17-B-52 - issuance of series 2018 general obligation refunding bondsFINAL
ORDINANCE NO. 17 -B -52
AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF
SCHERTZ, TEXAS AUTHORIZING THE ISSUANCE OF "CITY OF
SCHERTZ, TEXAS GENERAL OBLIGATION REFUNDING BONDS,
SERIES 2018 ", LEVYING AN ANNUAL AD VALOREM TAX, WITHIN
THE LIMITATIONS PRESCRIBED BY LAW, FOR THE PAYMENT OF
THE BONDS; PRESCRIBING THE FORM, TERMS, CONDITIONS, AND
RESOLVING OTHER MATTERS INCIDENT AND RELATED TO THE
ISSUANCE, SALE, AND DELIVERY OF THE BONDS, AUTHORIZING
THE EXECUTION OF A PAYING AGENT/REGISTRAR AGREEMENT,
A PURCHASE AND INVESTMENT LETTER, AND AN ESCROW
DEPOSIT LETTER; COMPLYING WITH THE LETTER OF
REPRESENTATIONS ON FILE WITH THE DEPOSITORY TRUST
COMPANY; AUTHORIZING THE EXECUTION OF ANY NECESSARY
ENGAGEMENT AGREEMENTS WITH THE CITY'S FINANCIAL
ADVISORS AND /OR BOND COUNSEL; AND PROVIDING AN
EFFECTIVE DATE
WHEREAS, the City Council (the City Council) of the City of Schertz, Texas (the City)
has heretofore issued, sold, and delivered, and there are currently outstanding obligations in the
aggregate original principal amount of $6,035,000, being the obligations set forth on Schedule I
hereto which is incorporated by reference for all purposes to this ordinance (the Refunded
Obligations); and
WHEREAS, the City Council intends to issue an aggregate principal amount of
$6,035,000 in general obligation refunding bonds the proceeds of which will be utilized to
provide for the (i) refunding of the Refunded Obligations and (ii) payment of the costs of
issuance of the general obligation refunding bonds; and
WHEREAS, pursuant to the provisions of Chapter 1207, as amended, Texas Government
Code (the Act), the City Council is authorized to issue refunding bonds and deposit the proceeds
of sale under an escrow agreement to provide for the payment of the Refunded Obligations, and
such deposit, when made in accordance with the Act, shall constitute the making of firm banking
and financial arrangements for the discharge and final payment of the Refunded Obligations; and
WHEREAS, the Act permits that the deposit of the proceeds from the sale of the
refunding bonds be deposited directly with any designated escrow agent which is not the
depository bank of the City; and
WHEREAS, when firm banking arrangements have been made for the payment of
principal of and interest to the stated maturity or redemption dates of the Refunded Obligations,
then the Refunded Obligations shall no longer be regarded as outstanding except for the purpose
29197728.5
of receiving payment from the funds provided for such purpose and may not be included in or
considered to be an indebtedness of the City for the purpose of a limitation on outstanding
indebtedness or taxation or for any other purpose; and
WHEREAS, Bank of America, N.A., Dallas, Texas, currently serves as the paying agent
for the Refunded Obligations; and
WHEREAS, UMB Bank, N.A., Austin, Texas is hereby appointed as the Escrow Agent
(hereinafter defined) for the general obligation refunding bonds; and
WHEREAS, First National Bank Texas, Killeen, Texas is hereby appointed as the Paying
Agent/Registrar (hereinafter defined) for the general obligation refunding bonds; and
WHEREAS, the City Council also hereby finds and determines that the Refunded
Obligations are scheduled to mature or are subject to being redeemed, not more than twenty (20)
years from the date of the general obligation refunding bonds herein authorized and being issued
to restructure the City's debt service and associated tax rates in the coming years, and such
refunding will result in a net present value savings of $566,500.84 and a gross savings of
$591,500.84; including the City's cash contribution of $200,678.85; and
WHEREAS, the City Council hereby finds and determines that the issuance of the
general obligation refunding bonds for the purpose of refunding the Refunded Obligations is in
the best interests of the residents of the City, now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
SECTION 1. Authorization - Designation - Principal Amount - Purpose. General
obligation refunding bonds of the City shall be and are hereby authorized to be issued in the
aggregate principal amount of SIX MILLION THIRTY FIVE THOUSAND AND NO /100
DOLLARS ($6,035,000), to be designated and bear the title of "CITY OF SCHERTZ, TEXAS
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2018" (the Bonds), for the purpose
of providing funds for the (i) discharge and final payment of the Refunded Obligations and
(ii) payment of the costs of issuance of the Bonds, all in conformity with the laws of the State of
Texas, particularly Chapter 1207, as amended, Texas Government Code, an ordinance adopted
by the City Council on December 12, 2017, and the City's Home Rule Charter.
SECTION 2. Fully Registered Obligations - Authorized Denominations - Stated
Maturities - Interest Rates — Dated Date. The Bonds shall be issued as fully registered
obligations, without coupons, shall be dated December 15, 2017 (the Dated Date), and shall
generally be in denominations of $100,000 or any integral multiple of $5,000 in excess thereof,
and the Bonds shall be lettered "R" and numbered consecutively from One (1) upward, and
principal shall become due and payable on February 1 in each of the years and in principal
amounts (the Stated Maturities) and bear interest on the unpaid principal amounts from the
Closing Date (hereinafter defined), or from the most recent Interest Payment Date (hereinafter
defined) to which interest has been paid or duly provided for, to the earlier of redemption or
Stated Maturity, at the per annum rates, while Outstanding, in accordance with the following
schedule:
29197728.5 -2-
Years of
Principal
Interest
Stated Maturity
Amounts ($)
Rates
2019
550,000
2.120
2020
56000
2.120
2021
570,000
2.120
2022
5855000
2.120
2023
59500
2.120
2024
610,000
2.120
2025
625,000
2.120
2026
635,000
2.120
2027
645,000
2.120
2028
660,000
2.120
The Bonds shall bear interest on the unpaid principal amounts from the Closing Date, or
from the most recent Interest Payment Date (hereinafter defined) to which interest has been paid
or duly provided for, to the earlier of redemption or Stated Maturity, while Outstanding, at the
rates per annum shown in the above schedule (calculated on the basis of a 360 -day year of
twelve 30 -day months). Interest on the Bonds shall be payable on February 1 and August 1 in
each year, commencing August 1, 2018 (the Interest Payment Date), while the Bonds are
Outstanding.
SECTION 3. Payment of Bonds - Paving A eng t/Re isg tray.
The principal of, premium, if any, and the interest on the Bonds, due and payable by
reason of Stated Maturity, redemption, or otherwise, shall be 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, and such payment of principal of, premium, if any, and interest on the
Bonds shall be without exchange or collection charges to the Holder (as hereinafter defined) of
the Bonds.
The selection and appointment of First National Bank Texas, Killeen, Texas (the Paying
Agent /Registrar) to serve as the initial Paying Agent/Registrar for the Bonds is hereby approved
and confirmed, and the City agrees and covenants to cause to be kept and maintained at the
corporate trust office of the Paying Agent/Registrar books and records (the Security Register) for
the registration, payment, and transfer of the Bonds, all as provided herein, in accordance with
the terms and provisions of a Paying Agent/Registrar Agreement, attached, in substantially final
form, as Exhibit A hereto, and such reasonable rules and regulations as the Paying
Agent/Registrar and the City may prescribe. The City covenants to maintain and provide a
Paying Agent/Registrar at all times while the Bonds are Outstanding, and any successor Paying
Agent/Registrar shall be (i) a national or state banking institution or (ii) an association or a
corporation organized and doing business under the laws of the United States of America or of
any state, authorized under such laws to exercise trust powers. Such Paying Agent/Registrar
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shall be subject to supervision or examination by federal or state authority and authorized by law
to serve as a Paying Agent/Registrar.
The City reserves the right to appoint a successor Paying Agent/Registrar upon providing
the previous Paying Agent/Registrar with a certified copy of a resolution or ordinance
terminating such agency. Additionally, the City agrees to promptly cause a written notice of this
substitution to be sent to each Holder of the Bonds by United States mail, first -class postage
prepaid, which notice shall also give the address of the new Paying Agent/Registrar.
Principal of, premium, if any, and interest on the Bonds, due and payable by reason of
Stated Maturity, redemption, or otherwise, shall be payable only to the registered owner of the
Bonds appearing on the Security Register (the Holder or Holders) maintained on behalf of the
City by the Paying Agent/Registrar as hereinafter provided (i) on the Record Date (hereinafter
defined) for purposes of payment of interest on the Bonds, (ii) on the date of surrender of the
Bonds for purposes of receiving payment of principal thereof upon redemption or at the Bonds'
Stated Maturity, and (iii) on any other date for any other purpose. The City and the Paying
Agent/Registrar, and any agent of either, shall treat the Holder as the owner of a Bond for
purposes of receiving payment and all other purposes whatsoever, and neither the City nor the
Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary.
Principal of and premium, if any, on the Bonds shall be payable only upon presentation
and surrender of the Bonds to the Paying Agent/Registrar at its corporate trust office (provided,
however, with respect to principal payments prior to the final Stated Maturity, the Bonds need
not be surrendered to the Paying Agent/Registrar, who will merely document this payment on an
internal ledger maintained by the Paying Agent/Registrar). Interest on the Bonds shall be paid to
the Holder whose name appears in the Security Register at the close of business on the fifteenth
day of the month next preceding an Interest Payment Date for the Bonds (the Record Date) and
shall be paid (i) by check sent on or prior to the appropriate date of payment by United States
mail, first -class postage prepaid, by the Paying Agent/Registrar, to the address of the Holder
appearing in the Security Register or (ii) by such other method, acceptable to the Paying
Agent/Registrar, requested in writing by the Holder at the Holder's risk and expense.
If the date for the payment of the principal of, premium, if any, or interest on the Bonds
shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city
where the corporate trust office of the Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day which
is not such a day. The payment on such date shall have the same force and effect as if made on
the original date any such payment on the Bonds was due.
In the event of a non - payment of interest on a scheduled payment date, and for thirty (30)
days thereafter, a new record date for such interest payment (a Special Record Date) will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (the Special Payment Date - which shall be fifteen (15)
days after the Special Record Date) shall be sent at least five (5) business days prior to the
Special Record Date by United States mail, first -class postage prepaid, to the address of each
29197728.5 -4-
Holder of a Bond appearing on the Security Register at the close of business on the last business
day next preceding the date of mailing of such notice.
SECTION 4. Redemption.
A. Optional Redemption. The Bonds shall be subject to redemption prior to Stated
Maturity, at the option of the City, on February 1, 2023, or on any date thereafter, in whole or in
part, in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated
Maturity selected at random and by lot by the Paying Agent/Registrar), at the redemption price
of par plus accrued interest to the date of redemption.
B. Exercise of Redemption Option. At least forty -five (45) days prior to a date set
for the redemption of Bonds (unless a shorter notification period shall be satisfactory to the
Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to
exercise the right to redeem Bonds, the principal amount of each Stated Maturity to be redeemed,
and the date set for the redemption thereof. The decision of the City to exercise the right to
redeem Bonds shall be entered in the minutes of the governing body of the City.
C. Selection of Bonds for Redemption. If less than all Outstanding Bonds of the
same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall
select at random and by lot the Bonds to be redeemed, provided that if less than the entire
principal amount of a Bond is to be redeemed, the Paying Agent/Registrar shall treat such Bond
then subject to redemption as representing the number of Bonds Outstanding which is obtained
by dividing the principal amount of such Bond by $5,000.
D. Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Bonds, a notice of redemption shall be sent by United States mail, first -class postage
prepaid, in the name of the City and at the City's expense, by the Paying Agent/Registrar to each
Holder of a Bond 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 whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the
Bonds, (ii) identify the Bonds to be redeemed and, in the case of a portion of the principal
amount to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption
price, (iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed,
shall become due and payable on the redemption date specified, and the interest thereon, or on
the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after
the redemption date, and (v) specify that payment of the redemption price for the Bonds, or the
principal amount thereof to be redeemed, shall be made at the corporate trust office of the Paying
Agent/Registrar only upon presentation and surrender thereof by the Holder. This notice may
also be published once in a financial publication, journal, or reporter of general circulation
among securities dealers in the City of New York, New York (including, but not limited to, The
Bond Buyer and The Wall Street ,journal), or in the State of Texas (including, but not limited to,
The Texas Bond Reporter).
29197728.5 -5-
If a Bond is subject by its terms to redemption and has been called for redemption and
notice of redemption thereof has been duly given or waived as herein provided, such Bond (or
the principal amount thereof to be redeemed) so called for redemption shall become due and
payable, and if money sufficient for the payment of such Bonds (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/Registrar, then on the redemption date designated in such notice,
interest on the Bonds (or the principal amount thereof to be redeemed) called for redemption
shall cease to accrue and such Bonds shall not be deemed to be Outstanding in accordance with
the provisions of this Ordinance.
E. Transfer/Exchange of Bonds. Neither the City nor the Paying Agent/Registrar
shall be required (1) to transfer or exchange any Bond during a period beginning forty -five (45)
days prior to the date fixed for redemption of the Bonds or (2) to transfer or exchange any Bond
selected for redemption; provided, however, such limitation of transfer shall not be applicable to
an exchange by the Holder of the unredeemed balance of a Bond which is subject to redemption
in part.
SECTION 5. Execution - Registration. The Bonds shall be executed on behalf of the
City by its Mayor or Mayor Pro Tem under the seal of the City reproduced or impressed thereon
and attested by its City Secretary. The signature of any of said officers on the Bonds may be
manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who were,
at the time of the Dated Date, the proper officers of the City shall bind the City, notwithstanding
that such individuals or either of them shall cease to hold such offices prior to the delivery of the
Bonds to the Purchasers (hereinafter defined), all as authorized and provided in Chapter 1201, as
amended, Texas Government Code.
No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Bond either a certificate of registration
substantially in the form provided in Section 8C, 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 provided in Section 8D, executed by the Paying
Agent/Registrar by manual signature, and either such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly certified or registered
and delivered.
SECTION 6. Registration - Transfer - Exchange of Bonds - Predecessor Bonds. The
Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and
address of every owner of the Bonds, or, if appropriate, the nominee thereof. Any Bond may, in
accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other
authorized denominations upon the Security Register by the Holder, in person or by his duly
authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation,
accompanied by a written instrument of transfer or request for exchange duly executed by the
Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar.
Upon surrender for transfer of any Bond at the corporate trust office of the Paying
Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver,
in the name of the designated transferee or transferees, one or more new Bonds of authorized
29197728.5 -6-
denomination and having the same Stated Maturity and of a like interest rate and aggregate'
principal amount as the Bond or Bonds surrendered for transfer.
At the option of the Holder, Bonds may be exchanged for other Bonds of authorized
denominations and having the same Stated Maturity, bearing the same rate of interest and of like
aggregate principal amount as the Bonds surrendered for exchange upon surrender of the Bonds
to be exchanged at the corporate trust office of the Paying Agent/Registrar. Whenever any
Bonds are so surrendered for exchange, the City shall execute, and the Paying Agent/Registrar
shall register and deliver, the Bonds to the Holder requesting the exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the
corporate trust office of the Paying Agent/Registrar, or be sent by registered mail to the Holder at
his request, risk, and expense, and upon the delivery thereof, the same shall be the valid and
binding obligations of the City, evidencing the same obligation to pay, and entitled to the same
benefits under this Ordinance, as the Bonds surrendered upon such transfer or exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that the
Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange
of any tax or other governmental charges required to be paid with respect to such transfer or
exchange.
Bonds canceled by reason of an exchange or transfer pursuant to the provisions hereof are
hereby defined to be Predecessor Bonds, evidencing all or a portion, as the case may be, of the
same debt evidenced by the new Bond or Bonds registered and delivered in the exchange or
transfer therefor. Additionally, the term Predecessor Bonds shall include any Bond registered
and delivered pursuant to Section 17 in lieu of a mutilated, lost, destroyed, or stolen Bond which
shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond.
SECTION 7. Initial Bonds. The Bonds herein authorized shall be initially issued as
either (i) a single fully registered Bond in the aggregate principal amount of $6,035,000 with
principal installments to become due and payable as provided in Section 2 hereof and numbered
T -1, or (ii) as one (1) fully registered Bond for each year of Stated Maturity in the applicable
principal amount and denomination and to be numbered consecutively from T -1 and upward (the
Initial Bond), and the Initial Bond shall be registered in the name of the Purchasers or the
designee thereof. The Initial Bond shall be the Bonds submitted to the Office of the Attorney
General of the State of Texas for approval, certified and registered by the Office of the
Comptroller of Public Accounts of the State of Texas and delivered to the Purchasers. Any time
after the delivery of the Initial Bond, the Paying Agent/Registrar, pursuant to written instructions
from the Purchasers, or the designee thereof, shall cancel the Initial Bond delivered hereunder
and exchange therefor definitive Bonds of like kind and of authorized denominations, Stated
Maturities, principal amounts bearing applicable interest rates, and shall be lettered "R" and
numbered consecutively from one (1) upward for transfer and delivery to the Holders named at
the addresses identified therefor; all pursuant to and in accordance with such written instructions
from the Purchasers, or the designee thereof, and such other information and documentation as
the Paying Agent/Registrar may reasonably require.
29197728.5 -7-
SECTION 8. Forms.
A. Forms Generally. The Bonds, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas, the Registration Certificate of Paying Agent/Registrar,
and the form of Assignment to be printed on each of the Bonds shall be substantially in the forms
set forth in this Section with such appropriate insertions, omissions, substitutions, and other
variations as are permitted or required by this Ordinance and may have such letters, numbers, or
other marks of identification (including insurance legends in the event the Bonds, or any Stated
Maturities thereof, are insured and identifying numbers and letters of the Committee on Uniform
Securities Identification Procedures of the American Bankers Association) and such legends and
endorsements (including insurance legends and any reproduction of an opinion of Bond Counsel
(hereinafter referenced)) thereon as may, consistent herewith, be established by the City or
determined by the officers executing the Bonds as evidenced by their execution thereof. Any
portion of the text of any Bond may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Bond.
The definitive Bonds shall be printed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Bonds as evidenced by their execution thereof, but the Initial Bond(s)
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
B. Form of Definitive Bond.
REGISTERED REGISTERED
NO. PRINCIPAL AMOUNT
United States of America
State of Texas
Counties of Guadalupe, Comal, and Bexar
CITY OF SCHERTZ, TEXAS
GENERAL OBLIGATION REFUNDING BONDS,
SERIES 2018
Dated Date: Interest Rate: Stated Maturity: CUSIP NO:
December 15, 2017
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Schertz, Texas (the City), a body corporate and a municipal corporation in
the Counties of Guadalupe, Comal, and Bexar, State of Texas, for value received, acknowledges
itself indebted to and hereby promises to pay to the order of the Registered Owner specified
above, or the registered assigns thereof, on the Stated Maturity date specified above, the
Principal Amount specified above (or so much thereof as shall not have been paid upon prior
29197728.5 -8-
redemption) and to pay interest on the unpaid Principal Amount hereof from the Closing Date or
from the most recent Interest Payment Date (hereinafter defined) to which interest has been paid
or duly provided for, until such Principal Amount has become due and payment thereof has been
made or duly provided for, to the earlier of redemption or Stated Maturity, while Outstanding, at
the per annum rate of interest specified above computed on the basis of a 360 -day year of
twelve 30 -day months; such interest being payable on February 1 and August 1 of each year,
commencing August 1, 2018 (each, an Interest Payment Date).
Principal and premium, if any, on this Bond shall be payable to the Registered Owner
hereof (the Holder), upon presentation and surrender (provided, however, with respect to
principal payments prior to the final Stated Maturity, the Bonds need not be surrendered to the
Paying Agent/Registrar, who will merely document this payment on an internal ledger
maintained by the Paying Agent/Registrar) at the corporate trust office of the Paying
Agent/Registrar executing the registration certificate appearing hereon or a successor thereof.
Interest shall be payable to the Holder of this Bond (or one or more Predecessor Bonds, as
defined in the Ordinance hereinafter referenced) whose name appears on the Security Register
maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is
the fifteenth day of the month next preceding each interest payment date. All payments of
principal of, and interest on this Bond shall be 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.
Interest shall be paid by the Paying Agent/Registrar by check sent on or prior to the appropriate
date of payment by United States mail, first -class postage prepaid, to the Holder hereof at the
address appearing in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar, requested by the Holder hereof at the Holder's risk and expense.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of $6,035,000 (the Bonds) pursuant to an ordinance adopted by the governing body of
the City (the Ordinance), for the purpose of providing funds for the (i) discharge and final
payment of the Refunded Obligations and (ii) payment of the costs of issuance of the general
obligation refunding bonds, under and in strict conformity with the laws of the State of Texas,
including Chapter 1207, as amended, Texas Government Code, and the City's Home Rule
Charter.
As specified in the Ordinance, the Bonds shall be subject to redemption prior to Stated
Maturity, at the option of the City, on February 1, 2023 or on any date thereafter, in whole or in
part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated
Maturity selected at random and by lot by the Paying Agent/Registrar) at the redemption price of
par, together with accrued interest to the date of redemption, and upon thirty (30) days prior
written notice being given by United States mail, first -class postage prepaid, to Holders of the
Bonds to be redeemed, and subject to the terms and provisions relating thereto contained in the
Ordinance. If this Bond is subject to redemption prior to Stated Maturity and is in a
denomination in excess of $5,000, portions of.the principal sum hereof in installments of $5,000
or any integral multiple thereof may be redeemed, and, if less than all of the principal sum hereof
is to be redeemed, there shall be issued, without charge therefor, to the Holder hereof, upon the
surrender of this Bond to the Paying Agent/Registrar at its corporate trust office, a new Bond or
Bonds of like Stated Maturity and interest rate in any authorized denominations provided in the
Ordinance for the then unredeemed balance of the principal sum hereof.
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If this Bond (or any portion of the principal sum hereof) shall have been duly called for
redemption and notice of such redemption has been duly given, then upon such redemption date
this Bond (or the portion of the principal sum hereof to be redeemed) shall become due and
payable, and, if the 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/Registrar, interest shall cease to accrue and be payable hereon
from and after the redemption date on the principal amount hereof to be redeemed. If this Bond
is called for redemption, in whole or in part, the City or the Paying Agent/Registrar shall not be
required to issue, transfer, or exchange this Bond within forty -five (45) days of the date fixed for
redemption; provided, however, such limitation of transfer shall not be applicable to an exchange
by the Holder of the unredeemed balance hereof in the event of its redemption in part.
The Bonds of this series are payable from the proceeds of an annual ad valorem tax
levied upon all taxable property within the City within the limitations prescribed by law.
Reference is hereby made to the Ordinance, a copy of which is on file in the corporate
trust office of the Paying Agent/Registrar, and to all of the provisions of which the Holder by his
acceptance hereof hereby assents, for definitions of terms; the description of and the nature and
extent of the tax levied for the payment of the Bonds; the terms and conditions relating to the
transfer or exchange of the Bonds; the conditions upon which the Ordinance may be amended or
supplemented with or without the consent of the Holders; the rights, duties, and obligations of
the City and the Paying Agent/Registrar; the terms and provisions upon which this Bond 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.
This Bond, subject to certain limitations contained in the Ordinance, may be transferred
on the Security Register upon presentation and surrender at the corporate trust office of the
Paying Agent/Registrar, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Paying Agent/Registrar duly executed by the Holder hereof, or his duly
authorized agent, and thereupon one or more new fully registered Bonds of the same Stated
Maturity, of authorized denominations, bearing the same rate of interest, and -of the same
aggregate principal amount will be issued to the designated transferee or transferees.
The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder
hereof whose name appears on the Security Register (i) on the Record Date as the owner hereof
for purposes of receiving payment of interest hereon, (ii) on the date of surrender of this Bond as
the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity or
its redemption, in whole or in part„ and (iii) on any other date as the owner hereof for all other
purposes, and neither the City nor the Paying Agent/Registrar, or any such agent of either, shall
be affected by notice to the contrary. In the event of a non - payment of interest on a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a
Special Record Date) will be established by the Paying Agent/Registrar, if and when funds for
the payment of such interest have been received from the City. Notice of the Special Record
Date and of the scheduled payment date of the past due interest (the Special Payment
Date - which shall be fifteen (15) days after the Special Record Date) shall be sent at least five
(5) business days prior to the Special Record Date by United States mail, first -class postage
29197728.5 -10-
prepaid, to the address of each Holder appearing on the Security Register at the close of business
on the last business day next preceding the date of mailing of such notice.
It is hereby certified, covenanted, and represented that all acts, conditions, and things
required to be performed, exist, and be done precedent to the issuance of this Bond in order to
render the same a legal, valid, and binding obligation of the City have been performed, exist, and
have been done, in regular and due time, form, and manner, as required by the laws of the State
of Texas and the Ordinance, and that the issuance of the Bonds does not exceed any
constitutional or statutory limitation; and that due provision has been made for the payment of
the principal of, premium if any, and interest on the Bonds by the levy of a tax as aforestated. In
case any provision in this Bond or any application thereof shall be deemed invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining provisions and
applications shall not in any way be affected or impaired thereby. The terms and provisions of
this Bond and the Ordinance shall be construed in accordance with and shall be governed by the
laws of the State of Texas.
IN WITNESS WHEREOF, the City has caused this Bond to be duly executed under its
official seal.
ATTEST:
City Secretary
(CITY SEAL)
CITY OF SCHERTZ, TEXAS
Mayor
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291977285 -11-
C. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Bonds Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER OF §
PUBLIC ACCOUNTS §
§ REGISTER NO.
THE STATE OF TEXAS §
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the 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
(SEAL)
* Note to Printer: Not to appear on printed Bonds
Only.
Comptroller of Public Accounts
of the State of Texas
D. Form of Certificate of Paying_Agent/Registrar to Appear on Definitive Bonds
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued under the provisions of the within - mentioned Ordinance;
the Bond or Bonds 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/Registrar.
Registered this date: FIRST NATIONAL BANK TEXAS, Killeen,
Texas as Paying Agent/Registrar
M.
29197728.5 -12-
Authorized Signature
E. Form of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
(Print or typewrite name, address, and zip code of transferee):
(Social Security or other identifying number):
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Bond on the books kept for registration
thereof, with full power of substitution in the premises.
DATED:
NOTICE: The signature on this assignment must
correspond with the name of the registered owner as it
appears on the face of the within Bond in every particular.
Signature guaranteed:
F. The Initial Bonds shall be in the respective forms set forth in paragraph B of this
Section except that the form of a single fully registered Initial Bond shall be modified as
follows:
(i) immediately under the name of the Bond(s) the headings "Interest Rate"
and "Stated Maturity" shall both be completed "as shown below ";
(ii) the first two paragraphs shall read as follows:
Registered Owner:
Principal Amount:
The City of Schertz, Texas (the City), a body corporate and municipal corporation in the
Counties of Guadalupe, Comal, and Bexar, State of Texas, for value received, acknowledges
itself indebted to and hereby promises to pay to the order of the Registered Owner named above,
or the registered assigns thereof, the Principal Amount specified above stated to mature on the
first day of February in each of the years and in principal amounts and bearing interest at per
annum rates in accordance with the following schedule:
29197728.5 -I3-
Years of Principal Interest
Stated Maturity Amounts -M Rates
(Information to be inserted from
schedule in Section 2 hereof).
(or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the
unpaid Principal Amount hereof from the Closing Date (anticipated to be November 30, 2016),
or from the most recent interest payment date to which interest has been paid or duly provided
for until the Principal Amount has become due and payment thereof has been made or duly
provided for, to the earlier of redemption or Stated Maturity, while Outstanding, at the per
annum rates of interest specified above computed on the basis of a 360 -day year of twelve
30 -day months; such interest being payable on February 1 and August 1 of each year,
commencing August 1, 2018.
Principal of this Bond shall be payable to the Registered Owner hereof (the Holder),
upon its presentation and surrender to Stated Maturity or prior redemption, while Outstanding, at
the corporate trust office of First National Bank Texas, Killeen, Texas (the Paying
Agent /Registrar) (provided, however, with respect to principal payments prior to the final Stated
Maturity, the Bonds need not be surrendered to the Paying Agent/Registrar, who will merely
document this payment on an internal ledger maintained by the Paying Agent/Registrar). Interest
shall be payable to the Holder of this Bond whose name appears on the Security Register
maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is
the fifteenth day of the month next preceding each interest payment date. All payments of
principal of and interest on this Bond shall be 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.
Interest shall be paid by the Paying Agent/Registrar by check sent on or prior to the appropriate
date of payment by United States mail, first -class postage prepaid, to the Holder hereof at the
address appearing in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar, requested by, and at the risk and expense of, the Holder hereof.
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29197728.5 -14-
G. Insurance Lei;end. If bond insurance is obtained by the City or the Purchasers for
the Bonds, the Definitive Bonds and the Initial Bonds shall bear an appropriate legend as
provided by the insurer.
SECTION 9. Definitions. For all purposes of this Ordinance (as defined below), except
as otherwise expressly provided or unless the context otherwise requires: (i) the terms defined in
this Section have the meanings assigned to them in this Section, and certain terms used in
Sections 21 and 37 of this Ordinance have the meanings assigned to them in such Sections, and
all such terms include the plural as well as the singular; (ii) all references in this Ordinance to
designated "Sections" and other subdivisions are to the designated Sections and other
subdivisions of this Ordinance as originally adopted; and (iii) the words "herein ", "hereof', and
"hereunder" and other words of similar import refer to this Ordinance as a whole and not to any
particular Section or other subdivision.
A. The term Authorized Officials shall mean the Mayor, the Mayor Pro Tem, the City
Manager, Director of Finance, and /or the City Secretary.
B. The term Bond Fund shall mean the special fund created and established by the
provisions of Section 10 of this Ordinance.
C. The term Bonds shall mean the $6,035,000 "CITY OF SCHERTZ, TEXAS
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2018" authorized by this
Ordinance.
D. The term City shall mean City of Schertz, located in the Counties of Guadalupe,
Comal, and Bexar, Texas and, where appropriate, the City Council of the City.
E. The term Closing Date shall mean the date of physical delivery of the Initial
Bonds in exchange for the payment in full by the Purchasers.
F. The term Debt Service Requirements shall mean, as of any particular date of
computation, with respect to any obligations and with respect to any period, the aggregate of the
amounts to be paid or set aside by the City as of such date or in such period for the payment of
the principal of, premium, if any, and interest (to the extent not capitalized) on such obligations;
assuming, in the case of obligations without a fixed numerical rate, that such obligations bear
interest at the maximum rate permitted by the terms thereof and further assuming in the case of
obligations required to be redeemed or prepaid as to principal prior to Stated Maturity, the
principal amounts thereof will be redeemed prior to Stated Maturity in accordance with the
mandatory redemption provisions applicable thereto.
G. The term Depository shall mean an official depository bank of the City.
H. The term Government Securities, as used herein, shall mean (i) direct noncallable
obligations of the United States, including obligations that are unconditionally guaranteed by, the
United States of America; (ii) noncallable obligations of an agency or instrumentality of the
United States, including obligations that are unconditionally guaranteed or insured by the agency
or instrumentality and that, on the date the governing body of the issuer adopts or approves the
proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a
29197728.5 -15-
nationally recognized investment rating firm not less than AAA or its equivalent;
(iii) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and that, on the date the governing body of the
issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated
as to investment quality by a nationally recognized investment rating firm not less than AAA or
its equivalent, or (iv) any additional securities and obligations hereafter authorized by the laws of
the State of Texas as eligible for use to accomplish the discharge of obligations such as the
Bonds.
I. The term Holder or Holders shall mean the 'registered owner, whose name
appears in the Security Register, for any Bond.
J. The term Interest Payment Date shall mean the date interest is payable on the
Bonds, being February 1 and August 1 of each year, commencing August 1, 2018, while any of
the Bonds remain Outstanding.
K. The term Ordinance shall mean this ordinance adopted by the City Council of the
City on December 12, 2017.
L. The term Outstanding when used in this Ordinance with respect to Bonds shall
mean, as of the date of determination, all Bonds issued and delivered under this Ordinance,
except:
(1) those Bonds canceled by the Paying Agent/Registrar or delivered to the
Paying Agent/Registrar for cancellation;
(2) those Bonds for which payment has been duly provided by the City in
accordance with the provisions of Section 23 of this Ordinance; and
(3) those Bonds that have been mutilated, destroyed, lost, or stolen and
replacement Bonds have been registered and delivered in lieu thereof as provided in
Section 17 of this Ordinance.
M. The term Purchasers shall mean the initial purchasers of the Bonds named in
Section 18 of this Ordinance.
N. The term Stated Maturity shall mean the annual principal payments of the Bonds
payable on February 1 of each year, as set forth in Section 2 of this Ordinance.
SECTION 10. Bond Fund; Investments. For the purpose of paying the interest on and to
provide a sinking fund for the payment, redemption, and retirement of the Bonds, there shall be
and is hereby created a special fund to be designated "CITY OF SCHERTZ, TEXAS GENERAL
OBLIGATION REFUNDING BONDS, SERIES 2018 INTEREST AND SINKING FUND" (the
Bond Fund), which fund shall be kept and maintained at the Depository, and money deposited in
such fund shall be used for no other purpose and shall be maintained as provided in Section 21.
Authorized Officials of the City are hereby authorized and directed to make withdrawals from
the Bond Fund sufficient to pay the purchase price or amount of principal of, premium, if any,
and interest on the Bonds as the same become due and payable and shall cause to be transferred
29197728.5 -16-
to the Paying Agent/Registrar from money on deposit in the Bond Fund an amount sufficient to
pay the amount of principal and /or interest stated to mature on the Bonds, such transfer of funds
to the Paying Agent/Registrar to be made in such manner as will cause immediately available
funds to be deposited with the Paying Agent/Registrar on or before the business day next
preceding each interest and principal payment date for the Bonds.
Pending the transfer of funds to the Paying Agent/Registrar, money deposited in any fund
created and established pursuant to the provisions of this Ordinance, at the option of the City,
may be placed in time deposits, certificates of deposit, guaranteed investment contracts, or
similar contractual agreements as permitted by the provisions of the Public Funds Investment
Act, as amended, Chapter 2256, Texas Government Code, secured (to the extent not insured by
the Federal Deposit Insurance Corporation) by obligations of the type hereinafter described, or
be invested, as authorized by any law, including investments held in book -entry form, in
securities including, but not limited to, direct obligations of the United States of America,
obligations guaranteed or insured by the United States of America, which, in the opinion of the
Attorney General of the United States, are backed by its full faith and credit or represent its
general obligations, or invested in indirect obligations of the United States of America,
including, but not limited to, evidences of indebtedness issued, insured or guaranteed by such
governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for
Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, Farmers
Home Administration, Federal Home Loan Mortgage Association, Small Business
Administration, or Federal Housing Association; provided that all such deposits and investments
shall be made in such a manner that the money required to be expended from such fund will be
available at the proper time or times. All interest and income derived from deposits and
investments in such fund shall be credited to, and any losses debited to, such fund. All such
investments shall be sold promptly when necessary to prevent any default in connection with the
Bonds.
SECTION 11. Tax Levy. To provide for the payment of the Debt Service Requirements
on the Bonds being (i) the interest on the Bonds and (ii) a sinking fund for their redemption at
Stated Maturity or a sinking fund of 2% (whichever amount shall be the greater), there shall be
and there is hereby levied for the current year and each succeeding year thereafter while the
Bonds or any interest thereon shall remain Outstanding, a sufficient tax, within the limitations
prescribed by law, on each one hundred dollars' valuation of taxable property in the City,
adequate to pay such Debt Service Requirements, full allowance being made for delinquencies
and costs of collection; said tax shall be assessed and collected each year and applied to the
payment of the Debt Service Requirements, and the same shall not be diverted to any other
purpose. The taxes so levied and collected shall be paid into the Bond Fund and are thereafter
pledged to the payment of the Bonds. The City Council hereby declares its purpose and intent to
provide and levy a tax legally and fully sufficient to pay such Debt Service Requirements, it
having been determined that the existing and available taxing authority of the City for such
purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding
indebtedness and other obligations of the City.
SECTION 12. Deposits to Bond Fund, Surplus Bond Proceeds. The City hereby
covenants and agrees to cause to be deposited in the Bond Fund prior to a principal and interest
payment date for the Bonds, from the annual levy of an ad valorem tax or from other lawfully
29197728.5 -17-
available funds, amounts sufficient to fully pay and discharge promptly each installment of
interest and principal of the Bonds as the same accrues or matures or comes due by reason of
Stated Maturity.
Accrued interest, if any, received from the Purchasers of the Bonds, along with any taxes
collected pertaining to the Refunded Obligations, after the Closing Date, shall be deposited to the
Bond Fund. In addition, any surplus proceeds from the sale of the Bonds, including investment
income thereon, not expended for authorized purposes shall be deposited in the Bond Fund, and
such amounts so deposited shall reduce the sums otherwise required to be deposited in said fund
from ad valorem taxes.
SECTION 13. Security of Funds. All money on deposit in the funds for which this
Ordinance makes provision (except any portion thereof as may be at any time properly invested
as provided herein) shall be secured in the manner and to the fullest extent required by the laws
of the State of Texas for the security of public funds, and money on deposit in such funds shall
be used only for the purposes permitted by this Ordinance.
SECTION 14. Remedies in Event of Default. In addition to all the rights and remedies
provided by the laws of the State of Texas, the City covenants and agrees particularly that in the
event the City (a) defaults in the payments to be made to the Bond Fund or (b) defaults in the
observance or performance of any other of the covenants, conditions, or obligations set forth in
this Ordinance, the Holders of any of the Bonds shall be entitled to seek a writ of mandamus
issued by a court of proper jurisdiction compelling and requiring the governing body of the City
and other officers of the City 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 provided shall be cumulative of
all other existing remedies and the specification of such remedies shall not be deemed to be
exclusive.
SECTION 15. Notices to Holders; Waiver. Wherever this Ordinance provides for notice
to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States mail, first -class postage prepaid, to
the address of each Holder appearing in the Security Register at the close of business on the
business day next preceding the mailing of such notice.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice with respect to all other Holders. Where this Ordinance provides for
notice in any manner, such notice may be waived in writing by the Holder entitled to receive
such notice, either before or after the event with respect to which such notice is given, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
29197728.5 -18-
SECTION 16. Cancellation. All Bonds surrendered for payment, redemption, transfer,
exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly
canceled by it and, if surrendered to the City, shall be delivered to the Paying Agent /Registrar
and, if not already canceled, shall be promptly canceled by the Paying Agent/Registrar. The City
may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously
certified or registered and delivered which the City may have acquired in any manner
whatsoever, and all Bonds so delivered shall be promptly canceled by the Paying
Agent/Registrar. All canceled Bonds held by the Paying Agent/Registrar shall be destroyed as
directed by the City.
SECTION 17. Mutilated, Destroyed, Lost, and Stolen Bonds. If (1) any mutilated Bond
is surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar receive
evidence to their satisfaction of the destruction, loss, or theft of any Bond, and (2) there is
delivered to the City and the Paying Agent/Registrar such security or indemnity as may be
required to save each of them harmless, then, in the absence of notice to the City or the Paying
Agent/Registrar that such Bond has been acquired by a bona fide purchaser, the City shall
execute and, upon its request, the Paying Agent/Registrar shall register and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost, or stolen Bond, a new Bond of the same
Stated Maturity and interest rate and of like tenor and principal amount, bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost, or stolen Bond has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Bond, pay such
Bond.
Upon the issuance of any new Bond or payment in lieu thereof, under this Section, the
City may require payment by the Holder of a sum sufficient to cover any tax or other
governmental charge imposed in relation thereto and any other expenses and charges (including
attorney's fees and the fees and expenses of the Paying Agent/Registrar) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not
the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and ratably with all other
Outstanding Bonds.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement and payment of mutilated, destroyed,
lost, or stolen Bonds.
SECTION 18. Sale of Bonds — Authorization of Purchase Contract. The Bonds
authorized by this Ordinance are hereby sold by the City to First National Bank Texas, Killeen,
Texas, as the initial purchaser of the Bonds pursuant to a private placement (the Purchasers, and
having all of the rights, benefits, and obligations of a Holder) in accordance with the provisions
of the Purchase and Investment Letter, dated as of December 12, 2017, and between the City and
the Purchasers, in substantially the form attached hereto as Exhibit B and incorporated herein by
reference as a part of the Ordinance for all purposes, between the City and the Purchasers (the
29197728.5 -19-
Purchase Contract). The Initial Bonds shall be registered in the name of First National Bank
Texas. The pricing and terms of the sale of the Bonds are hereby found and determined to be the
most advantageous reasonably obtainable by the City, Each Authorized Official is hereby
authorized and directed to execute the Purchase Contract for and on behalf of the City and as the
act and deed of the City Council, and in regard to the approval and execution of the Purchase
Contract, the City Council hereby finds, determines and declares that the representations,
warranties, and agreements of the City contained in the Purchase Contract are true and correct in
all material respects and shall be honored and performed by the City. Delivery of the Bonds to
the Purchasers shall occur as soon as practicable after the adoption of this Ordinance, upon
payment therefor in accordance with the terms of the Purchase Contract.
SECTION 19. Escrow Deposit Letter Approval and Execution; Proceeds of Sale;
Contribution by City. The Escrow Deposit Letter dated as of December 12, 2017 to be effective
upon the initial delivery of the Bonds to the Purchasers (the Agreement) between the City and
UMB Bank, N.A., Austin, Texas (the Escrow Agent), attached hereto as Exhibit C and
incorporated herein by reference as a part of this Ordinance for all purposes, is hereby approved
as to form and content, and such Agreement in substantially the form and substance attached
hereto, together with such changes or revisions as may be necessary to accomplish the refunding
or benefit the City, is hereby authorized to be executed by the Mayor, Mayor Pro Tem, and City
Secretary and on behalf of the City and as the act and deed of this City Council; and such
Agreement as executed by said officials shall be deemed approved by the City Council and
constitute the Agreement herein approved.
Furthermore, any Authorized Official, or any one or more of said officials, and Bond
Counsel in cooperation with the Escrow Agent are hereby authorized and directed to make the
necessary arrangements for the purchase of the Federal Securities referenced in the Agreement
and the initial delivery thereof to the Escrow Agent on the day of delivery of the Bonds to the
Purchasers for deposit to the credit of the "CITY OF SCHERTZ, TEXAS GENERAL
OBLIGATION REFUNDING BOND SERIES 2018 ESCROW FUND" (the Escrow Fund,
including the execution of the subscription forms for the purchase and issuance of the "United
States Treasury Securities - State and Local Government Series ", if any, for deposit to the
Escrow Fund; all as contemplated and provided by the provisions of the Act, this Ordinance, and
the Agreement.
Immediately following the delivery of the Bonds, the proceeds of sale along with a cash
contribution, if any, from the City (less certain costs of issuance, and accrued interest, if any,
received from the Purchasers of the Bonds) shall be deposited with the Escrow Agent for
application and disbursement in accordance with the provisions of the Agreement. The proceeds
of sale of the Bonds not so deposited with the Escrow Agent for the refunding of the Refunded
Obligations shall be disbursed for payment of costs of issuance and deposited with the place of
payment (of the Refunded Obligations) in an account in the name of the City and applied for the
purposes of providing for the payment of the costs and expenses incurred in connection therewith
or deposited in the Bond Fund for the Bonds, all in accordance with written instructions from
any Authorized Officials.
SECTION 20. Redemption of Refunded Obligations. The Refunded Obligations
referenced in the preamble hereof become subject to redemption prior to their stated maturities at
29197728.5 -20-
the price of par, premium, if any, and accrued interest to the date of redemption. The Mayor or
City Secretary shall give written notice to the paying agent/registrar for the Refunded
Obligations and the Escrow Agent that the Refunded Obligations have been called for
redemption, and the City Council orders that such obligations are called for redemption on the
date set forth on Schedule I attached to this Ordinance, and such order to redeem the Refunded
Obligations on such date shall be irrevocable upon the delivery of the Bonds. A copy of the
notice of redemption pertaining to the Refunded Obligations is attached to this Ordinance as
Exhibit D and is incorporated herein by reference for all purposes. The paying agent for the
Refunded Obligations is authorized and instructed to provide notice of this redemption to the
holders of the Refunded Obligations in the form and manner described in the ordinance
authorizing the issuance of the Refunded Obligations.
SECTION 21. 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 of physical delivery of the Initial Bonds in exchange
for the payment in full by the Purchasers.
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 Bonds.
Investment has the meaning set forth 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 Bonds are invested and which
is not acquired to carry out the governmental purposes of the Bonds.
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 are applicable to the Bonds. 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.
29197728,5 -21-
Yield of
(1) any Investment has the meaning set forth in Section 1.148 -5 of the
Regulations; and
(2) the Bonds means the yield on the Bonds as calculated pursuant to Section
1.148 -4 of the Regulations.
B. Not to Cause Interest to Become Taxable. The City shall not use, permit the use
of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition,
construction or improvement of which is to be financed or refinanced directly or indirectly with
Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on
any Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the City receives a written opinion 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 Bond, the City shall comply
with each of the specific covenants in this Section.
C. No Private Use or Private Payments. Except to the extent that it will not cause the
Bonds to become "private activity bonds" within the meaning of section 141 of the Code and the
Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of
Bonds:
(1) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Bonds (including property financed with Gross
Proceeds of the Refunded Obligations), and not use or permit the use of such Gross
Proceeds (including all contractual arrangements with terms different than those
applicable to the general public) or any property acquired, constructed or improved with
such Gross Proceeds in any activity carried 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 of the Bonds or any property
the acquisition, construction or improvement of which is to be financed or refinanced
directly or indirectly with such Gross Proceeds (including property financed with Gross
Proceeds of the Refunded Obligations), other than taxes of general application within the
City or interest earned on investments acquired with such Gross Proceeds pending
application for their intended purposes.
D. No Private Loan. Except to the extent that it will not cause the Bonds to become
"private activity bonds" within the meaning of section 141 of the Code and the Regulations and
rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans
to any person or entity other than a state or local government. For purposes of the foregoing
covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if-
29197728.5 -22-
(1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to
such person or entity 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 or entity under a
take -or -pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and
benefits of ownership, of such Gross Proceeds or any property acquired, constructed or improved
with such Gross Proceeds are otherwise transferred in a transaction which is the economic
equivalent of a loan.
E. Not to Invest at Higher Yield. Except to the extent that it will not cause the
Bonds to become "arbitrage bonds" within the meaning of section 148 of the Code and the
Regulations and rulings thereunder, the City shall not at any time prior to the final Stated
Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment, if as a
result of such investment the Yield of any Investment acquired with Gross Proceeds, whether
then held, or previously disposed of, materially exceeds the Yield of the Bonds.
F. Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the
Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Bonds to be federally guaranteed within the meaning of
section 149(b) of the Code and the Regulations and rulings thereunder.
G. Information Report. The City 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 the 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 City 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
Bond is discharged. However, to the extent permitted by law, the City may commingle
Gross Proceeds of the Bonds with other money of the City, provided that the City
separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City 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 City shall maintain such calculations with its
official transcript of proceedings relating to the issuance of the Bonds until six years after
the final Computation Date.
(3) As additional consideration for the purchase of the Bonds 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 City shall pay to
the United States out of the Bond Fund or its general fund, as permitted by applicable
29197728.5 -23-
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
Bonds 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 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 City 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. Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of
the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that
reduces the amount required to be paid to the United States pursuant to Subsection H of this
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 Bonds not been
relevant to either party.
J. Bonds Not Hedge Bonds.
(1) At the time the original bonds refunded by the Bonds were issued, the City
reasonably expected to spend at least 85% of the spendable proceeds of such bonds
within three years after such bonds were issued.
(2) Not more than 50% of the proceeds of the original bonds refunded by the
Bonds were invested in Nonpurpose Investments having a substantially guaranteed Yield
for a period of 4 years or more.
K. Current Refunding of the Refunded Obli atg ions. The Bonds are being issued, in
part, to refund the Refunded Obligations, and the Bonds will be issued, and certain proceeds
thereof used, within 90 days after the Closing Date for the redemption of the Refunded
Obligations. In the issuance of the Bonds, the City has employed no "device" to obtain a
material financial advantage (based on arbitrage), within the meaning of section 149(d)(4) of the
Code, apart from savings attributable to lower interest rates. The City has complied with the
covenants, representations, and warranties contained in the documents executed in connection
with the issuance of the Refunded Obligations. Accordingly, the City expects to invest the Bond
proceeds to be used to refund the Refunded Obligations without regard to Yield restrictions.
29197728.5 -24-
L. Elections. The City hereby directs and authorizes any Authorized Official, either
or any combination of the foregoing, to make such elections in the Certificate as to Tax
Exemption or similar or other appropriate certificate, form, or document permitted or required
pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate
in connection with the Bonds. Such elections shall be deemed to be made on the Closing Date.
M. Qualified Tax - Exempt Obligations. Section 265 of the Code provides, in
general, that interest expense to acquire or carry tax - exempt obligations is not deductible from
the gross income of the owner of such obligations. In addition, section 265 of the Code
generally disallows 100% of any deduction for interest expense which is incurred by "financial
institutions" described in such section and is allocable, as computed in such section, to tax -
exempt interest on obligations acquired after August 7, 1986. Section 265(b) of the Code
provides an exception to this interest disallowance rule for financial institutions, stating that such
disallowance does not apply to interest expense allocable to tax - exempt obligations (other than
private activity bonds that are not qualified 501(c)(3) bonds) which are properly designated by an
issuer as "qualified tax - exempt obligations." An issuer may designate obligations as "qualified
tax - exempt obligations" only if the amount of the issue of which they are a part, when added to
the amount of all other tax - exempt obligations (other than private activity bonds that are not
qualified 501(c)(3) obligations and other than certain current refunding bonds) issued or
reasonably anticipated to be issued by the issuer during the same calendar year, does not exceed
$10,000,000. A tax - exempt obligation may be "deemed- designated as "qualified tax - exempt
obligations" and receive the same treatment and not count against the City's annual $10 million
limit to the extent the amount of the City does not exceed the amount of the Refunded
Obligations, (i) the Bonds are a current refunding of the Refunded Obligations, (ii) the Refunded
Obligations were designated as a "qualified tax - exempt obligation ", (iii) the weighted average
maturity of the Bonds does not exceed the remaining weighted average maturity of the Refunded
Obligations, (iv) the amount of the Bonds does not exceed $10 million, and (v) the maturity date
of the Bonds is not later than 30 years after the date the original "qualified tax - exempt
obligation" was issued.
The City will designate the Bonds as "qualified tax - exempt obligations" or the
City will be deemed designated as "qualified tax - exempt obligations" within the meaning of
section 265(b) of the Code. In furtherance of that designation, the City will covenant to take
such action that would assure, or to refrain from such action that would adversely affect, the
treatment of the Bonds as "qualified tax - exempt obligations."
N. Control and Custody of Bonds. The Mayor shall be and is hereby authorized to
take and have charge of all necessary orders and records pending investigation by the Attorney
General of the State of Texas and shall take and have charge and control of the Bonds pending
their approval by the Attorney General, the registration thereof by the Comptroller of Public
Accounts and the delivery of the Bonds to the Purchasers.
Furthermore, any Authorized Official, either or all, are hereby authorized and directed to
furnish and execute such documents relating to the City and its financial affairs as may be
necessary for the issuance of the Bonds, the approval of the Attorney General and their
registration by the Comptroller of Public Accounts and, together with the City's financial
advisors, Bond Counsel, and the Paying Agent/Registrar, make the necessary arrangements for
29197728.5 -25-
the delivery of the Initial Bonds to the Purchasers and the initial exchange thereof for definitive
Bonds.
SECTION 22. Satisfaction of Oblijzation of City. If the City shall pay or cause to be
paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and
interest on the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge
of taxes levied under this Ordinance and all covenants, agreements, and other obligations of the
City to the Holders shall thereupon cease, terminate, and be discharged and satisfied.
Bonds, or any principal amount(s) thereof, shall be deemed to have been paid within the
meaning and with the effect expressed above in this Section when (i) money sufficient to pay in
full such Bonds or the principal amount(s) thereof on or prior to Stated Maturity, or to the
redemption date therefor, together with all interest due thereon, shall have been irrevocably
deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent,
and /or (ii) Government Securities shall have been irrevocably deposited in trust with the Paying
Agent/Registrar, or an authorized escrow agent, which Government Securities have, in the case
of a net defeasance, been certified by an independent accounting firm to mature as to principal
and interest in such amounts and at such times as will insure the availability, without
reinvestment, of sufficient money, together with any money deposited therewith, if any, to pay
when due the principal of and interest on such Bonds, or the principal amount(s) thereof, at the
Stated Maturity thereof or (if notice of redemption has been duly given or waived or if
irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made) the
redemption date thereof for the Bonds. In the event of a gross defeasance of the Bonds, the City
shall deliver a certificate from its financial advisor, the Paying Agent/Registrar, or another
qualified third party concerning the deposit of cash and /or Government Securities to pay, when
due, the principal of, redemption premium (if any), and interest due on any defeased Bonds. The
City covenants that no deposit of money or Government Securities will be made under this
Section and no use made of any such deposit which would cause the Bonds to be treated as
arbitrage bonds within the meaning of section 148 of the Code (as defined in Section 21 hereof).
Any money so deposited with the Paying Agent/Registrar, and all income from
Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow
agent, pursuant to this Section which is not required for the payment of the Bonds, or any
principal amount(s) thereof, or interest thereon with respect to which such money has been so
deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any
money held by the Paying Agent/Registrar for the payment of the principal of and interest on the
Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity or
redemption date of the Bonds, such money was deposited and is held in trust to pay shall upon
the request of the City be remitted to the City against a written receipt therefor, subject to the
unclaimed property laws of the State of Texas.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby
provided that any determination not to redeem defeased Bonds that is made in conjunction with
the payment arrangements specified in subsection (i) or (ii) above shall not be irrevocable,
provided that: (1) in the proceedings providing for such defeasance, the City expressly reserves
the right to call the defeased Bonds for redemption; (2) gives notice of the reservation of that
right to the owners of the defeased Bonds immediately following the defeasance; (3) directs that
29197728.5 -26-
notice of the reservation be included in any redemption notice that it authorizes; and (4) at the
time of the redemption, satisfies the conditions of (i) or (ii) above with respect to such defeased
debt as though it was being defeased at the time of the exercise of the option to redeem the
defeased Bonds, after taking the redemption into account in determining the sufficiency of the
provisions made for the payment of the defeased Bonds.
SECTION 23. Printed Opinion. The Purchasers' obligation to accept delivery of the
Bonds is subject to its being furnished a final opinion of Norton Rose Fulbright US LLP, San
Antonio, Texas, as Bond Counsel, approving certain legal matters as to the Bonds, said opinion
to be dated and delivered as of the date of initial delivery and payment for such Bonds. Printing
of a true and correct copy of said opinion on the reverse side of each of the Bonds, with
appropriate certificate pertaining thereto executed by facsimile signature of the City Secretary of
the City is hereby approved and authorized.
SECTION 24. CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof, and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 25. Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.
SECTION 26. Ordinance a Contract; Amendments - Outstanding Bonds. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Bonds. This Ordinance shall constitute a contract with the
Holders from time to time, shall be binding on the City and its successors and assigns, and shall
not be amended or repealed by the City so long as any Bond remains Outstanding except- as
permitted in this Section. The City may, without the consent of or notice to any Holders, from
time to time and at any time, amend this Ordinance in any manner not detrimental to the interests
of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or
omission herein. In addition, the City may, with the written consent of Holders holding a
majority in aggregate principal amount of the Bonds then Outstanding affected thereby, amend,
add to, or rescind any of the provisions of this Ordinance; provided; however, that, without the
consent of all Holders of Outstanding Bonds, no such amendment, addition, or rescission shall
(1) extend the time or times of payment of the principal of, and interest on the Bonds, reduce the
principal amount thereof, or the rate of interest thereon, or in any other way modify the terms of
payment of the principal of, the redemption price therefor, or interest on the Bonds, (2) give any
preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of
Bonds required for consent to any such amendment, addition, or rescission.
SECTION 27. Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is
intended or shall be construed to confer upon any person other than the City, Bond Counsel,
Paying Agent/Registrar, and the Holders, 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 City, Bond Counsel, the Paying
Agent/Registrar, and the Holders.
29197728.5 -27-
SECTION 28. Inconsistent Provisions. All ordinances and resolutions, or parts thereof,
which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to
the extent of such conflict, and the provisions of this Ordinance shall be and remain controlling
as to the matters ordained herein.
SECTION 29. Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine or
neuter gender shall be considered to include the other genders.
SECTION 30. Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
SECTION 31. Severability. If any provision of this Ordinance or the application thereof
to any person or circumstance shall be held to be invalid, the remainder of this Ordinance and the
application of such provision to other persons and circumstances shall nevertheless be valid, and
the City Council hereby declares that this Ordinance would have been enacted without such
invalid provision.
SECTION 32. Incorporation of Preamble Recitals. The recitals contained in the
preamble hereof are hereby found to be true, and such recitals are hereby made a part of this
Ordinance for all purposes and are adopted as a part of the judgment and findings of the City
Council.
SECTION 33. Authorization of Pang Agent/Registrar Agreement. The City Council of
the City hereby finds and determines that it is in the best interest of the City to authorize the
execution of a Paying Agent/Registrar Agreement concerning the payment, exchange,
registration, and transferability of the Bonds. A copy of the Paying Agent/Registrar Agreement
is attached hereto, in substantially final form, as Exhibit A and is incorporated by reference to the
provisions of this Ordinance.
SECTION 34. Public Meeting. It is officially found, determined, and declared that the
meeting at which this Ordinance is adopted was open to the public and public notice of the time,
place, and subject matter of the public business to be considered at such meeting, including this
Ordinance, was given, all as required by Chapter 551, as amended, Texas Government Code.
SECTION 35. Unavailability of Authorized Publication. If, because of the temporary or
permanent suspension of any newspaper, journal, or other publication, or, for any reason,
publication of notice cannot be made meeting any requirements herein established, any notice
required to be published by the provisions of this Ordinance shall be given in such other manner
and at such time or times as in the judgment of the City or of the Paying Agent/Registrar shall
most effectively approximate such required publication and the giving of such notice in such
manner shall for all purposes of this Ordinance be deemed to be in compliance with the
requirements for publication thereof.
SECTION 36. No Recourse Against City Officials. No recourse shall be had for the
payment of principal of, premium, if any, or interest on any Bond or for any claim based thereon
or on this Ordinance against any official of the City or any person executing any Bond.
29197728.5 -28-
below:
SECTION 37. Continuing Disclosure Undertaking.
A. Definitions.
As used in this Section, the following terms have the meanings ascribed to such terms
Rule means SEC Rule 15c2 -12, as amended from time to time.
SEC means the United States Securities and Exchange Commission.
The Bonds are being sold pursuant to a private placement with the Purchasers, in
denominations of generally $100,000 or any integral multiple of $5,000 in excess thereof, to less
than thirty-five sophisticated investors, and therefore the Rule is not applicable to the offering of
the Bonds. Accordingly, no contract to provide continuing disclosure information after the
issuance of the Bonds has been made by the City with investors.
SECTION 38. Book -Entry Only System.
The Bonds may initially be registered so as to participate in a securities depository
system (the DTC System) with the Depository Trust Company, New York, New York, or any
successor entity thereto (DTC), as set forth herein. Each Stated Maturity of the Bonds shall be
issued (following cancellation of the Initial Bonds described in Section 7) in the form of a
separate single definitive Bond. Upon issuance, the ownership of each such Bond shall be
registered in the name of Cede & Co:, as the nominee of DTC, and all of the Outstanding Bonds
shall be registered in the name of Cede & Co., as the nominee of DTC. The City and the Paying
Agent/Registrar are authorized to execute, deliver, and take the actions set forth in such letters to
or agreements with DTC as shall be necessary to effectuate the DTC System, including the Letter
of Representations attached hereto as Exhibit E (the Representation Letter).
With respect to the Bonds registered in the name of Cede & Co., as nominee of DTC, the
City and the Paying Agent/Registrar shall have no responsibility or obligation to any
broker - dealer, bank, or other financial institution for which DTC holds the Bonds from time to
time as securities depository (a Depository Participant) or to any person on behalf of whom such
a Depository Participant holds an interest in the Bonds (an Indirect Participant). Without
limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have
no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede &
Co., or any Depository Participant with respect to any ownership interest in the Bonds, (ii) the
delivery to any Depository Participant or any other person, other than a registered owner of the
Bonds, as shown on the Security Register, of any notice with respect to the Bonds, including any
notice of redemption, or (iii) the delivery to any Depository Participant or any Indirect
Participant or any other Person, other than a Holder of a Bond, of any amount with respect to
principal of, premium, if any, or interest on the Bonds. While in the DTC System, no person
other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a bond
certificate evidencing the obligation of the City to make payments of principal, premium, if any,
and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of
written notice to the effect that DTC has determined to substitute a new nominee in place of
Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks or
29197728.5 -29-
drafts being mailed to the Holder, the word "Cede & Co." in this Ordinance shall refer to such
new nominee of DTC.
In the event that (a) the City determines that DTC is incapable of discharging its
responsibilities described herein and in the Representation Letter, (b) the Representation Letter
shall be terminated for any reason, or (c) DTC or the City determines that it is in the best interest
of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall
notify the Paying Agent/Registrar, DTC, and the Depository Participants of the availability
within a reasonable period of time through DTC of bond certificates, and the Bonds shall no
longer be restricted to being registered in the name of Cede & Co., as nominee of DTC. At that
time, the City may determine that the Bonds shall be registered in the name of and deposited
with a successor depository operating a securities depository system, as may be acceptable to the
City, or such depository's agent or designee, and if the City and the Paying Agent/Registrar do
not select such alternate securities depository system then the Bonds may be registered in
whatever name or names the Holders of Bonds transferring or exchanging the Bonds shall
designate, in accordance with the provisions hereof.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to
principal of, premium, if any, and interest on such Bond and all notices with respect to such
Bond shall be made and given, respectively, in the manner provided in the Representation Letter.
SECTION 39. Further Procedures. The officers and employees of the City are hereby
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and under the corporate seal
and on behalf of the City all such instruments, whether or not herein mentioned, as may be
necessary or desirable in order to carry out the terms and provisions of this Ordinance, the initial
sale and delivery of the Bonds, the Paying Agent/Registrar Agreement, the Purchase Contract,
and the Agreement. In addition, prior to the initial delivery of the Bonds, any Authorized
Official and Bond Counsel are hereby authorized and directed to approve any technical changes
or corrections to this Ordinance or to any of the instruments authorized and approved by this
Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more
completely document the transactions contemplated and approved by this Ordinance, (ii) obtain a
rating from any of the national bond rating agencies, or (iii) obtain the approval of the Bonds by
the Texas Attorney General's office. In case any officer of the City whose signature shall appear
on any certificate shall cease to be such officer before the delivery of such certificate, such
signature shall nevertheless be valid and sufficient for all purposes the same as if such officer
had remained in office until such delivery.
SECTION 40. Accounting Reports. The City shall provide annually to the Purchasers, for
so long as they are the holders of the Bonds, within 210 days after the end of each fiscal year
ending in or after 2018, financial information and operating date with respect to the City;
provided that such financial statements so to be provided shall be (1) prepared in accordance
with the generally accepted accounting principles, or such other accounting principles as the City
may be required to employ from time to time pursuant to Texas law or regulations, and (2)
audited, if the City commissions an audit of such statements and the audit is completed within
the period during which they must be provided. If the audit of such financial statements is not
29197728.5 -30-
complete within such period, then the City shall provide (1)'unaudited financial statements for
the applicable fiscal year within 270 days after the end of such year, and (2) audited financial
statements for the applicable fiscal year to the Purchasers when and if the audit report on such
statements become available.
SECTION 41. City's Consent to Provide Information and Documentation to the Texas
MAC. The Municipal Advisory Council of Texas (the Texas MACS, a non - profit membership
corporation organized exclusively for non - profit purposes described in section 501(c)(6) of the
Internal Revenue Code and which serves as a comprehensive financial information repository
regarding municipal debt issuers in Texas, requires provision of written documentation regarding
the issuance of municipal debt by the issuers. thereof. In support of the purpose of the Texas
MAC and in compliance with applicable law, the City hereby consents to and authorizes any
Authorized Official, Bond Counsel to the City, and /or Financial Advisor to the City to provide to
the Texas MAC information and documentation requested by the Texas MAC relating to the
Bonds; provided, however, that no such information and documentation shall be provided prior
to the Closing Date. This consent and authorization relates only to information and
documentation that is a part of the public record concerning the issuance of the Bonds.
SECTION 42. Contracts with Financial Advisor and /or Bond Counsel. The City Council
authorizes any Authorized Official, or the designee thereof, to take all actions necessary to
execute any necessary financial advisory contracts with SAMCO Capital Markets, Inc., as the
financial advisor to the City (the Financial Advisor). The City understands that under applicable
federal securities laws and regulations that the City must have a contractual arrangement with its
Financial Advisor relating to the sale, issuance, and delivery of the Bonds. In addition, the City
Council also authorizes any Authorized Official, or the designee thereof, to take all actions
necessary to execute any necessary engagement agreement with Norton Rose Fulbright US LLP,
as Bond Counsel to the City.
SECTION 43. Effective Date. Pursuant to the provisions of Section 1201.028, as
amended, Texas Government Code, this Ordinance shall be effective immediately upon
adoption, notwithstanding any provision in the City's Home Rule Charter to the contrary
concerning a multiple reading requirement for the adoption of ordinances.
[The remainder of this page intentionally left blank.]
29197728.5 -31-
PASSED, APPROVED AND ADOPTED on the 12th day of December, 2017.
CITY OF SCHERTZ, TEXAS
Mayor
ATTEST:
City Secretary
(CITY SEAL)
29197728.5 S -1
INDEX TO SCHEDULE AND EXHIBITS
Schedule I .......... ............................... ..........................Table of Refunded Obligations
Exhibit A ............ ............................... .........................Paying Agent/Registrar Agreement
Exhibit B .............. ............................... .......................Purchase Contract
Exhibit C ............ ............................... .........................Escrow Deposit Letter
Exhibit D ............ ............................... .........................Notice of Redemption
Exhibit E ........................................ ............................DTC Letter of Representations
29197728.5 S -2
Schedule I
Refunded Obligations
City of Schertz, Texas General Obligation Bonds, Series 2008, dated August
1, 2008, in the original principal amount of $9,900,000 (the Refunded
Obligations) stated to mature on February 1 in each of the years 2019 through
2028 in the aggregate principal amount of $6,035,000, to be redeemed on
February 1, 2018.
29197728.5 Schedule I -1
EXHIBIT A
Paying Agent/Registrar Agreement
See Tab No. 3
29197728.5 A -1
EXHIBIT B
Purchase Contract
See Tab No. 6
29197728.5 B -1
10..11C - -
Escrow Deposit Letter
See Tab No. 4
29197728.5 C -1
Notice of Redemption
See Tab No. 18
29197728.5 D -1
EXHIBIT E
DTC Letter of Representations
See Tab No. 5
29197728.5 E -1
Agenda No. 2
CITY COUNCIL MEMORANDUM
City Council Meeting: December 12, 2017
Department: Finance
Subject: Ordinance No. 17—B — 52 — Consideration
and /or action approving an Ordinance by the
City Council of the City of Schertz, Texas
authorizing the issuance of "City of Schertz,
Texas General Obligation Refunding Bonds,
Series 2018 ", levying an annual ad valorem
tax, within the limitations prescribed by law,
for the payment of the bonds; prescribing the
form, terms, conditions, and resolving other
matters incident and related to the issuance,
sale, and delivery of the bonds, authorizing the
execution of a paying agent /registrar
agreement, a purchase and investment letter,
and an escrow deposit letter; complying with
the letter of representations on file with the
depository trust company; authorizing the
execution of any necessary engagement
agreements with the City's financial advisors
and /or bond counsel; and providing and
effective date.
BACKGROUND:
The City Council at its December 5, 2017 meeting authorized city staff and consultants to proceed
with a refunding of its General Obligation Bonds, Series 2008 for debt service savings.
FISCAL IMPACT
The City received 9 bids from banks around the State and First National Bank Texas submitted the
lowest bid with a rate of 2.12 %. Based upon their bid, the refunding generates gross savings of
$668,370 or 9.8% present value savings as a percentage of bonds refunded. The Bonds are supported
by the City's I &S tax rate and the I &S supported debt service is anticipated to decrease by $67,000
per year because of this refunding.
RECOMMENDATION
Staff recommends authorizing the sale of the refunding bonds and locking in the savings as presented
by SAMCO Capital Markets based upon the best bid received.
ATTACHMENT(S)
Final Refunding Results Presentation
Bond Ordinance 17 -B -52