17-B-16 - Issuance of City of Schertz Combination tax and limited pledge revenue certificates of obligation Series 2017FINAL
ORDINANCE NO. 17 -B -16
AN ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF
SCHERTZ, TEXAS COMBINATION TAX AND LIMITED PLEDGE
REVENUE CERTIFICATES OF OBLIGATION, SERIES 2017 ";
PROVIDING FOR THE PAYMENT OF SAID CERTIFICATES BY THE
LEVY OF AN AD VALOREM TAX UPON ALL TAXABLE PROPERTY
WITHIN THE CITY AND FURTHER SECURING SAID CERTIFICATES
BY A LIEN ON AND PLEDGE OF THE PLEDGED REVENUES OF THE
SYSTEM; PROVIDING THE TERMS AND CONDITIONS OF SAID
CERTIFICATES AND RESOLVING OTHER MATTERS INCIDENT AND
RELATING TO THE ISSUANCE, PAYMENT, SECURITY, SALE, AND
DELIVERY OF SAID CERTIFICATES, INCLUDING THE APPROVAL
AND DISTRIBUTION OF AN OFFICIAL STATEMENT PERTAINING
THERETO; AUTHORIZING THE EXECUTION OF A PAYING
AGENT/REGISTRAR AGREEMENT AND AN OFFICIAL BID FORM;
COMPLYING WITH THE REQUIREMENTS OF THE LETTER OF
REPRESENTATIONS PREVIOUSLY EXECUTED 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 of the City of Schertz, Texas (the City) has caused notice
to be given of its intention to issue certificates of obligation in the maximum principal amount of
$5,600,000 for the purpose of paying contractual obligations of the City to be incurred for
making permanent public improvements and for other public purposes, to -wit: (1) constructing
street improvements (including utilities repair, replacement, and relocation), curbs, gutters, and
sidewalk improvements, including drainage incidental thereto; (2) designing, renovating,
repairing, and improving the City's Municipal Complex and the Senior Center; (3) purchase of
ambulances and Fire apparatus and constructing improvements to Fire Station No. 2; (4)
designing, constructing, renovating, improving, and equipping the City's parks and recreational
facilities, including the construction of new hike and bike trails; (5) the purchase of materials,
public safety equipment, supplies, equipment, machinery, landscaping, land, and rights -of -way
for authorized needs and purposes relating to the aforementioned capital improvements; and (6)
the payment of professional services related to the design, construction, project management, and
financing of the aforementioned projects. This notice has been duly published in a newspaper
hereby found and determined to be of general circulation in the City, once a week for two (2)
consecutive weeks, the date of the first publication of such notice being not less than thirty (30)
days prior to the tentative date stated therein for the passage of the ordinance authorizing the
issuance of such certificates of obligation; and
WHEREAS, no petition protesting the issuance of the certificates of obligation described
in this notice, signed by at least 5% of the qualified electors of the City, has been presented to or
28181190.4
filed with the City Secretary prior to the date tentatively set in such notice for the passage of this
ordinance; and
WHEREAS, the City Council hereby finds and determines that the issuance of the
certificates of obligation, under the terms herein specified, is in the best interests of the City and
its residents; and
WHEREAS, the City Council hereby finds and determines that certificates of obligation
in the principal amount of $5,475,000 described in such notice should be issued and sold at this
time; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
SECTION 1. Authorization - Designation - Principal Amount - Purpose. The
certificates of obligation of the City shall be and are hereby authorized to be issued in the
aggregate principal amount of FIVE MILLION FOUR HUNDRED SEVENTY FIVE
THOUSAND AND NO /100 DOLLARS ($5,475,000), to be designated and bear the title of
"CITY OF SCHERTZ, TEXAS COMBINATION TAX AND LIMITED PLEDGE REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2017" (the Certificates), for the purpose of
paying contractual obligations of the City to be incurred for making permanent public
improvements and for other public purposes, to -wit: (1) constructing street improvements
(including utilities repair, replacement, and relocation), curbs, gutters, and sidewalk
improvements, including drainage incidental thereto; (2) designing, renovating, repairing, and
improving the City's Municipal Complex and the Senior Center; (3) purchase of ambulances and
Fire apparatus and constructing improvements to Fire Station No. 2; (4) designing, constructing,
renovating, improving, and equipping the City's parks and recreational facilities, including the
construction of new hike and bike trails; (5) the purchase of materials, public safety equipment,
supplies, equipment, machinery, landscaping, land, and rights -of -way for authorized needs and
purposes relating to the aforementioned capital improvements; and (6) the payment of
professional services related to the design, construction, project management, and financing of
the aforementioned projects, pursuant to the authority conferred by and in conformity with the
laws of the State of Texas, particularly the Certificate of Obligation Act of 1971, as amended,
Texas Local Government Code Section 271.041 through Section 271.064, Chapter 1502, as
amended, Texas Government Code, and the City's Home Rule Charter.
SECTION 2. Fully Registered Obligations - Authorized Denominations - Stated
Maturities - Interest Rates — Certificate Date. The Certificates are issuable in fully registered
form only; shall be dated May 15, 2017 (the Certificate Date) and shall be issued in
denominations of $5,000 or any integral multiple (within a Stated Maturity) thereof, and the
Certificates shall become due and payable on February 1 in each of the years and in principal
amounts (the Stated Maturities) and bear interest on the unpaid principal amounts from the
Certificate Date, or from the most recent Interest Payment Date (hereinafter defined) to which
interest has been paid or duly provided for, to the earlier of redemption or Stated Maturity, at the
per annum rates, while Outstanding, in accordance with the following schedule:
28181190.4 -2-
Years of
Principal
Interest
Stated Maturity
Amounts ($)
Rates
2018
345,000
3.000
2019
385,000
3.000
2020
400,000
3.000
2021
405,000
3.000
2022
420,000
3.000
2023
315,000
3.000
2024
325,000
3.000
2025
185,000
3.000
2026
190,000
3.000
2027
195,000
3.000
2028
200,000
3.000
2029
205,000
3.000
2030
215,000
3.000
2031
220,000
3.000
2033
460,000
3.000
2035
490,000
3.250
2037
520,000
3.250
The Certificates shall bear interest on the unpaid principal amounts from the Certificate
Date, or from the most recent Interest Payment Date (hereinafter defined) to which interest has
been paid or duly provided for, to Stated Maturity or prior redemption, 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 Certificates shall be payable on February 1 and August 1
in each year (each, an Interest Payment Date), commencing February 1, 2018.
SECTION 3. Payment of Certificates - Paving Agent /Registrar. The principal of,
premium, if any, and interest on the Certificates, 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 Certificates shall be
without exchange or collection charges to the Holder (hereinafter defined) of the Certificates.
The selection and appointment of BOKF, NA, Austin, Texas (the
Paying Agent /Registrar) to serve as the initial Paying Agent /Registrar, for the Certificates 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 Certificates, all as provided
28181190.4 -3-
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 City may prescribe. The City covenants to
maintain and provide a Paying Agent /Registrar at all times while the Certificates 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 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 Certificates 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 Certificates, due and payable by reason
of Stated Maturity, redemption, or otherwise, shall be payable only to the registered owner of the
Certificates 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 thereon, (ii) on the date of surrender of
the Certificates for purposes of receiving payment of principal thereof upon redemption of the
Certificates or at the Certificates' 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 Certificate 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 Certificates shall be payable only upon
presentation and surrender of the Certificates to the Paying Agent /Registrar at its corporate trust
office. Interest on the Certificates 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 Certificates (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
Certificates shall be a Saturday, 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 Certificates 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
28181190.4 -4-
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
Holder of a Certificate 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. The Certificates stated to mature on February 1, 2033, February 1, 2035, and
February 1, 2037 are referred to herein as the "Term Certificates ". The Term Certificates are
subject to mandatory sinking fund redemption prior to their stated maturities from money
required to be deposited in the Certificate Fund for such purpose and shall be redeemed in part,
by lot or other customary method, at the principal amount thereof plus accrued interest to the
date of redemption in the following principal amounts on February 1 in each of the years as set
forth below:
Term Certificates
Stated to Mature
on February 1, 2033
Principal
Year Amount ($)
2032 225,000
2033 235,000*
*Payable at Stated Maturity.
Term Certificates
Stated to Mature
on February 1, 2037
Principal
Year Amount ($)
2036 255,000
2037 265,000*
*Payable at Stated Maturity.
Term Certificates
Stated to Mature
on February 1, 2035
Principal
Year Amount ($)
2034 240,000
2035 250,000*
*Payable at Stated Maturity.
The principal amount of a Term Certificate required to be redeemed pursuant to the
operation of such mandatory redemption provisions shall be reduced, at the option of the City, by
the principal amount of any Term Certificates of such Stated Maturity which, at least fifty (50)
days prior to the mandatory redemption date (1) shall have been defeased or acquired by the City
and delivered to the Paying Agent /Registrar for cancellation, (2) shall have been purchased and
canceled by the Paying Agent/Registrar at the request of the City, or (3) shall have been
28181190.4 -5-
redeemed pursuant to the optional redemption provisions set forth below and not theretofore
credited against a mandatory redemption requirement.
B. Optional Redem tp ion. The Certificates having Stated Maturities on and after
February 1, 2028 shall be subject to redemption prior to Stated Maturity, at the option of the
City, on February 1, 2027, or on any date thereafter, as a 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.
C. Exercise of Redemption Option. At least forty -five (45) days prior to a date set
for the redemption of Certificates (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 Certificates, 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 Certificates shall be entered in the minutes of the governing body of the City.
D. Selection of Certificates for Redemption. If less than all Outstanding Certificates
of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent /Registrar
shall select at random and by lot the Certificates to be redeemed, provided that if less than the
entire principal amount of a Certificate is to be redeemed, the Paying Agent /Registrar shall treat
such Certificate then subject to redemption as representing the number of Certificates
Outstanding which is obtained by dividing the principal amount of such Certificate by $5,000.
E. Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Certificates, 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 Certificate to be redeemed, in whole or in part, at the address of the Holder appearing
on the Security Register at the close of business on the business day next preceding the date of
mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to
have been duly given irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Certificates,
(ii) identify the Certificates 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 Certificates, 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 Certificates, 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.
If a Certificate is subject by its terms to redemption and has been called for redemption
and notice of redemption thereof has been duly given or waived as herein provided, such
Certificate (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 Certificates (or of the
principal amount thereof to be redeemed) at the then applicable redemption price is held for the
28181190.4 -6
purpose of such payment by the Paying Agent /Registrar, then on the redemption date designated
in such notice, interest on the Certificates (or the principal amount thereof to be redeemed) called
for redemption shall cease to accrue and such Certificates shall not be deemed to be Outstanding
in accordance with the provisions of this Ordinance. 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).
F. Transfer /Exchange of Certificates. Neither the City nor the Paying
Agent /Registrar shall be required (1) to transfer or exchange any Certificate during a period
beginning forty -five (45) days prior to the date fixed for redemption of the Certificates or (2) to
transfer or exchange any Certificate 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
Certificate which is subject to redemption in part.
SECTION 5. Execution - Registration. The Certificates shall be executed on behalf of
the City by its Mayor or Mayor Pro Tem under its seal reproduced or impressed thereon and
attested by its City Secretary. The signature of either of said officers on the Certificates may be
manual or facsimile. Certificates bearing the manual or facsimile signatures of individuals who
were, at the time of the Certificate 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 Certificates to the Purchasers (hereinafter defined), all as authorized and
provided in Chapter 1201, as amended, Texas Government Code.
No Certificate shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Certificate 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 Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has been duly certified
or registered and delivered.
SECTION 6. Registration - Transfer - Exchange of Certificates - Predecessor
Certificates. The Paying Agent /Registrar shall obtain, record, and maintain in the Security
Register the name and address of every owner of the Certificates, or if appropriate, the nominee
thereof. Any Certificate may, in accordance with its terms and the terms hereof, be transferred
or exchanged for Certificates of other authorized denominations upon the Security Register by
the Holder, in person or by his duly authorized agent, upon surrender of such Certificate 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 Certificate 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 Certificates of
28181190.4 -7-
authorized denomination and having the same Stated Maturity and of a like interest rate and
aggregate principal amount as the Certificate or Certificates surrendered for transfer.
At the option of the Holder, Certificates may be exchanged for other Certificates of
authorized denominations and having the same Stated Maturity, bearing the same rate of interest
and of like aggregate principal amount as the Certificates surrendered for exchange upon
surrender of the Certificates to be exchanged at the corporate trust office of the Paying
Agent /Registrar. Whenever any Certificates are so surrendered for exchange, the City shall
execute, and the Paying Agent /Registrar shall register and deliver, the Certificates to the Holder
requesting the exchange.
All Certificates issued upon any transfer or exchange of Certificates 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 Certificates surrendered upon such transfer or
exchange.
All transfers or exchanges of Certificates 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.
Certificates canceled by reason of an exchange or transfer pursuant to the provisions
hereof are hereby defined to be Predecessor Certificates, evidencing all or a portion, as the case
may be, of the same debt evidenced by the new Certificate or Certificates registered and
delivered in the exchange or transfer therefor. Additionally, the term Predecessor Certificates
shall include any Certificate registered and delivered pursuant to Section 25 in lieu of a
mutilated, lost, destroyed, or stolen Certificate which shall be deemed to evidence the same
obligation as the mutilated, lost, destroyed, or stolen Certificate.
SECTION 7. Initial Certificate. The Certificates herein authorized shall be issued
initially either (i) as a single fully registered Certificate in the total principal amount of
$5,475,000 with principal installments to become due and payable as provided in Section 2 and
numbered T -1, or (ii) as one (1) fully registered Certificate 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 Certificate) and, in either case, the Initial Certificate shall be registered in
the name of the Purchasers or the designee thereof. The Initial Certificate shall be the
Certificates 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 Certificate to the
Purchasers, the Paying Agent /Registrar, pursuant to written instructions from the Purchasers or
their designee, shall cancel the Initial Certificate delivered hereunder and exchange therefor
definitive Certificates of authorized denominations, Stated Maturities, principal amounts and
bearing applicable interest rates on the unpaid principal amounts from the Certificate Date, or
from the most recent Interest Payment Date to which interest has been paid or duly provided for,
28181190.4 -8-
to Stated Maturity, 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.
SECTION 8. Forms.
A. Forms Generally. The Certificates, 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 Certificates 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
Certificates, or any Stated Maturities thereof, are insured, and any reproduction of an opinion of
Bond Counsel (hereinafter referenced)) and identifying numbers and letters of the Committee on
Uniform Securities Identification Procedures of the American Bankers Association) and such
legends and endorsements (including any reproduction of an opinion of counsel) thereon as may,
consistent herewith, be established by the City or determined by the officers executing the
Certificates as evidenced by their execution thereof Any portion of the text of any Certificate
may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the
Certificate.
The definitive Certificates 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 Certificates as evidenced by their execution thereof, but the Initial
Certificate submitted to the Attorney General of the State of Texas may be typewritten or
photocopied or otherwise reproduced.
[The remainder of this page intentionally left blank.]
28181190.4 -9-
B. Form of Definitive Certificate.
REGISTERED
REGISTERED PRINCIPAL AMOUNT
NO. $
United States of America
State of Texas
Counties of Guadalupe, Comal, and Bexar
CITY OF SCHERTZ, TEXAS
COMBINATION TAX AND LIMITED PLEDGE REVENUE
CERTIFICATE OF OBLIGATION, SERIES 2017
Certificate Date: Interest Rate: Stated Maturity: CUSIP No.
May 15, 2017
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 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
redemption) and to pay interest on the unpaid Principal Amount hereof from the Certificate 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 (each, an Interest Payment Date), commencing February 1, 2018.
Principal and premium, if any, of this Certificate shall be payable to the Registered
Owner hereof (the Holder), upon presentation and surrender, 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 Certificate (or one or more Predecessor
Certificates, 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 Certificate 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.
28181190.4 -10-
This Certificate is one of the series specified in its title issued in the aggregate principal
amount of $5,475,000 (the Certificates) pursuant to an Ordinance adopted by the governing body
of the City (the Ordinance), for the purpose of paying contractual obligations of the City to be
incurred for making permanent public improvements and for other public purposes, to -wit: (1)
constructing street improvements (including utilities repair, replacement, and relocation), curbs,
gutters, and sidewalk improvements, including drainage incidental thereto; (2) designing,
renovating, repairing, and improving the City's Municipal Complex and the Senior Center; (3)
purchase of ambulances and Fire apparatus and constructing improvements to Fire Station No. 2;
(4) designing, constructing, renovating, improving, and equipping the City's parks and
recreational facilities, including the construction of new hike and bike trails; (5) the purchase of
materials, public safety equipment, supplies, equipment, machinery, landscaping, land, and
rights -of -way for authorized needs and purposes relating to the aforementioned capital
improvements; and (6) the payment of professional services related to the design, construction,
project management, and financing of the aforementioned projects, under and in strict
conformity with the laws of the State of Texas, particularly Chapter 1502, as amended, Texas
Government Code, the Certificate of Obligation Act of 1971, as amended, Texas Local
Government Code, Section 271.041 through 271.064, and the City's Home Rule Charter.
The Certificates stated to mature on February 1, 2033, February 1, 2035, and February 1,
2037 are referred to herein as the "Term Certificates ". The Term Certificates are subject to
mandatory sinking fund redemption prior to their stated maturities from money required to be
deposited in the Certificate Fund for such purpose and shall be redeemed in part, by lot or other
customary method, at the principal amount thereof plus accrued interest to the date of
redemption in the following principal amounts on February 1 in each of the years as set forth
below:
Term Certificates
Stated to Mature
on February 1, 2033
Principal
Year Amount ($)
2032 225,000
2033 235,000*
*Payable at Stated Maturity.
Term Certificates
Stated to Mature
on February 1, 2037
Principal
Year Amount ($)
2036 255,000
2037 265,000*
*Payable at Stated Maturity.
28181190.4 -11-
Term Certificates
Stated to Mature
on February 1, 2035
Principal
Year Amount ($)
2034 240,000
2035 250,000*
*Payable at Stated Maturity.
The principal amount of a Term Certificate required to be redeemed pursuant to the
operation of such mandatory redemption provisions shall be reduced, at the option of the City, by
the principal amount of any Term Certificates of such Stated Maturity which, at least fifty (50)
days prior to the mandatory redemption date (1) shall have been defeased or acquired by the City
and delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and
canceled by the Paying Agent /Registrar at the request of the City, or (3) shall have been
redeemed pursuant to the optional redemption provisions set forth below and not theretofore
credited against a mandatory redemption requirement.
As provided in the Ordinance, the Certificates having Stated Maturities on and after
February 1, 2028 shall be subject to redemption prior to Stated Maturity, at the option of the
City, on February 1, 2027, or on any date thereafter, as a 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; provided, however, that at least thirty (30) days prior written notice shall be
sent to the Holder of the Certificates to be redeemed by United States mail, first -class postage
prepaid, and subject to the terms and provisions relating thereto contained in the Ordinance. If
this Certificate 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 Certificate to the Paying Agent /Registrar at its corporate trust office, a new Certificate or
Certificates 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.
If this Certificate (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 Certificate (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
Certificate 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 Certificate 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 Certificates of this series are payable from the proceeds of an ad valorem tax levied
upon all taxable property within the City, within the limitations prescribed by law, and are
further payable from and secured by a lien on and pledge of the Pledged Revenues (identified
and defined in the Ordinance), being a limited amount of the Net Revenues derived from the
operation of the City's combined utility system (the System), such lien on and pledge of the
limited amount of Net Revenues being subordinate and inferior to the lien on and pledge of such
Net Revenues securing payment of any Prior Lien Obligations, Junior Lien Obligations, or
Subordinate Lien Obligations hereafter issued by the City. The City has previously authorized
the issuance of the currently outstanding Limited Pledge Obligations (identified and defined in
28181190.4 -12-
the Ordinance) that are payable, in part, from and secured by a lien on and pledge of a limited
amount of the Net Revenues of the System in the manner and as described in the ordinances
authorizing the issuance of the currently outstanding Limited Pledge Obligations. In the
Ordinance, the City reserves and retains the right to issue Prior Lien Obligations, Junior Lien
Obligations, Subordinate Lien Obligations, and Additional Limited Pledge Obligations (all as
identified and defined in the Ordinance), while the Certificates are Outstanding, without
limitation as to principal amount but subject to any terms, conditions or restrictions as may be
applicable thereto under law or otherwise.
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 and the revenues pledged for the payment of the Certificates; the terms
and conditions under which the City may issue Prior Lien Obligations, Junior Lien Obligations,
Subordinate Lien Obligations, and Additional Limited Pledge Obligations; the terms and
conditions relating to the transfer or exchange of the Certificates; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holder; the
rights, duties, and obligations of the City and the Paying Agent /Registrar; the terms and
provisions upon which this Certificate may be redeemed or discharged at or prior to the Stated
Maturity thereof, and deemed to be no longer Outstanding thereunder; and for the other terms
and provisions specified in the Ordinance. Capitalized terms used herein have the same meanings
assigned in the Ordinance.
This Certificate, 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 Certificates 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
Certificate 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
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.
28181190.4 -13-
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 Certificate 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 issuance of the Certificates 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 Certificates by the levy of a tax and
collection of Pledged Revenues as aforestated. In case any provision in this Certificate 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 Certificate 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 Certificate to be duly executed under
its official seal.
CITY OF SCHERTZ, TEXAS
'r
ATTEST:
I
Ci ecretary
(CITY SEAL)
28181190.4 -14-
C. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Certificate 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 Certificate 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
Comptroller of Public Accounts
of the State of Texas
(SEAL)
*NOTE TO PRINTER: Not to appear on printed Certificates.
D. Form of Certificate of Paying Agent /Registrar to Appear on Definitive
Certificates Only.
REGISTRATION CERTIFICATE OF PAYING AGENT /REGISTRAR
This Certificate has been duly issued under the provisions of the within - mentioned
Ordinance; the Certificate or Certificates of the above - entitled and designated series originally
delivered having been approved by the Attorney General of the State of Texas and registered by
the Comptroller of Public Accounts, as shown by the records of the Paying Agent /Registrar.
Registered this date:
BOKF, NA, AUSTIN, TEXAS, as Paying
Agent /Registrar
IRA
Authorized Signature
*NOTE TO PRINTER: Print on Definitive Certificates.
28181190.4 -15-
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 Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Certificate on the books kept for
registration thereof, with full power of 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 Certificate in every
particular.
Signature guaranteed:
F. The Initial Certificate shall be in the form set forth in paragraph B of this Section,
except that the form of a single fully registered Initial Certificate shall be modified as follows:
(i) immediately under the name of the Certificate 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:
28181190.4 -16-
Years of Principal Interest
Stated Maturity Amounts ($) 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 Amounts hereof from the Certificate Date specified above, or from the most
recent Interest Payment Date (defined below) 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, 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 (each, an Interest Payment Date),
commencing February 1, 2018.
Principal of this Certificate 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 BOKF, NA, Austin, Texas (the Paying Agent /Registrar). Interest
shall be payable to the Holder of this Certificate 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 Certificate 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.
G. Insurance Legend. If bond insurance is obtained by the City or the Purchasers for
the Certificates, the Definitive Certificates and the Initial Certificate 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 27 and 44 of this Ordinance have the meanings assigned to them in Sections 27 and 44
of this Ordinance, 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 Additional Limited Pledge Obligations shall mean (i) any bonds, notes,
warrants, certificates of obligation or other evidences of indebtedness hereafter issued by the
City payable in part from a limited pledge of and lien on Net Revenues of the System being a
lien on and pledge of Net Revenues that is subordinate and inferior to the lien thereon and pledge
thereof securing the payment of any Prior Lien Obligations, Junior Lien Obligations, or
28181190.4 -17-
Subordinate Lien Obligations hereafter issued by the City, which pledge of revenues is limited
pursuant to Section 1502.052, as amended, Texas Government Code, all as further provided in
Section 20 of this Ordinance, and (ii) any obligations issued to refund the foregoing as
determined by the City Council in accordance with any applicable law.
B. The term Authorized Officials shall mean the Mayor, the Mayor Pro Tem, the City
Manager, the Director of Finance, and /or the City Secretary.
C. The term Certificates shall mean the $5,475,000 "CITY OF SCHERTZ, TEXAS
COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF
OBLIGATION, SERIES 2017" authorized by this Ordinance.
D. The term Certificate Fund shall mean the special Fund created and established by
the provisions of Section 10 of this Ordinance.
E. The term City shall mean the City of Schertz, located in Guadalupe, Comal, and
Bexar Counties, Texas and, where appropriate, the City Council of the City.
F. The term Closing Date shall mean the date of physical delivery of the Initial
Certificates in exchange for the payment of the agreed purchase price for the Certificates.
G. The term Collection Date shall mean, when reference is being made to the levy
and collection of annual ad valorem taxes, the date the annual ad valorem taxes levied each year
by the City become delinquent.
H. 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.
I. The term Depository shall mean an official depository bank of the City.
J. The term Fiscal Year shall mean the annual financial accounting period for the
System now ending on September 30th of each year; provided, however, the City Council may
change such annual financial accounting period to end on another date if such change is found
and determined to be necessary for accounting purposes or is required by applicable law.
K. 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
28181190.4 -18-
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
Certificates.
L. The term Gross Revenues for any period shall mean all revenue during such
period in respect or on account of the operation or ownership of the System, excluding
refundable meter deposits, restricted gifts, and grants in aid of construction, but including
earnings and income derived from the investment or deposit of money in any special fund or
account (except the Certificate Fund) created and established for the payment or security of the
Certificates.
M. The term Holder or Holders shall mean the registered owner, whose name
appears in the Security Register, for any Certificate.
N. The term Interest Payment Date shall mean the date interest is payable on the
Certificates, being February 1 and August 1 of each year, commencing February 1, 2018, while
any of the Certificates remain Outstanding.
O. The term Junior Lien Obligations shall mean (i) any bonds, notes, warrants,
certificates of obligation or any similar obligations hereafter issued by the City that are payable
wholly or in part from and equally and ratably secured by a lien on and pledge of the Net
Revenues of the System, such pledge being junior and inferior to the lien on and pledge of the
Net Revenues of the System that may be pledged to the payment of any Prior Lien Obligations
hereafter issued by the City, but prior and superior to the lien on and pledge of the Net Revenues
of the System that are or will be pledged to the payment of the currently outstanding Limited
Pledge Obligations, and the Certificates, or any Subordinate Lien Obligations or Additional
Limited Pledge Obligations hereafter issued by the City all as further provided in Section 20 of
this Ordinance and (ii) obligations hereafter issued to refund any of the foregoing that are
payable from and equally and ratably secured by a junior and inferior lien on and pledge of the
Net Revenues as determined by the City Council in accordance with any applicable law.
P. The term Limited Pledge Obligations shall mean (i) the Certificates and the
outstanding and unpaid obligations of the City that are payable, in part, from and secured by a
subordinate and inferior lien on and pledge of a limited amount of the Net Revenues of the
System and designated as follows:
(1) "City of Schertz, Texas Combination Tax and Limited Pledge Revenue
Certificates of Obligation, Series 2007 ", dated January 1, 2007, originally issued in the
aggregate principal amount of $9,915,000;
28181190.4 -19-
(2) "City of Schertz, Texas Combination Tax and Limited Pledge Revenue
Certificates of Obligation, Series 2013 ", dated September 1, 2013, originally issued in the
aggregate principal amount of $4,965,000;
(3) "City of Schertz, Texas Combination Tax and Limited Pledge Revenue
Certificates of Obligation, Series 2016A ", dated August 1, 2016, originally issued in the
aggregate principal amount of $2,375,000;
(4) "City of Schertz, Texas Combination Tax and Limited Pledge Revenue
Certificates of Obligation, Taxable Series 2016B ", dated August 1, 2016, originally
issued in the aggregate principal amount of $1,475,000;
(ii) obligations hereafter issued to refund any of the foregoing as determined by the City
Council in accordance with any applicable law.
Q. The term Maintenance and Operating Expenses shall mean all current expenses
of operating and maintaining the System not paid from the proceeds of the Certificates, including
(1) the cost of all salaries, labor, materials, repairs, and extensions necessary to render efficient
service, but only if, in the case of repairs and extensions, they are, in the judgment of the City
Council (reasonably and fairly exercised), necessary to maintain operation of the System and
render adequate service to the City and the inhabitants thereof, or are necessary to meet some
physical accident or condition which would otherwise impair obligations payable from Net
Revenues, (2) payments to pension, retirement, health, hospitalization, and other employee
benefit funds for employees of the City engaged in the operation or maintenance of the System,
(3) payments under contracts for the purchase of water supply, treatment of sewage, or other
materials, goods, or services for the System to the extent authorized by law and the provisions of
such contract, (4) payments to auditors, attorneys, and other consultants incurred in complying
with the obligations of the City hereunder, and (5) any legal liability of the City arising out of the
operation, maintenance, or condition of the System, but excluding any allowance for
depreciation, property retirement, depletion, obsolescence, and other items not requiring an
outlay of cash and any interest on the Certificates or other bonds, notes, warrants, or similar
obligations of the City payable from Net Revenues.
R. The term Net Revenues for any period shall mean the Gross Revenues of the
System less the Maintenance and Operating Expenses of the System.
S. The term Ordinance shall mean this ordinance as finally passed and adopted by
the City Council of the City.
T. The term Outstanding when used in this Ordinance with respect to the Certificates
shall mean, as of the date of determination, all Certificates issued and delivered under this
Ordinance, except:
(1) those Certificates canceled by the Paying Agent /Registrar or delivered to
the Paying Agent /Registrar for cancellation;
(2) those Certificates for which payment has been duly provided by the City
in accordance with the provisions of Section 29 of this Ordinance; and
28181190.4 -20-
(3) those Certificates that have been mutilated, destroyed, lost, or stolen and
replacement Certificates have been registered and delivered in lieu thereof as provided in
Section 25 of this Ordinance.
U. The term Pledged Revenues shall mean, while the Certificates remain
Outstanding, an amount of Net Revenues not in excess of $1,000. The Pledged Revenues shall
be deposited, allocated, and expended in accordance with Section 10 of this Ordinance.
V. The term Pledged Revenue Amount shall mean the total amount, not to exceed
$1,000 while the Certificates are Outstanding, of Net Revenues that may be transferred in whole
or in part by the City in any given Fiscal Year (however, any amounts transferred prior to the
final maturity date of the Certificates may not exceed the total amount of $1,000) to the
Certificate Fund.
W. The term Prior Lien Obligations shall mean (i) any bonds, notes, warrants,
certificates of obligation or any similar obligations hereafter issued by the City that are payable
in whole or in part from and equally and ratably secured by a first and prior lien on and pledge of
the Net Revenues of the System, all as further provided in Section 20 of this Ordinance, and
(ii) any obligations hereafter issued to refund the foregoing if issued in a manner so as to be
payable from and equally and ratably secured by a first and prior lien on and pledge of the Net
Revenues of the System as determined by the City Council in accordance with any applicable
law.
X. The term Purchasers shall mean the initial purchaser or purchasers of the
Certificates named in Section 26 of this Ordinance.
Y. The term Stated Maturity shall mean the annual principal payments of the
Certificates payable on February 1 of each year the Certificates are Outstanding as set forth in
Section 2 of this Ordinance.
Z. The term Subordinate Lien Obligations shall mean (i) any bonds, notes, warrants,
certificates of obligation, or any similar obligations hereafter issued by the City that are payable,
in whole or in part, from and equally and ratably secured by a lien on and pledge of the Net
Revenues of the System, such pledge being subordinate and inferior to the lien on and pledge of
the Net Revenues of the System that may be pledged to the payment of any Prior Lien
Obligations or Junior Lien Obligations hereafter issued by the City, but prior and superior to the
lien on and pledge of the limited amount of the Net Revenues securing, in part, the payment of
the currently outstanding Limited Pledge Obligations and the Certificates or any Additional
Limited Pledge Obligations hereafter issued by the City, all as further provided in Section 20 of
this Ordinance and (ii) any obligations hereafter issued to refund any of the foregoing if issued in
a manner so as to be payable from and equally and ratably secured by a subordinate and inferior
lien on and pledge of the Net Revenues as determined by the City Council in accordance with
any applicable law.
AA. The term System shall mean all properties, facilities and plants currently owned,
operated, and maintained by the City for the supply, treatment, and transmission of treated
potable water, for the collection and treatment of wastewater, together will all future extensions,
28181190.4 -21-
improvements, replacements and additions thereto, whether situated within or without the limits
of the City and the City expressly reserves the right at its sole discretion to include additional
utility, telecommunications, technology, or similar enterprise services as components of the
System; provided, however, that notwithstanding the foregoing, and to the extent now or
hereafter authorized or permitted by law, the term System shall not mean to include facilities of
any kind which are declared not to be a part of the System and which are acquired or constructed
by or on behalf of the City with the proceeds from the issuance of Special Facilities Bonds,
which are hereby defined as being special revenue obligations of the City which are not payable
from Net Revenues but which are payable from and equally and ratably secured by other liens on
and pledges of any revenues, sources or payments, not pledged to the payment of the Bonds
Similarly Secured including, but not limited to, special contract revenues or payments received
from any other legal entity in connection with such facilities.
SECTION 10. Certificate Fund — Investments. For the purpose of paying the interest on
and to provide a sinking fund for the payment, redemption, and retirement of the Certificates,
there shall be and is hereby created a special fund to be designated "COMBINATION TAX
AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION, SERIES 2017,
INTEREST AND SINKING FUND" (the Certificate Fund), which fund shall be kept and
maintained at the Depository, and money deposited in the Certificate Fund shall be used for no
other purpose and shall be maintained as provided in Section 27. Authorized Officials of the
City are hereby authorized and directed to make withdrawals from the Certificate Fund sufficient
to pay the purchase price or the amount of principal of, premium, if any, and interest on the
Certificates as the same become due and payable and shall cause to be transferred to the Paying
Agent /Registrar from money on deposit in the Certificate Fund an amount sufficient to pay the
amount of principal and /or interest stated to mature on the Certificates, 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 Certificates.
The City, at its sole discretion, may deposit the Pledged Revenue Amount to the
Certificate Fund. The Pledged Revenue Amount, if deposited, shall be expended annually to pay
principal of and interest on the Certificates as the same become due and payable. This Pledged
Revenue Amount shall be accounted for and transferred to the Paying Agent/Registrar in
accordance with the provisions of the previous paragraph of this Section.
Pending the transfer of funds to the Paying Agent /Registrar, money deposited in any fund
created and established by this Ordinance may, at the option of the City, 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
28181190.4 -22-
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, 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 any fund established pursuant to the provisions of this
Ordinance 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 Certificates.
SECTION 11. Tax Levy. To provide for the payment of the Debt Service Requirements
on the Certificates being (i) the interest on the Certificates 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 Certificates 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 Certificate Fund and
are thereafter pledged to the payment of the Certificates. 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.
The amount of taxes to be provided annually for the payment of the principal of and
interest on the Certificates shall be determined and accomplished in the following manner:
A. Prior to the date the City Council establishes the annual tax rate and passes an
ordinance levying ad valorem taxes each year, the City Council shall determine:
(1) the amount of Debt Service Requirements to become due and payable on
the Certificates between the Collection Date for the taxes then to be levied and the
Collection Date for the taxes to be levied during the next succeeding calendar year;
(2) the amount on deposit in the Certificate Fund after (a) deducting therefrom
the total amount of Debt Service Requirements to become due on Certificates prior to the
Collection Date for the ad valorem taxes to be levied and (b) adding thereto the amount
of the Pledged Revenues, if any, to be appropriated and allocated during such year to pay
such Debt Service Requirements, if any, prior to the Collection Date for the ad valorem
taxes to be levied; and
(3) the amount of Pledged Revenues, if any, to be appropriated and to be set
aside for the payment of the Debt Service Requirements on the Certificates between the
Collection Date for the taxes then to be levied and the Collection Date for the taxes to be
levied during the next succeeding Fiscal Year.
28181190.4 -23-
B. The amount of taxes to be levied annually each year to pay the Debt Service
Requirements on the Certificates shall be the amount established in paragraph (1) above less the
sum total of the amounts established in paragraphs (2) and (3), after taking into consideration
delinquencies and costs of collecting such annual taxes.
SECTION 12. Pledge of Revenues. The City hereby covenants and agrees that, subject
to (i) any prior lien on and pledge of the Net Revenues of the System to the payment and security
of any Prior Lien Obligations, Junior Lien Obligations, or Subordinate Lien Obligations hereafter
issued by the City and (ii) the lien on and pledge of a limited amount of the Net Revenues to the
payment and security of the currently outstanding Limited Pledge Obligations, the Pledged
Revenues are hereby irrevocably pledged to the payment of the principal of and interest on the
Certificates and the pledge of Pledged Revenues herein made for the payment of the Certificates
shall constitute a lien on the Pledged Revenues in accordance with the terms and provisions
hereof and be valid and binding without any physical delivery thereof or further act by the City.
SECTION 13. System Fund. The City hereby covenants and agrees that all Gross
Revenues derived from the operation of the System shall be kept separate and apart from all
other funds, accounts and money of the City and shall be deposited as collected into the "CITY
OF SCHERTZ, TEXAS UTILITY SYSTEM FUND" (the System Fund). All money deposited
in the System Fund shall be pledged and appropriated to the extent required for the following
purposes and in the order of priority shown:
• First: to the payment of the reasonable and proper Maintenance and Operating
Expenses of the System required by statute or ordinances authorizing the issuance
of any indebtedness of the City to be a first charge on and claim against the Gross
Revenues of the System;
• Second: To the payment of the amounts that must be deposited in the special
funds and accounts created and established for the payment, security, and benefit
of any Prior Lien Obligations hereafter issued by the City in accordance with the
terms and provisions of any ordinance authorizing their issuance;
• Third: To the payment of the amounts that must be deposited in the special funds
and accounts created and established for the payment, security, and benefit of any
Junior Lien Obligations hereafter issued by the City in accordance with the terms
and provisions of any ordinance authorizing their issuance;
• Fourth: To the payment of the amounts that must be deposited in the special
funds and accounts created and established for the payment, security, and benefit
of any Subordinate Lien Obligations hereafter issued by the City in accordance
with the terms and provisions of any ordinance authorizing their issuance; and
• Fifth: To the payment of the amounts that may be deposited in the special funds
and accounts established for the payment of the currently outstanding Limited
Pledge Obligations, including the Certificates, and any Additional Limited Pledge
Obligations hereafter issued by the City in accordance with the terms and
provisions of any ordinance authorizing their issuance.
28181190.4 -24-
Any Net Revenues remaining in the System Fund after satisfying the foregoing
payments, or making adequate and sufficient provision for the payment, security and benefit
thereof, may be appropriated and used for any other City purpose now or hereafter permitted by
law.
SECTION 14. Deposits to Certificate Fund — Surplus Certificate Proceeds. The City
hereby covenants and agrees to cause to be deposited in the Certificate Fund prior to a principal
and interest payment date for the Certificates, from the Pledged Revenues in the System Fund,
after the deduction of all payments required to be made to the special funds or accounts created
for the payment, security, and benefit of (i) any Prior Lien Obligations, Junior Lien Obligations,
or Subordinate Lien Obligations hereafter issued by the City and (ii) the currently outstanding
Limited Pledge Obligations, any amounts budgeted to be paid therefrom in such Fiscal Year.
Accrued interest received from the Purchasers of the Certificates shall be deposited to the
Certificate Fund and ad valorem taxes levied and collected for the benefit of the Certificates shall
be deposited to the Certificate Fund. In addition, any surplus proceeds, including investment
income therefrom, from the sale of the Certificates not expended for authorized purposes shall be
deposited in the Certificate Fund, and such amounts so deposited shall reduce the sums otherwise
required to be deposited in said fund from ad valorem taxes.
SECTION 15. 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 16. Maintenance of System - Insurance. The City covenants and agrees that
while the Certificates remain Outstanding it will maintain and operate the System with all
possible efficiency and maintain casualty and other insurance (including a system of self -
insurance) on the properties of the System and its operations of a kind and in such amounts
customarily carried by municipal corporations in the State of Texas engaged in a similar type of
business and that it will faithfully and punctually perform all duties with reference to the System
required by the laws of the State of Texas. All money received from losses under such insurance
policies, other than public liability policies, are held for the benefit of the holders of the
Certificates until and unless the proceeds are paid out in making good the loss or damage in
respect of which such proceeds are received, either by replacing the property destroyed or
repairing the property damaged, and adequate provision for making good such loss or damage
must be made within ninety (90) days after the date of loss. The payment of premiums for all
insurance policies required under the provisions hereof shall be considered Maintenance and
Operating Expenses. Nothing in this Ordinance 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 17. Rates and Charges. The City hereby covenants and agrees with the
Holders of the Certificates that rates and charges for utility services afforded by the System will
be established and maintained to provide Gross Revenues sufficient at all times:
28181190.4 -25-
A. to pay, together with any other lawfully available funds, all operating,
maintenance, depreciation, replacement, betterment, and other costs incurred in the maintenance
and operation of the System, including, but not limited to, Maintenance and Operating Expenses;
provided, however, that the City expressly reserves the right to utilize other lawfully available
funds to pay the Maintenance and Operating Expenses;
B. to produce Net Revenues sufficient, together with any other lawfully available
funds, to pay (i) the interest on and principal of any Prior Lien Obligations hereafter issued by
the City as the same becomes due and payable and the amounts required to be deposited in any
special fund created and established for the payment, security, and benefit thereof, (ii) the
interest on and principal of any Junior Lien Obligations hereafter issued by the City as the same
becomes due and payable and the amounts required to be deposited in any special fund created
and established for the payment, security, and benefit thereof, (iii) the interest on and principal of
any Subordinate Lien Obligations hereafter issued by the City as the same becomes due and
payable and the amounts required to be deposited in any special fund created and established for
the payment, security, and benefit thereof, and (iv) the amounts that may be deposited in the
special funds established for the payment of the currently outstanding Limited Pledge
Obligations, the Certificates, or any Additional Limited Pledge Obligations hereafter issued by
the City; and
C. to pay other legally incurred indebtedness payable from the Net Revenues of the
System and/or secured by a lien on the System or the Net Revenues thereof.
SECTION 18. Records and Accounts - Annual Audit. The City further covenants and
agrees that so long as any of the Certificates remain Outstanding it will keep and maintain
separate and complete records and accounts pertaining to the operations of the System in which
complete and correct entries shall be made of all transactions relating thereto, as provided by
Chapter 1502, as amended, Texas Government Code, or other applicable law. The Holders of
the Certificates or any duly authorized agent or agents of the Holders shall have the right to
inspect the System and all properties comprising the same. The City further agrees that,
following the close of each Fiscal Year, it will cause an audit of such books and accounts to be
made by an independent firm of Certified Public Accountants. Expenses incurred in making the
annual audit of the operations of the System are to be regarded as Maintenance and Operating
Expenses.
SECTION 19. 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 Certificate Fund, or (b) defaults in
the observance or performance of any other of the covenants, conditions, or obligations set forth
in this Ordinance, the Holders of any of the Certificates 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
28181 190.4 -26-
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 20. Issuance of Prior Lien Obligations, Junior Lien Obligations, Subordinate
Lien Obligations, and Additional Limited Pledge Obligations. The City hereby expressly
reserves the right to hereafter issue bonds, notes, warrants, certificates of obligation, or similar
obligations, payable, wholly or in part, as appropriate, from and secured by a pledge of and lien
on the Net Revenues of the System with the following priorities, without limitation as to
principal amount, but subject to any terms, conditions, or restrictions applicable thereto under
existing ordinances, laws, or otherwise:
A. Prior Lien Obligations payable from and equally and ratably secured by a first and
prior lien on and pledge of the Net Revenues of the System;
B. Junior Lien Obligations payable from and equally and ratably secured by a lien on
and pledge of the Net Revenues that is junior and inferior to the lien on and pledge thereof
securing the payment of any Prior Lien Obligations hereafter issued by the City, but prior and
superior to the lien on and pledge of the Net Revenues securing, in part, the payment of the
currently outstanding Limited Pledge Obligations, the Certificates, and any Subordinate Lien
Obligations or Additional Limited Pledge Obligations hereafter issued by the City;
C. Subordinate Lien Obligations payable from and equally and ratably secured by a
lien on and pledge of the Net Revenues that is subordinate and inferior to the lien on and pledge
thereof securing the payment of any Prior Lien Obligations or Junior Lien Obligations hereafter
issued by the City, but prior and superior to the lien on and pledge of the Net Revenues securing,
in part, the payment of the currently outstanding Limited Pledge Obligations, the Certificates,
and any Additional Limited Pledge Obligations hereafter issued by the City; and
D. Additional Limited Pledge Obligations secured by a lien on and pledge of a
limited amount of the Net Revenues in accordance with the provisions of the following
paragraph.
Prior Lien Obligations, Junior Lien Obligations, or Subordinate Lien Obligations, if
issued, may be payable, in whole or in part, from Net Revenues (without impairment of the
obligation of contract with the holders of the currently outstanding Limited Pledge Obligations
and the Certificates) upon such terms and conditions as the City Council may determine.
Additional Limited Pledge Obligations, if issued and payable, in whole or in part, from Pledged
Revenues (defined in the same or similar terms as provided in Section 9 of this Ordinance or in
the ordinances authorizing the issuance of the currently outstanding Limited Pledge Obligations),
shall not in any event be construed to be payable from the Pledged Revenues authorized by this
Ordinance or in the ordinance authorizing the issuance of the currently outstanding Limited
Pledge Obligations to be budgeted and appropriated for the payment of the Certificates or the
ordinance authorizing the issuance of the currently outstanding Limited Pledge Obligations.
However, the lien on and pledge of the limited amount of Net Revenues securing, in part, the
payment of the Certificates, the Limited Pledge Obligations, and any Additional Limited Pledge
Obligations shall be subordinate and inferior to the pledge of and lien on the Net Revenues
28181190.4 -27-
securing the payment of any Prior Lien Obligations, Junior Lien Obligations, or Subordinate
Lien Obligations hereafter issued by the City.
SECTION 21. Special Covenants. The City hereby further covenants that:
A. it has the lawful power to pledge the Pledged Revenues supporting the
Certificates and has lawfully exercised said powers under the laws of the State of Texas,
including power existing under Chapter 1502, as amended, Texas Government Code, the
Certificate of Obligation Act of 1971, as amended, Texas Local Government Code, Section
271.041 through Section 271.064, and the City's Home Rule Charter;
B. other than for the payment of the currently outstanding Limited Pledge
Obligations, and the Certificates, the Net Revenues of the System have not in any manner been
pledged to the payment of any debt or obligation of the City or of the System;
C. as long as any Certificates or any interest thereon remain Outstanding, the City
will not sell, lease or encumber (except in the manner provided in Section 20 of this Ordinance)
the System or any substantial part thereof, provided that this covenant shall not be construed to
prohibit the sale of such machinery, or other properties or equipment which has become obsolete
or otherwise unsuited to the efficient operation of the System;
D. to the extent that it legally may, the City further covenants and agrees that, so
long as any of the Certificates, or any interest thereon, are Outstanding, no franchise shall be
granted for the installation or operation of any competing utility systems other than those owned
by the City, and the operation of any such systems by anyone other than the City is hereby
prohibited; and
E. no free service of the System shall be allowed, and should the City or any of its
agents 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 from sources other than the
revenues and income of the System.
SECTION 22. Application of the Covenants and Agreements of any Prior Lien
Obligations, Junior Lien Obligations, or Subordinate Lien Obligations. It is the intention of the
City Council and accordingly hereby recognized and stipulated that the provisions, agreements,
and covenants contained herein bearing upon the management and operations of the System, and
the administration and application of Gross Revenues derived from the operation thereof, shall to
the extent possible be harmonized with like provisions, agreements, and covenants contained in
the ordinances authorizing the issuance of any Prior Lien Obligations, Junior Lien Obligations,
or Subordinate Lien Obligations hereafter issued by the City, and to the extent of any
irreconcilable conflict between the provisions contained herein and in the ordinances authorizing
the issuance of any Prior Lien Obligations, Junior Lien Obligations, or Subordinate Lien
Obligations, the provisions, agreements and covenants contained therein shall prevail to the
extent of such conflict and be applicable to this Ordinance, especially the priority of rights and
benefits conferred thereby to the holders of any Prior Lien Obligations, Junior Lien Obligations,
or Subordinate Lien Obligations hereafter issued by the City. It is expressly recognized that
prior to the issuance of any Prior Lien Obligations, Junior Lien Obligations, or Subordinate Lien
28181190.4 -28-
Obligations, the City must comply with each of the conditions precedent contained in the
respective ordinances authorizing the issuance of the currently outstanding Limited Pledge
Obligations and the Certificates, as appropriate.
SECTION 23. 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 as it appears in the Security Register.
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.
SECTION 24. Cancellation. All Certificates 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 Certificates previously certified or registered and delivered which the City may
have acquired in any manner whatsoever, and all Certificates so delivered shall be promptly
canceled by the Paying Agent /Registrar. All canceled Certificates held by the Paying
Agent /Registrar shall be destroyed as directed by the City.
SECTION 25. Mutilated, Destroyed, Lost, and Stolen Certificates. If (1) any mutilated
Certificate 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
Certificate, 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 Certificate 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 Certificate,
a new Certificate 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 Certificate has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Certificate, pay
such Certificate.
Upon the issuance of any new Certificate 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.
28181190.4 -29-
Every new Certificate issued pursuant to this Section in lieu of any mutilated, destroyed,
lost, or stolen Certificate shall constitute a replacement of the prior obligation of the City,
whether or not the mutilated, destroyed, lost, or stolen Certificate 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 Certificates.
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 Certificates.
SECTION 26. Sale of the Certificates at Competitive Sale — Approval of the Official
Statement. The Certificates authorized by this Ordinance are hereby sold by the City to Robert
W. Baird & Co., Inc., Milwaukee, Wisconsin, as the authorized representative of a group of
underwriters at a competitive sale (the Purchasers, having all the rights, benefits, and obligations
of a Holder), in accordance with the provisions of an Official Bid Form (the Official Bid Form),
dated May 23, 2017, attached hereto as Exhibit B and incorporated herein by reference as a part
of this Ordinance for all purposes, at the price of par, plus an original issue reoffering premium
of $239,137.00 plus accrued interest to the date of initial delivery of the Certificates to the
Purchasers and is hereby approved and confirmed. The Initial Certificate shall be registered in
the name of Robert W. Baird & Co., Inc. It is hereby officially found, determined, and declared
that the Purchasers are the highest bidder for the Certificates whose bid, received as a result of
invitations for competitive bids in compliance with applicable law, produced the lowest true
interest cost to the City. The pricing and terms of the sale of the Certificates are hereby found
and determined to be the most advantageous reasonably obtainable by the City. Any Authorized
Official is hereby authorized and directed to execute the Official Bid Form for and on behalf of
the City and as the act and deed of this City Council, and in regard to the approval and execution
of the Official Bid Form, the City Council hereby finds, determines and declares that the
representations, warranties, and agreements of the City contained in the Official Bid Form are
true and correct in all material respects and shall be honored and performed by the City.
Delivery of the Certificates 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 Official Bid Form.
Proceeds from the sale of the Certificates shall be applied as follows:
(1) Accrued interest in the amount of $16,214.24 received from the
Purchasers shall be deposited into the Certificate Fund.
(2) The City received an original issue reoffering premium from the sale of
the Certificates of $239,137.00 which is hereby allocated by the City in the following
manner: (i) $42,452.60 to pay the Purchasers' compensation (ii) $125,000.00 shall be
deposited into the construction account established in paragraph (3) below, and
(iii) $71,684.40 to pay the remaining costs of issuance.
(3) The balance of the proceeds derived from the sale of the Certificates (after
paying costs of issuance) shall be deposited into the special construction account or
accounts created for the projects to be constructed with the proceeds of the Certificates
and used to pay costs of such projects. This special construction account shall be
28181190.4 -30-
established and maintained at the Depository and shall be invested in accordance with the
provisions of Section 10 of this Ordinance. Interest earned on the proceeds of the
Certificates pending completion of construction of the projects financed with such
proceeds shall be accounted for, maintained, deposited, and expended as permitted by the
provisions of Chapter 1201, as amended, Texas Government Code, or as required by any
other applicable law. Thereafter, such amounts shall be expended in accordance with
Section 14 of this Ordinance.
Furthermore, the City hereby ratifies, confirms, and approves in all respects (i) the City's
prior determination that the Preliminary Official Statement was, as of its date, "deemed final" in
accordance with the Rule (hereinafter defined) and (ii) the use and distribution of the Official
Notice of Sale, Official Bid Form, and Preliminary Official Statement by the Purchasers in
connection with the public offering and sale of the Certificates. The final Official Statement,
being a modification and amendment of the Preliminary Official Statement to reflect the terms of
sale referenced in the Official Bid Form (together with such changes approved by any
Authorized Official, any one or more of said officials), shall be and is hereby in all respects
approved and the Purchasers are hereby authorized to use and distribute the final Official
Statement, dated May 23, 2017, in the reoffering, sale and delivery of the Certificates to the
public. The Mayor and City Secretary are further authorized and directed to manually execute
and deliver for and on behalf of the City copies of the Official Statement in final form as may be
required by the Purchasers, and such final Official Statement in the form and content manually
executed by said officials shall be deemed to be approved by the City Council and constitute the
Official Statement authorized for distribution and use by the Purchasers. The proper officials of
the City are hereby authorized to execute and deliver a certificate pertaining to such Official
Statement as prescribed therein, dated as of the date of payment for and delivery of the
Certificates.
SECTION 27. Covenants to Maintain Tax - Exempt Status.
A. Definitions. When used in this Section, the following terms have the following
meanings:
Bonds means the $3,935,000 "CITY OF SCHERTZ, TEXAS GENERAL
OBLIGATION BONDS, SERIES 2017," dated May 15, 2017 and issued on the Closing
Date.
"Closing Date " means the date on which the Certificates are first authenticated
and delivered to the initial purchasers against payment therefor.
"Code" means the Internal Revenue Code of 1986, as amended by all legislation,
if any, effective on or before the Closing Date.
"Computation Date" has the meaning set forth in Section 1.148 -1(b) of the
Regulations.
"Gross Proceeds" means any proceeds as defined in Section 1.148 -1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148 -1(c) of the
Regulations, of the Certificates.
28181190.4 -31-
"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 Certificates are invested and
which is not acquired to carry out the governmental purposes of the Certificates.
"Rebate Amount" has the meaning set forth in Section 1.148 -1(b) of the
Regulations.
"Regulations " means any proposed, temporary, or final Income Tax Regulations
issued pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal
Revenue Code of 1954, which are applicable to the Certificates. Any reference to any
specific Regulation shall also mean, as appropriate, any proposed, temporary or final
Income Tax Regulation designed to supplement, amend or replace the specific Regulation
referenced.
"Yield" of
(1) any Investment has the meaning set forth in Section 1.148 -5 of the
Regulations; and
(2) the Certificates means the combined yield on the Bonds and the
Certificates, treating them as a single issue and 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 Certificate 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 Certificate, 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
Certificates 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 Certificates:
(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 Certificates, 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
28181190.4 -32-
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 Certificates or any
property the acquisition, construction or improvement of which is to be financed or
refinanced directly or indirectly with such Gross Proceeds, 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 it will not cause the Certificates 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 Certificates 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-
(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 it will not cause the
Certificates 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 Certificates 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 Certificates.
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 Certificates to be federally guaranteed within the meaning of
section 149(b) of the Code and the Regulations and rulings thereunder.
G. Information Report. The 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
Certificate is discharged. However, to the extent permitted by law, the City may
28181190.4 -33-
commingle Gross Proceeds of the Certificates 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 Certificates until six years
after the final Computation Date.
(3) As additional consideration for the purchase of the Certificates by the
Purchasers and the loan of the money represented thereby and in order to induce such
purchase by measures designed to insure the excludability of the interest thereon from the
gross income of the owners thereof for federal income tax purposes, the City shall pay to
the United States out of the Certificate Fund or its general fund, as permitted by
applicable Texas statute, regulation or opinion of the Attorney General of the State of
Texas, the amount that when added to the future value of previous rebate payments made
for the Certificates equals (i) in the case of a Final Computation Date as defined in
Section 1.148- 3(e)(2) of the Regulations, one hundred percent (100 %) of the Rebate
Amount on such date; and (ii) in the case of any other Computation Date, ninety percent
(90 %) of the Rebate Amount on such date. In all cases, the rebate payments shall be
made at the times, in the installments, to the place and in the manner as is or may be
required by section 148(f) of 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 Certificates, 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 Certificates not been
relevant to either party.
28181190.4 -34-
Certificates Not Hedge Bonds.
(1) The City reasonably expects to spend at least 85% of the spendable
proceeds of the Certificates within three years after such Certificates are issued.
(2) Not more than 50% of the proceeds of the Certificates will be invested in
Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years
or more.
K. Elections. The City hereby directs and authorizes each Authorized Official, either
individually or any combination of them, to make elections permitted or required pursuant to the
provisions of the Code or the Regulations, as they deem necessary or appropriate in connection
with the Certificates, in the Certificate as to Tax Exemption or similar or other appropriate
certificate, form or document. Such elections shall be deemed to be made on the Closing Date.
L. Qualified Tax - Exempt Obligations. The City hereby designates the Certificates as
qualified tax - exempt obligations for purposes of section 265(b) of the Code. In furtherance of
such designation, the Issuer represents, covenants and warrants the following: (a) during the
calendar year in which the Certificates are issued, the City (including any subordinate entities)
has not designated nor will designate obligations, which when aggregated with the Certificates,
will result in more than $10,000,000 of "qualified tax - exempt obligations" being issued; (b) the
City reasonably anticipates that the amount of tax - exempt obligations issued during the calendar
year 2017 by the City (including any subordinate entities) will not exceed $10,000,000; and the
City will take such action or refrain from such action as is necessary in order that the Certificates
will not be considered "private activity bonds" within the meaning of section 141 of the Code.
SECTION 28. Control and Custody of Certificates. The Mayor of the City 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 Certificates pending their approval by the Attorney General of the State of Texas,
the registration thereof by the Comptroller of Public Accounts of the State of Texas and the
delivery of the Certificates to the Purchasers.
Furthermore, each Authorized Official, either individually or any combination of them, is
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 Certificates, the approval of the
Attorney General of the State of Texas and their registration by the Comptroller of Public
Accounts of the State of Texas and, together with the City's financial advisors, Bond Counsel,
and the Paying Agent /Registrar, make the necessary arrangements for the delivery of the Initial
Certificate to the Purchasers and, when requested in writing by the Purchasers, the initial
exchange thereof for definitive Certificates.
SECTION 29. Satisfaction of Obligation 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 Certificates, at the times and in the manner stipulated in this Ordinance, then the
pledge of taxes levied and the lien on and pledge of the Pledged Revenues under this Ordinance
28181190.4 -35-
and all covenants, agreements, and other obligations of the City to the Holders shall thereupon
cease, terminate, and be discharged and satisfied.
Certificates, 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 Certificates or the principal amount(s) thereof at 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 Certificates, or the principal amount(s) thereof, on
and prior to 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 Certificates. In the event of a gross defeasance of
the Certificates, 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 Certificate. 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 Certificates to be treated as arbitrage bonds within the meaning of section
148 of the Code (as defined in Section 27 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 Certificates, 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
Certificates and remaining unclaimed for a period of three (3) years after the Stated Maturity of
the Certificates, or applicable redemption date of the Certificates, 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 Certificates 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 Certificates for redemption; (2) gives notice of the reservation of
that right to the owners of the defeased Certificates immediately following the defeasance;
(3) directs that notice of the reservation be included in any redemption notices 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 Certificates, after taking the redemption into account in determining the
sufficiency of the provisions made for the payment of the defeased Certificates.
28181190.4 -36-
SECTION 30. Printed Opinion. The Purchasers' obligation to accept delivery of the
Certificates is subject to their being furnished a final opinion of Norton Rose Fulbright US LLP,
San Antonio, Texas, as Bond Counsel, approving certain legal matters as to the Certificates, this
opinion to be dated and delivered as of the date of initial delivery and payment for such
Certificates. Printing of a true and correct copy of this opinion on the reverse side of each of the
Certificates, with appropriate certificate pertaining thereto executed by facsimile signature of the
City Secretary of the City is hereby approved and authorized.
SECTION 31. CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Certificates. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Certificates shall be of no significance or effect as regards the legality
thereof, and neither the City nor Bond Counsel are to be held responsible for CUSIP numbers
incorrectly printed or typed on the definitive Certificates.
SECTION 32. Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof
SECTION 33. Ordinance a Contract, Amendments - Outstanding Certificates. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Certificates. This Ordinance shall constitute a contract with
the Holders from time to time, binding on the City and its successors and assigns, and it shall not
be amended or repealed by the City so long as any Certificate 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 Certificates 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 Certificates, no such amendment, addition, or
rescission shall (1) extend the time or times of payment of the principal of and interest on the
Certificates, 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 Certificates, (2) give any preference to any Certificate over any other Certificate, or (3)
reduce the aggregate principal amount of Certificates required for consent to any such
amendment, addition, or rescission.
SECTION 34. 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, Paying
Agent /Registrar, and the Holders.
SECTION 35. 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.
28181190.4 -37-
SECTION 36. 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 37. 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 38. 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 39. 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 of the City.
SECTION 40. Authorization of Paving 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 Certificates. 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 41. 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 42. 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 43. No Recourse Against City Officials. No recourse shall be had for the
payment of principal of, premium, if any, or interest on any Certificate or for any claim based
thereon or on this Ordinance against any official of the City or any person executing any
Certificate.
SECTION 44. Continuing Disclosure Undertaking,.
A. Definitions.
28181190.4 -38-
As used in this Section, the following terms have the meanings ascribed to such terms
below:
EMMA means the MSRB's Electronic Municipal Market Access system, accessible by
the general public, without charge, on the internet through the uniform resource locator (URL)
http://www.emma.msrb.org.
MSRB means the Municipal Securities Rulemaking Board.
Rule means SEC Rule 15c2 -12, as amended from time to time.
SEC means the United States Securities and Exchange Commission.
B. Annual Reports.
The City shall file annually with the MSRB, (1) within six months after the end of each
fiscal year of the City ending in or after 2017, financial information and operating data with
respect to the City of the general type included in the final Official Statement authorized by
Section 26 of this Ordinance, being the information described in Exhibit D hereto, and (2) if not
provided as part of such financial information and operating data, audited financial statements of
the City, when and if available. Any financial statements so to be provided shall be (i) prepared
in accordance with the accounting principles described in Exhibit D hereto, or such other
accounting principles as the City may be required to employ from time to time pursuant to state
law or regulation, and (ii) audited, if the City commissions an audit of such financial statements
and the audit is completed within the period during which they must be provided. If the audit of
such financial statements is not complete within such period, then the City shall file unaudited
financial statements within such period and audited financial statements for the applicable fiscal
year to the MSRB, when and if the audit report on such financial statements becomes available.
Under current Texas law, including, but not limited to, Chapter 103, as amended, Texas Local
Government Code, the City must have its records and accounts audited annually and shall have
an annual financial statement prepared based on the audit. The annual financial statement,
including the auditor's opinion on the statement, shall be filed in the office of the City Secretary
within 180 days after the last day of the City's fiscal year. Additionally, upon the filing of this
financial statement and the annual audit, these documents are subject to the Texas Open Records
Act, as amended, Texas Government Code, Chapter 552.
If the City changes its fiscal year, it will file notice of such change (and of the date of the
new fiscal year end) with the MSRB prior to the next date by which the City otherwise would be
required to provide financial information and operating data pursuant to this Section.
C. Notice of Certain Events.
The City shall file notice of any of the following events with respect to the Certificates to
the MSRB in a timely manner and not more than 10 business days after occurrence of the event:
(1) Principal and interest payment delinquencies;
(2) Non - payment related defaults, if material;
28181190.4 -39-
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB), or other
material notices or determinations with respect to the tax status of the Certificates, or other
material events affecting the tax status of the Certificates;
(7) Modifications to rights of holders of the Certificates, if material;
(8) Certificate calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Certificates, if
material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership, or similar event of the City, which shall
occur as described below;
(13) The consummation of a merger, consolidation, or acquisition involving the City
or the sale of all or substantially all of its assets, other than in the ordinary course of business, the
entry into of a definitive agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if material; and
(14) Appointment of a successor or additional paying agent /registrar or the change of
name of a paying agent /registrar, if material.
For these purposes, any event described in the immediately preceding paragraph (12) is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent,
or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the City, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or
business of the City.
The City shall file notice with the MSRB, in a timely manner, of any failure by the City
to provide financial information or operating data in accordance with this Section by the time
required by this Section.
28181190.4 -40-
D. Limitations, Disclaimers, and Amendments.
The City shall be obligated to observe and perform the covenants specified in this Section
for so long as, but only for so long as, the City remains an "obligated person" with respect to the
Certificates within the meaning of the Rule, except that the City in any event will give notice of
any deposit that causes the Certificates to be no longer Outstanding.
The provisions of this Section are for the sole benefit of the holders and beneficial
owners of the Certificates, and nothing in this Section, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Certificates at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN
CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM
ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITH OR WITHOUT FAULT
ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT
AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON
ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the City, but only if (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking
into account any amendments or interpretations of the Rule to the date of such amendment, as
well as such changed circumstances, and (2) either (a) the holders of a majority in aggregate
principal amount (or any greater amount required by any other provision of this Ordinance that
authorizes such an amendment) of the Outstanding Certificates consent to such amendment or
(b) a person that is unaffiliated with the City (such as nationally recognized bond counsel)
determines that such amendment will not materially impair the interests of the holders and
beneficial owners of the Certificates. The City may also repeal or amend the provisions of this
Section if the SEC amends or repeals the applicable provisions of the Rule or any court of final
28181190.4 -41-
jurisdiction enters judgment that such provisions of the Rule are invalid, and the City also may
amend the provisions of this Section in its discretion in any other manner or circumstance, but in
either case only if and to the extent that the provisions of this sentence would not have prevented
an underwriter from lawfully purchasing or selling Certificates in the primary offering of the
Certificates, giving effect to (a) such provisions as so amended and (b) any amendments or
interpretations of the Rule. If the City so amends the provisions of this Section, the City shall
include with any amended financial information or operating data next provided in accordance
with this Section an explanation, in narrative form, of the reasons for the amendment and of the
impact of any change in the type of financial information or operating data so provided.
E. Information Format — Incorporation by Reference.
The City information required under this Section shall be filed with the MSRB through
EMMA in such format and accompanied by such identifying information as may be specified
from time to time thereby. Under the current rules of the MSRB, continuing disclosure
documents submitted to EMMA must be in word - searchable portable document format (PDF)
files that permit the document to be saved, viewed, printed, and retransmitted by electronic
means and the series of obligations to which such continuing disclosure documents relate must
be identified by CUSIP number or numbers.
Financial information and operating data to be provided pursuant to this Section may be
set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document) available to the public
through EMMA or filed with the SEC.
SECTION 45. Book -Entry Only System.
It is intended that the Certificates will 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 Certificates shall be issued (following cancellation of the Initial Certificates described in
Section i) in the form of a single definitive Certificate. Upon issuance, the ownership of each
such Certificate shall be registered in the name of Cede & Co., as the nominee of DTC, and all of
the Outstanding Certificates 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 D (the
Representation Letter).
With respect to the Certificates 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 Certificates 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 Certificates (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
28181190.4 -42-
Certificates, (ii) the delivery to any Depository Participant or any other person, other than a
registered owner of the Certificates, as shown on the Security Register, of any notice with
respect to the Certificates, 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
Certificate, of any amount with respect to principal of, premium, if any, or interest on the
Certificates. 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 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 Certificates that they be able to obtain certificated Certificates, 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
Certificates 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 Certificates 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
Certificates may be registered in whatever name or names the Holders of Certificates transferring
or exchanging the Certificates shall designate, in accordance with the provisions hereof.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Certificate 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 Certificate and all notices with
respect to such Certificate shall be made and given, respectively, in the manner provided in the
Representation Letter.
SECTION 46. 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 Certificates, the Official Bid Form, the Paying Agent /Registrar
Agreement, and the Official Statement. In addition, prior to the initial delivery of the
Certificates, 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 and as described in the Official Statement 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 Certificates by the Texas
Attorney General's office. In case any officer of the City whose signature shall appear on any
28181190.4 -43-
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 47. Contracts with Financial Advisor and /or Bond Counsel. The City Council
authorizes the Mayor, the Mayor Pro Tem, and /or the City Manager, or their designees, 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
Certificates. In addition, the City Council also authorizes the Mayor, the Mayor Pro Tem, and /or
the City Manager, or their designees, to take all actions necessary to execute any necessary
engagement agreement with Norton Rose Fulbright US LLP, as the Bond Counsel to the City.
SECTION 48. City's Consent to Provide Information and Documentation to the Texas
MAC. The Municipal Advisory Council of Texas (the Texas MAC), 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
Certificates; 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 Certificates.
SECTION 49. 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.]
28181190.4 -44-
PASSED, APPROVED, AND ADOPTED on the 23rd day of May, 2017.
CITY OF SCHERTZ, TEXAS
ATTEST:
( , qn MML I W, -
Ci y Secretary
(CITY SEAL)
28181190.4 S -1
INDEX TO EXHIBITS
Exhibit A Paying Agent /Registrar Agreement
Exhibit B Official Bid Form
Exhibit C Description of Annual Financial Information
Exhibit D DTC Letter of Representations
28181190.4 S -1
EXHIBIT A
PAYING AGENT /REGISTRAR AGREEMENT
See Tab No. _
28181190.4 A -1
EXHIBIT B
OFFICIAL BID FORM
See Tab No.
28181190.4 B -I
EXHIBIT C
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 44 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section are as specified (and included in the Appendix or
under the headings of the Official Statement referred to) below:
(1) The City's audited financial statements for the most recently concluded fiscal year
or to the extent these audited financial statements are not available, the portions of the unaudited
financial statements of the City attached to the Official Statement as Appendix D, but for the
most recently concluded fiscal year.
(2) The information in the Official Statement under Table 1 of the Official Statement
and Tables 1 through 10 of Appendix A to the Official Statement.
Accounting Principles
The accounting principles referred to in such Section are generally accepted accounting
principles for governmental units as prescribed by the Government Accounting Standards Board
from time to time.
28181190.4 C -1
EXHIBIT D
DTC LETTER OF REPRESENTATIONS
SEE TAB NO.
28181190.4 D -1