2)obligations authorized under Texas law at the time of deposit for
OMEN' discharge and final payment of governmental obligations which,at the time of deposit,have been
assigned ratings in the highest rating category by nationally—recognized investment rating firm,
56827794.1 9
but in the case of both Clauses(1)and(2)only if such obligations may not be called for redemption
prior to maturity.
"Gross Revenues" for any period means all revenue during such period in respect or on
account of the operation or ownership of the System, excluding refundable deposits, restricted
gifts, refunds for amounts advanced in aid of construction, and grants in aid of construction, but
including earnings and income derived from the investment or deposit of money in any special
fund or account (other than earnings on the Certificate Fund) created and established for the
payment or security of the Certificates.
"Interest Payment Date"means a date specified in the Certificates as a fixed date on which
an installment of interest thereon is due and payable.
"Issue Date"means the date on which Certificates are first registered and delivered to the
Purchasers in exchange for the purchase price therefor.
"Issuer"has the meaning stated in the Recitals.
"Maintenance and Operating Expenses" means all current expenses of operating and
maintaining the System not paid from the proceeds of the Certificates, including the cost of all
salaries, labor, materials, interest, repairs, and extensions necessary to provide efficient service,
and each proper item of expense,but only if;in the case of repairs and extensions,they are,in the
judgment of the Governing Body,necessary to keep the System in operation and render adequate
service to the Issuer and its residents, or respond to a physical accident or condition that would
otherwise impair the Certificates or Prior Obligations or Parity Obligations.
"Maturity"when used with respect to any Certificate means the date on which the principal
of such Certificate becomes due and payable as therein provided,whether at the Stated Maturity,
by call for redemption, or otherwise.
"Net Revenues" for any period means the Gross Revenues less the Maintenance and
Operating Expenses in.an amount not to exceed$1,000.
"Ordinance"means this Ordinance as finally passed and adopted by the Governing Body
or as it may from time to time be supplemented, modified, or amended in accordance with the
provisions hereof.
"Outstanding" when used with respect to Certificates means, as of the date of
determination, all Certificates theretofore issued and delivered under this Ordinance, except,
without duplication:
(1) Canceled Certificates: Certificates theretofore canceled by the Paying
Agent or delivered to the Paying Agent for cancellation;
(2) Gross Cash Defeasance: Certificates for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Paying Agent in
trust for the Registered Owner of such Certificates, provided that, if such Certificates are
56827794.1 10
to be redeemed,notice of such redemption has been duly given pursuant to this.Ordnance,
irrevocably provided for to the satisfaction of the Paying Agent, or waived;
(3) Replaced Certif sates: Certificates in exchange for or in'lieu of which other
Certificates have been registered and delivered pursuant to this Ordinance;
(4) Paid Missing Certificates: Certificates alleged to have been destroyed,lost,
or stolen which have been paid as provided in Section 1.5; and
•
.(5) Net'Cash Defeasance : Certificates for the payment of the:principal (or
Redemption Price) of and interest on which money of Governmental Obligations or both
are held by the Paying Agent_or other bank or trust company and with the,effect specified
in Section 6,1;provided, however,that in determining whether the Registered Owners of
the requisite principal amount of Certificates.Outstanding.have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder, Certificates.owned by the
Issuer or any other obligor.upon. the Certificates ..are disregarded and deemed not
Outstanding,'except that,in determining whether the Paying Agent is protected in relying
upon any such request, demand, 'authorization, direction,notice, consent, or waiver, only
Certificates which the Paying Agent knows to be so owned .are required to be so
disregarded.
"Parity Obligations" means the obligations of the Issuer now or hereafter issued with a
lien on Net Revenues on a parity with the lien on Net Revenues'granted the Certificates.
"Paying:Agent" means the corporation named as the "Paying Agent" herein until a
successor.Paying Agent becomes such.pursuant to the applicable provisions of this Ordinance,and
thereafter"Paying Agent"means such successor Paying Agent.
"Person"means any individual, corporation,partnership,joint venture, association,joint-
stock company, trust, unincorporated organization, or government or any agency or political
subdivision thereof.
"Place of Payment" means a corporate trust office of the Paying Agent in the State of
Texas, as established in Section 1.1.
"Predecessor Certificates" of any particular Certificate means every previous Certificate
evidencing all or a portion of the same debt as that evidenced'by such particular Certificate, and,
for purposes of This definition, any Certificate registered and delivered under Section 1_5 in lieu
of a mutilated, lost; destroyed, or stolen.Certificate is deemed to evidence the same debt as the
mutilated,lost, destroyed, or stolen'Certificate.
"Prior Obligations"means the obligations of the Issuer so defined in Section 4.'7.
...�. "Purchaser" means the initial purchaser or purchasers of the Certificates named in
Section 7.1 of this Ordinance.
56827794.1 11
"Redemption Date" means the date fixed for redemption of a Certificate pursuant to the
terms of this Ordinance.
"Redemption Price"means the price specified in the Form of Certificate in Section 3.2 as
the price at which a.Certificate may be redeemed-pursuant tithe terms of the Ordinance.
'Registered Owner" mean the registered owner, whose name appears in the Security
Register,for any Certificate.
"Regular Record Date" for the interest payable on any Interest Payment Date means the
last business day Of the Calendar inonth'next preceding such Interest Payment Date.
"Security Register"has the meaning stated in Section 1.4.
"Stated Maturity" when used.with respect to any Certificate means the-date specified in
such Certificate as the fixed date on which the principal of such Certificate is due and payable.
"Subordinate Lien Obligations" means any bonds, notes, warrants, certificates of
obligation, or any similar obligations.hereafter issued by the Issuer that are payable, in whole or
in part, from and equally and ratably secured by a lien on and pledge of the Net Revenues, such
pledge being subordinate and inferior to the lien on and pledge of Net Revenues to payment of the
Certificates.
"System"means all Of the Issuer's waterworks and sewer system,together with all future
extensions, improvements, and additions thereto and replacements thereof, excluding from the `-
foregoing,however,to the extent now or hereafter authorized or permitted by law,facilities-of any
kind which are declared by the Governing Body,prior to the acquisition or construction thereof by
the Issuer,not to be apart of the System and which are acquired or constructed by or on behalf of
the Issuer with the proceeds from the-issuance of"Special Facilities Obligations", which are
hereby defined as being special'revenue-obligations.of the Issuer which are not payable from Net
Revenues but which are payable from and secured by other liens on and pledges'of any revenues,
sources,or payments,not pledged to the payment of the Certificates:
SECTION 2.2 Notices.
Where this Ordinance provides for notice to Registered Owners of any event, such notice
is sufficiently given (unless otherwise herein expressly provided) if in writing and.mailed,first-
class postage prepaid, to each Registered Owner, at the address of such Registered Owner as it
appears in the Security Register. Neither the failure to mail such notice, nor'any defect in any
notice so mailed, to any particular Registered Owner affects the sufficiency'of such notice with
respect to allother.Registered Owners. Any notice so mailed shall be-conclusively presumed to
have been duly given, whether or not the Registered Owner receives such notice. Where this
Ordinance provides for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event with respect to which such notice is -✓--
given, and such waiver is the equivalent of such notice. Waivers of notice by Registered Owners
are to be filed with the Issuer, but such filing is not a condition precedent to the validity of any
action taken in reliance upon such waiver.
56827794.1 12
SECTION 2.3 Effect of Headings and?'able of Contents,-Recitals.
The section headings herein and in the Table of Contents are for convenience only and do
•
not affect the construction:hereof.
The Recitals contained in the preamble hereof are hereby found to be true, and such
Recitals are hereby made a part,,hereof for all purposes and are adopted as part of the judgment
and findings of the Governing Body.
SECTION 2.4 Ordinance a Contiaet;Amendments.
This Ordinance constitutes a contract with the Registered Owners entered into.upon the
initial purchase of the Certificates,:is binding on the Issuer and its successors and assigns Whether
or.not so expressed, and may not be amended or repealed by the Issuer so long as any Certificate
remains Outstanding except as.petnlitted in this Section.. . . .
•
The Issuer may, without the consent of or notice to any Registered Owner., from.time to
time and at any time,amend this Ordinance in any manner not detrimental to the interests of the
Registered Owners, including the curing of.any ambiguity, inconsistency, or formal defect or
omission herein or therein.In addition,the Issuer may,with the written consent of the Registered
Owners of a majority in aggregate principal amount of the Certificates then Outstanding'affected
thereby,amend,add to, or rescind any of the provisions of this Ordinance; provided that,without
the consent of the Registered Owners of all of the affected Outstanding Certificates,,no such
amendment, addition, or rescission,may (1)change the Stated Maturity of the Certificates or any
Interest Payment Date for an installment of interest thereon,reduce the principal amount thereof,
the Redemption Price therefor,or the rate of interest thereon;change the place or places. at,or•the
coin or.currency in, which any Certificate or the interest thereon is payable, or in any other way
modify the terms or sources of payment of the principal of or interest on the Certificates,'(2) give
any preference to any Certificate over any other Certificate, (3) modify any of the provisions of
the proviso to the definition of the term"Outstanding";or(4)modify any'of the provisions:of this
Section, except to increase the percentage..provided hereby or to provide that certain other
provisions of this Ordinance cannot be modified or waived without the consent of the Registered
Owner of each Certificate affected thereby,
Any consent to any amendment hereof by the Registered Owner of any Certificate binds
every future Registered Owner of the same-Certificate and the Registered Owner of every
Certificate issued upon transfer or in lieu thereof or in exchange therefor, in respect of anything
done or suffered to be done by the Issuer in reliance thereon,whether or not notation of such action
is made upon such Certificate.
SECTION 2.5 Benefits of Ordinance.
Nothing in this Ordinance,expressed or implied,is intended or may be construed to confer
/MN% upon any Person(other than the Issuer and Registered Owners) any right,remedy, or claim, legal
or equitable,under or by reason of this Ordinance or any provision hereof,this Ordinance and all
its provisions being intended to be and being for the sole and exclusive benefit of the Issuer and
the Registered Owners.
56827794.1 13
•
•
SECTION 2.6 Repealer.
All orders, ordinances, and resolutions, or parts thereof, which are in conflict or
inconsistent with any provision of this Ordinance are hereby repealed and declared to be
inapplicable to the extent of such conflict, and the provisions of this Ordinance are•controlling as
to the matters prescribed herein.
•
SECTION 2.7 Governing Law. .
.This Ordinance:is to be construed in accordance'with and governed by the laws of the State
of Texas.and the United States of America
SECTION 2.8 Severability
•
If any provision of this Ordinance or the application thereofto any Person or circumstance
is held to be invalid,illegal,or unenforceable,.the remainder of this Ordinance and the application
of such provision to other Persons and circumstances is nevertheless valid, legal, and enforceable
and the Governing Body hereby declares that this Ordinance would have been enacted without
such invalid provision or application.
SECTION 2.9 Public Meeting.
The Governing.Body.officially finds, determines, and declares that notice of the adoption
of this Ordinance was posted as.required by law at a location within the Issuer in a place'readily
accessible to the general public at all times for at least 72 hours preceding the scheduled.time of
the meetings. at which this Ordinance is read and approved;that such meetings,were open to the
public; and that public notice of the time,.place, and purpose of such meetings was given as
required by Texas Government Code chapter 551, as amended.
SECTION 2.10 Authority of Officers.
The Mayor,the Mayor Pro Tem,the City Clerk or any assistant clerk,Manager,Attorney,
or Director of Finance of the Issuer, or any of them,'are authorized to evidence adoption of this
Ordinance and to do any and all things proper and necessary to carry out the intent hereof.
•
56827794.1 14
IMIRM
ARTICLE THREE
. .
FORMS •
SECTION 3.1 Forins Generally. •
•
•
.. . .
The Certificates,the Registration Certificate ofthe CoMptroller of.Public Accounts of the
State of Texas to be reproduced on the initial Certificates,the Registration Certificate of the Paying
Agent to be reproduced on subsequently delivered Certificates, and the form of Assignment to be
reproduced on each of the Certificates are to be substantially in the.forms set forth.in this Article
with.such appropriate insertions,omissions,substitutions,and Other.variations as are permitted or
required by this Ordinance,and the Certificates may have such letters,numbers, or other marks of
identification(inCluclipg identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the AMeriCan Bankers Association) *and such legends and
endorsements(including any reproduction of an opinion ofCounsel or notice Of-iush.ranbe)thereon
as may.. , .consistently herewith, be determin. ed by the officers executing such Certificates as
evidenced by their execution thereof: Any portion of the text of any Certificates may be set forth
on the reVersethereof,With an appropriate reference thereto on the face of the Certificate.
• • • -
: .
The Certificates may be printed, lithographed, .'engraved, typewritten, photocopied, or
produced by any combination of these methods,or prodUced in any*other manner;all as.determined
by the officers executing such Certificates as evidenced by their execution thereof. The initial
Certificates to be delivered to the Attorney.General may be issued either (i) as a single fully
registered certificate in the total principal amount of the Certificates with principal installments
to become due and payable asprovidedin Section 1.1 hereof and numbered consecutively T-1 and
upward, or (ii)as fully registered certificates, being.one note for each stated maturity in the
applicable principal amount and, denomination and tO be numbered consecutively from. T-1 and
upward(hereinafter called the"Initial Certificate(s)").
•
Ilhe remainder of this page intentionally left blank.]
•
56827794.1 15
•
SECTION 3.2 Form of Definitive Certificate.
•
Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation(`STC"),to the Issuer,or its agent for registration•of transfer,
exchange, or payment, and.any certificate issued is registered.in the name of Cede& Co: or in
such other name as is requested.by an authorized representative of DTC(and any payment is made
to Cede& Co..or•to such other entity as is requested by, an.authorized representative of DTC),
ANY TRANSFER,PLEDGE, OR OTHERUSE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,•Cede
has au interest herein. •• •
•
REGIS'1'.ERED REGISTERED
NO. $
United States of America
State of Texas
CITY OF NEDERLAND,'TEXAS
COMBINATION TAX AND REVENUE CER1IFICA'1E OF OBLIGATION;
SERIES 2023 ••
Interest Rate: Dated Date: Stated Maturity: CUSIP NO:
• June 1,2023
REGISTERED OWNER: .•
•
•
PRINCIPAL AMOUNT: DOLLARS
The City of Nederland,Texas.(hereinafter together with its successors referred to as the
"Issuer");abbdy politic and municipal corporation duly organized andexisting Under.and by virtue
of the laws of the State of Texas,,for'value received, hereby promises to pay, but solely to and
from the extent of the sources described herein, to the Registered Owner specified'above or
registered assigns, on the Stated Maturity,'specified above,the Principal Amountspecified above,
and to pay interest thereon to the Person herein specified from.the.Delivery Date(anticipated June
8, 2023), Or from.the most recent Interest Payment Date to which interest has been paid or duly
provided for,until such.principal is paid or duly provided for..oil or after siich'Stated Maturity or
any earlier Redemption Date,semiannually on Septeinber 1 and March 1'in each year commencing
September 1, 2023,.at the per annum Interest Rate specified,above, computed on the basis of a
360.-day year of twelve 30-day months and, except as otherwise permitted by the Ordinance
hereinafter referred to,•to make:the payments to the United.States of America in the amounts and
on the'date therein described when due. Principal of.this Certificate is payable: at its Stated
Maturity to the Registered Owner hereof; upon presentation and surrender, at the principal
payment office of the Paying Agent executing the Registration Certificate of Paying Agent (�
appearing hereon,which shall initially be BOKF,NA, or its successor in its designated place of
payment,initially Dallas,Texas (the"Place ofPayment").
56827794.1 16
• •
The interest so payable on, and paid or duly provided for on or within 10 days after, any
Interest Payment.Date will be paid to the Person in whosename this Certificate'(or one or more
Predecessor Certificates evidencing the same debt) is registered at the close of business on the
Regular Record Date for such interest,which is the last business.day of the calendar month next
preceding such Interest Payment Date. Any such interest not so paid or duly.provided for ceases
to be payable the Personin whose name such Certificate is registered on such.Regular Record
Date,.and shall be paid to the Person in whose name this Certificate (or one Cr.more Predecessor
Certificates)_is registered at.the close of business on'a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Paying Agent,notice whereof being sent to"the Registered
•Owners of the Certificates not less than:five business days prior:to"the Special Record Date. •All
such interest is payable.at the Place of Payment. Such,interest is.payable (1) by check or draft
mailed to.the address of the Registered Owner as the same appears on the Security Register of the
Issuer kept.by the Paying Agent, as Registrar, or. (2) in. accordance with other`customary
arrangements.acceptable to the.Paying Agent made by the Registered Owner: The principal or
Redemption Price'Of this Certificate is:payable at the Place of.Payment upon presentation and
surrender of this.certificate. .All such payments must be.Made in such'Coin or currency of the
United States of America as at the time of payment is legal tender for payment of public and private
debts.
•
If the specified date. for any such payment is a Saturday, Sunday, or legal holiday or
equivalent (other than a moratoriimi) for banking institutions generally in the•city in which the
Place of Payment is located, such payment:may be made on the next succeedingday which is not
one of the foregoing days without additional interest and With the same force and effect as if made
on the specified date for'such payment..-
This Certificate'is.one of the series:specified in its title issued in the aggregate principal
amount of.$5,000,000 (the "Cert ficates") pursuant to an Ordinance adopted by the governing
body of.the Issuer (the "Ordinance"), to pay contractual obligations of the Issuer incurred
constructionof public works, and purchase of materials, supplies; equipment, machinery,
buildings, land, and rights-of-way'for authorized needs and purposes,to wit Issuer-to fund study,
design,acquisition,construction,equipping,renovation,extension,and improvement of(1)streets
and for the purchase of materials, supplies,machinery,land,and rights-of-Way related thereto,.(2)
drainage and detention facilities, and for the"purchase of materials,supplies,machinery,land, and
rights-of-way related thereto; and (3) certain other costs related and incidental thereto and the
issuance costs ofthe Certificates,under and in strict conformity withthe laws of the State of Texas,
particularly Texas 1502.052 section and the Certificate of Obligation, Act of 1971, as amended,
Texas Local Government Code sections 271.041 through 271.063, as amended.
The Certificates with a Stated Maturity on or after September 1,2633,may be redeemed
at the option of the Issuer,on notice mailed to.the Registered Owners thereof not less than 30 days
prior to the Redemption Date as provided inthe Ordinance,as a whole or from time to tune in part
in integral multiples of$5,000 principal on any date prior to their Stated Maturity,but not before
..�, September 1,2032,upon payment of the Redemption Price,which is the principal amount thereof
together with interest, if any, accrued from the most recent Interest Payment Date to the
Redemption Date. The optional redemption of certificates may be conditioned upon issuance on
•
56827794.1 17
or prior to the redemption date of one or more series of refunding bonds or obligations to pay the
redemption price of the Certificates to be redeemed on or prior to the redemption date.
•
Certificates of a denomination larger than"$5;000 may be redeemed input(in,and leaving
unredeemed,an authorized denomination)and upon any partial.redemption of any such Certificate
the same must be surrendered in exchange for one or more new Certificates of the same Stated
Maturity-in authorized denominations for.the niiredeerned portion of principal. Certificates (or
portions thereof) for whose redemption and payment provision is made in accordance with the
Ordinance cease to bear.interest from and after the Redemption Date.
If this Certificate (or any'portion of the-principal sum hereof) has been duly•called for
redemption and notice of such redemption duly..given, then upon such redemption.date this
Certificate(or the portion of the principal slim hereof to be redeemed)is due and payable, and,if
money for the payment of the redemption price and the interest accrued on the principal amount
to be redeemed to the date of redemption is held for the purpose of such.payment,by the.Paying
Agent,interest ceases to.accrue and to be payable_hereon from and after the redemption date.on
the principal amount hereof to be redeemed.
The Certificates Of this series are payable from the proceeds of an ad valorem tax levied
upon all taxable property within the Issuer,within the limitations prescribed by law,and are further
payable from and secured by.a lien on and•pledge of the Net Revenues derived from the Operation
of the Issuer's waterworks.and sanitary.sewer system(the"System") in an amount not to exceed
$1,000 as identified`and defined in the Ordinance:.In the Ordinance;the Issuer reserves and retains
the right to issue additional obligations prior and. superior.in right to, on a .parity with, or .._
subordinate to the Certificates with respect to the lien on Net..Revenues, and the Certificates are
issued with the pledge ofNet Revenues.subordinate to the pledge of Net Revenues to the Is'suer's
other outstaucling obligations, and any other obligations of the Issuer hereafter issued.Which are
issued with a pledge of Net Revenues prior and.seinior to or on a parity with the pledge ofNet
Revenues to the Certificates.
Reference is hereby made to'the Ordinance, copies of which are on file in the principal
corporate.trust office of the.Paying Agent, and to all of the provisions of which the Registered
Owner by his acceptance hereof hereby assents,for definitions of terms;the description of and the
nature and extent of the tax levied and the revenues pledged for the'.payment.of the Certificates;
the terms and conditions relating to the transfer or exchange of the Certificates; the conditions
upon which the Ordinance may be,amended'or supplemented with or without the consent of the
Registered Owner;the rights,duties;and Obligations of the Issuer and the Paying Agent;the terms
and provisions upon which this Certificate may be redeemed or discharged at or prior to the Stated
Maturity thereof,and deemed to'be no longer Outstanding thereunder; and for the other terms•and
provisions specified in the Ordinance. Capitalized terms used herein have'the.same meanings
assigned in the Ordinance.
The Ordinance permits,with certain exceptions as therein provided,the amendment thereof
and the modification of the rights and obligations of the Issuer and the rights of the Registered
Owners of the Certificates under the Ordinance at any time by the Issuer with the consent of the
Registered Owners of a majority'in aggregate principal amount of such Certificates at the time
56827794.1 18
outstanding affected by such modification. Any such consent by the Registered Owners of this
Certificate or any Predecessor Certificate herefor evidencing the same debt is conclusive and
bidding upon such Registered Owner and all.future Registered Owners of this Certificate and of
any Certificate issued upon the transfer or in lieu hereof or,in exchange herefor,'whether or not
notation of such consent is made upon this Certificate.
As provided in the Ordinance and subject to Certain limitations therein set forth, this
Certificate,is transferable on the Security Register of the.Issuer,,upon surrender of this Certificate
for transfer to the Paying Agent at the Place.of Payment, duly endorsed by, or accompanied by a
written .instrument of transfer in form satisfactoryto the Paying Agent duly executed by, the
Registered Owner hereof or its attorney duly:authorized in viritiug, and thereupon one-or more
new fully registered Certificates of the same Stated Maturity, of authorized denominations, and
for the same aggregate principal amount-willthe issued to the designated transferee or transferees.
•
•
The Certificates are issuable as fully registered Certificates in denominations of principal,
equal to$5,000 and any integral multiple thereof. Uponsurrender of this Certificate for exchange
to the Paying Agent at the Place of Payment; and subject to certain limitations setforth in the
Ordinance,one or more new fully registered Certificates of the same Stated Maturity,of designated
authorized denominations, and for the same aggregate principal amount will be issued to the
Registered Owner of this Certificate. .
•
-�* No service charge may be made for any transfer or exchange hereinabove.referred to,but
the Issuer or the Paying Agent may require payment of a slim sufficient to cover any tax or
governmental chargepayable.in connection therewith.
•
•
•
The Issuer,the Paying Agent;and any agent of either of them may treat the Person in whose
name this Certificate is registered as the Registered Owner hereof for the purpose of receiving
payment as herein provided and for all other purposes;whether or not this Certificate be overdue,
and none Of the Issuer,the Paying Agent,and any such agent is affected by notice to the contrary.
It is hereby certified, covenalited, :and.represented that all acts, conditions, and things
required-to be perfot.ied, exist, and bedone.precedentto the issuance of this Certificate in order
to render the same a legal,valid, and binding.obligation of the Issuer have been performed, exist,
and have been done, in regular and due time, form, and manner, as required by law; and that
issuance of the'Certificates does not exceed any constitutional or statutory limitation. In case any
provision.in this Certificate or any application thereof is deemed invalid,illegal;or unenforceable,
the validity,legality,and enforceability of the remaining provisions and applications is not in any
way affected or impaired thereby. The terms and provisions of this Certificate and the Ordinance
are to be construed in accordance with and governed by the laws of the State of Texas.
Unless either a Registration Certificate hereon has been executed by the Comptroller of
Public. Accounts of the State of Texas or his duly authorized agent or by the Paying Agent,
respectively, by manual signature, this'Certificate shall not be entitled to any benefit under the
Ordinance or be valid or obligatory for any purpose.
IN WITNESS WHEREOF;the Issuer has caused this Certificate to be duly executed.
56827794.1 19
CITY OF NEDERLAND,TEXAS
By-
i :1;/ aggets2,6E---Mayor
ATTEST:
4, 7 tib
City Clerk
•
[The remainder of this page intentionally left blank]
•
56827794.1 20
SECTION 3.3 Form of Registration Certificate of Comptroller of Public Accounts.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS*
OFFICE OF THE COMPTROLLER§
OF PUBLIC ACCOUNTS §
§ REGISTER NO. •
THE STAI4 OF TEXAS § •
I HEREBY CERTIFY that this Certificate has.been examitled, certified as to validity and
approved bythe Attorney General of the State of Texas,:and duly registered by the Comptroller of
Public Accounts of the State of Texas.
•
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
*Note to Pater: Not to appear on printed Certificates
SECTION 3.4 Form of Certificate ofPaying Agent.
CERELEICAtE OF PAYING AGENT
. This certificate has been duly issued under the provisions of the within-mentioned
Ordinance; the Certificate or Certificates of the.above-entitled and designated series originally
delivered having been approved by the Attorney General of the State of Texas and registered by
the Comptroller of Public Accounts, as shown by the records of the Paying Agent.
Registration
Date-
BOKF,NA
as Paying Agent
By
Authorized Officer
1-*Note to Printer: Not to appear on initial Certificates]
56827794.1 21
SECTION 3.5 Form ofAssignrnent.
•
ASSIGNMENT `1
FOR VALUE RECEIVED the undersigned hereby sells,assigns,and transfers unto (Print
ortypewrite name,address,and.zip code of transferee):
•
(Social Security or otheridentifying number: )
the.within Certificate and all rights thereunder,and hereby irrevocably constitutes and appoints...
•
•
attorney to transfer the within Certificate on the books kept for registration thereof,with full power
of siibstitrrtibn in the premises.
DAt'ED:
NOTICE: The signature on this assignment
Signature guaranteed: must correspond with the name of the
registered owner as it.appears on the face of
. the within Certificate in:every particular.
SECTION 3.6 Form of Initial Certificate.
•
The Initial Certificate shall be in the form set forth in Section 3.2 except that the form of a
single fully registered Certificate shall be modified as follows:
(i) immediately under the name of the Certificate the headings "Interest Rate
", "Stated Maturity ", and "CUSIP No. " will be
omitted;
(ii) Paragraph one will read as follows:
The City of Nederland, Texas (hereinafter together with its successors referred to as the
"Issuer"),a body politic and municipal corporation duly organized and existing under and by virtue
of the laws of the State of Texas, for value received, hereby promises to pay, but solely to and
from the 'extent of the sources described herein, to the Registered Owner specified above or
registered assigns, the hereinabove stated the Principal Amount on September 1 in each of the
years and in principal amounts and bearing interest at per anmim rates in accordance with the
following schedule:
56827794.1 22
•
Year of Principal Interest
Stated Maturity Amount($) Rate(%)
(Information to be inserted from schedule in Section 1.1 hereof).
(or so much.thereof as.shall not have been paid upon prior redemption)and to pay interest thereon
computed on the basis of a 360-day year of twelve 30-day months to the Person herein specified
from the Delivery Date(anticipated June 8,2023), or fromthe.Most recent Interest Payment Date
to which interest has been paid or duly provided for,until,such principal is paid or duly,provided
for on or after such Stated Maturity or any earlier Redemption Date, semiannually on September
1 and March 1 in each year commencing September 1, 2023,.at the per:annum Interest Rates
specified above, computed,on the.basis *of a 360-day year of twelve 30-day months. Principal
installments of this Certificate are payable at its Stated.Maturity or on a prepayment date to.the
registered owner hereof by BOKF NA(the"Paying Agent"),upon its presentation and surrender,
at its designated offices in Dallas,Texas (the"Place of Payment").
SECTION 3.7 Insurance Legend.
If bond insurance is obtained by the Issuer or the Purchaser for the Certificates, the
Definitive Certificates and the Initial Certificate(s) shall bear an appropriate legend as provided by
the insurer.
•
56827794.1 23
ARTICLE FOUR
TAXES,.REVEN JES,AND FUNDS;
INVESTMENTS
SECTION 4.1 Certificate Fund
•
To pay interest on and to provide a. sinking fund for the payment, redemption, and
retirement of the Certificates,the Issuer hereby creates and shall maintain solely for such purposes
(subject to the provisions of Section 5.5) a special.fund designated•as its "CER11r'ICAIES OF
OBLIGATION, SERIES 2023, INTEREST AND SINKING FUND" (the "Certificate Fund").
The.Issuer.authorizes and directs its authorized officials to withdraw from the Certificate Fund and
to transfer to the Paying..Agent:money on deposit in the'Certificate Fund'Sufficient to pay,the
amount of principal or interest falling due on the Certificates ,.such transfer of funds to the Paying
Agent to be made in.such manner as will cause immediately available funds to be deposited with .
the Paying Agent on.or before the last business. day next preceding each.Maturity or Interest
Payment Date for the Certificates. •
•
SECTION 4.2. Deposits to Certificate Fund;Excess Certificate Proceeds.
•
The Issuer, prior to a Maturity or Interest Payment Date for the Certificates, may deposit
any of the Net Revenues to the Certificate Fund in accordance with Section 4.3. The Net
Revenues, if deposited, shall be expended annually to pay principal of and interest on the
Certificates as the*same become due and payable. The Net Revenues so deposited .shall be
accounted for and transferred to the Paying Agent in accordance with the provisions.of Section 4.1
governing other money in.the Certificate Fund.
The Issuer shall.deposit accrued interest and premium,if any,received from the Purchaser '
and ad valorem taxes levied and collected.to pay principal.or Redemption Price of or interest on
the Certificates to the Certificate Fund. In addition,the Issuer shall deposit.any surplus proceeds,
including investment income therefrom, from the sale of the certificates not, expended for
authorized purposes to the Certificate Fund.
SECTION 4.3 System Account.
The Issuer shall keep.all Gross Revenues derived from operation of the System separate
and apart from all other funds,. accounts, and money of the Issuer and shall deposit amounts
collected into the Issuer's"WATERWORKS AND SEWER SYS 1'EM ACCOUNT"(the "System
Account"). The Issuer shall pledge and appropriate money in the System Account as required for
the following purposes and in the order of priority shown:
First: as a first charge on and claim against the Gross Revenues, to pay reasonable and
proper Maintenance and Operating Expenses required by statute or ordinances authorizing
the issuances of aiay indebtedness of the Issuer;
Second: to deposit amounts requiredin the special funds and accounts established for
payment of any obligations of the Issuer with a lien on Gross Revenues.or Net Revenues
prior or superior to the lien granted to secure payment of the Certificates;
56827794.1 24
•
Third: to deposit amounts required.in the special funds and accounts established for the
Payment of the.Certificates or any additional obligations of the Issuer secured by the Net
Revenues on a.parity with the Certificates;..and
Fourth: any Net Revenues remaining in the System Account after satisfying the foregoing
payments, or making adequate-and sufficient Provision.for the payment, security and
benefit thereof,to be appropriated.and used for any other Issuer purpose now or hereafter
permitted by law. .
SECTION 4.4 Construction Accounts..
Except as provided in Section 4.2, the Issuer will deposit proceeds derived from thesale
of the Certificates (after paying costs of issuance) into special construction account or.accounts
created Tor the projects:to be constructed with such.proceeds. Pending completion"of construction
of the ects financed with such proceeds interest earned on the such proceeds must be accounted
for, maintained, deposited, and expended as permitted by the provisions of Texas Government
Code section 1201.043,as from time to time in effect,or as otherwise required by applicable law.
Thereafter, such interest must be accounted for, maintained, deposited, and expended in
accordance with Seetion 4.5.
SECTION 4.5 Investments and Security For.Funds.
The Issuer is required to keep all.money in such funds and accounts ata depository of the
Issuer except When invested pursuant.to this Section. Subject to Section 5.6,money in any fund
established by this'Ordinance may,atthe option of the Issuer,be invested in a manner permitted
by the provisions of the Public Funds Investment_Act of 1987, Texas Government Code chapter
2256, subchapter A, as then in effect,the Public.Funds Collateral Act, Texas Government Code
• chapter 2257, as then in effect:of or by an y othet law applicable to the Issuer;provided that all such
investments must be.made so that money required to be expended will be available at the proper
time or times: The Issuer shall credit or.debit all interest and income or losses'from deposits and
investments in any fund or account established pursuant to the provisions of this Ordinance.shall
be credited to such fund or account. The Issuer shall sell investments promptly as necessary to
prevent any default in connection with the Certificates.
SECTION 4:6 Tax Levy.
To provide for the payment of the Debt Service Requirements, which are defined to be
(i)the interest on the Certificates and(u)a sinking fund for payment ofprincipal of the Certificates
at Stated Maturity or earlier redemption or a sinking fund of 2% (whichever amount is greater),
the Issuer levies and shall levy for the current year and.each succeeding year thereafter while.the
Certificates or any interest thereon is Outstanding,a sufficient tax on each$100 of taxable property
in the Issuer, within the limitations prescribed by law, adequate to pay such. amounts, full
allowance being'made for delinquencies and.costs Of collection. Such tax shall be assessed and
collected each year; and the same may not be diverted to any other purpose. The Issuer shall pay
the taxes so levied and collected into the Certificate Fund. The:Governing Body hereby.declares
its purpose and intent to provide and levy such tax,it having been determined that the existing and
56827794.1 25
available taxing authority of the Issuer for such purpose is adequate to permit a legally sufficient
tax in consideration of all other outstanding indebtedness.
The Issuer shall determine the amount of taxes to be provided.annually for the Debt Service
Requirement in the following manner:
A. Prior to establishing the annual tax rate,the Governing Body shall determine:
(1) the amount of Debt Service Requirements to become due and payable on
the Certificates between the Collection Date.for thetaxes then to be levied and the
Collection Date for the taxes to b.e levied during the.next succeeding calendar year;
(2) the amount on deposit in the Certificate:Fund(including surplus Certificate
proceeds transferred to the Certificate Fund under Section 4.2) after (a) deducting
therefrom the total amount of Debt Service Requirements to become due'on Certificates
prior to the Collection Date for:the ad valorem taxes then to be levied and(b)adding thereto
the amount of the Net Revenues,if any,to be appropriated and allocated to:pay such Debt
Service Requirements,if any,prior to the Collection Date for the ad valorem taxes then to "
be'levied; and
(3) the'amount of Net Revenues, if any, to be appropriated and tole set aside
for the payment of the Debt Service Requirements on the Certificates between the
Collection Date for the taxes then to be levied and the Collection Date for the taxes to be
levied during the next succeeding.Fiscal Year.
B. The Issuer shall assess and levy annually each year a tax tO pay the Debt.Service
Requirements sufficient to provide tax revenues in the amount established in paragraph(1)above
less the sum total of the 'amounts established in paragraphs (2) and (3), after taking into
consideration delinquencies and costs of collecting such annual taxes.
SECTION 4.7 Net Revenues.
The Issuer covenants and.agrees that the Net Revenues are hereby irrevocably pledged to
the payment of the principal of and interest on the Certificates, and the pledge of Net Revenues
herein made for the payment of the Certificates constitutes a lien on the'Net Revenues in
accordance with the ternis and provisions hereof and is valid and binding without any physical
delivery thereof or further act by the'Issuer. The pledge of Net Revenues hereunder is subordinate
to the prior pledge of Net Revenues to'secure the Issuer's outstanding obligations secured by a
pledge of Net'Revenues to the extent of such pledge (together with prior obligations hereafter
issued pursuant to Section 4.8 (the"Prior'Obligations").
Section 1208, Government Code,applies to'the issuance of the.Certificates and the pledge
of the Net Revenues ofthe System granted by the Issuer under this Section, and such pledge is
therefore valid,effective and perfected. If Texas law is amended at any time while the Certificates
are Outstanding such that the pledge of the Net Revenues of the System,granted by the Issuer under
this Section is subject to the filing requirements of Chapter 9,Business & Commerce Code,then
to preserve to the Registered Owners the perfection of the security interest in said pledge,the Issuer
56827794.1 26
agrees to.take such measures as it determines are reasonable and necessary under Texas law to
comply with the applicable provisions of Chapter 9, Business.& Commerce Code, and enable a
filing to perfect the security interest in.said pledge to occur.
SECTION 4.8 Issuance of Additional Obligations.
The Issuer hereby expressly reserves the right to hereafter issue bonds, notes, warrants,
certificates of obligation, or similar obligations,payable,'wholly.or in part,from and secured by a
pledge of and lien on the Net Revenues of the System prior and superior in right to the Certificates,
on a parity with the Certificates as Parity Obligations, or subordinate to the pledge of and lien on
the Net.Revenues.in favor of the Certificates,without limitation as to principal amount,but subject
to any terms, conditions, or restrictions applicable thereto under existing ordinances, laws, or
otherwise.
•
56827794.1 27
•
•
•
ARTICLE FIVE
COVENANTS
SECTION 5.1 To Maintain Agency.
The Issuer will at all times until the Certificates are duly paid maintain an agency meeting
the qualifications herein described, for the performance of the duties of the Paying Agent
hereunder: BOKF,NA,Dallas,Texas, is hereby appointed Paying Agent for such purposes. The
Issuer retains.the right to replace the Paying Agent and the Paying Agent may be removed from
its duties hereunder at any tip-le-upon not less than 30 days notice with or without cause by action
of the"Governing Body entered in its:minutes, but no such removal is effective until a successor
has accepted the duties of the Paying Agent hereunder by written Inst invent..
Every Paying Agent appointed hereunder must at all times be a commercial bank or trust
company organized and'doing business under the laws of the United States of America or of any
state, authorized under such laws to exercise corporate trust powers, having a:combined'capital
and surplus of at least $10,000,000, subject to supervision or examination by federal or state
authority,and registered as a transfer agent with the Securities and Exchange Commission. If such
corporation publishes reports of condition'at least annually pursuant to law or to the requirements
of such supervising or examining authority, then for the purposes of this Section the combined
capital and surplus of such corporation shall be deemed to be its combined capital and.surplus as
set forth in its most recent report of condition so published. Upon any change in the Paying Agent, •
the City:agrees to promptly cause a written notice thereof to be sent to each Registered Owner
affected by the change,which notice shall also give the.address of the new Paying Agent,which
shall be the designated Place of Payment.
This Section is subject tothe provisions of Section.8.2.
The terms of the Transfer and Paying Agency Agreement with the initial Paying Agent are
hereby approved.in substantially the form andto the effect presented to the Governing Body on
this date;and the Mayor and the Mayor Pro Tern of the Issuer;or either of them,and the City Clerk
and any Assistant or Acting City Clerk of the Issuer, or any-of them, are hereby authorized to
execute and deliver such Transfer and Paying Agency Agreement.
SECTION 5.2 To Maintain and Operate the System and Insure Property.
The Issuer covenants and agrees that while the Certificates remain Outstanding it will
maintain and operate the System with all possible efficiency and maintain casualty and other
insurance on the properties of the System and its operations of a kind and in such amounts
customarily carried by municipalities in the State,of Texas engaged in a similar type of business
and that it will faithfully andpunctually perform all duties with reference to.the System required
by the laws of the State of Texas. All money received from losses under such insurance policies,
other than public liability policies, are hereby pledged as security for the Certificates until and
unless the proceeds are paid out in making good the loss or damage in respect of which such
proceeds are received, either by replacing the property destroyed or repairing the property
damaged, and adequate provision for making good such loss or damage must be made within 90
56827794.1 28
•
.
days after the date of loss.:The payment of preminrns for all insurance policies required under the
provisions hereof shall be considered-Maintenance and:Operating'Expenses. Nothing in this
Ordinance may be construed as requiring the Issuer to expend any funds which are-derived from
sources other than the operation of the System but nothing herein may•be construed as preventing
the Issuer from.doing so. •.. •
SECTION 5.3 Rates and Charges.
The Issuer hereby covenants and agrees that rates and charges for services afforded by the
System will be established andinaintained to provide Gross Revenues'snfficient at all times:
A. td'pay.all Maintenance and Operating Expenses;. •
• B. .to produce'Net Revenues.sufficient:(but subject to the:.m imurim arriount,of Net
Revenues pledged hereunder), together with.any other lawfully available hinds, to produce an
amount-of Net Revenues.sufficient to pay the interest'on and principal of the Certificates and any
additional obligations of the Issuer hereafter issued on a parity therewith;and
C. to pay other legally incurred indebtedness payable from the Net Revenues or
secured by a lien on the System or the Net Revenues thereof.
SECTION 5.4 Records•andAccounts, Annual Audit.
The Issuer covenants and agrees that so long as any of the Certificates remain Outstanding
it will keep and maintain separate and complete records and accounts pertaining to the operations
of the System in which complete and.correct entries shall be made of all transactions relating
thereto,as provided by Texas Government Code section 1502.067,as amended,or other applicable
law. The Registered Owners.or any duly authorized agent or agents of the Registered Owners may
inspect the System and all properties comprising the same. 'The Issuer agrees that, following the
close of each Fiscal Year, it will cause an audit of its books and accounts to be made by an
independent firm-of Certified Public Accountants. Copies of each annual audit shall be furnished
to the Executive Director of the Municipal Advisory Council of Texas at his office in Austin,
Texas, and,upon.written request,to the original purchaser of the Certificates and any subsequent
Registered Owner thereof. Expenses incurred in making the annual audit Of the operations of the
System are Maintenance and Operating Expenses.
Copies of the transcript of proceeding for the Certificates will be made available by Bond
Counsel to,the Municipal Advisory Counsel.of Texas.
SECTION 5.5 Special Covenants.
The Issuer covenants that:
A. Lawful Authority: it has the lawful power to pledge the Net Revenues supporting
the Certificates and has lawfully exercised said powers under the laws of the State of Texas;
_
56827794.1 29
B. No Encumbrance: as long.as any Certificates •or any interest thereon.remain
Outstanding,the Issuer will not sell,lease or encumber(except in the manner provided in Section `
4.8)the System or any substantial part thereof,provided that this covenant shall not be construed
to prohibit the sale of such machinery;or other properties•or equipment which has become obsolete
or otherwise unsuited to the efficient operation of the System,and ..
•
C. No Franchise: to the extent thatit legally may, the Issuer further covenants and
agrees that,so long as any ofthe Certificates,•or any interest thereon,are Outstanding,no franchise
shall be granted for the installation or operation of any competing systems other than thoseowned
by the Issuer, and the operation cif any such systems by anyone other than the Issuer is hereby
prohibited. . •
SECTION 5.6 • Covenants to Maintain Tax Exempt Status.
• A. Definitions. When Used in this Section,•the•following terms have the following
•meanings: . •
"Closing Date" means the date on which the Certificates are first authenticated and
delivered to'the initial purchasers against payment therefor.
"Code" means the Internal Revenue.Code of 1986, as amended by all legislation, if any,
effective on or before.the Closing Date.
"Computation_Date"has the meaning set forth in Section 1.148-1(b)of the Regulations.
"GrOSs Proceeds"means any'proceeds.as defined in Section.1.148-1(b)of the Regulations,
and any replacement proceeds as defined in Section 1.148-1(c) of the Regulations, of the
Certificates. •
"Investment".has the meaning set firth in Section 1.148-1(b) of the Regulations. •
"Nonpurpose Investment"means any investment property, as defined in section•148(b) of
the Code, in which Gross Proceeds of the Certificates are invested and which is not acquired to
carry out'the'governmental purposes of the Certificates.
'Rebate Amount"has the meaning set forth in Section 1.148-1(b)of the Regulations.
"Regulations"means any proposed, temporary, or final Income Tax Regulations issued
pursuant to Sections.103 and 141 through 150 of the Code,and 103 of the Internal Revenue Code
of 1954,which areapplicable to the Cetiificates. Any reference to any specific Regulation shall
also mean, as appropriate,any proposed, temporary or final Income Tax Regulation designed to
supplement, amend or replace the specific Regulation referenced.
"Yield"of
(1) any Investment has the meaning set forth in Section 1.148-5 of the Regulations;and
v
56827794.1 30
•
• .•
•
•
(2) the Certificates has the meaning set forth hi Section 1.14g-4 of the Regulations.
. . • -• .
• •
B. Not to Cause Inter eit to Become TOable.. The issuer shall not use,permit the use
of, or omit to •use Gross Proceeds or any:•6ther amounts (or any property the acquisition,
construction,or improvement of which is to be-financed directly or indirectly with Gross Proceeds)
in a manner which,if Made or omitted,respectively,would cause the interest on any Certificate to
become includable in the gross income;as defined in.Section 61 of the Code,of the owner thereof
for federal income tax purpoieS. Without limiting the generality of the foregoing,unless and until
the Issuer receives a writtenopinion of counsel nationally reCognized:in the field of Municipal
bond law to the effect that failure to•CoMply.With such covenant will not adversely affect the
*exemption from federal income tax of the interest on any Certificate,the Issuer shall comply with
each sof the specific Covenants in this Section. * • . • • . .
.• • •
• •
C. No Private .Use or Private Pajiments. Except as permitted by section 141 of the
Code and the Regulations and rulings thereunder, the Issuer shall, at all times prior to the final
Maturity,
•
•
• .. • .• , _
(1) exclusively • own, operate, and possess all property the acquisition, .
construction,.or improvement of which is to be financed directly or indirectly with Gross
Proceeds and not use or permit the use of Gross Proceeds (including contractual
arrangements with terms different than those applicable to the general public) or any
IN=1.1 property acquired,constructed,or improved with Gross Proceeds in.any activity earned on
by any person or entity (including the'United States .or any agency, department and
instrumentality thereof)other than a state or local government,unless such use is solely as
a member of the general public,and •
• • •••••
(2) not directly or indirectly impose or accept any charge or other payment by
any Person or entity who is treated as using Gross Proceeds or any property the acquisition,
construction,or improvement of which is to be financed directly or indirectly with Gross
Proceeds, other than taxes of general application within the Issuer or interest earned on
investments acquired with Gross Proceeds pending application for their intended purposes.
•
The proceeds of the Certificates and the facilities financed with the proceeds will not be
used in a manner that will cause the certificates to be"private activity bonds?'
D. No Private 3oan. Except as permitted by section 141 of the Code and the
Regulations and rulingS thereunder, the Issuer shall not use Gross Probeeds to make or finance
loans to any Person other than a state or local goyernment. For purposes of the foregoing covenant,
Gross Proceeds are considered to be"loaned"to a Person if(1)property acquired,constructed, or
improved With Gross Proceeds is sold or leased to such Person in a transaction which creates a
debt for federal income tax purposes, (2) capacity in or service from such property is committed
to such Person under a take-or-pay, output, or similar contract or arrangement, or (3) indirect
benefits, or burdens and benefits of ownership, of Gross Proceeds or any property acquired,
constructed, or improved with Gross Proceed§are otherwise transferred in a transaction which is
the economic equivalent of a loan..
56827794.1 31
E. Not to Invest at Higher Yield. Except as permitted by section 148 of the Code and
the Regulations and rulings thereunder,the Issuer shall not,at any time prior to the final Maturity,
directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace
money so invested), if as a result of such Investment the Yield from the Issue Date of any
Investment acquired with Gross Proceeds (or with money replaced thereby)whether then held or
previously disposed of, exceeds the Yield of the Certificates.
F. Not Federally Guaranteed. Except as permitted by section 149(b)of the Code and
the Regulations and rulings thereunder,the Issuer shall not take or omit to take any action which
would cause the Certificates to be federally guaranteed within the meaning of section 149(b) of
the Code and the Regulations and rulings thereunder.
G. Information Report. The Issuer shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in
such place as such Secretary may prescribe.
H. Rebate of Arbitrage Profits. Except to the extent otherwise provided in section
148(f)of the Code and the Regulations and rulings thereunder:
(1) The Issuer shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all
records of accounting for at least six years after the day on which the last outstanding
Certificate is discharged. However, to the extent permitted by law, the Issuer may
commingle Gross Proceeds of the Certificates with other money of the Issuer, provided
that the Issuer separately accounts for each receipt and expenditure of Gross Proceeds and
the obligations acquired therewith.
•
(2) Not less frequently than each Computation Date, the Issuer shall calculate
the Rebate Amount in accordance with rules set forth in section 148(f)of the Code and the
Regulations and rulings thereunder. The Issuer shall maintain such calculations with its
official transcript of proceedings relating to the issuance of the Certificates until six years
after the final Computation Date.
(3) As additional consideration for the purchase of the Certificates by the
Purchasers and the loan of the money represented thereby and in order to induce such
purchase by measures designed to insure the excludability of the interest thereon.from the
gross income of the owners thereof for federal income tax purposes,the Issuer shall pay to
the United States out of the Certificate Fund or its general fund,as permitted by applicable
Texas statute, regulation or opinion of the Attorney General of the State of Texas, the
amount that when added to the future value of previous rebate payments made for the
Certificates equals(i)in the case of a Final Computation Date as defined in section 1.148-
3(e)(2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such
date;and(ii)in the case of any other Computation Date,ninety percent(90%)of the Rebate
Amount on such date. In all cases,the rebate payments shall be made at the times, in the
installments,to the place and in the manner as is or may be required by section 148(f) of
56827794.1 32
the Code and the Regulations and rulings thereunder, and shall be accompanied by Form
8038-T•or such other forms and information as is or may be required by section 148(f) of
the Code and the Regulations and rulings thereunder.
(4) The Issuer shall exercise reasonable diligence to assure that no errors are made
in the calculations and payments required by paragraphs(2)and(3);and if an error is made,
to discover and promptly correct such error within a reasonable amount of time thereafter
(and in all events within one hundred eighty (180) days after discovery .of the error),
including payment to the United States of any additional Rebate Amount owed to it,interest
thereon,and any penalty imposed under section 1.148-3(h)'of the Regulations:
•
I. •. rof to Diver'tAr'bitrage'Proits..Except to the extent permitted:by section 148.of the
Code and the Regulations.and rulings thereunder, the.Issuer shall not, at any time prior to the
earlier of the Stated Maturity or final payment of the Certificates, enter'into any transaction that
reduces.the amount required to be paid to the United States pursuantto Subsection:Hofthis Section
because such transaction results in a smaller profit'or a larger loss than would have resulted if the
transaction had been at arm's length and had the Yield of the Certificates not been relevant to either
PAY= • •
•
J. Elections. The Issuer.'hereby directs'and authorizes the Mayor, Mayor Pro Tem,
City Clerk,City Manager,Attorney,or Director of Finance of the Issuer,either or any combination
of the foregoing,to Make such elections in the Certificate as to Tax Exemption br similar or other
appropriate certificate,form, or.docnment permitted or required pursuant to the provisions of the
Code or Regulations as they deem necessary or appropriate in connection with the Certificates.
Such elections are deemed made on.the Issue Date.
•
SECTION 5.7 .Remedies in Event of Default.
•
in addition to all the.rights and remedies provided by the.laws of•the State of Texas,the
Issuer covenants and agrees particularly that in the event the Issuer(a)defaults in the payments to
be made to the Certificate Fund, or(b) defaults in the observance or performance of any other-of
the covenants,conditions,or obligations set forth in this Ordinance,the Registered Owners Of any
Of the Certificates are entitled to seek a writ of mandamus issued by'a court of proper jurisdiction
compelling and requiring the governing body of the Issuer and other officers of the Issuer to
observe and perform any covenant, condition, or obligation prescribed in this Ordinance..
No delay or omission to exercise any right or power accruing upon any default shall impair
any such right or power or•shall be construed to be a waiver of any such default or acquiescence
therein,.and every such right and power may be exercised from time to time and as often as may
be deemed expedient. The specific remedies herein provide d shall be cumulative of all other
existing remedies and the specification of such remedies shall not be deemed to be exclusive.
56827794.1 33
ARTICLE SIX
DEFEASANCE
SECTION 6.1 Discharge of Obligations.
Any. Certificate is deemed paid'and is no longer considered to be Outstanding within the
meaning of this Ordinance when payment of the principal of and interest on such Certificateto the
Stated.Maturity thereof or(if notice of redemption has been duly given,irrevocably provided for,
or waived as provided herein)to the.Redemption Date has been Made or has been provided for by
deposit with the Paying Agent for such payment(or with any other bank.or trust company which
• has agreed to hold the same for such purpose) (1) money sufficient to make.such payment, (2)
Governmental Obligations certified by an independent public accounting firm ,of national
reputation to be of such maturities and•.interest payment dates and to bear such interest as will,
without further investment.or reinvestment of either the principal•amount thereof or.the interest
earnings therefrom, be sufficient to make such payment, or (3) a combination of money and
Governmental Obligations together so certified sufficient to make such payment,provided that all
the expenses pertaining to the Certificates with respect to which:such deposit is made have been
paid or the payment thereof provided for to the satisfaction of the Paying Agent(and to such other
bank or trust company)..
If such deposit is made with respect to some but not all of the Certificates then Outstanding,
the.Issuer shall designate the,Stated Maturities of Certificates with respect to which such deposit
is made. If such deposit is sufficient so to provide for the payment of the principalof and interest
on some but not all Outstanding Certificates of a particular Stated Maturity so. designated, the
Paying.Agent*shall select the Outstanding Certificates of such Stated. Maturity with respect to
which such deposit is made by such random method as the Paying Agent deems fair and
appropriate and which may provide for theselection of portions(equal to.and.leaving unredeemed
an authorized denomination)of Certificates a denomination larger than$5;000:
Notwithstanding•anything herein to the contrary, no such deposit has the effect described .
in this. Section (a) if made during the subsistence of a default in the payment of any Certificate
unless made with respect to all of the Certificates then Outstanding or(b).unless accompanied by
an opinion.of counsel of recognized standing in the field of federal income taxation to the effect
that neither such deposit nor the investulent thereof adversely affects the excludability of interest
on any Certificate from the'gross income of any owner thereof for federal income tax purposes.
The Paying Agent(or other bank or trust company)with which a deposit is made of money
and Governmental Obligations for such purpose shall hold the:deposit in a segregated account in
trustor escrow for.the.Registered Owners of the Certificates with respect to which such deposit'is
made and,together with any investment income therefrom,the deposit may be disbursed solely to
pay the principal.of and interest on such Certificates when due, except that cash receipts may be
withdrawn and paid to the Issuer provided the date and amount of such withdrawals are taken into
account in the most recent verification of the accounting firm referred to in this Section. No money
or Governmental Obligations so deposited may be invested or reinvested winless in Governmental
Obligations and unless such money and Governmental Obligations not invested and such new
investments are together certified by an independent public accounting.firm.of national.reputation
56827794.1 34
•
•
to be of such amounts, maturities, and interest payment.dates and to bear such interest as will,
without further investment or::reinvestdient of either the principal amount thereof or the interest
earnings therefrom;be sufficient to make such payment.
•
.. At such times as a Certificate is deemed to be paid hereunder, as aforesaid, it is no johger
entitled to the benefits of this Ordinance, except for the purposes of any such payment,from such
money or Governmental'Obligations and for the provisions. of Sections 1,4 and 1.5 and for the
continuing compliance of the Issuer withitheprovisions:of Section 5.6. •
. •Upon such deposit as described above, such Certificates.shall no longer be regarded to.be
outstanding or unpaid. Provided,however;the Issuer has reserved the•option,to be.exercised at
the time of the defeasance of the Certificates, to.call for redemption at;an earlier :date those
Certificates which have been:defeased to.their maturity date, if the Issuer (i)in the proceedings
providing for the firm banking and financial arrangements, expressly reserves the right to,call the
Certificates for redemption, (ii)gives'notice of the reservation of that right to the -owners.of the
Certificates immediately following the making of the firm bank and.financial arrangements,.and
(iii)directs that notice of the reservation be included in any redemption notices that it authorizes.
•
56827794.1 35
•
ARTICLE SEVEN
SALE
SECTION 7.1 Sale of the Certificates.
The sale of the Certificates to The Baker Group LP (the"Purchaser"), at the price of par
in the amount of$5,000,000 plus a net premium of$ • less an underwriters discount of
$ plus accrued:interest thereon from the Delivery Date,:or the most recent Interest
Payment Date, is hereby.confirmed and determined to.be in compliance with the terms of the
Notice of Sale.
Delivery of the Certificates shall be made to the Purchaser as soon as practicable after the
adoption of this Ordinance,upon payment therefor in accordance with the terms of sale.
SECTION 7.2 Payment of Costs of Issuance,.Engaggement of Bond Counsel.
The Issuer has in consultation•with its financial advisor,USCA Municipal Advisors,LLC,
set aside an amount of the proceeds of the Certificates to pay costs of issuance of the Certificates.
The amount of such proceeds will be designated in a closing letter prepared by the financial
advisor,and in the absence of contrary written instructions included as part:of such closing letter
to deposit such proceeds with the Issuer,the Paying Agent will pay'such costs of issuance on behalf
of the Issuer in accordance with invoices.
The Issuer hereby confirms engagement of Norton Rose Fulbright TJS LLP as Bond
Counsel("Bond Counsel")for the City it accordance with the terms'of the Letter of Engagement
between the Issuer and Bond Counsel.
SECTION 7.3 Official Statement.
The Issuer hereby authorizes and approves,in connection with the sale'of the Certificates,
the preparation and distribution of a Preliminary Official Statement relating to the Certificates,and
a final Official Statement containing such additional information and amendments as may be
necessary to conform tothe terms of the Certificates, and.this Ordinance.
The Issuer hereby ratifies and confirms that the Preliminary Official Statement approved
by this Section 7.3 constitutes an Official'Statement of the Issuer with respect to the Certificates
that was deemed"final."'by the Issuer as of its date, except for the omission of no more than the
information permitted by Subsection(b)(1) of Rule 15c2-12 of the Securities and Exchange
Commission.
The proper officials of the Issuer are hereby authorized to execute and deliver a certificate
pertaining to such Official Statement as prescribed therein.
56827794.1 36
4-4
ARTICLE EIGHT
CONTINUING DISCLOSURE UNDERTAKING
SECTION 8.1 Definitions.
As used in this Article, the following terms have the meanings ascribed to such terms
below:
•
"EMMA"ineai,s the Electronic Municipal Market Access system. •
•
"MSRB"means the Municipal Securities Rulemaking Board. •
•
"Rule"means SEC Rule 15c2-12, as amended from time to time or officially interpreted
by the SEC. •
"SEC"means the United States Securities and Exchange Commission.
SECTION 8.2' Updated Infonination and Data. •
•The Issuer shall provide annually to the MSRB through EMMA; within six months after
the end of each fiscal year endingin or after September 30, 2023, financial information and
operating data.with respect to.the Issuer of the general type included in the Preliminary Official
If] Statement provided to the Purchaser in connection with its initial approval of its purchase of the
Certificate.of Obligations, being the information described in.Exhibit A hereto. Any=financial
statements so to be provided shall be.(1).prepared in accordance with the_accounting principles set
forth. in Appendix.B to the Official Statement, 'or as*May otherwise hereafter be *established
consistent with Texas law and Generally Accepted Accounting Principles, and.(2) audited,if the
Issuer commissions an audit of such statements and the audit is completed within the period during
which they must be provided. If audited financial statements are not so provided,then the Issuer
shall, provide audited financial statements for the:applicable fiscal year to the 1VISRB through
EWA,when and if audited financial statements become available but if such audited financial
statements are unavailable:the Issuer will provide such financial statements on an unaudited basis
within the.above-deseribed six-month period.
If the Issuer changes its fiscal year,it will notify the MSRB through EMMA of the change
(and of the date of the new fiscal year end)prior to the next date by which the Issuer otherwise
would be required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may
be set forth in full in one or more documents or may be included by specific.reference to any
docnment (including an official statement or other offering.document, if it is available from the
MSRB)that theretofore has been provided to the MSRB through EMMA or filed with the SEC,or
may be provided in any other manner consistent with the Rule.
56827794.1 37
•
•
SECTION 8.3 Material Event Notices.
The Issuer shall notify the MSRB through EMMA of any.of the following events with
respect to the Certificates in a timely manner,and not more than 10 business days after occurrence
of the event:
1. Principal and interest payment delinquencies;
2. Non payment related defaults,if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution.of credit or liquidity providers,-or their failure to.perform;
•
6. Adverse tax opinions the issuance by the Internal Revenue Service,of proposed or
final determinations of taxability, Notices of Proposed Issue .(IRS Forth 5701-
, or other material notices'or determinations with respect to
th ) the tax-exempt
status of the Certificates, or other material events affecting the tax status of the
Certificates;
7. Modifications to rights of Registered Owners of the Certificates, if material;
8. Certificate calls,if material, and tender offers;
•
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Certificates; if
material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership, or similar event of the Issuer, which shall
occur as described below;
13. The consummation of a merger, consolidation, or acquisition involving the Issuer
or the sale of all or substantially all of its assets, other than in.the ordinary course
of business,the entry into of a definitive agreement to undertake such an action or
the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms,if material;
14. Appointment of a successor Cr additional trustee or the change of name of a trustee,
if material;
15. Incurrence of a financial obligation of the obligated person, if material, or
agreement to covenants,events of default,remedies,priority rights,or other similar
56827794.1 38
terms of a financial obligation of the obligated person, any of which affect security
holders,if material;and
16. Default, event of acceleration, termination event, modification of terms, or other
similar.events under the terms of the financial obligation of the obligated person,
any of which reflect financial difficulties.
For these;purposes,(a)any event described in the immediately preceding paragraph_(12)is
considered to occur when any_of the:following occur: the appointment of a receiver,fiscal agent,
or Similar officer for.the Issuer in a proceeding under the United States Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has assumed
jurisdiction over substantially all of the assets or business of the Issuer,or if such jurisdiction has
been assumed by leaving the:_existing:governing.body and officials or officers of. the Issuer in
possession but subject to the supervision and orders of a court=or governmental authority, or the
entry of an order confirming a:plan of reorganization, arrangement, or liquidation bya court or
governmental authority:having supervision or jurisdiction over substantially all of the assets or
business of the Issuer,and (b) "Financial Obligation" in the immediately preceding paragraphs
(15) and (16) means a (a) debt obligation; (b) derivative instrument entered into.in connection
with,or pledged as security.or a source of payment.for, an existing or planned debt obligation; or
(c) guarantee of a debt obligation or any such derivative instrument; provided.that "Financial
Obligation" shall not include municipal securities (as defined in the Securities Exchange Act of
.•■, 1934,as amended)as to which a final official statement(as defined in the Rule)has been provided
to the MSRB consistent with the Rule.
•
The Issuer shall notify the MSRB:through EMMA., in a timely manner, of any failure by
the Issuer to provide.financial information or operating data in accordance with Section 8.2 by the
time required.
SECTION.8.4 Limitations, Disclaimers, and Amendments.
The Issuer shall be obligated to observe and perform the covenants specified in this Section
with.respect to the Issuer and the Certificates while, *but. only while, the Issuer remains an
"obligated person"with respect to the Certificates within the meaning of the Rule, except that the
Issuer in any event will give the notice required by Section 8.3 of any Certificate calls and
defeasance that cause the Issuer to be no longer such an"obligated person".
The provisions of this Article are for the sole benefit of the Registered Owners. and
beneficial owners Of the Certificates,and nothing in this Article,express or implied,shall giye any
benefit or any legal or equitable right,remedy,or claim hereunder to any other person. The Issuer
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Article and does not hereby
undertake to provide any other. information that may be relevant or material to a complete
presentation of the financial results, condition, or prospects of the Issuer or the State of Texas or
'—' hereby undertake to update any information provided in accordance with this Article or otherwise,
except as expressly provided herein. The Issuer does not make any representation or warranty
56827794.1 39
concerning such information or its usefulness to a decision to invest in or sell Certificates at any
future date.
•
UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CER1'111ICA1'E ANY OTHER
PERSON,°IN CONTRACT OR.TORT; FOR DAMAGES RESULTING IN WHOLE OR IN
. PART FROM ANY BREACH BY'THE.ISSUER, WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS PART, OF ANY COVENANT SPECIFIEDiN•THIS ARTICLE,BUT.EVERY
RIGHT AND.REMEDY OF ANY SUCH PERSON;IN CONTRACT OR TORT, FOR OR ON
ACCOUNT OF ANY SUCH BREACH.'SHALL .BE LIMIT: D TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE. .
•
NO default by the.Issuer in observing or performing it obligations under this Article shall
constitute a breach of or default under this Ordinance for purposes of any other provision:of This
Ordinance.
•
Nothing in this Article is intended or shall act to disclaim, waive, or otherwise limit.the
duties of the Issuer under federal and state securities laws.
The provisions Of this'Article may be amended by the.Issuer from time to time to adapt to
changed circumstances resulting from a change in legal requirements,a change in law,or a change
in the identity;.nature,status, or type of operations of the Issuer,but only if(1)the provisions of
this Article, as so amended, wouldhave permitted an underwriter:to.purchase or sell Certificates
in the primary offering of the Certificates in,compliance with the Rule, taking into account any
amendments,or interpretations of the Rule tothe date of such amendment,as•well as such changed
circumstances, and (2) either (a) the Registered Owners of a majority in aggregate,principal
amount(or any greater amount required by any other provision of this.Ordinance that authorizes
such an amendment) of the Outstanding Certificates consent to such.amendment or.(b) a Person
that.is unaffiliated with the Issuer (such as nationally recognized bond counsel) determines that
such amendment will not.materially impair the interests of the Registered Owners p.ctbeneficial
owners'ofthe Certificates. The Issuer may also-amend or repeal the provisions of this Article if
the-SEC amends or repeals the applicable provisions of the Rule or-a court of final jurisdiction
determines that such provisions are invalid,but in either case only to the extent that its right to do
so would not.prevent the Purchaser from lawfully purchasing the Certificates in the offering
described herein. lithe Issuer so-amends the provisions of this Article, it shall include -with any
amended financial information or operating data next provided in accordance with Section 8.2 an
explanation,in narrative form, of the reasons for the amendment and of the impact of any change
in thetype of financial information or operating data so provided.
56827794.1 40
•
—, This Ordinance is in force and effect from and after its final passage, and it is so ordained.
PASSED AND ADOPTED on May 8,2023.
CITY OF NED.ERLAND,TEXAS
/s/Don Albanese
Mayor
ATTEST:
/s/Joni Underwood •
City Clerk
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•
56827794.1 S-1
EXHIBIT A
ANNUAL FINANCIAL INFORMATION
•In the Preliminary Official Statement dated March 13,.2023, the quantitative financial
information and operating data with respect to the Issuer of general type contained in Schedules 1
through 14 and certain information in the annual financial statements in Appendix A.
56827794.1 Exhibit A
SPECIAL MEETING OF THE CITY OF NEDERLAND
EMPLOYEE BENEFITS TRUST
4:44 p.m. May 8, 2023
1. MEETING
The meeting was called to order at 6:33 p.m. by Chairperson Albanese at the
Nederland City Office Building, 207 N. 12TH Street, Nederland, Texas.
The following statement was posted:
"PURSUANT TO SECTION 30.07, PENAL CODE (TRESPASS BY LICENSE HOLDER
WITH AN OPENLY CARRIED HANDGUN), A PERSON LICENSED UNDER
SUBCHAPTER H, CHAPTER 411, GOVERNMENT CODE (HANDGUN LICENSING
LAW), MAY NOT ENTER THIS PROPERTY WITH A HANDGUN THAT IS CARRIED
OPENLY."
2. APPROVAL OF MINUTES
A motion was made by Trustee Root and seconded by Trustee Austin to approve the
minutes of the May 9, 2022 meeting of the Employee Benefits Trust as written.
MOTION CARRIED.
�--+ Ayes: Chairperson Albanese,Trustees Austin, Root, Sonnier, and Guillot.
Noes: None.
3. HEALTH INSURANCE
Mr. Duque, said the City's health insurance provider is Blue Cross/Blue Shield of Texas
(BCBST) which expires on June 30th. The current plan year (July 2022 — March
2023) loss ratio (total paid medical and prescription claims over paid premiums) is
150%. Bids were opened on April 20th.
Currently the City provides a three-option plan design (Standard Plan, High
Deductible Health Plan and a Health Maintenance Organization Plan) with varying
levels of dependent coverage (employee-only, employee + spouse, employee +
children, and family) and differing monthly premiums. The City utilizes two defined
contributions: one for the Standard Plan and the HAS Plan and another for the HMO
Plan.
Due to the high loss ratio, the submitted bids were high. The City's insurance
consultant (HUB International) negotiated a best and final offer from Blue Cross/Blue
Shield of Texas with a rate reduction renewal (BCBS is also providing a $50,000 one-
time premium credit that further reduced the best and final renewal) while
maintaining the same standard plan design (a $1,500 deductible and $6,500
maximum out of pocket benefit) and blended rates (active employees indirectly
subsidize retiree insurance). The HSA plan was revised to reflect the latest IRS
requirements (in-network deductible increased from $2,800 to $3,000). BC/BS of
Texas will continue to offer the HMO plan utilizing the "Blue Essentials" network that
has minimal disruption from the existing PPO network. Two defined contributions are
recommended: one for the Standard Plan and the HSA Plan and another for the HMO
Plan.
The recommended Standard Plan/HSA Plan and HMO Plan Defined Contributions will
reduce the City's annual costs by $28.44 (0.00224%) and will reduce the employees'
dependent coverage costs. Across all tiers of coverage, the defined contributions were
increased by approximately $11. The increased defined contributions and premium
decreases result in the employees'costs decreasing at varying amounts based on their
selected dependent contribution and the existing dependent coverage percentage
decreasing. The recommended funding results in approximately $28,000 in annual
savings for the City employees with dependent coverage.
A motion was made by Trustee Root and seconded by Trustee Sonnier to award a bid for
employee health insurance to Blue Cross/Blue Shield of Texas. MOTION CARRIED.
Ayes: Chairperson Albanese, Trustees Austin, Root, Sonnier, and Guillot.
Noes: None.
4. DENTAL INSURANCE
Mr. Duque, stated the City utilizes Blue Cross/Blue Shield of Texas as its dental
insurance provider. Under the dental insurance plan design, the City pays 100% of the
employee premiums and 0% of dependent premiums, regardless of whether the
employee chooses the HIGH or LOW plan. The majority of City employees and
retirees utilize the HIGH plan.
The BCBS of Texas renewal offer is a rate pass (no increase) from the current
premiums. The City annually spends approximately $35,000 on dental insurance
premiums. In addition, the BCBS of Texas bid included a bundling discount with their
health insurance. Therefore, the recommendation is to renew the dental insurance bid
to BCBS of Texas maintaining the same plan design and contribution model.
A motion was made by Trustee Root and seconded by Trustee Guillot to award a bid
for employee dental insurance to Blue Cross Blue Shield Texas. MOTION CARRIED.
Ayes: Chairperson Albanese, Trustees Austin, Root, Sonnier, and Guillot.
Noes: None.
5. LIFE/AD&D/LTD
Currently, the City utilizes Blue Cross/Blue Shield of Texas for basic life/accidental
death and dismemberment and long-term disability coverage. Staff recommends
renewing the basic life/AD&D and LTD bid with BCBS of Texas; the rate increase is
8.6% or $4,482 annually. There are no revisions to the existing benefit terms. In
2013, the City began to offer a voluntary life insurance product employees could
purchase; BCBS of Texas offers a similar product.
A motion was made by Trustee Sonnier and seconded by Trustee Root to award a bid
for employee Life/AD&D/LTD insurance to Blue Cross/Blue Shield of Texas. MOTION
CARRIED.
Ayes: Chairperson Albanese,Trustees Austin, Root, Sonnier, and Guillot.
Noes: None.
6. AD]OURN
There being no further business a motion was made by Chairperson Albanese and
seconded by Trustee Root to adjourn the meeting at 6:42 p.m. MOTION CARRIED.
Ayes: Chairperson Albanese, Trustees Austin, Root, Sonnier, and Guillot.
Noes: None.
[1]
Don Albanese, Chairperson
City of Nederland Employee Benefits Trust
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