OFFICIAL STATEMENT Dated: March 11, 2015
NEW ISSUE - BOOK-ENTRY-ONLY RATINGS:
Moody's: “Aa1” S&P: “AAA”
(See “OTHER INFORMATION – Ratings”)
In the opinion of Co-Bond Counsel under existing law, interest on the Series 2015A Bonds will be excludable from gross income for federal income tax purposes. See “TAX MATTERS – Series 2015A Bonds" for a discussion of the opinion of Co-Bond Counsel, including a description of alternative minimum tax consequences. Interest on the Taxable Series 2015B Bonds will be included in gross income for federal income tax purposes. See “TAX MATTERS – Taxable Series 2015B Bonds” for a discussion of the opinion of Co-Bond Counsel.
$453,630,000 CITY OF DALLAS, TEXAS
(Dallas, Denton, Collin and Rockwall Counties) Waterworks and Sewer System Revenue Refunding Bonds,
Series 2015A
$150,630,000 CITY OF DALLAS, TEXAS
(Dallas, Denton, Collin and Rockwall Counties) Waterworks and Sewer System Revenue Refunding Bonds,
Taxable Series 2015B
Dated Date: Date of Delivery Due: October 1, as shown on Page 2
PAYMENTTERMS. . . Interest on the $453,630,000 City of Dallas, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 2015A (the “Series 2015A Bonds”) and interest on the $150,630,000 City of Dallas, Texas Waterworks and Sewer System Revenue Refunding Bonds, Taxable Series 2015B Bonds (the “Taxable Series 2015B Bonds” and, together with the Series 2015A Bonds, the “Bonds”) will accrue from the date of delivery and will be payable on October 1, 2015, and on each April 1 and October 1 thereafter until maturity or prior redemption. Interest on the Bonds 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, New York, New York (“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 owners thereof. Principal of 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” herein. The initial Paying Agent/Registrar for the Bonds is U.S. Bank National Association (see “THE BONDS - Paying Agent/Registrar”).
AUTHORITY FORISSUANCE. . . The Bonds are issued pursuant to the general laws of the State of Texas, particularly Chapters 1207 and 1371, Texas Government Code, and by two separate ordinances (the “Series 2015A Bond Ordinance” and the “Taxable Series 2015B Bond Ordinance” and, together, the “Ordinances”) passed by the City Council of the City of Dallas, Texas (the “City”) on February 25, 2015, and are special obligations of the City, payable, both as to principal and interest, solely from and, together with certain outstanding parity bonds, secured by a first lien on and pledge of the Pledged Revenues (defined herein) of the City's Waterworks and Sewer System (the “System”), which include the Net Revenues of the System remaining after deduction of current expenses of operation and maintenance. The City has
not covenanted nor obligated itself to pay the Bonds from monies raised or to be raised from taxation (see “THE BONDS – Security
and Source of Payment”).
PURPOSE. . . Proceeds from the sale of the Bonds, together with other available System funds, if necessary, will be used to (i) refund certain outstanding bonds of the City (the “Refunded Bonds”) (see Schedule I – “Schedule of Refunded Bonds”); and (ii) refund outstanding Commercial Paper Notes (the “Refunded Notes” and, together with the Refunded Bonds, the “Refunded Obligations”).
CUSIP Prefix: 235416
MATURITY SCHEDULE & 9 DIGIT CUSIP See Schedule on Page 2
LEGALITY. . . The Bonds are offered for delivery when, as and if issued and received by the Underwriters listed below (the “Underwriters”) and subject to the approving opinions of the Attorney General of the State of Texas, and the opinions of Co-Bond Counsel, McCall, Parkhurst & Horton L.L.P. and Escamilla & Poneck, LLP, (see Appendix D - “Forms of Co-Bond Counsel's Opinions”). Certain legal matters will be passed upon by the City by Andrews Kurth LLP, Dallas, Texas and Gonzales Saggio & Harlan, Atlanta, Georgia, Co-Disclosure Counsel for the City. Certain legal matters will be passed upon for the Underwriters by their Co-Counsel, Locke Lord LLP, Dallas, Texas and White & Wiggins, LLP, Dallas, Texas.
DELIVERY. . . It is expected that the Bonds will be available for delivery through DTC on or about March 25, 2015.
CABRERA
CAPITAL
MARKETS, LLC
MORGAN
STANLEY
RBC CAPITAL
MARKETS
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ORGANMATURITY SCHEDULE CUSIP Prefix: 235416(1)
$453,630,000
Waterworks and Sewer System Revenue Refunding Bonds, Series 2015A
(Interest accrues from the Date of Delivery)
$150,630,000
Waterworks and Sewer System Revenue Refunding Bonds, Taxable Series 2015B
(Interest accrues from the Date of Delivery)
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global
Services, managed by Standard & Poor’s Financial Services LLC on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The Underwriters, the City, and the Co-Financial Advisors are not responsible for the selection or correctness of the CUSIP numbers set forth herein.
(2) Yield shown is yield to the first optional call date, October 1, 2025.
REDEMPTION. . . The City reserves the right, at its option, to redeem Series 2015A Bonds having stated maturities on and after October 1, 2026, in whole, or in part in principal amounts of $5,000 or any integral multiple thereof, on October 1, 2025 or on any date thereafter, at the redemption price of par plus accrued interest to the date fixed for redemption.
The Taxable Series 2015B Bonds are not subject to redemption prior to maturity.
M aturity CUSIP(1) M aturity CUSIP(1)
(October 1) Amount Rate Yield Suffix (October 1) Amount Rate Yield Suffix 2015 $2,850,000 1.000% 0.125% 6A7 2027 $25,510,000 5.000% 2.670%(2) 6N9 2016 3,085,000 5.000% 0.250% 6B5 2028 17,220,000 5.000% 2.770%(2) 6P4 2017 3,245,000 5.000% 0.780% 6C3 2029 12,980,000 5.000% 2.830%(2) 6Q2 2018 3,410,000 5.000% 1.170% 6D1 2030 13,650,000 5.000% 2.890%(2) 6R0 2019 3,585,000 5.000% 1.450% 6E9 2031 14,350,000 5.000% 2.940%(2) 6S8 2020 3,770,000 5.000% 1.660% 6F6 2032 27,505,000 5.000% 2.980%(2) 6T6 2021 3,965,000 5.000% 1.870% 6G4 2033 28,770,000 4.000% 3.410%(2) 6U3 2022 4,170,000 5.000% 2.090% 6H2 2034 29,940,000 4.000% 3.450%(2) 6V1 2023 26,390,000 5.000% 2.210% 6J8 2035 31,165,000 4.000% 3.480%(2) 6W9 2024 41,640,000 5.000% 2.340% 6K5 2036 8,105,000 4.000% 3.530%(2) 6Z2 2025 33,890,000 5.000% 2.450% 6L3 2037 8,435,000 4.000% 3.560%(2) 7A6 2026 35,610,000 5.000% 2.560%(2) 6M 1
$27,425,000 4.000% Term Bonds Due October 1, 2040, Priced to Yield 3.620%(2) - CUS IP(1)S uffix: 6X7 $42,965,000 5.000% Term Bonds Due October 1, 2044, Priced to Yield 3.260%(2) - CUS IP(1)S uffix: 6Y5
M aturity CUSIP(1) M aturity CUSIP(1)
This Official Statement and the information contained herein are subject to completion and amendment. The Bonds may not be sold nor any offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Official Statement constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
This Official Statement, which includes the cover page, Schedule I 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, if given or made, such other information or representations must not be relied upon. The information set forth herein has been obtained from 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 City's Co-Financial Advisors. 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.
All information contained in this Official Statement is subject, in all respects, to the complete body of information contained in the original sources thereof and no guaranty, warranty, or other representation is made concerning the accuracy or completeness of the information herein. In particular, no opinion or representation is rendered as to whether any projection will approximate actual results, and all opinions, estimates and assumptions, whether expressly identified as such, should not be considered statements of fact. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under, the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
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.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE THE MARKET PRICE OF THE ISSUE AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE AGREEMENTS OF THE CITY AND OTHERS RELATED TO THE BONDS ARE CONTAINED SOLELY IN THE CONTRACTS DESCRIBED HEREIN. NEITHER THIS OFFICIAL STATEMENT NOR ANY OTHER STATEMENT MADE IN CONNECTION WITH THE OFFER OR SALE OF THE BONDS IS TO BE CONSTRUED AS CONSTITUTING AN AGREEMENT WITH THE PURCHASERS OF THE BONDS. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL SCHEDULES AND APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION.
THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THE BONDS HAVE BEEN REGISTERED, QUALIFIED, OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF.
All information contained in this Official Statement is subject, in all respects, to the complete body of information contained in the original sources thereof and no guaranty, warranty, or other representation is made concerning the accuracy or completeness of the information herein. In particular, no opinion or representation is rendered as to whether any projection will approximate actual results, and all opinions, estimates and assumptions, whether expressly identified as such, should not be considered statements of fact. Neither the City nor the Underwriters make any representation regarding the information contained in this Official Statement regarding The Depository Trust Company or its Book-Entry-Only System, as such information has been furnished by DTC. CUSIP numbers have been assigned to this issue by CUSIP Global Services, and are included solely for the convenience of the owners of the Bonds. Neither the City nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers shown on the inside cover page.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY...5
SELECTEDWATER ANDWASTEWATERSYSTEM INDICES...6
CITY OFFICIALS, STAFF AND CONSULTANTS ...7
ELECTEDOFFICIALS...7
SELECTEDADMINISTRATIVESTAFF...8
DALLASWATERUTILITIESDEPARTMENT MANAGEMENTOFFICIALS...8
CONSULTANTS ANDADVISORS...8
INTRODUCTION ...9
PLAN OF FINANCING ...9
THE BONDS ... 10
THE WATER AND WASTEWATER SYSTEM... 18
TABLE1 – WHOLESALETREATEDWATER CUSTOMERS... 23
TABLE2 - TREATEDWATERPUMPAGE... 24
TABLE3 – TREATEDWATERCONSUMPTION BY CUSTOMERCLASS... 24
TABLE4A – TENLARGESTWHOLESALETREATED WATERCUSTOMERS... 24
TABLE4B – TENLARGESTRETAILTREATEDWATER CUSTOMERS... 25
TABLE5 – WHOLESALEWASTEWATERCUSTOMERS. 26 TABLE6 – TREATEDWASTEWATERFLOW... 26
TABLE7 – RETAILCUSTOMERCHARGE... 27
TABLE8 – RETAILUSAGECHARGE... 28
TABLE9 – WHOLESALECUSTOMERCHARGES... 29
DEBT INFORMATION... 30
TABLE10 - WATERWORKS ANDSEWERSYSTEM REVENUEBONDREQUIREMENTS... 30
TABLE11 – HISTORICALCOVERAGERATIOS... 31
TABLE12 – OPERATIONS ANDMAINTENANCE FOR WATERSUPPLY ANDWASTEWATER TREATMENT... 32
FUTURE BOND ISSUANCE ... 33
FINANCIAL INFORMATION ... 34
TABLE13 – SUMMARY OFOPERATIONS... 34
TABLE14 – PROJECTEDCOVERAGE ANDFUND BALANCES... 35
TABLE15 – SUMMARY OFNETREVENUESFOR REVENUEBONDCOVERAGE- CASHBASIS... 35
TABLE16 – NETPOSITION ANDLONGTERMDEBT... 36
TABLE17 - CURRENTINVESTMENTS... 42
TAX MATTERS ... 43
OTHER INFORMATION... 46
RATINGS... 46
LITIGATION... 46
CLEANAIRACTAMENDMENTS OF1990 ... 48
CONTINUINGDISCLOSURE OFINFORMATION... 49
REGISTRATION ANDQUALIFICATION OFBONDS FOR SALE... 50
LEGALINVESTMENTS ANDELIGIBILITY TOSECURE PUBLICFUNDS INTEXAS... 50
LEGALOPINIONS... 51
VERIFICATION OFARITHMETICAL ANDMATHEMATICAL COMPUTATIONS... 51
UNDERWRITING... 51
CO-FINANCIALADVISORS... 52
FORWARD-LOOKINGSTATEMENTS... 52
SCHEDULE I ...SCHEDULE OFREFUNDEDBONDS APPENDICES
GENERALINFORMATIONREGARDING THECITY...A SELECTEDPROVISIONS OF THEBONDORDINANCES...B DALLASWATERUTILITIESFINANCIALSTATEMENTS...C FORMS OFCO-BONDCOUNSEL'SOPINIONS...D
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 summary from this Official Statement or to otherwise use it without the entire Official Statement.
THEISSUER... The City of Dallas, Texas (the “City”), is a political subdivision located in Dallas, Denton, Collin and Rockwall Counties operating as a home-rule city under the laws of the State and a charter initially approved by the voters in 1907. The City operates under the City Council/Manager form of government where the Mayor is elected for a four-year term and fourteen City Councilmembers are each elected for two-year terms. The Mayor’s term is limited to two consecutive terms and the fourteen Councilmembers are limited to four consecutive terms. The City Council formulates operating policy for the City while the City Manager is the chief administrative officer.
The City is among the three most populous cities in Texas and among the ten most populous cities in the U.S. The City is approximately 378 square miles in area (see Appendix A - “General Information Regarding the City”).
THEBONDS... The $453,630,000 City of Dallas, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 2015A (the “Series 2015A Bonds”) are issued as serial bonds maturing on October 1 in each of the years 2015 through and including 2037, and as Term Bonds maturing on October 1, 2040 and October 1, 2044. The $150,630,000 City of Dallas, Texas Waterworks and Sewer System Revenue Refunding Bonds, Taxable Series 2015B (the “Taxable Series 2015B Bonds”) are issued as serial bonds maturing on October 1 in each of the years 2019 through and including 2023. The Series 2015A Bonds and the Taxable Series 2015B Bonds are collectively referred to as the “Bonds”. The Bonds shall mature on the dates as shown on the inside cover of this Official Statement (see “THE BONDS - Description of the Bonds”).
PAYMENT OFINTEREST ... Interest on the Bonds accrues from their date of delivery, and is payable commencing October 1, 2015 and on each April 1 and October 1 thereafter until maturity or prior redemption (see “THE BONDS - Description of the Bonds”, “THE BONDS – Optional Redemption” and “THE BONDS – Mandatory Sinking Fund Redemption”).
AUTHORITY FORISSUANCE... The Bonds are issued pursuant to the general laws of the State, particularly Chapters 1207 and 1371, Texas Government Code, and the ordinances passed by the City Council of the City.
SECURITY FOR THEBONDS... The Bonds constitute special obligations of the City payable, both as to principal and interest, solely from and secured, together with parity bonds currently or hereafter outstanding, by a first lien on and pledge of the Pledged Revenues of the City's Waterworks and Sewer System, which include the Net Revenues of the System remaining after deduction of current expenses of operation and maintenance. The City has not covenanted nor obligated itself to pay the Bonds from monies raised or to be raised from taxation (see “THE BONDS - Security and Source of Payment”).
REDEMPTION... The City reserves the right, at its option, to redeem the Series 2015A Bonds having stated maturities on and after October 1, 2026 on October 1, 2025 or any date thereafter at the par value thereof, plus accrued interest to the date fixed for redemption (see “THE BONDS – Optional Redemption”). The Series 2015A Bonds maturing on October 1 in each of the years 2040 and 2044 are subject to mandatory sinking fund redemption prior to their scheduled maturities (see “THE BONDS – Mandatory Sinking Fund Redemption”).
The Taxable Series 2015B Bonds are not subject to redemption prior to maturity.
USE OFPROCEEDS... Proceeds from sale of the Bonds, together with other available System funds, if necessary, will be used to: (i) refund certain outstanding bonds of the City (the “Refunded Bonds”) (see Schedule I – “Schedule of Refunded Bonds”); and (ii) refund outstanding Commercial Paper Notes (the “Refunded Notes”).
RATINGS... Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P”), have assigned ratings of “Aa1” and “AAA”, respectively, to the Bonds. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. (See “OTHER INFORMATION – Ratings”).
PAYMENTRECORD... The City has never defaulted in payment of its bonds.
BOOK-ENTRY-ONLYSYSTEM... 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 distributions 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”).
SELECTEDWATER ANDWASTEWATERSYSTEMINDICES
(1) 2010 US Census Bureau.
(2) Source: North Central Texas Council of Governments, estimated.
For additional information regarding the City, please contact:
Ms. Jeanne Chipperfield Mr. Wayne B. Placide Mr. Noe Hinojosa, Jr. Chief Financial Officer Mr. Steve Johnson Mr. U.S. Williams
City of Dallas or First Southwest Company, LLC or Estrada Hinojosa & Company, Inc. 1500 Marilla Street, 4DN 325 N. St. Paul, Suite 800 1717 Main St., 47thFloor
Dallas, Texas 75201 Dallas, Texas 75201 Dallas, Texas 75201
(214) 670-7804 (214) 953-4000 (214) 658-1670
Fiscal Net Revenes Average Coverage
Year Available Annual Debt of
Ended Dallas Average Peak For Service Debt
9/30 Population Day Day Total Debt Service Requirements Service
2010 1,197,816 (1) 388,000 638,000 141,658,000 $ 238,395,000 $ 93,864,823 2.54x 2011 1,200,530 (2) 428,000 683,000 156,202,000 279,196,000 97,453,117 2.86x 2012 1,207,420 (2) 395,000 649,000 144,604,000 273,788,000 100,145,435 2.99x 2013 1,213,600 (2) 391,000 583,000 142,878,000 293,069,000 103,758,448 3.10x
2014 1,232,360 (2) 369,000 535,000 134,792,000 N/A 107,961,340 N/A
CITY OFFICIALS, STAFF AND CONSULTANTS ELECTEDOFFICIALS
City Council Te rm Expires Occupation
Mike Rawlings June, 2015 3 Years, 8 Months Private Equity (Vice-Chairman) Mayor - Place 15
Scott Griggs (formerly Place 3) June, 2015 3 Years, 8 Months Attorney Councilmember - Place 1
Adam Medrano June, 2015 1 Year, 8 Months Civic Leader
Councilmember - Place 2
Vonciel Jones Hill (formerly Place 5) June, 2015 7 Years, 8 Months Attorney Councilmember - Place 3
Dwaine Caraway June, 2015 7 Years, 8 Months Civic Leader
Councilmember - Place 4
Rick Callahan June, 2015 1 Year, 8 Months Real Estate Broker
Councilmember - Place 5
Monica Alonzo June, 2015 3 Years, 8 Months Civic Leader
Deputy Mayor Pro Tem - Place 6
Carolyn Davis June, 2015 7 Years, 8 Months Civic Leader
Councilmember - Place 7
Tennell Atkins June, 2015 7 Years, 8 Months Entrepreneur
Mayor Pro Tem - Place 8
Sheffield Kadane Jr. June, 2015 7 Years, 8 Months Investor and Real Estate Broker Councilmember - Place 9
Jerry Allen June, 2015 7 Years, 8 Months Banker
Councilmember - Place 10
Lee M. Kleinman June, 2015 1 Year, 8 Months Investor
Councilmember - Place 11
Sandy Greyson June, 2015 3 Years, 8 Months Community Volunteer
Councilmember - Place 12
Jennifer S. Gates June, 2015 1 Year, 8 Months Community Volunteer/Registered Nurse Councilmember - Place 13
Philip Kingston June, 2015 1 Year, 8 Months Commercial Litigator Councilmember - Place 14
SELECTEDADMINISTRATIVESTAFF
DALLASWATERUTILITIESDEPARTMENTMANAGEMENTOFFICIALS
* Richard Wagner was appointed Interim Assistant Director on March 18, 2015.
CONSULTANTS ANDADVISORS
Auditors ...Grant Thornton LLP Dallas, Texas
Co-Bond Counsel... McCall, Parkhurst & Horton L.L.P. Dallas, Texas
Escamilla & Poneck, LLP Dallas, Texas
Co-Disclosure Counsel ... Andrews Kurth LLP Dallas, Texas
Gonzales Saggio & Harlan LLP Atlanta, Georgia
Co-Financial Advisors ... First Southwest Company, LLC Dallas, Texas
Estrada Hinojosa & Company, Inc. Dallas, Texas
Name Position
A.C. Gonzalez City M anager 1 Year 14 Years, 8 M onths
Ryan S. Evans First Assistant City M anager 1 Year 30 Years
Jill A. Jordan, P.E. Assistant City M anager 16 Years, 2 M onths 32 Years, 3 M onths
Eric Campbell Assistant City M anager 5 M onths 5 M onths
M ark M cDaniel Assistant City M anager 6 M onths 6 M onths
Joey Zapata Assistant City M anager 3 Years, 9 M onths 20 Years, 10 M onths Jeanne Chipperfield Chief Financial Officer 5 Years, 1 M onth 20 Years, 10 M onths
Warren Ernst City Attorney 1 Year 11 Years, 5 M onths
Rosa A. Rios City Secretary 3 Years, 1 M onth 8 Years, 7 M onths
Craig Kinton City Auditor 8 Years, 5 M onths 8 Years, 5 M onths
Length of Time in Tenure with City This Position as of of Dallas as of
March 1, 2015 March 1, 2015
Name Position
Jo M . Puckett, P.E. Director of Water Utilites 9 Years, 11 M onths 33 Years, 2 M onths Terry S. Lowery Assistant Director, Business Operations 5 Years 23 Years, 4 M onths Richard Wagner, P.E. * Interim Assistant Director, Capital Improvements 20 Years, 9 M onths Randall Payton Assistant Director, Water Operations 3 Years, 7 M onths 24 Years, 4 M onths Zachary Peoples Assistant Director, Wastewater Operations 2 Years, 2 M onths 21 Years, 3 M onths Sheila E. Delgado Assistant Director, Customer Operations 6 Years, 9 M onths 20 Years
Ade Williams Assistant Director, Utility Systems Operations 4 Years, 2 M onths 16 Years, 4 M onths Kenneth Delregno Assistant Director, Water Production 1 Year, 9 M onths 30 Years, 5 M onths Length of Time in Tenure with City This Position as of of Dallas as of
OFFICIAL STATEMENT RELATING TO
$453,630,000 CITY OF DALLAS, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2015A $150,630,000
CITY OF DALLAS, TEXAS
WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, TAXABLE SERIES 2015B
INTRODUCTION
This Official Statement, which includes the Appendices and Schedule I hereto, provides certain information regarding the issuance of $453,630,000 City of Dallas, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 2015A (the “Series 2015A Bonds”) and $150,630,000 City of Dallas, Texas Waterworks and Sewer System Revenue Refunding Bonds, Taxable Series 2015B (the “Taxable Series 2015B Bonds”) and are referred to collectively as the “Bonds”. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the ordinances adopted on February 25, 2015, which authorized the issuance of the Bonds (collectively, the “Ordinances”), except as otherwise indicated herein (see Appendix B – “Selected Provisions of the Bond Ordinances - Definitions”).
This Official Statement includes descriptions of the Bonds and certain information regarding the City and its finances. All descriptions of documents contained herein are summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from First Southwest Company, LLC, Dallas, Texas, and Estrada, Hinojosa & Co., Inc., Co-Financial Advisors to the City of Dallas, Texas (the “City”).
DESCRIPTION OF THECITY. . . The City is a political subdivision located in Dallas, Denton, Collin and Rockwall Counties, operating as a home rule city under the laws of the State of Texas (the “State”) and a charter first approved by the voters in 1907 (the “City Charter”). The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and fourteen Council members. The Mayor is elected for a four-year term and the fourteen Council members are each elected for two-year terms. Each of the fourteen Council members represents a district within the City. 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, water and sanitary sewer utilities, environmental and health services, culture-recreation, public improvements, planning and zoning, and general administrative services. The 2014 estimated population for the City was 1,232,360. The City covers approximately 378 square miles.
PLAN OF FINANCING
PURPOSE. . . Proceeds from the sale of the Bonds, together with other available System funds, if necessary, will be used to: (i) refund certain outstanding bonds of the City (the “Refunded Bonds”) (see Schedule I – “Schedule of Refunded Bonds”); and (ii) refund outstanding Commercial Paper Notes (the “Refunded Notes”).
REFUNDEDNOTES. . . The principal and interest due on the Refunded Notes are to be paid on their scheduled maturity date from funds to be deposited with U.S. Bank National Association, the issuing and paying agent for the Refunded Notes. The Series 2015A Bond Ordinance provides that from a portion of the proceeds of the sale of the Series 2015A Bonds received from the Underwriters, together with other available funds of the City, the City will deposit with U.S. Bank National Association, as issuing and paying agent for the Refunded Notes, an amount sufficient to accomplish the discharge and final payment of the Refunded Notes on their scheduled maturity dates.
REFUNDEDBONDS. . . The principal and interest due on the Refunded Bonds are to be paid on the scheduled interest payment dates and the redemption date of such Refunded Bonds, from funds to be deposited pursuant to a certain Escrow Agreement (the “Escrow Agreement”) between the City and U.S. Bank National Association, Dallas, Texas (the “Escrow Agent”). The Ordinances provide that from a portion of the proceeds of the sale of the Bonds received from the Underwriters, the City will deposit with the Escrow Agent an amount which, together with the Escrowed Securities (defined below) purchased with a portion of the Bond proceeds and the interest to be earned on such Escrowed Securities, will be sufficient to accomplish the discharge and final payment of the Refunded Bonds on their respective redemption dates. Such funds will be held by the Escrow Agent in a special escrow account (the “Escrow Fund”) and used to purchase direct noncallable obligations of the United States, including obligations that are unconditionally guaranteed by the United States (the “Escrowed Securities”). Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds.
pay interest in such amounts which, together with uninvested funds in the Escrow Fund, will be sufficient to pay, when due, the principal of and interest on the Refunded Bonds on the respective redemption dates with respect to the Refunded Bonds. Such maturing principal of and interest on the Escrowed Securities will not be available to pay the Bonds (see “OTHER INFORMATION - Verification of Arithmetical and Mathematical Computations”).
By the deposit of the Escrowed Securities and cash, if necessary, with the Escrow Agent pursuant to the Escrow Agreement, the City will effect the defeasance of all of the Refunded Bonds in accordance with the law. It is the opinion of Co-Bond Counsel that as a result of such defeasance and in reliance upon the report of the Verification Agent, the Refunded Bonds will be outstanding only for the purpose of receiving payments from the Escrowed Securities and any cash held for such purpose by the Escrow Agent and such Refunded Bonds will not be deemed as being outstanding obligations of the City payable from System revenues nor for the purpose of applying any limitation on the issuance of debt.
In the Escrow Agreement, the City covenants to make timely deposits to the Escrow Fund, from lawfully available funds, of any additional amounts required to pay the principal of and interest on the Refunded Bonds, if for any reason, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund are insufficient to make such payment.
THE BONDS
DESCRIPTION OF THEBONDS. . . The Bonds are dated as of their date of delivery (the “Dated Date”), and will mature on October 1 in each of the years and in the amounts shown on page 2 hereof. Interest will accrue from their Date of Delivery, will be computed on the basis of a 360-day year of twelve 30-day months and will be payable on October 1, 2015 and on each April 1 and October 1 thereafter until maturity or prior redemption.
AUTHORITY FORISSUANCE. . . The Bonds are issued pursuant to the general laws of the State of Texas, particularly Chapters 1207 and 1371, Texas Government Code, and the Ordinances and are special obligations of the City, payable, both as to principal and interest, solely from and, together with certain outstanding parity bonds, secured by a first lien on and pledge of the Pledged Revenues of the System, which include the Net Revenues of the System remaining after deduction of current expenses of operation and maintenance. The City has not covenanted nor obligated itself to pay the Bonds from monies raised or to be raised from taxation (see “THE BONDS – Security and Source of Payment”).
SECURITY ANDSOURCE OFPAYMENT. . . The Bonds, together with certain outstanding revenue bonds of the City (the “Previously Issued Parity Bonds”) and any additional parity bonds that may be issued in the future (“Additional Bonds”), are special obligations of the City payable, both as to principal and interest, solely from and secured by a first lien on and pledge of the Pledged Revenues of the System, which include the Net Revenues of the System remaining after the payment of operation and maintenance expenses (see Appendix B – “Selected Provisions of the Bond Ordinances – Pledge”).
The Bonds are not a charge upon any other income or revenues of the City and will never constitute an indebtedness or pledge or a lien on the general credit or taxing powers of the City. The Ordinances do not create a lien or mortgage on the System, except the Pledged Revenues, and amounts on deposit in the Reserve Fund established for the benefit of the Parity Obligations (including the Bonds), and any judgment against the City may not be enforced by levy and execution against any property owned by the City.
As additional security, the Reserve Fund will be funded over a 60-month period from operations of the System in the amount equal to 100% of the average annual debt service requirements (including Amortization Installments) of the outstanding Previously Issued Parity Bonds, the Bonds and any Additional Bonds issued on a parity with the Bonds (see Appendix B - “Selected Provisions of the Bond Ordinances – Reserve Requirements”).
Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and the pledge of the Pledged Revenues, and such pledge is valid, effective, and perfected. Should Texas law be amended at any time while the Bonds are outstanding and unpaid, the result of such amendment being that the pledge of the Pledged Revenues is to be subject to the filing requirements of Chapter 9, Texas Business & Commerce Code, as amended, in order to preserve to the owners the perfection of the security interest in such pledge, the City agrees to take such measures as it determines are reasonable and necessary to enable a filing of a security interest in said pledge to occur.
APPLICATION OFSYSTEMREVENUES. . . Gross Revenues of the System are deposited in the Revenue Fund and are applied first to the payment of all necessary and reasonable expenses of operation and maintenance of the System, including payment of certain contractual obligations of the City with respect to water supply and wastewater treatment (see “DEBT INFORMATION – Table 12 – Operations and Maintenance for Water Supply and Wastewater Treatment”), then to the payment of the amounts required for the Interest and Sinking Fund and the Reserve Fund, in that order, established by the Ordinances. The City Charter requires that all System receipts and revenues be devoted to System purposes and to payment of charges that would be due the City if the Water Utilities Department were not a City-owned public utility. The Ordinance states that excess Pledged Revenues may be used for any lawful purpose not inconsistent with the City Charter (see Appendix B – “Selected Provisions of the Bond Ordinances – Deficiencies; Excess Pledged Revenues”).
least equal to 1.25 times the Annual Debt Service requirements on all then outstanding Previously Issued Parity Bonds, the Bonds and Additional Bonds for the fiscal year during which such requirement are scheduled to be the greatest, to pay all other System obligations reasonably anticipated to be paid from gross revenues and to establish and maintain the funds provided for in the Ordinance. The City has further covenanted that, if the System should become legally liable for any other indebtedness, it will fix and maintain rates and collect charges for the services of the System sufficient to discharge such indebtedness.
ADDITIONALBONDS. . . The City may issue additional revenue obligations payable from the Pledged Revenues which together with the Previously Issued Parity Bonds and the Bonds will be equally and ratably secured by a parity lien on and pledge of the Pledged Revenues of the System, subject, however, to complying with certain conditions in the Ordinances. (See Appendix B – “Selected Provisions of the Bond Ordinances – Additional Bonds” for terms and conditions to be satisfied for the issuance of Additional Bonds).
OPTIONALREDEMPTION. . . The City reserves the right, at its option, to redeem Series 2015A Bonds having stated maturities on and after October 1, 2026, in whole, or in part in principal amounts of $5,000 or any integral multiple thereof, on October 1, 2025 or on any date thereafter, at the redemption price of par plus accrued interest to the date fixed for redemption. If less than all of the Series 2015A Bonds are to be redeemed and if less than all of a maturity is to be redeemed, the Paying Agent/Registrar will determine by lot the Series 2015A Bonds, or portions thereof, within such maturity to be redeemed; provided, however, that during any period in which ownership of the Series 2015A Bonds is determined only by a book entry at a securities depository (see “Book-Entry-Only System”, below), if fewer than all of the Series 2015A Bonds of the same maturity are to be redeemed, the particular Series 2015A Bonds will be selected in accordance with arrangements between the City and the securities depository.
The Taxable Series 2015B Bonds are not subject to redemption prior to maturity.
MANDATORYSINKINGFUNDREDEMPTION. . .The Series 2015A Bonds are subject to mandatory redemption in part by lot pursuant to the terms of the Series 2015A Bond Ordinance, on October 1 in each of the years 2038 through 2039, inclusive, with respect to Series 2015A Bonds maturing October 1, 2040, and on October 1 in each of the years 2041 through 2043, inclusive, with respect to Series 2015A Bonds maturing October 1, 2044, in the following years and in the following amounts, at a price equal to the principal amount thereof and accrued and unpaid interest to the date of redemption, without premium:
__________ + Final Maturity
__________ + Final Maturity
To the extent, however, that Series 2015A Bonds subject to sinking fund redemption have been previously purchased or called for redemption in part and otherwise than from a sinking fund redemption payment, each annual sinking fund payment for such Series 2015A Bond shall be reduced by the amount obtained by multiplying the principal amount of Series 2015A Bonds so purchased or redeemed by the ratio which each remaining annual sinking fund redemption payment for such Series 2015A Bonds bears to the total remaining sinking fund payments, and by rounding each such payment to the nearest $5,000 integral; provided, that during any period in which ownership of the Series 2015A Bonds is determined only by a book entry at a securities depository for the
M andatory M andatory Redemption Date October 1, 2038 $ 8,780,000 October 1, 2039 9,135,000 October 1, 2040 + 9,510,000 Redemption Amount Term Bond due October 1, 2040 (CUSIP # 2354166X7)
Series 2015A Bonds, the particular Series 2015A Bonds to be called for mandatory redemption shall be selected in accordance with the arrangements between the City and the securities depository.
NOTICE OFREDEMPTION. . . Not less than 30 days prior to a redemption date for the Series 2015A Bonds called for redemption, the City will cause (i) a written notice of such redemption to be given by the Paying Agent/Registrar to the registered owner of each Bond or a portion thereof being called for redemption by depositing such notice in the United States mail, first class, postage prepaid, addressed to each such registered owner at the address of such registered owner shown on the Registration Books of the Paying Agent/Registrar and (ii) a notice of such redemption to be published one time in a financial journal or publication of general circulation in the United States of America or the State of Texas carrying as a regular feature notices of municipal bonds called for redemption; provided, however, that the failure to send, mail or receive such notice described in (i) above, or any defect therein or in the sending or mailing thereof, will not affect the validity or effectiveness of the proceedings for the redemption of any Series 2015A Bond, and the publication of notice as described in (ii) above shall be the only notice actually required in connection with or as a prerequisite to the redemption of any Series 2015A Bonds. ANY NOTICE WILL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE SERIES 2015A BONDS CALLED FOR REDEMPTION WILL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY SERIES 2015A BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND OR PORTION THEREOF WILL CEASE TO ACCRUE, EXCEPT AS PROVIDED IN THE NEXT PARAGRAH.
With respect to any optional redemption of the Series 2015A Bonds, unless the Paying Agent/Registrar has received funds sufficient to pay the principal and premium, if any, and interest on the Series 2015A Bonds to be redeemed before giving of a notice of redemption, the notice of redemption may state the City may condition redemption on the receipt by Paying Agent/Registrar of such funds on or before the date fixed for the redemption, or on the satisfaction of any other prerequisites set forth in the notice of redemption. If a conditional notice of redemption is given and such prerequisites to redemption and sufficient funds are not received, the notice shall be of no force and effect, the City shall not redeem the Series 2015A Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, that the Series 2015A Bonds have not been redeemed.
BOOK-ENTRY-ONLYSYSTEM. . . 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 The Depository Trust Company, New York, New York (“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 United States Securities and Exchange Commission (the “SEC”), and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC.
DTC 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) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate for each maturity and series of the Bonds will be issued, in the aggregate principal amount of such issue, and will be deposited with DTC.
DTC, the world’s largest depository, 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 corporation” 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 and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). Direct Participants and Indirect Participants are collectively referred to as “Participants”. DTC has a Standard & Poor’s rating of “AA+”. The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at
www.dtcc.com.
recorded on the Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests 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 Bonds, except in the event that use of the book-entry system for the Bonds of such series 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., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any 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. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent/Registrar and request that copies of the notices be provided directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts 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 Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Paying Agent/Registrar, on the payable date in accordance with their respective holdings shown on DTC’s records. 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 nor its nominee, the Paying Agent/Registrar of each series, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent/Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bonds are required to 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 or bondholders 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 Ordinances 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 Underwriters.
Effect of Termination of Book-Entry-Only System. In the event that the Book-Entry-Only System is discontinued by DTC or the
PAYINGAGENT/REGISTRAR. . . The initial Paying Agent/Registrar for the Bonds is U.S. Bank National Association. In each 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 must be a bank, trust company, financial institution 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. If the Paying Agent/Registrar is replaced by the City, the new Paying Agent/Registrar must accept the previous Paying Agent/Registrar’s records and act in the same capacity as the previous Paying Agent/Registrar.
In the event the Book-Entry-Only System hereinabove described should be discontinued, principal of the Bonds will be payable to the registered owner at maturity or redemption prior to maturity upon presentation at the Dallas, Texas corporate trust office of the Paying Agent/Registrar (the “Designated Trust Office”). Interest on the Bonds will be payable by check, dated as of the interest payment date, and mailed by the Paying Agent/Registrar to registered owners as shown on the records of the Paying Agent/Registrar on the Record Date (see “Record Date for Interest Payment” below), or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. If the date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal holiday, or 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 will 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.
TRANSFER, EXCHANGE ANDREGISTRATION. . . 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 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 Trust 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 series and for a like aggregate designated amount and series as the Bonds surrendered for exchange or transfer. See "THE BONDS -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 Series 2015A 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 the Series 2015A Bonds.
RECORDDATE FORINTERESTPAYMENT. . . 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.
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 must be 15 days after the Special Record Date) will be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each registered owner of a Bond appearing on the 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.
SOURCES ANDUSES OFFUNDS. . . The sources and uses of funds, including Bond proceeds and a contribution from the City, if necessary, shall be as follows:
DEFEASANCE. . . The Ordinances provide that the City may discharge its obligations to the registered owners of any or all of the Bonds to pay principal, interest and redemption price thereon in any manner permitted by current law. Under current State law, such discharge may be accomplished either (i) by depositing with the Comptroller of Public Accounts of the State a sum of money equal to the principal of, premium, if any, and all interest to accrue on the Bonds to maturity or redemption or (ii) by depositing with any place of payment (paying agent) for obligations of the City payable from revenues or from ad valorem taxes or both, amounts sufficient to provide for the payment and/or redemption of the Bonds; provided that such deposits may be invested and reinvested only in direct obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America. The foregoing obligations may be in book entry form, and shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of the Bonds.
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 for 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.
The Ordinances provide that upon receiving the consent of 51% of the outstanding Previously Issued Parity Bonds, the Bonds and Additional Bonds, defeasance of the Bonds and Additional Bonds may be effected by investing moneys in “Defeasance Securities”. See “THE BONDS – Amendments to the Ordinance”.
BONDHOLDERS’ REMEDIES. . . Each Ordinance specifies events of default with respect to the Bonds (see Appendix B – “Selected Provisions of the Bond Ordinance – Default and Remedies”). If the City defaults in the payment of principal, interest, or redemption price on the Bonds when due, or if it fails to make payments into any fund or funds created in the Ordinance, or defaults in the observation or performance of any other covenants, conditions, or obligations set forth in the Ordinance, the registered owners may seek a writ of mandamus to compel City officials to carry out their legally imposed duties with respect to the Bonds if there is no other available remedy at law to compel performance of the Bonds or the Ordinance and the City’s obligations are not uncertain or disputed. The issuance of a writ of mandamus is controlled by equitable principles, and with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. Neither Ordinance provides for the appointment of a trustee to represent the interest of the bondholders upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners.
The Texas Supreme Court ruled in Tooke v. City of Mexia 197 S.W.3d 325 (Tex. 2006) that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in “clear and unambiguous” language. Because it is unclear whether the Texas legislature has effectively waived the City’s sovereign immunity from a suit for money damages, bondholders may not be able to bring such a suit against the City for breach of the Bonds or Ordinance covenants. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Bonds.
Taxable
S ources Series 2015A Series 2015B
Par Amount of Bonds $453,630,000.00 $150,630,000.00
Reoffering Premium 69,062,949.15
-City Contribution 6,471,611.36 2,965,984.06
Total Sources of Funds $529,164,560.51 $153,595,984.06
Uses
Deposit to Escrow Fund for the Refunded Bonds $310,844,605.24 $153,154,912.38 Deposit to the Note Payment Funds for the Refunded Notes 216,575,665.11
-Underwriters' Discount 1,740,030.25 439,695.92
Rounding Amount 4,259.91 1,375.76
Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code (“Chapter 9”). Chapter 9 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 Co-Bond Counsel will note that all opinions relative to the enforceability of the Ordinances and the Bonds are qualified with respect to the customary rights of debtors relative to their creditors and by general principles of equity that permit the exercise of judicial discretion.
AMENDMENTS TO THEORDINANCE. . . In each Ordinance, under certain circumstances, the City has reserved the right to amend the Ordinance without the consent of any holder of the Bonds (see Appendix B – “Selected Provisions of the Bond Ordinances – Amendment of Ordinance”).
By acceptance of the Bonds, each owner of a Bond (i) irrevocably and specifically consents to and approves amendments to the Ordinances and the ordinances governing the issuance of Additional Bonds as described below, (ii) irrevocably appoints the City Manager as its true and lawful attorney-in-fact to evidence an owner’s specific consent to and approval of the amendments described below, and (iii) confirms all actions taken by the City Manager as attorney-in-fact for the owners. The amendments are as follows:
(1) Amend Section 12(b) of the Ordinances to read:
"(b) That money in any Fund established by ordinances authorizing Previously Issued Parity Bonds may, at the option of the City, be invested in Authorized Investments; provided, however, that all such deposits and investments shall have a par value (or market value when less than par) exclusive of accrued interest at all times at least equal to the amount of money credited to such Funds, and shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times. Money in the Reserve Fund shall not be invested in securities maturing later than the final maturity of the Previously Issued Parity Bonds, the Bonds, and Additional Bonds. Such investments shall be valued in terms of current market value as of the last day of each Year, except that direct obligations of the United States (State and Local Government Series) in book-entry form shall be continuously valued at their par or face principal amount. Such investments shall be sold promptly when necessary to prevent any default in connection with the Previously Issued Parity Bonds, the Bonds or Additional Bonds. As used in this Section, the term "Authorized Investments" shall mean those investments in which the City is now or hereafter authorized by law, including, but not limited to, Chapter 2256, Texas Government Code, and consistent with the City’s investment policy adopted and approved from time to time by the City Council pursuant to the provisions of Chapter 2256, Texas Government Code,, to purchase, sell and invest its funds and funds under its control.
(2) Amend Section 18 of the Ordinances to read:
"(a) That any Previously Issued Parity Bond, Bond or Additional Bond shall be deemed to be paid, retired and no longer outstanding within the meaning of this Ordinance when payment of the principal of, redemption premium, if any, on such bond, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (ii) shall have been provided for by irrevocably depositing with, or making available to, a paying agent (or escrow agent) therefor, in trust and irrevocably set aside exclusively for such payment, (1) money sufficient to make such payment or (2) Defeasance Securities, as hereinafter defined in this Section, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of such paying agent pertaining to the bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of such paying agent. At such time as a Previously Issued Parity Bond, Bond or Additional Bond shall be deemed to be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the benefit of this Ordinance or such other ordinance securing such bond or a lien on and pledge of the Pledged Revenues, and shall be entitled to payment solely from such money or Defeasance Securities.
(b) That any moneys so deposited with a paying agent may, at the direction of the City, also be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set forth, and all income from all Defeasance Securities in the hands of the paying agent pursuant to this Section which is not required for the payment of the Previously Issued Parity Bonds, Bonds and Additional Bonds, the redemption premium, if any, and interest thereon, with respect to which such money has been so deposited, shall be remitted to the City.
(d) That for the purpose of this Section, the term "Defeasance Securities" shall mean (i) direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (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 the City adopts or approves proceedings authorizing the issuance of refunding bonds or, if such defeasance is not in connection with the issuance of refunding bonds, on the date the City provides for the funding of an escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally-recognized investment rating firm not less than "AAA" or its equivalent, (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the City adopts or approves proceedings authorizing the issuance of refunding bonds or, if such defeasance is not in connection with the issuance of refunding bonds, on the date the Board provides for the funding of an escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally-recognized investment rating firm not less than "AAA" or its equivalent, or (iv) any other then authorized securities or obligations that may be used to defease obligations such as the Bonds under the then applicable laws of the State of Texas.
(e) That notwithstanding any other provisions of this Ordinance, all money or Defeasance Securities set aside and held in trust pursuant to the provisions of this Section for the payment of Previously Issued Parity Bonds, Bonds and Additional Bonds, the redemption premium, if any, and interest thereon, shall be applied to and used for the payment of such Previously Issued Parity Bonds, Bonds and Additional Bonds, the redemption premium, if any, and interest thereon.
(f) That in accordance with the provisions of Section 1207.033, Texas Government Code, the City may call for redemption, at a date earlier than their scheduled maturities, those Bonds which have been defeased to their maturity date. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem Bonds defeased under the terms of this Ordinance that is made in conjunction with the payment arrangements specified in clauses (i) or (ii) of subsection (a) above shall not be irrevocable, provided that: (1) in the proceedings providing for such payment arrangements, the City expressly reserves the right to call Bonds so defeased for redemption; (2) the City gives notice of the reservation of that right to the owners of the Bonds so defeased immediately following the making of the payment arrangements; and (3) the City directs that notice of the reservation be included in any redemption notices that it authorizes."
(3) Amend Section 20(b) of the Ordinances to read:
"(b) The Chief Financial Officer of the City signs a written certificate to the effect that, during either the next preceding Year, or any twelve consecutive calendar month period ending not more than ninety days prior to the date of the then proposed Additional Bonds, the Net Revenues were, in her or his opinion, at least equal to 1.25 times the average annual principal and interest requirements (computed on a fiscal year basis) including Amortization Installments, of all Previously Issued Parity Bonds, the Bonds and Additional Bonds to be outstanding after the issuance of the then proposed Additional Bonds."
The amendments described in clauses (1) and (3) will become effective once the City determines that the consent of 51% of the aggregate unpaid principal amount of the Previously Issued Parity Bonds, the Bonds and any Additional Bonds then Outstanding is received. The amendment described in clause (2) will become effective once the City determines that the consent of 51% of the aggregate unpaid principal amount of the Previously Issued Parity Bonds, the Bonds and any Additional Bonds then Outstanding is received, and would apply only to the Bonds and the Taxable Series 2015B Bonds, and any Additional Bonds delivered after the date of delivery of the Bonds and the Taxable Series 2015B Bonds. Upon the delivery of the Bonds and the refunding of the Refunded Bonds, the Bonds will comprise 28.7% of the aggregate principal amount of the Previously Issued Parity Bonds and the Bonds outstanding.