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ORDINANCE NO. 79 , , . , , ,; ORDINANCE NO. ~ AN ORDINMfCE AUTHORIZING THE ISSUANCE OF $300,000 WATER- WORKS AND SEWER SYSTEM REVENUE BONDS; PRESCRIBING THE TERMS AND PROVISIONS THEREOF; MAKING PROVISION FOR THE PAYMEVT OF THE PRINCIPAL THEREOF AND THE INTEREST THERE- ON; AWARDING THE SALE THEREOF; CONTAINING OTHER PROVISIONS RELATING TO THE SUBJECT; AND PROVIDING THAT THIS ORDINANCE SHALL BE IN FULL FORCE AND EFFECT FROM AND AFTER ITS ADOPTION THE STATE OF TEXAS ~ COUNTY OF GUADALUPE ~ The City Council of the City of Schertz, Texas, convened in Jrc./iI/ session at the City Hall within said City on the :J. q~day of _ JaN'u.#.RY ,1963, with the following members present, to-wit: Dr. Roy W, Richard Mayor Ralph R. Ikels Alderman Elgin Beck Alderman George P. Bolton Alderman W. E. Ebert Alderman R. R. Cosby Alderman G. W. Pickrell City Secretary and the following member(s) absent, to-wit: JlDN IE when the following, among other business, was transacted, to-wit: The Mayor introduced an ordinance which was read in full. Alderman tD5Jy made a motion that the ordinance be adopted as read. Alderman i1 e(! A:: seconded the motion for adoption of said ordinance. The motion, carrying with it the adoption of the ordinance, prevailed by the following vote: AYES: Aldermen Ikels, Beck, Bolton, Ebert, Cosby, and Mayor Richard. NOES: None. The Mayor thereupon announced that the motion had duly and lawfully carried, and that the ordinance had been duly and iawful~y adopted. The ordinance thus adopted follows: i , , . . AN ORDINANCE AUTHORIZING ,THE ISSUANCE OF $300,000 WATER- WORKS AND SEWER SYSTEM REVENUE BONDS; PRESCRIBING THE TERMS AND PROVISIONS THEREOF; MAKING PROVISION FOR THE PAYMENT OF THE PRINCIPAL THEREOF AND THE INTEREST THERE- ON; AWARDING THE SALE THEREOF; CONTAINING OTHER PROVISIONS RELATING TO THE SUBJECT; AND PROVIDING THAT THIS ORDINANCE SHALL BE IN FULL FORCE AND EFFECT FROM AND AFTER ITS ADOPTION WHEREAS, the City of Schertz, Texas, has no municipal water- works system; and WHEREAS, said City is now constructing a municipal sanitary sewer system for said City; and WHEREAS, at an election held in said City on the 15th day of December, 1962, more than a majority of the duly qualified resident electors of said City who owned taxable property within said City and who had dUly rendered the same for taxation, voting at said election, voted in favor of the issuance of revenue bonds of said City in the principal amount of $600,000 for the purpose of purchasing a privately- owned waterworks system which serves the inhabitants in and in the vicinity of said City, and improving and extending said waterworks system, said bonds to be payable from and secured by a pledge of the net revenues of said waterworks system and from the operation of the sanitary sewer system of said City, and said bonds to mature serially within 35 years from their date or dates and to bear interest at a ----.. rate or rates not to exceed 5% per annum; and WHEREAS, said election was called and notice Of said election was given and said election was held under and in strict conformity with the Constitution and laws of the State of Texas, and the City Council of said City has heretofore officially canvassed the returns of said election and determined the specific authority of the City to issue said bonds; and WHEREAS, the City Council has determined, and hereby affirma- tively determines, that a portion and first installment of $300,000 -2- , , . . , ' bonds out of said total authorized bonds should now be issued, re- serving the right to issue the remaining $300,000 authorized bonds when needed to carry out the voted purpose; and WHEREAS, the City Council wishes to proceed with the issuance and sale of said first installment bonds; Therefore BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: Section 1: AMOUNT, NAME, PURPOSE 0 AND AUTHORIZATION OF REVENUE BONDS: Tha t the serial coupon revenue bonds of the City of Schertz, Texas, be issued in the principal amount of $300,000, to be known and designated as "CITY OF SCHERTZ, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1963", for the purpose of purchasing a privately-owned water- works system which serves the inhabitants in and in the vicinity of said City, and improving and extending said waterworks system under and by virtue of and in strict conformity with the Constitution and laws of the State of Texas, particularly Articles llll to 1118, both inclusive, Vernon's Texas Civil Statutes, as amended, and pursuant to the special election held in said City on the 15th day of December, 1962, the bonds hereby authorized being a portion and the first in- stallment of bonds out of a total of $600,000 revenue bonds authorized at said election. Section 2: 2.01 - DATE, BOND NUMBERS, DENOMINATION, AND MATURITIES: That said revenue bonds shall be dated February 1, 1963, shall be numbered consecutively from I to 300, both inclusive, shall be in the denom- ination of $1,000 each, aggregating $300,000, and shall become due and payable serially in their numerical order on June 1st in each -3- . . of the years 1964 to 1993, both inclusive, in the respective amounts shown in the following sCheule, to-wit: Bond Numbers Year of Amount (both incl.) Maturity Maturing 1 - ,5 1964 $ 5,000 6 - 10 1965 5,000 11 - 15 1966 5,000 16 - 21 1967 6,000 22 - 27 1968 6,000 28 - 33 1969 6,000 34 - 39 1970 6,000 40 - 46 1971 7,000 47- 53 1972 7,000 54 - 60 1973 7,000 61 - 68 1974 8,000 69 - 76 197,5 8,000 77 - 84 1976 8,000 85 - 93 1977 9,000 94 - 102 1978 9,000 103 - 112 1979 10,000 113 - 122 1980 10,000 123 - 132 1981 10,000 133 - 143 1982 11 , 000 144 - 154 1983 11,000 155 - 166 1984 12,000 167 - 178 1985 12,000 179 - 191 1986 13,000 192 - 205 1987 14,000 206 - 219 1988 14,000 220 - 234 1989 15,000 235 - 250 1990 16,000 251 - 266 1991 16,000 267 - 283 1992 17,000 284 - 300 1993 17,000 2.02 - OPTION OF PRIOR REDEMPTION; That each of the bonds of this issue maturing on and after June I, 1984, shall be subject to redemp- tion prior to maturity on June 1, 1983, and on any interest payment date thereafter, at a price of par and unpaid accrued interest to the date so fixed for redemption. Notice of the intention to redeem shall be given in writing to the bank at which said bonds are payable, and said notice shall be published at least one (1) time in a finan- cial journal or publication of general circulation in the United States of America, which notice shall be given to said bank and pub- lished in said journal or publication at least thirty (30) days prior -4- , i . . to the date fixed for redemption. If, by the date fixed for re- demption, funds shall have been made available sufficient to pay the principal of any bond so called for redemption and unpaid ac- crued interest thereon to the date fixed for redemption, it shall not thereafter bear interest,. In the event that less than all bonds outstanding then eligible for redemption shall be thus called, the bonds then proposed to be redeemed shall be called in inverse numerical order. Section 3: 3.01 - INTEREST RATES AND INTEREST PAYMENT DATES: That said bonds shall bear interest per annum, represented by interest coupons at- tached to such bonds, at the following rates, respectively: Bonds Nos. 1 to 21, both inclusive, 5%, Bonds Nos. 22 to 60, both inclusive, 4%, Bonds Nos. 61 to 266, both inclusive, 4-1/2%, and Bonds Nos. 267 to 300, both inclusive, 4-5/8%, interest payable June 1, 1963, and semi-annually thereafter on December 1st and June 1st of each year until the principal sum is paid. 3.02 - MODE OF PAYMENT AND BANK OF PAYMENT: That both principal of and interest on said bonds shall be payable in any coin or currency of the United States of America which, on the respective dates of payment of such principal and interest, is legal tender for the payment of debts due the United States of America, at the Frost, National Bank, San Antonio, Texas, without exchange or collection charges to the owners of the bonds and/or interest coupons. The principal of said bonds shall be payable only upon presentation and surrender of said bonds as they respectively become due, and interest falling due on and prior to the respective maturity dates of the -5- ,. . . bonds shall be payable only upon presentation and surrender of the interest coupons attached to said bonds as such interest coupons severally become due. Section 4: EXECUTION ,OF BONDS AND INTEREST COUPONS: That each of said bonds shall be signed by the Mayor and countersigned by the City Secretary of the City of Schertz, Texas, by the lithographed or printed fac- simile signatures, and the facsimile of the corporate seal of said City shall be lithographed or printed on each of said bonds. The interest coupons attached to said bonds shall also be executed by said facsimi~e signatures of the Mayor and City Secretary. Said facsimile signatures on the bonds and interest coupons and said facsimile seal on the bonds shall have the same effect as if said bonds and coupons had been signed in person and manually by each of such officers and the corporate seal of the City had been manually impressed upon each of such bonds. The registration certificate of the ComptrOller of Public Accounts of the State of Texas, which cer- tificate is to be printed on the back of each of said bonds as pro- vided hereafter in Section 7 of this ordinance, shall be manually executed. Section 5: FORM OF BONDS: That said bonds shall be in substantially the follow- ing form: No. UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF GUADALUPE $1,000 CITY OF SCHERTZ, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BOND SERIES 1963 ,,;'. -6- . . THE CITY OF SCHERTZ, in the County of Guadalupe, in the State of Texas, FOR VALUE RECEIVED, hereby acknowledges itself in- debted to and PROMISES TO PAY TO BEARER ON THE FIRST DAY OF JUNE, I 9____, solely from the special fund hereinafter specified, the sum of ONE THOUSAND DOLLAR,S ($1,000), and to pay interest thereon from the date hereof at the rate of % (NOTE TO PRINTER: For interest rates, see Section 3.01 of bond ordinance) per annum, interest payable June 1, 1963, and semi-annually thereafter on December lst and June 1st of each year until the principal sum hereof shall have been paid. Both principal of and interest on this bond are payable in any coin or currency of the United States of America which on the respective dates of payment of such principal and interest is legal tender for the payment of debts due the United States of America, at the Frost National Bank, San Antonio, Texas, without exchange or collection charges to the owner or holder. The prinCipal hereof shall be pay- able only upon presentation and surrender of this bond, and interest hereon falling due on and prior to the maturity of this bond shall be payable only upon presentation and surrender of the interest coupons hereto attached as such coupons severally become due. THE DATE OF THIS BOND, in conformity with the ordinance hereinafter mentioned, IS FEBRUARY 1, 1963. THIS BOND IS ONE OF A SERIES OF 300 SERIAL BONDS of like date and tenor, except as to serial number, interest rate, maturity, and option of prior redemption, being numbered consecutively from 1 to 300, both inclusive, in the denomination of $1,000 each, AGGREGATING $300,000 (being a portion and the first installment of bonds out of a total of $600,000 bonds authorized at the election -7- " ,. . . hereinafter mentioned), and, together with the other bonds of said series, is issued for the purpose of purchasing a privately-owned waterworks system which serves the inhabitants in and in the vicinity of said City, and improving and extending said waterworks system, under and by virtue of the Constitution and laws of the State of Texas, particularly Articles 1111 to 1118, both inclusive, Vernon,' s Texas Civil Statutes, as amended, and by authority of a vote of the duly qualified resident electors of said City who owned taxable property within said City and who had duly rendered the same for taxation, at an election held within said City on the 15th day of December, 1962, and pursuant to an ordinance lawfully adopted by the City Council of said City and duly recorded in the official minutes of said City Council, to all the provisions of which ordi- nance the owner or holder of this bond and of the interest coupons appurtenant hereto, by the acceptance thereof, expressly assents. EACH OF THE BONDS OF THIS ISSUE MATURING ON AND AFTER JUNE 1, 1984 (being Bonds Nos. 155 to 300, both inclusive) SHALL BE SUBJECT TO REDEMPTION prior to maturity ON JUNE 1, 1983, and on any interest payment date thereafter, at a price of par and accrued interest to the date so fixed for redemption. If the City elects to redeem all or any part of said bonds, notice of the in- tention to redeem shall be given in writing to the bank at which said bonds are payable, and said notice shall be published at least one (I) time in a financial journal or publication of general circulation in the United States of America, which notice shall be given to said bank and published in said journal or publication at least thirty (30) days prior to the date fixed for redemption. If, by the date fixed for redemption, funds shall have been made avail- able sufficient to pay the principal of any bond so called for -8- . . redemption and unpaid accrued interest thereon to the date fixed for redemption, it shall not thereafter bear interest. In the event that less than all bonds outstanding then eligible for redemption shall be thus called, the bonds then proposed to be redeemed shall be called in inverse numerical order. ~ACH SUCCESSIVE HOLDER OF THIS BOND and each successive holder of each of the interest coupons hereto attached is conclusively presumed to forego and renounce his equities in favor of subsequent holders for value and without notice, and to agree that this bond and each of the coupons hereto attached may be negotiated by delivery by any person having possession thereof, howsoever such possession may have been acquired, and that any holder who shall have taken this bond or any of the coupons from any person for value and without notice thereby has acquired absolute title thereto, free from any defenses enforceable against any prior holder and free from all equities and claims of ownership of any such prior holder. The City of Schertz and its official and fiscal agents shall not be affected by any notice to the contrary. THIS BOND SHALL NOT BE DEEMED TO CONSTITUTE A DEBT of the City of Schertz or a pledge of its faith and credit, but shall be payable, as to principal and interest, solely from the revenues derived .from the operation of the waterworks and sanitary sewer sys- tem of said City, including all additions, extensions, replacements, and improvements thereto which may hereafter be made, after deduc- tion therefrom of the reasonable expenses of maintenance and operation of said System. The holder hereof Shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. THE CITY EXPRESSLY RESERVES THE RIGHT TO ISSUE the remaining bonds authorized at the election held on December 15, 1962, and :-9- . . additional bonds payable from the net revenues of said waterworks and sanitary sewer system, and such remaining voted bonds and addi- tional bonds may be on a parity and of equal dignity in all respects with the bonds of this issue, but such remaining voted bonds and additional parity bonds may be issued only pursuant to and subject to the restrictions, covenants, and limitations contained in the ordinance authorizing this issue of bonds, to which reference is hereby made for all particulars. IT IS HEREBY CERTIFIED, RECITED, AND REPRESENTED that the issuance of this bond and the other bonds of the series of which this bond is a part is duly authorized by law; that all acts, con- ditions, and things required to exist and to be done precedent to and in the issuance of this series of bonds to render the same law- ful and valid have been properly done and performed and have happened in regular and due time, form, and manner, as required by law; that due provision has been made for the payment of the principal of and interest on this bond and the other bonds of the series of which it is a part by irrevocably pledging the net revenues of said water- works and sanitary sewer system; and that the issuance of this series of bonds does not exceed any Constitutional or statutory limitation, IN TESTIMONY WHEREOF, the City Council of the City of Schertz, Texas, has caused the facsimile of the corporate seal of said City to be lithographed or printed hereon, this bond to be signed by the Mayor of said City and countersigned by the City Secretary by their lithographed or prtnted facsimile signatures, and the interest coupons hereto attached also to be executed by said facsimile signatures of the Mayor and City Secretary, all as of the lst day of February, 1963. Mayor, City of Schertz, Texas -10- .. . . COUNTERSIGNED: City Secretary Section 6: FORM OF INTEREST COUPONS: That the interest coupons attached to said bonds shall be in substantially the following form: No. $ ON THE 1ST DAY OF , 19 , * THE CITY OF SCHERTZ, in the County of Guadalupe, State of Texas, PROMISES TO PAY TO BEAREH, without exchange, or collection charges, at the Frost National Bank, San Antonio, Texas, THE SUM OF $ , in any coin or currency of the United States of America which on such date is legal tender for the payment of debts due the United States of America, solely from the special fund specified in the bond to which this coupon appertains, said sum being interest due that date on City of Schertz, Texas, Waterworks and Sewer System Revenue Bonds, Series 1963, bearing the number hereinafter specified, dated February 1, 1963. The holder hereof shall never have the right to demand pay- ment of this obligation out of any funds raised or to be raised by taxation. Bond No. Mayor Ci ty Secre tary *(Coupons maturing after June 1, 1983, shall contain the followipg additional clause: unless the bond to which this coupons ap- pertains has been called for previous re- demption and due provision made to redeem same, ) -11- . . Section 7: REGISTP~TION OF BONDS BY STATE COMPTROLLER AND FORM OF REGISTRATION CERTIFICATE: That each of said bonds shall be registered in the office of the Comptroller of Public Accounts of the State of Texas, as provided by law, and the registration certificate of said Comp- troller of Public Accounts, which certificate is to be printed on the back of each of said bonds and is to be manually executed, shall be in substantially the following form: OFFICE OF THE C:OMPTP,OLLEF REGISTER NOo THE STATE OF TEXA,S I HEEEBY CEETIFY that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this bond has been examined by him as re- quired by law, and that he finds that it has been issued in con- formi ty with the Cons ti tution and laws of the State of ry:'exas, and is a valid and bind.ing special obligation of the City of Schertz, Texas, payable from the revenues pledged to its payment by and in the ordinance authorizing the same; and said bond has this day been registered by me, WITNESS MY HAND AND SEAL OF OF.FICE at Aus tin, Texas, Comptroller of Public Accounts of the State of Texas Section 8~ DEFINITIONS: That, as used in this ordinance, the following words and terms shall mean and include, and are defined, as follows, to- wit: -12-, I i l / / . . (al Qity - the City of Schertz, Texas, and, where appro- priate, the City Council thereof. (b) ~stem - the waterworks system to be purchased by the City with the proceeds of sale of the bonds authorized by this ordin., ance and the sanitary sewer system of said City now under construction, including all present and future additions, extensions, replacements, and improvements to sa.id waterworks system and sanitary sewer system. (c) Net revenues - the gross revenues derived from the operation of the System less the reasonable expenses of maintenance and operation of said System, including all salaries, labor, materials, interest and such repairs and extensions as in the judgment of the governing body of the City are necessary to keep the plant or utility in operation and render adequate service to such City and the inhabi- tants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the original security. (d) Bonds - the $,300,000 City of Schertz, Texas, Water- works and Sewer System Revenue Bonds, Series 1963, dated February I, 1963, authorized by this ordinance, (e)P.emaining Bonds - the remaining $300,000 revenue bonds authorized at the election held .in the City on the 15th day of December, 1962, and which the City expressly reserves the right to issue in Section 10.06 of this ordinance. (f) Additional Bonds - the additional parity revenue bonds that the City expressly reserves the right to issue in Section 10.07 of this ordinance. ,eection 9; SECUR.ITY .FOR BONDS, REMAINING BOND~ AND ADDITIONAL BONDS: Tha t the Bonds (and, when issued, the Remaining Bonds and the Additional Bonds) '-13- . ~ are payable from and secured by a first lien on and pledge of the revenues of the System after deduction therefrom of the r~asonable expenses of maintenance and operation of said Systemo The Bonds and, when issued, the Remaining Bonds and the Additional Bonds shall be in all respects on a parity and of equal dignity with one another 0 Section 10: PLEDGE OF NET RElrnNUES: That all of the net revenues from the operation of the System, with the exception of those in excess of the amounts required to establish and maintain the funds as herein- after provided, are hereby irrevocably pledged to the payment of the Bonds, and, when issued, the Remaining Bonds and the Additional Bonds, subject to the terms and provisions of this ordinance 0 For the benefit of the original purchaser of the Bonds and for the bene- fit of any and all subsequent holders of said Bonds, interest coupons, or any part thereof, and in addition to all other provisions and covenants and the laws of the State of Texas and in this ordinance, it is expressly stipulated: 10.01 - RATES: The City shall fix and maintain rates and collect charges for the facilities and services afforded by the System which will produce revenues sufficient at all times: (a) To pay for all operation, maintenance, depreciation, replacement, and betterment charges of the System; (b) To produce net revenues each year in an amount not less than one and one-half (1-1/2) times the average annual princi- pal and interest requirements on all bonds then outstanding payable from the revenues of the System; (c) To establish and maintain the Bond Fund and the Reserve Fund as provided in this ordinance and any ordinances -14- . . authorizing the issuance of the Remaining Bonds and the Additional Bonds; and (d) To pay all outstanding indebtedness against the System, other than the Bonds, the Remaining Bonds, and the Additional Bonds, as and when the same become due, Provided, also, that no free service or services of the System shall be allowed, and should the City or any of its agencies or instrumentalities make use of the services and facilities of the System, payment of a reasonable value thereof shall be made by the City out of funds derived from sources other than revenues and income of the System. 10002 - USE OF REVENUES: The City will deposit, as collected, all revenues derived from the operation of the System into a separate account (herein called the "System Fund"), which shall be kept separate and apart from all other funds of the City. The System Fund shall be administered as follows; (a) Maintenance and Operation: From the moneys in the System Fund, the City shall pay the expenses of maintenance and opera tion of the Sys tem, including all salaries, labor, materials, interest, and such repairs and extensions as in the judgment of the governing body of the City are necessary to keep the plant or utility in operation and render adequate service to such City and the inhabi- tants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the original secur- ity. (b) Bond Fund: There is hereby created and established a special fund for the payment of the principal of and interest on the Bonds, to be known as CITY OF SCHERTZ WATERWORKS AND SEWER SYSTEM R~VENUE BOND INTEREST AND SINKING FUND, hereinafter referred to as the "Bond Fund". After the payment of all expenses provided for in -15- . . . the next preceding paragraph, the City, on or before the 10th day of each month, beginning with the month of March, 1963, and continuing until all the Bonds have been finally paid, both as to principal and interest, shall, from moneys in the System Fund, pay into the Bond Fund the following amounts; (1) On or before March 10, 1963, and on or before the 10th day of each month thereafter to and including the month of May, 1963, an amount which is not less than one-third (1/3rd) of the interest falling due on June 1, 1963, on the Bonds; and (2) On or before June 10, 1963, and on or before the lOth day of each month thereafter, an amount which is not less than: one sixth (1/6th) of the next maturing interest on the Bonds, and one-twelfth (1/12th) of the next maturing principal of the Bonds. If in any month the City shall, for any reason, fail to pay into said Bond Fund the full amounts above stipulated, amounts equivalent to such deficiency or deficiencies shall be set apart and paid into said Bond Fund from the first available and unallocated revenues of the following month or months and shall be in addition to the amounts hereinabove- provided to be otherwise paid into said Bond Fund each month. The moneys paid into the Bond Fund shall be deposited in the official deposito.ry of the City, and shall be continuously secured by a valid pledge to the City of direct obligations of the United States of America, having an aggregate market value, exclusive of accrued interest, at all times equal to such Bond .Fund. The amount received from the purchaser of the Bonds as accrued interest thereon from the date of the Bonds to the date of delivery shall also be placed in the Bond Fund, which shall reduce by such amount the sums which would -16- . . . " otherwise be required to be placed into the Bond Fund from the reve- nues of the System. (c) Reserve Fund; There is hereby created and established a special fund as a reserve for the Bonds, to be known as CITY OF SCHERTZ WATERWORKS AND SEWER SYSTEM REVENUE BOND RESERVE FUND, here- inafter referred to as the "He serve .Fund", After the payments re- quired by the next two preceding paragraphs have been made, the City, on or before the 10th day of each month, beginning with the month of , March, 1963, shall, from moneys in the System Fund, pay into the v ___Reserve Fund an amount which is not less than $340 per month, and , such monthly payments shall be continued until such time as there is in the Heserve Fund an amount not less than $21,000. If in any month the City shall, for any reason, fail to pay into the Reserve Fund the full amount above stipulated, amounts equivalent to such deficiency or deficiencies shall be set apart and paid into 'the Heserve Fund from the first avail~ble and unallocated revenues of the following month or months and shall be in addition to the monthly deposit here- inabove provided to be otherwise paid into said Reserve Fund, The moneys paid into the Reserve Fund shall be deposited in the official depository of the City and shall be continuously secured by a valid pledge to the City of direct obligations of the United States of America, having an aggregate market value, exclusive of accrued interest, at all times at least equa.l to such Reserve Fund, The moneys in the Reserve Fund, at the option of the City, may be invested in direct obligations of the United States of America maturing within IO years from the date of purchase or maturing before the final matur- ity of the Bonds then outstanding, whichever shall first occur, which shall be deposited in escrow with the local depository under an escrow agreement. If such moneys are so invested and deposited in escrow, -17- , " . . the City shall have the right to have sold and shall sell through the escrow agent on the open market a sufficient amount of such securities in order to meet its obligations of principal and inter- est in the event that it does not have sufficient uninvested funds on hand for such purpose. Under such circumstances, the Mayor is hereby authorized, ordered, and directed to give fifteen (15) days) written notice to such escrow agent of the necessity to sell such securities on the open market. After said sale, the moneys re- sul ting therefrom shall belong to the Reserve .Fund and shall be available to pay such obligations of' principal and interest as above provided. So long as the Eeserve Fund contains a balance of not less than $21,000, no further payments need be made into said Reserve J"und; however, in the event that said balance is ever reduced to an amount less than $21,000, the monthly payments, as provided above, shall be continued and resumed until said balance of not less than $21,000 is again reached and maintained. (d) Trust Punds: Moneys in the Bond Fund and in the Eeserve Fund shall constitute trust funds, and shall be used solely for the aforesaid purposes until all of the Bonds have been retired, both as to principal and interest. The appropriate officials of the City shall a~sure that moneys are transferred from the Bond Fund (and, if necessary, from the Reserve Pund) to the bank of payment at the proper times so that funds will be available for the payment of the interest on and principal of the Bonds as such interest and principal respectively become due and payable. When there are moneys in the Bond Fund and Reserve Fund sufficient to make all interest payments and all principal payments due and to become due to the final maturity of all bonds then outstanding payable from the reve-, nues of the System, no further payments need be made into said Bond Fund and Eeserve .Fund. -18- , . . (e) Surplus: Any funds remaining in the System Fund after provision has been made for the pa.yment of the reasonable costs of maintaining and operating the System, and for the payments into the I Bond Fund and the Reserve Fund, as above provided, and after provi- , sion has been made for all payments that may be required by ordinances or proceedings pertaining to Remaining .Bonds or Additional Bonds, may be used for the retirement of Bonds, Remaining Bonds, or Additional Bonds, or may be used for any other purpose or purposes permitted by law. 10003 - MAINTENANCE AND OPERATION: The City shall maintain the System in good condition and operate the same in an efficient manner and at a reasonable cost. So long as any of the Bonds are outstanding, the City agrees to maintain insurance, for the benefit of the holder or holders of said Bonds, on the System of a kind and in an amount which would usually be_carried by private companies engaged in a simi- lar type of business. Nothing in this ordinance shall be construed as requiring the City to expend any funds for this purpose which are de- rived from sources other than the operation of the System, but nothing herein shall be construed as preventing the City from doing so, 10.04 - ACCOUNTS, FISCAL YEAR, AND ACCOUNTING REPORTS: (a) The City shall keep proper records and accounts (separate from all other records and accounts of the City) in which complete and correct entries shall be made of all transactions relating to the System. The City will operate the System on the basis of a fiscal year ending /)E~EMB!1e 3/4. (b) Not later than the 15th day of each month, beginning with the month of II ~/Ci/ . 1963, the City will furnish, with- out cost to: M. E. Allison & Coo, Inc., San Antonio, Texas, and -19- . . Any holder of any Bond or Bonds who may so request in writing, a copy of a monthly operating statement signed by an official of the City, covering the next preceding calendar month, showing the fol- lowing information relating to the System: (1) Income and expense statement; (2) Balance in each of the Funds created by this ordinance; (3) Number of billings for water services of System; and (4) Number of billings for sanitary sewer services of System. (c) Not later than 90 days after the close of each fiscal year, beginning with the fiscal year ending lJ.Ee,EMI$ER. 2.L, 1963, the City will furnish, without cost, to: M. E. Allison & Co., Inc. San Antonio, Texas Municipal Advisory Council of Texas Austin, Texas, and Any holder of any Bond or Bonds who may so request in writing, a signed or certified copy of a report of an independent certified public accountant or firm of certified public accountants, covering the next preceding fiscal year, showing the following information relating to the System: (1) Income and expense statement; (2) Balance sheet; (3) Accountant's comment regarding the manner in which the City has complied with the requirements of this ordinance, and his recommendations for any changes or improvements in the accounting procedures; -20- . . (4) List of insurance policies in force at end of the fiscal year, showing as to each policy, the risk covered, the name of the insurer, and the expiration date; (5) The number of unmetered water customers of the System at the end of said fiscal year, if any; and (6) The number of gallons of water pumped into or taken by the System and the number of gallons of water sold by the System during said fiscal year. 10.05 - INSPECTIONS: Any purchaser of 25% or more in principal amount of the Bonds, and any holder of 25% or more in principal amount of the Bonds then outstanding Shall have the right at any reasonable time to inspect the System and all records, accounts, and data of the City relating thereto. 10.06 - REMAINING VOTED BONDS: The City expressly reserves the right to issue the remaining $300,000 bonds authorized at the election held in said City on the 15th day of December, 1962, in one or more in- stallments, and such Remaining Bonds, when issued, shall be payable from and secured by a first lien on and pledge of the net revenues of the System in the same manner and to the same extent as are the Bonds, and such Remaining Bonds shall be in all respects on a parity and of equal dignity with the Bondso No Remaining Bonds, however, shall be issued unless: ~(a) The City is not then in default as to any covenant, condition, or obligation prescribed by this ordinance; (b) Each of the funds created by this ordinance contains the amount of money then required to be on deposit therein; (c) The average annual net revenues of the System for either of the following two-year periods: -21- . . the 24-month period ending on the last day of the month preceding the month in which the bond ordinance is adopted authorizing such Remaining Bonds, or the then two preceding fiscal years, as certified by an independent certified public accountant or firm of certified public accountants, were equal to at least one and one- half (1-1/2) times the average annual principal and interest require- ments on all first-lien revenue bonds payable from the net revenues of the System that will be outstanding after the Remaining Bonds then proposed to be issued are issued and sold and delivered (such average annual prinCipal and interest requirements to be computed on a calen- dar year basis and as of the date of the Remaining Bonds then pro- posed to be issued); provided that if during any part of the two-year period all or any part of the System may have been owned and operated by a private corporation or person, the earnings and expenses during such time will be adjusted to reflect municipal ownership and opera- tion; (d) Provision is made in the bond ordinance authorizing the Remaining Bonds then proposed to be issued for additional pay- ments into the Reserve Fund (in addition to payments required by this ordinance) so that said Reserve Fund will in not later than five (5) years from the date of such Remaining Bonds contain a bal- ance of not less than the average annual principal and interest requirements on all first-lien revenue bonds payable from the net revenues of the System that will be outstanding after the Remaining Bonds then proposed to be issued are issued and sold and delivered (such average annual principal and interest requirements to be com- puted on a calendar year basis and as of the date of the Remaining Bonds then proposed to be issued; and -22- . . (e) The Remaining Bonds then proposed to be issued are made to mature on June 1st in each of the years in which they are scheduled to mature, The term "net revenues" as used herein shall mean all of the net revenues of the System (excluding income received specifically for capital items) after deduction of the reasonable expenses of main,- tenance and operation of the System (excluding expenditures for capi- tal items). !O,07 - ADDITIONAL PARITY BONDS: In addition to inferior lien bonds authorized by Chapters 249 and 250, Acts of the 51st Legislature of Texas, Regular Session, 1949, as amended, the City expreSSly reserves the right to issue additional parity revenue bonds in one or more in- stallments, and such Additional Bonds, when issued, shall be payable from and secured by a first lien on and pledge of the net revenues of the System in the same manner and to the same extent as are the Bonds and the Remaining Bonds, and such Additional Bonds shall be in all respects on a parity and of equal dignity with the Bonds and the Remaining Bonds. No Additional Bonds, however, shall'be issued unless the conditions and terms set forth in Section 10,.06 hereof relating to the Remaining Bonds are met, and said conditions and terms shall apply with equal force to the issuance of such Additional Bonds. Section 11: SYSTEM OF RECORDS AND ACCOUNTS: That the Mayor, City Secretary, and City Treasurer are hereby instructed and directed to do any and all things necessary in reference to the installing and maintaining of a complete system of records and accounts pertaining to the System and to make the moneys available for the payment of the Bonds in the manner provided by law. -23- , ' , . . Section 12~ SPECIAL COVENANTS; That the City covenants, by and through this ordinance, as follo1ATs; 12.01- POWER TO PLEDGE F~VENUES: That it has lawful power to pledge the revenues supporting this issue of Bonds and has lawfully exercised such power under the Cons titution and laws of the State of Texas, in-, cluding said power existing under Articles 1111 to IIIB, both inclusive, Vernon's Texas Civil Statutes, as amended; and that the Bonds issued hereunder shall be ratably secured under said pledge of net revenues and in such manner that one Bond shall have no preference over any other Bond of said issue. 12,02 - RE\ffiNUES NOT ENCUMBERED: That, other than the pledge of net revenues in support of the Bonds as provided in this ordinance, the rents, revenues, properties, and income of the System are not in any manner pledged to the payment of any debt or obligation of the City, nor of said System. 12.03 - SALE OF ENCUMBEANCE OF SYSTEM AND ISSUANCE OF REFUNDING BONDS: That, so long as any of the Bonds authorized herein remain outstanding, the City will not sell or encumber the System or any substantial part thereof, and that, with the exception of the Remaining Bonds mentioned in Section 10.06 hereof and the Additional Bonds mentioned in Section 10.07 hereof, when issued in accordance with all the terms and condi- tions of this ordinance, it will not encumber the revenues of the System unless such encumbrance is made junior and subordinate to the Bonds and to all the provisions of this ordinance. Provided, however, that the Bonds, Remaining Bonds, and Additional Bonds may be refunded with the consent of the holders thereof (except that as to Bonds, Remaining Bonds, or Additional Bonds which have matured by normal maturity or through the exercise of option of prior redemption -24- ,... , ... . . provisions, such consent shall not be necessary), and the refunding bonds so issued shall enjoy complete equality of lien with the por- tion of outstanding first,-lien revenue bonds which is not so refunded, if any there be, and the refunding bonds shall continue to enjoy the priority of lien that may have been enjoyed by the bonds refunded; provided, if only a portion of the first-lien revenue bonds then out- standing is so refunded and if the refunding bonds are issued in such manner that the interest rate is increased or that any refunding bond matures earlier than any of the outstanding first-lien revenue bonds which are not refunded, then such refunding bonds may be issued only if the terms and conditions set forth in Section 10.06 hereof with respect to Eemaining Bonds are mef., and such terms and conditions shall apply with equal force to such refunding bonds. Any refunding bonds may be either delivered to the holders of a like amount of the underlying bonds upon simultaneous surrender- and cancellation of such underlying bonds, or, if authorized by law, may be sold and delivered to purchasers pursuant to payment therefor for not less than par and accrued interest, in which event the proceeds of sale and delivery shall be applied to the payment of the underlying bonds authorized to be refunded. 12.04 - NO COMPETING SYSTEM: That the City further covenants and agrees, to the extent it legally may, that so long as any of the Bonds or interest thereon are outstanding, no franchise shall be granted for the installation or operation of any competing system, that the City will prohibit the operation of any system other than those owned by the City, and that the operation of any such system by anyone other than the City is hereby prohibited. Section 13: OHDINANGE IS CONTEACT: That the provisions of this ordinance shall -2.5- ," . . ., . . constitute a contract between the City and the holder or holders from time to time of the Bonds, and after the issuance of any of said Bonds, no change, variation, or alteration of any kind in the provisions of this ordinance may ,be made until all of said Bonds have been paid in full as to both principal and interest. Section 14; APPROVAL AND REGISTRATION OF BONDS BY STATE OFFICERS: That it: shall be the duty of the Mayor to submit the record of said Bonds and the Bonds to the Attorney General of the State of Texas for examination and approval, and. thereafter to have such Bonds registered by the Comptroller of Public Accounts of the State of Texas. Section 15: SALE OF BONDS: That the sale of said Bonds to M. Eo Allison & Co., Inc" San Antonio, Texas, at a price equal to the principal amount thereof plus accrued interest thereon from the date thereof to the date of actual delivery, subject to the unqualified approving opinion as to the legality of said Bonds by the Attorney General of the State of Texas and Vinson, Elkins, Weems & Searls, Houston, Texas, market attorneys, is here by authorized, approved, ratified, and. confirmed 0 When said Bonds have been approved by said Attorney General and registered by the Comptroller of Public Accounts of the State of Texas, they shall be delivered to the purchasers upon receipt of the full purchase priceo ~tion 16: DUTIES OF CITY OFFICERS: That the Mayor, the City Secretary, and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary or convenient to carry out the provisions of this ordinance. -26,- . . r . . " r"'- , . . " Section 17: EFFECTIVE DATE OF ORDINANCE: That this ordinance shall be in full force and effect from and after its adoption. PASSED AND APPROVED this 29# day of J"'Nul9ay 1963. Texas ATTEST: If. #, Q;1AflP}, City Secretary r' co. " \) ",I v C '#, ';:: _ '..:\ ....,':r...:J.,.}\ ':; ..\... ., ,. .-") ; ~' "' r~/ / '- ...,'.). \ ;' ~ ~(q"'AT''f. . ',~-, " ..~~.~I. ~.-.... ~ ; " ,. ,,>..,, :. "N,.: '. : 4 ~ " I ' . , .~":':. " \ :, "~ .~,.. ',../ -..,..~'; ~.. Ht . , ..... - . /j; -. .- ;:-.- ,t' :..........."'.<"'...~,. - v -7 ""': ,.< . ~ . I ~ . -27-