Loading...
OR 2000-911 Issuance of General Obligations Bonds, $9,865,000 CERTIFICATE FOR ORDINANCE NO. 2000911 THE STATE OF TEXAS : COUNTIES OF DENTON AND DALLAS : CITY OF COPPELL : We, the undersigned officers of said City, hereby certify as follows: 1. The City Council of said City convened in REGULAR MEETING ON THE 9TH DAY OF MAY, 2000, at the City Hall, and the roll was called of the duly constituted officers and members of said City Council, to-wit: Candy Sheehan, Mayor Marsha Tunnell, Mayor Pro Tem Greg Garcia Jayne P. Peters Pat Keenan Doug Stover Larry Wheeler Bill York Libby Ball, City Secretary and all of said persons were present, except the following absentees: NONE thus constituting a quorum. Whereupon, among other business, the following was transacted at said Meeting: a written ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF COPPELL, TEXAS GENERAL OBLIGATIONS BONDS, SERIES 2000, IN THE PRINCIPAL AMOUNT OF $9,865,000 AND ORDAINING OTHER MATTERS RELATING TO THE SUBJECT was duly introduced for the consideration of said City Council and read in full. It was then duly moved and seconded that said Ordinance be passed; and, after due discussion, said motion carrying with it the passage of said Ordinance, prevailed and carded by the following vote: AYES: All members of said City Council shown present above voted "Aye". NOES: None. 2. That a true, full and correct copy of the aforesaid Ordinance passed at the Meeting described in the above and foregoing paragraph is attached to and follows this Certificate; that said Ordinance has been duly recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true, full and correct excerpt from said City Council's minutes of said Meeting pertaining to the passage of said Ordinance; that the persons named in the above and fore- going paragraph are the duly chosen, qualified and acting officers and members of said City Council as indicated therein; that each of the officers and members of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered for passage at said Meeting, and each of said officers and members consented, in advance, to the holding of said Meeting for such purpose, and that 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. 3. That the Mayor of said City has approved and hereby approves the aforesaid Ordinance; that the Mayor and the City Secretary of said City have duly signed said Ordinance; and that the Mayor and the City Secretary of said City hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordinance for all purposes. SIGNED AND SEALED the 9TH DAY OF MAY, 2000. Libby Ball Candy Sheehan City Secretary Mayor SEAL ORDINANCE NO. 2000911 AUTHORIZING THE ISSUANCE OF CITY OF COPPELL, TEXAS GENERAL OBLIGATION BONDS, SERIES 2000, IN THE PRINCIPAL AMOUNT OF $9,865,000 AND ORDAINING OTHER MATTERS RELATING TO THE SUBJECT THE STATE OF TEXAS § COUNTIES OF DALLAS AND DENTON § CITY OF COPPELL § WHEREAS, the bonds hereinafter authorized were lawfully and favorably voted at an election held in the City on November 2, 1999; and WHEREAS, none of the bonds voted at said election has been authorized, issued or delivered: and WHEREAS, it is deemed necessary and advisable to authorize, issue, and deliver an installment or series of bonds; and WHEREAS, the bonds hereinafter authorized and designated are to be issued and delivered pursuant to Art. 1175, V.A.T.C.S., now known as Subchapter E of Chapter 51 of Local Government Code, Chapter 1331, Government Code; and WHEREAS, the meeting was open to the public and public notice of the time, place and purpose of said meeting was given pursuant to Chapter 551, Texas Government Code. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COPPELL, TEXAS: Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of the City of COPPELL (the "Issuer") are hereby authorized to be issued and delivered in the aggregate princi- pal mount of $9,865,000 providing $3,785,000 for the purpose of constructing, improving and equipping permanent public improvements, to-wit: the City's streets, including but not limited to West Sandy Lake Road (Denton Tap Road to S.H. 121); East Sandy Lake Road (Kimbel Court to east city limits); Bethel Road I (Freeport Parkway to west city limits); Bethel Road II (Freeport Parkway to Denton Tap Road); Coppell Road (West Sandy Lake Road to Bethel Road); Creekview Road (Ruby Rd./State Rd. west along south edge of Wagon Wheel Park); and Freeport Parkway (Bethel Road to I.H. 635); $5,785,000 for the purpose of acquiring, constructing, equipping and improving permanent public improvements for the City's parks, including but not limited to MacArthur Park Development; Wagon Wheel Park Development (Phase 2); Andrew Brown park East multi-purpose fields; extension of Trail System in North Zone; construction of a new Senior Citizen Center; development of tennis courts; development of the Town Center Master Plan; and 1 renovation of Grapevine Springs; and $295,000 for the purpose of acquiring, constructing and improving permanent public improvements for the City's drainage, including but not limited to Kaye Street; Meadowcreek Road; Stream G-2; Stream G-6; Sandy Knoll/Shadowcrest; The Meadows Subdivision; Cottonwood Estates; and Hunterwood Park. Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Ordinance shall be designated: "CITY OF COPPELL, TEXAS GENERAL OBLIGATION BOND, SERIES 2000", and initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in annual installments of principal (the "Initial Bond"), but the Initial Bond may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial and annual maturities, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinat'ter provided. The term "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds. Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond is hereby .authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated May 1, 2000, in the denomination and aggregate principal amount of $9,865,000, numbered R-I, payable in annual installments of principal to the initial registered owner thereof, to-wit: SALOMON SMITH BARNEY, or to the registered assignee or assignees of said Bond or any portion or portions thereof(in each case, the "registered owner"), with the annual installments of principal of the Initial Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance. (b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL BOND set forth in this Ordinance. Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interest from the date of the Initial Bond and will be calculated on the basis of a 360-day year of twelve 30- day months to the respective scheduled due dates, or to the respectiv~e dates of prepayment or redemption, of the installments of principal of the Initial Bond, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance. Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows: FORM OF INITIAL BOND NO. R-1 $9,865,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF DALLAS AND DENTON CITY OF COPPELL, TEXAS GENERAL OBLIGATION BOND SERIES 2000 The CITY OF COPPELL, in Dallas and Denton Counties, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to SALOMON SMITH BARNEY or to the registered assignee or assignees of this Bond or any portion or portions hereof(in each case, the "registered owner") the aggregate principal amount of NINE MILLION EIGHT HUNDRED SIXTY-FIVE THOUSAND DOLLARS in annual installments of principal due and payable on February 1 in each of the years, and in the respective principal amounts, as set forth in the following schedule: YEAR AMOUNT YEAR AMOUNT 2001 $ 255,000 2011 $ 485,000 2002 275,000 2012 515,000 2003 295,000 2013 540,000 2004 315,000 2014 575,000 2005 335,000 2015 605,000 2006 360,000 2016 640,000 2007 385,000 2017 6~0,000 2008 410,000 2018 720,000 2009 435,000 2019 765,000 2010 460,000 2020 815,000 and to pay interest,from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates as follows: maturity 2001, 7.00% maturity 2011, 5.50% maturity 2002, 7.00% maturity 2012, 5.60% maturity 2003, 7.00% maturity 2013, 5.65% maturity 2004, 7.00% maturity 2014, 5.75% maturity 2005, 7.00% maturity 2015, 5.80% maturity 2006, 7.00% maturity 2016, 5.85% maturity 2007, 7.00% maturity 2017, 5.90% maturity 2008, 6.75% maturity 2018, 6.00% maturity 2009, 5.50% maturity 2019, 6.00% maturity 2010, 5.50% maturity 2020, 6.00% with said interest being payable on August 1, 2000, and semiannually on each February 1 and August 1 thereafter while this Bond or any portion hereof is outstanding and unpaid. THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereof through the services of The Bank of New York, New York, New York, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check or draft, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on the 15th day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described, or by such other method acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. The Issuer cove- nants with the registered owner of this Bond that on or before each principal and/or interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on this Bond, when due. 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 in the city where the Paying Agent/Registrar is located are authorized by law or executive ord_er to close, 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. THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas, in the principal amount of $9,865,000, providing $3,785,000 for the purpose of 4 constructing, improving and equipping permanent public improvements, to-wit: the City's streets, including but not limited to West Sandy Lake Road (Denton Tap Road to S.H. 121); East Sandy Lake Road (Kimbel Court to east city limits); Bethel Road I (Freeport Parkway to west city limits); Bethel Road II (Freeport Parkway to Denton Tap Road); Coppell Road (West Sandy Lake Road to Bethel Road); Creekview Road (Ruby Rd./State Rd. west along south edge of Wagon Wheel Park); and Freeport Parkway (Bethel Road to I.H. 635); $5,785,000 for the purpose of acquiring, constructing, equipping and improving permanent public improvements for the City's parks, including but not limited to MacArthur Park Development; Wagon Wheel Park Development (Phase 2); Andrew Brown park East multi-purpose fields; extension of Trail System in North Zone; construction of a new Senior Citizen Center; development of tennis courts; development of the Town Center Master Plan; and renovation of Grapevine Springs; and $295,000 for the purpose of acquiring, constructing and improving permanent public improvements for the City's drainage, including but not limited to Kaye Street; Meadowcreek Road; Stream G-2; Stream G-6; Sandy Knoll/Shadowcrest; The Meadows Subdivision; Cottonwood Estates; and Hunterwood Park. ON AUGUST 1, 2008 or any date thereafter, the unpaid installments of principal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the Issuer shall select and designate the maturity, or maturities, and the amount that is to be redeemed, and if less than a whole maturity is to be called, the Issuer shall direct the Paying Agent/Registrar to call by lot (provided that a portion of this Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the principal amount, plus accrued interest to the date fixed for prepayment or redemption. AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepay,- ment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written notice ofprepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or 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 prepayments or redemptions of principal of this Bond or any portion hereof. THIS BOND, to the extent of the iunpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms 5 and conditions set forth in the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, 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. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Bond or any portion hereof. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof. Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment of principal of this Bond or portion hereof for which they are being exchanged. No such bond shall be payable in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted; subsequently, as provided in the Bond Ordinance. The I ssuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with 6 respect thereto. The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date. IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond 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 owner of this Bond. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and delivered pursuant to the laws of the State of Texas; 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 and the Series of which it is a part have been performed, existed, and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest and principal come due, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual signature of the Mayor of the Issuer and countersigned with the manual signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated May 1, 2000. City Secretary Mayor (CITY SEAL) 7 FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. 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 Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. (a) Registration and Transfer. The Issuer shall keep or cause to be kept at the principal corporate trust office of The Bank of New York, New York, New York (the "Paying Agent/Registrar") books or records of the regis- tration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and regis- trations as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered 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 registered 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 Issuer shall have the right to inspect 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. Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, (i) evidencing the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii)-the right of such assignee or assignees to have the Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and de- livered in conversion of and exchange for the Initial Bond shall be in any denomination or' denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal-maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted the Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the instailment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the Payi.ng Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such trans- fer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. (b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Bond .shall be' overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Bondholder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. (d) Conversion and Exchange or Replacement; Authentication. Each Bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall ha~e a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal balance or principal amount of any Bond or 'Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as provided heroin, a substitute Bond or Bonds having the same maturity date, bearing interest at the ~arne rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond or portion thereof(other than the Initial Bond) is assigned and 10 transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full. THE INITIAL BOND issued and delivered pursuant to this Ordinance is 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 or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially as follows: "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described on the face of this Bond; and that this Bond has been issued in conversion of and 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. Paying Agent/Registrar Dated By Authorized Representative" An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execu- tion, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary !1 weight and strength. Pursuant to Vemon's Ann. Tex. Civ. St. Art. 717k-6, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, approved by the Attomey General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. (e) In General. All Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, (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 and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE BOND set forth in this Ordinance. (f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this Ordinance. (g) Substitute Paying Agent/Registrar. The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to 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. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/ Registrar, to be effective not later than 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 Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust 12 company, financial institution, or other agency 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 Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered 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. (h) Book-Entry Only System. The Bonds issued in exchange for the Bonds initially issued to the purchaser specified herein shall be initially issued in the form of a separate single fully registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered in the name of Cede & Co., as nominee of Depository Trust Company of New York CDTC"), and except as provided in subsection (f) hereof, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest on the Bonds. Without limiting the immediately preceding sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a Bondholder, as shown on the Registration Books, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than a Bondholder, as shown in the Registration Books of any amount with respect to principal of, premium, if any, or interest on, as the case may be, the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest, as the case may be, with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective owners, as shown in the Registration Books as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of, premium, if any, and interest on, or as the case may be, the Bonds to the extent of the sum or sums so paid. No person other than an owner, as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest, as the case may be, pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has 13 determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks being mailed to the registered owner at the close of business on the Record Date, the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. (i) Successor Securities Depository; Transfers Outside Book-Entry Only System. In the event that the Issuer or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the representation letter of the Issuer to DTC and that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer or the Paying Agent/Registrar shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging BOnds shall designate, in accordance with the provisions of this Ordinance. (j) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on, or as the case may be, such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the representation letter of the Issuer to DTC. Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, including the form of Paying Agent/Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment to be printed on each of the Bonds, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance. 14 FORM OF SUBSTITUTE BOND PRINCIPAL NO. AMOUNT UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF DALLAS AND DENTON CITY OF COPPELL, TEXAS GENERAL OBLIGATION BOND SERIES 2000 Date of Interest Rate Maturi_ty Date Original Issue Cusip No. % May 1, 2000 ON THE MATURITY DATE specified above the CITY OF COPPELL, in Tarrant County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon from May 1, 2000 to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; with interest being payable on August 1,2000 and semiannually thereafter on each February 1 and August 1, except that if the date ofauthentication of this Bond is later than July 15, 2000, such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafier defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment 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 principal corporate trust office of The Bank of New York, New York, New York, 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 on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds (the '.'Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft 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 the address of the registered owner, as 15 it appeared on the 15th day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described, or by such other method acceptable to the Paying Agent/Registrar requested by, and the risk and expense of, the registered owner. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. 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 in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a 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. THIS BOND is one of an issue of Bonds initially dated May 1, 2000, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount .of $9,865,000, providing $3,785,000 for the purpose of constructing, improving and equipping permanent public improvements, to-wit: the City's streets, including but not limited to West Sandy Lake Road (Demon Tap Road to S.H. 121); East Sandy Lake Road (Kimbel Court to east city limits); Bethel Road I (Freeport Parkway to west city limits); Bethel Road II (Freeport Parkway to Denton Tap Road); Coppell Road (West Sandy Lake Road to Bethel Road); Creekview Road (Ruby Rd./State Rd. west along south edge of Wagon Wheel Park); and Freeport Parkway (Bethel Road to I.H. 635); $5,785,000 for the purpose of acquiring, constructing, equipping and improving permanent public improvements for the City's parks, including but not limited to MacArthur Park Development; Wagon Wheel Park Development (Phase 2); Andrew Brown park East multi-purpose fields; extension of Trail System in North Zone; construction of a new Senior Citizen Center; development of tennis courts; development of the Town Center Master Plan; and renovation of Grapevine Springs; and $295,000 for the purpose of acquiring, constructing and improving permanent public improvements for the City's drainage, including but not limited to Kaye Street; Meadowcreek Road; Stream G-2; Stream G-6; Sandy Knoll/Shadowcrest; The Meadows Subdivision; Cottonwood Estates; and Hunterwood Park. ON AUGUST 1,2008, or any date thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, ifin part, the Issuer shall select and designate the maturity or maturities and the amount that is to be redeemed, and if less than a whole maturity is to be called, the Issuer shall direct the Paying Agent/Registrar to call by lot (provided that a portion of a Bond 16 may be redeemed only in an integral multiple of $5,000), at the redemption price of the principal amount thereof, plus accrued interest to the date fixed for redemption. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first class postage prepaid, not less than 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date; provided, however, that the failure to send, mail, or receive such notice, 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, and it is hereby specifically provided that the publication of such notice as required above shall be the only notice actually required in connection with or as a prerequisite to the redemption of any Bonds or portions thereof. By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such written notice of redemption is mailed and if due provision for such payment is made, all as provided above; the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying Agent/- Registrar out of the funds provided for such payment. 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 denomination or denominations in any integral multiple of $5,000, 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 Issuer, all as provided in the Bond Ordinance. THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond 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 integral multiple of $5,000 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 shall be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment hereof. A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one 17 requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. 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. As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into 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 denomination or denominations in any integral multiple of $5,000 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 for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond 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. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and delivered pursuant to the laws of the State of Texas; 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 and the Series of which it is a part have been performed, existed, and been done in accordance with law; that'this Bond is a general obligation of the Issuer, issued on the full faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest and principal come due, have been levied 1'8 and ordered to be levied against all taxable property in the Issuer, and have been pledged for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. City Secretary Mayor FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for, a bond, bonds, or a portion of a bond or bonds of a Series 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 The Bank of New York By Authorized Representative 19 ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to / / (Assignee's Social Security (print or type Assignee's name or Taxpayer Identification Number and address, including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated Signature Guaranteed: NOTICE: This signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: This signature must correspond with the name of the Registered Owner appearing on the face of this Bond in every particular without alteration or enlargement or any change whatsoever. Section 8. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds, together with any premium received from the sale of the Bonds, shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the goveming body of the Issuer shall compute and ascertain a rate and amount ofad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal amount of the Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount ofad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Bonds or interest thereon axe outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of 20 the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. Section 9. DEFEASANCE OF BONDS. (a) 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 arrange- ments have been made by the Issuer 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 ad valorem taxes herein levied and pledged 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 9(a)(i) or (ii) shall not be irrevocable, provided that: (1) in the proceedings providing for such payment arrangements, the Issuer 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, and (3) directs that notice of the reservation be included in any redemption notices that it authorizes. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Defeasance Securities, maturing in the amounts and times as herein- before 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 Issuer, or deposited as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held 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 9(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 theIssuer or deposited as directed in writing by the Issuer. 21 (c) The term "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, (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, and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (d) 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 Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. .(e) In the event that the Issuer 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 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. 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 Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indenmity 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 registered owner shall furnish to the Issuer 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 registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. 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 Issuer 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. 22 (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered 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 Issuer 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) Authority for Issuing Replacement Bonds. In accordance with Section 6 of Vemon's Ann. Tex. Civ. St. Art. 717k-6, now codified as Chapter 1201, Texas Government Code, this Section 10 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 Issuer or any other body or person, and the 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 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 11. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION; CUSIP NUMBERS; AND CONTINGENT INSURANCE PROVISION, IF OBTAINED. The Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the Initial Bond. The approving legal opinion of the Issuer's bond counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Bond or any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. In addition, if bond insurance is obtained, the Bonds may bear an appropriate legend as provided by the Insurer. Section 12. COVENANTS REGARDING TAX EXEMPTION. The Issuer covenants to refrain from taking any action Which would adversely affect, and to take any required action to ensure, the treatment of the Bonds as obligations described in Section 103 of the Intemal Revenue Code of 1986, as amended (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 Issuer 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 23 "private business use," as defined in Section 141 (b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, 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 govemmental 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 (b) 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 -- (1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 30 days or less 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 mounts 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 24 (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 Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained heroin 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 Issuer 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 Issuer 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 such intention, the Issuer hereby authorizes and directs the Mayor of the Issuer to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, 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 covenant (h), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code. Section 13. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the Issuer shall not expend sale proceeds or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 14. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt 25 by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally- recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 15. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 2000, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authorized by Section 16 of this Ordinance, being the information described in Exhibit A. Any financial statements so to be provided shall be prepared in accordance with the accounting principles described in Exhibit A thereto, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and audited, if the Issuer Councils an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such' financial statements is not complete within such period, then the Issuer shall provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available. (ii) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the Issuer 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 each NRMSIR and any SID or filed with the SEC. (b) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 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 or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasanees; 26 10. Release, substitution, or sale of property securing repayment of the Certificates of Obligation; and 11. Rating changes. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer 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 Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer 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 Issuer 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 Issuer'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 Issuer 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 ISSUER 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 ISSUER, 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 Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the 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 Issuer under federal and state securities laws. (v) The provisions of this Section may be mended by the issuer 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 I ssuer, but only if( 1 ) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in 27 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 Issuer (such as bond counsel) determined that such amendment will not materially impair the interest of the holders and beneficial owners of the Bonds. If the Issuer 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 any change in the type of financial information or operating data so provided. The Issuer 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. (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. Section 16. SALE OF INITIAL BOND. The Initial Bond is hereby sold and shall be delivered to SALOMON SMITH BARNEY for cash for the par value thereof and accrued interest thereon to date of delivery (accrued interest to be deposited into the Interest and Sinking Fund). It is hereby officially found, determined, and declared that the Initial Bond has been sold at public sale to the bidder offering the lowest interest cost, after receiving sealed bids pursuant to an Official Notice of Sale and Bidding Instructions and Official Statement dated May 1, 2000, prepared and distributed in connection with the sale of the Initial Bond. Said Official Notice of Sale and Bidding Instructions and Official Statement, and any addenda, supplement, or amendment thereto have been and are hereby approved by the goveming body of the Issuer, and their use in the offer and sale of the Bonds is hereby approved. It is further officially found, determined, and declared that the 28 statements and representations contained in said Official Notice of Sale and Official Statement are tree and correct in all material respects, to the best knowledge and belief of the governing body of the Issuer. Section 17. INTEREST EARNINGS ON BOND PROCEEDS. The earnings derived from the investment of proceeds from the sale of the Bonds shall be used along with other Bonds proceeds as described in Section 1 hereof; provided that after completion of such project, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that interest earnings on the Bonds proceeds which are required to be rebated to the United States of America pursuant to Section 13 hereof in order to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as interest eamings for the purpose of this Section. Section 18. APPROPRIATION. There is hereby appropriated for transfer into the Interest and Sinking Fund, from available funds of the Issuer, moneys sufficient to pay the interest coming due on the Bonds on August 1, 2000. Section 19. PUBLIC NOTICE. It is hereby officially found and determined that public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Govemment Code, and no petition was received from the qualified electors of the Issuer protesting the issuance of such Bonds. 29 EXHIBIT A DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 16 of this Ordinance. I. Annual Financial Statements and Operating Data The financial information and operating data with respect to the Issuer to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement and Tables referred to) below: Tables 1 through 6 and 8 through 14 and in Appendix B Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in paragraph 1 above.' NEXT RECORD STARTS ON NEXT PAGE PRELIMINARY OFFICIAL STATEMENT Dated May 1, 2000 Ratings: S&P: Applied For i See ("Other Information Ratings" herein) ~ NEW ISSUE - Book-Entry-Only og-~ ¢n In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes ~ under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS =g $9,865,000 ._.9. CITY OF COPPELL, TEXAS g ( Denton and Dallas Counties) GENERAL OBLIGATION BONDS, SERIES 2000 =o Dated Date: May 1, 2000 Due: August 1, as shown below PAYMENT TERMS Interest on the $9,865,000 City of Coppell, Texas, General Obligation Bonds, Series 2000 (the "Bonds") o will accrue from May 1, 2000, (the "Dated Date") and will be payable February 1 and August I of each year commencing August 1, 2000, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company CDTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make .o distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the '5 Bonds. See "The Bonds - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is The Bank of New York, New ~ York, New York (see "The Bonds - Paying Agent/Registrar"). '~ AUTHORITY FOR ISSUANCE . The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, (the ~, '- "State") including particularly Vernon's Texas Codes Annotated CV.T.C.A."), Texas Government Code, Chapter 1331, as O " amended, and are direct obligations of the City of Coppell, Texas (the "City"), payable from a continuing ad valorem tax levied ~ on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds ~ (the "Ordinance") (see "The Bonds - Authority for Issuance"). PURPOSE . .. Proceeds from the sale of the Bonds will be used for street improvements, the development of parks, drainage o improvements and to pay the costs of issuance associated with the Bonds. MATURITY SCHEDULE "' Principal Principal Principal 0 ~ Maturity Amount Maturity Amount Maturity Amount 2001 $ 255,000 2008 $ 410,000 2015 $ 605,000 ~ 2002 275,000 2009 435,000 2016 640,000 g 2003 295.000 2010 460,000 2017 680,000 . 2004 315,000 2011 485,000 2018 720,000 ~ ~ 2005 335,000 2012 515,000 2019 765,000 2 '= 2006 360,000 2013 540,000 2020 815,000 m 2007 385,000 2014 575,000 ~ · (Accrued Interest from May 1, 2000 to be added) ..~ O'~ g g SEALED BIDS DUE TUESDAY, MAY 9, 2000, AT 11:00 AM CDT '~E~ I--~e~ OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Bonds having stated maturities on and after August l, 2009, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 1, 2008, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "The Bonds - Optional Redemption"). MANDATORY SINKING FUND REDEMPTION . . . In addition to the foregoing optional redemption provision, if principal mounts designated in the serial maturity schedule above are combined to create Term Bonds, each such Term Bond shall be subject to mandatory sinking fund redemption commencing on August 1 of the first year which has been combined to form such Term Bond and continuing on August 1 in each year thereafter until the stated maturity date of that Term Bond, and the amount required to be redeemed in any year shall be equal to the principal amount for such year set forth in the serial maturity schedule above. Term Bonds to be redeemed in any year by mandatory sinking fund redemption shall be redeemed at par and shall be selected by lot t~om and among the Term Bonds then subject to redemption. The City, at its option, may credit against any mandatory sinking fund redemption requirement Term Bonds of the maturity then subject to redemption which have been purchased and canceled by the City or have been redeemed and not thereto/bre applied as a credit against any mandatory sinking fund redemption requirement. LEGALITY . . . The Bonds are offered for delivery when, as and if issued and received by the initial purchaser(s) and subject to the approving opinion of the Attorney General of 'Fexas and the opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion"). DELIVERY ... It is expected that the Bonds will be available for delivery through The Depository Trust Company on Wednesday, June 14, 2000. This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, ~f given or made, such other information or representations must not be relied upon. The information set forth herein has been obtained Jkom the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial Advisor. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described TABLE OF CONTENTS RATINGS ..........................................................27 OFFICIAL STATEMENT SUMMARY ................ 4 LITIGATION ......................................................27 CITY OFFICIALS, STAFF AND REGISTRATION AND QUALIFICATION OF BONDS CONSULTANTS ............................................. 6 FOR SALE ................................................. 27 ELECTED OFFICIALS ...........................................6 LEGAL INVESTMENTS AND ELIGIBILITY TO SELECTED ADMINISTRATIVE STAFF ................... 6 SECURE PUBLIC FUNDS IN TEXAS ............ 27 CONSULTANTS AND ADVISORS .......................... 6 LEGAL OPINIONS AND NO-LITIGATION CERTIFICATE ...........................................27 INTRODUCTION ................................................... 7 AUTHENTICITY OF FINANCIAL DATA AND OTHER THE BONDS ............................................................7 INFORMATION ..........................................28 CONTINUING DISCLOSURE OF INFORMATION... 28 TAX INFORMATION .......................................... 12 FINANCIAL ADVISOR ........................................ 29 TABLE 1 - VALUATION, EXEMPTIONS AND INITIAL PURCHASER .........................................29 GENERAL OBLIGATION DEBT .................. 15 CERTIFICATION OF THE OFFICIAL STATEMENT 29 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY ......................................... 16 APPENDICES TABLE 3 - VALUATION AND GENERAL GENERAL INFORMATION REGARDING THE CITY ........ A OBLIGATION DEBT HISTORY ................... 17 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT . B TABLE 4 - TAX RATE, LEVY AND COLLECTION FORM OF BOND COUNSEL'S OPINION ........................ C HISTORY ..................................................17 TABLE 5 - TEN LARGEST TAXPAYERS ........... 17 The cover page hereof, this page, the appendices included TABLE 6 - TAX ADEQUACY ............................ 18 herein and any addenda, supplement or amendment hereto, TABLE 7 - ESTIMATED OVERLAPPING DEBT.. 18 are part of the Official Statement. DEBT INFORMATION ........................................ 19 TABLE 8 - PRO-FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS ............... 19 TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION .............................. 19 TABLE 10 - COMPUTATION OF SELF- SUPPORTING DEBT .................................. 19 TABLE 1 I - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS ................ 20 FINANCIAL INFORMATION ............................ 21 TABLE 12 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY ........................... 21 TABLE 13 - MUNICIPAL SALES TAX HISTORY22 TABLE 15 - CURRENT INVESTMENTS ............... 24 TAX MATTERS .................................................... 25 OTHER INFORMATION .................................... 27 3 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summar>' from this Official Statement or to otherwise use it without the entire Official Statement. THE CITY .....................................The City of Coppell is a political subdivision and municipal corporation of the State, located in Denton and Dallas Counties, Texas. ~Fhe City covers approximately 14.71 square miles (see "Introduction - Description of City"). THE BONDS ..................................The Bonds are issued as $9,865,000 General Obligation Bonds. Series 2000. The Bonds are issued as serial bonds maturing 2001 through 2020, unless the purchaser designates one or more maturities as a Term Bond (see "The Bonds - Description of the Bonds"). PAYMENT OF INTEREST .............. Interest on the Bonds accrues from May I, 2000, and is payable August 1, 2000, and each February I and August 1 thereafter until maturity or prior redemption (see "The Bonds - Description of the Bonds" and "The Bonds - Optional Redemption"). AUTHORITY FOR ISSUANCE ......... The Bonds are issued pursuant to the general laws of the State, including particularly V.T.C.A., Texas Government Code, Chapter 1331, and an Ordinance passed by the City Council of the City (see "The Bonds - Authority for Issuance"). SECURITY FOR THE BONDS .......... The Bonds constitute direct and voted obligations of the City, payable from the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the City (see "The Bonds - Security and Source of Payment"). QUALIFIED TAX-EXEMPT 0BLIGATIONS ..............................The City WILL NOT designate the Bonds as "Qualified Tax-Exempt Obligations" for financial institutions. REDEMPTION ..............................The City reserves the right, at its option, to redeem Bonds having stated maturities on and after August I 2009, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 1, 2008, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "The Bonds - Optional Redemption"). TAX EXEMPTION ......................... In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS ....................... Proceeds from the sale of the Bonds will be used for street improvements, the development of parks, drainage improvements and to pay the costs of issuance associated with the Bonds. RATINGS .....................................The presently outstanding tax supported debt of the City is rated "AI" by Moody's Investors Service, Inc. CMoody's") and "A" by Standard & Poor's Ratings Services, A Division of The McGraw-kIill Companies. Inc. CS&P"). The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on the Bonds have been made to Moody's and S&P (see "Other Information - Ratings"). BOOK-ENTRY-ONLY SYSTEM ......................................The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see "The Bonds - Book-Entry-Only System"). PAYMENT RECORD ...................... The City has never defaulted in payment of its general obligation tax debt. 4 SELECTED FINANCIAL INFORMATION Ratio G.O. Fiscal Per Capita General Per Tax Debt Year Estimated 'Faxable Taxable Obligation Capita to Taxable Ended City Assessed Assessed (G.O.) G.O. Tax Assessed 9/30 Population O) Valuation (2) Valuation Tax Debt (3) Debt Valuation 1996 26,600 $ 1,525,974,337 $ 57,367 $ 40,715,175 $ 1,531 2.67% 1997 27,500 1,694,320,857 61,612 47,009,375 1,709 2.77% 1998 29,000 1,990,428,558 68,635 47,054,375 1,623 2.36% 1999 33,050 2,217,910,119 67,108 47,199,375 1,428 2.I3% 2000 34,900 2,588,091,578 74,157 58,014,375 (4> 1,662 2.24% (1) Source: City of Coppell. (2) Values reported are audited fiscal year end numbers from the City. (3) Does not include self-supporting debt. (4) Projected and includes $9.865 million General Obligation Bonds being offered herein. GENERAL FUND CONSOLIDATED STATEMENT SUMMARY Fiscal Year Ended September 30, 1999 1998 1997 1996 1995 Beginning Balance $ 6,540,2 ! 5 $ 5,099,812 $ 3,694,896 $ 2,285,843 $ 2,977,804 Total Revenue 20,150,095 18,261,270 15,455,230 13,418,428 11,084,546 Total Expenditures 17,958,207 16,155,344 13,981,060 11,826,813 10,512,165 Net Transfers (172,697) (665,523) (69,254) (182,562) (1,264,342) Net Funds Available 2,019, 191 1,440,403 1,404,916 1,409,053 (691,961 ) Ending Balance $ 8,559,406 $ 6,540,215 $ 5,099,812 $ 3,694,896 $ 2,285,843 For additional information regarding the City, please contact: Jim Witt, City Manager W. Boyd London Jr. Jennifer Armstrong, Director of Finance or Jason L. Hughes City of Coppell First Southwest Company 255 Parkway Blvd. 1700 Pacific Avenue, Suite. 500 Coppell, Texas 75019 Dallas, Texas 75201 (972) 462-0022 (214) 953-4000 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Length of Term City Council Service Expires Occupation Candy Sheehan 6 Years May 2001 Community Volunteer Mayor Marsha Tunnell 5 Years May 2001 Public Relations/Consultant Mayor Pro-Tem - Place 4 Greg Garcia 2 Years May 2000 Self-Employed Retailer Councilmember - Place 1 Jayne P. Peters I Year May 2001 Community Volunteer Councilmember - Place 2 Pat Keenan 2 Years May 2000 Consultant Councilmember - Place 3 Doug Stover 2 Years May 2000 Managerial Accountant Councilmember - Place 5 Larry Wheeler 3 Years May 2001 Self-Employed Councilmember - Place 6 Support Services Bill York 3 Years May 2000 Retail Executive Councilmember - Place 7 SELECTED ADMINISTRATIVE STAFF Length of Length of Total Service Governmental Name Position With Coppell Service Jim Witt City Manager 6 Years 25 Years Clay Phillips Deputy City Manager 8 Years 19 Years Ken Griffin Director of Engineering/Public Works 8 Years 18 Years Jennifer Armstrong Director of Finance 9 Years 13 Years Libby Ball City Secretary 7 Years 7 Years Stephanie Tumlison Tax-Assessor Collector 3 Years 28 Years Robert Hager City Attorney 19 Years 20 Years Gary Sieb Director of Planning 10 Years 30 Years CONSULTANTS AND ADVISORS Auditors .......................................................................................................................................................Weaver & Tidell, L.L.P. Dallas, Texas Bond Counsel .......................................................................................................................................McCall, Parkhurst & Hotton Dallas, Texas Financial Advisor ......................................................................................................................................First Southwest Company Dallas, Texas 6 PRELIMINARY OFFICIAL STATEMENT RELATING TO $9,865,000 CITY OF COPPELL TEXAS GENERAL OBLIGATION BONDS, SERIES 2000 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $9,865,000 City of Coppell, Texas, General Obligation Bonds, Series 2000. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Ordinance to be adopted on the date of sale of the Bonds which will authorize the issuance of the Bonds, except as otherwise indicated herein. There follows in this Official Statement descriptions of the Bonds and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. DESCRIPTION OF THE CITY . . . The City is a political subdivision and municipal corporation of the State, duly organized and existing under the laws of the State, including the City's Home Rule Charter. The City was incorporated on December 17, 1955, and first adopted its Home Rule Charter in 1986. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and seven Councilmembers. The term of office is two years with the terms of the Mayor and three of the Councilmembers' terms expiring in odd-numbered years and the other terms of the four Councilmembers expiring in even-numbered years. The City Manager is the chief administrative officer for the City. Some of the services that the City provides are: public safety (police and fire protection), highways and streets, electric, water and sanitary sewer utilities, health and social services, culture-recreation, public transportation, public improvements, planning and zoning, and general administrative services. The 1990 Census population for the City was 16,983, while the estimated 2000 population is 34,900. The City covers approximately 14.71 square miles. THE BONDS DESCRIPTION OF THE BONDS.. . The Bonds are dated May 1, 2000, and mature, or are subject to mandatory redemption prior to maturity, on August I in each of the years and in the amounts shown on the cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on February 1 and August 1, commencing August 1, 2000. The definitive Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company CDTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE.. . The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, particularly V.T.C.A., Texas Government Code, Chapter 1331, as amended; election held November 2, 1999, and passed by a majority of the participating voters; and the Ordinance. SECURITY AND SOURCE OF PAYMENT.. . All taxable property within the City is subject to a continuing direct annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on all Bonds. TAX RATE LIMITATION.. . All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. OPTIONAL REDEMPTION . . . The City reserves the right, at its option, to redeem Bonds having stated maturities on and after August 1, 2009, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 1, 2008, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bonds are to be redeemed, the City may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be redeemed. the Paying Agent/Registrar (or DTC while the Bonds are in Book-Entry-Only form) shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. If a Bond (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be 7 redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. MANDATORY SINKING FUND REDEMPTION . . . In addition to the foregoing optional redemption provision, if principal amounts designated in the serial maturity schedule above are combined to create Term Bonds, each such Term Bond shall be subject to mandatory sinking fund redemption commencing on August I of the first year which has been combined to form such Term Bond and continuing on August I in each year thereafter until the stated maturity date of that Term Bond, and the amount required to be redeemed in any year shall be equal to the principal amount for such year set forth in the serial maturity schedule above. Term Bonds to be redeemed in any year by mandatory sinking fund redemption shall be redeemed at par and shall be selected by lot from and among the Term Bonds then subject to redemption. The City, at its option, may credit against any mandatory sinking fund redemption requirement Term Bonds of the maturity then subject to redemption which have been purchased and canceled by the City or have been redeemed and not theretofore applied as a credit against any mandatory sinking fund redemption requirement. The principal amount of Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of Term Bonds of the same maturity which (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. NOTICE OF REDEMPTION . . . Not less than 30 days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND OR PORTION THEREOF SHALL CEASE TO ACCRUE. DEFEASANCE.. . The Ordinance provides for the defeasance of the Bonds when the payment of the principal of and premium, if any, on the Bonds, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent, in trust (1) money sufficient to make such payment or (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation and expenses of the paying agent for the Bonds. The Ordinance provides that "Defeasance Securities" means (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) 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 are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (c) 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 are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. The City has additionally reserved the right, subject to satisfying the requirements of(l) and (2) above, to substitute other Defeasance Securities for the Defeasancc Securities originally deposited, to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the City moneys in excess of the amount required for such defeasance. Upon such deposit as described above, such Bonds shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment or redemption of the Bonds have been made as described above, all rights of the City to initiate proceedings to call the Bonds lbr redemption or take any other action amending the terms of the Bonds are extinguished; provided, however. that the right to call the Bonds for redemption is not extinguished if the City: (i) in the proceedings providing for the firm banking and financial arrangements, expressly reserves the right to call the Bonds for redemption; (ii) gives notice of the reservation of that right to the owners of the Bonds immediately following the making of the firm banking and financial arrangements; and (iii) directs that notice of the reservation be included in any redemption notices that it authorizes. BOOK-ENTRY-ONLY SYSTEM.. . This section describes how ownership of the Bonds are to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and credited by DTC while the Bonds are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The City believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company CDTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will be issued for each maturity of the Bonds in the aggregate principal amount of each such maturity and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing City" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing Citys, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Bonds under the DTC system must be made by or through DTC Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in rum to be recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system described herein is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined). The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts on each payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Bonds are in the Book-Entry Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and the Book-Entry Only System, and (ii) except as described above, notices that are to be given to registered owners under the Trust Agreement will be given only to DTC. Information concerning DTC and the Book-Entry Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City or the Purchasers. Effect of Termination of Book-Entry Only System. In the event that the Book-Entry Only System is discontinued by DTC or the use of the Book-Entry Only System is discontinued by the City, the following provisions will be applicable to the Bonds. The Bonds may be exchanged for an equal aggregate principal amount of the Bonds in authorized denominations and of the same maturity upon surrender thereof at the principal office for payment of the Trustee. The transfer of any Bond may be registered on the books maintained by the Trustee for such purpose only upon the surrender of such Bond to the Trustee with a duly executed assignment in form satisfactory to the Trustee. For every exchange or transfer of registration of Bonds, the Trustee and the City may make a charge sufficient to reimburse them for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer. The City shall pay the fee, if any, charged by the Trustee for the transfer or exchange. The Trustee will not be required to transfer or exchange any Bond after its selection for redemption. The City and the Trustee may treat the person in whose name a Bond is registered as the absolute owner thereof for all purposes, whether such Bond is overdue or not, including for the purpose of receiving payment of, or on account of. the principal of, premium, if any, and interest on, such Bond. PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar is The Bank of New York, New York, New York. In the Ordinance, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. TRANSFER, EXCHANGE AND REGISTRATION . .. In the event the Book-Entry-Only System should be discontinued, the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bonds being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Bond. RECORD DATE FOR INTEREST PAYMENT . . . The record date ("Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the 15th day of the preceding month; or In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("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 Holder of 10 a Bond appearing on the registration 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. BONDHOLDERS' REMEDIES . . . The Ordinance does not establish specific events of default with respect to the Bonds. Under State law there is no right to the acceleration of maturity of the Bonds upon the failure of the City to observe any covenant under the Ordinance. Although a registered owner of Bonds could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Bonds, such judgment could not be satisfied by execution against any property of the City. Such registered owner's only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the City to levy, assess and collect an annual ad valorera tax sufficient to pay principal of and interest on the Bonds as it becomes due. The enforcement of any such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. The Ordinance does not provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition. Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code. Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or bondholders of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Ordinance and the Bonds are qualified with respect to the customary rights of debtors relative to their creditors. USE OF BOND PROCEEDS.. . Proceeds from the sale of the Bonds are expected to be expended as follows: Bonds Deposit to Construction Fund $ Deposit to Debt Service Fund Total $ (1) (1) Includes costs of issuance. 11 TAX INFORMATION An VALOREM TAX LAW.. . The appraisal of propeta' within the City is the responsibility of the Dallas Central Appraisal District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under the Property Tax Code to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homesteM for a tax year to an mount not to exceed the less of(l ) the market value of the property, or (2) the sum of(a) 10% of the appraised value of the property for the last year in which the propeR, was appraised for taxation times the number of years since the propeR' was last appraised. plus (b) the appraised value of the property for the last year in which the propeR' was appraised plus (c) the market value of all new improvements to the propert3'. The value placed upon property within the Appraisal District is subject to review by an Appraisal Revie,,v Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property. within the Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the V.T.C.A., Property Tax Code, for identification of propeRt), subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property' for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Section l-b, Article VIII, and State law, the governing body of a political subdivision. at its option, may grant: (1) An exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section l-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. Article VIII provides that eligible owners of both agricultural land (Section l-d) and open-space land (Section 1-d-l), including open-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property appraised for propeRt), taxation on the basis of its productive capacity. The same land may not be qualified under both Section I-d and 1 -d- 1. Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorera taxation unless the governing body of a political subdivision elects to tax this property. Boats owned as nonbusiness property' are exempt from ad valorem taxation. Article VIII, Section l:j, provides for "freeport property" to bc exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less/br the purpose of assembly, storage, manufacturing, processing or fabrication. Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal. The City and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the tax values on properly, in the zone are "frozen" at the value of the property at the time of creation of the zone. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property.. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE ... By each September I or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The City Council will be required to adopt the annual tax rate for the City before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the City. If the City Council does not adopt a tax rate by such required date the tax rate for that tax year is the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the City for the preceding tax year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. 12 Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". Effective January l, 2000, a tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or 103 per cent of the effective tax rate until a public hearing is held on the proposed tax rate following a notice of such public hearing (including the requirement that notice be posted on the City's website if the City owns, operates or controls an intemet website and public notice be given by television if the City has free assess to a television channel) and the City Council has otherwise complied with the legal requirements for the adoption of such tax rate. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAX PAYMENT . . . Property within the City' is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October I of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February I of each year and the final installment due on August 1. PENALTIES AND INTEREST.. . Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative Month Penalty Interest Total February 6% 1% 7% March 7 2 9 April 8 3 11 May 9 4 13 June 10 5 15 July 12 6 18 After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, a 15% attorney's collection fee is added to the total tax penalty and interest charge. Under cermirt circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. CITY APPLICATION OF TAX CODE . . . The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $75,000; the disabled are also granted an exemption of $75,000. The City has not granted an additional exemption of 20% of the market value of residence homesteads; minimum exemption of $5,000. See Table 1 for a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. 13 The City does not tax nonbusiness personal propea)'; and the City collects its own taxes. The City does not permit split payments, and discounts are not allowed. The City does not tax freeport property. The City does not collect the additional one-half cent sales tax for reduction ofad valorera taxes. The City has adopted a tax abatement policy. TAX ABATEMENT POLICY.. . The City has established a tax abatement program to encourage economic development. In order to be considered for tax abatement, a project must meet several criteria pertaining to job creation, property value enhancement and type of use. Generally, projects are eligible for a tax abatement of up to 75% for a period of five years. The value of property subject to abatement is shown in Table 1. 14 TABLE 1 - VALUATION~ EXEMPTIONS AND GENERAL OBLIGATION DEBT 1999/00 Market Valuation Established by Dallas Central Appraisal District $ 2,968,435, 120 (excluding totally exempt property) 92,315,270 Less Exemptions/Reductions at 100% Market Value: Income Producing Tangible Personal Property Under $500.00 $ 2,630 Over 65 and Disabled 26, 163, 135 Disabled Veterans 386,610 Freeport 67,919,439 Open-Space and Timberland Use Reductions 68,224,063 Tax Abatement Reductions 117,364,698 1 0% Cap on Residential Homesteads 7,967,697 $ 288,028,272 1999/00 Taxable Assessed Valuation $ 2,588,091,578 General Obligation Debt Payable from Ad Valorera Taxes (as of 4/1 5/00)(~) General Obligation Debt $ 45,205,000 Contract Revenue Bonds 50,000 Coppell MUD # 1 Revenue Bonds 4,244,375 The Bonds 9,865,000 General Obligation Debt Payable from Ad Valorera Taxes $59,364,375 Less: Self Supporting Debt (2) Contract Revenue Bonds $ 50,000 $ 50,000 Net General Obligation Debt Payable from Ad Valorera Taxes $ 59,314,375 General Obligation Interest and Sinking Fund as of 10/1/99 $ 637,512 Ratio General Obligation Tax Debt to Taxable Assessed Valuation 2.29% 2000 Estimated Population - 34,900 Per Capita Taxable Assessed Valuation - $74, ! 57 Per Capita General Obligation Debt Payable from Ad Valorem Taxes - $1,701 Per Capita Net General Obligation Debt Payable from Ad Valorera Taxes - $1,700 (1) The above statement of indebtedness does not include currently outstanding $20,725,000 Waterworks and Sewer System revenue bonds, as these bonds are payable solely from the net revenues of the Waterworks and Sewer System (the "System"), as defined in the ordinances authorizing the bonds. (2) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 10. It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the future. 15 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY Taxable Appraised Vaue for Fiscal Year Ended September 30, 2000 1999 1998 % of % of % of Category Amount Total Amount Total Amount Total Real, Residential, Single-Fmmily $ 1,810,771,230 62.96% $ 1,562,525,880 64.13% $ 1,400,030,440 63.72% Real, Residential, Multi-Family 120,205,850 4.18% 75, 113,200 3.08% 66,943, ! 10 3.05% Real, Vacant Lots/Tracts 64,048,510 2.23% 63,489,450 2.61% 62,551,100 2.85% Real, Acreage (Land Only) 97,768,840 3.40% 116,700,880 4.79% 118,649,800 5.40% Real, Farm and Ranch Improvements 0.00% - 0.00% 875,970 0.04% Real, Commercial 419,570,080 14.59°/o 292,377,230 12.00% 226,972,220 10.33% Real, Industrial 4,217,140 0.15% 3,606,560 0.15% 3,572,800 0.16% Real, Oil, Gas and Other Mineral Reserves 38,240 0.00% 43,560 0.00% 0.00% Real and Tangible Personal, Utilities 45,157,960 1.57% 45,613,640 1.87% 43,452,440 1.98% Tangible Personal, Commercial 292,933,110 10.19% 261,464,236 10.73% 182,014,330 8.28% Tangible Personal, Industrial 18,828,790 0.65% 13,100,140 0.54% 9,875,420 0.45% Tangible Personal, Mobile Homes 2,580, 100 0.09% 2,441,420 0.10O/O 2,427,240 0.11% Other 0.00o/o 0.00% 79,653,470 3.63% Total Appralsed Value Before Exemptions $ 2,876,119,850 100.00O/O $ 2,436,476,196 100.00O/O $ 2,197,018,340 100.00o/o Less: Total Exemptions/Reductions 288,028,272 217,304,200 217,787,209 Taxable Assessed Value $ 2,588,091,578 $ 2,219, 171,996 $ 1,979,231,131 Taxable Appraised Value for Fiscal Year Ended September 30, 1997 1996 %of %of Category Amount Total Amount Total Real, Residential, Single-Family $ 1,246,923,090 69.88% $ 1,124,132,600 69.58% Real, Residential, Multi-Family 46,208,150 2.59O/O 45,406,400 2.81% Real, Vacant Lots/tracts 88,232,330 4.95% 81,149,270 5.02% Real, Acreage (Land Only) 81,321,180 4.56% 94,783,840 5.87% Real, Farm and Ranch Improvements %0,800 0.04% 760,800 0.05% Real, Commercial 153, 116, 160 8.58% 107,290,460 6.64% Real, Industrial 3, 144,800 0. 18% 2,756,240 0. 17% Real, Oil, Gas and Other Mineral Reserves 0.00% 0.00% Real and Tangible Personal, Utilities 38,801,850 2. 17% 38,965,930 2.41% Tangible Personal, Commercial l 15,459, 134 6.47% 96,088,300 5.95% Tangible Personal, Industrial 8,082,620 0.45% 20,749,999 1.28% Tangible Personal, Mobile Homes 2,222,800 0. 12% 0.00% Tangible Personal, Other 0.00% 3,576,050 0.22% Total Appraised Value Before Exemptions $ 1,784,272,914 100.00O/O $ 1,615,659,889 100.00O/O Less: Total Exemptions/Reductions 95,294,407 84,227,597 Taxable Assessed Value $ 1,688,978,507 $ 1,531,432,292 NOTE: Valuations shown are certified taxable assessed values reported by the Dallas Central Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. 16 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY Ratio G.O. Fiscal Per Capita General Per Tax Debt Year Estimated Taxable Taxable Obligation Capita to Taxable Ended City Assessed Assessed (G.O.) G.O. Tax Assessed 9/30 Population (D Valuation (2) Valuation Tax Debt (3) Debt Valuation 1996 26,600 $ 1,525,974,337 $ 57,367 $ 40,715,175 $ 1,531 2.67% 1997 27,500 1,694,320,857 61,612 47,009,375 1,709 2.77% 1998 29,000 1,990,428,558 68,635 47,054,375 1,623 2.36% 1999 33,050 2,217,910, ! 19 67, 108 47, 199,375 1,428 2.13% 2000 34,900 2,588,091,578 74,157 58,014,375 (4) 1,662 2.24% (1) Source: City ofCoppell. (2) Values reported are audited fiscal year end numbers from the City. (3) Does not include self-supporting debt. (4) Projected and includes $9.865 million General Obligation Bonds being offered herein. TABLE4 - TAX RATE, LEVY AND COLLECTION HISTORY Interest Fiscal and Year Tax General Sinking % Current % Total Ended Rate Fund Fund Tax Levy Collections Collections 1996 $ 0.66950 $ 0.41870 $ 0.25080 $ 10,216,400 99.16% 99.41% 1997 0.66860 0.41650 0.25210 11,328,230 99.52% 99.99% 1998 0.66860 0.40999 0.25861 13,308,006 99.61% 99.84% 1999 0.64860 0.41870 0.22990 14,385,365 99.23% 99.88% 2000 0.64860 0.42556 0.22304 16,813,960 97.57% 0) 97.68% O) (1) Collections for part year only, through February 29, 2000. TABLE 5 - TEN LARGEST TAXPAYERS 1999/00 % of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation Minyard Food Stores Wholesale/Grocery $ 54,092,281 2.09 % General Telephone Telephone/Utility 33,947,910 1.31 Gulf United Industries Wholesale/Distribution 32,863,245 1.27 Houtex USA Inc. Multi-Family Complex 25,500,000 0.99 Post Apartment/Homes LP Multi-Family Complex 17,039,820 0.66 Coppell Apartments I LP Multi-Family Complex 16,902,610 0.65 Texas Utilities Electric Electric Utility 16,488,620 0.64 First Security Bank Wholesale/Distribution 14,566,730 0.56 Western Rim Investors Multi-Family Complex 14,433,720 0.56 WHCO Real Estate LP Multi-Family Complex 11,132,310 0.43 $ 236,967,246 9.16 % GENERAL OBLIGATION DEBT LIMITATION.. . No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "Tax Rate Limitation"). 17 TABLE 6 - TAX ADEQUACY 2000 Principal and Interest Requirements ......................................................... $ 6,325,877 $0.2469 Tax Rate at 99% Collection Produces ................................................... $ 6,326,098 Average Annual Principal and Interest Requirements, 2000-2020 .............................. $ 4,373,666 $. 1707 Tax Rate at 99% Collection Produces ...................................................... $ 4,373,694 TABLE 7 - ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds CTax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. City's 1999/00 Overlapping Taxable 1999/00 Total Estimated G.O. Assessed Tax G.O. Tax % Tax Debt Taxing Jurisdiction Value Rate Debt Applicable As of 4/15/00 Direct: City of Coppell $ 2.588,091,578 $0.6486 $ 59,364,375 (1) 100.00% $ 59,364,375 Overlapping: Dallas County 106,531,922,692 0. 1960 256,490, 138 1.02% 2,616, 199 Coppell Independent School District 3,937,459,872 1.6000 128,614,432 50.94% 65,516,192 Carrollton-Farmers Branch Independent School District 11,252,935,510 1.6137 249,285,646 0.60% 1,495,714 Dallas County Community College District 109, 167,519,669 0.0500 1.02% Dallas County, Hospital District 106,723.025,652 0.1960 1.02% Denton County 19,155,009,081 0.0250 110,322,571 0.09% 99,290 Denton County RUD No. I 362,896,523 0.4730 16,645,000 10.98% 1,827,621 Irving FCD Section Ill 865,668,849 0.3558 7,250,487 * Lewisville Independent School District 9,704,817,666 1.5671 386,672,515 0.21% 812,012 Northwest Dallas County, Flood Control District No. I 260. 172,342 0.3000 8,424,000 100.00°/O 8,424,000 Total $1,223,069,164 $ 140, 155,404 Total Direct and Overlapping G. O. Tax Debt $ 140,155,404 Ratio of Direct and Overlapping G. O. Tax Debt to Taxable Assessed Valuation 5.42% Per Capita Overlapping G. O.Tax Debt 4,015.91 · Less than .01% (1) Includes the Bonds. 18 DEBT INFORMATION TABLE 8 - PRO-FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS Fiscal Year Ending Outstanding General Obligation Debt o) This $9,865,000 Issue (2) 30-Sep Principal Interest Total P&I Principal Interest Total P&I Totals 2000 $ 3,550,000 $ 2,627,651 $ 6,177,651 $ 148226 $ 148226 $ 6,325,877 2001 3,740,000 2,420,185 6,160,185 $ 255,000 584 299 839 299 6,999,484 2002 3,895,000 2,233,382 6,128,382 275,000 566 411 841 411 6,969,793 2003 4,130,000 2,028,950 6,158,950 295,000 547 174 842 174 7,001,124 2004 4,330,000 1,814,564 6,144,564 315,000 526 586 841 586 6,986,151 2005 4,520,000 1,592,399 6,112,399 335,000 504 649 839 649 6,952,048 2006 3,546,941 2,032,716 5,579,657 360,000 481 193 841 193 6,420,849 2007 2,242,398 1,899,242 4,141,640 385,000 456 049 841 049 4,982,689 2008 2,360,036 1,795,228 4,155,264 410,000 429 218 839 218 4,994,481 2009 2,490,000 977,575 3,467,575 435,000 403 418 838 418 4,305,993 2010 2,170,000 855,584 3,025,584 460,000 379 495 839 495 3,865,079 2011 2,085,000 743,810 2,828,810 485,000 354,683 839 683 3,668,493 2012 2,210,000 630,088 2,840,088 515,000 327,925 842 925 3,683,013 2013 2,280,000 509,291 2789,291 540,000 299,170 839 170 3,628,461 2014 2,260,000 386,129 2,646,129 575,000 268,220 843 220 3,489,349 2015 1,945,000 272,141 2,217,141 605,000 234,878 839 878 3,057,019 ~016 1,345,000 181,601 1,526,601 640,000 199,075 839 075 2,365,676 2017 1,420,000 109,506 1,529,506 680,000 160,455 840 455 2,369,961 2018 575,000 57,313 632,313 720,000 118,795 838 795 1,471,108 2019 605,000 26,219 631,219 765,000 73,863 838 863 1,470,081 2020 815,000 25,265 840,265 840,265 $ 51,699,375 $ 23,193,573 $ 74,892,948 $ 9,865,000 $ 7,089,044 $16,954,044 $ 91,846,992 (1) "Outstanding Debt" does not include lease/purchase obligations. (2) Average life of the issue - 12.171 years. Interest on the Bonds has been calculated at the rate of 5.909% for purposes of illustration. TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION Tax Supported Debt Service Requirements, Fiscal Year Ending 9-30-00 $ 6,177,651 Interest and Sinking Fund, 9-30-99 $ 637,512 Interest and Sinking Fund Tax Levy @ 98.5% Collection 5,685,892 Budgeted Transfers 150,000 Estimated Investment Income 140,000 Penalty and Interest and Delinquents 35,000 $ 6,648,404 Estimated Balance, 9-30-00 $ 470,753 TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT Net System Revenue Available, Fiscal Year Ended 9-30-99 $ 5,401,557 Less: Requirements for Revenue Bonds 2,461,155 Balance Available for Other Puposes $ 2,940,402 Requirements for System Tax Bonds $ 27, 175 Percentage of System General Obligation Bonds Self-Supporting 100% 19 TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Amount Date Amount Previously Being Unissued Purpose Authorized Authorized Issued Issued Balance Park Improvements 3/3/1990 $ 1,030,000 $ 835,000 $ - $ 195,000 Street Improvements 3/3/1990 7,750,000 7,665,000 85,000 Drainage Improvements 3/3/1990 800.000 400,000 400,000 Police and Fire Improvements 3/3/1990 1,400,000 1,295.000 105,000 Library, Improvements 3/3/1990 2,600,000 2,520,000 80,000 Park Improvements 11/2/1999 8,685,000 5.785.000 2,900,000 Drainage Improvements 11/2/1999 1,700,000 295,000 1,405,000 Street Improvements 11/2/1999 30,345,000 3,785,000 26,560,000 $54,310,000 $12,715,000 $ 9,865,000 $31,730,000 ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT... The City does not anticipate the issuance of additional general obligation debt within the next twelve months. PENSION FUND.. . The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System CTMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. (For more detailed information concerning the retirement plan, see Appendix B, "Excerpts from the City's Annual Financial Report" - Note #18.) 20 FINANCIAL INFORMATION TABLE 12 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY Fiscal Years Ended September 30, 1999 1998 1997 1996 1995 Revenues: Taxes, Penalties and Interest $14,055,946 $12,279,678 $10,795,915 $ 9,318,186 $ 8,069,566 Charges for Services 2,682, 841 2,418,901 2, 145,910 1,873, 102 1,306,862 Licenses and Permits 1,622,557 2, 141,409 1,365,335 1,456,004 1,091,873 Intergovernmental 299,883 162, 111 115,267 59,600 Interest 506,333 453,729 348,450 249,865 211,893 Fine and Forfeitures 732,263 555,587 471,272 319,862 292,892 Contributions Miscellaneous 250,272 249,855 2 ! 3,081 141,809 111,460 Total Revenues $ 20,150,095 $ 18,261,270 $15,455,230 $13,418,428 $11,084,546 Expenditures: .GeneralGovernment $ 3,620,756 $ 3,373,543 $ 2,945,948 $ 2,655,876 $ 2,546,570 Public Safety 7,919,724 7,025,384 6,046,898 5,297,477 4,661,124 Public Works 2,538,584 2,213,584 2, 106,842 2,010,90 ! 1,598,513 Cultural and Recreational 1,984,858 1,650,470 1,652,918 1,325,681 885,310 Capital Outlay 1,778,389 1,841,171 1,228,454 536,878 820,648 Debt Service 115,896 51,192 Total Expenditures $17,958,207 $16,155,344 $13,981,060 $11,826,813 $10,512,165 Capital Leases and Bonds Payable $ 47,501 $ 286,477 $ $ $ Operating Transfers - Net (220,198) (952,000) (69,254) (182,562) (1,264,342) Total Other Sources (Uses) $ (172,697) $ (665,523) $ (69,254) $ (182,562) $ (i,264,342) Excess (Deficiency) of Revenues Over Expenditures and OtherSources(Uses) $ 2,019,191 $ 1,440,403 $ 1,404,916 $ 1,409,053 $ (691,961) Beginning Fund Balance 6,540,215 5,099,812 3,694,896 2,285,843 2,977,804 Ending FundBalance $ 8,559,406 $ 6,540,215 $ 5,099,812 $ 3,694,896 $ 2,285,843 21 TABLE 13 - MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act. VATCS, Tax Code, Chapter 321, which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged to the payment of the Bonds. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts. State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. On May 4, 1996, the voters of the City approved the imposition of an additional sales and use tax of one-half of one percent (½% of 1%) for recreational facilities. Collection for the additional tax went into effect on October 1, 1996. Fiscal Equivalent Year % of of nded Total Ad Valorem Ad Valorera Per 9/30 Collected 1% Sales Tax 1/2% Sales Tax Tax Levy Tax Rate Capita 1996 $ 1,474,581 $ 1,474,581 N/A 14.43% $ 0.0966 $ 55.44 1997 2,870,720 (~) 1,970,218 900,502 25.34% 0.1694 104.39 1998 3,348,752 (1) 2,226,052 1,122,700 25.16% 0.1682 115.47 1999 4,023,912 (D 2,676,966 1,346,946 27.97% 0.1814 121.75 2000 1,532,369 (1) 1,027,794 (2)504,575 (2) 9.11% (2) 0.0592 (2) 43.91 (2) (1) Includes collections for the ½ of 1% sales tax. (2) Partial collections through February 29, 2000. FINANCIAL POLICIES Basis of Accounting.. . The City's accounting records of the governmental fund revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they are available and measurable. Expenditures are recognized in the accounting period in which the fund liability occurred, if measurable, except for unmatured interest on general long-term debt. Proprietary Fund revenues and expenses are recognized on the full accrual basis. Revenues are recognized in the accounting period in which they are earned and become measurable. Expenses are recognized in the accounting period in which they are incurred. Fund Balances.. . It is the City's policy regarding the General Fund and Enterprise Funds that working capital resources should be maintained at 10% of the Fund's operating expenditure budget by Council recommendation. The City Charter requires a minimum of 10% of operating expenditures be maintained. Debt Service Fund Balance.. . The City maintains its various debt service funds in accordance with the covenants of the bond ordinance. Use of Bond Proceeds.. . The City's policy is to use bond proceeds for capital expenditures only. Such revenues are never to be used to fund normal City operations. Budgetary Procedures.. . The City Charter establishes the fiscal year as the twelve-month period beginning each October 1. Each year by August 5, the City Manager, after review, submits a budget of estimated revenues and expenditures to the City Council. Subsequently, the City Council will hold work sessions to discuss and amend the budget to coincide with their direction of the City. Various public hearings may be held to comply with state and local statutes. The City Council will adopt a budget prior to September 30. If the Council fails to adopt a budget the amount appropriated for operations for the current fiscal year shall be deemed adopted for the ensuing fiscal year on a month to month basis with all items in it pro-rated accordingly until such time as the City Council adopts a budget for the ensuing fiscal year. INVESTMENTS The City of Coppell invests its investable timds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City of Coppell. Both state law and the City's investment policies are subject to change. 22 LEGAL INVESTMENTS.. . Under Texas law, the City, is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentaiities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) certificates of deposit that are guaranteed or insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and amount provided by law for City deposits, (7) certificates of deposit and share certificates issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the clauses (1) through (5) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper that is rated at least A-I or P-I or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no-load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no- load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating finn of not less than AAA or its equivalent. The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. INVESTMENT POLICIES.. . Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that ,includes a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum 'average dollar-weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives conceming: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers .jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS ... Under Texas law' the City is additionally required to: (1) annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the authorized representative of firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers: (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict the investment in mutual funds in the aggregate to no more than 80% of the City' s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service and further restrict the investment in non-money market mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the entity's monthly average fund balance, excluding 23 bond proceeds and reserves and other funds held for debt service: and (8) require local govemment investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. TABLE 15 - CURRENT INVESTMENTS As of March 3 1, 2000, the City's investable funds were invested in the following categories: Type of Investment %of Description Portfolio Purchase Price Market Value TexPool 6.76% 3,784,561.67 3,778,391.21 Freddie Mac Notes 10.40% 5,824,072.83 5,920,205.60 Fannie Mae Notes 47.77% 26,761,934.80 27,048,389.10 Federal Farm Credit Bank 1.96% 1,097,526.52 1,098,197.10 Federal Home Loan Notes 33.11% 18,548,703.48 18,707,905.80 100.00% 56,016,799.30 56,553,088.81 TexPool is a local government investment pool under the control of the Texas Comptroller of Public Accounts. The Comptroller has engaged Chase Bank of Texas, and its affiliates, to provide investment management and fund accounting services for TexPool. First Southwest Asset Management, Inc., an affiliate of First Southwest Company, provides customer service and marketing for the pool. TexPool currently maintains a AAAm rating from Standard & Poor's. The pool's investment objectives include achieving a stable net asset value of $1.00 per share. Daily investment or redemption of funds is allowed by the participants. 24 TAX MATTERS OPINION.. . On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render their opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof, (1) interest on the Bonds will be excludable from the "gross income" of the holders thereof and (2) the Bonds will not be treated as "private activity bonds" the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel ~vill express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See Appendix C - Form of Bond Counsel's Opinion. In rendering their opinion, Bond Counsel will rely upon (a) the City's no-arbitrage certificate and (b) covenants of the City with respect to arbitrage, the application of the proceeds to be received from the issuance and sale of the Bonds and certain other matters. Failure of the City to comply with these representations or covenants could cause the interest on the Bonds to become includable in gross income retroactively to the date of issuance of the Bonds. The law upon which Bond Counsel have based their opinion is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that such law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT... The initial public offering price to be paid for one or more maturities of the Bonds (the "Original Issue Discount Bonds") may be less than the principal mount thereof. In such event, the difference between (i) the amount payable at the maturity of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount with respect to such Original Issue Discount Bond in the hands of any owner who has purchased such Original Issue Discount Bond in the initial public offering of the Bonds. Under existing law, such initial owner is entitled to exclude from gross income (as defined in Section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the period that such Original Issue Discount Bond continues to be owned by such owner. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Bond. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. COLLATERAL FEDERAL INCOME TAX CONSEQUENCES . . . The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed earned income credit, owners of an interest in a FASIT, certain S corporations with Subchapter C earnings and profits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. 25 INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF TIlE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM TIlE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS. Interest on the Bonds will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Section 55 of the Code imposes a tax equal to 20 percent for corporations, or 26 percent for non corporate taxpayers (28 percent for taxable excess exceeding $175,000), of the taxpayer's "alternative minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for the taxable year. Interest on the Bonds may be subject to the "branch profits tax" imposed by section 884 of the Code on the effectively-connected earnings and profits of a foreign corporation doing business in the United States. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds, although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price or, in the case of a bond issued at an original issue discount, the "revised issue price'~ (i.e., the issue price plus accrued original issue discount.). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. STATE, LOCAL AND FOREIGN' TAXES.. . Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. 26 OTHER INFORMATION RATINGS The presently outstanding tax supported debt of the City is rated "AI" by Moody's. "A" by S&P. The City also has issues outstanding which are rated 'Aaa" by Moody's, "AAA" by S&P through insurance by various commercial insurance companies. Application(s) for contract rating(s) on this issue (have) (has) been made to Moody's, S&P. An explanation of the significance of such rating(s) may be obtained from the company furnishing the rating. The rating(s) reflect(s) only the respective view(s) of such organization(s) and the City makes no representation as to the appropriateness of the rating(s). There is no assurance that such rating(s) will continue for any given period of time or that they (it) will not be revised downward or withdrawn entirely by (either or both) of such rating companies (company), if in the judgment of (either or both) companies (company), circumstances so warrant. Any such downward revision or withdrawal of such rating(s), (or either of them), may have an adverse effect on the market price of the Bonds. LITIGATION The City is a Defendant in a land use case styled Jim Sowell Construction Co., et al. v. City of Coppell, et al., filed in United Stated District Court, in which the plaintiffs allege violations of the Federal Fair Housing Act, along with civil rights, vested rights and taking claims arising from City initiated zoning of certain property from multi-family to single family. Plaintiffs allege damages of $3,000,000 to $7,000,000. The City has denied any liability and is vigorously defending this case. The City has presented evidence on its behalf that plaintiffs have incurred no damages in this case. City staff is of the opinion that if a judgment were rendered against the City in this case, such judgment would not have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Bonds are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Bonds be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION - Ratings" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Bonds are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. LEGAL OPINIONS AND NO-LITIGATION CERTIFICATE The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and to the effect that the Bonds are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the approving legal opinion of Bond Counsel, to like effect and to the effect that the interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. The customary closing papers, including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Bonds, or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Bonds will also be furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in 27 its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds in the Official Statement to verify, that such description conforms to the provisions of the Ordinance. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. The legal opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of the discontinuance of the Book-Entry- Only System. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. CONTINUING DISCLOSURE OF INFORMATION In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds. The City is required to observe the agreement for so long as it remains Obligated to advance funds to pay the Bonds. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors. This information will be available to securities brokers and others who subscribe to receive the information from the vendors. ANNUAL REPORTS . . . The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered one through six and eight through fourteen and in Appendix B. The City will update and provide this information within four months after the end of each fiscal year ending in or after 2000. The City will provide the updated information to each nationally recognized municipal securities information repository CNRMS1R") and to any state information depository CSID") that is designated by the State of Texas and approved by the State of Texas and approved by the staffof the United States Securities and Exchange Commission (the "SEC"). The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial statements by the required time and audited financial statements when and if such audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by January 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768- 2177, and its telephone number is 512/476-6947. MATERIAL EVENT NOTICES . . . The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to purchase or sell Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (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 or events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; and (11) rating changes. (Neither the Bonds nor the Ordinance make any provision for debt service reserves, credit enhancement, liquidity enhancement. In addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board CMSRB"). AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID... The City has agreed to provide the foregoing information only to NRMSIRs and the S ID. The information will be available to holders of Bonds only if the holders comply with the procedures and pay the charges established by such information vendors or obtain the information through securities brokers who do so. 28 LIMITATIONS AND AMENDMENTS.. . The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be 'relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Bonds may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement 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, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of the SEC Rule 15c2-12 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. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS.. . The City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company may submit a bid for the Bonds, either independently or as a member of a syndicate organized to submit a bid for the Bonds. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor to the City has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. INITIAL PURCHASER After requesting competitive bids for the Bonds, the City accepted the bid of (the "Initial Purchaser") to purchase the Bonds at the interest rates shown on the (inside) cover page of the Official Statement at a price of __ of par plus a cash premium (if any) of $ . The Purchaser(s) can give no assurance that any trading market will be developed for the Bonds after their sale by the City to the Initial Purchaser. The City has no control over the price at which the Bonds are subsequently sold and the initial yield at which the Bonds will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and deliver,:; of the Bonds, the City will furnish a certificate, executed by proper officers, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of said Bonds and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue 29 in any material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of the last audited financial statements of the City. The Ordinance authorizing the issuance of the Bonds will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto. and authorize its further use in the reoffering of the Bonds by the Purchaser. Mayor City of Coppell, Texas ATTEST: City Secretary 30 APPENDIX A GENERAL INFORMATION REGARDING THE CITY · Amarillo F A . · Dallas ou C OPPEL L ort Worth ·· I Paso Austin aH ston · THIS PAGE LEFT BLANK INTENTIONALLY THE CITY LOCATION .... The City of Coppell is located in the extreme northwest comer of Dallas County with a portion extending into Denton County. It is approximately 18 miles from downtown Dallas, 24 miles from Fort Worth, and 20 miles from Denton. POPULATION .... The City of Coppell has experienced a steady growth in population since the 1950's. The City was incorporated during the 1950's with a population of 666. The 1980 U.S. Census showed a population of 3,826, with the 1990 U.S. Census figure reporting a population of 16,983. The population at present is estimated to be 34,900. Coppell is located near the Dallas/Fort Worth International Airport, a major intemational air transportation center providing more than 30,000 jobs for the surrounding area. The City's substantial growth can be attributed to its close proximity to the Dallas-Fort Worth Metropolitan Area. The City's master plan addresses the needs of Coppell, providing a healthy balance for future economic growth and quality of life by reserving the City's 14.71 square miles equally for homes, parks and businesses. INDUSTRY.. . The City has a large industrial area with rail service and adequate water storage available to meet fire protection and other demands. While not being financially dependent on any one industry or type of industsy, the City recognizes the value of industry to its economic base and continues to seek new industries which will be beneficial to the community. The City has created an economic development partnership which assists in reviewing various matters relating to industrial development including the issuance of industrial development bonds. Among the major employers in the City are the following: Approximate Number of Name of Firm Type of Business Employees U.S. Postal Service Bulk Mail Distribution 1,700 Coppell ISD Education 1,164 IBM Call Center 800 GTE Shared Services Administration Services for GTE 800 Minyards Food Store, Inc. Grocery Distribution 656 Lucent Technologies Communications 425 City of Coppell City Services 290 U.S. Postal Service Priority Mail Processing Center 250 Fritz Companies Freight Forwarder 200 Mannatech, Inc. Network Marketing of Neutraceuticals 200 Simmons Co. Mattress Manufacturer 200 Kroger Food Store Grocery Store 180 GTE Supply Electric Repair 160 Nutone, Inc. Rangehoods Manufacturer 150 Tom Thumb//88 Grocery Store 135 Haverty Furniture Furniture Retail/Distribution 120 Albertsons Grocery Store 118 Briggs &Weaver Industrial Distribution 115 Gulf Bearing Industrial Bearings 100 Rediform Business Forms Manufacturer 100 Cadillac Plastics Plastic Company 92 Alford Media Services Inc. Multi-Media Services 85 Craftmade International Inc. Ceiling Fan Manufacturer 80 TST Impreso, Inc. Continuous Form Manufacturer 75 Lone Star Plywood &Door Custom Millwork Distributor 70 Fluor-Daniel GTI Environmental Remediation 70 Major real estate development is currently underway in Coppell. Included is the creation of planned residential, commercial, industrial and office space from of land owned by Catellus Corporation, Emerson Partners and Prentiss Properties. Numerous industrial and retail developments have recently moved into the City, including GTE Shared Services, Fritz Companies, Inc., Haverty Furniture Companies, Mannatech, Inc., Flour-Daniel GTI, Quill Corporation, Park n Fly, Cadillac Plastics, Staples, Inc., Expediters International of Washington, Custom Chrome, Meiko America, United Copper Industries, Malt-O-Meal, Redding Tube Corporation, Briggs and Weaver, International Business Machines, Simmons Co., Lucent Technologies and GTE Supply. A-1 The United States Postal Service completed construction on the North Texas Mail Processing Center in October, 1990. The facility is located on 74 acres of land and includes over 660,000 square feet of space. This high-tech, state of the art facility handles 50% of all Dallas mail originations, all second class mail in Dallas, and all suburban destination mail. SERVICES... The City is served by four banks, Comerica Bank, Frost, Bank of America and BankOne, with combined deposits as of September 30, 1999 of $187,546,644. Electrical, gas, telephone and cable television services are provided by privately owned utility companies. These companies are Texas Utilities Electric, Lone Star Gas Company, General Telephone Company and Paragon Cable. Inc., respectively. A new City library facility was completed in April, t995 consisting of approximately 28,000 square feet containing over 78,000 volumes in the collection. Coppell has excellent recreation facilities. Its close proximity to three lakes--Grapevine Lake, North Lake, and Lake Lewisville-- provides facilities for fishing, boating and picnicking. Sandy Lake Amusement Park is located nearby offering swimming, horseback riding and amusement rides. Nine developed public parks are located in the City. TRANSPORTATION.. . The City has easy access to Interstate Highway 635 and Interstate Highway 35 North. The City is served by all carriers common to Dallas and Fort Worth. Raftroad freight service is provided by St. Louis, Southwestern, Missouri, Kansas and Topeka, Cotton Belt, Frisco, and Rock Island lines. The City is located only four miles north of Dallas/Fort Worth International Airport. EDUCATION.. . The City has fourteen schools. one high school, three middle schools, and ten elementaD~ schools. Enrollment for 1999/00 was 8,859 with a pupil-teacher ratio of one teacher to fifteen students. Colleges within close proximity to the City are Northlake College, Southern Methodist University, University of Dallas, University of North Texas, Texas Woman's University, University of Texas at Arlington and Texas Christian University. A-2 CONSTRUCTION... The following table illustrates residential projects currently underway in the City. Residential Development Total Total Number Years to Projected Development of Units Buildout Population Archon Apartments 600 3 1200 Asbury Estates i 4 2 49 Asbury Manor 46 1 161 Carter Addition, Phase II 5 3 17 Castlebury Court 19 3 67 Coppe|l Greens 217 4 760 Copper Stone 129 1 451 Deer Run 56 4 168 Estates of Cambridge Manor, Phase II 10 I 35 Fairways at Riverchase 98 1 343 Forest Cove Estates 88 3 308 Fountain Park, Phase It 8 3 28 Georgian Place 35 4 122 Hollows at Northlake Woodlands, The 71 5 248 Lake Park 91 I 318 Lauren Estates 2 2 7 Magnolia Park ! 14 4 399 Northlake Woodlands East 10 A, B, C 374 1 1309 Old Coppell Estates 32 I 112 Peterson Addition 2 2 7 Reserve, The 23 3 81 River Ridge Addition 61 1 213 Shadydale Acres 13 3 46 Stoneleigh Phase II Apartments 322 1 644 Stratford Manor 31 4 108 Summit at the Springs 68 2 238 Village ofCoppell III B 55 I 192 Villages at Cottonwood Creek V 58 ! 203 Vistas of Coppell, Phase 2A, 1A, 2B, 1B, 2C, 3 302 3 1058 Waters Edge, Phase II 20 1 70 Westbury Manor 35 3 140 Windsor Estates 27 4 108 Woodlands of Coppell, The 38 I 133 A-3 Commercial and Industrial Development Platted for Construction Number of Development Acres Use Coppell Crossings 3.2 Office Presbyterian Medical Center 14.9 Medical Offices/Ambulatory Care Coppell Animal Shelter 0.5 Public Building DFW Trade Center Bldgs "G & H" 29.2 Industrial/Office Valley Ranch Plaza 0.8 Commercial CiCi's Addition 5.0 Industrial/Office Burger King 1.0 Commercial 121 Business Park (The Industrial Group) 15.4 Office Dickey's Barbebue 0.9 Commercial Coppell Aquatic & Recreation Center 31.6 Institutional Iaam Headquarters 4.4 Office Smart Start School 1.7 Commercial Carrollton-Farmers Branch ISD Riverchase 10.0 Institutional PAC Trust Realty 31.0 Industrial/Office Lakeview Center 14.8 Industrial/Office Transwestern Beltline 32.8 Industrial/Office G&K Services, Inc 6.0 Industrial/Office Northlake Center 4.6 Commercial/Industrial GTE Shared Services Center 23.4 Office Freeport North Tech Center 12.1 Industrial/Office Lam Lee Addition 13.1 Industrial/Office Gateway Corporate Park (next to Fritz) 8.3 Industrial/Office BUILDING PERMITS Fiscal Year Ended Commercial Residential 9/30 Number Amount Number Amount Grand Total 1995 51 $ 45,192,435 446 $ 82,990,767 $ 128,183,202 1996 75 65,437,339 495 110,224,775 175,662, 114 1997 71 44, 188,968 430 108,243,559 152,432,527 1998 71 100, 941,774 646 129,956,362 230,898, ! 36 1999 123 88,716,770 376 79,044,024 167,760,794 2000 33 33,589,576 (n 135 28,715,409 (1) 62,304,985 (D Source: City of Coppell, Texas (1) Building Permits Issued through February 29, 2000. PERSONAL INCOME AND BUYING POWER. ..The following was taken from the 1999 Publication of Sales Management Survey for Dallas County. Total Effective Buying Income $ 66,870,280,000 Total Retail Sales 34,607,962,000 Effective Buying Income per Household: Dallas County 42,302 State Average 34,084 A-4 APPENDIX B EXCERPTS FROM THE CITY OF COPPELL, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 1999 The information contained in this Appendix consists of excerpts from the City of Coppell, Texas Annual Financial Report for the Year Ended September 30, 1999, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. THIS PAGE LEFT BLANK INTENTIONALLY I :! i INDEPENDENT AUDITOR'S REPORT WEAVER TIDWELL To the Members of the City Council, and City Manager L L. ~ CITY OF COPPELL CE.T,F,EO P~B,,C Coppell, Texas ACCOUNTANTS AND CONSULTANTS We have audited the accompanying general purpose financial statements of the City of Coppell, Texas as of and for the year ended September 30, 1999, as listed in the table of contents. These general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are flee of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Coppell, Texas at September 30, 1999 and the results of its operations and cash flows of its proprietary funds for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining, individual fund and account group financial statements and schedules and the statistical section listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Coppell, Texas. The combining, individual fund and account group financial statements and schedules have been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, are fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. The statistical section has not been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, accordingly, we express no opinion on such data. ~ WEAVER AND TIDWELL, L.L.P. Dallas, Texas December 2, 1999 .r,,.,. ~soe 893 WORLDWIDE AFFILIATIONS THROUGH SUMMIT INTERNATIONAL ASSOCIATES, INC. THIS PAGE LEFT BLANK INTENTIONALLY 20 CITY OF COPPELL, TEXAS CITY OF COPPELL, TEXAS COMBINED BALANCE SHEET ' ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30, 1999 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30.,, 1998) GOVERNNENTAL FUND TYPES Special Debt Capital ASSETS General Revenue Service Projects Cash $ 602,281 $ 449,216 $ 66,563 $ 1,089,780 Investments 8,573,061 3,287,061 614,792 20,766,011 Receivables (Net Of ALLowances For Uncollectables of $202,373 in 1999 and $171,729 in 1998): Taxes 477,217 81,]55 141,106 0 Accounts 270,569 Interest 59,596 13,685 0 162,257 Special Assessments O 0 4,280 0 Other 0 198 0 31,720 Due From Other Funds 647,400 0 0 0 Prepaid Items 24,876 0 0 0 Inventory 0 0 0 0 Restricted Assets: Cash 0 0 0 0 Investments 0 0 0 0 Deposits with Fiscal Agents 0 0 0 440,147 Interest Receivable 0 0 0 0 Fixed Assets (Net, Where Applicable, of Accumulated Depreciation) 0 0 0 0 Deferred Bond Issuance Costs 0 0 0 0 Amount Available In Debt Service Fund 0 0 0 0 Amount To Be Provided For Retirement Of Long-Term Debt 0 0 0 0 Total Assets $ 10t655fO00 $ 3f831~515 $ 826~741 $ 22~489f915 The accompanying notes to financial statements are an integral part of this statement. CITY OF COPPELL, TEY. AS CiTY OF COPPELL~ TEXAS (Combined BaLance Sheet - ALL Fund Types and Account Groups) (Continued) (Continued on the foLLowing pages) FIDUCIARY PROPRIETARY FUND TYPES FUND TYPE ACCOUNT GROUPS TotaLs - (Memorandum OnLy) General September 30t Internal General Long-Term Enterprise Service Agency Fixed Assets Debt 1999 1998 $ 283,594 $ 2,840 $ 0 $ 0 $ 0 $ 2,494,274 $ 2,179,770 8,994,717 495,851 0 0 0 42,731,493 31,488,124 0 0 0 0 0 699,678 703,7'57 2,591,871 0 0 0 0 2,862,440 2,382,290 62,270 5,006 0 0 0 302,814 147,569 O O O 0 O 4,280 4,280 31,972 O 0 0 0 63,890 22,260 O O 0 0 O 647,400 402,061 135 O 0 0 0 25,011 33#633 55e361 O 0 0 O 55,361 47,946 547,441 0 0 0 0 547,441 522,786 8,109,617 0 0 0 O 8,109,617 8,749,322 0 0 460,234 0 0 900,381 2,423o105 52,268 0 O 0 0 52,268 28,413 38,733,158 26,430 0 84,782,501 0 123,542,089 108,036,038 268,936 0 0 0 0 268,936 256,558 0 0 0 0 642,861 642,861 1,392,598 0 0 0 0 57t020~919 57r020~919 46~490r552 $ 5.__9~731~340_ $ 53.__.__0t127 $ 460~234 $ 84~782~501 $ 57F663~780 $ 240~971~153 $ 205t311~042 CITY OF COPPELL, TEXAS 23 CiTY OF COPPELL, TEXAS COMBINED BALANCE SHEET ' ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30~ 1999 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30~ 1998) (CONTINUED) GOVERNMENTAL FUND TYPES Special Debt Capital LIABILITIES General Revenue Service Projects Accounts Payable $ 1,121,197 $ 66,790 $ 41,654 $ 1,121,529 Accrued Liabilities 219,318 2,454 0 0 Retainage Payable 0 0 0 465,261 Due To Other Funds 0 0 0 20,000 Payable From Restricted Assets: Deposits 0 0 0 0 Accrued Interest 0 0 0 0 Bonds Payable - Current 0 0 0 0 Retainage Payable 0 0 0 0 Due to Property Owners 0 0 0 0 Deferred Revenue 755,079 0 142,226 2,935,501 General Obligation Debt 0 0 0 0 Revenue Bonds Payable Payable From Unrestricted Assets Current 0 0 0 0 Long-Term 0 0 0 0 Compensated Absences 0 0 0 0 Capital Leases Payable 0 0 0 0 Guaranteed Payments To Trinity River Authority 0 0 0 0 Total Liabilities 2,095,594 69,244 183,880 4,542,291 EQUITY AND OTHER CREDITS Contributed Capital 0 0 0 0 Investment In General Fixed Assets 0 0 0 0 Retained Earnings: Reserved for Revenue Bond Retirement 0 0 0 0 Unreserved 0 0 0 0 Fund Balances: Reserved Reserved for Prepaid Items 24,876 0 0 0 Reserved for Encumbrances 460,595 486,747 0 0 Reserved for Contingencies 2,369,157 0 0 0 Reserved for Capital Projects 0 0 0 17,947,624 Reserved for Debt Service 0 0 642,861 0 Unreserved Designated for Specific Projects 980,445 0 0 0 Undesignated 4,724,333 3,275,524 0 0 Total Equity and Other Credits 8,559,406 3,762,271 642,861 17,947,624 Total Liabilities, Equity and Other Credits $ 10,655,000 $ 3,831,515 $ 826,741 $ 22,489,915 CITY OF COPPELL, TEXAS 34 CITY OF COPPELL, TEXAS (Combined Balance Sheet - AlL Fund Types and Account Groups) (Continued from previous pages) FIDUCIARY PROPRIETARY FUND TYPES FUND TYPE ACCOUNT GROUPS Totals - (Memorandum Only) General September 30, Internal General Long-Term Enterprise Service Agency Fixed Assets Debt 1999 1998 1,523,864 $ 0 S 0 $ 0 $ 0 S 3,875,034 $ 3,002,650 12,270 0 0 0 0 234,042 214,379 0 0 0 0 0 465,261 113,376 627,400 0 0 0 0 647,400 402,061 407.434 0 0 0 O 407,434 385,954 96,346 0 0 0 0 96,346 94,215 108,750 0 0 0 0 108,750 97,000 229,610 0 0 0 0 229,610 51,401 0 0 460,234 0 0 460,234 507,464 0 0 0 0 O 3,832,806 3,974,920 0 0 0 0 56,864,375 56,864,375 47,054,375 1,196,250 0 0 0 0 1,196,250 1,068,000 18,933,693 0 0 0 0 18,933,693 18,186,468 21,360 0 0 0 619,622 640,982 615,312 0 O 0 0 179,783 179,783 235,285 50,000 0 0 0 0 50,000 75,000 23,206,977 0 460,234 0 57,663,780 88,222,000 76,077,860 20,850,793 400,000 0 0 0 21,250,793 20,761,132 0 0 0 84,782,501 0 84,782,501 72,281,462 1,351,085 0 0 0 0 1,351,085 1,483,807 14,322,485 130,127 0 0 0 14,452,612 11,392,112 0 0 0 0 0 24,876 32,657 0 0 0 0 0 947,342 982,371 0 0 0 0 0 2,369,157 1,859,791 0 0 0 0 0 17,947,624 12,946,936 0 0 0 Q 0 642.861 1,392,598 0 0 0 0 0 980,445 1,578,860 0 0 0 0 O 7,999,857 4,521,456 36,524,363 530.127 0 84,782,501 0 152,749,153 129,233,182 $ 59,731,340 $ 530,127 $ 460,234 $ 84,782,501 $ 57,663,780 $ 240,971,153 $ 205,311,042 CITY OF COPPELL, TEXAS 25 CiTY OF COPPELL, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- ALL GOVERNMENTAL FUND TYPES - FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999 (WITH COMPARATIVE TOTALS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998) Special General Revenue REVENUES: Taxes, Penalties and Interest $ 14,055,946 $ 1,331,946 Licenses, Fees and Permits 1,622,557 481,190 Intergovernmental 299,883 0 Charges for Services 2,682,841 0 Fines and Forfeitures 732,263 32,044 Interest Income 506,333 141,993 Contributions 0 30,472 Miscellaneous 250,272 367 Total Revenues 20,150,095 2,018,012 EXPENDITURES: Current General Government 3,620,756 56,021 Public Safety 7,919,724 17,084 Public Works 2,538,584 0 Culture and Recreation 1,984,858 528,105 Debt Service Capital Lease Payments 115,896 0 Principal Retirement 0 0 interest and Fiscal Charges 0 0 Capital Outlay 1,778,389 289,451 Total Expenditures 17,958,207 890,661 Excess Of Revenues Over (Under) Expenditures 2,191,888 1,127,351 OTHER FINANCING SOURCES (USES): Operating Transfers In 0 200,000 Operating Transfers Out (220,198) 0 Proceeds from Capital Lease 47,501 0 Proceeds from General Obligation Debt 0 0 Total Other Financing Sources (Uses) (172,697) 200,000 Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses 2,019,191 1,327,351 FUND BALANCES - October 1 6,540,215 2,434,920 FUND BALANCES - September 30 $ 8,559,406 $ 3,762,271 The accompanying notes to financial statements are an integral part of this statement. CITY OF COPPELL, TEXAS ~6 CITY OF COPPELL, TEXAS (Combined Statement of Revenues, Expenditures and Changes in Fund BaLances ALL GovernmentaL Fund Types) (Continued) TotaLs - (Memorandum OnLy) Debt Capital September 30, Service Projects 1999 1998 $ 5,220,410 $ 0 $ 20,608,302 $ 18,685 157 0 0 2,103,747 2,993 591 0 36,195 336,078 312 756 0 O 2,682,841 2,418 901 O 0 764,307 578 435 147,082 1,074,833 1,870,241 1,547 495 O 1,015,097 1,045,569 184 729 6,500 1,500 258,639 251 355 5,373,992 2,127,625 29,669,724 26,972,419 0 0 3,676,777 3,430,934 0 0 7,936,808 7,050,246 0 0 2,538,584 2,213,584 0 0 2,512,963 2,151,154 0 0 115,896 51,192 3,490,000 0 3,490,000 3,155,000 2,783,729 0 2,783,729 2,543,562 0 10,447,135 12,514,975 6,604,539 6,273,729 10,447,135 35,569,732 27,200,211 (899,737) (8,319,510) (5,900,008) (227,792) 150,000 20,198 370,198 1,102,000 0 0 (220,198) (952,000) 0 0 47,501 286,477 O 13,300,000 13,300,000 3,200,000 150,000 13,320,198 13,497,501 3,636,477 (749,737) 5,000,688 7,597,493 3,408,685 1,392,598 12,946,936 23,314,669 19,905,984 $ 642,861 $ 17,947,624 $ 30,912,162 $ 23,314,669 CITY OF COPPELL, TEXAS 27 CITY OF COPPELL, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES ANO CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, SPECIAL REVENUE AND OEBT SERVICE FUNDS - FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999 GENERAL FUND Variance Favorable Budget Actual (Unfavorable) REVENUES: Taxes, Penalties and Interest $ 14,061,467 $ 14,055,946 $ (5,521) Licenses, Fees and Permits 1,447,000 1,622,557 175,557 Intergovernmental 250,000 299,883 49,883 Charges for Services 2,640,124 2,682,841 42,717 Fines and Forfeitures 700,275 732,263 31,988 Interest Income 500,000 506,333 6,333 Contributions 0 0 0 Miscellaneous 222,733 250,272 27,539 Total Revenues 19,821,599 20,150,095 328,496 EXPENDITURES: Current General Government 3,970,773 3,620,756 350,017 Public Safety 8,248,346 7,919,724 328,622 Public Works 2,725,630 2,538,584 187,046 Cutlure and Recreation 2,078,230 1,984,858 93,372 Debt Service Capital Leases 147,284 115,896 31,388 Principal Retirement 0 0 0 Interest and Fiscal Charges 0 0 O Capital Outlay 2,137,675 1,778,389 359,286 Total Expenditures 19,307,938 17,958,207 1,349,731 Excess Of Revenues Over (Under) Expenditures 513,661 2,191,888 1,678,227 OTHER FINANCING SOURCES (USES): Operating Transfers In 0 0 0 Operating Transfers Out (227,745) (220,198) 7,547 Proceeds from Capital Lease 47,501 47,501 0 Total Other Financing Sources (Uses) (180,244) (172,697) 7,547 Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses 333,417 2,019,191 1,685,774 FUND BALANCES - October 1 6,540,215 6,540,215 0 FUND BALANCES - September 30 $ 6,873,632 $ 8,559,406 $ 1,685,774 The accompanying notes to financial statements are an integral part of this statement. CITY OF COPPELL, TEXAS CITY OF COPPELL, TEXAS (Combined Statement of Revenues, Expenditures and Changes in Fund BaLances - Budget and Actual GeneraL, Special Revenue and Debt Service Funds) (Continued) SPECIAL REVENUE FUNDS DEBT SERVICE FUNDS Variance Variance FavorabLe FavorabLe Budget Actual (UnfavorabLe) Budget Actual (UnfavorabLe) $ 1,335,905 $ 1,331,946 $ (3,959) $ 5,219,698 $ 5,220,410 $ 712 479,959 481,190 1,251 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 31,460 32,044 584 0 0 0 155,160 141,993 (13,167) 155,000 147,082 (7,918) 28,690 30,472 1,782 0 0 0 0 367 367 6,500 6,500 0 2,031,154 2,018,012 (13,142) 5,381,198 5,373,992 (7,206) 62,970 56,021 6,949 0 0 0 20,875 17,084 3,791 0 0 0 0 0 0 0 0 0 622,210 528,105 94,105 0 0 O 0 0 0 0 0 0 0 0 0 3,490,000 3,490,000 0 0 0 0 2,807,461 2,783,729 23,732 814,025 289,451 524,574 0 0 0 1,520,080 890,661 629,419 6,297,461 6,273,729 23,732 511,074 1,127,351 616,277 (916,263) (899,737) 16,526 200,000 200,000 0 150,000 150,000 0 0 0 0 0 0 0 0 0 0 0 0 0 200,000 200,000 0 150,000 150,000 0 711,074 1,327,351 616,277 (766,263) (749,737) 16,526 2,434,920 2,434,920 0 1,392,598 1,392,598 0 $ 3,145,994 $ 3,762,271 $ 616,277 $ 626,335 $ 642,861 $ 16,526 CITY OF COPPELL, TEXAS 39 CITY OF COPPELL, TEXAS COMBINED STATEMENT OF REVENUES, EXPENSES ANO CHANGES IN RETAINED EARNINGS ' ALL PROPRIETARY FUND TYPES FOR THE FISCAL YEAR ENOEO SEPTEMBER 30,1999 (WITH COMPARATIVE TOTALS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998) Totals - (Men~randum Only) Internal September 30, Enterprise Service 1999 1998 OPERATING REVENUES: Water and Sewer Sates S 11,524,222 $ 0 S 11,524,222 S 10,612,967 Water and Sewer Connection Fees 70,270 0 70,270 134,095 Capital Replacement Revenue 0 113,856 113,856 133,509 Miscellaneous 120,204 0 120,204 144,442 Total Operating Revenues 11,714,696 113,856 11,828,552 11,025,013 OPERATING EXPENSES: Purchase of Water 2,746,405 0 2,746,405 2,322,731 Purchase of Sewer Treatment 1,298,406 0 1~298,406 1,150,424 Salaries and Wages 572,183 0 572,183 471,348 Supplies and Services 3,024,917 0 3,024,917 2,818,812 Depreciation 843,476 96,301 939,777 962,558 Total Operating Expenses 8,485,387 96,301 8,581,688 7,725,873 Operating Income 3,229,309 17,555 3,246,864 3,299,140 NON-OPERATING REVENUES (EXPENSES): interest income 1,085,078 23,984 1,109,062 1,071,820 Interest Expense and Fiscal Charges (1,278,148) 0 (1,278,148) (1,245,896) Net Non-operating Revenues (iExpenses) (193,070) 23,984 (1.69,086) (174,076) Net Income Before Operating Transfers 3,036,239 41,539 3,077,778 3,125,064 OPERATING TRANSFERS: Transfers Out (150,000) 0 (150,000) (350,000) Total Operating Transfers (150,000) 0 (150,000) (150,000) Net Income 2,886,239 41,539 2,927,778 2,975,064 RETAINED EARNINGS - October 1 12,787,331 88,588 12,875,919 9,900,855 RETAINED EARNINGS - September 30 $ 15,673,570 $ 130,127 $ 15,803,697 $ 12,875,919 The accompanying notes to financial statements are an integral part of this statement. CITY OF COPPELL, TEXAS 30 CITY OF COPPELL, TEXAS COMBINED STATEMENT OF CASH FLOWS ' ALL PROPRIETARY FUND TYPES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999 (WITH COMPARATIVE TOTALS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998) Totals - (Memorandum Only) Internal September 30, Enterprise Service 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers $ 11,321,593 $ 113,856 $ 11,435,449 $ 10,594,863 Cash Paid to Suppliers (6,183,688) 0 (6,183,688) (6,039,327) Cash Paid to Employees (570,928) 0 (570,928) (470,992) Provided by Operating Activities 4,566,977 113,856 4,680,833 4,084,544 CASH FLOt. IS FROH CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and Construction of Capital Assets (3,944,789) 0 (3,944,789) (1,780,334) Bond Proceeds 2,000,000 0 2,000,000 0 Principal Payments on Long Term Obligations (1,190,462) 0 (1,190,462) 2,580,753 Interest Paid (1,288,395) 0 (1,288,395) (1,347,434) Contributions from Contractors 0 0 0 956,426 Water and Sewer Impact Fees Collected 489,661 0 489,661 716,380 Used in Capital and Related Financing Activities (3,933,985) 0 (3,933,985) 1,125,791 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Transfers Out (150,000) 0 (150,000) (150,000) Provided (Used) by Noncapital Financing Activities (150,000) 0 (150,000) (150,000) CASH FLOWS FROM INVESTING ACTIVITIES: Interest Received 1,033.985 19,295 1,053,280 1,037.229 Provided (Used) by Investing Activities 1,033,985 19,295 1,053,280 1,037,229 Net Increase (Decrease) in Cash and Cash Equivalents 1,516,977 133,151 1,650,128 6,097,564 Cash and Cash Equivalents at the Beginning of the Year 16,418,392 365,540 16,783,932 10,686,368 Cash and Cash Equivalents at the End of the Year $ 17,935,369 $ 498,691 $ 18,434,060 $ 16,783,932 RECONCILIATION OF OPERATING INCOHE TO CASH PROVIDED BY OPERATING ACTIVITIES: Operating Income $ 3,229,309 $ 17,555 $ 3,246,864 $ 3,299,140 Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities: Depreciation 843,476 96,301 939,777 962,558 (Increase) Decrease in Other Current Assets (421,157) 0 (421,157) (443,416) Increase (Decrease) in Current Liabilities 863,124 0 863,124 266,262 Provided by Operating Activities $ 4,514,752 $ 113,856 $ 4,628,608 $ 4,084,544 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE BALANCE SHEET: Beginning Increase End Of Year (Decrease) Of Year Cash $ 5,109 $ 281,325 $ 286,434 Investments 7,506,715 1,983,853 9,490,568 Restricted Cash 522,786 24,655 547,441 Restricted Investments 8,749,322 (639,705) 8,109,617 Cash and Cash Equivalents $ 16,783,932 $ 1,650,128 $ 18,434,060 The accompanying notes to financial statements are an integral part of this statement. CITY OF COPPELL, TEXAS 31 CITY OF COPPELL, TEXAS NOTES TO FINANCIAL STATEMENTS IN ORDER OF PRESENTATION SEPTEMBER 30. 1999 1. Summary of Significant Accounting Policies 33 2. Stewardship, Compliance and Accountability 37 Detail Notes on All Funds and Account Groups 3. Cash and Investments 38 4. Interfund Receivables/Payables 39 5. Fixed Assets 39 6. General Obligation Debt 40 7. Capital Lease Obligations 41 8. Revenue Bonds 41 9. Defeased Bonds 42 10. Compensated Absences 43 11. Guaranteed Payments to Trinity River Authority 43 12. Special Assessment Bonds 43 13. Contributed Capital 44 14. Reserved for Contingencies 44 15. Fund Balance Designations and Retained Earnings Reservations 44 16. Enterprise Segment Information 44 17. Transfers 45 18. Pension Plan 45 19. Deferred Compensation Plans 47 20. Risk Financing 47 21. Conduit Debt Obligations 47 22. Commitments and Contingencies 47 23. Subsequent Events 47 CITY OF COPPELL, TEXAS 31 CITY OF COPPELL, TEXAS NOTES T0 FINANCIAL STATEMENTS SEPTEMBER 30 r 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Reporting Entity The City of Coppell, Texas ("City"), was incorporated in 1955 and adopted its present charter in 1986 under the provision of Act 279, P.A. 1909, as amended (Home Rule City Act). The charter was amended in November 1995. The City operates under a Council-Manager form of government and provides the following services as authorized by its charter= Public Safety - Police and Fire, Highways and Streets, Sanitation, Health and Social Services, Culture and Recreation, Public Improvements, Planning and Zoning and General Administrative Services. The accounting policies of the City conform to generally accepted accounting principles ("GAAP") for local governments as prescribed by the Governmental Accounting Standards Board. As required by generally accepted accounting principles, these financial statements present the City and its component units, which are controlled by the elected officials of the City and for which the City is considered to be financially accountable. The "reporting entity" is the primary government and those component units for which the primary government is financially accountable. (Financial accountability is defined as the appointment of a voting majority of the component unit's board and the ability to either impose will by the primary government or the possibility that the component government will provide a benefit or impose a financial burden to the primary government.) A "blended component unit", although a legally separate entity, is in substance part of the City's operations and this unit is therefore combined with data of the City. A "discretely presented component unit", if one existed, would be presented in a separate column of the Combined Financial Statements to emphasize it is legally separate. Blended Component Units. The Public Improvement District - Gateway Project constructs street, drainage and other public improvements to be owned by the City within the boundaries of Gateway Business Park, which is located entirely within the City. The Board of the Public Improvement District - Gateway Project is comprised of five members. Two of the current members are from city Council. The City Manager also serves on the board. The Public Improvement District - Gateway Project is reported as a blended component unit because the District exclusively benefits the City. Separate financial statements for the Public Improvement District - Gateway Project are not available. The CoppEll Recreation Development Corporation (CRDC) was formed to plan, design and construct recreational facilities and improvements within the City using proceeds from a special 4(B)Sales Tax approved by the voters. Since the CRDC's Board of Directors is appointed by the City Council, its projects are intended to benefit City of Coppell. The City Council has ultimate authority and approval of its projectsl the CRDC is a method of financing City recreation property~ consequently the CRDC is presented as a blended component unit. Separate financial statements for the Coppell Recreational Development Corporation are not available. Discretely Presented Component Units. There are no component units of the City required to be discretely presented. CITY OF COPPELL, TEXAS 33 B. Fund Accounting The accounts of the City are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are summarized by providing a separate set of self- balancing accounts of its assets, liabilities, fund equity, revenues and expenses or expenditures, as appropriate. Government resources are allocated to and accounted for in individual funds, based on the purpose for which they are to be spent and the means by which spending activities are controlled. In this report, the various funds and accounts are grouped into seven generic fund types, three broad fund categories and two account groups as follows: General Fund - The General Fund is the operating fund of the City. It is used to account for all general tax revenues and other financial resources, except those required to be accounted for in other funds. Special Reveuue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue resources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Funds - The Debt Service Funds are used to account for the accumulation of resources for, and the payment of, principal, interest and related costs on general long-term debt. Capital Projects Funds - The Capital Projects Funds account for the financial resources used for the acquisition or construction of capital facilities (other than those financed by Proprietary Funds). PROPRIETARY FUNDS Enterprise Fund - The Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises where the costs (expenses, including depreciation) of providing water and sewer services to the general public on .a continuing basis are financed through user charges. Internal Service Fund - The Internal Service Fund is used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City on a cost-reimbursement basis. FIDUCIARY FUNDS Agency Funds - Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments and/or other funds. Agency Funds are custodial in nature (assets equal liabilities) and do not involve the measurement of results of operations. ACCOUNT GROUPS General Fixed Assets Account Group - The General Fixed Assets Account Group is used to account for City general fixed assets and maintains cost information and control on capital assets owned by the City, except for those accounted for in Proprietary Funds. General Long-Term Debt Account Group - The General Long-Term Debt Account Group is used to account for the long term debt and certain other liabilities that are not specific liabilities of proprietary or trust funds. C. Basis of Accounting Basis of accounting refers to the timing that revenues and expenses or expenditures are recognized in the accounts and reported in the financial statements. CITY OF COPPELL, TEXAS 34 Governmental funds are accounted for using the modified accrual basis of accounting. Revenues are recognized when they become both measurable and available to finance expenditures of the current period. The significant revenues treated as susceptible to accrual are tax revenue, interest earnings, and intergovernmental revenue. Special assessments and sales tax are reported as revenue when measurable and available. Expenditures are recognized when the liability is incurred, except principal and interest on general long-term debt which is recognized when due. Proprietary funds are accounted for using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the liability is incurred. Fiduciary funds are accounted for according to the nature of the fund. Agency funds are purely custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency funds are accounted for using the modified accrual basis of accounting. D. Measurement Focus All governmental funds are accounted for on a flow of current financial resources measurement focus. This means that, generally, only current assets and current liabilities are included on their balance sheets. Statements of revenues, expenditures and changes in fund balances for governmental funds generally present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in spendable resources. All Proprietary Funds are accounted for on a flow of economic resources measurement focus. This means that all assets and liabilities (whether current or non-current) associated with the activity are included on the balance sheets. Their reported fund equity presents economic position (total net assets). Proprietary fund operating statements present improvements (revenues and gains) and diminishments (expenses and losses) of the proprietary fund economic position. E. Budget Control As set forth in the City Charter, the City Council adopts an annual budget prepared in accordance with the modified accrual basis of accounting for the General, Special Revenue and Debt Service Funds. The department is the legal level of control in the General Fund. The City Manager may transfer part or all of any unencumbered appropriation balance among programs within a department, office or agency; however, any revisions that alter the total expenditures of a department, office or agency must be approved by the City Council. The legal level of control in the Special Revenue and Debt Service funds is at the fund level. Formal budgetary integration is employed as a management control device during the year for the General, Special Revenue and Debt Service Funds. All appropriations lapse at year-end. F. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of applicable appropriations, is employed as an extension of formal budgetary integration in the General, Special Revenue and Debt Service Funds. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities and are added to the subsequent year's adopted appropriations. G. Cash and Investments The City maintains a cash and investment pool for the purpose of increasing income through investment activities. The City has implemented GASB 31, Accounting and Financial Reporting for certain investments and for external investment pools. As of September 30, 1999, the investments held by the City had a remaining maturity at the time of purchase of one year or less and accordingly are carried at cost or amortized cost. The City intends to hold the investments until maturity. Fair value analysis is performed monthly and any significant losses are evaluated. CITY OF COPPELL, TEXAS 35 H. Cash and Cash Equivalents For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. All cash and investments of the proprietary funds are pooled with the City's pooled cash and investments, and are therefore considered cash equivalents. I. Unbilled Services Receivable Utility services revenue is recorded when earned. Customers are billed monthly. The estimated value of services provided but unbilled at year-end has been included in the accompanying financial statements. J. Inventory and Prepaid Items Inventory is valued at cost using the first in, first out method. Inventory in the Enterprise Fund consists of expendable supplies held for future consumption or capitalization. The cost is recorded as an expense in the period that inventory items are consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. K. Restricted Assets Certain proceeds of Enterprise Fund Bonds and resources for their repayment are classified as restricted assets on the Combined Balance Sheet because their use is limited by bond ordinances. Additionally, deposits with fiscal agent, representing cash and investments heId in trust for the Public Improvement District for construction projects and retirement of special assessments, are classified as restricted assets. L. Fixed Assets For governmental funds, purchases of fixed assets are recorded as expenditures. Such assets are capitalized at historical cost in the General Fixed Assets Account Group. Public domain ("infrastructure") general fixed assets, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems, are capitalized along with other general fixed assets. No depreciation has been provided on general fixed assets. For proprietary funds, fixed assets are recorded at historical cost. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Building and Improvements - 50 years Water and Sewer System - 50 years Vehicles, Machinery and Equipment - 5 to 10 years Gifts or contributions of fixed assets are recorded at fair value when received. ~ M. Deferred Issuance Costs Deferred debt issuance costs are amortized on a straight-line basis over the life of the related debt issues. N. Compensated Absences Compensated absences liability (amounts due employees for accumulated vacation and employee leave) is considered a long-term obligation of the City. For governmental funds, the liability for compensated absences has been recorded in the General Long-Term Debt Account Group. These amounts are recorded as expenditures in the year paid. For proprietary funds, the compensated absences expense is recorded in the period the benefit is earned by the respective employees. CITY OF COPPELL, TEXAS 36 O. Property Tax Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on October 1 and are due and payable on or before January 31 of the following year. All unpaid taxes become delinquent on February i of the following year. The City bills and collects its own property taxes. City property tax revenues are recognized when they become measurable and available. Property tax revenues are considered "available" if received within 30 days after year-end. The statutes of the State of Texas do not prescribe a legal debt limit. However, Article XI, Section 5 of the Texas Constitution applicable to cities with a population of more than 5,000 limits the ad valorem tax rate to $2.50 per $100 assessed valuation. For the year ended September 30, 1999, the City had a tax margin of $1.8514 per $100 assessed valuation based upon the maximum rates prescribed by law. P. Interfund Activity Salaries, wages and related payroll costs of personnel who perform administrative services for the Enterprise Fund and Recreation Development Corporation are paid through the General Fund. The City has recorded expenses for these administrative costs in the Enterprise Fund and Recreation Development Corporation Special Revenue Fund and recognized corresponding revenue in the General Fund. Q. FASB Pronouncements The City has elected not to adopt those Statements and Interpretations of the Financial Accounting Standards Board issued after November 30, 1989 for proprietary funds unless adopted by the Governmental Accounting Standards Board. R. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenditures and expenses during the reporting period. Actual results could differ from those estimates. S. Reclassification Certain reclassifications of prior year amounts were necessary in order to conform to the current year presentation. T. Comparative Data Comparative totals for the prior year have been presented in the accompanying combined financial statements in order to provide an understanding of changes in the City's financial position and operations. However, presentation of prior year totals by fund type has not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. U. Total Columns on Combined Statements-Overview Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate analysis. Data in these columns do not present financial position, results of operations, or changes in cash flows in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation, interfund eliminations have not been made in the aggregation of this data. 2. Stewardship, Compliance and Accountability Excess of Expenditures Over Appropriations For the year ended September 30, 1999, expenditures were within appropriations and no fund had a deficit as of year-end. CITY OF COPPELL, TEXAS 37 Supplemental Appropriations The City Council made several supplemental appropriations throughout the year. Supplemental appropriations totaled $937,767 in the General Fund, $698,067 in the Debt Service Fund, $920,418 in the Special Revenue Funds and $108,606 in the Enterprise Fund for 1999. Included in the $937,767 in the General Fund supplemental appropriation is funding for a new Animal Shelter Facility and a new traffic signal. The Special Revenue Funds supplemental appropriations of $920,418 includes major funding for recreational facilities development. The Debt Service Fund supplemental appropriation of $698,067 includes an increase for the 1999 Sales Tax Bonds issued in January 1999. Bond Requirements The City believes it and its component units have complied with all significant bond requirements and restrictions as of September 30, 1999. 3. Cash and Investments The City of Coppell maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the combined balance sheet as 'Cash" and "Investments" under each fund's caption. The City has an adopted investment policy pursuant to Chapter 2256 of the Texas Government Code, which authorizes the City's investment in obligations of the United States of America, its agencies and instrumentalities, direct obligations of the State of Texas and agencies thereof, obligations of the state, agencies thereof, counties, cities and other political subdivisions of any state rated as to investment quality and having received a rating of not less than "A" or its equivalent, common trust funds or comparable investment devices owned or administered by banks domiciled in Texas, certificates of deposit of state and national banks domiciled in Texas, guaranteed or insured by the Federal Deposit Insurance Corporation, fully-collateralized direct repurchase agreements with a defined termination date secured by obligations of the U.S. Government or its agencies and instrumentalities pledged with a third party and joint pools of political subdivisions in the State of Texas. The .City selects its investments based on safety, liquidity, yield and public trust. At September 30, 1999, the carrying amount of the City's deposits was $3,041,715 and the bank balance was $3,094,868. Of the bank balance, $100,000 was covered by federal depository insurance and $2,994,868 was covered by collateral pledged in the City's name and held by the City's agent, a third party bank. The City does not carry any bank balances over and above the insured and collateralized amounts. Cash is reflected in the Combined Balance Sheet as follows: Cash $ 2,494,274 Restricted Assets - Cash 547f441 Total ~ 3x041f715 The City's investments are classified as to custodial credit risk into three categories. Category 1 includes investments that are insured, registered or for which the securities are held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered investments for which the securities are held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the counterparty or by its trust department or agent, but not in the City's name. CITY OF COPPELL, TEXAS 38 Investments held by the City at September 30, 1999 are summarized below= CATEGORY CARRYING FAIR ~ ~ 3 AMOUNT VALUE U.S. Government Agencies ~51r741,49~ ~ -0- ~ -0- S51,741~49~ ~ Total Investments S51,741r491 S52,085r93~ Investments are reflected in the Combined Balance Sheet as follows: Investments $42,731,493 Restricted Assets - Investments 8,109,617 Deposits with' Fiscal Agents 900,381 Total ~51r741f491 4. Interfund Receivables/Payables The accompanying financial statement present interfund receivables in the General Fund as Due. From Other Funds in the amount of $647,400. This amount includes the interfund payables of $627,400 in the Enterprise Fund and $20,000 in the Capital. Projects Fund as Due To Other Funds. This amount represents a short-term cash overdraft in the Enterprise Fund and Capital Projects Fund. 5. Fixed Assets Fixed Assets owned by the City are recorded in the Enterprise Fund, Internal Service Funds and the General Fixed Assets Account Group. Activity for the year ended September 30, 1999 is summarized below: Balance Balance October 1, September 30, Enterprise Fixed Assets 1998 Additions Transfers Retirements 1999 Land $ 494,264 $ -0- -0- $ -0- $ 494,264 Water and Sewer System 40,103,621 116,230 76,084 -0- 40,295,935 Buildinqs 57,817 -0- -0- -0- 57,817 Vehicles, Machinery and Equipment 1,195,713 75,962 -0- -0- 1,271,675 Construction in Progress 3~506,455 3,752,597 |76,084} -0- 7~182,968 Total Fixed Assets 45,357,870 3,944,789 -0- -0- 49,302,659 Less Accumulated Depreciation 9,726,025 843~476 -0- -0- 10,569,501 Net Fixed Assets $35.631.845 $ 3.101.313 $ -O- $ -0- S38.733,158 Balance Balance October 1, September 30, Internal Service Fixed Assets 1998 Additions Transfers Retirements 1999 Vehicles, Machinery and Equipment $ 463,714 $ -0- $ -0- $ -0- $ 463,714 Total Fixed Assets 463,714 -0- -0- -0- 463,714 Less Accumulated Depreciation 340,983 96,301 -0- -0- 437,284 Net Fixed Assets $ 122,731 S 96~301 ~ -Q- $ -Q- $ 26.430 Balance Balance October 1, September 30, General Fixed Assets 1998 Additions Transfers Retirements 1999 Land $ 7,974,139 $ 9,755 $ -0- $ -0- $ 7,983,894 Buildings and Other Improvements 50,306,739 1,152,360 644,930 -0- 52,104,029 Vehicles, Machinery and Equipment 9,372,617 938,922 49,989 [10,940} 10,350,588 Construction in Progress 4~627,967 10~410F942 (694~919] -0- 14~343[990 Total $72.2811462 $12.511f979 $ -0- $ (10~940] $84.782.501 Investment in General Fixed Assets: From Current Funding Sources $68,953,178 $12,511,979 $ -0- $ (10,940] $81,454,217 From Contributions 3,328,284 -0- -0- -0- 3,328,284 Total $72.281.462 $12.511.979 $ -O- $ [10.940] S84.782.50~1 CITY OF COPPELL, TEXAS 39 6. General Obligation Debt The general obligation debt consists of general obligation bonds, notes and certificates of obligation that are serial debt collateralized by the full faith and credit of the City, and payable from property taxes and other revenues. The debt matures annually in varying amounts through 2019, and interest is payable semi-annually. A summary of activity of the general obligation debt for the year ended September 30, 1999 is as follows: Outstanding October 1, 1998 $ 47,054,375 Issued 3,300,000 Retirements 3,155t000 Outstanding September 30, 1999 ~ 47w1991375 General obligation debt at September 30, 1999, is comprised of the following issues: Date Date of of of September 30, Bonds Rate Issue Makurit~ Issue 1999 Combined Tax and Revenue 7.5 1989 2000 750,000 35,000 General Obligation Bonds 6.75-9.75 1990 2010 2,100,000 100,000 GO Refunding Bonds 5.60-6.80 1991 2005 12,495,000 1,125,000 General Obligation Bonds 6.0-9.0 1991 2012 800,000 40,000 General Obligation Bonds 5.60-7.75 1992 2013 2,525,000 315,000 GO Refunding Bonds 2.55-5.50 1993 2010 8,485,000 7,580,000 Combined Tax and Revenue 2.=0-5.75 1993 2015 6.,'044,374 4,789~,3~5 Combined Tax and Revenue 5.7-6.0 ~995 2015 4,720,O00 4,,1=0,000 Combined Tax and Revenue 4.~'5.8 1995 ~5 2,830,000 2,555,000 General Obligation Bonds 5.65-7.7 1995 2015 1,170,000 1,055,000 Combined Tax and Revenue 5.0-8.0 1996 2015 2,650,000 2,400,000 GO and Refunding Bonds 4.1-5.50 1997 2017 15,525,000 14,935,000 Combined Tax and Revenue 4.1-5.50 1997 2017 2,000,000 1,870,000 Combined Tax and Revenue 3.8-5.25 1997A 2017 3,200,000 2,970,000 Combined Tax and Revenue 4.15-5.125 1999 2019 3,300,000 3r300~000 S4~. 199.37______~_~ Aggregate maturities of the general long-term debt (principal and interest) for the years subsequent to September 30, 1999 are as follows: PRINCIPAL .INTEREST TOTAL FISCAL YEAR REQUIREMENTS REQUIREMENTS REQUIREMENTS 2000 $3,375,000 $2,401,051 $5,776,051 2001 3,605,000 2,177,733 5,782,733 2002 3,755,000 1,999,704 5,754,704 2003 3,980,000 1,804,373 5,784,373 2004 4,170,000 1,599,737 5,769,737 Thereafter 28t314,375 10,234,556 38,548,931 ~ 471199~375 ~ 20~217t154 ~ 67r416r529 Proceeds of general obligation bonds are recorded in the Capital Projects Funds and are restricted to the use for which they were approved in the bond elections. Certificates of obligation and note proceeds are recorded in the appropriate fund to account for the use of the funds for which the debt was issued. The City Charter expressly prohibits the use of bond proceeds to fund operating expenditures. The City has $865,000 of authorized but unissued general obligation bonds.' The City intends to retire all of its general obligation debt plus interest, from ad valeram taxes and other current revenues. CITY OF COPPELL, TEXAS 40 7. Capital Lease Obligations The annual obligations under Capital Leases are as follows: 2000 $119,295 2001 68,103 2002 3,399 Less amount representing interest 11,014 ~179(783 Included in vehicles, machinery and equipment in the General Fixed Assets account group are vehicles leased under capital leases totaling $333,978. 8. Revenue Bonds Water and Sewer System Bonds The revenue bonds are payable from the net revenues of the Water and Sewer system. Gross revenues are to be used first to pay operating and maintenance expenses of the system, and second to maintain revenue bond funds in accordance with the bond covenants. Remaining revenues may then be used for any lawful purpose. A summary of Revenue Bond activity for the year ended September 30, 1999 is as follows: Outstanding October 1, 1998 $ 19,890,000 Issued 2,000,000 Retirements 1,165,000 Deferred Refunding Costs (314,025) Unamortized Discounts (172,282) Outstanding September 30, 1999 $ 2Or238,693 Revenue Bonds payable at September 30, 1999 are comprised of the following issues: Da~ Date ~t ~tsta~t~ o~ of c~ S~tember 30, Bonds Rate Issue Maturit~ Issue 1999 Refunding Revenue Bonds 5.75-6.80 1991 2006 $ 7,965,000 $ 5,765,000 Revenue Bonds 6.35-6.80 1991 2007 2,500,000 500,000 Revenue Bonds 5.20-7.625 1992 2008 2,000,000 660,000 Revenue Bonds 5.7-6.0 1995 2014 6,900,000 2,915,000 Revenue and Refunding Bonds 3.80-5.25 1997 2017 9,100,000 8,885,000 Revenue Bonds 4.25-5.75 1999 2019 2,000,000 2/000/000 Total ~ 20:725:000 Aggregate maturities of the Water and Sewer refunding revenue bonds, revenue bonds and certificates of obligation (principal and interest) for the years subsequent to September 30, 1999 are as follows: 2000 $ 1,305,000 $ 1,1S6,1SS $ 2,461,155 2001 1,385,000 1,077,058 2,462,058 2002 1,465,000 991,703 2,456,703 2003 1,490,000 900,478 2,390,478 2004 1,575,000 809,S00 2,384,S00 Thereafter 13,505,000 3,434,826 16r939,826 $ 20,725,000 ~ 8f369r720 ~ 29f0941720 The revenue bonds will be repaid, plus interest, from operating revenues derived primarily from water sales, sewer service charges and capital recovery fees. CITY OF COPPELL, TEXAS 41 Sales Tax Bonds The Revenue Bonds are payable from the gross proceeds of the 1/2 of 1% Sales and Use Tax (Section 4B) levied for the benefit of the Coppell Recreation Development Corporation. A summary of Revenue Bond activity for the year ended September 30, 1999 is as follows: Outstanding October 1, 1998 $ 0 Issued 10,000,000 Retirements . .335~000 Outstanding September 30, 1999 ~ 9f665w000 Revenue bonds payable at September 30, 1999 are comprised of the following issues: Date Date Am~t ~tsta~i~ of of o~ S~tem~er 30, Bondss h~ Issue Ma~it~ Issue 1999 Sales Tax Revenue Bonds 4.125-5.625 1999 2018 $10,O0O,OOO $ 91665i000 Total 8 9,6~5. Debt service requirements of the Sales Tax Revenue Bonds (principal and interest) for the years subsequent to September 30, 1999 are as follows: PRINCIPAL INTEREST TOTAL FISCAL YEAR REQUIREMENTS REQUIREMENTS REQUIREMENTS 2000 $ 340,000 $ 470,838 $ 810,838 2001 355,000 451,713 806,713 2002 365,000 431,744 796,744 2003 380,000 411,213 791,213 2004 395,000 389,838 784,838 Thereafter 7,8~0~000 2,988,580 10,818,580 $ 9f665~000 $ 5~143~926 $ 14~808~926 9.Defeased Bonds On August 26, 1997 and March 15, 1993, the City issued $12,325,000 and $8,455,000 respectively to refund debt of $16,425,000. The proceeds of the new bonds were placed in a trust to provide for all future debt service payments on the old bonds. Accordingly, the refunded bonds are not included in the City's financial statements and are considered to be defeased. At September 30, 1999, a total of $10,400,000 of defeased general obligation bonds is still outstanding. On December 2, 1997, the City issued $9,100,000 of Waterworks and Sewer System Revenue Refunding and Improvement Bonds, a portion of which was to refund debt of (1) $1,075,000 of Waterworks and Sewer System Revenue Bonds, Series 1999; (2) $730,000 of Waterworks and Sewer System Revenue Bonds, Series 1992; and (3) $3,150,000 of Waterworks and Sewer System Revenue Bonds, Series 1995. The net proceeds of the refunding debt were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the old bonds. As a result, the old bonds are considered to be defeased and the liability for those bonds have been removed from the City's financial statements. On January 15, 1985, the City defeased certain Waterworks and Sewer System Revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. CITY OF COPPELL, TEXAS At September 30, 1999, $5,069,000 of Waterworks and Sewer System Revenue Bonds outstanding is considered defeased. 10. Compensated Absences Vacation leave is earned in varying amounts up to a maximum of twenty (20) days for employees with 10 or more years of service. Unused vacation leave is carried forward from one year to the next, up to a maximum of 20 days, depending on years of service. The City has a sick leave incentive policy that allows for the payment of up to four (4) days for employees not using sick leave during the fiscal year. As of September 30, 1999, the liability for accrued vacation leave and sick incentive is approximately $640,982. The amount applicable to the Enterprise Fund, $21,360, has been recorded in the fund and the amount applicable to other funds, $619,622, has been recorded in the General long-term Debt Account Group. Amounts expected to be paid from current resources are insignificant. A summary of the activity for the year is as follows: General Long Term Debt Total Additions 751 82,937 83,688 Reductions lf213 56f805 58~018 Balance - End of Year $ 21.360 S 619.622 $ 640.982 11. Guaranteed Payments to Trinity River Authority The City has entered into a water supply contract with the Trinity River Authority (TRA) whereby TRA issued its own bonds for the purpose of constructing facilities to enable it to supply water to the City. Terms of the agreement provide that the City will pay an amount equal to its proportionate share of the annual requirements of principal and interest on these bonds until they mature, in addition to charges for water purchased. The City has also entered into an agreement with TRA whereby TRA issued its own bonds.to enable the City to construct a water storage tank. The City is required to pay TRA the annual requirements of principal and interest on these bonds until maturity, at which time title passes to the City. The City has recorded as a long-term liability, the future minimum payments of its guaranteed portion of the debt service on the TRA bonds discussed in the two preceding paragraphs. The related assets were recorded as additions to the water and sewer system and are being amortized over the estimated life of the underlying assets. The future annual requirements as of September 30, 1999 are as follows: Fiscal Year Principal Interest Total 2000 $ 25,000 $ 2,175 $ 27,175 2001 25,000 1,088 26,088 ~ 50r000 ~ 3r263 ~ 531263 12. Special Assessment Bonds In order to fund construction of capital additions within the Coppell Gateway Public Improvement District (the "District"), the District has issued $5,000,000 in special assessment bonds. Such bonds are secured exclusively by special assessments levied against the benefited property owners. The City is in no way liable for repayment of the $4,190,000 still outstanding, but is only acting as agent for the property owners in collecting the assessments, forwarding the collections to bondholders and initiating foreclosure proceedings, if necessary. CITY OF COPPELL, TEXAS 43 13. Contributed Capital During the year, contributed capital increased by the following amounts: Internal Enterprise Service Water Impact & Availability Fees $ 274,789 $ -O- Sewer Impact & Availability Fees 214,872 -O- Total Additions 489,661 '0- Contributed.Capital, October 1 20,361~132 400~000 Contributed Capital, September 30 ~20f850r793 ~400f000 14. Reserved for Contingencies Reserved for Contingencies in the General Fund represents funds set aside pursuant to requirements of the City Charter. 15, Fund Balance Designations and Retained Earnings Reservations Fund Balance in the General Fund has been designated at year end by the City Council' for the' following projects or programs: E-911 Program $ 576,445 Improvements needed under the Americans with Disability Act 19,000 Facility Construction and Improvement 385,000 Total $ 980f445 The amount of Retained Earnings reserved for revenue bond retirement in the Enterprise Fund has been calculated as follows: Restricted assets - Revenue Bond Sinking and Reserve Fund $ 1,556,431 Less: Accrued Bonds and Interest Payable from Restricted Assets 205,346 Retained Earnings - Reserved ~ lf351f085 16. Enterprise Segment Information Segment information for the Water and Sewer Enterprise Fund is as follows: Operating Revenues $11,714,696 Depreciation Expense 843,476 Operating Income 3,229,309 Operating Transfers In (Out) (150,000) Net Income 2,886,239 Current Capital Contributions 489,661 Fixed Asset Additions 3,944,789 Net Working Capital 16,527,322 Total Assets 59,731,340 Total Equity 36,524,363 CITY OF COPPELL, TEXAS 44 17. Transfers Operating Transfers made during the year were as follows: Operating Operating Fund Transfers In Transfers Out General Fund $ -0- $ 220,198 Special Revenue Funds Infrastructure Maintenance Fund 200,000 '0- Debt Service Funds General Obligation 150,000 '0- Capital Projects Funds Computer System 20,198 '0- Enterprise Fund -0- 150~000 Totals ~ 370r198 ~ 370r198 18. Pension Plan Plan Description The City provides pension benefits for all of its full-tlme employees through a nontraditional, joint contributory, defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 717 administered by TMRS, an agent multiple-employer public employee retirement system. Benefits depend Upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant as often as annually another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 10 or more years of service or with 25 years of service regardless of age. A member is vested after 10 years. The plan provisions are adopted by the governing body of the City, within the optlone available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. The City of Coppell is one of 717 municipalities having the benefit plan administered by TMRS. Each of the 717 municipalities having an annual individual actuarial valuation performed. All assumptions for the December 31, 1998 valuations are contained in the 1998 TMRS Comprehensive Annual Financial Report. The report may be obtained by writing to TMRS, P.O. Box 149153, Austin, Texas 78714-9153. CITY OF COPPELL, TEXAS 45 Contributions The contribution rate for the employees is 7%, and the City's matching ratio is currently 2 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary annually determines the City contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's 25-year amortization period. When the City periodically adopts updated service credits and increases in annuities in effect, the increased unfunded actuarial liability is to be amortized over a new 25 year period. The unit credit actuarial cost method is used for determining the City's contribution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance to budget for it, there is a one year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect, such as December 31, 1998 valuation is effective for rates beginning January 2000. The annual pension cost for 1998 was $852,943. The City's annual pension cost was equal to the required and actual contributions for the years ended December 31, 1998, 1997, 1996 and 1995. ActuarialAssumptions Actuarial Cost Method Unit Credit Amortization Method Level Percent of Payroll Remaining Amortization Period 25 Years Asset Valuation Method Market Related Investment Rate of Return 8% Projected Salary Increases None Includes Inflation At None Cost of Living Adjustments None Schedule of Actuarial Liabilities and Funding Progress Actuarial Valuation 0ate 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 Actuarial Value of Assets $11,236,318 $ 9,082,806 $7,638,553 $6,061,246 $5,129,626 $4,215,821 Actuarial Accrued Liability 13,770,006 11,197,793 9,098,171 7,400,636 6,069,056 4,501,727 Percentage Funded 81.6% 81.1% 84.0% 81.9% 84.5% 93.6% Unfunded (Over-funded) Actuarial Accrued Liability (UAAL) 2,533,688 2,114,987 1,459,618 1,339,390 939,430 285,906 Annual Covered Payroll 9,382,326 7,880,189 7,588,141 6,933,430 6,139,888 5,616,187 UAAL as a Percentage of Covered Payroll 27.0% 26.8% 19.2% 19.3% 15.3% 5.1% Net Pension Obligation At the beginning of the period -0- -0- -0- -0- -0- '0- Annual Pension Cost: Annual Required Contribution (ARC) 852,943 785,736 698,225 613,386 515,582 317,682 Interest on NPO -0- -0- -0- -0- -0- '0- Adjustments to the ARC -0- -0- -0- -0- -0- '0- Contributions Made 852,943 785,736 698,225 613,386 515,582 317,682 Increases in NPO -0- -0- -0- -0- -0- -0- NPO at the end of the period $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- CITY OF COPPELL, TEXAS 46 19. Deferred Compensation Plans The City offers its employees a deferred compensation plan created in accordance with the Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. The City funds all amounts of compensation deferred under the plan, at the direction of the covered employee, through investments in fixed and variable annuity 'contracts underwritten by Public Employees Benefit Services Corporation, International City Manager Association (ICMA) Retirement Corporation and the Copeland Companies. All amounts of compensation deferred under the plan, all property and rights purchased .with those amounts, and all income attributable to those amounts, property, or rights are held in trust for the exclusive benefit of the participants and their beneficiaries. The City has no liability for losses under the plan. The City provides limited administrative duties. In accordance with GASB Statement No. 32, the deferred compensation plans are no longer included in the financial statements of the City. 20. Risk Financing The City is insured for liability, property and worker's compensation losses. There have been no reductions in coverages during the year or settlements in excess of coverages in the past three years. 21. Conduit Debt Obligations The City,. in the past, issued $3,600,000 of Industrial Development Revenue Bonds to provide financial assistance to a private-sector entity for the construction of facilities deemed to be in the public interest. The bonds are secured by the property financed' and are payable solely from payments received on the underlying mortgage and pledge agreement. Neither the City, the State nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of September 30, 1999, there was $1,200,000 of Industrial Development Revenue Bonds outstanding. 22. Commitments and Contingencies Outstanding commitments at September 30, 1999 under authorized construction contracts were $6,790,175 to be funded by Capital Project Funds, $3,808,188 to be funded by the ENterprise Fund and $4,043,061 to be funded by the Coppell Recreation Development Corporation Sales Tax Revenue Bonds. Various claims and lawsuits are pending against the City. In the opinion of the City's attorney, the potential loss on these claims will not be significant to the City's financial statements. The City receives State and Federal Grants for specific purposes that are subject to review and audit by the Grantor Agency. Such audits could result in a request for reimbursement for expenditures disallowed under terms and conditions of the appropriate agencies. In the opinion of City management, such disallowances, if any, will not be significant. 23. Subsequent Events In October 1999, the City issued $4,500,000 of Combination Tax and Revenue Certificates of Obligation, Series 1999A. The proceeds from the certificates were used for the purchase of land and the construction of a Municipal Field Operations facility. CITY OF COPPELL, TEXAS 47 The City had a successful bond election on November 2, 1999 which included $30,345,000 for street projects, $8,685,000 for park improvements, and $1,700,000 for drainage improvements. The City plans to issue the newly authorized General Obligation debt in increments over the next five years with the goal of maintaining a flat tax rate. CITY OF COPPELL, TEXAS 48 APPENDIX C FORM OF BOND COUNSEL'S OPINION THIS PAGE LEFT BLANK INTENTIONALLY LAW OFFICES MC._CALL, PARKHURST ~. HORTON L.L.P. 717 NORTH HARWOOD 3100 ONE AMERICAN CENTER 12,~5 ONE RIVERWALK PLACE NINTH FLOOR AUSTIN, TEXAS 78701-3,:E48 SAN ANTONIO, TEXAS 78205-3503 DALLAS. TEXAS 75201-6587 TELEPHONE: 51:> 47,~-3805 TELgF~NONE: 210 225-2800 TELEPHONE: 214 220-,'780(:D FACSIMILE: 512 472'()871 FACSrMILE: ~10 2~5-2984 FACSIM~LE 21,4 754-9250 CITY OF COPPELL, TEXAS GENERAL OBLIGATION BOND SERIES 2000, DATED MAY 1, 2000 IN THE PRiNCIPAL AMOUNT OF $9,865,000 AS BOND COUNSEL for the City of Coppell, Texas (the "Issuer"), we have examined into the legality and validity of the bond issue initially evidenced by the bond described above (the "Initial Bond"), which Initial Bond originally has been issued and delivered as a single fully registered bond, without interest coupons, with the principal amount thereof payable on August I in installments, and with the unpaid balance of each installment of principal, respectively. bearing interest from the date of the Initial Bond to the scheduled due date ("maturity"), or to the date of prepayment or redemption. of each installment of principal. at the following rates per annum for each maturity, respec- tively: maturity 2001, % maturity 2011, __% maturity 2002, % maturity 2012, ~% maturity 2003, ___% maturity 2013, ~% naatunty 2004, F __% maturity 2014, ~% maturity 2005, _~% maturity 2015, ~% maturity 2006, % maturity 2016, __% maturity 2007, ~% maturity 2017, __% maturity 2008, __% maturity 2018, __% maturity 2009, ~% maturity 2019, __% maturity 2010, % maturity 2020, % with interest payable on August 1, 2000, and semiannually on each February 1 and August 1 thereafter, and with the principal of the Initial Bond being subject to prepayment or redemption prior to the scheduled maturities, in accordance with the terms and conditions stated in the text of the Initial Bond. The Initial Bond may, at the request of the registered owner, be transitfred and converted into, and/or exchanged for, fully registered bonds, without interest coupons, in the denomination of $5,000 or any integral multiple of $5,000, and such bonds again may be transferred and/or exchanged. all subject to the conditions stated and in the manner provided in the ordinance authorizing the issuance of the Initial Bond (the "Bond Ordinance"), with any such bonds which are registered, authenticated, and delivered in accordance with the Bond Ordinance being hereinafter called "Definitive Bonds". WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas. and a transcript of certified proceedings of the Issuer, and other pertinent instruments relating to the authorization of the Initial Bond and Definitive Bonds and the issuance and delivery of the Initial Bond, including the executed Initial Bond and a printed form for the Definitive Bonds initially made available by the Issuer for conversion of and exchange for the Initial Bond, exclusive of the Statement of Insurance as to ~vhich we express no opinion. THIS PAGE LEFT BLANK INTENTIONALLY BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Initial Bond and Definitive Bonds have been duly authorized, and that the Initial Bond has been duly issued and delivered, all in accordance with law; and that, except as may be limited by laws applicable to the Issuer relating to bankruptcy, reorganization, and other similar matters affecting creditors' rights, the Initial Bond constitutes and Definitive Bonds (hereinafter referred to collectively as "Bonds") will constitute valid and legally binding obligations of the Issuer, and ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds have been levied and pledged for such purpose, within the limit prescribed by law. IN OUR OPINION, except as discussed below, the interest on the Bonds is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Bonds are not "specified private activity bonds" and that accordingly, interest on the Bonds will not be included as an individual or corporate alternative minimum tax preference item under Section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). In expressing the aforementioned opinions, we have relied on, and assume compliance by the Issuer with, certain representations and covenants regarding the use and investment of the proceeds of the Bonds. We call your attention to the fact that failure by the Issuer to comply with such representations and covenants may cause the interest on the Bonds to become includ- able in gross income retroactively to the date of issuance of the Bonds. WE CA LL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Bonds will be (a) included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax and the environmental tax imposed on corporations by Section 55 of the Code, (b) subject to the branch profits tax imposed on foreign corporations by Section 884 of the Code, and (c) included in the passive investment income of an S corporation and subject to ti~e tax imposed by Section 1375 of the Code. Under the Code, owners of tax- exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state or local tax consequences of acquiring, carrying, owning or disposing of the Bonds. In particular, but not by way of limitation, we express no opinion with respect to the federal, state or local tax consequences arising from the enactment of any pending or future legislation. WE HAVE ACTED AS BOND COUNSEL for the Issuer for the sole purpose of rendering an opinion with respect to the legality and validity of the Bonds described above under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on such Bonds for federal income tax purposes, and liar no other reason or purpose. We have not been requested to investigate or verify, and have not investigated or veri- fied, any records, data, or other material relating to the financial condition or capabilities of the Issuer, and we have not assumed any responsibility with respect thereto. We have relied solely on certificates executed by officials of the Issuer as to the current outstanding indebtedness and assessed valuation of taxable property in said Issuer. Respectfully, Financial Advisory Services Provided By FIRST SOUTHWEST COMPANY INVESTMENT BANKERS NEXT RECORD STARTS ON NEXT PAGE NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $9,865,000 CITY OF COPPELL, TEXAS (Dallas and Denton Counties) GENERAL OBLIGATION BONDS, SERIES 2000 Sealed Bids Due Tuesday, May 9, 2000, at 11:00 AM, CDT THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXE1ViPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING . . . The City of Coppell, Texas (the "City") is offering for sale its $9,865,000 General Obligation Bonds, Series 2000 (the "Bonds"). ADDRESS OF BIDS... Sealed bids, plainly marked "Bid for Bonds", should be addressed to "Mayor and City Council, City of Coppell, Texas", and delivered to the office of the Financial Advisor, First Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas, prior to 11:00 AM, CDT, on the date of the bid opening. All bids must be submitted on the Official Bid Form, without alteration or interlineation. ELECTRONIC BIDDING PROCEDURE . . . Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Bidders must submit, prior to May 5, 2000, SIGNED Official Bid Forms to W. Boyd London, Jr., First Southwest Company, Dallas, Texas, Subscription to the Thompson Financial Municipal Group's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms provided in the Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The City shall not be responsible for any realfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the use of such facilities being the sole risk of the prospective bidder. If any provisions of the Notice of Sale shall conflict with information provided by PARITY as the approved prorider of electronic bidding services, this Notice of Sale shall control. Further information about PARITY, including any fee charged, may be obtained from DaleDrop/Parity, 395 Hudson Street, New York, New York 10014, attention: Jennifer Emery (212) 806-8304. For purposes of both the written sealed bid process and the electronic bidding process, the time as maintained by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate the provisions of this Notice of Sale and the Official Bid Form. BIDS BY TELEPHONE OR FACSIMILE ... Bidders must submit SIGNED Official Bid Forms to W. Boyd London, Jr., First Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, and submit their bid by telephone or facsimile (fax) on the date of the sale Telephone bids will be accepted at (214) 953-8707, between 10:30 AM and 11:00 AM. Fax bids must be received between 10:30 AM and 11:00 AM, on the date of the sale at (214) 953-4050 attention Jason Hughes. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if telephone or fax options arc exercised. PLACE AND TIME OF BID OPENING . . . The bids for the Bonds will be publicly opened and read in the office of the Financial Advisor at 11:15 AM, CDT, Tuesday, May 9, 2000. i AWARD OF THE BONDS . . . The City Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to convene at 7:30 PM, CDT, on the date of the bid opening~ and adopt an ordinance authorizing the Bonds and approving the Official Statement (the "Ordinance"). TIlE BONDS DESCRIPTION.. . The Bonds will be dated May 1, 2000 (the 'Dated Date"). Interest will accrue from the Dated Date and will be due on August 1, 2000, and each February I and August I thereafter until the earlier of maturity or prior redemption. The Bonds will be issued only in fully registered forn~ in any integral :m~ltiple of $5,000 for any one maturity. 'Fhe Bonds will mature on August I in each year as follows: MATURITY SCHEDULE Principal Principal Principal Maturity Amount Maturity Amount Maturity Amount 2001 $ 255,000 2008 $ 410,000 2015 $ 605,000 2002 275,000 2009 435,000 2016 640,000 2003 295,000 2010 460,000 2017 680,000 2004 315,000 2011 485,000 2018 720,000 2005 335,000 2012 515,000 2019 765,000 2006 360,000 2013 540,000 2020 815,000 2007 385,000 2014 575,000 OPTIONAL REDEMPTION , . . The City reserves the right, at :Is option, to redeem Bonds having stated maturities on and after August 1, 2009, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 1, 2008, or any date thereafter, at the par value thereof plus accrued interest to the date fixed tbr redemption. SERIAL BONDS AND/OR TERM BONDS... Bidders may provide that all of the Bonds be issued as serial bonds or may provide that any two or more consecutive annual principal amounts be combined into one or more term bonds. IVIANDATORY SINKING FUND REDEMPTION . . . If the successful bidder elects to alter the Maturity Schedule reflected above and convert the principal amounts of the Serial Bonds into "Term Bonds", such "Term Bonds" shall be subject to mandatory redemption on the first August I next following the last maturity for Scx;al Bonds, and annually thereafter on each August I until the stated maturity for the Term Bonds at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no designation of such maturities as Term Bonds occurred. At least thirty (30) days prior to each mandatory date, the Paying Agent/Registrar shall select by lot the Term Bonds to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the r~incipal amount of the Tenn Bonds of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date c "purchase and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretotbre credited against a mandatons' redemption requirement. BOOK-ENTRY-ONLY SYSTEM . . . The City intends to utilize the Book-Entry-Only System of The Depository Trust Company CDTC"). See "The Bonds - Book-Entry-Only System" in the Official Statement. PAYING AGENT/REGISTRAR.. . The initial Paying Agent/Registrar shall be The Bank of New York, New York, New York (see "The Bonds - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT.. . The Bonds are direct and voted general obligations of the City of Coppell, Texas, payable out of the receipts from an ad valorem tax levied, within the limits prescribed by law, on all taxable property located within the City, as provided in the Ordinance. Further details regarding the Bonds are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES . . . The Bonds will be sold in one block on an "All or None" basis, and at a price of not less than their par value plus accrued interest from date of the Bonds to the date of delivery of the Bonds. Bidders are invited to name the rate(s) of interest to be borne by the Bonds, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/100 of 1% and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 1% in rate. Using the interest rate established for the August 1, 2008, maturity as the base year, interest rates for successive maturities shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest rate for the maturity of the preceding year. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. BASIS FOR AWARD.. . Subject to the City's right to reject any or all bids and to waive any irregularities except time of filing, the sale of the Bonds will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form (the "Purchaser") making a bid that conforms to the specifications herein and which produces the lowest Tree Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of all debt service payments on the Bonds on the basis of semi-annual compounding, produces an amount equal to the sum of the par value of the Bonds plus any premium bid, if any (but not interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the intended bid. GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of Coppell, Texas", in the amount of $197,300, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. The Good Faith Deposit of the Purchaser will be returned to the Purchaser upon payment for the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids arc opened, and an award of the Bonds has been made. DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Bonds, but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by the City'; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. DELlVERY OF BONDS.. . Delivery will be accomplished by the issuance of one Initial Bond (also called the "Bond" or "Bonds"), either in typed or printed form, in the aggregate principal amount of $9,865,000, payable in stated installments to the Purchaser, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Bond, it shall be immediately cancelled and one definitive Bond for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book-Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Bonds must be made in immediately available fonds for unconditional credit to the City, or as otherwise directed by the City. The Purchaser will be given six business days' notice of the time fixed for delivery of the Bonds. It is anticipated that deliver:,' of the Bond(s) can be made on or about June 14. 2000, and it is understood and agreed that the Purchaser will accept delivery and make payment for the Bonds by 10:00 AM, CDT, on June 14, 2000, or thereafter on the date the Bond is tendered for delivery, up to and including June 28, 2000. If for any reason the City is unable to make delivery on or before June 28, 2000, the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend its offer for an additional thirty days. If the Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Bonds, provided such failure is due to circumstances beyond the City's reasonable control. 111 CONDITIONS TO DELIVERY . . . The obligation of the Purchaser to take up and pay for the Bonds is subject to the Purchaser's receipt of (a) the legal opinion of McCall Parkhurst & Hotton, L.L.P., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"), (b) the no-litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exemption of interest on the Bonds fi'om the gross income of their owners, the Purchaser will be required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Bonds) a certification as to their "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder will not reoft~r the Bonds for sale, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate by the date of deliver>, of the Bonds, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. LEGAL OPINIONS . . . The Bonds are offered when, as and if issued. subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Purchaser of opinions of Bond Counsel, to the effect that the Bonds are valid and binding obligations of the City and that the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, sub. ject to the matters described under "Tax Matters" in the Official Statement, including alternative minimum tax consequences Ibr corporations. CERTIFICATION OF OFFICIAL STATEMENT . . . At the time of payment for and Initial Deliver>, of the Bonds, the City will execute and deliver to tbe Purchaser a certificate in the form set forth in the Official Statement. CHANGE IN TAX EXEMPT STATUS . . . At any time before the Bonds are tendered for delivery, the Purchaser may withdraw its bid if the interest received by private holders on bonds of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR.. . First Southwest Company is employed as Financial Advisor to the City in connection w'ith the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery.' of the Bonds. First Southwest Company may submit a bid for the Bonds, either independently or as a member of a syndicate organized to submit a bid for the Bonds. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the infbrmation, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or .judicial bodies. BLUE SKY LAWS.. . By submission of its bid, the Purchaser represents that the sale of the Bonds in states other than Texas will be made only pursuant to exemptions from registration or, where nccessar>', the Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees to cooperate with the Purchaser, at the Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL.. . This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds, but is merely notice of the sale of the Bonds. The offi:r to sell the Bonds is being made by means of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Bonds. ISSUANCE OF ADDITIONAL DEBT... The City does not anticipate the issuance of additional general obligation debt within the next twelve months. iv RATINGS ... The presently outstanding tax supported debt of the City is rated "AI" by Moody's Investors Service, Inc. CMoody's"), "A" by Standard & Poor's Ratings Services, A Division of McGraw-Hill Companies, Inc. CS&P"). The City also has issues outstanding which are rated "Aaa" by Moody's, "AA.A" by S&P through insurance by various commercial insurance companies. Application(s) for contract rating(s) on this issue have (has) been made to Moody's, S&P. The result(s) of their determination(s) will be provided as soon as possible. MUNICIPAL BOND INSURANCE.. . In the event the Bonds are qualified for municipal bond insurance, and the Purchaser desires to purchase such insurance, the cost therefore will be paid by the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. It will be the responsibility of the Purchaser to disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the Bonds. THE 0FFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15C2-12... The City has prepared the accompanying Official Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Official Statement contains information, including financial inforn~ation or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Bonds. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement. The City will furnish to the Initial Purchaser(s), acting through a designated senior representative, in accordance with instructions received from the Purchaser(s), within seven (7) business days from the sale date an aggregate of 150 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser(s). The Purchaser(s) shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT . . . The City will agree in the Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule 15c2-12, as described in the Official Statement under "Continuing Disclosure of Information". The Purchaser(s') obligation to accept and pay for the Bonds is conditioned upon delivery to the Purchaser(s) or (their) agent of a certified copy of the Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS.. . The City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT.. . A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, Financial Advisor to the City. On the date of the sale, the City Council will, in the Ordinance authorizing the issuance of the Bonds, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Bonds by the Purchaser. Mayor City of Coppell, Texas ATTEST: City Secretary OFFICIAL BID FORM Honorable Mayor and City Council May 9, 2000 City of Coppell, Texas Members of the City Council: Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated May 1, 2000 of $9,865,000 CITY OF COPPELL, TEXAS GENERAL OBLIGATION BONDS, SERIES 2000, both of which constitute a pan hereof. For your legally issued Bonds, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ for Bonds maturing and bearing interest as follows: Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 2001 $ 255,000 % 2011 $ 485,000 % 2002 275,000 % 2012 515,000 % 2003 295,000 % 2013 540,000 % 2004 315,000 % 2014 575,000 % 2005 335,000 % 2015 605,000 % 2006 360,000 % 2016 640,000 % 2007 385,000 % 2017 680,000 % 2008 410,000 % 2018 720,000 % 2009 435,000 % 2019 765,000 % 2010 460,000 % 2020 815,000 % Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which may include multiple term bonds, one term bond or no tem~ bond if none is indicated). For those years which have been combined into a term bond, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturiC' date shall mature in such year. The term bonds created are as follows: Term Bond Year of Principal Maturity Date First Mandatory Amount of Interest Redemption Term Bond Rate $ % $ % $ % $ % Our calculation (which is not a part of this bid) of the interest cost from the above is: TRUE INTEREST COST % We are having the Bonds of the following maturities insured by. at a premium of $ , said premium to be paid by the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. The Initial Bonds shall be registered in the name of , which will, upon payment for the Bonds, be cancelled by the Paying Agent/Registrar. The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book-Entry-Only System. A bank cashier's check or certified check of the Bank, , in the amount of $197,300, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of thc Bonds utilizing the Book-Entry-On[y System through DTC and make payment for the Initial Bond in immediately available funds in the Corporate Trust Division, The Bank of New York, New York, New York, not later than 10:00AM, CDT, on June 14, 2000, or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Bonds to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect accompanying the Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Coppell, Texas, subject to and in accordance with the Notice of Sale and Bidding Instructions, this the 9th day of May, 2000. ATTEST: Mayor City of Coppell, Texas City Secretary CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the sale of $9,865,000 CITY OF COPPELL, TEXAS GENERAL OBI,IGATION BONDS, SERIES 2000 (the "Bonds"). 1. The undersigned is the underwriter or the manager of the underwriters and selling group (the "Underwriter") which has purchased the Bonds from the City of ., Texas (the "lssuer"). 2. The undersigned has made a bona fide offering of the Bonds to the public. 3. The first price during the initial offering (expressed as a "yield") of each maturity of the Bonds at which a substantial amount hereof (at least 10 percent of the principal amount of each maturity of the Bonds) has been sold to the public is set forth below: Principal Principal Maturity Amount Yield Maturity Amount Yield 2001 $ 255,000 % 2011 $ 485,000 % 2002 275,000 % 2012 515,000 % 2003 295,000 % 2013 540,000 % 2004 315,000 % 2014 575,000 % 2005 335,000 % 2015 605,000 % 2006 360,000 % 2016 640,000 % 2007 385,000 % 2017 680,000 % 2008 410,000 % 2018 720,000 % 2009 435,000 % 2019 765,000 % 2010 460,000 % 2020 815,000 % 4. For purposes of this certificate, the term "public" does not include (a) the undersigned, (b) members of the syndicate, if any, managed by the undersigned, or (c) any bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers that are related to, or controlled by, or are acting on behalf of or as agents for the undersigned or members of any syndicate in which the undersigned is participating in the sale of the Bonds. 5. The offering price described above reflects current market prices at the time of such sales. 6. If any or all of the obligations constituting the Bonds are to be guaranteed then the premium paid for such guarantee in an amount equal to $ is a reasonable amount payable solely for the transfer of credit risk for the payment of debt service on the Bonds and does not include any amount payable for a cost other than such guarantee, e.g., a credit rating fee. The Underwriter has represented that the present value of the premium paid for the guarantee for each obligation constituting the Bonds to which such premium is properly allocated and which are insured thereby is less than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation constituting the Bonds. The premium has been paid to a person which is not exempt from federal income taxation and which is not a user or related to the user of any proceeds of the Bonds. In determining present value for this purpose, the yield of the Bonds (determined with regard to the payment of the guarantee fee) has been used as the discount rate. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its eflbrt to comply with the conditions imposed by the Internal Revenue Code of 1986 and by Bond Counsel in rendering their opinion that the interest on the Bonds is excludable from the gross income of the owners thereof. EXECUTED and DELIVERED this day of ,20 (Name of Underwriter or Manager) By (Title)