HomeMy WebLinkAboutOrdinance - 10041-1997 - Airport Surplus Revenue Certicficates Of Obligations - 12/11/1997ORDINANCE NO. 10041 v k' c. Ut'L bU' \ \ 1 \ 9. c..r I ~~ UO-<L1 <g I l 9'1 i AN ORDINANCE authorizing the issuance of 11CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 199811; levying an ad valorem tax upon all taxable property in the City and providing for a pledge of the Surplus Revenues of the City's Airport for the payment of said Certificates; prescribing the terms and details of such Certificates and resolving other matters incident and related to the issuance, sale, security, payment and delivery of said Certificates, including the approval of a Paying Agent/Registrar Agreement and the approval and distribution of an Official Statement pertaining thereto; and providing an effective date. WHEREAS, notice of the City Council's intention to issue certificates of obligation in the maximum principal amount of $1,330,000 for the purpose of paying contractual obligations to be incurred for (i) the purchase of land to expand the 11free zone" for the north/south runway expansion at the municipal airport, and {ii} professional services rendered in connection with such project and the financing thereof, has been duly published in the Lubbock Avalanche-Journal, a newspaper hereby found and determined to be of general circulation in the City of Lubbock, Texas, on December 21, 1997 and December 28, 1997, the date of the first publication of such notice being not less than fifteen (15) days prior to the tentative date stated therein for the passage of this Ordinance; and WHEREAS, no petition, protesting the issuance of such certificates and bearing valid petition signatures of at least 5% of the qualified voters of the City, has been filed with the City Secretary, any member of the Council or any other official of the City on or prior to the date of the passage of this Ordinance; and WHEREAS, the Council hereby finds and determines that all of the certificates of obligation described in such notice should be issued and sold at this time; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1: Authorization-Designation-Principal Amount-Purpose. Certificates of obligation of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $1,330,000 to be designated and bear the title 11CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 199811 {the 11Certificates11), for the purpose of paying contractual obligations to be incurred for (i) the purchase of land to expand the 11free zone" for the north/south runway expansion at 0480967
the municipal airport, and (ii) professional services rendered in connection with such project and the financing thereof, pursuant to authority conferred by and in conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Local Government Code, Subchapter C of Chapter 271. SECTION 2: Fully Registered Obligations -Authorized Denominations-Stated Maturities-Date. The Certificates are issuable in fully registered form only; shall be dated January 1, 1998 (the "Certificate Date11) and shall be in denominations of $5,000 or any integral multiple thereof and the Certificates shall become due and payable on February 15 in each of the years and in principal amounts (the 11Stated Maturities11) and bear interest at the per annum rate(s) in accordance with the following schedule: Year of Principal Interest Stated Maturity Amount Rate 1999 $105,000 5.25% 2000 110,000 5.25% 2001 115,000 5.25% 2002 125,000 5.25% 2003 130,000 5.875% 2004 135,000 4.35% 2005 140,000 4.40% 2006 150,000 4.45% 2007 155,000 4.50% 2008 165,000 4.50% Interest on the Certificates shall accrue from the Certificate Date at the per annum rate(s) shown above in this Section, and such interest shall be calculated on the basis of a 360-day year of twelve 30-day months. Interest on the Certificates shall be payable on February 15 and August 15 in each year, commencing August 15, 1998. SECTION 3: Terms of Payment-Paying Agent/Registrar. The principal of, premium, if any, and the interest on the Certificates, due and payable by reason of maturity or redemption or otherwise, shall be payable only to the registered owners or holders of the Certificates (hereinafter called the ttHolders11) appearing on the registration and transfer books maintained by the Paying Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The selection and appointment of U.S. Trust Company of Texas, N .A., Dallas, Texas to serve as Paying Agent/Registrar for the -2-
Certificates is hereby approved and confirmed. Books and records relating to the registration, payment, exchange and transfer of the Certificates (the "Security Register") shall at all times be kept and maintained on behalf of the City by the Paying Agent/Registrar, all as provided herein, in accordance with the terms and provisions of a "Paying Agent/Registrar Agreement", substantially in the form attached hereto as Exhibit A and such reasonable rules and regulations as the Paying Agent/Registrar and the City may prescribe. The Mayor and City Secretary of the City are hereby authorized to execute and deliver such Agreement in connection with the delivery of the Certificates. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Certificates are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company,· financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of and premium, if any, on the Certificates shall be payable at the Stated Maturities or the redemption thereof only upon presentation and surrender of the Certificates to the Paying Agent/Registrar at its designated offices in New York, New York (the 11Designated Payment/Transfer Office11) • Interest on the Certificates shall be paid by the Paying Agent/Registrar to the Holders whose name appears in the Security Register at the close of business on the Record Date (the last business day of the month next preceding each interest payment date) and payment of such interest shall be (i) by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Certificates shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the City where the Designated Payment/Transfer Off ice of 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, 1 egal holiday, or day when 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. 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 -3-
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 (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 Holder appearing on the Security Register at the close of business on the last business next preceding the date of mailing of such notice. SECTION 4: No Optional Redemption. The Certificates shall not be subject to redemption prior to maturity at the option of the City. SECTION 5: Registration Transfer -Exchange of Certificates-Predecessor Certificates. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the Certificates issued under and pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any Certificate may be transferred or exchanged for Certificates of other authorized denominations by the Holder, in person or by his duly authorized agent, upon surrender of such Certificate to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. Upon surrender of any Certificate for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar, the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new Certificates of authorized denominations and having the same Stated Maturity and of a like aggregate principal amount as the Certificate or Certificates surrendered for transfer. At the option of the Holder, Certificates may be exchanged for other Certificates of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Certificates surrendered for exchange, upon surrender of the Certificates to be exchanged at the Designated·Payment/Transfer Office of the Paying Agent/ Registrar. Whenever any Certificates are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new certificates to the Holder requesting the exchange. All Certificates issued in any transfer or exchange of Certificates shall be delivered to the Holders at the Designated Payment/Transfer Office of the Paying Agent/Registrar or sent by United States Mail, first class, postage prepaid to the Holders, and, upon the registration and delivery thereof, the same shall be 04&0967 -4-
the valid obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the Certificates surrendered in such transfer or exchange. All transfers or exchanges of Certificates pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Certificates canceled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be 11Predecessor Certificates," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the new Certificate or Certificates registered and delivered in the exchange or transfer therefor. Additionally, the term II Predecessor Certificates 11 shall include any mutilated, lost, destroyed, or stolen certificate for which a replacement Certificate has been issued, registered and delivered in lieu thereof pursuant to the provisions of Section 24 hereof and such new replacement certificate shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Certificate. SECTION 6: Book-Entry Only Transfers and Transactions. Notwithstanding the provisions contained in Sections 3 and 5 hereof relating to the payment, and transfer/exchange of the Certificates, the City hereby approves and authorizes the use of "Book-Entry Only11 securities clearance, settlement and transfer system provided by The Depository Trust Company (DTC), a limited purpose trust company organized under the laws of the State of New York, in accordance with the requirements and procedures identified in the Letter of Representation, by and between the City, the Paying Agent/Registrar and OTC (the 11Depository Agreement11) relating to the Certificates. Pursuant to the Depository Agreement and the rules of DTC, the Certificates shall be deposited with OTC who shall hold said Certificates for its participants (the "DTC Participants"). While the Certificates are held by DTC under the Depository Agreement, the Holder of the Certificates on the Security Register for all purposes, including payment and notices, shall be Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each Certificate (the 11Beneficial Owners") being recorded in the records of DTC and DTC Participants. In the event OTC determines to discontinue serving as securities depository for the Certificates or otherwise ceases to provide book-entry clearance and settlement of securities 04809$7 -5-
transactions in general or the City determines that DTC is incapable of properly discharging its duties as securities depository for the Certificates, the City covenants and agrees with the Holders of the Certificates to cause Certificates to be printed in definitive form and provide for the Certificates to be issued and delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the Certificates in definitive form shall be assigned, transferred and exchanged on the Security Register maintained by the Paying Agent/Registrar and payment of such Certificates shall be made in accordance with the provisions of Sections 3 and 5 hereof. SECTION 7: Execution -Registration. The Certificates shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Certificates may be manual or facsimile. Certificates bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the Certificate Date shall be deemed to be duly executed on behalf of the City, notwithstanding that one or more of the individuals executing the same shall cease to be such officer at the time of delivery of the Certificates to the initial purchaser(s) and with respect to Certificates delivered in subsequent exchanges and transfers, all as authorized and provided in the Bond Procedures Act of 1981, as amended. No Certificate shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such Certificate either a certificate of registration substantially in the form provided in Section 9C, manually executed by the Comptroller of Public Accounts of the State of Texas, or his duly authorized agent, or a certificate of registration substantially in the form provided in Section 9D, manually executed by an authorized officer, employee or representative of the Paying Agent/Registrar, and either such certificate duly signed upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly certified, registered and delivered. SECTION 8: Initial Certificate (s) . The Certificates herein authorized shall be initially issued either (i) as a single fully registered certificate in the total principal amount of $1,330,000 with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1, or (ii) as ten (10) fully registered certificates, being one certificate for each year of maturity in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward (hereinafter called the II Initial Certificate (s) 11) and, in either case, the Initial Certificate (s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial -6-
Certificate(s) shall be the Certificates submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the Initial Certificate (s) , the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Certificate{s) delivered hereunder and exchange therefor definitive Certificates of authorized denominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchaser (s) , or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 9: Forms. A. Forms Generally. The Certificates, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration Certificate of Paying Agent/Registrar, and the form of Assignment to be printed on each of the Certificates, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including insurance legends in the event the Certificates, or any maturities thereof, are purchased with insurance and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Certificates as evidenced by their execution. Any portion of the text of any Certificates may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Certificate. The definitive Certificates and the Initial Certificate (s) shall be printed, lithographed, or engraved, typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined by the officers executing such Certificates as evidenced by their execution thereof. -7-
B. Form of Certificates. REGISTERED REGISTERED NO.___ $ ____ _ Certificate Date: January 1, 1998 Registered Owner: Principal Amount: UNITED STATES OF AMERICA STATE OF TEXAS CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATE OF OBLIGATION, SERIES 1998 Interest Rate: Stated Maturity: ______ % CUSIP NO: DOLLARS The City of Lubbock (hereinafter referred to as the 11City11), a body corporate and municipal corporation in the County of Lubbock, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the Registered Owner named above, or the registered assigns thereof, the Principal Amount stated above, on the Stated Maturity date specified above, without right of prior redemption, and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid Principal Amount hereof from the Certificate Date at the per annum rate of interest specified above; such interest being payable on February 15 and August 15 of each year, commencing August 15, 1998. Principal of this Certificate is payable at its Stated Maturity to the registered owner hereof, upon presentation and surrender, at the Designated Payment/Transfer Office of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor. Interest is payable to the registered owner of this Certificate (or one or more Predecessor Certificates, as defined in the Ordinance hereinafter referenced) whose name appears on the 11 Security Register11 maintained by the Paying Agent/Registrar at the close of business on the 11Record Date", which is the last business day of the month next preceding each interest payment date and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register on the Record Date or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Certificate 0480967 -8-
shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. This Certificate is one of the series specified in its title issued in the aggregate principal amount of $1,330,000 (herein referred to as the 11Certificates11) for the purpose of paying contractual obligations to be incurred for (i) the purchase of land to expand the "free zone11 for the north/south runway expansion at the municipal airport, and (ii) professional services rendered in connection with such project and the financing thereof, under and in strict conformity with the Constitution and laws of the State of Texas, particularly V.T.C.A., Local Government Code, Subchapter C of Chapter 271, and pursuant to an Ordinance adopted by the governing body of the City (herein referred to as the "Ordinance") . The Certificates are payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City and, together with the outstanding "Previously Issued Certificates11 (identified and defined in the Ordinance), are additionally payable from and secured by a lien on and pledge of the Surplus Revenues (as defined in the Ordinance) of the City's Airport (the 11Airport"), such lien and pledge, however, being junior and subordinate to the lien on and pledge of the Net Revenues of the Airport securing the payment of "Priority Obligations" (defined in the Ordinance) hereafter issued by the City. In the Ordinance, the City reserves and retains the right to issue Priority Obligations while the Certificates are Outstanding without limitation as to principal amount but subject to any terms, conditions or restrictions as may be applicable thereto under law or otherwise. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment/Transfer Office of the Paying Agent/Registrar, and to all the provisions of which the Holder hereof by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the tax levied for the payment of the Certificates; the properties constituting the Airport; the Surplus Revenues pledged to the payment of-the principal of and interest on the Certificates; the nature and extent and manner of enforcement of the pledge; the terms and conditions relating to the transfer of this Certificate; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders of the Certificates; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which the tax levy and the liens, pledges, charges and covenants made therein may be discharged at or prior to the maturity of this Certificate, and this Certificate deemed to be no longer Outstanding thereunder; 0480961 -9-
and for the other terms and provisions contained therein. Capitalized terms used herein have the meanings assigned in the Ordinance. This Certificate, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the Designated Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more fully registered Certificates of authorized denominations and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, may treat the registered owner hereof whose name appears on the Security Register (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Certificate as the owner entitled to payment of principal hereof at its Stated Maturity, and (iii) on any other date as the owner for all other purposes, and neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In the event of nonpayment of interest on a scheduled payment date and for thirty (30) days thereafter, a new record date for such interest payment (a 11Special Record Date11) 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 (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 Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. It is hereby certified, recited, represented and covenanted that the City is a body corporate and political subdivision duly organized ·and legally existing under and by virtue of the Constitution and laws of the State of Texas; that the issuance of the Certificates is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the Certificates to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the State of Texas, and the Ordinance; that the Certificates do not exceed any constitutional or statutory limitation; and that due provision has 0460961 -10-
been made for the payment of the principal of and interest on the Certificates by the levy of a tax and a pledge of the Surplus Revenues of the Airport as aforestated. In case any provision in this Certificate or any application thereof shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions and applications shall not in any way be affected or impaired thereby. The terms and provisions of this Certificate and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Certificate to be duly executed under the official seal of the City as of the Certificate Date. CITY OF LUBBOCK, TEXAS COUNTERSIGNED: Mayor City Secretary (SEAL} 0430067 -11-
C. * Form of Registration Certificate of Comptroller of Public Accounts to Appear on Initial Certificate(s) only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS THE STATE OF TEXAS § § § § REGISTER NO. I HEREBY CERTIFY that this Certificate has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my (SEAL) *NOTE TO PRINTER: signature and seal of office Comptroller of Public Accounts of the State of Texas Do not print on definitive Certificates this D. Form of Certificate of Paying Agent/Registrar to Appear on Definitive Certificates. REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR This Certificate has been duly issued and registered under the provisions of the within-mentioned Ordinance; the certificate or certificates of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. The designated offices of the Paying Agent/Registrar located in New York, New York, is the 11Designated Payment/Transfer Office" for this Certificate. Registration Date: 0430967 U. S. TRUST COMPANY OF TEXAS, N.A., Dallas, Texas, as Paying Agent/Registrar By---------------Authorized Signature -12-
E. Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite name, address, and zip code of transferee:) number: (Social Security or other identifying ________________ ) the within Certificate and all rights thereunder, appoints and hereby irrevocably constitutes and attorney to transfer the within Certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • I I NOTICE: The signature assignment must correspond the name of the registered it appears on the face within Certificate in particular. on this with owner as of the every F. The Initial Certificate(sl shall be in the form set forth in paragraph B of this Section, except that the form of a single fully registered Initial Certificate shall be modified as follows: (i) immediately under the name of the headings II Interest Rate ______ 11 and _______ 11 shall both be omitted; (ii) paragraph one shall read as follows: Registered Owner: Principal Amount: certificate the "Stated Maturity Dollars The City of Lubbock {hereinafter referred to as the 11City11), a body corporate and municipal corporation in the County of Lubbock, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the Registered Owner named above, or the registered assigns thereof, the Principal Amount hereinabove stated, on February 15 in each of the years and in principal installments in accordance with the following schedule: 0430967 -13-
PRINCIPAL INSTALLMENTS (Information to be inserted from schedule in Section 2 hereof). INTEREST RATE (without right of prepayment prior to maturity) and to pay interest on the unpaid Principal Amount hereof from the Certificate Date at the per annum rates of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on February 15 and August 15 of each year, commencing August 15, 1998. Principal installments of this Certificate are payable in the year of maturity to the registered owner hereof by u. s. Trust Company of Texas, N. A. , Dallas, Texas ( the II Paying Agent/Registrar"), upon presentation and surrender, at its designated offices in New York, New York (the 11Designated Payment/Transfer Office"). Interest is payable to the registered owner of this Certificate whose name appears on the 11Security Register" maintained by the Paying Agent/Registrar at the close of business on the 11Record Date11, which is the last business day of the month next preceding each interest payment date hereof and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/ Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Certificate shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 10: Definitions. For purposes of this Ordinance and for clarity with respect to the issuance of the Certificates, and the levy of taxes and appropriation of Surplus Revenues therefor, the following words or terms, whenever the same appear herein without qualifying language, are defined to mean as follows: 0480967 {a) The term 11Additional Certificates11 shall mean tax and revenue obligations hereafter issued under and pursuant to the provisions of V.T.C.A., Local Government Code, Subchapter C of Chapter 271, or similar law and payable from ad valorem taxes and additionally payable from and secured by a parity lien on and pledge of the Surplus Revenues of the Airport of equal rank and dignity with the lien and pledge securing the payment of the Previously Issued Certificates and the Certificates. -14-
0480967 (b) The term 11Airport 11 and the term "municipal airport11 shall be synonymous, and shall mean all properties, real, personal or mixed which constitute a part of the existing municipal airport of the City of Lubbock, Texas, and any and all other property hereafter acquired or operated by the City for airport purposes, together with any and all additions or improvements thereto or changes therein made or authorized by the City. The term shall include, without limitation, all landing areas, runways, taxiways, ramps and apron areas, improvements, all buildings located on airport properties, fixtures, appurtenances, services, air navigation facilities, utility systems, and other facilities located on land heretofore or hereafter acquired for airport purposes. (c) The term °Certificates11 shall mean $1,330,000 11CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998" authorized by this Ordinance. (d) The term "Certificate Fund" shall mean the special Fund created and established under the provisions of Section 11 of this Ordinance. (e) The term "Collection Date" shall mean, when reference is being made to the levy and collection of annual ad valorem taxes, the date annual ad valorem taxes levied each year by the City become delinquent. (f) The term "Fiscal Year" shall mean the annual financial accounting period used with respect to the operations of the Airport now ending on September 30th of each year; provided, however, the City Council may change, by ordinance duly passed, such annual financial accounting period to end on another date if such change is found and determined to be necessary for budgetary or other fiscal purposes. (g) The term 11Government Securities" shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and the United States Treasury obligations such as its State and Local Government Series in book-entry form. (h) The term 11Gross Revenues" means the total revenues received by the City from ownership, control or operation of the municipal airport or air navigation -15-
0480967 facilities, including the proceeds from the sale of all or any part of such airport or facilities from whatever source derived, excluding any rentals (except for ground rentals) from net rent leases which may be executed in the future wherein the lease consideration is pledged or otherwise utilized to finance the construction of buildings or facilities for lessee-tenant of the City, or acquisition of additional lands or facilities, but only for such time and to such extent in each case as the rentals reserved in the lease and any extension or renewal thereof (other than ground rentals) are required to be deposited in a separate interest and redemption fund or other fund to provide and secure the performance of the City's obligation to pay debt service requirements on the indebtedness created to finance the improvement which is the subject of the lease. Without limiting the generality of the foregoing, unless otherwise restricted by the provisions of this Ordinance, the term 11gross revenues" will include all of the income from the ownership and operation of the municipal airport including landing fees and charges, ground rentals, space rental in buildings or rental of buildings located on land theretofore or hereafter acquired for airport purposes, fees for parking where the parking facility is not on a public street or thoroughfare, charges of every character made to concessionaires, receipts of the utility systems serving the airport, and all fees (if any) collected by the City on account of the operation of limousine or conveyances to and from the airport. (i) The term "Net Revenues11 shall mean Gross Revenues, with respect to any period, after deducting Operating Expenses during such period. (j) The term 110perating Expenses 11 shall mean all expenditures necessary for the efficiency, operation, maintenance and utilization of the municipal airport, including all salaries, labor, materials and repairs necessary to render efficient and adequate airport service to the City and its inhabitants, or such as might be necessary to meet some physical condition or accident which would otherwise impair the security of bonds payable from the same source. The term "operating expenses" shall not include any allowance for depreciation or capital improvements to the municipal airport. A capital improvement (as used in the foregoing sentence) shall mean (i) real property, or (ii) personal property which has an estimated life of more than two years. -16-
(k) The term 110utstanding11 when used in this Ordinance with respect to Certificates means, as of the date of determination, all Certificates theretofore issued and delivered under this Ordinance, except: (1) those Certificates canceled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; (2) those Certificates deemed to be duly paid by the City in accordance with the provisions of Section 20 hereof; and {3) those Certificates that have been mutilated, destroyed, lost, or stolen and replacement Certificates have been registered and delivered in lieu thereof as provided in Section 24 hereof. {l) The term "Previously Issued Certificates11 shall mean the outstanding (1) "CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 199311, dated October 1, 1993, and originally issued in the principal amount of $3,625,000, and (2) "CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 199511, dated May 15, 1995, and originally issued in the aggregate principal amount of $900,000. {m) The term "Priority Obligations" shall mean bonds or other similar obligations hereafter issued that are payable solely from and secured only by a lien on and pledge of the Net Revenues of the Airport and such lien and pledge securing the payment thereof is prior and superior in claim, rank and dignity to the lien and pledge of the Surplus Revenues securing the payment of the Previously Issued Certificates and the Certificates. {n) The term "Surplus Revenues" shall mean Net Revenues, with respect to any period, after deducting all payments to be made to the credit of the special funds or accounts created for the payment and security of Priority Obligations during such period. SECTION 11: Certificate Fund. For the purpose of paying the interest on and to provide a sinking fund for the payment and retirement of the Certificates, there shall be and is hereby created a special Fund to be designated "SPECIAL 1998 CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATE OF OBLIGATION FUND11, which Fund shall be kept and maintained at the 0480967 -17-
City's depository bank, and moneys deposited in said Fund shall be used for no other purpose. Proper officers of the City are hereby authorized and directed to cause to be transferred to the Paying Agent for the Certificates, from funds on deposit in the Certificate Fund, amounts sufficient to fully pay and discharge promptly each installment of interest and principal of the Certificates as the same accrues or matures or comes due by reason of redemption prior to maturity; such transfers of funds to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent for the Certificates at the close of business on the last business day next preceding each interest and/or principal payment date for the Certificates. Pending the transfer of funds to the Paying Agent/Registrar, money in the Certificate Fund may, at the option of the City, be invested in obligations identified in, and in accordance with the provisions of the II Public Funds Investment Act 11 (V. T. C. A. , Government Code, Chapter 2256) relating to the investment of "bond proceeds"; provided that all such investments shall be made in such a manner that the money required to be expended from said Fund will be available at the proper time or times. All interest and income derived from deposits and investments in said Certificate Fund shall be credited to, and any losses debited to, the said Certificate Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Certificates. SECTION 12: Tax Levv. To provide for the payment of the 11Debt Service Requirements" on the Certificates being (i) the interest on said Certificates and (ii) a sinking fund for their redemption at maturity or a sinking fund of 2% (whichever amount shall be the greater), there shall be and there is hereby levied for the current year and each succeeding year thereafter while said Certificates or any interest thereon shall remain Outstanding, a sufficient tax on each one hundred dollars' valuation of taxable property in said City, adequate to pay such Debt Service Requirements, full allowance being made for delinquencies and costs of collection; said tax shall be assessed and collected each year and applied to the payment of the Debt Service Requirements, and the same shall not be diverted to any other purpose. The taxes so levied and.collected shall be deposited into the Certificate Fund. This governing body hereby declares its purpose and intent to provide and levy a tax legally and fully sufficient to pay the said Debt Service Requirements, it having been determined that the existing and available taxing authority of the City for such purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding indebtedness. The amount of taxes to be provided annually for the payment of the principal of and interest on the Certificates herein authorized -18-
to be issued shall be determined and accomplished in the following manner: (a) Prior to the date the City Council establishes the annual tax rate and passes an ordinance levying ad valorem taxes each year, the City Council shall determine: {1) The amount on deposit in the Certificate Fund after (a) deducting therefrom the total amount of Debt Service Requirements to become due on Certificates prior to the Collection Date for the ad valorem taxes to be levied and (b) adding thereto the amount of Surplus Revenues of the Airport appropriated and allocated to pay such Debt Service Requirements prior to the Collection Date for the ad valorem taxes to be levied. {2) The amount of Surplus Revenues if any, appropriated and to be set aside for the payment of the Debt Service Requirements on the Certificates between the Collection Date for the taxes then to be levied and the Collection Date for the taxes to be levied during the next succeeding calendar year. (3) The amount of Debt Service Requirements to become due and payable on the Certificates between the Collection Date for the taxes then to be levied and the Collection Date for the taxes to be levied during the next succeeding calendar year. (b) The amount of taxes to be levied annually each year to pay the Debt Service Requirements on the Certificates shall be the amount established in paragraph (3) above less the sum total of the amounts established in paragraphs (1) and (2), after taking into consideration delinquencies and costs of collecting such annual taxes. SECTION 13: Pledge of Surplus Revenues. The City hereby covenants and agrees that, subject to a prior lien on and pledge of the Net Revenues for the payment and security of Priority Obligations and the deposits required by the ordinances securing the Priority Obligations, the remainder after such payment and deposit being the Surplus Revenues of the Airport, with the exception of those in excess of the amounts required to be deposited to the certificate Fund as hereafter provided, are hereby irrevocably pledged, equally and ratably, to the payment of the principal of and interest on the Previously Issued Certificates, the Certificates and Additional Certificates, if issued, as herein provided, and the pledge of the Surplus Revenues of the Airport herein made for the payment of the Certificates shall constitute a lien on the Surplus Revenues of the Airport in accordance with the 0<!80967 -19-
terms and provisions hereof and be valid and binding without further action by the City and without any filing or recording except for the filing of this Ordinance in the records of the City. SECTION 14: Airport Fund. The City hereby covenants and agrees that all Gross Revenues shall be deposited from day to day as collected into a 11City of Lubbock, Texas, Airport Fund" (hereinafter called 11Airport Fund11) which Fund shall be kept and maintained at an official depository bank of the City. All moneys deposited in the Airport Fund shall be pledged and appropriated to the extent required for the following purposes and in the order of priority shown, to wit: First: To the payment of all necessary and reasonable Operating Expenses of the Airport as defined herein to be a charge on and claim against the Gross Revenues; Second: To the payment of the amounts required to be deposited in the special Funds created and established for the payment, security and benefit of Priority Obligations in accordance with the terms and provisions of the ordinances authorizing the issuance of Priority Obligations; and Third: To the payment of the amounts required to be deposited in the special funds and accounts created and established for the payment of the Previously Issued Certificates, the Certificates and Additional Certificates. Any Surplus Revenues remaining in the Airport Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other City purpose now or hereafter permitted by law. SECTION 15: Deposits to Certificate Fund. The City hereby covenants and agrees to cause to be deposited in the Certificate Fund prior to each interest and principal payment date from the Surplus Revenues of the Airport, after deduction of all payments required to be made to special Funds or accounts created for the payment and security of the Priority Obligations, an amount equal to one hundred per centum (100%) of the amount required to fully pay the accrued interest and principal of the Certificates then due and payable by reason of maturity or redemption prior to maturity, such deposits to pay accrued interest and principal on the Certificates to be made in substantially equal monthly installments on or before the last business day of each month beginning the month the Certificates are delivered to the initial purchaser. 0480967 -20-
The monthly deposits to the Certificate Fund, as hereinabove provided, shall be made until such time as such Fund contains an amount equal to pay the principal of and interest on the Certificates to maturity. Ad valorem taxes levied, collected and deposited in the Certificate Fund for and on behalf of the Certificates may be taken into consideration and reduce the amount of the monthly deposits otherwise required to be deposited in the Certificate Fund from the Surplus Revenues of the Airport. In addition, any surplus proceeds of sale of the Certificates remaining after all authorized purposes have been paid shall be shall be deposited in the Certificate Fund, which amount shall reduce the sums otherwise required to be deposited in said Fund from ad valorem taxes and the Surplus Revenues of the Airport. SECTION 16: Security of Funds. All moneys on deposit in the Funds for which this Ordinance makes provision (except any portion thereof as may be at any time properly invested) shall be secured in the manner and to the fullest extent reqµired by the laws of Texas for the security of public funds, and moneys on deposit in such Funds shall be used only for the purposes permitted by this Ordinance. SECTION 17: Special Covenants. covenants as follows: The City hereby further (a) It has the lawful power to pledge the Surplus Revenues of the Airport supporting this issue of Certificates and has lawfully exercised said powers under the Constitution and laws of the State of Texas, including said power existing under V.T.C.A., Local Government Code, Subchapter C of Chapter 271 and Article 1269j.5-l, V.A.T.C.S. (b) Other than for the payment of the Previously Issued Certificates and the Certificates, neither the Net Revenues nor the Surplus Revenues of the Airport have not in any manner been pledged or encumbered to the payment of any debt or obligation of the City or of the Airport. SECTION 18: Issuance of Priority Obligations and Additional·certificates. The City hereby expressly reserves the right to hereafter issue Priority Obligations, without limitation as to principal amount or any other limitation or restriction. In addition, the City reserves the right to issue Additional Certificates, without limitation or any restriction or condition being applicable to their issuance under the terms of this Ordinance, payable from and secured by a lien on and pledge of the Surplus Revenues of the Airport of equal rank and dignity, and on a parity in all respects, with the lien thereon and pledge thereof 0480967 -21-
securing the payment of the Previously Issued Certificates and the Certi_f icates. SECTION 19: Subordinate to Prior Lien Obligations Covenants and Agreements. It is the intention of this governing body and accordingly hereby recognized and stipulated that the provisions, agreements and covenants contained herein bearing upon the management and operations of the Airport and the administering and application of revenues derived from the operation thereof, shall to the extent possible be harmonized with like provisions, agreements and covenants contained in ordinances authorizing the issuance of Priority Obligations, and to the extent of any irreconcilable conflict between the provisions contained herein and in ordinances authorizing the issuance of Priority Obligations, the provisions, agreements and covenants contained therein shall prevail to the extent of such conflict and be applicable to this Ordinance but in all respects subject to the priority of rights and benefits, if any, conferred thereby to the holders or owners of the Priority Obligations. Notwithstanding the above, any change or modification affecting the application of revenues derived from the operation of the Airport shall not impair the obligation of contract with respect to the pledge of revenues herein made for the payment and security of the Certificates. SECTION 20: Satisfaction of Obligations of City. If the City shall pay or cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on the Certificates, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied and the lien on and pledge of the Surplus Revenues of the Airport under this Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and satisfied. Certificates shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Certificates or the principal amount(s) thereof at maturity together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized escrow agent, which Government Securities have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the principal of and interest on such Certificates, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof. The City covenants that no deposit of moneys or Government Securities will be made 0480967 -22-
under this Section and no use made of any such deposit which would cause the Certificates to be treated as 11arbitrage bonds11 within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar and all income from Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Certificates, or any principal amount(s) thereof, or interest thereon with respect to which such moneys have been so deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Certificates and remaining unclaimed for a period of four (4) years after the maturity of the Certificates for which such moneys were deposited and are held in trust to pay, shall upon the request of the City be remitted to the City against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State of Texas. SECTION 21: Ordinance a Contract Amendments. This Ordinance shall constitute a contract with the Holders from time to time, be binding on the City, and shall not be amended or repealed by the City so long as any Certificate remains Outstanding except as permitted in this Section. The City, may, without the consent of or notice to any Holders of the Certificates, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders of the Certificates, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent of Holders of the Certificates holding a majority in aggregate principal amount of the Certificates then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Certificates, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Certificates, reduce the.principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Certificates, (2) give any preference to any Certificate over any other Certificate, or (3) reduce the aggregate principal amount of Certificates required to be held by Holders for consent to any such amendment, addition, or rescission. SECTION 22: Notices to Holders -Waivers. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly 0480967 -23-
provided) if in writing and sent by United States Mail, first class postage prepaid, to the address of each Holder appearing in the Security Register at the close of business on the business day next preceding the mailing of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other Certificates. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event with respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 23: Cancellation. Certificates surrendered for payment, redemption, transfer, or exchange, if surrendered to the Paying Agent/Registrar, shall be promptly canceled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already canceled, shall be promptly canceled by the Paying Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Certificates previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Certificates so delivered shall be promptly canceled by the Paying Agent/Registrar. All canceled Certificates held by the Paying Agent/Registrar shall be returned to the City. SECTION 24: Mutilated, Destroyed, Lost and Stolen Certificates. In case any Certificate shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Certificate of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Certificate, or in lieu of and in substitution for such destroyed, lost or stolen certificate, only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying Agent/Registrar of evidence satisfactory to the Paying Agent/Registrar of the destruction, loss or theft of such Certificate, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Certificate shall be borne by the Holder of the Certificate mutilated, or destroyed, lost or stolen. 0480861 -24-
Every replacement Certificate issued pursuant to this Section shall be a valid and binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Certificates; notwithstanding the enforceability of payment by anyone of the destroyed, lost or stolen Certificates. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost, or stolen Certificates. SECTION 25: Covenants to Maintain Tax-Exempt Status. (a) Definitions. When used in this Section, the following terms have the following meanings: 0480961 11Closing Date" means the date on which the Certificates are first authenticated and delivered to the initial purchasers against payment therefor. "Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any, effective on or before the Closing Date. "Computation Date" has the meaning set forth in Section 1.148-l(b) of the Regulations. "Gross Proceeds" means any proceeds as defined in Section 1.148-1 (b) of the Regulations, and any replacement proceeds as defined in Section 1.148-l(c) of the Regulations, of the Certificates. "Investment" has the meaning set forth in Section 1.148-l(b) of the Regulations. "Nonpurpose Investment II means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Certificates are invested and which is not acquired to carry out the governmental purposes of the Certificates. "Rebate Amount" has the meaning set forth in Section 1.148-l(b) of the Regulations. 11Regulations11 means any proposed, temporary, or final Income Tax Regulations issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Certificates. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to -25-
supplement, amend or replace the specific Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in Section 1.148-5 of the Regulations; and (2) the Certificates has the meaning set forth in Section 1.148-4 of the Regulations. (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any Certificate to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Certificate, the City shall comply with each of the specific covenants in this Section. (c) Use of Surplus Proceeds. At least 95% of the proceeds of the Certificates will be used to provide airport facilities within the meaning of section 142(a) (1) of the Code and the regulations and rulings thereunder. For purposes of this subsection, all costs of issuance financed directly or indirectly with proceeds of sale of the Certificates shall not be treated as used to provide airport facilities. (d) ownership of Project. At all times prior to the final Stated Maturity of the Certificates, the City shall own all of the property to be financed by the proceeds of the Certificates. (e) Elections. The City hereby directs and authorizes the Mayor, City Manager, Finance Director and City Secretary, individually or jointly, to make elections permitted or required pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate in connection with the Certificates, in the Certificate as to Tax Exemption or similar or other appropriate certificate, form or document. (f) Information Reoort. The City shall timely file the information required by section 149 {e) of the Code with the 0480987 -26-
Secretary of the Treasury on Form 8038 or such other form and in such place as the Secretary may prescribe. (g) Prohibition on Certain Uses of Certificate Proceeds. The City shall not use or permit the use of any proceeds of the Certificates or any income from the investment thereof: ( 1) to provide any airplane, skybox, or other private luxury box, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises, or (2) to pay or otherwise finance costs of issuance of the Certificates (~, underwriting compensation, trustee and rating agency fees, printing costs, Issuer fees, and fees and expenses of counsel) in an amount which exceeds 2% of the proceeds of the Certificates. (h) Prohibition on Certain Uses of Proceeds. The City shall not use or permit the use of proceeds of the Certificates to pay or otherwise finance the costs of acquisition of property (or an interest therein) unless the first use of such property is pursuant to such acquisition. (i) Public Approval. Following a public hearing being held by the City Council on the 22nd day of December, 1997, and notice of such public hearing published in the Lubbock Avalanche-Journal on the 7th day of December, 1997, public approval required by section 147(f) of the Code with respect to the Certificates has been obtained. (j) Representation Regarding Maturity of Certificates. The weighted average maturity of the Certificates will not exceed 120% of the average reasonable expected economic life of the facilities being financed with the Surplus Proceeds of the Certificates, both as calculated in accordance with section 147(b) of the Code. (k) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Certificates to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. (1) Rebate of Arbitrage Profits. otherwise provided in section 148{f) Regulations and rulings thereunder: 04a0987 -27-Except to the extent of the Code and the
0480967 (1) The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last Outstanding Certificate is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Certificates with other money of the City, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. (2) Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Certificates until six years after the final Computation Date. (3) As additional consideration for the purchase of the Certificates by the Purchasers and the loan of the money represented thereby and in order to induce such purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall pay to the United States out of the Certificate Fund or its general fund, as permitted by applicable Texas statute, regulation or opinion of the Attorney General of the State of Texas, the amount that when added to the future value of previous rebat·e payments made for the Certificates equals (i) in the case of a Final Computation Date as defined in Section 1.148-3(e) (2) of the Regulations, one hundred percent {100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place· and in the manner as is or may be required by section 148 (f) of the Code and the Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required by Section 148 (f) of the Code and the Regulations and rulings thereunder. (4) The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an -28-
error is made, to discover and promptly correct such error within a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under Section l.148-3(h) of the Regulations. (m) Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier of the Stated Maturity or final payment of the Certificates, enter into any transaction that reduces the amount required to be paid to the United States pursuant to Subsection (1) of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield of the Certificates not been relevant to either party. (n) Not to Invest at Higher Yield. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the Certificates directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace money so invested), if as a result of such investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Certificates. SECTION 26: Sale of the Certificates. Pursuant to a public sale for the Certificates, the bid submitted by Salomon Smith Barney & Associates (herein referred to as the 11Purchasers11) is declared to be the best bid received producing the lowest net effective interest cost to the City, and the sale of the Certificates to said Purchasers at the price of par and accrued interest to the date of delivery, plus a premium of$ 380.70 , is hereby approved and confirmed. Delivery of the Certificates to the Purchasers shall occur as soon as possible upon payment being made therefor in accordance with the terms of sale. SECTION 27: Proceeds of Sale. The proceeds of sale of the Certificates, excluding the accrued interest and premium, if any, received from the Purchasers, shall be deposited in a construction fund maintained at the City's depository bank. Pending expenditure for authorized projects and purposes, such proceeds of sale may be invested in authorized investments and any investment earnings realized may be expended for such authorized projects and purposes or deposited in the Certificate Fund as shall be determined by the City Council. Accrued interest and premium, if any, received from the Purchasers as well as all surplus proceeds of sale of the 0480967 -29-
Certificates, including investment earnings, remaining after completion of all authorized projects or purposes shall be deposited to the credit of the Certificate Fund. SECTION 28: Control and Custody of Certificates. The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, including the printing of the Certificates, and shall take and have charge and control of the Certificates pending the approval thereof by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchasers. Furthermore, the Mayor, City Secretary, City Manager, First Assistant City Manager, Director of Financial Services, and Finance Manager, any one or more of said officials, are hereby authorized and directed to furnish and execute such documents and certifications relating to the City and the issuance of the Certificates, including a certification as to facts, estimates, circumstances and reasonable expectations pertaining to the use and expenditure and investment of the proceeds of the Certificates as may be necessary for the approval of the Attorney General, registration by the Comptroller of Public Accounts and delivery of the Certificates to the purchasers thereof and, together with the City's financial advisor, bond counsel and the Paying Agent/Registrar, make the necessary arrangements for the delivery of the Initial Certificate(s) to the purchasers. SECTION 29: Official Statement. The Official Statement prepared in the initial offering and sale of the Certificates by the City, together with all addendas, supplements and amendments thereto issued on behalf of the City, is hereby approved as to form and content, and the City Council hereby finds that the information and data contained in said Official Statement pertaining to the City and its financial affairs is true and correct in all material respects and no material facts have been omitted therefrom which are necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The use of such Official Statement in the reoffering of the Certificates by the Purchasers is hereby approved and authorized. SECTION 30: Legal Opinion. The obligation of the Purchasers to accept delivery of the Certificates is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys, Dallas, Texas, approving such Certificates as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for such Certificates. A true and correct reproduction of said opinion is hereby authorized to be printed on the definitive Certificates or an executed counterpart thereof 0480967 -30-
shall accompany the global Certificates deposited with the Depository Trust Company. SECTION 31: CUSIP Numbers. That CUSIP numbers may be printed or typed on the definitive Certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Certificates shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving said Certificates as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Certificates. SECTION 32: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City, the Paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar and the Holders. SECTION 33: Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. SECTION 34: Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 35: Severability. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and the City Council hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 36: Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 37: Construction of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, words of the plural number shall be considered to include the singular, and words of the masculine, feminine or neuter gender shall be considered to include the other genders. 0480961 -31-
SECTION 38: Continuing Disclosure Undertaking. (a) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: 11MSRB" means the Municipal Securities Rulernaking Board. 11NRMSIR11 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. 11Rule11 means SEC Rule 1sc2-12, as amended from time to time. 11 SEC11 means the United States Securities and Exchange Commission. 11 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. (b) Annual Reports. The City shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year (beginning with the fiscal year ending September 30, 1997) financial information and operating data with respect to the City of the general type included in the final Official Statement approved by Section 29 of this Ordinance, being the information described in Exhibit B hereto. Financial statements to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit B hereto and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If audited financial statements are not available at the time the financial information and operating data must be provided, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and any SID with the financial information and operating data and will file the annual audit report, when and if the same becomes available. If the City 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 City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. -32-
(c) Material Event Notices. The City 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 Certificates, 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 Certificates; 7. Modifications to rights of holders of the Certificates; B. Certificate calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Certificates; and 11. Rating changes. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such Section. (d) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section while, but only while, the City remains an 11obligated person" with respect to the Certificates within the meaning of the Rule, except that the City in any event will give the notice required by subsection (c) hereof of any Certificate calls and defeasance that cause the City to be no longer such an "obligated person. 11 The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Certificates, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. -33-
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances resulting from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if {l) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the Outstanding Certificates consent to such amendment or (b) a person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Holders and beneficial owners of the Certificates. The provisions of this Section may also be amended from time to time or repealed by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation of the City's right to do so would not prevent underwriters of the initial public offering of the Certificates from lawfully purchasing or selling Certificates in such offering. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection {b) an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information or operating data so provided. SECTION 39: Public Meeting. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered 0480007 -34-
at such meeting, including this Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as amended. SECTION 40: Effective Date. This Ordinance shall take effect and be in force immediately from and after its passage on second and final reading, and IT IS SO ORDAINED. PASSED AND ADOPTED ON FIRST READING, December 11, 1997. PASSED AND ADOPTED ON SECOND AND FINAL READING, this the 8th day of January, 1998. CITY OF LUBBOCK, TEXAS ATTEST: 0480967 -35-
EXHIBIT A ) PAYING AGENT/REGISTRAR AGREEMENT See Document Number 5 ·.s . ) D 707757
E.XH18.l[ ! ... PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of January 1, 1998 (this "Agreement"), by and between the City of Lubbock, Texas (the 11 Issuer") , and U. S. Trust Company of Texas, N .A., a banking association duly organized and existing under the laws of the United States of America (the "Bank") RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of Lubbock, Texas, Tax and Airport Surplus Revenue Revenue Certificates of Obligation, Series 199811 (the 11 Securities 11 ) in the aggregate principal amount of $1, 3 3 o , o o o , which Securities are scheduled to be delivered to the initial purchasers on or about February 12, 1998; and WHEREAS, the Issuer has selected and the Bank has agreed to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners; and WHEREAS, the Bank represents it has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1. 01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities, and, as Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium {if any), and interest on the Securities as the same become due and payable to· the registered owners thereof; all in accordance with this Agreement and the "Bond Resolution11 {hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Bond Resolution••. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the securities. 04813624
Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A attached hereto. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof {including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: 0-488624 "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal office of the Bank as indicated on page 11 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. 11Bond Resolution" means the resolution, order, or ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank. 11Fiscal Year" means the fiscal year of the Issuer, ending September 30th. 11Holder11 and "Security Holder" each means the Person in whose·name a Security is registered in the Security Register. "Issuer Request" and 11Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor, City Manager, First Assistant City Manager, Director of Financial Services, Finance Manager or City Secretary, any one or more of said officials, and delivered to the Bank. 11 Legal Holiday" means a day on which the Bank is required or authorized to be closed. EXHIBIT I
11Person11 means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. 11Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Resolution}. "Redemption Date11 when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Bond Resolution. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register11 means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfers of Securities. "Stated Maturity11 means the date specified in the Bond Resolution the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms 11Bank," 11Issuer,11 and "Securities (Security)11 have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar11 refers to the Bank in the performance of the duties and functions of this Agreement. 0488624 -3-c:XHlB.ll I . .J
ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following offices: By Hand: U. S. Trust Company of Texas, N.A. 111 Broadway Lower Level New York, New York 10006-1906 By Mail: u. s. Trust Company of Texas, N.A. P. 0. Box 841 Cooper Station New York, New York 10276 As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and making payment thereof to the Holders of the Securities (or their Predecessor Securities) on the Record Date. All payments of principal and/or interest on the Securities to the registered owners shall be accomplished (1) by the issuance of checks, payable to the registered owners, drawn on the fiduciary account provided in Section 5.05 hereof, sent by United States mail, first class, postage prepaid, to the address appearing on the Security Register or (2) by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities at the dates specified in the Bond Resolution. ARTICLE FOUR REGISTRAR Section 4.01. Security Register -Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the 11Security Register11) for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by 0486&24 cXHl.B.lI A
the Issuer and subject to such reasonable regulations as the Issuer and Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. The Bank represents and warrants its office in Dallas, Texas will at all times have immediate access to the Security Register by electronic or other means and will be capable at all times of producing a hard copy of the Security Register at its Dallas off ice for use by the Issuer. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4. 02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other governments or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which -5-tXHIBlT A
the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Certificates. The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. Section 4.06. Mutilated, Destroyed, Lost or Stolen Securi-ties. The Issuer hereby instructs the Bank, subject to the provisions of Section 24 of the Bond Resolution, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may execute and deliver a replacement security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outsta.nding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated -6-i:XHJBff j
with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents. Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. {b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. {c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement,· instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters -7-tXHIBll A
stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5. 03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank -Fiduciary Account/ Collateralization. A fiduciary account shall at all times be kept and maintained by the Bank for_ the receipt, safekeeping and disbursement of moneys received from the Issuer hereunder for the payment of the Securities, and money deposited to the credit of such account until paid to the Holders of the Securities shall be continuously collateralized by securities or obligations which qualify and are eligible under both the laws of the State of Texas and the laws of the United States of America to secure and be pledged as collateral for fiduciary accounts to the extent such money is not insured by the Federal Deposit Insurance Corporation. Payments made from such fiduciary account shall be made by check drawn on such fiduciary account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. The Bank shall be under no liability for interest on any money received by it hereunder. Subject to the applicable unclaimed property laws of the State of Texas, any money deposited with the Bank for the payment 0486624 -8-EXHIBl1 A
of the principal, premium (if any), or interest on any Security and remaining unclaimed for four years after final maturity of the Security has become due and payable will be paid by the Bank to the Issuer, and the Holder of such Security shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such moneys shall thereupon cease. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6. 03 of this Agreement shall constitute adequate service. The Issuer and the Bank fur,:her agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. DT Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for 11Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements", effective December 12, 1994, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6. 01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. -9-EXHIBIT A
Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on page 11. Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6. 05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6. 08. Entire Agreement. This Agreement and the Bond Resolution constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Bond Resolution, the Bond Resolution shall govern. Section 6. 09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the.date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a} a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement -10-EXHIBIT A
shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof) , together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1. 02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. [SEAL] Attest: Title: (CITY SEAL) Attest: City Secretary U.S. TRUST COMPANY OF TEXAS, N.A. BY Title: Address: 2001 Ross Ave., Suite 2700 Dallas, Texas 75201 CITY OF LUBBOCK, TEXAS BY Mayor Address: P. o. Box 2000 Lubbock, Texas 79457 -11-'XHlBIT A
DESCRIPTION OP ANNUAL FINANCIAL INFORMATION Exhibit B to Ordinance The following information is referred to in Section 38 of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: 1. The financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. The information contained in Tables 1 through 6 and SA through 17 of the Official Statement. Accounting Principles The accounting principles referred to in such Section are the generally accepted accounting principles as applicable to governmental units as prescribed by The Government Accounting Standards Board.
GENERAL CERTIFICATE THE STATE OF TEXAS COUNTY OF LUBBOCK CITY OF LUBBOCK § § § § § We, the undersigned, Director of Financial Services and City Secretary, respectively, of the City of Lubbock, Texas, DO HEREBY CERTIFY as follows: 1. Relative to Tax-Supported Indebtedness. The total principal amount of indebtedness of the City, including the proposed $1,330,000 "City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 199811, dated January 1, 1998 (the 11Certificates11) and the $10,260,000 11City of Lubbock, Texas, Tax and Waterworks System (Limited Pledge) Revenue Certificates of Obligation, Series 199811, dated January 1, 1998 (the "Limited Pledge Certificates") payable from ad valorem taxes levied and collected by the City, is as follows: OUTSTANDING INDEBTEDNESS ------------------$138,914,318 THE CERTIFICATES---------------------------1,330,000 LIMITED PLEDGE CERTIFICATES----------------10,260,000 TOTAL INDEBTEDNESS ------------------------$150,504,318 2. Relative to Debt Service Requirements. A debt service requirement schedule for all outstanding tax debt of the City, including the Certificates and the Limited Pledge Certificates, is attached hereto as Exhibit A and made a part of this certificate for all purposes. 3. Relative to Taxable Values. The assessed value of all taxable property (net of exemptions) in the City, as shown by the tax rolls for the year 1997, and which have been duly approved and are the latest official assessment of taxable property in the City is as follows: TOTAL ASSESSED TAXABLE VALUES OF REAL AND PERSONAL PROPERTY ------------$5,830,249,173 0486861
4 . Relative to Nonencumbrance. Save and except for the pledge of the income and revenues of the City's Airport to the payment of the principal and interest to become due with respect to the outstanding "City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1993", dated October 1, 1993, now outstanding in the principal amount of $3,085,000, 11City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 199511, dated May 15, 1995, now outstanding in the principal amount of $580,000 (hereinafter collectively referred to as the 110utstanding Obligations"), and the Certificates, said income and revenues of said Airport have not been pledged or hypothecated in any other manner or for any other purpose; and the Outstanding Obligations and the Certificates evidence the only liens, encumbrances or indebtedness of said Airport or against the income and revenues of such Airport. 5. Relative to No-Default. The City is not in default as to any covenant, condition or obligation contained in the ordinances authorizing the issuance of the Outstanding Obligations; and there is on deposit in the respective special funds and accounts created for the payment and security of the Outstanding Obligations the amounts now required to be on deposit therein. 6. Relative to Income and Revenues. A schedule of the gross receipts, operating expenses and net revenues of the City's Airport for the years stated is as follows: Fiscal Year Ending 9/30 1993 1994 1995 1996 1997* *unaudited Gross Receipts $ 4,661,266 4,444,384 6,329,224 6,510,573 6,829,069 Operating Expenses $ 3,778,187 3,263,354 3,414,114 3,351,803 4,273,601 7. Relative to Rates and Charges. Net Revenues $ 883,079 1,181,030 2,915,110 3,158,770 2,555,468 A schedule of the rents for hangers and other services provided by the Airport are as shown in Exhibit B attached hereto and made a part hereof for all purposes. 0486861
8. Relative to City Officials. Certain duly qualified and acting officials of the City are as follows: WINDY SITTON ALEX "TY11 COOKE BOB CASS DEBRA B. FORTE KAYTHIE DARNELL ANITA BURGESS ANNA MOSQUEDA BETSY BUCY MAYOR MAYOR PRO TEM CITY MANAGER FIRST ASSISTANT CITY MANAGER CITY SECRETARY CITY ATTORNEY DIRECTOR OF FINANCIAL SERVICES FINANCE MANAGER 9. Relative to Appropriation of Funds. The City has sufficient current funds available to pay the interest to become due on the Certificates on August 15, 1998 and there will be deposited in the special fund created for the payment of the Certificates such amount of current funds which, together with the accrued interest received from the purchasers of the Certificates, will be sufficient to pay the amounts to become due on the Certificates on August 15, 1998. 10. Relative to Incorporation. The City is incorporated under the general laws of the State of Texas, and is operating under the Home Rule Amendment to the Texas Constitution, Section 5, Article XI, as amended in 1912. The City Charter was originally adopted at an election held on December 27, 1917, and said Charter has not been amended or revised in any respect since May 7, 1988, the date of the last Charter Amendment Election. 11. Relative to No-Petition. No valid petition of any kind or character, signed by at least 5% of the qualified electors of the City, has been filed with or presented to the Mayor, City Secretary or any other official of the City protesting the issuance of the Certificates. -3-
WITNESS OUR HANDS AND THE SEAL OF THE CITY OF LUBBOCK, TEXAS, this the 8th day of January, 1998. CITY OF LUBBOCK, TEXAS ~~~ Director of Financial Services (City Seal) 0488881 -4-
CITY OF LURH0CK, T&XAS GENF..R.AL OBLIGATION DEBT SEllVJCE REQUIREMENTS AR.ER SALE OF $10,260,000 TAX AND WA l'XH.WORKS SYSTEM (LIMIT.ED PLEDGE) REVENUE CERTJFICATES OF OBLIGATION. SElURS 19~ AND <C $113301000 TAX AND AIRPORT SURPLUS REVENUE CERTF1CATES OF OllLTGATrON, SERIES 1998 ON JANUA.RY 8, 19~8 t--f"q11l m -Y~• :r: £,.d,,j o.-d~Oebl T .. Ta .... W,i.wodi1 St-,-eatir-.J<> TIie.A~ Ccl.liloorlc,"> C-'i• T-.. ll.oq .. emalS X mo Prioo,eol l11Jtt•II Tll&II f'lillC!!! I-.1 T""1 PJi~ l,,IC~ ToW Pri-,fpol I'llmal TaNI UJ 1991 $ 13-,401>,!m ,$ Ci,515!l',lU $ l.0,3511,&9 I .t ~ .s 1-U,-tvl s n..,411 ,S -0,.. s 1-9.U7 r ,,,~1)1 " 13,490,1)76 s 7,125,1'.5 r 20,,m,rn l!IM 1~,.~,:i IS,2(>7,711P. ••.ffl,:1111 !lll,IIOO Jos,s5:t 1,eu,su lti,GOCI l>e.11' 1'-',m, U,"'6,4n &.m,,L6 2o_m.40, '2()111 I0,,7U,W 1,rn,,,21• ll,iot,2115 Jto,ec» Ul,6?1t ,.l,ffl 11.t,CIOCI ~933 1~911-ll»4,"6 1,111.m l~,8" ?00! 10,1n,•a ',.U~,"S 1'5,S65,117 Jlo,IC)t ~41,111:t fSUe.t 1 IS,OOCI @,O)Ci l~l6 I0,72.C,,H2 "'-'lf,4,J 17-'",MS 2002 9,%5.3,6}9 ~S,114 l'-HCl,4Z! Jlo.lC)t 409Jl;Zi ,.,,ffl 12S,OOO 42,1JG "1.,26 9,UIIJ,~9 s.m,,11 lj,641.07'1 21m S,ffl,C 4,383,1:ZI ,,.ll2,"3 .m,.-37"8'3 ISl,ffl l:,t.000 3',JTIS l"-216 t,!to.r.«t 4.'197,iSO 1un.<m ~0()4 7,6'15,0IIQ M'!J4..1Ut. ll,Le'J.°"5 Sll),IOO s,.,111 1$41,17' •~oo 3t,17l IM,m t,120,,oot !,no.u.. U,l,O,•(N. 20CJ:I 7-'"tO.QOO 3,IU,'11 IQ,1$3,6'7 :JI~ 31WI 124,621 1-.000 IM,ISS 164,15:J 8,2",-GOI 3,&,4U 11,Ul,,t(l, 2~ 7.$51!.,0IO :z. .,., • .,., 10.)2(,,51'1 SIO,OCO 2tt,ll6S mJ0 151,1)00 '"·'"' 167,'1)7 U"-000 3,nl,~lt 11.MIJ..,119 2001 ,.us.om ~:t."1 9,tlrl,541 :SIS,800 2G6.2!S 7tl,2SS ISS,000 ll,91~ 16S,9lS l,Uf.000 2,AiH,111'!1 10.,hUll'J 20Cla 5'00.,0IC) J,97(),sGt e.r,o .. ~ n~.-:W,,981 7St.,9tl IU.ClOO 3,113, IQ.71l ,,,-.oot Ull,:1163 1,7'1,263 '200, ~-1,627,IU a,,tl,UI .51S,eot Ul,2'.ll 'J1',.JJI ,.1,S,-oot 1,141.4" 8,913,,1S!> '21)1,t ',l~,m<I 1,ff7,U3 71«11,IIJ JIS.,00 IN,M5 n1.:i• 6,62$,0011 1.4'6,0l!> B,IZ~i~ ~011 6,lt!,1111(1 98~0 7,oll8,01CI Jl"'900 114,5,BS 6at,51S (i.~--~ l.l:J1.~,S 1,m.~u 1Dl2 4,,00,118(1 110,LOO S.6»,lto $1,»ol) U0,766 '6'.7t6 s,m,fl>f '60,Sli6 ~,21',11f6 lOll ',11MIDO 414,llS "'44.l2' JIJ,I® llM'O '41.6'1) .,,3ti,tof GOO,.tlJ j,'ltS,115 .201,1 f,UUOCI ll!l,13' ,.tot.Pl JIS.000 I~!~ ,11.:r,6 5,315,00I :M2J94 5.ffl.194 '2111S 1,79',.ID(I il.l(IIS .l,lli~ SIS,000 71,19-4 S~2P4 2,3.,ilOt lt9,lto :2,0,.100 ~01, tJD,IIOO 19,713 sn.11, Jls,oo& 54,'119 S4.9,719 1,,.,.-oot "H,m 1,~1f.,n:t: "2011 .515,000 U,Ul i-17,t:IJ Sll,CIOII :n,bi HJ,IH 10a 51~ __ ... 9~"-__ S'l!,~ Sl.',000 IO~ }2S,,e1 s lll,914,311 S SS,Sll'l',IJS S 194,112,.lil I; 10,251,000 S S,IU,91'1 S ls,«l~I J 1.)30,DOI S :Jl!ll,6ll J 1.~~J. l J.$0.504,111 s ,1.4141,41.1 s 211,!>14,n, (I) lnre:rc:st ct1k11latcd :R1 ffi!CS cmhlisllcd at the Sa.le.. (2) Interest Cllk:Ufnted :it. rnle:!1 establlslled at ffie Sale..
, EXHIBIT B Rentals and Fees Exclusive Terminal Building Space ... Including ticket counter, operations offices, airfreight handling areas and administrative offices • S 13.50 per square foot per year. Non-exclusive Terminal Building Space ... Boarding Lounge Area • S7.87 per square foot per year. with 20% of the total monthly charge prorated among all scheduled airlines based upon the ratio of each such airline's number of departures to the total number of departures for the calendar month and 80% of the total prorated among all scheduled airlines based upon the ration of each such airline's number of enplaned passengers to the total of enplaned passengers for the calendar month. Baggage Claim Area • $ 13.50 per square foot per year. with 20% of the total monthly charge divided equally among all scheduled airlines and 80% of the total prorated among all scheduled airlines based upon the ratio of .. -ach such airline's number of enplaned passengers to the total of enplaned passengers for the calendar month. Extraordinary Cost and Expenses The agreements provide for timely renegotiation and adjustments to rental, landing fees and other charges in the event .:xtraordinary costs or expenses are incurred by the City, including technical advances or new governmental requirements. Rent Car Companies Rental car agencies currently lease storage, service and office space at the airport a rates of IO percent of gross car rental revenues. There are four rent car agencies on the airport. Sen·ice center acreage is available; four firms have these leases at th,: rate of SO. 0929 per square foot per year. General Aviation Fixed Base Operators arc currently paying ground lease rates of SO. I I 56 per square foot per year. various rates on hangars and other bui I dings and a fuel flow age fee equal to S0.04 per gallon of fuel sold to general aviation or military aircraft. Airport Industrial Area Rates on leases in the Airport Industrial Area are based on a flat rate per building: the land lease is SO. 1156 per square foot per year.
January 8, 1998 U. S. Trust Company of Texas, N.A. 2001 Ross Avenue, Suite 2750 Dallas, Texas 75201 Attention: Corporate Trust Department Re: $1,330,000 11City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998 11, dated January 1, 1998 Ladies and Gentlemen: Delivery of the above described obligations to the initial purchasers shown below is to occur at your bank on or about February 12, 1998. Such delivery is to be accomplished with a single fully registered obligation (the II Initial Obligation11) which you will be receiving from the City's bond counsel, Fulbright & Jaworski L.L.P., 2200 Ross Avenue, Suite 2800, Dallas, Texas 75201 (214/855-8013). When the City's bond counsel has forwarded the Initial Obligation together with their approving opinion, you are authorized to deliver the Initial Obligation to the initial purchasers, to wit: Salomon Smith Barney & Associates, or their order, upon payment being made for the obligations in immediately available funds in accordance with the terms of sale. Furthermore, when funds are received in settlement for the payment of the Certificates, please transmit the amounts received by the fastest means available pursuant to instructions to be received from the City's financial advisor. In regard to the delivery of the obligations to the initial purchasers, the following documents are enclosed herewith to be completed, executed and dated, as the case may be, when payment has occurred, to wit: 1. Four copies of a Signature and No-Litigation Certificate. 2. Four copies of a Certificate as to Official Statement. 3. Four copies of a Receipt for Payment. 0486674
When said documents have been completed and dated, one copy of the Signature and No-Litigation Certificate and the Certificate as to Official Statement is to be released to the initial purchasers, together with Bond Counsel's approving opinion, and the remaining copies are to be returned to Bond Counsel at the address shown above. One copy of the Receipt for Payment is to be retained by your bank and the remaining three copies should be sent to Bond Counsel with the other closing documents enclosed herewith. Furthermore, should any litigation be filed or instituted which would cause the statements appearing in the Signature and No-Litigation Certificate to be incorrect or untrue or should a circumstance or event occur which would cause the certifications in the Certificate as to Official Statement to be incorrect or misleading, the undersigned or other proper official of the City will notify you and Bond Counsel at once by telephone or other means. You and Bond counsel, therefore, can be assured that, unless advised otherwise by the City, the statements pertaining to no-litigation appearing in the Signature and No-Litigation Certificate and the certifications in the Certificate as to Official Statement are accurate and complete prior to and at the time of the delivery of the Initial Obligation. 0436574 Mayor, Ci Lubbock, Texas
Attorney General of Texas P.O. Box 12548 Capitol Station Austin, Texas 78711 January 8, 1998 Attention: Public Finance Division RE: $1,330,000 "City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 199811, dated January 1, 1998 Ladies and Gentlemen: Enclosed herewith is the Initial Certificate of the above series and a Signature and No-Litigation Certificate relating thereto, executed and completed except as to date. When the record of proceedings relating to the issuance of the above referenced series and the Initial Certificate have been approved by your office, this will be your authority to date the Signature and No-Litigation Certificate and deliver such Initial Certificate to the Comptroller of Public Accounts for registration. It is further requested that four (4} copies of your approving opinion be included with the Initial Certificate sent to the Comptroller. Should there be a change in circumstances which would alter or modify the certifications or recitals contained in such Certificate, particularly the absence of litigation or a change in the office of Mayor or City Secretary, the undersigned or other official of the City will notify you at once by telephone or other means. You may thus be assured that the certifications and statements appearing in the Signature and No-Litigation Certificate are accurate and complete at the time the Certificates are finally approved unless notice to the contrary has been given in the manner aforementioned. 0436ri74. Mayor, Ci of Lubbock, Texas
January 8, 1998 Ms. Melissa Mora Economic Analysis Center Comptroller's Department P.O. Box 13528, Capitol Station Austin, Texas 78711 Re: $1,330,000 11City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 199811, dated January 1, 1998 Dear Ms. Mora: When the Initial Certificate of the series described above has been received from the Attorney General, please register the same on behalf of the City, and when so registered, forward it by overnight delivery to the firm of Fulbright & Jaworski L.L.P., 2200 Ross Avenue, Suite 2800, Dallas, Texas 75201, Attention: Ed H. Esquivel, for further handling under our instructions to them. It is further requested that four copies of the approving opinion of the Attorney General and Comptroller's Registration Certificate be enclosed with the Initial Certificate when it is sent to said firm. Very truly yours, Lubbock, Texas 0486574
January 8, 1998 Messrs. Fulbright & Jaworski L.L.P. 2200 Ross Avenue, Suite 2800 Dallas, Texas 75201 Re: $1,330,000 11City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 199811, dated January 1, 1998 Gentlemen: Enclosed you will find four Certificates as to Tax Exemption executed but undated. At such time as the above described certificates of obligation are delivered to the purchaser, you are authorized to complete and date each of these certificates. 0488574 na Mosqueda Director of Fi ncial Services City of Lubbock, Texas
TELEPHONE: 214/855-8000 f"ACSIM ILE; 214/855-8200 WRl"l'ER'S OIREC"l' DIAL NUMBER: 214/855-8013 Ms. Anna Mosqueda FULBRIGHT & JAWORSKI L. L. P. A REGISTERl'.:O LIMITED LIABILITY PARTNERSHIP 2200 Ross AVENUE SUITE 2800 DALLAS, TEXAS 75201 January 13, 1998 Director of Financial Services City of Lubbock 1625 13th Street Lubbock, Texas 79401 HONG KONG Re: $1,330,000 "City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998", dated January 1, 1998, $9,170,000 "City of Lubbock, Texas, Electric Light and Power System Revenue Bonds, Series 1998", dated January 1, 1998 and $10,260,000 "City of Lubbock, Texas, Tax and Waterworks System (Limited Pledge) Revenue Certificates of Obligation, Series 1998", dated January 1, 1998 Dear Ms. Mosqueda: In reference to the above described documents, enclosed are the following executed documents for your records: Tax and Airport Certificates of Obligation 1. Executed Bid Form; 2. Ordinance authorizing the certificates, together with Certificate of City Secretary relating to its adoption; 3. General Certificate; and 4. Instruction Letters. Revenue Bonds 1. Ordinance authorizing the bonds, together with Certificate of City Secretary relating to its adoption; 2. General Certificate; and 3. Instruction Letters. Tax and Waterworks System Certificates of Obligation 0489635 1. Ordinance authorizing the certificates, together with Certificate of City Secretary relating to its adoption;and 2. Instruction Letters.
I t; Ms. Anna Mosqueda January 13, 1998 Page 2 Should you have any questions, please advise. DFC:mdh Enclosures Senior Legal Assistant
CERTIFICATE OF CITY SECRETARY THE STATE OF TEXAS COUNTY OF LUBBOCK CITY OF LUBBOCK § § § § § I, the undersigned, City Secretary of the City of Lubbock, Texas, DO HEREBY CERTIFY as follows: 1. On the 11th day of December, 1997, the City Council of the City of Lubbock, Texas, convened in regular session at its regular meeting place in the City Hall of said City; the duly constituted members of the Council being as follows: WINDY SITTON ALEX 11TY11 COOKE VICTOR HERNANDEZ T. J. PATTERSON DAVID NELSON MAX INCE RANDY NEUGEBAUER ) ) ) ) ) } MAYOR MAYOR PRO TEM COUNCILMEMBERS all of said persons were present at said meeting, except the following: none Among other business considered at said meeting, the attached ordinance (the 110rdinance11) entitled: 0~88561 ORDINANCE NO. 10041 "AN ORDINANCE authorizing the issuance of 'CITY OF LUBBOCK, TEXAS, TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998'; levying an ad valorem tax upon all taxable property in the City and providing for a pledge of the Surplus Revenues of the City's Airport for the payment of said Certificates; prescribing the terms and details of such Certificates and resolving other matters incident and related to the issuance, sale, security, payment and delivery of said Certificates, including the approval of a Paying Agent/Registrar Agreement and the approval and distribution of an Official Statement pertaining thereto; and providing an effective date.11
was introduced and submitted to the Council for first reading. After presentation and due consideration of the Ordinance, and upon a motion being made by Alex 11Ty11 Cooke and seconded by David Nelson , the Ordinance was approved on first reading by the Council by the following vote: 7 voted "For" -0-voted 11Against11 -0-abstained all as shown in the official Minutes of the Council for the meeting held on the aforesaid date. 2. City of meeting members On the 8th day of January, 1998, the City council of the Lubbock, Texas, convened in regular session at its regular place in the City Hall of said City; the duly constituted of the Council being as follows: WINDY SITTON ALEX 11TY11 COOKE VICTOR HERNANDEZ T. J. PATTERSON DAVID NELSON MAX INCE RANDY NEUGEBAUER MAYOR MAYOR PRO TEM COUNCILMEMBERS all of said persons were present at said meeting, except the following: T.J. Patterson Among other business considered at said meeting, the Ordinance was submitted to the Council for second reading and final passage and adoption. After presentation and due consideration of the Ordinance, and upon a motion being made by Randy Neugebauer and seconded by Max Ince , the Ordinance was duly passed and adopted on second reading to be effective immediately by the following vote: 6 voted "For11 -0-voted 11Against" -0-abstained all as shown in the official Minutes of the Council for the meeting held on the aforesaid date. 3. The attached Ordinance is a true and correct copy of the original on file in the official records of the City; the duly qualified and acting members of the City Council of said City on the date of the aforesaid meetings are those persons shown above and, according to the records of my office, advance notice of the time, place and purpose of each meeting was given to each member of the Council; and that said meetings and the deliberation of the aforesaid public business were open to the public and written notice of said meetings, including the subject of the above entitled Ordinance, was posted and given in advance thereof in 0486681 -2-
. ~ compliance with the provisions of V.T.C.A., Government Code, Chapter 551, as amended. IN WITNESS WHEREOF, I have hereunto signed my name officially and affixed the seal of said City, this the 8th day of January, 1998. Texas (City Seal) 0486561 -3-
,. PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of January 1, 1998 (this 11Agreement 11), by and between the City of Lubbock, Texas (the 11 Issuer11), and U. S. Trust Company of Texas, N .A., a banking association duly organized and existing under the laws of the United States of America (the 11Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of Lubbock, Texas, Tax and Airport Surplus Revenue Revenue Certificates of Obligation, Series 199811 (the 11Securities11) in the aggregate principal amount of $1,330,000, which Securities are scheduled to be delivered to the initial purchasers on or about February 12, 1998; and WHEREAS, the Issuer has selected and the Bank has agreed to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners; and WHEREAS, the Bank represents it has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities, and, as Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to· the registered owners thereof; all in accordance with this Agreement and the "Bond Resolution11 (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the 11Bond Resolution". The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. 0436624
.. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A attached hereto. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: 0436624 11Acceleration Date11 on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal office of the Bank as indicated on page 11 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Bond Resolution" means the resolution, order, or ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank. 11Fiscal Year11 means the fiscal year of the Issuer, ending September 30th. 11Holder11 and "Security Holder" each means the Person in whose-name a Security is registered in the Security Register. 11Issuer Request" and "Issuer Order11 means a written request or order signed in the name of the Issuer by the Mayor, City Manager, First Assistant City Manager, Director of Financial Services, Finance Manager or City Secretary, any one or more of said officials, and delivered to the Bank. 11Legal Holiday" means a day on which the Bank is required or authorized to be closed. -2-
"Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. 11Predecessor Securities11 of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security {and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Resolution). "Redemption Date" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Bond Resolution. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register11 means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfers of Securities. "Stated Maturity" means the date specified in the Bond Resolution the principal of a Security is scheduled to be due and payable. Section 2. 02. Other Definitions. The terms "Bank, 11 "Issuer," and "Securities (Security) 11 have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. 0486624 -3-
ARTICLE THREE PAYING AGENT Sect ion 3 • O 1 • Duties of Paying Agent . As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following offices: By Hand: U. S. Trust company of Texas, N.A. 111 Broadway Lower Level New York, New York 10006-1906 By Mail: U. S. Trust Company of Texas, N.A. P.O. Box 841 Cooper Station New York, New York 10276 As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and making payment thereof to the Holders of the Securities (or their Predecessor Securities) on the Record Date. All payments of principal and/or interest on the Securities to the registered owners shall be accomplished {1) by the issuance of checks, payable to the registered owners, drawn on the fiduciary account provided in Section 5.05 hereof, sent by United States mail, first class, postage prepaid, to the address appearing on the Security Register or (2) by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities at the dates specified in the Bond Resolution. ARTICLE FOUR REGISTRAR Section 4.01. Security Register -Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records {herein sometimes referred to as the "Security Register11) for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by 04lUl824 -4-
the Issuer and subject to such reasonable regulations as the Issuer and Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. The Bank represents and warrants its office in Dallas, Texas will at all times have immediate access to the Security Register by electronic or other means and will be capable at all times of producing a hard copy of the security Register at its Dallas office for use by the Issuer. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4. 02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other governments or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which 0486624 -5-
the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Certificates. The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. Section 4.06. Mutilated. Destroyed, Lost or Stolen Securi-ties. The Issuer hereby instructs the Bank, subject to the provisions of Section 24 of the Bond Resolution, to deliver and issue securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security,. and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated 0-486624
with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, -instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters 0486824 -7-
stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank -Fiduciary Account/ Collateralization. A fiduciary account shall at all times be kept and maintained by the Bank for the receipt, safekeeping and disbursement of moneys received from the Issuer hereunder for the payment of the Securities, and money deposited to the credit of such account until paid to the Holders of the Securities shall be continuously collateralized by securities or obligations which qualify and are eligible under both the laws of the State of Texas and the laws of the United States of America to secure and be pledged as collateral for fiduciary accounts to the extent such money is not insured by the Federal Deposit Insurance Corporation. Payments made from such fiduciary account shall be made by check drawn on such fiduciary account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. The Bank shall be under no liability for interest on any money received by it hereunder. Subject to the applicable unclaimed property laws of the State of Texas, any money deposited with the Bank for the payment -8-
_, of the principal, premium (if any), or interest on any Security and remaining unclaimed for four years after final maturity of the Security has become due and payable will be paid by the Bank to the Issuer, and the Holder of such Security shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such moneys shall thereupon cease. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, 1 iabi 1 i ty, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6. 03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. DT Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements11, effective December 12, 1994, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6. 01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. -9-
.. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on page 11. Section 6.04. Effect of Headinos. The Article and section headings herein are for convenience only and shall not affect the construction hereof. Section 6. 05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabilitv. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6. 08. Entire Agreement. This Agreement and the Bond Resolution constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Bond Resolution, the Bond Resolution shall govern. Section 6. 09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the·date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement -10-
,. shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1. 02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. [SEAL] Tit le:vie PRESIDENT (CITY SEAL) Attest: 0486624 BY Title: OF TEXAS, N .A. Address: 2001 Ross Ave., Suite 2700 Dallas, Texas 75201 Address: P. o. Box 2000 Lubbock, Texas 79457 -11-
. ' I Ii, ·' U.S.TRUST ANNEXA Fee Schedule City of Lubbock, Texas Corporate Trust and Agency Services Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998 Paying Agent / Registrar Fees Acceptance Fee: $0.00 Annual Fee: $300.00 Due At Closing: $300.00
R-4090 THE STATE OF TEXAS COUNTY OF LUBBOCK BEFORE M , t appeared AFFIDAVIT OF PUBLICATION § § § dersigned authority on this da Lubbock Avalanche-Jour al, a newspaper published int Lubbock Texas, who, being by me duly sworn, upon oath says: That said newspaper of Lubbock, Texas, and that attached, was published in is of general circulation the "NOTICE OF PUBLIC HEARI said newspaper in its issu --¥j2..._;.t1 .... r .#-a:z .... J .... e .... c __ 7~, 19 97; SWORN TO AND SUBSCRIBED BEFORE ME, this the ,.J;mwry , 199g. /.2 day of (Notary Seal) 047'5600 PHIUIP HERNANDEZ Notary Publie, 81811 of Ttm My Commission Eiqllr8I 12.()4-2001 of Texas
" NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that the City of Lubbock, Texas, will hold a public hearing on December 22, 1997, commencing at l O :00 o'clock A.M. in the Council Chambers, Municipal Complex, 1625 13th Street, Lubbock, Texas, to provide an opportunity for all interested persons to be heard with respect to the proposed issuance and sale of certificates of obligation in an aggregate principal amount not to exceed $1,330,000 (the "Certificates"). The proceeds of sale of the Certificates will be utilized by the City for the purpose of paying contractual obligations to be incurred for (i) the purchase of land to expand the '"free zone" for the north/south runway expansion at the municipal airport, and (ii) professional services rendered in connection with such project and the financing thereof, as provided and limited by the Internal Revenue Code of 1986, as amended, and V.T.C.A., Local Government Code, Chapter 271, as amended. The land to be acquired with the proceeds of the Certificates will be owned by the City and become a part of the City's existing airport. The Certificates will be payable from ad valorem taxes and a lien on and pledge of the net revenues of the City's municipal airport. All interested persons are invited to attend the hearing to express their views with respect to the issuance of the Certificates. In lieu of attendance at the meeting, written comments may be submitted to the City addressed to the undersigned: Kaythie Darnell City Secretary City of Lubbock, Texas PO Box2000 Lubbock, Texas 79457 Posted on the bulletin board outside the east entrance of City Hall, 1625 13th Street, Lubbock, Texas, on the ,~ day of ~.t~w 1997, at b;'¥b.w-CITY OF LUBBOCK PUBLIC HEARINGS ARE AVAILABLE TO ALL PERSONS REGARDLESS OF DISABIUTY. IF YOU REQUIRE SPECIAL ASSISTANCE, PLEASE CONTACT THE CITY SECRET ARY AT 775~2026 OR AT POST OFFICE BOX 2000, LUBBOCK, TEXAS 79457, AT LEAST 48 HOURS IN ADVANCE OF THE MEETING.
R-4116 THE STATE OF TEXAS COUNTY OF LUBBOCK AFFIDAVIT OF PUBLICATION § § § "4ndersigned authority on this day personally appeared le" of the Lubbock Avalanche-Journal, a newspaper published in the County of Lubbock, Texas, who, being by me duly sworn, upon oath deposes and says: That said newspaper is of general circulation in the City of Lubbock, Texas, and that the "NOTICE OF INTENTION TO ISSUE CITY OF LUBBOCK, TEXAS, CERTIFICATES OF OBLIGATION", hereto attached, was published in said newspaper in its issues of ])re fv:ober ef I , 1997; and 12ec e O'.'.' bee ;;8 , 1997; and said newspaper devotes not less than twenty-five percent (25%) of its total column lineage to items of general interest, is published not less frequently than once each week, entered as periodical postal matter in the county where it is published and has been published regularly and continuously for not less than twelve (12) months prior to the date of the publication of said "NOTICE OF INTENTION TO ISSUE CITY OF LUBBOCK, TEXAS, CERTIFICATES OF OBLIGATION11• SWORN TO AND SUBSCRIBED BEFORE ME, this the ~(\\)~{\\ , 1998. ___._{"""':2._ day of 04.761119 PHILLIP HERNANDEZ Notary Public, State ol 'lml ~ Commlsalon Explrlt 12-04-2001 ~~eofTexas
NOTICE OF INTl!'NTIOH TOISS\leCrTYOf' LUBIIOCI<, Tl!XAS, CERTIPICATRS Of' OBLIGATION TAKI, NOTlce lllllt1M City Coun-cil of the aty el L.utlbOclc. Te,c.as 1holl co,,,..,. al I:_, O'dock A.M. on 11,e 81h •v of .>anwrv, 1991, at Ille Clly CIOl,~I ctanbws. Munic-ipal C°"'plaw, ~ 13111 SINel, 1-ub-bock Texo,, ond, durlno tuCh fflHI· lno, lho CIIY cou.-.:11 wlll contlder the Ncond reodlne ond ftnal odop-llon ol an ordinance out~orlzlno lhe ls111onoe ol <:ertll!cotes of oblleo-llon In on omovnt not lo HClffd SIQ,M0,000 for the P11rP01• ol POI'· lno cont ractua I obllgot Ions lo IHI ,,,_ currtd for (I) lmpro,..,.,...ts and Ulenalons lo lhe Clh't Woter-work• sv,tem, Ill) sit• develop-ment for lolld wetle dlSP090I, and {Ill) -,..,10,,01 tervlett rendered In connacllon wllh such Protect• and lhelll\Onclno llleteof, suctlcer-llllcotes lo be POVOble from od •• ,. erem fo•n ond a llmlled Piede• of !ht net revenu" of n,e Cllv's Wa-terworkt System, The certlllcotes a,. to be lttved, and ,.,,, OHlllc:e la elven, under and pursuanl lo the Provi&lana ol V,T,C.A .. Locol Gov-ernment Coda, Subehapter c of Ctwpter 271. Kovlhle Darnell City Secretory City of Lutlbock. , .... NOTICE OF INTENTION TO ISSUE CITY OF LUBBOCK, TE.XAS, Rl!VENUE BONDS NOTICE 15 HEREBY GIVEN that lh1 Cltv Council of l~t City al Lub-bock, THO., shoU c:o,w-ot 1:00 o'clock A.M. on lhe lllh day at Jon-uary, 1991, at lhe City Council Cha~s, Municipal Compl••• lffl 13th SlrMt, LWbOd<, THOI, ond, during such rnHllno, 111, Ceuncll wlll conalder th• ,econd NOdlnG and ffnol odoPtlon oto11or-dlna11<11 oulharlzlno tl'te lHuance ol revanue bondt In a orlnclPal Ol'IIOUnl not lo ·•-St,IIG.000 ,., lhe puroose of maklll8 lrnprov .. rnents ollcl exlet11lons to th• Cllv'• Elec:trlc Ll9hl and POWlf Svat.m. Sucl\ rewm,e bonds lholl rnolure not loler lhan D1<:tmber 31, 201' ond beor lnlere1t of sue~ rote or rain (ilOI lo nC>Hd 1.,. -on-numJ aa deltrmlnecl by Ille City Council. Such bOndt Sholl be pay. able solely trom and oquoltv H· cured i,,, o !left on ond plectgeol the ... reve1111 .. of lht CIIY'• Etectrlc Llohl Md Power SY1lem. Tho l\olderol such bonclUl\all nev-er ho"" the rl9hf to domond pc,y. menl out of any fund• raised °' IO .,. raised by lo,..,,lon. Thi• Nollet Is lsslled PUrtuant lo ....n,or11y and <llreeflon of lie Cllv Council ot the Cllv of Lubboc~. r .. os, and In oceordane1 with the provlslont of Arflcle 2361a, V.A.T.C.S. Ko¥1hle Damtll Cttv ltcntla,., City ft/ Lulibock, Tellat TICE OP INTENTION TO IS$Uli CITY 01" LU8BOCIC, TEXAS, Cl!RTIFICATH OF 08UGATION TAl<E NOTICE lhotthe City Coun-cll ol the City of LubbOCk, Texot, tholl conv"'• of 8:00 o'clock A.M. on !ht 8111 day ot Januory, 1991, ot ~ Cllv council Chomb•r1, Munl~-k>al ComPle•, 161$ 13th S!Tett, Lllb-bock, Texa,, and, d1Jrlng 1uch mNlins, lhe City Councll will con-~• the '8Cond reodl1111 and fl nol odoPllon of an ordinance oulhorlz-lnt the luuonct of certlflcatea Of oblloollon In an omoont nol 10 ex-. c.td Sl,330,NO for the ,,.,,_ of paving contracluol oblloallons to 'b<I Incur rtd tar (I) lhe purchoM of land to e•POnd the "free _ .. tor lltt nortlvlOlllh •un-v ••ool!Slon at the munldpal alrpar1, ond Clll orotesslonal services rendered In connection wltlt tuch Pf'Olecf and the financing lherot, such certlll-catn to be payable from od vol-orem taxu ond o lle11 on and pledoe ol Ille nll ,. .. nun derived from the ownership ond oi>erollon ol lhe Cllv's Munlcl11al Airport. The cerllflcoles ore to bt Issued, ond lllls notice Is tlven, under and 11ursuonl to !ht 11rovl1lons of V,T,C.A., locol Governrn•fll Code, SubchopterC ol Chopter271. l(oylhle liatMII City Secretary (;lly of Lulibock, Ttxas
R-4089 THE STATE OF TEXAS COUNTY OF LUBBOCK AFFIDAVIT OF PUBLICATION § § § BEFORE ME, th undersigned authority on this day personally appeared ~ • t, · · of the Lubbock Avalanche-Jou nal, a newspaper published in the County of Lubbock Texas, who, being by me duly sworn, upon oath deposes and says: ./ ;~hat said newspaper is of general circulation in the City of Lubijock, Texas, and that the "NOTICE OF SALE", hereto attached, was published in said newspaper in its issues of \ . '"Det t' cl'l l11:1 .,1.. 7 , 1997; ~~~~1~ ~lf , 1997; '.Dm);c I 1997; r:}?7.. , 1997; .J (lH'a l ll 'l, 1993; I and said newspaper devotes not less than twenty-five percent (25%) of its total column lineage to items of general interest, is published not less frequently than once each week, entered as periodical postal matter in the county where it is published and has been published regularly and continuously for not less than twelve (12) months prior to the date of the publication of said 11NOTICE OF SALE11• SWORN TO AND SUBSCRIBED BEFORE ME, this the .::Jc: f\ \,)q I )I , 19 98 . ' (Notary Seal) PHILLIP HERNANDEZ Notary Public, Slatt ot Tm.s M~ Commlselon Explr11 12--04-2001 12 day of
NOTIC• 01' IAI.I ,10,HGAIQ C:11, Of I.Ul!IIDck, Tlllft, TH Olld w11tuwo~~• '"''"' ILlmlltct f'l1dii1) 1t•ve11u, c;1r11t1e11tt1 of OblltatlOfl, llfltt 11N Thi City C:Ouncll of n,, c:uv ol l.ull-bock, TtXol r WIii rtctl ~• Ha I Id bin al o,, tlllet of lhl Director of Flnonclol tlrYlc11, Riiom ~. Mu• n ICI IIGl C:omot••· 1611 131h 81 rift, Lullllol;k, nxa1, Unifi 11 100 Cl'GIOCk A,M,, January t.-lffl, A complelt dtKrlPllon Of 1h• C.r-llllcol" bllno ofl9rtd for H!t, ID> 11at111r W II h , ... t1rm1 of 1011, IKU• ' rnv tar lhetr payment a!ld II non• clot Information and operaun, data about th, C:H v aoooor In un OIIICI0I Nollce ot lalt, llddln, In• •lrucllon, Olld '" 0111 clol ... , .. mtnl, which ~n bl oblal111d from th1 01.-111on ot Flnonct, c11, ot Lublloc:k, P,O, BOIi 2oaa. Llibllack, T11101 'IN57, or from Pini 8ou1h, Wtlt Company, 1,CO Poelllc AYI• 111111, tulle toO. Dall GI, T1•01 7ml!, Plnonc101 C:On1u11Qnl1 to lhtClly, Kavthte Darnell Cllv ltcrttllrv Cit Y of Lullbock, Tticot NOTICE! OP IALE '9,170.000 City ol Lubllack, TtXDI, SltClrlc Lhrhl and Pow1r &n11m Rt111nue Bonda, Strltl 199' The City Covncll or ,_, City .. Lub-bock, TIXOI, WIii r1eelvt 110 led b!d1 ot 11111 olflce of the Dlroetor of Flnonclal &ervlcn, Room~, Mu-nicipal Comi>ltll, 16H 13th 81""1, Lubbock, Tt"OI, until 11 :00 O'Clock A,M" January 8, 1 "8, A complete cl11crlptlon of 1111 Bondi being Olllrtd !tr 101,. lo-111111,r with 11111 term, of 1011, 11cu, rtt, tor their PGVmtnt a nll Uno n• c lat lnlormollon and operoll n, dClla about Ille City oppeor In an Olllclol Ntllc:e of lalt, Blddln1 In, 1lruct1 on, UII an Offlcl ol 111ft. mtrll, which can be tlllalned from the Dtvlllon ot Finance, cnv of Lubbock, P.O. l!OX 1000, Lubbock, Texa, 7''51 r or lrom Fl r11 Sout11-we1t Compc,ny, UOI) Pac Ille Avt• nu,, auri. m, Dallaa, Texa1 75201, F lnancla I Con1ultonl1 to !ht Cit,, Kavthle Dorntll ' C IIY ltcNl!tlrv City of Lubbock, TIXGI NOTICE OF $ALE 11,130,000 Cllv of Lubbock, Te.a,, Tax and Alrpc,rt Sur plus Revenue Certfll • COltl of Obll11Dtlon, ser, .. !ffl The Clly Cauncll of Ille Clly of Lui> bock, TtXOI, wl It NIC111vt Maltd bid, al !hi omc:e of !he Dlrtdor of Flnuncta I StrYk:e,, Room 20,i, Mu• nlCIPOI Compl111, 16t5 131h Sir"', Lubbock, TtxOI, untll 11:00Cl'ctock A,M., January a. 1998, A complete dtacrlPllon ot the Cer-llllcolet bllln' Olf<lred for sole, .... '9th tr with 11111 141 rms DI Hie, -U· rltv tor thet r payment and II nan• clot lntormullon and operatln• doto about tho City appear In an OIQctal Notte, of Sale, Blddln9 In• 11 rucll on1 ond ap Olllclol Stale-mtnl, which con be oblal ned from the Division of Finance, CIIY of Lullboc:k, P.O. 8ox 2000, Lubbock, Tex"' 7961, or lnim First South• wt11I Companv, 1700 Pac Ille Ave• n1111, Svllll 500, Dollm, Tam, 75201, Flnonclell COniUIIOnll IO lhe City. R-4089 l(ayt~leOclmell 'CIIYSKN1fary C lh Ill Lul>back, Te,coe
Ratings: Moody's: "Aal11 Standard & Poor's: "AA" SUPPLEMENT TO OFFICIAL STATEMENT relating to $1,330,000 CITY OF LUBBOCK, TEXAS (Lubbock County) TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998 On January 8, 1998, the above-captioned certificates (the "Certificates") were awarded to an underwriter or group of underwriters managed by Salomon Smith Barney (the ''Purch~"). The interest rate with respect to each maturity of Certificates and the initial reoffering price/yield for each maturity are as follows: MATURITY SCHEDULE Maturity Price or Maturity Pric:e or Amo11nt (Febnwy IS) Rate Yield Alnount (February 15) Rate Yield s I0S,000 1999 S.2S0% 3.95% s 135,000 2004 4,35% 4.40% 110,000 2000 S.250% 4.05% 140,000 2005 4.40¾ 4.45% 115,000 2001 5.250% 4.15% IS0,000 2006 4.45% 4.SO% 125,000 2002 S.250% 4.25% ISS,000 2007 4.50% 4.55% 130,000 2003 4.875% 4.30% 16S,OOO 2008 4.50% 4.60% The initial reoffering prices/yields were supplied to the City by the Purchasers and such initial reoffering prices/yields for one or more maturities may be changed at any time and from time to time by the Purchasers and other dealers. The initial reoffering prices/yields, less the premium, would produce compensation to the Purchasers of approximately $11,757.20. The Purchasers have indicated in their bid fotm that the Certificates will not be insured. Subject to circumstances occurring subsequent to the date hereof, this Supplement together with the Official Statement noted above, dated December 11, 1997, constitute the "Final Official Statement" within the meaning of SEC Rule 15c2-12. Dated: January 8, 1998
\ THE STATE OF TEXAS COUNTY OF LUBBOC /'llf7 -----------.-------.--------No~~~---:iic;;~--, ed copy of the....,.,,.l~1,~-,,_../..__ _____ _____,-=--~ Avalanche-Journal ~n the following dates :-d--.Q...1,-.6.¥--:-~,-..,.___.~':-"-'~-------------NOTARY PUBLIC in and fort tate of Texas My Commission Expires .................. 1.:2-Y ~;,"" / Morris Communication Corporation Subscribed and sworn to before me this-_,,,,,_/_f ___ day of_.....,~__,,. ..... J,,._~d......-.d~:« .... /'-¥'u _____ 19,_,_~"lf,~.,.._---/ FORJ\158-10 OIIDtNANca NO.-. At, Ordl-.., ... blne Ille .... once of "CITY OF LUIIOCK TEXAS, IILKTIIIC LIGHT AND POWER IYITl!M REVENUE IIONOS, Sl!RIH lft .. •1 Prtserlb-lne the ronn,, , .. 1111. 1111d PfOVI• 1IC011 of -IN!ldJ: .,._.,1111 Ille "81 , __ or Ille Cllt"S ElectYlc Light and Po ... , SY•lem to Ill• PDvment of the prlnclPal of and rn. l•rest on SOid borlds; Oflacll 1111 PrO-vlslon1 Incident and rel<Jted to Ille 11,uance, payment, ,ecurUr, sole and do,llwrv ol 1old bon<l1, 1nc1uc1. ln9 llleaooroval onddlslrlbuHonof an Offlclal Slalemant 1>ertalnln11 tt,.,910 and 111• •-oval and eX4!• Cl/Hon al a p.,.,,,., AD&nl/Retlalrar f~:":,":i'::l!'. and PtOVldlne an ef. ORDINAINQE NO._.. An Ordlnanct Qllhorl1ln1 ,.,. IHU• once al "C ITV OF LU IIBOC K, Tl!XAS, TAX A.ND AIRPORT SURPLUS REVENUE CERTIFr. C.IITES OF 08LIGATION, Sf!!. RIES 1"8'', levl'll\ll (ll'I ad ...,..,,.m lu 1/POn all ••able property In the Crtv and Provr ding far o plqe of the 3urplu • Reven .... or 1111 City•• Airport for th pc,yment of told Corl1Ucat&S111rescrlblna ti. terms Otld dtlalls of JUCh Certltlcalet ond reeolvlne other mallart l11ddent and reloted lo the IHuance, .... , MCurlly, p""ment anll di II very of said Ctrlllk:llfet, lncludfng Iha ap. PravalafaPavlng A"nllR"llfrar At,.......,I OAd ... ___ ...,,_lonofon Offlclal Slot11manl HrlalAlng thttetoz -..-w1111n11 an elfoctl .. dale, PHILLIP HERNANDEZ Nollty Public:, State ofTnu My Commilelon ~ 12.o4-2001 011.DINAlfCE N0.11M2 An Ordinance oulhorllfng Ille ltsu once 01 "CITY OF LUBBOCK. TEXAS, TAX AND WATER' WORKS SYSTEM (LIMITED Plf:OGI!) REVENUE CERTIFI· CATE:S OF OBLIGATION SE RI ES 1'91"; INC:llyfllll Illa i.r~ """ , .. , ..... Of SQld Cerllffcates · ""'*'"9 tor the _,.,..,, <JI sold certl!lcote1 of Oblfeollon b th lew ar on ad valorern fa,c Y e la•oble property wllh lt1 t~':'~r~~ and a llmltld Pledlle al Iha nel ~~•!• ~rom Ille OPtrollan ot ~v~ 'I' 5 alerworksS,-st..,.1-,.,, toMn, °"'" m<rtten Incident and related lo lht I lluance. .... rlly, POYffllnl and dellverv ;,":r.i C9rllllcatu, lncl11dlng llleaPllr ~~ a Pavrn, A11ant1Reo1,1'::'::'~ reemen1 and the approval and dlllrlbullo,, ot on Ollkfal Slal• ::1 Plrfcdn Ing thereto: ond -...... -... dale. r••a
CITY OF LUBBOCK, TEXAS (Lubbock County) $1,330,000 TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998 Sealed Bids Due Thursday, January 8, 1998 at 11:00 AM, CST ...... 0 0 ~ ......
\ -ISSUE • Book-Entry-Only OFFICIAL STATEMENT Dated December 11, 1997 Ratings: Moody's: Applied For S&P: Applied For Fitch: Applied For See ("Other Information NEW Ratings" herein) In the opinion of Bond Counsel, assuming compliance by the City after the date hereof with certain covenants described herein, interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, except with regard to any Certificate for any period of time during which such Certificate is held by a "substantial user" of any of the facilities financed with the proceeds of the Certificates or a flrelated person• within the meaning of section 147(a) of the Internal Revenue Code of 1986 (the "Code"). HOWEVER, INTEREST ON THE CERTIFICATES WILL BE INCLUDED IN COMPUTING TI1E ALTERNATIVE MINIMUM TAXABLE INCOME OF THE OWNERS THEREOF WmCH ARE INDIVIDUALS, CORPORATIONS, TRUST OR ESTATES. See "Tax Matters and Tax E><emption•. THE CERTIFICATES WILL NOT BE DESIGN A TED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITIITIONS. $1,330,000 CITY OF LUBBOCK, TEXAS (Lubbock County) TAX AND AIRPORT SURPLUS REVENUE CERTIFICA 1ES OF OBLIGATION, SERIES 1998 Dated Date: January I, 1998 Due: February IS, as shown below PAYMENT TERMS ... Interest on the $1,330,000 City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998 (the "Certificates") will accrue from January I, 1998, (the "Dated Date") and will be payable February IS and August 15 of each year commencing August IS, 1998, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Certificates will he initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("OTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physieal delivery of the Certificates will be made ro the owners thereof, Principal of, premium, if any, and interest on the Certificates 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 Certificates. See "The Certificates -Book-Entry-Only System" herein. The initial Paying Agent/Registrar is U.S. Trust Company of Texas, N.A., Dallas, Texas (see "The Certificates• Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE •.• The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended, and constitute direct obligations of the City of Lubbock, Texas (the "City"), payable from a combination of (i) the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of Smplus Revenues of the City's Airport, as provided in the ordinance authorizing the Certificates (the "Ordinance") (see "The Certificates • Authority fur Issuance"). PURPOSE ... Proceeds from the sale of the Certificates will be used for acquisition of land to expand the "free zone" for north/south runway expansion at the City's Airport and to pay the costs of issuance ass(K)iated with the O::rtificates. Maturity Amount ( February 15) Rate $ 105,000 1999 110,000 2000 115,000 2001 !2S,0OO 2002 130,000 2003 The Certificates are not optional fur prior redemption. MATURITY SCHEDULE Price or Yield $ Amount 135,000 140,000 150,000 155,000 165,000 Maturity Price or (February I 5) Rate Yield 2004 2005 2006 2007 2008 LEGALITY ... The Certificates 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 Texas and the opinion of Fulbright &, Jaworski, L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion"). DELI VERY ... It is expected that the Certificates will be avail able for de! ivery through The Depository Trust Company on February 12, 199 8.
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 arry 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 lo ma/re 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 oblainedfrom 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 noJ intended as statements of fact. and no representaJion is made as to the correctness of such eslimales and opinions, or that they will be realized. The information and expressions of opinion contained herein are subject to change without nolice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implicalion that there has been no change in the affairs of the City or other matJers described. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARY ......................... 3 CITY OFFICIALS, STAFF AND CONSULTANTS ..... 5 ELECTED OFFICIALS.········· .......................................... 5 SELECTED ADMINISTRATIVE STAFF ............................. 5 CONSULTANlS AND ADVISORS .................................... 5 INTRODUCTION ............................................................ 7 THE CERTIFICATES ..................................................... 7 TAX INFORMATION ................................................... 11 TABLE I • VALUATION, EXEMPTIONS AND GENERAL OBLI0A TION DEBT .......................................... 13 TABLE 2 · TAXABLE ASSESSED VALUATIONS BY CATEOORY ...................................................... 15 TABLE 3A • VALUATION AND GENERAL OBLIGATION DEBTHISTORY ................................................ 15 TABLE 3B -DERIVATION OF GENERAL PURPOSE FUNDED TAX DEBT ......................................... 16 TABLE 4 • TAX RATE, LEVY AND COLLECTION HISTORY .....................................•..•................ 16 TABLE 5 -TEN LARGEST TAXPAYERS ..................... 16 TABLE 6 • TAX ADEQUACY .................................... 17 TABLE 7 • EsTIMA TED OVERLAPPING DEBT ............ 17 DEBT INFORMATION ................................................. 18 TABLE 8A • PRO·FORMA GENERAL OBLIGA TION DEBT SERVICE REQUIREMENTS ....................... 18 TABLE 8B • DIVISION OF DEBT SERVICE REQUIREMENTS ............................................... 19 TABLE 9 -INTEREST AND SINKING FUND 8UDGf.T PROJECTION .................................................... 20 TABLE 10 -COMPUTATION OF SELF-SUPPORTING DEBT .............................................................. 21 TABLE 11 • AUTHORIZED Bur UNISSUED GENERAL OBLIGATION BONDS ........................................ 22 TABLE 12 • OTHER 0BLIGA TIONS ............................. 22 FINANCIAL INFORMATION ..................................... 24 TABLE I 3 • GENERAL FUND REVENUES AND EXPENDITURE HISTORY .....•.........•.....•............. 24 TABLE 14 • MUNICIPAL SALES TAX HISTORY ......... 25 CAPITAL PROJECTS PROGRAM ................................... 25 TABLE 15 • CURRENT INVESTMENTS ......................... 28 2 THE AIRPORT .............................................................. 30 TABLE 16-PASSENGER ENPLANEMENTS ................... 3 0 TABLE 17• CONDENSED STATEMENT OF OPERATIONS AIRPORT SYSTEM ........................................... 32 TAX MATTERS ............................................................ 33 OTHER INFORMATION ............................................. 35 RATINGS .................................................................. 35 LITIGATION .............................................................. 3 5 R.EGISlRA TION AND QUALIFICATION OF CERTIFICATES FOR SALE ........................................................ 35 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS ................................. 3 5 LEGAL OPINIONS AND NO-LITIGATION CERTIFICATE 35 AUlHENTICITY OF FINANCIAL DATA AND 0TIIER INFORMATION ................................................. 36 CONTINUING DISCLOSURE OF INFORMATION ............. 36 CERTIFICATION OF THE OFFICIAL STATEMENT .......... 37 APPENDICES GENERAL INFORMATION REGARDING THE CITY ......... A EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B FORM OF BOND COUNSEL'S OPINION........................ C The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement. --
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 Certificates 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. THI~ C1TV ..................................... The City of Lubbock, County Seat of Lubbock County, is a political subdivision and municipal corporation of the State, located in Lubbock County, Texas. The City covers approximately l04 square miles and has an estimated 1997 population of 195,367 (see "Introduction -Description of City"). THE CERTIFICATES ..................... The Certificates are issued as $1,330,000 Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998. The Certificates are issued as serial certificates maturing February 15, 1999 through February 15, 2008 (see "The Certificates -Description of the Certificates"). PAYMENT OF INTEREST .............. Interest on the Certificates accrues from January I, 1998, and is payable August 15, 1998, and each February IS and August 15 thereafter until maturity or prior redemption (see "The Certificates• Description of the Certificates" and "The Certificates• Optional Redemption"). AUTHORITY FOR ISSUANCE.......... The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971 ), as amended and an Ordinance passed by the City Council of the City (see "The Certificates -Authority for Issuance"). SECURITY FOR TIIE CERTIFICATES.............................. The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection ofa direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of Surplus Revenues of the City's Airport (see "The Certificates -Security and Source of Payment"). REDEMPTION............................... The Certificates are not optional for prior redemption. TAX EXEMPTION.......................... In the opinion of Bond Counsel, assuming compliance by the city after the date hereof with certain covenants described herein, interest on the Certificates will be excludahle from gross income for federal income tax purposes under existing law, except with regard to any Certificate for any period of time during which such Certificate is held by a "substantial user" of any of the facilities financed with the proceeds of the Certificates or a "related person" within the meaning of section 147(a) of the Internal Revenue Code of 1986 (the "Code"). HOWEVER, rNTEREST ON THE CERTIFICATES WILL BE rNCLUDED IN COMPUTING THE ALTERNATIVE MrNIMUM TAXABLE rNCOME OF THE OWNERS THEREOF WHICH ARE INDIVIDUALS, CORPORATIONS, TRUST OR ESTATES. See "Tax Matters -Tax Exemption". · UsE OF PROCEEDS....................... Proceeds from the sale of the Certificates will be used for acquisition of land to expand the "free zone" for north/south runway expansion at the City's Airport and to pay costs of issuance associated with the Certificates. RATINGS ..................................... The presenlly outstanding tax supported debt of the City is rated "Aa" by Moody's Investors Service, lnc. ("Moody's") and "AA" by Standard & Poor's Ratings Services, A Division of The McGraw-Hill Companies, Inc. ("S&P"). The City also has one issue outstanding which is rated "Aaa" by Moody's and "AAA" by S&P through insurance by a commercial insurance company. Applications for contract ratings on the Certificates have been made to Moody's, S&P and Fitch Investors Service, L.P. ("Fitch") (see "Other Information -Ratings"). BOOK-ENTRY-ONLY SYSTEM ...................................... The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee ofDTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members ofDTC for subsequent payment to the beneficial owners of the Certificates (see "The Certificates -Book-Entry-Only System"). 3
PAYMENT RECORD ...................... The City has never defaulted. SELECTED FINANCIAL INFORMATION Ratio General Purpose Per Capita Funded Fiscal Per Capita General General Tax Debt Year Taxable Taxable Purpose Purpose to Taxable Ended Estimated Assessed Assessed Funded Funded Assessed 9/30 Population (ll Valuation Valuation Tax Debt (l) Tax Debt Valuation 1993 187,981 $ 4,667,750,168 $ 24,831 $ 39,585,305 $ 211 0.85% 1994 190,038 4,910,763,048 25,841 55,909,058 294 1.14% 199S 191,020 5,087,312,020 26,632 58,0SS,OIS 304 1.14% 1996 193,064 5,399,356,462 27,967 67,438,562 349 1.25% 1997 195,367 5,567,072,641 28,495 61,728,036 316 1.11% 1998 195,367 (J) 5,830,249,173 28,843 57,156,101 (') 293 {S) 0.98% (I) Source: Estimates by City of Lubbock, Texas. (2) Does not include self-supporting debt (see "Table 3B -Derivation of General Purpose Funded Tax Debt"). (3) Unaudited. (4) No official estimate has yet been made for 1997, this figure used for illustration only. (5) Projected. (6) In process of collection. GENERAL FuNDCONSOLIDATED STATEMENT SUMMARY Fiscal Year Ended September 30, i99T1) 1996 1995 1994 Fund Balance at Beginning of Year $ 17,672,385 $ 17,655,263 $ 14,746,780 $ 12,385,233 Total Revenues and Transfers 77,697,211 75,697,081 71,851,128 68,925,208 Total Expenditures and Transfers 76,635,263 75,679,959 68,942,645 66,563,661 Fund Balance at End of Year $ 18,734,333 $ 17,672,385 $ 17,655,263 $ 14,746,780 Less: Reserves and Designations (4,770,059) (4,974,060) (701,640) (1,056,628) Undesignated Fund Balance $ 13,964,274 $ 12,698,325 $ 16,953,623 $ 13,690,152 (I) Unaudited. For additional information regarding the City, please contact: Ms. Anna Mosqueda Mr. Vince Viaille Mr. Joe W. Smilh (5) %of Total Tax Collections 99.73% 100.65% 100.63% 100.03% 99.78% N.A. {6) 1993 $ 10,801,437 64,775,630 63,191,834 $ 12,385,233 (1,254,118) $ 11,131,115 Director of Financial Services City of Lubbock First Southwest Company First Southwest Company P.O. Box2000 Lubbock, Texas 79457 Phone (806) 775-2002 Fax (806) 775-2051 or 100 I Main Street Suite 802 Lubbock, Texas 79401 Phone (806) 749-3792 Fax (806) 749-3793 4 or 402 Cypress, Suite 707 P.O. Box 2754 Abilene, Texas 79604-2754 Phone(915)672-8432 Fax (915) 675-6218 -
CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED 0FFIC1ALS Length of Tenn City Council Service Expires Occupation Windy Sitton 5 Years May, 1998 Business Owner Mayor Alex "Ty" Cooke 5 Years May, 2000 Investments Mayor Pro Tern and Councilmember, District 6 Victor Hernandez 4 Years May, 1998 Attorney-at-Law Councilmember, District l T. J. Patterson 12 Years May,2000 Co-Publisher Councilmember, District 2 David Nelson 9 Months May, 1998 Attorney-at-Law Councilmember, District 3 Max Ince S Years May,2000 Insurance Agent Councilmember, District 4 Randy Neugebauer 5 Years May, 1998 Land Development Councilmember, District 5 SELECTED ADMINISTRATIVE STAFF Length of Employment Length of Employment Total Government Nami: Position in Current Position with City of Lubbock Service Bob Cass City Manager September, 1992 April, 1976 20 Years Anita Burgess City Attorney December, 1995 December, 1995 2 Years Kaythie Darnell City Secretary September, 1996 September, 1996 14 Years Debra Forte Fi~t Assistant City Manager Janua,y, 1995 January, 1995 18 Years Anna Mosqueda Director of Financial Services December, 1994 November, 1989 ?Years Betsy Bucy Finance Manager February, 1996 January, 1985 II Years Jimmy Rodriguez Chief Accountant July, 1996 July, 1991 5 Years Mark Earle Director of Aviation April, 1995 April, 1995 17 Years CONSULTANTS ANO ADVISORS Auditors ....................................................................................................................... Robinson Burdette Martin & Cowan, L.L.P. Lubbock, Texas Bond Counsel ....................................................................................................................................... Fulbright & Jaworski, L.L.P. Dallas, Texas Financial Advisor ........ , ............................................................................................................................. First Southwest Company Abilene and Lubbock, Texas 5
THIS PAGE INTENTIONALLY LEFT BLANK 6
OFFICIAL STATEMENT RELATING TO $1,330,000 CITY OF LUBBOCK, TEXAS TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $1,330,000 City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998. 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 Certificates which will authorize the issuance of the Certificates, except as otherwise indicated herein. There follows in this Official Statement descriptions of the Certificates 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. Dto:SCRIPTION OF THE CITY ... The City, County Seat of Lubbock County, 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 in 1909, and first adopted its Home Rule Charter in 1917. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and six Councilmembers. The Mayor is elected at-large for a two year tenn ending in an even year. Each of the six members of the City Council resides in a separate single-member district and is elected by the qualified voters of this district for a four year term. The terms of three members of the City Council expire each even year. 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, airport, sanitation and solid waste disposal, health and social services, culture-recreation, public transportation, public improvements, planning and zoning, and general administrative services. The I 990 Census population for the City was 186,206, while the estimated 1997 populalion is 195,367. The City covers approximately I 04 square miles THE CERTIFICATES DESCRIPTION OF THE CERTIFICATES ... The Certificates are dated January I, 1998, and mature, on February 15 in each of the years and in the amounts shown on the cover page hereof. Interesl will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on February 15 and August 15, commencing August 15, 1998. The definitive Certificates 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 ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying AgenVRegistrar 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 Certificates. See "Book-Entry-Only System" herein. AUTHORl1Y FOR ISSUANCE .•. The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended, and an Ordinance passed by the City Council. 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 obligations payable in whole or in part from ad valorem taxes, which tax must be levied within limits prescribed by law. Additionally, the Certificates are payable from and, together with the outstanding "Previously Issued Certificates" (identified and defined in the Ordinance), secured by a lien on and pledge of the Surplus Revenues (as defined in the Ordinance) of the City's Airport, such lien and pledge, however, being junior and subordinate to the lien on and pledge of the Surplus Revenues securing the payment of "Prior Lien Obligations" (as defined in the Ordinance) hereafter issued by the City. In the Ordinance, the City reserves and retains the right to issue Prior Lien Obligations while the Certificates are Outstanding without limitation as to principal amount but subject to any terms, conditions or restrictions as may be applicable thereto under law or otherwise. 7
TAX RAn: 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. Administratively, the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all General Obligation debt service, as calculated at the time of issuance. REDEMPTION OF CERTIFICATl!S .•• The Certificates are not optional for prior redemption. B001<-ENTRV-ONLY SYSTEM .•• The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Certificates. The Certificates 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 Certificates 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 corporation" within the meaning of the New York Unifonn Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A 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 corporations, 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 OTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Certificates under the OTC 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 Certificate ("Beneficial Owner") is in tum to be recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confinnation from OTC 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 Certificates 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 Certificates, except in the event that use of the book-entry system described herein is discontinued. To facilitate subsequent transfers, all Certificates deposited by Direct Participants with OTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Certificates with OTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. OTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behal r 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. Neither DTC nor Cede & Co. will consent or vote with respect to the Certificates. 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 Certificates are credited on the Record Dale (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Certificates 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 OTC 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 OTC. the Paying Agent/Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from lime to time. Payment of principal and interest to 8
OTC 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 Certificates al any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Certificates 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, Certificates 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 Certificates are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the persQn for which the Participant acquires an interest in the Certificates, 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 Ordinance will be given only to DTC. Information concerning OTC and the Book-Entry 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. PAYING AGENTIREGISfRAR ... The initial Paying Agent/Registrar is U.S. Trust Company of Texas, N.A., Dallas, Texas. ln 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 Certificates 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 perfonn the duties and services of Paying Agent/Registrar for the Certificates. Upon any change in th.e Paying Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. TRANSFER, EXCHANGE ANO REGISTRATION ... In the event the Book-Entry-Only System should be discontinued, the Certificates 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 lo be paid with respect to such registration, exchange and transfer. Certificates may be assigned by the execution of an assignment fonn on the respective Certificates or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Certificates will be delivered by the Paying Agent/Registrar, in lieu of the Certificates 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 Certificates issued in an exchange or transfer of Certificates 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 Certificates 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 Certificates 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 Certificates 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 Certificates. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Certificate 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 Certificate. RECORD DATE FOR INTEREST PAYMENT ... The record date ("Record Date") for the interest payable on the Certificates on any interest payment date means the close of business on the last business 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 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 a Certificate 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. 9
BoNDHOLDERS' REMEDIES .•. The Ordinance does not establish specific events of default with respect to the Certificates. Under State law there is no right to the acceleration of maturity of the Certificates upon the failure of the City to observe any covenant under the Ordinance. Although a registered owner of Certificates could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Certificates, 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 valorem tax sufficient to pay principal of and interest on the Certificates as it becomes due. The enforcement of any such remedy may be difficult and time consuming and 11 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. Purthennore, 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 Certificates are qualified with respect to the customary rights of debtors relative to their creditors. USE OF CERTIFICATE PROCEEDS ... Proceeds from the sale of the Certificates will be used for acquisition ofland to expand the "free zone" for north/south runway expansion at the City's Airport and to pay costs of issuance associated with the Certificates. JO
TAX INFORMATION ADV ALOREM TAX LA w ... The appraisal of property within the City is the responsibility of the Lubbock 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. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review 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 detennination 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 property 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 prope11y from ad valorem taxation. Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (I) 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 ofup 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 1-b, Article Vlll, 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 anned forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from SS,000 to a maximum ofSI 2,000. Article VIII provides that eligible owners of both agricultural land (Section 1-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 property ta.xation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d and l-d-1. Nonbusiness personal prope11y, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body ofa political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation. Article VIII. Section 1-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose of ~sembly, 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 property 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 prope11y. The City in tum 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 ofup to 10 years. EFFECTIVE TAX RAn: 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. Under State law, the tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. As a matter of policy. the City dedicates a portion of its maintenance and operations tax rate to its Economic Development Fund, and such designation is reflected in certain tables herein. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". The City Council may not adopt a tax rate that exceeds !he lower of the rollback tax rate or 103% of the effective tax rate until it has held a public hearing on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds the roUback 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 Januaey I, 1998, a governing body may not adopt a tax rate that, if applied to !he total taxable values, would impose an amount of taxes 11
exceeding the prior year's levy without holding a public hearing and otherwise complying with the requirements for giving notice of such public hearing. "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 op:.:ration tax levy (adjusted) from this year's values (adjusted) mulliplied 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 ue generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for lhe 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 I of each year. Business inventory may, at the option of the taxpayer, be assessed as of September I. 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 I 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 I. 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 II May 9 4 13 June IO 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 certain 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 Jaw 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 lo 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 !he bankruptcy coun. CITv 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 $16,700; the disabled are also granted an exemption of$10,000. The City has not granted any part of the additional exemption of up to 20% of the market value of residence homesteads which may be granted on a local option basis. See Table I 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. The City does not tax nonbusiness personal property. The City does not pennit split payments, and discounts are not allowed. The City does tax freeport property. 12
The City collects an additional one-eighth cent sales tax for reduction of ad valorem taxes. The City has adopted a tax abatement policy as described below. TAX ABATEMENT Poucv ... The City has established a tax abatement program to encourage economic development. In order to be considered for tax abatement, a project must be located in a reinvestment zone or enterprise zone (a commercial project must be in an enterprise zone) and must meet several criteria pertaining to job creation and property value enhancement. The amount and term of abatement shall be determined on a case by case basis, however, in no event shall taxes be abated for a tenn in excess of ten ( I 0) years. TAX INCREMENT DISTRICT ... Together with other taxing units, the City participates in a Tax Increment District {"TID") pursuant to Article I066e, V.T.C.S. The TID covers an approximately 0.71 square-mile area which includes part of the central business district, the Overton Addition and the Broadway Corridor of the City. The base taxable values of the TID are frozen at the level of taxable values for 1986, the year of creation. Any ad valorem taxes relating to growth of the TID's tax base above the frozen base may be used only to finance improvements within the TIO. The tax base for the TID for 1986 was $98,180,307; the 1997 taxable assessed value of property in the TIO is less than the tax base and there is no current tax increment. TABLE I -VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 1997 Market Valuation Established by Lubbock Central Appraisal District Less Exemptions/Reductions at l00% Market Value: Residential Homestead Exemptions Disabled Veterans AgriculturaVOpen-Space Land Use Reductions Tax Abatement Reductions (lJ 1997 Taxable Assessed Valuation City Funded Debt Payable from Ad Valorem Taxes General Obligation Debt (as of9-30-97) C2l The Certificates (the "Airport Certificates") The Tax and Waterworks System Certificates (J) Total Funded Debt Payable from Ad Valorem Taxes Less: Self Supporting Debt <4l Waterworks System General Obligation Debt Sewer System General Obligation Debt $ 188,071,461 12,969,146 36,603,851 26,907,747 $ 138,914,318 1,330,000 10,260,000 $ 28,424,070 52,064,567 5,532,645 $ 6,094,801,378 264,552,205 $ 5,830,249,173 $ 150,504,318 Solid Waste Disposal System General Obligation Debt Hotel Occupancy Tax Certificates of Obligation 1,425,000 87,446,282 General Purpose Funded Debt Payable from Ad Valorem Taxes (SJ General Obligation Interest and Sinking Fund as of9-30-97 (Unaudited) Ratio Total Funded Debt to Taxable Assessed Valuation Ratio General Purpose Funded Debt to Taxable Assessed Valuation 1997 Estimated Population -195,367 <6> Per Capita Taxable Assessed Valuation • $29,843 Per Capita Net Funded Debt Payable from Ad Valorem Taxes -$770.37 Per Capita General Purpose Funded Debt Payable from Ad Valorem Taxes· $322.77 (I) Set: above, "Tax lnfonnation • Tax Abatement Policy". 13 $ 63,058,036 $ 1,280,060 2.58% 1.08%
(2) Unaudited. The statement of indebtedness does not include outstanding $22,945,722 Electric Light and Power System Revenue Bonds or $9,170,000 Electric Light and Power System Revenue Bonds, Series 1998, selling Januaiy 8, 1998, as these Bonds are payable solely from the net revenues of the System. (3) SI0,260,000 Tax and Wateiworks System(Limited Pledge) Revenue Certificates of Obligation, Series 199& (the "Tax and Waterworks System Certificates") also being offered for sale on January 8, 1998. (4) The City provides for debt service on general obligation debt issued lo fund Waterworks System improvements, Sewer System improvements and Solid Waste Disposal System improvements from surplus revenues of these Systems; debt service on the Hotel Occupancy Tax Certificates of Obligation is provided from Hotel Occupancy TID{ revenues (see "Tables SA • Pro-Fonna General Obligation Debt Service Requirements", "Table 8B -Division of Debt Service Requirements", "Table 9 -Interest and Sinking Fund Budget Projection" and "Table 10 -Computation of Self-Supporting Debt"). "Waterworks System General Obligation Debt" includes $6,584,000 principal amount of the Tax and Waterworks System Certificates, $16,195,070 principal amount ofoutstanding general obligation bonds and SS,645,000 principal amount of outstanding Combination Tax and Waterworks System Subordinate Lien Revenue Certificates of Obligation. The City has no outstanding Waterworks System Revenue Bonds but the City has obligated revenues orthe Waterworks System to make payments under water supply contracts. "Sewer System General Obligation Debt" includes $8,154,567 principal amount of outstanding general obligation bonds and $43,910,000 principal amount of outstanding Combination Tax and Sewer System Subordinate Lien Revenue Certificates of Obligation. The City has no outstanding Sewer System Revenue Bonds. "Solid Waste Disposal System General Obligation Debt" includes $3,676,000 principal amount of the Tax and Waterworks System Certificates and $1,856,645 principal amount of outstanding general obligation debt. The City has no outstanding Solid Waste Disposal System Revenue Bonds. "Hotel Occupancy Tax Certificates of Obligation" includes $1,425,000 principal amountofoutstandinggeneral obligation debt. (5) "General Puipose Funded Debt Payable from Ad Valorem Taxes" includes $3,665,000 principl!i amount of outstanding Tax and Airpo11 Surplus Revenue Certificates of Obligation on which debt service is provided from Passenger Facility Charge ("PFC") revenues (see Footnote (2), "Table 9 -Interest and Sinking Fund Budget Projection") and the Certificates on which debt service will also be provided from PFC Revenues. (6) Source: City of Lubbock, Texas. 14
TABLE2 • TAXABLEASSESSEDVALUATIONSBVCATEGORV Category Real, Residential, Single-Family Real, Residential, Multi-Family Real, Vacant Lois/Tracts Real, Acruge (Land Only) Real, Fann and Ranch Improvements Real, Commercial and Industrial Real, Oil, Oas and Other Mineral Reserves Real and Tangible Personal, Utilities Tangible Personal, Commercial and Industrial Tangible Personal, Other Real Property, Inventory Total Appraised Value Before Exemptions Less: Total Exemptions/Reductions Taxable Assessed Value Category Real, Residential, Single-Family Real, Residential, Multi-Family Real, Vacant Lois/Tracts Real, Acreage (Land Only) Real, Fann and Ranch Improvements Real, Commercial and Industrial Real, Oil, Oas and Other Mineral Reserves Real and Tangible Personal, Utilities Tangible J>er.;onal, Commercial and Industrial Tangible Personal, Other Real Property, Inventory Total Appraised Value Before Exemptions Less: Total Exemptions/Reductions Taxable Assessed Value Taxable Appraised Value for Fiscal Year Ended September 30, 1998 1997 1996 ¾of Amount Total Amou11t $ 3,112,040,906 Sl.06% S 3,019,393,785 382,170,749 6.27% 348,118,848 96,3l2,77S 1.58% 100,053,738 46,128,990 0.76% 45,572,096 6,671,096 0.11% 6,933,323 l,180,704,813 19.37% 1,121,128,529 10,638,260 0.17% 9,263,830 171,889,877 2.82% 167,598,757 1,065,115,428 17.48% 974,209,635 12,087,601 0.20% 11,028,113 11,040,883 0.18% 15,225,881 $ 6,094,801,378 100.00% $ 5,818,526,535 (264,552,205) (251,453,894) $ 5,830,249,173 $ 5,567,072,641 Taxable Appraised Value for Fiscal Year Ended September 30, 1995 1994 %of Amount Total Amount $ 2,754,503,815 51.84% $ 2,667,702,100 337,977,738 6.36% 318,160,996 99,547,319 1.87% 100,240,564 45,954,067 0.86% 45,288,322 12,739,995 0.24% 11,784,081 1,039,190,164 19.56% 1,020,680,238 IS,018,920 0.28% 22,178,990 159,462,546 3.00% 152,961,630 819,836,742 15.43% 763,606,589 9,479,831 0.18% 8,120,819 20,069,741 0.38% 16,600,495 $ 5,313,780,878 100.00% $ s, 127,324,824 (226,468,858) (216,561,776) $ 5,087,312,0W $ 4,910,763,048 %of Total 51.89% 5.98% 1.72% 0.78% 0.12% 19.27% 0.16% 2.88% 16.74% 0.19% 0.26% 100.00% %of TOllll 52.03% 6.21% 1.96% 0.88% 0-23% 19.91% 0.43% 2.98% 14.89% 0.16% 0.32% 100.00% Amount $ 2,933,814,784 342,785,637 102,325,087 48,457,195 I 1,513,821 1,090,617,874 9,722,690 161,811,254 903,591,253 9,588,811 19,795,564 S 5,634,023,970 (234,667,508) S 5,399,356,462 %of Tocal 52.07% 6.08% 1.82% 0.86% 0.20% 19.36% 0.17% 2.87% 16.04% 0.17% 0.35% 100.00% NOTE: Valuations shown are certified taxable assessed values reported by the Lubbock 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. TABLE3A -VALUATION AND GENERAL OBLIGATION DEBT HISTORY General Purpose Ratio Fiscal Taxable Funded Tax Debt Tax Debt Funded Year Taxable Assessed Outstanding lo Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9/30 Population (I) Valuation <2> Per Capita of Year CJ> Valuation Capita 1993 187,981 $ 4,667,750,168 $ 24,831 $ 39,585,305 0.85% $ 21 t 1994 190,038 4,9!0,763,048 25,841 55,909,058 1.14% 294 1995 191,020 5,087,312,020 26,632 58,085,015 1.14% 304 1996 193,064 5,399,356,462 27,967 67,438,562 l.25% 349 1997 195,367 5,567,072,641 28,495 61,728,036 I.II% 316 1998 195,367 (4) 5,830,249, 173 29,843 57,156,101 {S) 0.98% (S) 293 (S) (I) Source: Estimates by City of Lubbock, Texas. (2) As reported by the Lubbock Central Appraisal District on City's annual State Property Tax Board Reports; subject to change during the ensuing year. (3) Does not include self-supporting debt. (4) No official estimate has yet been made for 1997, this figure used for illustration only. (5) Projected. 15
TABLE 38 -DERIVATION OF GENERAL PURPOSE FUNDED TAX DEBT Fiscal Funded Tax Debt Year Outstanding Ended at End 9/30 of Year ---1993 $ 137,358,752 1994 152,693,752 1995 148,178,752 1996 151,763,752 1997 138,914,318 1998 (1) I 37, !04,242 (I) Projected; includes the Certificates and Airport Certificates .. TABLE 4 -TAX RA TE, LEVY AND COLLECll0N HISTORY Fiscal Year Distribution Ended Tax General Economic 9/30 Rate Fund Development Less: Self-Supporting Funded Tax Debt $ 97,773,447 96,784,694 90,093,737 84,325,190 77,186,282 79,948, 14 I Interest and Sinking Fund Tax Levy General Purpose Funded Tax Debi Outstanding at End of Year $ 39,585,305 55,909,058 58,085,015 67,438,562 61,728,036 57,156,101 %of Current Tlll< Colleclions to Tax Levy o/oofTotal Tax Collections to Tax Levy 1993 S 0.6400 $ 0.40450 $ 0.03550 $ 0.20000 $ 29,879,149 97.53% 99.13% 1994 0.6400 0.41700 0.02310 0.19990 31,334,334 97.89% 100.65% 1995 0.6400 0.42540 0.03000 0.18460 32,481,841 98.34% 100.63% 1996 0.5859 0.39650 0.03000 0.15940 31,634,830 98.19% 100.03% 1997 0.5859 0.37771 0.03000 0.17819 32,617,479 97.99% (I) 99.78% {I} 1998 0.5800 0.39689 0.03000 0.15311 33,815,445 In process of colleclion (I) Unaudited. TABLES -TEN LARGEST TAXPAYERS 1997/98 %ofTotal Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation Texas Instruments Inc. Electronics Manufacturer $ 100,9)7,840 1.73% South Plains Mall Regional Shopping Mall 81,140,102 1.39% Southwestern Bell Telephone Co. Telephone Utility 76,930,657 1.32% Southwestern Public Service Electric Utility 51,672,482 0.89% Plains Co-Op Oil Mills Agricultural Processing 31,136,520 0.53% Wal-Mart Stores Inc. Discount Retail Stores 35,981,709 0.62% Methodist Hospital Hospital and Medical Office Building 35,336,459 0.61% Eagle-Pincher Industries Inc. Heavy Equipment Manufacturing 24,919,642 0.43% Southern Cotton Oil Co. Agricultural Processing 22,855,659 0.39% Fleming Companies Inc. Wholesale Groceries 22,037,892 0.38% $ 482,928,962 8.28% GJENERAL 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 "The Certificates -Tax Rate Limitation"). 16
TABLE6 • TAXADEQUACY(l) Maximum Principal and Interest Requirements, All General Obligation Debt (Pro-Forma), 1998 111 .................................................................................................. $20,752,389 $0.367Tax Rate at 97% Collection Produces ..................................................................................... : ............................. $20,755,104 Maximum Principal and Interest Requirements, General Purpose General Obligation Debt (Pro-Fonna), 1998 <11 ............................................................................ $ 8,983,553 $0.159 Tax Rate at 97%Collection Produces ................................................................................................................... $ 8,991,993 (I) See Tables 8A and 8B. 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 ("Tax Debt") was developed from infonnation contained in ''Texas Municipal Reports" published by the Municipal Advisory Council of Texas and the Lubbock Central Appraisal District. 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 infonnation as being accurate or complete. Further-more, certain of the entities listed may have issued additional bonds since the date hereof, and such entitles may have programs requiring the issuance of substantial amounts of additional bonds, the amount of which cannot be dctennined. The following table reflects the estimated share of overlapping Tax Debt of the City. 1997/98 Total funded City's Authorized Taxable 1997/98 Debt Eslima!ed Overlapping But Unissued Assened Tax AsOf % G.O.Debt Debt As Of Taxing Jurisdic1ion Val11e Rate 12-IS-97 Applicable Mof12-IS-91 12-IS-91 City of Lubbock s S,830.249,173 s o.ssooo s 63,058,036 {I) 100.00% s 63,058,036 s 3,742,000 Lubbock Independent School District 4,978,9 I 7,488 I.S6S00 71,244,969 98.91% 70,468,399 3,400,275 Lubbock County 6,965,209,987 0.16800 2,300.000 82.94% 1,907,620 S00,000 Frenship Independent School District 623,393,078 1.48800 38,173,739 64.44% 24,S99,IS7 8,SS0,000 ld~lo11 Independent School Di'1rict 116,278,043 1.38680 2,3S0,OOO 1.10% lS,850 -0-Lubbock-Cooper Independe:11 School District 201,000,514 1.57200 8,194,SSS 1$.30% 1,253,767 .(). New Deal Independent School District 80,IS6,S37 1.47500 -0-0.03% -0--0· Roosevelt Independent Sch.ool District 97,840,248 1.50000 -0-4.72% -0--0· Total Direct and Overlapping 0.0. Debt s 161,312,829 Ratio of Direct and Overlapping G.O. Debt lo Taxable Assessed Valua!ion ................. , ...................... , . , ... . 2.77% Per Capita Overlapping 0.0. Debt .........•..•............•..........•...•...•.•........•.............•........• s 826 (I) General Purpose Funded Tax Debt; excludes self-supporting General Obligation Debt (see "Table I -Valuation, Exemptions and General Obligation Debt" which includes the Certificates and the Tax and Waterworks System Certificates). 17
DEBT INFORMATION TABLE 8A -PRO-FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS Fiscal Year %of Ended OutSW1di11g Debt io The Tax and Waterworks System Ccnilicatesf2) The Airport Ccnifi,atc,<)> Combined Total Requirements Principal 9/30 Principal Interest Total Principal lntercsl Total Principal lnlercsl Toral Principal lncc~I Total Rctin:d 1998 $ 13,400,076 s 6,959,815 s 20,359,891 s -0. $ 351,120 $ 3H,l20 $ -0-s 41,378 $ • 1.378 $ 13,400,076 $ 7,352,313 s 20,752,389 1999 13,231.493 6,207,788 19,439,281 SJ0,000 SS0,27S 1,060,275 IOS,000 63,815 l68,87S 13,846,493 6,821,938 20,668,431 2000 10,714,9116 7,489,219 18,204,205 SJ0,000 S22,22S 1,032,225 110,000 S8,SOO 168,SOO 11,334,986 8,069,9<14 19,404,930 2001 10.099,442 6,465,665 16,S6S,l07 SI0,000 494,17S 1.004,175 115,000 52,875 167,87S J0,724,442 7,0J2,7Jj 17,737,157 2002 9.253,639 S,306,784 14,560,423 SJ0,000 466,IIS 976,125 125,000 46,87S 171,87S 9,888,639 5,819,714 15,701,423 39.33% 2003 8,749,682 4,383,021 13,132,703 ,10,000 43&,075 948,075 130,000 40,SOO 170,500 9,389,682 4,861,596 14,lSl,271 2004 7,67',000 3,494,056 11,169,056 SJ0,000 410,025 920,025 135,000 33,87S 168,875 8,320,000 3,937,956 12,257,956 200s 7,640,000 3,113,637 10,753,637 SI0,000 381,975 1191,975 140,000 27,000 167,000 8,290,000 3,$22,612 11,812,612 2006 7,595,000 2,731,587 10.326,587 SI0,000 353,925 1163,925 150,000 19,750 169,750 s,2s,.ooo 3.lOS.262 I 1,360,262 2007 7,SSS,000 2,342,641 9,897,641 SIS,000 325,738 840,738 ISS,000 12.m 167,12S 8,22S,OOO 2,680,504 10,905,504 67.56% 2008 6,900,000 1,970,569 8,870,569 SIS,000 297,413 812,413 165,000 4,12S 169,125 7,580,000 2,272,107 9,852,107 2009 6,620,000 1,627,138 8,247,138 SIS,000 269,088 784,088 7.JJ,,000 1,896.226 9,031,226 2010 6,110,000 1,297,883 7,407,883 515,000 240,763 755,763 6,625,000 l,S38,646 8,163,646 -2011 6,I U,000 983,0SO 7,098,0SO 515.000 212,431 727,438 6,630,000 1,195,488 7,125,4&& 00 2012 4,900,000 710,100 5,610,100 515,000 184,113 699,113 S,4 lS,000 894,213 6,309,213 89.74% 2013 4,870,000 474,125 S,344,125 515,000 155,787 670,787 S,385,000 629,912 6,014,912 2014 4,870,000 239,838 S,109,838 515,000 127,462 642,462 S,385,000 367,300 5,752,300 2015 1,785,000 Sl,206 1,866,206 SIS,000 99,137 614,137 2,300,000 180,343 2,480,343 2016 830,000 19,713 849,713 SLS.000 70,812 585,812 1,3-45,000 90,525 l,43S,525 2017 515,000 42,4&7 557,4&7 SlS,000 42,•87 557,487 2018 515,000 14,162 529,162 515,000 14,\62 529.162 100.00% -s 138,914,311 $ SS,891,835 s 194,812,lSJ s 10,260.000 $ 6,007,320 S 16,267,320 s 1,330,000 s 400,878 s 1,730,878 s 150,504,318 s 62,306,033 s 212,810,351 (I) "Outstanding Debt" includes self-supporting debt but does not include capital lease obligations. (2) Interest calculated at S,5% for purpose or illustration. (3) Interest calculated at 5. 0% for purpose of illustration.
T ABU: 88 -DIVISION OF DEBT SERVICE REQUIREMENTS Less: Less: Les.s: Solid Waste Watcrworlcs Sewer Disposal Fiscal System System System Year General General General Ended Combined Total Requirements Obligation Obligation Oblig;a_lion 9130 Principal Interest Total Rcquiremmts<'1 Requirements Rcquircmentslll 1998 s 13,400,076 $ 7,352,3)3 $ 20,752,389 $ 4,267,678 s 6,S00,044 $ 613,339 1999 )3,846,493 6,821,938 20,668,431 4,453,984 6,284,329 846,171 2000 11,334,986 8,069,944 19,404,930 4,072,270 6,029,663 813,643 2001 10,724,442 7,012,715 17,137,IS7 3,744,167 S,450,IIS 176,322 2002 9,888,639 S,819,784 IS,708,423 3,237,832 5,157,067 635,740 2003 9,389,682 4,861,596 14,251,278 2,874,365 4,894,860 341,586 2004 8,320,000 3,937,956 12,2S7,9S6 2,301,276 4,659,913 329,64S 2005 8,290,000 3,522,612 11,.812,612 2,214,740 4,471,161 319,S9S 2006 8,2SS,000 3,IOS,262 I l,360,262 2,105,526 4,304,399 309,544 2007 8,225,000 2.680,504 J0,90S,S04 2,019,588 4,)36,695 30),236 2008 7,580,000 2,272,107 9,852,107 1,711,033 3,659,266 291,088 2009 7,135,000 1,896,226 9,0.H,226 1,609,724 3,497,876 280,93!> 2010 6,625,000 I .. H&,646 8,163,646 1,461,997 3,2S9,6lS 270,790 2011 6,630,000 1,)95,488 7,825,488 1,393,S98 3,128,766 260,641 2012 S,415,00-0 894,213 6,309,213 539,273 2,939,536 250,492 2013 5,385,000 629,912 6,014,912 517,800 2,776,974 240,343 2014 5,385,000 367,300 S,752,300 496,327 2,64S,Sl3 230,194 2015 2,300,000 180,343 2,480,343 394,092 74),313 220,04.S 2016 1,345,000 90,525 l,435,525 375,916 209,896 2017 515,000 42,487 557,487 351,139 199,748 2018 515,000 14,162 m,162 339,563 189,599 s JS0,504,318 $ 62,306,033 s 212,810,JSI s 40,488,488 s 74,537,105 s 7,930,596 (I) Includes 64.17% of debt service (Pro-Fonna) on the Tax & Waterworks System Certificates. (2) Includes 35.83% of debt servi~ (Pro-Fonna) on the Tax & Waterworks System Certificates. (3) Includes debt service (Pro-Fonna) on the Airport Certificates. 19 Less: Hotel Occupancy General Tax Pu,pose General General Obligatjoo Obligation Requin:ments Rcquircmenl$()) s 387,775 $ 8,983,SSJ 387,415 8,696,S32 390,903 8,098,451 393,663 7.372,890 6,611,184 6,140,467 4,967,122 4,1101,116 4,640,793 4,447,985 4,190,720 3,642,687 3,171,244 3,042,483 2,S79,912 2,479,795 2,380,266 1,124,893 849,713 $ 1,559,756 s 88,294,406
TABLE 9 -INTEREST AND SINKING FuND BUDGET PROJECTION General Obligation Debt Service Requirements (Pro•Fonna), Fiscal Year Ending 9•30-98 Fiscal Agent, Tax Collection and Other Uses Total Requirements Sources of Funds Interest and Sinking Fund, 9-30-97 Budgeted Ad Valorem Tax Receipts Budgeled Transfers From: Water Fund (IJ Sewer Fund <•l Solid Waste Fund <1> Hotel Occupancy Tax Fund Cl) Airport Fund • from Passenger Facility Charges ("PFCs") Budgeted Interest Earned Total Sources of Funds Estimated Balance, 9-30-98 (I) See "Table IO -Computation of Self-Supporting Debt". (2) $ 20,752,389 ll2,000 $ 20,864,389 s 1,280,060 8,929,860 4,267,678 (}) 6,500,044 613,339 (}) 387,775 579,577 (l) 174,900 $ 22,733,233 $ 1,868,844 (2) PFCs are authorized by the Federal Aviation Administration ("FAA"). PFC revenues must be used for allowable costs of FAA approved airport projects including debt service on airport obligations issued to carry out approved projects. The City issued Tax and Airport Surplus Revenue Certificates of Obligation (the "Airport Certificates") in 1993 and 1995 to fund certain approved airport improvements. The outstanding principal balance of the Airport Certificates on 9-30•97 was $3,665,000; debt service on the Airport Certificates is provided from PFC revenues. Unaudited PFC revenues in fiscal year ending 9·30-97 were $1,700,877. Debt service on other airport general obligation debt (principal balance outstanding at 9-30-97 $6,373,283 is provided from ad valorem taxes. The City anticipates that debt service on the Series 1998 Airport Certificates will also be provided from PFC revenues. (3) Includes interest due 8-15-98 (Pro-Fonna) on the Tax and Waterworks System Certificates and the Airport Certificates (see "Debt Information"). 20
TABLE 10 • COMPUTATION OF SELF-SUPPORTING DEBT THE WATERWORKS SYSTEM (I) Net System Revenue Available, Fiscal Year Ended 9-30.97 (Unaudited) Less: Requirements for Revenue Bonds, Fiscal Year Ended 9-30-98 Balance Available for Olher Puposes Requirements for System General Obligation Debt (Pro-Fonna), Fiscal Year Ending 9-30-98 Percentage of System General Obligation Debt Self-Supporting $ 9,045,874 -0-$ 9,045,874 $ 4,267,678 100.00% ( I) Each Fiscal Year the City transfers from net revenues of the Waterworks Enterprise Fund to the General Obi igation lnten:st and Sinking Fund an amount equal 10 debt service requirements on System general obligation debt. THE SEWER SYSTEM (I) Net System Revenue Available, Fiscal Year Ended 9-30-97 (Unaudited) Less: Requirements for Revenue Bonds, Fiscal Year Ending 9-30-98 Balance Available for Other Puposes Requirements for System General Obligation Debt, Fiscal Year Ending 9-30-98 Percentage of System General Obligation Debt Self-Supporting $ 8,898,436 -0-$ 8,898,436 $ 6,500,044 100.00% (I) Each Fiscal Year the City transfers from net revenues of the Sewer Enterprise Fund to the General Obligation Interest and Sinking Fund an amount equal to debt service requirements on System general obligation debt. THE SOLID WASTE DISPOSAL SYSTEM (1) Net System Revenue Available, Fiscal Year Ended 9-30-97 (Unaudited) Less: Requirements for Revenue Bonds, Fiscal Year Ending 9-30-98 Balance Available for Other Puposes Requirements for System General Obligation Debt (Pro-Fomia), Fiscal Year Ending 9-30-98 Percentage of System General Obligation Debt Selr-Supporting $ 7,793,735 -0-$ 7,793,735 $ 613,339 100.00% (I) Each Fiscal Year the City transfers from net revenues of the Solid Waste Enterprise Fund to the General Obligation Interest and Sinking Fund an amount equal to debt service requirements on System general obligation debt. THE HOTEL OCCUPANCY TAX (1) Revenue Available, Fiscal Year Ended 9-30-97 (Unaudited) Less: Requirements for Revenue Bonds, Fiscal Year Ending 9-30-98 Balance Available for Other Purposes Requirements for Tax Bonds, Fiscal Year Ending 9-30-98 Percentage of General Obligation Bonds Self-Supporting $ $ $ 1,483,187 -0-1,483,187 387,775 100.00% (I) Each Fiscal Year the City transfers revenues of the Hotel/Motel Special Revenue Fund to the General Obligation Interest and Sinking Fund an amount equal to debt service requirements on Hotel Occupancy Tax obligations. 21
TABLE 11 -AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Date Amount Previously Unissued Purpose Authorized Authorized Issued Balance Waterworks System 10-17-87 $ 2,810,000 $ 200,000 $ 2,610,000 Sewer System 5-21-77 3,303,000 2,175,000 1,128,000 Street Improvements 5-1-93 10,170,000 10,166,000 4,000 $ 16,283,000 $ 12,541,000 $ 3,742,000 ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ... The City Council has appointed the Finance Subcommittee of a prospective Citizens Advisory Committee ("CAC"); the CAC will review the City's general capital requirements. It is possible that a general obligation bond election could be held in Fiscal Year 1998-99 as a result of the CAC's recommendations. In addition, the City has tentative plans lo authorize and issue combination tax and revenue certificates of obligation (the "Future Certificates") for various system and other improvements over the period, Fiscal Years 1998-99 through 2000-01. Preliminary planning projects the issuance of approximately $75,000,000 Future Certificates, which includes an estimated $23,100,000 for the City's portion of a Canadian River Municipal Water Authority ground water project. Other financed improvements would include the Waterworks System, the Sewer System, the Solid Waste Disposal System, the Airport and Stonnwater Drainage. Debi service on the Future Certificates will be self-supporting from the various system surplus revenues, Airport PFC revenues and stonnwater user fees. TABLE 12 · OTHER OBLIGATIONS The City has entered into lease agreements for the purpose of acquiring certain properties and equipment. As of 9-30-97 capital leases were as follows: Fiscal Year Ending 9-30 Balance Payable from: 1998 1999 Interest Outstanding Internal Service Fund Computer Equipment $342,094 $ -0-$ 8,289 $ 333,805 Communications Fund Radio Equipment $592,762 $592,762 $ 59,118 $1,126,406 Total $934,856 $592,762 $ 67,407 $1,460,211 PENSION FUNDS TEXAS MUNICIPAL RETIREMENT SYSTEM ( I )(2) ... All permanent, full-time City employees who are not firefighters are covered by lhe Texas Municipal Retirement System. The System is an agent, multiple-employer, public-employee retirement system which is covered by a State statute and is administered by six trustees appointed by the Governor of Texas. The System operates independently of its member cities. The City of Lubbock joined the System in 1950 to supplement Social Security. All City employees except firefighters are covered by Social Security. Options offered under the System, and odopted by the City, include current, prior and antecedent service credits, ten year vesting, updated service credit, occupational disability benefits and survivor benefits for the spouse of a vested employee. An employee who retires receives an annuity based on the amount of the employees conlributions over-matched two for one by the City. Employee contribution rate is 6% of gross salary. Beginning October 11, 1997, employee contribution rate is 7% of gross salary. The City's contribution rate is calculated each year using actuarial techniques applied to experience. The 1997 contribution rate was 12.50%. The 1998 contribution rate is 12.93%. Enabling statutes prohibit any member city from adopting options which impose liabilities that cannot be amortized over 25 years within a specified statutory rate. On December 3 1, 1996, assets held by the System, not including those of the Supplemental Disability Fund which is "pooled", for the City of Lubbock were $107,984,862. Unfunded accrued liabilities on December 31, 1996 were $30,464,464, which is being amortized over a 25-year period beginning January, 1997. Total contributions by the City to the System for Calendar Year 1996 were $5,372,808. 22 -
FIREMEN'S RELIEF AND RETIREMENT FUND (I)_ .. City of Lubbock firefighters are members of the locally administered Lubbock Firemen's Relief and Retirement Fund, operating under an act passed in 1937 by the State Legislature and adopted by City firefighters, by vote of the department, in 1941. Firefighters are not covered by Social Security. The Fund is governed by seven trustees, three firefighters, two outside trustees (appointed by the other trustees), the Mayor or his representative and the chief financial officer or his representative. Execution of the act is monitored by the Firemen's Pension Commissioner, who is appointed by the Governor. Benefits of retired firemen are detennined on a "formula" or a "final salary" plan. Actuarial reviews arc perfonned every two years, and the fund is audited annually. Firefighters contribute 11% of full salary into the fund and the City must contribute a like amount; however, the city contributes on a basis of the percentage of salary which is a ratio adjusted annually that bears the same relationship to the firefighter's contribution rate that the City's rate paid into the Texas Municipal Retirement System and FICA bears to the rate other employees pay into the Texas Municipal Retirement System and FICA. The City's contribution rate for 1997 was 16.40¾. As of December 31, 1996, unfunded pension benefit obligations were $21,643,034 which is being amortized over a 13 year period beginning January I, 1997. (I) For historical infonnation concerning the retirement plans, see Appendix B, "Excerpts &om the City's Annual Financial Report" -Note #Ill, Subsection E, "Retirement Plans.") (2) Source: Texas Municipal Retirement System, Comprehefl.five Annual Financial Report for Year Ended December 31, /996, "City of Lubbock. T~XDs". 23
FINANCIAL INFORMATION TABLE 13 -GENERAL FuND REVENUES AND EXPENDITURE HISTORY Fiscal Year Ended September 30, Revenues Ad Valorem Taxes Sales Taxes Franchise Fees Miscellaneous Truces Licenses and Pennits Intergovernmental Charges for Services Fines Miscellaneous Tll}(es Interest 0 perating Transfers (2) Total Revenues and Transfers Expenditures General Government Financial Services Management Services Development Services Public Safety & Service Non-departmental Health & Community Services Strategic Planning Culture/Leisure Services Police Fire Information & Comm. Services Transportation Services Eleclric Utilities Human Resources Operating Transfers Total Expenditures Excess of Revenues and Transfers (in) Over Expenditures (out) Fund Balance at Beginning of Year Fund Balance at End of Year Less; Reserves and Designations <3l Undesignated Fund Balance (I) Unaudited. 199i1> 1996 $ 21,488,971 $ 21,776,739 23,921,664 22,827,516 5,249,119 5,180,874 557,186 171,555 1,058,609 1,125,809 736,851 1,417,496 3,483,455 2,725,584 3,400,072 3,144,431 1,623,787 1,677,201 986,436 1,884,037 15,191,061 13,765,839 $ 77,697,21J $ 75,697,081 $ 4,996,278 s 3,462,253 1,404,008 1,834,463 2,526,119 7,041,640 50,891,276 894,426 4,329,719 734,130 12,310,608 20,487,274 14,038,040 832,554 5,006,032 1,775,329 831,734 8,310,583 9,029,782 $ 75,056,289 $ 75,679,959 $ 2,640,922 $ 17,122 17,672,385 17,655,263 $ 20,313,307 $ 17,672,385 (6,349,033) (4,974,060) $ 13,964,274 $ 12,698,325 195'5 1994 $ 22,024,013 S 20,211,459 20,082,629 19,467,903 5,168,825 S,247,351 I 59,171 631,158 1,184,292 l,03&,772 1,422,117 1,310,604 2,420,122 2,326,521 2,339,288 2,141,811 1,910,355 1,496,574 1,930,103 1,242,134 13,210,213 13,810,921 $ 71,851,128 $ 68,925,208 s 3,180,655 $ 2,731,960 1,780,443 2,071,418 2,320,670 1,989,477 6,716,104 6,662,148 48,339,953 47,253,201 963,205 661,181 5,641,615 5,194,276 $ 68,942,645 S 66,563,661 $ 2,908,483 $ 2,361,547 14,746,780 12,385,233 $ 17,655,263 $ 14,746,780 (701,640) (1,056,628) $ 16,953,623 S 13,690,152 1993 $ 18,780,657 17,731,784 4,498,921 561,774 882,87& 1,280,182 2,160,504 2,421,749 1,008,681 1,403,948 14,044,552 $ 64,775,630 $ 2,664,896 2,065,725 2,037,481 6,397,086 45,611,706 648,242 3,766,698 $ 63,191,834 $ 1,583,796 10,801,437 $ 12,385,233 (1,254,118) $ I 1,131,115 (2) The City's financial policies provide for transfers to the General Fund from the City's enterprise funds. The policies provide that the water, waste water and solld waste funds transfer an amount sufficient to cover the pro rata share of the City's general and administrative expenses, an amount representing a franchise payment and an amount representing a payment in lieu of ad valorem taxes. The Electric System makes transfers for the foregoing purposes, and, in addition, makes a transfer reflecting the System's share of street lighting expense (3) The City's financial policies target a General Fund balance of at kast two months of General Fund expendituKs. Amounts representing fund balances in excess of the target are reserved for future capital expenditures. 24
TABLE 14 -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. In addition, in January, 1995, the voters of the City approved the imposition of an additional sales and use tax of one-eighth of a cent as authorized by VATCS, Tax Code, Chapter 323, as amended. Collection for the additional tax commenced in October, 1995 with the proceeds from the one-eighth cent sales tax designated for the use and benefit of the City to replace property tax revenues lost as a result of the adoption of the tax; the revenues of the tax are not pledged lo 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. Revenue from the I% Local Sales and Use Tax, for the years shown, has been: Fiscal Year Ended Total 9-30 Collected (I) 1993 $ 17,731,784 1994 19,467,903 1995 20,082,629 1996 22,827,516 1997 23,921,664 (l) (I) Excludes bingo tax receipts. (2) Based on population estimates of the City. (3) Unaudited. The sales tax breakdown for the City is as follows: City: (I) City Sales & Use Tax Property Tax Relief County Sales & Use Tax State Sales & Use Tax Total %of Ad Valorem Tax Levy 59.35% 62.13% 61.83% 72.16% 73.34% Equivalent of Ad Valorem Tax Rate $ 0.3799 0.3964 0.3948 0.4228 0.4297 1.000¢ 0.125¢ 0.500¢ 6.250¢ 7.875¢ Per Capita (2) $ 94.33 102.44 105.13 118.24 122.44 ( I) An election to authorize a 0.375¢ local sales and use tax for economic development will be held by the City on January 17, 1998. CAPITAL PROJECTS PROGRAM The City Council adopted a resolution during the 1984-85 budget process establishing permanent capital maintenance funds for capila\ projects. In order for a project 10 be funded as a capital project it must have a cost of $25,000 or more and a life of seven or more years. Many of the projects require more than one year of completion and are accounted for on a life to date basis. For fiscal year ending 9-30-98, the City Council has approved $55,216,421 in expenditures for capital projects. The Capital Projects Funds budget for 1996-1997 also identifies $148,752,688 in future improvements. FINANCIAL POLICIES Basis of Accounting ... The accounting policies of the City conform to generally accepted accounting principles of the Governmental Accounting Standards Board and program standards adopted by the Government Finance Officer's Association of the United States and Canada ("GFOA"). The GFOA has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Lubbock for each of the fiscal years ended September 30, 1984 through September 30, 1995. The City's 1996 report has been submitted to GFOA to determine its eligibility for another certificate. General Fund Balance ... The City's objective is to achieve and maintain a General Fund balance equivalent to two months operating costs of the General Fund Budget. This should be sufficient to provide financing for necessary projects. unanticipated contingencies, and fluctuations in anticipated revenues. Debt Service Fund Balance ... A reasonable debt service fund balance is maintained in order to compensate for unexpected contingencies. 25
Budgetary Procedures ... The City follows these procedures in establishing operating budgets: t) Prior to August I, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October I. The operating budget includes proposed expenditures and the means of financing them. 2) Public hearings are conducted to obtain taxpayer comments. 3) Prior to October I the budget is legally enacted through passage of an ordinance. 4) The City Manager is authorized to transfer budgeted amounts between departments and funds. Expenditures may not legally exceed budgeted appropriations at the fund level. 5) Fonnal budgetary integration is employed as a management control device during the year for the Convention and Tourism, Criminal Investigation, and Capital Projects Funds. Budgets are adopted on an annual basis. Formal budgetary integration is not employed for Debt Service funds because effective budgetary control is alternatively achieved through general obligation bond indenture and other contract provisions. 6) The Budget for the General Fund is adopted on a basis consistent with generally accepted accounting principles ("GAAP"). 7) Appropriations for the General Fund lapse at year end. Unencumbered balances for the Capital Projects Funds continue as authority for subsequent period expenditures. 8) Budgetary comparison is presented for the General Fund in the combined financial statement section of the Comprehensive Annual financial Report. The City has also received the GFOA's award for Distinguished Budget Presentation for the following budget years: October I, 1983-88 and October l, 1990-97. The City will submit the current budget to the GFOA to determine its eligibility for another award. Insurance ... Except for Airport liability insurance, the City is self-insured for liability, workers' compensation, and health benefits coverage. Insurance policies are maintained with large deductibles for fire and extended coverage and boiler coverage. An Insurance Fund has been established in the Internal Service Fund to account for insurance programs and budgeted transfers are made to this fund based upon estimated payments for claim losses. At 9-30-97 the reserves had the following balances: Reserve for self-insurance • health Reserve for self-insurance • risk management (I) Unaudited. INVESTMENTS $ $ l,400,704(IJ 3,692,586(!) The City of Lubbock invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City of Lubbock. Both state law and the City's investment policies are subject to change. 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 Stale of Texas or its agencies and instrumentalities, (3) collateralized mortgage oblig(ltions 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 Stale 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 (I), 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 tenn of270 days or less, if the short-term obligations of the accepting bank or its parent are rated at 26 7
least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency, (10) corrunercial paper that is rated at least A-1 or P-1 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 ofa stable net asset value of$l 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 firm of not less than MA 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 mongage-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 IO years; and (4) collateralized mortgage obligations the interest rate of which is detennined by an index that adjusts opposite to the changes in a market index. INVESTMENT PouaES •.. Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasiz.e 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 Slatement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (S) 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: (I) 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 lo 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. Aoo1T10NAL 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 finns 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 registered principal of finns 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 tenn 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 funher rc.,trict 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 bond proceeds and reserves and other funds held for debt service; and (8) require local government investment pools to confonn to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. 27
TABLE 15 • CURRENT INVESTMENTS ~ of 9-30-97, the City's investable funds were invested in the following categories: Estimated Fair Book Value Markel Value (I) Weighced %ofTotal %ofBook Average Type Par Value Value Book Value Value Value Maturity United States Treasury Obligations $ 73,760,000 $ 73,813,186 49.7S% $ 74,099,278 100.38% 447 Days United States Agency Obligations 60,950,000 60,581,158 40.83% 60,591,634 I00.01¾ 137 Days Bank Certificates of Deposit 283,600 283,600 0.19% 283,600 I00.00% 286Days Logic (local government investment pool) 13,685,543 13,685,543 9.23% l3,685,S43 100.00% I Day $ 148,679,143 $ 148,363,487 100.00% $ 148,660,055 100.20% 279 Days (I) As delennined by Patterson & Associates, the City's investment advisor. As of such date, the market value of such investments was approximately 100.00% of their book value. No funds of the City are invested in mortgage-backed securities. The City holds all investments to maturity which minimizes the risk of market price volatility. During the 199S Texas legislative session, substantial changes were enacted to the Public Funds Investment Act effective September I, 1995. Much of the modification was clarification of past sections, however some of the changes will require specific changes to the investment procedures of most Texas entities. Specific changes to the City's policy and reporting procedure were required, however significant portfolio changes were not necessary. The following list highlights the substantive changes to the Act: I) Specifically addressing the maximum allowable stated maturity of any individual investment and the weighted average maturity of each internal pool in the adopted Investment Policy. 2) Fonnally adopting an "Investment Strategy Statement" that specifically addresses each fund's investment. That Strategy Statement will describe its objectives concerning; a) suitability ofinvesnnent type, b) preservation and safety of principal, c) liquidity, d) marketability of each investment, e) diversification of the portfolio, and f) yield. 3) Creating the requirement for the governing body to annually review the Policy and Strategy. 4) Requiring 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 entity's governing body. 5) Requiring the registered principal of firms seeking to sell securities to the entity to : a) receive and review the 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 6) Requiring an annual internal audit of the management controls on investments and adherence to the entity's Investment Policy; the annual audit can be an internal or an external at the entity's discretion. 7) Requiring specific investment training for the Treasurer, Chief Financial Officer and Investment Officers. 8) Restricting specific mortgage securities as investments, deposit collateral and repurchase agreement securities. 9) Allowing insured and collateralized deposits in savings and loan and credit union institutions domiciled in the State of Texas. JO) Restricting rever.;e repurchase agreements to not more than 90 days and restricting the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement. 11) Allowing money market mutual funds without restriction to investment type. 12) Allowing investing up to 15% of the entity's monthly average fund balance in mutual bond funds that are registered, have an average life less than two years and are AAA rated. 28
13) Requiring local government investment pools that confonn to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. I 4) Requiring a quarterly written report to the entity's governing body that must include: a) detailed position report. b) signatures of all of the Investment Officers, c) beginning period market value and book value, d) additions and changes to market value and book value, e) ending period market value and book value, f) stated maturity dates of each separately invested asset, g) allocation of each investment to a fund or pool, and h) a statement of compliance with the Investment Policy and Strategy. 29
THEAIRPORT The City has owned and operated the Airport since 1929, with scheduled airline service beginning I 1946. Lubbock International Airport is located six miles north of the central business district and has an area of 3,148 acres, of which approximately 1,900 acres is used for fanning and clear zones. Scheduled Airline Service ... Scheduled airline transportation is provided by South.vest Airlines, American Eagle, Continental Airlines and Atlantic Southeast Airlines. Non-stop scheduled service is provided to Dallas-Fort Worth International Airport, Dallas Love Field, Bush Intercontinental Airport (Houston), Houston Hobby, Amarillo, El Paso, Austin and Albuquerque, with one-stop or through service to New York, Washington, Chicago, Frankfurt, London, Paris, Honolulu, and other cities. Lubbock International Airport Terminal ... The terminal building contains approximately 222,000 square feet; the terminal houses airport administrative offices, airline offices and ticket counters, the baggage claim are, car rental offices, a restaurant and intlight meal preparation kitchen, air freight tenants, meeting and press rooms, and 9 jetway equipped gates for airline use. Parking capacity is 1,820. The former terminal building has been converted to government and commercial office space and houses a Federal Aviation Administration ("FAA") Flight Standard District Service Office and Airways Facility Sector Field Office. Runway System ... The runway system consists of: I • 11,500' x 150', north/south, primary runway with high intensity lighting and a FAA-operated instrument landing system and other navigational aids; I. S,000' x 150', cast/west, crass-wind runway with high intensity lighting and a FAA-operated instrument landing system and other navigational aids; I -2,800' x 75', general aviation runway; and a taxiway system connecting the runways with aprons, the terminal and other facilities. General Aviation Facilities . . . An 8,779 square foot building on the east side of the airport houses general aviation services and a U.S. Customs office. General aviation services are also available from two west-side located major fixed base operators who provide hangars, aprons, fuel sales and other services for private aviation. JOO T-Hangars house most of the approximately 200 private aircraft that are based at the airport. CONSTRUCTION IN PROGRESS • . . Current construction includes the reconstruction of the keel section of the North/South runway, adding center line lights and reconfiguration of the public parking area. Air Cargo Complex The City has constructed ramp and connecting taxiways at the Air Cargo Complex to serve air freight airlines; Federal Express and Airborne Express have constructed cargo terminals and office facilities in the Complex. Warehouse, Hangar and Land Rentals ... the airport has five 16,000 square foot warehouses and six other warehouses for storage space rental. Industrial/Commercial ... One sleel company, one metal fabrication company and two air ambulance companies are located at the airport. Certifirated Passenger Airline/Airport Use Agreement The City of Lubbock has executed a "Certificated Airline/Airport Use and Lease Agreement" with each of the certificated airlines services at Lubbock International Airport. These agreements terminate on September 30, 1999. Rentals, landing fees and other provisions are subject to negotiation by both parties prior to renewal. Additionally, certain operational and maintenance cost recovery provisions are subject to renegotiation at three year intervals. Landing fees are $0.65 per 1,000 lbs. gross weight, effective l0-1-97. 30
Rentals and Fees Exclusive Terminal Building Space ... Including licket counter, operations offices, airfreight handling areas and administrative offices· $13.50 per square foot per year. Non-exclusive Terminal Building Space ... Boarding Lounge Area • $7.87 per square foot per year, with 20% of the total monthly charge prorated among all scheduled airlines based upon the ratio of each such airline's number of departures to the total number of departures for the calendar month and 80% of the total prorated among all ~heduled airlines based upon the ration of each such airline's number of enplaned passengers to the total of enplaned passengers for the calendar month. Baggage Claim Area -$13.S0 per square foot per year, with 20% of the total monthly charge divided equally among all scheduled airlines and 80% of the total prorated among all scheduled airlines based upon the ratio of each such airline's number of enplaned passengers to the total of enplaned passengers for the calendar month. Extraordinary Cost and Expenses The agreements provide for timely renegotiation and adjustments to rental, landing fees and other charges in the event extraordinary costs or expenses are incurred by the City, including technical advances or new governmental requirements. Rent Car Companies Rental car agencies currently lease storage, service and office space at the airport a rates of 10 percent of gross car rental revenues. There are four rent car agencies on the airport. Service center acreage is available; four finns have these leases at the rate of $0. 0929 per square foot per year. General Aviation Fixed Base Operators are currently paying ground lease rates of $0.1156 per square foot per year, various rates on hangars and other buildings and a fuel flowage fee equal to $0.04 per gaUon of fuel sold to general aviation or military aircraft. Airport Industrial Area Rates on leases in the Airport Industrial Area are based on a flat rate per building; the land lease is $0.1156 per square foot per year. TABLE 16 -PASSENGER ENPLANEMENTSON SCHEDULED AIRLINE FLIGHTS Delta Airlines.I Atlantic American Calendar Southwest Southeast Eagle American Continental Other Year AirlillC$ Airlines <•> Airlincs11> Airlincs01 Airlines111 Airlines Total 1992 359,140 123.683 5,628 80,234 8,201 S76,886 1993 407,836 65,497 11,890 103,229 12,860 601,312 1994 433,217 53,977 49,326 64,414 10,S61 61 l,49S 1995 433,212 47,419 107,137 16,20S 603,973 1996 416,556 33,ISI 123,298 31,179 10,869 61S,0S3 (I) Della Airlines ceased service July 31, 1993; Atlantic Southeast Airlines commenced service July I, 1993. American Airlines ~ased service in November, 1994, and was replaced by American Eagle. Continental Airlines commenced service June, 1996. 31
TABLE 17-AIRPORTC0NDENSEDSTATEMENTOFOPERATIONS Fiscal Year Ended September 30, J997(l) 1996 1995 REVENUE Operating Revenues $ 4,949,838 $ 4,307,213 $ 4, 148,5(14 Non-Operating Revenues<2l 1,879,231 2,203,360 2,180,720 Gross Revenues $ 6,829,069 $ 6,510,573 $ 6,329,224 EXPENSE Operating Expense()) $ 4,273,601 $ 3,351,803 $ 3,414,114 Net Revenues $ 2,555,468 $ 3,158,770 $ 2,915,110 (I) Unaudited. (2) Non-Operating Revenues include Passenger Facility Charges for fiscal years ended 9-30-1995/97. (3) Operating Expense excludes depreciation and capital expenditures. 32 $ $ $ $ 1994 1993 4,134,455 $ 4,527,898 309,929 133,368 4,444,384 $ 4,661,266 3,263,354 $ 3,778,187 1,181,030 $ 883,079
TAX MATTERS TAX EXEMPTION ..• The delivery of the Certificates is subject to an opinion of Fulbright & Jaworski LL.P., Dallas, Texas, Bond Counsel to the City ("Bond Counsel"), to the effect that interest on th.e Certificates is excludable from gross income, as defined in Section 61 of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), of the owners thereof for federal income tax purposes. pursuant to Section 103 of the Code and exist.ing regulations, published rulings, and court decisions, except with regard to any bond for any period of time during which such bond is held by a "substantial user" of any of the facilities financed with proceeds of the Certificates or by a "related person" within the meaning of Section 147(a) of the Code. The statute, regulations, rulings, and court decisions on which such opinion is based are subject to change. BOND COUNSEL'S OPINlON WILL NOTE THAT INTEREST ON TIIB CERTIFICATES WILL BE A PREFERENCE ITEM FOR PURPOSES OF COMPUTING THE ALTERNATIVE MINIMUM TAXABLE INCOME OF OWNERS OF THE CERTIFICATES WHICH ARE INDIVIDUALS, CORPORATIONS, TRUSTS OR ESTATES. Alternative minimum taxable income is the basis on which is computed the alternative minimum tax. imposed on corporations, individuals, trusts and estates by the Tax Reform Act of 1986. In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the City made in a certificate of even date herewith pertaining to the use, expendilure, and investment of the proceeds of the Certificates and will assume continuing compliance by the City with the provisions of the Ordinance subsequent to the issuance of the Certificates. The Ordinance contains covenants by the City with respect to, among other matters, the use of the proceeds of the Certificates and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Certificates are to be invested, the periodic calculation and payment to the United States Treasury of arbitrage "profits" from the investment of the proceeds, and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants would cause interest on the Certificates to be lncludable in the gross Income of the owners thereof from date of the issuance of the Certificates. Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Certificates. Prospective purchasers of the Certificates should be aware that the ownership of tax-exempt obligations such as the Certificates may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance compwlies, certain foreign corporations doing business in the United States, S corporalions with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a financial asset securitization investment trust, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN CERTIFICATES ... The initial public offering price of certain Certificates (the "Discount Certificates") may be less than the amount payable on such Certificates at maturity. An amount equal to the difference between the initial public offering price of a Discount Certificate (assuming that a substantial amount of the Discount Certificates of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the inilial purchaser of such Discount Certificate. A portion of such original issue discount allocable to the holding period of such Discount Certificate by the initial purchaser will, upon the disposition of such Discount Certificate (including by reason of its payment at maturity), be treated as interest excludable from gross income. rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Certificates described above under "Tax Exemption." Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Certificate, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Certificate and generally will be allocated to an original purchaser in a different amount from the amount of the payment denominated as interest actually received by the original purchaser during the tax year. Such interest will be required to be taken into account in determining the alternative minimum taxable income of an individual, corporation, trust or estate for purposes of calculating the alternative minimum tax imposed by Section 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with "subchapler C" earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for earned income tax. credit, owners of an interest in a financial asset securitization investment trust, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Certificate by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Certificate in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Certificate was held) is includable in gross income. 33
Owners of Discount Certificates should consult with their own tax advisors with respect to the detennination of accrued original issue discount on Discount Certificates for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Certificates. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Certificates may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Certificates (the "Premium Certificates") may be greater than the amount payable on such Certificates at maturity. An amount equal to the difference between the initial public offering price of a Premium Certificate (assuming that a substantial amount of the Premium Certificates of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Certificates. The basis for federal income tax purposes of a Premium Certificate in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount af any gain (or decrease the amount of any loss) to he recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Certificate. The amount of premium which is amonizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Certificates should consult with their own tax advisors with respect to the detennination of amortizable bond premium on Premium Certificates for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Certificates. 34
OTHER INFORMATION RATINGS The presently outstanding tax supported debt of the City is rated "Aa" by Moody's and "AA" by S&P. The City also has one issue outstanding which is rated "Aaa" by Moody's and "AAA" by S&P through insurance by a commercial insurance company. Applications for contract ratings on this issue have been made to Moody's, S&P and Fitch. 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. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Certificates. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE The sale of the Certificates 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 Certificates have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Certificates been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Certificates under the securities laws of any jurisdiction in which the Certificates may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Certificates 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 9 of the Bond Procedures Act provides that the Certificates "shall constitute negotiable instruments, and are investment securities governed by Chapter 8, Texas Uniform Commercial Code, notwithstanding any provisions of law or court decision to the contrary, and are legal and authorized investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, and trustees. and for the sinking fund of cities, towns, villages, school districts, and other political subdivisions or public agencies of the State of Texas". The Certificates are eligible to secure deposits of any public funds of the state, its agencies and political subdivisions, and are legal security for those deposits to the extent of their market value. For political subdivisions in Texas which have adopted investment policies and guidelines in accordance with the Public Funds Investment Act (V.T.C.A., Government Code, Chapter 2256), the Certificates may have to be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency before such obligations are eligible investments for sinking funds and other public funds. No review by the City has been made of the laws in other states to detennine whether the Certificates 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 Certificates, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Certificate and to the effect that the Certificates 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 Certificates 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 individuals, corporations, trusts or estates. 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 Certificates, or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Certificates 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 its capacity as Bond Counsel, such firm has reviewed the information describing the Certificates 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 Certificates is contingent on the sale and delivery of the Certificates. The legal opinion will accompany the Certificates deposited with DTC or will be printed on the Certificates in the event of the discontinuance of the BookpEntry-Only System. 35
AUTHENTICl1Y 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 arc 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 Certificates. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Certificates. 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 infonnation vendors. This infonnation 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 I through 6 and 8A through 17 and in Appendix B. The City will update and provide this infonnation within six (6) months after the end of each fiscal year ending in or after 1998. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") and to any state information depository ("SID") that is designated by the State of Texas and approved by the State of Texas and approved by the staff of 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-l2. 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 lhe accounting principles described in Appendix B or such olher 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, ii must provide updated information by March 31 in each year, unless the City changes its fiscal year. lfthe 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. 0. 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 Certificates, if such event is material to a decision to purchase or sell Certificates: (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 Certificates; (7) modifications to rights of holders of the Certificates; (8) Certificate calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Certificates; and (11) rating changes. Neither the Certificates nor the Ordinance make any provision for debt service reserves, early redemption or liquidity enhancement. In addition, the City will provide timely notice of any failure by the City to provide infonnation, 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 ("MSRB"). AVAILABILITY OF INFORMATION FROM NRMSIRs AND SID ... The City has agreed to provide the foregoing information only to NRMS!Rs and the SID. The information will be available to holders of Certificates 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. 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 Certificates 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 36 -
pursuant to its agreement, although holders of Certificates 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 Certificates 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 Certificates 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 Certificates. The City may also amend or repeal lhe provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the SEC Rule l 5c2-l 2 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 Certificates in the primary offering of the Certificates. 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 fonn, of the reasons for the amendment and of the impact of any change in the type of financial infonnation 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 l5c2-12. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. First Southwest Company has agreed, in its Financial Advisory contract, not to bid for the Certificates, either independently or as a member of a syndicate organized to submit a bid for the Certificates. 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 Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Certificates, 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 Certificates 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 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 Certificates 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 Certificates by the Purchaser. ATTEST: Kaythie Darnell City Secretary 37 Windy Sitton Mayor City of Lubbock, Texas
THIS PAGE INTENTIONALLY LEFT BLANK
APPENDDC.A GENERAL INFORMATION REGARDING TiiE CITY • Amarillo • City of Lubbock Fort Warth• •Calla~ • * Austin San Antonia
-THIS PAGE INTENTIONALLY LEFT BLANK
THE CITY LocATION The City of Lubbock, County Seat of Lubbock County, Texas, is located on the South Plains of West Texas. Lubbock is the economic, educational, cultural and medical oenter of the area. POPULATION Lubbock is the ninth largest City in Texas: 1910 Census l920Census 1930Census 1940Census 1950Ccnsus 1960Census 1970Census 1980Census 1990Census 1994(Estimated)(l) 1995 (Estimated) (I) 1996 (Estimated) (I) 1997 (Estimated) {I) City of Lubbock (Corporate Limits} 1,938 4,051 20,520 31,853 71,390 128,691 149,701 173,979 186,206 190,038 191,020 193,064 195,367 Metropolitan Statistical Area {"MSA") <Lubbock County) 1970 Census 179,295 1980 Census 211,65 I 1990 Census 222,636 1995 (Estimated) (I) 228,394 1996 (Estimated) (I) 230,838 1997 (Estimated) (1) 232,454 (I) Source: City ofLubboclc, Texas AGRICULTURE; BUSINESS AND INDUSTRY Lubbock is the center of a highly mechanized agricultural area with a majority of the crops inigated with water from underground sources. Principal crops are cotton and grain sorghums with livestock a major additional source of agricultural income. In 1996 cotton production in the 25-county area in and around Lubbock was 3.10 million bales; 1995 production was 2.60 million bales; estimated 1997 production is 3.00 million bales.(I) Two major vegetable oil plants located in Lubbock have a combined weekly capacity of over 1,81 t tons of cottonseed and soybean oil. Several major seed companies are headquartered in Lubbock. Over 200 manufacturing plants in Lubbock produce such products as semiconductors, vegetable oils, heavy earth-moving machinery, inigation equipment and pipe, fann equipment, paperboard boxes, foodstuffs, mobile and prefabricated homes, poultry and livestock feeds, boilers and pressure vessels, automatic sprinkler system heads, structural steel fabrication and soft drinks. (I) Source: Plains Cotton Growers, Inc., Lubbock, Texas. LUBBOCK MSA LABOR FORCE Esm.tATES (1) Civilian Labor Force Total Employment Unemployment Percent Unemployment (I) Source: Texas Workforce Commission. (2) Subject to revision. October 199i1) 126,351 122,083 4,268 3.4% 1996 122,183 117,360 4,823 3.9% A - 1 Annual Averages 1995 1994 120,709 ti 7,858 115,826 112,865 4,883 4,993 4.0% 4.2% 1993 1992 116,677 115,754 111,211 109,107 S,466 6,647 4.7% 5.7%
Estimated non-agricultural wage and salaried jobs in various categories as of October, 1997, were: Manufacturing Construction Transportation & Public Utilities Trade Finance, Insurance and Real Estate Services Government Total 7,800 4,200 5,600 33,400 5,500 33,000 25,500 115,000 MAJ<>R EMPLOYERS (300 EMPLOYEES OR MORE) Company Texas Tech University Lubbock Independent School District Methodist Hospital 1W Health Sciences Center SI. Mary of the Plains Hospital University Medical Center City of Lubbock United Supemwkets Texas Instruments, Jncorporaled Lubbock Staie School Wal-Mart Texas Dept. of Criminal Justice Psychiatric Hospital Fum Cafeterias U.S. Postal Service Southwestern Bell Telephone Company McDonald's Industrial Molding Corporation Lubbock Regional MHMR Center Caprock Home Health Services Aramark Dillard's Department Stores American State Bank Pay & Save Corporation MarTiott School Services Lubbock A valanche-Joumal McLane High Plains Type of Business State Univcrslty Public Schools Hospital Medical and Allied Health School Hospital Hospital City Government Supermarkets Semiconductors School for Mentally Retarded Discount Retailer Psychiatric Hospital CafctcJias Post Office Telephone Utility Restaurants Manufacturing/Plastic Products Social Services Home Health Care Service Food Broker Department Stores Bank Lowe's Retail Groceries Hotel/Housekeeping and Hotel Newspaper Wholesale Food Distributor (I) Source: Business Development Support Service, City of Lubbock, Texas. (2) Full and part time. Estimated Employees September, 199,<1> 7,629 (1) 3,300 2,900 2,295 2,180 2,145 1,910 1.260 1,000 925 893 850 655 590 460 430 425 400 42S 295 390 380 350 350 342 335 (1) (3) See "Texas Department of Criminal Justice ("TDCJ") Prison Psychiatric Hospital" following for mori.: detailed information. EDUCATION· TEXAS TECH UNIVERSITY Established in Lubbock in 1923, Texas Tech University is the fifth largest State-owned University in Texas and had a Fall, 1997, enrollment of 25,022. Accredited by the Southern Association of Colleges and Schools, the University is a co-educational, State-supported institution offering a bachelor's degree in 158 major fields, the master's degree in 107 major fields, the doctorate degree in 64 major fields, and a professional degree in 2 major fields (law and medicine). The University proper is situated on 451 acres of the 1,829 acre campus, and has over 160 pennanent buildings with addition~ construction in progress. Fall, 1997, total employment was 7,629. Health Sciences Center faculty membership for 1996 is 547 full-time and 122 part-time. Including the Health Sciences Center, the University's operating budget for 1996/97 is $554,041,055; book value of physical plant assets, including the Health Sciences Center, is in excess oUl,234,417,417 million. A -2
The medical school had an enrollment of 489 for Fall, 1997, not including residents; there were 39 graduate students. The School of Nursing had a Fall. 1997, enrollment of 365 including the Pennian Basin Program, located in Midland/Odessa; there were 46 graduate midents. The Allied Health School had a Fall, 1997, enrollment of 255. Soun:e: Texas Tech Universily. OlllER EDUCATION INFORMATION The Lubbock Independent School District, with an area of 87.5 squan: miles, includes over 90"/4 of the City of Lubbock. There are approximately 3,300 total employees. The District operates four senior high schools, ten junior high schools, 40 elementary schools and other educational programs. Scholastic Membership History (1) School Year 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 Average Daily Attendance 28,357 28,111 28,089 27,799 27,661 27,461 (2) (I) Source: Superintendent's Office, Lubbock Independent School District (2) Estimated. Lubbock Christian University, a privately owned, co-educational senior college located in Lubbock, had an enrollment of 1,204 for the Fall Semester, 1997. South Plains College, Levelland, Texas (South Plains Junior College District) operates a major off-campus learning center in a downtown Lubbock, 7-story building owned by the College. College offerings cover technical/vocational subjects; Fall Semester, 1997, emollment was 1,4 IO. The State of Texas School for the Mentally Retarded, located on a 226-acre site in Lubbock, consists of 40 buildings with bed-capacity for 440 students; 394 midents were in residence. The School's operating budget for 1996/97 is in excess of $18.2 million; there are approximately 882 professional and other employees. TRANSPORTATION Scheduled airline transportation at Lubbock International Airport is furnished by Southwest Airlines, Continental Airlines, Atlantic Southeast Airlines and American Eagle; non-slop service is provided to Dallas-Fort Worth International Airport, Dallas Love Field, Bush Intercontinental Airport (Houston), Houston Hobby, El Paso, Auslin, Amarillo and Albuquerque. Passenger boardings for 1996 totaled 615,053 and for fiscal year ended September 30, 1997, 613,522. Extensive private aviation services are located at the airport. Rail transportation is furnished by the Burlington Northern Santa Fe Railroad with through service to Dallas, Houston, Kansas City, Chicago, Los Angeles and San Francisco. Short-haul rail service is also furnished by the Seagraves, Whiteface and Lubbock Railroad. Texas, New Mexico and Oklahoma Bus Lines, a subsidiruy of Greyhound Corporation, provides bus service. Several motor freight common carriers provide service. Lubbock has a well-developed highway network including Interstate 27 (Lubbock-Amarillo), 4 U.S. Highways, I Stale Highway, a controlled-access outer loop and a county-wide system of paved farm-to-market roads. GOVERNMENT AND MILITARY (1) On March 1, 1995, the Secretary of the Air Force announced that Reese Air Force Base ("Reese"), a pilot training base located adjacent to the City, was included in the-list of bases recommended for closure submitted to the Base Closure and Realignment Commission ("BRAC"). BRAC reevaluated Reese along with all other undergraduate pilot training bases, however, Reese was included in the final list of bases recommended for closure. Final recommendations were submitted to the President in July, 1995. The President and Congress approved the BRAC recommendations and Reese has closed as of October I, 1997. A-3
As a result, the City is developing a re-use plan for the facilities. Prior to closure Reese represented approximately 2.6% of the local work force. While closure of the base will not have a positive impact on the Lubbock economy, the current growth in other economic sectors should minimize or neutralize closure of the base. In addition, there could be a positive economic impact from the re-use of the base. State o(Texas ... More than 25 State of Texas boards, departments, agencies and commissions have offices in Lubbock; several of these offices have multiple units or offices. Federal Government •.. Several Federal departments and various other administrations and agencies have offices in Lubbock; a Federal District Court is located in the City. (I) Source: City of Lubbock, Texas. TEXAS DEPARTMENT OF CRIMINAL JUSTICE ("TDCJ") PRISON PsYCHlATRIC HOSPITAL TDCJ operates a SSO-bed Prison Psychiatric Hospital and a 48-bed regional prison hospital on a 1,303 acre site in southeast Lubbock. An adjacent 400-bcd capacity "trustee" facility houses prison trustees some of whom work at the hospital. Employment for all facilities is approximately 850 with an annual estimated payroll of$17 million and an estimated remaining annual operating budget of$27 million. HOSPITALS AND MEDICAL CARE There arc five hospitals in the City with over 1,900 beds. Methodist Hospital is the largest and also operates an accredited nursing school. Lubbock County Hospital District, with boundaries contiguous with Lubbock County, owns the Vniversity Medical Center which it operates as a teaching hospital for the Texas Tech Health Sciences Center. There are numerous clinics and over 600 practicing physicians and surgeons (M.D.s) plus the TeKas Tech University Medical School Staff and over 100 dentists. A radiology center for the treatment of malignant diseases is located in the City. REc:REATION AND ENTERTAINMENT Lubbock's Mackenzie Regional Park and over 70 City parks and playgrounds provide recreation centers, sheller buildings, a garden and art center, swimming pools, a golf course, tennis and volley ball courts, baseball diamonds and plcnic areas, including the Yellowhouse Canyon Lakes system of four lakes and 500 acres of adjacent parlcland extending from northwest to southeast Lubbock along the Yellow house Canyon. There are several privately-owned public swimming pools and golf courses, and country clubs. The City of Lubbock has developed a 36 square block area of approximately 100 acres adjacent to downtown Lubbock under the Lubbock Memorial Civic Center program. Approximately SO acres contain the 300,000 square fool Lubbock Memorial Civic Center, the main City library building and State Department of Public Safety offices; a SO-acre peripheral area has been redeveloped privately with office buildings, hotels and motels, a hospital, and other facilities. Available to residents are Texas Tech University programs and events, Texas Tech University Museum, Planetarium and Ranching Heritage Center exhibits and programs, Lubbock Memorial Civic Center and its events, Lubbock Symphony Orchestra programs, Lubbock Theatre Center, Lubbock Civic Ballet, Municipal Auditorium and coliseum programs and events, the library and its branches, the annual Panhandle-South Plains Fair, college and high school football, basketball, and other sporting events as well as modem movie theaters. Lubbock is now the home of a professional minor-league baseball team, the Lubbock Crickets. a member of the Texas-Louisiana Baseball League. In the 1997 season the Crickets played 48 regular season games and three playoff games on their homefield, Dan Law Field at Texas Tech University. CHURCIIES Lubbock has approximately 300 churches representing more than 25 denominations. A -4
UTJLllY SERVICES Water and Sewer -City of Lubbock. Gas -Energas Company. Electric -City of Lubbock (Lubbock Power & Light) and Southwestern Public Service Company; and, in a small area, South Plains Electric Co-operative. ECONOMIC INDICES (1) Year 7991s 1992 1993 1994 1995 1996 Building Permits 131,333,756 142,921,124 174,346,368 162,427,737 177,744,359 163,076,593 Utility Connections Water 62,267 62,898 (3) 63,006 64,921 65,700 66,859 Gas 60,803 60,208 61.448 62,670 62,558 61,807 Electric (LP&L Only)(2) 46,245 47,194 48,526 49,391 50,448 51,305(4) (I) All data as of 12-31, except where noted; Source: City of Lubbock. (2) Electric connections are those of City of Lubbock owned Lubbock Power and Light ("LP&L'1 and do not include lhose of Southwestern Public Service Company or South Plains Electric Cooperative. LP&L provides service to approximately 60"/4 of the electric customers in the City. (3) As of9-30-92. ( 4) As of 9-30-96. BUILDING PERMITS BY CLASSIFICATION (1) Residential Pennils Commercial, Single Family Multi-Family Total Residential Public Total Calendar No. No. Dwelling No. Dwelling and Other Building Year Units Value Units \'1l Value Units a> Value Pennits Pennits 1991 -w-$ 38,574,190 -0-$ -0-424 $ 38,574,190 $ 92,759,566 $ 131,333,756 1992 603 SS.530,190 44 (3) 1,743,000 647 60,273,190 82,647,934 142,921,124 1993 673 72,894,295 58 2,313,197 731 75,207,492 99,138,876 174,346,368 1994 686 73,318,480 260 6,271,150 946 79,589,630 82,838,107 162,427,737 1995 560 58,923,555 39 10,404,000 589 69,327,5.55 108,416,804 177,744,359 1996 540 55,931,633 131 30,75.5,680 671 86,687,313 76,389,280 163,076,593 (I) Source: City of Lubbock, Texas. (2) Data shown under "No. Dwelling Units" is for each individual dwelling unit, and is not for separate buildings; includes duplex, triplex, quadruplex and apartment permits. (3) Includes one retirement center with 40 dwelling units. A-5
THIS PAGE INTENTIONALLY LEFr BLANK
APPENDIXB EXCERPTS FROM THE CITY OF LUBBOCK, TEXAS ANNUAL FlNANCIAL REPORT For the Year Ended September 30, 1996 The infonnation contained in this Appendix consists of excerpts from the City of Lubbock, Texas Annual Financial Report for the Year Ended September 30, 1996, 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 INTENTIONALLY LEFT BLANK
FINANCIAL SECTION CITY OF LUBBOCK, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEl\iIBER 30, 1996 TABLE OF CONTENTS Audicor's Opinion ............................................................................................................................... 3 General Purpose Financial Scacemcnts: Combined Balance Sheet • Primary Government Fund Types, Account Groups and Discretely Presented Component Units ........................................................................................................ 6 Combined Sucement of Revenue, Expenditures and Changes in Fund Balances • Primary GQvcrnment Fund Types, Expend:ible Trust funds and Discretely Presented Component Units .................................... 18 Combined St.itemenc of Revenues, Expenditures and Changes in Fund Balances-Budget (GAAP Basis) and Actual• General Fund ............................................................................................................ 21 Combined Statement of Revenues, Expenses and Changes in Equity•· All Proprietary Fund Types and Discretely Presented Component Unics ................................................ 22 Combined Statement of Cash Flows -All Proprietary Fund Types and Discretely Presented Component Units ................................................................................... 24 Notes co Financial Statements ......................................................................................................... 26
THIS PAGE INTI:NTIONALLY LEFT BLANK
Robinson Burdette Martin &Cowan, L. L. P. certified public accountants INDEPENDENT AUDITOR'S REPORT Mayor Pro Tempore Alex Cooke Members of City Council City of Lubbock, Texas We have audited the accompanying general-purpose financial statements of the City of Lubbock, Texas, as of and for the year then ended September 30, 1996, as list'ed in the Table of Conte_nts. These general-purpose financial statements are the responsibility of the management of the City of Lubbock, Texas. 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 and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general-purpose financial statements are free 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 general-purpose 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 Lubbock, Texas, as of September 30, 1996, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 3, 1997, on our consideration of the City of Lubbock, Texas internal control structure and a report dated January 3, 1997, on its compliance with laws and regulations. 3
-----Our audit was made for the purpose of forming an opinion on the general-purpose financial statements taken as a whole. The combining and individual fund and account groi.ip financial . . statements and schedules 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 Lubbock, Texas. Such information has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general-purpose financial statements taken as a whole. The information listed as Statistical Section and Supplementary Information in the Table of Contents 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. January 3, 1997 Lubbock, Texas 4 J 6u rel e' r-f e /II,,,> r ;, .,, 1...1.../1.
General Purpose Financial Statements
CITY OF LUBBOCK, TEXAS . ,.,.. .. COMBINED BALANCE SHEET -PRIMARY GOVERNMENT FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS September 30, 1996 With Comparative Totals for September 30, 1995 Governmental Fund Types Special Debt Capital General Revenue Service Projects As.s.el~ Pooled cash and cash equivalents $ 11,307,081 $ 2,423,336 $ 1,623,358 $ 45,898,265 Receivables (net, where applicable, of allowance for uncolleclibles ): Taxes. including interest, penalities, and liens 4,304,391 48,477 272,635 Accounts, notes, and mortgages 344,371 Interest 713,493 15,180 18,994 Due from other funds 4,007,000 Due from other governments 135,699 Due from other agencies 841,459 677,147 Prepaid items 72,160 Advances to other funds 622.272 Inventory, at average cost Restricted assets: Pooled cash and cash equivalents Accounts receivable Interest receivable Due from other agencies Deferred charges Fixed assets (net of accumulated depreciation) Other assets (net of accumulated amortization) Amount available in deb! service funds Amount to be provided for retirement of general long•term debt Total assets $ 22,3471926 $ 3,164 140 $ 1,914,987 $ 45,898,265 6
LUBBOCK TEXAS 20
Component Units Governmental T~es Markeling, Entertainment, Travel, Tourism and Sports. Inc. $ s 1,004,557 27,949 1,032,506 1,096,237 21,501 1.117,73B (85,232} Market Lubbock, Inc. $ 6,667,860 70,227 6,738,087 2.609.279 2,609,279 4.1.28.808 4,128,808 Totals Component Units 1996 1,004,557 . 6,667,860 98,176 7,770,593 3,705,516 21,501 3,727,017 4,043,576 4,043,576 369,237 s (85,232) 369,237 284,005 S 4 128,608 $ 4,412,813 See accompanying notes to financial statements 19 $ Totals Reporting Entity (Memorandum Onlil 1996 62.454,295 1,125,809 8,828,779 3,216,995 3,144,431 6,802,508 6,282,758 91,855,575 22,165.402 1,834,463 2,526,119 7,041,640 50,891,276 1,129,146 12,968,255 4,961,453 3,602,513 18,703 107,138,970 (15,283,395) 16,505,000 39,751,004 (28,768,086) 27,467,918 12,204,523 60,761,071 $ 1995 60,234,506 1,184,292 10,812,251 2,659,321 2,339,288 8B,085 6,365,613 83,683,356 13,450,704 1,780,443 2,320,670 6,716,104 48,339,953 963,205 12,955,307 4,331,964 2,820,762 72,169 93,751.281 (10,067,925) 6,690,000 31,247,295 (21,825.485) 16,111,810 6,043,885 54,717,186 S 72 965,594 $ 60,761 071
CITY OF LUBBOCK, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -PRIMARY GOVERNMENT FUND TYPES, EXPENDABLE TRUST FUNDS AND DISCRETELY PRESENTED COMPONENT UNITS For Year Ended September 30, 1996 With Comparative Totals for Year Ended September 30, 1995 Revenues: Taxes and special assessments $ Licenses and permits I nterg ove rnment al Charges for services Fines and forfeits Contributions Miscellaneous Total revenues Expenditures: Current: General government Financial services Management services Development seivices Public safety and seivices Non-departmental Capital outlay Debt service: Principal retirement Interest and fiscal charges Collections Total expenditures Excess (deficiency) of revenues over {under) expenditures Other financing sources (uses): Bond proceeds Operating transfers in Operating transfers out Total other financing sources (uses) E)(cess (deficiency) of revenues and other financing sources over (under} e)(penditures and other uses Fund balances at beginning of year Fund balances at end of year General 49,956,684 $ 1,125,809 1,417,496 2,725,584 3,144,431 3,561,238 61,931,242 3,462,253 1,834,463 2,526,119 7,041,640 50,891,276 894,426 66,650,177 {4,718,935) 13,765,839 (9,029,782) 4,736,057 17,122 17,655,263 $ 17 672385 $ Governmenta! Fund Types Special Revenue 3,896,826 $ 279,311 4,176,137 8,236,111 594,060 8,830,171 (4,654,034) 2,583,929 {1,874,701} 709,228 (3,944,806) 5,716,441 1 771 635 $ 18 Debi Service 8,600,785 $ 103,859 8,704,644 4,961,453 3,530,502 18,703 8,510,658 193,986 12,447,670 (12,722,903) (275,233) (81,247) 1,757,429 Capital Projects 491,411 134,648 1,926,731 2,552,7~0 234,720 12,184,616 72,011 12,491,347 {9,938,557) 16,505,000 10,386,25-4 (5, 140,689) 21,750,565 11,812,008 32,218,739 s 1676,182 $ 44030747 $ Fiduciary Fund Type Expendable Trust 6,406,726 313,443 6,720,169 6,761,522 168,078 6,929,600 (209,431) 567,312 {11} 567,301 357,870 3,043,962 $ Totals Primary Government (Memorandum Only) 1996 62,454.295 1,125,809 7,824,222 3,216,995 3,144,431 134,648 6,184,582 84,084,982 18,459,886 1,834,463 2,526,119 7,041,640 50,891,276 1,129,146 12,946,754 4,961,453 3,602,513 18,703 103,411,953 (19,326,971) 16,505,000 39,751,004 (28,768,086) 27,487,918 8,160,947 60,391.834 3.401.832 $ 68 552,781
Comeonent Units Account Groups General Fixed Assets Totals Totals Marketing, Component Reporting Entity Entertainment, Travel, Units (Memorandum Only) Tourism & Sports, Inc. 1996 19g6 1995 $ $ 4,929,624 $ 131,186,114 $ 127,959,729 182,023 182,023 215,116,856 204,508,845 225,221 34,947,648 36,391,139 12,364,621 9,023,613 5,863,159 4,602,621 9,801,302 8,912,700 1,525,537 1,378,993 2,899,727 8,583,798 1,626,058 1,196,952 4,804,354 3,309,518 117,759 178,577 145,704,303 118,373,727 3,859 76,019 79,368 622,272 622,272 1,676,182 1,757,429 44,030,747 33,698.474 500,000 1,809,295 3,787,539 3,100,936 280,146 4,707,621 1,036,153 4,128,808 17,565,214 18,657,144 4,816,611 292,502,303 252,651,891 182,023 9,928,258 638,805,273 585,120,465 $ 182,023 $ 11,774977 $ 951,199,648 $ 898,923,081 See accompanying notes to financial statements 17
CITY OF LUBBOCK, TEXAS COMBINED BALANCE SHEET -PRIMARY GOVERNMENT FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS September 30, 1996 With Comparative Totals for September 30, 1995 Fund E_q~nd other Credits Contributed capital Investment in general fixed assets Retained earnings: Reserved for capital projects Reserved for facilities/system improvements Reserved for system improvements Reserved for rate slabilizalion Reserved for economic development Reserved per bond indentures Reserved for self insurance -health Reserved for self insurance -risk management Reserved for leasing Unreserved Fund balances: Reserved for prepaid items Reserved for advances to other funds Reserved for debl service Reserved for capital projects Reserved for fine arts center Reserved for industrial development Reserved for Federal housing programs Unreserved: Designated for subsequent year's expenditures Undesignated Total retained earnings/fund balances T olal fund equity and other credits Total liabilities and fund equity and other credits Governmental Types Marketing, Entertainment, Travel, Tourism & Sports, Inc. $ -$ 3,859 280,146 284,005 284,005 $ 574 619 $ 16 Component Units Market Lubbock Inc. -$ 4,128,808 4,128,808 4,128,808 4,229,915 $ Proprietary Types Civic Lubbock, Cilibus Inc. 4,929,624 $ 225,221 178,577 403,798 4,929,624 403,798 5,565,620 $ 1,222,800
Proprietary Fund Types Internal Enterprise Service $ 121,933,400 $ 34,120,103 11,628,767 5,863,159 9,801,302 1,525,537 2,899,727 148,209,455 214,048,050 335,981,450 4,323,090 $ 602,324 735,854 1,626,058 4,804,354 (2,683,729) 5,084,861 9.407,951 Fiduciary Fund Type Trust and Agency -$ 3,787,539 (385,707) 3,401,832 3,401,832 Account Groups General General Long-term Fixed Assets Debt • $ 214,934,833 214,934,833 -$ Totals Primary Government (Memorandum Onl1 199 126,256,490 214,934,833 34,722,427 12,364,621 5,863,159 9,801,302 1,525,537 2,899,727 1,626,058 4,804,354 145,525,726 72,160 622,272 1,676,182 44,030,747 500,000 3,787,539 4,427.475 13,436.406 287,685,692 628,877,015 $ 543,150,385 $ 24,050,861 $ 12,522,718 $ 214,934,833 $ 71,440,556 $ 939,424,671 (continued) See accompanying notes to financial statements 15
CITY OF LUBBOCK, TEXAS COMBINED BALANCE SHEET -PRIMARY GOVERNMENT FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS September 30, 1996 With Comparative Totals for September 30, 1995 Governmental Fund Types Special Debt Capital General Revenue Service Projects Fund f;,guity and Qther Cr~dit~ Contributed capital $ -$ . $ . $ Investment in general fixed assets Retained earnings: Reserved for capital projects Reserved for facilities/system improvements Reserved for system improvements Reserved for rate stabilization Reserved for economic development Reserved per bond indentures Reserved for self insurance -health Reserved for se!f insurance -risk management Reserved for leasing Unreserved Fund balances: Reserved for prepaid items 72,160 Reserved for advances to other funds 622,272 Reserved for debt service 1,676,182 Reserved for capital projects 44,030,747 Reserved for fine arts center 500,000 Reserved for industrial development Reserved for Federal housing programs Unreserved: Designated for subsequent year's expenditures 4,279,628 147,847 Undesignated 12,698,325 1,123,788 Total retained earnings/fund balances 17,672,385 1,771,635 1,676,182 44,030,747 Total fund equity and other credits 17,672,385 1,771,635 1,676,182 44,030,747 Total liabilities and fund equity and other credits $ 22,3471926 $ 3,1641140 $ 119141987 $ 4518981265 14
Component Units Account Groups General Fixed Assets Totals Totals Marketing, Component Reporting Entity Entertainment, Travel, Units (Memorandum Only) Tourism & Sports, Inc. HJ96 199S 1995 $ $ 1,448,702 $ 9,700,283 $ 10,926,707 2,478,399 2,487,326 3,001 6,717,004 3,849,000 152,198 212,963 26,483 1,020,279 1,193,909 157,753 2,982,432 2,903,194 8,499,052 10,954,883 1,347,597 2,774,578 641,687 661,692 3,461 1,797,048 2,400,593 3,036,537 3,553,733 401,759 373,544 7,064,889 6,725,503 15,065 629,261 842.864 3,929,355 4,148,284 70,000 70,000 70,000 2,978,107 2,978,107 2,378,322 3,163,804 21,592,301 22,355,448 143,985,061 137,918,98~ 72,285,490 75,313,745 11,078,072 11,205,960 7,565,016 6,974,271 $ $ 1,846,719 $ 312,394,375 $ 313,802,616 (continued) See accompanying notes to financial statements 13
CITY OF LUBBOCK, TEXAS COMBINED BALANCE SHEET -PRIMARY GOVERNMENT FUND TYPES, ACCOUNT GROUPS ANO OISCRETEL Y PRESENTED COMPONENT UNITS September 30, 1996 With Comparative Totals for September 30, 1995 Lla.billlie.s Accounts and vouchers payable Contracts payable Due to other funds Due to other governments Accrued general obligation interest Other accrued liabilities Current portion of general obligation bonds and contruction obligation payable Payable from restricted assets: Accounts payable Accrued interest Other accrued liabilities Accrued insurance claims Revenue bonds payable (current portion) Customer deposits Deferred compensation Deferred revenue Advances from other funds Advances from other agencies Accrued insurance claims Notes and leases payable Construction obligation payable General obligation bonds (net of current portion) Revenue bonds payable {net of current portion) Accrued vacation and sick leave Anticipaled landfill closure and postclosure Total liabilities Governmental Types Marketing, Entertainment, Travel, Tourism & Sports, Inc. $ 283,213 $ 3,001 4,400 $ 290,614 $ 12 Component Units Market Lubbock Inc. 7,407 $ 86,296 7,404 101,107 $ Proprietary Types Civic Lubbock, Citibus Inc. 420,047 $ 738,035 65,902 145,949 15,065 70,000 635,996 $ __ 8_1_9.c..,0_0_2
Totals Proprietary Fiduciary Primary Fund Types Fund Type Account Groups Government General (Memorandum Internal Trust and General Long-term Only) Enterprise Service Agency Fixed Assets Debt 1§9S $ 3,548,239 $ 882,616 $ 655,951 $ -$ -$ 8,251,581 839,573 2,478,399 2,010,000 2,707,003 1,354,000 6,714,003 60,765 1,020,279 1,020,279 592,698 133,128 46,046 2,824,679. 8,499,052 8,499,052 899,385 448,212 1,347,597 641,687 641,687 3,461 3,461 1,797,048 1,797,048 3,036,537 3,036,537 401,759 401,759 7,064,889 7,064,889 614,196 981,071 2,948,284 3,929,355 2,978,107 2,978,107 48,038 2,330,284 2,378,322 21,592,301 21,592,301 80,853,062 63,131,999 143,985,061 72,285,490 72,285,490 2,354,748 414,767 8,308,557 11,078,072 7,565,016 7,565,016 $ 207,168,935 $ 14,642,910 $ 9,120,886 $ -$ 71,440,556 $ 310,547,656 (continued) See accompanying ·notes to nnench!I su1tements 11
CITY OF LUBBOCK, TEXAS COMBINED BALANCE SHEET -PRIMARY GOVERNMENT FUND TYPES, ACCOUNT GROUPS ANO 01S CRETEL Y PRESENTED COMPONENT UNITS September 30, 1996 With Comparative Totals for September 30, 1995 Governmental Fund Types Special Debt Capital General Revenue Service Projects Liab.ilill.~ Accounls and vouchers payable $ 2,238,903 $ 697,180 $ - $ 228,692 Contracts payable 1,638,826 Due to other funds 643,000 Due to other govern merits 26,483 34,282 Accrued general obligation interest Other accrued liabilities 2,034,764 18,043 Current portion of general obligation bonds and contruction obligation payable Payable from restricted assets: Accounts payable Accrued interest Other accrued liabilities Accrued insurance claims Revenue bonds payable (current portion) Customer deposits Deferred compensation Deferred revenue 375,391 238,805 Advances from other funds Advances from other agencies Accrued insurance claims Notes and leases payable Construction obligation payable General obligation bonds (net of current portion) Revenue bonds payable (net of current portion) Accrued vacation and sick leave Anticipated landfill closure and postclosure Total liabilities $ 4,675,541 $ 1,392,505 $ 238,805 $ 1,867,518 10
Account Groups General General Long-term Fixed Assets Debt 6 $ -$ )7 73 126 406 214,934,833 1,676,182 69,764,374 ,718 $ 214,9341833 $ 71,440,556 (continued) 19 notes to financial statements 7 $ Totals Primary Government (Memorandum Only) 1996 88,884,466 4,625,503 11,892,599 1,174,592 6,714,003 941,818 1,536,619 152,455 3,929,355 1,884,943 80,872,478 162,076 208,781 19,207 2,210,261 640,708,675 22,066,284 1,676,182 69,764,374 939,424,671 ued) Totals Reporting Entity (Memorandum Only) 1996 1995 $ 93,877,472 $ 86,468,157 4,654,716 4,868,353 12,348,780 12,613,835 1,175,501 1,181,697 6,717,004 3,849,000 1,603,710 1,554,522 1,536,619 618,923 171,276 190,178 3,929,355 4,148,284 2,129,954 2,072,759 81,097,699 82,477,808 162,076 419,444 208,781 182,005 19,207 2,210,261 2,210,261 645,850,397 613,688,617 22,066,284 22,453,412 1,676,182 1,757,429 69,764,374 58,168,397 $ 951,199,648 $ 898,923,081 to financial statements 9
CITY OF LUBBOCK, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES --BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND Year Ended September 30, 1996 General Fund Variance-favorable Budge! Actual (unfavorable) Revenues: Taxes $ 49,303,875 $ 49,956,684 $ 652,809 Licenses and permits 1,056,160 1,125,809 69,649 Intergovernmental 1,377,337 1,417,496 40,159 Charges for services 2,536,454 2,725,584 189,130 Fines and forfeits 2,745,000 3,144,431 399,431 Miscellaneous 3,492,064 3,561,238 69,174 Total revenues 60,510,890 61,931,242 1,420,352 Expenditures: Current: General government 3,636,268 3,462,253 176,015 Financial services 1,854,484 1,834,463 20,021 Management services 2,628,242 2,526,119 102,123 Development services 7,648,168 7,041,640 606,528 Public safely and services 51,540,940 50,891,276 649,664 Non-departmental 794,800 894,426 (99,626) Total expenditures 68,104,902 66,650,177 1,454,725 Deficiency of revenues under expenditures (7,594,012) (4,718,935) 2,875,077 Other financing sources (uses): Operating transfers in 13,701,054 13,765,839 64,785 Operating transfers out (8,904,643) (9,029,782) (125,139) Total other financing sources 4,796,411 4,736,057 (60,354) Excess (deficiency) of revenues and other financing sources over (under) expenditures (2,797,601) 17,122 2,814,723 Fund balance al beginning of year 17,655,263 17,655,263 Fund balance at end of year $ 14,857,662 $ 17,672,385 $ 2,814,723 See accompanying notes to financial statements 21
CITY OF LUBBOCK, TEXAS COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN EQUITY ALL PROPRIETARY FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNITS Year Ended September 30, 1996 With Comparative Totals for Year Ended September JO, 1995 Operaling revenues: Charges for services New taps and reconnects Effluent water sales Commodity sales Landing fees Parking Green fees and memberships Pro shop sales Rentals Concessions Administrative charges Total operating revenues Operating expenses: Personal services Subsidization of insurance premiums Insurance Supplies Materials Maintenance Uncollectible accounts Purchase of fuel and power Collection expense Other services and charges Depreciation Total operating expenses Operating income Nonoperating revenues (expenses): Interest Passenger facility charge Disposition of properties Miscellaneous Interest and fiscal charges Cash grants and reimbursements Total nonoperating revenues (expenses) Income (loss) before operating transfers Transfers: Operating transfers In Operating transfers oul Total transfers in (out) Net income Depreciation on fixed assets acquired by contributions Retained earnings al beginning of year as previously reported Adjustment (See Note VI.) Retained earnings at beginning of year as restated Retained earnings at end of year Contributions at beginning of year as previously reported Adjustment Conlr1butions al beginning of year as restated Capflal contributions Depreciation on capital contributions Contributions at end of year Total equity al end of year s $ 22 Proprietary Fund Types Internal Totals Primary Government (Memorandum Only} Enterprise 117,573,488 S 121,688 490,646 468.403 728,089 1,433,259 1,335,166 810,699 122,961,438 16,721,694 2,641,185 5,165,217 720,761 31,312,384 1,770,879 16,874,065 12,606,232 87.812,417 35,149,021 5,272,422 1,793,408 416,007 2,174,832 (10,232,865) (576,196) 34,572,825 12,785,904 (24,254,541) (11,468,637) 23,104,188 664,001 189,398,224 881,637 190,279,861 214,048,050 119,451,563 119,451,563 3,145,838 (664,001) 121.933.400 335.981 450 $ Service 25,218,165 $ 67,492 25,285.657 4,942,064 9,618,415 186,311 5,899,740 742,599 1,534,300 491,731 23,415,160 1,870,497 413,166 (22,808) 285,198 (135,682) 2 410,371 486,039 (320) 485,719 2,896,090 2,188,771 2,188.771 5,084,861 3,784,846 3,784,846 538,244 1996 142,791,653 121,688 490,646 468,403 728,089 1,433,259 1,335,166 810,699 67 492 148,247,095 21,663,758 9,618.415 2,827,496 5,899,740 5,907,816 720,761 31,312,384 1,770,879 18,408,365 13,097,963 111,227,577 37,019,518 5,685,588 1,793,408 393,199 2,460,030 (10,368,547) (36,322) 36,983,196 13,271,943 (24,254,861) (10,982,918) 26,000,278 664.001 191,586,995 881,637 192,468,632 219,132,911 123,236,409 123,236,409 3,684,082 (664,001) 4,323,090 126,256.490 9,407 951 S ===3=45!,!:,3"',;8~9=,4;:0::::::1
Comeonent Units Totals Totals Component Reporting Entity Proerieta!l'. TlE!eS Units {Memorandum Only:} Civic Lubbock, lnc. Citibus 1996 1996 1995 s 1,262.766 s 1,237,838 $ 2,500,604 s 145,292,257 $ 133,808,335 121,688 115,510 490,646 463,080 468,403 439,629 728,089 636,602 1,433,259 1,382,649 16,140 3,200 1,335,166 1,314,406 810,699 819,608 67,492 69,105 1,262,766 1,237,838 2,500,604 150,747,699 139,068,264 887,576 1,935,606 2,823,182 24,486,940 23,279,026 737,312 281,797 253,359 535,156 10,153,571 11,028,391 2,827,496 2,750,996 5,899,740 5,646,435 1,020,782 1,020,782 6,928,598 6,199,678 720,761 830,827 31,312,384 27,349,436 1,770,879 1,567,607 737,962 737,962 19,146,327 14,508,193 11,548 274,986 286,534 131384,497 12,600,699 1,160,921 4,222,695 5,403,616 116,631,193 106,498,600 81.845 (2,984,857) (2,903,012) 34,116,506 32,569,664 18,128 18,128 5,703,718 5,446,724 1,793,408 1,740,335 393,199 424,909 2,460,030 2,323,816 (4,519) (4,519) (10,373,066) (7,726.563) 2,714,390 2,714,390 2,714,390 2,494,604 18,128 2,709,871 2,727,999 2,691,677 4,703,825 99.973 (274,986) (175,013) 36,808,183 37,273,489 13,271,943 13,228,971 (24,254,861) (22,650,781 l p0,982,918) (9,421,810) 99,973 (274,986) (175,013) 25,825,265 27,851,679 274,986 274,986 938,987 1,178,039 303,825 303,825 191,890,820 161,440,419 303,825 303,825 8811637 192,772.457 1,420,681 H52,881, 100 403,798 403,798 2191536,709 1911890,818 4,723,322 4,723,322 127,959,731 126,854,442 4,723.322 4,723,322 127,959,731 11,420,681) 125,433,761 481,288 481,288 4,165,370 3,704,009 (274,986) (274,986) (938,987) (1. 178,039) 4,929,624 4,929,624 131,186,114 127,959,731 $ 403,79§ $ 4,929,624 s 5,333,42Z $ JS0,722,1123 $ 31~ 850,542 See accompanying notes lo financial statements 23
CITY OF LUBBOCK Notes to Financial Statements September 30, 1996 I. Summary of Significant Accounting Policies ......................................... 29 A. Reporting Entity ............................................................................. 29 B. Basis of Presenution ~ Fund Accounting ........................................ 31 C. Basis of Accounting ......................................................................... 32 D. Budgetary Accounting .................................................................... 33 E. Encumbrances ................................................................................. 33 F. Assets, Liabilities and Fund Equity ................................................. 34 G. Risk Management ............................................................................ 35 H. Revenues, Expenses and Expenditures ............................................ 35 I. Totals (M:emorandum Only) ........................................................... 37 J. Reclassification ................................................................................ 37 II. Stewardship, Compliance and Accountability ...................................... 37 A. Retained Earnings/Fund Balance Deficits ....................................... 37 ID. Detail Notes on all Funds and Account Groups ................................... 38 A. Pooled Cash and Investments ......................................................... 38 B. lnterfund Transactions .................................................................... 40 C. Deferred Charge .............................................................................. 40 D. Property, Plant and Equipment ...................................................... 41 E. Retirement Plans ............................................................................. 42 F. Deferred Compensation .................................................................. 50 G. Surface Water Supply ...................................................................... 50 H. Other Enterprise Fund Activities ................................................... 51 26
CITY OF LUBBOCK Notes to Financial Statements September 30, 1996 I. Segment Information • Enterprise Funds ........................................ 51 J. Lease Agreements ............................................................................ 52 K. Long-Term Debt ............................................................................. 54 L. Advanced Def easement ................................................................... 57 M. Accrued Insurance Claims ............................................................... 58 N. Landfill Closure and Postclosure Care Cost .................................... 59 IV. Contingent Liabilities ............................................................................ 60 A. Federal Grants ................................................................................. 60 B. Litigation ......................................................................................... 60 C. Site Remediation ............................................................................. 60 V. Financial Instruments .......................... , ................................................. 60 VI. Restatement of Beginning Balances ....................................................... 61 VII. Accounting Changes .............................................................................. 61 VID. Subsequent Events ................................................................................. 61 27
LUBBOCK TEXAS 28
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Lubbock, Lubbock County, Texas (City) have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applicable to governmental units. The Government Accounting Standards Board (GASB) is the acknowledged standard-setting body for establishing governmental accounting and financial reporting principles. With respect to proprietary activities, including component uoiu, the City has adopted GASB Statement No. 20, "Accouming and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting." The City bas elected to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board (F ASB) pronouncements and Accounting Principles Board (APB) Opinions, issued on or before November 30, 1989 unless those pronouncements conflict with or contradict GASB pronouncements. The more significant accounting policies are described below. A. REPORTING ENTITY In June, 1991, the GASB issued Statement No. 14, •The Financial Reponing Entity". Jn accordance wich this statement, the City has presented those entities ~hich comprise the primary government along with its discretely presented Component Units in the fiscal year 1996 general purpose financial st:uemenu. The City is a municipal corporation governed by a Mayor-Council form of government. As required by GAAP, the general purpose financial statements present the reporting entity which consists of the primary government, organiz:nions for which the primary government is fin~ncially accountable: and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion could cause the City's general purpose financial Statements to be misleading or incomplete. BLENDED COMPONENT UNITS The following Component Unit has been presented as a blended Component Unit because although it is legally separate, the Component Unit is so intertwined with the primary government that it is, in substance, a part of the primary government. The Urban Renewal Agency (URA) was formed to provide Urban Renewal Services for the City of Lubbock, that include rehabilitation of housing, acquisition of housing, and disposition of land. The Urban Renewal Agency Boucl is composed of nine members appointed by the Mayor, with the consent of City Council, and am only in an advisory capacity to the City Council. All powers to govern the component unit are held by the City Council such that, the City Council is essentially the governing body for the Urban Renewal Agency. Financial activity of the Component Unit is reported in the Community Development Expendable Trust Fund. DISCRETELY PRESENTED COMPONENT UNITS The Component Unit columns in the combined financial statements include the financial data of the City's other Component Units. They are reported in a separate column to emphasize that they arc legally separate from the City. The following Component Units are induded in the reporting entity because the primary government is financially accountable and is able to impose its will on the organization. A primary government bas the ability to impose its will if it can significantly influence operations and/ or acti\'ities of an organization. · City Transit Management Co., Inc. dba Citibus (Citibus) In 1993, the City renewed a five year management agreement with McDonald Transit Associates, Inc. to manage and operate a city owned transportation system (Citibus). Citibus is a legally separate entity. The City Council appoints the seven-member Lubbock Public Transit Advisory Board, and approves the annual budget. The City is responsible for fundlllg deficits. Citibus is reported as a proprietary type component unit. 29
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REPORTING ENTITY (CONTINUED) Civic Lubbock, Inc. promotes tbe cultural and educujonal usage of the Lubbock Memorial Civic Center and Lubbock Municipal Coliseum. The 15-membcr boird is appointed by the City Council. City Council approves the annual budget for Civic Lubbock, Inc. Civic Lubbock, Inc. is reported as a proprietary type compo.aent unit. Market Lubbock, Inc. On October JO, 1995, the Lubbock City Cowicil created Market Lubbock, Inc., a no.a•profit corporation responsible for creating, managing, operating and supervising programs and activities for the purpose of promoting, assisting and enhancing economic development within and around tbe City of Lubbock. Market Lubbock, Ice. is a legally separate entity. The City Council appoints the seven-member board. The operation is funded mostly by the equivalent of three cents of the property tax rate. Market Lubbock, Inc. is reponed as a governmencal type component unit. Marketing, Entertainment, Travel, Tourism, and Sports, Inc. (METTS) was formed on September 22, 1995 with tbe merger of the Civic Center aod the Co.nvencion and Tourism Bureau of Lubbock, Inc. boards. METTS promotes the City as a convencion center, as a City of interest to tourists, and encourages the use of the Lubbock Memorial Civic Center and Auditorium/Coliseum as well as otber facilities located in the Cicy, The operations are managed by a board of direct0rs appointed by rhe City Council. METTS is a legally separate entity. City Council approves the annual budget, METTS is reported as a governmental type component unit. The combined financial statements present financial statements for each of the four discretely presented componellt uniu. Copies of financial statements of the individual component units may be obtained from their respective administrative offices listed below: Administrative Offices City Transit Management Co., Inc. dba Citibus 801 Texas Lubbock, Tens Civic Lubbock, l.ac. 1501 6th Street Lubbock, Texas RELATED ORGANIZATIONS Market Lubbock, Inc. do City of Lubbock 1625 13th Street Lubbock, Texas METTS,Inc. 14th Street and Avenue K Lubbock, Texas The City's officials are also responsible for appointing the memben of the boards of other organizations but tbe Gty's accountability for these organizations does not extend beyond making the appointments. The foUowiog are related organizations which have not been included in the reporting e.atity: Housing Authority of the City of Lubbock (Authority) is a legally separate entity. The Mayor appoints the five-member board. It is the City Attorney's opinion that the Authority is independent of the City of Lubbock. The Authority is not fiscally dependent on die City of Lubbock and City Council is not able to impose its will on the entity. The City of Lubbock bas 00 responsibility for debt issued by the Authority. Lubbock Firemen's Retirement and Relief Fund (LFRRF) operates under provisions of the Firemen's Relief and Retirement Laws of the State of Texas for purposes of providing retirement benefits for the City's firefighters. Its affairs are governed by tbe Mayor's designee, the Finance Manager, three firefighters elected by members of the LFRRF, and cwo at-large members elected by the Board. It is funded by cootributions by the firefighters and matched by contributions from the City. As provided by enabling legislatioo, the City's responsibility co the LFRRF is limited to muchiog monthly contributions made by the members. Tide co assets is vested in the LFRRF aod 30
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. REPORTING ENTITY (CONTINUED) not in tbe City. The Sme Firemen's Pension Commission exercises general oversight authority over the LFRRF; tbus, the City of Lubbock does not significantly influence operations. Lubbock Arts Alliance, Inc. (Alliance) is dedicated to the promotion and improvement of the am and sponsoriDg the annual Lubbock Arts Festival. Fiscal dependence by the Alliance on the City is not significant to the City. City Council does not appoint the board. The City is not able to cxm its will on the Alliance. Lubbock Health F:icilities Development Corporation (LHFDC) promotes health facilities development. City Council appoints the seven-member board. Bonds issued by LHFDC do not constitute indebtedness of the City. The City does not govern operations of LHFDC. Omnirnax is a theater financed with proceeds from bonds issued by the City. The Omnimax is leased to the Science Spectrum, Inc. City Council does not appoint tlie board. The City is not able to impose its ,,..ill on the organization. The City has a contractual agreement with Science Spectrum, Inc. for the operation and maintenance of the theater and for a percentage of net re,•enues co be allocated to the City for debt service reimbursement. Lubbock Housing Finance Corporation, Inc. {LHFC) was formed pursuant to the Texas Housing Finance Corporation Act, to finance the cost of decent, safe, affordable residential housing. The Mayor appoints the seven-member board. It is the opinion of the City Attorney that LHFC is independent of the City. Indebtedness of the LHFC does not constitute indebtedness of the City. The City is not able to impose its will on the LHFC. B. BASIS OF PRESENTATION . FUND ACCOUNTING The financial trans:actions of the City ace recorded in individual funds and account groups. Each fund is accounced for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, reserves, fund equity, revenues, and expenditures/ expenses. The various funds are cla.ssified into three categories: governmental, proprietary and fiduciary. The following fund types and account groups are used by _the City: GOVERJ\,'MENT AL FUND TYPES General Fund is the general operating fund of the City. It is used to account for all financial tramactions except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sowces (other than special assessments, expendable truStS, or major capital projects) that are legally restricted to expenditures for specified purposes. Debt Scn·ice Funds are used to account for the accumulation of fi~ancial resources for the payment of interest and principal on the general long-term debt of the City. Capital Project Funds arc used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds or Trust Funds). PROPRIETARY FUND ITPES Enterprise Funds are used to account for operations of the City (a) that are financed and operated in a manner similar to prit·ate busioess enterprises, where the intent is to provide goods or services to the general public on a continuing basis, the cost of which is to be recovered in whole or part 31
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B. BASIS OF PRESENTA!ION • FUND ACCOUNTING (CONTINUED) through user charges; or (b} where che governing body has decided that periodic determination of revenues earned, expenses incurred, and/ or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Internal Servke Fund is used to account for the financing or goods and services provided by one department or agency co other dc:panmcnts or agencies of the City, or to other governments, on a user charge basis. FIDUCIARY FUND TYPES Transactions related to assets held by the City in a trustee capacity or as an agent for individuals, private organiutions, other governments and other funds, are accounted for in fiduciary fund types. Fiduciary fund types are comprised of: Expendable Trust Funds account for assets received and expended by the City as trustee in essentially the same manner as governmental fund types. Agency Funds are used to account for assets held by the City as a custodial trustee. They are accounted for on the modified accrual basis of accounting. ACCOUNT GROUPS General Fixed Assets Ac:count Group represent, a summary of the fixed assets o! the City, other than those fixed assets reported in the Proprietary Funds. Capital expenditures of the Capital ProjectS Fund are· tbc primary source from which tbe detailed records of the general fo"<ed assets account group are developed. Capital expenditures are carried in this account group as constniction in progress until the projects arc completed and are then capitaliud by function and classification. Infrastructure fixed assets such as streets, highways, bridges, sidewalks, street lighting, traffic poles and signals, and storm sewers, are accounted for in the General Fixed Assets Account Group and reported in the Schedule of General Fixed Assets. Geoera! fixed assets arc not depreci:i.tcd and are recorded at historical cost at the time of acquisition. Donated assets are recorded at their fair market value on the date donated. General Long-Term Debt Account Group is used to account for the City's liability for general long-term debt such as general obligation bonds, certificam of obligation, loog-u:rm notes payable, long-term leases,· and obligations for employee vacation, sick-leave benefits, insurance claims and rebatablc arbitrage, other than those reported in the Proprietary Funds. C. BASIS OF ACCOUNTING The modified accrual basis of accounting and the flo'I,· of current fir:1ancial resources is followed for 1be govcrnmeaul fuod trpes, special revenue funds, debt sen·icc funds, capital project fuods, expendable trust fu.ods, and ageocy fuods. Under this basis of accounting, expenditures, other than interest on long-term debt in the Debt Service Fund, which is recorded when due, are recorded when the liabili1y is incurred. Reveoues arc recorded wben received in cash unless susceptible to accrual. Rcve.oues under the modi(ied accrual basis must be botb measurable and available to fioance current year appropriations. Revenues considered to be susceptible to accrual under the modified accrual basis are property tax, sales tax, franchise tax, hotel/ motel tax, certain grant revenue and invenment incornc. The accrual basis of accounting and the flow of ccor:1ornic resources is followed in 1he entcrprhe fuods and internal service funds. Under this method of accounting, revenues arc recognized when earned aod expenses arc recorded when a liability is 32
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES c. BASIS OF ACCOUNTING (CONTINUED_) incurred. Go\•ernmental fund types aod expendable trust funds are accouated for using a current financial resources measurement focus. Under the current financial resources measurement focus, only current assets and current li:abilities are included on the balance sheet. Net current assets or fund balance l$ considered a measure of available spendable resources. The flow of financial resources measurement focus is concerned primarily with the measure of interperiod equity (e.g. whether current year revenues were sufficient to pay for current year services). Enterprise funds and internal service funds are accounted for using an economic resource measurement focus. All assets and liabilities including fixed assets and long-term debt are included on the balance sheet. Fund equity is segregated into its contributed capital and retained earnings components. Proprietary fund type operating statementS present increases (reveaues) and decreases (e,-penses) in net total assets. D. BUDGETARY ACCOUNTING An.nual budgen are adopted on a basis consistent with geacrally accepted accounting principles for all governmental funds except for special revenue funds, debt service funds, and capital project funds, which adopt project-length budgets. All aD.Dual appropriations lapse at fiscal year end. Anaually, the City Manager submits to City Council a proposed operating budget for the upcoming focal year. Public hearings arc conducted to obtain taxpayer comments, and the budget is legally enacted through passage of an ordinance by the City Council. Budgetary control is maintained by department and by the following category of expenditures: personnel services, supplies, maintenance, other charges, and capital outlay. All budget supplements must be approved by the City Council. Ad.min.istrative transfers aad increases or decreases in accounts within categories may be made by management as long as expenditures do no1 exceed budgeted appropriations at the fund level. Budgeted amounts shown are from the revised budget, adopted by resolution on August 22, 1996. During the year, the budget was revised to reflect a 1.11% increase in t0tal revenues and a 4.62% increase for the General Fund operating expenditures from the original budget. Each year, in accordance '\\'itb State law, the City Counca seu a.n ad valorem tax levy for a sinking fund (General Obligation Debt Ser..,.ice) which, with cash and investments in the fund, would be sufficient to pay all the bonded indebtedness and interest due in the following fiscal year. E. ENCUMBRANCES Ac the end of che year, eocumbrances for '1-•hich goods and/or services have not been received are canceled. At the beginning of the next year, management-approved prior year encwnbranccs and related appropriations arc re-established through a budget amendment. Re-established encumbrances at October 1, 1996 for the General Fund is $46,054. 33
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES F. ASSETS. LIABILITIES AND FUND EQUITY Equity in Pooled Cash and Investments• A "Pooled Cash" concept is used to m2iotain the cash and investment accounts in chc accouncing records. Under this method, all cash is pooled for investment purposes and each fund has an equity in the pooled cash amount and earnings cberefrom. All amounts included in the pooled cuh and invesunent accouots arc considered to be cash and cash equivalents. For purposes of the statemc:nt of cash flows, the City considers cash and c:i.sb equivalents {including restricted cash and cash equivalents) to be currency on band, demind dcposiu with baoks, and amounts included i.a pooled cash and investment accounts due to their liquid nature. Cash and cash equivalents are included in both unrestricted as well as restricted assets. Investments other than those in the deferred compensation plans arc stated at cost or amortized COSL Property Tax Receivable• Property taxes arc assessed and liens attach on valuations as of January 1, levied on Oct0bcr 1 of each year, and become delinquent February 1 of the following year. Uncollcctc:d taxes, net of tbc estimated uncollectiblc amount, arc recorded as receivables in tbe General and Debt Service Funds. Deferred revenue is recorded in an amount equal to net delinquent taxes receivable, less taxes collected within 60 days after the end of the fiscal year. Enterprise Fund Receivables • Within the Electric, Water, Sewer and Solid Waste Enterprise Funds, services rendered but not billed as of tbe close of the fiscal year, are not considered significant. Amounts billed arc reflected as receivables net of an allowance for uncollectiblcs. Inventories • Ioventorics in tbe Proprietary Fund Types consist of expendable supplies beld for consumption. Inventories arc valued at coSt using the average cost method of valuuioo. Proprietar}' F1111d Types use the consumption method of accounting (i.e., inventory is expensed "11.·hen used rather tban wben purchased). Prepaid Items • Prepaid items arc accounted for under the consumption method. Restricted Assets • Certain enterprise fund assets are nmrictc:d for construction which has been funded through. long-term debt, therefore, ret:1.ined earnings have not been reserved for these amounts. The excess of assets restricted for the payment of debt service over certain liabilities are iocluded as retained earnings reserved for capital projects, race stabilization, economic development aod bond indenrures. Fixed Assets and Depreciation • General fixed assets 2re not capitalized in the funds used to acquire or construct them. lnstead, ca pit.I.I acq uisicioo and construction are reflected as expenditures in Governmental Funds, and the related assets are reported io the General Fixed Assets Account Group. All purchased fixed assets are recorded at cost. Donated assets are recorded at the fair value on che d:ite of donation. Assets in tbe Gencr:1.l Fixed Assets Account Group arc not depreciued. Property, plant and equipment of the Proprietary Funds :ire seated at cost or c:stimated market value for donated assets. Depreciation is computed using cbe str:1igb1,Jinc method over the estimated useful lives as follows: Improvements Buildings Equipment 34 10.SO years 15-50 years 3-15 years
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES F. ASSETS, LIABTLITIES AND FUND EQUITY (CONTINUED) Interest Capitali2.ation -The City capitalizes interest cost in its Enterprise Funds on bonds used for fixed asset construction, net of interest income e:uned on the temporary investment of tbe t:i.x-exempt bond proceeds. Interest com incurred during the year were SH,369,996 of which S 1,003,975 has been capitalized. Advances to Other Funds -Amounts owed to one fund by another which arc not due within one year arc recorded as advances to other funds. Tbese arc equally offset by a fund b:i.iance reserve amount in the governmental funds, which indicates they do not constitute available spendable resources. G. RJSK MANAGEMENT The City is primarily self-insured for medical and dental coverage. The liability for incurred claims represents estimates for medic.al a.od dental daims incurred 2s of September 30, 1996. Some of these claims were reported at September 30, 1996, and others which are incurred but not reported (IBNR), may not be reported until a later date. IBNR is actuarially determined by the City's independent insurance admininr2tor. The City's self-insured worker's compensation and general li2bility programs are on a cash flow basis, which rneans that the service contractor processes, adjum and p:iys claims from a deposit provided by the City. The City accoUDtS for the worker's compensation program in the Risk Management Fund (an Internal Service Fund) by charging premiums b:a.sed upon losses, administrative fees and reserve requirements. The Risk Man:igmcnt Fund esublishcs claim liabilities based on estimates of the ultimate cost of cbims (including future claim adjustment expenses) that have been reported but not settled, and of claims that have been incurred but not reported. The length of time for which such com mun be estimated varies depending on the covcr:a.ge involved. Enimated amounts of salvage and subrogation and reiasurance recoverable on UDpaid claims are deducted from the liability for unpaid claims. Because 2ctual claim costs depend on such complex factors as inflation, changes in doctrines of legal li2bility, and damage awards, the process used in computing claim liabilities does not necessarily result in an exact amount, panicularly for coverages such as general lia.bility. Cbim liabilities arc recomputed periodically using a variety of actuarial and statistical techniques to produce current estimates that reflect recent settlements, claim frequency, and other economic :1.nd soci2I factors. Adjustments to cbim liabilities are charged or credited to expense in the period in "11.0bich they 2re made. Additionally, propeny :and boiler coverage is accounted for in the Risk Managmcnt Fund. The property insurance policy was purchased from an outside insurance carrier. The policy has a S250,000 deductible per occurrence, 20d the boiler coverage insurance deductible is $2,500 to S 100,000, dependent upon the unit. Premiums arc ch:arged to funds b2sed upon policy premiums and reserve payments. Other small insurance policies, such as surety bond coverage and miscellaneous floaters, are 2ccountcd for in tbc Risk Managmcat Fund. Funds are charged expenditures based on premium amounts and admininrative charges. The City has had no significant reductions in insurance coverage during the year, Settlements in the current year and preceding two years have not ·exceeded insurance coverage. H. REVENUES. EXPENSES AND EXPENDITURES Interest Income on pooled cash and investments is aUocatcd monthly based on the percentage of a fund's average dJily equity in pooled cash and investments to the total average daily pooled equity in pooled cash and in~·estrnents, except for Trust and Agency Funds, certain Special Revenue Funds, Governmental Capital Project Funds, :md certain Internal Service Funds. The interest 35
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES H. REVENUES. EXPENSES AND EXPENDITURES {CONTINUED) income on pooled cash aad investments of these funds is reported in the General Fund or tbc Debt Service Fund. Sales Tax Revenue for the City results from an allocation of 1.125% of the total sales tax levy '11.0hich is collected by the State of Tens and remitted to the City monthly. The tax is collected by the vendor and required to be remitted to the State by the 20th of the month following collection. The tax is then paid to the City by the 10th of the next month.. Oa January 21, 1995, voters approved a 1/g cent increase in sales tax to reduce the property u,c rate which went into effect October 1, 1995. Grant Revenue from federal and state grants is recoi;niud to the extent that the related expenditure bas been incurred. lnterfond Transactions or quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/ expenses initially made from that fund th:i.t are properly applicable to anotber fund, arc recorded as expenditures/expenses in the reimbuniag fuod and as reductions of expeoditurcs/expenses in tbe fuod that is reimbursed. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other intcrfund transactions except quasi-external transactions, reimbursements, temporary recciv:1blcs and payables, and residual equity tr:msfcrs arc reported as operating transfers. Compensated Absences consists of vacat.ioo leave and sick leave. Vacation leave of 10-20 days is granted to all regular employees dependent upon the date employed, years of service, and civil service status. Beginniog in calendar year 1995, up to 40 hours of vacation leave may be ~carried over~ to the next calendar year. The City is obligated to make payment upon retirement or termination for any available, unused vacation leave. Sick leave for employees is accrued at 1 1/4 days per month with a maximum accrual status of 200 days. Aher 15 years of continuous full time service for non-civil service personnel, vested sick leave is paid on retirement or termination at the current bourly rate for up to 90 days. Civil Service personnel are paid for up to 90 days accrued sick leave after one year of employment. The Texas Civil Service laws dictate certain benefits and personnel policies above and beyond chose policies of the City. The liability for the accumulated vacation and sick leave is recorded io the general long-term debt account group for governmental fund employees and as a noacurreot liability in the proprietary foods for proprietary fund employees. Managemeot has decemuned that the current portion of this liability is 001 significant to the overall financial position of the City. Post Employment Benefits for retirees of tbe City of Lubbock include the option to purchase health and life iosurance benefits at their ow11 expense. Amounts to cover premiums and administrative com, with a.n incremental charge for reserve funding, are determined by the City's health care administrator. Financial activity is reported in the Health Insurance Internal Service Fund. Tb.e following schedule reflects pan.icip..tion in the Cicy's health care program: Parci~ipaots Active Retired Cobra 36 1996 1,692 358 14
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES H. REVENUES, EXPENSES AND EXPENDITURES (CONTINUED} Active Claims Retired Claims Cobra Claims Toul Claims % of Employee Groups to t0tal claims Active Retired Cobra Total% I. TOTALS (MEMORANDUM ONLY} 54,478,359 1,831,049 33,833 $6,343.241 70.60% .28.87% ~% 100.00% Tbe Tot:i.ls (Memorandum Only) columns represent an aggregation of the combined financial statements and do not represent consolid:ned financial information. Data in those columns do not represent financial position and results of operations, in conformity with GAAP and are presented only to facilitate analysis. f. RECLASSIFICATION Cenain 1995 amounts have been reclassified to conform to 1996 presentation. NOTE II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. RET AINEO EARNINGS/FUND BALANCE DEFICITS The deficit of $35,442 in the Airpon Enterprise Fund results from the pr:tcti« of not funding depreciation. The majority of debt service for the airpon improvements is funded by propeny taxes and was never intended to he funded by airport revenues. The deficit in the Golf Enterprise Fund of Sl,5-40,821 is the result of placing itself in a more competiti\'e position through non•capiul course equipment improvements. On October H, 1994, tbe City contracted with Fore Star Golf, Inc. for management services to be provided for the City's operations. The management agreement is effective through December 31, 2014. Over the term of the contract, Fore Star Golf, lnc. will receive a ponioo of the golf course revenues based on a sliding scale. The deficit of $43,201 in the Library Expendable Tnm Fund is the result of a tim.iog difference between expenditures iocurred aad the filing of requests for reimbursements. These funds have not been accrued, as certain reimbursement amounts are not measurable at September 30, 1996, which is consistent with the revenue recognition required by the modified accrual basis of accounuag. The deficit of $941,656 in the Police Expendable Trusr Fund is rhe result of a timing difference between expenditures incurred and the filing of requests for reimbursements. These funds have not been accrued, as cenm reimbursement amounts are not measurable at September 30, 1996, which is consistent with the revenue recognition required by the modified accrual basis of accountiog. The deficit of $31,828 in tbe Community Services Expcodable Trust Fund is the result of a timing difference between expenditures incurred :1.nd the fil.uig of rcquem for reimbursements. These funds b.we not been accrued, as uruin reimbursement amounu are not measurable at September 30, 1996, which is consistent with the reveoue rccogoition required by the modified accrual basis of accounting. 37
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. RETAINED EARNINGS/FUND BALANCE DEFICITS (CONTINUED) The deficit of $528,270 io the Iotcroal Service Fleet Maintenance Fund results from the practice of not recovering depreciation through user charges. Management is evaluating user charges in order to recover depreciation and recover the retained earnings deficit. The deficit of $2,353.756 in the Internal Service Radio Shop Fund results from the practice of not recovering depreciation through user charges. Management is evaluating user charges in order to recover depreciation and recover the retained earniogs deficit. The Radio Shop Fund also incurred a capital lease of $2.1 million and will recover the financing cost and capital cost from user dcpanments over the next few years. The deficit of $3,869,841 ia tbe Internal Service Managemeot Iaformation Fund results from the practice of not recovering depreciation through user charges. A capital lease in the Management Information Fund also contributed to the retained earnings deficit. Management is evaluating user charges in order to recover depreciation, financing and capital costs, and the retained earnings deficit. The deficit of $401,176 in the Internal Service Communications Fund results from the practice of not recovering depreciation througb user charges. Management is evalu:ating user charges in order to recover depreciation and recover the retained earnings deficit. No otbcr funds of the City had deficits in either total fund balances or t0tal retained earnings. NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. POOLED CASH AND INVESTMENTS The City's investment polices are governed by State statute and City ordinances. Permissible investments include direct obligations of the United States or iu agencies and instrumentalities, certificates of deposit, prime domestic banker's acceptances, commercial paper, repurchase agreements, and deposits in a qualifying investment pool. Collateral is required for demand deposits, certificates of obligation, and repurchase agreements at 102% of all amounn not covered by Federal deposit insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the state and its subdivisions. The City's deposits and investments arc categorized below to indicate the level of risk assumed by the City at September 30, 1996. INVESTMENT CATEGORY OF CREDIT RISK (1) Insured, registered or in securities held by the entity or its agent in the entity's .aame. (2} Uninsured and unregistered, with securities held by tb.e counter pany's trust department or its agent in the entity's name. {3} Uninsured and unregistered, v.•ich securities held by tbe couoter party or by the trust department or agent but not in the entity's oame. DEPOSIT CATEGORY OF CREDIT RISK (A) Insured or coUaterali.ted with securities held by the entity or by its agent in cbe entity's name. (B) Collateralized v.•itb securities held by tbe pledging financial institution's trust department or agent in the entity's name. (C) Uncollateral.ized. 38
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. POOLED CASH AND INVESTMENTS (CONTINUED) Pooled Cash and Investments The City's pooled cash and in vestments consist of deposits with financial institutions, certificates of deposit, U.S. government and agency securities, and deposits in qualifying investment pools. These invenments have varying maturities ranging from one day to four years.-The weighted avenge maturity of the total portfolio is kept to Wlder two years. The following is a schedule of the City's pooled cash and investments at September JO, 1996: Investments U.S. Treasury and Agency Obligations• Primary Government $ 143,174,178 Mutual Funds • Primary Government Total Investments · Primary Government U.S. Treasury and Agency Obligations· Component Units Certificates of deposit• Component Units Repurchase agreement· Component Units Working capital management account· Component Units Total Investments· Component Units T ocal In vestments· Repon:iog Entity Cash and Bank De osits Cash and Bank Deposits-Primary Government Cash and Bank Deposits-Component Units Cash and Bank Deposits• Reporting 3,568,023 50,628 A S 6,239,877 1,241,686 Entity S 7,481,563 Category 2 s s Category B 39 3 S 159,817 C $ 245,844 S 245,844 Carrying Amount Market Value S 143,174,178 S 143,228,615 21,085,752 21,085,752 164,259,930 164,314,367 3,568,023 3,579,641 50,628 50,628 159,817 159,817 247,762 247,118 4,026,230 4,037,204 S 168,286,160 S 168,351,571 s s Carrying Amount 5,497,014 1,191,997 6,689,011 Bank Balance S 6,239,877 1,487,530 $ 7,727,407
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. B. POOLED CASH AND INVESTMENTS (CONTII::{UED) Cash and lo\'escments are reported io the financial scatcmeots as: Primary Component Reporting Government Units Entit:t: Cash aod Investments -Restricted s 80,872,478 s 225,221 s 81,097,699 Cash aod In,•estments • Non-Restricted 88,884,466 4,993,006 93,877,472 Total Cash and lovestmencs s 169,756,944 s 5,218,227 s 174,975,171 Carrying amount of deposits s 5,497,014 s 1,191,997 $ 6,689,011 Carrying amount of investments 164,259,930 4,026,230 l 68,286,160 Total Cash aod Investrneou S 169,756,944 s 5,218,227 s 174,975,171 INTERF~D TMNSACTIONS lmerfund receivables and payables consisting of due from/to and advances to/from other fUJ1ds at September 30, 1996 were as follows: Funds General Fuod Special Reveoue Funds: Hotel/Motel Tax Enterprise Funds: Electric Enterprise Water Enterprise Sewer Enterprise Airport Enterprise Golf Enterprise Stormwater Enterprise Internal Service Expendable Trust Fuods: Community Development Community Servi«s Library Police Total Interfund Receivables $ 4,629,272 1,765,513 1,090,499 451,071. 2,707,003 S 10,643,358 $ lntcrfund Pay:ibles -451,071 2,010,000 530,000 5,655,287 941,500 35,500 187,000 190,000 S 10,6-43,358 C. DEFERRED CHARGE The deferred charges of S2,210,261 at September 30, 1996 and 1995, represent prepayments for two separate contracts for future delivery of natural gas as contracted for by the City. I.o 1988, a contract v.-as entered into for the purchase of proven aod unproven reserves, totaling 2,000,000 ~TU at Sl.56 per MMBTU with an option, which the Gty has citercised, to purchase an additional 2,000,000 MMBTU at the same price. Tbc remaining amount of prepayment relative to tbis contract at September 30, 1996 is Sl,641,333, Quaoticies in excess of the first 4,000,000 MMBTU cao then be purchased at market value. During 1988, proveo reserves of 338,000 MMBTU v.·ere purchased ac the Sl.56 rate. The remaining reserves are being purchased as proven. One-half the rate, or S.78 per MMBTU, is paid upon proven deterrninacioo of the reserves and the bal:ince is to be paid upon delivery. The prepayments are to be expensed as the gas is taken until the prepaid units of gas have been consumed. At September 30, 1996 and 1995, 1,317,934 MMBTU h2d been delivered, and remaioiog proven reserves at September JO, 1996 and 1995 were 2,104,273 MMBTU. 40
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS C. DEFERRED CHARGE (CONTINUED) On August 25, 1994, the City contracted for tbe purchase of natural gas to be delivered in future years. An a.mount of $568,928 is induded in deferred charges which represents a deposit on future gas deliveries. The City is obligated to purchase 4,000,000 MMBTU of gas per year in fiscal years 1998, 1999, and 2000. D. PROPERTY, PLANT AND EQUIPMENT Gcncn.l fixed assm of tbe City for the year ended September 30, 1996, are as follows: Balance 10.1-95 Additions» L:ind $ 8,611,411 s Buildings and Improvements 34,322,249 196,239 Other Improvements 1 t 1,046,554 3,134,703 Equipment 25,601,272 2,234,710 Construction in Progress 24,927,359 12,184,616 Total $204,508,845 $17,750,268 " lacludcs transfers Construction in progress is composed of the following: Fire Station Park Improvements Street Improvements Permanent Street Maintenance General Permanent Capital Projects General Pcrmancot Capital Maintenance Toni Life-to•D:ue Activity Project Authorization S 10,977,5)9 5,159,331 35,190,491 3,-426,529 16,383,523 9,828,155 S 80,965,568 Deletions• s 21,500 276,699 2,335,764 4,690,317 S 7,32-4,280 Expended 9-30-96 S 644,019 2,116,447 11,370,110 2,691,091 10,949,343 4,650,648 S 32,421,658 Balance 9-30-96 s 8,589,911 34,241,789 114,181,257 25,500,218 32,421,658 $214,934,833 Unexpended Balance $ 10,333,520 3,042,884 23,820,381 735,438 5,434,180 5,177,507 $ 48,543,910 General fixed asset account group for MEIT's for the year ended September 30, 1996, are as follows: Balance 10-1-95 Additions Deletions s B2lance 9-30-96 Equipment s S 182,023 S 182,023 Propertr, plant, md equipment recorded in 1be City's various proprietary funds (including component units) as of September 30, 1996, is as follows: Enterprise Fund Land $ 28,618,982 Buildings and improvements 36,877,346 lmpro\'ements 296,418,881 Equipment 3-4,189,371 Construction in Progress 180,465,434 Total 576,570,014 Less: Accumulated Depreciation (160,358,656) Total $416,211,358 Internal Service Fund S 71,182 1>91,855 197,469 7,514,337 5,850,965 15,425,808 (6,78l,730) $ 8,642,078 41 Total Proprietary Fund Type S 28,690,164 38,669,201 296,616,350 41,703,708 186,316,399 591,995,822 (167,142,386) $424,853,436 Component Units S 520,403 3,879,020 173,904 7,078,428 11,651,755 (6,692,056) $4,959,699 Total Reporting Entity Proprietary J;und Type S 29,210,567 42,548,221 296,790,254 48,782,136 186,316,399 603,647,577 (173,834,442} $429,813,135
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS fach qualified employee is included in one of t'lll'0 retirement plans in which the City of Lubbock paruc1pates. These arc the Texas Municipal Retirement System ([MRS) and the Lub~ock Firemen's Relief and Retirement Fund (LFRRF). The City does noc maintain the accounting records, hold che invenments or administer either fund. Summary of significant daca for each recirement plan follows: TEXAS MUNICIPAL RETIREMENT SYSTEM (TMRS) Plan Description The City provides pension benefits for all of its full-time employees with che exception of firefighters through a nontraditional, joint contributory, defined contribution plan in the state• wide TMRS, one of over 670 admininered by TMRS, an agent mulciple-employer public employee retirement system. It is the opinion of the TMRS management that the plans in TMRS arc substaotially defined contribution plans, but they have elected co provide additional voluntary disclosure to help foster a better undemanding of some of che nontraditional characteristics of the plan. Benefits depend upon the sum of the employee's contributions to the plan, wich interest, and the City-financed monetary credits, with interest. At the date tbc 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. Monecary credits for service since the plm began arc 200% of the employee's accumulated contributions. In addition, the City c:m 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 concributions and the monet:1.ry credits for service since the plan began, would be the total moncu.ry credits and employee concributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence, and if chc employee's salary had always been the average of his salary in the h.st three years that arc one year before the effective date. Ac retirement, the benefit is calculated as if the sum of the employee's accumulated contributions ~·ith intcrcsc and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above wirh 10 or more years ol service or with 25 years of service regardless of age. The plan also provides de:nb and disability benefits. A member is vested after 10 years, but be must le:i.ve bis accumulated contributions in the plan. If a member withdraws his own moaey, he is not eatided to the employer-financed monetary credits, even if he was vested. The plan pro\·isions are adopted by the governing body of the City, within the options avail:1.ble in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributions The contribution rate for the employees is 6%, and the City matching percent is currently 200%, both as adopted by the governing body of the City. UDder the state law governing TMRS, the City contribution rate is annually determined by the actuuy. This rate consists of tbc normal cost contribution rate and the prior service contribution race, both of which are calculated to be a level percent of payroll from year to year. The normal cost cootcibution rate finance.s the currently accruing monetary credits due to City matching percent, which are the obligation of the City as of an employee's retirement date, noc 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 obligat.ioo of the City to each employee at the time his retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 42
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS {CONTINUED) 25-year amoniz:uion period. When the City periodically adopts updated service credits and increa5es its annuities in effect, the increased unfunded actuarial liability is to be amonized over a new 25-ye:u period. Currently, the unfunded actuarial liability is being amonized over the 25-year period whicb began January, 1996. Tbe unit credit actuarial cost method is used for determining the City contribmion rate. Contributions are m3de monthly by both the employees and the Cit}'· Since the City needs to know its contribution rate in advance co budget for it, there is a one-year hg between the actuarial valuation that is the basis for the rate and the calendu year when the rate goes into effect. The City's total payroll in fiscal year 1996 was $50,043,840 and the City's contributions were based on a payroll of $43,441,907. Both the City and the covered employees made the required contributions, amounting co $5,268,537 (11.48% of covered payroH for the months in calendar year 1995, 8.22% normal cost plus 3.26% to amortize the unfunded actuarial liability, and 12.J7% for the months in calendar year 1996, 8.52% normal cost plus 3.85% to amortize the unfunded actuarial liability) for the City and $2,606,516 (6%) for the employees. Of the $5,268,537 cootribmions, approximately $3,664,685 was allocated to normal cost while approximately S 1,603,852 was allocated to amortize the unfunded actuarial liability. The City adopted changes in the plan since che previous actuarial valuation, which ha~ the effect of increasing the City's contribution rate for 1996 by 0.34% of payroll. There were no related-party transactions. Funding Status and Progress Even though the substance of the City's plan is not to provide a defined benefit in some form, some additional voluntary disclosure is appropriate due to tbe nontraditional nature of the defined contribution plan which had an initial unfunded pension benefit obligation due to the monetary credits granced by tbe City for services rendered before the plan began and which can have additions to the unfunded pension benefit obligation through the periodic adoption of increases in benefit credits and benefits. GASB Smement No. 5 defines pension benefit obligation as a standardized disclosure measure of the actuarial present value of pension benefits, adjusted for the effects of projected salary increases, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of public employee pension plans, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among public employee pension plans. Tbe pensioo benefit obligation sbown below is similar in nature to the standardized disclosure measure required by GASB Statement No. 5 for defined benefit plans, except that there is no need to project salary increases since the benefit credits earned for service to date are not dependent upon future salaries. The calculations were made as part of the annual actuarial valuuion as of December 31, 1995. Because of the money-purchase nature of the plan, tbe interest rate assumptioa, currently 8.0% per year, does not have as much impact on the results as it does for a defined benefit plan. Market value of assets is not determined for each city"s plan, but tbe market value of assets for TMRS as a wbole v.as 114.2% of book value as of December 31, 1995. Pension Benefit Obligation Annuitants currently receiving benefits Terminated employees Current employees Accumulated employee contributions including allocated invested earnings Employer-financed vested Employer-financed nonvested Total Pension Benefit Obligation Less: Net Assets A'"ailable for Benefits, at Book Value Uafunded Pension Benefit Obligation 43 S 16,817,933 10,537,231 38,548,920 66,605,695 7,642,964 140,152,743 109.679.187 s :m,473.556
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DE1'AIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS {CONTINUED) The book value of asseu is the amortized cost for bonds and original cost for short•term securities and stocks. The actuarial assumptions used to compute the actuarially determined City contribution rate are the same as those used to compute tbe pension benefit obligation. The numbers above reflect the adoption of cbaagcs in the plan since the previous actuarial valuation, which had the effect of increasing the pension benefit obligation by $2,617,429. TEXAS MUNICIPAL RETIREMENT SYSTEM REQUIRED SUPPLEMENTAL DISCLOSURE. 10 YEAR HISTORICAL INFORMATION ANALYSIS OF FUNDING PROGRESS Unfunded Unfunded Net Assets Pension Pension Annual PBO as a% As of Available for Benefit Percentage Benefit Covered of Covered December 31 Benefits Obligation Funded Obligation Parroll Papoll 1985 $ 36,379,281 S 52,393,316 69.4% $16,014,035 S 33,420,720 47.9% 1986 41,954,383 58,271,284 72.0 16,316,901 31,2)3,200 52.2 1987 47,678,645 67,617,486 70.5 19,938,841 31,757,680 62.8 1988 52,910,917 68,298,980 77.5 15,388,063 32,610,720 47.2 1989 59,340,355 76,642,544 77.4 17,302,189 34,648,960 49.9 1990 67,453,028 88,427,433 76.3 20,974,405 37,469,960 55.9 1991 74,489,168 93,745,652 79.5 19,256,484 39,581,450 48.6 1992 82,930,899 102,479,816 80.9 19,548,917 41,642,633 46.9 1993 95,946,540 121,493,799 78.9 25,547,239 44,324,483 57.6 1994 101,453,897 128,062,753 79.2 26,608,856 42,815,350 62.1 1995 109,679,187 140,152,743 78.3 30,473,556 43,750,083 69.6 REVENUES BY SOURCE Employer Contribution as a% of Year Ended Employee Employer Investment Covered December 31 Contributions Contributions Income Other Total Parroll 1985 s 1,671,036 s 2,372,632 S 3,519,432 s 6,393 S 7,569,493 7.1% 1986 1,561,660 2,462,401 4,075,372 {450) 8,098,983 7.9 1987 1,587,884 2,475,870 4,610,402 8,674,156 7.8 1988 1,630,536 2,704,942 5,217,750 32,496 9,585,724 8.3 1989 1,732,448 2,965,951 5,819,041 10,517,440 8.6 1990 1,873,498 3,481,188 6,545,398 219,632 12,119,716 9.3 1991 2,374,887 4,469,819 7,349,501 1,090 14,195,297 11.J 1992 2,498,558 4,661,638 7,959,300 494 15,119,990 11.2 1993 2,659,469 4,579,094 8,706,022 2,806,169 18,750,754 10.3 1994 2,568,921 4,457,659 9,507,141 1,512 16,535,2.B 10.4 1995 2,625,005 5,011,685 9,844,565 17,481,255 11.5 44
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS (CONTINUED) EXPENSES BY TYPE Transfers Current Service Yc:u Ended Annuity Administrative December 31 Reserve Fund Exeenscs Refunds Total 1985 S 1,655,712 $ 620,760 s 477,873 s 2,754,345 1986 1,959,906 705,430 438,1-45 3,103,481 1987 1,614,136 776,861 556,240 2,947,237 1988 2,994,355 834,648 541,990 4,370,993 1989 2,656,780 904,570 527,309 4,088,659 1990 2,500,012 985,269 523,057 •,oos,.ns 1991 5,508,879 1,114,763 535,519 7,159,161 1992 4,807,263 1,252,958 618,0)4 6,678,255 199) 3,880,116 1,329,650 525,347 5,735,113 1994 8,725,889 1,539,167 759,823 11,024,879 1995 6,876,232 1,592,614 790,115 9,258,961 LUBBOCK FIREMEN'S RELIEF AND RETIREMENT FUND (LFRRF) Plan Description The Board of Trustees of tbe LFRRF is the admi11istmor of a single-employer defined benefit pension plan maintained for members of the City of Lubbock Fire Depanment under provisions of applicable law of tbe Smc of Texas. All fire lighters in the Lubbock Fire Department are covered by the LFRRF. The table below summarizes the membership of the fund at December 31, 1995: 1. Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 2. Current employees a. Vested b. Nonvested Total 183 150 ..:il 430 The LFRRF provides sen·ice retirement, death, disability and withdrawal benefits. These benefits become fully vesced after 20 years of credited service. Employees may retire at age SO with 20 years of service. A reduced early service retirement benefit is provided for employees who terminate employment with 20 or more years of service before age 50. A partially vested benefit is provided for employees who terminate employment with at least 10 but less than 20 yeus of service. A firefighter bad the option to participue in a Deferred Retirement Option Plan (DROP) which ,,_,jU provide a lump sum beoefit and a reduced annuity upon cermin:1.tion of employment. As of December 31, 1995, firefighters must be at least age 54 with 24 years of service t0 participate in the DROP plan. Under the "New Plan" effective December 20, 1995, che monthly benefit at normal retirement, payable in a Joint and Two-Thirds to Spouse form of annuity, is equal to 69.25% of Final 48-Montb Average Salary plus SlOl.00 per month for each year of service in excess of 20 years. Under the "Old Plan" prior to December 20, 1995 (Plan Effective December 20, 1993), the mootbly normal retirerneot beocfit "-'as equal to 68.75% of Final 48-Month Average Salary plus $94.00 per mootb for each year of service io excess of 20 years. 45
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 ---NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS {CONTINUED) The "New Plan~ also pro"idcs increased benefits to current ~nsioners, allows a Retroactive DROP where :a fircfiglitcr can choose a benefit calculation date prior to cbc employment terminatioo, allows for a reduced E:irly Retirement DROP and RETRO DROP at age 50 with 20 years of service aod modifies the children's survivor benefits. Under both plans, Lubbock firefighters are required to contribute 11% of their pay ro the fuod. At the present time, the City of Lubbock's contributions arc based on a formula which causes the city's contribution rate to fluctuate from year to year. We assume that contributions by the City of Lubbock will average 14.5% of payroll ovu the JO.year period beginning January 1, 1995. The benefit and contribution provisions of this plan are auth.orized by chc Texas Local Fire Fighters' Retirement Act (TLFFRA). Summary of Significant Accounting Policies and Plan Asset Matters 1. Basis of Accounting The LFRRF financial statements are prepared on the accrual basls of accounting. The LFRRF's fiscal year is the calendar year. Employee and employer contributions arc recognlz.cd as revenues in the period in whicb the sahries are earned. Expenses are recorded when incurred. 2. Method Used to Val11t lnvmmtnts The LFRRF's investmentS are reported at original con. Discount accretion and premium amonization is recorded as an adjustment to investment income over tbe life of the security if significant. Gains and losses on s.ales of :asseu are recognized on the transaet.ion date. Funding Status and Progress The amount shown as ·pension benefit obligation• is a standardized disclosure measure of the present value of pension benefits estimated to be payable in the future as a result of employee service to date. These benefits have been adjusted for the effecu of projected salary increases. The Kpcnsion benefit obligation" is tbe actuarial present value of credited projected benefits :tnd is intended to help users assess the LFRRF's funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and m:i.ke comparisons among public employee retirement systems. This measure is independent of the actuarial funding method used to perform the actuniaJ valuation. The pension benefit obligation as of December 31, 199S is based on the actuarial valuation as of December 31, 1994, updated one year, and based oo the "New Planft in effect on December 31, 1995. Actuarial assumptions used in determining the pension benefit obligation as of December 31, 1995 ue the nme as those used in the December 31, 1994 valuation. Significant actuarial assumptions used include (a) a rate of return oo the invescment of present and future assets eq1.12l to 8.00% per year compounded annually, (b) projected salary increases of 4.S% per year compounded annually, attributable to inflation, (c) additional projected salary increases which averages approximately 1.00% per year, attributable to promotion and longevity and (d) no postretirement benefit increases. The actuarial assumptions used to determine the pension benefit obligation are the same as those used to determine the adequacy of the financing arrangement. 46
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNf GROUPS E. RETIREMENT PLANS (CONTINUED} pension Benefit Obljgation 1. Recirecs and beneficiaries currently receiving benefiu and ccrminatcd employees not yet receiving benefits 2. Current employees a. Accumulated employee contributions b. Employer-financed vested c. Employer-financed nonvested 3. Total pension bencfic obligation 4. Less net assets a,•ailable for benefits, at book value (market value at December 31, 1995 is $70,729,006). 5. Unfunded pension benefit oblig:i.tion s December 31, 1995 34,810,031 9,626,887 20,681,058 1,890,819 67,008,795 49,018,835 s 17,989,960 As a result of the adoption of the "New Plan", the pension benefit obligation as of December 31, 1995 increased by $1,415,066 over what it would have been under the MOid Plan~. Contributions Required and Contributions Made For the plan in effect December 31, 1995 the funding policy of the LFRRF required contributions equ:al to 11.00% of p:iy by the fire fighters and contributions which would average not less than 14.5% of payroll by the City over the 30-year period beginning January 1, 1995. For the 1995 calend:ar ye.ar the City contributed 15.42% of payroll to the LFRRF. A total of $2,351,646 o( fire fighters and City contributions were required and paid into the LFRRF during 1995. While the contribution requirements arc not actuarially determined, state l:aw requires th.at e:ach plan of benefits adopted by the LFRRF must be approved by a qu:alified actu:ary. The actuary cenifies that the contribution commitment by the fi.re fighters and the City provides an adequ:ice financing arrangement. Using the entry age :actuarial cost method, the plan's normal cost is determined as :a percentage of payroll. The excess of tbe total contribution rate over the normal cost rne is used to amortize tbe pl:an's unfunded actu:arial accrued liability, and the number of years needed to imortii.e the plan's unfunded :actuaria1 accrued liability is determined using :a level percentage of payroll method. For the "Old Plan" in effect :It December 31, 1994 the normal coSt is 20.06% of pay and the amortization period was :ipproximatcly 22 years. For the ~New Plan~ effective December 20, 1995, the norm:al cost is 20.29% of pay and the amortization period is approximately 30 y'4rs based on a December 31, 1994 valuation date. Tea y~rs of the standardized measure of the pension obligation is un:ivailable; the information will be presented only for :as many years as the measure is av:ailable. This data provides i.nforrnation :ibout progress made io accwnulating sufficient assets to pay benefiu wb.en due. Further details conccrniog tbe financial position of the LFRRF aod the latest :actuarial v2luation :arc available by contacting the Boud of Trustees, LFRRF, City of Lubbock, P.O. Box 2000, Lubbock, Texas 79457. 47
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS (CONTINUED) LUBBOCK FIREMEN'S RELIEF AND RETIREMENT FUND ANALYSIS OF FUNDING PROGRESS (6) Unfunded Pension (l) (4) Benefit Net Unfunded Obligation Assets (2) (3) Pension (5) as a% of Available Pension Percentage Benefit Annual Covered Fiscal For Benefit Funded Obligation Covered Payroll Year Benefits* Obligation (1} / {2} (2) • (1) Pa>,:roll ( 4!f(5}X100% 1987 $42,780,282 $47,785,715 89.5% $5,005,433 $6,524,303 76.7% 1988 28,739,352 38,112,853 75.4 9,373,501 6,770,331 138.4 1989''* 32,209,973 42,013,008 76.7 9,803,035 7,338,261 133.6 1990 3-4,663,461 45,378,384 76A 10,714,923 7,737,659 138.5 1991"''* 38,071,363 50,923,389 74.8 12,852,026 8,195,215 156.8 1992 40,993,483 53,804,511 76.2 12,81 l,028 8,48-4,196 151.0 1993"*"* 44,037,838 59,044,523 74.6 15,006,685 9,250,527 162.2 1994 .. .,,.,.,. 46,643,604 62,346,484 74.8 15,702,880 9,163,014 171.4 1995 ........... 49,018,835 67,008,795 73.2 17,989,960 9,300,857 193.4 " At cost on December 31 of th:i.t year. In October 1989, the plan was amended to increase nandard retirement benefits from 64.5% to 65% of average sal;i.ry and to increase additional seniority benefits from $66 to $74 for each year of service ic excess of 20 years. The amendment increased the pension benefit obligation as of December 31, 1989 by Sl,412,516. In December 1991, the plan was amended to increase standard retirement benefits from 65.0% to 66.75% of average salary and to increase additional seniority benefits from S74.00 to $82.00 for each year of service in excess of 20 years. The amendment increased the pension benefit obligation as of December n, 1991 by $2,361,716. In December, 1993 the plan was amended to increuc standard retirement benefits from 66.75% to 68.75% of average salary and to increase additional seniority benefits from $82.00 to $94.00 for e11cb. year of service in excess of 20 years. The :amendment increased the pension benefit obligation as of December 31, 199) by $2,008,996. New assumptions used in the December 31, 1994 actuarial valuation arc: (1) the withdrawal rate, were lowered to 500/4, of the former rates; (2) the salary increase assumption was lowered from 5% to 4.5% plus promotional and longevity increases; (3) disabjJity rates were revised to reflect equa.l rates for on and off-duty disabilities; aod (4) the cbildreo's death benefit was changed to assume the benefit would terminate at age 23 racbcr than age 18 if the child is a full-time studeot. The new assumptions decreased the pension benefit obligation as of December 31, 199-4 by $331,608. MNew Plan" provisions effective December 20, 1995 increased the monthly service retirement benefit from 68.75% of Final 48-Month Average Salary plus $94.00 per month for each year of service io excess of 20 ye2rs to 69.25% of Final 48-Month Avenge Salary plus $101.00 per month for e;1.ch year of service in excess of 20 years. The "New Piao" provisioos increased the pension benefit obligation as of December 31, 1995 by Sl,415,066 over what it would have been under the MOid Pho". 48
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS E. RETIREMENT PLANS {CONTINUED) REVENUES BY SOURCE Employer Contribution as a% Ye:ir Ended Employee Employer Investment of Covered December 31 Contribution,., Contribution•> Income'-' Other Total Parroll 1985 S 720,016 s 889,620 S 3,048,840 s s S '4,658,481 13.0% 1986 766,468 942,620 2,778,953 2,033 4,490,074 13.2 1987 748,051 921,523 2,723,038 35,411 4,428,023 14.1 1988 744,736 936,880 2,897,527 4,579,143 13.8 1989 807,209 1,036,997 4,008,844 7,982 5,861,032 14.l 1990 851,143 1,152,051 2,642,338 4,645,532 15.1 1991 935,202 1,294,782 2,753,785 4,983,769 15.6 1992 949,968 1,309,442 2,538,095 4,797,505 15.2 1993 986,633 1,300,725 2,383,302 4,670,660 14.5 1994 1,006,892 1,334,219 2,339,112 4,680,223 14.6 1995 1,023,881 1,433,153 2,521,398 '4,978,432 15.4 EXPENSES BY TYPE Year Ended Administrative December 31 · Benefits"' Ex2enses* Other Total 1985 S 1,046,806 $ 248,499 $ $ 1,295,305 1986 1,301,712 470,606 49,358 1,821,676 1987 1,722,194 147,148 40,161 1,909,503 1988 2,040,693 150,934 15,081 2,206,708 1989 2,111,733 278,679 2,390,412 1990 2,448,809 118,295 35,122 2,602,226 1991 2,522,5-40 15-4,683 2,677,223 1992 2,755,358 211,368 2,966,726 1993 2,845,747 290,511 3,136,258 1994 3,302,828 268,056 9,743 3,580,627 1995 3,674,255 263,581 41,305 3,979,141 * Amounts prior to 1990 arc shown on the cash basis o! accounting. In 1990, the fund changed its basis of accounting to the accrual basis which is in accordance with GAM. PENSION BENEFIT OBLIGATION (PBO) AS OF DECEMBER 31, 1995 Pension Benefit Qbli~ation TMRS LFRRF Total Annuitants currently receiving beocfirs $ 16,817,933 $ 34,810,031 $ 51,627,964 T ermi.imed Employees 10,537,231 10,537,231 Current Employees Accumulated Employee contributions including allocated investment earnings 38,548,920 9,626,887 48,175,807 Employer-financed vested 66,605,695 20,681,058 87,286,753 Employer•financcd noovcned 7,642,964 1,890,819 9,533,783 Total PBO 140,152,743 67,008,795 207,161,538 Less: Net Assets Available for benefits (TiviRS: book value, LFRRF: cost) 109,679,187 49,018,835 158,698,022 Unfunded PBO S 30,473,556 1 17,989,960 S 48,463,516 49
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS F. DEFERRED COMPENSATION The City offers its employees 1wo deferred compensation plans crc:i.ted in accordance with Internal Revenue Code Section 457. The plans, a\•ailable to all City employees, permit them to defer a portion of 1beir salary until future ye:i.rs. The dderrcd compensation is not available 10 employees until termination, retirement, death or unforeseeable emergency. All amounts of compenmion deferred under the plans, all property and rights purchased with those amounts, and all income attribuu.ble to those amounts, pro~rty, or rights are (u.otil paid or made :available to the employee or other beneficiary) solely the property and right of the City (without beiog restricted to the provisioos of benefits under the pl2ns), subjecc only to the c1aims of the Ciry's gmeral creditors. Participant's righcs under the plans arc equal to those of general creditors of the Cicy in an amount equal to the fair market ~lue of the deferred account for each panicipant. In management's opinion, the City has no liability for losses under the plans but does have the duty of due care that would be" required of an ordinary prudent inve.stor. The City believes that it is unlikdy thu it will use the assets to $atisfy the claims of general creditors in the future. All assets of the plans arc held by an independent administrator :and va.lucd at market. The deferred compensa.tion plans are included io the City's general purpose financial statements as an agency fund. G. SURFACE WATER SUPPLY Canadian River Municipal Water Authority The Canadian River Municipal Wa1er Authority (CRMW A) is a Conservation and Redarnation Distriet established by the Texas Legislature to construct a dam, water reservoir and aqueduct system for the purpose of supplying water to surrounding cities. The District was created in 1953 and comprises eleven cities, including the City. The budget, financing and operations of the District arc governed by a Board of Directon selected by the governing bodies of each of the member cities, cacb city being entitled to one or two members dependent upon population. At September 30, 1996 the Board w:as comprised of 18 members, two of which represented the City of Lubbock. The City contracted with the CRMW A to reimburse it for a portion of the cost of the Canadian River Dam and aqueduct system in exchange for surface water. Accordingly, such payments are made solely out of water system revenues and ue oot general obligations of the City. The City's pro r:ata share of anoual fixed and variable operating and reserve assessments is recorded :is an expense of obuinicg surface ii.•ater. The long-term debt is owed to the U.S. Bureau of Reclamation for the cost of constructio.11 of the fa(:ility, ~·hich was completed in 1969. The City's allocatio.11 of project cost was $32,905,862. During the rear ended September 30, 1996, principal payments in the amount of $743,576 reduced the amount outstanding due to die authority at September 30, 1996 to $22,355,4'48, due in annu:11 installments of $1,351,543 iocludiog interest of 2.632% until the year 2018. The above cost for the righu are being arnoniz:ed over 85 years. The cost and debt arc recorded in the Water Enterprise Fund. GAAP requires accounting for debt service as a reduction in construction obligation payable aod related interest expense. However, the contract between the City and CRMWA requires the classification of payments to CRMW A to be reflected as operating expenses of the Water Enterprise Fund. Accordingly, the adjustment required to convert GAAP expenses to the cootr:ictual agreement results in an adjustment to increase operating expenses for principal payments io the amount of $743,576, interest in the amouat of $607,967, and reduce amortization expense by $387,128. so
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS G. SURF ACE \V.1 ATER SUPPLY (CONTINUED) Brazos River Authority -Lake Alan Henry During 1989, the City entered into an agreement with the Brazos River Authority (BRA) for the coosm1ction, maintenance and operation of the facilities known as Lake Alan Henry. The BRA, which is authorized by the State of Texas to provide for the conservation and development of surface waters iD tbe Brazos River Basin, has issued bonds for the construction of the dam and lake facilities on tb.e South Fork of the Double Mountaias Fork of the Brazos River. Total costs are expected to exceed S120 million. The agreement obligates the Cit)' to provide revenues to BRA in amounu sufficient to cover all maintenance and operating com, management lees to the authority, as well as funds sufficient to pay all capital costs associated with construct.ion. The City will receive surface water for the payments to BRA. Approximately 5300,445 was paid to the BRA for maintenance and operating com in fiscal year 19%. The BRA issued Sl6,970,000 in revenue bonds in 1989 and $39,685,000 in revenue bonds in 1991. These bond$ were refunded July 1995. Disdosure of the refunding can be found in Nore ID. L. Construction of the dam and lake facilities began in 1989. The City is obligated to ·provide sufficient funds over the remaining life of the bonds to service the debt requirement. The financial activity, along with the related obligation, is accounted for in the Water Enterprise Fund. At September 30, 1996, certain mineral rigbu associated with land located in the Lake Alan Henry site owned by individuals had not been acquired by the City. The addiciona.l amount needed to purchase such mineral rights is yet to be detenn.ined, H. OTHER ENTERPRISE FUND ACTIVITIES Enterprise Fund Transfers Transfers to the General Fund from the Electric, '3:1ater aod Sewer Enterprise Funds, in the opinion of management, exceed the amount that would have been paid to the City if these funds were privue sector companies engaged in the same enterprises. In addition to the amount transferred in excess of private sector caxes, there is also an amount transferred to compensate the General Fund for shared services and indirect costs. I. SEGMENT INFORMATION· ENTERPRISE FUNDS The City rnainuias seven enterprise fuads which include electric, water, sewer, solid waste, airpon, golf, and stormwater dr:linage. 51
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS I. SEGMENT INFORMATION • ENTERPRISE FUNDS (CONTINUED} Segment information for tbe year ended Sl'ptember 30, 1996, u•as as follows: Solid S1onnwstcr Totsl Elutric w~tcr s, ... , Waste Airport Gol( Orain2.gc En1crprise Fund Fuod Fund Fund Fund Fund Fund Fund, Opcr>ting Revenues S 57,126,068 $27,211,114 SIS,200,091 SJ7,295,88} S 4,}07,213 s SJ,121,069 1122,961.•38 D,prtciuion Expcn,c 4,299,491 2,S29,306 2.06),580 1,756,•l) l,869,Sl7 81,281 6,604 12,606,2)2 Op,ming incomt Oon) 1,069,619 13,479,IS) 7,218,955 5,751,951 (91•,IV) (14,777) 1,428,210 lS,149,021 Opcra,ing Tnni!er, In (ou,) (6,)87,579) (2,022 ,5 8 S) (1,014,770) (999,66S) {451,205) {590,lll) (I I ,•68,6l7) Net Income ~oss) l,178,87• 8,231,767 4,836,219 5,069,901 720,850 (t•,777) 951,JS• 2.1,104,111 Current capital contribu,ion11 net 13,046 7•),458 675,125 13,101 1,045,511 (8,•~) 2,~11.u, Propeny, pl.m, and cquipmcni: Additions: 4,451,510 J,024,7l5 J,•61,0H 6,383,895 159,65• 121,260 15,602,0U Deletions: 6,•l2,l60 262,liS 71,9•8 737,2)7 22,015 7,526,5~8 Net Working C•pital 10,068,914 (1,211,m) 2,9l•,•Jl 2,•82,064 (84,106) (2,030,176) 50),930 12,517,226 Allow an« for doubt/111 aecoun,s 137,6)9 2S•,759 98,921 170,9H 1,328 1,)70,581 Total Assen 134,264,149 208,)05,SOS 112, Ill ,039 26,672,•)4 S5,•52,532 569,719 5,75),007 5•l,ISO,J8S Donds ind other long• ltrrn li•bilities p•)•ab!t from optnling revenue, 2•,•29,513 9),09•,742 52.)7S,782 9,502,179 6,S80,.18l 5)5,930 186,519,299 'foul Equity S IOJ,6lS,16I 1108,962,•SS 155,118,769 $)6,~12.290 10,269,904 S(l,•6J,Jlt) SS,046,202 UJS,9&1,450 J. LEh,SE AGREEMENTS The City has catered into lease agrecmenu with independent third parties for the purpose of acquiring certain properties and equipment. These lease agreements qualify as capital leases for accounting purposes, and therefore, have been recorded as purchases at the present value of the fucure minimum lease payments as of the date of their inception. Obligations under c2pital leases at September 30, 1996 were as follows: Internal Service Computer and Software Radio Pagers Total Maturity Dates 1998 1999 52 Interest Rate 5.06% 4.96% Remaining Balance S 681,135 1,649,148 $2,330,283
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS I. LEASE AGREEMENTS {CONTINUED) Future minimum lease paymenu are as follows at September 30, 1996: Fiscal Year Ended September JO Total Minimum Lease Payments Less: Interest 1997 1998 1999 Present Value of Future Minimum Lease Payments S 965,956 9J4,856 592,762 2,493,574 (163,291) $2,J)0,283 The following is a summary of assets acquired under the above capital leases at September 30, 1996: Equipment Len: Accumulated Amortization Total $4,075,606 (597,967) $3,477,639 Amortization expea~ on assecs under capital leases is included in depreciation expeose. The City enters into monthly leases for various items of equipment for purposes of evaluating a future purchase. Accordingly, at September 30, 1996, the City had no material initial or rem.i.ining non•cancclable operating leases with terms exceeding one yeu. Rent expense for 1996 was Sl,022,665. Civic Lubbock, Inc. leases cenai11 space in a retail shopping area in Lubbock, Texas for the purpose of ticket sales and solicitation of civic and promotional events. Payments under this lease agreement arc made monthly. The lease expired in March, 1995, at which tune the agreement became a month-to•rnonth lease tancelable with notice. Rent expense for the ye-ar ending September 30, 1996 was $22,297. Citibus contracted with Goodyear Tire and Rubber Co. ("Goodyear~) to provide tires through August 1994. Citibus paid a flat rate per tire per mile for the Jim 42,000 miles and one-half that r:ite for excess mileage. Io September 1994, Citibus entered ioto a six month lease to provide tires under substantially the same terms. In February 1995, Citibus entered into a new agreement with Goodyear for a 56 month term ending September JO, 1999. The contract may be terminated at any time by Citibus with written notification to Goodyear. Under the terms of the c9ntract, Citibus p:iys a flat rate per ti.re which is dependent on vehicle type. The flat rate is adjusted each six months based on the spot market price of rubber and Goodyear's manufacturing com. The tot:i.l amount paid for 1996 was $32,092. On July 28, 1994, the City (on behalf of METTS) entered into a five year lease with the Lubbock Chamber of Commerce for office space. The lease requires annual payments of $31,500 due on the first day of October of each of the five years begin11ing October 1, 1994. Accordingly, Ul,500 of related le2se expense has been incurred for the year ended September 30, 1996. 53
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS K. LONQ-TERM DEBT GENERAL OBLIGATION BONDS AND CERTIFICATES OF OBLIGATION: Interest Jute 7.86% 7.65 7.46 7.63 7.11 6.84 6.BJ 6.64 6.67 6.29 9.01 6.69 5.75 5.50 5.50 5.37 3.97 5.39 5.39 5.20 5.14 4.30 5.50 4.92 4.78 5.07 5.07 Toul • .... ...... Final Balance Issue Maturity Amount Outstanding Date Date Issued 9-30-96 11-15-85 2-15-03 s 60,614,070 $ 1,879,070 • 4-15-87 2-15-07 5,960,000 1,200,000 5-15-88 2-15-08 6,560,000 660,000 8-15-88 2-15-07 5,000,000 650,000 8-15-88 2-15-00 2,774,682 631,895 .. ,. 8-15-89 2-15-09 3,800,000 2,470,000 8-15-89 2-15-09 7,445,000 4,855,000 5-15-91 2-15-11 16,120,000 12,095,000 5-15-91 2-15-11 4,030,000 3,030,000 5-15-91 2-15-01 1,145,000 570,000 5-15-91 2-15-11 l,085,000 810,000 5-15-91 2-15-11 2,000,000 1,500,000 4-11-92 2-15-03 24,035,000 16,640,000 ,,.,..,., 1-14-92 2-15-12 1,655,000 1,335,000 5-15-92 2-15-14 34,520,000 31,070,000 8-15-92 2-15-12 7,565,000 1,815,000 5-1-93 2-15-15 14,425,000 13,705,000 10-1-93 2-15-14 3,625,000 3,265,000 1~1-93 2-15-14 2,550,000 2,300,000 10-1-93 2-15-14 1,470,000 1,330,000 10-1-93 2-15-14 19,215,000 17,295,000 12-1-93 2-15-08 9,865,000 9,165,000 ..... 5-15-95 2-15-15 4,690,000 4,460,000 5-15-95 2-15.00 900,000 750,000 5-15-95 2-15-01 2,000,000 1,735,000 12-15-95 2-15-16 6,505,000 6,505,000 12-15-9S 2-15-16 10,000,000 10,000,000 S 259,553,752 s 151,720,965 *,.,,.,.,. Refunding bonds j55ued to replace bonds issued 1966-1982 and 1984 . Refunding bonds issued to replace Certificates of Obligation issued in 1986 . Balance outstanding includes $42,787 di$COW1t on bonds sold. Refunding bonds issued to replace bonds issued 1983 and 1985 . Refunding bonds issued for a panial refunding of bonds issued 1987 and 1988. Includes $88,631,753 used to finance enterprise activities. 54
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS K. LONG.TERM DEBT (CONTINUED) ELECTRIC REVENUE BONDS: Final Interest Rzte Issue Date Maturitr Date 5.00 to 7.50% 7.00to 10.00 7.00to 10.00 6.25 to 9.20 5.00 to 6.50 5.00 to 6.60 3.80 lO 5.50 Total 9-15-75 -4-15-87 5• 15-88 5-15-91 7-15-91 7-15-91 6-15-95 4·15-96 -4-15-07 4-15•08 4-15-11 4-15-02 4-15-04 4-15-08 Balance Amount Outstanding Issued 9·30-96 s 2,000,000 s 7,000,000 350,000 17,000,000 1,700,000 7,500,000 5,625,000 4,424,976 1,924,976 ,. 4,999,989 2,919,989 u 13,560,000 12,906,185 ,.,._ S 56,484,965 $25,426,150 .. Refunding bonds issued for a partial refunding of the bonds issued May 15, 1983 . Refunding bonds issued for a partial refunding of tbe bonds issued April 15, 1984. Refunding bonds issued for a partial refunding of the bonds issued April 15, 1976, Aprjl 15, 1987, and May 15, 1988. Balance outstanding indude.s S163,815 discount on bonds sold. WATER REVENUE BONDS: Balance Final Amount Outstanding Interest R2te Issue Date Maturitl:'. Date Issued 09-~0-96 3.80to5.50% 6-1-95 8-15-21 S 58,170,000 $ 56,579,405 Total $58,170,000 S 56,579,405 ,. Balance outstanding included $880,595 discount on bonds sold. 55 •
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS Al\.'D ACCOUNT GROUPS K. LONG-TERM DEBT (CQNTINUEQ) The aonual requirements to amorti:r:e all outstanding debt of the City as of September 30, 1996, iocluding interest payments of S 124,186,237, are as follows; General As of Obligation Revenue September 30 Bonds Bonds Leases Total 1997 S 21,442,805 $ 9,054,770 s 965,956 S 31,463,531 1998 20,424,089 8,564,468 934,856 29,923,413 1999 19,498,918 8,326,103 592,762 28,417,783 2000 18,267,618 8,084,658 26,352,276 2001 16,646,373 7,8•6,360 24,492,733 2002 14,623,650 7,592,858 22,216,508 2003 ll,193,200 7,013,258 20,206,458 2004 11,228,524 6,847,148 18,075,672 200S 10,815,559 6,227,078 17,042,637 2006 10,389,652 6,098,700 16,488,352 2007 9,961,766 5,994,708 15,956,474 2008 8,930,725 5,558,910 14,489,635 2009 8,305,394 4,694,093 12,999,487 2010 7,407,883 4,670,)80 12,078,263 2011 7,098,050 4,663,283 11,761,333 2012 5,610,100 4,268,625 9,878,725 2013 5,344,125 4,282,550 9,626,675 2014 5,109,838 4,302,950 9,412,788 2015 1,866,206 4,324,000 6,190,206 2016 849,713 4,340,150 5,189,863 2017 4,361,125 4,361,125 2018 4,376,100 4,376,100 2019 4,404,800 4,404,800 2020 2,960,850 2,960,850 2021 2,964,550 2,964,550 Total $217,014,188 Sl41,822,475 s 2,493,574 S 361,330,237 ,. ,. This schedule does not include the effect of premiums or discounts. The City bas complied in all material respects with the bond covenants as outlined in each issue's indenture. 56
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996. NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS K. LONG-TERM DEBT (CONTINUED) Long-term debt transactions for governmental and proprietary (unds for the year ended September JO, 1996 are as follo"-'S: Debt Payable Debt Payable Governmental: 10-1-95 Additions Deletions 9-30·96 Tu,Supponed Obligation Bonds S 51,588,452 S 16,505,000 s 4,961,453 $ 63,131,999 Compensated Absences 8,337,374 28,817 8,308,557 Total Governmental 59,925,826 16,505,000 4,990,270 71,440,556 Proprietary: Self-Supported Obligation Bonds 96,590,300 7,958,547 88,631,753 Revenue Bonds 86,225,863 49,692 4,270,000 82,005,555 Notes 74,184 74,184 I.uses J,16),804 833,521 2,330,283 Compensated Absences 2,868,586 129,678 228,749 2,769,515 Total Proprietary 188,922,737 l~,370 13,365,001-175,737,106 Total City-Wide: Obligatioa Bonds 148,178,752 16,505,000 12,920,000 151,763,752 Revenue Bonds 86,225,863 49,692 4,270,000 82,005,555 Notes 74,184 74,184 Leases 3,163,804 833,521 2,330,283 Compensated Absences 11,2051960 129,678 257,566 11,078,072 Total City-Wide $248,848,563 S 16,684,370 S 18,355,271 $247,177,662 The total long•term debt is reconciled to the total a.nnual requirements to amonize long-term debt as follows: Long-Tenn Debt Interest Total amount of debt Add: Discounts Less: Compensated Absences Total future debt requiremenu $247,177,662 124,186,237 1,044,410 {11,078,072) $371,363,899 {10,033,662) $~61,330,237 L. ADVANCED DEFEASEMENT Io fiscal year 1994, the Cit}' defeased certam General Obligation Bonds. A po'rtlon of the proceeds of tbe Series 1993 Refunding Bonds was used to purchase United States Treasury Securities-St:ue and Local Government Series which were placed in an irrevocable trust to be used solely to refund the ponion of the Series 1987 General Obligation Bonds payments due February 15, 1998 through February 15, 2004, the portion of the Series 1988 General Obligation Refunding Bonds payments due February 15, 1999 through February 15, 2008, the ponion of the Series 1988 Ta.x and Golf Course Revenue Certificates of Obligation payments due February 15, 1999 through February 15, 2003, and the portion of tbe Series 1988 Combination Tax and Sewer System Subordin:1.te Lien Revenue Certificates of Obligation payments due February 15, 1999 through February 15, 2007. Accordingly, the trun :1.ccount assets and tbe liability for the defeased bonds are not included io the City's financial statements. On September JO, 1996, $8,775,000 of bonds outstanding arc considered defeascd, S7
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS L. ADVANCED DEFEASEMENT (CONTINUED) In fiscal yeu 1994, the City defeased $3,600,000 of the 1992 Tax and Waterworks Cenifica1es of Obligation. The proceeds were used to purchase United States Treasury Securities which were placed in an irrevocable trust to be used solely to defease the above indicated bond issue. According!)', tbc trust account assets and the liability for the def eased bonds arc not included in rbe City's financial stamru:ncs. On September 30, 1996, $3,200,000 of bonds outstanding ue considered ddeased. In focal ye:u 1995, tbe City dcfeased $205,000 Combinarion Tax and Golf Coum Revenue Certificates of Obligation, Series 1988, and S)85,000 General Obligation Refunding Bonds, Series 199). The $385,000 Series 199) bonds were the ponion of $9,865,000 General Obligation Refunding Bonds allocated to the Municipal Golf Coutsc. These proceeds were used to purchase Uoited States Treasury Securities, which wne placed in an irrevocable trust for the Series 1988 Certificates and a sinking fund.for the Series 1993 Bonds co defease these obligations. Accordingly, the trust accouot :assets and the liability for the defcased bonds are not included in the City's financial statements. On September 30, 1996 $485,000 of bonds outstanding are considered defeased. In fiscal year 1995, the Brazos River Authority defeased cenaio revenue bonds, on behalf of the Cicy of Lubbock. A portion of the proceeds of the Series 1995 Refuoding Bo.ads was used to purchase United Sutcs Treasury Securities-State and Local Government Series which were placed in an irrevocable trust to be used solely to refund Series 1989 Brazos River Autb.ority Revenue Bond payments due February 15, 1996 through February 15, 2019 and the Series 1991 Bruos River Authority Revenue Bond payments due February 15, 1996 througb February 15, 2021. Accordiogly, the trust account assets and the liability for the ddeascd bonds are not included in the City's financial statemeots. On September 30, 1996, $52,745,000 of bonds outstanding arc considered de!eased.. In fiscal year 1995, the City of Lubbock dcfeased cerram revenue bonds. A portion of the proceeds of the Series 1995 Refunding Bonds was used to purchase United States Treasury Securities-Seate and Local Government Series which were placed in ao irrevocable trust to be used solely to partially refund the Series 1976 Electric Light and Power System Revenue Bond payments due April 15, 1996 through April 15, 1997, Series 1987 Electric Light and Power System Revenue Bond payments due April 15, 1998 through April 15, 2007, and the Series 1988 Electric Light and Power System Revenue Bond payments due April 15, 1999 through April 15, 2008. Accordingly, tbe trust account assets and the liability for tbe dcfcased boods ue oot included in the City's financial statemeots. On September 30, 1996 Sl2,220,000 of bonds outstanding ace considered defeased. M. ACCRUED INSURANCE CLAIMS As discussed in Nore I.G., the Risk Ma.nagment Fund establishes a liability for self-iosurance for both reported and unreported insured events, which includes es1imatcs of both future payments of losses and related cl.i.im adjustment expenses. The following represents changes in those aggregate liabilities for the lnsuraoce Funds during the p:m two years ended September 30: 58
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS M. ACCRUED INSURANCE CLAIMS (CONTINUED) 1996 1995 Worker's Compensation and Liability Reserves at beginning of fiscal year s 3,734,341 s 5,535,452 Claims expenses 2,217,037 2,647,936 Cla.ims paymenu (503,490) (4,449,047) Reserve adjustment (1,713,547} Worker's Compensation and liability reserves at end of fiscal year 3,734,341 3,734,341 Medical and Dental Claims Liability at end of fiscal year • 1,040,814 1,644,359 Total Self-Insurance Liability at end of fiscal year $ 4,775,155 s 5,378,700 T Ota! Asseu to pay claims at end of fiscal year s 8,227,460 s 6,907,063 Accrued insurance cla.ims payable from restricted assets-current $ 1,797,048 $ 2,400,593 Accrued insurance claims•non·current 2,978,107 2,978,107 Total accrued insurance claims $ 4,775,155 s 51378,700 '1 The information necessary to prep,.re the separate disclosure for medical and dental claims liabilities is currently unavailable. N. LANDFILL CLOSURE AND POSTCLOSURE CARE COST State and federal laws and regulations require the City to place a final cover on its landfill site "'hen it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thiny years after closure. Although closure and postclorure care costs will be paid only near or after the date that the landfill stops accepting wasce, the City reports a portion of these closure and postdosurc com as an operating expense in each period hued on landfill capacity used as of each balance sheet date. The $7,565,016 reported as landfill closure and postclosure care liability at September 30, 1996, represents the cumulative amount reponed to date based on the use of 81 percent of the estimated capacity of the landfill. This amount includes $590,745 of expense applicable to fiscal year 1996. The City will recognize the remaining estimated cost of closure and pondosure care of Sl,699,284 as tbe remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postdosure care in 1996. The City expects to close the landfill in the year 1998. Actual cost may be higher due to inflation, changes in technology, or changes in regulaions. The City is required by state and federal laws and regulations to provide assurance that financial resources v.•ill be available to provide for closure, postclosure care, and remediation or containment of environmental hazards at it$ landfill The City is in compliance with these requirements and has chosen the Local Government Financial Test and Government Guarantee mechanism for providing this assurance. The City expects to finance closure costs through normal bperations. 59
CITY OF LUBBOCK, TEXAS Notes to Financial Statements Sep,tember 30, 1996 NOTE IV. CONTINGENT LIABILITIES A. FEDERAL GRANTS In the normal course of operations, the City receives grant funds from v.arious Federal agencies. The grant programs arc subject to audit by agenu of the granting authority to ensure compliance with conditions precedent to the granting of funds. Any liability for reimbursement which may arise as the result of audits of granu is not believed to be material. B. UTIGATlON The City is involved in lawsuits arising in the normal coune of business, including claims for property damage, penonal injury and personnel practices, disputes over contract awards and property condcll'lllation proceedings, and suits contesting the legality of certain uxes. Io the opinion of man.agemem, the ultim.ate outcome of these lawsuits will not have a material adverse effect on the City's financial position as of September 30, 1996. C. SITE REMEDIATION The Cit}' has identified specific locations requiring site remediatioa relative to underground fud storage tanks. The potential exposure is not readily determinable ;is of September JO, 1996. In the opinion of m2nagement, the ultimate liability will not have 2 material adverse effect on the City's financial position. NOTE V. FINANCIAL INSTRUMENTS The City is subject to off-balance sheet risk associated with asseu that are not recorded in the financial statements, specifically with respect to United States Treasury Securities-State and Local Government Series, held in four irrevocable trusts. These include: • a trust to refund a portion of General Obligation Bonds, Series 1987, a portion of General Obligation Bonds, Series 1988, a portion of Combination Tax and Golf Course Revenue Certificates of Obligation, Series 1988 and a portion of Combination Tax and Sewer System Subordinate Lien Revenue Certificates of Obligation, Series 1988 • a trust to refund a portion of Tax and Waterworks Certificates of Obligation, Series 1992 • a trust to refund the Brazos River Authority Revenue Bonds, Series 1989 and a portion of tbe Brazos River Authority Revenue Bonds, Series 1991 • a trust to refund a portion of the Electric Light and Power System Revenue Bonds, Series 1976, a ponion of the Electric Light and Power System Revenue Bonds, Series 1987, and a portion of the Electric Light 2nd Power System Revenue Bonds, Series 1988 Management feels that due to the nature of these securities, there is a minimal amount of credit or market risk associated witli these securities. Financial i.nu.ruments which potentially subject the City to concentrations of credit risk consist primarily of non-insured or collateralized demand deposits and trade receivables. Management believes that tbe City places its demand deposits in well capitalized financial institutions in amounts that are within the Federal Deposit Insurance Corporation limitations or are collateralized by pledged securities. Concentruions of credit risk are primarily focused on trade receivables which are due from cunomen. No significant credit losses from individual receivables were experienced during the year. 60
CITY OF LUBBOCK, TEXAS Notes to Financial Statements September 30, 1996 NOTE VI. RESTATEMENT OF BEGINNING BALANCES Beginnlllg fund equity has been restated to reflect confiscated funds in the Airport Enterprise Fund as a liability. The effect of the change was to decrease retained earnings in the Airport fund by $16,741 and increase liabilities by tbe same amount. In the Stormwater Enterprise Fund, beginning fund equity bas been restated to reflect amounts that were closed to retained ea.rnings in prior years that in fact a.re capital assets. This change is due to moving a project from the general fund capital projects which expenses capital assets and records them in the General Fixed Asset Account Group to an enterprise fund that capitalized and depreciates fixed assets. The effect of the change was to increase retained earnings and construction in progress in the Stormwater fund by $898,378 and decrease investment in fixed assets and construction in progress by the same amount in the General Fixed Asset Account Group. NOTE VII. ACCOUNTING CHANGES During fiscal year ending September 30, 1996 GASB Statement No. 24 • Accounting and Financial Reporting for Certain Grants and Other Financial Assistance" became effective. The Statement had no material effect on the September 30, 1996 gener:tl purpose financial statements of the City. In August 1995, the GASB issued Statement No. 29, "The Use of Not-for-Profit Accounting and Financial Reponing Principles by Governmental Entities·. The provisions of this Statement generally are effective for financial smementS for periods beginning after Deccmbe.r 15, 1994; the modification of the AICP A Not-for-Profit model for cenain GASB pronouncements is effective for entities that previously have not applied those pronouncements £or periods beginning ahcr December 15, 1995. This Statement u not expecud to impact the City's financial reporting as the City will continue to use the governmental reponiog model and elected in fiscal year 1993-94 the provisions of GASB Statement No. 20, paragraph 7, which provides the City the option of not applying certain Financial Accounting Standards Board Statements. NOTE VIII. SUBSEQUENT EVENTS The City of Lubbock has scheduled a second reading by the City Council of an advance refunding ordinance to refund cenain general obligation debt amounting to approximately $12-1-4 million. The expected delivery date of tbe refunding issue is February 1997. 61
LUBBOCK TEXAS 62
APPENDIXC FORM OF BOND COUNSEL'S OPINION
THIS PAGE INTENTIONALLY LEFT BLANK
FULBRIGHT & JAWORSKI L. L. P. A REGISTERED LIMITED LIABILITY PARTNERSMIP 2200 Ross AVENUE SUITE 2800 MOUSTON WASMINGTON. D.C. TELEPl-<ON E: 214/655-8000 FACSIMILE: 214/855·6200 DALLAS, TEXAS 75201 AUSTIN SAN ANTONIO CALLAS NEW YORK LOS ANGELES LONDON MONG KONG IN REGARD to the authorization and issuance of the "City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998" (the "Certificates"), dated January 1, 1998 (the "Certificate Date11), in the principal amount of $1,330,000, we have examined into the legality and validity of the issuance thereof by the City of Lubbock, Texas (the "City"), which Certificates are issuable in fully registered form only, in denominations of $5,000, or any integral multiple thereof (within a maturity) have stated maturities of February 15, 1999 through February 15, 2008, and bear interest on the unpaid principal amount from the Certificate Date at the rates per annum set forth in the ordinance authorizing the issuance of the Certificates (the "Ordinance"), such interest being payable on February 15 and August 15 in each year, commencing August 15, 1998, to the registered owners thereof shown on the registration books of the Paying Agent/Registrar on the Record Date (stated on the face of the Certificates). WE HA VE SERVED AS BOND COUNSEL for the City solely to pass upon the legality and validity of the issuance of the Certificates under the Constitution and laws of the State of Texas, and with respect to the exclusion of the interest on the Certificates from gross income for federal income tax purposes and none other. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the City. OUR EXAMINATIONS into the legality and validity of the Certificates included a review of the applicable and pertinent provisions of the Constitution and laws of the State of Texas, a transcript of certified proceedings of the City relating to the authorization and issuance of the Certificates, including the Ordinance, customary certifications and opinions of officials of the City and other pertinent showings, and an examination of the Certificate executed and delivered initially by the City, which we found to be in due form and properly executed. BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that, under the applicable law of the United States of America and the State of Texas in force and effect on the date hereof: 0478923 (1) The Certificates have been duly authorized by the City in compliance with the Constitution and laws of the State of Texas now in force, and the Certificates issued in compliance with the provisions of the Ordinance are valid and legally binding obligations of the City, payable
THIS PAGE INTENTIONALLY LEFT BLANK
Page 2 of Legal Opinion of Fulbright & Jaworski L.L.P. Re: $1,330,000 "City of Lubbock, Texas, Tax and Airport Surplus Revenue Certificates of Obligation, Series 1998", dated January 1, 1998 from an ad valorem tax levied, within the limitations prescribed by law, upon all taxable properly within the limits of the City, and are additionally payable from and equally and ratably secured by a lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's Airport in the manner and to the extent provided in the Ordinance; except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with the general principles of equity. (2) Assuming continuing compliance after the date hereof by the City with the terms of the Ordinance and in reliance upon representations and certifications of the City made in a certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the Certificates, pursuant to section 103 of the Internal Revenue Code of 1986 and existing regulations, published rulings, and court decisions thereunder, interest on the Certificates is excludable from the gross income, as defined in section 61 of such Code, of the owners thereof for federal income tax purposes, except with respect to any Certificate for any period of time during which such Certificate is held by a "substantial user" of any of the facilities financed with proceeds of the Certificates or by a "related person," within the meaning of section 14 7(a) of such Code. We call your attention to the fact that interest on the Certificates will be treated as an item of tax preference for purposes of calculating the alternative minimum tax applicable to taxpayers for tax years beginning after December 31, 1986. WE EXPRESS NO OPINION as to any other federal, state, or local tax consequences under the Internal Revenue Code of 1986 or any proposed tax legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Certificates. Ownership of tax-exempt obligations such as the Certificates may result in collateral Federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, and taxpayers who may be deemed to have paid or incurred certain expenses allocable to, tax-exempt obligations. EHE:dfc 0478923
No Text
-
ISSUE PRICE CERTIFICATE
The undersigned hereby certifies with respect to the sale of CITY OF LUBBOCK, TEXAS TAX AND AIRPORT SURPLUS
REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998 (the "Certificates"), issued in aggregate principal amount of
$1,330,000, as follows:
I. The undersigned is the undelWriter or the manager of the syndicate ofundelWritcrs which has purchased the Certificates from the
City of Lubbock, Texas (the "Issuer") at competitive sale.
2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to the
public of the Certificates of each maturity at the respective prices set forth below.
3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the
Certificates of each maturity at which a substantial amount of the Certificates of such maturity was sold to the public is as set forth
below:
Principal Offering Principal Offering
Amount Year of Price Amount Year of Price
Maturing Maturity (%Yield) Maturing Maturity (%Yield)
$ 105,000 1999 % $ 135,000 2004 %
110,000 2000 % 140,000 200.S %
115,000 2001 % 150,000 2006 %
125,000 2002 % 155,000 2007 %
130,000 2003 % 165,000 2008 %
4. The tenn "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations
acting in the capacity of underwriters or wholesalers.
5. The offering prices described above reflect curTent market prices at the time of such sales.
6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased
bond insurance for the Certificates. The bond insurance, if any, has been purchased from ____________ (the
"Insurer") for a premium cost of$ ________ (net of any nonguarantcc cost, e.g., rating agency fees). The amount of
such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The
premium docs not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in
comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present
value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the
Certificates which results after recovery of the insurance premium, exceeds the present value of the bond insurance premium.
7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the
conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Certificates from the
gross income of their owners.
EXECUTED and DELIVERED this ___ day of ___ __, 19_.
(Name of Underwriter or Manager)
By _____________ _
(Title)
Honorable Mayor and City Council
City of Lubbock, Texas
Members of the City Council:
OFFICIAL BID FORM
January 8, 1998
Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated December 11, 1997 of$I,330,000
CITY OF LUBBOCK, TEXAS TAX AND AIRPORT SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 1998,
both of which constitute a part hereof.
For your legally issued Certificates, 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 Certificates
maturing and bearing interest as follows:
Maturity Principal Interest Maturity Principal
(February I 5) Amount Rate (February 15) Amount
1999 $ 105,000 % 2004 $ 135,000
2000 110,000 % 2005 140,000
2001 115,000 % 2006 150,000
2002 125,000 "% 2007 155,000
2003 130,000 % 2008 16S,0O0
Our calculation (which is not a part of this bid) of the interest cost from the above is:
Total Interest Cost $ ______ _
Less Premium
NET INTEREST COST
EFFECTIVE INTEREST RA TE
$. _____ _
_______ %
Interest
Rate
%
%
%
%
%
We are having the Certificates of the following maturities _________________ insured by __ _
___________ at a premium of$ ______ _, said premium to be paid by the Purthaser. Any fees
to be paid to the rating agencies as a result of said insurance will be paid by the City.
The Initial Certificates shall be registered in the name of _________________ __, which will, upon
payment for the Certificates, be cancelled by the Paying Agent/Registrar. The Certificates 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 __________ Barne, _____ __, in the amount of$26,600,
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 the Certificates utilizing the Book-Entry-Only System through DTC and make payment for the Initial
Certificate in immediately available funds in the Corporate Trust Division, U.S. Trust Company of Texas, N.A., Dallas, Texas, not
later than 10:00 AM, CST, on February 12, 1998, or thereafter on the date the Certificates are tendered for delivery, pursuant to the
tenns set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Certificates 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 Certificates, a
certificate relating to the "issue price" of the Certificates 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. THE UNDERSIGNED AGREES THAT THE
AGGREGATE COMPENSATION WILL NOT EXCEED 2% OF THE ISSUE PRICE OF THE CERTIFICATES TO THE
PUBLIC EXCLUDING INTEREST PAID BY THE PUBLIC.
-
We agree to provide in writing the initial reofferiog 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 Lubbock, Texas. subject to and in accordance with the
Notice of Sale and Bidding Instructions, this the 8th day of January, I 998.
ATrEST: Mayor
City of Lubbock, Texas
City Secretary
-
'I [
BOND YEARS
Bonds Accumulated Bonds
Maturing Amount Bond Years Bond Years Maturing
1999 $ 105,000 117.833 117.833 1999
2000 110,000 233.444 351.278 2000
2001 115,000 359.056 710.333 2001
2002 125,000 515.278 1,225.611 2002
2003 130,000 665.889 1,891.S00 2003
2004 135,000 826.500 2,718.000 2004
2005 140,000 997.111 3,715.111 2005
2006 150,000 1,218.333 4,933.444 2006
2007 155,000 1,413.944 6,347.389 2007
2008 16.5,000 1,670.167 8,017.556 2008
Average Maturity ............................. 6.028 Years
-
COMPLIANCE Wl111 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.
AoomONAL COPIES Of NOTICE, BID FORM AND STATEMENT ... A limited number o( additional copies of this Notice of Sale and
Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the nonnal 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 Certificates, confirm its approval of the
fonn and content of the Official Statement, and any addenda. supplement or amendment thereto, and authorize its use in the
reoffering of the Certificates by the Purchaser.
ATTEST:
-
Kaythie Darnell
City Secretary
December II, l 997
V
Windy Sitton
Mayor
City of Lubbock, Texas
DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS
CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Certificat~ but neither the failure to
print or type such number on any Certificate 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 Certificates 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
Certificates 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.
DELIVERY OF CERTIFICATES ... Delivery will be accomplished by the issuance of one Initial Certificate (also called the "Certificate"
or "Certificates"), either in typed or printed form, in the aggregate principal amount of $1,330,000, payable in stated installments to
the Purchaser, signed by the Mayor and City Secretary, approved by the Anomey General, and registered and manually signed by the
Comptroller of Public Accounts. Upon delivery of the Initial Certificate, it shall be immediately cancelled and one definitive
Certificate 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 Certificates must
be made in immediately available funds 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 Certificates. It is anticipated that delivery of the Certificate(s)
can be made on or about February 12, 1998, and it is understood and agreed that the Purchaser will accept delivery and make
payment for the Certificates by 10:00 AM, CST, on February 12, 1998, or thereafter on the date the Certificate is tendered for
delivery, up to and including February 26, 1998. If for any reason the City is unable to make delivery on or before February 26,
1998, 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 Certificates, provided such failure is due to circumstances beyond the City's reasonable control.
CoNDm0NS TO DELIVERY •.. The obligation of the Purchaser to take up and pay for the Certificates is subject to the Purchaset's
receipt of (a) the legal opinion of Fulbright & Jaworski, L.L.P., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"), (b) the
no-I itigation certificate, and ( c) the certification as to the Official Statement, all as further described in the Official StatemenL
In order to provide the City with infonnation required to enable it to comply with certain conditions of the Internal Revenue Code of
1986 relating to the exemption of interest on the Certificates from 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 Certificates) a certification as
to their "issue price" substantially in the fonn and to the effect attached hereto or accompanying this Notice of Sale and Bidding
Instructions. In the event the successful bidder will not reoffer the Certificates for sale, such certificate may be modified in a manner
approved by the City. In no event will the City fail to deliver the Certificates as a result of the Initial Purchaser's inability to
sell a substantial amount of the Certificates 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 delivery of the Certificates, 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 Certificates 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 Certificates is subject to the receipt by the Purchaser of opinions of Bond
Counsel, to the effect that the Certificates are valid and binding special obligations of the City and that the interest on the
Certificates will be excludable from gross income for federal income tax purposes under existing law, except as explained under
"Tax Matters" in the Official Statement, and will be an item of tax preference for purposes of determining the alternative
minimum tax imposed on individuals, corporations, trust or estates. For further information, see "Tax Matters" in the
Official Statement.
CERTIFICATION OF OFFICIAL STATEMENT ... At the time of payment for and Initial Delivery of the Certificates, the City will
execute and deliver to the Purchaser a certificate in the form set forth in the Official Statement
TAX ExEMPT STATIJS .. , .Interest on the Certificates will be included in computing the alternative minimum taxable income of the
owners thereof which are individuals, corporations, trusts or estates (see "Tax Matters and Tax Exemption" in the Official
Statement). At any time before the Certificates are tendered for delivery, the Purchaser may withdraw its bid if the interest received
by private holders on obligations 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.
iii
-
GENERAL
FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of
the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the
issuance and delivery of the Certificates. First Southwest Company has agreed, in its Financial Advisory contract, not to bid for the
Certificates, either independently or as a member of a syndicate organized to submit a bid for the Certificates. First Southwest
Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Course! and has not verified and does not assume
any responsibility for the infonnation, covenants and representations contained in any of the legal documents with respect to the
federal income tax status of the Certificates, 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 Certificates in slates other than Texas will
be made only pursuant to exemptions from registration or, where necessary, the Purchaser will register the Certificates in accordance
with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Purchaser, at
the Purchaser's written request and expense, in registering the Certificates 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 jurisdiclion.
NOT AN OFFER TO SELL ... This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Certificates,
but is merely notice of the sale of the Certificates. The offer to sell the Certificates 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 detennine the investment quality of the Certificates.
ISSUANCE OF ADDITIONAL DEBT ... Simultaneously with issuance of the Certificates the City is issuing $10,260,000 Tax and
Waterworks System (Limited Pledge) Revenue Certificates of Obligation, Series 1998. Although the City does not anticipate the
issuance of additional general obligation debt within the next twelve months planning is in progress that, if realized, will result in the
isruance of general obligation debt over the period Fiscal Years 1998-99 through 2000-01 (See the Official Statement and "Table l •
Valuation, Ex.emptions and General Obligation Debt" and "Anticipated Issuance of General Obligation Debt", thereunder).
RATINGS ... The presently outstanding uix supported debt of the City is rated "Aa" by Moody's Investors Service, Inc.
("Moody's") and "AA" by Standard & Poor's Ratings Services, A Division of The McGraw-Hill Companies, Inc. ("S&P"). The
City also has one issue outstanding which is rated n Aaa" by Moody's and "AAA" by S&P through insurance by a commercial
insurance company. Applications for contract ratings on the Certificates have been made to Moody's, S&P and Fitch Investors
Service, L.P. ("Fitch"). The results of their determinations will be provided as soon as possible.
MUNICIPAL BoND INSURANCE ... In the event the Certificates are qualified for municipal bond insurance, and the Purchaser desires
to purchase such insurance, the cost therefor will be paid by the Purchaser. Any fees to be paid to the rating agencies as a resuh 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 Certificates.
THE OFFICIAL STATEMENT AND COMPLIANCE WlTH SEC RULE 15c2-12 ... The City has prepared the accompanying Official
Statement and, for the limited purpose of complying with SEC Rule l 5c2-12, 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 information or operating data, concerning every entity, enterprise, fund, account,
or person that is material to an evaluation of the offering of the Certificates. 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 Purchaser, or Purchasers, 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 100 copies of the
Official Statement including a like number of copies of any Supplement(s) reflecting interest rates and other terms relating to the
initial reoffering of the Certificates. The cost of a reprinted Official Statement, if the Purchaser{s) shall so elect, and the cost of any
Official Statement in excess of the number specified shall be prepared and distributed at the cost of the 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 lhe
distribution or delivery ofany copies of the Official Statement in connection with the offering or reoffering of the subject securities.
CONTINUING DISCWSURE AGREEMENT ... The City will agree in the Ordinance to provide cenain periodic infonnation and
notices of material events in accordance with Securities and Exchange Commission Rule l 5c2-l 2, as described in the Official
Statement under "Continuing Disclosure of Infonnation". The Purchaser(s') obligation to accept and pay for the Certificates 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.
iv
-
NOTICE OF SALE
AND
BIDDING INSTRUCTIONS
ON
Sl,330,000
CITY OF LUBBOCK, TEXAS
(Lubbock County)
TAX AND AIRPORT SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 1998
Sealed Bids Due Thursday, January 8, 1998, at 11:00 AM, CST
IN TI-IE OPINION OF BOND COUNSEL, INTEREST ON THE CERTiflCA TES WILL BE A PREFERENCE ITEM FOR
PURPOSES OF COMPUTING THE ALTERNATIVE MINIMUM TAXABLE INCOME OF OWNERS OF THE
CERTIFICATES WHICH ARE INDIVIDUALS, CORPORATIONS, TRUSTS OR ESTATES.
1lfE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS.
THE SALE
CERTIFICATES OFFERED FOR SALE AT COMPE1TTIVE BIDDING .•• The City of Lubbock, Texas (the "City"} is offering for sale its
$1,330,000 Tax and Airport Surplus Revenue Ccnificates of Obligation, Series 1998 (the "Certificates").
ADDRESS Of Bros ... Scaled bids, plainly marked "Bid for Certificates", should be addressed to "Mayor and City Council, City of
Lubbock, Texas", and delivered to the Director of Financial Services, Room 204, in the Municipal Complex, 1625 13th Street,
Lubboclc, Texas, prior to 11 :00 AM, CST, on the date of the bid opening. All bids must be submitted on the Official Bid Fonn,
without alteration or interlineation.
BIDS BY TELEPHONE OR FACSIMILE ... Bidders must submit SIGNED OfficiaJ Bid Forms to VINCE VIAILLE, FIRST
SOUTHWEST COMPANY, IOOI MAIN STREET, SUITE 802, LUBBOCK, TEXAS 79401, and submit their bid by telephone or
facsimile (fa,c) on the date of the sale.
Telephone bids will be accepted at (806} 775-3690, between I0:00 AM and 10:45AM, CST.
fax bids must be received between l0:00 AM and 10:4S AM. CST, on the date of the sale at (806) 775-3307, attention VINCE
VIAILLE.
First Southwest Company will not be responsible for submitting any bids received after tile above deadlines.
First Southwest Company assumes no responsibility or liability with respect to any irregularities ~iated with the submission of
bids if telephone or fax options are exercised.
PLACE AND TIME OF BID OPENING ••• The bids for the Certificates will be publicly opened and read in the office of the Director of
Financial Services, Room 204, Municipal Complex at 11 :00 am, CST, Thursday, January 8, 1998.
AWARD OF nu: CERTIFICATES ... The City Council will take action to award the Certificates (or reject all bids) at a meeting
scheduled to convene at 8:00 AM, CST, on the date of the bid opening, and adopt an ordinance authorizing the Certificates and
approving the Official Statement (the "Ordinance").
THE CERTIFICATES
DESCRlmON ... The Certificates will be dated January I, 1998 (the "Dated Date"). Interest will accrue from the Dated Date and
will be due on August 15, 1998, and each February 15 and August IS thereafter until the earlier of maturity or prior redemption. The
Certificates will be issued only in fully registered fonn in any integral multiple of$5,000 for any one maturity. The Certificates will
mature on February 15 in each year as follows:
-
MATURITY SCHEDULE
Principal Principal
Year Amount Year Amount
1999 $ l05,000 2004 $ 135,000
2000 110,000 2005 140,000
2001 115,000 2006 150,000
2002 125,000 2007 155,000
2003 130,000 2008 165,000
OPTIONAL REDEMPTION ... The Certificates are not subject to redemption prior to maturity.
BooK-ENTRY-ONLY SYSTEM ... The City intends to utilize the Book-Entry-Only System of The Depository Trust Company
("DTC~). See "The Certificates -Book-Entry-Only System" in the Official Statement
PAYING AGENT/REGISTRAR .•• The initiaJ Paying Agent/Registrar shall be U.S. Trust Company of Texas, N.A, Dallas, Texas (see
"The Certificates -Paying Agent/Registrar" in the Official Statement).
SOURCE OF PAYMENT ... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and
coll~ction of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and
(ii) a pledge of Surplus Revenues of the City's Airport, as provided in the Ordinance.
Further details regarding the Certificates are set forth in the Official Statement.
CONDITIONS OF THE SALE
TYPE OF BIDS AND INTEREST RATES •.• The Certificates 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 the date of the Certificates to the date of delivery of the Certificates.
AGGREGATE PURCHASERS' COMPENSATION MAY NOT EXCEED 2% OF THE ISSUE PRICE OF THE
CERTIFICATES TO THE PUBLIC EXCLUDING INTEREST PAID BY THE PUBLIC. Bidders are invited to name the
rate(s) ofinterest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of !%or 1/20 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. No
limitation is imposed upon bidders as to the number of rates or changes which may be used. All Certificates of one maturity must
bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in the bid the
total interest cost in dollars and the effective interest rate detennined thereby ( calculated in the manner prescribed by Article 717k-2,
VATCS), which shall be considered informative only and not as apart of the bid.
BAs1s FOR AWARD ... For the purpose of awarding the sale of the Certlficates, the interest cost or each bid will be computed by
detennlning, at the rate or rates specified therein, the total dollar cost of all interest on the Certificates from the Dated Date to their
respective maturities, using the table of Bond Years herein, and deducting therefrom the premium bid, if any (the "Net Interest Cost
Calculation"). Subject to the City's right to reject any or all bids and to waive any irregularities except time of filing, the Certificates
will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form (the "Purchaser")
whose bid, based on the Net Interest Cost Calculation, produces the lowest net effective interest cost to the City and complies with
the allowable aggregate purchasers' compensation in the reoffering of the Certificates to the public.
GOOD FAITH DEPOSIT ..• A Good Faith Deposit, payable to the "City of Lubbock, Texas", in the amount of$26,600, is required.
Such Good Faith Deposit shaJI be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the
Purchasets compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may
accompany the Official Bid Fonn or it may be submitted separately. If submitted separately, ii 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 Certificates. 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 Certificates 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 are opened, and an award of the Certificates has been made.
ii
-