22-R-76 - SSLGC Bond ResolutionRESOLUTION NO. 22-R-76
APPROVING A RESOLUTION BY THE SCHERTZ CITY COUNCIL
APPROVING A BOND RESOLUTION PREVIOUSLY ADOPTED BY THE
BOARD OF DIRECTORS OF THE SCHERTZ /SEGUIN LOCAL
GOVERNMENT CORPORATION AUTHORIZING THE ISSUANCE OF
OBLIGATIONS DESIGNATED AS "SCHERTZ /SEGUIN LOCAL
GOVERNMENT CORPORATION CONTRACT REVENUE
IMPROVEMENT BONDS, NEW SERIES 2022A"; ACKNOWLEDGING
THAT THESE BONDS WILL BE SOLD PURSUANT TO THE PROVISIONS
OF A PURCHASE CONTRACT; RATIFYING, RECONFIRMING, AND
READOPTING THE PROVISIONS OF A REGIONAL WATER SUPPLY
CONTRACT EXECUTED BETWEEN THE CITY OF SCHERTZ, TEXAS,
THE CITY OF SEGUIN, TEXAS, AND THE SCHERTZ /SEGUIN LOCAL
GOVERNMENT CORPORATION; AUTHORIZING THE MAYOR, THE
CITY MANAGER, AND THE CITY SECRETARY OF THE CITY OF
SCHERTZ, TEXAS TO EXECUTE ON BEHALF OF THE CITY OF
SCHERTZ, TEXAS ALL DOCUMENTS IN CONNECTION WITH THIS
TRANSACTION; AND OTHER MATTERS IN CONNECTION
THEREWITH
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
SCHERTZ, TEXAS THAT:
Section 1. The City Council of the City of Schertz, Texas (the "City ") has reviewed and
hereby approves (i) the Bond Resolution as to form and content, including the factual findings
contained therein and all documents referenced therein, adopted by the Board of Directors of the
Schertz /Seguin Local Government Corporation (the "Corporation ") relating to the issuance of
obligations designated as "Schertz /Seguin Local Government Corporation Contract Revenue
Improvement Bonds, New Series 2022A" (the "Bonds "), (ii) the Bonds that will be sold to Estrada
Hinojosa & Company, Inc., as the authorized representative of a group of underwriters (the
"Underwriters "), (iii) the Regional Water Supply Contract, including the factual findings contained
therein, previously approved and executed among the City of Schertz, Texas, the City of Seguin,
Texas (collectively, the "Cities "), and the Schertz/Seguin Local Government Corporation (the
"Contract ") which provides certain security for the payment of these obligations, (iv) the bond
purchase contract (the "Purchase Contract ") authorizing the sale of the Bonds to the Underwriters,
(v) the Sale and Offering Documents (as defined in the Contract), including, but not limited to, the
City's annual continuing disclosure requirements in accordance with the Rule (as defined in the
Contract), and (vi) the City's obligations under the Contract and acknowledges that the payment of
principal of and interest on such Bonds is payable, in whole or in part, from the Annual Payments
to be made by the Cities to the Corporation under and pursuant to the Contract. The Mayor, the
City Manager, and the City Secretary of the City (each, an "Authorized Official ") are hereby
authorized to execute on behalf of the City, the Purchase Contract, and any and all documents in
connection with this transaction. This resolution may be relied upon by the appropriate
representatives of the parties to this transaction and the Texas Attorney General in his review and
approval of this transaction.
Section 2. The City Council recognizes that Section 53 of the Bond Resolution contains
covenants of the City relating to the Bonds. Since certain financial information, financial status,
130839893.4
operating data, and annual audits of the City's utility system will be entirely within the control and
disposition of the City, and the Preliminary Official Statement and the Final Official Statement
prepared in connection with the issuance of the Bonds (together, the "Official Statement "), describe
a continuing disclosure undertaking agreement (the "Undertaking ") of the City, the City Council
specifically adopts the covenants hereinafter described, which comprise the Undertaking, and shall
comply therewith for so long as all or any portion of the Annual Payments made by the City under
the Contract act as security for or a source of repayment of the Bonds.
A. Definitions.
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)
htti)://www.emma.msrb.org.
Financial Obligation means a (a) debt obligation; (b) derivative instrument entered into in
connection with, or pledged as security or a source of payment for, an existing or planned debt
obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that
"financial obligation" shall not include municipal securities (as defined in the Securities Exchange Act
of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided
to the MSRB consistent with the Rule.
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.
Undertaking means the City's continuing disclosure undertaking, described in Paragraphs B
through F below, hereunder accepted and entered into by the City for the purpose of compliance with
the Rule.
B. Annual Report s.
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 2022, financial information and operating data with respect
to the City of the general type included in the final Official Statement authorized by Section 35 of
the Bond Resolution, being the information described in Exhibit E thereto, 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 E thereto, 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,
130839893.4 -2-
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 one hundred eighty
(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 Bonds 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;
(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 Bonds, or other material
events affecting the tax status of the Bonds;
(7) Modifications to rights of holders of the Bonds, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds, 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;
130839893.4 -3-
(14) Appointment of a successor or additional paying agent /registrar or the change of
name of a paying agent/registrar, if material;
(15) Incurrence of a Financial Obligation of the City, if material, or agreement to
covenants, events of default, remedies, priority rights, or other similar terms of a Financial
Obligation of the City, any of which affect security holders, if material; and
(16) Default, event of acceleration, termination event, modification of terms, or other
similar events under the terms of a Financial Obligation of the City, any of which reflect financial
difficulties.
For these purposes, (a) any event described in the immediately preceding paragraph (12) is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent,
or similar officer for the 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 and (b) the City intends the words used in the immediately preceding paragraphs (15) and (16)
and the definition of Financial Obligation in this Section have the same meanings as when they are
used in the Rule, as evidenced by SEC Release No. 34- 83885, dated August 20, 2018.
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.
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
Bonds within the meaning of the Rule, except that the City in any event will give notice of any
deposit that causes the Bonds to be no longer Outstanding.
The provisions of this Section are for the sole benefit of the holders and beneficial owners
of the Bonds, 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 Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
130839893A -4-
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 the Bond Resolution for purposes of any other provision of
the Bond Resolution.
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 Bonds in the
primary offering of the Bonds 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 the Bond Resolution that authorizes such an amendment) of the
Outstanding Bonds 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 Bonds. 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 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 Bonds in the primary
offering of the Bonds, 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 b% 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.
130839893.4 -5-
F. General Policies and Procedures Concernin�� Compliance with the Rule.
Because the issuance of the Bonds is subject to the provisions of the Rule and because the
potential "underwriters" in a negotiated sale of the Bonds or the initial purchasers in a competitive
sale of the Bonds may be subject to MSRB rules and regulations with respect to such sale (including
certain due diligence and suitability requirements, among others), the City hereby adopts the
General Policies and Procedures Concerning Compliance with the Rule (the Policies and
Procedures), attached hereto as Exhibit A, with which the City shall follow to assure compliance
with the Undertaking. The City has developed these Policies and Procedures for the purpose of
meeting its requirements of the Undertaking and, in connection therewith, has sought the guidance
from its internal staff charged with administering the City's financial affairs, its municipal or
financial advisors, its legal counsel (including its Bond Counsel), and its independent accountants
(to the extent determined to be necessary or advisable). The Policies and Procedures can be
amended at the sole discretion of the City and any such amendment will not be deemed to be an
amendment to the Undertaking. Each Authorized Official is hereby authorized to amend the
Policies and Procedures as a result of a change in law, a future issuance of indebtedness subject to
the Rule, or another purpose determined by the Authorized Official to be necessary or desirable for
or with respect to future compliance with the Undertaking.
Section 3. Authorized Officials of the City will review and approve the Official Statement.
Information appearing in the Official Statement concerning the City (including, particularly, the
description of the Undertaking and Appendices C and E thereto), as of its date, were and are true and
correct in all material respects. Insofar as the City and its affairs, including its financial affairs, are
concerned, such Official Statement did not and does not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading. Insofar as the
descriptions and statements, including financial data, of or pertaining to entities, other than the City,
and their activities contained in such Official Statement are concerned, such statements and data have
been obtained from sources which the City believes to be reliable, and the City has no reason to believe
that they are untrue in any material respect.
Section 4. The recitals contained in the preamble hereof are hereby found to be true,
and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a
part of the judgment and findings of the City Council.
Section 5. All ordinances and resolutions, or parts thereof, which are in conflict or
inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict,
and the provisions of this Resolution shall be and remain controlling as to the matters resolved
herein.
Section 6. This Resolution shall be construed and enforced in accordance with the laws
of the State of Texas and the United States of America.
Section 7. If any provision of this Resolution or the application thereof to any person
or circumstance shall be held to be invalid, the remainder of this Resolution and the application of
such provision to other persons and circumstances shall nevertheless be valid, and the City Council
hereby declares that this Resolution would have been enacted without such invalid provision.
130839893.4 -6-
Section 8. It is officially found, determined, and declared that the meeting at which this
Resolution 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 Resolution, was given, all as
required by Chapter 551, as amended, Texas Government Code.
Section 9. This Resolution shall be in force and effect from and after the date of its
adoption, and it is so resolved.
[The remainder of this page intentionally left blank.]
130839893.4 -7-
EXHIBIT A
General Policies and Procedures Concerning Compliance with Federal Securities Laws
I. Capitalized terms used in this Exhibit have the meanings ascribed thereto in Section 2 of
the Resolution. "Bonds" refers to the Bonds that are the subject of the Resolution to which this
Exhibit is attached.
II. As a capital markets participant, the City is aware of its continuing disclosure requirements
and obligations existing under the Rule prior to February 27, 2019, the effective date of the most
recent amendment to the Rule (the "Effective Date "), and has implemented and maintained internal
policies, processes, and procedures to ensure compliance therewith. Adherence to these internal
policies, processes, and procedures has enabled underwriters in non - exempt negotiated sales and
initial purchasers in non - exempt competitive sales to comply with their obligations arising under
various MSRB rules and regulations concerning due diligence and findings of suitability, among
other matters, regarding the City's compliance with the Rule.
III. The City is aware that the Rule was amended as of the Effective Date (the Rule Amendment)
and has accommodated this amendment by adding subparagraphs (15) and (16) to Section 53C of
the Resolution, which provisions are a part of the Undertaking.
IV. The City is aware that "participating underwriters" (as such term is defined in the Rule) of
the Bonds must make inquiry and reasonably believe that the City is likely to comply with the
Undertaking and that the standards for determining compliance have increased over time as a result
of, among others, the United States Securities and Exchange Commission's Municipalities
Continuing Disclosure Cooperation Initiative and regulatory commentary relating to the
effectiveness of the Rule Amendment.
V. The City now establishes the following general policies and procedures (the "Policies and
Procedures ") for satisfying its obligations pursuant to the Undertaking, which policies and
procedures have been developed based on the City's informal policies, procedures, and processes
utilized prior to the Effective Date for compliance with the City's obligations under the Rule, the
advice from and discussions with the City's internal senior staff (including staff charged with
administering the City's financial affairs), its municipal or financial advisors, its legal counsel
(including Bond Counsel), and its independent accountants, to the extent determined to be
necessary or advisable (collectively, the "Compliance Team "):
1. the City Manager and the Director of Finance (each, a "Compliance Officer ") shall be
responsible for satisfying the City's obligations pursuant to the Undertaking through
adherence to these Policies and Procedures;
2. the Compliance Officer shall establish reminder or "tickler" systems to identify and
timely report to the MSRB, in the format thereby prescribed from time to time, the City's
information of the type described in Section 53B of the Resolution;
3 the Compliance Officer shall promptly determine the occurrence of any of the events
described in Section 53C of the Resolution;
130839893.4 A -1
4. the Compliance Officer shall work with external consultants of the City, as and to the
extent necessary, to timely prepare and file with the MSRB the annual information of
the City and notice of the occurrence of any of the events referenced in Clauses 2 and 3
above, respectively, the foregoing being required to satisfy the terms of the Undertaking;
5. the Compliance Officer shall establish a system for identifying and monitoring any
Financial Obligations, whether now existing or hereafter entered into by the City, and
(upon identification) determining if such Financial Obligation has the potential to
materially impact the security or source of repayment of the Bonds;
6. upon identification of any Financial Obligation meeting the materiality standard
identified in Clause 5 above, the Compliance Officer shall establish a process for
identifying and monitoring any City agreement to covenants, events of default,
remedies, priority rights, or other similar terms under such Financial Obligation;
7. the Compliance Officer shall establish a process for identifying the occurrence of any
default, event of acceleration, termination event, modification of terms, or other similar
events under the terms of any Financial Obligation, the occurrence of any of which
reflect financial difficulties of the City; and
VI. the Compliance Officer shall annually review these Policies and Procedures with the
remainder of the Compliance Team, make any modifications on an internal document retained by
the Compliance Officer and available to any "participating underwriter" (as defined in the Rule), if
requested, and on the basis of this annual review (to the extent determined to be necessary or
desirable), seek additional training for herself or himself, as well as other members of the City's
internal staff identified by the Compliance Officer to assist with the City's satisfaction of the terms
and provisions of the Undertaking.
130839893.4 A -2
APPROVED THIS THE 9TH DAY OF AUGUST, 2022.
ATTEST:
City Secretary
130839893.4 S -1
AA L
�yf 0