1973-B-9-Bonds
AN ORDINANCE
.#-
13-B-q
.
BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS, AUTHOR-
IZING THE ISSUANCE OF $165,000 PRINCIPAL AMOUNT OF SPECIAL
OBLIGATION BONDS OF THE CITY OF SCHERTZ TO BE KNOWN AS
$165,000 CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM REVENUE
BONDS, SERIES 1973," FOR THE PURPOSE OF SECURING FUNDS TO
BE USED TO IMPROVE, ENLARGE AND EXTEND THE WATERWORKS SyS-
TEM OF SAID CITY; PRESCRIBING THE MATURITIES OF SAID BONDS
AND THE INTEREST RATES; PRESCRIBING THE FORM OF SAID BONDS
AND THE INTEREST COUPONS; PLEDGING THE NET REVENUES FROM
THE CITY'S COMBINED WATERWORKS AND SEWER SYSTEMS TO PAY
THE PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING
THAT IN THE EVENT OF THE LATER ACQUISITION OF AN ELECTRIC
LIGHT AND POWER SYSTEM AND/OR A NATURAL GAS SYSTEM, SAID
BONDS, THE PREVIOUSLY ISSUED BONDS, AND ANY OR ALL REVENUE
BONDS ISSUED FOR THE PURPOSE OF ACQUIRING ANY SUCH SYSTEM
(EITHER OR BOTH), SHALL BE PAYABLE FROM AND EQUALLY SECURED
BY A FIRST LIEN ON AND PLEDGE OF THE NET REVENUES OF THE
CITY'S COMBINED, WATERWORKS, SANITARY SEWER, ELECTRIC LIGHT
AND POWER AND/OR NATURAL GAS SYSTEMS; PROVIDING THAT SAID
BONDS SHALL OCCUpy A POSITION OF PARITY AND EQUAL DIGNITY
WITH THE OUTSTANDING "CITY OF SCHERTZ, TEXAS, UTILITY SYS-
TEM REVENUE BONDS, SERIES 1972," DATED MARCH 1, 1972, OF
SAID CITY, AND THE OUTSTANDING "CITY OF SCHERTZ, TEXAS,
UTILITY SYSTEM REVENUE BONDS, SERIES 1968," DATED MARCH 1,
1968, OF SAID CITY; PROVIDING FOR ADDITIONAL PARITY BONDS;
PROVIDING THAT THE HOLDER OR HOLDERS OF SAID BONDS SHALL
NEVER HAVE THE RIGHT TO DEMAND PAYMENT OF SAID BONDS OUT
OF FUNDS RAISED, OR TO BE RAISED, BY TAXATION; CONFIRMING
THE SALE OF SAID BONDS; MAKING CERTAIN FINDINGS AND COVENANTS
AND ENACTING OTHER PROVISIONS INCIDENT AND RELATING TO
THE SUBJECT AND PURPOSE OF THIS ORDINANCE; AND PROVIDING
THAT THIS ORDINANCE SHALL TAKE EFFECT IMMEDIATELY UPON
ITS PASSAGE.
WHEREAS, at an election held in the City of Schertz, Texas,
on the 30th day of October, 1971, the City Council of the City of
Schertz became authorized and empowered to issue $200,000 of special
obligation bonds for the purpose of improving and extending the
City's Waterworks System, said bonds to mature in not to exceed
forty (40) years from their date, to be payable solely from and
secured by a pledge of the net revenues from the operation of the
City's combined Waterworks and Sanitary Sewer System, and in the
event of the later acquisition of an electric light and power sys-
tem and/or natural gas system, such bonds may also be secured by a
pledge of the net revenues of all of such combined Waterworks, Sani-
tary Sewer, Electric Light and Power and/or Natural Gas Systems;
and
WHEREAS, pursuant to an ordinance duly passed and approved
by the City Council of said City on the 2nd day of March, 1972, the
first series of said bonds so authorized were issued, being an issue
of $35,000 City of Schertz, Texas, Utility System Revenue Bonds,
Series 1972, said bonds being issued for the purpose of imprOVing
and extending the Waterworks System of said City; and
WHEREAS, the City Council of said City now desires to issue
the remainder of said bonds so authorized in the principal amount of
$165,000 for the purpose of securing funds to improve, enlarge and
extend the Waterworks System of said City (being the second and final
installment of bonds authorized by the aforesaid election), and that
such bonds authorized by and under this ordinance shall be authorized
and issued in such a manner that they shall occupy a position of
parity and equal dignity with the outstanding bonds of the afore-
mentioned Series 1968 and Series 1972 Bonds; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS:
SECTION 1 - Amount, Purpose, Name and Authorization: That for
the purpose of securing funds in the amount of ONE HUNDRED SIXTY-FIVE
THOUSAND DOLLARS ($165,000) to be used to improve, enlarge and ex-
tend the Waterworks System of the City of Schertz, Texas, there shall
1
be issued Utility System Revenue Bonds of said City, to be known as
"$165,000 CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM REVENUE BONDS, SERIES
1973," in the aggregate principal amount of ONE HUNDRED SIXTY-FIVE
THOUSAND DOLLARS ($165,000), under and pursuant to the Constitution
and laws of the State of Texas, including particularly Articles 1111
to 1118, both inclusive, Revised Civil Statutes of Texas, as amended,
and the authority of the resident qualified electors of the City of
Schertz, at the aforesaid election held on the 30th day of October,
1971.
SECTION 2 - Date, Numbers, Denomination, Amount and Maturity
Schedule: That said bonds shall be serial coupon bonds, shall be
dated APRIL 1, 1973, shall be numbered consecutively from one (1)
to thirty-three (33), both inclusive, shall be in the denomination
of Five Thousand Dollars ($5,000) each, aggregating the principal sum
of ONE HUNDRED SIXTY-FIVE THOUSAND DOLLARS ($165,000), and shall
become due and payable in each of the years and in the respective
amounts shown in the schedule as follows, to-wit:
BOND NOS.
(Both Incl~) DATE OF MATURITY AMOUNT
1 - 8 September 1, 1996 $40,000
9 - 16 September 1, 1997 40,000
17 - 24 September 1, 1998 40,000
25 - 33 September 1, 1999 45,000
SECTION 3 - Redemption Provision: That the City expressly re-
serves the right to redeem before maturity Bonds Nos. 1 to 33, both
inclusive, being the bonds maturing September 1 in the years 1996
through 1998, on any interest payment date on and after September 1,
1983, by paying the principal and accrued interest therefor to the
interest payment date fixed for redemption; and in case any of said
Bonds Nos. 1 to 33, both inclusive, shall be called before maturity,
notice thereof shall be given in writing to the SCHERTZ STATE BANK,
SCHERTZ, TEXAS, at least thirty (30) days before the interest pay-
ment date fixed for redemption, and should such bond, or bonds, when
so called, not be presented for redemption, the same shall cease to
2
bear interest rrom and arter the interest payment date so fixed for
redemption.
SECTION 4 - Interest Rates and Interest Payment Dates: That
said bonds shall bear interest per annum rrom their date until paid
at the following rates, respectively: Bonds Nos. 1 to 16, both in-
clusive, at the rate of 6.10% per annum and Bonds Nos. 17 to 33, both
inclusive, at the rate of 5.75% per annum; said interest shall be
payable on September 1, 1973, and semi-annually therearter on March 1
and September 1 or each year, while said bonds or any of them are
outstanding, which interest shall be evidenced by coupons attached
to each of said bonds.
SECTION 5 - Place of Payment: That said bonds shall be payable,
both as to principal and interest, in lawful money of the United
States of America, without exchange or collection charges to the
owners or holders of the bonds or interest coupons, at the SCHERTZ
STATE BANK, SCHERTZ, TEXAS. The principal of such bonds shall be pay-
able only upon presentation and surrender of the bonds as they re-
spectively become due, and interest falling due on and prior to the
respective maturity dates or said bonds shall be payable only upon
presentation and surrender of the interest coupons attached to said
bonds as such coupons severally become due.
SECTION 6 - Execution of Bonds and Coupons: That, in accordance
with the provisions of Article 717j-l, as amended, Revised Civil
Statutes or Texas, each of said bonds shall be executed by the im-
printed facsimile signature of the Mayor and countersigned by the
imprinted facsimile signature of the City Secretary or the City of
Schertz, Texas; and each or the interest coupons attached to said
bonds shall be executed by the imprinted facsimile signatures of
said Mayor and said City Secretary; and such imprinted facsimile sig-
natures of said Mayor and said City Secretary shall have the same
effect as if such bonds and interest coupons had been manually
signed by each of said officials; and the City Secretary is hereby
authorized to cause the seal of said City to be imprinted in facsi-
mile upon each of said bonds; and the imprinting of the Seal of
3
said City in facsimile on each of said bonds shall have the same
legal effect as the impression of the Seal of said City on each of
said bonds. The registration certificate of the Comptroller of
Public Accounts of the state of Texas (which certificate is to be
printed on the back of each of said bonds as provided for herein-
after in SECTION 9 of this ordinance) shall be manually executed by
said Comptroller (or by a Deputy designated in writing to act for
said Comptroller).
SECTION 7 - The Form of the Bonds: That the form of said bonds
shall be substantially as follows, to-wit:
NO.
$5,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTIES OF GUADALUPE AND BEXAR
CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM
REVENUE BOND, SERIES 1973
***********************************************
FOR VALUE RECEIVED, the City of Schertz, a municipal
corporation of the State of Texas, i-n-Guadalup:e::.::!1Q.unt;y-,..
~~s~ hereby acknowledges itself indebted to and hereby
promises to pay to bearer, as hereinafter stated, on the
1st day of September, 19
, the sum of
FIVE THOUSAND DOLLARS
($5,000), in lawful money of the United States of America
with interest thereon from date hereof, at the rate of
per cent (
%) per annum
until the principal sum hereof shall have been paid; said
interest being payable on September 1, 1973, and semi-
annually thereafter on March 1 and September 1 of each year
upon presentation and surrender of bond or proper annexed
interest coupon as they severally mature.
Both principal of and interest on this bond are here-
by made payable at the SCHERTZ STATE BANK, SCHERTZ, TEXAS,
without exchange or collection charges to the owner or
holder, and the City of Schertz is hereby held and firmly
4
bound to apply the pledged revenues of its combined Water-
works and Sanitary Sewer Systems to the prompt payment of the
principal of and interest on this bond, providing that in
the event of the later acquisition of an electric light and
power system and/or a natural gas system, the net revenues
of the City's combined Waterworks, Sanitary Sewer, Electric
Light and Power and/or Natural Gas Systems, shall be, and
are hereby, pledged to pay the principal of and interest on
this bond as the same mature.
The City of Schertz hereby expressly reserves the right
to redeem this bond before maturity on any interest payment
date on and after September 1, 1983, by paying the principal
and accrued interest therefor to the interest payment
date fixed for redemption; and in case this bond shall
be called for redemption before maturity, notice thereof
shall be given in writing to the SCHERTZ STATE BANK, SCHERTZ,
TEXAS, at least thirty (30) days before the interest payment
date so fixed for redemption, and should this bond when
so called, not be presented for redemption, the same shall
cease to bear interest from and after the interest pay-
ment date so fixed for redemption.
This bond is one of a series of thirty-three (33)
bonds of like tenor and effect (except as to number,
interest rate and maturity), numbered consecutively from
One (1) to Thirty-three (33), both inclusive, in the denomi-
nation of Five Thousand Dollars ($5,000) each, aggregating
the principal sum of ONE HUNDRED SIXTY-FIVE THOUSAND DOLLARS
($165,000) for the purpose of securing funds to improve,
enlarge and extend the Waterworks System of said City, in
accordance with the Constitution and laws of the State of
Texas, including Articles 1111-1118, both inclusive, Revised
Civil Statutes of Texas, as amended, and pursuant to an
ordinance passed by the City Council of the City of Schertz,
Texas, which ordinance is duly recorded in the Minutes of
said City Council.
5
THE DATE of this bond, in conformity with the ordi-
nance above mentioned, is APRIL 1, 1973.
THIS BOND and the series of which it is a partconsti-
tute special obligations of the City of Schertz, Texas and
together with the outstanding bonds of said City entitled
CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM REVENUE BONDS,
SERIES 1968, dated March 1, 1968, and the outstanding bonds
of said City entitled CITY OF SCHERTZ, TEXAS, UTILITY SYS-
TEM REVENUE BONDS, SERIES 1972, dated March 1, 1972, are
payable both as to principal and interest solely from and
are secured by a first lien on and pledge of the revenues
of the City's combined Waterworks and Sewer Systems, after
deduction of reasonable expenses of operation and maintenance;~
providing that in the event of the later acquisition of an
electric light and power system and/or natural gas system,
and the issuance of revenue bonds in connection therewith,
then these bonds, the Series 1968 bonds and the Series 1972
bonds together with any such revenue bonds shall be payable
from and equally secured by a first lien on and pledge of
the net revenues of the City's combined Waterworks, Sanitary
Sewer, Electric Light and Power and/or Natural Gas Systems.
THE CITY, however, expressly reserves the right to
issue, in addition to the bonds for the electric light and
power system and/or natural gas system purposes, further
and additional bond obligations, in all things on a parity
with the bonds of this series and the aforesaid outstanding
bonds, and payable from and equally secured by a first lien
on and pledge of the net revenues of the City's combined
Waterworks, Sanitary Sewer, Electric Light and Power and/or
Natural Gas System; PROVIDED, HOWEVER, that any and all
such additional parity bonds may be issued only in accor-
dance with and subject to the covenants, conditions,
limitations, and restrictions relating thereto, which are
6
set out and contained in the ordinances authorizing said
Series 1968 Bonds, said Series 1972 Bonds 'and These Bonds,
to which said ordina~ces reference is hereby made for more
complete and full particulars.
EACH HOLDER of this bond, payable to bearer, or of the
interest coupons hereto attached, is conclusively presumed to
forego and renounce his equities in favor of subsequent
holders for value without notice, and to agree that, being
payable to bearer, this bond and each of the interest cou-
pons attached, may be negotiated by delivery, however pos-
session may be acquired, and that any subsequent holder or
holders who may receive this bond, or any of the interest
coupons attached, for value without notice, has thereby
acquired absolute title, free from all equities and claims
of ownership of any prior holder. The City of Schertz,
Texas, its officers and the paying agent shall not be
affected by any notice to the contrary.
THE HOLDER HEREOF shall never have the right to de-
mand payment of this obligation out of any funds raised,
or to be raised, by taxation.
AND IT IS HEREBY CERTIFIED AND RECITED that the
issuance of this bond, and the series of which it is a
part, is duly authorized by law; that all acts, conditions
and things required to exist and to be done precedent to
and in the issuance of this bond, and of the series of
which it is a part, to render the same lawful and valid,
have been properly done, have happened and been performed
in regular and due time form and manner, as required by
the Constitution and laws of the State of Texas, and the
ordinance hereinabove mentioned; that this series of rev-
enue bonds does not exceed any constitutional or statutory
limitation, and that provision has been made for the pay-
ment of the principal of and interest on this bond, and
the series of which it is a part, by irrevocably pledging
the net revenues of the City's combined Waterworks and
Sanitary Sewer Systems and, in the event of the later ac-
quisition of an electric light and power system and/or a
natural gas system, the net revenues of the combined Water-
works, Sanitary Sewer, Electric Light and Power and/or
Natural Gas Systems of said City.
IN WITNESS \~EREOF, the City of Schertz, Texas, by
its City Council, has caused the corporate seal of said
City to be imprinted hereon in facsimile, and this bond
to be executed by imprinting hereon the facsimile signa-
ture of the Mayor of the City of Schertz, and countersigned
by imprinting hereon the facsimile signature of the City
Secretary of the City of Schertz, and the interest coupons
hereto attached to be executed by the imprinted facsimile
signatures of said Mayor and said City Secretary (in ac-
cordance with the provisions of Article 717j-l, as amended,
Revised Civil Statutes of Texas), as of the date of this
bond, the 1ST DAY OF APRIL, 1973.
Mayor, City of Schertz, Texas
COUNTERSIGNED:
City Secretary, City of
Schertz, Texas
(SEAL OF CITY)
SECTION 8 - The Form of the Interest Coupons: That the form of
said interest coupons shall be substantially as follows:
NO.
$
ON THE 1ST DAY OF
, 19
,
*(unless the bond to which this coupon appertains has been
properly called for prior redemption and provisions made
for payment and redemption properly made in accordance with
its terms), THE CITY OF SCHERTZ, a municipal corporation of
the State of Texas, hereby promises to pay to bearer, out
8
of funds specified in the bond to which this coupon is
attached (without right to demand payment out of any funds
raised, or to be raised, by taxation) and in lawful money
of the United States of America, without exchange or
collection charges at the SCHERTZ STATE BANK, SCHERTZ,
TEXAS, the sum of
DOLLARS ($
) ,
said sum being the interest due that day on "CITY OF SCHERTZ,
TEXAS, UTILITY SYSTEM REVENUE BONDS, SERIES 1973," dated
April 1, 1973, Bond No.
City Secretary
Mayor
*(NOTE TO PRINTER: The expression in the first
parentheses of the coupon form is to be included
in coupons maturing on March 1, 1984, and all
subsequent coupons affixed to These Bonds.)
SECTION 9 - Form of Comptroller's Certificate: That each of
said bonds shall be registered by the Comptroller of Public Accounts
of the State of Texas, as provided by law, and as to the registration
of such bonds, there shall be printed on the back of each of said
bonds substantially the following certificate, which shall be manu-
ally signed by said Comptroller (or by a Deputy designated in writing
to act for said Comptroller).
OFFICE OF COMPTROLLER
STATE OF TEXAS
o
o
o
REGISTER NO.
I HEREBY CERTIFY that there is on file and of record
in my office a certificate of the Attorney General of the
State of Texas, to the effect that this bond has been ex-
amined by him as required by law, and that he finds that
it has been issued in conformity with the Constitution and
laws of the State of Texas, and that it is a valid and
binding special obligation of the City of Schertz, Texas,
payable from the revenues pledged to its payment by and
in the ordinance authorizing same, and said bond has this
day been registered by me.
WITNESS MY HAND AND SEAL OF OFFICE at Austin, Texas,
this
Comptroller of Public Accounts
of the State of Texas
9
SECTION 10 - Definitions: That, for the purpose of this ordi-
nance, the following words and terms shall mean and include, and are
hereby defined, as follows, to-wit:
(a) City - shall mean and refer to the City of Schertz, Texas,
and where appropriate, the City Council of said City.
(b) System or Systems - shall mean and refer to the "Waterworks
and Sanitary Sewer Systems" of the City of Schertz, Texas, and in the
event of the later construction or purchase of an electric light and
power system and/or a natural gas system, then the combined Water-
works, Sanitary Sewer, Electric Light and Power and/or Natural Gas
Systems, including all present and future extensions, additions,
replacements and improvements thereto, whether situated within or
without the limits of the City.
(c) Net Revenues - shall mean and include the gross revenues
derived from the operation of the System less the reasonable expenses
of maintenance and operation of said System, including all salaries,
labor, materials, interest, repairs and extensions necessary to
render efficient service, and every proper item of expense, as re-
quired by Article 1113, Revised Civil Statutes of Texas, as amended;
said repairs and extensions as used herein shall mean and include
only those as are found by the City to be necessary to keep the
System in operation and to render efficient service, or necessary
to meet or remedy some physical accident, condition or defect which
would otherwise impair the security of the bonds hereunder authorized.
(d) Series 1968 Bonds - shall mean and refer to the $579,000
of CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM REVENUE BONDS, SERIES
1968, dated March 1, 1968, authorized by an ordinance of said City
duly passed and adopted.
(e) Series 1972 Bonds, - shall mean and refer to the $35,000 of
CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM REVENUE BONDS, SERIES 1972,
dated March 1, 1972, authorized by an ordinance of said City passed
and adopted on March 2, 1972.
(f) These Bonds - or Series 1973 Bonds - shall mean and refer
10
to the $165,000 of CITY OF SCHERTZ, TEXAS, UTILITY SYSTEM REVENUE
BONDS, SERIES 1973, dated April 1, 1973, authorized by this ordinance.
(g) Additional Parity Bonds - shall mean the additional parity
bonds which the City expressly reserves the right to issue in
SECTION 20 of this ordinance.
(h) Bonds Similarly Secured - shall mean the Series 1968 Bonds,
the Series 1972 Bonds and These Bonds and any and all additional
parity bonds which are payable from a first lien on and pledge of the
net revenues of the System.
SECTION 11 - Continuing Fiscal Year - Maintaining Soecial Funds
Heretofore Created and Application of Revenues: That the System
shall continue to be operated on the basis of a fiscal year, the
fiscal year as presently established being and commencing on October 1
of each year and ending on September 30 of the following year. That,
in accordance with the ordinances authorizing the issuance of the
Series 1968 Bonds and the Series 1972 Bonds, all revenues derived from
the operation of the System shall be kept separate from other funds of
the City. To that end, the following Special Funds heretofore created
are hereby reaffirmed:
(a) City of Schertz Utility System Fund, hereinafter
called SYSTEM FUND. This fund shall be kept in the City's
depository bank.
(b) City of Schertz Utility System Revenue Bond Interest
and Sinking Fund, hereinafter called INTEREST AND SINKING FUND.
This fund shall be deposited with the MAIN BANK AND TRUST, San
Antonio, Texas, as Trustee of the pledged revenues, and shall
be used to pay principal of and interest on the bonds similarly
secured when and as the same shall become due and payable.
(c) City of Schertz Utility System Revenue Bond Reserve
Fund, hereinafter called RESERVE FUND. This fund shall be
deposited with the MAIN BANK AND TRUST, San Antonio, Texas,
as Trustee, and shall be used to pay principal of or interest
on the bonds similarly secured falling due at any time when
there is not sufficient money available in the INTEREST AND
SINKING FUND.
11
SECTION 12 - System Fund: All revenues of every nature received
through the operation of the System shall be deposited from day to
day as collected into the SYSTEM FUND, and the reasonable and proper
expenses of operating and maintaining the System as set forth in
Section 10(b) hereof shall be paid therefrom upon approval of the
City Council. All revenues of the System not actually required to
pay expenses and costs incurred as permitted by this Section shall
be appropriated and used for the purposes and in the order of prece-
dence hereinafter set forth.
SECTION 13 - Interest and Sinking Fund: In addition to the de-
posits required to be made into the INTEREST AND SINKING FUND by the
ordinances authorizing the issuance of the Series 1968 Bonds and the
Series 1972 Bonds for the payment of the principal and interest re-
quirements of such bonds, the City shall on or before the 1st day
of September, 1973, deposit in the INTEREST AND SINKING FUND an
amount of money not less than all of the interest to become due
on the first installment of interest on These Bonds; and on or before
the 15th day of each month thereafter, the City shall deposit in
said INTEREST AND SINKING FUND an amount of money not less than
one-sixth (1/6) of the next semi-annual installment of interest
to become due on These Bonds. In addition, commencing on or before
the 15th day of the twelfth month next immediately preceding the
first maturity of principal of These Bonds (being the 15th day of
August, 1995), the City shall deposit in the INTEREST AND SINKING
FUND an amount of money not less than one-twelfth (1/12) of the
installment of principal falling due on September 1, 1996, and on
the 15th day of each month thereafter until the bonds are paid and
retired, the City shall deposit in said INTEREST AND SINKING FUND
an amount of money not less than one-twelfth (1/12) of the next
~-
maturing principal on These Bonds.
SECTION 14 - Reserve Fund: After the requirements set forth
in SECTIONS 12 and 13 have been satisfied, and all deficiencies in
such requirements have been remedied, there shall be paid into the
RESERVE FUND on or before June 15, 1973, and on or before the 15th
12
day of each month thereafter, the sum of $ per month
until there shall have been accumulated in said RESERVE FUND an
amount of not less than one and one-half times (1-1/2) times the
average annual principal and interest requirements of all bonds se~qred
by a first lien on and pledge of the net revenues of the System.
When fUlly accumulated in accordance herewith, no further payments
need be made into the RESERVE FUND, except that whenever said fund
is reduced below such amount, monthly deposits shall be resumed as
hereinafter specified and continued until such time as the fund has
been fully restored. Monies in the RESERVE FUND, at the option of
the City, may be invested in direct obligations of the United States
of America having maturities not in excess of ten (10) years from
the date of making such investment, which securities shall be deposited
and held by the Trustee Bank, and if at any time uninvested funds
shall be insufficient to permit payment of principal of or interest
on These Bonds or any of the bonds similarly secured when needed
for the purpose, said bank shall promptly and timely sellon the
open market such amount of securities as is required to pay said
interest and/or principal when due, and shall give notice thereof to
the City. Any money resulting from maturity of principal and/or of
interest on the securities in which the RESERVE FUND is invested
may be reinvested or accumulated in said RESERVE FUND and shall be
considered a part thereof, and used for and only for the purposes
specified herein with reference to said RESERVE FUND.
SECTION 15 - Deficiencies in Funds: If in any month the City
shall, for any reason, fail to pay into the INTEREST AND SINKING
FUND and the RESERVE FUND the full amounts above stipulated, amounts
equivalent to such deficiencies shall be set apart and paid into
said funds from the first available and unallocated revenues of the
following month or months and such payments shall be in addition to
the amounts hereinabove provided to be otherwise paid into said
funds during such month or months.
SECTION 16 - Excess Revenues: Any revenues in excess of those
13
required to fully establish and maintain the funds herein provided,
may be used for the redemption of bonds similarly secured, or may
be transferred to the general fund of the City and used for general
or special purposes.
SECTION 17 - Security of Funds: All special funds heretofore
created and herein reaffirmed for which this ordinance makes provision
(except any portions thereof as may be at any time properly invested)
shall be secured in the manner and to the fullest extent required by
the laws of the the State of Texas for the security of public funds,
and such funds shall be used only for the purposes permitted by this
ordinance and the ordinances authorizing the Series 1968 Bonds and
the Series 1972 Bonds.
SECTION 18 - Pledge of Net Revenues: That These Bonds, to-
gether with the outstanding Series 1968 Bonds and Series 1972 Bonds,
(and any and all Additional Parity Bonds when issued in accordance
with the terms and provisions of this ordinance and the ordinances
authorizing the Series 1968 Bonds and the Series 1972 Bonds) shall
be payable solely from and secured by'a first lien on and pledge
of the Net Revenues of the System; and These Bonds are issued on a
parity and equal dignity with said outstanding Series 1968 Bonds
and Series 1972 Bonds; and the City hereby irrevocably pledges all
of the Net Revenues from the operation of the System (with the ex-
ception of those amounts in excess of the amounts required to main-
tain the funds hereinabove provided for) to the payment of These
Bonds, the Series 1968 Bonds and the Series 1972 Bonds (and any and
all Additional Parity Bonds when issued subject to the terms and
provisions of this ordinance and the ordinances authorizing the
Series 1968 Bonds and the Series 1972 Bonds).
SECTION 19 - Rates and Charges: That the City covenants and
agrees that it shall faithfully and punctually perform all duties
with reference to the System required by the Consitution and laws
of the State of Texas, and that so long as any of These Bonds, the
Series 1968 Bonds and the Series 1972 Bonds (and any and all Ad-
ditional Parity Bonds when issued), both as to principal and interest,
14
remain outstanding and unpaid, it shall fix and maintain reason-
able and sufficient rates and collect charges for the facilities
and services afforded by the System which will produce income and
revenues sufficient at all times to:
(a) Pay all operation, maintenance, depreciation, replace-
ment and betterment charges and expenses of the System;
(b) Fully maintain the hereinabove prescribed INTEREST AND
SINKING FUND and RESERVE FUND; and
(c) Pay all outstanding indebtedness against the System,
including These Bonds, the Series 1968 Bonds and the
Series 1972 Bonds (and any and all Additional Parity
Bonds) as and when the same become due.
The City further covenants and agrees that no free service
shall be rendered by the System to any customers; and should the
City or any of its agencies or instrumentalities make use of the
services and facilities of the System, payment of the reasonable
value thereof shall be made by the City out of funds derived from
sources other than the revenues and income of the System.
SECTION 20 - Issuance of Additional Parity Bonds: That, (in ad-
dition to the right to issue junior lien bonds, as authorized by the
laws of the State of Texas), the City reserves the right to issue
Additional Parity Bonds payable from the Net Revenues of the System
when issued in compliance with the law and terms and conditions here-
inafter appearing; such Additional Parity Bonds shall occupy a position
of parity and equal dignity with These Bonds, the Series 1968 Bonds
and the Series 1972 Bonds, and such Additional Parity Bonds shall be
equally secured by a first lien on and pledge of the Net Revenues of
the System. The Additional Parity Bonds, which the City reserves the
right to issue, may be issued in one or more installments, provided
that the following conditions shall have been met:
(a) That the City is not then in default as to any cove-
nant, condition or obligation contained in the ordi-
nances authorizing the issuance of These Bonds, the
15
Series 1968 Bonds and the Series 1972 Bonds;
(b) That the laws of the State of Texas in force at such
time provide for the issuance of such Additional
Parity Bonds;
(c) That each of the funds reaffirmed by this ordinance
contains the amount of money then required to be
on deposit therein;
(d) The net revenues of the System for the completed twelve
(12) months immediately preceding the adoption of the
ordinance authorizing the issuance of the Additional
Parity Bonds are equal to at least one and one-half
(1-1/2) times the average annual requirement for the
payment of principal and interest on the then out-
standing bonds and on the Additional Parity Bonds, as
such net revenues are shown by a report of a certified
public accountant or a licensed public accountant.
The term "net revenues" as used in this SECTION shall
mean the gross revenues after deduction of expenses
of operation and maintenance, but not deducting ex-
penditures which, under standard accounting practice,
should be charged to capital expenditures; PROVIDED,
HOWEVER, that the requirement of this subparagraph
(d) shall not apply or be a condition to the right
of the City to issue bonds for the initial acquisition
(by purchase or construction) of an electric light
and power system and/or a natural gas system in and
for said City, but such bonds may be issued at any
time provided the City has secured a certificate
from an engineer registered by the State Board of
Registration for Professional Engineers of the State
of Texas, showing that the average annual net income
and revenues of the System (after providing for ade-
quate maintenance and operation expenses) as esti-
mated by him throughout the maturities of all of
16
such outstanding bonds, will be at least one and one-
half (1-1/2) times the average annual requirements for
the payment of principal of and interest on all bonds
to be payable from and secured by a first lien on and
pledge of the net revenues of the System after giving
effect to thy issuance of the proposed Additional
Parity Bonds;
(e) The Additional Parity Bonds are made to mature on Sep-
tember 1 in each of the years in which they are
scheduled to mature;
(f) The ordinance authorizing the issuance of the Ad-
ditional Parity Bonds provides for the accumulation
in the INTEREST AND SINKING FUND of amounts suffi-
cient to pay the principal of and interest on such
Additional Parity Bonds as the same mature; and
(g) The ordinance authorizing issuance of the Additional
Parity Bonds provides that the amount to be accumu-
lated and maintained in the RESERVE FUND shall be
pot less than one and one-half (1-1/2) times the
average annual requirement for the payment of prin-
cipal of and interest on all bonds to be secured
by a first lien on and pledge of the net revenues
of the System after giVing effect to the issuance
of the proposed Additional Parity Bonds, and pro-
vided that any additional RESERVE FUND amount which
may thus be required shall be accumulated within
sixty (60) calendar months from the date of adoption
of the ordinance authorizing such proposed Additional
Pari ty Bonds.
The term "Net Revenues" as used in this SECTION 20 shall
mean all of the net revenues of the System (excluding income received
specifically for capital items) after deduction of the reasonable
expenses of maintenance and operation of the System (excluding
expenditures for capital items).
lr(
SECTION 21 - Issuance_J?.~_~efunding Bond~_: That, if, prior to
the payment and discharge of all of These Bonds, the Series 1968 Bonds
and the Series 1972 Bonds, it shall be found desirable to refund any
of such bonds under the provisions of any law then available, such
first lien bonds or any part thereof may be refunded with the consent
of the holders thereof (except as to any bonds which are redeemable,
and have been properly called for redemption, in which case, such
consent shall not be necessary), and the refunding bonds so issued
shall enjoy complete equality of lien with the portion of any of
the first lien bonds which is not refunded, if any there be, and such
refunding bonds shall continue to enjoy the same priority of lien
as was enjoyed by the bonds refunded; PROVIDED, HOWEVER, that if
only a portion of said bonds is refunded in such manner that the in-
terest on the refunding bonds is increased or any of the refunding
bonds mature at a date earlier than the maturity dates of any of the
bonds not refunded, then that portion of the first lien bonds desired
to be refunded may not be refunded without the consent of the holders
.of'the unrefunded portion of the first lien bonds then outstanding.
SECTION 22 - Maintenance and Operation: That the City hereby
covenants and agrees to maintain the System in good condition and to
operate same in an efficient manner and at reasonable cost. So long
as any of the bonds similarly secured are outstanding, the City
agrees to maintain insurance for the benefit of the holder or holders
of such bonds of the kinds and in the amounts which are usually
carried by private companies operating similar properties, and that
during such time all policies of insurance shall be maintained in
force and kept current as to premium payments. Monies received
from losses under such insurance policies other than public liability
policies, are hereby pledged as security for the bonds until and un-
less the proceeds are paid out in making good the loss or damage in
respect of which such proceeds are received, either by replacing the
property destroyed or by repairing the property damaged or adequate
provisions for making good such loss or damage may be made within
ninety (90) days from the date of loss. Nothin~ in this ordinance
18
shall be construed as requiring the City to expend any funds which
are derived from sources other than the operation of the System, but
nothing herein shall be construed as preventing the City from doing
so.
SECTION 23 - Records and Accounts and Fiscal Year: That the
City hereby covenants and agrees that so long as any of the bonds
similarly secured or any interest thereon remain outstanding and un-
paid, it will keep and maintain a proper and complete system of
records and accounts pertaining to the operation of the System,
separate and apart from all other records and accounts in which com-
plete and correct entries shall be made and maintained of all trans-
actions relating to said System as provided by Article 1113, Revised
Civil Statutes of Texas, as amended. Any holder of the bonds similarly
secured or any duly authorized agent or agents of such holder or
holders shall have the right at all reasonable times to inspect
all such records, accounts, and data relating thereto and to inspect
the System and all properties comprising same. The City further
agrees that following close of each fiscal year, it will cause an
audit of such books and accounts to be made by an independent Certi-
fied Public Accountant or a Licensed Public Accountant within sixty
(60) days after the close of each fiscal year. Each such audit, in
addition to what other matters may be thought proper by the accountant,
shall contain the following:
(a) A statement of the income and expenditures of the
System for such fiscal year;
(b) A balance sheet as of the end of such fiscal year;
(c) The accountant's comments regarding the manner in which
the City has carried out the requirements of all ordi-
nances authorizing bonds then outstanding, and his re-
commendations for any change or improvement in the
operation, records and accounts of the System;
(d) A list of the insurance policies in force at the end of
the fiscal year on the System properties, setting out
as to each policy the amount thereof, the risk covered,
19
the name of the insurer, and the policy's expiration
date;
(e) A list of the securities which have been on deposit as
security for the money in the INTEREST AND SINKING
FUND and RESERVE FUND throughout the fiscal year, a
list of the securities, if any, in which the RESERVE
FUND has been invested, and a statement of the manner
in which the money in the SYSTEM FUND has been secured
in such fiscal year;
(f) The number of properties connected with the System.
Expenses incurred in making the audits above required are
to be regarded as maintenance and operation expenses and paid as such.
Copies of the aforesaid annual audit shall be immediately furnished
to the Executive Director of the Municipal Advisory Council of Texas
at his office in Austin, Texas, and to the original holders of the
bonds and any subsequent holder at his request. At the close of the
first six month's period of each fiscal year, the City Secretary is
hereby directed to furnish a copy of an operating and income statement
in reasonable detail covering such period to any bondholder upon
his request therefor received not more than thirty (30) days after
close of said six-month's period. Any bondholder shall have the
right to discuss with the Accountant making the annual audit the
contents thereof and to ask for such additional information as he
may reasonably require.
SECTION 24 - Arbitra~e Bond and Deposit of Funds Covenants:
That the City Council of said City hereby specially covenants and
agrees with the original owners and holders of the bonds authorized
hereby and with all subsequent owners and holders from time to time
of said bonds that:
(1) The City Council of said City will promptly proceed
to utilize the proceeds from the sale of said bonds
(other than accrued interest to date of delivery) for
the purpose set forth in SECTION I of this ordinance;
and
20
(2) No portion of the bonds hereby authorized is issued as
a part of an issue, all or a major portion'of the proceeds
of which are reasonably expected to be used directly
or indirectly
(a) to acquire securities (within the meaning of Section
165(g) (2) (A) or (B) of the Internal Revenue Code) or
obligations other than obligations described in Section
103 (a) (1) of the Internal Revenue Code (except for a
temporary period of time to the extent permitted by
Section 103 (d) (4) (A) of the Internal Revenue Code)
which may be reasonably expected at the time of the issuance
of such issue to produce a yield over the term of the issue
which is materially higher (taking into account any
discount or premium) than the yield on obligations of
such issue, or
(b) to replace funds which were used directly or in-
directly to acquire securities or obligations described
in subparagraph (a).
(3) The City Council of said City will take such action in
accordance with regulations prescribed from time to
time by the Secretary of the Treasury or his delegate
to carry out the purposes of Section 103 (d) of the
Internal Revenue Code so that no portion of the
bonds authorized hereby shall be classified as an
"arbitrage bond" within the meaning of Section 103 (d)
of the Internal Revenue Code. Specifically, but not
by way of limitation, said City Council covenants that
it will make no use of the proceeds of such bonds
at any time during the term thereof which would cause
such bonds to be arbitrage bonds within the meaning
of Section 103 (d) of the Code as interpreted by
Sections 1.103-13 and 1.103-14 of the regulations
proposed for such purpose by the United States
Treasury Department or, after permanent regulations
21
interpreting such Code section are promulgated.
(4) Said City Council covenants that it will not permit
to be deposited to the credit of the SYSTEM FUND or
the INTEREST AND SINKING FUND or the RESERVE FUND
or applied to the payment of the principal of or
interest on the bonds authorized hereby, any pro-
ceeds from any grant, donation or income received
from the United States Government, whether pursuant
to agreement or otherwise, if such deposit or ap-
plication would result in interest payable on said
bonds being includable in whole or in part in Gross
Income, under Section 103 of the Internal Revenue
Code for Federal income taxes.
SECTION 25 - Remedies in Event of Default: That in addition to
all the rights and remedies provided by the laws of the State of
Texas, the City covenants and agrees that in the event the City (a)
fails to make the payments required by SECTIONS 13 through 14 of this
ordinance to be made into the INTEREST AND SINKING FUND and the RESERVE
FUND, or (b) defaults in the observance or performance of any other
of the covenants, conditions or obligations set forth in the ordinance
authorizing the issuance of any of the bonds similarly secured, the
following remedies shall be available:
(1) The holder or holders of any of any of the bonds
similarly secured shall be entitled to a writ of
mandamus issued by a Court of proper jurisdiction,
compelling and requiring the City Council and
other officers of the City to observe and perform
any covenant, obligation or condition prescribed by
said ordinances.
(2) 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
22
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 re-
medies shall not be deemed to be exclusive.
SECTION 26 - Further Covenants: That the City further cove-
nants and agrees by and through this ordinance, as follows, to-wit:
(a) That These Bonds, the Series 1968 Bonds and the Series
1972 Bonds (and any Additional Parity Bonds when issued),
including the interest coupons thereto attached, shall
be special obligations of the City, and the holder or
holders thereof shall never have the right to demand
payment of said obligations out of any funds raised,
or to be raised, by taxation;
(b) That it has the lawful power to pledge the revenues
supporting These Bonds, and has lawfully exercised
said power under the Constitution and laws of the
State of Texas, including the power existing under
Articles 1111 to 1118, both inclusive, as amended,
Revised Civil Statutes of Texas; that These Bonds
issued hereunder shall be ratably secured in such
manner that no one bond shall have preference over
any other bond of said issue; and that These Bonds
are issued on a parity and equal dignity with the
outstanding Series 1968 Bonds and the Series 1972
Bonds;
(c) That other than for payment of These Bonds, the Series
1968 Bonds and the Series 1972 Bonds~ the rents, reve-
nues and income of the System are not in any manner
pledged to the payment of any debt or obligation of
the City; and said System is otherwise free and clear
of all other liens and encumbrances whatsoever; and
(d) That so far as it legally may do so, for the protection
and security of These Bonds, the Series 1968 Bonds and
the Series 1972 Bonds and the holders thereof from time
23
to time, the City will not grant a franchise for the
operation of any competing waterworks or sewer system
in the City until all said bonds shall have been retired.
(e) That, so long as any of the bonds similarly secured
or any interest thereon remain outstandinf>, the City
will not sell or encumber the System, or any substantial
part thereof', and that, with the exception of the Ad-
ditional Parity Bonds expressly permitted by this or-
dinance to be issued, it will not encumber the revenues
thereof unless such encumbrance is made junior and
subordinate to all of the provisions of this ordinance,
(provided that this covenant shall not be construed to
prevent the disposal by the City of property which in
its judgment has become inexpedient to use in connection
with the System when other property of equal value has
been substituted therefor).
SECTION 27 - Ordinance to Constitute Contract: That the pro-
visions of this ordinance shall constitute a contract between the
City and the holder or holders from time to time of These Bonds,
and that after the issuance of any of These Bonds, no change, alter-
ation or variation of any kind of the provisions of this ordinance
may be made (except as herein otherwise provided), until all of
said bonds shall have been paid both as to principal and interest.
SECTION 28 - Bonds as Negotiable Instruments: That each of the
bonds herein authorized shall be deemed and construed to be a
"Security" and as such a negotiable instrument, within the meaning
of Article 8 of the Uniform Commercial Code.
SECTION 29 - Duties of Mayor: That the Mayor of the City is
hereby authorized to take and have charge of all necessary records
pending investigation by the Attorney General of the State of Texas,
and shall take and have charge and control of These Bonds pending
approval by the said Attorney General of Texas, and registration by
the Comptroller of Public Accounts of the State of Texas. When These
Bonds have been registered, said Comptroller is hereby authorized and
21j
instructed to deliver These Bonds to THE AMERICAN NATIONAL BANK OF
AUSTIN, AUSTIN, TEXAS, where they will be taken up and paid for
by the purchaser.
SECTION 30 - Confirmation of Sale: That the bid of Underwood,
Neuhaus & Co., Inc. & Associates, Houston, Texas, for These Bonds
at the price of par and accrued interest to the date of delivery,
having been heretofore accepted, sale of These Bonds is hereby confirmed
to said purchaser and the Mayor and the City Manager of the City are
hereby authorized directed and instructed to do all things necessary
to deliver These Bonds to said purchaser at THE AMERICAN NATIONAL
BANK OF AUSTIN, AUSTIN, TEXAS, at the aforesaid price.
SECTION 31 - Invalidity of Part of Ordinance: That, if any
section, paragraph, clause or provisions of this ordinance shall be
held to be invalid for any reason, the invalidity thereof shall not
affect any of the remaining sections, paragraphs, clauses or provi-
sions of this ordinance.
SECTION 32 - Printing of Legal Opinion on Bonds: That the pur-
chaser above named, having purchased the bonds herein authorized
subject to the final opinion of Messrs. Dobbins, Howard & Harris,
Attorneys at Law, San Antonio, Texas, approving the validity of such
bonds, which approving opinion is to be dated as of the date of pay-
ment for and delivery of the bonds herein authorized, the printing of
a true and correct copy of said approving opinion on the reverse side
of each of said bonds with an appropriate certificate pertaining
thereto, executed by the facsimile signature of the City Secretary
of said City, is hereby approved and authorized.
SECTION 33 - Ordinance Effective Immediately: That this ordi-
nance shall take effect immediately and be in full force and effect
from and after its passage, AND IT IS SO ORDAINED.
FINALLY PASSED AND ENACTED this I~ day of ~~
o
,
1973.
&J~~
~~~ City of Schertz, Texas
ATTEST:
rl"UAI/ ~.I:nJ'LuA.O ,
~cretary, City of Schertz
(SEAL OF CITY)
25
COUNTY OF GUADALUPE
D
~
~
THE STATE OF TEXAS
CITY OF SCHERTZ
The City Council of the City of Schertz, Texas, convened
in regular session on the 1st day of May, 1973, at 7:00 o'clock P.M.,
in the City Hall within said City, which meeting was at all times
open to the public, and the roll was called of the duly constituted
officers and members of said Council, namely:
ROBERT C. BUEKER
MAYOR
ROBERT E. SCHWARTZ
HUGH G. SANDIFER
ALDERMAN
ALDERMAN
ALDERWOMAN
ALDERMAN
ALDERvlOMAN
MRS. BOBBIE L. KOCH
TOM KOOLE
MRS. NELL FUNK
AND
DENNY L. ARNOLD
CITY MANAGER
JUNE G. KRAUSE
CITY SECRETARY
and all of said persons were present with the exception of the fol-
lowing absentees:
.'
thus constituting a quorum.
Whereupon, among other business, the
following was transacted at said meeting: A written ordinance
AUTHORIZING THE ISSUANCE OF $165,000 CITY OF SCHERTZ, TEXAS, UTILITY
SYSTEM REVENUE BONDS, SERIES 1973, was duly introduced for the con-
sideration of the Council and read in full. It was then duly moved
and seconded that said ordinance be adopted; and, after due discus-
sion, said motion, carrying with it the adoption of said ordinance,
prevailed and carried by the following vote:
AYES: All members of said City Council shown
present above voted "AYE"
NOES: None