HomeMy WebLinkAboutOrdinance 22213-05-2016 ORDINANCE NO. 22213-05-2016
ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF CITY OF
FORT WORTH, TEXAS DRAINAGE UTILITY SYSTEM REVENUE
REFUNDING BONDS, SERIES 2016; AND ORDAINING ALL OTHER
MATTERS RELATED THERETO
THE STATE OF TEXAS
COUNTIES OF TARRANT, DENTON, PARKER, WISE AND JOHNSON
CITY OF FORT WORTH
WHEREAS, the City of Fort Worth, Texas (the "City" or the "Issuer"), is a "home-rule"
city operating under a home-rule charter adopted pursuant to Section 5 of Article XI of the Texas
Constitution, with a population according to the latest federal decennial census of in excess of
50,000; and
WHEREAS, the City is authorized by the Municipal Drainage Utility Systems Act,
Subchapter C, Chapter 552, Texas Local Government Code (formerly codified at Subchapter C,
Chapter 402, Texas Local Government Code) (the "Act"), to establish a municipal drainage
utility system and to issue bonds of the City for this purpose; and
WHEREAS, on January 24, 2006, in accordance with the provisions of the Act, the City
Council of the City adopted an ordinance whereunder the City adopted to apply the provisions of
the Act to the City and which further declared that the drainage system of the City was a public
utility; and
WHEREAS, on March 7, 2006, in accordance with the provisions of the Act, the City
Council of the City adopted an ordinance whereunder the City adopted drainage charges
applicable for the availability and use of the municipal drainage utility system; and
WHEREAS, the City has previously issued its City of Fort Worth, Texas Drainage Utility
System Revenue Bonds, Series 2007, in the aggregate principal amount of $24,430,000 (the
"Series 2007 Bonds"), its City of Fort Worth, Texas Drainage Utility System Revenue Bonds,
Series 2009, in the aggregate principal amount of$45,190,000 (the "Series 2009 Bonds") and its
City of Fort Worth, Texas Drainage Utility System Revenue Bonds, Series 2011, in the
aggregate principal amount of $78,325,000 (the "Series 2011 Bonds", and together with the
Series 2007 Bonds and the Series 2009 Bonds, the "Outstanding Parity Bonds"); and
WHEREAS, in the ordinance authorizing the Series 2007 Bonds, the City reserved the
right to issue additional bonds on a parity with the Outstanding Parity Bonds, for any lawful
purpose; and
WHEREAS, the City Council finds that the issuance of the bonds authorized by this
Ordinance for the purpose of refunding all or a portion of the Series 2007 Bonds maturing on
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February 15 in each of the years 2018 through 2033 (the "Refunded Bonds") to realize a debt
service savings is a public purpose; and
WHEREAS, the bonds authorized by this Ordinance shall be issued under authority of
Chapter 1207, Texas Government Code ("Chapter 1207"), for the purpose of refunding the
Refunded Bonds for a debt service savings; and
WHEREAS, because of fluctuating conditions in the municipal bond market, the City
Council delegates to the City Manager and the Chief Financial Officer of the City, acting
individually but not collectively (each, an "Authorized Representative") the authority to effect
the sale of the bonds authorized by this Ordinance, subject to the parameters described in this
Ordinance.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS:
Section 1. BONDS AUTHORIZED. That the City's bonds (the "Bonds") are hereby
authorized to be issued in an aggregate principal amount not to exceed $19,700,000 for the
purpose of (i) refunding the Refunded Bonds, and (ii) paying costs of issuance incurred in
connection with the issuance of the Bonds. The Bonds shall be designated as the "City of Fort
Worth, Texas Drainage Utility System Revenue Refunding Bonds, Series 2016". The Bonds
constitute the fourth series of"Parity Bonds" issued or incurred in accordance with the terms and
conditions as set forth in this Ordinance.
Section 2. DELEGATION OF SALE OF BONDS; PARAMETERS. (a) Maximum
Maturity of Bonds. That the Bonds shall be sold as fully registered bonds, without interest
coupons, numbered consecutively from R-1 upward, payable to the respective initial registered
owners of the Bonds, or to the registered assignee or assignees of the Bonds, in any Authorized
Denomination, maturing not later than February 15, 2033, payable serially or otherwise on the
dates, in the years and in the principal amounts, and dated, all as set forth in the bidding
instructions prepared in connection with the sale of the Bonds (the "Bidding Instructions") and
the bid form to be submitted by bidders seeking to purchase the Bonds (the "Official Bid Form").
(b) Delegation of Authority. Each Authorized Representative, acting for and on behalf of
the City, is hereby authorized to seek competitive bids for the sale of the Bonds authorized to be
sold by this Ordinance, and is hereby authorized to prepare and distribute the Bidding
Instructions and the Official Bid Form with respect to seeking competitive bids for the sale of the
Bonds. The Bidding Instructions shall contain the terms and conditions relating to the sale of the
Bonds, including the date bids for the purchase of the Bonds are to be received, the date of the
Bonds, any additional designation or title by which the Bonds shall be known, the aggregate
principal amount of the Bonds to be sold, the price at which the Bonds will be sold, the years in
which the Bonds will mature, the principal amount to mature in each of such years, the rate or
rates of interest to be borne by each such maturity, the interest payment periods, the dates, price,
and terms upon and at which the Bonds shall be subject to redemption prior to maturity at the
option of the City, as well as any mandatory sinking fund redemption provisions, and all other
matters relating to the issuance, sale and delivery of the Bonds so sold including, without
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limitation, the use of municipal bond insurance for the Bonds. Each Authorized Representative,
acting for and on behalf of the City, is hereby authorized to receive and accept bids for the sale
of Bonds in accordance with the Bidding Instructions on such date as determined by an
Authorized Representative. The Bonds so sold shall be sold at such price as an Authorized
Representative of the City shall determine to be the most advantageous to the Issuer, which
determination shall be evidenced by the execution thereby of the Official Bid Form submitted by
the best and winning bidder. One Bond in the principal amount maturing on each maturity date
as set forth in the Official Bid Form shall be delivered to the Purchasers, and the Purchasers shall
have the right to exchange such bonds as provided in Section 5 hereof without cost. The FORM
OF BOND shall be revised to reflect the terms of the sale of the Bonds as reflected in the
Official Bid Form accepted as the best bid for the Bonds. The Bonds shall initially be registered
in the name as set forth in the Official Bid Form. In case any officer whose signature shall
appear on the Bonds shall cease to be such officer before the delivery of the Bonds, such
signature shall nevertheless be valid and sufficient for all purposes the same as if such officer
had remained in office until such delivery. Each Authorized Representative shall not execute the
Official Bid Form unless the best bidder has confirmed to an Authorized Representative that it
has made disclosure filings to the Texas Ethics Commission in accordance with Section
2252.908, Texas Government Code. Within thirty (30) days of receipt of the disclosure filings
from the best and winning bidder for the Bonds, the City will submit a copy of the disclosure
filings to the Texas Ethics Commission. The authority of an Authorized Representative to
execute the Official Bid Form accepting the best bid for the Bonds shall expire at 5:00 p.m. on
Thursday, December 29, 2016. Any finding or determination made by an Authorized
Representative relating to the issuance and sale of the Bonds shall have the same force and effect
as a finding or determination made by the City Council.
(c) Requirement of Savings. The Bonds shall not be sold unless the refunding of the
Refunded Bonds exceeds the minimum net present value savings set forth in subsection (d) of
this Section. The amount of the savings to be realized from the refunding of the Refunded
Bonds, on both a gross and a present value basis, shall be set forth in a certificate (further
described in subsection (d) of this Section) to be executed by the Chief Financial Officer of the
City.
(d) Savings Threshold. As a condition to the issuance of the Bonds for the purpose of
refunding the Refunded Bonds, the refunding of the aggregate principal amount of the Refunded
Bonds must produce a net present value savings, calculated in accordance with the Governmental
Accounting Standards Board (GASB) Statement No. 7, of at least 3.50%. The principal amount
of Bonds issued to refund Refunded Bonds, and the Refunded Bonds to be refunded, shall be
specifically identified in the certificate described below. An Authorized Representative may
elect not to refund any or all of the Series 2007 Bonds designated as Refunded Bonds, but in no
event shall the Bonds be issued for the purpose of refunding the Refunded Bonds if the refunding
of the aggregate principal amount of the obligations selected for refunding does not exceed the
minimum net present value savings established above. The Chief Financial Officer of the City
shall execute and deliver to the City Council prior to the delivery of the Bonds a certificate
identifying the Refunded Bonds to be refunded from proceeds of the Bonds and stating that the
net present value savings resulting from the refunding of the Refunded Bonds is no less than the
minimum savings threshold established above. The certificate shall specifically state both the
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net present value savings and the gross savings realized by the City as a result of refunding the
Refunded Bonds. The determination of an Authorized Representative relating to the issuance
and sale of Bonds to refund all or any of the Refunded Bonds shall have the same force and
effect as a determination made by the City Council.
(e) General. The City Council authorizes the City Manager, any Assistant City Manager
and the Chief Financial Officer of the City to provide for and oversee the preparation of a
preliminary official statement and the final official statement (the "Official Statement") in
connection with the issuance of the Bonds, and to approve the preliminary official statement and
the Official Statement and deem the preliminary official statement final, and to provide the
Official Statement to the Purchasers, in compliance with the Rule. The Official Statement in the
form and content approved by an Authorized Representative shall be deemed approved by the
City Council and constitute the Official Statement authorized for distribution and use by the
initial purchasers of the Bonds.
Section 3. RIGHT OF PRIOR REDEMPTION. (a) Optional Redemption. That the
Bonds may be subject to redemption prior to their scheduled maturities at the option of the City,
on the dates and in the manner provided in the Bidding Instructions. Should the Bonds be
subject to redemption prior to their scheduled maturities, if less than all of the Bonds are to be
redeemed by the City, the City shall determine the maturity or maturities and the amounts to be
redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions of Bonds,
within a maturity and in the principal amounts for redemption; provided, that during any period
in which ownership of the Bonds is determined only by a book entry at a securities depository
for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest
rate are to be redeemed, the particular Bonds shall be selected in accordance with the
arrangements between the City and the securities depository. The FORM OF BOND shall be
revised to reflect any optional redemption of the Bonds, to the extent provided in the Bidding
Instructions and incorporated by reference into the Official Bid Form accepted by an Authorized
Representative as the best bid on the Bonds. The City also reserves the right to rescind and
cancel an optional redemption of the Bonds, in the manner described in the FORM OF BOND.
(b) Mandatory Redemption. Should the Official Bid Form provide for the mandatory
sinking fund redemption of the Bonds, the terms and conditions governing any mandatory
sinking fund redemption and the payment of mandatory sinking fund payments shall be set forth
therein, and the FORM OF BOND shall be revised to reflect any mandatory sinking fund
redemption of the Bonds, to the extent provided in the Official Bid Form accepted by an
Authorized Representative as the best bid for the Bonds.
(c) General Notice. Notice of any redemption of Bonds shall be given in the following
manner,to-wit, a written notice of such redemption shall be given to the registered owner of each
Bond or a portion thereof being called for redemption at least thirty (30) days prior to the date
fixed for such redemption by depositing such notice in the United States mail, first-class postage
prepaid, addressed to each such registered owner at the address shown on the Registration Books
of the Paying Agent/Registrar. By the date fixed for any such redemption due provision shall be
made by the City with the Paying Agent/Registrar for the payment of the required redemption
price for the Bonds or the portions thereof which are to be so redeemed. If such notice of
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redemption is given, and if due provision for such payment is made, all as provided above, the
Bonds, or the portions thereof which are to be so redeemed, thereby automatically shall be
redeemed prior to their scheduled maturities, and shall not be regarded as being outstanding
except for the right of the owner to receive the redemption price from the Paying Agent/Registrar
out of the funds provided for such payment. The Paying Agent/Registrar shall record in the
Registration Books all such redemptions of principal of the Bonds or any portion thereof. If a
portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity
date, bearing interest at the same rate, in any Authorized Denomination at the written request of
the owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be
issued to the owner upon the surrender thereof for cancellation, at the expense of the City, all as
provided in this Ordinance. The maturities of Bonds to be called for redemption shall be
determined by the City. The Bonds or portions to be redeemed within each such maturity shall
be selected by lot or other customary random method selected by the Paying Agent/Registrar
(provided that a portion of a Bond may be redeemed only in an Authorized Denomination). The
City shall give written notice to the Paying Agent/Registrar of any such redemption of Bonds at
least sixty (60) calendar days (or such shorter period as is acceptable to the Paying
Agent/Registrar)prior to such redemption.
Section 4. INTEREST. That the Bonds shall bear interest at the rates per annum set
forth in the Official Bid Form accepted as the best bid. The interest on the Bonds shall be
payable to the registered owner of any such Bond on the dates and in the manner provided in the
FORM OF BOND set forth in Exhibit A to this Ordinance. Interest shall be calculated on the
basis of a 360-day year consisting of twelve 30-day months.
Section 5. PAYING AGENT/REGISTRAR; BOOK-ENTRY ONLY SYSTEM. (a)
Registration, Transfer, Conversion and Exchange; Authentication. That the City shall keep or
cause to be kept at the designated corporate trust office of BOKF, NA (the "Paying
Agent/Registrar"), books or records for the registration of the transfer, conversion and exchange
of the Bonds (the "Registration Books"), and the City hereby appoints the Paying
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such
registrations of transfers, conversions and exchanges under such reasonable regulations as the
City and the Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make
such registrations, transfers, conversions and exchanges as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the owner of
each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but
it shall be the duty of each owner to notify the Paying Agent/Registrar in writing of the address
to which payments shall be mailed, and such interest payments shall not be mailed unless such
notice has been given. The City shall have the right to inspect at the Designated Trust Office the
Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise
the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise
required by law, shall not permit their inspection by any other entity. Except as otherwise
provided in the FORM OF BOND, the owner of each Bond requesting a conversion, transfer,
exchange and delivery of such Bond shall pay the Paying Agent/Registrar's standard or
customary fees and charges for making such registration, transfer, conversion, exchange and
delivery of a substitute Bond or Bonds. Registration of assignments, transfers, conversions and
exchanges of Bonds shall be made in the manner provided and with the effect stated in the
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FORM OF BOND. Each substitute Bond shall bear a letter and/or number to distinguish it from
each other Bond. An authorized representative of the Paying Agent/Registrar shall, before the
delivery of any such Bond, date and manually sign the "Paying Agent/Registrar's Authentication
Certificate" in the form set forth in the FORM OF BOND (the "Authentication Certificate"), and,
except as provided below, no such Bond shall be deemed to be issued or Outstanding unless the
Authentication Certificate is so executed; the foregoing notwithstanding, the Authentication
Certificate need not be executed if any such Bond is accompanied by an executed "Comptroller's
Registration Certificate" in the form set forth in the FORM OF BOND. The Paying
Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for conversion and
exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the
governing body of the City or any other body or person so as to accomplish the foregoing
conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall
provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed
herein. Pursuant to Chapter 1206, Texas Government Code, the duty of conversion and
exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon
the execution of the Authentication Certificate, the converted and exchanged Bond shall be valid,
incontestable, and enforceable in the same manner and with the same effect as the Bonds which
initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General,
and registered by the Comptroller of Public Accounts. As of the date this Ordinance is approved
by the City, the Designated Trust Office is its Austin, Texas corporate trust office.
(b) Payment of Bonds and Interest. The City hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of, premium, if any, and
interest on the Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep
proper records of all payments made by the City and the Paying Agent/Registrar with respect to
the Bonds.
(c) In General. The Bonds (i) shall be issued in fully registered form, without interest
coupons, with the principal of and interest on such Bonds to be payable only to the registered
owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred
and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the
characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) shall be payable,
and (viii) shall be administered and the Paying Agent/Registrar and the City shall have certain
duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to
the effect as required or indicated, in the FORM OF BOND. The Bonds initially issued and
delivered to the Purchaser pursuant to this Ordinance are not required to be, and shall not be,
authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of
and exchange for any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar
shall execute the Authentication Certificate.
(d) Substitute Paying A eg nt/Re isg tray. The City covenants with the owners of the Bonds
that at all times while the Bonds are Outstanding a competent and legally qualified entity shall
act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance,
and that the Paying Agent/Registrar will be one entity. Such entity may be the City, to the extent
permitted by law, or a bank, trust company, financial institution, or other agency, as selected by
the City. The City reserves the right to, and may, at its option, change the Paying
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Agent/Registrar upon not less than one hundred and twenty (120) days written notice to the
Paying Agent/Registrar, to be effective not later than sixty (60) days prior to the next principal or
interest payment date after such notice. In the event that the entity at any time acting as Paying
Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or
otherwise cease to act as such, the City covenants that promptly it will appoint a competent and
legally qualified entity to act as Paying Agent/Registrar under this Ordinance. Upon any change
in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and
deliver the Registration Books (or a copy thereof), along with all other pertinent books and
records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by
the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written
notice thereof to be sent by the new Paying Agent/Registrar to each owner of the Bonds, by
United States mail, first-class postage prepaid, which notice also shall give the address of the
new Paying Agent/Registrar. By accepting the position and performing as such, each Paying
Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a
certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
(e) Additional Notice of Redemption. (i) In addition to the manner of providing notice
of redemption of Bonds as set forth in Section 3 hereof, the Paying Agent/Registrar shall give
notice of redemption of Bonds by United States mail, first-class postage prepaid, at least thirty
(30) days prior to a redemption date to the MSRB. In addition, in the event of a redemption
caused by an advance refunding of the Bonds, the Paying Agent/Registrar shall send a second
notice of redemption to the persons specified in the immediately preceding sentence at least
thirty (30) days but not more than ninety (90) days prior to the actual redemption date. Any
notice sent to the MSRB shall be sent so that such notice is received at least two (2) days prior to
the general mailing or publication date of such notice. The Paying Agent/Registrar shall also
send a notice of redemption to the registered owner of any Bonds who has not sent the Bonds in
for redemption sixty (60) days after the redemption date. The failure to send, mail or receive any
such notice described in this clause (i), or any defect therein or in the sending or mailing thereof,
shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond.
(ii) Each redemption notice, whether required in the FORM OF BOND or otherwise
by this Ordinance, shall contain a description of the Bonds to be redeemed including the
complete name of the Bonds, the series, the date of issue, the interest rate, the maturity date, the
CUSIP number, the amounts called of each Bond, the publication and mailing date for the notice,
the date of redemption, the redemption price, the name of the Paying Agent/Registrar and the
address at which the Bond may be redeemed including a contact person and telephone number.
(iii) All redemption payments made by the Paying Agent/Registrar to the registered
owners of the Bonds shall include a CUSIP number relating to each amount paid to such
registered owner.
(f) DTC Book-Entry-Only System of Registration. The Bonds initially shall be issued
and delivered in such manner that no physical distribution of the Bonds will be made to the
public, and DTC initially will act as depository for the Bonds. DTC has represented to the City
that it is a limited purpose trust company incorporated under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the meaning of the
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New York Uniform Commercial Code, and a "clearing agency" registered under Section 17A of
the Securities Exchange Act of 1934, as amended, and the City accepts, but in no way verifies,
such representations. The definitive Bonds delivered to the Purchaser may be registered in the
name of CEDE & CO., the nominee of DTC. So long as each Bond is registered in the name of
CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC the same in all respects
as if it were the actual and beneficial owner thereof. DTC may maintain a book-entry system
which will identify ownership of the Bonds in Authorized Denominations, with transfers of
ownership being effected on the records of DTC and its participant pursuant to rules and
regulations established by them, and that the Bonds deposited with DTC shall be immobilized
and not be further exchanged for substitute Bonds except as hereinafter provided. The City is
not responsible or liable for any functions of DTC, will not be responsible for paying any fees or
charges with respect to its services, will not be responsible or liable for maintaining, supervising,
or reviewing the records of DTC or its participants, or protecting any interests or rights of the
beneficial owners of the Bonds. The City does not represent, nor does it in any way covenant
that the initial book-entry system established with DTC will be maintained in the future. If for
any reason any of the originally delivered Bonds is duly filed with the Paying Agent/Registrar
with proper request for transfer and substitution, as provided for in this Ordinance, substitute
Bonds will be duly delivered as provided in this Ordinance, and there will be no assurance or
representation that any book-entry system will be maintained for the Bonds. Should there be
established a book-entry system with DTC in respect to the Bonds, the City heretofore has
executed a "Blanket Letter of Representations" prepared by DTC in order to implement the
book-entry system described above.
Section 6. FORM OF BONDS. That the form of all Bonds, including the form of the
Authentication Certificate, the form of Assignment, and the form of the Comptroller's
Registration Certificate to accompany the Bonds on the initial delivery thereof, shall be,
respectively, substantially in the forms as set forth in Exhibit A to this Ordinance, with such
appropriate variations, omissions, or insertions as are permitted or required by this Ordinance.
Section 7. DEFINITIONS. That, as used in this Ordinance, the following terms shall
have the meanings set forth below, unless the text hereof specifically indicates otherwise:
"Accountant" means a nationally recognized independent certified public accountant, or
an independent firm of certified public accountants.
"Act" means Subchapter C, Chapter 552, Texas Local Government Code.
"Additional Bonds" means the additional bonds which the City reserves the right to issue
in the future as Parity Bonds, as provided in this Ordinance.
"Amortization Installment", with respect to the Bonds designated in the Official Bid Form
accepted as the best bid for the Bonds, and any Term Bonds of any Additional Bonds, means the
amount of money which is required to be deposited into the Mandatory Redemption Account
referred to in Section 10 hereof for retirement of such Term Bonds (whether at maturity or by
mandatory redemption and including redemption premium, if any) provided that the total
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Amortization Installments for such Term Bonds shall be sufficient to provide for retirement of
the aggregate principal amount of such Term Bonds.
"Annual Debt Service Requirements" means, for any Fiscal Year, the principal of and
interest on all Parity Bonds coming due at Maturity or Stated Maturity (or that could come due
on demand of the owner thereof other than by acceleration or other demand conditioned upon
default by the City on such Debt, or be payable in respect of any required purchase of such Debt
by the City) in such Fiscal Year, and, for such purposes, any one or more of the following rules
shall apply at the election of the City:
(1) Committed Take Out. If the City has entered into a Credit Agreement
constituting a binding commitment within normal commercial practice to discharge any
of its Funded Debt at its Stated Maturity (or, if due on demand, at any date on which
demand may be made) or to purchase any of its Funded Debt at any date on which such
Debt is subject to required purchase, all under arrangements whereby the City's
obligation to repay the amounts advanced for such discharge or purchase constitutes
Funded Debt, then the portion of the Funded Debt committed to be discharged or
purchased shall be excluded from such calculation and the principal of and interest on the
Funded Debt incurred for such discharging or purchase that would be due in the Fiscal
Year for which the calculation is being made, if incurred at the Stated Maturity or
purchase date of the Funded Debt to be discharged or purchased, shall be added;
(2) Balloon Debt. If the principal (including the accretion of interest resulting
from original issue discount or compounding of interest) of any series or issue of Funded
Debt due (or payable in respect of any required purchase of such Funded Debt by the
City) in any Fiscal Year either is equal to at least 25% of the total principal (including the
accretion of interest resulting from original issue discount or compounding of interest) of
such Funded Debt or exceeds by more than 50% the greatest amount of principal of such
series or issue of Funded Debt due in any preceding or succeeding Fiscal Year (such
principal due in such Fiscal Year for such series or issue of Funded Debt being referred to
herein as "Balloon Debt"), the amount of principal of such Balloon Debt taken into
account during any Fiscal Year shall be equal to the debt service calculated using the
original principal amount of such Balloon Debt amortized over the Term of Issue on a
level debt service basis at an assumed interest rate equal to the rate borne by such Balloon
Debt on the date of calculation;
(3) Consent Sinking Fund. In the case of Balloon Debt (as defined in clause (2)
above), if a Designated Financial Officer shall deliver to the City an Officer's Certificate
providing for the retirement of (and the instrument creating such Balloon Debt shall
permit the retirement of), or for the accumulation of a sinking fund for (and the
instrument creating such Balloon Debt shall permit the accumulation of a sinking fund
for), such Balloon Debt according to a fixed schedule stated in such Officer's Certificate
ending on or before the Fiscal Year in which such principal (and premium, if any) is due,
then the principal of(and, in the case of retirement, or to the extent provided for by the
sinking fund accumulation, the premium, if any, and interest and other debt service
charges on) such Balloon Debt shall be computed as if the same were due in accordance
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with such schedule, provided that this clause (3) shall apply only to Balloon Debt for
which the installments previously scheduled have been paid or deposited to the sinking
fund established with respect to such Debt on or before the times required by such
schedule; and provided further that this clause (3) shall not apply where the City has
elected to apply the rule set forth in clause (2) above;
(4) Prepaid Debt. Principal of and interest on Parity Bonds, or portions thereof,
shall not be included in the computation of the Annual Debt Service Requirements for
any Fiscal Year for which such principal or interest are payable from funds on deposit or
set aside in trust for the payment thereof at the time of such calculations (including
without limitation capitalized interest and accrued interest so deposited or set aside in
trust) with a financial institution acting as fiduciary with respect to the payment of such
Debt;
(5) Variable Rate. As to any Parity Bond that bears interest at a variable interest
rate which cannot be ascertained at the time of calculation of the Annual Debt Service
Requirement then, at the option of the City, either (1) an interest rate equal to the average
rate borne by such Parity Bonds (or by comparable debt in the event that such Parity
Bonds has not been outstanding during the preceding 24 months) for any 24 month period
ending within 30 days prior to the date of calculation, or (2) an interest rate equal to the
20-year Tax-Exempt Revenue Bond Index (as most recently published in The Bond
Buyer), shall be presumed to apply for all future dates, unless such index is no longer
published in The Bond Buyer, in which case an index of tax-exempt revenue bonds with
maturities of at least 20 years which is published in a newspaper or journal with national
circulation may be used for this purpose. If two Series of Parity Bonds which bear
interest at variable interest rates, or one or more maturities within a Series, of equal par
amounts, are issued simultaneously with inverse floating interest rates providing a
composite fixed interest rate for such Parity Bonds taken as a whole, such composite
fixed rate shall be used in determining the Annual Debt Service Requirement with respect
to such Parity Bonds;
(6) Guarantee. In the case of any guarantee, as described in clause (2) of the
definition of Debt, no obligation will be counted if the City does not anticipate in its
annual budget that it will make any payments on the guarantee. If, however, the City is
making payments on a guarantee or anticipates doing so in its annual budget, such
obligation shall be treated as Parity Bonds and calculations of annual debt service
requirements with respect to such guarantee shall be made assuming that the City will
make all additional payments due under the guaranteed obligation. If the entity whose
obligation is guaranteed cures all defaults and the City no longer anticipates making
payments under the guarantee, the guaranteed obligations shall not be included in the
calculation of Annual Debt Service Requirements; and
(7) Credit Agreement Payments. If the City has entered into a Credit Agreement
in connection with an issue of Debt, payments due under the Credit Agreement (other
than payments for fees and expenses), for either the City or the Credit Provider, shall be
included in such calculation, except to the extent that the payments are already taken into
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account under (1) through (6) above and any payments otherwise included above under
(1) through (6) which are to be replaced by payments under a Credit Agreement, from
either the City or the Credit Provider, shall be excluded from such calculation. For
purposes of satisfying the provisions of Sections 19(a) and 19(b) of this Ordinance, the
City shall assume that for the term of the Credit Agreement, it will not receive any
payments from the counterparty thereto, and further that the City shall calculate the
amount of its payments due annually to the counterparty under the Credit Agreement
(other than payments for fees and expenses) on the basis of the percentage rate applicable
to the stated notional amount of the Credit Agreement, as such percentage rate is
determined as of the date the Credit Agreement is approved by ordinance adopted by the
City Council.
With respect to any calculation of historic data, only those payments actually made in the subject
period shall be taken into account in making such calculation and, with respect to prospective
calculations, only those payments reasonably expected to be made in the subject period shall be
taken into account in making the calculation.
"Authorized Denomination" means Bonds in a denomination of $5,000 or any integral
multiple thereof.
"Authorized Investments" means any and all of the authorized investments described in
the Public Funds Investment Act of 1987, Chapter 2256, Texas Government Code, provided that
such investments are at the time made included in and authorized by the City's official
investment policy approved from time to time by the City Council.
"Authorized Representative" shall have the same meaning as set forth in the preamble to
this Ordinance.
"Bidding Instructions" shall have the same meaning as set forth in Section 2(a) hereof.
"Bond, Bonds" and "Series 2016 Bond, Bonds" means one or more, as the case may be, of
the City of Fort Worth, Texas Drainage Utility System Revenue Refunding Bonds, Series 2016,
authorized to be issued by this Ordinance.
"Business Day" means a day other than a Saturday, Sunday, a legal holiday, or a day on
which banking institutions are authorized by law or executive order to close in the City or the
city where the Designated Trust Office of the Paying Agent/Registrar is located.
"Chapter 1207" means Chapter 1207 of the Texas Government Code.
"City" and "Issuer" means the City of Fort Worth, Texas.
"Code" means the Internal Revenue Code of 1986.
"Credit Agreement" means, collectively, a loan agreement, revolving credit agreement,
agreement establishing a line of credit, letter of credit, reimbursement agreement, insurance
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contract, commitments to purchase Parity Bonds, purchase or sale agreements, interest rate swap
agreements, currency exchange agreements, interest rate floor or cap agreements, or
commitments or other contracts or agreements authorized, recognized and approved by the City
as a Credit Agreement in connection with the authorization, issuance, security, or payment of
Parity Bonds and on a parity therewith.
"Credit Facility" means (i) a policy of insurance or a surety bond, issued by an issuer of
policies of insurance insuring the timely payment of debt service on governmental obligations,
provided that a Rating Agency having an outstanding rating on Parity Bonds would rate the
Parity Bonds fully insured by a standard policy issued by the issuer in its two highest generic
rating categories for such obligations; and (ii) a letter or line of credit issued by any financial
institution, provided that a Rating Agency having an outstanding rating on the Parity Bonds
would rate the parity obligations in its two highest generic rating categories for such obligations
if the letter or line of credit proposed to be issued by such financial institution secured the timely
payment of the entire principal amount of the Parity Bonds and the interest thereon; and, in any
case, no lower than the rating assigned by a Rating Agency to the Parity Bonds.
"Credit Provider" means any bank, financial institution, insurance company, surety bond
provider, or other entity which provides, executes, issues, or otherwise is a party to or provider of
a Credit Agreement.
"Debt" means all:
(1) indebtedness incurred or assumed by the City for borrowed money (including
indebtedness arising under Credit Agreements) and all other financing obligations of the
City that, in accordance with generally accepted accounting principles, are shown on the
liability side of a balance sheet;
(2) all other indebtedness (other than indebtedness otherwise treated as Debt
hereunder) for borrowed money or for the acquisition, construction, or improvement of
property or capitalized lease obligations that is guaranteed, directly or indirectly, in any
manner by the City, or that is in effect guaranteed, directly or indirectly, by the City
through an agreement, contingent or otherwise, to purchase any such indebtedness or to
advance or supply funds for the payment or purchase of any such indebtedness or to
purchase property or services primarily for the purpose of enabling the debtor or seller to
make payment of such indebtedness, or to assure the owner of the indebtedness against
loss, or to supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether or not such property is
delivered or such services are rendered), or otherwise; and
(3) all indebtedness secured by any mortgage, lien, charge, encumbrance, pledge
or other security interest upon property owned by the City whether or not the City has
assumed or become liable for the payment thereof.
For the purpose of determining the "Debt" of the City, there shall be excluded any particular
Debt if, upon or prior to the Maturity thereof, there shall have been deposited with the proper
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depository (a) in trust the necessary funds (or investments that will provide sufficient funds, if
permitted by the instrument creating such Debt) for the payment, redemption, or satisfaction of
such Debt or (b) evidence of such Debt deposited for cancellation; and thereafter it shall not be
considered Debt. No item shall be considered Debt unless such item constitutes indebtedness
under generally accepted accounting principles applied on a basis consistent with the financial
statements prepared by or for the benefit of the City in prior Fiscal Years.
"Defeasance Securities" means (i) direct, noncallable obligations of the United States of
America, including obligations that are unconditionally guaranteed by the United States of
America and (ii) noncallable obligations of an agency or instrumentality of the United States of
America, including obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date of the purchase thereof, are rated as to investment quality by
a nationally recognized investment rating firm not less than AAA or its equivalent.
"Designated Financial Officer" means the City Manager or the Chief Financial Officer of
the City.
"Designated Trust Office" shall have the same meaning as set forth in Section 5(a)
hereof.
"DTC" means The Depository Trust Company, New York, New York, or any successor
securities depository designated by the City in accordance with the provisions of Section 5(i)
hereof.
"Escrow Agent" means the financial institution acting as the depository of funds
designated in the Escrow Agreement.
"Escrow Agreement" means the escrow agreement between the City and the Escrow
Agent, in respect to the refunding of the Refunded Bonds.
"Fiscal Year" means the regular fiscal year used by the City in connection with the
operation of the System, which may be any twelve consecutive months period established by the
City.
"Funded Debt" means all Parity Bonds that mature by their terms (in the absence of the
exercise of any earlier right of demand), or are renewable at the option of the City to a date, more
than one year after the original creation, assumption, or guarantee of such Debt by the City.
"Gross Revenues of the City's Drainage Utility System" and "Gross Revenues" means all
revenues, income, and receipts of every nature derived or received by the City from the operation
and ownership of the System, including the interest income from the investment or deposit of
money in any Fund created by this Ordinance, or maintained by the City in connection with the
System.
"MAC" means the Municipal Advisory Council of Texas.
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"Maturity" when used with respect to any Debt means the date on which the principal of
such Debt or any installment thereof becomes due and payable as therein provided, whether at
the Stated Maturity thereof or by declaration of acceleration, call for redemption, or otherwise.
"MSRB" means the Municipal Securities Rulemaking Board.
"Non-Recourse Debt" means any Debt secured by a lien (other than a lien on Gross
Revenues), liability for which is effectively limited to the property subject to such lien with no
recourse, directly or indirectly, to any other property of the City attributable to the System;
provided, however, that such Debt is being incurred in connection with the acquisition of
property only, which property is not, at the time of such occurrence, owned by the City and being
used in the operations of the City.
"Officer's Certificate" means a certificate executed by a Designated Financial Officer.
"Official Bid Form" shall have the same meaning as set forth in Section 2(a) hereof.
"Official Statement" shall have the same meaning as set forth in Section 2(e) hereof.
"Outstanding Parity Bonds" shall have the same meaning as set forth in the preamble to
this Ordinance.
"Parity Bonds" means the Outstanding Parity Bonds, the Bonds and all bonds and
obligations issued or incurred by the City that are determined and declared by the City Council
of the City to be on a parity with the Bonds, including Additional Bonds and obligations of the
City issued or incurred under the terms of a Credit Agreement.
"Paying Agent/Registrar" shall have the meaning as set forth in Section 5(a)hereof.
"Purchaser" means the entity or entities listed in the Official Bid Form accepted by the
City as the best bid for the Bonds.
"Refunded Bonds" shall have the same meaning as set forth in the preamble to this
Ordinance.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"Series 2007 Bonds", "Series 2009 Bonds" and "Series 2011 Bonds" each shall have the
meaning as set forth in the preamble to this Ordinance.
"Stated Maturity" when used with respect to any Debt or any installment of interest
thereon means any date specified in the instrument evidencing or authorizing such Debt or such
installment of interest as a fixed date on which the principal of such Debt or any installment
thereof or the fixed date on which such installment of interest is due and payable.
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"Subordinated Debt" or "Subordinate Obligations" means any Debt which expressly
provides that all payments thereon shall be subordinated to the timely payment of all Parity
Bonds then outstanding or subsequently issued.
"System" means and includes the City's drainage utility system, together with all future
extensions, improvements, enlargements, and additions thereto, and all replacements thereof,
provided that, notwithstanding the foregoing, and to the extent now or hereafter authorized or
permitted by law, the term System shall not include any facilities which are declared not to be a
part of the System and which are acquired or constructed by 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 secured by or payable from the Gross Revenues as defined
herein, but which are secured by and payable solely from special contract revenues or payments
received from any other legal entity in connection with such facilities, and thus constitute Non-
Recourse Debt; and such revenues or payments shall not be considered as or constitute Gross
Revenues of the System, unless and to the extent otherwise provided in the ordinance or
ordinances authorizing the issuance of such "Special Facilities Bonds".
"Term Bonds" means those Parity Bonds so designated in the ordinances authorizing such
bonds (including, with respect to any Bonds so designated as term bonds in the Official Bid
Form accepted as the best bid for the Bonds), which shall be subject to retirement by operation of
the Mandatory Redemption Account referred to in Section 10 hereof.
"Term of Issue" means with respect to any Balloon Debt, a period of time equal to the
greater of(i) the period of time commencing on the date of issuance of such Balloon Debt and
ending on the final maturity date of such Balloon Debt or (ii) twenty-five years.
"Treasury Regulations" means all applicable temporary, proposed and final regulations
and procedures promulgated under the Code or promulgated under the Internal Revenue Code of
1954, to the extent applicable to the Code.
"Value of Investment Securities" and words of like import means valuation at their market
value, excluding accrued interest, in accordance with the City's official investment policy
approved from time to time by the City Council.
Section 8. PLEDGE. That the Parity Bonds, and any interest payable thereon, are and
shall be secured by and payable from a first lien on and pledge of the Gross Revenues; and the
Gross Revenues are further pledged to the establishment and maintenance of the Debt Service
Fund as hereinafter provided. The Parity Bonds are and will be secured by and payable only
from the Gross Revenues, and are not secured by or payable from a mortgage or deed of trust on
any real,personal or mixed properties constituting the System.
Section 9. REVENUE FUND. That there has been created and established on the books
of the City, and accounted for separate and apart from all other funds of the City, a special
drainage utility fund entitled the "City of Fort Worth, Texas, Drainage Utility System Revenue
Fund" (hereinafter called the "Revenue Fund"). All Gross Revenues are and shall be credited to
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the Revenue Fund immediately upon receipt. Monies in the Revenue Fund shall be maintained
at an official depository bank of the City.
Section 10. DEBT SERVICE FUND. (a) That for the sole purpose of paying the
principal of and interest on the Parity Bonds, as the same come due, there has been created and
established on the books of the City a separate fund entitled the "City of Fort Worth, Texas,
Drainage Utility System Revenue Bonds Debt Service Fund" (hereinafter called the "Debt
Service Fund"). Monies in the Debt Service Fund shall be maintained at an official depository
bank of the City.
(b) That within the Debt Service Fund there is hereby established an account entitled
the "City of Fort Worth, Texas Drainage Utility System Revenue Bonds Mandatory Redemption
Account" (the "Mandatory Redemption Account"), into which shall be credited the Amortization
Installments which shall be used for the payment of the principal of Term Bonds as the same
shall come due, whether by maturity thereof or by redemption, through the operation of the
Mandatory Redemption Account.
Section 11. RESERVE FUND. That the City reserves the right to establish and fund a
reserve fund for the benefit of the owners and holders of the Parity Bonds. Any such reserve
fund so established shall be maintained in such amount as shall be determined by the City
Council, subject to the provisions of Section 24 of this Ordinance. With respect to the Bonds, no
reserve fund shall be required to be established at the time of the delivery of the Bonds.
Section 12. DEPOSITS OF GROSS REVENUES; INVESTMENTS. (a) That the
Gross Revenues shall be transferred from the Revenue Fund and deposited to the credit of the
Debt Service Fund when and as required by this Ordinance and by ordinances hereafter adopted
by the City Council of the City authorizing Parity Bonds.
(b) Moneys in any Fund or Account established pursuant to this Ordinance may, at the
option of the City, be placed or invested in Authorized Investments. The value of any such Fund
or Account shall be established by adding any money therein to the Value of Investment
Securities. The value of each such Fund or Account shall be established no less frequently than
annually as of the last Business Day of each Fiscal Year, and in any event the value of each such
Fund and Account shall be established as of the last Business Day of the month preceding the
date the City Council adopts an ordinance authorizing the issuance and delivery of Parity Bonds.
Earnings derived from the investment of moneys on deposit in the various Funds and Accounts
shall be credited to the Revenue Fund.
Section 13. FUNDS SECURED. That money in all Funds created by this Ordinance, to
the extent not invested, shall be secured in the manner prescribed by law for securing funds of
the City.
Section 14. DEBT SERVICE REQUIREMENTS. (a) That promptly after the
delivery of the Bonds the City shall cause to be deposited to the credit of the Debt Service Fund
any accrued interest received from the sale and delivery of the Bonds, and any such deposit shall
be used to pay part of the interest next coming due on the Bonds.
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(b) That the City shall transfer Gross Revenues from the Revenue Fund and deposit
to the credit of the Debt Service Fund the amounts, at the times, as follows:
(1) such amounts, deposited in approximately equal monthly installments on
or before the last Business Day of each month hereafter, commencing with the month
during which the Bonds are delivered, as will be sufficient, together with other amounts,
if any, then on hand in the Debt Service Fund and available for such purpose, to pay the
interest scheduled to accrue and come due on the Bonds on the next succeeding interest
payment date;
(2) such amounts, deposited in approximately equal monthly installments on
or before the last Business Day of each month hereafter, commencing with the month
during which the Bonds are delivered, as will be sufficient, together with other amounts,
if any, then on hand in the Debt Service Fund and available for such purpose, to pay the
principal scheduled to mature and come due on the Bonds on the next succeeding
principal payment date; and
(3) such amounts, deposited in approximately equal monthly installments on
or before the last Business Day of each month hereafter, commencing with the month
during which the Bonds are delivered, as will be sufficient, together with other amounts,
if any, then on hand in the Debt Service Fund and available for such purpose, to pay the
Amortization Installments scheduled to come due on the Bonds on the next succeeding
mandatory sinking fund redemption payment date.
Section 15. DEFICIENCIES; ADDITIONAL USES FOR GROSS REVENUES. (a)
That if on any occasion there shall not be sufficient Gross Revenues to make the required
deposits into the Debt Service Fund, then such deficiency shall be made up as soon as possible
from the next available Gross Revenues, or from any other sources available for such purpose.
(b) That, subject to making the required deposits to the credit of the Debt Service
Fund when and as required by this Ordinance, or any ordinance authorizing the issuance of
Parity Bonds, Gross Revenues may be used by the City for any lawful purpose not inconsistent
with the Act including, without limitation, paying the costs of operating and maintaining the
System.
Section 16. PAYMENT OF THE PARITY BONDS. That on or before each date upon
which principal of or interest on any Parity Bonds are scheduled to be due and payable, while
any of the Parity Bonds are outstanding and unpaid, the City shall make available to the paying
agents therefor (including the Paying Agent/Registrar), out of the Debt Service Fund (if
necessary), money sufficient to pay such interest on and such principal of the Parity Bonds as
shall become due on such dates, respectively, at maturity or by redemption prior to maturity.
The aforesaid paying agents (including the Paying Agent/Registrar) shall furnish the City with an
appropriate certificate that such payments to the holder or owner thereof have been made when
due.
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Section 17. DEFAULT AND REMEDIES. (a) Events of Default. That each of the
following occurrences or events for the purpose of this Ordinance is hereby declared to be an
Event of Default:
(i) the failure to make payment of the principal of or interest on any of the Bonds
when the same becomes due and payable; or
(ii) except as provided in Section 26(c)(iv) of this Ordinance, default in the
performance or observance of any other covenant, agreement or obligation of the City,
the failure to perform which materially, adversely affects the rights of the registered
owners of the Bonds, including, but not limited to, their prospect or ability to be repaid in
accordance with this Ordinance, and the continuation thereof for a period of sixty (60)
days after notice of such default is given by any registered owner to the City.
(b) Remedies for Default.
(i) Upon the happening of any Event of Default, then and in every case, any
registered owner or an authorized representative thereof, including, but not limited to, a
trustee or trustees therefor, may proceed against the City, or any official, officer or
employee of the City in their official capacity, for the purpose of protecting and enforcing
the rights of the registered owners under this Ordinance, by mandamus or other suit,
action or special proceeding in equity or at law, in any court of competent jurisdiction,
for any relief permitted by law, including the specific performance of any covenant or
agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or
in violation of any right of the registered owners hereunder or any combination of such
remedies.
(ii) It is provided that all such proceedings shall be instituted and maintained for
the equal benefit of all registered owners of Bonds then outstanding.
(c) Remedies Not Exclusive.
(i) No remedy herein conferred or reserved is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or under the Bonds or
now or hereafter existing at law or in equity; provided, however, that notwithstanding any
other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds
shall not be available as a remedy under this Ordinance.
(ii) The exercise of any remedy herein conferred or reserved shall not be deemed
a waiver of any other available remedy.
(iii) By accepting the delivery of a Bond authorized under this Ordinance, such
registered owner agrees that the certifications required to effectuate any covenants or
representations contained in this Ordinance do not and shall never constitute or give rise
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to a personal or pecuniary liability or charge against the officers, employees or members
of the City or the City Council.
(iv) None of the members of the City Council, nor any other official or officer,
agent, or employee of the City, shall be charged personally by the registered owners with
any liability, or be held personally liable to the registered owners under any term or
provision of this Ordinance, or because of any Event of Default or alleged Event of
Default under this Ordinance.
Section 18, FINAL DEPOSITS; GOVERNMENTAL OBLIGATIONS. (a) Defeased
Bonds. That any Bond and the interest thereon shall be deemed to be paid, retired and no longer
outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent
provided in subsection (d) of this Section, when payment of the principal of such Bond, plus
interest thereon to the due date (whether such due date be by reason of maturity or otherwise)
either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii)
shall have been provided for on or before such due date by irrevocably depositing with or
making available to the Paying Agent/Registrar in accordance with an escrow agreement or other
instrument (the "Future Escrow Agreement") for such payment (1) lawful money of the United
States of America sufficient to make such payment or (2) Defeasance Securities that mature as to
principal and interest in such amounts and at such times as will insure the availability, without
reinvestment, of sufficient money to provide for such payment, and when proper arrangements
have been made by the City with the Paying Agent/Registrar for the payment of its services until
all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed
to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no
longer be secured by, payable from, or entitled to the benefits of, the pledge of Gross Revenues
as provided in this Ordinance, and such principal and interest shall be payable solely from such
money or Defeasance Securities. Notwithstanding any other provision of this Ordinance to the
contrary, it is hereby provided that any determination not to redeem Defeased Bonds that is made
in conjunction with the payment arrangements specified in subsection 18(a)(i) or (ii) shall not be
irrevocable, provided that the City: (1) in the proceedings providing for such payment
arrangements, expressly reserves the right to call the Defeased Bonds for redemption; (2) gives
notice of the reservation of that right to the owners of the Defeased Bonds immediately
following the making of the payment arrangements; (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 for the redemption of the Bonds as provided in the FORM OF BOND set
forth in Exhibit A to this Ordinance as though they were being defeased at the time of the
exercise of the option to redeem the Bonds, after taking the redemption into account in
determining the sufficiency of the provisions made for the payment of the Bonds.
(b) Investment in Defeasance Securities. Any moneys so deposited with the Paying
Agent/Registrar may at the written direction of the City be invested in Defeasance Securities,
maturing in the amounts and times as hereinbefore set forth, and all income from such
Defeasance Securities received by the Paying Agent/Registrar that is not required for the
payment of the Bonds and interest thereon, with respect to which such money has been so
deposited, shall be turned over to the City, or deposited as directed in writing by the City. Any
Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held
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for the payment of Defeased Bonds may contain provisions permitting the investment or
reinvestment of such moneys in Defeasance Securities or the substitution of other Defeasance
Securities upon the satisfaction of the requirements specified in subsection 18(a)(i) or (ii). All
income from such Defeasance Securities received by the Paying Agent/Registrar which is not
required for the payment of the Defeased Bonds, with respect to which such money has been so
deposited, shall be remitted to the City or deposited as directed in writing by the City.
(c) Paying_AA Agent/Registrar t/Registrar Services. Until all Defeased Bonds shall have become
due and payable, the Paying Agent/Registrar shall perform the services of Paying
Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the City
shall make proper arrangements to provide and pay for such services as required by this
Ordinance.
(d) Selection of Bonds for Defeasance. In the event that the City elects to defease
less than all of the principal amount of Bonds of a maturity, the Paying Agent/Registrar shall
select, or cause to be selected, such amount of Bonds by such random method as it deems fair
and appropriate.
Section 19. ADDITIONAL BONDS. (a) Parity Bonds. That the City reserves and shall
have the right and power to issue or incur Parity Bonds for any purpose authorized by law
pursuant to the provisions of this Ordinance and any ordinance hereafter adopted authorizing the
issuance or incurrence of Parity Bonds. The City may issue, incur, or otherwise become liable in
respect of any Parity Bonds if a Designated Financial Officer shall deliver to the City a
certificate stating that, to the best knowledge thereof, (i) the City is in compliance with all
covenants contained in this Ordinance and any ordinance hereafter adopted authorizing the
issuance or incurrence of Parity Bonds, is not in default in the performance and observance of
any of the terms, provisions and conditions hereof and thereof, and the Funds and Accounts
securing the Parity Bonds then outstanding contain the amount then required to be therein, and
(ii) the Gross Revenues for the preceding Fiscal Year, or for twelve consecutive months out of
the fifteen months immediately preceding, the dated date of such proposed Parity Bonds, are at
least equal to 1.50 times the Annual Debt Service Requirements of the Parity Bonds to be
outstanding after the issuance of the then proposed Parity Bonds for the Fiscal Year during
which such Annual Debt Service Requirements are scheduled to be the greatest. For purposes of
this subsection (a), if Parity Bonds are issued to refund less than all of the Parity Bonds then
outstanding, the certification required by clause (ii) above shall give effect to the issuance of the
proposed refunding Parity Bonds (and shall not give effect to the Parity Bonds being refunded
following their cancellation or provision being made for their payment).
(b) Reserve Fund. Should a reserve fund be hereafter established in connection with the
issuance of Parity Bonds, the City shall deposit to the credit of such reserve fund such amounts,
at such times, and in such manner, as shall be provided by ordinance adopted by the City Council
establishing such reserve fund.
(c) Non-Recourse Debt and Subordinate Obligations. Non-Recourse Debt and
Subordinate Obligations may be incurred without limitation by the City, upon passage of an
ordinance by the City Council of the City for the purpose of approving the issuance of Non-
20
Recourse Debt or Subordinate Obligations, as the case may be, and approval of such Non-
Recourse Debt or Subordinate Obligations by the Attorney General of Texas, to the extent
required by law.
(d) Credit Agreements. Payments to be made under a Credit Agreement may be treated
as a payment in respect of a Parity Bond and secured by Gross Revenues if the governing body
of the City makes a finding in the ordinance authorizing the execution and delivery of a Credit
Agreement as a Parity Bond that, based upon the findings contained in a certificate executed and
delivered by a Designated Financial Officer, the City will have sufficient funds to meet the
financial obligations of the System, including sufficient Gross Revenues to satisfy the Annual
Debt Service Requirements of the System and the financial obligations of the City relating to the
System after giving effect to the treatment of the Credit Agreement as a Parity Bond. The
payment obligations incurred by the City under a Credit Agreement shall not be treated as a
Parity Bond unless the form of such Credit Agreement is approved by ordinance adopted by the
City Council.
(e) Determination of Gross Revenues. In making a determination of Gross Revenues for
any of the purposes described in this Section, including, without limitation, subsection (a) of this
Section, the Designated Financial Officer may take into consideration a change in the rates and
charges for services and facilities afforded by the System that became effective at least thirty
(30) days prior to the last day of the period for which Gross Revenues are determined and, for
purposes of satisfying the Gross Revenues test described in subsection (a) above, make a pro
forma determination of the Gross Revenues of the System for the period of time covered by the
Designated Financial Officer's certification based on such change in rates and charges being in
effect for the entire period covered by the Designated Financial Officer's certificate.
Section 20. APPROVAL BY ATTORNEY GENERAL. That to the extent required by
the laws of the State of Texas, no Parity Bonds shall be delivered by the City until the approval
of the Attorney General of Texas has been obtained.
Section 21. GENERAL COVENANTS. That the City further covenants and agrees that
in accordance with and to the extent required or permitted by law:
(a) Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Ordinance, and each ordinance
authorizing the issuance of Parity Bonds, and in each and every Parity Bond; it will promptly pay
or cause to be paid the principal of and interest on every Parity Bond, on the dates and in the
places and manner prescribed in such ordinances and Parity Bonds; and it will, at the times and
in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited
into the Debt Service Fund; and any holder of the Parity Bonds may require the City, its officials
and employees to carry out, respect or enforce the covenants and obligations of this Ordinance,
or any ordinance authorizing the issuance of Additional Bonds, by all legal and equitable means,
including specifically, but without limitation, the use and filing of mandamus proceedings, in any
court of competent jurisdiction, against the City, its officials and employees.
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(b) City's Legal Authority. It is a duly created and existing home rule city of the
State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the
Bonds; that all action on its part for the creation and issuance of the Bonds has been duly and
effectively taken; and that the Bonds in the hands of the holders and owners thereof are and will
be valid and enforceable special obligations of the City in accordance with their terms.
(c) Title. It has or will obtain lawful title to the lands, buildings, structures and
facilities constituting the System, that it warrants that it will defend the title to all the aforesaid
lands, buildings, structures and facilities, and every part thereof, for the benefit of the holders
and owners of the Parity Bonds, against the claims and demands of all persons whomsoever, that
it is lawfully qualified to pledge the Gross Revenues to the payment of the Parity Bonds in the
manner prescribed herein, and has lawfully exercised such rights.
(d) Liens. It will from time to time and before the same become delinquent pay and
discharge all taxes, assessments and governmental charges, if any, which shall be lawfully
imposed upon it, or the System; it will pay all lawful claims for rents, royalties, labor, materials,
and supplies which if unpaid might by law become a lien or charge thereon, the lien of which
would be prior to or interfere with the liens hereof, so that the priority of the liens granted
hereunder shall be fully preserved in the manner provided herein; and it will not create or suffer
to be created any mechanic's, laborer's, materialman's or other lien or charge which might or
could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof
might or could be impaired; provided, however, that no such tax, assessment or charge, and that
no such claims which might be used as the basis of a mechanic's, laborer's, materialman's or
other lien or charge, shall be required to be paid so long as the validity of the same shall be
contested in good faith by the City.
(e) Operation of System; No Free Service. It will, while the Parity Bonds are
outstanding and unpaid, continuously and efficiently operate the System, and shall maintain the
System in good condition, repair and working order, all at reasonable cost. No free service 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 the reasonable value shall be made by the
City out of funds from sources other than the revenues of the System, unless made from Gross
Revenues as permitted in Section 16(b) hereof.
(f) Further Encumbrance. It, while any Parity Bonds are outstanding and unpaid,
will not additionally encumber the Gross Revenues in any manner, except as permitted in this
Ordinance in connection with Parity Bonds, unless said encumbrance is made junior and
subordinate in all respects to the liens, pledges, covenants and agreements of this Ordinance; but
the right of the City to issue revenue bonds payable from a subordinate lien on the Gross
Revenues is specifically recognized and retained.
(g) Sale or Disposal of Property. It, while the Parity Bonds are outstanding and
unpaid, will not sell, convey, mortgage, encumber, lease or in any manner transfer title to, or
otherwise dispose of the System, or any significant or substantial part thereof; provided, that
whenever the City deems it necessary to dispose of any other property, machinery, fixtures or
equipment, it may sell or otherwise dispose of such property, machinery, fixtures or equipment
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when it has made arrangements to replace the same or provide substitutes therefor, unless it is
determined that no such replacement or substitute is necessary. Proceeds from any sale
hereunder not used to replace or provide for substitution of such property sold, shall be used for
improvements to the System or to purchase or redeem Parity Bonds.
(h) Insurance. (1) Except as otherwise permitted in clause (2) below, the City shall
insure such parts of the System as would usually be insured by corporations operating like
properties, with responsible insurance companies, against loss to the extent insurance is usually
carried by corporations operating like properties. To the extent reasonably obtainable, it shall
include insurance against the perils of fire, extended coverage and flood. At any time while any
contractor engaged in construction work shall be fully responsible therefor, the City shall not be
required to carry insurance on the work being constructed if the contractor is required to carry
appropriate insurance. All such policies shall be open to the inspection of the bondholders and
their representatives at all reasonable times.
(2) In lieu of obtaining policies for insurance as provided above, the City may self-insure
against risks, accidents, claims or casualties of the nature described in clause (1) above.
(3) The annual audit hereinafter required shall contain a section commenting on whether
the City has complied with the requirements of this subsection, and listing the areas of insurance
for which the City is insuring, all policies carried, and whether all insurance premiums upon the
insurance policies to which reference is hereinbefore made have been paid.
(i) Rate Covenant, The City Council of the City will fix, establish, maintain and
collect such rates, charges and fees for the use and availability of the System at all times as are
necessary to produce Gross Revenues sufficient for each Fiscal Year (1) at least equal to 1.25
times the Annual Debt Service Requirements of all then outstanding Parity Bonds for the Fiscal
Year during which such Annual Debt Service Requirements are scheduled to be the greatest, (2)
to pay all current operation and maintenance expenses of the System, and (3) to pay all other
obligations of the System reasonably anticipated to be paid from Gross Revenues during the
current Fiscal Year.
0) Records. It will keep proper books of record and account in which full, true and
correct entries will be made of all dealings, activities and transactions relating to the System, the
Gross Revenues and the Funds and Accounts created pursuant to this Ordinance, and all books,
documents and vouchers relating thereto shall at all reasonable times be made available for
inspection upon request of any bondholders.
(k) Audits. After the close of each Fiscal Year while any Parity Bonds are
outstanding, an audit will be made by an Accountant of the books and accounts relating to the
System and the Gross Revenues. As soon as practicable after the close of each such Fiscal Year,
and when said audit has been completed and made available to the City, a copy of such audit for
the preceding Fiscal Year shall be mailed to the MAC and to any holder of 5% or more in
aggregate principal amount of then outstanding Parity Bonds who shall so request in writing.
Such annual audit reports shall be open to the inspection of the bondholders and their agents and
representatives at all reasonable times.
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(1) Governmental Agencies. It will comply with all of the terms and conditions of
any and all franchises, permits and authorizations applicable to or necessary with respect to the
System, and which have been obtained from any governmental agency; and the City has or will
obtain and keep in full force and effect all franchises, permits, authorization and other
requirements applicable to or necessary with respect to the acquisition, construction, equipment,
operation and maintenance of the System.
(m) No Competition. It will not grant any franchise or permit for the acquisition,
construction or operation of any competing facilities which might be used as a substitute for the
System's facilities, and, to the extent that it legally may, the City will prohibit any such
competing facilities.
Section 22. AMENDMENT OF ORDINANCE. (a) That the holders of the Parity
Bonds aggregating in principal amount a majority of the aggregate principal amount of then
outstanding Parity Bonds shall have the right from time to time to approve any amendment to
this Ordinance which may be deemed necessary or desirable by the City; provided, however, that
without the consent of the holders of all of the Parity Bonds at the time outstanding, nothing
herein contained shall permit or be construed to permit the amendment of the terms and
conditions in this Ordinance or in the Parity Bonds so as to:
(1) Make any change in the maturity of the outstanding Parity Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Parity Bonds;
(3) Reduce the amount of the principal payable on the outstanding Parity Bonds;
(4) Modify the terms of payment of principal of or interest on the outstanding Parity
Bonds or impose any conditions with respect to such payment;
(5) Affect the rights of the holders of less than all of the Parity Bonds then
outstanding; or
(6) Change the minimum percentage of the principal amount of Parity Bonds
necessary for consent to such amendment.
(b) That if at any time the City shall desire to amend the Ordinance under this
Section, the City shall cause notice of the proposed amendment to be published in a financial
newspaper or journal published in The City of New York, New York, once during each calendar
week for at least two (2) successive calendar weeks; provided, however, that the publication of
such notice shall not constitute a condition precedent to the adoption of such amendatory
ordinance and the failure to publish such notice shall not adversely affect the implementation of
such amendment as adopted pursuant to such amendatory ordinance. Such notice shall briefly
set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the
principal office of the Paying Agent/Registrar for inspection by all holders of Parity Bonds.
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Such publication is not required, however, if notice in writing is given to each holder of Parity
Bonds.
(c) That whenever at any time not less than thirty (30) days, and within one (1) year,
from the date of the first publication of said notice or other service of written notice the City
shall receive an instrument or instruments executed by the holders of at least a majority in
aggregate principal amount of all Parity Bonds then outstanding, which instrument or
instruments shall refer to the proposed amendment described in said notice and which
specifically consent to and approve such amendment in substantially the form of the copy thereof
on file with the Paying Agent/Registrar, the City Council may pass the amendatory ordinance in
substantially the same form.
(d) That upon the passage of any amendatory ordinance pursuant to the provisions of
this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory
ordinance, and the respective rights, duties and obligations under this Ordinance of the City and
all the holders of then outstanding Parity Bonds shall thereafter be determined, exercised and
enforced hereunder, subject in all respects to such amendments.
(e) That any consent given by the holder of a Parity Bond pursuant to the provisions
of this Section shall be irrevocable for a period of six (6) months from the date of the first
publication of the notice provided for in this Section, and shall be conclusive and binding upon
all future holders of the same Parity Bond during such period. Such consent may be revoked at
any time after six (6) months from the date of the first publication of such notice by the holder
who gave such consent, or by a successor in title, by filing notice thereof with the Paying
Agent/Registrar therefor and the City, but such revocation shall not be effective if the holders of
a majority in aggregate principal amount of the then outstanding Parity Bonds as in this Section
defined have, prior to the attempted revocation, consented to and approve the amendment.
(f) For the purposes of this Section, the ownership and other matters relating to all
Parity Bonds registered as to ownership shall be determined from the registration books kept by
the Paying Agent/Registrar therefor. The Paying Agent/Registrar may conclusively assume that
such ownership continues until written notice to the contrary is served upon the Paying
Agent/Registrar. For purposes of this Section, the notional amount attributable to a Credit
Agreement that is treated as a Parity Bond shall be deemed to be the principal amount of such
Parity Bond.
(g) The foregoing provisions of this Section notwithstanding, the City by action of
the City Council may amend this Ordinance for any one or more of the following purposes:
(1) To add to the covenants and agreements of the City in this Ordinance
contained, other covenants and agreements thereafter to be observed, grant additional
rights or remedies to bondholders or to surrender, restrict or limit any right or power
herein reserved to or conferred upon the City;
(2) To make such provisions for the purpose of curing any ambiguity, or
curing, correcting or supplementing any defective provision contained in this Ordinance,
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or in regard to clarifying matters or questions arising under this Ordinance, including,
without limitation, those matters described in Section 26(c)(v) hereof, as are necessary or
desirable and not contrary to or inconsistent with this Ordinance and which shall not
adversely affect the interests of the holders of the Parity Bonds; or
(3) To modify any of the provisions of this Ordinance in any other respect
whatsoever, provided that (i) such modification shall be, and be expressed to be, effective
only after all previously issued Parity Bonds outstanding at the date of the adoption of
such modification shall cease to be outstanding, and (ii) such modification shall be
specifically referred to in the text of all Additional Bonds issued after the date of the
adoption of such modification.
Section 23. DAMAGED, MUTILATED, LOST, STOLEN OR DESTROYED
BONDS. (a) That in the event any outstanding Bond is damaged, mutilated, lost, stolen, or
destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new
bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost,
stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided.
(b) Application for replacement of damaged, mutilated, lost, stolen, or destroyed
Bonds shall be made to the Paying Agent/Registrar. In every case of loss, theft, or destruction of
a Bond, the applicant for a replacement bond shall furnish to the City and to the Paying
Agent/Registrar such security or indemnity as may be required by them to save each of them
harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or
destruction of a Bond, the applicant shall furnish to the City and to the Paying Agent/Registrar
evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be.
In every case of damage or mutilation of a Bond, the applicant shall surrender to the Paying
Agent/Registrar for cancellation the Bond so damaged or mutilated.
(c) Notwithstanding the foregoing provisions of this Section, in the event any such
Bond shall have matured, and no default has occurred which is then continuing in the payment of
the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the
payment of the same (without surrender thereof except in the case of a damaged or mutilated
Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as
above provided in this Section.
(d) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall
charge the owner of such Bond with all legal, printing, and other expenses in connection
therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of
the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the
City whether or not the lost, stolen or destroyed Bond shall be found at any time, or be
enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and
proportionately with any and all other Bonds duly issued under this Ordinance.
(e) In accordance with Chapter 1206, Texas Government Code, this Section of this
Ordinance shall constitute authority for the issuance of any such replacement bond without
necessity of further action by the governing body of the City or any other body or person, and the
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duty of the replacement of such bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such bonds in the
form and manner and with the effect, as provided in Section 5(d) of this Ordinance for Bonds
issued in exchange for other Bonds.
Section 24. TAX COVENANTS. That the City covenants to refrain from any action
which would adversely affect, or to take any action to assure, the treatment of the Bonds as
obligations described in section 103 of the Code, the interest on which is not includable in the
"gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the
City covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds
of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund,
if any) are used for any "private business use", as defined in section 141(b)(6) of the
Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or
not received by the City, with respect to such private business use, do not, under the
terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or
provide for the payment of more than 10 percent of the debt service on the Bonds, in
contravention of section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and
not "disproportionate", within the meaning of section 141(b)(3) of the Code, to the
governmental use;
(c) to take any action to assure that no amount which is greater than the lesser
of$5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a
reserve fund, if any), is directly or indirectly used to finance loans to persons, other than
state or local governmental units, in contravention of section 141(c) of the Code;
(d) to refrain from taking any action which would otherwise result in the
Bonds being treated as "private activity bonds" within the meaning of section 141(a) of
the Code;
(e) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to
acquire investment property (as defined in section 148(b)(2) of the Code) which produces
a materially higher yield over the term of the Bonds, other than investment property
acquired with --
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(1) proceeds of the Bonds invested for a reasonable temporary period
until such proceeds are needed for the purpose for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the
meaning of section 1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed 10 percent of the
proceeds of the Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts
treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to
90 percent of the "Excess Earnings", within the meaning of section 148(f) of the Code
and to pay to the United States of America, not later than 60 days after the Bonds have
been paid in full, 100 percent of the amount then required to be paid as a result of Excess
Earnings under section 148(f) of the Code.
The City understands that the term "proceeds" includes "disposition proceeds" as defined in the
Treasury Regulations and, in the case of a refunding bond, transferred proceeds (if any) and
proceeds of the refunded bonds expended prior to the date of the issuance of the Bonds. It is the
understanding of the City that the covenants contained herein are intended to assure compliance
with the Code and any regulations or rulings promulgated by the U.S. Department of the
Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated
which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be
required to comply with any covenant contained herein to the extent that such failure to comply,
in the opinion of nationally-recognized bond counsel, will not adversely affect the exemption
from federal income taxation of interest on the Bonds under section 103 of the Code. In the
event that regulations or rulings are hereafter promulgated which impose additional requirements
which are applicable to the Bonds, the City agrees to comply with the additional requirements to
the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the
exemption from federal income taxation of interest on the Bonds under section 103 of the Code.
In furtherance of the foregoing, any of the Mayor, the City Manager, the Chief Financial Officer
of the City, and any Assistant City Manager may execute any certificates or other reports
required by the Code and to make such elections, on behalf of the City, which may be permitted
by the Code as are consistent with the purpose for the issuance of the Bonds. In order to
facilitate compliance with the above clause (h), a "Rebate Fund" is hereby established by the
City for the sole benefit of the United States of America, and such Rebate Fund shall not be
subject to the claim of any other person, including without limitation the registered owners of the
Bonds. The Rebate Fund is established for the additional purpose of compliance with section
148 of the Code.
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Section 25. DISPOSITION OF PROJECT; WRITTEN PROCEDURES. (a) That
the City covenants that the property financed or refinanced with the proceeds of the Bonds will
not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or
other compensation, unless the City obtains an opinion of a nationally-recognized bond counsel
substantially to the effect that such sale or other disposition will not adversely affect the tax-
exempt status of the Bonds. For purposes of this Section, the portion of the property comprising
personal property and disposed of in the ordinary course of business shall not be treated as a
transaction resulting in the receipt of cash or other compensation. For purposes of this Section,
the City shall not be obligated to comply with this covenant if it obtains an opinion of a
nationally-recognized bond counsel to the effect that such failure to comply will not adversely
affect the excludability for federal income tax purposes from gross income of the interest.
(b) Until superseded by another action of the City, the written procedures to ensure
compliance with the covenants contained herein regarding private business use, remedial actions,
arbitrage and rebate approved by the City in the ordinance authorizing the issuance of City of
Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2012, apply to
the issuance of the Bonds. A copy of the approved written procedures is attached to this
Ordinance as Exhibit C.
Section 26. CONTINUING DISCLOSURE UNDERTAKING. (a) Annual Reports.
(i) That the City shall provide annually to the MSRB within six months after the end of each
fiscal year ending in or after 2016, financial information and operating data with respect to the
City of the general type described in Exhibit B hereto. The City will additionally provide
audited annual financial statements of the City, when and if available, and in any event, within
twelve (12) months after the end of each fiscal year ending in or after 2016. If audited financial
statements are not available by the end of the twelve (12) month period, then the City shall
provide notice that the audited financial statements are not available, shall provide unaudited
financial information containing the information described in the tables referenced in Exhibit B
hereto under the heading "Annual Financial Statements and Operating Data' by the required
time, and shall provide audited financial statements for the applicable fiscal year to the MSRB,
when and if the audited financial statements become available. Any financial statements so to be
provided shall be prepared in accordance with the accounting principles described in Exhibit B
hereto, or such other accounting principles as the City may be required to employ from time to
time pursuant to state law or regulation
(ii) If the City changes its Fiscal Year, it will notify the MSRB of the change (and of the
date of the new Fiscal Year end) prior to the next date by which the City otherwise would be
required to provide financial information and operating data pursuant to this Section. The
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, if it is available from the MSRB)
that theretofore has been provided to the MSRB or filed with the SEC.
(b) Disclosure Event Notices. The City shall notify the MSRB, in a timely manner not in
excess of ten Business Days after the occurrence of the event, of any of the following events with
respect to the Bonds:
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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 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 other similar event of the City;
13. The consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of the assets of the City, other
than in the ordinary course of business, the entry into 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 Paying Agent/Registrar or change in the name
of the Paying Agent/Registrar, if material.
As used in clause 12 above, the phrase "bankruptcy, insolvency, receivership or similar event"
means the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding
under the U.S. 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 of
the City, or if jurisdiction has been assumed by leaving the City Council and officials and
officers of the City 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 notify the
MSRB, in a timely manner, of any failure by the City to provide financial information or
operating data in accordance with subsection (a) of this Section by the time required by such
subsection.
(c) Limitations Disclaimers and Amendments. (i) 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
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Rule, except that the City in any event will give notice of any deposit made in accordance with
this Ordinance or applicable law that causes Bonds no longer to be outstanding.
(ii) 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.
(iii) 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 THE CITY, WHETHER NEGLIGENT 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.
(iv) No default by the City in observing or performing its obligations under this Section
shall comprise 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.
(v) Should the Rule be amended to obligate the City to make filings with or provide
notices to entities other than the MSRB, the City agrees to undertake such obligation in
accordance with the Rule as amended.
(vi) 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 since such offering 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 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 interest of the holders and beneficial owners of the
Bonds. If the City so amends the provisions of this Section, it shall include with any amended
financial information or operating data next provided in accordance with subsection (a) of this
Section an explanation, in narrative form, of the reason for the amendment and of the impact of
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any change in the type of financial information or operating data so provided. The City may also
amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or
repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that
such provisions of the Rule are invalid, but only if and to the extent that the provisions of this
sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the
primary offering of the Bonds.
Section 27. ESCROW AGREEMENT; REDEMPTION OF REFUNDED BONDS.
(a) That concurrently with the delivery of the Bonds, the City shall cause to be deposited with
the Escrow Agent, from the proceeds from the sale of the Bonds and other available moneys of
the City, all as described in the letter of instructions referred to in Section 30 of this Ordinance,
an amount sufficient, together with investment earnings on securities held by the Escrow Agent
pursuant to the Escrow Agreement, to provide for the refunding of the Refunded Bonds in
accordance with Chapter 1207. For this purpose, the City Council authorizes the City Manager
or any Assistant City Manager and the City Secretary to execute the Escrow Agreement, in
substantially the form and substance attached to this Ordinance. If required by law, the City shall
not execute the Escrow Agreement unless the Escrow Agent has confirmed to the Chief
Financial Officer of the City that it has made disclosure filings to the Texas Ethics Commission
in accordance with Section 2252.908, Texas Government Code. Within thirty (30) days of
receipt of the disclosure filings from the Escrow Agent, the City will submit a copy of the
disclosure filings to the Texas Ethics Commission.
(b) The City Council determines that, subject to the delivery of Bonds for the purpose of
refunding Refunded Bonds, the Refunded Bonds to be refunded shall be called for redemption at
the redemption price of par plus accrued interest to the date fixed for redemption, on the
redemption date set forth in the Official Statement, all in accordance with the applicable
provisions of the proceedings authorizing the issuance of the Refunded Bonds. The City
Manager or his designee shall take such actions necessary to cause the required notice of
redemption to be given in accordance with the terms of the proceedings for the Refunded Bonds
called for redemption.
Section 28. APPROVAL AND REGISTRATION OF BONDS. That the City
Manager of the City is hereby authorized to have control of the Bonds and all necessary records
and proceedings pertaining to the Bonds pending their delivery and their investigation,
examination and approval by the Attorney General of the State of Texas, and their registration by
the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds, the
Comptroller of Public Accounts (or a deputy designated in writing to act therefor) shall manually
sign the Comptroller's Registration Certificate. The Bonds thus registered shall remain in the
custody of the City Manager(or the designee thereof) until delivered to the Purchaser.
Section 29. FURTHER PROCEDURES. That the Mayor, the City Manager, any
Assistant City Manager, the Chief Financial Officer of the City, the City Secretary or any
Assistant City Secretary, and all other officers, employees, and agents of the City, and each of
them, shall be and are hereby expressly 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,
32
whether herein mentioned, as may be necessary or desirable in order to carry out the terms and
provisions of this Ordinance, and the sale and delivery of the Bonds and fixing all details in
connection therewith. The City Council hereby authorizes the payment of the fee of the Office
of the Attorney General of the State of Texas for the examination of the proceedings relating to
the issuance of the Bonds, in the amount determined in accordance with the provisions of Section
1202.004, Texas Government Code.
Section 30. USE OF PROCEEDS. That the proceeds from the sale of the Bonds shall
be used in the manner described in the letter of instructions executed by the City or by its
financial advisor on behalf of the City, provided, that any accrued interest received from the sale
of the Bonds shall be deposited to the Debt Service Fund, and any proceeds representing
premium on the Bonds shall be used in a manner consistent with the provisions of Section
1201.042(d), Texas Government Code.
Section 31. PREAMBLE. That the preamble to this Ordinance is incorporated by
reference and made a part hereof for all purposes.
Section 32. MISCELLANEOUS PROVISIONS. (a) Titles Not Restrictive. That the
titles assigned to the various sections of this Ordinance are for convenience only and shall not be
considered restrictive of the subject matter of any section or of any part of this Ordinance.
(b) Rules of Construction. 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. Except where the context otherwise requires, terms defined in this Ordinance
to impart the singular number shall be considered to include the plural number and vice versa.
References to any named person means that party and its successors and assigns. References to
any constitutional, statutory or regulatory provision means such provision as it exists on the date
this Ordinance is adopted by the City and any future amendments thereto or successor provisions
thereof. Any reference to "FORM OF BOND" shall refer to the form of the Bonds set forth in
Exhibit A to this Ordinance. Any reference to the payment of principal in this Ordinance shall
be deemed to include the payment of any Amortization Installments as may be described herein.
(c) Inconsistent Provisions. All ordinances, orders and resolutions, or parts thereof,
which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed
and declared to be inapplicable, and the provisions of this Ordinance shall be and remain
controlling as to the matters prescribed herein.
(d) Severability. If any word, phrase, clause, paragraph, sentence, part, portion, or
provision of this Ordinance or the application thereof to any person or circumstance shall be held
to be invalid, the remainder of this Ordinance shall nevertheless be valid and the City hereby
declares that this Ordinance would have been enacted without such invalid word, phrase, clause,
paragraph, sentence, part, portion, or provisions.
(e) Governing Law. This Ordinance shall be construed and enforced in accordance with
the laws of the State of Texas.
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(f) Open Meeting. The City officially finds and determines that the meeting at which this
Ordinance is adopted was open to the public; and that public notice of the time, place, and
purpose of such meeting was given, all as required by Chapter 551, Texas Government Code.
Section 33. IMMEDIATE EFFECT. That this Ordinance shall be effective
immediately from and after its passage in accordance with the provisions of Section 1201.028,
Texas Government Code, and it is accordingly so ordained.
ADOPTED AND EFFECTIVE May 17, 6.
ayor,
City of ort ti q
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Signature Page—Ordinance Authorizing Issuance of Drainage Utility System Revenue Refunding Bonds,Series 2016
34
EXHIBIT A
FORM OF BOND:
NO. R-
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF FORT WORTH, TEXAS
DRAINAGE UTILITY SYSTEM
REVENUE REFUNDING BOND, SERIES 2016
MATURITY INTEREST ORIGINAL CUSIP
DATE RATE ISSUE DATE
ON THE MATURITY DATE SPECIFIED ABOVE, THE CITY OF FORT WORTH, IN
TARRANT, DENTON, PARKER, WISE AND JOHNSON COUNTIES, TEXAS (the "City"),
hereby promises to pay to , or the registered assignee hereof
(either being hereinafter called the "registered owner") the principal amount of
and to pay interest thereon, from the original issue date of this Bond specified above, to the date
of its scheduled maturity or the date of its redemption prior to scheduled maturity, at the rate of
interest per annum specified above, with said interest being payable on August 15, 2016, and
semiannually on each February 15 and August 15 thereafter, except that if the Paying
Agent/Registrar's Authentication Certificate appearing on the face of this Bond is dated later than
August 15, 2016, such interest is payable semiannually on each February 15 and August 15
following such date.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of
the United States of America, without exchange or collection charges. The principal of this
Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at
maturity, or upon the date fixed for its redemption prior to maturity, at the designated corporate
trust office in Austin, Texas (the "Designated Trust Office") of BOKF,NA, which is the "Paying
Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the
Paying Agent/Registrar to the registered owner hereof as shown by the Registration Books kept
by the Paying Agent/Registrar at the close of business on the Record Date (hereinafter defined)
by check drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City
required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter
provided; and such check shall be sent by the Paying Agent/Registrar by United States mail,
first-class, postage prepaid, on each such interest payment date, to the registered owner hereof at
its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as
hereinafter described. The record date ("Record Date") for the interest payable on any interest
payment date means the last business day of the month preceding the interest payment date. In
the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a
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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 15 days after the Special Record Date)
shall be sent at least five business days prior to the Special Record Date by United States mail,
first-class, postage prepaid, to the address of each registered owner of a Bond appearing on the
books of the Paying Agent/Registrar at the close of business on the last business day next
preceding the date of mailing of such notice. The City covenants with the registered owner of
this Bond that no later than each principal payment date and interest payment date for this Bond
it will make available to the Paying Agent/Registrar the amounts required to provide for the
payment, in immediately available funds, of all principal of and interest on the Bonds, when due,
in the manner set forth in the ordinance authorizing the issuance of the bonds (the "Ordinance").
IF THE DATE for the payment of the principal of or interest on this Bond shall be a
Saturday, Sunday, a legal holiday, or a day on which banking institutions are authorized by law
or executive order to close in the city where the Designated Trust Office of the Paying
Agent/Registrar is located, then the date for such payment shall be the next succeeding day
which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made on
the original date payment was due. Notwithstanding the foregoing, during any period in which
ownership of the bonds of this Series is determined only by a book entry at a securities
depository therefor, any payment to the securities depository, or its nominee or registered
assigns, shall be made in accordance with existing arrangements between the City and the
securities depository.
THIS BOND is one of a Series of bonds of like tenor and effect except as to
denomination, number, maturity, interest rate and right of prior redemption, dated as of the
Original Issue Date stated above, issued in the aggregate principal amount of $ for the
purpose of(i) refunding the Refunded Bonds (as defined in the Ordinance) and (ii) paying costs
of issuance incurred in connection with the issuance of the Bonds. All Bonds of this Series are
issuable solely as fully registered bonds, without interest coupons, in the denomination of any
integral multiple of$5,000 (an "Authorized Denomination").
THE BONDS of this Series scheduled to mature on and after February 15, 2027 may be
redeemed prior to their scheduled maturities, in whole, or in part in principal amounts of$5,000
or any integral multiple thereof, at the option of the City, on February 15, 2026, or on any date
thereafter, at the redemption price of par plus accrued interest to the date fixed for redemption.
If less than all of the Bonds are to be redeemed by the City, the City shall determine the maturity
or maturities and the amounts therewith to be redeemed and shall direct the Paying
Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and
in such principal amounts, for redemption;provided, that during any period in which ownership
of the Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer
than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed,
the particular Bonds of such maturity and bearing such interest rate shall be selected in
accordance with the arrangements between the City and the securities depository.
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THE BONDS are also subject to mandatory redemption in part by lot pursuant to the
terms of the Ordinance, on February 15 in each of the years 20_ through 20_, inclusive, with
respect to Bonds maturing February 15, 20_, in the following years and in the following
amounts, at a price equal to the principal amount thereof and accrued and unpaid interest to the
date of redemption, without premium:
Year Principal Amount
* Final Maturity
To the extent, however, that Bonds subject to sinking fund redemption have been previously
purchased or called for redemption in part and otherwise than from a sinking fund redemption
payment, each annual sinking fund payment for such Bond shall be reduced by the amount
obtained by multiplying the principal amount of Bonds so purchased or redeemed by the ratio
which each remaining annual sinking fund redemption payment for such Bonds bears to the total
remaining sinking fund payments, and by rounding each such payment to the nearest $5,000
integral;provided, that during any period in which ownership of the Bonds is determined only by
a book entry at a securities depository for the Bonds, the particular Bonds to be called for
mandatory redemption shall be selected in accordance with the arrangements between the City
and the securities depository.
AT LEAST 30 days prior to the date fixed for any such redemption, a written notice of
such redemption shall be given by the Paying Agent/Registrar to the registered owner of each
Bond or a portion thereof being called for redemption by depositing such notice in the United
States mail, first-class, postage prepaid, addressed to each such registered owner at his address
shown on the Registration Books of the Paying Agent/Registrar. By the date fixed for any such
redemption due provision shall be made by the City with the Paying Agent/Registrar for the
payment of the required redemption price for this Bond or the portion hereof which is to be so
redeemed, plus accrued interest thereon to the date fixed for redemption. Such notice may state
(i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in
an amount equal to the amount necessary to effect such redemption, with an authorized entity, no
later than the redemption date or (ii) the City retains the right to rescind such notice at any time
prior to the scheduled redemption date if the City delivers a certificate to the Paying
Agent/Registrar instructing it to rescind the redemption notice, and such notice and redemption
shall be of no effect if such moneys and/or authorized securities are not so deposited or if the
notice is rescinded. If such notice of redemption is given and is not rescinded, and if due
provision for such payment is made, all as provided above, this Bond, or the portion hereof
which is to be so redeemed, thereby automatically shall be redeemed prior to its scheduled
maturity, and shall not bear interest after the date fixed for its redemption, and shall not be
regarded as being outstanding except for the right of the registered owner to receive the
redemption price plus accrued interest to the date fixed for redemption from the Paying
Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall
record in the Registration Books all such redemptions of principal of this Bond or any portion
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hereof. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same
maturity date, bearing interest at the same rate, in any Authorized Denomination, at the written
request of the registered owner, and in aggregate principal amount equal to the unredeemed
portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation,
at the expense of the City, all as provided in the Ordinance.
THE FOREGOING PARAGRAPH NOTWITHSTANDING, with respect to any optional
redemption of the Bonds, unless certain prerequisites to such optional redemption required by the
Ordinance have been met and money sufficient to pay the principal of, premium, if any, and
interest on the Bonds to be redeemed will have been received by the Paying Agent/Registrar
prior to giving such notice, such notice may state that the optional redemption will, at the option
of the City, be conditional upon the satisfaction of such prerequisites and receipt of such money
by the Paying Agent/Registrar on or prior to the date fixed for such redemption or upon any
prerequisite set forth in the notice of redemption. If a conditional notice of redemption is given
and such prerequisites to the redemption are not satisfied, such notice will be of no force and
effect, the City will not redeem such Bonds and the Paying Agent/Registrar will give notice in
the manner in which the notice of redemption was given, to the effect that such Bonds will not be
redeemed.
AS PROVIDED IN THE ORDINANCE, this Bond, or any unredeemed portion hereof,
may, at the request of the registered owner or the assignee or assignees hereof, be assigned,
transferred, and exchanged for a like aggregate principal amount of fully registered bonds,
without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as
the case may be, having the same maturity date, and bearing interest at the same rate, in any
Authorized Denomination as requested in writing by the appropriate registered owner, assignee,
or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar at its
Designated Trust Office for cancellation, all in accordance with the form and procedures set
forth in the Ordinance. Among other requirements for such assignment and transfer, this Bond
must be presented and surrendered to the Paying Agent/Registrar, together with proper
instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying
Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any
Authorized Denomination to the assignee or assignees in whose name or names this Bond or any
such portion or portions hereof is or are to be transferred and registered. The form of
Assignment printed or endorsed on this Bond may be executed by the registered owner to
evidence the assignment hereof, but such method is not exclusive, and other instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of
this Bond or any portion or portions hereof from time to time by the registered owner. The City
shall pay the Paying Agent/Registrar's reasonable standard or customary fees and charges for
transferring, converting and exchanging any Bond or portion thereof; provided, however, that
any taxes or governmental charges required to be paid with respect thereto shall be paid by the
one requesting such transfer, conversion and exchange. In any circumstance, neither the City nor
the Paying Agent/Registrar shall be required (1) to make any transfer or exchange during a
period beginning at the opening of business 15 days before the day of the first mailing of a notice
of redemption of bonds and ending at the close of business on the day of such mailing, or (2) to
transfer or exchange any Bonds so selected for redemption when such redemption is scheduled to
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occur within 30 calendar days; provided, however, such limitation shall not be applicable to an
exchange by the registered owner of the uncalled principal balance of a Bond.
WHENEVER the beneficial ownership of this Bond is determined by a book entry at a
securities depository for the Bonds, the foregoing requirements of holding, delivering or
transferring this Bond shall be modified to require the appropriate person or entity to meet the
requirements of the securities depository as to registering or transferring the book entry to
produce the same effect.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City,
resigns, or otherwise ceases to act as such, the City has covenanted in the Ordinance that it
promptly will appoint a competent and legally qualified substitute therefor, and promptly will
cause written notice thereof to be mailed to the registered owners of the Bonds.
BY BECOMING the registered owner of this Bond, the registered owner thereby
acknowledges all of the terms and provisions of the Ordinance, agrees to be bound by such terms
and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in
the official minutes and records of the City, and agrees that the terms and provisions of this Bond
and the Ordinance constitute a contract between each registered owner hereof and the City.
THE CITY has reserved the right, subject to the restrictions stated, and adopted by
reference, in the Ordinance, to issue or incur bonds or other obligations ("Parity Bonds") which
also may be made payable from, and secured by a lien on and pledge of, the "Gross Revenues"
(as defined in the Ordinance) on a parity with the lien on and pledge of the Gross Revenues
securing this Bond and the series of which it is a part.
THE REGISTERED OWNER HEREOF shall never have the right to demand payment of
this obligation out of any funds raised or to be raised by taxation, or from any source whatsoever
other than the Gross Revenues,
IT IS HEREBY certified and covenanted that this Bond has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be
performed, exist and be done precedent to or in the authorization, issuance and delivery of this
Bond have been performed, existed and been done in accordance with law; that this Bond is a
special obligation; and that the principal of and interest on this Bond and the series of which it is
a part, together with any Parity Bonds hereafter issued or incurred and outstanding, are payable
from, and secured by a first lien on and pledge of, the Gross Revenues.
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IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
manual or facsimile signature of the Mayor of the City, attested by the imprinted or lithographed
facsimile signature of the City Secretary, and approved as to form and legality by the imprinted
or lithographed facsimile signature of the City Attorney, and the official seal of the City has been
duly affixed to, printed, lithographed or impressed on this Bond.
CITY OF FORT WORTH, TEXAS
By
Mayor, City of Fort Worth, Texas
ATTEST:
(SEAL)
City Secretary, City of Fort Worth, Texas
APPROVED AS TO FORM AND LEGALITY:
City Attorney, City of Fort Worth, Texas
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FORM OF PAYING AGENPREGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the
proceedings adopted by the City as described in the text of this Bond; and that this Bond has
been issued in exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of
an issue which originally was approved by the Attorney General of the State of Texas and
registered by the Comptroller of Public Accounts of the State of Texas.
Dated BOKF,NA,
Paying Agent/Registrar
By:
Authorized Representative
(FORM OF COMPTROLLER'S CERTIFICATE ATTACHED TO
THE BONDS UPON INITIAL DELIVERY THEREOF ONLY)
OFFICE OF COMPTROLLER
REGISTER NO.
STATE OF TEXAS
I hereby certify that this Bond has been examined, certified as to validity, and approved
by the Attorney General of the State of Texas, and that this Bond has been registered by the
Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this
xxxxxxxx
Comptroller of Public Accounts of the
State of Texas
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FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Please insert Social Security or Taxpayer Identification Number of Transferee
(Please print or typewrite name and address, including zip code of Transferee)
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to
register the transfer of the within Bond on the books kept for registration thereof, with full power
of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signatures must be guaranteed by NOTICE: The signature above must correspond with
an eligible guarantor institution participating the name of the registered owner as it appears upon the
in a Securities Transfer Association front of this Bond in every particular, without alteration
recognized signature guarantee program, or enlargement or any change whatsoever.
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Exhibit B
to
Ordinance
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 26 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 Section 26 of this Ordinance are as specified (and included in the
Appendix or under the headings of the Official Statement referred to) below:
The quantitative financial information and operating data with respect to the City of the
general type included in the main text of the Official Statement under Tables 1 through 5.
The portions of the financial statements of the City appended to the Official Statement as
Appendix B, but for the most recently concluded fiscal year.
Accounting Principles
The accounting principles referred to in Section 26 of the Ordinance are the accounting
principles described in the notes to the financial statements referred to in the third
paragraph under the heading "Annual Financial Statements and Operating Data" above.
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EXHIBIT C
WRITTEN PROCEDURES
RELATING TO CONTINUING COMPLIANCE
WITH FEDERAL TAX COVENANTS
These procedures, together with any federal tax certifications, provisions included in the
authorizing document (the "Ordinance') with respect to the issuance and sale of Obligations (as
defined below), letters of instructions and/or memoranda from bond counsel and any
attachments thereto (the "Closing Documents'), are intended to assist the Issuer in complying
with federal guidelines related to the issuance of any tax-exempt debt such as the Bonds (the
"Obligations').
A. Arbitrage Compliance. Federal income tax laws generally restrict the ability to earn
arbitrage in connection with the Obligations. The Responsible Person (as defined below) will
review the Closing Documents periodically (at least once a fiscal year) to ascertain if an
exception to arbitrage compliance applies.
Procedures applicable to Obligations issued for construction and acquisition purposes.
With respect to the investment and expenditure of the proceeds of the Obligations that are issued
to finance public improvements or to acquire land or personal property, the Issuer's Chief
Financial Officer (such officer, together with other employees of the Issuer who report to such
officer, are, collectively, the "Responsible Person") will:
1. Instruct the appropriate person who is primarily responsible for the construction,
renovation or acquisition of the facilities financed or refinanced with the
Obligations (the "Project") that (i) binding contracts for the expenditure of at least
5% of the proceeds of the Obligations are entered into within six months of the
date of closing of the Obligations (the "Issue Date") and that (ii) the Project must
proceed with due diligence;
2. Monitor that at least 85% of the proceeds of the Obligations to be used for the
construction, renovation or acquisition of the Project are expended within three
years of the Issue Date;
3. Monitor the yield on the investments purchased with proceeds of the Obligations
and restrict the yield of such investments to the yield on the Obligations after
three years of the Issue Date;
4. Monitor all amounts deposited into a sinking fund or funds pledged (directly or
indirectly) to the payment of the Obligations, such as the interest and sinking fund
or debt service fund, to assure that the maximum amount invested within such
applicable fund at a yield higher than the yield on the Obligations does not exceed
an amount equal to the debt service on the Obligations in the succeeding twelve-
month period plus a carryover amount equal to one-twelfth of the principal and
interest payable on the Obligations for the immediately preceding twelve-month
period; and
5. Ensure that no more than 50% of the proceeds of the Obligations are invested in
an investment with a guaranteed yield for four years or more.
Procedures applicable to Obligations with a debt service reserve fund. In addition to the
foregoing, if the Issuer issues Obligations that are secured by a debt service reserve fund, the
Responsible Person will assure that the maximum amount of any reserve fund for the Obligations
invested at a yield higher than the yield on the Obligations will not exceed the lesser of(1) 10%
of the principal amount of the Obligations, (2) 125% of the average annual debt service on the
Obligations measured as of the Issue Date, or (3) 100% of the maximum annual debt service on
the Obligations as of the Issue Date.
Procedures applicable to Escrow Accounts for Refunding Issues.ssues. In addition to the
foregoing, if the Issuer issues Obligations and proceeds are deposited to an escrow fund to be
administered pursuant to the terms of an escrow agreement, the Responsible Person will:
1. Monitor the actions of the escrow agent to ensure compliance with the applicable
provisions of the escrow agreement, including with respect to reinvestment of
cash balances;
2. Contact the escrow agent on the date of redemption of obligations being refunded
to ensure that they were redeemed; and
3. Monitor any unspent proceeds of the refunded obligations to ensure that the yield
on any investments applicable to such proceeds are invested at the yield on the
applicable obligations or otherwise applied.
Procedures applicable to all Tax-Exempt Obligations. For all issuances of Obligations,
the Responsible Person will:
1. Maintain any official action of the Issuer (such as a reimbursement resolution)
stating the Issuer's intent to reimburse with the proceeds of the Obligations any
amount expended prior to the Issue Date for the acquisition, renovation or
construction of the facilities;
2. Ensure that the applicable information return (e.g., Form 8038-G, 8038-GC, or
any successor forms) is timely filed with the Internal Revenue Service (the
"IRS"); and
3. Assure that, unless excepted from rebate and yield restriction under section 148(f)
of the Code, excess investment earnings are computed and paid to the U.S.
government at such time and in such manner as directed by the IRS (i) at least
every five years after the Issue Date and (ii) within 30 days after the date the
Obligations are retired.
B. Private Business Use. Generally, to be tax-exempt, only an insignificant amount of the
proceeds of each issue of Obligations can benefit (directly or indirectly) private businesses. The
Responsible Person will review the Closing Documents periodically (at least once a fiscal year)
for the purpose of determining that the use of the Project does not violate provisions of federal
tax law that pertain to private business use. In addition, the Responsible Persons will:
1. Develop procedures or a "tracking system" to identify all property financed with
tax-exempt debt;
2. Monitor and record the date on which the Project is substantially complete and
available to be used for the purpose intended;
3. Monitor and record whether, at any time the Obligations are outstanding, any
person, other than the Issuer, the employees of the Issuer, the agents of the Issuer
or members of the general public, has any contractual right (such as a lease,
purchase, management or other service agreement) with respect to any portion of
the Project;
4. Monitor and record whether, at any time the Obligations are outstanding, any
person, other than the Issuer, the employees of the Issuer, the agents of the Issuer
or members of the general public, has a right to use the output of the Project (e.g.,
water, gas, electricity);
5. Monitor and record whether, at any time the Obligations are outstanding, any
person, other than the Issuer, the employees of the Issuer, the agents of the Issuer
or members of the general public, has a right to use the Project to conduct or to
direct the conduct of research;
6. Monitor and record whether, at any time the Obligations are outstanding, any
person, other than the Issuer, has a naming right for the Project or any other
contractual right granting an intangible benefit;
7. Monitor and record whether, at any time the Obligations are outstanding, the
Project is sold or otherwise disposed of; and
8. Take such action as is necessary to remediate any failure to maintain compliance
with the covenants contained in the Ordinance related to the public use of the
Project.
C. Record Retention. The Responsible Person will maintain or cause to be maintained all
records relating to the investment and expenditure of the proceeds of the Obligations and the use
of the facilities financed or refinanced thereby for a period ending three years after the complete
extinguishment of the Obligations. If any portion of the Obligations is refunded with the
proceeds of another series of tax-exempt Obligations, such records shall be maintained until the
three years after the refunding Obligations are completely extinguished. Such records can be
maintained in paper or electronic format.
D. Responsible Persons. Each Responsible Person shall receive appropriate training
regarding the Issuer's accounting system, contract intake system, facilities management and other
systems necessary to track the investment and expenditure of the proceeds and the use of the
Project financed or refinanced with the proceeds of the Obligations. The foregoing
notwithstanding, each Responsible Person shall report to the City Council whenever experienced
advisors and agents may be necessary to carry out the purposes of these instructions for the
purpose of seeking City Council approval to engage or utilize existing advisors and agents for
such purposes.
ESCROW AGREEMENT
CITY OF FORT WORTH, TEXAS DRAINAGE UTILITY SYSTEM
REVENUE REFUNDING BONDS SERIES 2016 ESCROW
THIS ESCROW AGREEMENT, dated as of , 2016 (herein, together with any
amendments or supplements hereto,called the"Agreement")is entered into by and between the City
of Fort Worth, Texas (herein called the "Issuer")and BOKF,NA, as escrow agent(herein,together
with any successor in such capacity,called the'Escrow Agent"). The addresses of the Issuer and the
Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof.
WITNESSETH:
WHEREAS, the Issuer heretofore issued and there presently remain outstanding the
obligations (the "Refunded Bonds") described in the Verification Report of Grant Thornton LLP, a
true and correct copy of which is attached hereto as Exhibit "B" and made a part hereof (the
"Report"), relating to the Refunded Bonds; and
WHEREAS,the Refunded Bonds are scheduled to mature on such dates,bear interest at such
rates, and be payable at such times and in such amounts as are set forth in the Report; and
WHEREAS,when firm banking arrangements have been made for the payment of principal
and interest to the maturity or redemption date of the Refunded Bonds, then the Refunded Bonds
shall no longer be regarded as outstanding except for the purpose of receiving payment from the
funds provided for such purpose; and
WHEREAS,Chapter 1207,Texas Government Code("Chapter 1207"),authorizes the Issuer
to issue refunding bonds and to deposit the proceeds from the sale thereof, and any other available
funds or resources,directly with any place of payment(paying agent)for any of the Refunded Bonds,
and such deposit, if made before such payment dates and in sufficient amounts, shall constitute the
making of firm banking and financial arrangements for the discharge and final payment of the
Refunded Bonds; and
WHEREAS, Chapter 1207 further authorizes the Issuer to enter into an escrow agreement
with any such paying agent for any of the Refunded Bonds with respect to the safekeeping,
investment, administration and disposition of any such deposit, upon such terms and conditions as
the Issuer and such paying agent may agree,provided that such deposits may be invested only in(1)
direct obligations of the United States of America,including obligations the principal of and interest
on which are unconditionally guaranteed by the United States of America,and which may be in book
entry form, (2) noncallable obligations of an agency or instrumentality of the United States of
America, including obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date of the purchase thereof are rated as to investment quality by a
nationally recognized investment rating firm not less than AAA or its equivalent,and(3)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 financial arrangements are rated as to investment quality by a nationally
recognized investment rating firm not less than AAA or its equivalent,and which shall mature and/or
bear interest payable at such times and in such amounts as will be sufficient to provide for the
scheduled payment of principal and interest on the Refunded Bonds when due; and
WHEREAS, the Escrow Agent is the paying agent for the Refunded Bonds, and this
Agreement constitutes an escrow agreement of the kind authorized and required by said
Chapter 1207; and
WHEREAS, Chapter 1207 makes it the duty of the Escrow Agent to comply with the terms
of this Agreement and timely make available the amounts required to provide for the payment of the
principal of and interest on such obligations when due,and in accordance with their terms,but solely
from the funds, in the manner, and to the extent provided in this Agreement; and
WHEREAS, the issuance, sale, and delivery of the City of Fort Worth, Texas Drainage
Utility System Revenue Refunding Bonds, Series 2016 (the "Refunding Bonds")have been issued,
sold and delivered for the purpose, among others,of obtaining the funds required to provide for the
payment of the principal of the Refunded Bonds at their maturity or date of redemption and the
interest thereon to such dates; and
WHEREAS,the Issuer desires that,concurrently with the delivery of the Refunding Bonds to
the purchasers thereof,certain proceeds of the Refunding Bonds,together with certain other available
funds of the Issuer,if applicable,shall be applied to purchase certain direct obligations of the United
States of America hereinafter defined as the "Escrowed Securities" for deposit to the credit of the
Escrow Fund created pursuant to the terms of this Agreement and to establish a beginning cash
balance (if needed) in such Escrow Fund; and
WHEREAS,the Escrowed Securities shall mature and the interest thereon shall be payable at
such times and in such amounts so as to provide moneys which, together with cash balances from
time to time on deposit in the Escrow Fund,will be sufficient to pay interest on the Refunded Bonds
as it accrues and becomes payable and the principal of the Refunded Bonds on their maturity or date
of redemption; and
WHEREAS, to facilitate the receipt and transfer of proceeds of the Escrowed Securities,
particularly those in book entry form, the Issuer desires to establish the Escrow Fund at the
designated corporate trust office of the Escrow Agent; and
WHEREAS,the Escrow Agent is herein also referred to as the "Paying Agent", and in such
capacity as paying agent for the Refunded Bonds,acting through the Escrow Agent,is also a party to
this Agreement,as the sole Paying Agent for the Refunded Bonds,to acknowledge its acceptance of
the terms and provisions of this Agreement in such capacity.
NOW,THEREFORE,in consideration of the mutual undertakings,promises and agreements
herein contained,the sufficiency of which hereby are acknowledged,and to secure the full and timely
payment of principal of and the interest on the Refunded Bonds, the Issuer and the Escrow Agent
mutually undertake, promise, and agree for themselves and their respective representatives and
successors, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.01. Definitions. Unless the context clearly indicates otherwise, the following
terms shall have the meanings assigned to them below when they are used in this Agreement:
"Code"means the Internal Revenue Code of 1986,as amended,or to the extent applicable the
Internal Revenue Code of 1954, together with any other applicable provisions of any successor
federal income tax laws.
"Escrow Fund"means the fund created by this Agreement to be administered by the Escrow
Agent pursuant to the provisions of this Agreement.
"Escrowed Securities" means the direct noncallable,non-prepayable United States Treasury
obligations and obligations the due timely payment of which is unconditionally guaranteed by the
United States of America described in the Report or cash or other direct obligations of the United
States of America substituted therefor pursuant to Article IV of this Agreement.
Section 1.02. Other Definitions. The terms "Agreement", "Issuer", 'Escrow Agent",
"Refunded Bonds", "Refunding Bonds", "Report" and "Paying Agent", when they are used in this
Agreement, shall have the meanings assigned to them in the preamble to this Agreement.
Section 1.03. Interpretations. The titles and headings of the articles and sections of this
Agreement have been inserted for convenience and reference only and are not to be considered a part
hereof and shall not in any way modify or restrict the terms hereof. This Agreement and all of the
terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein
and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in
accordance with applicable law.
ARTICLE II
DEPOSIT OF FUNDS AND
ESCROWED SECURITIES
Concurrently with the sale and delivery of the Refunding Bonds the Issuer shall deposit, or
cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the funds and
Escrowed Securities described in the Report, and the Escrow Agent shall,upon the receipt thereof,
acknowledge such receipt to the Issuer in writing.
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ARTICLE III
CREATION AND OPERATION OF ESCROW FUND
Section 3;01. Escrow Fund. The Escrow Agent has created on its books a special trust fund
and irrevocable escrow to be known as the City of Fort Worth, Texas Drainage Utility System
Revenue Refunding Bonds Series 2016 Escrow Fund (the "Escrow Fund"). The Escrow Agent
hereby agrees that upon receipt thereof it will irrevocably deposit to the credit of the Escrow Fund
the funds and the Escrowed Securities described in the Report. Such deposit,all proceeds therefrom,
and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow
Fund,(b)shall be applied only in strict conformity with the terms and conditions of this Agreement,
and (c) are hereby irrevocably pledged to the payment of the principal of and interest on the
Refunded Bonds,which payment shall be made by timely transfers of such amounts at such times as
are provided for in Section 3.02 hereof. When the final transfers have been made for the payment of
such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow
Fund shall be transferred to the Issuer,and the Escrow Agent shall thereupon be discharged from any
further duties hereunder.
Section 3.02. Payment of Principal and Interest. The Escrow Agent is hereby irrevocably
instructed to transfer from the cash balances from time to time on deposit in the Escrow Fund, the
amounts required to pay the principal of the Refunded Bonds and interest thereon in the amounts and
on the date shown in the Report.
Section 3:03. Sufficiency of Escrow Fund. The Issuer represents that the successive receipts
of the principal of and interest on the Escrowed Securities will assure that the cash balances on
deposit fiom time to time in the Escrow Fund will be at all times sufficient to provide moneys for
transfer to the Paying Agent at the times and in the amounts required to pay the interest on the
Refunded Bonds as such interest comes due and the principal of the Refunded Bonds as the
Refunded Bonds mature, all as more fully set forth in the Report. If,for any reason,at any time,the
cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to
transfer the amounts required by each place of payment (paying agent) for the Refunded Bonds to
make the payments set forth in Section 3.02 hereof, the Issuer shall timely deposit in the Escrow
Fund,from any funds that are lawfully available therefor,additional funds in the amounts required to
make such payments. Notice of any such insufficiency shall be given as promptly as practicable as
hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any
insufficiency of funds in the Escrow Fund or the Issuer's failure to make additional deposits thereto.
Section 3.04. Trust Fund.. The Escrow Agent shall hold at all times the Escrow Fund, the
Escrowed Securities and all other assets of the Escrow Fund,wholly segregated from all other funds
and securities on deposit with the Escrow Agent;it shall never allow the Escrowed Securities or any
other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow
Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The
Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow
Agent as trust funds for the benefit of the owners of the Refunded Bonds; and a special account
thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the
Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed
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Securities,the proceeds thereof,and all other assets of the Escrow Fund to which they are entitled as
owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Agreement
shall not be considered as a banking deposit by the Issuer, and the Escrow Agent shall have no right
to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this
Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subj ect to
warrants, drafts or checks drawn by the Issuer or, except to the extent expressly herein provided,by
the Paying Agent.
Section 3.05. Security for Cash Balances. Cash balances from time to time on deposit in the
Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its
successor, be continuously secured by a pledge of direct obligations of, or obligations
unconditionally guaranteed by,the United States of America,having a market value at least equal to
such cash balances.
ARTICLE IV
LIMITATION ON INVESTMENTS
Section 4.01. Duty of Escrow Agent to Investment Funds. Except as provided in Sections
3.02, 4.02, 4.03 and 4.04 hereof, the Escrow Agent shall not have any power or duty to invest or
reinvest any money held hereunder, or to make substitutions of the Escrowed Securities, or to sell,
transfer or otherwise dispose of the Escrowed Securities.
Section 4.02. Reinvestment of Certain Cash Balances in Escrow by Escrow Agent. In
addition to the Escrowed Securities listed in the Report, the Escrow Agent shall reinvest cash
balances shown in the Report in United States Treasury Obligations- State and Local Government
Series with an interest rate equal to zero percent(0%)to the extent(i)such Treasury Obligations are
available from the Department of the Treasury and (ii) such reinvestments are called for in the
Report. All such reinvestments shall be made,if and to the extent so required,only from the portion
of cash balances derived from the maturing principal of and interest on Escrowed Securities that are
United States Treasury Certificates of Indebtedness,Notes or Bonds- State and Local Government
Series. All such reinvestments shall be acquired on and shall mature on the dates shown on the
Report.
Section 4.03. Substitutions and Reinvestments. At the direction of the Issuer, the Escrow
Agent shall reinvest cash balances representing receipts from the Escrowed Securities, make
substitutions of the Escrowed Securities or redeem the Escrowed Securities and reinvest the proceeds
thereof in other Escrowed Securities or hold such proceeds as cash,together with other moneys or
securities held in the Escrow Fund, provided that the Issuer delivers to the Escrow Agent the
following:
(1) an opinion by an independent certified public accountant that after such
substitution or reinvestment the principal amount of the securities in the Escrow Fund,
together with the interest thereon and other available moneys, will be sufficient to pay,
without further investment or reinvestment,as the same become due in accordance with the
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Report,the principal of,interest on and premium,if any,on the Refunded Bonds which have
not previously been paid, and
(2) an unqualified opinion of nationally recognized municipal bond counsel to the
effect that (a) such substitution or reinvestment will not cause the Refunded Bonds to be
"arbitrage bonds" within the meaning of section 103 of the Code or the regulations
thereunder in effect on the date of such substitution or reinvestment, or otherwise make the
interest on the Refunded Bonds subject to federal income taxation,and(b)such substitution
or reinvestment complies with the Constitution and laws of the State of Texas and with all
relevant documents relating to the issuance of the Refunded Bonds.
The Escrow Agent shall have no responsibility or liability for loss or otherwise with respect
to investments made at the direction of the Issuer.
Section 4.04. Substitution for Escrowed Securities. Concurrently with the initial deposit by
the Issuer with the Escrow Agent,but not thereafter,the Issuer, at its option,may substitute cash or
non-interest bearing direct noncallable, non-prepayable obligations of the United States Treasury
(i.e., Treasury obligations which mature and are payable in a stated amount on the maturity date
thereof,and for which there are no payments other than the payment made on the maturity date)(the
"Substitute Obligations") for non-interest bearing Escrowed Securities, if any, but only if such
Substitute Obligations
(a) are in an amount, and/or mature in an amount, which is equal to or greater than the
amount payable on the maturity date of the obligation listed in the Report for which
such Substitute Obligation is substituted,
(b) mature on or before the maturity date of the obligation listed in the Report for which
such Substitute Obligation is substituted, and
(c) produce the amount necessary to pay the interest on and principal of the Refunded
Bonds,as set forth in the Report,as verified by a certified public accountant or a firm
of certified public accountants.
If, concurrently with the initial deposit by the Issuer with the Escrow Agent, any such Substitute
Obligations are so substituted for any Escrowed Securities, the Issuer may, at any time thereafter,
substitute for such Substitute Obligations the same Escrowed Securities for which such Substitute
Obligations originally were substituted.
Section 4.05. Arbitrage. The Issuer hereby covenants and agrees that it shall never request
the Escrow Agent to exercise any power hereunder or permit any part of the money in the Escrow
Fund or proceeds from the sale of Escrowed Securities to be used directly or indirectly to acquire any
securities or obligations if the exercise of such power or the acquisition of such securities or
obligations would cause any Refunding Bonds or Refunded Bonds to be an"arbitrage bond"within
the meaning of the Code.
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ARTICLE V
APPLICATION OF CASH BALANCES
No withdrawals, transfers, or reinvestment shall be made of cash balances in the Escrow
Fund, except as provided in Sections 3.01, 3.02, 4.02, 4.03 and 4.04 hereof.
ARTICLE VI
RECORDS AND REPORTS
Section 6.01. Records. The Escrow Agent will keep books of record and account in which
complete and correct entries shall be made of all transactions relating to the receipts,disbursements,
allocations and application of the money and Escrowed Securities deposited to the Escrow Fund and
all proceeds thereof,and such books shall be available for inspection at reasonable hours and under
reasonable conditions by the Issuer and the owners of the Refunded Bonds.
Section 6.02. Reports. While this Agreement remains in effect,the Escrow Agent annually
shall prepare and send to the Issuer a written report summarizing all transactions relating to the
Escrow Fund during the preceding year,including,without limitation,credits to the Escrow Fund as
a result of interest payments on or maturities of the Escrowed Securities and transfers from the
Escrow Fund for payments on the Refunded Bonds or otherwise,together with a detailed statement
of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such
period.
ARTICLE VII
CONCERNING THE PAYING AGENTS AND ESCROW AGENT
Section 7.01. Representations. The Escrow Agent hereby represents that it is the duly acting
Paying Agent for the Refunded Bonds, it has all necessary power and authority to enter into this
Agreement and undertake the obligations and responsibilities imposed upon it herein, and it will
carry out all of its obligations hereunder.
Section 7.02. Limitation on Liability. The liability of the Escrow Agent to transfer funds for
the payment of the principal of and interest on the Refunded Bonds shall be limited to the proceeds
of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund.
Notwithstanding any provision contained herein to the contrary, neither the Escrow Agent nor the
Paying Agent shall have any liability whatsoever for the insufficiency of funds from time to time in
the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment
thereon, except for the obligation to notify the Issuer as promptly as practicable of any such
occurrence.
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The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as
the statements of the Issuer and shall not be considered as made by, or imposing any obligation or
liability upon,the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the
Refunding Bonds or the Refunded Bonds and is not responsible for and is not bound by any of the
provisions thereof(except as a place of payment and paying agent and/or a Paying Agent/Registrar
therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the
terms and provisions of this Agreement.
The Escrow Agent makes no representations as to the value,conditions or sufficiency of the
Escrow Fund, or any part thereof,or as to the title of the Issuer thereto,or as to the security afforded
thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to
any of such matters.
It is the intention of the parties hereto that the Escrow Agent shall never be required to use or
advance its own funds or otherwise incur personal financial liability in the performance of any of its
duties or the exercise of any of its rights and powers hereunder.
The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in
good faith in any exercise of reasonable care and believed by it to be within the discretion or power
conferred upon it by this Agreement,nor shall the Escrow Agent be responsible for the consequences
of any error of judgment; and the Escrow Agent shall not be answerable except for its own action,
neglect or default,nor for any loss unless the same shall have been through its negligence or willful
misconduct.
Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to
determine or inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of the Issuer with respect to arrangements or contracts with
others,with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund,to dispose
of and deliver the same in accordance with this Agreement. If,however,the Escrow Agent is called
upon by the terms of this Agreement to determine the occurrence of any event or contingency, the
Escrow Agent shall be obligated,in making such determination,only to exercise reasonable care and
diligence, and in event of error in making such determination the Escrow Agent shall be liable only
for its own willful misconduct or its negligence. In determining the occurrence of any such event or
contingency the Escrow Agent may request from the Issuer or any other person such reasonable
additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact
relating to the occurrence of such event or contingency, and in this connection may make inquiries
of, and consult with, among others, the Issuer at any time.
Section 7.03. Compensation. (a) Concurrently with the sale and delivery of the Refunding
Bonds,the Issuer shall pay to the Escrow Agent, as a fee for performing the services hereunder and
for all expenses incurred or to be incurred by the Escrow Agent in the administration of this
Agreement, and for all future paying agency services as Paying Agent for the Refunded Bonds,the
sum of$ ,the sufficiency of which is hereby acknowledged by the Escrow Agent. In the event
that the Escrow Agent is requested to perform any extraordinary services hereunder, the Issuer
8
. J
hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services and to re-
imburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extra-
ordinary services, and the Escrow Agent hereby agrees to look only to the Issuer for the payment of
such fees and reimbursement of such expenses. The Escrow Agent hereby agrees that in no event
shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether
regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of
its expenses.
(b) Upon receipt of the aforesaid specific sums stated in subsection (a) of this Section
7.03 for Escrow Agent and paying agency fees, expenses, and services, the Escrow Agent shall
acknowledge such receipt to the Issuer in writing.
Section 7.04. Successor Escrow Agents. If at any time the Escrow Agent or its legal
successor or successors should become unable, through operation or law or otherwise, to act as
escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or
federal court or administrative body because of insolvency or bankruptcy or for any other reason, a
vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the Issuer, by
appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor
Escrow Agent shall have been appointed by the Issuer within 60 days,a successor may be appointed
by the owners of a majority in principal amount of the Refunded Bonds then outstanding by an
instrument or instruments in writing filed with the Issuer, signed by such owners or by their duly
authorized attorneys-in-fact. If,in a proper case,no appointment of a successor Escrow Agent shall
be made pursuant to the foregoing provisions of this section within three months after a vacancy
shall have occurred, the owner of any Refunded Bond may apply to any court of competent
jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if
any, as it may deem proper, prescribe and appoint a successor Escrow Agent.
Any successor Escrow Agent shall be a corporation organized and doing business under the
laws of the United States or the State of Texas,authorized under such laws to exercise corporate trust
powers, authorized under Texas law to act as an escrow agent,having its principal office and place
of business in the State of Texas,having a combined capital and surplus of at least$50,000,000 and
subject to the supervision or examination by Federal or State authority.
Any successor Escrow Agent shall execute, acknowledge and deliver to the Issuer and the
Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall
execute and deliver an instrument transferring to such successor Escrow Agent,subject to the terms
of this Agreement,all the rights,powers and trusts of the Escrow Agent hereunder. Upon the request
of any such successor Escrow Agent, the Issuer shall execute any and all instruments in writing for
more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights,
powers and duties.
The Escrow Agent at the time acting hereunder may at any time resign and be discharged
from the trust hereby created by giving not less than sixty(60)days'written notice to the Issuer and
publishing notice thereof,specifying the date when such resignation will take effect,in a newspaper
9
printed in the English language and with general circulation in New York, New York, such
publication to be made once at least three(3)weeks prior to the date when the resignation is to take
effect. No such resignation shall take effect unless a successor Escrow Agent shall have been
appointed by the owners of the Refunded Bonds or by the Issuer as herein provided and such
successor Escrow Agent shall be a paying agent for the Refunded Bonds and shall have accepted
such appointment, in which event such resignation shall take effect immediately upon the
appointment and acceptance of a successor Escrow Agent. If the sixty(60)day notice period expires
and no successor has been appointed,the Escrow Agent,at the expense of the Issuer,has the right to
petition a court of competent jurisdiction to appoint a successor under this Agreement.
Under any circumstances, the Escrow Agent shall pay over to its successor Escrow Agent
proportional parts of the Escrow Agent's fee and, if applicable, its Paying Agent's fee hereunder.
Section 7.05. Indemnity. To the extent permitted by law,the Issuer agrees to indemnify and
save harmless the Escrow Agent fiom all losses,liabilities,costs and expenses,including reasonable
attorney's fees and expenses, which may be incurred by the Escrow Agent as a result of its
acceptance of the Escrow Fund or arising from the performance of its duties hereunder,unless such
losses, liabilities, costs and expenses have resulted fiom the bad faith or negligence of the Escrow
Agent,and such indemnification shall survive the resignation by or removal of the Escrow Agent,or
the termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notice. Any notice,authorization,request,or demand required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by
registered or certified mail, postage prepaid addressed to the Issuer or the Escrow Agent at the
address shown on Exhibit"A" attached hereto. The United States Post Office registered or certified
mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of
delivery. Any party hereto may change the address to which notices are to be delivered by giving to
the other parties not less than ten (10) days prior notice thereof. Prior written notice of any
amendment to this Agreement contemplated pursuant to Section 8.08 and immediate written notice
of any incidence of a severance pursuant to Section 8.04 shall be sent to Moody's Investors Service,
Attn: Public Finance Rating Desk/Refunded Bonds,99 Church Street,New York,New York 10007;
Standard&Poor's Corporation,Attn: Municipal Bond Department,25 Broadway,New York,New
York 10004; and Fitch Ratings, Attn: Municipal Structured Finance, One State Street Plaza,New
York,New York 10004.
Section 8.02. Termination of Responsibilities. Upon the taking of all the actions as
described herein by the Escrow Agent, the Escrow Agent shall have no further obligations or
responsibilities hereunder to the Issuer,the owners of the Refunded Bonds or to any other person or
persons in connection with this Agreement.
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Section 8.03. Binding Agreement. This Agreement shall be binding upon the Issuer and the
Escrow Agent and their respective successors and legal representatives,and shall inure solely to the
benefit of the owners of the Refunded Bonds, the Issuer, the Escrow Agent and their respective
successors and legal representatives.
Section 8.04. Severability. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement,but
this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never
been contained herein.
Section 8.05. Texas Law Governs. This Agreement shall be governed exclusively by the
provisions hereof and by the applicable laws of the State of Texas.
Section 8.06. Time of the Essence. Time shall be of the essence in the performance of
obligations from time to time imposed upon the Escrow Agent by this Agreement.
Section 8.07. Effective Date of Agreement. This Agreement shall be effective upon receipt
by the Escrow Agent of the funds described in the Report and the Escrowed Securities,together with
the specific sums stated in subsection(a)of Section 7.03 for Escrow Agent and paying agency fees,
expenses, and services.
Section 8.08. Amendments. This Agreement shall not be amended except to cure any
ambiguity or formal defect or omission in this Agreement. No amendment shall be effective unless
the same shall be in writing and signed by the parties thereto. No such amendment shall adversely
affect the rights of the holders of the Refunded Bonds.
Section 8.09. Counterparts. This Agreement may be executed in any number of
counterparts,each of which shall be regarded as an original and all of which shall constitute one and
the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by
telecopy or other electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Agreement.
[Execution Page Follows]
11
EXECUTED as of the date first written above.
CITY OF FORT WORTH, TEXAS
By
City Manager
ATTEST:
(SEAL)
City Secretary
APPROVED AS TO FORM:
City Attorney
BOKF,NA
By
Title:
Signature Page—Drainage Utility System Revenue Refunding Bonds Escrow Agreement
12
INDEX TO EXHIBITS
Exhibit "A" Addresses of the Issuer and the Escrow Agent
Exhibit "B" Verification Report of Grant Thornton LLP
EXHIBIT "A"
ADDRESSES OF THE ISSUER
AND ESCROW AGENT
ISSUER
City of Fort Worth, Texas
1000 Throckmorton
Third Floor
Fort Worth, Texas 76102
Attention: City Manager
ESCROW AGENT
BOKF,NA
100 Congress Avenue, Suite 250
Austin, Texas 78701
Attention: Financial Services
EXHIBIT "B"
VERIFICATION REPORT OF
GRANT THORNTON LLP
THE STATE OF TEXAS
COUNTIES OF TARRANT, DENTON, PARKER AND WISE
CITY OF FORT WORTH :
I, Mary Kayser, City Secretary of the City of Fort Worth, in the State of Texas, do hereby
certify that I have compared the attached and foregoing excerpt from the minutes of the regular,
open, public meeting of the City Council of the City of Fort Worth, Texas held on May 17, 2016,
and of the ordinance authorizing the issuance of Drainage Utility System Revenue Refunding
Bonds, Series 2016, which was duly passed at said meeting, and that said copy is a true and
correct copy of said excerpt and the whole of said ordinance. Said meeting was open to the
public, and public notice of the time, place, and purpose of said meeting was given, all as
required by Chapter 551, Texas Government Code, as amended.
In testimony whereof, I have set my h and have hereunto affixed the seal of said City
of Fort Worth,this 17th day of May, 2016.
ox5% 'f 0R jr�4 ity Secretary of the
°00 Q® �¢ City of Fort Worth, Tex
(SEA
00000 IV
4aaLlllllYv�4 ��
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 5/1712016 - Ordinance iNo. 22213-05-2016 & 22214-05-
2016
DATE: Tuesday, May 17, 2016 REFERENCE NO.: G-18735
LOG NAME: 131316 DRAINAGE UTILITY SYSTEM REVENUE REFUNDING BONDS
SUBJECT:
Adopt Ordinance Authorizing Issuance of City of Fort Worth, Texas Drainage Utility System Revenue
Refunding Bonds, Series 2016 in an Aggregate Principal Amount Not to Exceed $19,500,000.00
Establishing Parameters with Respect to Sale of the Bonds, Delegating to Designated City Officials
Authority to Effect Sale of the Bonds, Enacting Other Provisions Relating to the Subject and Declaring an
Immediate Effective Date and Adopt Appropriation Ordinance (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached ordinance (1) authorizing the issuance of City of Fort Worth, Texas Drainage Utility
System Revenue Refunding Bonds, Series 2016 in an aggregate principal amount not to exceed
$19,500,000.00; (ii) approving sale of the bonds subject to certain parameters being met; (iii) authorizing
execution of an Agreement for the retirement of the refunded obligations and other instruments related to
the issuance of the bonds; (iv) providing for the establishment of rates and collection of system revenues
sufficient to pay the interest and principal on said bonds; and (v) ordaining other matters related to
issuance of the bonds; and
2. Adopt the attached ordinance increasing estimated receipts and appropriations in the Stormwater Debt
Service Fund in the amount of $20,000,000.00, subject to sale of the bonds and receipt of proceeds, for
the purpose of refunding existing drainage utility debt and paying costs of issuance.
DISCUSSION:
The purpose of this M&C is to approve issuance and sale of refunding bonds that will allow refinancing of
existing Stormwater Utility debt to achieve a net savings.
It is the City of Fort Worth's practice to gain positive debt service savings through refinancing when the
opportunity presents itself. Staff and the City's Co-Financial Advisors, First Southwest, a Division of
Hilltop Securities, and Estrada & Hinojosa, are recommending the 2007 Series Drainage Utility System
Revenue Refunding Bonds be refunded, with a par amount outstanding of$18,500,000.00.
Refunding will offer an estimated present value savings of approximately $2.7 million or 14.65 percent of
the refunded par amount.
The actual savings amount will not be determined until the time bids are received. However, in
accordance with the City's Financial Management Policy Statements, the ordinance provides that the
refunding debt shall not be sold unless the sale will result in net present value savings of at least 3.5
percent of the par amount refunded.
Logname: 131316 DRAINAGE UTILITY SYSTEM REVENUE REFUNDING BONDS Page I of 2
Staff is recommending that these bonds be sold through a competitive bid sale with the City Manager or
the Chief Financial Officer being authorized to approve the terms of the sale so long as it comes within the
parameters set forth in the Council-adopted ordinance. Rating agency presentations for Moody's, Fitch,
and Standard & Poor's were conducted the week of April 26, 2016. Ratings are anticipated to be received
in early May. Bids for the sale of the bonds are scheduled to be submitted on May 25, 2016. Subsequent
to accepting the best bid and awarding the sale of the bonds, the City will seek approval for the debt
transactions from the Texas Attorney General with an estimated closing date of June 28, 2016.
This M&C does not request approval of a contract with a business entity.
FISCAL INFORMATION /CERTIFICATION:
The Director of Finance certifies that upon adoption of the attached ordinances, the sale of the 2016
Drainage Utility System Revenue Refunding Bonds will occur as required under the parameters set forth
therein and that funds will be available in the Stormwater Debt Service Fund to record the appropriate and
necessary transactions.
FUND IDENTIFIERS (FIDs):
TO
Fund Department ccoun Project Program ctivity Budget Reference # Amoun
ID ID Year Chartfield 2
FROM
Fund Department ccoun Project Program ctivity Budget Reference # moun
ID ID Year Chartfield 2
CERTIFICATIONS:
Submitted for City Manager's Office by: Susan Alanis (8180)
Originating Department Head: Aaron Bovos (8517)
Additional Information Contact: Trey Imes (8558)
Logname: 131316 DRAINAGE UTILITY SYSTEM REVENUE REFUNDING BONDS Page 2 of 2