HomeMy WebLinkAboutOrdinance - 2010-O0073 - $41,000,000 Tax And Waterworks System Revenue Surplus - 09/16/2010Ordinance No. 2010-00073
ORDINANCE
relating to
$41,000,000
CITY OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 201 OC
Adopted: September 16, 2010
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND OTHER PRELIMINARY MATTERS
Section l.l. Definitions ..................... ,,, ....... ,, ...... ,,, .................. ,, ............................................ , .... 1
Section 1.2. Findings ....................... , .. , ............. ,, ... ,, .................................................................... 5
Section IJ. Table of Contents, Titles, and Headings .................................................................. 5
Section 1.4. Interpretation ........ , ................. ,, ................ ,, ... , ......................................................... 5
ARTICLE U
SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND; PRIOR LIEN,
PREVIOUSLY ISSUED M'D ADDITIONAL OBLIGATIONS
Section 2.1.
Section 2.2.
Section 2.3.
Section 2.4.
Section 2.5.
Payment of the Certificates ...................................................................................... S
Interest and Sinking Fund ........................................................................................ 7
Deposits to Interest and Sinking Fund ..................................................................... 7
Issuance of Prior Lien and Additionol Obligations ................................................. S
Certificates Subordinate to Prior Lien Obligations, Covenants and
Agreements .......... , ........................................................ ,,, ........................................ 8
Section 2.6. Pledge of Revenues ...................................... , ........ , ...... ,, ... , ............ , ..................... ,,, 8
Section 2.7. System Fund ............................................................................................................ 9
ARTICLE ill
AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE
CERTIFICATES
Section 3.L
Section 3.2.
Section 3 .3 .
Section 3.4.
Section 3.5.
Section 3 .6.
Section 3.7.
Section 3.8.
Section 3.9.
Section 3.10.
Section 3 .l 1.
Section 3.12.
Authoriz3tion .............................. , ................................................................. , .......... 9
Date, Denomination.. Maturities; and Interest ...................................... , .. , .............. 10
Mediwn, Method, nnd Place of Payment .............................................................. IO
Execution and Registration ofCertificate, ............................................................ 11
Ownership .............................................................................................................. 12
Registration,. Transfer, and Exchange ...................... , .... , ............... , ... , .......... ,, ........ 12
Cancellation ............................ , ....................... , .............................................. , ....... 13
Temporary Certificates .......................................................................................... 13
Replacement Certificates ....................................................................................... 14
Book-Entry-Only System ...................................................................................... 15
Successor Securities Deposilory; Transfer Outside Book-Entry-Only System ..... [6
Payments to Cede & Co ......................................................................................... 16
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Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
Section 4.6.
Section 4. 7.
Section 4.8.
Section 4.9.
Section 5, l,
Section 5.2.
Section 5.3.
Section 5.4.
Secti•n 5.5.
Section 5.6.
Section5.7.
ARTICLEN
REDEMPTION OF CERTlflCATES BEFOREMATIJR!lY
Redemption. ............... , ........................................ ,., .. ,.,,, .... ,, ................................... 16
Optional Redemption. ............................................................................................ 16
No Mandatory Sinking Fund Redemption ............................................................. 17
Partial Redemption ................................................................................................ 17
Notice of Redemption lo Owners .......................................................................... 17
Payment Upon Redcmption. ................. ,,, ....... ,,.,., .. ,., .. ,, ................... ,,.,,,, .............. 18
Effect ofRedemption ............................................................................................. 18
Conditional Notice of Redemption. ....................................................................... 18
Lapse ofPaymenl ................................................................................................. 19
ARTICLEV
PAYING AGENT/REGISTRAR
Appoinlment oflnitinl Paying Agent/Registrnr ..................................................... 19
Qualifications .............................................. , .......................................................... 19
Mainteining Paying Agent/Registrar ..................................................................... 19
Termination. ........ ,., ........................... ,, .................................................................. 19
Notice of Change to Ownm ................................................................................. 19
Agreement to Perform Duties and Functions. , ...................................................... 20
Delivery ofRerords to Successor .......................................................................... 20
ARTICLE VI
FORM OF 1HE CERTiflCA TES
Section 6.1. Form Generally ...................................................................................................... 20
Section 6.2, Fann of the Certificates .... , ... , ................ ,, .... ,,,, .... ,. ...... ,. ........................................ 20
Section 6.3. CUS!P Regi,tralion. .............................................................................................. 26
Section 6.4. Legnl Opinion ........................................................................................................ 26
Section 6.5. Bond Insurance ...................................................................................................... 26
ARTICLE VII
SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS
Section 7.1.
Section 7 .2.
Section 7.3.
Section 7.4.
Section 7.5.
Sale ofCenificates; Applicntion ............................................................................ 26
Control and Delivery ofCenificates ..................................................................... 26
Project Fwid ........................................................................................................... 27
Deposit of Procceds ............................................................................................... 27
Approval of Escrow Agreement ............................................................................ 27
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AR TI CLE VIII
INVESTMENTS
Section 8.1. lnvestinents ............................................................................................................ 27
Section 8.2. lnvestnlent Income ................................................................................................ 28
Section 9.1.
Section 9.2.
Section 9 .3.
ARTICLE IX
PARTICULAR REPRESENTATIONS AND COVENANTS
Pa)'JD.ent of the Certificates .................................................................................... 28
Other Representations and Covenants ................................................................... 28
Provisions Concerning Federal Income Tax Exclusion ........................................ 28
ARTICLEX
DEFAULT AND REMEDIES
Section IO.I. Events ofDefault ................................................................................................... 30
Section 10.2. Remedies for Default. ............................................................................................ 31
Section I 0.3. Remedies Not Exclusive ........................................................................................ 31
ARTICLE XI
DISCHARGE
Section 11.1. Discharge ............................................................................................................... 31
ARTICLE XII
CONTINUING DISCLOSURE UNDERTAKING
Section 12.1. Annual Reports ...................................................................................................... 32
Section 12.2. Material Event Notices .......................................................................................... 32
Section 12.3. Limitations, Disclaimers and Amendments ........................................................... 33
ARTICLE XIII
AMENDMENTS; ATTORNEY GENERAL MODIFICATION
Section 13.1. Amendments .......................................................................................................... 34
Section 13.2. Attorney General Modification ............................................................................. 35
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ARTICLEXN
SPECIAL PROVISIONS REL.A TING TO THE TEXAS WATER DEVEWPMENT BOARD
Section 14. L Application of Article XIV .................................................................................... 3 5
Section 14.2. Covenant to Abide "ith Rul« ............................................................................... 35
Section 14.3. Tax Covenant. ........................................................................................................ 35
Section 14.4. Final Accounting ................................................................................................... 35
Section 14.5. Annual Audit Reports ............................................................................................ 35
Section 14.6. Maintenance and Operation-Insurance: ............................................................... 36
Section 14. 7. Environmental Indemnification ............................................................................. 36
ARTICLE XV
EFFECTNE IMMEDIATELY
Section 15.1. Effective Immediately ........................................................................................... 36
Exhibit A -Description of Annual Disclosure of Financial lnfonnatioo .................................... A-I
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AN ORDINANCE PROVIDING FOR THE ISSUANCE OF CITY OF
Ll:BBOCK, TEXAS, TAX AND WATER WORKS SYSTEM SURPLUS
REVB.lJE CERTIFICATES OF OBLIGATION, SERIES 20IOC;
APPROVING A PAYING AGENT/REGISTRAR AGREEMENT;
PRESCRIBING 1HE FORM OF SAID CERTIFICATES; LEVYING A
TAX AND PLEDGING SURPLUS WATERWORKS SYSTEM
REVENUES IN PAYMENT TIIEREOF AND ENACTING OTHER
PROVISIONS RELATING THERETO
WHEREAS, under the pro,i,ioru of Subchapter C, Chapter 271, Texns Local
Government Code, as amended~ the City of Lubbock, Texas (the "City''), after giving proper
notice, is authorized to issue and sell for cash its certi:ficnte.s of obligation (herein defined as the
uCcrt.ificates") that nre secured by and payable from the nd valorem taxes nnd other revenues
specified in Article II of this Ordinance, and that ore issued in the amount, for the purposes, and
with the provisions set forth in Section 3 .1 of this Ordinancej
WHEREAS, pursuant to a resolution heretofore passed by the City Council, notice of
intention to issue the Certificates was published in a newspaper of general circulation in the City
in accordnnce with applicable law;
WHEREAS, no petition bas been filed with the City Secretary, any member of lhe City
Council or any other official of the City, protesting the issuance of the Certificates;
\\ollEREA.S, the City Council is now authorized and empowered to proceed with the
issuance and sale of the Certificates, and has found and determined tlw it is necessary and in the
best interests of the City and its citizens that it issue the Certificates in accordimce with the terms
and provisions of this Ordinance; and
\1/HEREA.S, the meeting at which this Ordinance is considered is open to the public BS
required by law, and public notice of the time, place, and purpose of swd meeting was given as
required by Chapter 551, Texas Government Code, as amended; therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF 1HE CITY OF LUBBOCK:
ARTICLE I
DEFINITIONS AND OTHER PRELIMINARY MATTERS
Section LL l)efinitions.
Un.Jess otherwise expressly provided or unless the context clearly requires otherwise in
this Ordinance, the following terms shall have the meanings specified below:
"Additional Obligations" means tax and revenue obligations hereafter issued Mlich by
their terms are payable from ad vruorem taxes and additionally payable from and secured by a
parity lien on aod pledge of the Net Revenue, of the System of equal rank ood dignity with the
lien and pledge securing the payment of the Previously Issued Obligations aod the Certificates.
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"Application" means the Application filed with the Texas Water Development Boord
requesting financial assistance for the purposes set forth therein.
"Certificate" means any of the Certificates.
"Certificate Date" means the date designated as the initial date of the Curificmes by
Section 3.2(a) oftltis Ordinance.
"Certificates" means the cenificates of obligation 11uthorized to be issued by Section 3.1
of this Ordinance and designated as "City of Lubbock, Texas, TllX and Waterworks System
Swplus Revenue Certificales of Obligatioo, Series 2010C."
"City'' means the City of Lubbock, Texas.
"Closing Date" means the date of the initial delivery of and payment for the Certificates.
"Collection Date" means, when reference is bein9 made to the levy and collection of
annual ad valorem taxes, the date annual ad valorem taxes ossessed each yi:ar by the City
become delinquent under applicable law.
"Designated Payment!rransfor Office" means (i) with respect lo the initial Paying
Agent/Registrar =ed in this Ordinance, the Designated Payment!rransfer Office as designated
in the Paying Agent/Registrar Agreemcn~ or al such other location designated by the Paying
AgentffiegiBtrar and (ii) with respect lo any successor Paying Agent/Registrar, the office of such
successor designated and located as may be agreed upon by the City and such successor.
"DTC" means The Depository Trust Company of New York, New York, or any
successor securities depository.
"OTC Participant" means brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations on whose behalfDTC was created to hold securities
to facilitate the clearance and settlement of securities transactions among DTC Participants.
"EMMA" means the Electronic Municipal Market Access System.
"Escrow Agent" means Texas Treasury Safekeeping Trust Co., its successors and
as11gns.
"Escrow Agreement•~ means that certain Escrow Agreement, between the City and the
Escrow Agent, dated ns of October I, 20!0, penaining to the deposit of the proceeds of the
Certificate<,
"Event of Default'' means any event of default as defined in Section JO. I of this
Ordinance.
"Fiscal Year" meBDS such fiscal year as sh.al) from time to time be set by the City
Cow,ciJ.
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"Gross Revenues" means, with respect to any period, all income, revenues and receipts
received from the operation and ownership of the System.
''Initial Certificate" means the initial certificate authorized by Section 3.4 of this
Ordinance.
"Interest and Sinking Fund" means the interest and sinking fund established by
Section 2.2 of this Ordinance.
"Interest Payment Date" means the date or dates on which interest on the Certificates is
scheduled to be paid until their respective dates of maturity or prior redemption, such dates being
February 15 and August 15 of each year, commencing February 15, 2011.
"MSRB" means the Municipal Securities Rulemaking Board.
"Net Revenues" means the Gross Revenues of the System, with respect to any period,
after deducting the System's Operating and Maintenance Expenses during such period.
"Operating and Maintenance Expenses'' means all reasonable and necessary expenses
directly related and attributable to the operation and maintenance of the System, including, but
not limited to, the costs of insurance, the purchase and carrying of stores, materials, and supplies,
the payment of salaries and labor, and other expends reasonably and properly charged, under
generally accepted accounting principles, to the operation and maintenance of the System or by
statute deemed to be a first lien against the Gross Revenues. Depreciation charges on equipment.
machinery, plants and other facilities comprising the System and expenditures classed under
generally accepted accounting principles as capital expenditures shall not be considered as
"Operating and Maintenance Expenses" for purposes of determining ''Net Revenues."
"Owner" means the person who is the registered owner of a Certificate or Certificates, as
shown in the Register.
"Outstanding" means when used in this Ordinance with respect to Certificates, Previously
Issued Obligations or any Additional Obligations, as the case may be, as of the date of
determination, all Obligations and any Additional Obligations theretofore sold, issued and
delivered by the City, except:
(!) Certificates, Previously Issued Obligations or any Additional Obligations
cancelled or delivered to the Paying Agent/Registrar for cancellation in
connection with the exchange or transfer of such obligations;
(2) Certificates, Previously Issued Obligations or any Additional Obligations
paid or deemed to be paid in accordance with the provisions of Article XI
hereof; and
(3) Certificates, Previously Issued Obligations or any Additional Obligations
that have been mutilated, destroyed, lost. or stolen and replacement bonds
have been registered and delivered in lieu thereof.
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"Paying Agent/Registrar'' mean., initially The Bank of New York Mellon Trust
Company, National AsSQc.iation, or any successor thereto as provided in this Ordinance.
"l'Ieviously Issued Obligations" means the outstanding City of Lubbock, Texas, Tax and
Waterworks System Surplus Revenue Certificate, of Obligation, Series 20 IO, dated Janwuy l,
2010, issued in the aggregate principal amount of$!9,945,000; the outstanding City of Lubbock,
Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2008A,
dated June 15, 2008, issued in the aggregate principal amount of $22,615,000; the outsmnding
Tax and Waterworks System Surplus R,:venue Refunding Bonds, Series 2005, dated July I,
2005, issued in the aggregate principal amount of $43,080,000; the out.standing City of Lubbock,
Texas, Tax and Waterworks System Surplus R<lvenue Certificates of Obligation, Series 2004,
dated September 15, 2004, issued in the original principal amount of$3,]00,000; the outstanding
City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of
Obligation, Series 2003, dated July 15, 2003, issued in the original principal amount of
$9,765,000; the outstanding City of Lubbock, Texas, Tax and Waterworlcs System Surplus
R<lvenue Certificates of Obligation, Series 2002, dated February 15, 2002, issued in the original
principal amount of$6,450,000.
"Prior Lien Obligations" means all bonds or other similar obligations of thi;: City
pn,sently outstanding or that may be hereafter issued, payable in whole or in part from and
secured by a lien on and pledge of the Net ~; of the System and such lien and pledge
securing the payment thereof is prior and superior in claiint renk and dignity to the lien on and
pledge of the Net Revenues securing the payrneot of the l'Icviously Issued Obligations and the
Certificates.
''Project'' mearu. the purposes for which the Certi:ficntes ure issued as set forth in
Section 3.1.
"Project Fund" means the fund created pursuant to Section 7.3.
"'Purchaser" means the Texas Willer Development Bowd,
"Record Date" means the last busineS9 day of the month aext preceding an Interest
Payment Date.
"Register" means the Register specified in Section 3.6(a) of this Ordinance.
"Representations Letter" means the Blanket Letter of Representations betweeo the City
and DTC,
"Rule" means SEC Rule l 5c2-12, as amended from time to time.
"SEC" means the United States Securities and Ex.change Commission.
"Similarly Seemed Obligations" means collectively the Certificates, the l'Ieviot19ly
Issued Obligations, and any Additional Obligorions .
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"System" means the City's Waterworks System being all properties, facilities and plants
currently owned, operated and maintained by the City for the supply, treatment, transmission and
distribution of treated, potable water, together with all future extensions, improvements,
replacements and additions thereto.
"TWDB" means the Texas Water Development Board.
"Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the
payment of principal of or interest on the Certificates as the same come due and payable and
remaining wiclaimed by the Owners of such Certificates after the applicable payment or
redemption date.
Section 1.2. Findings.
The declarations, determinations, and findings declared, made, and fowid in the preamble
to this Ordinance are hereby adopted, restate, and made a part of the operative provisions hereof.
Section 1.3. Table of Contents, Titles, and Headings.
The table of contents, titles and headings of the Articles and Sections of this Ordinance
have been inserted for convenience of reference only and are not to be considered a part hereof
and shall not in any way modify or restrict any of the terms or provisions hereof and shall never
be considered or given any effect in construing this Ordinance or any provision hereof or in
ascertaining intent, if any question of intent should arise.
Section 1.4. Interpretation.
Unless the context requires otherwise, words of the masculine gender shall be construed
to include correlative words of the feminine and neuter genders and vice versa, and words of the
singular nwnber shall be construed to include correlative words of the plural nwnber and vice
versa.
This Ordinance and all the terms and provisions hereof shall be liberally construed to
effectuate the purposes set forth herein.
ARTICLE II
SECURITY FOR TifE CERTIFICATES; INTEREST AND SINKING FUND;
PRIOR LIEN, PREVIOUSLY ISSUED AND ADDITTONAL OBLIGATIONS
Section 2.1. Payment of the Certificates.
(a) Pursuant to the authority granted by the Texas Constitution and laws of the State
of Texas, there shall be levied and there is hereby levied for the current year and for each
succeeding year thereafter while any of the Certificates or any interest thereon is outstanding and
wipaid, an ad valorem tax on each one hwidred dollars valuation of taxable property within the
City, at a rate sufficient, within the limit prescribed by law, to pay the debt service requirements
of the Certificates, being (i) the interest on the Certificates, and (ii) a sinking fund for their
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redemption at maturity or a. sinking fund of two percent per annum (whichever amount is the
greator), when due ond payable, full alloWB!lce being made for delinquencies and costs of
collection.
(b) The ad valorem tax thus levied shall be assessed and collected each year against
all property oppearing on the tax rolls of the City most recently approved in accordance with law,
and the money thus collected shall be deposited as collected to the Interest and Sinking Fund.
(c:) Said wt valorem tax, the collections therefrom, and aJJ amounts on deposit in ot
required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and
committed irrevocobly to the payment of the principal of and interest on the Certificates wben
and as due and payable in accordance with their terms and this Ordinance.
( d) The arnowit of taxes to be as.sessed and provided annually for the payment of
principal of and interest on the Certificates shall be determined and accomplished in the
follo.,ing manner. Prior to the date the City Council establishes the annual tax rate and passes
an ordinance leV};ng and assessing ad valorem taxes each yeBr, the City Council shall detennine:
(i) The amount on deposit in the Interest and Sinking Fund after (x) deducting
therefrom the total amount of debt service requirements ta bewme due on Certificates
prior to the next Collection Date for the ad valorem taxes to be assessed, and (y) adding
thereto the amount of Net Revenues of the System appropriated and allocated thereto to
pay .such dfbt service requirements prior to the next Collection Date;
(ii) The amount of Net Revenues, if any~ ~ppropriated end to be .'id aside for
the payment of the debt service requirements on the Certificates between the Collection
Date for the taxes then to be assessed and the Collection Date for the taxes to be assessed
during the next succeeding calendar year; BIid
(iii) Toe amount of debt service requirements to become due and payable on
the Certificates between the Collection Date for the taxes then to be 85Sessed and the
Collection Date for the taxes to be assessed during the next succeeding calendar year.
The amount of taxes to be assessed and colleewd annually em:h year to poy the debt
service requirements on the Certificates shall be the amount established in paragraph (iii) above
less the sum t<Jla) of the amounts established in paragraphs (i) aod (ri), after taking into
consideration delinquencies and costs of collecting such annual taxes.
(e) The City hereby covenants and agrees that it will at all times maintain rates and
chorges for the services of the System sufficient to provide for the payment of all costs of
operation and maintenance of the System plus an amount equal to the wmual debt service
requirements of all obligations pay,ihle from the revenues of the System for which the City is
budgeting repayment of such obligations; provided, however, ff the City elects to determine the
tax rate to be assessed for each Fiscal Year based on the amount of Net Revenues budgeted,
appropriated aod allocated to be available pur.,uant ID subparagraph (d) of this Section, the City
shall maintain rntes and charges for the services of the System sufficient in conjunction with
other legally available funds to provide fo, payment of all costs of operation and maintenance of
the System plUB an amount equal to l. l O times the annual debt service requiremeJtts of all
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50841)1;.J LUBl00/71018
obligations payable from the revenues of the System for which the City is budgeting the
repayment of such obligations, or the City shall provide docwnentatlon which evidences the levy
and collection of an ad valorem tax rate dedicated to the Interest and Sinking Fund, in
conjunction with any other legally available funds except water system rates and charges,
sufficient for the repayment of water system debt sen-ice requirements.
(f) The City hereby covenants and agrees that, during such time as the Certificates
are outstanding and prior to the time taxes are levied each year~ it \.Vill establish,. adopt, and
maintain an annual budget that provid,s for ei1her the monthly deposit of sufficient Net
Revenues or the proceeds of ad val•n:m taxes or nny other legally available funds on hand al the
time of adoption of the annual budge~ or a combination thereof, inlo the Interest and Sinking
Fund.
(g) If the liens and provisions of this Ordinance shall be released in a manner
permitted by Article XI hereof, then the collection of such ad valorem tax may be suspended or
appropriately reduced, as the facts =Y pem,it, and further deposits to the Interest and Sinking
Fund may be suspended or appropriately reduced, "' the facts may permit. In determining the
aggregate principal amoW1t of outstanding Certificates, there shall be subtrBcted the amouot of
any Certificates that have heen duly called for redemption and for which money has been
depo,ited with the Paying Agent/Registrar for such redemption.
Section 2.2. Interest and Sinking Fund.
(a) The City hereby establishes a special fund or account lo be designated the "City
of Lubbock, Texas, Tax and Wuterwork., System Smplus Revenue Certificate, of Oblig,tion,
Series 20lOC, Interest and Sinking Fund" (the "Interest and Sinking Fund'), said fund to be
maintained at an official depository bank of the City sepamte and apart from all other funds and
accounlS of the City.
(b) Money on deposit in or required by this Ordinance to be deposited lo the Interest
and Sinking Fund shall be used solely for the purpose of paying the interest on and principal of
the Certificales when and as due and payable in accordance with their lerms and this Ordinance.
Section 2.3. l)eposjts to Interest and Sinking Fund.
The City horeby covenants and agrees to cause to be deposited in the Interest and Sioking
Fwtd prior to each interest and principal payment date from the Net Revenues of the System,
after deduction of ail payments required to be made to special funds or accounts created for the
payment and security of the Prior Lien Obligations, an amount equal lo one hundred percent
(100%) of the amount required lo fully pay the accrued interest and principal of the Certificates
then due and payable by reason of maturity or red,mption prior to maturity, such deposiis lo pay
accrued interest and principal on the Certificates to be made in substantially equal monthly
installments.
The monthly deposiO! to the Interest and Sinking Fund, as h,,mnabove 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 volorem taxes levied, collected and deposited in the Interest
and Sinking Fund for and on behalf of the Certificates may be token inlo consideration and
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reduce the amount of the monlhly deposits otherwise required to be deposited in the Interest and
Sinking Fund from the :,/et Revenues of the System,
Section 2.4. l§sunnce of Prior Lien nnd Additional Obligatigru;.
(a) The City hereby expressly reserves the right to hereafter issue Prior Lien
Oblign:tions, without limibtion as to principal amount or subject to any terms, conditions, or
restrictions other than as may be required by Jaw 01 otherwise.
(b) The City hereby expressly reserves the right to is,ue Additional Obligations,
without limitation or any restriction or condition being applicnbJe to their issuance under the
tenns of thi, Ordinance, payable from and, together with the other Similarly Secured
Obligations, e<jually and ratably secured by a pority lien on and pledge of the :,/et Revenues of
the System.
Section 2.5. Certificates Subordinate to Prior Lien Obligations, Covenants and
Agreements.
It is the intmtion of the City Council and accordingly hereby recognized and stipulated
that the provisions, agreements and covenanrs contained herein bearing upon the management
and operations or the System and the administering and application of revenues derived from the
operation thereor, shall to the extent possible be harmonized with like provisions. agreements
and coverumts contained in 01dinances authori7lag the issuance of Prior Lien Ob1igations, and to
the extent of any irreconcilable conflict behveen the provisions contained herein end in
ordinances authorizing the issuance of Prior Lien Obligations, the proltisi.ons, agreements and
covenants contained therein shall prevail to the extent of sucb 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 owru:rs of the Prior Lien Obligations. Notwithstanding the above, any
change or modification affecting the opplication of revenues derived from the operation of the
System shall not impair the obligation of contract ,.;th re,pect to the pledge of revenues herein
made fur the payment and security of the Ccrtificates.
Section 2.6. Pledge or Revenues.
The City hereby oovenants and agrees that, subject only to a prior lien on and pledge of
the Net Revenues of the System for the payment and security of Prior Lien Obligations, the Net
Revenues of the System, with the exception of those in excess of the aroounts required to be
deposited to the Interest and Sinking Fund as hereufler pm,ided, are hereby pledged, equally and
ratably, to the payment of the principal or, redemption premium, if any, and interest on the
Certificates and the other Similarly Secured Obligations as herein provided, and the pledge of the
Net R,,venues of the System herein made for the payment of the Certificates shall constitute a
lien on the Net Revenues of the System in accordance with the tenns and provisions hereof and
be valid and binding in accordance with the terms hereof without any filing or recording thereof
(except in the official reeords of the Cify), physical delivery of such Net Revenues or further act
by the City,
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Section 2.7. System Fund.
The City hereby reaffirms its covenant and agreement made in connection Vrith the
issuance of the Pnwiously Issued Obligations that all Gross Revenues (excluding earnings from
the investment of money held in any special funds or accounts created for the payment and
security of Prior Lien Obligations) shall be cl.posited from day to day as collected into an "City
of Lubbock, Texas, Waterworks System Operating Fund" (the "System Fund'1 which Fund shall
be kept and maintained at ao official depository bank of the City. All moneys deposited into the
System Fund shall be pledged aod 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 Operation and Maintenance
Expenses of the System as defined herein or n::quired by statute to be a first charge on and claim
against the Gross Revenues;
Second: To the payment of the amounts required to be deposited in the special funds
created aod established for the payment, security and benefit of Prior Lien Obligations in
accordance with the tenns and provisions of the ordinances authorizing the issuance of Prior
Lien Obligations; and
Tbinl.: Equally and ratably to the payment of the amounts required to be deposited in the
special funds aod accounts created and established for the payment of Similarly Seemed
Obligations.
Any Net Revenues remammg in the System Fund after satisfying the foregoing
payments,. or milking adequate and sufficient provision for the payment thereot may be
appropriated and wed for any other City purpose now or hereafter permitted by law, provided
that, as r,:qu.ired by the TWDB, if annual debt service on the Certificates in a particular Fiscal
Year will not be paid from funds on deposit in the Interest and Sinking Fund plus ad valorem
taxes (as permitted by Section 2.1 hereof), but instead will be paid in whole or in part from
appropriated Net Revenues (as permitted by Section 2.1 hereof), the City shall not lronsfi:r Net
Revenues except as provided above in Ibis Section 2.7 until an amount equal to the annual debt
service requirements on the Certificates for the then-cun-ent Fiscal Year h.ne been deposited to
the Interest and Sinlcing Fund.
ARTICLE Ill
AL"IHORIZATION; GENERAL TERMS AND PROVISIONS
REGARDING THE CERTIFICATES
Section 3. l. AuthorizatiQll.
The City's certificates of obligation to be designated "City of Lubbock. Texas, Tax and
Waterworks System Surplus Revenue Certificates of Obligation, Series 20IOC" (the
''Certificates''), are hereby authorized to be issued and delivered in accordance with the
Constitution and laws of the State of Texas, specifically Sulx:hapter C, Chapter 271, Texas L<lCal
Government Code, as amended. and Article VIII of the City's Home-Rule Charter. The
Certificates shall be issued in the aggregate principal arnnuot of $41,000,000 for the purpose of
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paying contractual u bligaitions to be incurred for the following purposcst to wit: (i) construction
of a raw water transmission line, pump station and water treatment plant improvements to enable
Lake Alan Henry to serve as a water supply for the City (the "Project") and (ii) payment of
professional services of attorneys, financial advisors and other professionals in cormectiun "With
the Projett and the issuance of the Certificates.
Section 3.2, Date, Denomination, Maturities, arul Interest.
(a) Tiu: Certificates shall be dated October I, 2010. Tiu: Certificates shall be in fully
registered form, without coupons, in lhe denomination of $5,000 or any integral multiple thereof
and shall be nwnbered separately from one upward, except lhe Initial Certificate, which sholl be
numbered T-l.
(h) Tiu: Certificates shall mature on February 15 in the years and in the principal
a.mounts set forth in the following schedule:
Principal Interest Principal Interest
Year Amount Rate Year Amount Rate
2011 $1,575,000 0.000% 2021 $2,050,000 1.684%
2012 1,600,000 0.000 2022 2,110,000 1.834
2013 1,645,000 0.000 2023 2,170,000 1.979
2014 1,690,000 0,000 2024 2,230,000 2.092
2015 1,740,000 0.075 2025 2,290,000 2.192
2016 1,790,000 0.485 2026 2,355,000 2.281
2017 1,840,000 0.785 2027 2,420,000 2.363
2018 1,890,000 0.995 2028 2,485,000 2,437
2019 1,940,000 1.185 2029 2,555,000 2.487
2020 1,995,000 l.449 2030 2,630,000 2.480
( c) Interest shall accrue and be paid on eacli Certificate respectively until its maturity
or prior redemption, from the later of lhe Closing Date 01 the most recent Interest Payment Date
to '\\"ilich interest has been paid ur provided fur at the J3le.s per annum for each respective
maturity specified in the schedule contained in subsection (h) above. Such interest sb,,JJ be
payable on each Interest Payment Date until maturity or prior redemption. Interest on the
Certificates shall be calculated on the basis of a lhree hundred sixty (360) day year composed of
twelve (12) months of thiny (30) days each.
Section 3.3. Medium. Method, and Place of Payment.
(a) The principal of and interest on the Certificates shall be paid in lawful money of
the United Slates of America.
(h) lnlerest on lhe Certificates sholl be payable to lhe Owners as shown in the
Register at lhe close of business on the Recoro Date.
(c) lnlerest shall be paid by check, dated as of Ibo Interest Payment Date, and sent
United States mail, first class postage prepaid, by the Paying Agent/Registrar to each Owner, at
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the nddress thereof es it appears in the Register, or by such other customary banking arrangement
acceptable tc the Paying Agent/Registrar and tbe Owner; provided, however, that tbe Owner
shall bear all risk and expense of such alternative banking arrangement. At the option of an
Owner of at least $1,000,000 principal aroouot of tbe Certificates, interest may be paid by wire
transfer to the bank account of such O..ner on file with the Paying Agent/Registrar.
(d) The principal of each Certificate shall be paid to the Owner thereof on the due
date, whelber ot the maturity date or the date af prior redemption thereof, upon presentation and
swrender of such Certificate at the Designated Payment/Traosfer Office of the Paying
Agent/Registrar.
(e) Notwithstanding the preceding Subsections (c) and (d), so long as TWDB is the
owner of the Certificates, payrm:nts of interest on and principal of the Certificates shall be made
by -wire transfer at no cost to TWDB.
(fJ If the date for the payment of the principal of or interest on the Certificates shall
be a Saturday, SW1day, legal holiday, or day on which banking institutiom in the city where the
Designated Payment/Transfer Offioe of the Paying Agent/Registrar is localed are required or
authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day that is not a Saturday, Sunday, legal holiday, or day on which banking
institutions are required or authorized to close, and payment on such date shall for all pmposes
be deemed to have been made on the due date thereof as specified in Section 3.2 of this
Oi:dinance.
(g) Unclaimed Payments shall be segn,gated in a special escrow ac0-0unt and held in
trust, uninvested by the Paying Agent/Registrar, for the account of the Owners of the Certificates
to "''hich the Unclaimed Payments pertain. Subject to Title 6 of the Texas Property Code,
Unclaimed Payments remaining unclaimed by the O,,,.,ers entitled thereto for three yeaI> after
the applicable pa)menl or redemption date shall be applied to the next pa)IDent on the
Certificates thereafter coming due; to the ex.tent any such moneys remain three years after the
retirement of all outstanding Certificates, such moneys shall be paid to the City to he used fur
any lawful pUipQse. There;,iler, neither the City, the Paying Agent/Registrar, nor any other
pelSOil shall be liable or responsible to ony Owners of such Certificates for aoy further payment
of such unclaimed moneys or on account of any such Certificates, subject to Title 6 of the Texas
Property Code.
Section 3.4. Execution and Registration of Certificates.
(a) The Certificates shall be executed on behalf of the City by the Mayor and the City
Secretary, bY their manual or facsimile signatures, and the official seal of the City shall be
impressed or placed in facsimile thereon. Such facsimile signatures on the Certific[ltes shall
have the ,ame effect as if each of the Certificates had been .signed manually and in person by
each of said officers, and such fo.csim.i.le seal on the Certificates shall have the same effect as if
the official seal of the City had been manually impres,ed upon each of the Certificates.
(b) In the event that any officer of the City whose manual or facsimile signature
appears on the Certificates ceases to be such officet" before the authentication of such Certificates
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or before the delivery lhoreof, such mnnual or facsimile signature oevcnheless shall be valid and
sufficient for all purposes as if such officer had remained in such office.
(c) Except as provided below, no Certificale shall be valid or obligatory for any
purpose or be entitled to any security or benefit of this Ordinance unless and Wltil there appears
thereoo the Certificate of Paying AgenvRegistrar substantially io the form provided herein, duly
authenticated by Illllllual execution by an officer or duly authorized signatory of the Paying
Agent'Registrar. It ,ball not be required that the same officer or authorized signatory of the
Poying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Certificates.
In lieu of 1ho executed Certificate of Paying Agent/Registrar described above, the Initial
Certificate delivered at the Closing Date shall have attached then:to the Comptroller's
Registration Certificate substantially in the form provided herein, =ually executed by the
Comptroller of Public Accounts of the State of Texas, or by his duly authorized agent, which
Certificate shall be evidence that the Certifiarte has been duly approved by the Attorney General
of the State of Texas, that it is a valid nnd binding obligation of the City, ond that it has been
registered by the Comptroller of Public Accounts of the State of Texas.
(d) On the Closing Date, one Initial Certificate representing the eotire principal
amount of all Certificates, payable in stated installments to the irritwl purchaser, or its dcsignee,
executed by the Mayor and City Secretary of the City by lhoir manual or facsimile signatures,
approved by the Attorney General, and registered ond manually signed by the Comptroller of
Public Accounts, will be delivered to the initial purehaser or its designee. Upon payment far the
Initial Cortificale, the Paying Agent'Registrar shall cancel tho Initial Certificate and deliver a
single registered, defmidve Certificate for each maturity, in the aggregate principal amount
thereof, to DTC on behalf of the purcbil3er.
Section 3.5. Ownershil!.
(o) Th• City, 1ho Paying Agent'Registrar, and any other person may treat the pcrnon
in whose name any Certificate is registered as the absolute owner of such Certificate for the
purpose of making and receiving payment as herein provided (except interest shall be paid to the
person in whose name such Certificate is registered on the Record Dote), and for all o1her
purposes, whether or not such Certificate is overdue, and neither the City nor the Paying
Agent'Registrar shall be bound by any notice or knowledge to the contrary.
(b) All payments made to the Omier of a Certificate shall be valid and effectual aod
shall discharge the liability of the City and the Paying AgenvRegi,trar upon such Certificate to
the extent of the sum, paid.
Section 3.6. Registration, Transfer, and Exclum~.
(a) So long as any Certificates remain outstanding, the City shall cause the Paying
Agent/Registrar to keep at the Designated Payment!I'l'llll5fer Office a register (the "Register") in
which. subject to sU<:h reasonable reguJations as it may prescribe1 the Paying Agent/Registrar
shall provide for the registm.tion and transfer of Certificates in accordance with this Ordinance.
(b) The ownerahip of a Certificate may be transferred only upon th• presentation ond
surrender of the Certificate at the Designated Payment/fl'llll5fer Office of the Paying
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AgenttReg.lstrnr 'With such endorsement or other evidence of transfer as is acceptable to the
Paying Agent/Registrar, No transfer of any Certificate shall be effective until entered in the
Register.
(c) The Certificates shall be exchangenble upon the presentation 11nd swrender
thereof at the Designated PaymeuVfransfer Office of the Paying Agent/Registrar for a
Certificate or Certificates of the same maturity and interest rate and in a denomination or
denominations of any integral multiple of $5,000, and in an aggregate principal amount equal to
the unpaid principal amount of the Certificates presented for exchange, The Paying
Ageo~'Registrar is hereby authorized to authenticate end deliver Certificales exchanged for other
Certificates in accordance with this Section.
(d) Each exchange Certificate delivered by the Paying AgMIIRegistrar in acconlance
with this Section shall constitute an original contractual obligation of the City and shall be
entitled ID the benefits and security of this Onlinan<e to the same extent as the Certificale or
Certificates in lieu of which such exchange Certificate is delivered.
(e) No service charge shall be made to the Owner for the initial registration,
suhsequenJ transfer, or exchange for a different denomination of any of the Certificates. The
Paying Agent/Registrar, however, may require the Dwner to pay a :rum sufficient to cover any
tax or other governmental charge that is authorized to be imposed in connection with the
registration, transfer~ or exchange of 1.1 Certificate.
(t) Neither the City nor the Paying Agent'Registrar shall be required to issue,
transfer~ or exchange any Certi:ficare called for redemption, in whole or in part, where such
redemption is scheduled to occur within furty-five (45) calendar dnys after the transfer or
exchange dnte; provided, however, such limitation shall not be applicable to an exchange by the
Owner of the uncalled principal balance of• Certificate.
Section 3.7. Cmcellation.
All Certificates paid or redeemed before scheduled maturity in accordance: with thi,
Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates
are authenticated Wld delivered in a.cconlnnce with this Ordinance, sh.all he Cllllcelled and proper
records made rcgmding such payment. redemption, exchange. or replacement. The Paying
Agent!Regiffl'Clr shall then retunt such cancelled Certi:fi~ to the City or may in accordance
with law destroy such cancelled Certificates ond periodically furnish the City with certificates of
destruction of such Certificates.
Section 3.8. Temporary Certificates.
(a) Following the delivery and registration of the Initial Certificate and pending the
prepan,tion of definitive Certiftcates, the City may execute and, upon the City's request, the
Payin9 AgentrRegistrar shall autheuticate and deUver, one or more temporary Certificates that
are printed, lithographed, typewritten, mimeographed, or otherwise produced, in any
denomination, substantially of the tenor of the definitive Certificates in lieu of which they are
delivered, without coupons, and with such appropriate insertions, omissions, substitutions, and
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other variations as the officers of the City executing such temporary Certificates may determine,
as evidenced by their signing of such temporary Certifi.c11tes.
(b) Until exchanged for Certificates in definitive fonn, such Certificates in tempora,y
form shall be entitled to the benefit nnd security of this Ordinance.
(c) The City, without imreasonable delay, slwll prepare, execute and deliver to the
Paying Agent'Regist:rar the Certificates in definitive fonn; thereupon,. upon the presentation and
surrender of the Certificate or Certificates in tempara,y fonn to the Paying Agent/Registrar, lhe
Paying Agent/Rcgis1rar shall authenticate and deliver in exchange therefor a Certificate or
Certificates oft.he swne maturity md series, in definitive form, in the authorized denomination,
and in the smne aggregate principal amount, as lhe Certificate or Certificates in temporary form
surrendered. Such exchange shall be made "ithout the malwlg of any charge therefor to any
Owner.
Section J.9. Rru;,laoemenJ Certificates.
(a) Upon the presentation and surrender to the Poying Agent/Registrar of a mutilated
Certificate, the Paying Agent'Registrar shall authenticate and deliver in exchange lherefor a
replacement Certificate of like tenor and principal amount. bearing a number not
contemporaru:ously outstanding. The City or the Paying Agent'Registrar may require the Owner
of such Certificate to pay n sum sufficient to cover any tax or other governmental charge that is
authoriud to be imposed in connection the.n:v.ith and any other expenses connected therewith.
(b) In the event that any Certificate is lost, apparently destroyed or wrongfully taken,
the Paying AgentlRegi,trnr, pursuant to lhe applicable la"~ of the Stale of Texas and in the
absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser,
shall authenticate and deliver a replacement Certificate of like tenor and principal ammmt.
bearing a numbeJ not contemporaneously outstanding, provided that the OMicr first complie,,
with the following requirements:
(i) furnishes to the Paying Agent/Registrar satisfactory evidence of bis or her
ownership of and the circwnstances of the loss, destruction, or theft of such Certificate;
(ii) furnishes such security or indemnity as may be required by the Paying
Agent/Regism,r lo save it and the City hannlcss;
(iii) pays all expenses and churges in connection therewith, including, but not
limited to, printing costs, legal fi:es, fees of the Paying Agent/RegistraJ:, and any tax or
other governmental charge that is authorized to be imposed; and
(iv) satisfies any other reasonable requirements imposed by lhe City and the
Paying Agent/Registrar.
(c) If, after the delivery of such replacement Certificate, a bona fide purchaser of the
original Certificate in Heu of which such replacement Certificate was issued presenl5 for
payment such original Certificate, the City and the Paying AgentlRegistrar shall be entitled to
recover such replacement Certificate from lhe person to whom it was delivered or any person
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talcing therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security
or indemnity provided therefor to the extent of any loss, damage, cost, or expense incurred by the
City or the Pa)ing Agent/Registrar in connection therewith.
(d) In the event that any such mutilated, lost, apparenUy destroyed, or wrongfully
taken Certificate has become or is about to become due and payable, the Paying Age111/Registrar,
in its discretion, instead of issuing a replacement Certificate, may pay such c.ertificate when it
becomes due and payable.
(e) Each replacement Certificote delivered in accordance with this Section shall
constitute an original additional contractual obligation of the City and shall be entitled to the
benefits and security of this Ordinance to the same extent as the Certificate or Certificates ia lieu
of which such replacement Certificate is delivered.
Section 3. 10. Bool&•Entrv-Only System
(a) Notwithstnnding any other provision hereof, upon initial issuance of the
Certificates, the Certificates shall be registered in the name of Cede & Co., as nominee of DTC.
The definitive Certificates shall be initially issued ia the form of a single separate cenificate for
each of the maturities thereof.
(b) With respect to Certificates registered ia the name of Cede & Co., as nominee of
DTC, the City and the Paying Agent/Registrar shall have no n:.,ponsibility or obligation to any
DTC Porticipant or to llDY person on behalf of whom such a DTC Participant holds an interest in
the Certificates. Without limitiag the immediately precediag sentence, the City and the Payiag
Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the
n:cords of DTC, Cede & Co. or any DTC Participant with respect to any omrershlp interest in
the Certificates, (ii) the delivery to any DTC Participant or any other person, other than an
Owner, as shov.n on the Register, of any notice with respect to the Certificates, including any
notice of redemption, or (iii) the payment to any DTC Participant or any other pmon, other than
an Owner, as shown in the Register of any amount Yrith respect to principal of or interest ou the
Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City llOd
the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name ea.ch
Certificate is registered in the Register as the absolute owner of such Cenificate for the pwpose
of payment of principal of and interest on Certificates, for the purpose of giving notices of
redemption and other lllll!ters with respect to such Certificate, for the purpose of registering
transn,, with respect to snch Certificate, llOd for •11 other purpooes whatsoever. The Paying
Agent/Registrn, shall JlllY all principal of and interest OJl the Certificates only to or upon the
order of the respective Owners as shown in the Register, as provided in this Ordinance, or their
respective attorneys duly authorized ia writing, llOd all such pa)Tllents shall be vnlid and
effective to fully satisfy and discharge the City's obligations with respect to payment of interest
on the Certificates to the extent of the smn or sums so paid. No person other than BO Owner, as
shown ia the Register, shall receive a certificate evidenciag the obligation of the City to moke
pllyments of amounts due pursuant to this Onlinance. Upon deli•ery by DTC to the Paying
Agent/Regislrar of writtcn notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., the word "Cede & Co."' in this Ordinance shall refer to such
new nominee of ore.
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(c) The Representations Letter previously e~ecuted and delivered by the City, and
applicable to the City's obligations delivered in book-ent,y-only fo,m to DTC as securities
depository, is hereby ratified and approved for the Certificates.
Section 3.1 J. Successor Securities !)\\po$itory; Tmnsrer Outside Book-Entry-Only
System.
In the event that the City determines that it is in the best interest of the City and the
beneficial o"'ners of the Certificates that they be .able to obtain certificated Certificates, or in the
event DTC discontinues the services described herein, the City shall (i) appoint • successor
securities depository, qualified to act as such under Section l 7(a) of the Securities and ~change
Act of 1934, a, amended, notify DTC and DTC Participants of the appointment of such
successor securities depository and transfer one or more separate Certificates to such. successor
securities depository; or (ii) notify DTC and DTC Participants of the availability through DTC of
certificated Certificates Bild cause the Paying Agent/Registrar to transfer' one or more separate
registered Certificate, to DTC Participants having Certificates credited to their DTC accouots;
provided, however, that neither the City nor the Paying Agenr/Registrar shall discharge DTC
without the prior written consent of TWDB. lo such. event, the Certificates shall no longer be
restricted to being registered in the Register in the name of Cede & Co., as nontinee of DTC, bu!
may be registered in the name of the successor securities depository, or its nominee, or in
whatever name or names Owners transferring or exchanging Certificates shall designate, in
accord~e with the provisions of this Ordinance.
Section 3. 12. Payments to Cede & Co.
Notwithstanding any other provision of this Ordinance to the contrary, so long as the
Certifo;ates ere registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to principal of and interest on such Certiiicates, and o11 notices with respect to such
Certificate, shall be made and given, respectively, in the manner provided in the Represenllltions
Letter of the City to DTC.
ARTICLEN
REDEMPTION OF CERTIFICATES BEFORE MATURm'
Section 4.L Redemption.
The Certificates are subject to redemption befure their scheduled maturity only as
provided in this Article IV.
Section 4.2, Optional Redemption.
(a) The City 1eserves the option to redeem Certificates maturing on 11D.d after
February 15, 2022 in whole or any port, before their respective scheduled maturity dates, on
February 15, 2021 or on any date thereafter, such redemption date or date, to be fi•ed by the
City, at a price equal to the principal amouot of the Certificates called for redemption plus
accrued interest ID the date fixed for redemption,
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(b) If less than all of the Certificates a,e to be redeemed pursuant to !ll1 optional
redemption, the Certificates shall be redeemed in inver.ie order of maturity. !fies, than all of the
Certificates within a maturity a,e to be redeemed, Certificates "'ithin such maturity shall be
called by Jot or other custormu-y method that results in a random selection of the Certifirotes.
(c) The City, at least 45 da)'li before the redemption date, unless a shorter period shall
be satisfactory to the Paying Agenl/Registrar, shall notify the Paying Agenl/Registrar of such
redemption date and of the principal amount of Certificates to be redeemed.
Section 4.3. No ~andatory Sinking Fund Redemption.
The Certificates a.re not subject to scheduled mandatory redemption.
Section 4.4. Partial Redemption.
(a) A portion of a single Certificate of a denomination greater than $5,000 may be
redeemerl, but only in a principal amount equal to $5,000 or any integral multiple thereof. If
such a Certificate is to be partially redeemed, the Paying Agenl/Registrer shall treat each $5,000
portion of the Certificate as though it were a single Certificate for purposes of selection for
redemption.
(b) Upon surrender of any Certificate for redemption in part, the Paying
Agenl/Registrar, in accordance with Section 3.6 of this Ordinance, shall authenticate and deliver
an exchange Certificate or Certificates in an aggregate principal amount equal to the wrredeemed
portion of the Certificate so surrendered, such exchange being without charge.
(c) The Paying Agenl/Registrar shall promptly notify the City in writing of the
principal amonnt to be redeemed of any Certificate as lo which only a portion thereof is to be
redeemed.
Section 4.5. Notice ofR¢;,mptimJ l2 OW!\ll[S,
(a) The Paying Agenl/Registrar shall !live notice of any redemption of Certificates by
sending notice by United States moil, fust class postage prepaid, not less than 30 days before the
date fixed for redemption. to the Owner of each Certificate (or part thereof) ID be redeemed, at
the address shown on the Register al the close of business on the business day next preceding the
date of mailing suc.b notice.
(b) The notice shall state the redemption date, the redemption price, the place at
"1tlch the Certificates are to be sunende,cd for payment, and, if less than all the Certificates
outstanding are to be redeemed, an identification of the Certificates or portions thereof ID be
redeemed.
(c) Any notice !liven as provided in this Section shall be conclusively presumed to
have been duly given, whether or not the Owner receives such notice.
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3084l3v.J LUDl00/7101K
Section 4.6. Payment Upon Redemption.
(a) Before or on each redemption date, the City shall deposit with the Pa)ing
Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying
Agent/Regislillr shall make provision for the payment of the Certificates to be redeemed on such
date by setting aside and holding in trust such amounts as an: received by the Paying
Agent,Registrar from the City and shall use such funds solely for the purpose of paying the
principal of and accrued interest on the Certificates being redeemed.
(b) Upon presentation and surrender of any Certificate called for redemption at the
Designated Payment/Transfer Office on or after the date fixed for redemption, the Paying
Agent/Registrar shall pay the principal of and occrued interest on such Certificate to the date of
redemption from the money set aside for such purpose.
Section 4.7. Effect ofRedemptiQg.
(a) Notice of redemption having been given as provided in Section 4.5 of tms
Ordinance, the Certificates or portions thereof called for rederaption shall become due and
payable on the date fixed for redempdon and, unless the City delilults in its obligation to make
provision for the payment of the principal thereof or accrued interest thereon, such Certificates or
portions thereof shall cease 10 bear interest from and after the date fixed for redemption, whether
or not such Certificates are presented and surrendered fur payment on such date.
(b) lf the City shall fail to make provision for payment of all s\lDls due on a
redemption date, then nny Certificare or portion thereof called for redemption shall continue to
bear interest at the rate stated on the Certificaie until due provision is made for the payment of
same by the City.
Section 4.8. Conditional Notice of Redemption,
The City re.serves the right, in Iha case of aa optional redemption pursuant to Section 4.2
herein. to give notice of its election or direction to redeem Certificates conditioned upon the
occurrence of subsequent events. Such notice may smte (i) that the redemption is conditioned
upon the deposit of moneys and/or authorized securities,. in an amount equal to the amount
necessary to effect the redemption., with the Paying Agent/Registrar, or such other entity as may
be authorized by law, no later than the redemption date, or (ii) that the City retains the right to
rescind such notice at any time on or prior to the scheduled redemption date if the City delivers n
certificare of the City to the Paying Agent/Registrar instructing the Paying Agent/Registrar to
rescind the redemption notice and such notice and redemption shall be of no effect if such
moneys and/or authorized securities are not so deposited or if the notice is rescinded. The
Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of
redemption to the offected Owners. Any Certificates subject to conditional redemption and such
redemption has been rescinded shall remain Outstanding and the rescission of such redemption
shall not constitute aa Event of Default Further, in the case of a conditional redemption, the
failure of the City to make moneys aad or authorized securities available in part or in v.bole on
or before the redemption date shall not constitute an Event of Default
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Section4.9. Lapse of Payment.
Money set a.side for the redemption of Certificates and remaining unclaimed by the
Owners of such Certificates shall be subject to the provisions of Section J.J(l) hereof.
ARTICLEV
PAYING AGENT/REGISJRAR
Section 5.1. Appointment of Initial Paying Agent/RegjstraT.
The Bank of New York Mellon Trust Company, National Association, is hereby
appointed as the initial Paying Agent/Regiscrar for the Certificates.
Section 5.2. Oualifioatioas.
Each Paying Agent/Registrar shall be a CCJ1IllIU$ial bank, • trust company organized
unde, the laws of the State ofTc:xns, or other entity duly qualified and legally authorized to save
ns and perform the duti .. and services of paying agent and registrar for lhe Certificates.
Section S.3. Mainlajning Paying Agent/Registrar.
(a) At all times while any of lhe Certificates are outstanding, the City will maintain a
Paying Agent/Regis-lhat is qualified 11nder Section 5.2 of this Ordinance. The Mayor is
hereby aulhorized and dire<:ted to e<ecute an agreement wilh the Paying Agent/Registrar
specifying the duties and responsibilities of lhe City and the Paying Agent/Registrar in
substantially the fonn presented al this m<eting, such form of agreement being hereby approved.
The signature of the Mayor shall be attested by the City Secretary of the City.
(b) If the Paying AgentlRegistrar resigns or otherwise ce~ to serve BB such, tbe
City will promptly appoint a replacement.
Section 5.4. IenninatioIL
The City, upon not less than sixty (60) days notice, reserves the right to tennina!e the
appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to
be terminated written notice of such termination.
Section 5.5. Notice of Change to Own,;rn.
Promptly upon each change in the entity serving EIS Paying Agent/Registrar, lhe City will
cause notice of the change to be sent to each Owner by United States mail, first class postage
pn:paid, at the address thereof in the Register, stating the effective date of the change and the
name and mailing address of the replacement Paying Agent/Registrar.
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Section 5.6. Agreement to Perf9rm Duties and Functions.
By accepting the appointment as Paying Agent/Registrar and executing the Paying
Agent/Registrar Agreement, the Paying Agent/Registrar is deemed lo have agreed to the
provisions of this Ordinance and that it v.ill perform the duties and functions of Paying
Agenti\legistrar prescribed thereby.
Section 5. 7. Delivery of Records to Successor.
If a Paying Agenv'Registrar is replaced, such Paying Agent, promptly upon the
appointment of the successor, will deliver the Register (or a copy thereof) and all other pcrtincnt
books and records relating to the Certificates to the successor Paying Agent/Registrar.
ARTICLE VI
FOR.\! OF THE CERTIFICATES
Section 6, I. Fgrm Generally.
(a) Ibe Certificates, including the Registration Certificate of the Comptroller of
Public Accounts of the State of Tex"", the Certificate of the Paying Agent/Registrar, and the
Assignment form to appear on each of the Certificates, (i) shall be subslllntially in the form set
forth in this Article, with such appropri!lte insertions, omissions. substitutions. and other
variations as are permitted or required by this Ordinance, ond (ii) may have such lel:tels,
numbers, or other marks of identification (including identifying oumbers and letters of the
Cotnmittee on Uniform Secwities Identification Procedures of the American Bankers
Association) and such legends and endorsements (including any reproduction of an opinion of
coWLSel) thereon as, consistently herewith, may be determined by the City or by the officers
executing mc:h Certificate:s, as evidenced. by their execution thereof.
(b) Any portion of the text of any Certilicate, may be set forth on the reverse side
thereof, with an appropriate reference thereto on the face of the Cenificates.
(c) Ibe definitive Certificates, if any, shall be typewritten, photocopied, printed,
lithographed, or engraved, and may be produced by any cambination of these methods or
produced in any other similar manner, all as determined by the officers executing such
Certificates, as evidenced by their execution thereof.
(d) The Initial Certificate submitted to the Attorney General of the State of Texas
may be typewritten and photocopied or otherwise reproduced.
Section 6.2, Form of the Certificates.
The form of the Certificates, including the form of the Registration Certificate of the
Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying
Agent/Registrar and the furm of Assignment appearing on the Certificates, shall be substantially
as follows:
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.50341]11.] LUBl00..7lOJ8
(a) Form of Certificate.
REGISTERED
No.
United Si,,n,s of America
State of Texas
County of Lubbock
CITY OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION
SERIES 20l0C
INlEREST RA TE: MATURITY DATE: CERTIFJCA TE
DATE:
CLOSING
DATE:
% October l, 2010
REGISTERED
$ __ _
CUSIP
NUMBER:
The City of Lubbock (the "City"), in the County of Lubbock, State of Texas, for value
received, hereby promises to pay to
or registei:ed assigns, on the Maturity Date specified above, the sum of
________ DOLLARS
and to pay interest on such principal <U110unt from the later of the Closing Date speoified above
or the most recent interest payment dale to Mlich interest has been paid or provided for until
payment of such principal amount has been paid or provided for, at the per annum rate of interest
specified above, computed on the basis of a 360-day year of twelve 30-day months, such interest
to be paid semiannually on February 15 and August 15 of each year, commencing February 15,
2011.
The principal of this Certificate shall be payable without exchange or collection charges
in lawful money of the United States of America upon presentation and surrender of this
Certificate at the corporate trust office in Dallas, Texas (the "Designated PaymenVfransfi:r
Office")i of The Bank of New York Mellon Trust Company~ NotioMl Association, or, 'With
respect to a successor Paying Agenl/Rqµstror, at the Designated PaymenVfransfi:r Office of
sucli succeS!or. Interest on this Certificate is payable by check dated as of the interest payment
date, and will be mailed by the Paying Agent>Registrar to the registered owner at the addn:.ss
shown on the registration boob kept by the Paying Agent/Registrar or by such other customary
banking arrangement acceptable to the Paying Agentffiegistror and the registered owner;
provided, however, such registered owner shall bear all risk and expense.9 of such customary
banking ammgemenl At the option of an Owner of at least $1,000,000 principal amount of the
Certiftcateo, interest may be paid by wire transfer to the bank account of such Owner on file with
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tho Paying AgentlRegistrar. For the purpose of the payment of interest on this Certificate, the
registered owner shall be the person in whose name this Certificate is registered at the close of
business an the "Record Date," which shall be the last business day of the month next preceding
such interest payment date.
If the dare for the payment of the principal of or interest on this Certificate shall be •
Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the
Designated Payrnenl/T ransfer Office of the Paying Agent/Registrar is localed are required or
authorized by law or executive ruder to close~ the date for such payment shnll be the next
succeeding day that is not a Saturday, Sunday, legal holiday, or day on which banking
institutions are required or authori=I to close, and payment on such date shall have the same
force and effect ns if made on the original date payrnenl was due.
Th.is Certificate is one of a series of fully registered certificates specified in the title
hereof issued in the aggregate principal ill!IOunt of $4 l ,Oll0,000 (herein referred to as the
"Certifiootes''), issued pursuant to a certain onlinance of the City (the "Ordinance") for the
purpose of paying contractual obligations to be incurred for authori=I public improvements
(collectively, the "Project"), as described in the Ordinance, and to pay the contractual obligations
for professional services of attorneys, financial advisors wui athc:r professionals in connection
with lhe Ploject and the issuance of the Certificales.
The City has reserved the option to redeem the Certificates matming on or after
February 15, 2022, in whole or in part, before their respective scheduled maturity dates, on
February 15, 2021, or on any date thereafter, at a price equal to the principnl amount of the
Certificates so called for redemption plus accrued interest to the date flXed fur redemption. If
less than all of the Certificates are to be redeemed pursuant to an optional redemption, the
Certificates shall be redeemed in inverse order of maturity. If less than all of the Certificates
within a maturity are to be redeemed, Certificates within such maturity shall be called by lot or
other customary method that results in l'.l random selection of the Certificates,
Notice of such redemption or redemptions shall be given by fi,st class mm!, posmge
prepaid, not less than JD days before the date fixed for redemption, to the registered owner of
each of the Certificates to be redeemed in whole or in part. Notice having been so given, the
Certificales or portions thereof designated for redemption shall become due and payable on the
redemption date specified in such notice; from and after such dale, notwithstonding that any of
the Certificates or portions thereof so called fur redemption ,hall not have been surrendered for
payment, interest on such Certificates or portions thereof shall cease to accrue.
A• provided in the Ordinance, and subject to certain lirnitaticm5 therein set forth, this
Certificate is transferable upon surrender of this Certificate for ttansfer at the designated office of
the Paying Agent/Registrar "'°ith such endorsement or other evidence of transfer as is acceptable
to the Paying AgenllRegistrar; !hereupon, one or more new fully registered Certificaies of the
same stated maturity~ of authorized denominations, bearing the same rate of interest. and for the
same aggregate principal amomrt "'1ill be issued to the designated transferee or transferees.
The City, the Paying Agenl/Registrar, and any other person may treat the person in whose
name this Certificate is registered as the owner hereof for lhe purpose of receiving payment as
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herein provided (except interest shall be paid to the person in whose name this Certificate is
registered on the Record Date) and for all other purposes, whether or not this Certificate be
overdue, and neither the City nor the Paying Agent/Registrar shall be affected by notice to the
contrary.
IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Certificate and the
series of which it is a part is duly authorized by law; that all acts, conditions, and things to be
done precedent to and in the issuance of the Certificates have been properly done and perfonned
and have happened in regular and due time, form, and manner as required by law; that ad
valorem taxes upon all taxable property in the City have been levied for and pledged to the
payment of the debt service requirements of the Certificates within the limit prescribed by law;
that. in addition to said taxes, further provisions have been made for the payment of the debt
service requirements of the Certificates to be additionally payable from and secured by a lien on
and pledge of the Net Revenues (as defined in the Ordinance) of the City's Waterworks System
(the "System"), such lien and pledge, however, being (i) junior and subordinate to the lien on and
pledge of the Net Revenues of the System securing the payment of Prior Lien Obligations (as
defined in the Ordinance) currently outstanding and hereafter issued by the City and (ii) on parity
with the lien on and pledge of the Net Revenues of the System securing the payment of the
Previously Issued Obligations (as defined in the Ordinance) and any Additional Obligations (as
defined in the Ordinance) hereafter issued; that 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 or subject to any terms, conditions or restrictions other than as may be
required by law or otherwise, as well as the right to issue Additional Obligations payable from
and, together with the Certificates and the Previously Issued Obligations, equally and ratably
secured by a parity lien on and pledge of the Net Revenues of the System; and that the total
indebtedness of the City, including the Certificates, does not exceed any constitutional or
statutory limitation.
IN WITNESS WHEREOF, the City has caused this Certificate to be executed by the
manual or facsimile signature of the Mayor of the City and countersigned by the manual or
facsimile signature of the City Secretary, and the official seal of the City has been duly
impressed or placed in facsimile on this Certificate.
[SEAL]
City Secretary,
City of Lubbock, Texas
S0841Jv.J Lue2oon101s
Mayor, City of Lubbock, Texas
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(b) Form of O,,l!ll)!rQUer's Registration Certificate. The following Comptroller's
Registration Certificate may be deleted from the definitive Certificates if such certificate on the
Initial Certificate is fully executed.
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
OFTHESTATEOFTEXAS
§
§
§
REGISTER NO. __ _
I hereby certify that there is on file and of m:ord in my office a certificate of the Attorney
General of the Slate of T e."<llS to the effect that thls Certificate has been examined by him as
required by law, that he f111ds that it has been issued in confor,nity with the Constitution and laws
of the State of Texa.,, and that it is a valid and binding obligation of the City of Lubbock, Texas;
and that thls Certificate has this day been registered by me.
Witru,ss my hand and seal of office at Austin, Texas, _______ _
[SEAL] Comptroller of Public Accounts
of the State of Texas
(c) Form of Certificate of Paying Agem/Registrar. The following Certificate of
Paying Agent/Registrar may be deleted from the Initial Certificate if the Comptroller's
Registration Certificate appears thercoIL
CERTIFICATE OF PA YING AGENT/REGISTRAR
The records of the Paying Agem/Registrar show that the Initial Certificate of this series
of Certificates wn,; approved by the Attorney General of the State of Texas and regi.,te,-ed by the
Comptroller of Public Accounts of the State of Texas, and that thls is one of the C<:rtificatos
referred to in the 'Within-mentioned Ordinance.
Dated:
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The Bank of New York Mellon Trust
Company, National Association
as Paying Agent/Registrar
By:
Authorized Signatory
(d) Fonn of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
(print or typewrite name, address and Zip Code of transferee): ___________ _
(Social Security or other identifying nwnber: -~--~-------: the within Certificate
and all rights hereunder and hereby irrevocably constitutes and appoints
atromey to transfer the within Certificate on the books kept for
registration hereof, with full power of substitution in the premises.
Dated:
NOTICE: The signature on this Assignment
must correspond with the name of the
registered owner as it appears on the face of
the within Certificate in every particular and
must be guaranteed in a manner acceptable
to the Paying Agent/Registrar.
Signature Guaranteed By:
Authoriz.ed Signatory
(e) The Initial Certificate shall be in the fonn set forth in paragraphs (a), (b) and (d)
of this Section, except for the following alterations:
(i) immediately under the name of the Certificate the headings "INTEREST
RATE" and "MATIJRITY DATE" shall both be completed with the expression "As
shown below'' and, the heading "CLOSING DATE" shall be completed with the date of
delivery of the Certificates; and
(ii) in the first paragraph of the Certificate, the words "on the maturity date
specified above" shall be deleted and the following will be inserted: "on February 15 in
each of the years, in the principal installments and bearing interest at the per annum rates
set forth in the following schedule:
Principal Installments Interest Rate
(Infonnation to be inserted from schedule in Section 3.2 of the Ordinance)
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Section 6.3. CUSIP Registration.
The City may secure identification nwnbers through the CUSIP Service Bweau Division
of Standard & Poor's, A Division of the McGraw-Hill Companies, New York, New York, and
may authorize the printing of such nwnbers on the face of the Certificates. It is expressly
provided, however, that the presence or absence of CUSIP nwnbers on the Certificates shall be
of no significance or effect in regard to the legality thereof and neither the City nor the attorneys
approving said Certificates as to legality are to be held responsible for CUSIP nwnbers
incorrectly printed on the Certificates.
Section 6.4. Legal Opinion.
The approving legal opinion of Vinson & Elkins L.L.P., Bond Cowisel, may be attached
to or printed on the reverse side of each Certificate over the certification of the City Secretary of
the City, which may be executed in facsimile.
Section 6.5. Bond lnswance.
Information pertaining to bond inswance, if any, may be printed on each Certificate.
ARTICLE VII
SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS
Section 7 .1. Sale of Certificates; Ap_plication.
(a) The Certificates are hereby officially sold to the Purchaser for a purchase price
equal to the principal amount thereof pwsuant to the terms of the commitment issued by the
Pwchaser in connection with the sale of the Certificates. It is hereby officially found,
detennined and declared that the terms of this sale are the most advantageous reasonably
obtainable. The Initial Certificate shall be registered in the name of the Purchaser or its
designee.
(b) All officers of the City are authorized to execute such documents, certificates and
receipts as they may deem appropriate in order to consummate the delivery of the Certificates in
accordance with the terms of sale therefor.
(c) The obligation of the Pwchaser identified in subsection (a) of this Section to
accept delivery of the Certificates is subject to such pwchaser being furnished with the final,
approving opinion of Vinson & Elkins L.L.P., bond counsel for the City, which opinion shall be
dated and delivered the Closing Date.
Section 7 .2. Control and Delivery of Certificates.
(a) The Mayor of the City is hereby authorized to have control of the Initial
Certificate and all necessary records and proceedings pertaining thereto pending investigation,
examination, and approval of the Attorney General of the State of Texas, registration by the
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ComptroUer of Public Accounts of the State of Texas Bild registration with, and initial exchange
or transfer by, the Paying AgenliRegistrar.
(b) After registration by lhe Comptroller of Public Accounts, delivery of lhe
Certificates shall be l'llll<le to the initial pun:hasers thereof under and subject 10 lhe general
S1.1pervisi•n and direction of the Mayor, against receipt by the City of all amounts due to the City
under the terms of sale.
Section 7.J. Project Fund.
(a) There is haeby established and created the "City of Lubbock, Texas, Tox and
Waterworb System Surplus Revenue Certificare, of Obligation, Seri"" 2010C Project Fund"
(the "Project Fund"), which shall be kept segregated and apart from other funds and aee-0unts of
lhe City.
(b) Moneys remaining in the Project Fund upon completion of the Project shall be
applied as provided in Section 14.4. Moneys on deposit in the Project Fund shall be lljlplied
solely to lhe pa)ment of lhe costs related to the isswmce of the Certificates and the costs of the
Project in accordance with the applicable requirements of the Texas Water Code and the rules
and regulations of the TWDB.
Section 7.4. Deposit of P~.
Proceeds from the sale of the Certificat<s shall be lljlplied to the payment of the costs of
issuing the Certificores with the remainder deposited to the Escrow Fund (as defiaed in the
Escrow Agreement) and, to the extent directed in writing by TWDB, to the Project Fund.
Monies deposited to the Escrow Fund shall be awlied as provided in the Escrow Agreement.
Section 7.5. Awroval of Escrow Agreement
The Escrow Agreement, in substan:tially the form presented at this meeting, and the terms
and provisions theteof, are hereby lljlproved, and its execution and delivecy by the Mayor, are
heteby authorized and approved.
Section 8.1. Investment§:,
AR TI CLE VIII
INVESTMENTS
(a) Money in the Interest and Sinking, Escrow and Project Funds created by this
Ordinance, at the option of the City, may be invested in su.cli securities or obligations as
permitted under lljlplicable law, including specifically the Public Funds Investment Act, Chapter
2256, Texas Government Code Bnd shall be collateralized os provided by the Public Funds
Collateral Ac~ Chapter 2257, Texas Government Code.
(b) Any securities or •bligatiOil!i in which such money is so invested shall be kept and
held in trust for the benefit of the Owners and shall be sold and the proceeds of sale shall be
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timely applied to the making of all payments required to be made from the fund from which the
investment was made.
Section 8,2. Investment Income.
Interest and income derived from investment of the Interest w,d Sinking Fund and the
Project Fund shall be credited ID such fund.
ARTICLE IX
PARTICULAR REPRESENTATIONS AND COVENANTS
Section 9.1. Paw,en! of the Certificat91.
On or before each Interest Payment Date "'1ri!e any of the Certificates are outstanding and
Wipaid, there shall be made available to the Paying Agent/Regislrnr, out of the Interest and
Sinking Fund, money sufficient to pay such interest on and principal of and interest on the
Certifica!eS as will accrue or marure on the applicable Interest Payment Date or date of prior
redemption.
Section 9.2. Other fumresentations !IIld Covenants.
(a) The City will faithfully perform, at all times, any aod all covenants, undertakings,
stipulations1 and provisions contained in this Ordinance; the City will promptly pay or cause to
be paid the principal of and interest on each Certificate on the dates and at the places and l1llllUler
prescribed in such Certificate; and the City will, at the times and in the manner prescribed by this
Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance.
(t,) The City is duly authorized under the laws of the State of Texas to issue the
Certificates; Ml action on its part for the creation and issuance of the Certificates hos been duly
and effectively taken; and the Certificates in the hands of the Owners thereof are and will be
valid and enforceable obligations of the City in accordance with their terms.
Section 9.3. Provisions Concerning Federal Jncome T1111 Exclw,ion.
(a) General. The Cjty intends that the interest on the Certificates shall be excludable
from gross income for purposes of federal income taxation pursuant to sections 103 and 141
through 150 of the lntemol Revenue Code of 1986, os amended (the "Code"), and the applicable
regulations promulgated thereunder (the "Regulations"). The City covenants and agrees not to
take any action, or knowingly omit to talce any action within its control, that iftakea or omitted,
respectively, would cause the interest on the Certificates to be includable in the gross income, as
defined in section 61 of the Code, of the holders thereof for purposes of federal income taxation.
In particular, the City covenants and agrees to ccmply with each requirement of this Section 9.3;
provided, however, that the City shall not be required to comply with aoy particular requirement
of this Section 93 if the City hos received sn opiaion of notionally recogni,.ed bond counsel
C'Counsel's Opinion') that such noncomplionce will not adversely affect the exclusion from
gross iacome for federal income tax purposes of interest on the Certificates or if the City has
received a Counsel's Opinion to the effect that compliance with some other requirement set forth
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in this Se<:tion 9.3 will satisfy the applicable requirements of the Code, in which case complinnce
with such other requirement specified io such CounsePs Opinion shall constitute compliance
with the correspcnding requirement specified in this Sectioo 9 .J.
(b) No Private Use gr Payment Hnd No Private L9'ID Financing. The City shall
certify, through an authorized officer~ employee or agent, that,, billied upon all facts and estimates
known or reasonably expected to be in existence on the date the Certificates are deliveied, the
proceeds of lhe Certificates will not be used in a Dl2IIln<r that would cause the Certificates 1o be
"private activity bonds" within lhe meaning of section 141 of lhe Code ilDd lhe Regulations. Toe
City covenants and agrees that it will make such use of lhe proceeds of the Certificates, including
interest or other investment income derived from Certificate proceeds, regulate the use of
property financed, directly or indirectly, wilh such proceeds, and talce such other and further
action as may be required i;o that the bonds will not be "private activity bonds" within the
meaning of section 141 of the Code and the Regulations.
(c) No Fedcn,J Guarann:. The City coverumts and agrees oot to take any action, or
knowingly omit to take any action witWn lrn control, that, if taken or omitted, respectively,
would cause lhe Certificates to be "federally guaranteed" within the meaning of S<'ction I 49(b) of
the Code and the Regulations, c::iu:ept as permitted by section 149(b)(J) of rhe Code and the
Regulations.
(d) Certificates Are Not Hedge Bonds. Toe City covenants ond agrees not to take any
action, or knowingly omit to take any action, and bas not knowingly omitted and will oot
knowingly om.it to take ony action, within its control, thoJ, if taken or omitted, respectively)
would cause rhe Certificates ro be "hedge bonds" within the meaning of seetion 149(g) of the
Code and 1m, Regulations.
(e) Ng-Artitrage Coverumt. Toe City shall certify, rhrougb. an authorized officer,
employee or agent, that, based upon all facts and estimates known or reasonably expected ro be
in existence on the date lhe Certificates are delivered, the City will reasonably expect that the
proceeds of the Certificates "ill not be used in a manner that would cause the Certificates to be
"arbitrage bonds" withio the meaning of section !48(a) of lhe Code ond the Regulations.
Moreover, the City covenants and agrees lhat it will make such use of lhe proceeds of the
Certificates including interest or other investment income derived from Certificate proceeds,
regulate investtnen.ts of proceeds of the Certificntes, and tak.e such other and fim.her action as
may be required so that the Certificates will not be "arbitrage bonds" within the meaning of
section 148(a) of the Code and the Regulations.
(f) Arbitrage Rebate. If the City does not qualify fur an exception to the
requirerm:rits of Section 148(1) of lhe Code, the City v.ill take all necessary steps to comply wilh
the requirement that certain amounts earned by the City on the investtnent of the 1.1gross
proceeds" of the Certificates (within the meaning of section 148(f)(6XB) of the Code), be
rebated to the federal government. Specifically, the City will (i) maintain records regarding the
investment of the gross proceeds of the Certificates a.s may be required to calculate the amount
earned on the investment of the gross proceeds of the Certificates separately from records of
amounts on deposit in the funds and accoUDts of the City allocable to other bond issues of the
City or moneys which do not represent grosa proceeds of any Certificate, of the City, (ii)
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calculate at such times as are required by the Regulations, the amount earned from the
investment of the gross proceeds of the Certificates which is required to be rebated to th• federal
government, and (iii) pay, not less often than every fifth annive""'Y date of the delivery of the
Cortificates or on such other dotes as may be permitted under the Regulations, all amount,
required to be rebated to the federal govermnont. Further, the City will not indirecdy pay any
amount otherwise payable to the federnl government purswmt to the foregoing requirements to
any person other than the federal government by entering into any investment arrangement with
respect to the gross proceeds of the Certificntes that might result in a reduction in the amount
required to be paid to the federal government because such IIIT!lllgOment result. in a smaller
profit or a larger loss than would have resulted if the arrangement had been at arm's leng1h and
had the yield on the issue not been relevant to either party.
(g) lnfunnation Reporting. The City covenants and agrees to file or cause to be filed
with the Secretary of the Treasury, not later than the 15th day of the second calendar month ofter
the close of the calendM quarter in which lhe Certificotes are issued, !lll information statement
coru:eming the Certificates, all under and in BCCOrdance with section l49(e) of the Code and the
Regulations.
(h) Record Retention. The City will retain oil pertinent and material records relating
to the use and expenditure of the proce,:ds of the Certificates until six years ofter the last
Certificote is redeemed, OT such shorter period as authorized by subsequent guidance issued by
the Department of Treasury, if applicable. All records will be kept in a manner that ensnres their
complete access throughout the retention period. Fot this pmpose, it is acceplable that such
records are kept either as hardcopy books and records or in an electronic storage and retrieval
system, provided that such electronic system includes reascnable controls and quality assurance
progmms that assure the ability of the City to retrieve and reproduu such books and records in
the event of an examination of the Certificates by the Intemo.1 Revenue Service.
(i) Registration. The Certificates will be issued in registered furm.
(i) Continuing Obligation. Notwithstanding any other provision of this Ordinance,
the City's obligotions under the covenant, and provisions of this Section 9.3 shilll survive the
defeasance and discharge of the Certificates.
ARTICLEX
DEFAULT AND REMEDIES
Section 10.1. Events ofDef!Ylll-
Each of the follo\\t1ng occurrences or events for the purpose of this Ordinance is hereby
declared to be an Event of Default:
(i) the failure to make payment of the principal of <>r interest on any of
the Certificates when the same becomes due and payable; or
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5014 i3v .3 UJBl00/110 18
{ii) default in the perfonnance or observance of any other covenant,
agreement, or obligation of the City, which default materially and adversely
affects the rights of the Owners, including but not limited to their prospect or
ability to be repaid in accordance with this Ordinance, and the continuation
thereof for a period of sixty (60) days after notice of such default is given by any
Owner t.o the City.
Section 10,2, Remedies for )2efault.
(a) Upon the happening of any Event of Delimit, then any Owner or an authorized
representative thereof, including but not limited to a t,ustee or trustees therefor, moy proceed
agmnst the City for the purpose of protecting and enforcing the rights of the Owner, under this
Ordinance by mandHmus or other sui½ action or specinl proceeding iD equity or at Jaw in any
court of competent jurisdiction for ony relief pem,itted by law, including the specific
performance of WIY covenant or agreement contained herein, or thereby to enjoin any act or thing
lhat may be unlawful or in violation of any rigbt of the Owners hereunder or any combination of
such remedies.
(b) It is provided that all such proc=!ings shall be instituted and maintained for the
equal benefit of all Owners of Certificates then outstanding,
Section l0.3, Remedjes Not Exclusive,
(a) No remedy herein conferred or reserved is intended to be exclusive of any other
ovmlable remedy, but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereWider or under the Cenificates or now or hereafter existing at law
or in equity; provided, however, that notwithstanding any other provision of this Ordinancet the
right to accelerate the debt evidenced by the Certificates shall not be available as a remedy under
this Ordinance.
(b) The exercise of ooy remedy herein confe=d or reserved shall not be deemed a
waiver of any other available remedy,
ARTICLE XI
DISCHARGE
Section I LL Discharge.
The Certificates ma.y be defeascd, discharged or refimded in any manner _pennitted by
applicable law,
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508413..-.3 LUB2007l011!
ARTICLE XII
CONTINUING DISCLOSURE UNDERTAKING
Section 12. l. Annual Reports.
(a) The City shall pro,ide annually to the MSRB, v.ithln six (6) months ofter the end
of each fiscal year, financial infonnation and operating data with respect to the City of the
general !)'pc included in the Application, being the information described in Exhibit A hereto.
Any financial. statements so to be provided .shall be (i) prepared in accordance with. the
ac<:oUDting principles described in Exhibit A hereto, (ii) audited, if the City commissions an audit
of such statementa and the audit is completed within the period during which they must be
pro~ded, and (iii) submitted through the EMMA, in on electronic format with nccompanying
identifying information, as prescribed by the MSRB. If the audit of such financial statements is
not complete within such period, then the City shoJJ provide notice that audited fuumcial
statoments are not avnilable and shall pro_;de unaudited financial statements for the applicable
fiscal year to the MSRB. The City shall provide audited ftrulDcial statements for the applicable
fiscal year to the MSRB when and if audited financial statements become available.
(b) If the City changes its fiscal year, it v.ill notify the MSRB of the change (and of
the dete of the new fiscal year end) prior to the nelll date by which the City otherwise would be
required lo pro~de financial information and operating data pursuant to this Section.
( c) The finaucial information and operating data to be provided pw.uant to this
Section may be set forth in full in one or more documeru.s or may be included by specific
referenced lo any document (including an official statement or other offering documen~ if it i,
available from the MSRB) that theretofore has been provided to the MSRB or filed with the
SEC.
Section 12.2. Mitterial Event Notices.
(a) The City shall notify the MSRB, in a timely manner, of any of the following
events with respect lo the Certificates, if such event is material within the meaning of the federal
secmities laws:
(i) principal and inrerest psyment delinquencies;
(ii) nonpa)menl related defaults;
(iii) unscheduled. draws on debt service reserves reflecting financial
difficulties;
(iv) unscheduled draws on credit enhancements reflecting financial
difficulties;
(v) substitution of credit or liquidity providers, or their failure to perform;
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508413v.l LUB200f7l018
(vi) advenae tax opinions or events affecting the mx-exempt status of the
Certificates;
(>ii) modifications to rights of OWners;
(viii) redemption cnlls;
(ix) defeasances;
(x) release, substitution, or sale of property securing repayment of the
Certificates; and
(xi) rating changes.
The City will provide notice of such events to the MSRB in !ID electronic fonnat and
accompanied by identifying infonnation, as prescribed by the MSRB.
(b) The City shall notify the MSRB, in a timely manner, of any failure by the City to
provide financial information or operating data in accordance with Section 12.l of this
Ordinance by the time required by such Section.
Section 12.3. Limitatio~ Djsclaimcrs and Amendments.
(a) The City shall be obligated to observe and perform the coverumts specified in this
Article for so long as, but only for so long as, the City remains W1 uobligated persoo" with
respect to the Certificates within the meaning of the Rule, except that the City in any event will
give notice of any redemption calls and any defe:nsB.llCe:s that cause the City to be no longer nn
J.<obligated person."
(b) The provisions of this Article are fur the sole benefit of the Owners Wld beneficial
owuers of the Certificates, and nothing in this Article, express or implied, shall give any benefit
or any legal or equitable righ~ remedy, or claim hereunder to nny other person. The City
undertakes to provide only the fillWlcial information, operating data, finnncial statements, and
notices which it has expressly agreed to provide pursuant to this Article and does not hereby
undertake to provide any other information that may be 1elevunt or material to a oomplete
presentation of the City's financial results, oondition, or prospects or hereby widertake to update
any infonnation provided in accordance with this Article or otherwise, except as expressly
provided herein. The City does not make any representation or '-¥8J'I'8nty concerning such
infonnation or its usefulness to a decision to invest in or sell Certificates at any future date.
UNDER NO CIRCUMSTANCF,S SHALL 1HE CITY BE LIABLE TO TilE OWNER
OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTIIER PERSON, IN
CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM
ANY BREACH BY THE CITY, WHETHER NEGLIGENf OR WITHOUT FAULT ON ITS
PART, OF ANY COVENANT SPECIF!ED IN IBIS ARTICLE, 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.
.33 •
.3DIWDvJ LUB20Cl/7l018:
(c) No defoult by the City in observing or performing its obligalions Uildo-r this
Article ,hall constitute a brench of or default Uildo-r the Ordinance for pmposes of any other
provisions of this Ordinance.
(d) Nothing in this Article is intended or shall act to disclaim, waive, or otherwise
limit the duties of the City under federal and state securities laws.
(e) The provisions of this Article may be amended by the City from time to time lo
adapt to changed circumstances that arise from a change in legal requirements~ a change in law,
or a change in the identity, nature, status, or type of operations of the City, but onJy if (i) the
_provisions of this Article, as so am.ended, would have permitted an underwrit-er to purchase or
sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking
into accmmt any amendments or interpretations of the Rule to the date of such amendment, as
well as such changed circumstances, and (ii) either (A) the Owners of a majority in aggregate
principal amount (or any greater amount required by any other provisions of this Oroinance that
authoriw.; such an amendment) of the outstanding Cenificates consent to such amendment or (B)
an entity or indi,idual person that is unaffiliated with the City (such as nationally recognized
bond coW1Sel) determines that such amendment will not mnterially impair the interests of the
Owners and beneficial owners of the Certificates. If the City so amends the provisions of this
Article, it shall include with aoy amended fmancial information or operating data next prov:ided
in accordance with Section 12.1 fill explanation, in narrative form, of the reasons for the
amendment and of the impact of any change in type of financial information or operating data so
prov:idcd.
ARTICLE XIII
AMENDMENTS; ATTORNEY GENERAL MODIFICATION
Section l 3.1. Amendments.
This Ordinance .shall constitute a contract with the Owners, be binding on the City, and
shall not be amended or repealed by the City so long as any Certificate remains outstanding
except cu permitted in this Section. The City may1 without consent of or notice to any Owners.
from time to time and at any time, amend this Ordinance in any manner not detrimental to the
interests of the Owners, including the curing of any ambiguity, inconsfs-tency, or formal defect or
omission herein. In addition. the City mar~ v.ith the written eoru;cnt of the Owners of the
Certificates holding a majority in aggregate principal amount of the Certificates then
outstanding, amend, ndd to, or rescind any of the provisions of this Ordinance; provided that,
v.ithout the consent of all Owners of outstanding Certific.ntes, no such amendment, addition, or
rescission shall (i) extend the time or rimes of payment of lhe principal of and interest on the
Cenificales, n:duce the principal amount thereof, the redemption price, or the rate of interest
lhereon, or in any olher way modify the terms of payment of the principal of or interest on the
Cenificates, (ii) give any preference to any Certificate over any other Certificate, or {iii) reduce
the aggregate principal amount of Certificates requi,,:d to be held by Owners for consent to any
such amerulrnent,. addition, or re~ission.
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Section 13.2. Attorney General Modification.
In order to obtain the approval of the Certificates by the Attomey General of the Stale of
Texas, any provision of this Ordinance may be modified, altered or amended after the date of its
adoption if required by the Attorney General in connection with the Attorney General's
examination as to the legality of the Certificates and approval thereof in accordance with the
applicable law. Such changes, if any, shall be provided to the City Secretary and the City
Secretary shall insert such changes into this Ordinance as if approved on the date hereof.
ARTICLEXN
SPECIAL PROVlSlONS RELATING TO
THE TEXAS WATER DEVELOPMENT BOARD
Section 14.l. Application of Article XN.
The provisions of this Article .5hall apply so long as the Certificates, or any of them. are
owned by the TWDB.
Section 14.2. Covenant l2 Abide v.jth Rules.
Toe City will abide with all applicable laws of the State ofT exas and Rules of th,, TY/DB
relating to the loan of funds evidenced by the Certificates and the Project.
Section 143. Tax Covenant
The City will not take, or omit to take, any action which B:Ction or omission would
adveraely affect the excludability for federal income tax purposes of interest payable on the
Certificates or on any series of bonds issued by the lWDB.
Se<:tion 14.4. Final Accounting.
Upon completion of the Project, the City shill! render• final accounting of the cost of the
Project; and, if the totnl cost of the Projec~ as finally completed, is less than originally estimated,
so that the proper share of the participation of the TWDB in the Project is reduced, the City shall
return to lhe TWDB the amount of such excess to the nearest multiple of the denomination of the
Certificates, whereupon the TWDB ,hall can«:I and return to the City a like amount of said
Certificates held by the TWDB. Toe Certificates to be canceled and retwned shall be chosen in
inverse order of maturity. Toe remainder of ,uch excess (an amount less than $5,000) shall be
deposited into the Interest and Sinking Fund.
Section 14.5. Annual Audit Reports.
The City shall provide to the Executive Administrator of TWDB, without necessity of a
writren request therefor, a copy of the City's annual audit report within 180 days after the end of
the City's fiscal year.
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S084Uv.3 LUB200ril0Hl
Section 14,6, Maintenance and Operation -Insurance,
The City hereby covenant, and agrees that the System shall be rnaintcined in good
condition and operated in an efficient manner and at reasonable cost. So long as nny of the
Certific,11:es are outstanding, the City agrees to obtain and maintain casualty and otheT insurance
on the System of a kind and in an amount sufficient to protect the TWDB's interest in the
Project. Nothing in this ordinance shall be con;trued as requiring the City to expend any funds
which are derived from sources other than the operation of the System but nothing herein shall
be constmed as proventing the City from doing so,
Section 14,7, Envirgnmentaj lndemnificatign,
Proceeds of the Certificates shall not be used by the City when sampling, testing,
removing or disposing of contaminated soils and/or media at the project site. The City agrees to
indemnify, hold harmless and protect the TWDB from any and all claims, causes of action or
damages to the pmon or property of third parties arising from the swnpling, analysis, transport,
storage, treatment and disposition of any contaminated sewage sludge, contaminated sediments
and/or contaminated media that may be generated by the City, its contractors, consultants,
agents, officmls and employees as a result of activities relating to the project, to the extent
permitted by Jaw.
Section 14.8, Accmate Records and Accounts.
The City agrees to maintain current, accurate and complete records and accomcts
necessmy to demonstrate compfom.ce v.-ith legal and contractual provisions related to the
financial assist!lnce provided by the TWDB.
Section 14.9. Approved Water Conservation Program.
The City agrees lo implement a wnter conservation program approved by the TWDB
until all financial obligations to the State of Texas have been discharged.
Section 14.JO. CgmpliW1Ce »ith Enyjronmentaj ~on.
The City agrees to comply with the environmental detennination of the Executive
Administrator of the TWDB.
ARTICLE XV
EFFECTIVE IMMEDIATELY
Section 15.1, Effective Imrnedjately.
Notwithstanding the provisions of the City Charter, this Ordinance shall become effective
immediately upon its adoption at this meeting pursuant ta Section 1201.028, Texas Government
Code,
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508413\1.3 LUB200/710lS
PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE on the 16th
day of September1 2010, at a regular meeting of the City C.Ouncil of the City of Lubbock, Texas.
TOM MARTIN, MaYor
ATTEST:
[SEAL]
APPROVED AS TO CONTENT:
By:
ANDY BU CHAM, Chief Financial Officer
APPROVED AS TO FORM:
By:
Signature Page for Order for Issuance
5084/Jv./ lUB200fl1018
Ordinance No. 2010-00073
EXHIBIT A
DESCRIPTION OF ANNUAL DISCLOSURE OF FINANCIAL INFORMATION
The following infonnation is referred to in Article XII of th.is Ordinance,
Annual Financial Statements and Operating Data
The financial infonnation and operating data with respect to the City to be pro,.ided annually in
accordance with such Article are as specified below:
1. The nudited financfol statements of the City far the most recently concluded fiscal
year,
2, Statistical wtd firumciaJ data 1<ith respect IO the City of the general type included
in 1he main text of the Application.
Accounting PrinciplH
The accounting principles referred to in such Article are the acrowiting principles
described in the notes to the financial statements rcfem:d to in Paragraph I above.
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SO!MIJv,3 LUB200nJill8
TRANSCRIYf OF PROCEEDINGS
VOLUME TWO
pertaining to
CITY OF LUBBOCK, TEXAS
$8,840,000
GENERAL OBLIGATION BONDS
SERIES 201 0A
CITY OF LUBBOCK, TEXAS
$15,320,000
GENERAL OBLIGATION BONDS
TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PA YMENf)
$48,955,000
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2010A
$96,540,000
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DIRECT PAYMENf)
US 238630v.1
Delivered: February 4, 2010
VINSON & ELKINS
ATTORNEYS AT LAW
3700 Trammell Crow Center
2001 Rol!i Avenue
Dallas., Teus 75281-2975
Tehpbone: (214) 120.7700
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CITY OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION SERIES 2010A AND
TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DlRECT PA YMENI)
AND
CITY OF LUBBOCK, TEXAS
GENERAL OBLIGATION BONDS SERIES 2010A AND TAXABLE SERIES lOJOB
(BUILD AMERICA BONDS-DIRECT PAYMENT)
TABLE OF DOCUMENTS
DOCUMENT
L ELECTION DOCUMENTS
LI Certified Ordinance Calling Bond Election
1.2 Affidavit ofP051ing Notice of Election
1.3 Affidavit of Publication
l.4 Certified Resolution Canvassing Election Result.,
1.5 DOJ PrecleBl'llllce Letter
II. BOND DOCI!MENIS
IABN'O,
I
2
3
4
5
2.1 Certified Resolution Authorizing Publication of Notice of Intent to 6
Issue Certificates end Bonds
2.2 Affidavits of Publication 7
2.3 Certified Ordinance Providing for the Issuance of the Certificates 8
2.4 Pricing Certificate Relating to the Certificates 9
2.5 Certified Onlinance Providing for the Issuance of the Bonds IO
2.6 Pricing Certificale Rel!lling lo the Bonds 11
2. 7 Paying Agent/Registrar Agreement for the Certificates 12
2,8 Paying Agent/Registrar Agreement for the &nds 13
,.
DOCUMENT TAB NO.
2.9 Preliminary Official Statement 14
2.10 Official Statement 15
2.11 Purchase Contract for Certificates 16
2.12 Purchase Contract for Bonds 17
2.13 Specimen Bonds 18
2.14 Specimen Certificates 19
III. CERTIFICATES, LETTERS AND RECEIPTS
3.1 General Certificate 20
3.2 Attorney General/Comptroller Instruction Letter 21
3.3 Federal Tax Certificates -Bonds 22
3.4 Federal Tax Certificates -Certificates 23
3.5 Form 8038-G and Evidence of Transmittal 24
3.6 Receipts and Delivery Certificate of Paying Agent/Registrar 25
3.7 Rating Letters 26
' 3.8 Certificate Pursuant to Bond Purchase Contract 27
3.9 Certificate Pursuant to Certificate Purchase Contract 28
3.10 DTC Registration Verification 29
' IV. OPINIONS
4.1 Opinions of Bond Counsel (including qualification as Build America 30
Bonds) -Bonds
' 4.2 Opinions of Bond Counsel (including qualification as Build America 31
Bonds) -Certificates
4.3 Supplemental Opinions of Bond Counsel -Bonds 32
4.4 Supplemental Opinions of Bond Counsel -Certificates 33
4.5 Opinions of Underwriter's Counsel 34
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US 236254v.l
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DOCUMENT TAB NO,
4.6 Opinions of Attorney General 1111d Comptroller's Registtation 35
Certificates -Bonds
4.7 Opinions of Attorney General end Comptroller's Registrstion 36
Certificates • Certificates
4.8 Opinion of City Attorney-Bonds 37
4.9 Opinion of City Attorney• Certificates 38
.3.
No Text
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Pleaae attach this Addendum to the copies of llre Official Statement in }'OMr possession and forward to the parties ID
whllt11 you have prniously delivered copies of such Official Statement,
ADDE."IDUM TO OFFICIAL STATEMENT DATED JANUARY 21, 2010
Relating to:
CITY OF LUllBOCK, TEXAS
$8,840,000 General Obllgodoo Hoods, Seri .. 2010A
515,310,000 Generol Obligalion lkiuds, Taxable Serles 10l0B
(Bulid America Booda -Dln:ct Payment)
54ll,955,000 Tax Bod Waterworks Syatem Surplus Revanae Certificat,. ofObllgatton,
Series lDlDA
$96,§401000 Tu an.d Watenvotk:s System SurplllS Revenue Certlficates of ObligatloD,
Taxable Series 2010B (Build America Bonds -Direct Payment)
Plea."le be .advised 1hat the above refi-"'renc:ed Official Si.atement he., been supplemented as follows:
Page 47: The section capti<>oed "OTHER INFORMATION -INVESTIGATIONS RELATING TO CITY'S
HEALTIIINSURANCE ADMINISlRA TOR" is hereby n:vised by the addition of the underlined language below and
" sh.all JCad in its entirety as follows:
INVESTIGATIONS RJ:LATING TO CITY'S HEALIB INSURANCE ADMINISTRATOR
In 2006, the City hi=l oo outside iodependoot auditing company, Beoalit Plan Partners, a California compooy (the
"Auditor"), to cooduct an audit ofits CO:l'ltnlct (the "Admm.istration Contract'') with its then current health insunmce
administrator, American Admini'iitmtive Group, Inc. ("'AAG''). The" Administration Coo.tmct provided far AAG's
administration of all City employee claims on the City )s self-insured health iosurance. The Aud.Jtor found numerous
possible overcharges ond errors by AAG during the term of the Adminimation Contract. including ovcrcbatges
possibly Wing from unmithorized co.trllJU1"sions taken by AAG and ~sible payments to A.AG by phammcies as
rehiltcs, Toe outside Aud.Jtor estimated the aforementioned errors and overcharges to be approximately $2 million.
The Administration Contract terminated by ill own tmns in Dece.mber 2006, and AAG bas ceased to administer any
clailll!:l for the City. The City has.hired another l:birdparty administrator to admini5lCtthe nm-out claims that accrued
prior to December 2006. The City selected Blue Cross Blue Shield to be the City's .new health insurance ad.ministrator
begiooiog Jaowuy 2007,
In MllJ'Cb 2007. the City filed I.Ill application with the State district court to compel AAG to preseJ'\'e and provide
docummtation relnting to the.Administration Contract and cln:ims submitted by City employees during the tenn of the
Administration Contmcl It is the in.teot of the City to utilize such documenbtioo. to complete the audit by Benefit Plan
Partners of its contract with AAG to determine whether BDY :further overcharges have ocrum:d,
Toe trial courtaever issuedanlling as to the City's application and instead referred the mattertoarbib-alion. The City
, will continue to purrue the documents and e.ay damages it may be entitled in the arbitration. AAG also sued the City
forda.mages to its business in the amount of$4501000. Arbltrotion has been scheduled lo these matters for March.-
April 2010.
lo. an attempt to obtain the necessary docwnents to conduct the audit1 the City attempted to obtain the necessary
documents directly from Covenant Hea]th System. Covenant was unsure it could release the documents to the City as
it opined such could be a violation of the Health Insunm.ce Portability aod Accountability Act("HIPAA"). The City
filed a declara.tozy judgment action in federal court against Covenant seeking a dechmUicm. as to whether Covenants
release of these docwnents violBled. the mPAA. HealthSmart intervened in the: lawsuit presllIDf:lbly in an a.ttempt to
prevent the release of the documeo.ts, Toe matter is still pending, No damages .are being sought by any party in the
suit
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Anathm lawsuit has been filed by A.AG agaiost Lee Ann Dumbauld, City Manager; Soott Snider1 .Assistant City
Manager; Leisa Hutcheson, City Risk Manager; and David Miller. former Mayor, The lawsuit arises from the City's
selecting Blue Cross as its new third party admioistrotor iruaead of AAG. The City employees were sued for civil
conBpiracy, misappropriation, tortious interfereoce with existing and prospective CODllacts, business disparagement;
and defamation. The City is providing a defense for1he employees and is seeliag motley from Travelers. lnsumnce.
Travelers Insurance is disputing this. Even though the City employees have counter suited the plaintiff, the City is
only paying for the defense of the lawsuit against the employees,
The City is aware thn.r fedeml auJ.horitics, including lhe Federal Bureau of Investigation. have conducted investigations
with respect to matten relating to AAG, The Parker Group (the parent company of A.AG), I.be Administration
Contract, and the selection by the City of Blue Cross Blue Shield M its health imauraoce administrator. On May 14;
200S, a search warrant issued by the U.S. District Court for die Northern District ofTelil.J Lubbock Division required
that FBI agents search and seize vmiollB written and electronic records of the City relating to these .matters. No
subpoenas at this time have been directed at, or issued to, the City in regards 1.Q these .iDvefflgations, The City beUeves
these investigations ere oogoing. On February 2, 2010, rhe City Attorney's office received a 1ettel' from City Council
M,ombcr John )Y, l,~QQ!![d, m·, uttomcy iof onning the City that Co!mgil Mombor l.eonard "has become aware that be
may be part of the federal investigationre)ating lot.be City of I,ubb<x;k's di,!pute with AAG and The Po,;l<er Gnivi>,"
Thi, addeodwn i,, dated February 4, 20!0.
No Text
OFFICIAL STATEMENT DATl:DJANUARY 21. 2010
In the opinion of Bond Cowisel, Wider existing law, the interest on the Series 2010A Bond!i will be excludable from gross income for fedeml income tax
purposes, subject to the mailers described in 'TAX MATTERS TAX EXEMPTION OF SERIES 2010A BONDS AND SERIES 20IOA CERTIFICATES"
below and. is not a specific prefercnt:e item or included in a colJ)Oration's adjusied cumnl earnings for purposes of lhe allernaliw mininwm tax. See MT AX
MATTERS -TAX EXEMYTlON OF SERIES 2010A BONDS AND SERIES 2010A CERTIFICATES" for a discussion of the opinion of Bond Counsel. 0 Interest on the Series 201 OB Bonds is not excludable from ~ income for federal income tax purposes. Sec "TAX MATTERS -SERIES 20 I OB BONDS
AND SERIES 2010B CERTIFICATES" ha-c:in.
0
D
,
)
)
Nt:W ISSUE: 8{)(.lK-ENTRV-ONLY
()amt; Date or Ddtnry
IU TINGS: Moody', lnvestun Sc.oitt, Inc. "Aa3"
StB11d1nl & l"oor·1 RatiapSffi'lto "AA+"
ficcll Radogs .. AA!'
See "OTHER INFORM/\ TION -RA TINGS"
herein.
CITY OF LUBBOCK, TF-XAS
$8,340.0Q() GENER-U,·OBLIGATION BONDS. SERJES ?OIOA
$J5'J20,000 GENERAL OBLIGATION BONDS, T A...'tABJ...E SERIF .. ~ 2010'5
(8UILD A.MERICA BONDS -DIRECT PAYMENT}
Dae: February 15. u shDWD herein
Principal of and interest on the $8,840,<m City of Lubbock. T~as. Gena-al Oblil!lllion Bonds, Series 2010A (the «series 2010A Bonds") 111d the
$15,320,000 Gena-al Obligarion Bonds, Taxable Series 2010B (Build America Bonds-Direct Paymt:lll)(lhe "Series 2010B Bonds", and collectively wilh the:
Series 20\0A Bonds, the "Bonds") issued by the City of Lubbock., Texas (lhe "Ci1y") are payable by The Bank of New Yoit. Mellon Tiust Company,
Natiooal ~illlion, Dallas, Texas (the WPaying Agait/Rcgis1rat"). The Bonds are initially rqistellld and deliv~ only to Cede & Co., the nominee of The
Depo,itory Trust Company ("OTC'") pul'SUllllt ID the Book-Enoy-Only System described herein. Beneficial owncoh.ip of lhe Bonds may be iw:quillld in
denominarions ofSS,000 or integral multipll:5 thawf. No ph)'liral deli~ry oft!le Bondi wW be 11111de to Ille beodlidal ownen lhereul. Principal of1111d
inrerest OIi. the Bonds will be payable by lhe Paying Agern/Rc::gisttllr to Cede & Co .• which will mate distnbution of the amounts so paid to the beneficial
owners oflhe Bon~ See1lfEOBLIGATIONS-BOOK-ENTRY-ONLY SYSTEM" herein. lno:rtst on IN: .Bonds will be celculllled on lhe basis ofa 3<i0-
day year consisting of twelve JG-day monlh!I. will accrue from their date or delivery, and is payable:: on February 15 and August 15 or each year, mmmendng
February 15, 2011, until maturity or earlier redemption, ID the regis~~ owners (initially Cede & Co.) appearing on the regisblltion books of lhe Paying
Agenl/Regisnr on lhe last business day of the month preceding eech inlereSt payment dale (the "Record Date") (sec '"THE OBLIGATIONS -
DESCRIPTION OF THE OBLIGATIONS"). 1111: BoDds are subj~t to optional m!cmption prior lo their scheduled maturities at the option of the City (see
"THE OBLIGATIONS -REDEMPTION -Optional Redemption"). The Tmn Bonds (as defined hcrc:in) arc subject to mandalDry sinkiDB fund redemption
as described herein (sec "'THE OBLIGATIONS -REDEMPTION -Mandatory Redemption"). In addition, lhe Series 2010B Baim iR subject to
extraoniinaty optional rt:dt:mption prior to thelr scheduled maturities (see .. THE OBLIGATIONS -REDEMPTION -Extraadinary Optio1111l Rmemption").
The Bonds con.~illlte dircci obligations of lilc City dnd are payable: fiom lhe pmceeds of a continuiDB, di11;e1 11mual ad v11lunm1 ta~ 1,:Yied within the.: limits
prescrib.:d by law. againsr all 19.\able property wilhin the City. The AlrienCM Recovery a,id Reinvcs1me1u Aet of 2009 (th~ "Rl!OJvery Act'11111thorizes the
Ciry ID issue taxable oblipriom known as "811ild America Borwb'' to .finance capiull cxpcnd1tures d11l1 oou1d be financed with !he i:.suan~ of w.-e,:t.-mpi.
bcluds and w elect to r~eivea subsidy pa~nt from rhe fu1kral govert1meAt equal io 35o/o1'f the :unow,1 of cacb intenes4 pil)TOeflt 011 such lax3ble hoods.. The
City will issue all of die Series 20108 8oooh RS obliprions that are not obligations de:icribed in ser.tion 103(11) oflbe lnt1..-mal Revenue Code{lile "Code") and
the i11tcrcs1 or\ which is no( eii:clurlable fro1n gross income for fcdi:tal income w: ruq,,.i~. Th~ available subsidy ror the Series 2010B 8o1\ds \llo,iJJ Ix ~id
101iu: City. No h\"'llder$ of Series 20100 Bonds are eolitlc::d to such payment orlO rccelV( ll w ~redil wi1h re:spe<:1 to lhc: Senes 20100 Elonds. Sec "THE
OBLiOA TIONS -DESIGNATION OF SERIES 2010B BONDS AND SERIES 2010B CERTIPICATES AS BUILD AMERICA BONDS.~
The Bonds are issued pursuant to the Constitution and general la~ of the Slillc ofTeus, particularly Chapter 1331 and IJ71, Teus Go-temment Code, as
amended, elections held in lhe City on May 15, 2004 and November 3, 2009, and an ortlinana: adopted by the City Co1111cil (the "Bond O!dinance").
The Series 2010A Bonds and the Series 20I08 Bonds ere. being offen;,d by die City concurrmtly with the ''City of Lirhboek, Tew, Tex and WaleTWOrk:s
System Surplus Revenue Cc:rtificaits ofObligarion, Series 2010A'' (the "Series 2010A Certificates") and the "City of Lubbock, Teu.s, Tax and WBICTWO!b
System Surplus Revenue Certificates of Obligation, Taxable Series 20 !OB (Bv.ild America Bonds -Direct Payment)" (IN: "Series 2010B Certificaits" 1111d
colleaivcly, with the· Series 2010A Cc:rtif1cates, I.hi: "Certificates") and such Bonds 811d Certificates arc hen:inafter somecil11C5 rcfem:d to collectively as the
"Obligations." The Series 2010A Bonds.. the Series 20108 Bonds, the Series 2010A Certificates and the Series 1010B Certilicab:s BR xparatc:: 811d distinct
securities offcrinp and eech such 01Terin1 is being issued and sold independently excq,t for the Olticial Slldement. and while each offai"I shares ci:rtein
common c1rtributes, each issue is ieparatc from t.hi: other and ~ould be reviewed and 11t1alyzcd indepc:ndcntly, including without limitation the type: or
obligation being offen:d, ils tc:nns for payment, me security fur ilS payment. wid the rights of the holdcr.i.
The Bonds are olTcn:d when, as and if issued, .subject to the approv.ing opinion of the Attorney General of the Staie of Texas and the opinion of Vin10n &
Elkins L.L.P., Bond Counsel, Dallas, Texas. Certain legal mattcB will be passed upon fur the undc::nmtc:rs named belOllf (the "Underwriter.1'') by their
counsel, McCall, Pmhum & Horton L.L.P., Dallas, Texas. See ''OTHER INFORMATIOJ', -LEGAL MATTERS." Delivery of the Bonds lhrough The
OepositOf}' Trusl Company, ts expecud to l;,c: on or about February 4, 20 I 0.
Hutchinson, Shockey, Erley & Co.
Morgan Keegan & Company, Inc.
fintSouthwest
J.P. Morgan
Southwest Securirift
l
Maturi!%
20ll
2012
2013
2014
2015
2016
2017
2018
2019
2020
PRINCIPAL AMOUNTS, INTEREST RATES AND PRICES
CUSIP PreliI: 549188
$8,840,000 General Obligation Bonds, Series 2010A
(Due February 15)
Principal Interest Offering Suffix Principal Interest Offering Suffix
Amount Rate Yield tal NOL (b) Maturi!% Amount Rate Yield tal Nos. Q!)
(c)
s 445,000 2.000% 0.700% EV8 2021 (c) s 170,000 3.500% 3.680%
910,000 2.000% 0.880% EW6 2022 (c) 175,000 3.700% 3.810%
935,000 3.000% 1.230% EX4 2023 (c) 180,000 3.750% 3.910%
960,000 3.000% Ui00% EY2 2024 (c) 190,000 3.875% 4.010%
990,000 4.000o/o 2.030% FZ9 2025 (c) 195,000 4.000o/o 4.120o/o
1,030,000 4.00()Q/o 2.480% FA3 2026 (c) 205,000 4.000% 4.190%
1,075,000 3.000% 2.800% FBI 2027 (c) 215,000 4.125% 4.260o/o
150,000 3.250o/o 3.080% FC9 2028 (c) 225,000 4.200o/o 4.320%
155,000 3.625% 3.350o/o FD7 2029 (c) 230,000 4.250% 4.390%
165,000 3.750% 3.540% FE5 2030 (c) 240,000 4.300% 4.450%
(Interest to accrue from the date of delivery)
S15,310,000 General Obliglltton Bonds, Tauble Series 1010B (el
(Bu.ild America Bonds -Dired Payment)
$7,355,000 Serial Bonds
(Due February 15)
Initial CUSIP
Principal Interet Offering Suffix
Maturi~ Amount Rau: Yield ~al Nos.~~
2018 s 955,000 4.442% 4.442% FR.6
2019 985,000 4.542% 4.542% FS4
2020 (c) 1,015,000 4.742% 4.742% FTI
2021 (c) 1,045,000 4.892% 4.892% FU9
2022 (c) 1,080,000 4.992% 4.992% 'fV1
2023 (c) 1,120,000 5.242% 5.242% FWS
2024 (c) 1,155,000 5.342% 5 . .342% FX3
$7,965,000 6.032% Term Bonds Due February 15, 2030, Priced at Par, CUSIP Suffix No.: FYI (a) (b) (c) (d)
(Interest to accrue from the date of delivery)
(a) The initial yields will~ establi.slaed by and are !he mle responsibility of Ille UndetwritenJ, and may 51lbsequeutly ~ changed. Yield is
dcurmilled IU of lhc call date.
(b) CUSIP numbcn have been assigned. to the Bonds by S111ndaro and Poor's CUSIP Setvice Bureau, a Division or The McGraw-Hill
CompaniH, Inc., and an:: included solely !'or the CODYa1ieuce of !he regi,tcmi owncn of lhc Bonds. Neilher the Chy, the Financial
Advisor. nor the UndetwritenJ are resportsible for the selec:tion or~~ Qfthe CUSIP number&~ forth be~.
( c) The Bonds .ma111rh1g on Febnwy IS, 2020 and ~ are subjea to redemption, at Ille option or the City, at par value thei:cof plUJ
acctued intetest to rhe dale-of n:dm\ption, on Fe'brua!y 15, 2019 or any dale 1hereaftet {see wTilE OBLIGATIONS -REDEMPTION -
Optional Redemption").
(d) The Tenn Bonds (.u deflped herein) are Sllbject Ill mandatmy sinking fund Ridffll!llion as dciaibcd hen:ln (a:B "'THE OBLIGATIONS~
REDEMPTION -MIU1dalory Redemption'),
(e) Toe Serles l0108 Bondii ~ also subject lo ~traordi11111Y opciQolll red£mptioo (lee '"THE OBLIGATIONS -REDEMPTION -
Exmum,linary Opri0nal RedemptiOD'').
FF2
FGO
FHS
FJ4
FKI
FL9
FM7
FNS
FPO
FQS
0
0
0
0
C
C
C
C:
C
C
C
0
J
,
,
OFFICIAL STATEMENT DATED JANUARY ll, 2010
In the opinion of Bond Coumel, under existing law, lhe interest on the Series 201 0A Certificales will be e1tcludable from groe.5 income for federal income IJIX
purposes, $Ubject to the mlltters described in "TAX MATTERS -TAX EXEMPTION OF SERIES 2010A BONDS AND SERIES 2010A CERTIFICATES"
below and is oot a specific prefun:occ iccm or included in a corporation's adjusted cunent earnings for purposes of the alternative minimum tax. See "TAX
MATTERS-TAX EXEMPTION OF SERIES 2010A BONDS AND SF.RIES 2010A CERTIFICATES" for a discussion of che opinion of Bond C:OW1Sel.
Interest oo the Series 2010B Certificates is not excludable from gross income for federal income IJIX purposes. See ''TAX MATTERS -SERIES 20108
BONDS AND SERIES 20108 CERTIFICATES" herein.
NEW ISSUE: BOOK-ENTRY-ONLY
Dated: Date or Delivery
RA.TINGS: Moody's lDveston Sen1ce, Joe. "AaJ"
Smndard &. Poor't Rating& Sen-ices "AA+"
Fitch Ratinga "AA"
See "OTHER INFORMATION -RATINGS"
herein,
CITY OF LUBBOCK, TEXAS
$48,955,000 TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2010A
$96,540,000 TAX AND WATERWORKS SYSTEM SURPLUS REVEI'll'UE
CERTIF1CATES OF OBLIGATION, TAXABL£ SERIES 1010B
(BUILD AMERICA BONDS -DIRECT PAYMEN1)
Due: February 15, as sllmrn huein
Principe! of end interest on the $48,9S5,000 City of Lubbock, Texas, Tax and Waterworks Sysitm Sll.l])lll8 Revenue C~i'ficates ofOblisation, Series 20lOA
(the "Series 2010A Certifica1es"') end the $96,S40,000 Tax aud Waterlllorks System Sll.l])lus Revenue Certificates of Obligation, Taxable Series 2010B (Build
America Bonds-Direct Payment) (the "Series 20 I OB Ccrtificaccs", aod collective\ y with the Series 201 0A Certificates, the "Certificates") iuued by the City
of Lubbock, Texas (the "City'') are payable by The Bank of New Yorlc Mellon Trust C:Ompany, National Association, Dallas, Texas (the "Paying
Agent/Registrar"). The Certificates are initially registered end delivered only lo Cede & Co., the nominee of The Deposilory Trust Company (''DTC'')
pursuant lo tile Book-Entry-Only System described hereio. Beneficial ownenhip of the Certificates may be acquin:d in denominetions of $5,000 or integral
multiples thereof. No pllyslcal delivery of the Certlficatn wiU be m•de to the bendic:i.al o•nen thereof. Principal of and inl=t on the Certificates will
be payable by lhe Paying Agent/Registrar to Cede & Co., wbich will make distribution of the amo1.111ts so paid to the beneficial owners of the Certificates·.
See "THE OBLIGATIONS -BOOK-ENTRY-ONLY SYSTEM" herein. Interest oo the Certificates will be calculated on the basis of a 360-day year
consisting of twelve 30-<iay months, will e,c,crue from their date of deli~, end is pll)'llble on February 15 and August IS of each year, commencing February
IS, 2011, u.ntil 111&turity or earlier redemption, to lhe registered ~ (initially Cede & Co.) appearing oo the n:gislllllion books of the Paying
Agi:ut/Rcgistl'al on the last business day of the monlh preceding each interest psyment date (the "Ra:oni Dace") (see "'IHE OBLIGATIONS -
DESCRIPTION OF TilE OBUGATIONS"). The Certificates are subject lo optional redemption prior to thr.ir scheduled maturities at the optioo of the City
(see ''THE OBLIGATIONS-REDEMPTION-Optional Redemption"). The Term Certificates (as defined herein) IICC subject io mandatory sinking fund
redemption as described herein (see "TIIE OBLIGATIONS -RFDEMPTION -Mandatory Redemption''). In e.dditioa, lhe Series 20108 Certificates are
subject lo extraordinary optional redemption prior to their acheduled 111&turities (aee ''TIIE OBLIGATIONS -REDEMPTION -Extraordin&ry Optional
Redemption").
The Certificates are payable from a combination of (i) the proceeds of a cootin11iog, direct annnal ad valorem tax, levied withio the limits presc:ribed by law,
on ell taxable property within lhe City, and (ii) a pledge of surplus oet revenues of lhe City's Waterworks System, not to exceed Sl,000. The America.n
Ra:overy and Reinvestment Act of 2009 (the "Recovery Act'') authorizes lhe City to issue lax.able obligations known as "Build America Bonds" lo fill,llllce
capital expenditures tlusa could be financed with the i&11W1I1.cc of tax-exempt hoods end to elect to m=eive a subsidy payment from the federal government
equal to 35° o of the amount of each interest payment on 5llCb taxable hoods. The City will issue all of the Series 20 JOB Certificates as obligations that are not
obligations described in aection 103(a) of the Internal Revenue Code (the "Code") end the inlc~st on which is not excludablc from gross income for federal
income tax purposes. The available subsidy for che Seri~ 20108 Certificates would be paid lo the City. No holders of Series 2010B Certificates are entitled
to such payment or to receive a lllX credit with respect lo lhe Series 2010B Certificates. See "'IHE OBLIGATIONS DESIGNATION OF SERIES 20l08
BONDS AND SERIES 2010B CERTIFICATES AS BUILD AMERICA BONDS."
The Certificates are iuued pru,uant to che Comtitution and general laws of the State of Texu, perticularly rubcbapia C of Oiapter 271, Te:1.116 Local
Gov=1I11ent Code, as amended, Chapter 1371, Texas Goverument Code, as amended, end an ordi1111.DCe adopted by the City Council (che "Certificate
Ordinance").
The Series 2010A Certificates and lhe Series 2010B Certificates are being offered by the City concunently with the ''City of Lubbock, Texas, General
Obligation Bonds, Series 20IOA" (the "Series 2010A Bonds') end the "City of Lubbock, Texas, General Obligatioo Bonds, Taxable Series 20108 (Build
America Bonds-Direct Payment)" (the "Series 2010B Bonds" and collectively with the Series 2010A Bonds, the "Bonds") end such Certificates and Bonds
are hereinafter sometimes referred lo collectively III the ''Obligations." The Series 201 OA Certificates, the Series 2010B Certificalcs, the Series 20 I0A Boods
and the Series 20 I OB Bonds are r;eparate md clistinct securities offerings 1111d each IUCh offering is being i86ued and sold iodependently except for the Officiel
Sllliemmt, aod wbile eaeh offering shares certain common attributes, each issue is separate from che other and should be reviewed and analyzed
independently, including without limilation the lype of obligation being offe~d, its r=JJS for payment, the security for its payment, end the rights of the
holders.
The Certificates are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State ofTex.w. end the opinion ofViDson
& ElkiDs LL.P., Bond Counsel, Dallas, Texas. Certain legal matte11 will be ~sed upon for the undawrite~ named be!QW (the "Undawri~") by their
oounsel, McCall, Parkhurst & HortA:ln L.L.P., Dallas, Texas. See "OTIIER INFORMATION -LEGAL MAlTE.RS." Delivery of the Certificates through
The Depository Trust Company is expected to beon or about February 4, 2010.
Hutchinson, Shockey, Erley & Co.
Morgan Keegan & Company, Inc.
FintSouthwest
J.P. Morgan
Southwest Securiti~s
MBturi!l:
2011
2012
2012
2013
2013
2014
2014
2015
2015
2015
2016
2016
2017
2017
PRINCIPAL AMOUNTS, INTEREST RATES AND PRICES
CUSIP Prefii:: 549188
$48,955,000 Tu and Waterworks System Surplus Revenue Certificates of Obligation, Series l0lOA
(Due Februwy 15)
Initial CUSIP Initial
Principal Interest Offering Suffix Principal Interest Offering
Amount Rate Yield ia} Nos.~ Maturi!l': Amount Rate Yield ta)
$ 3,010,000 2.000% 0.400% FZ8 2018 $ 1,215,000 3.250% 3.080%
2,750,000 1.875% 0.880% GA2 2019 1,250,000 3.500% 3.350%
3,115,000 2.000% 0.880% GB0 2020 (c) 1.295,000 3.375% 3.540%
1,150,000 1.875% 1.230% GC8 2021 (c) 265,000 3.500% 3.680%
4,900,000 5.000% 1.230% GD6 2022 (c) 275,000 3.700% 3.810%
450,000 2.000% 1.590% GE4 2023 (c) 285,000 3.750% 3.910%
5,890,000 5.000% 1.590% GFl 2024 (c) 295,000 3.875% 4.010%
350,000 2.250% 2.030% GG9 2025 (c) 310,000 4.000% 4.120%
2,775,000 4.000% 2.030% GH7 2026 (c) 320,000 4.000% 4.190%
3,515,000 5.000"'/o 2.030% GJ3 2027 (c) 335,000 4.125% 4.260%
3,000,000 2.750% 2.480% GK0 2028 (c) 345,000 4.200% 4.320%
J,925,000 5.000% 2.480% GL8 2029 (c) 360,000 4.250% 4.390%
J,500,000 3.000% 2.800% GM6 2030 (c) 380,000 4.300% 4.450%
3,695,000 4.000% 2.800% GN4
(Interest to accrue from the date of delivery)
596,540,000 Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (el
(Build America Bonds -Direct Payment)
S46,795,000 Serial Bon<k
(Due February 15)
Initial CUSIP
Principal Interest Offering Suffix
Maturi~ Amount Rate Yield (a) Nos. (b)
2018 s 6,240,000 4.442% 4.442% HC7
2019 6,425,000 4.542% 4.542% HD5
2020 (c) 6,620,000 4.742% 4.742% HE3
2021 (c) 6,540,000 4.892% 4.892% HFO
2022 (c) 6,755,000 4.992% 4.992% HG8
2023 (c) 6,985,000 5.242% 5.242% HH6
2024 (c) 7,230,000 5.342% 5.342% HJ2
$49,745,000 6.032% Term Certificates Due February 15, 2030, Priced e.t Pe.r, CUSIP Suffix No.: HK.9 (a) (b) (c) (d)
(Interest to aCGrue from the date of delivery)
(a) The initial yields will be established by BDd are the sole responsibility of lhe Underwrite11, and may subsequently be changed.
(b) CUSIP numb= have been assigned to lhe Certificates by Standard and Poor's CUSIP Se!vice BURau, a Division of The McGraw-Hill
Cornpe.nies, Inc., and are included solely for the convenience of the registered owners of the Certificall:s. Neither the City, the Financial
Advisor, nor lhe Underwriters are responsible for the selection or correctness of lhe CUSIP number$ set furth hen:in.
(c) The Certificates maruring on Fet,nwy 15, 2020 1111d thereafter are subject to redemption, at lhe option of lhc City, at par val~ lhcn:of plus
aci:rucd interest to the date af n::dcmptian, on Februazy 15, 2019 or any dall: thereafter (see "THE OBLIGATIONS -REDEMPTION -
Optional Redemption").
(d) The Term Certificates (111! defined herein) are subject to mandatory sinking fund redemption as described herein (see "THE OBLIGATIONS
-RFDEMPTION -Mandatory Redemption").
(e) The Series 20108 Certificates are also subject to extraordinary optiolllll redemption (see "TIIE OBLIGATIONS -REDEMPTION -
Fitraon1in81)' Optional Redemption").
0
C
CUSIP
Suff"DC
Nos.~)
GP9
GQ7 C
GR5
GS3
GT!
GUS
GY6
GW4
GX2 C
GY0
GZ7
HAI
HB9
C
C
C
C
C
C
0
USE OF lNFORMATION IN OFFICIAL STATEMENT
No dealer, broker, salesman or other person bas been authorized by the City to give any infonnati011 or to make any representati011
other than those contained in this Official Statement, and, if given or made, such other infonne.tion or representations must not be
O relied upon as having been a.uthorized by the City.
0
0
0
0
0
D
This Official Statement is not to be used in an offer to sell or the solicitation of an offer to buy in auy stare in which such offer or
solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any per.1on to
whom it is unlawful to make such offer or solicitation.
This Official Statement contains, in part, estimates, assumptions and matters of opinion which are not intended as statements of
fact, and no representation is made as to the correctness of such estimates, assumptions or matters of opinion or as to the lilcelihood
that lhey will be realized. Any information and exim,ssions of opinion herein contained are subject to change without notice:, and
neither the delivery of this Official Statement nor any sale ma.de hereunder shall, under any circumstances, create auy implication
that there has been no change in the condition of the City or other matters described herein since the date hereof. See "OTIIER
INFORMATION -CONTINUING DISCLOSURE OF INFORMATION'' for a description of the City's undertaking to provide
certain infonne.tion on a continuing basis.
The informa1ion set forth or included in this Official Statement has been provided by the City and from other sources believed by
the City to be reliable. The informati011 and expressions of opinion herein are subject to change without notice, and neither the
delivery of this Official Statement nor any sale hereunder sha.11 create any implica.tion that there has been no change in the
financial condition or operations of the City described herein since the date hereof. This Official Statement contains, in part,
estimates and matters of opinion that ore not intended as starements of fact, and no representati011 or wammty is made as to the
correctness of such estimates and opinions or tha.t they will be realized.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OYER ALLOT OR EFFECT 1RANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OBLIGATIONS AT A LEVEL ABOVE THAT WHICH
MIGHT PREY AIL IN THE OPEN MARKET. SUCH STAB£LIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
The Underwriten1 have provided the following sentence for inclusion in this Official Statement. The Underwriteill have reviewed
the information in this Official Statement in accordance with, and as part of, their responsibilities to investor.ii under federa.i
securities laws as applied to the facts and circumstances of this transa.ction, but the Underwriters do not guarantee the a.ccuracy or
completeness of such infonnation.
THE COYER PAGES CONfAIN CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY AND ARE NOT
INTENDED AS A SUMMARY OF nns OFFERING. INVESTORS SHOULD READ nns ThIIRE OFFICIAL
STATEMENT, INCLUDING THE ATTACHED APPENDICES, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN
INFORMED INVESTMENT DECISION.
THE OBLIGATIONS HAYE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN
RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACT. THE REGISTRATION OF QUALIFICATION OF THE
OBLIGATIONS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAW OF THE STATES IN
WHICH THE OBLIGATIONS HA YE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM
REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION
THEREOF.
THIS OFFICIAL STATEMENT CONTAINS "FORWARD-LOOKING" STATEMENTS WITIIIN THE MEANING OF
SECTION 2IE OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WIDCH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROM FUTIJRE RESULTS, PFBFORMANCE
AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE
CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN 1HE
FORWARD-LOOKING STATEMENTS.
Neither the City, its financial advisor, nor the Uuderwriters make any representation or warranty with respect to the infonnation
contained in this Official Statement regarding the Depository Trust Company ("DTC") or its book-entry-only system herein, as
such infonnation has been provided by DTC.
TABLE OF CONTENTS
~
OFFICIAL STATEMENT SUMMARY .................... 7
INTRODUCTION .... -............................................... 11
DESCRIPTION OF THE CITY ____ II
THE Ci)BLIGATIONS ..... " .......................................... 11
DESCRIPTION OF THE OBLJGA TIONS ........ 11
DESIGNATION OF SERIES 201 OB BONDS
AND SERIES 2010B CERTIF[CATES AS
BUILDAMERICABONDS ...................... 12
Build Anlerica Bonds ........................................... 12
Interest Subsidy Payment... .................................. 12
Series 2010B Bonds and Series 20 I OB
Certificates ................................................... 12
AUTHORITY FOR ISSUA..NCE ......................... 12
SECURITY AND SOURCE OF PAYMENT .... 12
TAXRATELIMITATION ................................. 13
REDEMPTION .................................................... 13
NOTICE OF REDEMPTION .............................. 14
.AJdENDMENTS .................................................. 14
DEfEASANCE .................................................... 15
BOOK-ENTRY-ONLY SYSTEM ...................... 15
Use of Certain Terms in Other Sections ofthls
Official Statement ........................................ 16
PAYING AGENT/REGISTRAR ........................ 17
TRANSFER, EXCHANGE AND
REGISTRATION ........................................ 17
RECORDDATEFORINTERESTPAYMENT 17
REMEDIES .......................................................... 17
SOURCES AND USES OF PROCEEDS ........... 19
ADV ALOREM TAX INFORMATION .................. 19
ADVALOREMTAXLAW ............................... 19
EFFECTIVE TAX RA TE AND ROLLBACK
TAX RATE ................................................. 21
PROPERTY ASSESSMENT AND TAX
PAYMENT .................................. ~~-21
PENAL TIES AND INTEREST .......................... 21
CfIY APPLICATION OF TAX CODE ............. 22
TAX ABATEMENT POLICIES ......................... 22
TAX INCREMENT FINANCING ZONES ....... 22
FINANCIAL INFORMATION ................................. 24
FINANCIAL POLICIES ............................................ 38
P()LIQES ............................................................. 38
ADMOOSTRA TION ........................................... 39
INVESTMENTS .......................................................... 40
LEGAL INVESTMENTS .................................... 40
INVESTMENT POLICIES ................................. 41
ADDITIONAL PROVISIONS ............................ 41
TAX MA TIERS .......................................................... 42
TAX EXEMPTION OF SERIES 2010A
BONDS AND SERIES 2010A
CERTIFICATES ......................................... 42
ADDITIONAL FEDERAL INCOME TAX
CONSIDERATIONS RELATING TO
11:IE TAX-EXEMPT OBLIGATIONS ...... 42
Coll.eteral Tax Consequences ............................... 42
Tax Accounting Treatment of Original lssue
Premium.---------··· .......................................... 42
Loog Fint Coupon Consequences , ...................... 43
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Tax Accounting Treatment of Original Issue
Discount Tax-Exempt Obligations ............. 43
SERIES 2010B BONDS A.ND SERIES Z0l0B
CERTIFICATES ......................................... 44
la General ............................................................. 44
Paynients of Interest ............................................. 44
Long First Coupon Consequences ....................... 44
Original Issue Discount ........................................ 44
Accrual Method Election ..................................... 45
Disposition or Retirement .................................... 45
Defeasance of the Taxable Obligations ............... 45
lnforma.tion Reporting and Backup Withholding 45
Treasury Circular 230 Disclosure ........................ 45
OTHER INFORMATION ......................................... 46
RATINGS ............................................................. 46
LITIGATION ....................................................... 46
INVESTIGATIONS RELATING TO CITY'S
HEAL TH INSURANCE
ADWNISTRA TOR .................................... 47
REGISTRATION AND QUALJFICA TION OF
OBLIGATIONS FOR SALE ...................... 47
LEGAL INVESTMENTS AND ELIGIBILITY
TO SECURE PUBLIC FUNDS IN
TEXAS··········-··-···-··-·--····················· ........... 48
LEGAL MATI'ERS ............................................. 48
CONTINUING DISCLOSURE OF
INFORMATION ......................................... 48
Annual Reports ..................................................... 48
Material Event Notices ......................................... 49
Availability of Information .................................. 49
Limitations and Amendmen1s .............................. 49
Compliance with Prior Undertakings .................. 49
FCNANCIAL ADVISOR ..................................... 49
UNDERWRITING ............................................... 49
FORWARD-LOOKING STATEMENTS
DISCLAIMER ............................................ 50
MISCELLANEOUS ............................................ 50
APPENDICES
APPENDIX A -EXCERPTS FROM ANNUAL
FINANCIAL REPORT FOR THE YEAR ENDED
SEPTEMBER 30, 2008
APPENDIX B -FORMS OF BOND COUNSEL
OPINIONS
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OFFICIAL STATEMENT SUMMARY
This sullllIUll)' is subject in all respects to the more e-0mplete infonnation and definitions contained or incorporated in this
Official Statement. The offering of the Obligations 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.
THE CITY ........................................... The City of Lubbock, Texas (the "City") is a political subdivision and municipal
corporatioo of the State, located in Lubbock County, Texas. The City cove.rs
approximately 119.1 sqlllll"e miles and has an estimated 2009 population of 219,643 (see
''INTRODUCTION ~ DESCRWTION OF THE CITY").
THE BONDS ....................................... The Bonds are issued as $8,840,000 General Obligation Bonds, Series 2010A (the
"Series 2010A Bonds") and $15,320,000 General Obligation Bonds, Taxable Series
2010B (Build America Bonds -Direct Payment) (lhe "Series 2010B Bonds" and
collectively with the Series 2010A Bonds, the "Bond5j. The Series 2010A Bonds are dated
as of their date of delivery, and mature oo February 15 in each of the years 2011 through
2030. The Series 2010B Bonds are dated a.,; of their date of delivery, and mature serially
on February 15 in each of the years 2018 through 2024, and on Februazy IS, 2030 (the
"Term Bonds").
THE CERTIF1CA TES ....................... The Certificates are issued as $48,955,000 Tax lilld Waterworks System Surplus Revenue
Certificates of Obligation, Series 2010A (the "Series 2010A Certificates") and
$96,540,000 Tax and Waterworks Syiitem Surpllll Revenue Certificates of Obligation,
Taxable Series 2010B (Build America Bonds -Direct Payment) (the "Series 2010B
Certificates" and collectively with the Series 20 I 0A Certificates, the "Certificates''). The
Series 2010A Certificates are dated as of their date of delivery,, and mature on February IS
in each of the years 2011 through 2030. The Series 2010B Certificates are dated ti of their
date of delivery, and marure serially on February IS in each of the ycm 2018 through
2024, and on February 15, 2030 (the "Term Certificates").
PAYMENT OF INTEREST ............... Interest on the Bonds and the Certificates (collectively, the ''Obligations") accrues from
their date of delivery, and is payable February IS, 2011 and ea.ch August 15 and Februazy
IS thereafter until maturity or prior redemption (see ''THE OBLIGATIONS -
DESCRWTION OF THE OBLIGATIONS").
AUTHORITY FOR ISSUANCE ....... The Bonds are issued plllSUB.Dt to the Constitution and general laws of the State of Texas,
partiC1Jlerly Chapters 1331 and 1371, Texas Government Code, as amC1Jded, elections
held in the City oo May 15, 2004 and November 3, 2009, and an ordinance adopted by
the City Council (the "Bond Ordinance'').
SECURITY FOR THE
The Certificates are issued pursuant to the Constitution and general laws of the State of
Texas, particularly Subchapter C of Chapter 271 of the Texas Local Government Code,
as amended, Chapter 1371, Texas Government Code, as amended, Md an ordinance
adopted by the City Council (the "Certificate Ordinance" and, together with the Bond
Ordinance, the "Ordinances").
BONDS ................................................ The Bonds constitute direct obligations of the City and are payable from the proceeds of
a e-0ntinuing, direct annual ad valorem tax, levied within the limits prescribed by law,
against all taxable property within the City.
SECURITY FOR THE
CERTIF1CA TES ................................ The Certificates are payable from a combination of (i) the proceeds of a continuing,
direct annual ad valorem tax, levied within the limits preseribed by le.w, on all taxable
property within the City, and (ii) a pledge of surplus net revenues of the City's
Waterworks System, not to exceed $1,000.
OPTIONAL REDEMPTION ............. The City reserves the right, at its option, to redeem Obligations having stated maturities
on and after February 15, 2020, in whole or in pan in principal amounts of$5,000 or any
integral multiple thereof, on Februazy 15, 2019, or any date thereafter, at the par value
thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS -
REDEMPTION -Optional Redemption").
MANDATORY REDEMPTION ....... The Term Bonds and the Term Certificates are subject to mandatory sinking fund
redemption as described herein (see "TIIE OBLIGATIONS -REDEMPTION -
Mandatory Redemption").
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EXTRAORDINARY
OPTIONAL REDEMPTION ............ The Series 2010B Bonds and Series 2010B Certificates are subject to extraordinary
optional redemption on any date through February 15, 2019 in whole or in part in
principal amounts of $5,000 or any integral multiple thereof (see ''1HE OBLIGATIONS 0
-REDEMPTION -Extraordinary Optional Redemption").
RATINGS ........................................... The Obligations are rated "Aa.3" by Moody's Investora Service, Inc., "AA+" by Standard
& Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. and "AA"
by Fitch Ratings (see "OTHER INFORMATION -RA TINGS").
TAX MATTERS ................................ In the opinion of Bond Counsel, wider existing law, the interest on the Series 2010A O
Bonds and Series 2010A Certificates will be excludable from gross income for federal
income tax purposes, subject to the matters described in "TAX MATTERS -TAX
EXEMPTION OF SERIES 20IOA BONDS AND SERIES 2010A CERTIFICATES"
below and is not a specific preference item or included in a corporation's adjusted current
earnings for purposes of the alternative minimum tax. See "TAX MATI'ERS -TAX
EXEMPTION OF SERIES 2010A BONDS AND SERIES 2010A CERTIFICATES" for
a discussion of the opinion of Bond Counsel.
Interest on the Series 2010B Bonds and Series 2010B Certificates is not excludable from
gross income for federal income tax purposes. See ''TAX MATTERS -SERIES 2010B
BONDS AND SERIES 201 OB CERTIFICATES" herein.
USE OF PROCEEDS ........................ Proceeds from the sale of the Bonds will be used {i) for various public improvements and
public purposes and {ii) to pay the costs associated with the issuance of the Bonds.
0
Proceeds from the sale of the Certificates will be used for the purpose of paying 0
contractual obliglllions to be incurred for (i) various public improvements including solid
waste, drainage, water, street, electric, airport, waste-water and (ii) professional services
rendered in connection therewith. In addition, a portion of the proceeds from the sale of
the Certificates will be used to pay the costs ofisruance of the Certificates.
BOOK-ENTRY-ONLY
SYSTEM ............................................. The definitive Obligations will be initially registered and delivered only to Cede & Co., 0
the nominee of OTC pursuant to the Book•Entry•Only System described herein.
Beneficial ownership of the Obligations may be acquired in denominations of $5,000 or
integral multiples thereof. No physical delivery of the Obligations will be me.de to the
beneficial owneD thereof. Principal of, premium, if any, and interest on the Obligations
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 ownera of the Obligations (see "THE OBLIGATIONS 0
BOOK-ENTRY-ONLY SYSTEM'').
PAYMENT RECORD ........................ The City has never defaulted in payment of its general obligation tax debt
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SELECTED F1NA.t"'ifCIAL INFORMATION
Fiscal Per CapilB Guenl
Ye•r E.titimated Tuable Taxable P1upose
Ended City Anased AlletMd Funded
30-Sel! Poelllation <il Valuation Vahaatiou TuDebt('o>
2005 209,120 $8,634,994,862 s 41,292 $ 80,210,269
2006 211,187 9,346,613,951 44,258 87,231,945
2007 212,365 10,002,725,637 47,102 92,487,363
2008 214,847 I 0,897,210,563 50,721 101,185,953
2009 218,327 11,673,074,132 53,466 106,303,936
2010 219,643 12,002,616,180 54,646 108,479, 132 (I)
''1 Source: Tho City.
ll>l Doe nOI include etlf'"Pl)Onal debt.
~I [nc]udes the Bonds
Genenl Fund Co11101ldated Sra.temeat S1unmary
Un.audited
l009 1008 1807
Begjnning Balance s 19 ,96.2,275 S 19,125,648 $ 19,924,711
Total Revenues 102,218,639 I 06,5 71,570 I 02,520,653
Tobi Expendlnu-es 124,321,204 120,345,933 ll?,202,093
Ending Balance 19,881,415 19,962,275 19,125,648
Reserves & Designalions
Undesignated FI.Llld Balance s 19,881,415 $ 19,962,275 $ 19,125,648
For additional informarioo regarding the City, please contact:
AndyB=bam
ChiefFiDIIDcial OffiC4:r
City of Lubbock
P.O. Box2000
Lubbock, TI< 79457
Phone (806) 775-2149
Fax (806) 775-2051
~ewBoles
RBC Capital Markets Corporation
2711 N. He.sell Avenue, Suiie 2500
Du.llas, TX 75204
Phone (214) 989-1672
f!IJ{ (214) 989-1650
Per Capita
Genenal
P11rpote
Funded
Tu Debt('o1
s 383.56
413.06
435.51
470.97
486.90
493.89 ~·
2006
S 17,376,420
97,818,207
112,278,444
19,924,711
$ 19,924,711
Ratio
Tu Debt to
Auesed
V aluatioo ('oJ
0.93%
0.93%
0.92%
0.93%
0.91%
0.90%
1095
S 12,694,525
104,351,116
103,203,269
17,376,420
s 17,376,420
[TRE REMAINDER OF nns PAGE INTENTIONALL y LEFT' BLANK)
9
%of
Total Tai: TH
Colleedons ....!!!L
100.28% 2004
99.71 o/o 2005
99.02% 2006
99.62% 2007
98.87% 2008
(<j (r,t Process) 2009
CITY OFF1CIALS, STAFF AND CONSULT ANTS
EU:cn:D OmCJALS
City Council
Tom Martin
Mayor
Linda. Deleon
Council Member, District 1
Floyd Price
Council Member, District 2
Todd R. Klein (I)
Council Member, District 3
Paul R. Beane
Council Member, District 4
John W. Leonard, Ill
Council Member, District 5
Jim G;Jbreath
Council Member, District 6
Date of Term
Installation to Office Ex12ires
May2008 May2010
Me.y 2004 Me.y2010
Me.y2004 May2012
June 2007 May2010
June 2008 May2012
Me.y 2006 Me.y2010
May 2003 May 2012
Occupe.tion
Retired Police Chief
Business Owner
Retired
Radio Show Host
Rlllired
Business Owner
Business Owner
(l) Todd R. Klein W8II elected June 9, 2007, lo fill the unexpired term of District 3 Councilman Gary O. Boren.
SELECTED ADMINISTRATIVl'. STAFF
Date ofE.mplayment Thte ofFmployment Total GovemnJmt
Name Position in Cl.im!nt Position with City of Lubbock Secvice
Lee Ann Dumbauld City Manager Septembc:2-2005 July2004 20+-
Andy Burcham ClliefFinancial Officer Aligust:2(X)8 N~1998 11
:M"arshaReed Orief()perating Officer September 2()()1) February 1993 26
SamMedina City Anomey Cktober 2009 October 2009 14
Rt:becca Garza City Secretary Jamwy2001 Au~t 1996 13
CONSULTANTS AND ADVISORS
Auditors ....................................................................................................................................... BKD, LLP
Little Rock, Arkansas
Bond Counsel .............................................................................................................................. Vinson & Ellcins L.L.P.
Dallas, Texas
Financial Advi.ii>r ........................................................................................................................ RBC Ce.pita! Markets Corporation
Dall as, Texas
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OFFICIAL STATEMENT
RELATING TO
CITY OF LUBBOCK, TEXAS
SS,840,000 GENERAL OBLIGATION BONDS, SERIES l0lOA
SI5,.320,000 GENERAL OBLIGATION BONDS, TAXABLE SERIES 20108
(BUILD AMERICA BONDS-DIRECT PA YMEN1)
$48,955,000 TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIF1CATES OF OBLIGATION, SERIES l0lOA
596,540,000 TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, TAXABLE SERIES 20108
(BUll,D AMERICA BONDS-DIRECT PA YMEN1)
INTRODUCTION
This Official S1atement, which includes the Appendices hereto, provides certain information regarding the issuance by the City of
Lubbock. Texas (the "City") of its $8,840,000 General Obligation Bonds, Series 2010A (the "Series 2010A Bonds") and
$15,320,000 General Obligation Bonds, Taxable Serles 2010B (Build America Bonds -Direct Payment) (the "Series 2010B
Bonds", and collectively with the Series 2010A Bonds, the "Bonds") and $48,955,000 Tax and Waterworb S~tem Surplus
Revenue Certificates ofObligaticm, Series 2010A (the "Series 2010A Certificates") and the $96,540,000 Tax and Waterworks
System Swplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bcmds -Direct Payment) (the "Series
2010B Certificates'', and collectively with the Series 2010A Certificates, the ''Certificates''). The Bonds and Certificates are
hereinafter sometimes referred to collectively as the "Obligations." Capitalized tenm med in this Official Statement have the
same meanings assigned to such terms in the Ordinances (as defined herein) aulhorizing the issuance of the Bonds and the
Certificates, eJtcept as otherwise indicated herein.
The Series 2010A Bond.\, the Series 2010B Bonds, the Series 2010A Certifice.tes and the Series 2010B Certificates are sepmn:
and distinct securities offerings and each such offering is being issued and sold seJ)IJ:'!lte and apart from the other offering and
should be reviewed and analyzed independently, including, amcmg other matters, the kind and type of obligations being offered,
their terms for payment, the sixurity for their payment and the rights of the holders.
All financial and other infonnation presented in this Official Statement has been provided by the City from its records, except for
infonnation ~pressly attributed to other sources. The presentation of infonnation, including tables of n:ceipts from taxes and
other sources, is intended to show recent historic information and is not intended to indicate future or continuing trends in the
rmancial pos_ition or other affair., of the City. No representation is made that past experience, as is shown by that .financial and
other information, will necessarily continue or be repealed in the future (see "OTHER INFOR...MATION -FORWARD-
LOOKING ST A TEMENTS DISCLAIMERj.
There follows in this Official Statement de,criptioM of the Obligations and certain information regarding the City and its
fmances. All descriptions of documents contained herein an: 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, RBC Capital Martets
Corporation, Dallas, Texas.
DESCRIPTION OF THE CITY
The City is a political mbdivision and municipal corporation of the State of Tex11$ (the "State"), duly organized and eltisting
under the laws of the State, including the City's Home Rule Charter. The City was incorporated in 1909, and first adopted ili
Home Rule Charter in 1917. Toe City operates under a CounciVManager fonn of government with a City Council comprised of
the Mayor and six council members. The Mayor is elected at-large for a two-year tenn ending in an even-numbmd year: Each of
the six members of ihe City Council is elected from a single-member district for a four-year term of ,office. Toe ienns of lhree
memben of the City Council expire in each even-numbered year, Toe City Manager is !he chief administrative officer for the
City. Some of the services that the City provides an:: public safety (police and fire protection), highwa~ end slnlets, electric,
water and sanitary sewer utilities, airport, sanitation and solid waste disposal, health and social services, culture-recrution, public
transportation, public improvements, plenoing and zoning, and general administrative services. Toe 2000 Census population for
the City was 199,564; the estimated 2009 population is 219,643. The City cove~ approximately 119.1 square miles.
THE OBLIGATIONS
--, DESCRIPTION OF THE OBLIGATIONS
The Obligations ace da.t.ed BS of their delivery date and she.II bear interest on the unpaid principal amounts from mch date, and.
mature on February 15 in each of the yea.rs and in the amounts sho,wn on che respective inside co,·er pages for each series of
Obligations described herein. Interest ....,,jJJ be computed on the buis of a 360-day year of twelve 30-da.y months, and will be
payable on Februa,y 15, 201 l, end on each August 15 and February 15 thereafter until maturity or prior redemptioo. The
I 1
definitive Obligations will be issued only in fully registered fonn in Ill)' integral multiple of $5,000 for any one maturity of each
series and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company (''OTC")
punuant to the Book-Entry-Only System described herein. No physical delivery of the Obllgadons will be made to the ownen
thereof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying Agent/Registrar to Cede &
0
Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the O
beneficial owners of the Obligations.. See 11IE OBLIGATIONS -BOOK-ENlRY-ONL Y SYSIBM" hen:io.
DESIGNATION OF SERIES 20108 BONDS AND SERIES 20108 CERTIF1CATES AS BUILD AMERICA BONDS
Build America Bonds
In February 2009, as part of the Recovery Act, Congress added Sections 54AA and 6431 to the Tax Code, which permit state or
local governments to obtain certain tax advantages when issuing taxable obligations that meet certain requirements of the Tax
Code and the related Tff.llSuty regulations. Such obligations are referred to as Build America Bonds. A Build America Bond is a
qualified bond under Section S4AA(g) of the Tax Code (a "Qualified Build America Bond') if it meels certain requirements of
the Tax Code and the related Treasmy Regulations and lhe issuer has made an irrevocable election to have the special rule foc
qualified bonds apply. Inten:st on Qualified Build America Bonds is not excluded from gross income for fcdfflll income tax
purposes, and ownel"!l of Qualified Build America Bonds will not niceive any tax credils u II result of ownerahip of such
Qualified Build America Bonds when an issuer has elected to receive the Interest Subsidy Payment, as defined below.
Interest Subsidy Payment
Under Section 6431 of the Tax Code, an issuer of 11. Qualified Build America Bond may a:pply to receive payments (the "Interest
Subsidy Payment"} directly &om lhe Seeretary of lhe U.S. To::aswy (the "Secn:wyj. The amooot of an Interest Subsidy
Payment is set in Section 6431 of the Tu: Code at 35% of lhe oonespoodiog iob:resl payable on the related Qualified Bmld
America Bond. To receive an Interest Subsidy Payment, under cunwtcly existing procedure:i, the isrner will have to tile a tax
fonn (now designated u Fonn 8038 CP) benveen 90 and 45 days prior to the corresponding bond interest payment date. The
issuer should expect to receive the Interest Subsidy Payment contempomneously with the inteRst payment date with respect to
the Qualified Build America Bond. Depending on the timing of the filina and other factors, the Interest Subsidy Payment may be
received before or after the corresponding interest payment date.
Serm 2f108 Boads and Series 2fl0B Catilicata
Interest on the Series 20 I OB Bonds and. Series 201 OB Certificales will be iocludable in gross income of the holders tben:of fur"
fedenil income tax purposes and the holders of the Series 2010B Bondi llnd Series 2010B Certificates will not be enritled to any
tax credits as a result of either ownership of the Series 2010B Bonds and Series 2010B Certificates or receipt of any interest
payments on the Series 2010B Bonds 1111d Series 2010B Certificates. Holders of the Series 2010B Bomb and Series 2010B
Certificates should consult their tax advisor.; with respect to the inclusion of interest on the Series 2010B Bonds and Series
20108 Certificates in gross income for federal income tax purposes. The City intends to apply for Interest Subsidy Payment from
the Secretary under the "Build America Program" pumJant to Section 643 I of the Tax Code, Such credits, if received by the
City, will be used under the Bond Ontinm:e and Certificate Ordinance IO pay interest on. or rcimbulse lhe City for the payment
of imm:sl on, Series 20108 Bonds and Series 2010B CertificalCS-No 8551D'IIDCCS ue provided that the City will receive the
Interest Subsidy Payment regarding the Series 2010B Bonds or Series 2010B Certificates. The amount of any Intereat Subsidy
Payment is subjeet to legislative changes by Congress. Interest Subsidy Payments will only be paid if the Series 2010B Bonds
and Series 2010B Certificates are Qualified Build Americ11 Bonds. For the Series 2010B Bonda and Series 2010B Certificates to
be and remain Qualified Build America Bonds, the City must comply with certain covenant! and the City must establish certain
facts and expectations with respect to the Series 2010B Bonds and Serles 2010B Certificates, the use and investment of proceeds
thereof and the use of property financed thereby. There are currently no procedures for requesting an lntere!rt Subsidy Payment
after lhe 451h day prior IO an interest payment date; therefore, if the Qty fails to file the necessary tax n:IDm in a timely fashion,
it is possible lhat the City will never receive such Interest Subsidy PaymenL AJso, Interest Subsidy Payments ere subject to offset
against certain amounts that may, for unrelated reasons, be owed by the City to an agency of the United Sta.tes of America.
AUfflORITY FOR ISSUANCE
The Bonds are issued pursumt to the Constituti011 and general laws of the State, particularly Chapters 1331 1111d 1371, Texas
Government Code, as 11.JDended, elections held in the City on May 1,, 2004 and November 3, 2009, and an ordinence adopted by
the City CoUllCil (the "Bond Ordinimcc").
'The Certificates ere i&SUed punuant to the Constilulion aod gene,a1 law, of the Slate of Teus, particularly Subchapter C of
Chapter 271 of the Teu.s Local Government Code, as amended, Olapter 1371, Texas Government Code, as 11.JDended, and an
ordinance adopted by the City Council (the "Certificate Ordinance" and, together with the Bond Ordinance, the "Ordin111ces').
SECURITY AND SOURCE OF PAYMENT
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The Bonds constitute direct obligations of the City and are payable from the proceeds ofll continuing, direct annual ad valorem
tax., levied within the limits prescribed by 111.w, against all taxable property within the City. C
The Certificates ue payable from a combination of (i} the proceeds of a cootinuing, direct annual ad wlorem mx, IC\lied within
the limits prescribed by law, on all taxable propeny within the City, and (ii) a pledge or surplus net revenues or the City's
Waterworks System, not to aceed $1,000.
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TAX RA TE LIMITATION
All tax.able property within the City is subject to the RJSessment, levy and collection by the City of a continuing, direct ann\llll ad
valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem. tax debt within the limilli
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 l:Juable assessed valuation for all City purposes. The Home Rule Charter of tbe City adopts the
constiru1ional\y authorized maximum Wt rate of $2.50 per $100 taxable assessed valuation. Administratively, the Attorney
Ge.men) of the State of Texu will pmnit alJocation of $1.50 of the $2.50 maximum Wt rate for all general obligation debt
service, u calculated at the time of issuance.
REDEMPTION
Optional Rede111ption
The City reserves the right, at its option, to n:deem Obligations having stJ11ed maturities on and after February 15, 2020, in whole
or in part in principal e.mounl'i of $5,000 or any integral multiple thereof, on Februacy l 5, 2019, or any date thereafter, at the pal
value thereof plus accrued interest to the elate of redemption. If less than all of the Obligations are to be redeemed, the City may
select lbe maturities of Obligations to be redeemed. If Jess than all the Obligatiom of any maturity are to be redeemed, lbe Paying
Agent/Registrar (or DTC while the Obliaations are in Book-Ent:Jy-OnJy fonn) shall determine by lot the Obligations, or portions
thereof, within such maturity to be redeemed. Tfan Obligation (or any portion oflhe principru sum thereof) shall have been called
for ~emption and notice of such redemption shall have been given, S\lCh Obli~tion (or the principal amount thereof to be
redeemed) shall become due and pa)'llble on such redemption date and interest thereon shall cease to accrue from and after the
redemption date, provided funds for the payment of the tedernprion price and accrued interest thereon are held by the Paying
Agent/Registrar on the redemption date.
Mandatory Redemption
The Series 2010B Bonds maturing on FebrulUY 15, 2030 are being issued as term bonds (the "Term Bon&',, and are rubjeot to
mandatory redem.ption prior to maturity in the following amounts (subject to reduction as hereinafter provided), on the following
dates, at a price equal to the principal amount redeemed pills accrued interest to each mandatory redemption elate, subject to the
conditions set forth below:
• Maturity.
S7,965,QOO TER.M BONDS DUE FEBRUARY 15, 2030
Mandatory
Redemption Date
February 15, 2025
Februacy 15, 2026
February 15, 2027
February 15, 2028
February 15, 2029
February 15, 2030"'
Principal Amount
$1,200,000
1,250,000
1,300,000
l,350,000
1,405,000
1,460,000
The Series 20108 Certificates maturing on February 15, 2030 are being isrued as term certificates (the "Tenn Certificates'), and
are subject to mandaiory redemption prior IO maturity in rbe following amourns (subject co reduction 83 bereiorfter provided), on
the following dates, at a price equal to the principal amount redeemed plus accroed interest co each mandatory redemption date,
subject to the conditions set forth below:
• Maturity.
$49,745,000 TERM CERTIFICATES DUE FEBRUARY 15, 2030
Mandatory
Redemption Daze
February 15, 2025
February 15, 2026
February 15, 2027
February I 5, 2028
February 15, 2029
February LS, 2030•
Principal Amount
$7,500,000
7,800,000
8,110,000
8,435,000
8,775,000
9,125,000
At least forcy-five (45) days prior to each redemption date specified above the Term Bonds or Term Cenificates, as the 0119e mny
be, are to be mandatorily redeemed, ,the Paying Agent/Registrar shall select by Jot the numbers of the Term Bonds or Term
Certificates, as the case may be, to be redeemed on the next following February 15 from moneys set aside for that purpose in the
interest and sinking fund maintained for the payment of such series of Obligations. Airj Tenn Bond or Term Certificate not
selected for prior redemprion shall be paid on the date of its stated maturity.
The principal amount of the Term Bonds or Tenn Certificates, as the case may be, of a stated maturity required to be redeemed
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pumiant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal
amount of Tenn Bonds or Tenn Certificates, as the ease may be, of such stated maturity which, at lea.st forty-five (45) days prior
to a mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding the principal amount of such
Tenn Bonds or Tenn Certificates, as the case may be, plus accrued interest to the date of purchase thereof, and delivered to the
Paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the optional redemption provisions and not
theretofore a-edited against a mandatmy redemption requirement.
Es:tn.ordinary Opti.onaJ Redemption
Prior to February 15, 2019, the Series 2010B Bonds and Series 2010B Certificates are subject to redemption prior to maturity at
the option of the City, in whole or in part, in principal amounts of $5,000 or any integral thereof on any date on or after the
occurrence of an fatraordinBiy Event at a redemption price equal to the greater of:
(a) the issue price of the principal amount of the Series 2010B Bonds and Series 2010B Certificates to be redeemed,
prow:led that such amount must be at least equal to the per amount of the Series 20108 Bonds and Series 2010B Certificates
to be redeemed; and
(b) the sum of the present value of the remaining scheduled payments of principal and interest to the earher of the stated
mllhlrity or the optional redemption date (FebruBiy 15, 2019) of the Series 2010B Bonds and Series 2010B Certificates to be
redeemed, not including any portion of those payments of interest accrued and unpaid as of the redemption date, discounted
to the redemption date on a :.emi-annual buis, as&um.ing a 360-day year consisting ofrwclve 30-clay month.s, at the Treasury
Rate, plus one hundred (100) be.sis points, plus, in each case, accrued and unpaid interest to the redemption date on the
Series 20108 Bonds and Series 20108 Certificates to be redeemed.
"ERaOR:liruu:y Evmt" means any change to Section S4AA or Section 6431 oflhe Code (as such Sectioos were added by Section
1531 of the Recovery Act, pertaining to Build America Bonds) purtuant to which the lnterelt Subsidy Paymen~ in connection
with the Series 2010B Bonds and Series 2010B Certificates are reduced or eliminated.
The ''Treasury Rate" is, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury
securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519)
that has become publicly available at least rwo (2) Business Days prior to the redemption date (excluding inflation indexed
securities) (or, if such Statistir.al Release is DO longer published, any publicly available &Our« of s.imilar market data.)) most
nearly equal ID the period from the redemption date ro the maturity dare of ilic Bands to be redeemed; provided, howevu, that if
the period from the redemption date to such mamrity date is less than one (1) year, the weekly average yield on actually traded
United States Treasury :1ecurities adjusted to a constant maturity ofont (1) year will be used.
NOTICE OF REDEMPTION
Not less than 30 days prior to a redemption date fur any Obligation, the City shall cause a notice of redemption to be sent by
Uniied States mail, fnt c\us, postage prepaid, to the registered ownen of the Obligations to be redeemed, in whole or in part, at
the address of the registered owner appearing on the registratioo boob of ilic Paying Agent/Regisnr at the close of business on
the business day next preceding the dare of mailing such notice.
The City reserves the right, in the case of an optional redemption, to give notice of its election or direction to redeem Bonds
conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the
deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the
Paying Agent/Regisnr, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the City
retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the City delivers a certificate of
the City ro lhe Pllying Agenr/llegisnr instructing the Paying Agenl/Regisnr ro n:sciod the redemplioo DDlice, and such notice
and redcmptioo shall be of no effect if such moneys and/or-aulhorized se,curiticl are not so deposited or if the notice is rescinded..
The Paying Agent/Registrar shall give prompt notice of any such rescission ofa conditional notice of redemption to the affected
ONners. Any Bonds subject to conditional redemption and such redemption ha.s been rescinded shall remain Outstanding, and the
rescission of such redemption shall not constitute an Event of Default. Further, in the case of a conditional redemption, the failure
of the City to make moneys and/or authorized securities available, in part of in whole, on or before the redemption date shall not
constitute an Event of Default
ANY NOTICE SO MAILED SHALL BE CONCLUSIVFJ.Y PRESUMED TO HA VE. BEEN DULY GIVEN, WHETI-IER OR
NOT TifE REGISTERED OWNER RECE£VES SUCH NOI1CE. NOTICE HAVING BEEN SO GIVEN, TIIE OBLIGATIONS
CAllED FOR REDEMPTION SHALL BECOME DUE AND PAY ABLE ON 1liE SPECIFIED REDEMPTION DATI, AND
NOTWITIISTANDINO THAT ANY OBLIGATION OR PORTION TIIEREOF HAS NOT BEEN SURRENDERED FOR
PAYMENT, INIBREST ON SUCH OBLIGATION OR PORTION THEREOF SHAU CEASE TO ACCRUE.
AMENDMENTS
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The City may, without consent of or notice to any owners, from time to time and at any time, amend the Ordinance:i in any O
manner not detrimental ro the ink:rc!lls of the owners, including the curing of any ambiguity. inconsistency, or formal defect Cll"
omission herein. In addition, the City may, with lhe writtm cement of the owners of the Obligations holding a majority in
aggregate principal amount of the Obligations then outstanding, amend, add to, or rescind any of the provisioM of the
Ordimmces; provided that, without the consent of all owners of autatanding Obligations, oo such amendment, addition, or
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rescission shall (i) extend the time or times of ,payment of the prim;(pal of, premium, if any, and interest on the Obfigations,
reduce the principal amount thereQf, the redemption price, or the rate ofinterest thereon, or in aey ,other'waymodify the tenns of '
payment of the principal of, or interest on the Obligations, (ii) give any preference to any Obligation over any other Obliga.tion,
or (iii) reduce the aggregate principal amount •of Ob)igations required to be held by owners for consent to any such amendment,
0 addition, er rescission.
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DEFEASANCE
The Ordinances provide that the City may discharge its obligations to tl\e registered owners of any or all of the Obligations to pay
principal, interest and tedemption price thereon in any matterpennitted by law. Under cWT.ent Teitas. law, slich discharge may be
accomplished by either (i) depositing with the Complroller of Pub1ic Accounts of the State of Texas a sum of money equal to
principal, premium, if any and all interest to accrue on the Obligations to marurity or redemption and/or (ii) by depositing with a
paying a.gent or other authorized escrow agent amounts sufficient to provide for the payment and/or redemption of the
Obligations; provided that mch deposits may be invested and reinvested only in (a) direct, nonca.llable obligations of the United
States of America.. including obligations that are unconditionally guaran1eed by the United States of America, (b) noncallable
obligation.i of an agency or instrumeniality of the United States of America, including obligations that are unconditionally
guaranteed or insured by the agency or inslrumentality and that are rated a.s to investment quality by a nationally recognized
investment rating finn not less than AAA or its equivalent, or (c) noncallable obligations of a state or an agency or a county,
municipa.lity; or other political' subdivision of a state that have been refunded and that are rated as to investment quality by e.
nationa.lly recognized investment rating firm not less than AAA or its equivalenl The foregoing obligations may be in book-
entiy-only form, and shall me.tun and/or bear intz:rest in sucJt am.ounta 113 will .be sufficient to provide for the scheduled payment
and/or redemption of the Obligations. If any such Obligations are to be redeemed prior to their respective dates of maturity,
provision must have been made for giving notice of redemptiop as provided. in the· respective Ordinanees,
Under cummt Texas law, upon the making of a deposit as described above, sucb Obligations shall no longer be regarded to be
outstanding or unpaid. After firm banking and financial arrangements for the discharge and fina.l payment or redemption of the
Obligations have been made as described above, all rights of the City to initiate proceedings to caH the Obligations for
redemption or to take any other action amending the teans of the Obligation.i are extinguished; provided however, the rigbt to
call the Obliga.tions for ~emptiQD is not extinguished if the City: (i) in the proceedings providing fur the firm banking and
financial ammgemenls, ~ressly reserves ,the right to ca.II the Obligations for redemption; (ii) gives notice of the reservation of
that right to the owners of the Obliga.tioos immediately following the making of the finn banking and financial arrangem~ts; and
(iii) directs that notice of the reservation beincluded in any redemption notices that it authorizes.
BOOK-ENTRY-ONLY SYSTEM
TJ,i.s section describes how own~rship of the Ob/igatio,u is to be tron.sferred and huw the principal of, premiwrt, if any, and
interest on the Obligations ore to be paid to and credited by The Depository Tnut Compony ("DTC'J, New York;. New York,
while the Ob/igotions are registered ill its nominee name. The information in this section conceming DTC and the Book-Entry-
Only System has been pro'tlided by DTC for use in dirclosure documents such as this Officio/ Stateme,it. TJ,e City, the Filloncial
Ad'tlisor, and the Underwriters believe the source of such information to be reliable, but take no responsibility for the accuracy or
completeness thereof.
The City cannot and does not give any tnsuronce that (I) DTC will distribute payments of debt service on the Obligations, or
redemption or other notices, to DTC Participonts, (2) DTC Participants or othe~ will distribute debt service payments paid to
DTC or its nominee (a.r the registered owner of the Obligations), or redemption or other notices, to the Beneficiol Owners, or
thot they will da so on a timely barfs, or (3) DTC will senie and act in the manner describui in this Official Statement. The
current rules applicable to DTC are on file with the United Stotes Securities and &cha,ige Commissio,i, ond the current
procuiures of DTC to be followed in dealing with DTC Participonts are on file with DTC.
DTC will act as securities depository for tbe Obligations. The Obligations will be issued as fully registered securities registered
in tbe name of Cede & Co. (DTC's pa..rtnership nominee) or such other name as may be requested by an authorized repmientative
of DTC. One fully registered certificate will be issued for each maturity of each series of the Obligations, in the aggregate
principal amount of such issue, and will be deposited with DTC.
DTC, the world's lergest depository, is a limited-purpose trust company organir.ed under the·New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law. a member of the Federal Resern: System, a "clearing
O corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17 A of the Securities Exchange Act of 1934. DTC bolds and provides asset servicing for over 3 .5 million
is!lles of U.S. and non-U.S. equity, corporate and municipal debt issues, and money ma.rlc:et instrumenls from over 100 countries
that DTC's participants ("Direct Participants") deposit with OTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities tralisactfons in deposited securities, through electronic computerized book-entry
transfers and pledges between Direct Participants' accounts. This eliminates the need for pbysical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities broken and dealers, banks, trust companies, clearing
O corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depositocy Trust & Clearing
Corporation ("DTCC''). DTCC is the holding company for DTC, National Securities Clearing Corporation. and Fixed Income
Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its n:gulated subsidiaries.
Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial relatioM!iip with a Direct Participant, either
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directly or indirectly ("Indirect Participants''). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to
its Participants are on file with the United States Securities and Exchange Commission. More information about DTC can be
found at www.dtcc.com and www.dtc.org.
Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for
the Obligations on DTC's records. The ownership interest of each actual purchllliel" of each Obligation ("Beneficial Owner") is in
tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from
OTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction, as well a..s periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownenhip interests in the Obligations are to be accomplished by entries made
on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownenhip interests in Obligations, except in the event that use of the book-entry system for the
Obligations is discontinued.
To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name ofDTC's
partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative ofDTC. The deposit
of Obligations with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change
in beneficial owneBhip. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC's records reflect only
the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participant.i, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participant.i to Beneficial OwneB will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to time. Beneficial OwneB of Obligations may wish to
take certain steps to augment the transmissicm to them of notices of significant events with respect to the Obligatiom, such as
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redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example, Beneficial Owners of O
Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit
notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the
registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Obligatiom within an issue are being m::leemed, DTC's practice
Li to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations unless authorized by 0
a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City
as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. 's consenting or voting rights to those Direct
Participants to whose accounts Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption, principal, and interest payments cm the Obligations will be made to Cede & Co., or such other nominee as may be
requested by an authorized representative ofDTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt
of funds and corresponding detail infonnation from the City or the Paying Agent/Registrar, on the payable date in accordance 0
with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Ovmers will be governed by
standing instructions and customary practices, as is the case with securities held for the accounts of customeB in bearer form or
registered in "street name", and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying
Agent/Registrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment
of redemption proceeds, principal, and interest payments to Cede & Co. (or such other nominee as may be requested by an
authorized representative ofDTC) is the responsibility of the City or the Paying Agent/Registrar, disbursement ofsuch payments
to Direct Participants will be the responsibility ofDTC, and disbursement of such payments to the Beneficial Owners will be the 0
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Obligations at any time by giving reasonable notice
to the City or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained,
security certificates for ea.ch maturity of the Obligations 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, security
certificates for each maturity of the Obligations will be printed and delivered and the Obligatiom will be subject the transfer,
exchange and registraticm provisiom as set forth in the respective Ordinances and summarized under "TRANSFER, 0
EXCHANGE AND REGISTRATION" below.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City, the
Financial Advisor, and the Underwriters believe to be reliable, but neither of the City, the Financial Advisor, nor the
Underwriters take responsibility for the accuracy thereof.
Use of Certain Terlilll in Other Sections of this Official Statement
In reading this Official Statement it should be understood that while the Obligations are in the Book-Entry-Only System,
references in other sections of this Official Statement to registered owners should be re.ad to include the person for which the
Participant acquires an interest in the Obligations, but (i) all rights of ownership must be exercised through DTC and the Book-
Entry-Only System, and (ii) except as described above, payment or notices that are to be given to registered owners under the
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Ordinance will be given only to DTC.
PAYING AGENT/REGISTRAR
The initial Paying Agent!Registrar is The Bank of New York Mellon Trust Company, National Association, Dallas, Tex.as. [n the
Ordinances, 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 unbl the Obligations of each series are duly paid and any successor Paying Agent/Registrar shall be a
commercial bank or qust company organized under lhe laws of the State of Texas or other entity duly qualified and legally
authorized to ,erve as and perfonn the duties and services of Paying Agent/Registrar for the Obligations. Upon any change in the
Paying Agent/Registrar for the Obligations, the City agrees to promptly cause a written notice thereof to be 5ellt to each
registered owner of the Obligations then outstanding !Ind affected by such change by United States mail, first clas's, postage
prepaid, which notice shall give the address of the new Paying Agent/Rcgistrar.
Interest on the Obligations shall be paid to the registered owne~ appearing on the registration boob of the Paying
Agent/Rcgistrar at the close of business on the Record Date (hereinafter defined), and such interest shall be paid (i) by check sent
United States mail, fi~t cl~, postage prepaid, to the address of the registered owner recorded in the registration boob of the
Paying Agent/Registrar, or (ii) by such oilier method acceptable to the Paying Agent/Registrar requested by, and at the -risk and
expense of: the registered owner. Principal oftbe Obligations ·will be paid to the ngistercd o~ner at the staled maturity or earlier
~tion upon presentation r.o th.e designated payment/transfer office of lhe Paying Agent/Registrar. If the date for the payment
of the principal of, or interest on, the Obliga&;ions shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions
in the city where the designated payment/transfer office of the Paying Agent/Registrnr is localed are authorized to close, then the
date for such payment shall be the next succeeding day which is not such a day, and payment on such date shaJJ have the same
force and effect as if made on the date payment wos due. So long as Cede & Co. is the registered owner of the Oblii:ations,
principal and interest on the Obligations will be made as described in "THE OBLIGATIONS -BOOK-ENTRY-ONLY
SYSTEM''.
TRANSFER. EXCHANGE AND REGISTRATION
In the event the Book-Entry-Only System is discontinued, printed Obligatioos will be issued to the registered owners of the
Obligations affec.led and, thereafter, the Obligatioo.s may be tmmferre<I and e1icb111ged oo tb.e registration book.s of lhe Paying
~en~gi.strar only upon presentation and..sWTender of suoh printed Obligations t,o the Paying Agent/Registrar, Such lransfcr or
e~change shall be, without expense or service charge to the registered owner, except for any taX or other governmental charges
required to be paid with respect io such regis.tratioa, e11:cbange or transfer. Obligations may be assl.gned by lhe execution of an
,a,ssignment fonn QD the Obligations or by other instrument of trarufer and assignma1t acceptable to the P~yiog Agent1legistrar.
New Obligations will be delivered by tbe Paying Agenl/Ri:gistrar, in lieu of the Obligations being tmlsferred or exchanged. at
the designated office of the Paying Agent/Registrar, or sent by United States .mail, !mt class, postage prepaid, to the new
registered owner ot bis designee. To the extent possible, new Obligations issued in an c,ccba.nge or transfer of Obligations Will be
delivered to the registered O'\\'ller, or assignee of the registered owner, not i'nore thAA three business days after !he receipt of the
Ob\igationg to be canceled, and the written ·insttwnent o(tnmsfe~ or request for txchange duly executed by the registered ov,ner,
or bis duly authorized agent, in a form satisfactory to the Paying Agent/Re.gistrar. New Obligations registe_red. and delivered in all
~change or tnnsfor shall be in any integral multiple of S5,000 for !ll'ly one a1aturily and a like aggregate principal amount as the
Obligations surrendered for exchange or transfer. See "THE OBLIGATIONS -BOOK-ENTilY-ONL Y SYSTEM" herein for a
descriptio.n of the system to be utilized initially in regard to ownership and tnnsfe~bility of the Obtiptions. Neither the-City oor
th.e Paying Agen~strar sball be l'equired to tran.'lfer or exch11nge any Obligation called for redemption, in whole or in part,
within 45 days of the date fixed for wJ.emption; provided, however, such limitation of transfer shall not be applicable to an
e~change by tl!e re-gistered owner of the uncalled balance pf an Obligation.
RECORD DATE FOR INTERESTPAYMEN1'
0 The record date ("Record Date") for the interest payable on the Obligations 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 Kheduled payment date, and for 30 days thereafter, a new record daie 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 inteoest have been received from the Cicy. Notice of the Special Record Date a.nd of the scheduled payment date of the
past due interest (''Special Payment Date", which shall be IS days after the Special Record Date) shall be sent a1 least five
D business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each Holder of
an Obligation appearing on the registration books of the Paying Agent/Registrar at lhe close of business on the last bnsincss day
next preceding the date of mailing of such notice.
REMEDIES
The respective Ordinances establish specific events of default with respect to the Obligaciotl6. If the City defaults in lbe payment
of principal of, or interest oo, the Obligations when due, or if the City defaults in the observMce or performance of any of the
covenants, conditions or obligations of the City, the failure to perform which materially, adversely affects tile rights or the
owners, including but not limited to their prospect or ability to be repaid in accordance with each respective Ordinance, and the
continuation thereof for a period of 60 days after notice of such default is given by any owner to the City, each respective
Ordinance provides that any owner is entitled to seek a writ of mandamus from a court of proper jurisdictioo requiring !he City t0
make such payment or obseo-e and perfonn such covenants, obligations, or conditions. The issuance of a writ of llllllldamllS may
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be &ought if there is no other available remedy at law lo compel perfonnance of the Obligations or the respective Ordinance and
the City's ol,liga~ are not unr.ertain « disputed. 1be remedy of mandamus is concrolled by eqoilable principles, so reso with
the discretion of the court, but may not be l!Ibitrarily refused. There is no acceleration of maturity of the Obligations in the evmt
of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The respective Ordinances
do not provide for the appointment of a trustee to ~esent the interests of the owners upon any failure of the City to perform in
accordance with the terms of the respective Ordinances, or upon any other condition. Accordingly, all legal actions to enforce
such remedies would have co be undeztakeo at the initiative of, and be fUWICed by, the registered owners.
On June 30, 2006, the Te= Suptcme Caurt ruled in Toolw v. City of Muia, 197 S.W.3d 325 (Tex.2006), that a waiver of
sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguoWl" language. In so ruling,
the Court declared that statutory language such as "sue and be sued," in and of itself, did not constitute a clear and unambiguous
waiver of sovereign immunity. Because it is not clear that the Texas Legislature has effectively waived the City's immunity from
suit for money damages, holders of Obligaiions may not be able to bring !JUCh a suit against the City for breach of the Obligation
or the rap:ctivc OrdiP1111a:s. 1n Teoh, die Cowt noml lhe enactment in 200$ or sa:tiom 271.l~J-.100, Texas Local
Government Code (the "Local Government Immunity Waiver Act"), which, according tO the Cowt, waives "immunity from suit
for contract claims agaiust most local goverumental entities in certain ci~sta.nces." The Local Government Immunity Waiver
Act covers cities and relates to contn.cts entered into by cities for providing goods or services to cities. The City is not aware of
any Texas court construing the Local Government Immunity Waiver Act in the context of whether contractual undertalcings of
local governments that relate tO their borrowing powm are contracts covered by the Act As noted above, the respective
OrdinllJlllf!S provide that holders of Obligations may ex~ise die remedy of .mandamus to euforce lhe obligations of the City
under the respective Ordinances. Neither the remedy of mandamus nor aoy other type of injunctive reliefw11.5 at is.sue in Took#!,
and it is unclear whecher Took#! will be construed to have any effect with respect to the exercise of mandamus, as such n:medy
hu been interpreted by Texll.S courts. In general, Texu courts have held that a writ of mandamus may be issued to requira public
officials to pe1form ministerial acts that clearly pertain to their duties. Texas courts have held that a ministerial act is defined as a
le&al duty that is prescribed and defined with a precision and certainty the.t leaves nothing tO the txen:ise of discretion or
judgment, lhaugh mandamus is DOC available to enforce ))ID'Cly contncaJal duti&:s.. However, mandamus may be usal ro require a
public officer to perform legally-imposed minisrerial duties neceswy for the performance of a valid contract tO which the State
er e political subdivision of the State is a party (including the payment of monies due under a contr1Wt), Chapter 13 71, Texas
Government Code ("Chapter 1371''), which pertains to the issuance of public securities by issuers such a.s the City, permits the
City to waive sovereign immunity in the procer4ings authorizin11 ils bonds, but i.o connection with the issuance of the
Obligati.005, the City 1w not waived sovereign immunity in the manner provided by Chapter 13 71.
Even j( a judgmml against the City could be obtained, it could not be mfon:ed by direct levy and execution again.st the City's
property. Further, the registered o'ilr'1lm cannot themselves foreclose on property within the City or sell property within the City
to enforce the tax lien on taxable property to pay the principal of, 1111d interest on, the Obligations. Furthermore, the City is
eli&ible to seek relief from its aeditnr.. under Chapier 9 of the U.S. Bankruptcy Code ("Chapter !ii"). Although Chapter 9
provides for the recognition of a security interest represented by a specifically pledged iOurce of revenues, the pledge of e.d
valorem lllXeS in supPOrt of a general ohliga!ian of a bankrupt entity is llDt specific.ally reoognizcd • a 5a:Urity' iotcrat uodcr
Chapter 9. Chapa,r 9 a.lso includes an 1111tomatic stay provision that wonk! prohibit, widiout Bankruptcy Court approval, die
prosecution of any other legal action by creditors or registered owners of an entity that has sought protection nnder 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 adlon be heard in Banlcruptcy Court instead of other federal or
state court); and the Bankruptcy Code provides for broad disaetionary powers of a Bankruptcy Court in administering any
proceeding brought befare lhe Court The opinions of Bond Counsel will note that all opinions relative to lhe enfun:eability of
the Obligations are qualified with respect to the customary rights of debtors relative to their creditors and that all opinions relative
to the enfon:eability of the Ordinances and the Obligations are subject to bankruptcy and other laws affecting creditors rights or
tcmedies generally.
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SOURCES AND USES OF PROCEEDS
The proceeds from the sale of the Bonds will be applied ag follows:
SOURCES OF FUNDS:
Principal Amount of Series 2010A Bonds .......................................................................... .
Principal Amount of Series 20 l OB Bonds .......................................................................... .
Net Original Issue Premium on the Series 2010A Bonds .................................................... .
Total Sources of Funds .................................................................................................. .
USES OF FUNDS:
Deposit to Project Fund ....................................................................................................... .
Underwriters' Discount ...................................................................................................... .
Cost of Issuance .................................................................................................................. .
Total Uses ofFunds ....................................................................................................... .
The proceeds from the sale of the Certificates will be applied as follows:
SOURCES OF FUNDS:
Principal Amount of Series 2010A Certificates .................................................................. .
Principal AmoWlt of Series 2010B Certificates .................................................................. .
Net Original Issue Premium on the Series 2010A Certificates ........................................... .
Total Sources of Funds .................................................................................................. .
USES OF FUNDS:
Deposit to Project Fund ...................................................................................................... ..
Underwriters' Discount ..................................................................................................... ..
Cost of Issuance .................................................................................................................. .
Total Uses ofFunds ....................................................................................................... .
ADV ALOREM TAX INFORMATION
ADV ALOREM TAX LAW
S 8,840,000.00
l 5,320,000.00
295,967.60
$24 455.967.60
$24,200,000.00
140,556.31
115,411.29
$24,455 967 60
$ 48,955,000.00
96,540,000.00
3,173,768.25
$148.668.768 25
$] 47,398,591.00
825,668.63
444,508.62
$146,668,768.25
The appraisal of property within Lubbock is the responsibility of the Lubbock Central Appraisal District (the ''Appraisal
District'l Excluding agricultural and open-SpQ.Ce land. which may be taxed on the basis of productive capacity, the Appraisal
District is required under the Property Tax Code (defined below) to appraise all property within the Appraisal District on the
basis of l 00% of its market value and is prohibited from applying any assessment ratios. In detennining market value of property,
different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal, and the
matket data comparison method of appraise.I. The method considered most appropriate by the chief appraiser is to be used The
appraised value of a residence homestead for a tax yeac may not exceed the lesser of (I) the most recent market value of the
residence homestead as determined by the appraisal entity or (2) 110"/4 of the appraised value of the residence homestead for the
preceding tax year plus (3) the market value ofall new improvements to the property. The value placed upon property within the
Appraisal District is subject to review by an Appraisal &:view Board consisting of three membeni 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 requ~ annual review at its own expense, and is entitled to challenge the determination
of appraised value of property within the City by petition filed with the Appraisal Review Board.
Reference is made to Title I of the Texas Tax Code (the "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 VIll'') 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 penonal property from ad
valorem taxation.
Under Article VIll, Section l-b, and State law, the governing body of a political subdivision, e.t its option, may grant 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. Once authorized, such exemption may be
repealed or decreased or increased in amount (i) by the governing body of the political subdivision or (ii) by a favorable vote of e.
majority of the qualified voters at an election called by the governing body of the politica.1 subdivision, which election must be
called upon receipt of a petition signed by e.t least 20"/4 of the number of qualified voters who voted in the preceding election of
the politica.1 subdivision. In the case of a decrease, the a.mount of the exemption may not be reduced to less than $3,000 of the
:, market va.lue.
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The surviving spouse of an individual who qualifies for the foregoing exemption for the residence homestead of a person 65 or
older (but not the disabled) is entitled lo an exemption for the same property in an amount equal to that of the exemption for
which the deceased spouse qualified if (i) the deceased spouse died in a year in which the deceased spouse qualified for the
exemption, (ii) the surviving spouse was at least 55 years of age e.t the time of the death of the individua.l 's spouse and (iii) the
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property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence
homestead of the surviving spouse.
In addition to any other exemptions provided by the Property Tax Code, the governing body of a political subdiYision, at its
0
option, may grant an exemption of up to 20% of the market w.lue of residence homesteads, with a minimum exemption of 0
$5,000.
In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be
levied against the value of homesteads exempted where ad valorem U!Xes 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 tbe armed forces; the exemption applies to either real or
personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of$12,000.
Under Article VITI and State law, the governing body of a county, municipality, or junior college district, may provide that the
total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years of age or older will
not be increased above the amount of taxes imposed in the year such residence qualified for such limitation. Also, upon receipt of
a petition signed by 5% of the registered voters of the county, municipality or junior college district, an election must be held to
determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of
age or older or of persons who are disabled Upon providing for such exemption, such freeze on ad valorem taxes is transferable
to a different residence homestead within the taxing unit and to a surviving spouse living in such homestead who is disabled or
who is at least 55 yea.rs of age. If improvements (other than maintenance or repairs) ate made to the property, the value of the
improvements is taxed at the then current tax rate, and the total amount of taxes imposed is increased to reflect the new
improvements with the new amount of taxes then serving as the ceiling on taxes for the following years. Once established, the tax
rate limitation may not be repealed or R:Scinded. The City has established such a limitation on ad valorem taxes.
Article vrn provides that eligible owners ofboth agricultural land (Section 1-d) and open-space land (Section l-d-1), including
open-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such
property apprai!ied for property taxation on the basis of its productive capacity. The same land may not be qualified under both
Section 1-d and 1-d-I.
Nonbusiness personal property, such a.s automobiles or light trucks, are exempt from ad valorem taxation unless the governing
body of a political subdivision elects to tax such property. Boats owned as nonbusiness property are exempt from ad valorem
taxation. State law additionally provides for one motor vehicle owned by an individual and used in the course of the owner's
occupation or profession, and for personal activities of the owner, to be exempted 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 assembly, storage, manufacturing, processing or fabrication.
Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal. In
addition, under Section 11.253 of the Texas Tax Code, "goods-in-transit" are exempt from taxation unless a taxing unit opts out
of the exemption. Goods-in-transit are defined as tangible personal property that: (i) is acquired in or imported into the state to
be forwarded to another location in the state or outside the state; (ii) is detained at a location in the state in which the owner of the
property does not have a direct or indirect ownership interest for assembling, storing, manufacturing. processing. or fabricating
purpo5es by the person who acquired or imported the property; (iii) is transported to another location in the state or outside the
state not later than 175 days after the date the person acquired the property in or imported the property into the state; and (iv)
does not include oil, natural gas, petroleum products, aircraft, dealer's motor vehicle inventory, dealer's vessel and outboard
motor inventory, dealer's heavy equipment inventory, or retail manufactured housing inventory.
Article VIII, Section 1-n of the Texas Constitution provides for the exemption from taxation of"goods-in-transit." Under Section
11.253 of the Texas Tax Code, "Goods-in-Transit" are exempt from taxation unless a taxing unit opts out of the exemption.
Goods-in-Transit are defined u tangible personal property that: (i) is acquired in or imported into the state to be fo1warded to
another location in the state or outside the state; (ii) is detained at a location in the state in which the owner of the property does
not have a direct or indirect ownership interest for assembling, storing, manufacturing, processing, or fabricating purposes by the
person who acquired or imported the property; (iii) is transported to another location in the state or outside the state not later than
175 days after the date the person acquired the property in or imported the property into the state; and (iv) does not include oil,
natural gas, petroleum products, aircraft, dealer's motor vehicle inventory, dealer's vessel and outboard motor inventory, dealer's
heavy equipment inventory, or retail manufactured housing inventory. A taxpayer may receive only one of the Freeport
exemptions or the goods-in-transit exemptions for items of personal property.
The City may create one or more tax increment financing zones under which the lax values on property in the zone are "frozen"
at the value of the property at the time of creation of the zone. Other overlapping taxing units may agree to contribute all or part
of future ad valorem taxes levied and collected against the value of property in the zone in excess of the "frozen w.lue" to pay or
finance the costs of certain public improvements in the zone. Taxes levied by the City against the values of real property in the
zone in excess of the "frozen value" are not available for general city use but are restricted to paying or financing "project costs"
within the :rone. See ''TAX INCREMENT FINANCING ZONES" below.
The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property
owner agrees to construct certain improvements on its property. The City in tum agrees not to levy a tax on all or part of the
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increased value attributable to the improvements until the expiration of the agreeme11t. The abatement agreement may 111st for a
period ofup to 10 yean. Sec "TAX ABATEMENT POLICIES" below.
Cities l:lre also authorized, pursuant to Chapter 380, Texas Local Government Code ("Chapter 380") to establish programs to
promote state or local economic development and to stimulate business e.nd commercial activity in the City. In accordance with a
program esiablished plllliuant to Chapter 380, the City may make lo.ans or grant of public fund for economic development
purposes, however, no obligations secured by ad valorem taxes may be is!lled for such pwposes unless approved by voter3 of the
City.
EFFECTIVE TAX RATE AND ROLLBACK TAX RA TE
By each September I, or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the
current year. The City Council is required to adopt the annual tax rate for the City before the later of September 30 or the 60rh
day after the date the certified appraisal roll is received by the City. If the City Council does not adopt a tax rate by such required
date, the tax rate for that 1B:l!. year is the lower of the "effective tax rate" calculated for that tax year or the tax rate adopted by the
City for the preceding Wt year. The tax nite consists of two components: (I) 11. rate for funding of maintenance and openitlon
expenditures, and (2) a rate for debt service.
Under the Property Tax Code, ,the City must annually calculate and publicize its "effective tax rate" and "rollbaclc tax nite". A tax
iate cannot be adopted by the City Council that c;,,;.ceeds the lower of the rollback tax rate or lhc effective tax .rate until two public
hearings are held on the proposed tax rate following a notice of such public hearing (including the requirement that notice be
posted on the City's website if the City owns, operates, or controls an internet website, and ihat public notice be given by
television if the City bu fRe access to a tele,1sion channel), and the City Council ha& otherwise complied with ihe legal
requirements for ihe adoption of such uu rate. If the adopted tu rate exceeds iihc rollback we rate, the qualified voters of the
City, by petition, may require that an election be held to determine whether or not ro reduce the wt rate, adopted for the cwreot
year, to the rollback iax rote.
"Effective tax rate" is defined u the rate that will produce the preceding year's tot31 w: levy (adjusted) from the current year's
total taxable values (&djmtcd). ''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 nitc" is defined as the rate that will produce the preceding year's maintenance and operation tax levy (adjmted)
from the cwrent year's values (adjusted) multiplied by I.08 plus a rate that will produce the current year's debt 1ervice from the
current year's values (unadjusted) divided by the anticipated tax collection rate.
0 The Property Tax Code provides that certain cities and counties in the State may submit a proposition to lhc votelll to authori7.e
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 reve11uc that will be generated by the sales tax in the current year.
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Reference is made to the .Property Tax Code for definitive requirem.e11ts for the levy and collection of ad valorem taxes e.nd the
calculation of the VBrious defined tax rotes.
PROPERTY ASSESSMENT AND TAX PAYMENT
Property within the City is generally assessed as of January I eacb year. Business inventory may, at the option of the taxpayer,
be assessed as of September I. Oil and gas reserves ai:-e asse~ed on the ba.-!is of a valuation process that uses an average of the
daily price of oil and gas from the prior year. Taxes become due October 1 of the same year, and become delinquent on February
I of die following year. Taxpayers 6S yeam of age or older~ permitted by Smte law to pay Wtes on homesteads in folll'
installments with the lint due on February 1 each year and the final installment due on August I.
PENAL TIES AND INTEREST
Charges for penalty and interest on the unpaid balance of delinquent taxes~ made as follows:
Cumulative Cumulative
Month Penal!l °le, Interest% Total%
February 6 7
Man:h 7 2 9
April 8 3 11
May 9 4 13
JW'le 10 5 IS
July 12 6 18
After July, the penalty remains at 12%, and interest increases Ill the rate of 1% ei,ch month. ln addition, if an account i.s
delinquent in July, a 15% attoroey's collection fee is added to the total tax penalty and. interest charge. Under certain
circumstances, delinqueut taxes on the homestead of a taxpayer 65 yem of age or older incur a penalty of 8% pc:r BJ111um with no
additional penalties or interest IIS$CSScd. In general, property subject to the City's lien may be sold, in whole or in parcels,
pursuant to coun order to collect the ·amounts due. Federa.l law does not allow for the collection of penalty and interest against· an
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estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including
governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units
from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor
status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are
0
paid as an administrative experuie of the estate in bankruptcy or by order of the bankruptcy court. 0
CITY APPLICATION OFT AX CODE
The City grants a $16,600 exemption to the market value of the residence homestead of persorui 65 years of age or older; the
disabled are also granted an exemption of $10,000.
Toe City has not granted any part of the additional exemption of up to 20% of the market value of residence homesteads; the
minimum exemption that may be granted under this provision is $5,000. 0
The City has established the tax freeze on residence homesteads of disabled persons and persons 65 of age or older.
See Table l 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; and the Appraisal District collects taxes for the City.
The City does not pennit split payments of taxes, and does not allow discounts for early payment of taxes, although discounts are
permitted on a local-option basis by the Property Tax Code.
Since the 1999 tax year, the City has exempted freeport property from taxation.
The City does not tax goods-in-transit.
Toe City collects an additional one-eighth cent sales tax to help reduce ad valorem taxes. The City held an election on November
4, 2003, to increase sales tax one quarter cent, for a total of three eighths of a cent. The rate increase became effective on October
I, 2004.
TAX ABATEMENT POLICIES
The City has established a tax abatement program to encourage economic development. 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
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meet several criteria pertaining to job creation and property value enhancement. The City had three enterprise zones that have 0
expired: the Lubbock 2000 North Enterprise Zone and the Lubbock 2000 South Entuprise Zone expired September 1, 2008, and
the Lubbock International Airport Enterprise Zone that expired September l, 2005. In 2003, the Legislature made changes to the
statute governing enterprise zones, including designating zones by block group based on poverty mte. The block groups meeting
the criteria become enterprise zone eligible, but can only be used for tax abatement if the new zones are activated. In November,
2007 the City activated thirty eligible block groups. At present, there are 20 active tax abatement agreements, principally for
companies located in the northeast and southeast xctiorui of Lubbock. In accordance with State law, the City has adopted
policies for granting tax abatements, which provide guidelines for tax abatements for both industrial and commercial projects. 0
Toe guidelines for industrial and commercial projects are similar, except that qualifying industrial projects may receive a ten-year
abatement, while qualifying commercial projects are limited to five-year tax abatements. Although older abatements were given
full (100%) tax abatement, since 1997 the City has negotiated abatements on a declining percentage basis, with a portion of the
tax value added to the City's tax roll each year during the life of the abatement. The City's policies provide a variety of criteria
that affect the terms of the abatement, including the projected life of the project, the type of business seeking abatement, with
certain businesses targeted for abatement, the amount of real or personal property to be added to the tax roll, the number of jobs
to be created or retained, and other factors. The policiei disallow abatements for certain categories of property including real C
property, inventories, tools, vehicles, e:ircmft, and housing. Each abatement policy provides for a recapture of the abated taxes if
the business is discontinued during the tenn of the agreement, except for discontinuances caused by natural disaster or other
factors beyond the reasonable control of the applicant. For a description of the amount of property abated for City taxation
purposes, see "TABLE I~ VALUATIONS, EXEMPTIONS AND GENERAL OBLIGATION DEBT."
TAX INCREMENT FINANCING ZONES
Chapter 311, Texas Tax Code, provides that the City and other taxing entities may designate a continuous geographic area in its C
jurisdiction as a tax increment financing zone ("TIF'') if the area constitutes an economic or social liability in its present
condition and use. Other overlapping taxing units may agree to contribute all or a portion of their taxes collected against the
"Incremental Value" in the TIF to pay for TIF projects. Any ad valorem taxei relating to growth of the tax base in a TIF, above
the frozen base, may be used only to finance improvements within the TIF and are not available for the payment of other tax
supported debt of the City and other participating taxing units. Together with other taxing units, the City participates in two TIFs:
the Central Business District Reinvestment Zone (the "Downtown TIF') and the North Overton Tax Increment Financing
Reinvestment Zone (the "North Overton TIF").
The Downtown TIF covers a 0.71 square-mile area, which includes pa.rt of the Central Business District and abuts the North
Overton TIF. The base taxable values of the TIF are frozen at the level of taxable values for 2001, the year of creation, at
$105,858,251. For lax year 2009, the Downtown TIF had a taxable value of $171,42&,178 before taking into account tax
abatements and exemptions. After tax abatements and exemptions, the tax value in the Downtown TIF was $166,824,005. In
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addition to the City, the County, Lubbock County Hospital District, and the High Plains Undergrotmd Water Conservation
District (collectively, the "Taxing Units") participate in the Downtown TIF. Given the relative tax rates of the participants, it is
anticipated that the City will be the largest contributor to the tax increment fund if there is growth from the frozen base. The City
Ordinance establishing the Downtown m provides that the Downtown TIF will terminate on December 31, 2021, or at an earlier
time designated by a subsequent City ordinance.
In addition to the Downtown TIF, the City enacted an ordinance in 2001 establishing the North Overton TIF. Each of the other
Taxing Units in the Downtown TIF also participate in the North Overton TIF. The City orrlinance establishing the North Overton
TIF provides lhat the North Overton TIF will tenninate on December 31, 2031, or at an earlier time designated by e. subsequent
City ordinance. The North Overton TIF consists of 325 acres near the Central Business District of Lubbock:. The frozen tax base
for the North Overton TIF was established as of January I, 2002, at $26,940,604. For tax year 2009, the North Overton m had a
taxable value of $279,9 l 0, 784 before taking into account tax abatements and exemptions. After tax abatements and exemptions,
the tax value in the North Overton TIF was $278,423,523.
{THE REMAINDER OF nns PAGE INTENTIONALLY LEFT BLANK]
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FINANCIAL INFORMATION
TABLE 1-VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT
2009 Matket Valuation Established by Lubbock Cmlral Appraisal District
Less Exemptions/Rrouctions at 100% Market Value:
Residential Homestead Exemptions
Homestead Cap Adjustment
Disabled Persons
Disabled Veterans
Prorated Exempt Property
Agricultural/Open-Spece Land Use Reductions
Pollution Exemptions
Lease Vehicles Exempt
House Bill 366
Energy
Fn:cport Exemptions
Ta.x Abatement Reductions (1)
Mixed Use Vehicle
Low Income Housing
MBtket Value Reduction for Protested Properties
2009 T8U1,le Assessed Valuation
City Fwided Debt Payable from Ad Valorem T ;ue~:
Gcne11l Obligation Debt (as of 1-1-10) (2)
Plus: The Bonds
Plus: The Certificates
Total funded Debt Payable from Ad Vatorem T~es
Less: Self Supportin8 Debt (as of 1-1-10) (3)
Waterworks System General Obligation Debt
Sewer System General Obligation Debt
Solid W86tc Disposal System Geneml Obligation Debt
Drainage Utility System GenCTal Obligation Debt
Tu Increment Finani:ing General Obligation Debt
Elecaic Light and Power System General Obligalion Debt
Cemeter:y General Obli!!lltion Debt
Gateway General Obligation Debt
Howl Oc,;upency Tax Debt
Audiiorium/Coliseum General Obligation Debt
Airport General Obligation Debt
General Purpose Funded Debt Payable from Ad Valorem Taxes (4)
219,776,233
-4 3,905,052
15,680,307
65,519,566
330,454
76,899,527
3,156,649
25,117,767
183,554
16,000,400
83,105,152
54,445,455
1,011,408
4,279,460
154,161,&41
702,820,000
24,160,000
145,49~.ooo
297,179,583
107,020,362
13,773,433
115,884,123
37,038,992
72,761,700
637,401
98,582,534
1,144,548
500,000
13,757,312
$ 12,766,189,IOS
763,572,825
12,002,616,280
872,475,000
758,279,987
$ 114,195,013
Unaudited General Obli!!lltion Interest and Sinking Fund es of Sept.ember 30, 2009 $ 1,498,276
Ratio Total Funded Debt to Taxable Assessed Valuation
Ratio General Pwpo6e Funded Debt to Taxable Assessed Valuation
2010 Estima~ Population (5)
Per Ce.pita Taxable A.5se5-5ed Valuation
Per Capita Total Funded Debt Payable from Ad Valorem T!llles
Per Capita Genetal Purpose F1111ded Debt Paynble from Ad Valorem Ta.xes
(1) See ~ADV ALOREM TAX INFORMATION -TAX ABATEMENT POLICIES."
$
s
s
7.27%
0.95%
219,643
54,646
3,972
520
(2) The statement of indebtedness does not include the City's outstanding Electric Light and Power System ~veoue Bomb,
payable solely from the net revenues of the City's Electric Light and Power S~tem.
(3) Includes the Certificates. As a malier of policy, lhe City provides debt service on general obligation debt issued. to fund
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improvements to its Waterworks System, Sewer System, Solid Waste System, Drainage System, Tax Increment Finance
Reinvestment Zone, Electric Light and Power System, Cemetery, Gateway Streets, Hotel Occupancy Tax projects,
Auditorium/Coliseum, and Airport from surplus revenues of these Systems (see "TABLE 8A -GENERAL OBLIGATION
DEBT SERVICE REQUIREMENTS," "TABLE 8B -INTEREST AND SINKING FUND BUDGET PROJECTION,"
''TABLE 9 -DIVISION OF GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS," and "TABLE 10 -
COMPUTATION OF SELF-SUPPORTING DEBT').
The City's Waterworks System GeneraJ Obligation Debt has been issued to finance or refinance Waterworks System
improvements and is being paid, or is expected to be paid, from Waterworlcs System revenues. The City has no outswiding
Waterworks System Revenue Bonds but has obligated revenues of the Waterworks System under water supply contra.els.
The City's Sewer System General Obligation Debt has been issued to finance or refinance Sewer System improvements and
is being paid, or is expected to be paid, from Sewer System revenues. The City bas no outstanding Sewer System Revenue
Bonds.
The City's Solid Waste DisposaJ System General Obligation Debt has been issued to finance or refinance Solid Waste
System improvements and is being paid, or is expected to be paid, from revenues derived from Solid Waste service fees.
The City has no outstanding Solid Waste Disposal System Revenue Bonds.
The City's Drainage Utility System General Obligation Debt has been issued to finance or refinance Drainage System
improvements and is being paid, or is expected to be paid, from revenues derived from Drainage Utility System fees. The
City has no outstanding Drainage Utility System Revenue Bonds.
The City's Tax Increment Financing General Obligation Debt has been issued to finance or refinance construction of
improvements in the North Overton TIF and is being paid, or is ~pected to be paid, from revenues derived from the
Pledged Tax Increment Revenues. The City has no outstanding Tax Increment Financing Revenue Bonds. For FY 2010, the
City anticipates chat tax increment revenues will not be adequate to cover debt requirements on the existing Tax Increment
Certificates of Obligation. In the instance that the tax increment revenues are not sufficient to pay debt service, the City
intends to make an interfund loan to cover the debt service and, if the projected development in the North Overton TIF
proceeds as expected, repay such loan from revenues received in futwe yean. The North Overton master plan projects
additional debt to be issued by the City for infrastructure improvements in the TIF. If that occurs, there could be years in
which the TIF may not produce revenues in amounts sufficient to cover all debt issued for it, at least until the TIF bas
reached full build-out status. If revenues are insufficient and no ioterfund loan is made, the City is obligated to pay such
obligations from ad valorem taxes.
The City's Electric Light and Power System General Obligation Debt has been issued to finance or refinance Electric Light
and Power System improvements and is being paid, or is expected to be paid, from revenues derived from the Electric Light
and Power System. The City has $14,760,000 of outstmding Electric Light and Power System Revenue Bonds payable
from a pledge of system revenues.
The City's Cemetery General Obligation Debt has been issued to finance or refinance Cemetery improvements and is being
pa.id, or is expected to be paid, from revenues derived from the Cemetery. The City has no outstanding Cemetery Revenue
Bonds.
The City's Gateway General Obligation Debt has been issued to finance or refmance Gateway Streets improvements and is
being paid, or is expected to be paid, from franchise fees. The City bas no outstanding Gateway Fund Revenue Bonds.
The City's Hotel Occupancy Tax General Obligation Debt has been issued to finance tourism projects and is being pa.id, or
is expected to be paid, from hotel occupancy taxes. The City has no outstanding Hore I Occupancy Tax Bonds.
The City's Auditorium/Coliseum General Obligation Debt has been issued to finance or refinance Auditorium/Coliseum
improvements and is being pa.id, or is ~pected to be paid, from revenues derived from the Auditorium/Coliseum. The City
has no outstanding Auditorium/Coliseum Revenue Bonds.
The City's Airport General Obligation Debt has been issued to finance or refinance Airport improvements and is being paid,
or is expected to be paid, from revenues derived from the Airport. The City has no outstanding Airport Revenue Bonds.
(4) Includes the Bonds.
(5) Source: City ofLubbock, Texas.
[TIIE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
25
0
TABLE 2-TAXABLE ASSESSED VALUATION BY CATEGORY
Taxable Al!l!l'.UHd V1l11e for fllcal Year l:nded S!:J!tefflber 30
2010 2009 zooa
%or %of %of 0 CategOJy Amounl Total Amounl Total Amount Total
Tw.l, Residential, Single-Family s 6,'.,147 ,946,941 54.42 6,687,368,655 54.61 6,321,729,050 55.01
llce.l, Resldencie.J, Multi-Family 997,043,862 7.81 922,530,900 7.53 931,507,661 8.11
Real, Vacant Loi,ffracis 189,296,951 1.48 201,167,097 1.64 202,703,022 1.76
Real, Acreage (Land Only) 104,927,547 0.82 106,628,878 0.87 103,474,361 0.90
Real, Farm and Ranch !mproV1:mems 13,502,162 0.11 11,9TI,889 0.10 10,948,790 0.10
Real, Corn!nmial and lnd118trie.l 2,686,373,355 21.04 2,476,922,746 20.23 2,246,869,059 19.55 0 Real, Oil, au 111d Other Mineral Reserves 32,632,310 0.Ui 39,976,390 0.33 26,864,150 0.23
Real and T11111ible Pi:nonal, Utilities 168,123,979 1.32 173,239,955 1.41 181,023,472 1.58
Tllll.gib\e hnorial, Business 1,502.932, 704 11.n 1,494,921,128 12.21 I ,3"10,911,089 11.67
Tang,l,le Pcnom I, Olba-10,943,476 0.()'J 11,981,462 0.10 13,018,766 O.ll
RCi\l Prupcny, lnvmlar)' 43.022,634 034 43,435,213 0.35 41,291,m Q.36
Special ~ 69.422,082 0.54 76,063,260 0.62 72,685,000 0.63
Othtr/ Adj USl!llenl!I 211102 0.00 2161600 0.00 (1151001} (0.00} 0 Total AppniilCd Vallie Before Exemptions 12,766,189,105 100.00 12,246,430,173 100.00 11,492,911,247 100.00
Le:s.<i: Total Exemptions/Reductions l76315TI1825) (573,356,<MQ ,5951700,684)
Tuab\e Alleued Vallie s 121002,616,280 111673,074,132 10189712 I 0,56 3
Ta~ble Al!J!"'IHd V1l11e £or fllclll Yeiu-l:nded Sel!llmber 30
2007 2006 2005
%of %of %of
CalCS!!!):'. Amo11nt Total Amo1111t Total Amollllt Tota! 0
Rw,Residential,Siog)e-Fmnily s 5,889,918.195 55.13 S,SJ7,769,l06 55.15 S,169,490,706 56.09
:Real, Raidelllial, Multi-Family SJJ,.394,391 &.lJ 195,689,400 8.01 61 S,453,250 6.68
Real, Vacant t.olsfTrudli 186,939,508 1.76 166,089,379 1.67 137,411,731 1.49
Real, Acreage (Land Only) 104,443,417 0.98 80,067,791 0.81 64,532,486 0.70
Rn.I, Fam, and Ranch Improvements 10,601,986 0.10 11,038,895 0.11 10,406,299 0.11
Ral, Commm:ial and Industrial 1,968,271,689 18.56 1,827,901,763 18.40 1,712,457,490 18.58 0 Real, Oil, au md Other Mioeral Reserves 28,446,050 0.27 17,526,510 0.18 12,167,754 0.13
Real and T111fJlble Perrone\, Utilities 179,562,657 1.69 177,838,907 1.79 173,908,469 1.89
T 1111gible Personal, Bllllincss 1.245,600,988 11.74 1,:228,428,632 12.37 1,226,369,118 13.31
Tengible Personal, Orher 13,940,265 0.13 14,527,171 0.15 15,465,413 0.17
llce.l Propmy, lnvemrary 37,577,657 0.35 26,685,491 0.27 9,863,035 0.11
Special ln~nto,y 68,621,321 0.65 67,329,545 0.68 68,232,264 0.74
Other/ A4j1151m1:lll.J 220,192 0.00 114991616 O.Ql
Toial Appnised Value Belixe EB:mpliom 10,607,538,316 100.00 9,932,392,406 100.00 9,21 S,758,01 S 100.00 G
L£ss: focal Ell~ !604,812.6?9} iS85,778.45~ {SS0.763,153~
Tuable Asseued Value s tO,Otll,7251637 9.346,613,95 l *'634,994,862
NOTE: Valuations shown are certified taxable assessed values reported by the Appraisal District to the City for purposes of
establiahing and levying the City's annual ad valorem tax rate and to the State Comptroller of Public Accounts. Certified values
~ subject to change throughout the year u contested values are resolved and the Appraisal District updates records. C
C
26
0
0
0
0
D
)
TABLE 3A -VALUATION AND GENER..\L OBLIGATION DEBT HISTORY
Fiscal Per Capita Genel"llll Ratio
Ytar .Esn.ai.ted Ta:iiable Tnable Purpose Ta:i: Debt to
Ended City A.Hased ASlleued Funded Al1es!1ed Funded Debt Tu
30-S!J! Poeulallon <-J VaJualton Valuation Ta:i:Debt<"l Valuation fol Per C•ett• Year
2005 209,120 S 8,634,994,862 s 41,292 $ 80,210,269 0.93% $ 384 2004
2006 211,187 9,346,613,951 44,258 87,231,945 0.93% 413 2005
2007 212,365 I 0,002, 725,637 47,102 92,487,363 0.92% 436 2006
2008 214,847 10,897,210,563 50,721 101,185,953 0.93% 471 2007
2009 218,327 11,673,074,132 53,466 106,303,936 0.91% 487 2008
2010 219,643 12,002,616,180 54,646 108,479,132 (~ 0.90°0 (<) 494 l<l 2009
<'! Source: nc City.
tbl Does not include sicll'-supportcd debt.
~l IDc!ud., Iha BaDdi,
TABLE 38 -DERJV ATION OF GENERAL PURPOSE FUNDED TAX DEBT
The following table sets forth certain infonnation with respect to the City's general purpose and self-supporting general
obligation debt The City is continually revising its capital improvement plan, but the City expects to issue additional self-
supporting general obligation debt within a three to five year time frame. See "ANTICIPATED ISSUANCE OF GENERAL
OBLIGATION DEBT' below.
Filcal
Year
Ended
30-See
2006
2007
2008
2009
2010 ..i
Funded Tu Debt
Ouutimding at
End or Year
$ 447,275,000
512,250,000
633,065,000
682,87 S ,000
837,410,000
Leta:
SeJf-Supportlng
Funded Tu
Debt
$ 360,043,055
419,762,637
531,879,047
576,571,064
728.930,868
General Purpo1e
Funded T.u Debt
Oul!tandfag
at End of Year
$ 87,231,945
92,487,363
101,185,953
106,303,936
108,479,132
"' Includes the Obliptiom.
TABLE 4-TAX RATE, LEVY AND COLLECTION HISl'ORY
Fhcal Tu Rat~ Distribution
Year End GeneraJ Economic Interest and Tax
0,130 F!Uld Develoement Sinldns Fund Rate
2005 ' 0.33474 $ 0.03000 $ 0.09496 $ 0.45970
2006 0.35626 0.03000 0.0@4 0.44720
2007 0.36074 0.03000 0.07125 0.46199
2008 0.35380 0.03000 0.07125 0.4550S
2009 0.32540 0.03000 0.09100 0.44640
2010 0.33240 0.03000 0.08400 0.44640
27
Tu Per~ent CoUecnd
Le!I C11n-ut Total
$ 39, 777,!!66 97.73% 100.28%
41,%8,431 98.1S% 99.71%
46,068,744 98.12% 99.02%
49,195,247 98.41% 99.62%
51,616,589 97.78% 98.87%
.53,455,322 (In process of collection)
Tu
Year
2004
2005
2006
2007
2008
2009
TABLE 5-TEN LARGEST TAXPAYERS
Name
Macerich Lubbock: Lid.
Southwestern Bell Telephone
United Supennark:ets OFC
PYCO Industries., lnc.
Southwestern Public Services Co.
Wal-Mart Real Estate Business Trust
Atmos Energy West Texas Division
Wal-Mart Stores Inc.
TYCO Fire Products
Lubbock Property llC
TABLE 6 -TAX ADEQUACY
2009
Tauble
Aueswd Valuation
S 123,830,275
53,972,632
53,174,661
47,SSJ,556
40,037,280
38,609,000
34,339,220
31;325,2ll
29,471,236
27.~3,903
S 479,796,974
Average Annual Debt Service Requirements All General Oblige.lion Debt (2010-2034):
$0.4337 per $100 AV against the 2009 Taxable AV, at 99% collection, produces
MBximWll Annual Debt Service Requirements All General Obligation Debt (2011):
$0.7116 per $100 AV e.gainst the 2009 Taxable AV, e.t 99% collection, produces
t•> Includes me Oblipti006,
TABLE 7 -ESTIMATED OVERLAPPING DEBT
o/• ofToul
Ta.1.able
Assesstd Valuatjo11
1.03%
0.45%
0.44%
0.40%
0.33%
0.32%
0.29%
0.26%
0.25%
0.23'r~
4.00o/.
$51,529,743
SSl,534,793
$ 84,549,.264
$84,556,511
0
0
0
4•> 0
(,)
0
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 borrowin~ to finance their expenditures.
This statement of direct and estimated overlapping ad valorem tax debt ("Tax Debt") was developed from information contained 0
in "Texas Municipal Reporu" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the
City, the City has not independently verified the accuracy or completeness of such information, and no pelSOn should rely upon
such information BS being acclllllte or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt
since the date hereof, and such entities may have programs requiring the issuance or substantial amountll of additional Tax Debt,
the amount of which cannot be determined. The following table reflects the estimated she.re ofoverlapping Tax Debt of the City.
Tuag Jarisdiclita
Frenship ISD
Idalou ISD
Lubbock County
Lubbock ISD
Lubbocli::-Cooper !SD
New Deal ISD
Roosevelt ISD
Estimated Ovcr\app1ng Debt
The City
Gross Debt
(As of 9/30/89)
S 157,389,717
78,005,000
118,.505, 113
124,259,959
11,909,998
S 872,475,000 {al
Total Direct & Estimated Overlapping Debt
As a% of2009 Tu;able Assessed Valuation
Per Capita Total Direct & Estimated Overlapping Debt
"1 Inch.des lhe Obliptions,
28
Estimated%
0\/erlappiag
66.53%
3.92%
83.13%
98.70%
.57Jl9%
25.44%
2.98%
100.00%
Ovul1ppiac
Debt
s 104,711,378
64,845,557
116,964,546
70,940,010
354,918
$ 357,816,409
872,475,000
S 1,230,291,409
10.25%
$ 5,601
C
C
(
'J 1-,l \Q u lJ u u u TABLE 8A -GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS FYE Oa1r1u<101 n.l!t"' Tbd•rt .. )DlDA Bondi Th• BnfH lOtGII a.nt1 "' ...1!!!L 1'111<!f>l ·-· 111111 ""1Mfol laleulf. Torol Mod~ lllltnsl Tomi lOIO $ Ji,QM,600 }3,1'9,152 61,)44.Ul 1011 ll,4l.s,ol() 30,07~11 '8,491,}71 05,000 '14~0I 191,581 1,217,411 1,217,481 2012 ls.m.ooo 2&,3.a,,745 •t1,lll0,74S !}IO,IO) 216,6l3 1,m,6n 1141,1'5 Ml,IU lOD l~,895,000 26Pll.1Ul 6&,Sll,llSl •m.lU) 2Sl)DS 1,1!8,SOS 1141,IBS 1141,185 101, 40,"6!,000 24,112',J:>I 65,llltl.J24 9IIO,OCO 22',083 l,l!5,0U 1141,IBS 841,185 lDIS 39,015,000 2l.fl.17.,$8 Sl,l•l,958 9110,IIOO 190,lll 1.110,IIU 1141,IBS 1141,185 l01~ J&,780,000 2IJ41,614 60,1271>74 l,Ol0.000 IS0,4ll l,IB0,48~ B4l,l8S lMl,185 1017 )9,560,000 l9J1.l,1.JS S9,ll5,7lS 1,075,IO) 113,758 1,188;13' 1141•,l85 841,IU 10" ,I0,7"1.000 1T.7JUU S8.Sll,IEI UO.OIIO 9S.l95 :io.m 9S5.0IIO ll9,97:S 1.1wm 2019 J9.W,lll)O IUll.JSI SS,ll7,9>I m.OIIO ~t,9n 24'1.>"9 aspoo TII.)" 1,761,~95 20!6 )&,t.J,Ojlll 14Jl49,941 S0,61'1,1141 IM,j:U) HJMS J.ffJ>4S 1,01 S,000 729.960 1.7 .... 2021 35,MOjlll l2.ll4,lJl 4&,1114,)81 170,(DJ 17,916 m,976 l,<MS,<m 680,3)4 1,725,334 10ll. 34,DlO.OOO 10,11]7,119 +1,661,219 175,00l 71,764 246,764 l,OIIO,rol 621)116 1,107,816 202) 34,0IS,Or., Ul>J,<MII 43,008,Cllil l!IO,tm 6S,m 245,151 1,120,(D] 571,104 1,691,504 2024 33,080,000 7,36l,-Hl 40,4'],445 1\10,000 S!.,09S 248,095 1,1",(D] 511,2519 1,6(,6,299 2025 31,005.DOO S,78:l,22} 38,787.lll 195,(n'.) so.m 245)14 1,200,(0) -144,257 l,6'14,l.17 202~ J<l,ISS,000 4.Zl0,0&6 l4,4DS,CD6 lQl,000 42,514 m,314 1,:HO,(D] l?U,165 1,610,3'5 2027 25,IOSJIOO l,912,658 28.1)17,6'8 m,<m ll,1119 24L979 l,JOO,COl 29l.4S7 1.llll,457 ion 1Ll,471Jlll0 l,Ul,l.<4 21,JOlJ,!4 m,ooo J4,,IJ. 149110· IJl0,000 21UJl 1,.m.m 2029 10,-1.111;)19 11,£&1,)99 2l0,@ 11,u,I l41li8 l,4Gl1QOO 13 ,441 1,513~2 2010 1,0(0,IOII 7111,)16 1,110,S116 :149,a.> ~,llill l4U60 l,oKI01000 +lpJ,4 1,50(034 10)1 6,!D),000 +!S,949 6,'145,9'19 2032 2,i,;:,000 2M,4ll 2,m,m 20)] 2,290,000 l59,S25 2,449,s:H 20H 2,400,IOI 54,000 2,4l4,(D] 10l,8l0,000 JI 1,671,J4M 1,014,491,ltM !,114.1),000 l,371J,Jl 11.lll,llS 11,120,<m 12,J.U,9~ 17,161,961 .................... Dul s.,..;~~1:1 All 0.,,-ml Oblil,Oliooo.bl{lDI0,2Q:J4), s ~l,Sl9,70 "4uimum/Wlill Ddll~~Al1Gfton!Obfl£t!ioi-o llm(lOII): l 8U49,l64 •• ~ ... odol.....,-<i>bp,00<. ., l',,,j,,,:qd ~,ti __ .,._ ij,.._,,d _., __ tli,rmw-oal ..,.1,o 1J1'oril• ..---mi lllon,.101Dlllboblld5oriol lO!Da.tij)-. T ADLE 8B • INTEREST AND SlNKING FUND BUDGET Gcncr1l Pw,,o11e Genei,al Obli1111tillll Debt Service Req11in:m~nb, ScpteJBber 30, 2010 Fiscal Apt fees lnu:n:sl and Sinkin,g Fund, Sep~mber 30, 2009 lnleresl and Sinking Fuml Ta,; Levy@ 99.0% EatimalCd lnterat Eamingll Pmjecltd Balance. Sep11tmbcr 30, 2010 $ JO,00S,9S3 IS,000 l,4~8,276 9,.560,023 IS6,814 11,2151113 S 1,19-4,1~• (J Q 0 0 0 n.sw1n lQLOACndft .. !a "'• s..i .. lOIGB CttlUltaln "' Tllll l!'l1a~ II-T<i:111 Motlptl 1-..1 T...:J --t.8,l44,IS2 3,010,000 2,'ll>lJ74 ,.rn J1• 8,IOl,l37 LIOl,))1 114,S<\9,2(>4 S,86',00l I .. JOl>,UO J,511,BJO S,293,070 S,29),070 81,813,463 6,0.!0,COl J,S16,61B 7,S<,6,618 S,191,070 s,.m.ooo Bl,427,433 fi,340,000 1,nl.lll6 1,571,116 S,293,070 5,293,070 80,181,248 6.6«1,COl 9]2,114 7,512,.IJ4 5,191,070 s.m,1110 77,0J0,620 6,9:lS,000 '45Jl6 7,'70,11]6 s,m,010 S,293,(170 7S.illl,248 7,195.00l l!0,061 1,S1S,ll'il S,293,070 S,291,070 'J4,Qll,!IO\l 1.215,(0) JJJ.911 1,441,911 6,1,IQ,IKII) S,154,479 11,3!14,479 7l.ll!(L"18 1)51),000• 19%.19'' 1,442,29, 6.4".000 4,.f6t;}l'l7 ll.]94,'117 49.981..l!U l,l9S,OIIO l•l,Sll l,44J,5ll Ui7DJO) 4.)67,llll 11.1n,10s 65,304,622 2M,OOO ;122,0111 387.1180 6,540,0111 4,110,117 1 D,7JO, 177 61,314,954 27S,00l 112,)55 l87,llS 6,7$~0.., l.~l.i'JO'I I 0,676,604 57,1185,758 2~,000 ltll.1114 386,924 6,99SJIOO 1,569,922 J0,114,922 S5,0S6,S6l 295,000 90,1164 lBS,11,1 7,230,0-, l,l9l,7ll 10,41),732 Sl,167,435 ]l0,000 78,ll4'l l88,9"9 1.soo.or., 2,n,1,411 10,274,418 Sl,340,360 llll,000 "'1.)49 )16,:149 1.uo,oi., l,lll,1110 IO,lll,!110 46,712,21-4 JJS,000 !l,OO<J lB8,lll9 1,1 IQ,j)r., 1,lll,12S ,,q4J,ll5 40,191,2'9 m,ooo 11,!IU 10.US 1,435.0110 1,134,lll 9,119,111 J(.26&.71l9 3'°,000 2l,911Cl :13!$0 t,77MOO mJJI~ ,,1,0,074 n,m,111 JIO;QJ(I I.no 381,1711 ).125,000 m;.10 9,400.210 19;31111,1(!0 6,445,9'49 2,05,418 2,449,SZS l,45',COl 48,9",(0) IO,.M6,421 19,401,411 9M40,DOO 1&,711,1117 l?l,111,6'7 l,2111,l4l,l80
TABLE 9 • DIVISION OF GENERAL OBLIGATION DEBT SERVICE c~) 5olld Wo.tm Dnlo•p Tu llftclr1< LlaM Wilterwero :SN-tr Obpn•I lJIOlty ln<ffll'l•A• "f'ow,r Auclllorwml <lffUf111 i'>lol fYf. Sytlem S)'1CUI Sy1teM S:p!HI n•-11&:1 .. SJllem c • .,,. •• ,,, G•i.w•y eor Ali,,,on Calhoum Pa'l"'"" G,O. ~ O.blSe..ice D•bt Sen1.., o.111s""'.., OoblSenlce 0.btS•nto DelltServl<e Dt.l!Hn1u D•btknlc,, Dellt!ionl.:. O.lltStnl<t Debi Semoo 0.btSenloo DtbtSenln 2010 $ 17.172,088 11,11.l,IH 1,314,322 8,704,945 J.IIUSS 6,1148,IIW S5,l:1$ 1.lSl,.5S9 97,.)13 2,417,686 41,888 10.005,9.lJ 68,344,152 2011 28,592.827 11,396,037 1,344,$80 9,876,592 l,291,90} 7,41ll,S37 SS,,1_24 7,967,863 97,274 2,4(1$,617 39,243 12,-077,SS6 &4-'49,264 2012 26,9-12,539 11,166,177 1,)29,947 9,84-4,6]0 J,276,Ml 1,216,621 SS,lJ3 7,905,210 97,248 1,405,\173 39,314 11,474,451 81,813,463 201.1 26,91)1,761 10,98S,860 1,.119,454 9,8,0,913 3,177,08¥ 1..2117,683 SS,l)4 7,900,,:16 97,323 2;m,m 39,337 11,39,.,138 81,427,433 2014 26,898,660 10,&20,77~ 1,)03:140 9,a,4],966 3,l?a.082 1.ll9,34S 55,l]? 7,905,)83 91.2811 1.48•.0.SS 39,314 ll,31$,63' 80,!81,248 20JS 26,68S,680 8,981,008 1,287,600 9,a,41,296 3,277,062 1.0S2,962 S5,l27 7,~Ul,B14 97.m !.)48,035 39,425 10,4$7.C93 77,030,62!1 201G 26,649,318 8,189,125 l.J06,98l 9,B19,0I0 3,277,S?S 6,971,313 SS,223 7,898.19) 97,248 45.S,l15 38,7:23 10,l\M,359 75,013,248 2017 26,63 0,42-4 8,149,34-4 1,283,961 9,901,039 3.:l.lJ,151 6,810,44!1 55,]06 7,900,152 97,]48 457,1140 38,897 g,365,997 74,033,8119 2018 26,408,015 7,183,664 J,271,6'4 9,914,292 3,277.l'!ll 6,BOJ,497 SS,l04 7,900,9')4 97,Jl 7 456,(),jS 38,980 9,i79,17S 73,386,648 1019 25,!93,775 7,B41,Ul JD81,VS6 K,829,76} 3,2'711,~8 5,.2'6;900 SS.211 7,1190,290 97,]90 •S4DZS 38,970 9,l.sl,PJI> 69,981,510 l!ll!I 2J,018,M7 7,121,195 1,074,246 1,164,116 ),.280,618 S,252..s91 SS)U 7,8S2.,l3P 91.2•2 4$$,82) JB,906 9,l6H80 65,)04,622 1021 20,US,869 6,9'],4'] l.066.598 6-•91,4.S!I 3,.m.307 j,245,100 SUIO 7,879,411 •91,;m A)0.,969 38,802 8,60,152 61.]:14,9~ lO'l2 l[l.,113,951 .s,990,•n 9)1,881 6,7114,91)1 ,,no,S66 J,244,$-! 5S,lJ8 7,809,631 '.11,])9 ~S1.B~ 19,550 7,909,6,J S1,62S,1S8 2023 17 ,4 711,448 6,M?,,:1411 914,248 6,6116,71S l,l7M16 S.l)J,,866 SS.):)4 7.B(iJ,062 97.iS.8 457,8•9 39,258 1,101.~80 S:S,886,S62 ZOJ4 17,J!!!l,J93 6,6SS,49'l 931,lSI M71,194 l,261,116 l,S70,5S4 H,Wl 7.S,:J,IM 97,289 451,)17 JS.796 6,199,98~ 53,167,435 2ot1 l6,l21-'01 6,1!05,811 659,286 6,67:2,61!J 2.971.671 J,569,007 SS,207 7.839,S-43 <J7,l08 451,137 39.099 S,8,16,IOS Sl,340,360 2016 16,IOJ,1159 6,024,017 656.4118 6,674,917 2.262.410 3,UB0,083 SS,212 6.61!1,1R7 <J7,l05 231,)52 39,343 4,B56,ll41 46,771,284 2027 14,650,977 4,1149,KS6 l~,080 6,0M,7)3 l.7Sl;9S, 2,584,229 15,689 6,4S6,)0l 97,270 ,1.191 39:132 3,J91,836 40,191,259 2028 l3,088,04S 4,629,831 186,121 S,562,654 379,860 l-'lS,017 6,441,m 38,705 2.417.045 34,268,7119 u> 2029 10,010,901 239,119 83,510 4,999,176 m.m 997,052 4,810.419 38,7'2 1 me..•~ I lJ,437,1 ]J 0 2030 9,463,246 234,667 47,628 4,BS0,804 142-,0H 4)2,946 Z,381,661 1.749,l!M 19,JO!I, 160 2031 4,740,044 l.?0S.905 6,445,1149 2032 2,455,438 2,455,438 2013 2.-449,S25 2,<M9,.S25 10).t ".!,4H,OOO i.4s~.ooo s 43).sn,:rn ISl,'.iB,816 Jll,7101425 J.?7907,429 ~6.736i$20 I 05,652,ll<t 9SA..JS!I 15->I.QIJ9,4SO 1,751,l{M 17.2811)10 784,833 164).l I 16112 112u.20.sao l!i •c1,1,1,4i;a ~~ O:ilio,iliit1as. {\ n. (\ 0 0 0 0 0 0
0
0
0
0
D
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)
TABLE 10 -SELF-SUPPORTED DEBT
The following details the revenues available and debt allocations for the self-supported general obligation debt of the City. See
also Table 9. In addition to the funds detailed below, the City Council of the City approved ordinances designating debt issued
for the Cemetery (a unit of the City's General Fund) to be supported by sales of crypts and niches at the City Cemetery.
THE WATERWORKS FUND c.,J
Net System Rewnue Awilable, Fiscal Year Ended 9-30-09
Less: :Requirements for Revenue Bonds, Fiscal Year End'ed 9-30-10
Balance Available for Other Purposes
Requkements for System General Obligation Debt, Fiscal Year Ending 9-30-10
Pel'Cel'ltage of System Genera.I Obligation Debt Self-Supporting
$ 31,363,712
31,363,712
17,272,088
100.00%
<•l Each Fiscal Year lhe City o-aosfen an amount equal m debt service requin:ments cm lhe Warerworks Fund 8):lleral obligation debt ma se~led IICCQIJDt
in the Walerwodcs Fund. FY2009 revenue is unaudited.
fflE SEWER FUND(•)
Net System Revmue Available, Fiscal Year Ended 9-30-09
Less: Requirements for Revenue Bonds, Fiscal Year Ende"d 9-30-10
Balance Available for Other Purposes
Requiremenu for System General Obligation Debt, Fiscal Year Ending 9-30-10
Percentage of System General Obligation Debt Self-Supporti.i1g
$ 20,304,764
20,304,764
11,115,135
100.00%
W Each Fiscal Year tbe City lnlmfm llll llllOWlt equal to debt llffl'ice 19quiremeo.ta on the Sewer Fund general oblisa,lion debt ma segn:ga~ IICCQUQI iD the
Sewi:r Fund. FY2009 re-,renue includes a planned t12rufer ofS4,680,Sl3 from g,:nen,l s,;w,;r flDld bllliiu~ FY200ll reYe11ue is 11118udited.
THE SOLID WASTE FUND">
Net System ~venue Available, Fiscel Year Ended 9-30-09
Less: Requiremenu for Revenue Bonds, Fiscal Year Ended 9-30-10
Balance Ava.ilabl~ for Otner Purpos~
Requirements for System General Obligation Debt, Fiscel Year Ending 9-30-10
Percentage of System General Obligation Debt Self-Supporting
$ 7,507,723
7,507,723
1,314,322
100.00%
(,) Each Fiscal Year the City lrall$li:r$ an amOIIQt eq1111I to debt ser,iu requiremt:111& OD Ille Solid Wute Fund genera! obligation debt to a MgRgllted lloCCOIIIII
in tbe Solid W11.11e Fund. FY2009 revenue includes a planned tmnsf.,,. ofSl,79'4,032 from gen,ml aolid waste fund bal1ncc. FY2009 n:vcnuc is unaudib!d.
THE DRAINAGE FUND (IJ
Net System Revenue Available, Fiscal Year Ended 9-30-09
Less: Requirements for Revenue Bonds, Fiscal Year Ended 9-30-10
Balance Available for Other Purposes
Requirements for System Goot:ral Obligation Debt, Fiscal Yenr Ending 9-30-10
Percentage of System Genentl Obligation Debl Self-Supporting
$ 8,792,176
8,792,176
8,704,945
100.00%
<•> Each Fiscal Y car lhc City transfers 8JI am.011111 equal 10 debt Jel'Vioe requin:m1:11t1 on the DraiDase FWld g,:neral obligation debt 10 a segregated a.:count in
the Di-aiu,e Fund. FY2009 reYellue includes a pla11Ded t12rufer ofSJ,674,910 from gmen,l <bainagE fund bal11Dce. F\"2009 revenue is uoaudiled.
THE ELECTRIC LIGHT AND POWER FUND l•)
Net Electric Light and Power System Revenue Available, Fiscal Year Ended 9-30-09
Less: Requirements for Revenue Bonds, Fiscal Year Ending 9-30-10
Balance Available for Other Purposes
Requirements for Electric System General Obligation Debt, Fiscal Year Ending 9-30-1 0
Pel'Cel'ltage of Electric System General Obligation Debt Self-Supporting
s 37,107,074
2,415,945
34,691,129
6,948,169
100.00%
!•l Each Fiscal Y irar the City IIallsfer.i an amount equa! 1'1 debt !iervice n:quin:m~l5 oo the EJec Irie Ught 111\d Po~ Fund gen en.I obliaa,tion debt to a
segrega~ a.:count in the Eledric Ught and Powa-Fund FY200'J =enue ii unaudited.
31
THE GATEWAY FUND c,i
Net System Revenue Available, Fi~cal Yellt Ended 9-30-09
Less, Requirements for Revenue Bonds.. Fiscal Year Ended 9-30-10
Balance A.,,1tilable for Other Purposes
Requirements for Fund General Obligation Debt, Fiscal Year Ending 9-30-10
Percentage of Fund General Obligation Debt Self-Supporting
s 4,213,532
4,213,532
7,251,559
58.11%
<•) Eedl Fl:IClll Y= the City tranSfm an ar11011nl equal IO debt service requiremcnl5 OD the 0,,.1<:way Fund gcncn.l obligation debt to a scgn:gamd
r,ccount in the Gat~y Fund. The remainder of the r=uc needed to support the Gaieway Pi.ind will be tnmsferrcd from the Elccrric Light and
PO\loff Fund. FY2009 n:,,eoue is unaudited.
THE AIRl"ORT FUND 1•>
Net System Revenue Available, Fi~cal YeJlf Ended 9-30-09
Less; Requin:meots for Revenue Bonds, FiscaJ Year Ended 9-30-10
Balance Available for Other Purpo,es
Requirements for Fund General Obligation Debt, Fiscal Year Ending 9 30#10
Percentage of Fund General Obligation Debt Self-Supporting
<•l Each Fllcal Year lhc City 1r11DSfim an amoont ~ w debt service requiremcnl5 OD lbe Aliport Fund general obligation debt
to a ,ell!Cpled oc:,;ount in the Ai!pOrt Fund. FY2009 ~ is unaudiled.
11IE NORTII OVERTON TAX INCREMENT FINANCING FUND 111
Net Sy.nem Revenue Available, Fiseal Year Ended 9-30-09
Less: Requiremeols for Revenue Boods, Fiscal Year Ended 9-30-10
Balaooe A VY)ilable for Other Purpo.ses
Requirements for Fund General Obligation Debt, Fiscal Year Ending 9-30-10
Percentage of Fund General Obligation Debt Self-Supporting
s
5,093,115
5,093,115
2,417,686
100.00%
1,692,773
l,9J2,773
3,119,818
100.00%
<•l Eeeb Flacol Year the City 1nmsfers an amouot ~uol to debt service requimnenis ou. I.he Ta,c Jncmnent Financing Fund sen.ml obligatiou debt to a
8Cgl"Cptcd accoont in the Tax Increment fi01111cing Fund, FY2009 r=uc includea a pl111111ed lnnaf.:r crt $155,833 from Tax In=meot Financing
Fu.ad g,:nmi! fund balance. The remainder of m-enw: o=kd IO supporl the Ta:i. Jncr,:ment Finllncing Fund seneraJ ob ligation debt is transfcrml
frllm die Ciiys Solid WBlllc Fund. FY2009 ls unaudited
TABLE 11 -AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
Date A111oant I.Mutd The
Pu!:e!!R Authorized Aatboriicd To Date Bood1 Uaiuu:d
Snm-Sys~ smm s 3,303,000 2,175,000 1,128,000
WatCJW11rlr.s Systmi 10117/87 2,810,000 200,000 2,610,000
Sn-ert lmprovemenrs 5/1/93 10,170,000 10,166,000 4,000
Street lmprovernC11l! 5115104 9,210,000 8,764,000 446,000
Civic C.Cnter/Auditoriwn Renovation ond hnprowment1 5/151<!4 6,4~0.000 500,000 5,950,000
PM< lmpruwmmits 5/1 5/-04 6.39S,OOO 6,395,000
PoliceiMwiioipal C.01111 Foci!ilie$ 5/15/-04 3,)50,000 500,000 2,350,000
Lilnly lmprovcm~nts 5/15/CM 2,145,000 250,000 1,395,000
Fire Sl.liioni;. S:<15i04 1,405,000 1,405,000
Aniffla! Sheller Renovations & lmpro~eali S/15/04 1,045,000 160,000 885,000
Sa-eet lmpro~enl5 11/3!09 43,085,000 13,605,000 29,480,000
Fire Siations 11/3!09 7,500,000 217501000 4?501000
SSlM68,000 301Sl5i!!!!O 24,200,000 42JS3,00D
32
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ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ... The City Council adopted a resolution during the
1984-85 budget process establishing capita.I maintenance funds for capita.I projects. A capital improvement plan is made for
pl!11llling purposes and may identify projects that will be deferred or omitted entirely in future years. In addition, es conditions
change, new projects may be added that are not cwreotly identified. Un~ current City policy, for a project to be funded as a
capital project. it must have a cost of $25,000 or mon: and II life of seven or more years. For FY2009-10, the City Council
approved $240.5 million in total expenditures for capital projects for all general purp05C projects, as weU as projecl.!I for the
electric fund, water fund, sewer fund, solid wnste fund, storm water funds and aiiport. The Capital Projects Fund budget for
FY2009-IO also included an additional $490.8 million in future improvements for all City departments over the five succeeding
fiscal yean. The improvements included in the City's capitaJ improvement plan are generally funded from a blend of bond
proceeds, reserves or current year revenue sources.
As shown in Table JI, upon isrnance of the Bonds, the City will have $4,181,000 of authorized but unissued bonds from the May
15, 2004 bond election and $34,230,000 from ll:ie November 3, 2009 bond election. The City typically issues voted bonds for
general purpose City projects, such as streets, par~, libraries, civic centers and public safety improvemeni.9. However, the City
has incurred substantial unvoted tax supported debt. suc;b as the Cetificates, to fund portions of the capim.l budget of the Electric
Fund. Water Fund. Sewer Fund, Solid Waste Fund, Storm Water Fund, Tu: Increment Fund, Cemeiery Fund.
Auditorium/Coliseum Fund, Hotel Occupancy Tax Fund, Gateway Fund and Ai.rpo.1t fund. As described elsewbeR in the
Official Statement, such enterprise fund indebtedness is generally 8llticipated to be self-supporting from enterprise fund revenues,
The City plans u, issue SI 07 ,602,000 in additional general obligation debt within the oext 12 months.
TABLE 12 -OTHER OBLIGATIONS
The City has various capital leases outstanding. The debt service requirements of the leases are detailed below.
Coven mental Busloess-Typ~ TotaJ
Capilal Leue Capital Leue Capiml Lease
F\IE Minimum Mini.m11.m J\,finjmum
36-SeJ! Pa2:ment Pavmenl Pa2:ment
2010 $ 4,680,633 6,953,062 11,6.33,694
20)1 3,621,468 6,219,873 9,841,341
2012 3 019,9% 5,029,903 8,049,849
2013 2,500,332 2,619,742 5,120,074
2014 2,318,939 1,635,379 3,954,318
2015-2019 4,191,337 3,615,561 7,806,898
Interest p.326,75ll (2,363,795} !4,690l542):
$ 18,005,903 23,709.725 41,715,628
The City e.lso has obligations to p11y various contract revenue bonds issued through the Department of Howing and Urban
Development and the Canadian Municipal River Authority. The debt service requirements of the contract revenue bonds are
detailed below.
FY[ Contract Revenue Bo•ch
30-Sel! Princieal Interest Total
2010 $ 1,442,600 1,636,951 3.079,SSl
2011 1,494,093 1,573,481 3,067,574
2012 1,556,264 1,504,834 3,061,098
2013 1,495,327 1,433,120 2,928,447
2014-2027 27,809~27 10,1 B4,132 3719931359
$ 33,797151 I 16,332,511 50,130,028
PENSION FUND ... TEXAS MUNICIPAL RETIREMENT SYSTEM <•)('oi ..• All permanent full-time City employees who are
not firefighters are covered by the Texas Municipal Retirement Sy3tem ('1'MRS"), 'IMRS is an agent, multiple-employer, public
employee retirement system covered by a Sr.ate statute and administered by six trustees appointed by the Governor or T=.
'IMRS operates independently of its member cities.
The City joined TMRS in 1950 to supplement Social Security. All City employees except firefighters are covered by Social
Security. Options offered under TMRS, and adopted by the City, include =t, prior and antecedent service credits, five year
vesting, updated service credit, occupational disability benefits, and survivor benefits for the spouse of II vested employee. An
employee who retires receives an annuity based on the amount of the employee's contributions over-matched two for one by the
City. Since October 11, 1997, the employee contribution rate has been 7% of gross s11lary. The City's conDibution rate is
calculated each year using adUarial techniques applied to experience. Enabling statute, prohibit any member city from adopting
options which impose liabilities that cannot be amortized over 25 year5 within a specified statutory rate.
On December 31, 2008, the actuarial value of assets held by TMRS (not inclrlding lhose or the Supplemen111l Disability Fuod,
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which is "'pooled") for the City were S205 million. Unfunded actuarial accrued liabilities on December 31, 2008, were S13S
million and amortized over a 30-year closed period.
TIRE PENSION ruND to) ••• City firefighters are members of the locally administered Lubbock Fire Pension Fund (the "Fund")
operating under an act passed in 1937 by the State Legislature and adopted by City firefightm, by vote of the department, in
1941. Firefighters arc not covmd by Social Security.
The Fund u governed by seven trustees, consisting of three firefighters, two outside trustees (appointed by the other trustees), the
Mayor or the representative thereof, and the Chief Financial Officer or the representative thmof. Execution of the act is
monitored by the Firemen's Pension Commissioner who is appointed by the Governor.
Benefits of retired firemen arc determined on a ''formula" or a "final salary" plan. Actusrial reviews are performed every two
years, and the fund is audited annually. Firefighters contribute a percentage of full sala,y into the fund. Based on the plan
effective December 1, 2005, the Fund's funding policy requires cootributions equal 10 12.43% of the firefighters' pay. The City
contributes on a baals of the percentage of salary, which is an annually adjusted ratio that bem the same relationship to the
firefighter's contribution rate that the City's rate paid into the TMRS and FICA bean to the rate other employees pay into the
TMRS and FICA The December 31, 2008, actuarial valuation assumes the City's contributions will average 22% of payroll in
the future.
As of Dei.:ember 31, 2008, the most recent actuarial valuation date, the plan was 78.3% funded. As of December 31, 2008, the
unfunded actuarial accrued liability was $40,019,171 amortized with the excess of the assumed total contribution rate over the
nonnal cost rate. The number of yean needed to e.mortiu the unfunded actuarial liability is decermined using an open, level
pen:entege of payroll method, uswning lhal lhe payroll will incn:ase 4% per year. The Decanbe, 31, 2008 actuarial valuation
needed 30 year.; to amortize the unfunded actuarial accrued liability.
OTHER POST-EMPWYMENT BENEFTl'S ... The City cmrently provides cenain post-employment benefits ID its
employees. The City's annual OPED eq,ense is calcolalcd based on the annual reqwm:I contribution of the employer, an
amount actuarially determined in acaxdance with the pemmeten ofGASB Smremeot 45, For further information regarding the
City's OPEB obligation, see Note III. F (Notes to the Basic Financial Statements) set fonh in Appendix A.
(•l For historical information c:t111cmiing lhc retirement pl!.n$, see "APPENDIX A, EXCERPTS FROM ANNUAL FINANCIAL REPORT FOR
THE YEAR ENDED SEPTEMBER 30, 2008 -Note III, Subsection E -Retirem~t Pillnsn.
(bl Sourt:e: Te11:as MUD.iclpal Retirement System, Compn1hensiw A,rnua/ Fina,rcia/ Re.JJQrtfor Ymr £,rd,d INcnrber 31, 2008..
[THE REMAINDER OF nns PAGE INTENTION ALL y LEFT BLANK]
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TABLE 13-CHANGES IN NET ASSETS
Fiscal Year Ended Se2tember 30 ("-)
Unaudited
2009 2008 2007 2006 2005
REVENUES
Program Revenues
Charges for Services $ 9,665 12,677 10,636 9,632 10,583
Grants and Contributions 20,292 25,154 14,645 11,048 13,296
General Revenues
Property Taxes 52,598 50,330 47,007 42,771 39,748
Sales Taxes 50,705 50,549 47,780 45,577 41,803
Other Taxes 5,452 5,370 4,909 4,447 4,242
Franchise Taxes 10,765 12,978 12,378 13,348 11,154
Other 5,399 101316 9,787 11,292 51742
Total Revenues 154,876 167,374 147,142 138,115 126,568
EXPENDITURES
Administrative Services 11,078 12,372 12,155 9,910 8,220
Community Services 7,038 6,874 6,951 6,112 6,146
Cultural and Recreation 15,039 16,660 19,671 18,915 17,745
Economic Development 37,221 12,378 11,620 10,283 9,739
Fire 33,098 31,789 27,338 26,711 23,517
Health 5,819 6,142 5,899 5,014 5,040
Police 48,342 46,850 43,022 42,063 38,452
Other Public Safety 6,326 6,678 5,886 5,240 4,977
Streets and Traffic 30,139 16,357 14,370 11,850 12,466
Non-departmental 5,206 6,253
Intergovernmental 12,500
Interest on Long-Tenn Debt 9,840 8,367 6,968 4,326 3,195
Total Ei:penditures 203,940 164,467 166,380 145,630 135,750
Changes in net assets before special
items and transfers (49,064) 2,907 (19,238) (7,515) (9,182)
Special items
Transfers 10,039 (4,703) 10,572 9,607 15,469
Changes in net assets (39,025) (1,796) (8,666) 2,092 6,287
Net Assets -beginning of year, as restated 139,933 141,729 112,721 110,629 104,341
Restatement 37,674
Net assets -end of year $ 100,908 139,933 141,729 112,721 110,628
<•) Uni.ts are in tho11Sands.
Note: Data shown in Tobie 13 reflects general governmental activities reported in accordance with GASB Statement No. 34. The financial
statements include a management discussion and a.nalysis uf lhe operating results ufsucb fiscal year, including restatements to begi1111ing fund
balances and net assets.
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TABLE 13A-GENERAL FUND REVENUES AND EXPENDITURES HISTORY
Fiscal Year Ended Se2tember 30
Unaudited
1009 ~ 2007 1006 2005
REVENUES
TPMS s 84,711,760 85,345,082 80,266,416 75,999,624 68,716,601
Franchi..'!e Taxes 6,459,207 7,786,611 7,429,660 8,008,973 6,693,209
Licenses and Penn.its 2,213,041 2,663,139 2,531,032 2,250,635 1,953,666
IntergovemmenLal 503,889 530,389 514,896 408,997 480,648
Charges for Services 2,930,335 3,339,148 4,057,958 4,781,043 4,070,642
Fees and Fines 3,315,472 3,279,911 3,669,099 3,981,978 4,015,402
Miscellaneous 1,757,534 2,574,448 2,582,509 1,465,215 1,506,315
Interest 327,401 1,052,842 l,469,083 921,742 349,236
Operating Transfers 16,565,397
Total ReYenuea and Transfen S 102,218,639 I 06,571 ,570 102,520,653 97,818,207 104,351, I 16
EXPENDITURES
General Government s 6,159,536
Financial Services 2,139,492
Cul ture.J and Recreation 11,515,865 12,253,380 15,25(,742 13,986,576
Economic & Busines.s Development 966,068 1,215,978 I, 122,880 1,146,267
Non-departmenlal 1,882,255 445,251
Admin/General Government 9,611,385 11,047,039 11,560,733 9,356,059 18,330,508
Police 43,539,601 42,831,016 40,448,254 37,463,740 33,919,626
Fire 30,479,464 29,630.222 26,690,350 24,638,814 21,943,267
Heallh 4,069,411 4,133,917 4,004,913 3,738,790
Other Public Safely 4,872,418 4,703,249 4,508,394 4,287,806
Planning end Transportation 8,120,727
Streets and T raffle 8,013,700 8,168,462 7,663,278 7,439,045 2,214,291
Human Resoun:es 740,826
Debt Service 2,840,461 2,396,605 1,694,844 1,(54,226
Capital Outlay 8,412,831 3,966,065 4,256,705 7,184,866 5,277,(00
Operating Transfers 3,912,645
Total E:s:penditvres S 124,321,204 120,345,933 117,202,093 112,278,444 103,203,269
Excess (Deficiency) of Revenues
and Transfers over Expenditures (22,102,565) (13,774,363) (14,681,440) (14,460,237) I, 147,847
Capital Leases 8,714,556 3,011,141 3,721,262 5,119,980 3,534,048
Transfer In [9,303,155 17,729,361 14,536,071 13,325,046
Transfer Out (5,996,006) (6,129,512) (4,374,956) (1,436,498)
Fund BalPDce al Beginning ofYear 19,962,275 19,125,648 19,924,711 17,376,420 12,694~525
Fund Balence at End of Year s 19,881,415 19,962,275 19,125,648 19,924,711 17,376,420
Undesignaled Fund BalBnCe 1"1 s 19,881,415 19,962,275 19,125,648 19,924,711 17,376,420
l•l The City's finllilcia\ policies target a General Fund undesignated balance of at least 20% of GenetRI Fund revenues. The undesignated fund
balance is at 97.25% of the target established by the City's financial policies.
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TABLE 14-MUNICIPAL SALES TAX HlSTORY
The City h&s adopted the Municipal Sales and Use Tax Act, Chapter 321, Texas Tax Code, which grants the City the power to
impose and levy a I% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not
pledge{! to the payment of the Obligations or other debt of the City. In addition, in January 199.S, Lubbock approved the
imposition of an additional sales and use tax of one-eighth of a cent e.s authorized by Chapter 323 Texe.s Tax Code, ll!! amended.
Collection for the a.clditionaJ 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 tox. At an election held in the
City on November 4, 2003, voters approved an additional one-quarter cent sales and we tax. with the proceeds to be dedicated to
the reduction of ad valorem taution, and an additionaJ one-eighth cent sales and use tax under Section 4A of the Texll.i
Development Corporation Act (Article 5190.6, Texll.i Revised Civil Statutes), to be used for economic d,evelopment in Lubbock.
The City began to receive proceeds of these I.Bxes in October 2004. Collection and enforcement of the City's sales mis effected
through the offices of the Compl?Oller of Public Accounts, State ofTe:ir.as. The Comptroller remits the proceeds of the tax to the
City on a monthly basis after the deduction of a 2% service fee. HistoricaJ collections of the City's locaJ Sales and Use Tax are
shown below:
%or Equi\l1lleot or
FYE Total AdVaJorem Ad Valorem Per
JO-Sep CoUected ,-i T•:1 Le!l'. Tu Rate Capita(b•
2004 S 30,554,632 70.67 $ 0.3819 1-48.11
2005 41,803,092 105.09 0.4793 199.90
2006 45,576,582 108.60 0.4828 215.81
2007 47,780,448 103.72 0.4729 224.99
2008 50,548,865 102.75 0.4592 235.28
2009 50,705,301 98.23 0.4300 232.24
t•1• ExQJu,;t,:,, b llJ80 wt recciplll 111d mixed beverage tax.
!bl Based on populadoo ettirnalles of the City.
Effective os of October I, 2006, the sales tlx allocation for the City is ll!! follo-ws:
City Sales & Use Tax
City Sales & Use Tax for Property Ta::i:: Relief
City Sales & Use Tax for Economic Development
County Sales & Vse Tax
Siate Sales & Use Tax
Total
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Sales Tax
Allocation%
l.000
0.375
0.125
o . .soo
6.250
8.250
FINANCIAL POLICIES
POLICIES
Bti.fis of Accounting . . . The accounting policies of the City conform to generally accepted ~ounting 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 for each of the fiscal years ended September 30, 1984 through September 30, 2002 and September 30, 2004
through September 30, 2008. The City will submit the City's 2009 report to GFOA to determine ils eligibility for another
certi ti cate.
Comprehensive Annug/ Financial Report (CAFRJ ... Beginning with the year ended September 30, 2002, the City's CAFR has
been presented under the Governmental Accounting Standard Board ("GASB") Statement No. 34, Basic Financial Statements -
and MIJnagement 's Discussion and AIIDlysis -for State and Local Governments, GASB Statement No. 37, Basic Financial
Statements -and Management's Discwsion and Analysis -for State and Local Governments: Omnibu.s, and GASB Statement
No. 38, Certain Fi11Dncial Note Disclosures. For additional information reguding accounting policies that are applicable to the
City, see Note I. "Summary of Significant Accounting Policies" in the financial statements of the City attached as Appendix A.
General Fund Balance ... The City's objective is to maintain an unreserved/undesignated fund balance at a minimum of an
amount equal to two months budgeted operating expenditures to meet unanticipated contingencies and fluctuatiom in revenue.
The City's General Fund currently has an unreserved/undesignated fund balance that is at 97.2~·o of the target established by the
City's financial policies.
Water. Wastewater. Storm Water. Solid Wti.fte and Airport Enterprise Fund Balances .•. It is the policy of the City to maintain
appropriable net assets in the Water !illld Wastewater funds in an amount equal to 2~% of operating revenues for unfore»een
contingencies. The City's goal of appropriable net assets in the Solid Waste, Airport, and Stonn Water funds is an amount equal
to 15% of regular operating revenues. The City cwrently exceeds its policy on appropriable net assets and unrestricted net assets
for its various enterprise funds. Acconling to unaudited numbers for FY 2009, the target net assets by policy and current
appropriable net assets for the Water, Wastewater, Stonn Water, Solid Waste and Airport enterprise funds are as follows:
Ente!]!rise Fuod Tar~ Nd Assets bl'. Polle~ Appropriable Net Assen
Water $13.0 million $16. 3 million
Wastewater $6 .l million $10.3 million
Storm Water $ l. 2 million $6.7 million
Solid Waste $2.5 million $7 .6 million
Airport $1.0 million $4.5 million
Electric Enterprise Fynd Balance ... It is the policy of LP&L to maintain unrestricted net assets set by the City Charter. The
LP&L Governance Ordinance was amended in November of 2008 to include, among other things, changes to the ~uirements
regarding the reserve funds LP&L maintains. The LP&L Governance Ordinance requires the Electric Utility Board to (i)
IIlllintain sufficient operating cash to satisfy all current accounts payable and (ii) maintain a general reserve fund that is eqU11.l to
the greater of four months gross retail electric revenue (ORR) as determined by taking the average monthly ORR from the
previous fiscal year or $50 million dollars. This general reserve fund shall be use.cl for operational purposes, rate stabilization and
for meeting the electric utility demand of any rapid or unforeseen increase in residential and/or commercial development.
According to unaudited numbers for FY 2009, the taiget net assets by ordinance and cwrent unrestricted net assets for LP&L are
as follows:
Enterprise Fund
LP&L
Target Net Assetli by Polley
$50.0 million
u nrestril:ted Net Assets
$62.5 million
At the end ofFY 2009, LP&L fully funded ils general reserve fund of$50 million.
Entemrise Fund Revenues ... It is the policy of the City that each of the Electric, Water, Solid Waste a.ad Sewer funds be
operated in a !Ililll.0er that results in self sufficiency, without the need for additional monetary transfers from other funds
(although the Electric System received transfers from the General Fund during FY 2003). Such self sufficiency is to be obtained
through the rates, fees and charges of each of these enterprise funds. For purposes of determining self sufficiency, cost recovery
for each enterprise fund includes direct operating and maintenance expense, ag well as indirect cost recovery, in-lieu of tramfeni
to the General Fund for property and franchise tax payments, capital expenditures and debt service payments, where appropriate.
Rate increases may be considered in future budgets as costs may warrant, including specifically the costs related to fuel charges
that may affect LP&L and the co.5t of providing service.
Debt Service Fw,d Balance ... A reasonable debt service fund balance is IIlllintained in order to compensate for unexpected
contingencies.
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Budgetary Procedures ... The City follows these procedures in establishing operating budgets:
I) Prior to August 1, 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 1 the budget is legally enacted through passage of 8l'J ordinance.
4) The City Manager is authorized to transfer budgeted amounts between accounts below the department level. Any tramfer of
funds between departments or higher level are presented to the City Council for approval by ordinance before the funds are
transferred or expended. Expenditures may not legally exceed budgeted appropriations at the fund level.
5) Fonnal budgetary integration is employed BS 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 bBSis consistent with generally accepted accounting principles.
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 I?lCeived the Distinguished Budget Presentation Award from the GFOA for the following
budget yelllS beginning October 1, 1983-88 and 1990-08.
Jmuronce and Risk Management ... The City is self-insured for public entity liability lll'Jd health benefits coverage. Risk
management purchases an $18 million excess insurance policy for liability claims in excess of $500,000, per occurrence. Airport
liability insurance and worlcers' compensation is insured nnder guaranteed cost policies. 1ne Health Benefits are covered by a
:-i self insured program with a $24,945,725 cap and a $350,000 individual cap for 2010. The City maintains insurance policies with
large deductibles for fire and extended property coverage and boiler and 1J13Chinery coverage.
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An lnsut8tlce Fund has been established in the Internal Service Fund to account for insurance programs and budgeted transfers
a.re made to this fund based upon estimated payments for claim los..ses.
At September 30, 2009 the unaudited total Net. Assets oftbese insurlll'Jce funds were as follows:
Self-insurance -health $8,699,962
Self-insurance -risk management $4,626,254
The City obtains an actuarial study of its risk management fund (the "Risk Fnnd'') every year. In FY 2005, an actuarial study was
conducted that considered the types of insurance protection obtained by the City, the loss exposure and loss history, and claims
being paid or reserved that are not covered by insurlll'Jce. 1ne 2009 actuarial review recommended that the liabilities of the Risk
Fund be increased to $3,371,451 from $2,845,679 to the minim.um expected confidence level of the Government Accounting
Standard Board Statement Number 10 (''GASB 10''), which requires maintenance of risk management assets at a level
representing at least a 50% confidence level that all liabilities, if presented for payment immediately, could be paid. The Rislc
Fund he..s net assets restricted for in:iUrance claims of $1,042,459 over the recommended funding level. Given the risk net assets
balance, the City exceeds the minimum GASB 10 nlquirement.
ADMINISTRATION
Since FY 2004, the City has implemented a number of significant changes in the administration and management of the City's
budgeting and fiscal needs. Certain of the measures implemented by the City to strengthen this process we described below.
Establishment ofAudit and Investment Committee ... Through the adoption of a I?lSO!ution in June 2003, the City Council
established an independent Audit and Investment Committee composed of five membeni. The Audit and Investment Committee
is charged with maintaining an open avenue of communication between the City Cowicil, City Manager, internal auditor and
independent external auditor to assist the City in fulfilling its fiduciary responsibility to its citizens. Toe committee has the
power to conduct or authorize investigations into the City's financial perfonnances, internal fiscal controls, exposure Md risk
assessment. The committee is appointed by the City Council and informally reports to the City Manager. Toe establishment of
the committee is designed to serve as an additional check on the preparation of the City's financial statements and to avoid
weaknesses in the City's internal controls, including the statu.i and adequacy ofinfonnation systems and security.
The chair of the committee is appointed by the Mayor and the other positions are filled by a vote of the City Council. At least
two members of the committee are required to have a background in financial reporting, accounting or auditing, at least one
member is required to be a certified public accountant, and at least one member is required to have an extensive background in
investments. The current membership of the committee consists of: Jim Brunjes, Senior Vice Chancellor lll'Jd Chief Finlll'lcial
Officer for the Tex.as Teeh University System; Richard Griffith, ownel' of Richard Griffith Investments; R.J. Givens, a real estate
agent in the City; Kim Turner, the Director of Internal Audit at Texas Tech; and John Zwiacher, a member of the Board of
Directors ofLP&L. Mr. Zwiacber is the chair of the committee.
Monthly A.uessments of Revenues and Expenditures . . . Since FY 2006, City management assesses monthly the budgeted
expenditures and revenues of the City, and incorporates budget adjustments a.s necessary to bettel" match expenditures with
revenues. Transfers within the various Funds of the City are implemented on 8l'J as-needed basis to take into account changes in
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revenues projected to be received throughout a fiscal year as well as efficiencies realizerl in the provision of services to the
citizens of the City.
Truth-in-Taxation ... In FY 2009, the City's total tax rate was set at $0.44640 per $100 taxable assessed valuation, the same as in
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FY 2008. The City's tax roll increased $329.S million, or 2.8%, from FY 2008 to FY 2009. The City Council, on June 12, 2003, 0
passed a resolution affirming their support for truth-in-taxation. The goal of this resolution is to allow the citizens to be better
informed about the real needs of City government and if the increased revenue from increased appraisal values is truly neces.illC)'.
The resolution goes on to provide that each year the tax rate should be adopted based on the actual needs of government. The
goal was affirmed in April 2004 in a resolution that stated the City Council has supported, as well as taken action, to provide tax
relief to property owners within the City. In addition, the City Council recognized the need for the City to be autonomous in its
ability to provide the public safety, health, and quality oflife for its citizens.
INVESTMENTS C
The City invests its investable funds in investments authorized by Texas law, including specifically the Public Funds Investment
Act (Chapter 2256, Texas Government Code, and referred to herein as the "PFIA'j, in accordance with investment policies
approved by the City Council of the City. 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, including letters of credit, of the United States or its agencies C
and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collaterali:u!d mortgage
obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is
guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are
unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their
respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of
any state rated as to investment quality by a nationally recognized investment rating finn not less than A or its equivalent, (6)
bond3 issued, assumed, or gue.ranteed by the State of Israel, (7) certificates of deposit that are issued by a state or national bank C
domiciled in the State of Texas, a savings bank domiciled in the State of Texas, or a state or federal credit union domiciled in the
State of Texas and 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 Bonds described in clauses (1) through (6) or in any other manner and amount
provided by law for City deposits, (i) that are issued by an institution that has its main office or a branch office in the State of
Texas and are guaranteed or i=red by the Federal Deposit Insurance Corporation or the National Credit Union share Insurance
Fund, or are secun:d as to principal by obligations described in clames (I) through (6) or in any other manner and amount
provided by law for City deposits or (ii) where (a) the funds are invested by the City through a depository irutitution that has a C
main office or branch office in the State and that is selected by the City; (b) the depository irutitution selected by the City
arranges for the deposit of funds in one or more federally insured depository instirutions, wherever located, for the account of the
City; (c) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States
or an instrumentality of the United States; (d) the depository institution acts as a custodian for the City with respect to the
certificates of depOliit; and (e) at the same time that the certificates are issued, the depository institution selected by the City
receives deposits from customers of other federally insured depository institutions, whevever located, that is equal to or greater
than the funds invested by the City through the depository institution selected under clause (ii) (a.) above (8) fully collatemlized C
repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are
placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) securities
lending programs if (i) the securities loaned under the program are 10(1'/4 collatera.lized, a loan made under the program allows
for tennination at any time and a loan made under the program is either secured by (a) Bonds that are described in clauses (1)
through (6) above, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a. nationally
recognized investment rating finn at not less than "A" or its equivalent or (c) ca.sh invested in Bonds described in clauses (1)
through (6) above, clauses (11) through (13) below, or an authorized investment pool; (ii) securities held as collateral under a C
loan are pledged to the City, held in the City's name and deposited at the time the investment is made with the City or a third
party designated by the City; (iii) a loan made under the program is placed through either a primary government securities dealer
or a financial institution doing business in the State of Texas; and (iv) the agreement to lend securities has a term of one year or
less, (I 0) bankers' acceptances with the remaining tenn of270 da.ys or less, if the short-tenn obligatiorui of the accepting bank or
its parent are rated at least A-1 or P-1 or the equivalent by at lea.st one nationally recognized credit rating agency, (11)
commercial paper that is rated at least A-I 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 C
U.S. or state bank, (12) no-load money market mutual fund3 regulated by the Securities and Exchange Commission that have a
dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a
stable net asset value of $1 for each share, and (13) no-load mutual funds registered with the Securities and Exchange
Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the
preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating
finn of not less than AAA or its equivalent. In addition, bond proceed3 may be invested in guaranteed investment contracts
secured by obligations of the United States of America or its agencies and instrumentalities, other than the prohibited obligations C
described in the next succeeding paragraph.
The City may invest in such obligations directly or through government investment pools that invest solely in such obligations
provided that the pools = 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
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the outstanding principal balance of the underlying mortgage-be.eked security collateral and pays no principal; (2) obligations
whose payment represents the principal stream of cash flow from the underlying morq;age-backed security and benrs no interest;
(3) collaieralized n:io~age obligations that have a stated final maturity of greater than 10 yea.n; and (4) collateralized mortg-age
obligations the interest rate of which is d.etennjned by an indu that adjusts opposite to the changes in a market index.
INVESTMENT POLICIES
Under Texas law, the City is required to inv~t its funds under written investment policies that primarily emphasize safety of
principal and liquidity; that address investment diversification, yield, maturity, and the quality and capabilfty 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 fonnaUy adopted "Investment Strategy Statement" that specifically addresses each funds'
investment. Each Investment Strategy Statemeot will describe its objectives concerning: ()) suitability of investment type, (2)
preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6)
yield.
Under Texas law, City investments must be made ""with judgment and ~. under prevailing circumstances, that a perSon of
prudence, discretion, and intelligence would exercise m the management of the person's own affairs, not for speculation, but for
invesanent, consid,:ring the probable safety of capital and the probable income to be derived," At least quarterly the investment
officm of the City shall submit an investment report detailing: (I) the investtnent position of the City; (2) chat all iovestment
officers jointly prepared and signed the report; (3) the beginning market value, any additions and changes to martet 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; (1) the maturity date of each separately invested asset; (6) the account or fund or pooled fund group
for which each individual investment was acquired, lltld (7) the compliance of the investment portfolio as it relates to: (a) adopted
investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City
Council.
ADDITIONAL PROVJSIONS
Under Texas law, the City is additionally required to: (I) ;mou.aUy review it& adopted policies and strategies; (2) require any
invesanent officers' with personal business relationships or relatives with finm seeking 10 sell securities to the entity co disclose
the relationship and file a :statement with the Texas Ethics Commission ar:id the Cicy Council; (3) require tbe registered principal
of firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that
reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) de\jver a written
statement attesting to these requirements; (4) perform an annual andit of the manaaement controls on investments nnd adherence
to the City's investtnent policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer and investment
officers; (6) restrict reverse repurchase agreements to not more tlwn 90 days and restrict the investment of ~verse repurchase
agreement funds to no greater than the tenn of fhe revenie ~purchase agreement; (7) restrict its invesanent in murual funds in the
aggregate to no more than 15 percent of its moolbly overage fund balance, excltlding bond proceeds and reserves Estimated Fair
Book Value Market· Vwue and other funds held for debt ser;ice, and to invest no portion of hood proceeds, reserves and funds
held. for debt service, in mutual funds; and (8) require local government investment pools to conform to the new disclosure,
rating, net asset value, yield calculation, and advisory board requirements, (9) adopt an ordinance or resolution stilting that it has
reviewed its investment policy and invesanent srntegies and records any changes ma.de 10 either its investment policy or
investment strflteSY in the said ordinance or resolution; and (10) at least annually review, revise and adopt a list of qualifie;:l
brokers that are outhorized to engage in invesanent transactions with the City.
TABLE 15 · CURRENT INVESTMENTS
As of October 31, 2009, the City's investable fimds were invested in the following catego·ries:
TYpe
United States Agency Obligations
Money Market Muruel funds "'1
u:,ca! Government Investment Pools 14
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Value
S 77,000,000
3,724,955
264,977,.250
$ 345,702.205
BookVahae
Value
77,211,464
3,724,955
264,977,250
345,913,669
% ofTobll
Book Valve
22.32
l.08
76,60
100,00
Estimated Market Value 1111
Valve
77,812,950
3,124,9SS
264,977,250
346,515,155
% ofTolal
Markel Value
22.46
1.07
76.47
100.00
<•> Market prices arc obtained from Wells Fargo Brokerage. No funds are iovested in mortgage backed securities. The City holds all i0~sttnenl3
to maturity which mioimiz.cs the risk of marut price volatility.
(b) Money Market fUDdi are beld at Wells Fa.rgo Bank, Texas N.A.
<•J Local governmcot investment pools co11Sist of entities whose inveslIIICllt objectives are preservation and se.fc:ty of principal, liquidity and yield.
The pools eeM: to m4lntaln a $ 1.00 value per share iu required by lhe PFIA.
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TAXMATTERS
TAX EXEMPTION OF SERIES lOlOA BONDS AND SERIES lOlOA CERTIF1CATES
In the opinion of Vinson & Elkins L.L.P., Bond Counsel, (i) interest on the Series 2010A Bonds and the Series 2010A
Certificates (the ''Tax-Exempt Obligations'') is excludable from gross income for federal income tax puq,oses under existing law
end (ii) interest on the Tax-Exempt Obligations is not (A) a specific preference item subject to the alternative minimum tax on
individuals and corporations, or (B) included in a corporation's adjusted current earnings for purposes of the alternative minimum
tax.
The Internal Revenue Code of 1986, as amended (the "Code'') imposes a number of requirements that must be satisfied for
interest on state or local obligations, such as lhe Tax-Exempt Obligations, to be excludable from gross income for federal income
tax purposes. These requirements include limitatiorui on the use of bond proceeds and the source of repayment of bonds,
limitations on the investment of bond proceeds prior lo expenditure, a requirement that excess arbitrage earned on the investment
of bond proceeds be paid periodically to lhe United States and a requirement that the issuer file an information report with the
Internal Revenue Service (the "Service"). The City has covenanted in the Ordinances that it will comply with these requirements.
Bond Counsel's opinion will assume continuing compliance with the covenants of the Ordinances pertaining to those sections of
the Code that affect the exclusion from gross income of interest on the Tax-Exempt Obligations for federal income tax purposes
and, in addition, will rely on reprexntations by the City, the City's Financial Advisor and the Underwriters with respect to
matters solely within the knowledge of the City, the City's Financial Advisor and the Underwriters, re3pectively, which Bond
Counsel has not independently verified. If the City should fail to comply with the covenants in the Ordinances or if the foregoing
representations should be detennined lo be inaccurnte or incomplete, interest on the Tax-Exempt Obligations could become
includable in gross income from the date of delivery of the Tax-Exempt Obligations, regardless of the date on which the event
causing such includability occurs.
Except as stated above, Bond Counsel will express no opinion as lo any federal, state or local tax consequences resulting from the
receipt or accrual of interest on, or acquisition, ownership or disposition of, the Tax-Exempt Obligations.
Bond Counsel's opinions are based on existing law, which is subject to change. Such opiniorui are further based on Bond
Counsel's knowledge of facts as of the date thereof. Bond Counsel asswnes no duty to update or supplement its opinions to
reflcet any facts or circumstances that may thereafter come lo Bond Counsel's attention or lo reflect any changes in any law that
may thereafter occur or become effective. Moreover, Bond Counsel's opiniorui are not e. guarantee of result and are not binding
on the Service; rather, such opinions represent Bond Counsel's legal judgment based upon its review of existing law and in
reliance upon the representations and covenants referenced above that it deems relevant to such opinions. The Service ha..i an
ongoing e.udit program to detennine compliance with rules the.t relate to whether interest on state or local obligations is
includable in gross income for fedeni.l income tax purposes. No assurance can be given regarding whether or not the Service will
commence an audit of the Tax-Exempt Obligations. If an audit is commenced, in accordance wilh its current published
procedun:s tbe Service is likely to treat the City as the taxpayer and the Owners me.y not have a right lo participate in such audit.
Public aWl!I"eness of any future audit of the Tax-Exempt Obligations could adversely affect the value and liquidity of the Tax-
Exempt Obligations regard]ess of the ultimate outcome of the audit.
ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE TAX-EXEMPT OBLIGATIONS
CollateraJ Tax Conaequenees
Prospective purchasers of the Tax-Exempt Obligations should be aware tbat the ownership of tax-exempt obligations may result
in collateral federal income tax consequences to financial institutions, life insurance and property and casualty insurance
companies, certain S corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad
Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness ID purchase or carry tax-exempt
obligations, and individuals otherwise qualifying for the earned income credit. In addition, certain foreign corponi.tions doing
business in the United States may be subject to the "branch profits tax" on their effectively connected eamin~ and profits,
including tax-exempt interest such as interest on the Tax-Exempt Obligations. These categories of prospective purchasers should
consult their own tax advisorn as lo the applicability of these consequences. Prospective purchasers of the Tax-Exempt
Obligations should also be aware that, under the Code, taxpayers are required to report on their returns the amount of tax-exempt
int=t, such as interest on the Tax-Exempt Obligations, received or accrued during the year.
TH Accounting Treatment or Original Issue Premium
The issue price of all or a portion of the Tax-Exempt Obligations may excud the stated redemption price paY11ble at maturity of
such Tax-Exempt Obligations. Such Tax-Exempt Obligation-. (the "Premium Oblige.tions'1 are considered for federal income tax
purposes to have "bond premium" equal to the amount of such excess. The basis of a Premium Obligation in the hands of an
initial owner is reduced by the amount of such excess that is amortized during the period such initial owner holds such Premium
Obligation in determining gain or loss for federal income tax purposes. This reduction in basis will increase the amount of any
gain or decrease the amount of any loss recognized for federal income tax purposes on the sale or other taxable disposition of a
Premium Obligation by the initial owner. No corresponding deduction is allowed for federal income tax purposes for the
reduction in basis resulting from amortizable bond premium. The amount of bond premium on a Premium Obligation that is
amortizable each year ( or shorter period in the event of a sale or disposition of a Pmnium Obligation) is determined using the
yield to maturity on the Premium Obligation based on the initial offering price of such Obligation,
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The federal income tu. consequences of the purchase, ownership and redemption, sale or other disposition of Premium
Obligations that are not purchased in the initial offering at the initial offering price may be determined according to rules that
differ from those described above. All owners of Premium Obligations should consult their own tax advisors with. respect to the
determination for federal, state, and local income taX purposes of amortized bond premium upon the redemption, sale or other
disposition of a Premium Obligation and with respect IO the federal, state, loca~ Md foreign tax consequences of the purcwe,
ownership, and sale, redemption or other dispos.ition of guch Premium Obligations.
Long Fint Coupon Consequences
Because the nrst interest payment on the Tn•Exempt Obligations will be made more than one year after the issue date, the Tax-
Exempt Obligations may be treated as issued at an "original issue discount" under current Treasury Regu]ations. Although the
interest on the Tax-Exempt Obligations will be excludnble from gross income as discussed above, the interest on the To.x.-Exempt
Obligations may be considered "original issue discount" for federal tax pwposes. As a result, special tax accounting rules for
"original issue discount" may require a portion of certain interest payments to be taken inl:o account for the taxable year or years
prior to the taxable year during which the interest payment is received for pwpo&es of any altc:mative minimum taxable Income
consequenc;es for corporations and any collateml federal income tax consequences for certain purchasers (referred IO in the
preceding paragraph of this section). In addition. this treatment may aJso give rise to taxable ''man.:et discount" to seoonda,y
market puccba.sen of Tax-Exempt Obligations. Prospective pl:ltChasera should consult their tax advison regarding the application
of the "maricec discount" rules to the Tax-E;,:.empt Obligations. For a discussion ofth.e tax accounting treatment of"original iMue
discount" on the Tax-Exempt Obligations in the hands of the initial purchaseB that acquire Tax-Exempt Obligatiorui at 1heit issue
price, sec the cli5Cl.1Ssion below under" -Tax Accounting Treatment of Original Issue Discount Tax-Exempt Obligations.''
Tax Accounting Treatment of Original Issue Discount Tax-Exempt Obligations
The issue price of all or a portion of the Tu-Exempt Obligations may be less thM the stated redemption price payable a.t maturity
of such Tax-Exempt Obligations (the "Original Issue Discount Tax-Exempt Obligations"). In ruch case, the difference between
(i) the amount payable at the maturity of each Original Issue Discount Tax-Exempt Obliiation, and (ii) the initial offering price
to the public of such Original Issue Discount Tax-Exempt Obligation constitutes original issue discount with re.spea to such
Original Issue Discount Tax-Exempt Obligation in the hands of any owner who has purchased such Original Issue Discount Tu-
Exempt Obligation in the initial public offering of the Tax-Exempt Obligations. Generally, suc.h initial owner is entitled to
exclude from gross income (as defined in Section 61 of the Code) an amount of income with respect to such Original lswe
Discount Tax-Exempt Obligatioo equal to that portion of che amount of such original islSlle discount allocable to the period that
such Original Issue Discount Tax-Exempt Obligation continues to be owned by sucb owner. Because original issue discount is
treated as inten,st for federal income tax pw-poses, the discussion rega.nling interest on the Tax-Exempt Obligations under the
captions "TAX MATTERS -TAX EXEMPTION OF SERIES 2010A BONDS A.ND SERIES 2010A CERTIFICATES" and
"TAX MATTERS -ADDITIONAL FFDERAL INCOME TAX CONSIDERATIONS RELATING TO 1HE TAX-EXEMPT
OBUGATIONS • Collateral Tax Consequences" generally applies, and should be oonsidered in connection with the discussion
in this portion of the Official Statement.
In the event of the redemprion, sale or other taxable disposition of such Original Issue Discount Tax-Exempt Obli&).tions prior to
stated maturity, hoy.ever, the amount realized by such owner in exces..s of the basis of such Original Issue Discount Tex-1:Jtempt
Obligations in the hand$ of such owner ( adjusied upward by the portion of die original is&uc discount allocable to the period for
which such Original Issue Discount Tax-Exempt Obligation was held by such initial owner) is includable in gross income.
The foregoing discussion assumes that (i) the Underwriters have purchued the Tax-EJtempt Obligations for contemporaneous
sale to the public and (ii) all of the Original Issue Discount Tax-~empt Obligations have been initially offered, and a subst.mtial
amoWlt of eacb maturity thereof bas been sold, to the general public in arm 's-length transactions for a price (and with no other
consideration being included) not more than the initial otfering prices thereof stated in this Official Statement. Neither r.be City
nor Bond Counsel has ma.de any investigation or offers 11J1Y comfort that the Original Issue Dis,count Tax-Exempt Obligations
will be offered and sold in accordance with such assumptions.
Under existing law, the original issue discount on each Original Issue Discount Tax-Exempt Obligation is accrued daily to the
stated maturity thereof (in amounts calculated as described below for each six-month period ending on the dale before the
semiannual annivenary dates of the date of lhe Tax-Exempt Obligations and ratably within each such si:x-month period) and the
accrued amowtl is added to an initial owner's basis for such Original Issue Discount Tax-E~empt Obligation for pwpo~s of
determinirtg i.he amount of gain or loss recognized by such owner upon the redemption, sale or other clisposirion tbm:of. The
amount to be added to basis for each accrual period is equal to (i) the sum of the issue price and the amount of original isrue
discount accrued in prior periods multiplied by the yield to stated maturity (detennined on the basis of compounding at the close
of each accrual period .and properly adjusted for the length of the accrual period) less (ii) the amounts payable as current interest
during such accrual ·period on such Tax-Exempt Obligation.
The federal income tax comequences of the purchase, ownership, and redemption. sale or other disposition of Original Issue
Discount Tax-Exempt Obligations that are not purchased in the initial offering at the initial offering price may be determined
aecording to rules that differ from those described above. All owners of Original Issue Discount Tax-Exempt Obligations should
consult their own tu advisors with respect to the determination for federal, state, -and local income tax pwposes of interest
accrued upon redemption, sale or other disposition of mch Original Issue Discount Tu-Exempt Ohligatiom and with respect to
the federal, sr.a.te, local and foreign tax consequences of the purchase, ownership, redemption. sale or other disposition of such
Ori.ginal Issue Discount Tax-Exempt Obligations.
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SERIES 2010B BONDS AND SERIES 2010B CERTIFICATES
The. following discussion describes certain U.S. federal income tax considerations of United States persons that are Owners of the
Series 2010B Bonds and the Series 2010B Certificates (the ''Taxable Obligations"). This discussion is based upon the provisions
of the Code, applicable Treasury Regulations promulgated and proposed thereunder, judicial authority and administrative
interpretations, as of the date hereof, all of which are subject to change, possibly with retroactive effect, or are subject to different
interpretations. Owners cannot be assured that the Service will not challenge one or more of the tax consequences described
herein, and neither the City nor Bond Counsel ha.s obtained, nor does the City or Bond Counsel intend to obtain, a ruling from the
Service with respect to the U.S. federal tax consequences of acquiring, holding or disposing of the Taxable Obligations. This
summary is limited to initial holders who purchase the Taxable Obligations for ca.sh at their "issue price" (which will equal the
first price at which a substantial portion of lhe Taxable Obligations is sold for cash to persons other than bondhouses, brokers, or
similar persons or organizaticms acting in the capacity of underwriters, placement agents, or wholesalers) and who hold the
Taxable Obligations as capital assets within section 1221 of the Code (generally property held for investment).
This summary does not discuss all of the tax consequences that may be relevant to an Owner in light of its particular
circumstances or to Owners subject to special rules, such as certain financial institutions, insurance companies, tax-exempt
organizations, foreign taxpayers, taxpayers who may be subject to the alternative minimum tax or personal holding company
provisions of the Code, dealers in securities or foreign currencies, or Owners whose functional currency (as defined in section
985 of the Code) is not the U.S. dollar, or to an Owner that might have purchased the Taxable Obligations in circumstances that
would give rise to original interest discount, acquisition premium. market discount or amortizable premium. Except as stated
herein, this summary describes no federal, state or loeal tax consequences resultmg from the ownership of, receipt of interest on,
or disposition of, the Taxable Obligations. Investors who are subject to special provisions of the Code should consult their own
tax advisors regarding the tax consequences to them of purchasing, holding. owning and disposing of the Taxable Obligations,
including the advisability of making any of the elections described below, before detennining whether to purchlllile the Taxable
Obligations.
The Code generally defmes a ''United States penon" as (i) an individual who, for U.S. federal income tax purposes, is a citizen or
resident of the United States, (ii) a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, that
was created or organized in or under the laws of the United States, and any state thereof or the District of Columbia or any
political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source
and (iv) a trust whose administration is subject to the primary supervision of a United State court and which has one or more
United States persons who have the authority to control all substantial decisions of the trust. .
If a partnership (inclnding an enrity treated as a partnership for U.S. federal income tax purposes) holds Taxable Obligations, the
tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Any Ov.ner of
the Taxable Obligation that is a partner ofa partnership that will hold Taxable Obligations should consult its tax advisor.
This discussion does not addn:ss any tax considerations arising under the laws of any foreign, state, local or other jurisdiction.
In General
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Interest on a Taxable Obligation generally will be taxable in each year the Taxable Obligation is held by the Owner as ordinary
income without lllgacd to the time it otherwise accrues or is received in accordance with such Owner's regular method of C
accounting for U.S. federal income tax purposes.
Payments of Interest
Stated interest paid (and other original issue discount) on each Taxable Obligation will generally be taxable in each tax year held
by an Owner as ordinary interest income without regard to the time it othel'\Vise accrues or is received in accordance with the
Owner's method of accounting for federal income tax purposes. Special rules governing the treatment of original issue discount
are described below.
Lo111g Fint Couipon Consequiences
Because the first interest payment on the Taxable Obligations will be made more than one year after the issue date, the Taxable
Obligations may be treated as issued at an "original issue discount" under current Treasury Regulations. For a discussion of the
tax accounting treatment of"original issue discount" on the Taxable Obligations in the hands of the initial purchasers that acquire
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Taxable Obligations at their issue price, see the discussion below under" -Original Issue Discount." C
Original Issue Discount
Certain Taxable Obligations may be sold at a discount below their principal amount. As provided in the Code and the Treasury
Regulations, the excess of lhe "stated redemption price at maturity'' (115 defined below) of each such Taxable Obligation over its
issue price will be original issue discount if such excess equals or exceeds a de minimis amount (i.e., one quarter of one percent
of the Taxable Obligation's stated redemption price at maturity multiplied by the number of complete years to its maturity). A
Taxable Obligation having original issue discount equal to or greater than a de minimis amount will be referred to an "Original
Issue Discount Taxable Obligation." Owners of Taxable Obligations that are not Original Issue Discount Taxable Obligations
will include any de minimis original issue discount in income, as capital gain, on a pro rat.a basis as principal payments are made
on the Taxable Obligation. The stated redemption price at maturity of an Taxable Obligation includes all payments on the
Taxable Obligations olher lhan the stated interest amounts, which are based on a fixed rate and payable unconditionally at the end
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of each six-month accrual period.
Except as described below, Ownea; of Original Issue Discount Taxable Obligations will have to include in gross income
(irrespective of their method of accounting) a portion of the original issue discount of the Original Issue Discount Taxable
Obligations for each year in which Original Issue Discount Taxable Obligations are held, even though the case to which such
income is amibutable will not be receive until maturity of the Original lssu1: Discowit Taxable Obligations. The amount of
original issue discount included in income for each year will be calculated under a constant yield to maturity foonula thllt results
in the allocation of less original issue discount to earlier yean; of the terms of Original Issue Discount Taxable Obligations and
more original is.sue discount to the later years.
The foregoing summary is based on the assumptions that (i) the Underwriters have purchased the Taxable Obligations for
contemporaneous sale to the general public and not for investment pwposes, (ii) all of the Taxable Obligations have ber:n offered,
and a substantial amount of each maturity thereof has been sold, to the general public in arm'i-length transactions for a cash price
(and with no other consideration being included) equal to the initial offering price thereof stated on the inside cover page of this
Official Statement, lllld (iii) the respective initial offering prices of the Tax.able Obligations to the gene.ml public are equal to the
fair market va.lue thereo[ Neither ,the City nor Bond CQWlSel bas made llllY investigation or off= and assurance lh.at the TBMble
Obligations wm be offered and sold in accordance with such a.ssumptions.
Accrual Method Election
Under the Treasury Regulations relating to original issue discount, an Owner that uses an accrual method of accounting would be
pennitted to elect to include in gross income its entire return on a Taxable Obligatiou (i.e., the excess of all remaining psyments
to be received on the Taxable Obligation over the amount pa.id for the TBXllble Obligation by such Owner), based on the
compounding of interest at a constant rate. Such an election for an Taxable Oblig11tion with amortiz.able bond premium (or
market discoimt) would result in a deemed election for all of the Owner's debt insttum.ents, witb amortizable bond premiwn (or
market discount) and could be revoked only with the pennission of the Service with ri:spect to debt instruments acquired after
revocation.
Di~position or Retirement
Upo·o the sale, exchange or certain other dispositions of a Taxable Obligation, or upon the retirement of a Taxable Obligation
(including by redemption), an Owner will generally recognize capital gain or loss.. This gain or loss ""ill equal the diffen:net:, if
any, between the Owner's adjusted tax basis in the Taxable Obligation end the proceeds the Owner receives, excluding any
proceeds aa:ributable to accrued interest, which will be recognized as ordinary interest income to the extent the owner ba.5 not
previously included in the accrued interest income.
The proceeds !ID Owner receives will include the amount of any ca.sh and the fuir m!lrlcet value of any other property received for
the Tax.ablo Obligation. Notwithstanding the diSl:\l$sion under ''Original Issue Discount," an Owner's tax basis in the TllXllble
Obligation will generally equal the amount the Owner paid for the Taxable Obligation. The gain or loss will be long-tenn capital
gain or loss if the Owner held the Taxable Obligation for more than one year. Long-term capital gains of individuals, estates and
trusts currently are subject to a reduced tax rate. The deductibillty of capital los.se.i may be subject to limitation.
) Defea.sanee of the Taiab•e Obligations
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Defease.nce of any of the Taxable Obligations may result in a reissuance thereof, for U.S. federal income tax pu,poses, in which
event e.n Owner inay recognize taxable gain or loss as described above, even if such Owner docs not receive any cash in such
defeasance transaction.
Information Reporting and Backup Withholding
lnfonnation reporting will apply to payments of interest on, or the proceeds of the sale or other disposition of, the Taxable
Obligations held by an Owner, lllld backup withholding may apply unless such Owner provides the appropriate intermediary with
a taxpayer identification number, certified under penalties of perjury, as well as certain other infonnation or othefWise est:abJishes
an exemption from backup wilhholding. Any lllllO\ltlt withheld under the ba:ckup Withholding rules is aJlowable as a eredit
against the Owner's actual U.S. federal income tax liability and such Owner timely provides the required information or
appropriate claim fonn to the Service.
Treasury Circular 130 Disclosure
The tax discussion set forth above was written to support the marketing of the Tax.able Obligations end is not intended or written
by Bond Counsel to be used, and it cannot be used, by any taxpayer for the purpose of avoiding any penalties t1w may be
imposed on a taxpayer by the Service in respect of federal income taxes. No limitation has been imposed by Bond Counsel on
disclosure of the tax treatment or tax structure of the Taxable Obligations. Bond Counsel will receive a non-refundable fee
contingent upon the successful marketing of the Taxable Obligations, but not contingent on llllY taxpayer's realization of tax
benefits from the Taxable Obligations. All taxpayers should seek advice based on such taxpayer's particul.a.r circumstances from
an independent tax advisor. This disclosure is provided to comply with Treasury Circular 230.
IN ADDITTON, THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY ANTI MAY NOT BE APPLICABLE DEPENDING UPON AN OWNER'S PARTICULAR SlnJA TION. INVESTORS
SHOULD CONSULT 'IHEIR OWN TAX ADVISORS CONCERNING THE TAX IMPLICATIONS OF HOLDING AND
DISPOSING OF 1HE TAXABLE OBLIGATIONS UNDER APPLICABLE STATE OR LOCAL LAWS. FOREIGN
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INVESTORS SHOULD ALSO CONSULT TIIEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES
UNIQUE TO INVESTORS WHO ARE NOT U.S. PERSONS.
OTHER INFORMATION
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RATINGS C
The Obligations are rated "Aa3" by Moody's Investors Service, Inc., "M+" by Standard & Poor's Ratings Services, a Division
of The McGraw-Hill Companies, Inc. and "M" by Fitch Ratings. An explanation of the significance of such ratings may be
oblained from the company furnishing the raring. The ratings reflect only the respective views of such organizations and the City
makes no representation u.s 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 any or all of such rating companies, if in
the judgment of 1111y or all companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may C
have an adverse effect on the market price of the Obligations.
LITIGATION
The City is involved in various legal proceedings related to alleged personal and property damages, torts, breach of contract and
civil rights cases, some of which involve claims again.it the City that exceed $500,000. State law limits municipal liability for
personal injury at $250,000/$500,000 and property damll8e at $100,000 per claim. The following represents the significant
litigation against the City at this rime. For purposes of this report, included are only suits in which the City has exposure greater C
than $50,000.
The City's insurance coverage, if available, contains either a $250,000 self-insured retention or a $500,000 self-insured retention
depending on the date of the occurrence.
The City, its Police Chief, and two police officers have been sued for violation of a citizen's first amendment rights when the
plaintiff's film from his camera was confiscated by the police while the individual was photographing e. children's basketball
game. The matter bas been dismissed on a plea to the jurisdiction, and the plaintiff appealed the court's decision. The Court of
Appee.ls reversed the trial court's decision and n:manded the case back to the trio.I court. The plaintiff did not seek. monetary
damages except for attorney's fees. The trial was held in August and the jwy fuund in the plaintiff's favor and awarded $116,000
in attorney's fees. The City is appee.ling the case.
The City and a police officer have been rued by an individual on behalf of himself and his childien rising out of the death of the
plaintiff's teenage daughter and injuries to his son from an automobile accident with the police officer. The plaintiff alleges that
the officer -was operating the vehicle in a negligent manner and was speeding at the time of the automobile collision. The
defendants have u.sserted th.at the driver of the vehicle carrying the plaintiff's children was negligent in failing to yield the rigbt-
of-way to the police officer. The City filed a motion for SWIUIUIIY judgment which was granted based on the fact the plaintiff did
not file a claim with the City. The Court of Appeals reversed the decision and remanded the case back for trial. The City appealed
the cue to the Texas Supreme Court but the Court refused to hear the case. The case is now back in tbe trial court. The City
Attorney believes th ere is insurance covering the cle.ims.
The City, G= County, Kent County, and the Texas Attorney General's Office has been sued by Templeton Mortgage for
certain rights regarding the restrictive easements at Lake Alan Heruy as well as other areas such as the use of water. This is not a
damages case, but the court has authority to grant attorneys fees to the prevailing party. Trial was held in May 2009, with the
City prevailing on all but one issue. Despite this ruling, Plaintiff is still seeking attorney fees in an undisclosed amount. The City
is also seeking attorney fees from the Plaintiff. The attorney fees issue hu yet to be argued before the Court.
The City has been rued by Templeton Mortgage and Mark Brown for damages to his property bees.we of the rising and falling of
water at Lake Alan Henry. He e.IgUes that if the restrictive easements are strictly enforced u interpreted by the City ofLubbock,
be will not be able to build a structure to stop the erosion of his property, thus causing him damage. There is no insurance on the
damage claim. Plaintiff is currently asserting damages of $100,000.
The City is being sued by a lady who fell at the Civic Center. She alleges that the bleachers were defective in th.at they 'Nl!re
unstable, causing her to fall. The lessor of the event procured insurance in which the City wa.s named as an additional insured.
The City is being defended by the insurer in this cax.
The City is being sued by a City employee in two separate laW11uits pertaining to auto accidents he was involved in while working
for the City. In one case, he wu.s involved in an accident with an intoxicated automobile driver. Plaintiff has sued the driver
along with her insurance carrier, another insurance carrier, and the City pursuant to its uninsured motorist coverage. There is
little doubt that the driver was at fault. However, the driver carried only $20,000 worth of insurance. The City, pursuant to its
workers' compensation coverage, has paid for most of the Plaintiff's medical expenses although some of the expenses are in
dispute. The City is contesting whether the City provides uninsured motorist coverage to employees if they are injured on duty.
The second lawsuit involves minimal damages and lhe City is setting forth the same defenses. The City believes there is
insurance coverage in this matter.
The City is also being sued by a furmer police officer under the Texas Whistleblower Act. She claims that she was terminated
for reporting certain allegations against her estranged husband. The City is asserting that the report was not made in good faith,
and in fact was false. Plaintiff is claiming damages of over $970,000. The City has insurance in this ca.,e with a $500,000 self-
insured retention.
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The City is involved in a lawsuit in which the owner of a car wash is asserting that lhe City improperly perfonned an abatement
as to his car Vr'BSh, He alleges that the City's contractor damaged equipment in the car wash while taking down the roof. The
City is assening that the equipment was already damaged due to lhe stonn that damaged the roof.
The City bas also been pllt on notice of a possible lawsuit by the estate of Tun Cole who was wrongfully convicted of rope back
in the l980's. At this time, the estate desires to depose a number of officen; that were working on the investigation during the
l 980's. There is no question that Tim Cole was innoctmt of !the rapes for which be was convicted. Re later died while be Wl1!l in
prison. Given that the incident occurred during the l 980's, the City has inswance with the Texas Municipal League ("TML'') in
the amount of$! 1,000,000. IML has hired Bill Wade, with Crenshaw, Dupree & Milam, to de~nd this potential lawsuit.
The City also has three employee matters under cum:nt litigation. These matter.; are being handled by Craig, Terrill, Hale, and
Grantham, LLP.
The City intends to vigorously defend itself on all claims, although no assurance cm be given that the City will prevail in all
ca.5es. Hcwever, the City Attorney and City management are of the opinion that tbe City's available sources for payment of eny
such claims, which include insurance policies and City reserves for self insured claims, are adequate to pay any foreseeable
damages (see "FINANCIAL POLICIES -Insurance and Risk Management'').
On the date of delivery of the Obligations to !he Underwriters, the City wilt execute and deliver to the Underwriters a certificate
to the effect that, except as disclosed herein, no significant litigation of any nature has been filed or is pending, as of that date, to
restrain or enjoin the isruance or delivery of the Obligations or which would affect the provisions for their payment or security or
in any manner question the validity of the Obligations.
INVESTIGATIONS RELATING TO CITY'S HEAL TR INSURANCE ADMINISTRATOR
In 2006, the City hired an outside independent auditing company, Benefit Plan Partners, a California company (the "Auditor''), to
conduct an audit of its contra.ct (the "Administration Contra.ct") with its then c~t health inswance adminlsirator, American
Administrative Gt'O'Up, Inc. ("AAG"). The Administration Conb"act provided for AAO's administration of all City employee
claims on the City's self-insured health insurance. The Auditor found numerowi possible overcharges and errors by AAG during
the term of the Admi.nistration Conb"act, including overcharges possibly arising from unauthorized commissions tabn by AAG
and possible payments to AAO by pharmacies as rebates. Toe ontside Auditor estimated the afoTCfllentioncd en-ors and
overchacges to be approximately $2 miJlion.
The Administration Contra.ct terminated by its own t.crms in December 2006, and AAG has ceased to adminisrer any claims for
the City. The City has hired another third party administrator to administer the ruo--out claims that accrued prior to December
2006. The City selected Blue Cross Blue Shield to be the City's new health in:surance adminisb"ator beginning January 2007.
In March 2007, t.be City filed an application with the State district court to compel AAO to preserve and Jn"Ovide documentation
rdating to the Administration Contract and claims submitted by City employees during the tenn of the Administration Contract.
It is the intent of the City to utilize such documentation to complete the audit by Benefit Plan Partnen; ofits contract with AAG to
determine whether any funher overcharges have ,occurred.
The crial court never issued a ruling as to the City's application end insiead referted the matter to arbitration. The City will
continue to pursue (he documents and any damages it may be entitled in the erbiuation. AAG also sued the City for damagu to
its business in the a.mount of$450,000. Arl>itration he.s been scheduled in these matters for March-April 2010.
In an attempt to obtain the necessary documenis IO conduct the audit, the City attempted to obtain the necessary documents
directly from Covenant Health System. Covenant was unsure it could release lhe documents lo the City as it opined such could
be a violation of the Health Insurance Portability Md Aceountability Act ("HIP AA''"). 1be City filed a declaratory judgment
action in federal court against Covenant seeking a declaration as to whether Covennnts release of these docwnents violated the
HIP AA. Health.Smart intervened in the lawsuit presumably in an attempt to prevent the release of the documents. The matter is
still pending. No damages are being sought by any party in the suit.
Another Jawruit has been filed by AAG against Lee Ann Dumbauld, City Manager; Scott Snider, Assistant City Manager; Leii;a
Hutcheson, City Risk MMager; and David Miller, formci-Mayor. The la~uit arises from the City's selecting Blue Cross 11.s its
new third party administrator instead of AAG. The City employees were sued fOI" civil conspira.cy, misappropri11tion, tortious
interference with existing and prospective contracts, b\lSioess disparagement; and defamation. The Cily is providing ll defell5C
for the employees Md is seeking money from Travelers fnsunmce. Travelers lnsUl11llct is disputing this. Even though the City
employees have counter suited. the plaintiff, the City is only paying for the defense of tbe lawsuit against the employees.
The City is aware that federal authorities, including the Federal Bureau of lnvestigation, have conducted investigations with
respect to matters relating to AAG, the Administration Contract, and the selection by the City of Blue Cross Blue Shield 113 its
health insurance administrator. On May 14, 2008, a search wenant issued by the U.S. District Court for the Northern District of
Texas Lubbock Division required that FBI agents search and seize various written end electronic records of the City relatinE to
these matters. No subpoenas at this time have been directed at, or issued to, the City in rege.n:ls to these investigations. The City
believes these investigations may still be ongoing.
REGISTRATION AND QUALmCA TION OF OBLIGATIONS .FOR SALE
The sale of ihe Obligations has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon lhe
exemption provided thereunder by Section J(a)(2); and the Obligations have not been qualified under the Securities Act of Texas
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in reliance upon various exemptions conlained therein; nor have the Obligations been qualified under the securities acts of any
jurisdiction. Toe City assumes no responsibility for qualification of the Obligations under the serurities laws of any jurisdiction
in which the Obligations may be sold, assigned, pledged, bypothecated or otherwise transferred. This disclaimer of responsibility
for qualification for sale or other disposition of the Obligations shall not be construed as en interpretation of any kind with regard
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to the availability of any exemption from securities registration provisions. O
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Obligatiom
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and Ille legal end authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political
subdivisions or public agencies of the State of Texas. With respect to investment in the Obligations by municipalities or other
political subdivisions or public a.gencies of the State ofTexa.s, the PFIA, requires that the Obligations be assigned a ra.ting of"A"
or its equivalent as to investment quality by a national rating agency. See "01HER INFORMATION -RATINGS" herein. In
addition, various provisions of the Texas Fine.nee Code provide that, subject lo a prudent investor standard, the Obligations Ille
legal investments for state banlcs, savings banb, trust companies with at capital of one million dollars or more, and savings and
loan associations. The Obligations are eligible to secure deposits of any public funds of the State, its agencies, and its political
subdivisions, e.nd are legal security for those deposits to the extent of their marlcct value. No review by the City has been made of
the laws in other states lo determine whether the Obligations are legal investments for various institutions in thooe states.
LEGAL MATTERS
The delivery of the Obligations is subject to the approval of the Attorney General of Texas to the effect that such Obligations are
valid and legally binding obligations of the City payable from sources and in the manner described herein and in the respective
Ordinances e.nd the approving legal opinions of Bond Counsel. The fonns of Bond Counsel's opinions are attached hereto in
Appendix B. The legal fee to be paid Bond Counsel for services rendered in c01mection with the issuance of the Obligatioru. is
contingent upon the sale e.nd delivery of the Obligations. The legal opinions of Bond Counsel will accompany the Obligations
dep~ited with DTC or will be printed on the definitive Obligations in the event of the discontinuance of the Book-Entry-Only
System. Certain legal matter.; will be passed upon for the Underwriters by McCall, Parkhurst & Horton L.L.P, Dallas, Texas,
Counsel for the Underwriters. The legal fee of such firm is contingent upon the sale e.nd delivery of the Obligations.
Bond Counsel was engaged by, and only represents, the City. Except as noted below, Bond Counsel did not take part in the
preparation of the Official Statement, e.nd such finn has not assumed any respomibility with respect thereto or undertaken
independently to verify any of the information contained herein except that in its capacity as Bond Counsel, such firm has
reviewed the information appearing in this Official Statement under the captions "THE OBLIGATIONS" (exclusive of the
information under the subcaptions "BOOK-ENTRY-ONLY SYSTEM," "SOURCES AND USES OF PROCF.EDS" e.nd
"REMEDIES") and "TAX MATI'ERS" e.nd under the subcaptiom ''LEGAL MA1TERS," "LEGAL INVESTMENTS AND
ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS" and "CONTINUING DISCLOSURE OF INFORMATION" (except
for the rubsection "Compliance with Prior Undertakings") under the caption "OTiiER INFORMATION" and such firm is of the
opinion that such descriptions present a fa.ir and accurate summary of the provisions of the laws e.nd instruments therein
described and such information conforms to the Ordinances.
The legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the
attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does
not become e.n insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future
performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute tbat
may arise out of the transaction.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinances the City has made the following agreement for the benefit of the holders and beneficial owners of the
Obligations. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the
Obligations. 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 the Municipal Securities Rulemalcing Board ("MSRB"). This
information will be available free of charge via the Electronic Municipal Market Access ("EMMA") system at
www.emma.msro.org.
Annual Reports
The City will provide certain updated financial information e.nd operating data to the MSRB annually via EMMA in accordance
with the provisions of Rule 15c2-12 (the "Rule"), promulgated by the SEC. The information to be updated includes all
quantitative financial infonnation 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 1.5 and in Appendix A. The City will update and provide this
information within six months after the end of each fiscal year.
The financial information and opera.ting da.ta to be provided may be set forth in one or more documents or may be included by
specific reference to e.ny document available to the public on EMMA or filed with the SEC as permitted by the Rule. 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
information and operating data which is customarily prepared by the City by the required time, and audited financial statements
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when and if such audited financial statements become available. Any such financiol statements will be prepared in accordance
with the a.ccounting principles described in Appendix A or such other accounting principles as the City may be required lo
employ from time to time pursuant to state law or regulatioo.
The City's current fiscal year end is September 30. Accordingly, it must provide updated infonnation by March 31 in each year,
unless die City chanaes its fiscal year. If the City changes its fiscal year, it will notify the MSRB via EMMA.
Material E\'eot Notices
The City will also provide timely notices of certain events to the MSRB via EMMA. The City will provide notice of any of the
following events with respect to the Obligations, if such event is material to a decision to purchase or sell Obligations: (!)
principal and interest payment delinquencies; (2) non~payment related defaults; (3) unscheduled draws on debt service reserves
reflecting financil\l difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of
credit or liquidity provideni, or their failure to perfonn; (6) adverse tax opinions; (7) modifications to rights of holden of the
Obligations; (8) early redemption of the Obligations; (9) deft;:al!ances; (IO) releBSe, substitution, or sale of property securing
repayment of the Obligations; and (l 1) rating changes. (Neither lh.e Obligations nor the Ordinances make any provision for debt
service reserves or liquidity enhancement.) In addition, ihe City will provide timely notice of any failure by the City IO provide
infonnation, data, or finaocial statements in accordance with its agreement described above under" Annual ~1"13."
Anilability of lnfonnation
The City has agreed to provide the foregoing infonno.tioo only as described abo~. The information will be available free of
charge via the EMMA system at www.emma.msrb.ora.
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 otheir information that may be relevant or material to a complete presenmtion of its financial results of
operations, condition, or prospects or agreed to update MY infonnotion that is prvvided, ucept as described above. The City
makes no representation or wammty concerning such information or concerning it3 usefulness to a decision to invest in or sell
Ohligations at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in Jlll1t from
any breach of its continuing disclosure agreement or from any statement made J1U(!U8nt to its agreement, although bolder.I of
Obligations may see!_ a writ of mandamus to compel the City to comply v.ith its agreement.
The City may a.mend its continuing disclorure 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, natwe, status, or type of operations of the City, if (i)
the agreement., as amended, would have permitted an underwriter to purchase or sell Obligutions, in the offering described herein
in compliMce with the Rule, taking into account any amendments or interpremtions of the Rule to the date of such amendment,
al! well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the
outstanding Obligations consent lo the amendment or (b) any person unaffiliated with the City (such as nationally recognized
bond counsel) detmnines that the amendment will not materially impair the interests of the holders and beneficial owners of the
Obligations. The Ciry may also amend or repeal the provisions of this continuing disclos~ a~ment if the SEC amends or
repeals the applicable provisions of the Rule or ll coun of final jurisdiction enteo judgment that such provisions of lhe Rule are
invalid. bu1 only if and 10 the extent that the provisions of this sentence would not prevent an underwriter from lawfully
purchasing O£ selling the Obligations in the primary offering of such Obligations.
If the City so amen~ lhe agreement, it has agree(! to include with the next financial information and operating data provided in
accordance with ir.s agreement described above under "Annual Reports" an explanation. in nami.tive form, of the reasons for the
amendment and of the impact of any change in the type of financial information and operating data so provided.
) Compliance with Prior Undertakings
During the la!!t five yem, the City has not failed to comply in any material respect with any continuing disclosure agiument
ma.de by it in accordance with the Rule.
FINANCIAL ADVISOR
RBC Capital Markets C-Orporation is employed u Financial Ad,,-isor to the City in COMeciioo with ihe issuance of the
) Obligations. The Finlll'lcial Advisor's fee for s«via:s. rendered with .respect to the sale of the Obligations is contingent upon the
issuance and delivery of the Obligations. The Fina.ncial Advisor bas not independentty verified any of the data contained herein
or conducted a debiled investigation of the affairs of the City to detennine the accuracy or completeness of this Official
Smtement.
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UNDERWRITING
The Underwriten have agreed, subject to certain conditions, to purchase the Series 2010A Bonds from the City at a price equal to
the initial offering prices as shown on page 2 of this officie.J statement, at an underwriting discount of$4S,S06.43.
The Underwrit.cB have agreed, subject to certain conditiora, to purchue the Series 2010B Bonds from the Cit;y at a price equal to
the initial offering prices a.s shown on page 2 of this official statement, at an undC'fWTiting d.iscoW"lt ofS95,049.88.
The Underwriters have agreed, subject lo certain conditions, to purchase the Series 2010A Certificates from the City at a price
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equal to the initial offering prices as shown on page 4 of this official statement, at an underwriting discount ofS233,946.01.
The Underwriters have agreed, subject to certain conditions, to purchase the Series 20108 Certificates from the City at a price
equal to the initial offering prices as shown on page 4 of this official statement, at an underwriting discount ofS.591,722.62.
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The Underwriters will be obligated to purchase all of the Obligations if any Obligations are putehased. The Obligations to be C
offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing
Obligations into investment trusts) at prices lower than the public offering prices of such Obligations, and such public offering
prices may be changed, from time to time, by the Underwriters.
The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed
the information in this Official Statement in accordance with, and as part of, their respomibilities to investors under federal
secwities Jaws a.s applied to the facts and circumstances of this transaction, but the Underwriters do not gwirantee the accuracy or C
completeness of such infonnation.
J.P. Morgan Securities Inc., one of the underwritm of tbe Obligations, has entered into an agreement (the "Distribution
Agreement") with UBS Financial Services Inc. for the retail distribution of certain municipal securities offerings, including the
Obligatiol15, at the original issue prices. Pumiant to the Distribution Agreement, J.P. Mo~an Securities Inc. will share a portion
of its underwriting compensation with respect to the Obligations with UBS Financial Services Inc."
FORWARD-LOOKING STATEMENTS DISCLAIMER (
The statements contained in this Official Statement, and in any other infonnation provided by the City, that are not purely
historical, are forward-looking statements, including statements regarding the City's expectations, hopes, intentiom, or strategies
regarding the future. Readers should not place undue reliance on forward•loolcing statements. All forward-looking statements
included in this Official Statement are based on infonnation available to the City on the date hereof, and the City assumes no
obligation to update any such forward-looking statements. The City's actual results could differ materially from those discussed
in such forward-loolong statements. C
The forwud-looking statements included herein are necessarily based oo various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptiol15 and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and ections taken or omitted to be taken by third parties, including customers, suppliers,
business partner., and competitors, and legislative, judicial, and other govemmental authorities and officials. Assumptions related
to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and
future business decisiom, all of which are difficult or impossible to predict accurately and many of which are beyond the control C
of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forwacd-looking
statements included in this Official Statement will prove to be accurate.
MISCELLANEOUS
The financial data and other infonnation contained herein have been obtained from the City's records, audited financial
statements and other-sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates
contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official
Statement are made :rubject to all of the provisions of such statutes, documents and resolutions. These summaries do not plll]lort
to be complete statements of such provisions and reference is made to such documents for further infonnation. Reference is made
to original documents in all respects.
The Ordinances authorizing the issuance of the Obligatio115 also approve the fonn and content of this Official Statement, and any
addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the Undenvriters.
Isl Tom Martin
Mayor
City ofLubbock, Texas
ATI'EST:
Isl R~lx!cca Garza
City Secretary
City of Lubbock, Teiw
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APPENDIX A
EXCERPTS FROM ANNUAL FINANCIAL REPORT FOR THE
YEAR ENDED SEPTEMBER 30, 2008
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Office of the City Manager
February 13, 2009
P.O. Box2000• 162513th Street• Lubbock, T:x:79457
(806) 775-3002 • Fax: (806) 775-2051
Honorable Mayor, City Council, and Citizens of Lubbock, Texas:
We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of the City of Lubbock,
Texas for the fiscal year ended September 30, 2008. The purpose of the CAFR is to provide accurate and
meaningful information concerning the City's financial condition and performance. In addition,
independent auditors have verified that the City has fairly presented its financial position, in all material
respects.
The CAFR satisfies Section 103.001 of the Texas Local Government Code requiring annual audits of all
municipalities. Responsibility for both the accuracy of the presented data and the completeness and
fairness of the presentation, including all disclosures, rests with the City. We believe the data is accurate
in all material respects and is presented in a manner that fairly sets forth the fmancial position and results
of the City. We also believe all disclosures necessary to enable the reader to gain an understanding of the
City's financial affairs have been included. To provide a reasonable basis for making these
representations, City ma.nagement has established a comprehensive internal control framework that is
designed both to protect the City's assets from loss, theft, or misuse and to compile sufficient, reliable
information for the preparation of the City's fmancial statements, in conformity with accounting
principles generally accepted in the United States of America (GAAP). Because the cost of internal
controls should not outweigh their benefits, the City's comprehensive framework of internal controls has
been designed to provide reasonable, rather than absolute assurance that the fiD.aDcial statements will be
free from material misstatement.
The City's fmancial statements have been audited by BKD, LLP, a firm of licensed certified public
accountants. The goal of the independent audit is to provide reasonable assurance that the financial
statements are free of material misstatement. The independent audit involves:
• examining evidence on a test basis that supports the amounts and disclosures in the fmancial
statements,
• assessing the accounting principles used and significant estimates made by management, and
• evaluating the overall financial statement presentation.
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Honorable Mayor, City Council,
And Citizens of the City of Lubbock, Texas
February 13, 2009
The independent auditor has concluded that the City's financial statements are in conformity with GAAP,
are fairly represented, and there is a reasonable basis for providing an unqualified opinion. The
independent auditor's report is presented as the first component of the financial section of this report.
The independent accountants' audit of the City's financial statements is part of a broader, federally
mandated "Single Audit", which is designed to meet the special needs of federal granting agencies. These
reports are available in the City's separately issued Single Audit Report. The standards governing Single
Audit engagements require the independent auditor to report on several facets of the granting agencies'
financial processes and controls:
• Fair presentation of the financial statements,
• Internal controls involving the administration of federal awards, and
• Compliance with legal and grant requirements.
GAAP requires management to provide a narrative introduction, overview, and analysis to accompany the
basic financial statements in the form ofa Management Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement the MD&A. The City's MD&A can be found immediately
following the report of the independent accountants.
THE CITY AND ITS ORGANIZATION
Description of the City
The City is a political subdivision and municipal corporation of the State, duly organized and existing
under the laws of the State, including the City's Home Rule Charter. The City was incorporated in 1909,
and first adopted its Home Rule Charter in 1917. The City operates under a Council/Manager form of
govemment with a City Council comprised of the Mayor and six council members. The Mayor is elected
at-large for a two-year term ending in an even-numbered year. Each of the six members of the City
Council is elected from a single-member district for a four-year term of office. The terms of three
members of the City Council expire in each even-nwnbered year. The City Manager is the chief
administrative officer for the City. The City is empowered to levy a property tax on both real and
personal properties located within its boundaries. It is also empowered by state statute to extend its
corporate limits by annexation, which occurs periodically as the City Council deems appropriate. The
2000 Census population for the City was 199,564; the estimated 2008 population is 214,847. Tue City
covers approximately 119.9 square miles.
City Services
The City provides a full range of services including public safety (police and fue protection), electric,
water and wastewater, storm water, solid waste, public transportation, health and social services, culture-
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P11blic Safety: The Police Department serves and protects the public by conducting criminal
investigations and enforcing laws governing public health, and order. The department is staffed with 377
sworn officers. Tue Fire Department serves to minimize loss of life and property from the effects of fires
by quickly responding to emergencies. The department operates 15 fire stations and is staffed with 334
sworn firefighters. During 2008 the City improved it insurance standards rating, going from a Class 3 to C
a Class 2 on a measurement of 10 with Class 1 representing the best public protection.
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Electric Utili9': Electric service in the City is provided by Lubbock Power and Light (LP&L). Xcel
Energy, and South Plains Electric Cooperative. LP&L is the municipal-owned electric company and has
73,619 meters with an average daily consumption of 4,485,835 kWh. LP&L bas 14 substations, one
substation under construction, more than 1,030 miles of distribution lines, and approximately 85 miles of
transmission lines.
Water Utility: To assist wilh the strategic development of additional water supplies, lhe City Council
established lhe Lubbock Water Advisory Commission in July 2003, with lhe primary objective of
developing a 100-year water supply plan. In July of 2007, with the recommendation of the Lubbock
Water Advisory Commission, the City Council approved I.be Strategic Water Supply Plan for Lubbock.
The City has also worked closely wi'lh the Region O Planning Group in preparing the State Water Plan,
which includes lhe City's water supply needs and alternatives.
The City has initiated five major water and wastewater studies over the past fow years in order to help
develop lhe Strategic Water Supply Plan. The Water Texas study was completed in 2004 and laid lhe
foundation for additional work so the City could document bolh current and future water needs for annual
supply and peak day demand. The City has also completed preliminary engineering and final design for
improvements to the Southeast Water Reclamation Plant to improve the quality of the City's effluent
discharge and prepare for possible future reuse.
The City obtains to billjon gallons of its annual water supply from Canadian River Municipal Water
Authority (CRMW A). CRMW A combines surface water from Lake Meredith and ground water from
Roberts County to meet the -water demands of Lubbock and the other 10 member cities of CR.MW A . The
City secures the remaining 2 billion gallons of its annual water supply from groundwater in Bailey and
Lamb counties. The City provides water service to over 77,000 meters through 1,400 miles of
distribution lines. ln addition to Lubbock, the City also services the communities of Shallowa.ter, Ransom
Canyon, Buffalo Springs Lake, Reese Redevelopment Authority, and Lubbock Cooper and Roosevelt
school districts.
The daily capacity of the City water supply and treatment system is 81 million gallons per day with ao
average utilization of 33 million gallons per day. In the Bailey County Well Field, the City has 160 active
water wells with 83,265 acres of water rights. CRMW A allocates more than l 0 billion gallons of water
to the City annually. Lake Alan Henry, built by the City in 1993, is in development as a future water
sowce. In order for the City to utilize water from Lake Alan Henry, the construction of pump stations, a
pipeline, and a new water treatment plant is required. Preliminary engineering for these improvements
was completed in November of 2007 and final design is now underway. The projected construction
completion date is 2012.
CRMW A bas secwed additional acres of groundwater rights in the Northern Texas Panhandle. The
additional groundwater rights have increased the total from 42,000 to 265,999 acres with estimated 15
million acre feet of water within those rights. Conservative projections, using current secured water
rights, indicate CRMW A will be able to p.rovide groundwater supplies utilizing existing in'frastrucrure
through the year 2097.
Wastewater Utility: Wastewater collection and treatment is provided within the city limits to residential,
commercial, and industrial customers. As of January 1, 2008, the collection system consists of 996 miles
of sanitary -sewer lines. The wastewater treatment plant has a capacity of 31.5 million gallons per day
(permitted. capacity) and an average utilization of approximately 23 million gallons per day. The peak
utilization of the wastewater treatment plant is 27 million gallons per day. The City bas completed Phase
I and begun construction of Phase II of a four phase· project to upgrade the Southeast Water Reclamation
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Honorable Mayor, City Council.
And Citi:r.ens of the City of Lubbock. Texas
February 13, 2009
Plant. Phase I included upgrades and improvements to the influent lift station. Phase II construction has
begun and includes upgrades to Plant 3 for filtration and ultraviolet disinfectioD and Plant 4 for biological
nutrient removal, filtration and ultraviolet disinfection. Phase III will include design and construction
improvements to solids and handling. Phase IV will include upgrades to Plant 3 for biological removal.
The improvements will produce a high quality of effluent that will be discharged for potential reuse into
the North Fork of the Double Mountain Fork of the Brazos River.
Storm Water Utility: The City's storm drainage is primarily conveyed through the City's street system
that discharges into more than 115 playa lakes. The subsurface drainage, via storm sev.rer pipes with curb
inlets, conveys water to two small intermittent streams (Blackwater Draw and Yellowhouse Draw) which
both converge at the upper reaches of the North Fork of the Double Mountain Fork of the Brazos River.
The City's separate municipal storm sewer system (MS4) is made up of approximately 3,000 lane miles
of paved and unpaved streets, 55 5 linear miles of paved and unpaved alleys, 1,188 storm sewer inlets, 70
miles of subsurface storm sewer pipe, three detention basins, 11 S playa lakes, and one pump station.
Maintenance of all of the storm sewers and street deaning .are funded through stonn water fees.
During FY 2007-08, a primary focus of the stOim water utility was the completion of the South Lubbock
Drainage Project -Phase l Main Trunk Line. This project was substantially completed approximately
one year ahead of schedule and has connected six playa lakes. Construction for Phase lA of the South
Lubbock Project began in FY 2007-08. This project will add five additional playa lakes to the Project,
and is scheduled for completion in 20 l 0.
Other areas of activity within the Storm Water Utility during FY 2007-08 included the following:
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Received the new Texas Pollution Discharge Elimination System (TPDES) MS4 permit issued by the
Texas Commission on Environmental Quality (TCEQ). Efforts are underway to generate a
comprehensive Storm Water Ordinance in order to comply with the provisions set forth in the new
MS4 permit.
Completed and submitted information to the Federal Emergency Management Agency (FEMA) for
the Flood Insurance Restudy of two of the play a lake systems. Toe study is currently awaiting review
by FEMA for further action.
Began a master plan of the northwest quadrant of the City as well as an update to the Master Drainage
Plan for western and southern portions of the City.
Continued evaluating options for flood risk. reduction al Maxey Pwk Lake .
Continued video inspection and cleaning of the downtown area stonn sewer pipelines .
Continued the design of drainage improvemenas at Mose Hood and Stumpy Hamilton PSlb .
Solid Waste Utilily: Toe City provides garbage collection and disposal services to 65,829 residential
customers and 2,829 commercial customers. One of the City's two landfill sites is designated as the Nortb
Avenue P Landfill and includes a citizen's transfer station. The second site is the West Texas Regional
Disposal Facility. Toe West Texas Regional Disposal Facility opened in 1999 and is one of the largest
landfills in the State of Texas. With 1,260 acres, the expected useful life is more than 92 years.
Public Transportation: Citibus provides public transportation for the City and is professionally managed
by McDonald Transit Associates, Inc. Citibus provides a Fixed Route Service, CitiAccess (paratransit
system), evening service, and other special services. CitiAccess is a curb-to-curb service for disabled
members of the community. Toe Citibus evening service is designed to meet the needs of CitiAccess and
fixed route passengers who rely on public transit. A majority of evening service passengers work at night
and use the service for transportation to and from their jobs. In addition, Citibus offers route service for
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Texas Tech University. Finally, Citibus is the contracted agent for passenger sales aod freight shipping
and receiving for Greyhound Lines, Inc. operating out of the Downtown Transfer Plaza.
Health and Social Services: Tbe City has a housing and community development program implemented
and administered through funding from the Federal Community Development Block: Grant Pl'ogram,
HO~ Investment Partnership Program, and Emergency Shelter Grant Program. Through these
programs, the City has completed work on over 196 houses aod created 3 jobs through an economic
development loan program.
The City also receives funding from the Texas Department of Housing and Community Affairs. These
funds allow the City to offer additional programs to its citizens. Through these programs, 71 homes or
141 individuals received assistance in weatherizing their home to make their home more energy efficient;
1,369 households received utility assistance; 54 individuals graduated from the Self-Sufficiency Program;
and, 25,093 residents ,received referral assistance through the Information and Referral Hotline.
Culture-Recrtation: Cultural and recreational services are provided by the City through four libraries, 80
parks, and 57 playgrounds. Other recreational facilities include 4 swimming pools, 58 tennis courts, 48
baseball and softball fields, a cultural arts center, five commUDity centers, and five senior ceaters. To
further enhance quality of life and to provide support to tourism, the City operates the Memorial Civic
Center, City Bank Colisewn, City Banlc Auditorium, the Buddy Holly Center, the Wells Fargo
Amphitheatre, and the Silent Wings Museum.
The City is financially accountable for a legally separate civic services corporation and three economic
development corporations, which are reported separately within the City's financial statements as
discretely presente:d component units. Additional iaformation on these legally separate entities can. be
found in the notes to thefinancial statements .
. Highways and Streets: The City is responsible for the construction and maintenance of 1,058 centerline
miles of paved streets.
In 2004 the City Council established the Gateway Streets Program. The program, funded primarily
through 40 percent of franchise fees, opens areas of the City through thoroughfare construction. The
Gateway Streets Program consists of the Northwest Passage, which includes City thoroughfare streets and
Texas Department of Transportation (TxDOT) improvements in Northwest Lubbock, as well as other
thoroughfare improvements mother parts of the City.
The City streets portion of the Northwest Passage consists of the wideaing of Erskine Street from
Franlcford Avenue to Salem Road, and the construction of Slide Road from 4m Street to Erskine. The
construction of a Slide Road overpass at Loop 289, is being funded by the City, and will be constructed
by TxDOT as part of a larger Loop 289 improvement project.
Other major street improvement projects approved by the City Council for design include: Indiana
Avenue from 103m Street to FM 1585; Quaker Avenue from 98th Street to FM 1585; 114th Street from
Qualcer Avenue to Slide Road; Frankford Avenue from 98ih SIIeet to 114th Street; 98d:I. Street from
Frankford Avenue to Milwaukee Avenue; and Milwaukee Avenue from 94th Street to FM 1585. The
construction of 98th Street from Slide Road to Frankford Avenue was completed during FY 2007-08.
Lubbock Preston Smith International Airport: A key component of Lubbock's transportation system is
the Lubbock Preston Smith International Airport, located seven miles north of the City's central busioess
district on 3,000 acres of land adjacent to Interstate 27. The Airport is operated as a department of the
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Honorable Mayor, City Couocil,
And Citizens of tbe City or Lubbock. Texas
February 13, 2009
City, with the guidance of an advisory board, and includes a 220,000 square foot passenger terminal
building. The Airport has two commercial service runways, 11,500 &Dd 8,000 feet in length. The
Airport's third general aviation runway is 2,869 feet in length. Air traffic control services include a 24-
hour Federal Aviation Administration control tower and a full range of instrument approaches. The
Airport is served by four major passenger airlines and two major cargo airlines having over 80
commercial flights per day,
Annual Budget Proce11
The annual operating budget serves as the foundation for the City's financial planning and control. All
City departments submit requests for appropriation to the City Manager each year. The City Manager
uses these requests as the starting point for developing the proposed Operating Budget and Capital
Program. The City Manager then presents the proposed Operating Budget &Dd Capital Program to the
City Council for review, as required by City Charter. The City Council is required to hold a public
hearing on lhe proposed Operating Budget and Capital Program and to adopt it no later lhan September
30, the close of the City's fiscal year. The adopted Operating Budget and Capital Program appropriates
funding at the departmental level in the General Fund, at the fund level in the other funds. and at the
project level in the Capital Program.
The General Fund Operating Budget is adopted on a basis other than GA.AP, with the main difference
being that capital lease proceeds and related capital outlay are not budgeted. Budgetary control is
maintained at the department level. Management may make administrative transfers and increases or
decreases between accounts below the department level without Council approval. However, any transfer
of funds between departments, the legal level of control, or higher level shall be presented to Council for
approval by ordinance before such funds can be transferred between departments or expended. All annual
operating appropriations lapse at the end of the fiscal year. Capital Project appropriations do not lapse at
fiscal year end but remain in effect until the project is completed and closed.
ECONOMIC CONDITION AND OUTLOOK
The information presented in the financial statements is perhaps best understood when it is considered
within the context of the City's economy. The following information is provided to highlight a broad
range of economic forces that support lhe City's operations.
Local Ecooorny
Lubbock has a stable economy with historically slow and steady growth, which has continued throughout
FY 2007-08. Lubbock's agriculturally based economy has diversified over the past 20 years, which has
minimized the effects of business cycles experienced by individual sectors.
The South Plains is one of the most productive agricultural areas in the United States. In 2008, 17.4
percent of the nation's cotton crop and 46.3 percent of the state's cotton crop were produced by farmers in
the Southern High Plains District. Southern High Plains production was 2.36 million bales, down 44.7
percent from record highs in 2006 and 2007. The decrease in production was due to weather conditions
(United States Department of Agriculture, National Agriculture Statistics Service, Texw County Data -
Crops, retrieved from http://www.nass.usda.gov/QuickStats/Pul!Data _US_ CNTY.j sp ).
The City has strong m&Dufacturing, wholesale and retail trade, services, and government sectors.
Manufacturing includes a diverse group of employers who support approximately 5,200 workers. A
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central location and access to transportation have contributed to Lubbock's development as a regional
warehousing and distribution center. Lubbock serves as the major retail trade center and health care
provider for a region of more than a half nu Ilion people. A breakdown of the percent of employment base
by industry category has been provided, giving a snapshot of the industry base of the City.
l'er~ent Employment Bue by Industry Cat.gory
Transportation
Wholesale l'r.lde
4.7%
M.mu(ae1uring
4.-0
Natural Re!OUrcc:s.
Mining &. Constn.1ction
4.8%
Ware housing &
U1iltics
J.l'Y.
Jufonnation
4.1%
Financial A,;t.JYities
5.6%
Professional &
BllSineat S enricei
8,6%
Educ1tiooal & Health
Services
IS.2'1,
LeislD'e and Hosplt.111icy
Olbcr S....-xz. 12.4¾
4., ...
(Texas Workforce Commission, MSA Employment and Unemployment Data, retrieved from
http://www.tracer2.com.)
Two major components of the local economy are education and health care services. Lubbock is borne to
three universities and one community college: Texas Tech University, Lubbock Christian University,
Wayland Baptist University -Lubbock Center, and South Plains College. Total enrollment for all higher
education institutions in Lubbock for fall 2008 is 46,032. This is a 1.1 percent increase over the
enrollment for fall of 2007. Toe availability of graduates in the City is an added advantage to local
industries as the universities and colleges continue to produce a ready source of qualified labor. (City of
Lubbock Finance Department, Secondary and Higher Education Enrollments 2000-2008. Fall 2008)
The health care and social services sector is also a vital component of the Lubbock economy, with more
than 19,435 employees and payroll of more than $712 million (U.S. Census Bureau, 2006 County
Business Patterns, retrieved from http://cemtats.census.govlcgi-binlcbpnaiclcbpsect.pl (2-year delay in
publication)).
Lubbock Economic Inde:r
The Lubbock Economic Index is designed to represent the general condition of the Lubbock economy by
tracking local economic growth rates. The base year for the index was 1996, when the index. was set to
100. The economic index for September 2008 is 132.8, which represents an increase of 1.2 percent from
September 2007.
The Lubbock Economic Index rose to record levels in FY 2007-08, with September marking the fourth
consecutive monthly increase in the Index. Local aud regional spending by households and businesses
remains the bright spot in the economy, along with continued strength in the construction sector and gains
in home building.
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Honorable Mayor, City Council,
And Citizens of the City of Lubbock, Texas
Februlll}' 13 , 2009
Lubbock Economic Index
Eleven Year Trend by Month
100 +---.----,,---~----,----,---~----r----~--~--.--'
Jan-98 Jan -99 Jan-00 Jan-01 Jan-02 Jan-03 Jao-04 Jan-OS Jan-06 Jan-07 Jan-08
(Ingham Economic Reporting, September 2008, Lubbock Economic Index and Consumer Price Index,
Amarillo, Texas: Karr Ingham.)
Building Permit Valuadons
The construction sector continues to make a strong contribution to the economy with the value of all
building permits issued through September 2008 up 14.9 percent over the same period in 2007. The
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$412.3 million in building pemtits issued through the first nine months of 2008 are near the record setting C
levels that have been seen during the last few years
Total Building Permit Valuations
(Calendar Year)
5452.5 ks.1.S $454.7 C
500
450
400
,,, 350 = S278.t =5 300 0 = ~ 2S0
200
150
100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0
8 0
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And Cilizens of the City ofLuli,ock, Texas
February 13, 2009
The total number of new residential permits through September 2008 increased 12.9 percent over 2007
levels, and valuation amounts were $207.1 million, or 27.9 percent, higher than 2007 valuations (City of
Lubbock Building Inspection Department, September 2008, Building Inspeclion Statistical Report).
The average home sale price, through September 2008, has increased 10.3 percent over the September
2007 average home sale price (Texas A&M University Real Estate Center, Lubbock Resulenlial Housing
Activity Report, retrieved from http://recenter.tamu.edu/data/datahs.html).
Sales Tax Collections
Sales tax collections for September 2008 were 5.8 percent higher than the September 2007 level (FY
2008 and FY 2007 City of Lubbock Comprehensive Annual Financial Report, Statement of Activities) .
TourismNisitor Related lndic.aton
Lodging we receipts increased &om $2.9 millioc in September 2007 to $3.0 million in September 2008, a
3.9 percent increase. Airline boardings at Lubbock Preston Smith International Aiiport decreased 0.6
percent from FY 2006-07 to FY 2007-08 (Ingham Economic Reporting, September 2008, Lubbock
Economic Index and Consumer Price Index. Amarillo, Tex.as: Karr Ingham).
Employment
The tolal non-agricultural employment estimate for September 2008 was 128,600. This is a 0.2 percent
improvement over September 2007. There were 300 more people employed in September 2008 than in
September 2007. The unemployment rate for the Lubbock Metropolitan Statistical Area in September
2008 was 4.0 percent, the 4th lowest in the State of Texas. Historically, Lubbock ~ had a low rate of
unemployment lbat is one to two percent below the national rate and about one percent below the state
rate (Texas Workforce Commission, LMCI Economic Profiles, retrieved fiom
bttp://www.tracer2.com/a.dmin/uploadedpublications/1724_lubbockmsa.pdJ) .
Unemploy1Dent Rates -Lubbock MSA
1999 2000 Z00I 2002 1003 2004 2005 2006 1007 2008
Nole: The methodology for calculating the unemploymeru rate was changed in 2005 and the last
four years were recalcuJared based on the new method. The Lubbock MSA also changed in
2005 to include both Lubbock and Crosby Counties..
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Honorable Mayor, City Council,
And Ciliz.ens of the City of Lubbock, Texas
Febn.uuy 13, 2009
Econonlic Development
In 1995 the City Council created Market Lubbock, Inc., a non-profit corporation to oversee economic
development for the City. Market Lubbock, Inc. is funded with three cents of the property tax allocation.
In October 2004, the Lubbock Economic Development Alliance (LEDA), an economic development sales
tax corporation, assumed responsibility for economic development. LEDA program strategies include
business retention, business recruitment, workforce development, foreign trade zone, and the bioscience
initiative. LEDA is funded by a 1/8 cent economic development sales tax. Total allocated tax revenues
for Market Lubbock, Inc. and LEDA for FY 2007-08 were $7,381 ,355. During the last year, through
th.eir business retention, expansion, and attraction programs, LEDA assisted 12 companies in the creation
of 589 new jobs with an annual payroll of$l 7.9 million and capital investment of $34.8 million.
The City's Business Development Department works closely with LEDA to provide assistance in their
economic deve1opment projects. Business Development is responsible for tracking and maintaining
economic and demographic information for the City, assisting with city-related business issues, the
enterprise zone and tax abatement programs, two Tax Increment Financing Reinvestment Zones and all
Public Improvement Districts.
Development Initiatives
Otierlon Park: Overton Park, a former blighted area called. North Overton, is a 300-acre revitalization
project adjacent to the downtown area-of Lubbock. Overton Park has developed much faster than
anticipated.
By the end of 2008, three student oriented apartment complexes were completed along with The Centre,
an apartment complex built over upscale retail. Other projects completed were City Ban.le, Starbucks,
Super Wal-Mart, a retail center adjacent to Wal-Mart, and tbe first phase of Main Street Condominiums.
The second phase of the condominiums and nine single family houses were nearing completion.
There were several projects under construction at the end of 2008. An hotel/conference center project
began construction in September 2007 with an estimated completion date of July 2009. The Suites, an
apart.ment complex, is under construction and should be completed in late 2009. A retail center adjacent
to the hotel/conference center began construction in early 2008 and should be completed in 2009. The
Cottages, a large multi-family project, began construction in 2008 and is expected to be completed by
August 2009. The Overton Park project, as a whole, is running three years ahead of schedule with much
of the construction now expected to be complete by the end of 2010.
The City of Lubbock, Lubbock County, Lubbock Hospital District and High Plains Underground Water
District have participated in this public/private project with the creation of a Tax Increment Financing
Reinvestment Zone that has funded the replacement of the 80-ycar old infrastructure. According to the
latest Project and Finance Plan for the North Overton Tax Increment Financing Reinvestment Zone· (TIF),
there are planned expenditures of approximately $41. 7 million for public infrastructure improvements,
which will result in an increase of taxable value of approximately $530 million over the TIF's 30-year
life. Toe 2008 appraised value of the North Overton TIF was $209.9 million, which is a $183 million
increase over the 2002 base year value.
Nortll and East Lubbock Community Development Corporadon: While Lubbock grew during the last
50 years, the areas of north and east Lubbock experienced an out-migration of people. From 1960 to
2000, the area's population decreased by 47 percent. Io response to the deterioration of north and east
Lubbock, the City created the North SDd East Lubbock Community Development Corporation
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(NELCDC) in 2004 to oversee and promote development in the area. The City also committed to provide
funding to the NELCDC for four years. King's Dominion. a new single-fami1y housing project, consists
of fifteen homes with a sixteenth presently under construction. The NELCDC bas also placed tweory-
three families into scattered site developments, and has an additional two homes under construction. At
the end of 2008, the NELCDC has originated $1,678,245 in mortgages for King's Dominion and an
additional $I,914,301 for scattered site developments.
Downtown Redevelopment: The City of Lubbock Cenlral. Business District (CBD) has developed over
the ye.ars with traditional office, retail, and governmental agency uses. As for many cities in the last ten
to twenty years, retail has moved to shopping areas and other areas outside the CBD, and office
development has stagnated. On December 3, 2001, in an effon to reverse that trend and to stimulate
further development downtown, the City established the CBD Tax Increment Finance Reinvestment Zone
(TIF). Also in 2005, the City Council created the Downtown Redevlopment Commission (DRC) who
retained a consultant to draft a Revitalization Action Plan for the downtown area During the planning
process, the DRC conducted one-on-one interviews with business and property owners in the downtown
area and held three public meetings to receive input from citizens on their vision for downtown.
The new Revitalization Action Plan (Pl.an) for downtown Lubbock was completed in FY 2007-08. The
Plan has been approved by the TIF Board of Directors and the City Council. The City issued an RFQ in
FY 2007-08 for a Master Developer to implement the Plan. On December 4, 2008, the City Council
contracted with McDougal Land Company, LT. to provide Consulting/Master Developer services to
implement the Plan.
, Other Reside,atiaVCommerc/41 Development: Growth in commercial and residential construct.ion
occurred at a healthy rate throughout the past five years. Construction on several new residential and
commercial developments has continued. The Cottages, a multi-family project in Overton Park. will have
an expected $50 million investment and should be completed by August 2009. Vintage Township, a
residential/commercial d.evelopment will have an expected $350 million investment. Development along
Milwaukee Avenue is expected to generate a total investment in commercial/residential development of
approximately $844 million in the next five to ten years.
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FINANCIAL INFORMATION
Loog~term financial plapging
The City uses ten-year rate models for long-range planning in all enterprise funds as a basis for budget
discussion and. policy decision-making. These models are based on current projects and policies and are
driven by the idea that the rate should be annually adjusted to reflect the service needs of the citizens and
long term capital needs. Because of this philosophy, the rates in the models are annually trimmed to
leave as little excess as possible, after allowing for financially sound net asset reserves, as established by
City Council Policy. The models, in association with the City's Five-Year Forecast, provide anticipated
trends given current policies.
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Honorable Mayor, City Council,
And Citmms of tbe City of Lubbock. Texas
February 13, 2009
Cash management policies and practices
Cash is invested in U.S. Agencies, money market mutual funds, and state investment pools. The
maturities of the investments range from I day to 3 years, with an average maturity of approximately
11.25 months. The average yield on investments for FY 2008 was 4.21 percent for the City's operating
funds and 3.21 percent for the City's bond funds. Investment income is enhanced with increases in the
fair value of investments. Increases in fair value during the current year, however, do not necessarily
represent trends that will continue; nor is it always possible to realize such amounts, especially in the case
of temporary changes in the fair value of investments that the City intends to hold to maturity.
Risk management
During 2007, the City coo.tinued its use of third party workers' compensatioa coverage on an initial dollar
coverage basis. The City is primarily self-insured for various liability coverages with an attachment point
of $500,000 per occurrence and $ I 0,000,000 aggregate annual coverage.
During 2007, the City's Health Benefits Fund continued its self-insured status for medical and dental
The current stop loss coverage provides for $175,000 individual attachment and a $18,181,945 aggregate
attachment point. The City also carried transplant insurance on an initial dollar basis. Additional
infonnation on the City's risk management activities can be found in the notes to the financial statements.
Pension benefits
The City sponsors a multiple-employer hybrid defmed benefit pension plan, through the Texas Municipal
Retirement System. for its employees other than firefighters. Each year, an independent actuary, engaged
by the plan, calculates the amount of the annual contribution that the City must make to ensure that the
plan will be able to fully meet its obligations to retired employees. As a matter of policy, the City fully
funds each year's annual required contribution to the pension plan as determined by the actuary. As of
December 31, 2007, the City has funded 61.4 percent of the present value of the projected benefits earned
by employees. The remaining unfunded amount is being systematically funded over 30 years as part of
the annual required contribution calculated by the actuary.
The City also provides benefits for its firefighters. These benefits ere provided through a single-employer
defined benefit peosioo plan, the Lubbock Fire Pension Fund (LFPF), which is administered by the Board
of Trustees. The City contributes an amount that is determined by a formula and is 19.97 percent of
firefighter's pay.
The City provides 34 percent to 73 percent of post retirement health and 8 percent to 38 percent of dental
care benefits for retirees or their dependents.
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Additional information on the City's pension arrangements and post employment benefits can be found in
the notes to the financial statements. C
AW ARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal O
year ended September 30, 2007. This is the fourth consecutive year that the City has received this award.
In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable
12 0
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Honorable Mayor. City Council,
And Citizens of the City of Lubbock, Texas
February 13, 2009
and efficiently organized comprehensive annual financial report whose contents conform to program
standards. Such reports must satisfy both GAAP and applicable lepl requirements.
A Certificate of Achievement is valid for a period of one-year only. We believe our current report
continues to conform to the Certificate of Achievement Program requirements and we are submitting it to
the GFOA to determine its eligibility for another certificate.
The preparation of this report would not have been possible without the efficient and dedicated services of
the entire staff of the Finance Division. We wouJd particularly like to thank the Senior Accountants aad
Accountants for their countless hours of work on this financial report. We express our appreciation to all
members of the departments who assisted with and contributed to the preparation of this report. Credit is
also given to the City Council and the Audit Committee for their interest and support in planning and
conducting the operations of the City in a responsible and progressive manner.
Respectfully submitted,
/µJ/4&,JtW/
Lee Ann Dumbauld
City Manager
~~
Chief Financial Officer
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Pamela Moon, CPA
Director of Accounting
0 City of Lubbock -Organization Chart Ca» l:nfomomint ~luMW1ills< 0 0 0 1'itM~ .4ncl,Nllic;Wa,u Aut,c.rMt<, , __ 0 () 0 n n 0 ()
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Certificate of
Achievement
for Excellence
in .Financial
Reporting
Presented to
City of Lubbock
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2007
A Certificate of Achievement for Exce.lfonce in Financial
Reporting is presimted by the Goven...o.ent Finance Office~
Asoocuition of the United States and Canada to
govcmmcnt units and public employee rctircmeDI
systems whose comprehensive ennual .financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial n:portmg.
President
~/.~
Executive Director
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Comprehensive Annual Financial Report
for the Fiscal Year Ended September 30, 2008
16
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CJIAs. & Adv1sors
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Independent Accountants' Report on Financial Statements
and Supplementary Information
The Honorable Mayor and
Merµbers of the City Council
City of Lubbock. Texas
We have audited the accompanying financial statements of the governmental activities, the.business,,type,
activities, the aggregate discretely _presented component uni~ each major fund and the a_ggregate
remaining_ fund information of the City of Lubbock, Tex.as (the City), as.of and for the year ended
Sept.ember 30,2008, which collectively comprise the City's basic fi:Qa.ncial statements es listed in1he
table of contents. These financial statements arc the t~sibility of the City's management. Our
responsibility is to e;l{press opinions on these fimrnciaJ statements based on ow audit~ We did not aud'it
·the financiat statqnents of Civic Lu ti bock, J.nc .• Ma.tket I.iubboc)c Economic Development Co[J>Oration
d/b/a Mane~ Lubbock. lnc. and Lubbock Economic Deyelopment Alli8llce. comp<ment units· of the City.
which statcmenls reflect toiaJ .assets ~nd prognm n:vcoues of $30., 119,969 and .S 16_, 76~.680, respectively,
and represent 93.0%.and 99.5% ofthe aggregate.discretely presented component units~ tofal assets and
program .revenues, respectively; at Septetnber.30.,, 2008 .. and lbr the year~ ended. The financial
statements (1-f these entities were audited by other accountants whose reports thereon have been fwnished
to us. and our opinion, insofar as it relates to the amounts included for such entities:. is based solely on the
reports of the other accountants.
We conducted our audit in accordance, with auditing standards generally accepted jn the United States of'
Afi'lerica -and the standards applicable to financial audits contained 'in Government Aflditing St4ndards,
hsued by the Comptroller General of the United States~ Those standards require that we plao and per.form
the at1dit to obtain reasonable asswance about whetberlhe financial statements are free of materiaJ
misstatement. The finan:cial .st"temeots oftbe'componcnt units Civic Lubbock. Inc ... Market Lubbock
Economic Development Corporation d/b~a Market. Lubboclc, lnc., Lubbock Economic DeveJopmez;at
Alliance and the major ftmd West Texas,Municipal Power Agency, were not al,ld:ited in accordance with
00W!T1'lment Auditing Standards. An audit includes examining, on a lest basls, evidence suppbrtiag tht;=
amounts and disclosures in the financial statements. An audit also includes ·assessing the-act:ounting
principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and tbe reports of the other accountants provide a
reasonable basis for our opinions.
1n our opinion. based on our audit and the reports of the other accountants. the financial statements
referred to above present fai(ly, in all material respects, the respective financial position of the
gpvemmental-activilies, the businesNype activities, the aggregate discretely presented component units,
each major fund, and the aggregate remaining fund infonnation of the City of Lubbock. Texas, as of
September 30, 2008, and the respective changes in financial position and cash flows, where applicable,
thereof for the year the,i ended in conformity with accounting principles generally accepted in the United
States of America.
) experience BKD 17
The Honorab1e Mayor and
Members of the City Council
City of Lubbock, Texas
Page2
As discussed in Note I. I., in 2008, the City changed its method of accounting for poste:m.ployment benefits
other than pensions and its method of disclosures of pension information by implementing Governmental
Accounting Standards Board Statement No. 4:5. Accounting and Financial Reporting by Employers for
Postemploymenl Benefits Other than Pensions and Statement No. 50, Pensio"s Disclosures.
In accordance with Government Auditing Standards, we have also issued our report dated
February 13, 2009, on our consideration of the City's internal control over financial reporting and our
tests of it~ compliance with certain provisions of laws, regulations, contracts and grant agreements and
othc:r matters. The purpose of that report is to describe the scope of our testing of internal control over
fmancial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in asse.ssing the
results of our audit.
The accompanying management's discussion and analysis, budgetary information and schedule of
funding progress related to pension plans and other postemployment benefits as listed in the table of
contents are not a required part of the basic financial statements but are supplementary infonnation
required by the Governmental Accowiting Sumdards Board. We have applied certain limited procedurc5,
which consisted principally ofinquiries of management .regarding the methods of measurement and
presentation of the required supplementary :infonnation. However, we did not audit the infonnation and
expr~s no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that col1ectively
comprise the City's basic financial statements. The acwmpanying supplementary information, as listed
in the table of contents is presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been$ubjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
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The acwmpanying infonnation in the introductory and statistical sections as listed in the table of contents
has not been subjected to the procedures applied in the audit of the basic financial statements and,
accordingly, we express no opinion on it. C
February 13, 2009
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
The Management Discussion and Analysis (MD&A) provides a narrative overview and analysis or the
financial activities of the City of Lubbock for the fiscal year ended September 30, 2008.
Readers or the financial statements are encouraged to consider the information included in the transmittal
letter and in the other sections of the Comprehensive Annual Financial Report (CAFR) e.g., combining
statements, and the statistical section in conjunction with the MD&A.
Financial HigbligbtJ
The following financial highlights summarize the City's financial position and operations as presented in
more detail in the Basic Financial Statements (BFS).
• The City's assets exceeded its liabilities at September 30, 2008, by $666.5 million (net assets), of
which $136.4 million (unrestricted net assets) may be used to meet the City's ongoing obligations
to citizens and creditors.
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The City's total net assets increased by $26.5 million as a result of operations during tbe fiscal
year.
The ending unreserved fund balance for the General Fund was $19.8 million, or 18.6% of total
General Fund revenues; an increase of $0.8 milJion from the prior year.
The City's governmental funds reported combined ending fund baLa.nces of $130.5 million, or
which $19.8 million is available for spending at the City's discretion.
• The City's enterprise funds reported combined ending net assets of $517.3 million, of which
$96.3 million is available for spending at the City's discretion.
• During FY 2008, the City issued S 169. 8 million in debt for capital projects.
Overview of the Financial Statements
Basic Financial Statements. The MD&A is intended to serve as an introduction to the City's BFS. The
BFS are comprised of three component!!: l) Government-Wide Financial Statements (GWFS), 2) Fund
Financial Statements (FFS), and 3) Notes to Basic Financial Statements (Notes). The CAFR contains
other supplementary information in addition to the BFS.
Government-Wide Financial Statements, Tbe GWFS, shown on pages 35-37 of the CAFR. contain the
Statement of Net Assets and the Statement of Activities, described below~
The Statement of Net Assets presents information on the City's assets and liabilities (:including capital
) assets and short-and long-tenn liabHities), with the difference between the two reported as net assets
using the accrual basis of accounting. Over time, increases or decreases in net assets serve as a useful
indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents a comparison between direct expenses and program revenues for each
of the City's functions or programs. Direct expenses are specifically associated with an activity and are
) therefore clearly identifiable with that activity. Program revenues include charges paid by the recipient of
the goods or services offered by the program. Program revenues also include grants and contributions
restricted to meeting the operational or capital requirements of a particular activity. Revenues not directly
) 19
City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
related to a specific activity are presented as general revenues. The comparison of direct expenses with
revenues from activities identifies the extent to which each activity is self-financing, or alternatively,
draws from any City generated general revenues.
Governmental activities (activities principally supported by taxes and intergovernmental revenues) of the
City include administrative services and general government, community services, cultural and recreation,
economic and business development, fire, health, police, other public safety, and streets and traffic.
Business-type activities (activities intended to recover all of their costs through user fees and charges) of
the City include Electric, Water, Wastewater, Solid Waste, Storm Water, Transit, Airport, Civic Centers,
and Cemetery. Electric includes Lubbock Power and Light (LP&L) and West Texas Municipal Power
Agency (WTMPA). All changes in net assets are reported as soon as the underlying event occurs (accrual
basis), regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this
statement for some items that will only result in cash flows in future fiscal periods, such as uncollected
taxes and earned but unused vacation leave.
Component Units. The GWFS include the City (the "primary government"), and four legally separate
entities (the "component units") for which the City is financially accountable. The component units
consist of: Market Lubbock Economic Development Corporation, d/b/a Market Lubbock, Inc., Lubbock
Economic Development Alliance, Civic Lubbock, Inc., and Vintage Township Public Facilities
Corporation. The component units provide economic development services, arts and cultural activities,
and public improvement financing for the City. Financial information for the component units is reported
separately in the GWFS to differentiate them from the City's financial information. No component unit is
considered a major component unit.
Fund Financial Statements. Afand is defined as a fiscal and accounting entity with a self-balancing set
of accounts recording cash and other fmancial resources, together with all related liabilities and residual
equities or balances, and changes therein, which are segregated for the purpose of carrying on specific
activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.
The principal role of funds in the financial reporting model is to demonstrate fiscal accountability. The
City, as with other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
The focus of the FFS is on major funds. Major funds are those that meet minimwn criteria (a percentage
of assets, liabilities, revenue, or expenditures/expenses of fund category and of the governmental and
enterprise funds combined), or those that the City chooses to report as major funds given their qualitative
significance. Non-major funds are aggregated and shown in a single column in the appropriate financial
statements. Combining schedules of non.major funds are included in the CAFR following the RSI. All
funds of the City can be divided into two categories: governmental funds and proprietary fonds.
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Governmental FFS. Governmental funds are used to account for essentially the same functions reported (
as governmental activities in the GWFS. However, unlike the GWFS, governmental FPS focus on near-
term inflows and outflows of spendable resources, as well as on balances of spendable resources available
at the end of the City's fiscal year. Such infonnation is useful in evaluating the City's near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the GWFS (modified accrual versus
accrual basis of accounting, and current financial resources versus economic resources), it is useful to
compare the information presented for governmental funds with similar information presented for
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City of Lubbock, Texas
Management's Dlscussion and Analysis
For the Year Ended September 30, 2008
governmental activities in the GWFS. By doing so, the reader may better understand the long-term
impact of near-tenn fmancing decisions. Reconciliations are provided for both the governmental fund
balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund
balances to facilitate the comparison between governmental funds and governmental activities.
:, The City maintains 27 individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes, in fund balances for the General Fund and the Governmental Capital Projects Fund, both of
which are considered to be major funds. The governmental FFS can be found on pages 38-41 of the
CAFR. Data for the other 25 governmental funds are combined into a single, aggregated presentation.
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The City adopts a budget annually for the General Fund and all other funds. In the RSI section, a
budgetary comparison statement for the General Fund has been provided to demonstrate compliance with
the budget.
Proprietary FFS. The City maintains two different types of proprietary funds. Enterprise fonds are used
to report the same functions presented as business-type activities in the GWFS. Enterprise FFS provide
the same type of information as the GWFS, only in more detail. The City uses enterprise funds to account
for LP&L, Water, Wastewater, WTMPA, Storm Water, Transit, Solid Waste, Airport, Civic Centers, and
Cemetery activities, of which the first five activities are considered to be major funds by the City and are
presented separately. The latter five activities are coll.5idered non-major funds and are combined into a
single aggregated presentation.
Internal service fonds are an accounting device used to accumulate and allocate costs internally among
the City's various functions. The City uses internal service funds to account for vehicle service
operations and fueling, central warehouse and printing services, information technology services, risk
management, health benefits, and investment pool funds. The services provjded by the internal service
funds benefit both governmental and business-type activities, and accordingly, they have been included
within governmental activities and business-type activities, as appropriate, in the GWFS. All internal
service funds are combined into a single aggregated presentation in the proprietary FFS. Reconciliations
are provided for the proprietary fund statement of net assets and the proprietary fund statement of
revenues, expenses, and changes in fund net assets for comparison between enterprise funds and business-
type activities. The proprietary FFS can be found on pages 42-53 of the CAFR.
Notes to Baslc Financial Statements. Toe notes provide additional information that is essential to a full
understanding of the data provided in the GWFS and FFS. The notes can be found on pages 55-94 of the
CAFR.
Other Information. In addition to the basic fmancial statements and accompanying notes, this report
also presents certain Required Supplementary lnfonnation (RS]) concerning the City•s progress in
funding its obligation to provide pension and post retirement benefits to its employees and retirees. The
General Fund budgetary comparison demonstrating the legal level of budgetary control can also be found
as part of RSI. RSI can be found on pages 95-99 of the CAFR.
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
Government-Wide Financial Analysis
As noted earlier, net assets serve as a useful indicator of the City's financial position. Assets exceeded
liabilities by $666.5 million (net assets) at the close of the fiscal year, compared to assets exceeding
liabilities by $640.0 million (net assets) at the end of the prior fiscal year. As a result of operations, total
net assets increased by $26.5 million during the period.
Current and other assets
Capital assets
Total assets
Current liabilities
Noncurreat liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Res1ricted
Unres1ricted
Total net assets
City of Lubbock Net Assets
For the Year Enda?d. September JO
fm tboOUlnds)
Governmental
Activities
2008
$ 161,688 $
237,203
398,891
41,496
217.462
258.958
96,275
11,956
31,701
$ 139,932 $
2007
141,205
213,679
354,884
38,303
174,853
213,156
102,925
5,128
33,676
141,729
Business-type
Activities
2008
$ 314,011
787,522
1,101,533
66,249
508,748
574,997
400,552
21,275
104,709
$ 526,536
2007
$ 220,133 $
738,066
958,199
56,939
403,003
459,942
384,516
17,730
96,011
$ 498,257 $
Total
2008
475,699 $
1,024,725
1,500,424
107,745
726,210
833,955
496,827
33,231
136,410
666,468 $
2007
361,338
951,745
1,313,083
95,242
517,856
673,098
487,441
22,858
129,687
639,986
Approximately 7 4.5% of the City's net assets reflect its investment in capital assets, e.g., land, buildings,
infrastructure, machinery, and equipment, less any related outstanding debt used to acquire those assets.
The City uses capital assets to provide services to citizens; consequently, those assets are not available for
future spending. Although the City's investment in capital assets is reported net of related debt, the
resources needed to repay this debt must be provided from other sources since the capital assets cannot be
used to liquidate the liabilities.
The City has restricted net assets totaling 5.0% of total net assets, which represent resources subject to
external restrictions on how they may be used. Such resources include bond funds restricted to be spent
for specified capital projects, debt service reserves restricted by bond covenants, passenger facility
charges restricted for airport improvements, and grant programs restricted for specific purposes. The
remaining balance of unrestricted oet assets of $136.4 million may be used to meet the City's ongoing
obligations.
The City reports positive balances in all three categories of net assets for the City as a whole, and for its
separate governmental activities and business-type activities.
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
) Oty of lnbbock Ch1111ges in Net Assets
For the Year Ended September 30
(in thousands)
Business-
GovernmenlBI type
Activities Acdvities Totals
) Revenues: 2008 2007 2008 2007 2008 20117
Program Rewn1Es:
Charges fur services $ 12,677 $ 10,636 $ 260,494 $ 243,835 $ 273,171 $ 254,471
Operating grants and contributions 9,232 10,323 5,133 5,813 14,365 16,136
Capital grants ani caitributions 15,922 4,322 5,9:53 8,792 21,875 13,114
General Revenues:
) Property laxes 50,330 47,0<Jl 50,330 47,007
Sales taxes 50,549 47,7'e/J 50,549 47,780
Other taxes 5,370 4,900 5,370 4,~9
Franchise tees 12,978 12,378 12,978 12,378
lnvestIIEll.t earn.in~ 5,505 6,118 8,284 7,146 13,789 13,264
Other 4,811 3,669 31007 §z004 8,618 9,673
) Total reven1Es 167,374 147,142 283,671 271,590 451,045 418,732
Expenses:
Administrative services/general govt 12,372 12,155 12,372 12,155
Commmi ty services 6,874 6,951 6,874 6,951
Culrural and recreation 16,660 19,671 16,6(,() 19,671
Economic ruxl f:us:iness dewlq,mmt 12,378 11,620 12,378 11,620
Fire 31,789 27,338 31,789 27,338
) Health 6,142 5,899 6,142 5,899
Pooce 46,850 43,022 46,850 43,02.2
Other public safety 6,678 5,886 6,678 5,886
Streets ruxl traffic 16,357 26,870 16,357 26,870
Interest ai long-term dlbt 8,367 6,968 8,367 6,968
Electric 153,108 145,832 153,108 145,832
Water 38,424 32,125 38,424 32,125
Wastewater 19,001 18,048 19,001 18,048
Solid Waste 16,261 14,454 16,261 14,454
Storm Watt.r 7,677 3,933 7,671 3,933
Transit I 1,338 11,004 11,338 11,004
Airpcrt 9,465 8,524 9,46.S 8,524
Civic Centers 4,(})9 4,099
) CenEtery 722 619 722 619
Total expem;es 164,467 l 66,3'e/J 260,(})5 234,539 424,562 400,919
Oiange in net assets before
transfer.; 2,907 {19,238) 23,576 37,051 26,483 17,813
Tr.msfers (4,703) 10,572 4,703 (10.572)
Change in net assets (1,796) (8,6li6) 28,279 26,479 26,483 17,813
) Net am:s -beginningof~ar
Net assets -end of year $
141,729
IJ~~JJ $
1501395 141,7~ s 498!257 3Zo.~o $ 47r78 4g 237 $
639,986
ofi:i~69 $
6222173 oJ9,imo
Changes in Net Assets. Details of the above summarized information can be found on pages 36-37 of
theCAFR.
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
Governmental activities. The City's governmental activities experienced a decrease in net assets of$1.8
million, compared to a decrease of $8.7 million during the prior fiscal year. Key elements of the
operational decrease include:
• Revenues increased approximately $20.3 million, from $147.1 million to $167.4 million.
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o Capital grants and contributions accounted for the largest increase, rising from $4.3 million in FY C
2007 to $15.9 million in FY 2008. In FY 2008, private foundations and private developers
granted money and donated property in the amount of $7 .5 million for a conference center. In FY
2008, private developers donated $6.5 million of streets, alley ways, and parks; compared to $3.6
million in the prior year with most of the developer increase due to donations for the Vintage
Township development.
o Property taxes increased from $47.0 million in FY 2007 to $50.3 million in FY 2008. The C
property tax rate was $0.45505 per $100 of assessed value in FY 2008, compared to $0.46199 per
$ l 00 of assessed value in FY 2007. While the tax rate decreased, taxable assessed values
increased from $10.4 billion in FY 2007 to $11.3 billion in FY 2008.
o Sales tax revenue totaled $50.5 million, an increase of$2.8 million from the prior year, reflecting
Lubbock's growing economy.
o Charges for services increased $2.1 million to $12.7 million, primarily due to revenue recognized
from prepaid paving jobs at the completion of street projects.
• Total expenses decreased $1.9 million from the prior year, from $166.4 million to $164.5 million.
o Fire expenses totaled $31.8 million, a $4.5 million increase from the prior year. In FY 2008, the
City Council authorized 21 new fire fighter positions, 2 new division chief positions, 2 new fire
inspector positions, and a 5-year firefighter compensation plan to achieve salaries that rank in the
top 10 of fire departments in the State. Vehicle costs and computer expenses also increased
accordingly with the increase in personnel.
o Police expenses totaled $46.9 million, a $3 .8 million increase from the prior year with most of the
increase occurring in salaries and benefits. Police has the largest number of employees in
governmental activities and received the largest allocation of post retirement benefit expense due
to the adoption ofGASB Statement No. 45. In FY 2008, the City implemented a shift differential
program and certification pay for police officers. In addition, higher fuel costs and increased
vehicle maintenance expenses occurred.
o Streets and traffic expenses totaled $16.4 million, a decrease of$10.5 million from the prior year,
primarily due to a one-time $12.5 million contribution in FY 2007 to the Texas Department of
Transportation (TxDO1), which provided funding for the Marsha Sharp Freeway project.
Exclusive of the TxDOT transaction, costs in streets increased for planned use of prepaid paving
funds and additional depreciation on infrastructure added by donated and dedicated assets.
o Cultural and recreation expense totaled $16.7 million, a decrease of $3.0 million from the prior
year as a result of moving the Civic Centers from a governmental activity in FY 2007 to a
business-type activity in FY 2008.
o Interest expense totaled $8.4 million, an increase of$1.4 million from the prior year as a result of
additional bonded indebtedness and capital leases.
• Transfers to or from business-type activities during the fiscal year reduced governmental activities'
net assets $4.7 million. During the prior fiscal year, the transfers increased governmental activities'
net assets by $10.6 million.
o $13.8 million of one-time transfers from governmental activities to business-type activities
consisting of capital assets, net of long-term liabilities, were made in FY 2008. Most of the
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City of Lubbock, Texas
Management's Discussion aod Analysis
For the Year Ended September 30, 2008
transfers were related to moving the Civic Center, Auditorium, and Coliseum from the
governmental funds to the Civic Centers Enterprise Fund.
o Transfers from business-type activities included payments in lieu of taxes, franchise fees, and
indirect costs of operations for centralized services such as payroll and purchasing to
governmental activities. The most notable increase in payments was related to a contribution
from LP&L totaling $1.0 million for a payment in lieu of franchise fees.
o Transfers from governmental activities to business-type activities increased due to General Fund
support of the newly created Civic Centers Enterprise Fund and increased contributions to Transit
due to a decline in Federal funding.
The following graph depicts the expenses and program revenues generated through the City's various
governmental activities.
sso,ooo
$45,000
~ 540,000 ... • $35,000 ft .. ::,
C, $30,000 -= C ,:, 525,000 ... i: :: Sl0,000 E < $15,000
SI0,000
$5,000
Sil
Expenses and Program Revenues -Governmental Activities
25
•Expense
•Program
revenue
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
The following graph reflects the source of revenues and the percentage each source represents of
the total.
Revenues by Source -Governmental Activities
Charges for ervices
7.5%
Grants &
C ontributioos---.,_
15.0%
Investment Earnings
3.3%
Franchise Fees
7.8%
3.3%
M iscellaneous
2.9%
Property Taxes
30.0%
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Business-type activities. The City's business-type activities experienced an increase in net assets of
$28.3 million during FY 2008> compared to an increase of $26.5 million during the prior fiscal year. Key
elements of the increase from operations include: C
• Revenues for business-type activities totaled $283. 7 million in FY 2008, an increase of $12.l million
from the prior year.
o Charges for services for business-type activities totaled $260.5 million in FY 2008, an increase of
$16.7 million from the prior year. c
o Electric operations, which include LP&L and WTMPA, accounted for $7.2 million of the
increase in charges for services. Charges for services in the electric operations consist principally
of tbe retail sale of electricity to residential, commercial, and government customers, and off-
system sales to wholesale power customers. LP&L charges a base rate for electric service, which
remained consistent between FY 2007 and FY 2008, plus a fuel cost adjustment rate for electric
service, which increased in FY 2008. Offsetting the increase in charges for services was a $14.5 C
milli.on decline in revenues related to gas sales to a third party wholesaler. LP&L's gas supplier
26
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
exhausted its supply dwing the prior fiscal year, and as a result, sales to the third party wholesaler
were eliminated.
o Water and Wastewater operations accounted for $8.3 million of the increase in charges for
services. Water rates increased 11 % in March 2007 and again in March 2008 when the City, in
an attempt to encourage water conservation, implemented a tiered water rate structure with higher
rates charged for peak demand and excess usage. The rate increase was necessary to pay debt
service on aging infrastructure and water supply projects. The City continues to implement
mandatocy water conservation efforts as part of its drought :management plan due to low levels of
water in area reservoirs. Water levels continues to fluctuate from year to year depending on the
amount of annual rainfall, while the new water rate structure bas moderated peak water use and
revenue in summer months. Water revenue was $42.5 million in FY 2008, an increase of $7.1
million over the prior year. Wastewater revenue was $21.1 million, an increase of $1.2 million
over the prior year. Wastewater had a mid-year rate increase and processed additional water as
water usage increased.
o Operating grants, capital grants, and contributions continued to be a significant revenue source
for business-type activities dwing FY 2008, producing $11.1 million in revenue. This is a $3.5
million decrease from $14.6 million during the prior year. The decrease is primarily due to fewer
developer donated assets to the Water and Wastewater Funds.
• Expenses for business-type activities were $260.1 million in FY 2008, an increase of$25.6 million.
o Collection expense decreased in the LP&L Fund by $4.l million, with an offsetting increase in
Water, Wastewater, Solid Waste, and Storm Water due to a change in recording interfund activity
for billing and other services provided to other utility funds by the LP&L. In FY 2008, operating
expenses of LP&L were reduced by charges to other utility funds, and operating expenses of the
other utility funds were increased. In FY 2007, the other utility funds transferred funds to the
LP&L Fund to pay for services provided by the LP&L Fund.
o Electric operating expenses were $153.1 million, an increase of $7.3 million from the prior year.
Fuel purchases, after eliminating interfund activity between LP&L and WTMPA, decreased from
$123.3 million in FY 2007 to $121.0 million in FY 2008. In FY 2007, surplus fuel for sale to a
third party wholesaler totaled $12.8 million; however, there were no purchases of surplus fuel in
FY 2008 as supplies were exhausted. The average cost of fuel for use in the production of
electrical power and for sale to government users increased in FY 2008.
o Expenses in Water and Wastewater Funds were $38.4 million and $19.0 million, respectively.
Water expenses increased by $6.3 million and Wastewater expenses increased by $1.0 million
over the prior fiscal year. Three staff positions were added and additional supplies and
contractors were needed in order to address frequent pipeline breaks. Interest expense in the
funds increased by $2.0 million as more debt bas been incurred during the last few years to
address future water supply needs and infrastructure and facility improvements.
o Expenses in Storm Water were $7.7 million, an increase of $3.8 million from the prior year. In
FY 2008, five staff members were added to comply with the MS4 pennit and video inspections of
storm sewers were performed. The Storm Water Fund continued to issue debt to pay for capital
improvements to the storm water system, resulting in an increase of interest expense of $1.0
million.
o Civic Centers, with expenses of $4.1 million, was recorded as a business-type activity beginning
in FY 2008.
27
City of Lubbock, Texas
Management's Discussion and Analysis
For tbe Year Ended September 30, 2008
• Transfers from governmental activities to business-type activities increased net assets by $4.7 million
during the fiscal year compared to a decrease of $10.6 million in the prior year. The reasons for the
changes were discussed under governmental activities.
The following graph reflects the revenue sources generated by the business-type activities. As noted
earlier, the activities include LP&L sod WTMPA (Electric), Water, Wastewater, Storm Water, Solid
Waste, Transit, Airport, Civic Centers, and Cemetery.
Reveooes by Source -Business-type Activities
Charges for
Senices
91.9%
Financial Analysis of the City's Funds
Miscellaneous
1.3%
Grants and
Contributions
J.9•;.
luvesttoent
earnings
2.9%
GovernmenJalfunds. The focus of the City's governmental.funds is to provide infonnation on near-tenn
inflows, outflows, and balances of spendable resources. Sue b information is useful in assessing the City's
financing requirements. In particular, unreserved fund balance serves as a useful measure of the City's
resources available for spending at the end of the fiscal year.
At the end of the, year, the City's governmental funds reponed combined ending fund balances of $ l 30 .5
million, compared to $110.2 million at the end of the prior fiscal year. The increase is primarily the result
of debt issued for North Overton Tax Increment Finance Reinvestment Zone Cap.ital Projects and
Gateway Streets Capital Projects, which exceeded capital outlays by $22 .9 million. Unreserved fund
balance, which is available for spending at the City's discretion, amounts to $19.8 million, or 15.2% of
the ending governmental fund balance. This is compared to $19.0 million, or 17-2% of ending
governmental fund balance, at the end of the prior fiscal year. There is $21 .7 million, or 16.7% of ending
govemmental fund balance, reported in unreserve<l fund balance designated in special revenue funds.
28
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
This is compared to $24.9 million, or 22.6% of ending governmental fund balance, at the end of the prior
fiscal year. Tbe reason for the reduction in unreserved fund balance was primarily due to a transfer of
$1.8 million from the Information Technology Fund and $0.3 million from the Print Shop and Warehouse
fund to the General Fund that represented funds in excess of policy levels. The remainder of the fund
balance is reserved to indicate it has already been committed to pay debt service, use in construction of
approved capita1 projects, or is restricted for other purposes.
The General Fund is the chief operating fund of the City. At the end of the fiscal year, unreserved fund
balance in the General Fund was $19.8 million, compared to $19.0 million in the previous fiscal year,
representing an increase of approximately $0.8 million. Total fund balance (reserved and unreserved) was
$20.0 million at the end of the fiscal year, compared to $19.l million at the end of the prior fiscal year.
As a measure of the General Fund's liquidity, it is useful to compare both unreserved fund balance and
total fund balance to total fund revenues. Unreserved fund balance represented 18.6% of total General
Fund revenues compared to 18.5% of total General Fund revenue in the prior year. Total fund balance
was 18.7% of total General Fund revenues in FY 2008 and FY 2007.
Proprietary funds. The City's proprietary fund statements provide essentially the same type of
information found in the GWFS, but in more detail. Unrestricted net assets of the major proprietary funds
at the end of September 30 are shown next with amounts :presented in lhousands:
2008 2007
LP&L $ 62,540 $ 51,020
Water Fund 2,764 9,663
Wastewater Fund S,829 8,270
WTMPA 1,883 1,514
Storm Water 6,318 9,158
$ 79,334 $ 79,625
.
The LP&L Fund increased unrestricted net assets by $11.5 million, compared to an increase of $18.9
million during the prior year. The increase is due to the results of operations and the decision of the City
Council to reduce the charge for payments in lieu of franchise fees to increase cash reserves.
At the end of the fiscal year, the Water Fund unrestricted net assets decreased $6.9 million, compared to a.
decrease of $1.2 million from the prior year. The FY 2008 adopted budget included a $6.4 million
utilization of net assets in an effort to smooth rate increases over a five-year period. Net assets were
utilized and acted as a rate stabilizer, while future rates were planned in a man.ner that ultimately leaves
the fund with sufficient net assets in accordance with policy levels.
At the end of the fiscal year, the Wastewater Fund unrestricted net assets decreased $2.4 million
compared to a $1.3 million decrease during the prior year. In FY 2008, the City budgeted $1.5 million
utilization of net assets to smooth rate increases over a five-year period. Net assets were utilized and
acted as a rate stabilizer, while future rates were planned in a manner that ultimately leaves the fund with
sufficient net assets in accordance with policy levels.
29
City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
The WTI.1P A Fund bad an increase in unrestricted net assets of $0.4 million, compared to an increase in
unrestricted nets assets of $0.2 million during the prior fiscal year.
The Storm Water Fund experienced a decrease in unrestricted net assets of $2.8 million during the fiscal
year, compared to a $0.9 million decrease in the prior fiscal year. In FY 2008, the City budgeted $1.5
million utilization of net assets. Unrestricted net assets are in excess of policy levels, and will continue to
act as a rate stabilizer as debt service expenditures exceed revenues. A rate increase is planned for FY
2009-10 when the umestricted net assets reach policy levels.
General Fund Budgetary Highlights
The final amended budget expenditures and transfers out increased by $84,463 over the original budget.
The main reason for the increase was related to encumbrances that had lapsed in the prior year that were
appropriated in FY 2008.
Revenues and transfers in the General Fund were under budget by $.2 million. The General Fund ended
the fiscal year with expenditures and transfers out of $.4 million more than budgeted. The City budgets
on a basis other than Generally Accepted Accounting Principles (GAAP), with the main difference being
that capital lease proceeds and related capital outlay are not budgeted.
Capital Assets and Debt Administration
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Capital assets. The City's investment in capital assets for its governmental and business-type activities C
at September 30, 2008, totaled $1.0247 billion net of accumulated depreciation, a $48.3 million increase
over the prior fiscal year's balance of $951.7 million net of accumulated depreciation. The investment in
capital assets includes land, buildings and improvements, equipment, construction in progress, and
infrastructure.
City of Lubbock Capital Assets
(Net or Accumulated Depreciation)
September 30
(in thousands)
Business-
Land
Buildings
Improvements other
than buildings
Machinery and equipment
Construction in progress
Total
$
$
Governmental
Activities
2008 2007
9,034 $ 9,056
23,141 32,029
120,298 111,293
17,915 20,541
66:816 40:760
237,204 $ 213,679
type
Activities
2008
$ 33,112 $
68,150
477,402
81,185
12 71673
$ 787,522 $
Major capital asset projects during the fiscal year included the following:
1:007
31,963
62,459
476,269
76,859
90:516
738,066
Totals
2008 2007
$ 42,146 s 41,019
91,291 94,488
597,700 587,562
99,100 97,400
1941489 1311276
$ 1,024,726 $ 951,745
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• The City spent $12.4 million on a youth sports complex, and 2 new Little League complexes. C
• The City spent $9.0 million on projects that included street improvements, drainage, curbs, gutters,
and other improvements.
30
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
• The North Overton Tax Increment Finance reinvestment zone (TIF) spent $7.9 million on the
construction of a conference center.
• The City began construction on the Southeast Water Reclamation Plant. Phase II of the project
includes the design and construction of improvements associated to upgrade Plant 4 for biological
nutrient removal, filtration1 and UV disinfection. Expenditures during the fiscal year totaled $7.3
million.
• LP&L spent $6.9 million during FY 2008 for projects such as transformers, overhead and
underground electric lines, and substations.
• The South Central and South Lubbock Drainage projects spent $6.9 million on the first and second
phase of the drainage system.
• The Airport continued improvements on the parking lot and runway and started improvements to the
terminal building. Expenditures during the fiscal year amounted to $6.8 million.
At the end of the fiscal year, the City had construction commitments of $215 .3 million. Construction on
the Southeast Water Reclamation Plant will continue as the City strives to make wastewater facility
improvements. The Water Treatment Plant upgrade, Lake Alan Henry Reservoir construction, Canadian
River Municipal Water Authority (CRMW A) projects, and ne,.v water lines throughout the City will take
a large share of financial resources while the City implements plans for current and future water supplies.
Additional information about the City's capital assets can be found on pages 70-72 of the CAFR.
, Long-term debt. A summary of the City's total outstanding debt follows:
)
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General obligation bonds $
Revenue bonds
Total $
City ofL11bbock O11tst.nding Debt
General Obligation and Revenue Qonds
September 30
(in thousands)
Business-
Governmental type
Activiti es Activities
2008 2007 2008
i 99,054 $ 160,388 s 457 ,126 $
50143 1
199,054 $ 160,3~8 $ 507,557 $
Total s
2007 l'OOS 2007
352,487 $ 656,180 $ 512,875
54120 8 501431 54~08-
406,695 $ 706,61 l $ 567,083
There is no direct debt limitation in the City Charter or under state law. The City operates under a Home
Rule Charter that limits the maximum tax rate for all City purposes to $2.50 per $ 100 of assessed
valuation. The Attorney General of the State of Texas permits an allocation of $1.50 of the $2.50
maximum tax rate for general obligation bonds debt service. The current interest and sinking fund tax
rate per $100 of assessed valua.tion is $0.07125, which is significantly below the maximum allowable tax
rate.
As of September 30, 2008, the City's total outstanding debt has increased by $139.5 million, or 24.6%
over the prior fiscal year. The increase in outstanding debt is attributed to the issuance of $169.8 million
in debt, offset by the payment of scheduled debt service totaling $30.3 million.
31
City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
During the fiscal year, the City issued the following bonds and certificates:
• $11.8 million Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable
Series 2008 were issued to fund construction of a Hotel Conference Center.
• $52.9 million of Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series C
2008 were issued for improvements and extensions to the City's wastewater system.
• $2.0 million of General Obligation Bonds, Series 2008 were issued for various public purposes
including street improvements.
• $80.5 million of Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series
2008 were issued to finance various public improvements including cultural and arts, fire, airport,
park, solid waste, drainage, street, electrical, tax increment financing reinvestment zone, water, and
wastewater.
• $22.6 million of Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series
2008 were issued to finance design and engineering of the Lake Alan Henry Pipeline.
All bonds and certificates issued during the fiscal year were insured in an effort to provide a lower cost of
interest expense. It is the City's policy to evaluate each bond issue to detennine whether it is
economically prudent to purchase bond insurance.
In April 2008, the City received from Standard & Poor's a rating upgrade from "AA" to "AA+".
Concurrently, the ratings of "Aa3" and "AA" were confinned by Moody's Investors Service and Fitch
Ratings, Jnc., respectively. All three rating agencies characterize the City's rating outlook as stable.
During FY 2008, there were no cbanges in the ratings for LP&L. Toe current ratings and corresponding
outlooks for LP&L are as follows:
Standard & Poor' s, BBB (positive outlook)
Fitch Ratings, BBB+ (stable outlook)
Moody's Investor's Service, A3 (stable outlook)
Additional information about the City's long-tenn debt can be found on pages 80-85 of the CAFR.
Economic Factors and the Next Fiscal Year's Budget and Rates
• In September 2008, the unemployment rate for tbe Lubbock area was 4.0%. This is a 0.2%
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improvement over September of the previous year, and compares favorably to the state's (
unemployment rate of 5.2% and the national rate of 6.0% for September 2008.
• Taxable retail sales figures reflected a 5.8% increase in FY 2008, compared to FY 2007.
• Toe number of building permits for new construction decreased from 1,709 during FY 2007 to 1,660
in FY 2008, a 2.9% decline. Building permit values for new construction increased from $404.0
million in FY 2007 to $431. 9 million in FY 2008, or a 6 .9% increase.
32
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City of Lubbock, Texas
Management's Discussion and Analysis
For the Year Ended September 30, 2008
• Total occupancy in local hotels and motels improved, and the local occupancy tax totaled nearly $4.2
million, a 10.5% increase over the prior fiscal year.
The above factors were considered in preparing the City's budget for FY 2009.
• In FY 2009, the City continues to focus on public safety, transportation infrastructure, and the
development of future water supplies. The FY 2009 budget focuses on maintaining core services and,
at the same time, decreasing the tax rate by $0.00865 per $100 valuation.
• The City adopted a tax rate of $0.44640 in FY 2009. General Fund revenue from property tax is
lower than the prior fiscal year by $498,956 due to a shift of $0.01975 of the tax rate from General
Fund operation and maintenance to debt service and the $0.00865 reduction in the rate to offset
increasing property valuations.
• Sales tax estimates for FY 2009 call for no growth due to the all-time high cost of fuel, natural gas,
and corresponding utility rates. Though Lubbock's economy is solid, a conservative approach is
fmancially prudent at this time. Total General Fund revenue projections are $0.89 million over FY
2008 amounts.
• A resumption of payment in lieu of franchise fees for LP&L will result in a $5.0 million dollar
transfer to the City. The allocation of the payment will be $3.7 million to the General Fund and $1.3
million to the Gateway Fund.
• The City's fuel costs are expected to increase $2.7 million in FY 2009. The increase totals $1. l
million in the General Fund, $0.9 million in the Solid Waste Fund, $0.5 million in the Water and
Wastewater Funds, and $0.2 million in all other funds. Fuel estimates are based on the City's fuel
price on June 2, 2008, of $3.83 per gallon for unleaded and $4.25 per gallon for diesel.
• In FY 2009, rate increases in Water, Wastewater, and Storm Water are planned. The increases are
mainly related to increased debt service requirements, pay-as-you-go funding, and fuel and utility
costs. There is no rate increase for Solid Waste, as fund net assets are utilized to offset the increase
for FY 2009. The City will continue to implement the strategic water plan focusing on future water
supply needs, additional infrastructure to transport water, and facilities maintenance.
• In September 2008, LP&L implemented a 2.0% surcharge to recover costs associated with our
provider's new power plant. LP&L also anticipates a rate increase to occur in March 2009.
Requests for Information
) The financial report is designed to provide a general overview of the City of Lubbock's finances.
)
)
Questions concerning any of the infonnation provided in the report or requests for additional financial
information should be addressed to the Chief Financial Officer, City of Lubbock, P.O. Box 2000,
Lubbock, Texas, 79457.
33
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.,d.._11.._,.,, .,
-.. -~ -'-,• -
'";.-'' , ~· ,,
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-\...> ·-·•c-...__ __ -....:.=•.._~__, • ..-....,,,.,,,.....;u.1C!.l.Jr..--.,r,.. .. ..:.i
Comprehensive Annual Financial Report
for the Fiscal Year Ended September 30, 2008
34 C
City of Lubbock, Texas
Statement of Net Assets
September 30, 2008
Prlmllr, Go¥enunmt
Governmental BUl!llnest-t)'pe Component
'.) AetMdes Actividet Total Uolb
AS.5ET8
CUil 111d c:a!h equivalellts $ 37S,S46 s 2,092,480 s 2,468,026 S S,OS9,.S63
law,ll=D 47,092,702 92,621,.585 139,714,287 100,408
~lcs (im otallowwu:e bl" 1111COlli:alllics) 11,573,206 31,880,880 43,454,086 1,762,016
J lnmnal balance (99,681) 99,681
Due ft-om od:ler govemmenll 4,480,115 4,480, t 15
DU& from olhffl 2,509,088 1,351,244 3,860,332
lnwntmies 205,454 3,342,792 3,548,246 126,950
lffllalmc:nt in property 208,213 208,213
PRpaid ctpmSal 882,298 60,261 942,SS9 1()6,308
Rt:sttie!ed useta:
Cull 1111d cub eqUMlir:na 2,562,465
bwesmimlls 88,668,725 179,596,581 268,265,306
ka:iYlbll:s 178,571 154,648 333,219 S,000,000
Mortgage recciw.bla S,612,742 5,612,742
Capiml U3Cb (aec of accwna,blm. dl:pn:cwian):
) Non,d,,pn,eiable 75,849,966 160,785,542 236,635,508 17,430,818
Dlpmablc, 161,353,736 626,736,918 788,090,654 252,020
Deferred chllrgta 21811:110 218111110
Tola! IISSlll5 39818901681 1,101,533;722 1,500,424,403 3214001548
LIABIUTIE6
Aa:olUll5 Pll)lab II: 10,088,992 20,394,74-0 30,483,732 1,148,361
A4:il;Ned tiab11illes 6,382,994 3,279.222 9,662.216 320,139
M.rllCd intve:!l pa,abll, 1,432,711 3,950,697 5,383,408
Cusmmcr depo&ilS 3,655,481 3,655,481
Uncami=d rew:one 2,772,640 81,621 2,854,261 5,264,793
Nancummt liabilillcs due within one ~
Compensatedabscrxa 6,806,236 2,838,245 9,644,481
ACC1'1111:d inslnllae c11im1 1,599,299 1,420,757 3,020,056
ColllnelS 111d leases pa)albll! 2,934,588 4,164,910 7,099,498 2,539,123
BondipsJBh~ 9,478,486 26,%3,446 35,941,932
Nuaevn:nt lillbililies due iD m~ INn orw ,ar.
Compmsawl.a~ 11,117,607 2,769,439 13,887,046
Pm emplo)UICllt °bcllc:llb 2,813,759 1,541,761 4,355,520
AQtnmdinannceclLlms 156,407 1,424,922 1,581,329
Rcbuable arbiirqe 570,747 571,274 I, 142,021
I..m:11111 closllre and. pasrckmire care 3,770,566 3,no,566
Comraca 1111d 1caSles pa)all,Je 9,287,918 14,417,486 23,705,404 6,724,275
Bonds~Je 193,515,885 484,252,822 6n, 768,101 3,394,000
) TOia! iiabiiities 2581958,269 5741997J89 833195516.58 19~90,691
NP~ETS
ln>'C!lcd in api1al uam, Mt of rdaird debt 96,274,734 400,552,048 496,826,782 8,696,339
lu!stricted li:lr.
P.-ager lidlicy ~ 2,318,723 2,318,723
Debl!Zl'w:e 4,676,551 18,956,448 23,632,999
) Gram prollfMI& 7,156,393 7,1.56,393
Primary go1'Cl'lllllelll asi-nt 100,000
Non-expendable perpebllJ can 123,462 123,462
Uonstric!M 3117011272 104,709,114 13614101386 412131518
to1al 111:1 ll&1CU 139,932,412 526,536,333 666,468,74S 13,009!857
See accompP1ying NOies to Basic PinanciaJ Smtements
) 35
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City of Lubbock, Texas
St.atement of Activities
For the Year Ended September 30, 2008
Program Ret'enues
Operating Capita.I C
Charges for Gnntsand Gnntsand
Ei:penRS Services Contributions Contr1bndons
Primuy govaument:
Governmental activities:
Administnltive services and general government $ 12,372,316 $ 35,766 $ $ 200,289
Cormnunity services 6,874,065 5,990,797 C
Cultural and recreation 16,660,378 1,589,515 692,460 1,534,716
&onomic 1nd business development 12,378,335 423,747 7,504,530
Fire 31,789,223 14,420 126,534
Health 6,141,386 805,601 1,667,263 24,360
Police 46,849,826 208,621 279,984 1,136,221 C
0th~ public 88fcty 6,677,751 7,307,182 601,24S 101,497
Streets and traffic 16,357,025 2,291,900 5,293,806
Interest on long-tc:rm debt 8,3671167
Total governmental activities 164,467,472 12,676,752 9,231,749 15,921,953
Business-type acti vi lies: C Electric 153,108,050 161,329,847
Wai:er 38,424,263 42,527,445 198,400 1,073,098
Wastewater 19,000,488 21,095,745 1,030,539
Solid Wa5te 16,260,630 16,754,438
Storm Wat£r 7,676,456 6,633,255
'I'rlnsit 11,338,463 4,306,204 3,231,060 C
Airport 9,465,392 6,793,829 1,703,632 3,849,200
CivicCenlierS 4,098,873 717,494
Cerneteiy 722,393 335,884
TotaJ business-type activities 2601095,008 260,494!141 511331092 5!952,837
Total primary govemmcnt $ 424,562,480 $ 273,170!893 $ 1413641841 $ 21,874,790 C
Component units:
Civic Lubbock, Inc. $ 2,491,456 $ 2,018,527 $ 512,975 $ 30,000
Martet Lubbock, Inc. 5,837,232 59,746 6,817,752
Lubbock Economic DeYelopmmt Alliance 4.293,560 6,102,18S 1,228,495
Vintage Township Public Facilities Corporation 1,302,311 78,993 C Total component units $ 13,924,559 $ 2,078,273 $ 13,432,912 $ 11337,488
General revenues:
Pniperty taxes
Sales taxes
Occupancy taxes
Other taxes
Franchise taxes
Investment eemings
Miscellaneous
Transfers, net
Total general revenues and transfers
Change in net assetS C
Net assets -beginning
Net assets -ending
Sec accompanying Notes to Basic Financial Sl3Icments
36 (
')
)
)
)
)
)
)
)
)
Net (Expenses) Revenu.a and
Cbangm In Nd Assets
Primary Governmmt
GoYlmmental BusiDeu-type
Amritles Activities Total
$ (12,136,261) $ S (12,136,261)
(883,268) (883,268)
(12,843,687) (12,843,687)
(4,450,058) (4,450,058)
(31,648,269) (31,648,269)
(3,644,162) (3,644,162)
(45,225,000) (45,225,000)
1,332,173 1,332.173
(8,771,319) cs,n1.319)
{813671167) {81367,167)
(126,637,018) (126,637,018)
8,.221,797 8,221,797
5,374,680 5,374,680
3,125,796 3,125,796
493,808 493,808
(1,043,201) (1,043,201)
(3,801,199) (3,801,199)
2,881,269 2,881,269
(3,381,379) (3,381,379)
(386,509i (386i5M}
11,485,062 11,485,062
(126,637,018) 11,485,062 (115,151,956)
50,330,322 50,330,322
50,548,865 50,548,865
4,190,376 4,190,376
1,180,332 1,180,332
12,977,686 12,977,686
5,505,386 8,284,058 13,789,444
4,810,900 3,806,864 8,617,764
(4,703,317) 4,703,317
124,840,550 16,794J39 141,634,789
(1,796,468) 28,279,301 26,482,833
141,728,880 498,257,032 639,985,912
$ 139,932,412 $ 526,536,333 $ 666.z4681745
Component Units
$
70,046
1,040,266
3,037,120
(I ,223,318)
2,924,114
28,213
(1,396,145)
{1,367,932)
1,556,182
11,4531675
$ 13,009,857
37
C
City of Lubbock. Texas
Balance Sheet
GovenLm.ental Funds
September 30, 2008 ,,.. ....
Noomajor Total
Covenmeotal Governmental Go¥ernmentaJ
General Fund Capital .Projects FIIDda Fv.nda
ASSETS
Cash and cash eguiwlents $ 120,449 s 68,267 $ 164,560 $ 353.276 C
Investmem 14,747,933 8,358,699 21,259,261 44,365,893
Taxes receivable (net) 9,711,930 376,629 10,088,559
Accounts receivable (net) 1,109,105 1,109,105
Interest receivable 177,748 14,078 150,733 342,559
Due from other funds 3,266,168 152,000 3,418,168
Due from other govcmme:nts 4,480,11.S 4.480,11.S C
Due from others 882,879 1,528,818 2,411,697
ln~mt iD property 208,213 208,213
lnvmtary 168,657 168,657
Restricted investments 18,200,686 60,975,583 79,176,269
Mortgage receivables 5,612,742 .S,612,742 ,.. ..
Total assets $ 30,184,869 s 26,641,730 $ 94,908,654 $ 151,735,253
LIABILITIES
Accoonts payable s 3,522,540 $ 1,.233,491 $ 4,172,472 $ 8,928,503 C Due to other funds 2,073,164 2,073,164
Accrued liabilities 4,69.S,OC57 18,633 238,782 4,952,482
Accrued intcn:&t pa)'ble 191,702 191,702
Deferred t'C'ffllue 2,004,987 455,724 2,595,236 S,0SS,947
Total liabilities 10,222,S94 1,707,848 9,271,356 21,201,798 C
FUND BALANCES
R.cservcd far:
Prepaid itcms/invenlmy 168,657 168,657
Debt service 2,104,697 2,104,697 C
Capiml projects 24,933,882 53,855,061 78,788,943
Special revenue • Ci vie Center facilities 650,080 650,080
Special reYl:IIUe -grants 7,156,393 7,156,393
Perpetual care 123,462 123,462
Unreserved. designated in special revenue funds 21,740,729 21,740,729 < Unreserved, undesignated reported in:
General fund 19,793,618 19,793,618
Pi;nnanent fimd 6,876 6,876
Total fund balaDCCi 19,962,275 24.933,882 85,637,298 130,533,455
C
Total liabili tics and fund balances $ 30,184,869 s 26,641,730 $ 94,908,654 S 151,735,253
Sec accamp!ID)'ing Notes to Buie Financial Statements
38 (
....
aty of Lubbod, Tens
Reconciliation of the Balance Sheet of Governmental Fand1
To the Statement of Net Assets
September 30, 2008
Total filnd ba1mlce -goybW.,UW funds
Amount., reported for govemmmnal activities in tu m.temcnt ofnet aucm are
differeDt because:
Capital .wets used in govemmcntal activitie.s are not :financial
n::sources and tbaefore are DOC tq)Oltm in the fund,,
lntemal serv.ice funds (ISF's) are used by management to charge the costs of certain
activitiea, such as insurance and tclecommunicatiom, to individual funds. The
portion or the assets and liabilities of the ISF's primarily serving governmental funds
are included in govemmentll activities in the statmnmlt oh.et assets as follows:
NetBS&ets
Net book wlue of capital 8$.MU
Capital leues payable
Compensated a~
Post rctl:rement benefits
Amomm due from bu.linen-type ISFs for amounts undercharged
Certain liabilities aR not due and payable in 1he cunat period
and therefore aR not reported iD the funds. 'Those liabilities are as
follows:
Genera.I. obligation bonds
Capital leucs payable
Compensated absences
Po5t retirement bc:odils
Accrued inetrest OII gc:m:ral obligation bands
Arbitra1e payable
Envirommm:al remediation
Bond premiums are recognized as an other financiDa 10wce in the fund atatcIIKmts
but the premiums are amortized over the life of the 'boaJds in the govemm=a--wide
!datl:me:Dts.
Actual City cootributio~ to tu dre:fighter's pe:nsion cruet fund is greater than the
actuarially determined required comributian. This will reduce future funding
requiieIDCD.ts and is not recognized as an asset at tu fund level but is a prepaid
expense in the Sratement of Net A.uet&.
Revame eamed but 1JDPllllablc in the mods is deferred.
Net assets of governmental activities
See aocmnpenying Natea to Basic Finuu::ial Statements •
39
s 130,Sll,455
237,203,702
10,157.898
(2,204,710)
1,110,llS
403,091
129.867
(1,444,685)
(199,0Sl,653)
( 12.222,506)
(17,923,843)
(2.813,759)
(1,237,703)
(570,747)
(1,290,280)
(3,940.118)
813,571
2.,283,.307
$ 139,932,412
0
City of Lubbock, Tuu
Statement of Revenues, E:i:penditares and Changes In Fond Balances
Gwernmeatal F11Dd1
For the Year Ended September 30, 2008
Noa1Njor Total 0
Governmealal Governmental Goven11nmta1
Gllletal FU.ad Capital PruJt.eU Funds Funds
REVENUES
Taxes $ 85,345,082 $ s 20,971,596 $ 106,316,678
Franchise taxes 7,786,611 5,191,075 12,977,686 a
Special assessmenEI 296,482 296,482
Fees and fines 3,279,911 521,391 3,801,302
l..iOCIUlal and permits 2,663,139 2.663,139
lottrgovcmmcntal 530,389 21.S,561 16,733,463 17,479,413
ClWJCS(or~I 3,339,148 2,290,160 466,131 6,095,439 0 1ulerett 1,052,842 1,259,842 2,375,665 4,688,349
Mia:eJJanmus 2,574.448 2J:931465 4.967z913
Tat•lteRDUeS 1~7l.S70 3.76S.,563 48.949.268 159J86.401
EXPENDl11JRES
CUm:nt: 0
Admini111ntive services and pnalll govc:mment 11,047,039 63,697 11,110,736
Community l!Cfflcel 6,586,711 6,586,711
Cultural and m:readon 12.253,380 95,598 927,430 13,276,408
F.conomic lllld busiMIIII deY'elOJ)ftll.t 1,215,978 10,663,287 11,879,265
Health 4,133,917 1,671,071 5,804,988
Fire 29,630,222 4',856 57,231 29,733,309 0
Police 42,831,016 1,034,256 43,865,272
Other public saf«Y 4,703,249 1,401,664 6,104,913
Strem a.nd traffic: 8,168,462 324,850 8,493,312
Intergovermnental 123,852 123,852
Debt &erVi cc: 0
Principal 2.069,461 7,939,868 10,009,329
Interest and other charges 327,144 151,047 7,854,089 8,332.280
Capital outlay 32966,065 28,3571960 14.359,347 ~683J72
Tor.alc,q,mditureS 120.345&233 29,0391008 522618,806 202.003, 747
Dc6cicocy of revenues under 0
expmditura (13,774,363) (25,273.445) (3,669~38) (42,717,346)
OTHER nNANCING SOURCES (USES)
Long-tam dl:bt iu~ 10,690,376 35,914,775 46,605,151
Bond premiwn 625,760 1,218,259 1,844,019
C11pital leexs 3,011,141 345,878 3,357,019 C
Transfers in 17,729,361 1,019,009 7,394,572 26,142,942
Tnmfers out (6,129,512} !114691423l p.2771103) !14,876,038)
Net odw:r financing aroes (usca) 14,610,990 11,2111600 37,250,503 6310731093
Net change in fund bl1lnccl 836,627 (14,061,845) 33,580,965 20,35S,147
FWJd balances -begirmlnr afyear 19,125,648 38,99~.727 52,056,333 110,177,708 0
Fund balanc:a -end or year $ 19,962,275 s 24,933,882 s 85,637,298 $ 130,533,455
See acwmpaning Na1a to Basic Financial Slatl!lnents
40 0
')
0
0
()
City of Lubbock, Tetu
Reeonelllatlon of the Statement of Revenues, Expenditures and Changes
In Fu•d Balances of Governmental Funds
To the Statement of Activities
For the Year Ended September 30, '2008
Net change in fund balances -total govemrneota1 funds
Amounts reported for governmental activities in the statement of activities are different because:
Governmt7Jcal funds Teport capiw outl11;Yt as expenditures. However, in the Statement of Activities the
,cost of tho5e anets is allocated over thc.ir estimated u~l li\les and reported u ,depreclati:o_n ex;pe:nse.. This
is the am-01mt by which capital out1ays of S-46,683,372 ,ex.c«ded deprecietioo of${6,9 I 2_.331 in the Clfflfflt
period.
Bond proceeds provide eurtertt financial resources to govem1nenUI funds. but ii9uing debt increases 1ong•
term liabilities in the Statement ofN~ A,$jets.Repa:,ment ofbond-princip,l is ail expenditore in the
govemmental funds, 1:Nt the repayment reduces kmg•tmri Uabllities in 'the Statement ofN~ Assets. This is
rhe arnc,~( by which ~t of $46.605 l 5 l exceeded repayments and debt dd'casence of $7,939,868.
CapitaJ lease transactions provide current financial resoimes to governmental funds and repayment of
principal is an expenditure. This is the amount by which proceeds of $3,357,019 exceeded ~ayrnents of
$2,069,461.
Bond pn:mium, are recognized u an other financing source in the governmental fun&!, but are considered
deferred assets on the Statement of Net Assm. Premiums~ amor:tiied ova-the life of the bonds. This is
the unotmt by which bond premium is.sued of$ 1,844,0 I 9 exceeded amortiz.ation 0£$219,225.
Estimated long-term liabilities #fC recognized 11S ~te$ in the Statement of Activities IS earned, b1.1t are
reoopjicxl when current financial tHOurc_es ~ used in the governmental funds.
Arbitrag1: payable.
Compensated absences
Post retirement benefits
Environmental remedia.tion
Property taxes levied and court fines and fees earned. but not available, arc. deferred in the governmental
fund&, but 11re recognized when esmed (net of estimated uncollcctibles) in the Statement of Activities. This
amount is the net change in deferred property taxes and ooun fines and feea for the year.
Actual City contributions fa, 'the firefightct's ,~an trust fund are greater than ihe actwuia.lly determined
Net 'PcnsiQTI Obligat:ion (NP()). This .,-oount is recognized as ail ~diturc at the fi.md level but ii
•ccrued when overpaid end teduces expenses on the Statement of Activities.
Internal service funds are used by managmient to charge the costs of certain acti'r'ities, such as insurance
end telecommunications, to indhidual funda. The net revenue (expense) of certain internal lel"Vice fimds is
reponed ..;th governmental acti't'ities.
Accrued interest is rooognized as expenses in the Statement of Acti'r'itiea ~ incurred, but is recognized
when current financial resources are used in the governmental funds. This amowrt is the net change in the
accrued interest this ~ar.
The nel effect of varioui misteUanequs a-ensactions involving c11;pital. ass.ets This amount includes
S7A74,000 dnelopm donated streets and p~ks, less $13,775,023 equipment tra1.1sfers out to busin=s•type
activitie$, less $304,282 saJes and tnlde-in.
Change in net assets of govemmentaJ activities
See 11C001DpU1ying Notes \0 Ba.sic Financial S1atemeots.
41
s
s
20,JSS,747
29,771,041
(38,665.283)
( 1,287,.S.SS)
(1,624,794)
105,30.S
(640,671)
(2,683,892}
(497,611)
(246,393)
(48,740)
596,996
(325,310)
(6,60.S,30.S}
(1,796.~8)
City of Lubbock, Texas
Statement of Net Assets
Proprietary Foods
September 30, 2008
ASSETS
Current assets:
Cash and c:8lb equivalents
Investments
Accounts rcc:rrivable
Interest rccrivable
Duefi'mnothen
Due from otber funds
Prepaid expenses
Inventories
Total cwmrt assm
Noncurren:t aasets:
Restrieted invmments
lus~tcd interest receivable
~cted accounm receivable
Deferred charges
Qipital ass«s:
Land
Co.nstruction in progress
Buildings
Improvements other than buildings
Machinery and equipment
Les& accumulated dep~ciation
Total capilal 8"C1S
Total noocum:nt assets
Total wets
See accompanying Notes to Basic Financial Statements
LP&L
$ 491,892
00,227,762
18,870,298
378,414
223,661
801192,027
9,847,790
2,8111110
12,6581900
756,714
14,207,964
8,054,811
199,561,578
56,974,517
(126,673,52~
1521ss2pss
165,540,958
$245,732,985
42
0
Enterprtse Funds
Water Wastewater Wl'MPA
0
$ 24,093 $ 60,467 $ 1,301,168
2,950,033 7,403,649 398,645
4,998,563 2,297,834 899,013
54,542 165,330
33,901 161,958 C
9,009,713
226,079
8,287,211 10,089,238 11,608,539
0
68;831,2)4 6.S,861,577
934
3.309
68,834,543 65,862,511 0
12,724,350 12,578,774
27,600,824 21,654,174
22,240,58~ 24,018,,814
291,969,454 127,470,376 0
34,681,932 18,054,744
{104,898,8911 {73,516,931~
2'84,318,258 130,259t951
353, 152,SOJ 196, 1.22,462
0
$361,4401012 $206,2111700 $ 11,6081539
0
0
0
'.)
StonnWaur
s 56,878
6,964,191
825,365
65,631
7,912,065
0
15,278,471
0 15,278,471
283,337
50,127,279
64,580
0 47,834,412
4,126,314
~111614;0252
90,82(,897
l061100J68
0 S 114,012,433
0
0
0
Enterprise Fanda
s
Nonmajor
Enterprise
Fu.ode
l52,745
14,036,081
3,280,713
39,636
1,153,009
S11,cy)6
60,261
73S1614
19,970,0SS
12,018,048
70,787
12,088,835
6,768,963
14,083,163
64,773,414
125,785,894
65,317,750
!148;322.501 ~
t:28,406,683
t40,49~.Sl8
$ 160.465,573
Total Enterprise loteraJI Semce
Fand1 Funds
s 2,087,243 $ 27,S07
91,980,361 3,368,033
31,171,786
703,553 38,524
1,348,868 cy),761
9,521,709
ti0,261 68,727
11185,354 22194,235
138,059,135 S,7961793
171,837,120 17,251,917
71,721 99,817
3,309 158,372
2,811,110
174,723,200 17,510,106
33,112,138 65,343
127,673,404 180,942
119,152,208 1,637,054
792,621,714 649,868
179,155,257 9,309,071
{ 465,0251874} (8,803,9SSl
186,688,847 3,038!323
961,41~107 20,548,429
$ 110991471,242 S 26,345,222
43
City of Lubbock, Texas
Statement of Net Assets
Proprietary Funds
September 30, 2008
LIABILfIIES
Cumnt liabilitiea:
Aa:ounu payable
Accrved liabili tia
Accrua:I intaesr payable
Due to other fimds
Customer depmits
Deferred rcvmiue
Compensated absences
Accrued insurmce claims
Leases pa)'ble
Dom& peylble
Tocal current liabilities
NonCUlmlt liabilities:
Accrued insm1nce claims
Reba!able arbitr11Be
Landfill clown and post closure care
Compensaicd abxnces
Pon employmmt benefit!
Leases payable
Bond& payable
Total non clll'TCftt liabilities
Total liabilities
NET ASSETS
lnvesccd in capital assets. net of related debt
Reslrickdfor;
Passenger facility charges
Debtsemce
Unrestricted
Total net assm
LP&L
s 1,946,626
1,761,681
1,217,841
9,009,713
3,499,752
1,183,514
1,067,930
5,121,.9'77
24,809,034
72,702
1.264,172
506,873
2,!J75JJ82
74,699,158
79,518,787
104,327,821
72,858,231
6,006,670
62,S40,263
S 141,405,164
44
0
.......
Water Wastewater Wl'MPA
0
s 2,402,156 s 2.760,545 s 9>725,988
361,733 200,251
1,193.544 6S4,239
,-. ,._,
80,340
494,183 241,390
675,290 473,734 0
IOJ5~70 ~620.942
15.557,516 101951,101 9,725,988 ..
0
163,965 184,351
527,861 257,841
302,778 130,082
2,583.912 1,114,259 0
18918491751 106,454,669
193.428,267 108,141,202
2081985,783 119,092,303 9,725,988
0
143,586,818 76,784,510
6,103,451 4.506,302 0 2,763,960 5,828,585 1,882,551
$152,454,229 $ 87,119,397 s 1,882,551
0
0
0 Enterprise FIIDda
Naamaiw
Enterprise Total Eatcrprl• lntenw Scnica
StormWa• Funds Fonds Flum
D
$ 619,990 $ 2,346,355 s 19,801.660 $ 1,753,569
69.444 834.208 3,.227,.317 192,137
574,084 310,775 3,950,483 3,520
1,857,000 10,866,713
:'I 75,389 3,655,481
81,621 81,62]
89,428 m.4~3 2,781,968 209,323
3,020,0S6
76.176 1,857,1851 4,150,319 461,361
0 2,177,520 2,1~737 26,463,446
3,606,642 10,328,727 74,9791008 5,6391966
1,581,329
0 64,050 86,206 571,274
3,770,566 3,770,566
95,522 563,389 2,708,785 310,699
&2.,021 437,986 1,459,740 211,888
566.829 7,148,115 14,388,997 691.844
0 85,21~981 281032,263 484.252.822
86,025.403 40,038,525 507,152,184 2,795,760
89,632.045 50,367,252 582,131,Un 8,435,726
16,321,372 90,210,584 399,761,515 1,885,118
2,318,723 2,318,723
1,741,490 .S98,53$ 18,956,448 :-, 6,317.526 16.970.479 96.,303,.364 16.024.378
$ 24,380,388 S 110.098,321 s 517,340,050 S 17i909,496
45
":_.
Comprehensive Annual Financial Report
for the Fiscal Year Ended September 30, 2008
46 0
D
D
0
0
0
0
D
0
0
City of Lubbock, Texas
Reconciliation of the Statement of Net Asset!-Proprietary Fonds
To the Statement of Net Assets
September 30, 2008
Total net U8Cl'S -proprietary :rund5
Amounts reported for business-t)pe activities in tbt Statement of Net Assets are different
because:
Internal service funds (ISFs) an: U5ed by management 10 charge the costs of certain
activitiea, such as insurance and telecommunication&, io individual funds. The portion of
assets and liabilities of the ISFs primarily serving enle:rprise funds en: included in busineS&
type activities in the Statement of Net Assets as follows:
Net assets of business-type ISFs
Amounl5 due to governmental ISFs for amounl5 overcharged
Net assets ofbus.iness-typc activities
See accompanying Noies to Basic Financial Statemcnt!l.
47
S 517,340,050
7,751,598
1,444,685
$ 526,$36,333
l
0
City of Lubbock, Texas
Statement o! Revenues, Expenses aad Changes in Fund Net Assets
Proprietary Funds
For The Year Ended September 30, 2008
C Eaterprue Punds
LP&L Water WIIJte'Water WfMPA
OPERATING REVENUES
Charges for services (net) S 153,071,017 $ 42,527,445 $21,095,745 $ 121,111,798 0
Miscellaneous
Total operating revenues 153,071,017 42.527,445 21,095,745 121,111,798
OPERATING EXPENSES
Personal services 12,305,453 7,793,454 4,120.422 -0
Insurance
Supplies 1,196,956 1,674,784 1,028,572
Materials
Ma:inlenanc:e 1,841,172 2,309,434 1,290,050
Purchase of fuel and power 112,852,968 121,005,410 0
Collection expense 1~742,590 1,074,669
Other 5e!Vices and charges 3,819,293 10,023,600 4,191,443 563,666
Depreciation wi llrllOl'ti7.ation 9,732,413 8,387,182 S,4321048
Total operating cxpmses 141,748,255 31,931,044 17,1371204 121,569,076
Operating income Ooss) 11,322,762 10,596,401 3,958,541 (457,278) 0
NONOPERATING REVENUES (EXPENSES)
Interest earnings 2,765,622 1,648,913 1,837,589 12,628
Passenger f.a.cility charges/Federal grants 198,400
Disposition of ums 284,272 (61,505) 9,393 -0 Miscellaneom 2,316,917 338,045 107,762 200,000
Interest expense (3,352,470} f6,683,456} (2,022.380}
Net nonoperating re't'enUC6 (cxpemiCS) 2,014.341 (4,559,603) (67.636) 212,628
Income Oos.a) before contributions and tranafen 13,337,103 6,036,798 3,890,905 (244,650)
Capital contributions 175,075 1,713,804 1,672,990 0
Transfers in 2,186,447 409,574 30,344 613,612
Tranl&rs out (2,409,9971 {6,3861649) p,0941350}
Chai)ac in net asseu 13,288,628 t.773,527 2,499,889 368,962
Total net assets• beginning of year 128,116,536 1,50,680,702 84,619,508 1,513,589 0
Total ne1. assets -ending S 141,405,164 $ 152,454,229 $87tl 19,397 $ 1,882,551
0
See aceompanying Noles ro Basic Financial Swcments.
48 0
J
D Enterprise Fllnda
Noamajor Total Entcq,dte Internal Scn1ce
Storm Water Enterprbe FlHtda Fllnds Fondl
$ 6,633,255 $ 28,907,849 $ 373,347,109 $ 47,945,658
0 125,486 1251486
6,633,25.S 29,0331335 373&472,595 47,945.658
1,594,511 15,606.457 41,420,297 4,797,207
.23, 776,560
130,597 4,153,794 8,184,703 109,978
11,430,974
254,116 3,906,332 9,601,104 2,110,429
D 2.33,858,378
629,302 694,832 4,141,393
1,729,228 6,221,917 26,549,147 2.518,552
1,274,719 10,780,827 35,607,189 323,558
51612,473 41,364,159 359,362,21 .1 4Sli61,2S8
0 1,020,782 (12,.330,824) 14,110,384 2,878,400
950,337 712,799 7,927,888 1,173,207
4,934,692 5,133,092
0 1,566 15,537 249,263 (40,770)
77.S,173 3,737,897 133,580
{2,107,878} (885,538} (15,051,722) {36,167)
(1,155,975) 5,552,663 1,996.418 1,229.850
(135,193) (6,nS,161) 16,106,802 4,108,250
D 16,165,991 19,727,860 200,289
4,51.9,160 7,759,137 320,880
!1,0661358) !3,876,21 Sl { 16,8332569} {2,513235-1)
(1,201,551) 10,030,775 26,7ti0,230 2,116,067
D 25,581,939 100,067.546 490,579,820 15,793.429
$ 24,380,388 $ 110,098,321 $ 517,340,050 $ 17,909,496
0
0 49
,, ,.
..
Comprehensive Annual Financial Report
for the Fiscal Year Ended September 30, 2008
50 0
Qty of Lubbock, Texas
Reconciliation of the Statement of Revenues, Expenses and Change! ill
Fund Net Assets -Proprietary Fund.I
To the Statement of Activities
O For the Year Ended September 30, 2008
Net change in fund net usets -total enterprise funds
Amounb iq:,orted for business-type activities in the statement of ~tivitics are diffen:JXI
D because:
0
0
0
0
0
0
0
Internal service fun& (ISFs) are used by ma.oagemcnt IO charge the costs of c:c:rtain
activities such as fleet -services, ccotral warehowmg activities, manaaement
information activities, etc. to individual funds. The net revenue (expense) of certain
ISFs is reported with busmess-type activities.
Qaange in~ assetlil of businesf..t)Pe ~tivities
See accompanying Notes to Basic Financial Statements.
51
S 26,760,230
1,519,071
S 2g,279.301
City or Lubbock, TeJ:IIS
0
Statement or Cask Flows
Proprietary h .nds
For tile Year .Ended September 30, 2008
.1 •• ,,.~ ....
C
LP&L Wabr wu-••r Wl'MPA
CASH FLOWS FRO~ OPERATING ACTlVITIES
Ra:aitm &gm ~ s 150,857,330 s 42,426,063 s 21,14·7,248 s 120,812.497
Payoien,111 QI ~1i(ir, (l l 7·,6fJ7 ,449) (14,685,716) (5,836,31).) (121,459,026)
.P!iyirin~ !.D employees (12,510,948) (8,155,187) {4,Jl0,613)
~rPinpil 2,60).189 536144!5 107 .. 762 2001000 C Net wh pro,.'ided (-1) by o,;,emin1 wivities 2J~80·1122 201\l,11605 111098102.S 1446.5292
CASH fLOWSlllOM.NONCAPITAL AND ULATID
FINANctJil'.G ACTMTIL'!i
J,-ii:rt in mllTI odlm' funds 2,186,447 409,574 30,344 613,612
TJ'llllll'En CNI' ID Oilier fund& (2,409,997) (6,386.649) (3,094,350)
Sharl-inlemlnd boml'11'11J3! (43,662) C P&ymmi111 nceiw.d 0111 adnncet from other fwJda -
NII gmJi prtwidcd (umed) by noncapiml
mid "'lal!:d linimciug IClivitic:! {223.SSO} !51977,075} p,107,668j 613,612
CASll nows FROM CAPITAL A.ND REI.A TED
FINANCING ACTlVmES
Purehalm af'aipiial -(16,023,497) (12,924,246) (14,005,819)
S.t.ofcapital ~ 540,244 2,873 9,393 C Pri~ paid: w c.pi!Jl lass (789,245) (3~1.881) (364,072)
frinRpil :plid on bondl &lid ow:r de~ (S,855,576) (8,673,559) (4,814,663)
9cnd~~·p1i~ (llS,866) (364,615) (761,278)
bllel'dplidOll_.bonda (899,060) (2,928,491) (l 87,S46)
fnlle:rtSI p11id oc bolldl ad o4hlr debl (1,523,574) (4,875,957) (1.725,452)
~ ofTneDue ad G,O. bonda 7,041,314 43,534,276 59,949,300
bAJMce otClpital --1,239,763 1,868,123 586,738
~ facility dmp&icapital gnmt, .--. ._,
R.ebamble artiiD1ge 509 2.419 869
Ne! cMh providod (used) for c:apill1l .i ff,._,,
fiDangq acti vmes {t 7.394,9B&l !S,248~2 3816871470
·C-ASB n.ows fROM INVESTING ACl'IVITII".S
hx:adJ lklfflllllb IDd maniririescLDro'Utl!IIIID 52,768,241 '35,479,oai 19,541,109
Purebuc orm....a,_w:r,11 (61,380,198) (66.626. n~} (68,004, l Tl} (12,682) 0 lala=il ca,iing, oa cMh and illv&mllf!lb p6S,6~ t. 52.960 l.731,838 12,681
Ne cub pmvid4d (I&-') ·i,r lll~I~ {S,846.929) !!914~11l c.t62131.no>
iNft ·~ d.cicftae) iD i:uJ!pf Ql$b ilq~~ (IB5,34S) (101.345) (53,403) 167,083
Cah end C&1h ~alan-beginnlng of~ 677.237 '125,438 113,870 1,134,085
Cllllh and.call eq~ • end or,-, s 4,1,Hl I -24,093 $ 60,4l! s 113011168
Rilaladlllaloa OfOptJ11tl•& lllC9DY(JCIWs) IQ DftQIII
ptoVldM (•Bed) b7 openilq utMtia: 0
Opmr!ngincome(los:s) s 11,322,762 s l0.S9MOI s 3,958,541 s (457,278)
Mju.sfmtllts IP ~ile openmn1 UIQDmc (km)
~ clft.mh Pff)yj~ (URl:f) by opmring~~:
~ mi ll!IOJ1iratiot1 9,732,413 8,387,182 5,432,048
Otha-mCXlll'IC (ts,~) 2,601,139 536,445 107,761 100,000
Cllallp iD Qlffal[ IIISICtl lllld, h11biliries:
A.ccaunts i,:,cdvtble (2,213,687) (101,382) 51,503 (180,057) 0 ID~ 5,802 (4,649)
Dueoom~.-mmmu (187)
AcaJlm1II s-yabla 869;426 JJo,sn 1,398,846 110,051
Due!D'fn;,n, otMf .funm 119,245 (119,245)
Otho:r acctwd ~'P'll'09 74,823 82,158 24.S52
~dcp:,tlt.! 296,268 18,025
Cbanp in ~tel absaic-.es IID(j ~I benefits 471,881 276,63.S 124,773 0 Nel GUii JlfO't'idl!d (lllld) by aperacing ICliYicies s 23.ZSO,Ul s 20,121,605 s 1 l,098,QlS s i.4461529}
Supplemntal call fto• lat!Dnnuloa:
Noamata c:ai-111 conaibwia!i5 4111d om,,r dsps s l7S,075 $ 1,713,804 $ 1,672,990 s
&z aci:ornpall)'VII N.-IO ~ finln;ial S-i,.
52 0
:)
Ea!!!J!r1• Fllad•
NoaDIIJDr lDltnlll
EIIIU'prts Servlca
SmnnW1a.r F ... 1111 Toalt Faalls
::,
s 6,561,486 $ 29.072,631 s 170,8$3,lSS s 47,,914,0 I 7
(3,024,665) (8,973,720) (271,586,8881) (41,212,271)
(1,663,955) (15,994,690) (4l,705,4SJ) (4,585,319)
905,910 4,351,306 133,SSO
1,87&,866 5,010,131 601942j220 2,250,007
D
4,519,160 7,759,137 320,880
(1,066,358) (3,876,llS) (16,833,569) (2,513,352)
(2,659,996} (2,703,658) 24.357
1,100,000 111001000
(1,066.358) (917,051) (10,67&.090) (2,168,115)
(9,390,965} (14,652,034) (66,996.561) (488,984)
1,566 1,374,442 1,928,518 23,698
D (38,175) (1,161,526) (2,744,899) (422,409)
(l,9S2.S07) (1,157,563) (22,453,868)
(98,928) (147,SlS) (1,498,202)
(1,958.798) (5,973,895)
(820,474) (9,945,4$7) (34,708)
7,434,060 11,085,260 129,044,210 426,360
417,060 4,161,619 8,273,303
:, 4,934,692 4,934,692
t 738 724 6~59
(5,584,949) 3,617,625 34,574,100 (496,043)
24,395,925 15,177.259 147,961,542 12,971,953
,(2().645,45}) (24,1.83,226) (24-0,853,11 7) ( 13, 778,69-S)
938,913, 700,199 7,802.2!4 1.1,68.728
41689.,38:3, ,z.,~.768! !IS,089.361~ 361.986
(81,058) 4,937 (25l,l31) (52,l6S)
139,936 147.808 2,338,374 79,672
s !i6,878 s 152,745 $ l,087.243 :s 2:7,507
,
s 1,020,782 s (12.330,824) s 14,110,384 s 2,878,400
1,274,719 10,780,827 35,607,189 323,SSI
775,173 4,220,569 133,SSO
(65,769) 39,296 (2,470,096} (31,1 Sl)
(89,814} (88,661) (171,614)
2,820,448 2,820,261
(533,492) 965,590 3,141,298 (720,721)
1,147,080 1,147,080 (488)
24,876 152,893 359,402 (378,409)
') 68,017 382.310 1s1i7so 7411706 1,772.745 2l61SS3 s 1,878,866 s 5,010,131 $ 60,942.220 $ 2,250,007
s s 16,16S,991 s 19,727,860 $
'."') 53
; ,
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........ i:._, :.•,
Comprehensive Annual Financial Report
for the Fiscal Year Ended September 30, 2008
54 C
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J
City of Lubbock, Texas
Notes to Basic Fin~cial Statements
September 30, 2008
NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POIJCIES
The Basic Financial Statements (BE'S) of the City of Lubbock, Texas (City) have been prepared in conformity
with accom1ting principles generally accepted in l'be Ullited States of America (GAAP) as applied to
govcmmcnt units, including specialized industry ptactices as specified in the Am:rican Institute of Certified
Public Accountants audit and accounting guide titled State and Local GovernmenJs. The Governmcnt:11
Accountiug Standards .Board (GASB) is the acknowledged standard~setting body for establishing
·goverDJl'ICJltal accounting and financial reporting Vrinciples. Wil:b res~ t.o proprietary activities related to
business,.typc: activities and enterprise fund&, iDclw;ling cOD'lpom:nt umts. the City applies all applicable GASB
pronouncements as -well as Financial Ae4:ounting Standards Bo~ (F ASB) Statements and lntcrpr.et.ati®S,
Accountiug Principles Board (APB) Opinions and Accounting Research Bulletins of the Committee on
A~owrtmg Procedure'., issued on or before November 30, 1989, unless those promUDCemeIIts conflict with or
contradict GASB prmwuncements. The more significant accounting policies are described below.
A. ltEPORTING ENTITY
Toe City is a municipal corporation goveme.d by a Council-Manager form of govemment. The City,
incorporated in 1909, is located in the northw-estem part of the state. The City cum:ntly occupies a land area
of 119.9 sqtWC miles and &erVes a population approxime:ting 215,000. The City is empowered to levy a
property tax on both real and personal properties located widrin its boundaries. It is also empowered by mte
statute to exrend its corporate limits by amJ.eution, which occurs periQdically when deemed apPropriate by
the City Council.
The City provide& a fu.ll range of services, inclu~ poli¢¢ and fire protection; n:cn:ational activities and
cultural events; cODStruction and maintenance of highways, streets, auport imd other infrastructure; and
sanitation services. The, City also provides utilities for electricity, \VB.tel', wastewater, imd storm water as well
as a public transportation system.
The BFS ~~ the City and ll!!I component units and include all activities, organi:z.ations, and func:tiolll! for
'Wbich the City is considered to be financia.Uy accountable. The criteria oonsidered in determining activities
t.o ~ rq,orted 'iVithin tbe City's BFS are based upon and consistent with those set forth in the Codification of
Govemmer1tal Accounting Slandards, Section 2100, "Defining the Financial Reporting Elllity. " The criteria
includes w~h~
• The •orgamzation is legally sepatate ( cliD me and be sued in its own name);
• The City bolds the corpQrate powers ofihe organization;
• The City appoam a votiDg DJ3ji;,rity of the orga,nization's bo!ird;
• The, City is able to 1iJnpose its wili on the organization;
• The organization. bas the potential to impose a finallcial benefit or burden OD the City: at
• There is fiscal d~ncy by the o~tion on the City,.
As required by GAAP, the BFS present the reporting entity which consists of the City (the primary
goveIIIIB:llt), QI'gatti.zafions for 'Which the City is financially accountable, and other otgallizations for which
the nature and signi:ficanct, of their relatiombip with the City are such that exclusion could cause the City's
BFS to be misleading or ioc;omp1ete.
55
City or Lubbock, Texas
Notes to Basic Financial Statements
S~p·temb,er 30, 2008
NOTE I. S\.rMMARY OF SIGNIFJCANT ACCOUNTING POLICIES (Continued.)
A. IlEPORTINC,ENTITY· lCogtinllCd)
BLENDED COMPONENT UNITS
The Urban Renewal Agency· (lJRA) has been. included in the City's prlnmy government. financial reporting
entity using the blended method bt,cause) although it is legally separate, the URA is an arm of the Ci.ty, The
URA is go~ by State law and was fo~ 'to belp eliminate slum and blight within the Ci~ The URA
board oversees acquisition and disposition of real property a:od atso desigllat'ef and approves Utban Renewal
Plam. The URA Botrd is ~sed of nine .tntmbeis appointed by the City Council. Ther~ att no separate
fiDancial statcmeni. available tor the UlU..
West Tu:as Municipal Power Agency (WTMPA) is a legally sepuate m.micipal cotporation. a political
subdivision of Tex.as, and body politic and COJJIOrate, fanned in 19&3, governed by an eight member Board of
Directors. The board consists of two directors from ea.ch padicipating city. One member is elected as the
president who preside, over monthly meetings. Dilecton save without compemation. WTMP A bas no
employees and i:o&tead contracts for services to meet its general operating nee&. WTMPA may engage in~
business of geoera.tion. transmission. sale, and exchange of electric energy to the four participatillg. public
etlti~: Lubbock, Tulia, Brovmfield, and Floydada. WI'MPA may also participate in power poc;:,lh1.g and
power excballge agreements with other entities. WTivlPA provides electricity to its four member cities with
the City bavmg a 92.7% interest in ii$ operations. Each member city appoints two members to the WTMPA
board. hov.-ever an affirmative vote of the "majority in interest" is required. hj approve the operating budget.
approve c.apital proje,;n, appr~ve debt issuance. and approve any amendroen.lS to WIMP A rules and
rei'U&tions. The Ci\)' maintains tlic: "majotity in interest" ·vote based oa kilowatt purchases. ~ ~nsequmtly
bas majorit,voting control. As the City purchases approximat.ely 92.7% of the electricity brokered. WTMPA
providea services almost exclwively to the Ci~ and iB therefore present~d as a b1ended enteiprise fund.
Separate audited tmancial statements may be obtamQd .through the City.
DISCRETELY .PltESENTED COMPOrt.ENT tJNITS
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The financial data for the Component Units are shown in the Government-Wide Financial Statements. They
are reported in a sepantc column to emphasize that they are, 1egally sepamte from the City. The !olloww.g C
CompollCDt Units are included in ih.e ·reporting entity because the primary govermnent is financially
accountable, is able to impose its will on lhe organization, or can significantly influence ope.rations a.n.d/or
activities of the ()[ganization.
Civic Lubbock. loe. is a legally sepa.nue entity that was organized to foster and promote the presentation of
wholesome educational, cultural, md entertainment programs for the general moral, intellectua~ physical C
improvement, and welfare of the citizens of Lubbock and iis swrounding area. The eleven-member board is
appointed by the City Council. City Council reviews and accepts the annual budget. Separate audited
financial statemcn~ for Civic Lubbock may be obtained from Civic Lubbock, Inc. at lSOl 601 Street.
Lubbock, Texas.
Markt Lubb@ck. Economic Dnelopment Col"JIOratioo, dba Market Lubbock, is a legally separate entity C
that was funned on October 10, 1995 by the City Council to create, manage. ope.rate, and supervise proaram,
and activities to promote, assist, and enhance economic development within and around the City. The City
Council appoints the seven-member board and its operations arc funded primarily through budgeted
allocations of the City's property and hotel occupancy taxes. Sep11I11.tc audited financial statements may be
obtained from Maiket Lubbock at 1500 Broadv.-ay, Sixth floor, Lubbock. Texas.
C
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City of Lubbock, Texas
Notes to Basic financial Statements
Sept.ember 30, 2008
NOTE L SUMMARY OF SIGNIFICANT ACCOUNTIN'G POLICIES (Continued)
A. REPORTING ENTIIT ,con:rlnued1
Lubbock Economic Development Alliance i9 a legally separate entity 1hat was formed on June 1, 2004 by
the City of Lubbock to create, manage and supervise progi:ams and activities to promote, a.uist, and enhance
economic development within and around the City1 The City Q>uncil appoin~ the seven-member board end
its operations are funded primarily through budgeted aUocatrom of the Ci~y' s sales and use taxes, Separate
audired finaru:ial statements may be obtained -0,Qm Lubbod Economic Development Alliance, Inc. at 1500
Broadway, Sooh Floor, Lubbock, Texas.
The Vintage Township PubHc Facilitits Corporation is a legally separate entity that ~<BS formed on
Jawwy 12, 2007 by the City Council to assist die City in financing, refinancing, providing or otherwise
assisting in 1he acquisition, construction and maintenance of certain public facilities benefiting the Vintage
Township Public Improvement District The three-member board is appointed by the City CoUDCil. City
Co.uneil reviews and ~ts the aonualbttdget. Separate audited financial statements are uot ave.ilable.
RI.LA JED OR.GANIZA TIONS
The City Council is responsible for appointing the board members of other or'@anizations and the City's
accountability for these organizations does not extend beyond board nppoi.ntments. The City Council is not
able to impose its will on these entities and tbtre is no financial bcµefi.t or burden re1atfonshlp. Bonds issued
by these mgan:izations do not constitute indebtedness of the City. The following related organizations are not
included in the reporting eutity:
The Housing Authority of the City of Lubbock is a legally sepante entity. The Mayor appoints the five-
member board.
The Lubbock Health FaciUties Development Corporation promotes health facilities development The
City Council appoints the seven-member board.
The Lobboek Rousing Finance Corporation, Inc, ~·es formed pursuant to the Texas Housing Finaru:c
Corporation Act to finance the cost of decent, safe, and affordable residential housing. The City COUDcil
appoints the seven-member board.
The North and East Lubb~k Community DeYdopment Corporation (CDC) was incorporated in
February 2004 to effectuate, ehmge in North and East Lubbock. The North and East Lubbock CDC is a local
entitr that drives sQCial chang~ and promotes autonomy and ~owcmient hy mer~ Ifie supply of quality
and affordable housing, generating economic aQtivity, and coordinating the efficie:Ot delivery of social
services.
The Lubbock Education F•mlities Authority, Inc. is a no1rprofi.t corporation and instrumentality of 'i11e
City and was cre!lted pwsuant to the Higher Education AuthoritY Act., Chapter 53 Texas Edu.cation Code for
the, purpose of aiding inst:itutions of higher education, secondary schools, and primary schools in providing
edu,c:atio.w faeilities and housing facilities. The seven-member board is appointed by 1he City Council.
The Lubb~k Fire Pens,lan Fund (LFPF) operates under provisiom of the Texas Local Fire Fighters'
Retirement Act for purpo.ses of providing retirement benefits for the City's firefighters. The .Mayor's
designee, the Chief Financial Officer, three firefighters clcc:n::d by active firefighters and two at-large
members elected by the LFPF Board. govern its affairs. The Pension Fund is funded by contributiom from
the firefighters and City matching contributions. As provided by enabling legislation. the City's
57
City of Lubbock, Texas
Notes to Basic Financial Statements
September 30, l008
NOTE I. SUMMAR\' OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A. REPORTll'lG_ENTITY {Contlouedl
responsibility to the LFPF is limited to matching bi-weekly contnbutiom made by the members. Title to
assets is vested in the LFPF and not the City. The Texas State Pension Review Board is mandated to oversee
all Texas public retirement systems in regard to their actuarial soundness and compliance with state law and
the City cannot significantly influence its operations. Separate audited financial statements may be obtained
from the LFPF or from the City.
B. !il)VERNME'NT-WIDE AND ·FUND FINANCIAL STATEMENTS
The City's financial statements are prepared using the reporting model specified in GASB Sta'lx:ment No. 34 -
Basic Financial Statemenu -and Management's Discwsion and Analysis -for State and Local
Governments, GA:SB Statement No. 37 -Basic Financial Statements -and Management's Discwsion and
Analysis -For State and Local Governments -Omnibus, GASB Statement No. 38 -Certain Financial
St/Jtement Note Disclosum, and GASB Interpretation No. 6 -Recognition and Measurement of Certain
Liabilities and Expendituru in Governmental F1111d Financial Statement!. As specified by Statement No. 34,
the BFS include both Government-Wide and Fwid Financial Statements.
The Govenml£nt-Wide Financial Statements (GWFS) (i.e., the Statement of Net Assets llDd the Statement of
Activities) report iDfoIID@.pn on~ of ihenon~.fiducia.ry activities-of the CUy and. its blended component unit~
as a whole. The iliscretely presented component units are also aggregately presented '1ritbin these statements.
The effect of iDterfund activity has been removed from these statements by allocation of the activities of the
various internal service funds to the governmental a-Cid bllSllleSS-type activities ou a fund basis based on the
predominant users of the services. Go .. e1mueutal activities, which are primarily supported by t.axes and
intergovemmenlal revemJeS, are reported separately from business-type activities, which :rely to a significant
extent on fees and charges for support. All activities, both govcmmcntal and business-type, arc reported in
the GWFS using the economic resourees measurement focus and the accru.al basis of accoum::ing, which
includes long-term asset5 and receivables as well as long-term debt and obligations. The GWFS focus more
on the sustainability of the City as an cotity and the change in aggregate financial position resulting from the
activities of the fiscal period.
The Government-Wide Statemcmtof Net Assets reports all .financial llDd capital resour-ees, of the City. It is
di$pla)'ed in the format ohsse.ts less liabilities.equals-net assets, with the assets and liabilities shown in order
of their ~lative 1iquidity. Net assets are .required to be displayed in tbJ:ee coinponents: (1) invested in capital
assets net of related debt, (2) restricted, and (3) unrestricted Invested in capital asset.s net of related debt
equals capital assets net of accumwated dcprcc:iation and reduced by outstanding balances of any bonds.
mortgages, notes, or other borrowings that are a.ttdbutable t.c, the acquisition, ooustr;ucti.011.i or in'lptovement of
those' assets. .R.¢stricted net ~sets are ·tho,se with coo.strain.ts placed on their use by either; (l) extemally
lD:!alOSed by creditors {such as thrd~ debt (:0¥enati.ts), gratllor:s, 0001ribt1tors, ot' laws ot tegulati.oJJ.' of other
-governments: or (2) imposed by lJiw through. constitutional provisions. or enabling legislation. All llflt assetll
not otherwise classified as inves1ed in capital assets net of related debt or restricted. aa: shown as
unrestricted. Reservatiom or designations Qfnet assetS imposed by the City,. whether by adm.imstrative policy
or legislative actions of the City Council that do not otherwise m~t the definition of restricted net assets, ai:e
considered untestrictedin the GWFS.
The Government-Wide Statement of Activities demonstrates the degree to which the direct expenses for a
given function or segment is offset by program revenues. Direct expemes are those that are clearly
identifiable '1rith a specific function or scgmem. Program revenues include: (1) charges to customers or
applicants who purchase, use, or directly benefit from good,, services, or privileges provided by a given
58
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City of Lubbock, Texas,
Notes to Basic Financial Statements
Ser,tember 30, 2008
NOTE I. SUMMARY OF SIGNJFICANT ACCOUNTING POLICIES (Continued)
B. GOVERl'ITMENT-WlDE ~ FUND FINANCIAL STATEMENTS {Continued)
function or segment; end (2) grants and contribution,; that m: restricted to meeting the operational or capital
requiremmts of a particular function or segmeut. Taxes and other items not properly :included ElQJong
program. revenues are reported instead as general revenues. The general TOVCDU.ts support the net cost, of the
functions and segments not covered by program revCDUCs.
FUDd F:inaocial St:aterrents (FFS) for gove:rnmenta1 and proprietary funds are also part of the BFS. Tot focus
of the FFS is on major funds, as defined by GASB Statement No. 34. GASB Statement No. 34 sets forth
rnioinnun criteria for determination of major funds, i.e., a percentage of assets, liabilities, revenue; or
expenditures/e:xpenses of fund category and of tbe goYernJDental and entefprise funds combined. Ho"WeVer, it
also gives governments the option ol displaying other funds as 1mjot funds. The City can el.ed to add some
funds as n:iajor: funds because of owtan,ding debt or coIWl'.llmity foc:us. Major individual goverutDental fuilds
and major individual entclpri.se funds are reported as separate columns in the FFS. Othe.r non~major funds
are combined in a single column in the appropriate FFS.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRl:SENTATION
Fond Financial Statements
The GWFS ate reported using the economic resources measureme11t focus and the accrual basis of
accounting; as are the pf()l>rietary FFS. Iu:venues arc recorded when earned and expenses are recorded when
a liability is incutred. rep:rdless of the 'timing of related ca!ib flows. Property taxes are recognized as revenues
in the yt:ar for which they are levied. Grants and similar itcrm lli'e recognized as revenue as soon as all
eligil>ility requirements have been met.
Because the eoterprise funds are combined into a single business-type activities column on the GWFS, certain
interfund activities bctwem these funds are eliminated in the consolidation for the GWFS, but are included in
the fund columns in the propriemy FFS. The effect of interfund activity has beci eliminated from the GWFS.
For :i:astancc, 92. 7% of the opemtions of WTMP A representing mmsacti.om between WI'MP A and Lubbock
Power & Light (LP&L) have been eliminated for the GWFS presentati«m and for the electric bU5iness-type
activities (BTA). Exceptions to this geoeml rule are payments-in-lieu of taxes BDd other charges between the
City's electric, water and wastev;atcr functions and various other functions of the government. Elimination of
these charges would distort the direct costs and pr\'lgram revenues reported for the vario1115 functions
concerned.
Goveromental FFS are l'e_PQrted using the current finallciai resources measurement focus and the mcidi:fied,
accrual basis of accouming. This is the traditio.nal basi., of accowrtin8 for govemmem:al funds. This
presentation is iieccssary (1) to demonstrati: legal and covenant compliance, (2) to demonstrate the sources
'11d uses of Iiqtilil resources, and (3) to demonstrate how the City's actual revenues and expenditlue$ conform
to the annual budget, Revenues ~e recogniz.cd as soon as they are both measurable and available, Revenues
are considered to be available when they are collectible within the CllIR!nt period or soon enough thereafter to
pay liabilities of the cuxrent period. Fer this purpose, the government considers revenues to be 11:vailable,
generally. if they are collected -within 45 days of the end of the current flSCal period. The City comider.i the
grant availability p~riod to be one yeat for revenue recognition. BxpendiJW"es generally are r~orded when a
liJbility is iocmred, as under accniaJ acc~ting. However. debt ~e expenditures_, as well as expenditures
related to COlllpi;llS8ted ahscnce:s, and claims and judgments arc recorded only W}\en tb,e . .liJbility has matured.
Because the governmental FFS &U"e prcscnl:c:d on a different basis of' accounting than the GWFS,
59
City of Lubbock, Te:ras
Noto to Basic Fin1nd•I Statements
September 30, 2008
NOTE I. SUMMARY O:F SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. MEASUREMENT FOCUS, BASIS OF ACCOUNTING. AND FINANCIAL STATEMENT
PRESENTATION CCootiouetll
reconciliations are provided immediaiely following each fund stalemt:nt. These reconciliations explain the
adjustments necessary to convert the FFS into the governmental activities column of the GWFS.
Property taxes, sales taxes, franchise taxes, occupmcy W(t:S, grants, licenses, court fines, and int.crest
associated with the cumnl fiscal period ,are all considered to be susceptible to accrual and have been
recognized as revenues of the cum:nt fisc41 period. OnJy the po:rtioo of special assessments receivable due
within the cummt fiscal period is considered to be suscepn.ble to accrual as revenue of the current period. All
other revenue itexm are considered to be measurable and available only when the City receives cash.
Fund Accounting
The City uses funds to report its financiaJ position and the results of its operations. Fwid aceountiDg
segregates funds accQrding to their inJended pwpose and is: desipd oo demonstrate lt:gal complianee aod to
aid financial Qnagemcnt by segregating tnnsacticms related to certain govcrnnietttal functions or activities.
A fund is a sepll.Iate-accounting entity with a self-balaocing set ofalXOUDts, which includes assets, liabilities,
fund balance/net assets, reveniies and expendittm!s/expenses..
Gp't'enunenul F•undl are those through 'lw'bicb most of the govemmeutal functiona of the City are financed.
The City reports two major governmental ·fuDds:
'The General Fund, as the City's primary operating fund, accotmiS for all financial resources of the
general government. eic.cept those required to be a.ccounted for in another fund.
The Governmental Capital Projeeu Fund accounts for financing and construction ofgovermnent capital
projects. el(cept for North Overton Tu I:ocrement FinanciDg Reinvestment Zone (TIF) capital projects
aod Gateway Streets Fund capital projects. Projects include public safety impr1:1vemQilts.. park
improvemenbl, street improvemems, purchase and construction of municipal bw1dings, and major
maintenance, repair, and replacement of public buildings and facilitie5.
Enterprise Furuh arc used to account for operations: (1) that are :financed and operated in a manner similar
to private business enterprises where the intent of the governing body is that 'the costs (expenses, including
depreciation) of providing goods ot services to the general public on a CODtiuuing basis be financed or
recovered through U$et' charges; or (2) where the goveming body has decided that periodic determination of
revenues earned, expemes incurred. and/or net income is appropria~ for capital maintenance, public policy,
raanagement control, accowitability, or other pw:po5es. The City reports the following major enterprise
funds:
LP&L accounts for the acti'lities of the City.owned electric production and distribution system.
The Water Fund accounts far the activities of the aty·s war.er system.
'The Wastewater Fund accoUDts for the activities of the City's sllllitary -wastev.-ater system.
The W"TMP A Fund accounts for the: activities of power g~tion and power brokering to member
c1t1.es. Member cities include Lubbock with 92. 7% ownership, and Tulia, Brownfield, aod Floydada
comprising the remaining 7 .3% ownenhip,
60
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City of Lubbock, Teu.s
Notes to Basic Financial Statements
September 30, 2008
NOTE I. SUMMARY OF SIGNWICANT ACCOUNTING POUCIES (Continued)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION (Continued)
The Storm Water Fund accounts for the activities of the stonn water utility.
The City reports the following non-major funds:
Governmental Funds
Speeial Revenue Funds~ used to account for the proceeds of specific revenue sourses (other than
special assessments or major capital projects) that are legally restricted to expenditures for specified
puq,oses.
'The Debt Service Fund is used to account for the accumulation of resources for and the payment of,
gcncnl long-term obligation principal and interest (other than debt service pa~ts made by proprietary
funds).
The Permanent Fund is used to rq,ort rcwurccs that are legally restricted to the extenr that only
earnings, and not principal, may be used for puq,oses that benefit the City and its citix.ens. The Cemetery
Permanent Que FlDld accounts for interest earned on principal funds and authorized disbursements for
cemetery mainlEDanee and improvemeuts.
Capital Projects Funds are used to account for financial resources ID be used for the acquisition or
construction of major capital improvements ( other than those recorded in the proprietary funds).
Proprietan Fund•. distinguish operating revenues and ~s from non--operating items. Operating
rev~nucs and expenses gcn~tally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the
City's eti'.terpnse :fu.nds and of the City's internal service funds are charges to customers for sales and services.
Operating expenses for enterprise funds u,,d internal service funds include the cost of sales and services,
adminj,;ttative expemes, and depreciation on capital 1159ets. All revenues and expenses not meeting this
definition are reported as DOD-operating revenues and expenses.
Enterprise hnds a.re used to a.ccou:nt for services to outside ustt1 where the filll cost of providing
services, including capital, is to be recovered through fees and charges, e.g., Lubbock Preston Smith
lnt1:matiooal Aiipart (Airport Fund), Citibus (Transit Fund), Solid Waste, Cemetcr:y, md Civic Centers.
Iofena) Suvitt F.i11d.s are used to account for services provided to other departmmts, agencies of the
departments or to other govemment5 OD a cost rc;m:ibursemcnt basis (i.e., Fleet MaiD.tellance F'wld, Print
Shop and Warehi>use Fund, Information Technology Fund. Risk Management, Health Benefits, and
Investment Pool),
D. BUDGETARY ACCOUNTING
The City Manager submits a proposed operating budget and capital program to the City Council annually for
the upcoming fiscal year. Public hearings are conducted to obtain citiun comments, and the budget is legally
ena~ tbrvugh passage of an onlil:Jance by City Council. City Council action is also required for the
approval of any supplemental appropriations. All budget amounts presented in the budget comparison
statement reflect the otjginal budget and the amended budget, which have beeu adjusted for legally authorized
supplemental appropriations to the annual budget during the fiscal year. The operating budget is adopted on
61
City of Lubbock.i Texas
Notes to Basic Financial Statements
September 30, 2008
NOTE I. SUMMAR¥ OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. llUDGETARJ ACCOUNTING <Coqtiouedl
a b~is other than GA.AP for the General Fund, with the mun difference being that ~ital lease proceed.$ and
related capital outlay are not budgeted. Budgetary control is maintained at the d.epamnent level in ·the
following expenditure categoric:,.: pemmnel services, &upplies, other charges, and capital outlay.
Management may make administrative tnilsfas and increases or decreases 'between ·accounts below the
department level without Council apprQvu However, any transfer of funds between departmems, the legal
level of control, shall be presented to Council for approval by ordinance before such funds can be trall$ferred
between departments or expended. AU annual operating appropriatioos lapse at the end of the fiscal year.
Capital budgets do not lapse at fisc.a.l )":Br end but remain in effect until the project is completed and closed.
In addition to the tax levy for genetal operations. in accordance with State law, the City Council sets an ad
valorem tax levy for a sinking fund (Oener1l Obligation and Certifkates of Obligation.Debt Servi.cc) which,
with c.asb and investments In the. fimd, is sufficient to pay alJ debt smvk.e due durin,g, the fiscal year.
:t. ENCUMBRANCES.
At the end of the fiscal year, encumbrances for goods and se,:vices that have not been received are canceled.
At the beginning of the next fiscal year, management reviews all open encumbrances. On October 1, 2008,
the General Fund bad no s.ignificant amounts of open encumbrances.
Equity in Cash and Investmenu ~ The City pools the reiOw:tes of the variom funds in order to facilitale the
mamgemeru: of cub. and enhance investment earnings. Records are maintained wb.Ich reflect each fi.md.'s
equity in the pooled ICCOllllt. The City's investments are stated at fair value, which is based on quoted market
prices as of the valuation date.
Cull Equivalenu -Cub equivalents are defined as sbart-rerm highly liquid iJivestmcnu that are J'Cadily
couvcrtible to known amounts of casb aad have original marurities of three rmmlls or less when purche.scd.
These investments present en insignificant risk of change in value due to changes in inmest rates.
Investments -Invtstmen:ts include securities in the Federal Home Loan Ban.ts. Federal Home Loan
Mortgage COiporation. Federal National Mor1g&ge Association. U S Treasury Notes, and Fann Credit Notes.
Restricted invcstmenis include invesnnerus that have been .restricted for bond financed capital projcds and
money restricted for cla.ilm in the Risk and HealUi Insurance Funds. Restricted investments also include
funds that ha'Vt been restricted by bond OO'Venants for debt service requimnent5 and for i,asscnger ~ility
charges.
Preperty Tu Receivable -The valne of all real and business property located in the City is assessed
ammally on Ianuary 1 in conformity with Subtitle E of the Texas Propeny Code. Property 'taxes ar= 1cvied oo
October 1 on those assessed values and the taxes are due cm receipt of the tu bill, On. th_e. following Jammy
1, a tax lien attaches to pi~ t.o IM?CW'e the payment of all taxes. penalties, and inteEeSt ultimately i~.
The tnes are considered delinquent if not paid before February 1. 'fherefare, at fiscal year end all property
~es receivable arc delinquent, but are secured by a tax lien.
At the GWFS level. property tax revenue is rc:cognjzed upon levy. In govermnenJal funds, the City records
property taxes receivable 1,1po~ hwy illld defers tu revenue. U!ltil the taxes are :collected ,or e;vailable. For each
·&~ year, the City recognizes .reverwe in me IU:t)Ount of taus collected during lhe }'ea( plus an estima~ of
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Cl)
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City of Lubbock, Texu
Notes to Basic Financial St.ate.ments
September 30, 2008
NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
I'. ASSETS, LL.\BU,ITIES, AND FUND BALANCE/NET ASSETS (Co.ntinued)
taxes to be collc:ctcd in the subsequeot 45 days. The City allocates property tax revenue between the General,
certain Special Revemte, and Debt Service Funds based on tax rates adopted for 'the year of levy. The
Lubbock Central Appraisal District assesses property values., bills, collects, and remits the property taxes to
the City. The City adjusts the allowance for uncollectible taxes and deferred tax revenue at fiscal year end
based upon bist.orical collection experience. To write off property taxes receivable, the City eliminates 'the
receivable and reduces the allowance for uncollect1l>le accounts.
:Enterprise Funds Recei'val>les -Within the LP&L, Water, Wastewater, Storm Water, and WTMPA
Enteiprise FUDds, services rendered but not billed as of the close of the fiscal year are accrued and this
amoun1 is re:O~ted in the accolliltS receivable balances of ea.ch fund. Amounts billed are reflected as
accounls m::eivable net of an allowance for uncollectible accounts.
Inventories -Inventories CODSist of expendable supplies held for CODSUDlption. Inventories are valued using
the a~ge cost method. of valuation. and are accounted for using lhe consumption method of accounting,
i.e., inventory is p.xpem;ed when used rather than \Wen purchased.
Prepaid Ite1m -Prepaid items ere accounted for under the consumption method.
Mortgage Rece1\'ables -Mortgage receive.hies consist of loans made to Lubbock residents and busines.ses
under the City's C.ommu;nify Developinent loau progiwn. These loans were originally funded through grants
Teceived born the U.S. Departtnent of 'Housing al.ld Urball DeYelopment.
Capital Asats and Depred:aiion -Capital assets, including public domain inftastructurr; (streets, bridges,
sidewalks and other assets that are iJPJnoV3ble and of value only to the City) !Ir¢ de~ 8$ ~sets with an
initial. individual cost ofmo~ than SS,000 and an csfuna~d useful life in ex.cess ofthree years, These capital
assets are reported ill the GW FS and the proprietary fun&. Capital assets ~ recorded. at cost ox estimated
histori~ eost if purchased or constructed Do.nated a.sstts are recorded at the estimated fair value on the date
of doDtltion.
Major outlays for capital asl:lets and improvements arc capimlizcd u the projects are constructed. The ccst of
normal maintenance and repairs that do not add to the value of the asset or materially extend the asset lives
are not c:apitalized. Major improvements are capitalized and depreciated over the remaining useful lives of
the related capital assets.
Depreciation is computed using the straight-line method over the estimated useful lives as follows:
lnfrastructure/Irnprovemmts
Buildings
Equipment
Water rights
10-50yean
15-50 years
3-15 ~
85 years
Interest Capitalization -Because the City issues gener:al-purpose capital nnprovem:ent bonds, which are
recorded within the proprietary funds, the City capi~ interest costs for business---type activities and
enterprise fund& according to~ F:ASB Statement No. 3'4 capitalizatiop oflnterest Cost aJ;ld.f'ASB Sfate(l'lent
No. 62 c.apitalization of Interest Costs. The City capitalized interest of approximately $4,190,000 net of
interest earned, for the business-type activities and the enterprise funds during the current fisca1 year.
63
City of Lubbock, Texas
Notes to Basic Financial Statements
September 30, 2008
NOTE I. SUMMARY OF SIGNU'lCANT ACCOUNTING POIJCIES (Condnued)
F, ASSETS. LIABILITIES,.AND Fl1MJ BALANCE/NET.ASSETS (Continued)
Fund Balances -In the fund financial statemeots, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or ue legally restricted by outside parties for use for a
specific purpose. Designations of fund balance represent tentative management plans that ~ subject to
change. ·
.Restricted Net Alletl -c.ertain enterprise fund and govemmental activities assets are restricted for debt and
federal requirements; consequcntly, net assets have been restricted for these amounts. The excess of other
restricted assets over related liabilities art. included as restricted net assets for bond indenture requirements
and passenger facility charges.
Use of Estimates -The preparation of financial stafflnents in conformity with GAAP requires management
to mah estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and
expenses/expenditures during the reporting period. Actual results could differ from those estimates.
G. REVENUES, EXPENSES AND EXPENDITURES
Interest Ineome on pooled cash and investments is allocated monthly based on the percenlage of a fund's six.-
month rolling average monthly balance in pooled cash and mvestments to the total City-Vride six-month
rolling average moDlhJy balance in pooled cash and investments. Bond Funds and other separate nonpooled
cash are distnbuted to the fund where the cash and investment is recorded.
Sales Tax Re'Yenue for the City results from en allocation of 1.5% of the total sales tax levy of 8.25%, which
is collected by the State of Texas and remitted to the City monthly. The tax is collected by the vendor and is
requited to be remitted to the State by the 20th of the IWDth following collection. The tax is then paid to the
City by the, Friday foUowing the second Wednes:cby of the month.
Grantllennue from federal and state grants is recognized as revenue as soon as all eligibility requirements
have been met The availability period for grants is considered to be one year.
loterf11Dd Transaetions are acc01llltcd for as revennes, expenditures, expemes. or othtt financing sources ot
uses. Tran.98.ctions that comtitute reimbursements to a fund for expenditures/expenses initially made from
that fund tbat are properly applicable to another fund, arc recorded es expenditures/expenses in the
reimbursing fund and as reductions of expenditures/expe!ISt!S in the fund that is reimbursed In addition,
transfers are made between funds to shift resources from a fund legally authorized to receive revenue to a
fund authorized to expend the revenue.
Compemated Absences consists of vacation leave and sick leave. Vacation leave of 10-20 days is granted
to all regular employees dependent upon the date employed, years of service, end civil service status.
Currently, 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 employees in good standing 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 i:1$:ys,
After 15 years of continuous full time aenice for non-civil service p~nnel, vested sick leave is paid on
retireinent or termination at the current hourly rate for up to 90 days. UPQ:n i;etirement or termination, Police
Civil Service Personnel are paid for up to 90 days accrued sick leave after one year of etnployntent.
Firefighter Civil Sen-'ice Personnel are paid for up to 90 days of .accrued sick leave upon retirement or
64
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City or Lubbock, Texu
Notes to Basic Financial State)Dents
September 30, .2008
(!;) NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING P-OLICIES (Continued)
G. @VENUES, EXPENSJtS ~D EXPENDITURES {Continued)
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termination, The Texas Civil Service laws dictate certain bencti~ and penonnel policies above and beyond
those policies of the City.
The liability for the accumulated. vacation and sick leave is recorded in the GWFS and in the FFS for
.Pr()J>~ry fund ep:iployee, wheJl earned. The liability is recorded in the governmental FFS to the extent it is
due and payable.
Post Employment Beneftts for retirees of the City include the option to purchase health and life insurance
benefits at a subsidized premium. Ho~er, employees that retire with 15 years of service or Civil Service
employees that retire who have a sick-leave balallce in excess of 90 days will be able to elect to 0011tinue
receiving medical coverage in :full 30-day periods for th£ term oftbe ba]ance of their sick leave. Amounts to
cover premiums and administrative costs, with an incremental charge for re!lerVe fundio,g, are determin~d by
the City's health care administrator, Emplo)'CI" contributions arc funded on a pay-as-you-go basis and
approximatM $2.3 million for FY 2008. 1bese contributions are included in th£ amount of imurance expen,e
reflecred in th£ financial activity reported in the Heakb Benefits fntemal Service Fund.
e. NEW PR.OUNCEMENTS
The City will implement the followmg new financial accounting and reporting standards issued by the GASB.
• Statement No. 49, "Accow:rting and Financial Reporting for Pollution Remediation Obliga-
tions:' The requirements of this statement are effective for FY 2009, but the effect of
implementing the statement is unknown.
• Statement No. 51, "Accounting and-Financial Reporting for Intangible Assets." The
requirements of this statement are effective for FY 2010, but the effect of implementing the
statement is UDknown.
I. CHANGE JN ACCOUNTING PRINCIPLES
Effective October 1, 2007, the City implemented the followmg new ~ial accoUDting and reporting
standards issued by GASB:
• Statement No. 45, Accounting and Financial Reporting by Employers for Postemploymmt
Benefits other than Pe:nsiom. Statement No. 45 establishes wiiform finaD.cial reporting
standards for other postemployment benefits (OPEB) plans, improves the relevauce and
usefulness of finaneiaJ repotting, and supersedes _portions of stal:eJnetlts No. 12 and 27. The
fmancial impact of the implementation on the City during the year is discussed in Nore lll. P.
• Statement No. 50, Pension Disclosures. Statement No. 50 amends the note disclosure and
required supplementary information standards of S~teznePts No. 2, and 27. The pension
footnote dnclo~ ~ discussed in Note: W. E.
NOTE II. STEW ARDSBIP, COMPLIANCE AND ACCOUNTABILITY
A. RESTRICTED NET ASSETS
Restricted net assets are only used for their intended purpose. For the majority of projects funded by tax
0 exempt debt proceech, the debt proceeds are used fint. followed by unrestricted resources.
0 65
City of Lubbock, Texas
Notes to Buie Financial Statements
September 30, 2008
NOTE Il. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued)
8. GENERAL FUND BUDGET COMPARISON
The Gem:ra1 Fund FY 2008 amended budgeted expenditures and traosfers out were $122,506,503 and actual
expe:ndib.lles and tmnsfers out were $122,874,160, a difference 0£$367,657.
NOTE IlL DETAIL NOTES ON ALL .ACTIVITIES .AND FUNDS
A. J!EPOSITS AND INVE-STMENTS
Depollts
On Septembe,: 30, 2008, the bank balat1ee of the City's dq,osits WBS S3,018,670. All of the bank bBlances are
covered by federal. depositocy insuraneo ot o.re fully collateralized. Custodial credit risk is the risk 'that in the
event of a bank failure, a government's deposits may oot be r-etumed. The City's deposit policy for rustodial
credit risk requires compliance with the provisions of Texas Public Ftmds Investment Act.
State law requin=s col.lateralization of all deposits 'With federal depository msll11UlCe, eligible securities, or a
surety bond bavi.og an aggregate value at least equal to the amowrt of the deposits. The City's Investment
Policy requires the minimum collateral level to be 102% ofmaiket value of principal and accrued interest.
At Scptclllbex 30, 2008, benk balances were exposed to custodw credit risk as foUmw:
Insured
Uninsured and uncollatenilized
Uninsun:d and collateral held by pledging financial institution
Uninsun:d and collateral held by plediUli finBncial institution's
trust department or agent in other than the City's name
S 750,000
2,268,670
S 3,018,670
lu.¥e5tments
At September 30, 2008, the City bad the following investments and maturities:
September30,l008
Maturltla in Yan
i...
Type Fair Value TILaa 1 1-S
Moaey Markets S 21,S20,865 S 21,520,865 s -
Fedc:ral Home Loan Banks 72,100,888 37,685,274 34,415,614
Federal Home Loan Mortgage
Corpontion 22,026,380 9,011,960 13,014,420
Federal Nlllional Mortgage
Associarion 9,240,630 5,035,630 4,205,000
F81lll Credit Note IS,012,510 6,987,510 8,025,000
US Treasury Note l.S0,797 150,797
State lnveSb'neTlt Pools • ~Z,227,.S23 2§7,927,523
lia7 222~23 i~iB mt ~~2 S~266003~
•state Investment Pools arc considered investments for financial reporting.
66
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City of Lubbock, Texas
Notes to Basic Financial Statements
September 30, 2008
NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
A. DEPOSITS AND INVESTMENTS (Continued)
Interest Rate Risk -As a means of limiting its exposure to fair value losses arising from rising interest ratei,
the City's investment po1icy limits investments to those that can be held to maturity and by limiting final
maturity to no more than five (S) yeaa. The money market accounts and investment pools are presemed as an
investment with a maturity of less than one year becau.w they are redeemable in full immediately.
Credit Risk -Credit risk is the risk that the issuer or other counterparty to an investment will not fulfill its
obligations. The City's polley allows iDvestmcnt in direct obligations of and other obligatiom guaranteed as
to principal of the U.S. Tr.easwy and U.S. agencies and instrumentalities with the exception of mortgage
backed securities. It allo~ obligations of investment in the State ofTexa.9 or its agencies and obligations of
states, agencies, counties, cities, and other political subdivisions rated not less than A or its equivalent It may
also invest in fully collateraliz.ed repurchase agreements, fully collatcralized certificates of deposit,
conmiercial paper 3nd bank acceptances with a stated maiurlty oi 270 days or fewer from the date of issuance,
AAA-rared, ,io-load tnoney ;market mutual funds regulated by the Securities and Exchange Commission, and
AAA-rared, conswrt dollar investments pools authorized by the City Council. At September 30, 2008,
Standard & Poor's rated the investment pools and the money Diarket mutual funds AAAm. The senior
unsecured debt for investments in FNMA and Fill.MC are rated AAA by Standard & Poor's and Aaa by
Moody's.
Cmtodial Credit Risk -For an investment, custodial credit risk is the risk that, in the event of the failure of the
counterparty, the City will not be able to recover the value of its investment or collateral securities that axe in
the possession of an outside party. The City requires that deposits and ~urcbase agreements be held in an
institutioq that has a minfm1m collateral level of 101.% of the matket value. FFCB, FHLB, Flll..MC, and
FNMA investments are held in the City's name in third party safekeeping by a Federal Reserve member
financial institution designated as a City depository. The City shall maintain a list of authorized
broker/dealeJ'& and financial institutions, which m approved by the Audit and Investment Committee for
investment purposes.
Concentration of Credit Risk -The City places limits on the amount that may be invested in any one issuer
with the exception of United States Treasury obligations. As of September 30, 2008, the City's investmcllts
constituted the following percentages of total investments:
lnnmnent
State Investment Pools
FHlB
FHLMC
Money Markets
FFCB
FNMA
U.S. Treasury
Percentage
tiS.67
17.67
S.40
5.28
3.68
2.26
0.04
Foreign Currency Risk -This risk relates to adverse affects on the &ir value of an investment from changes in
exchange rates. The City bas no foreigzi cu:crency risk.
67
City or Lubbock, Texas
Notes to Basic Financial Statements
September 30, 2008
NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Con.tinned)
B. INTERFUND TRANSACTIONS
Interfimd balances, specifically the due to and due from other funds, are short-term lollJlli to cover temporary
cash deficits in various funds. This occasionally ocC\m prior to bond sales or g,:ant reimbUISelDell1s. These
outstanding balances are rq,aid within the following fiscal year.
Intafund ha.lances. specifically advances to and from other filods, are longer-term loam to cover Council
directed .iJitemal financing of cettlin projects. At September 30, 2008 the City had $12,938,877 in internal
fl.llllDCUJg. These balances are assessed an interest charge and are repaid over time through operations end
transfers.
The following amounts due to other funds or due from other funds, including advances, 11re included in the fund financial
statements (all amounts in thousands):
Interl'lmd Recelvabla (Tbo1111111ds)
Governmental Funds Proerie1a2: Funds
laC.rfllDd Payablts (Tbo11u.nds) Nonmajor Nonm1jor
General Governmut WTMPA F.nterprite Tolals
Govern~ml Funds:
N onmajor Governmental s 1,4()1) s 152 s s S12 s 2,073
Proprtetuy Funds:
LP&L 9,009 9,009
Nonmaiior Enteiprise 1,857 1,857
Totals $ 3,266 5 152 s 9,009 s 512 s 12,939
Transfers include 1) debt service paymenls made from tbe debt service fund. but funded from an operating
fund; 2) subsidy transfeis from wuestricted funds; and 3) transfen to m>ve indirect cost allocations,
payments in lieu of taxes (PILOT), and fraru::hise fees to the general fund or other funds as appropriate. The
following intcmmd transfers are reflected in the fund financial statemcms (all amounts in thoUWlds):
68
0
I
0
0
0
0
01
0
0
0
0
C
0
0
0
0
0
0
City of Lubbock, Texas
Notes to Basic Financial Statements
Septembe.r 30, 1008
NOTE m. DETAIL NOTES ON ALL ACI1VITIES AND FUNDS (Continued)
B. INTERFUND TRANSACTIONS (Conttpued)
F11md1 Prop rfemr)' r 111ul1
lnterfund Trand'en Govt. Nonmajar Waste-SIDnn-NomTl.;or htemal
In: (Tho111and1) General cae1a1 0oVI Electric Water water wall:r En!!Eri• Service
Go,ernautal F.ao:
Gaicral Fund s -s -s 3\S S 1,796 SS,987 $2,894 S 1,066 s 3,624 s 2,047
Govt. Capital Projccll 759 25 12.S 110
N onmajor Govcmmental 221 1,444 5,729
P roprlenry Funds:
LP&L 1,013 514 400 200
Wiler 282 128
Wastewater 30
WTMPA 614
N onma;or Ent.erprise 4,137 347 35
lntenial Service 321
Totals S 6,130 s 1,469 S 7).77 $2,410 S6,387 $3,094 $1,066 s 3.877 s 2,513
Net lranSfers on the GWFS emounted to $4,703,317 from govemmenml activities to business-type activities.
In FY ZOOS the Civic Centen Enterprise Fund wm. created and $12,299,69Z in capital ~ets net of long-term
liability was contributed from govemmental funds. 1.0 the Civic Center Enterprise Fund This was netted
agemst transfeni of indirect co,t allocations and Pll.OT transfers from business-type .activities to
govemmental activities.
C. DEFERRED CHARGES
The total deferred charge of $2,811,110 in the LP&L Entetprise Fund tepr~ an advertising contract with
the United Spirit Arena. The advertising (and amortization.) began. with the open.mg of the sports arena in
fiscal year 2000 and will continue for 30 years.
69
Tolals
Sl7,729
1,019
7,394
,1
2.\87
410
30
614
4,519
321
$34,223
City of Lubbock. Texas
Notes to Basic Financial Statements
September 30, 1008
NOTE m. DETAil.. NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
D. CAPITALMSETS
Capital SSMlt ac:tivity for the year ended September 30, 2008, was as followa:
Primary Gonrnment:
Govenu-tll Adid:i.111
.... i.
Balance Jncra.1• DecnalN9
Capital A,etll Not Depnd1ttd:
Land $ 9,056,284 $ 1,216,338 $ 1,238,454
CGnstruction in Progn:ss 40,759,945 42,,767,016 16,711,163
Tc,1aJ Capilal Assets Nat Deprcwud 49,816,22'.J 43,983.354 17,949,617
Capital As11tl Depnciateda
Buildings 65,604,748 148,293 21,352,638
lmprovemeMS Ofter than Buildings 231,108,.317 19,979,475 4,264,979
Machinsy and Equipm:nt Ql,762,6'6 7,8(111656 12,382,438
Total Capial Assets Deprecia11d 365,475,721 27,935,424 38,000,055
Less ~cnmlllattd Depredation:
Buildings 33,575,928 1,784,067 14,100,591
lmprovennta 01hcr than Buildinp 119,815,172 9,505,742 2,795,500
Me.di in sy and Equip m:nt 48,2211912 6,6671058 8,616,434
Total Amimulated [)q)recill:ion 201,613,012 17,956,867 25,512,525
TOlalCapial AssetsDeprec:iued, Net 163,862, 1(1) 9,978,557 12,487,530
Governmental Activities Capital Assets, Net s 213,678,938 $ 53,961,911 $ 30,437,147
Dqm:ciatioD expcose was charged to fimctionslprogrum o( the go-vemmental activities as follows:
Govcrrn:nentll acrivities:
Ad IIDJ\lstratrve Service a and Gmeral Govcmmen t
Community Scrvi:es
Cwmal and lka"ealion Sctvm
Economic and Bm;inca Devdopmcnt
Fin:
Health
01hcr Pllblic Safety
Police
Stn:tn and Traffic
Intanal Service Funds
Tola.I deprec:laton expense -sovemmental activities
Transfer in 'ti accumulated depreciation -govemrrental activities
Increase in accWllllltm depJtCiatian -~ actirities
70
$ 524,279
138,044
3,245.553
481,235
1,359,866
313,159
532,832
2.S45.S51
7,771,812
265,779
17,178,110
778,757
S 17,)56,867
0
0
0
Eada.-
Bab.nus
$ 9,034,168
6~815.798 0 75,849,966
44,400,403
246,822,813
641187,874 0
355,411,090
21,259,404
126,525,414 0 4~272,536
194,057,354
161.353,736
$ 237,203,702 0
0
0
C
a
0
0
0
0
0
0
City of Lubbock, Texas
Notes to Basic Financial Statements
September 30, 2008
NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
D. CAPITAL ASSETS (Continued)
Business-type Activities
Beginning
Balan~ Jntteues Decreases
Caplcal Allffl Not Depreciated:
Land s 31,962.807 $ 1,.238,453 $ 89,122
Conmucrioo in Progress 90,515,665 61,225.550 24!067,811
Total Capital Assets Not Depreciated 122,478,472 62,464,003 24,156,933
Capital Aaets Depndated:
Bui\ding,i 98,005,752 22,755,074
lmpro'ffltlents Other than Buildings 769,665,416 25,525,413 2,569,115
Machineey and Equipment 166,693,910 19,712,468 6,447,317
Toti! capital As,ets Depreciated 1,034,365,078 67,992,955 9,016,432
l...eD Accumulated Depreciatioa:
Buildings 35,546,976 17,063,888
Improvem:nts Other than Buildiags 293,396,223 22,518,048 694,486
Mecltinery and Equipment 89,834,350 15,183,983 6,244,299
Total Ac:cumwated DepRciation 418,777,549 54,765,919 6,938,785
Total Capital Assets Depreciated, Net 615,587,529 13.227,036 2,077,647
Busi.ne.sirtype Activities Capital Asselli, Net $ 738,066,001 $ 75,691,039 $ 26,234,580
Depreciation expen.,e was charged to fimctiom/programs of the buaiot,a-cype activities as follows:
But11inea&-1)'pe Activities:
LP&L
Water
Wastewater
Stormwatc:r
Solid Waste
Airport
Transit
Civic Centers
Cemetey
I ntemal Service
To111l dcprecia.mn expense. business-type actimes
Tran,fe,-in ID 1<CU1D1laccd depreciation• businesMYJ.IC activities
lnaeasc in acclllilll la.red dep rec iaion -business-type activities
71
$ 9,599,079
8J87,182
5,432.048
1,274,719
4,233,675
4,205,461
1,509,962
813,674
18,055
57,779
35,531,634
19,234,285
S 54,765,919
Ending
Balances
$ 33,112,138
127,673,404
160,785,542
120,760,826
792,621,714
179,959,061
1,093,341,601
52,610,864
3 IS,219, 785
98,774,034
466,604,683
626?36,918
$ 787,522,460
City orLubboek, Texas
Notes to Buie Fia,ncla1 Statements
September 30, 2008
NOTE m. DETAD.. NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
D. CAPITAL MSETS (Coptinued)
Construction Commitmentl
1b.e. City of Lubbock has active consttuclion. projects at fisc:al year end. Water Projects include the acquisition
oftbe right"f..way necessary far the CODSINCtion of 11. pipeline to mzupc,rt water from the Lake Alan Henry
reservoir ID die Cily. .ADOlber project relaced to bringing Lake A.Jan Hemy Odline are t:OSIS associated 'With
the final design of an in.tab pump station, a 6S mile transmission line, trammission pump stations, and a 24
million gallon per day water treatment plant
Wastewater projects include the design and construction for plant improvements to the Southeast Water
Reclamation Pbmt. 1bcse improvements will praduce stream quality cfllueat to be discharged into the North
Fork ofthi: Double MountaiD. Fork of the Brazos River for potential reuse.
Construction of Fire Station 1¥17 has begun. This new fire station will maintain the current service level of
our fire protection services throughout the cily. Wotk continued on a Gateway Street Project that will
consttact a T ·2 tborough&re stn:et: on BnkiDe Street from Fraattbcd to Salem. The completed i-o,icct will
provide for three lanes of traffic in each direction plus a cominuous left tum lane.
Projeds Commitments Si!Bt-to-Datc Commltl.ments
Governmental Capital Projects s 92,714,556 $ 56,632,482 $ 36,082,074
TIF Cllpital P,ojedB 38.520,171 l 7,106,456 21;413,,71S
G 111:ewe:y S~ec PtCJj«:ts 26,795,200 3,443,571 23,351,629
LP&L 21,497,813 17,341,462 4,156,351
Water 89,249,756 40,63S,81)J 48,613,948
Wastewater 87,688,073 30,488,082 57,199,991
SolidWaae 3,503,900 818.893 2,68S.007
Airp<>rt 23,157,941 13,097,475 10,060,466
Stmmwater 56,729,500 45,744, 1 (,6 10,985,334
Internal Ser.ice Fund 1,600,000 835,799 764,201
Total $ 441,456,910 s 226,144,194 $ 215,312.716
E. RETIREMENT PLANS
Each qualified employee is included in one of two retirement plans in which the Cily participates. These arc
the Texas M1111icipal Rctuemcat System and the Lubbock Fire Pcmi.on FUDd. Toe City does not maintain the
accouoting records. hold the bm:stmmts or admioisla' cuber retirement plan.
Summary of significant data for each retin:nmt plan followa:
TEXAS MVNICIPAL RETIREMENT SYSTEM (fMRS)
Pbm Deacrlpdon
Toe Cily provides pension benefits for all of its fiill..time employees (with the exception of firefighters)
through a non-tnditiona.1, joint contributory, hybrid defined benefit pl.au in the state-wide TMRS, an agent
0
0
0
0
0
0
0
0
0
mukiple-employer public eq,loyce retiremmt systan. 0
TI 0
0
0
0
0
0
0
0
City ofLabbotk, Texas
Notes to Buie Financial Statements
September 30, 2008
NOTE Ill. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
E. RETIREMENT PUNS cc ontipued)
Benefits depe.11d upon the-sum of the employee's contributions to the plan, with interest; and the City-financed
mone1my cmlits, with interest At the date the plan began, Jhe. City granted monetary credits for service
rendered before the plm beg,m of a lheQretical amown-eqQa.1 to two titiles whit would' have been contributed
by the employee, with interest. -prior to establiabmenl of the plan. Monet::ary credits for service since the plan
began are a per~ent (lOOo/4, lSOo/o; or 2000/4) of the employee's a,Cqi,IIDUlatt:d contn'bution.s. In addition. the
City can gram. as ofml as annually,. another type of monetary credit referred to u an: updated service credit
which is a l:beoretical amount which, when added to the employee's accumula~d contn'butions and the
monetary credits for servi~ since the plan began, would be the total monetuy credits and employee
c:ODtnoutions accumlllated with interest if the current employee contn'bution rate and City qtdtiQg percent
bad always been in existence and if the empl~yee's salary ha~ always been the ~it of Im sa~ in die, last
three years that are one~ before the effective date. At retirement, the benefit ,s c-alculated as-if the sum of
the employee's accunmlated contributions with interest and the employer-financed IDO?letary credits with
·interest WCR med to purclwe an annuity.
The plan provisions are adopted by City Council, witbii'I the optiom available m the Slate statutes governillg
TMRS end within the actuarial COil.!itmin~ also in the statutes. Members cen retire at ages 60 and above with
5 or more yeus of service or with 20 yeani of service regardless of age. A member is vested after S yea.rs.
Contributions
The contribution rate ror employees is 7% and the City matchillg ratio is currently 2~to-1, both as adopted by
the City Council. Under the State. law governing TMR.S, the actuary annually determines the City
contnbution rate. This rate consists of the normal cost contribution rate and tbe prior service cost
cantnbution nte, both ot which are calculated to be a level percent of payroll from year to year. The normal
cost contribution mte finances tilt currently accruing monetary credits due to the City matching percent,
which is the obligation of the City as of B.ll employee's Rt:imncnt date, not at lhe time the employee's
contn'butio~ 1,1e made. The nonnal cost contribution rate is the actuarially determined percent of payroll
necessary to sawfy 1he obligation of the City to each employee at the time bis/her retirement becomes
effective. The prior service contnoution rate amortizes the unfunded (overfundcd) actuarial liability (asset)
over the remairuw of the plan's 30-year amortization period. The projected unit credit acruarial cost method
.is used fOl" determining the City contribution rate. Both the employee$ and .the City make contnb utions
U10Dthly. Smee ·uie City oeed.s to know iCs -contnbntion rate in advance for budgetaey pw:poses then: is a one~
year delay between the actuarial vduation th@t serves as the basis fur the .rate aod 1he calendar yev whell die
rate goes into effect (i.e. December 31, 2007 V1luation ~ etfective for ra~ bfpnmng, JID\lacy 2009).
Actuarial Assumptions
The actuarial asSWDptiom for tilt December 31, 2007 vawatiom ~ u follows:
Actuarial cost method:
Amortization method:
Remainillj amonmtion period:
Aasct valuation mcdiod:
Investment me of rerum:
Projected salary increases:
Includes inflation at:
Cost o!Living a4justmenl5:
Projected unit credit
Level percent of payroll
30 years-closed period
Amortized cost
7%
Varies by age and service
3%
2.1 % (3% CPI)
73
City o.f Lubb~ Tes:as
Notes to Basic Financial Statemena
September 30, 2008
NOTE lIL DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
E. llTJREMENT PLANS {Cootfnued)
Payroll Gro'M:h
Withdn!.wal rates for Male/Female
9/30(06
9/30(07
9l30IOB
Aaaulll Pnli.t111.
CGlt
S 10,904,031
10,903,717
11,369,691
3%
Mid/Mid
Peruntqe
otAPC
Coatrlllaled
100
100
100
so
0
0
As of December 31, 2007, the most recent actuarial valuation date, the plan was 61.4% funded. The actuarial
accrued liability for benefits was $326.0 milli°°". and the actuarial value of assets was $200.0 million,
l'eilllring in en unfunded a.ctuarial accrued liability (UAAL) of $126.0 million. The covered payroll (annual
payroll of active employees oovered by the pla.11) was S70.9 miltion, and the ratio of the U AAL to the ~overed
payroll was l77.5%.
llu: scm:dole of funding ptQgress, pn:sented as required supplementary imoonatiou r oJfowing tho notes to the
fiuaocial statements, wiU present multiyear trend infonnati<>n about whether the actuarial value of plan a.ssets
is increasing or d~iD& OVet" time re.lative to :the ~~1 ~ed liabilities for benefits.
The City of Ll.lbbook it one of827 mwticipalities having che benefit plan idministeted by TMRS, Each of the
municipaEties bas an. azmual, individual aQiuarial valuation performed. All assumptfons fortbe December 31,
2007 valuations are contained in the 2007 TMRS Comprehensive Amwal Financial Rt:;port. a copy ofw.bich
may be obtained by vmtiDg to P.O. Bo:x. 149153, Austin, Texas 7871 4-9153.
LUBBOCK FIRE PENSION F1JND (Lll'PF)
Plan Daalption
The Board of Trustees of the LFPF is the administrator of a single-employer defined benefit pension plan.
This pension fun4' is a trust fund. It is reported by the City as I related -0rganizaticm and is not coJJSidc:red lO
be a put of the City financial n,porting entity. Firefight~ in the l:abbock !Fire Dc,partment are covered by
dte LFPF.
0
0
0
0
0
0
0
0
The LFPF provides setVice retirement, death, disability and withdrav.al benefits. These benefits fully vest
after 20 years of credited service. A partiAlly vested benefit is prO'\,ided for firefighters who tmminate
employment with at least 10 but less than 20 years-of service. Employees may retire at age 50 with 20 )'P,8IS
of service. A reduced early service n:!:itement benefit is ptovided for employees who terminate employment
Vritb 20 or more )'CU!l of servk;e. The l.FPF Plan, eff~c:tive December 1, 2005, provides a monthly normal
service retirement 'bcn~fit, payable in a Joint ~ Two-Thin;ls to Spo\l.Se fonn of lUIIluity, equaJ to 68.92% of O
fmal 48•month &\t~e salal:)i pfus $335 0$ per mmth for each ~ of service in e~ess of 20 ye~
A firefighter has the option to participate in a Retroactive Deferred Retirement. Qption Plan (RETRO DROP)
Wbfoh:provides-·a lmnp sum benefit and a reduced &llDllity upon termination of eq,loyment. .F.imfigbters IDllSl
be at least 51 years of age with 21 years of service at the selected "RETRO .DROP benefit calculation date"
(which is prior to date ofiemployment t:el'l:rllllBtioD). 'Early RETRO DROP with benefit reductions is available O
0
C
0
0
0
0
City or Lubbock, Texas
Notes· to Basic Fioanci-1 St.temeots
September 30, 2'008
NOTE Ill, DETAIL NOTES ON AIL ACTIVITIES AND FUNDS (Condnued)
E. RETIR:EME;NT PLANS (Continued)
at age 50 with 20 years of service for the selected "early RETRO DROP benefit calculation date". A Partial
Lump Sum option is also available where a reduced monthly benefit is determined based on an elected lump
sum amouot such that the combined present value of the benefits under the option is actuarially equivalent to
that of the normal form of the monthly benefit. Optio:oal forms ll{C also availabl~ at 'r'8I)'ing levels of
surviving spollSC benefits instead of the standard two-thirds form.
There ~ no provision for auton1atic postretirement benefit increases, LFPF bas the authority to ptOvide, and
has periodiaally proVJded for in the past. ad hoc postretirement benefit :increases. The benefit provisions of
this ~ are authorized by the Texas Local Fire: Fighter's Retirement Act (TLFFRA). 'Jl,FFRA provides the
authority and procedme to amend benefit provisions.
Contributions Required and Contril>ulioos Mad«:
The contribution provisions of this plan are authorized by 11.FFRA. TI.FFRA provides the authority and
procedure to change the amount of contributions determined as a percentage of pay by each firefighter end a
percentage of payroll by the City.
While the actual oontnbuti.on rates arc not actuarially determined, state law requires that each plan of benefits
adopted by LFPF be approved by an eligible actuary. The actuary certifies that the contribution commitment
by the firefighters and the City provides an adequate financing arrangement Using the entry age actuarial
cost method, LFPF's nonnal cost contnbution rate is determined as a pm:ci:imge of payroll. Th£ excess of
the tolal contnbution rate over the nonnal cost contribution rate is used to amortize LFPFs umunded actuarial
accrued liability ((JAAL), if any. and the DllDlher of years needed to a:imrtize LFPF's unfunded actuarial
liability, if any, is detennined using a le.vel _pe~ge of piyrc,:,11 ~Ui.()d. The costs of administering the plan
,are fiwwced by LFPF.
Annual Pension Cost
For the :fiscal year ended September 30, 2008, lhe City Annual Pension Cost (APC) for the LFPF was equal to
$3,889,208 as descnbed in item 4 in the table below. Based on the results of the December 31, 2006
actuarial valuation of the Plan effective December 1, 2005, the most recent biennial actuarial valuatioo. the
Board's actuary found that the fund bad an adequate &ancing ammgem=t based on the current level of the
firefigbter contribution rates and on the assumedavera,ge of City contnbution ;rat.es. The funding policy oftbe
Fllfid requires firefighters to contnbu~ 12.43% of pay. The City contributes based on a foJlllUla whkh ~es
the City's contribution rate to fluctuate from year to year. The December 31, 2006 actuarial valuation
usumes that the City's contnbutiODS will avemge 19.75% of payroll in the future.
The Annual Required Contnbution (ARC) by the City for the fiscal year ending September 30, 2008 were
based on the results of the actuarial valuations as of December 31, 2004 and as of December 31, 2006 using
0 the entry age actuarial cost method and were detcmrined in compliaru::e with the GASB Statement No. 27
parameters. The actuarial methods and assumptions used for these two valuations as follows:
0
75
City or Lubbock, Texas
Notes to Basic Fin andal Statements
September 30, l008
NOTE m. DET All. NOTES O'N ALL ACTIVITIES AND _FUNDS (Contillued)
E. RETIREMENT PLA.1'-iS, (ConUauat)
Valuation Date
Actuarial cost method
Amortization method
Amortiz:stion period of ARC
:\s.,et valuation method
Actuarial assumptions:
lnvmment return
Projected salary inaci.scs
lnilation
Cost--of-living increase
Payroll increases
ARC as ·percent of payroll
12'31/2004
Entry age
Level percent of payroll, gpen
21 years
-5-year adjusted market value
8%
4% plus promotion and longevity
4%
0%
4%
Budget rates
12'311'2006
Entry age
Level percent ofpayrol~ open
30 years
.S•year adjusted marlcet value
&%
4%plus punmon and longrnty
-4%
0%
4¾
20.42%
The following shows the development of the Net Pension Obligation (NPO) as of September 30, 2008
I. Annual Required Contributions (ARC)
2. lntereSt on NPO
3. Adjustment to ARC
4. Annual Pension Cost (APC)
S. A.Qtual City conrribvtiOlls nwlc
6. I:n~ (Decrease} i'1 NPO/(W!lt)
7. N'PO/(asset)· at October l, 2007
8. NPO/(assc:t) at Sei,tcrnbt!t 30, 2008
S 3,908,048
(68,985)
50145
3,889,208
(JW>,.468)
481740
(86~ll)
$ (813,S71L
furthel details concerning the rmancial position of~ LFPF and tbe l:ates.t actuarial valuation are available by
contaotina t~ Board of Trustees, LFPF, City ofL~bbock, P.O. Box 2000, Lubbock, Texas 79457. A stand-
tlone ncanoial repon is available by contacting the :i.FPF.
FualYear
Eoded
9/30/06
9/30/07
9/30/08
Trend Information
Allllul Pemio•
Cost(APC)
$ 3,208,595
3,530,944
3,889,208
Percentqe el APC
Contributed
100.0%
98.4
98.8
NetPenaiPn
Obligation
(Asset}
$(920,722)
(862,311)
(813,571)
As of December 31, 2006, the most recent actuarial valuation dB.ti; the plan was 84% .funded. The actuarial
aecrued liability for benefits was SJ64.4 million, and the actuarial value of assets w:as $138.J million.
resulting in an unfunded actuarial acaued liability (UAAL) of S26.3 million. Tbe covered pa)Toll (11111ual
payroll of active employees coveted by d:ae plan} was $)7.3 million. and the ratio of the UAAL to die oowred
payroll was 152.1%.
The schedule oJ:fundmg progress, presented .a,.s required supp emenmry lnforma·tion following the notes to the
financial statements, will :present mriltiyear Jtend information about w~ the actuarial value of plan DSsets
is mcrea.i;ing or decreasing over time relative to the .achwial accrued liabilities for benefits.
76
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()
City of Lubbock, Texas
Notes to Basic Fintmti-1 St•tements
September 30, 2008
NOTE III. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
F. OTHER POST EMPLOYMENT BENEF1TS (OPEB)
Plan Description: The City sponsors and administers an informal single-employer heiutb/dental plan. Texas
1t.a1Ute provides that retirees fiom a municipality with a population of 25,000 or more and that receive
reti:rem,enl bcniefits from a municipal :retirement plan are entitltd to purchase continued health benefits
coverage for the person and the person's dependents unless the person ts eligible for group health bcnefi.15-
coverage through anolher employer. The St.ate of Texas has the authority to establish and amend the
requirements of this statute. The City does ·not issue stand alone financial staletl]Cnts of the healtb/den'tal
plan, however, all required information is presented in this report.
Fu,uling Policy: The contnbution requirements of plan mcrnbcrs .are established by the City and may be
amended as needed. Retiree medical/dema1 coverage levels for retirees is the same as coverage provided to
active City employees in accordance with the terms and conditions of the current City Benefit Plan.
Employees who retire with 15 or more years of service or Civil Service employees that retire who have a
balance in excess of 90 days sick leave are eligible to continue receiving medical coverage in full 30 day
periods for the 'tenn of their sick leave balance. The City contnbutes 33.89% to 58.83% of the monthly
premium for the retiree only health premium and 7 .88% for the retiree only dental premium. Plan members
may purchase retiree health/dental care coverage for eligible spouses and dependents at their own expense
and receive a benefit fiom the blended premium rate from all of the employees participating in the City's
health inslll'IUlU plam. The City is not required to maJce contributions to the plan on behalf of the retirees and
funds the plan on a projected pay-as-you-go financing method. The plan has 499 active participants who pay
monthly premiums between 5272/$22 (medical/denttl) for single coverage and ($320/$27) medical/dental for
family coverage.
Annual OPEB Cbst fl!ld Net OPEB Obligaoon: The City's annual OPEB expense is calculated b~ on the
amrual required contn"bution (ARC) of the employer, an ·amount acruarially detennin.ed in accordance-with the
parameters of GASB Statement 45. The ARC represents a level of funding that. if paid on an ongoing
basis, is projected to cover normal cost each year and amortiz.e any \]Il'funded actuarial liabilities over a
petipd not to exceed. thirty years. The follc;i,wing table shows the components of the City's. annual Ol>EB cost
for the year, the amount actually contributed to the plan, and chl,.nges in 1be City's net OPEB obligation:
AmwBl required contnbuti.on
Interest on net OPEB obligation
Annual OPEB Cost
Total amrual employer contribution (pay-as-you-go)
[ncrease in net OPEB obligation
Net OPEB obligation-beginning of year
Net OPEB obligation -end of year
S 6,636,899
6,636,899
(2,281,379}
4,355,520
S 4.355.520
The components of the ARC ca1culation reflecting a 30 year amortization period is as follows:
Normal Cost
Amortization of transition obligation
Interest cost
ARC
77
$3,221,541
3,415,358
S 6.636,899
City of Lubbock, Tuas
Now, to Basic Financial Statements
· September 30, 1008
NOTE m. DE'tAIL NOTES ON ALL ACTMTIES AND FUNDS (Continued)
F. OTBEllPQST EMPLOYMENT BENJ;Ql'S CConfloneitl
The City's annual OPEB cost. the percentage of annual OPEB cost comnbuted to the pl.en. and the net OPEB
obligation for 2008 is as follows:
FitcaJ Year
Ended
09/30/2008
Annual OJ'EB
Cost
$6,636,899
Perceatage or Aaaual
OPEBCosl
Contributed
34.4%
NetOPEB
Obligation
$4,355,520
Funded Status and Funding Progress: As of October 1, 2007, the amt ~cnt actuarial valuation date, the
plm was not funded, The actuarial accrued liability for benefits was $81,918,738, and the actuarial value of
assets was $0, resulting in~. unfunded actuarial accived liability (UAAL) of$81,9l8,738. The CQvered
payroll ( annual payroll of active employees covered by the plan) was '$88,185,412, and 1:be ratio of th, UAAL
to the eov.ered payroll was. 92.9%.
Actuarial valuatiom of an ongoillg plan involve estimates ()f the value-of-reported amGWlts and USUllJ)tions
about the probability of OCCUD'ence or events far into the future. Bx.aq,les ifielude usumptions about future
~loyment, mortality, and die healthcare cost trend. Amounts determined regarding the funded staros of 1he
plan and the ARC of the employer ~ subject to continual revision as actual results are compared with past
expectations and new estimates -are made about the future. Toe schedule of funding progress, pre9ellted as
required supplemenwy information following the notes to the financial statements, will present multi-year
trend infonnation about whether tbc ac11larial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits. However, since this is the first year of implementation
th£r-e is no trend in.fonnation to report.
ActMarial Mellwds a,ad Assumptions: Projections ofbenefim for financial reporting pwposes are based on the
substantive plan (the plan as understood by the employer and the plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit cosas between
the employer and plan members to that poiot. The actuarial methods and assumptioos ~ed include
techniques that arc designed to redu.cc the effects of shoi:Menn volatility in actuarial aconied lie bililics and
~ actuarial value of tssets. CODSiatcnt with the long.term petSpective of the calculations.
ln the October l, 2007, actuarial valuation, the projected w:tlt c:redit actuarial cost method '\1r'BS used The
actuarial assumptiom included a 4.5% inveslD:ent rate of n:tum bued on a lODB term tate of investmc:Jlt, a 3%
annual salary increase projection, and an annual healthcare cost ·trend rate of 10% for 2007 and then reduced
by decremems to an ultimate rate of 4.5% after fifteen years. The UAAL is being amortized a.s a level
p~tage of project2d payroll on a close.d basis. The remaining amarti7Jltion period at September 30, 2008,
WIS twenty-nine ye.an.
G. DEFERRED COMPENSATION
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The City offers its employees five deferred compensation plan., in accordance with Internal Revenll1' Code
("IRC") Section 457. The plans, available to all City employees, permit them to defer a portion of !heir
salary until future years. The deferred compensation is not available to employees UDti1 termination,
retireoat, death, or Ullforeseeable. cm,rgenty. The plan.,' assets are held in trutt for the exclusive benefit, of 0
Ulc participantS and ~ir beoeficiaries.
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City of L11bbock, Teus
Notes to Buie Ji'inaacial Statements
September 3011008
NOTE DL DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
G. DEFERRED COMPENSATION (Continued>
The City does not provide administmtive services or have any fiduciary rt:5J)OI11ibilitiel for these plans;
therefore, they are not presented in the BPS.
B. SURFACE WATER SUPPLY
Canadian River Mua.ldpal Water Authority
The Canadian River Mmlicipal Water Authority (CRMW A) is a Conservation and Reclamation Authority
eitablished by the Texas LcgislaJure to construct a dam, water mervoir, and aqueduct system for the purpose
of supplyio,g water to surrounding cities. The AUlhority was created in 19S3 and comprucs elcvco cities,
inl:ludiog the City of Lubbock. The budget. :financing, and operatioos of the AU1borily are govemed by a
Boanf of Directors selected by dae governing bodies of each oftk nember cities, each city being entitled to
one or two I.I.Od)U1 dependent tlpOD population. At SeplembeJ 30, 2008, dae Board wu comprised of' 18 memxn. two of which~ the City.
The City contracted widi the CRMW A to reimbune it for a portion of the cost of the Cc.adian River Dam
and aqueduet system in exchange for surface water. The City's pro rata share of amrual fixed and variable
opera.ting a:od :rc,crve asaessmenm are recorded as an expense of obtauli:Dg surface water.
Prior to fiscal year 1999, lcmg-tmn debt was owed to the U.S. Bureau of Rec:lamatiou for the cost of
construction of the facility, whkh was completed in 1969. The City's allocation of project cosw was
$32,905,862. DuriDg fiscal year 1999, bonds in the principal amowt of $12,300,000 "Were issued to pay off
the construction oblip.tion owed to the U.S. Bureau of Reclamation via CRMW A ia the amount of
$20,809,067. The diff'emlce of SS,509,067 WQ a discouot in the l'T!IJYlining principal provided by tht U.S.
Bureau ofReclamaticm to the member cities. This discount has been recorded u a deferred gain on refunding
and is being amortized over the life of the refunding bands. At September 30, 2008, Sl,363,690 .remains
unamortized. The anmlll prin~ipal and interest payment, are included in the disclosures for other City related
loog-term debt. The above cost for the rights are recorded as capital assets and m being amortized over 8S
years. The cost a:od debt are recorded in the Water Enterprise Fund
In 2005, the Ooadiao River Mmipal Authority issued S48,12S,OOO ill Contract Revenue Bonds. The City
of Lubboct shared ill dlis issue in lhe amount of $17,960,000. The CtDICti•o 'liver Municipal Autborily
issued a new Coutmcl Revenue Bond. Series 2006 in April 2006 in the arm:nmt of $49,075,000. The Cily of
Lubbock sbared in the issue for $18.573,906 1111d. other costs or 5492.465, am received depreciable assets
(1181a' right,) valued at S 19,066,.371. These as:seCs and liabilities are reco.ded ill the w acer Eaterprue Fund.
Brazos River Authority-Lake Alan Henry
Owing 1989, the City em:tred iDto an agreement with~ B:razos River Authority (BRA) for the construction,
mainte:Danec; and operation of the facilities known as Lake Alan Hemy. The BRA, which is authorized by the
State of Teus to provide for the conservation and development of swface \li'l11er& iD the Brazos River Basin,
issued bonds ft>r the camtruction of a dam and lab facilities on the South Park of the Double Ml;IUDlain Fork
of the Brazos River. The Blt.A issued $16,970,000 in revenue bonds in 15'89 and $39,685,000 in revenue
bonds in 1991. The BRA revenue bonds were refimded in 1995 and 2005, legally defeu:lng the BRA debt.
The new debt is in the City's name and is no longer BRA debt. The Lake Alan Hemy dam and facWt:ies-
assets are recorded as capital usets and are being depreciated over SO years. The fiDm:ial activity, along
with related obligation, is accowued for in the Water Eaterprise Fuod,
79
City of Lubbock, Texas 0
Note1 to Basic Finaocl.al Statements
September 30, 2008
NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (C41atinued) 0
L LQ~O-TERMDm!I
GINER.AL OBUGATION BO~"DS AND CERTIFICATES OF OBLIGATION:
laterest Maturity Amouat Oulsialldla1
Rateo/a Dated DI!! ~ 09-30-08
5.39 10-01-93 02-15-14 $ 2,550,000 $ 780,000
5.20 10-01-93 02-15-14 t,470,000 225,000 0
5.14 10-01-93 02-lS-14 19,215,000 2,895,000
4.71 01-01-98 02-15-18 10,260,000 l,5AS,000
4.36 01-15-99 02-15-14 20,83$,000 12,900,000
4.58 01-15-99 02-15-19 15,35$,0QO 170,000
4.77 04--01-99 02-15-19 6,100,000 30S,0OO
4.71 04--01-99 02-15-19 12.300,()00 6,820,000
5.37 09-15-99 02-1S-20 24,80(),000 1,085,000
5.54 03-15-00 02-15-20 7,000,000 310,000
4.90 02-01--01 02.1 S-21 9,100,000 815,000
4.81 02-01.01 02-15-21 2,770,000 280,000
5.25 06-01-01 02-15-31 35000,000 2,335,000
4.68 02-15-02 02-15-22 9,400,000 3,700,000
4.71 02-1S-02 02-15-22 6,450,000 2,535,000 0 4.70 02-15-02 02-15-22 '1,545,000 1,.270,000
4.62 07-01-02 02-1S-22 t605,000 2,045,000
3.18 07.01.02 02-lS-10 10,&10.000 1,855,000
4.42 07-15--03 02-15-23 11 855,000 3,655,000
4.47 07-15---03 0z.!S-24 '9,765,000 8,425,000
4.48 07-15-03 02-15-24 680,000 .585,000
4.47 07-15-03 02-15-24 3!590,000 3,095,000 0 4.87 07-15-03 02-15-34 4(1,135,000 6,060,000
4.47 07-15-03 02-1S-24 3.795,000 3.275,000
4.60 08-15-03 04-15-23 8,900,000 7,130,000
4.60 08-15-03 04-15-23 Il.270,000 4,810,000
4.37 06-30-04 08-0t-12 1.000.000 500,000
4.09 09-15-04 02-15-24 2.0"ZS,000 1,590,000
4.08 09-28-04 02-15-24 l.100,000 2,370,000 0 3.58 09-28-04 02-15-20 22,620,000 18,385,000
3.89 02-15-05 04.1S-25 13,0.H,000 18,040,000
3.94 06-15-05 02-15-21 49,615,000 49,615,000
4.26 08-IS-05 02-1S-25 46.S~.ooo 41,700,000
4.82 07-01-05 02-15-21 43,080,000 37,215,000
4.27 07-15---05 02-IS-25 7.26S,OOO ,6,510,000
4..58 04-15.()6 02-15-26 76,9"0,QOQ 73,435,000 0 4.58 04--15--06 02-15-26 2 740,000 2,645,000
4.84 OS·lS--06 02-15-3 I 18,830,000 18,170,000
4.42 01-01-07 02-15-34 54,020,000 51,485,000
4.42 01-01-07 02-15-34 25,255,000 24,625,000
4,88 08-15-07 08-15-27 :J,lSS,000 1,125,000
4.88 08-15-07 08-15-27 60,8201000 58,825,000
6.45 12-15-07 08-15-27 11,805,000 11,805,000 0
4.22 01-15-08 08-lS-27 52,900,000 52,900,000
4.80 04-15-08 08-15-27 2,035,000 2.,035,000
4.42 04-15-08 08-15-27 80,485,000 80,485,000
2.45 06-01-08 08-15-27 2216151000 :U,615,000
Total $ ~0217!0,000 s 656,180,000. (A)
(A) Euludes ($7,841,525) net deferred losses on advance refunding&. :net bond ~ums and discountsi and bond 0 isewmoe costs -(S3,900,807) business-type and ($3,940,718) governmental. Addili0b81ly. 1his amown includes
$457,)26,347 of bonds used to finance enterprise fund acth·ities.
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City of Lubbock, Texas
Notes to 1J1sic Financial Statements
September 30, 2008
NOTE m~ DETAIL NOTES ON ALL ACTIYITIES MlJ FUNDS (Continued)
I. LONG-TERM' DJU lCon1ioued)
At September 30, 2008, management of the City believes that it was in compliance Vrith all financial bond
covenants on outstanding general obligation bonded debt, certificates of obligation, and Vr"ater revenue
bonded debt.
LP&.L J(EVENUE BONDS
BaJoce
Finl) DIQUDt out.-tOq
Interest Rate(%) IMue Date Matllrl!l'. Date laued 09.Je-0.8
4.25 to 6.25 1-01-98 4-15-18 S 9,170,000 s 4,600,000
3.10to5.00 1-15-99 4-15-19 14,975,000 5,900,000
4.00toS.25 7-01-01 4-15-21 9,200,000 5,980,000
Tola.I S 33,345,000 S 16,480,000 •
• Balance outstanding &Xdudes $376,493 of net defi:rlcd losses on adV811ce refundings, bond praniums and discounts,
and bond iuuance costs.
Interest Rate(%)
3.983
4.25 to S.O
lsaueDate
09-30-05
04-30--06
OTIDR REVENl.JE. BONDS
J"ioal
Maturity Date
09-30-25
02-15-27
BaJaa~
AIIIINIDt Out.sbodlog
luued 09-30-08
:Ii 17,960,000 S 16,299,167
18,573,906 17,651,6TI
S 36,533,906 S 33,950,844 •
•Balance outstmding_ a cludcs $365,241 discount and deferred losses on bonds sold or refunded.
The amwa.l requirements to amorfuz all outstanding debt of the City as o!Septl:mber 30, 2008 are as follows:
Govennneatll kth'ides Bmlness--Typ e Adkitles
Fiaul Geeerll O1:ilptiDD Bonds Geaeral Obl~don Bo..lds . Revmue&oadt
Year Prh~~-al late-at Priactpal lateres:t l"r1DC(pal !merest
20@ $ 9.478.48(i $ 9,s:n,982 $ 23,446,514 s 21.319,.399 $ .3.0l6.93l $ 2~448.196
2010 9,876,223 8.,853,219 24,318., 777 19,572,553 3,062,637 2,315.474
201t l0,249,465 8,407,095 2S,010,S35 18,526,832 3,110,359 2.181,036
2012 10,327,340 7,940,486 24,882,660 17,439,327 2,828,634 2,040,891
2013 10.593,204 7,463,337 25,666,796 16,326,550 2,896,718 1,911.990
2014-2018 53,884,423 29,SOS,852 124,02S,S7S 64,730,247 tS,,694,414 7,414,fi09
2019-2023 .53,170,710 16,938,528 107,634,292 36,593,050 13,265,992 3,616.,585
2024-2028 36,673,802 4,856,312 82,846,198 13,397,027 6,555,158 651,232
2029-2033 4,800,000 315,620 16,895,000 2.),29/,07
2034-2038 2,400,000 54,000
Totals S 199,0$3,653 $ 94,413,430 S 457,126.347 S 210,188,592 $ '50,430,844 S .2~80,013
81
City of Lubbock. Texas
Notes to Basic Financial Statemeats
September 30, 2008
NOTE ID. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
L LONG-TERM DDT (Contiaaed)
C-apital leases were used to acquire equipment and vehicles. The interest rate on the leases ranged from 1.5%
to 3.8%. The annual requirements on capital leases of the City as of September 30, 2008, including interest
payments of$3,052,943 are as follows:
Govn•meatal Basiae•-Type Teral
Capital Lease Capital Luse CapibJ Leaa
fllCII Mioimam Mialm1m Miaimilm
Y•r Pa2:mut Pa2:ment Pa2!!ent
2009 s 3,316,870 s 4,715,877 s 8,032,747
2010 3,090,580 4,697,081 7.787,661
2011 2,031,41 S 3,963,893 5,995,308
2012 1,-429,893 2,773,922 4,203,815
2013 910,279 1,689,579 2,599,858
2014•2018 2,768,721 2,469,736 S,238,4S7
Less:
Interest (l ,325:252 l (1,727,692) (3,052,944)
Toial s 12,222,506 s 18,582,396 s 30,804~02
Tbe carrying values on the lea5ed assets of the City as of September 30, 2008 are as follow..:
Aceumulated Net Book
Gross Value Depredation Value
Governmental Activities s 16,813,621 s 3,144,099 s 13,669,522
BuaineS&•type Adivitics 27,085,294 2,713,112 2A,372,182
Tola.I Lcued Assets s 43,8,98,915 s 5,857,211 s 38,041,704
82
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City of Lubbock, Tel<ll&
Notes to Basic Financial Statement&
September 30, 2008
NOTE ill. DETAIL NOTES ON ALL ACTlVITIES AND FUNDS (Continued)
I. LONG-TERM DEBT (Coodnued)
Long-tmn obligations (net of discoums and premiums) for governmental and business-type activities for the
year ended September 30, 2008 are as follows:
Gonmmmtal. adb1tlea:
Tax-Supported·
Obligation Bonds
Bond DB:ounU/Pran.iwns
Capital Leases
0,mpeDSlled Ab~UCBS
Pl:>n R~ment Benefits
Jnsunmce Qaim Payable
Arbitrage P8)'11hle
Total GoYermnentel aetlvldes
Baldnest-lype •dlvitlm:
Self-Supported -
Obligation Bonds
:Rcn:nue Bonds
Bond Dili;:ounwl>mniums
Capillll Lmscs
OosurdPost Closun:
Compensal.ed Abznccs
Pl:>st R.etirem:nl Ben di.ts
lniurf!DCC aun Pl}'able
Aroicrage Payable
Total Bualam-type •cdYldea
DdJtPayabk
09138/07 Adcld0Di
S 160,388,370 :Ii
2,315,924
10,916,970
17,228,753
46,60S,151 $
1,844,019
3,783,379
8,002,065
2,813,759
19,333,090 2,469,382
676,0S2
S 193,995,451 $ &2,381,463 $
352,486,630
:54,208,174
314,988
13,049,379
3,:531,611
S,3:57,820
3,258,788
565,01:5
S 432,772,405
123,234,849
4,182,809
8,273,303
238,9:5:5
2,977,390
1,541,761
4,443,470
6.613
$144,899,150 S
Deldl.ons
7,939,868
219,22S
2,477,843
7,306,975
20,046,766
10, ,30S
38,09:5,9&2
18,S9S,l32
3,777,330
1,338,720
2,740,286
2,7V,S26
4,856,579
"' 34 ,oJ:5,927
Debt Pa)'llb~
09/30/08
S 199,053,653
3,940,718
12,222,506
17,923,843
2,813,7:59
l,7:55,706
570,747
S 238,280,932
457,126,347
50,430,844
3,159,077
18,582,396
3,770.:566
5,607,684
1,:541,761
2,84:5,679
:571,274
.... ,.
one year
S 9,478,486
2,934,588
6,806,236
1,599,299
$ 20,818,609
23,446,514
3,016,932
4,164,910
2,838,24:5
1,420,757
$ 543,635,628 S 34,887,358
Payments on bonds payable for governmental activities are made in the Debt Service Fund. Bonded debt is
subject to the applicability of fedem.l arbitrage regulations. Accrued compensated absences that pertain to
govemmenta1 activities will be liquidated by the Geoera1 Fund and Special Revenue Funds. The Risk
Managemelll Internal Service Fund will liquidate iDsurance claims payable that pertain to governmental
activities. Payments for the capital leases that pertam to the governmental activities will be liquidated by the
General Fund and Capital Projects Funds.
The total long-tmn debt is rccom:iled to the total anm.ial requirements to amortize long-1:elDJ. debt as follov;s:
Loag-t=n debt -Go~mmeoti.l Acti~tics
l.mig-tum debt-Busincss-rype Activities
I11CCfcst
T ota1 amount of debt
Less: Bond discounai/pmniwns
Less: Capiw me.1
Less: Oo:;urc/p:::,st dosll-lC
Less, Coo,peoatedabsirnSC!l
Less: Post m:iremeot benefits
Less: Illlllnrw:e claims payable
Less: Arbimgepayable
T ob.I otbci: debt
Total futum hooded d«ltrai_uh:emaits
83
' 238,280,933
543,635,628
327,182,035
(7,099,795)
(30,804,902)
(3,770,566)
(23,531,528)
(4,355,520)
(4,601,385)
(1,142,0Z1)
S t,tOM98,596
(75,305,717)
$ 1,033,792,879
City of Lubbock, Texas
Notes to Buie Financial Statements
September 30, 2008
NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
L LONG-TERMDEBT {Contin~dl
New Bond IAUallteS
In January 2008, the City is.med $11,805,000 Tu: and Waterworks System Surplus Revenue Certificates of
Obligation, Taxable Series 2008. The Certificates were issued at a discount of S.185,703. After paying
isswmce costs of $219,297, the net proceeds were $11,400fOO0. Procee& from the sale of these certificates
will be used for the purpose of paying contra.ctnal obligatiom IO be incurred for construction of a
Civic/Conference Center. The proceeds o{tbe debt arc recorded in a Cap~l Projects Fund
In February 2008, the City issued $52,900,000 Tu: and Wa.m-water System Surplus Revenue c.ertifi.cate of
Obligation, Series 2008. The Certificates were issued at a premium of $2,851,567. After paying issuance
costs of $686,897, the net proccc& were SSS,064,670. Proceeds from the sa1e of these certificates will be
used for the purpose of paying -contractual obligatiom to be incurred for Wastewater System extmsion and
UDprov~ts. The proceeds of the dtbt are, recorded w, the W asw,v&terFuiid.
In May 2008, the City issued $2,035,000 Geue,:al Obligation Bonds, Series 2008 and $80,485,000 Tax and
Waterwodcs System Surplus. Revenue Certifie,res of Obligation, Series 2008. The General Obligation Bonds
~ere is!!Ued at a ·premium of Sll0,554. After paying is.suance costs of $36,832, the net proceeds were
$2,108,722. Proceeds from the sale of these bonds will be used for street improvements and costs associated
with the issuance of the bonds. The c.erti.ficates of Obligation 'iY'Cre is.,ued at a premium ofS4, 714,285. After
paying u;SU8Dte costs of $1,082,542, the net proceeds were $84,116,742. Proceeds from the sale of these
certificates will be used for the purpose ofp4ying cop~ctual obligations IO be incurred for i) various public
improvement.! includmg fire, garb, municipal building, solid waste, drainage, street, electrical, water end
wastewater improvements and ii) profes$ional services :i:.endeted in conneeti.Qn therewith. and costs ilSl!>OCiated
With the issuauce oilhe O,rtifica;t.es. The proceeds of the debt arc recorded in various Capital Projects Fuwh.
In June 2008, the City issued $22,615,000 Tax end Waterworks System Surplus Revemie Certificates of
Obligation, Series 2008A. After paying isswmce costs of $76,733, the net proceeds were $22,538,267.
Proc~ from the sale of th.:se certificates will be used for the purpose of paying contractual obligations IO
be incurred for construction of Lake Alan Hem:y Pipeline. The proceeds of the debt are recorded in the
Water Fund 1111d are held in escrow by the Texas Water Development Board.
Proceeds from debt issuances arc primarily capital related and are included in net assets invested in capital
assets, net of related debt
Advanced Refundings
The City issued advance refwiding5 to retire a portion of the City's outstanding debt to lo'Ner the debt service
requirements. The net proceeds from the issUAnce of the Refundin.g Bonds were deposited with the Escrow
Agent in an amount 11.ecessaty to accomplish. the discharge iuid final payment of the Refunded Bonds on their
scheduled.redemption date. These t'l,md.s will be held by the Escrow Agent in a special escrow fund and will
be used to pwcbase direct obligatiPnS of the United States of America. Under the escrow agreemems,
between tlle City and tho Escrow Agent:; the escrow funds are irrevocably pledged IO the payment of principal
and. interest on the Refunded Bonds.
84
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C
City of Lubb~k, Te:ias
Notes to Basic Financial Statements
September 30, 2008
NOTE m. DETAR, NOTES ON ALJ_, ACTIVITIES AND FUNDS (Continued)
J. COl'll'DIIlT DEBT
The C'i:ty, issued ff (Jll.$ing f inuice: Corporation Bonds, Health Facilities De'lelopment Corporation Bonda. and .
.Educ:alion Facilities Authority Boods w provide financial assistance to private sector entities for the
acquisition and construction of public facilities. The bonds an: secured by the property financed Upon
repayment of the bond5, ownership of the acquired facilities traosfers to the private..sector entity served by the
'bond i$sy,ance, Neither the City, the State noI' any political Slibdivisiouthe~of is obligated in any mahiler for
repayment of the bonds. Accordingly, the bonds are not reported as liab:ilities. in the accotnpa.nying financial
st.atements.
As of September 30, 2008 there were &e1/'cn series of Lubbock Health Facilities Developaitnt Corporation
Botlds outstanding with a:o aggrega(e principal amount payable of 5260,695,343. The bonds were issued
b~ 1993 and 2008. Also as of September 30, 2008, there was. one series of Lubbock Education
Facilities Aulhorily Jue. Donds owstandin,: with ao aggregate priocipal BIIIOWl.t payable ofSS,455,000. The
bonds Wffll issued in 1999.
K. ~l:CIAL t,SSESSM!;NTDEBT
The Vintage Township PFC, a discretely presented compOilellt unit of the Ci'~. issued specipJ assessment
debt for scquisitfon and comtruction of certain public facilities benefiting Vin-.:.p Township. The PFC
issued $3,472 000 in special as&e'LUDlmt debt and bad 53,394,000 outstanding special assessment debt as of
Septeniber 30,. 2008. The City collects assessments and forwards the collections to the hondbolden. The
City is not oblipfed i.D any ~ fpr special assess:tncnt debt and is not liable for repayment or the del,Jf. As
the PFC completes construction of certain public facilities, the assets are donall=d to the City. As of
September 30, 2008, Sl,200,000 in completed coostruction costs Vr'BS contn"'buted to the City,. The PFC has a
defid.t in net assets inves.ted in capitiJ assets, net of related debt W,bich is a result of t:lie debt. held in. the PFC
name while the asset$ l,fe dQWltc:d to the City and held in the. City name.
L .RJSKMANAGEMENT
Tiu: Risk. M~g•at Fund was established to account for liability claims, worker's compensation cl.aims,
and premiums foe property/casualty insurance coverage. The Rhl: Management Fund generates it5 m."etlue
through charge5 to other depa:rtmen.lS, which are based on costs.
In April 1999, the City purchased worken' compensation coverage, with no deductible, from a third party.
Prior to April 1999 the City was self-insured for worker's compensation claims. Any claims out,tanding
prior to April l999 continue to be the City•s responsibility.
The City's self-insurance liability program is ,on a cash flow basis, which means that the servicing contractor
prQCCSses, adjusts and pays claims from a deposit provided by tbe City. The City accounts for the liability
program by ohargina premiums based upon losses, adrnioislJ'a.tive fees and reserve requirements. In order to
control the risks associated with liabilily claims, the City purchased exees~ liability coverage in September
1999, which is rene\\'Cd annually. The: policy has a $10 million 8DDU8l aggregate limit and is subject to a
5250,000 deducbole per claim prior to October 1. 2005, and a $500,000 dedoctible per claim since October
J, 2005.
For self-imured aovemg~, the Risk Management Fund. establishes claim liabilities based on estimates of the
ultimate cost of claims (including fu1Ure claim a(l.justment expenses) that have been reported but not settled.
.and of claims that have been. incurred but not reported (IBNR). The length of time for which such costs must
be estimated varies depeooing on the oovinge 'i,nvoh·ed. Because actual clJur:n costs depend on such complex
85
City of Lubbock, Tei:as
Notes to Basic Financial Statements
September 30, 2008
NOTE llL D!TAIL NOUS ON ALL ACTIVITIES AND .FUNDS (Continued)
L. RISK MANAGEMENT {Continued)
factors as inflation, changes in doctrines of legal liability, and damage awards, the process used in computing
claim liabilities does not necessarily result in en exact amollllt, particularly for liability coverage. Cla:im
liabilities are recomputed periodically using a varioty of actuarial. and stttistical techniques to produce ·current
estimates that renoct recent settlements, claJm frequency, and other economic and social factors. Adju.st:mi:Dts
,to claim liabilities a,e clwged or eredned to e~ in the pedod in which they -are iDcua:ed.
Additionally, property aDd boiler coverage is accounted for in the Risk Managemmlt Fund. The property
insunnce policy was purchased from a.n ouiside :insurance carrier. The policy~ a $250,000 deductible per
occummce, and the boiler coverage insurance deductible• is up to $500,000 dependent upo,n the unit
Premiums are charged to :funds based upon estimated premiums for tht upcoming year.
Other -small io.ruraDce policies, such as surety bond coverage and miscellaneous ·floaters, are also ~ouoted
for in the Risk. Management Fund. Funds are charged based on pmnium amounts and administrative charges.
The City has bad no ,ignifiCBnt reductions in insurance coverage during the fucaJ year. Settlemcats in the
curreot year lilI1d preceding two ·yea.rs have not exceeded insurance coverage. The City accounts for all
insurance activity i:n 1be ·Int~ Service Funds.
M. BEALTHINSJJMNCE
The City provides medical and dental insurance for all full-time employees that are accounted for in the
Health Benefits Fund. Revenue for the health insurance prcmiwns a:re generated from each cost center bued
upon the number of active full-time employees. The City's plan is se1f-insured under an Administrative
Services Only (ASO) Agreement The City purchases exce&S coverage of $175,000 per covered individual
annually and an aggregate cap of S 19,188,006. The insurance vendor based on medical trend. clwms history,
and utilization determines the aggregate deducb.ble. The actuarially determined calculation of the claim
liability is $1.45 million at September 30, 2008 for all health coverages including medical, prescription drugs
and. dental.
The City also provides full-time employees basic tenn life insurance. T'he life insurance policy has a face
value ofSl0,000 per employee.
Full-time employee., may elect to purchase; medfoal and dental insurance for eligible dependents at a reduced
rate. Employees may also elect. at their cost, to participate in sevcral voluntary insu:nmce programs such as a
qncer income policy, volum:acy life and personal accident insurance.
N. ACCRUED INSURANCE CLAIMS
The Risk Management and Health Benefits Funds establish a liability for self-insurm:e for both reported lllld
WRJ>Orted insured events, which include! cstimares of future payments oflosses and related claim adjustment
expemes. T'he following represents changes in those aggregare liabilities for tbe9e fuwk dwing the past two
}'e'al1 ended September 30:
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n
aty of Lubbock, Texas
Notes to Basic Fillancial Statements
September 30, 2008
NOTE m DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
N. ACCRUED INSURANCE CLAIMS (Continued)
FY 2008 FY2007
Workers' compcnation and liability resen"CS at
beginnln& offiacal year s 3,258,788 s S,260.976
Claims 9pen1e1 4,443,470 2,907,050
Oailn• paymenl!I (4,856,579) (4,909,238)
Workm' compcnal:lon and habibty rexna at
end of fi:tcal }al' 2,845,679 3.258, 788
Medical and dental claims liability st beginning of
fiscal year 2-469,382 2,761,156
Claims expcn• 19,333,090 l 7,307,683
Oaimspaymera
Medical •d denial claim!! liam6ty at cod offis::al
(l0,D46, 766) ( I 7 ~99t45 !!
year l,7S5.706 21!!!va2
Toral ulf.in,urance liability at end of fiscal year 4,601,385 5,728,170
Tota.I asm 10 pay elaims at end of fiscal year 17,510.106 14,293,590
Accru.ed inllll'IIIICe claims pa)9ble -current 3,020,056 4,344,914
AcCNed il'INl'ance claims pa)"!lblc -noncwrcnt 1,581,329 1~831256
Tola] accrued insumncc claims s 4,601,385 s 5172!170
o. LANDfRJ, CLOSURE AND POSTCLOSURE CARE COST
State and federal laws and regulations require the City to place final covers on its landfill sites at closure and
to perform certain mamtclW!Ce and monitoring functions for thirty yum ~after. Altboup closure and
postclosUJl.l can: costs will be paid only near or after the date that the landfills stop accepting waste, the City
ieports a portion of these closure and postclosure costs as operatiDg expenses (and n:cogn:ius a
corresponding liability) in eacb period buc:d on landfill capacity used as of eacb balaace sheet date.
The S3,nO.S66 included in landfill closure and postclosure care liability at September 30. 200&, represents
the cmmla1ive 111DOU11t expemed by the City to date mr iD twP laudfiJls that are regisleled under TCEQ
permit DUIJlbers 69 (I and611 69) and 2252 (I andfilJ 2252), less mmuots 1bat have been paid. Approximately
93.3 pccccnt of tbe estimated capacity of landfill 69 bas beeo used. wilh S780.S72 mnaining to be
recognized over the remaining closure period. an estimated two yean. Approximately 3.6 ptrce:nt of the
estimated capacity of Landfill 2252 baa been used to date, with $25,055,779 "'OD•inina to be recogntt.ed over
the ~ming closure period, estimated at over 80 years. Postclosure care costs are based on prior estimates
and have been adjusted for inflation. Actual costs :imy differ due to inflation. deflation. changes in
technology, or other reawatory changes.
The City is required by state and fe.deml laws and regulation, to provide assunmce that financial resources
will be available for laadfiJ.I closure, postclosure care, and remediation or contaimmmt of environmental
hazards. The City is iD compliance with these requirements and has chosen the Local Government Financial
Test mechanism for providing assurance. The City expects to finance costs through normal operations.
87
City of Lubbock, Texas
Notes to Basic F,inancial Statements
September 30, 2008
NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued)
P. DISAGGREGATION OF ACCOUNTS -FUND FINAN'CIAL STATEMENTS
Account, Ra:dnbl! Snmma2
Court Prop1rty
nam 1>11au1e Pavlag Misc.
Governmealal Firnda:
Gencml Fund s 312291541 S 268z333 S 283.79S $ 126.405 $
Total $ 3,229,541 S 268,333 S 283,795 s 126,405 s
Ac:c:011111ts Recelv•bl! S11111m12
Genenl CredU Balance al
Conaomer Card MIIC. 09130/08
Proprietary Fonds:
LP&L $ 21,226,784 s . S 367,212 $ 21,593,996
Water 6,081,279 6,081,279
Waslllwelcr 2,759,263 2,7.,9,263
WTMPA 899,013 899,013
SZormwater 1,031,468 1,031,468
Nonmajor 3191i110 S46 3,918,716
Tolal $ 3S,915,977 $ S46 $ 367,212 S 36,283,735
Allowance tor Doubtf11l Accounts Summary
Jlalanc;e at
09/30/08
Govemment:AI Funds:
General Fund s 2,798,969
Proprtetuy Fnnds:
LP&L 2,723,698
Water 1,082,716
Wastewater 461,429
Storm WatJ:.r 206,103
Nonnajor 6381003
Total $ 7,910,918
88
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09130/08 0
319()81074
3,9()8,074
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City of Lubbock, Texas
Notes to Basic FiD.anciaJ Statements
September 30, 2008
NOTE ill .. DETAil.. NOTES, ON ALL ACTIVITIES AND FUNDS (Continued)
P. DI8AGQGATION OF ACCOUNTS-EJJND FINANCIAL STATEMENJS {Continued}
Goyernm•tal Funds:
GenenlFund
Govt. Capitll P,qj~ts
Nonmlljor
Prvprtdar)' hnda:
LP&L
Water
Wastewater
WTMPA
Sror~lc!r
Norunajor
Cnttrnal Service
Total
VoudJ.ers
$ 833,893
120,890
463,522
1,619,1 lS
687,152
413,S3S
132,188
384,802
86S.0S3
S S,520,150
Aa:ounCs Payable SU.mmary
Accounts
$ 1,952,776
1,112,601
3,707,404
211,428
l,533,l 08
2,246.435
9,725,988
487,802
1,951,474
888,516
$ 23t8 l 7,S32
Mi1tellaneoas
s 735,871
1,546
l 16,08.1
181,896
100,S7S
10,079
1.146,050
Balance at
09/30/08
S 3,522,540
1,233,491
4,172,472
1,946,626
2,402,156
2,760,S4S
9,725,988
619,990
2,346,3SS
1,753,569
$ 30;483,732
Q. DJSA§GREGATION OF .ACCOUNTS -GOVERNMENT-WIDE
Govtmlrulll cal
Acmu.nts
Recelvabll
Iaterest
Ra:clnblirl
Net Rec:eivables
Taxes lnterul Senice Bal11111:e at
Recelnblt R~dwhles 09/3 0/08
Activities $ 1,109,105 $ 342,.539 S 10,088,559 $ 32,983 $ 11,573,206
B•siDIP.typ•
AdMtas 31,171,786 703,553
T<Ml S 32,280,89l S 1,046,ll2 S 10.088.559 S
Aa.'OIIDW Payable
AccOUDts Intemal Service
Payable Payable
Go\l&runa12.l
AdMties s 8,.928,503 $ 1,160,489
Baslaeu.type-
Adivltits 19,801,660 593,080
Total $ 28,730,163 $ l,753,Sf9
R. EJND CLOSURES
S,541 31,880.880
38,524 S 43,454,086
Balance 11t
09/30/08
S 10.088,992
20.394,740
$ 30,483,732
In &cal year 2008, Cily Council terminated the automated traffic signal enforcement program. As a re.suit,.
the Red Light C-ameta fund v.,i,s closed.
89
City of Lubbock, Texas
!Sotes ·to Basic Finucial Stlltements
September 30, 2008
NOTE IV. CONTINGENTUABWTIES
A. FIIDERAL GRANTS
1n. the normal co~ of operations, the City receives grant funds from state and fedetal agencies. Toe g,ant
p.-ograms are subject to e.udirs by agents of the granting authority to ensure compliance with conditions
precedent to the granting of funds. Arly liability for reimb'lll'BCIDtDt which may arise as the remit of audits of
gr~ is not believed to be significant.
B. UTIGATION
The City is :involved in various legal proceedings related to alLeged petsoml od property damages, breach of
•contract and civil rights cases, some of which involve claims against the City tba.t cx-eeed. $500,000, State law
limits municipal liability for pemona1 ·iltjury to $2.50,000/$500;000 and propeny &!Dage to $100,000 per
claim. The full.owing represents !he siamfiean.t litigation aga~t the City at this time.
Depcru:ling on the date of the oc,cun:ence, the City's insurance coverage, if available, contains either a
$250,000 or a SS001000 :self-insured ffltention.depending on the date of the ocmureace. As of September 30,
2008, the City bas Sl,048,856 reserved oo general liability cl.a.i,tm-.
Oscar Renda Con:tractin&, Inc.., et al"• City of Lubbock:
The Pia.inti.ff is a conb"lctor who bid to perfoan a romract for the City of Lubbock. Oscar Renda asserts that
they ~re not awarded the contract because Ibey had filed a suit against mother public entity. City of
Lubbock filed a motion for summary judgnient and it was granted by the ttia1 court. However, the Fifth
Circuit of Appeals reversed the decwon of the trial eourt and remanded the case back to ttial in a split
dedsfon ill August 2006. The City of Lubbock has filed a petition with the Uai'ted Slates Supreme Court in
an effort to get them to TCYiew dlC case. The City's _request was denied. The City 6led a motion 'for sumll1IIY
judpDt !1DQ it~ granted in April 2008. The case is on appeal to the Fil\:h Circuit of Appeals,
Cbarles, Emma.noel BOIier, as SvvMag Parent of Ce11rtnty Nicole Bosler, at G•ardiao· of Colten
Bo.ler v. Travis lliddlc and The City of L..,bbock:
Plaintiff sued the aiy of Lubbock and Officer Travis Riddle on behalf of himself and his children arising out
of the death of his teenage daugh1cr and .injuries to bis son from an automobile accident with Officer Travis
Riddle. Plaintiff alleges that the officer was operating bis vehicle iD a negligent manner. The City filed a
imtion for sun:mmy judgroent based on the fact that the Plaiotiff did not present his notice of claim IO the
City ()fLubboct within h: (6) months of the date of the accident The Plaintiff never filed a notice of claim
and filed suit seven (7) months a.ft:er the da~ of the accident. The Plaintiff clauns that notice was not
necessary in that the Defendants bad octual notice of the incident. The trial cow1 granted 1he City's SUIIJinarY
judgment based o~ the fact that the Pl.alntitT did not :file a claim with the City of Lubbock within six (6)
molltbs from the date of the accident The Plaintiff appealed this decision to the Court of Appeals and the
Court of Appellate revmed the trial court ruling as to the City of Lubbock but a:ffinned the ruling as to
Officer Riddle. The case is set fo.-trial on Juoe 1, 2009.
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a
City of Lubbock, Texas
Notes to Buie F"mancial Statements
September 30, 2008
NOTE IV. CONTINGENT LIABllJTIES (Continued)
c. YTJQATION (Continued}
L.J. MeCallao, Jr. v. City of Lubbock. et al:
A lawwit was filed in late November against the City of Lubbock and three Lubbock police officers
pmaining to an incidenl in which a suspect was injured widi a laser utilized by OI1e of the Lubbock polic-e
officers. Plailltiffia ming the City and the officers under the Civil Ri&hJs Act mi is abo suing the City UDder
the Texas Tort Claiim A.ct The cue is in federal court and bas not been set for trial Plaintiff does not
appear lO have su.ff'crcd lasting physical iqjuries as a ICSUlt of the lasing. Two of the individual officers .have
been dismissed.
Ackers v. City or Lubbock. et al
Plaintiff sued the City, its Police Chief and two police officers for violation of his First Amendment rights.
PWnttlt alleges that bis First Amendment rigbts were ·violated when the film ftQm his c;:amera was-coniillcated
by police while be was photographing a children•, basketball game. The City filed a Plea to the Jurisdiction
which Willi gramed by the trial court Plaintiff appealed the case to the appellate court and the appellate court
remanded the case ro the trial coW1 reasoning that a .Plea to the Jurisdiction was not the proper procedural
mechanism. The case is set for trial in August 2009.
Eltate or Tommy Zobor v, City or Lubbock and Atmos Energy
A lawsuit was filed in October 2008 by the Estate of Tommy l.obor. Zohor died as a result of an accident
0 with an AIIIIOs Energy truck. A City patrol car was respondiT)g to a call with his lights on As the patt0l car
came up behind the Atmos Energy truck the officer ''bumped.'' his siren and the Atmos Energy truck made a
left tum to move out of the patrol car's path. The motorcyclist. Tornruy Zohor, was proceeclirli in the
opposite direction and collided with the Atmos truck
TemplelOn Mortgage v. City or Lubbock. Garza Ceu•ty, Keat County .and the l'eiu Attoruey
O General's Oflit.t
C
0
Plaintiff seeb a declaration as to~ tights reg~ding the restrictive c;asements at Lake AJan Henry as well
as other atel.9 such as the use of water. Ib.e Cicy will .file a motion fot summary judgment 'b)' February 200-9,
This is not a damages case, hut the cowt ha$ the authority lO grant attomcys' fees lO the prevailing party.
The trial is set for spring 2009.
Templeton Mortgage Corporation & Mark Brown v. City or Lubbock
lbis case involves some of the same facts and arguments as the Templeton Mortgage v. City of Lubbock,
G8l'lJl Coumy, Kenc County and tbe Texas Attorney General's Office. In additioo, the Plaintiff is seeking
$100,000 in damages to bis property because oftht: risini and. falling of ihe-water at Lake Alan Henry. The
City ls wai_ting for ,the QUtcome. of' the TempletoD Mo~age V. City of L~book. Gan.a County. Kent County
aDd the T~s Attorney General's Office case.
91
City ofLubboek, Texas
Notes to Basic FinanclaJ Statements
September 30, 2008
NOTE IV. CONTINGENT LIABil.JTIES (Continued)
B. LfflGA1JON lConllnggd)
lo Re: ICON BeoeJlt Administrators, L.P., American Admioistratln Group, lne., Health Smart
Preferred Care. LP. and Tbe Parker Group. Inc. v. City of Lubbock
lo the fall of 2006, the CJty requested an audit of the claimc admioistmrioa performed by the aboVll-lllllned
eatiries on bcbalt' of the City o( Lubbock. American Administration Group, lnc (MG) and ICON refused to
give the City the necesmy documents to perform the audit. The City filed a pre.arbitration disccn'ery petition
ill March 2007 in 1111 attempt to obtain the documents ncecssary to perl'orm this audit.
Prior to a hearing scheduled in February 2008, the court merred mattas to arbitration. The arbm:aticn is
scbedu1ed for October 26, 2009.
]CON mid the otber Pa:rkm companies are claiming that the City breached it! contract with them by hiring an
insurance broker in 2006 and by providing confidential information from ICON/AAG to third parties. The
City is also being sued for disparagtment, baraslD!fmt, performing an inappropriate audit. seekiag
coofideDtial infomation. and other ailegatioaa ~ lhe City believes are not actionable.
The City claims that ICON/MG 811d HealtbSmart breached tbe comract witb the City by not providing the
City with the aame discounts and prices u provided by Btue Cross a agreed to in the contract and for
applying the discounB and administering the contract improperly.
ICON a.ad AA.G v. loella Mallia, Stanley Self, Andrea Davenport, Lee Ann Dumbauld, Scett Snider,
Leila Hutcbeaon, DaY:id MIiier, and unknown odle:rs
ICON and AAG sued the defendants for various tort9 including civil compiracy, misappropriation by
preJWiDg ao unlawful proposaJ to the City o( Lubbock. wroagfiLI iotemn:nce witb COOJraCt. interference wilh
prospective contmctua1 relaliom, business diisparagement, defamation IIOd violations of lhe Local
Government Code. Dumbauld, Snider and Hutcheson are employees of the City of Lubbock and David
Miller is tbe fbrmer Mayor of Lubbock. Diacovery bas begun.
Robert Smith v. City of Lubbock
Robert Smitb ui an employee of the City of Lubbock who Vr'1lS involved iD an auto accident witb an.other
vehicle. Mr. Sniith suffered injuries in this accident and &led a claim against the otber driver. Toe other
driver had only minimum limitJ of :insunmc:e II required by tbe State of Texas and the insurance company
tendered the policy limits to Mr. Smitb. However, Smith claims this money was insufficient to cover his
damages Smida sued the Cily of Lubbock under the City's UIM COYCrBge claiming 1hal the City owr:a bim
for bis damq;es under that iasunmce. He asserts he is entitled to over $600,000.
Jerry R. Avery, Erika Cleveland, Joy EIUott, Donna MeMWian, and Diana Melcher v. City or Lubbock
(Lubbock Power & light)
Plaintiff's filed suit in December 2008 agaimt tfu: City of Lubbock/Lubbock Po"M:r & Light a11eging damage
to personal property from an electrical sura:e (electric applimces, computers, etc.) a.ad related expenaes
(spoiled food. hotel expenses, etc.). Toe estimate of damages received by IP & L from the Plaintiffs is
11ppioximately $39,300 but could reach $60,000. Toe lawsuit is in ia initial stages and the City (LP&L) bas
amwered the PJainti.ffa • petition.
92
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City of Lubbock, Tens
Notes 10 Basie Financial Statements
September 30, 1008
NOTE IV. CONTINGENT LIABILITIES (Continued)
B. LmGA'l10N (Continned)
Weatherbee d/b/a Sudly Springs Car Wuh v. G. Greenstreet. Inc. and Qty of Lubbock
Plaiutiff' filed mit against the City of Lubbock, along wi1h the contractor who constructed. the building, for the
destruction of a buildiq. The plaintiff's build.ma MS damaged after a wind stoim It was damaged to the
extent dmt the City believed that it comtituled a hazard to the public and after giving nodce to the plaintiff,
tore it down. Plamtiff doe:, not seem lo dispuce that the huilding was damaged and cbl1 some work needed 10
be performed to alleviate my hazards. HoMVer, plaintiff conte:nds that the City should not have tom the
entire building dovm in order to alleviate any danger. The City's damages !lbould be limited to $250,000
Diaz v, City of Lubbock
Diaz is a Cily police officer who was suspended wi1bout pay in May 1JJfT1 after an indictmmt was eotered
agalmt her. This indictment was dismissed m late 2008. Diaz, pursuant to civil service law, bas petitioned
the Civil Service Commission for back pay. Th&! back pay is approximately S 100,000.
LIIJIIODt Veatch
Lamont Veatch tripp:d and fell over a rope at l:bt Colisemn trmltiDg in a broken sbowder. Mr. Veatch died
durina 8UiserY to repair his ahooldcr, The roping was a baliicade Id up by ABC Rodeo.
Senoa Enterprises
Soaon Entelprises allege lbat the Cily of Lubbock Council wrongfolly awarded a conaact that Sexton bid for
to another company.
c. sm REMEPIADQN
The City has identified speci&: locatiom requiring site tcmediation relative-to undergrowut fuel storage tanks
and hiltorical fire training sites. One of the-aites referred to below as LP&L Plant 1, represents a liability
equally shared by both the Ci1y and LP&L.
Ar. of Septead,& 30, 2008 tbe City idc:otifm tbree Joartions that pose a probable liability. The City recorded
Che liabilities for the dm,e locations in the eob:l'pme mods as Jollows:
• LP&L Plant 1 S 173,909 -this represents LP&L •s portion of the liabilily only
• LP&L Cooke Plutt $467,869
• WesTex Aircraft $100,000
C The City recmded l:bt probable liabilities in 1be I0•OdlEllt-wide govcuii,c-mtal stalmlCDts as follows:
• LP&L PlaDl 1 $173,909 -this reprciClltB the City's portian only
• CFR Training Facility $124,706
• Fire Training Academy $854,918
O • SouthFuelingFacilityS136,748
93
City of Lubbock, Texas
Notes to Baaic Finanelal Stauments
September 30, 2008
NOI'E IV. CONTINGENT LIABIIJTIES (Coadnued)
c. SIJI REMWt\DQN (Continued)
The City has idetrtified elevated levels of nitrates in the ground water beneath the Lubbock Land Application
Site {I.LAS), which is attnbuted to the historical land application of treated Vi1111:nlater effluent and also
impacted by the a.cdvities of individuals IDd other en.ti.t:i.es. h a result. the Texas Commission on.
&viromnental Quality has issued an Agreed Order that requires the City 1o remedy the situation. The Order
glls for, among other requiremmts, pumping an amrual a\lerage of 1,580 gallons per minure from 16
groUDdwater "Wells on the LLAS in order to eliminare a mound of groundwater under the LLAS. The
groundwater, that is high in nitra1es, is discharged into a surlilce water lab:: sygtem where it is remediated
DIIUrally. An effluent bmd applicaaion DBDlgemcnl plan aod groundwater monitoring prop&m 'iWS aJso
establ:isbed as a result of the Order. Pl:me I of the project to construct additions and impro\lcments to die
City's wutcwater reclamation plant that will treat the sewage to higher quality in the future and address the
uit:rate ilsw: is complete. Phase ll began in the spring of 2008 and will be complete by 2011.
During FY 08, die City held discussions wilb TCEQ 10 com:idcr terminating the Agreed Order and ID
incmporate the rerneining requirements for rmnediatioo into the main wastewater tnatment pemut. Beca:wie
the an,undwater mound under the LLAS bas been eliminated in accordance with the requjrements of the
Order, there is an QPPOrtUDity to terminate the Agreed Order and to contuwe addres.siog any residuol conc:ems
as part o!tbc permit. The City is encomaged by the initial discussions and believes TCEQ will approve this
in the near futun:.
Tm: City expects that the remediation o( ni'lrates will contmue for some time after the new plant is built, but
the 1eogtb of time and lotal expense are not estimable. Since lhe renw:liatinu is probable, but not estimable
and it is likely that we will tcmmwe tht: Agreed Order, the City bas not accrued this remediation. The
remediation and monitoring costs for the next fiscal yr.ar are included in the FY 2009 budget. The City plans
to implement GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation
Obligatiom, in FY 2009. This autboribdive guidance requires that roncmatinn liabiliti.es be 1DeBS11mi aod
recarded a the sma of probability, weiJbted. amowrts in a nmge of possible estimated amou:m,.
Consequem:ly, the City _plans to secure an eagineering firm to delermine the .amDWlt of the-potential. exposme-,
exploring various me'lhods of.addressing the remediation.
The potential exposure for one remaining location is not readily determinable as of Septr:mber 30, 2008. In
the opinion of management. the ultimate liability for this location will not ha\le a materially adverse effect on
the City's financial position.
94
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APPENDIXB
FORMS OF BOND COUNSEL OPINIONS
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IVinson&Elkins
[FORM OF OPINION OF BOND COUNSEL]
[Closing Date]
$8,840,000
CITY OF LUBBOCK, lEXAS
GENERAL OBLIGATION BONDS
SERIES 2010A
WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Counsel in
connection with an issue of bonds (the "Bonds") described as follows:
CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, SERIES
2010A, dated their date of delivery, issued in the principal amount of$8,840,000.
The Bonds mature, bear interest, are subject to redemption prior to maturity and may be
transferred and exchanged as set out in the Bonds and in the ordinance adopted by the City
Council of the City authorizing their issuance (the "Ordinance'') and the Pricing Certificate
executed pursuant to the Ordinance.
WE HA VE represented the City as its Bond Counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Bonds under the Constitution and laws of
the State of Texas and with respect to the exclusion of interest on the Bonds from gross income
for federal income tax purposes. We have not investigated or verified original proceedings,
records, data or other material, but have relied solely upon the transcript of proceedings
described in the following paragraph. We have not asswned any responsibility with respect to
the financial condition or capabilities of the City or the disclosure thereof in connection with the
sale of the Bonds. Our role in connection with the City's Official Statement prepared for use in
connection with the sale of the Bonds has been limited as described therein.
IN OUR CAP A CITY as Bond Counsel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Bonds, on which we have
relied in giving our opinion. The transcript contains certified copies of certain proceedings of the
City, customary certificates of officers, agents and representatives of the City and other public
officials, and other certified showings relating to the authorization and issuance of the Bonds.
We have also examined executed Bond No. 1 of this issue.
Ylnson & Elkins LLP Attorneys at Law Austin Beijing Dallas
Dubai Houston London Moscow N-Yorli: Tokyo Washing\on
Trammell Crow Center, 2001 Roas Avenue, Suite 3700
Dallas, Te:icas 75201-2975 Tel 214.220.7700 Fu. 214.220.7718
www.velaw.com
BASED ON SUCH E){AMINA TION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Bonds in full compliance with the Constitution
and laws of the State of Texas presently effective and, therefore, the Bonds
constitute valid and lega11y binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property with.in the
City, necessary to pay the interest on and principal of the Bonds, has been levied
and pledged irrevocably for such purposes, within the limit prescribed by law, and
the total indebtedness of the City, including the Bonds, does not exceed any
constitutional, statutory or other limitations.
1HE RIGHTS OF TI-IE OWNERS of the Bonds are, subject to the applicable provisions
of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of
political subdivisions generally, and may be limited by general principles of equity which permit
the exercise of judicial discretion.
IT IS OUR FURTHER OPINION THAT:
(1) Interest on the Bonds is excludable from gross income for federal
income tax purposes under existing law; and
(2) Interest on the Bonds is not (A) a. specific preference item subject
to the alternative minimum tax on individuals and corporations or (B) included in
a corporation's adjusted current earn.in~ for purposes of the alternative minimum
tax.
lo providing such opinions, we have relied on representations of the City, the City's
financial advisor and the underwriters of the Bonds with respect to matters solely within the
knowledge of the City, the City's financial advisor and the underwriters respectively, which we
have not independeotly verified, and have assumed cootinuing compliance with the covenants in
the Ordinance pertaining to those sections of the Internal Revenue Code of 1986, as amended,
that affect the exclusion from gross income of interest on the Bonds for federal income tax
purposes. If such representations are determined to be inaccurate or incomplete or the City fails
to comply with the foregoing provisions of the Ordinance, interest on the Bonds could become
incJudab]e in gross income from the date of original delivery, regardless of the date on which the
event causing such inclusion occurs.
Except as stated above, we express no opinion as to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Bonds.
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Owners of the Bonds should be aware that the ownership of tax-exempt obligations may
result in collateral federal income tax consequences to financial institutions, life insuraoce and
property and casualty insurance companies, certain S corporations with Subchapter C earnings
and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers
who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt
obligations, and individuals otherwise qualifying for the earned income credit. In addition,
certain foreign corporations doing business in the United States may be subject to the "branch
profits tax" on their effectively-connected earnings and profits (including tax-exempt interest
such as interest on the Bonds).
The opinions set forth above are based on existing law, which is subject to change, Such
opinions are further based on our know ledge of facts as of the date hereof We assume no duty
to update or supplement these opinions to reflect any facts or circwnstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal
Revenue Service (the "Service"); rather, such opinions represent our legal judgment based upon
our review of existing law and in reliance upon the representations and covenants referenced
above that we deem relevant to such opinions. The Service has an ongoing audit program to
determine compliance with rules that relate to whether interest on state or local obligations is
includable in gross income for federal income tax pUiposes. No assurance can be given as to
whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in
accordance with its current published procedures the Service is likely to treat the City as the
taxpayer. We observe that the City has covenanted in the Ordinance not to take any action, or
omit to take any action within its control, that if taken or omitted, respectively, may result in the
treatment of interest on the Bonds as includable in gross income for federal income tax pUipOses.
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rvmson&£Ikins
[FORM OF OPINION OF BOND COUNSEL]
[Closing Date]
$15,320,000
CITY OF LUBBOCK, TEXAS
GENERAL OBLIGATION BONDS
TAXABLE SERIES 20108
(BUILD AMERICA BONDS -DIRECT PA YMENf)
WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Couosel in
connection with an issue of bonds (the "Bonds") described as follows:
CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, TAXABLE
SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT), dated
their date of delivery, issued in the principal amount of $15,320,000.
The Bonds mature, bear interest, are subject to redemption prior to maturity and may be
transferred and exchanged as set out in the Bonds and in the ordinance adopted by the City
Council of the City authorizing their issuance {the "Ordinance") and the Pricing Certificate
executed pursuant to the Ordinance.
WE HA VE represented the City as its Bond Counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Bonds under the Constitution and laws of
the State of Texas. We have not investigated or verified original proceedings, records, data or
other material, but have relied solely upon the b"anscript of proceedings described in the
following paragraph. We have not assumed any responsibility with respect to the financial
condition or capabilities of the City or the disclosure thereof in connection with the sale of the
Bonds. OUr role in connection with the City's Official Statement prepared for use in connection
with the sale of the Bonds has been limited as described therein.
IN OUR CAPACITY as Bond Counsel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Bonds, on which we have
relied in giving our opinion. The transcript contains certified copies of certain proceedings of the
City, customary certificates of officers, agents and representatives of the City and other public
officials, and other certified showings relating to the authorization and issuance of the Bonds.
We have also examined executed Bond No. 1 of this issue.
VlllllOII & Bklnl LLP AnDmap at i._. Au!llin Bei" Dallas
Dubill Houelon London Mosa» ,_.Yen Toq,o WashinglDII
TIBll'llnBI CrtM Center, 2001 RDu Awrlua, SLile 3700
Dallil8. T-15201.2975 Tai 214~noo Fu 214-220. 1116
-.wlaw.-:offl
BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Bonds in full compliance with the Constitution
and laws of the State of Texas presently effective and, therefore, the Bonds
constitute valid and legally binding obligations of the City; and
(B) A continuing ad va1orem tax upon a11 taxable property within the
City, necessary to pay the interest on and principal of the Bonds, has been levied
and pledged irrevocably for such purposes, within the limit prescribed by law, and
the total indebtedness of the City, including the Bonds, does not exceed any
constitutional, statutory or other limitations.
TIIE RIGHTS OF 1HE OWNERS of the Bonds are subject to the applicable provisions
of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of
political subdivisions generally, and may be limited by general principles of equity which pennit
the exercise of judicial discretion.
IT IS OUR FURTHER OPINION THAT:
Interest on the Bonds is not excludable from gross income for federal income tax
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purposes under existing law. We express no other opinion as to any federal, state or local tax 0
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Bonds.
The opinioos set forth above are based on existing Jaw, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty o
to update or supplement these opinions to reflect any facts or circumstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective.
0
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'J
)
[FORM OF OPINION OF BOND COUNSEL]
[Closing Date J
$48,955,000
CITY OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 201 OA
WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Counsel in
connection with an issue of certificates of obligation (the "Certificates'') described as follows:
CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A,
dated their date of delivery, issued in the principal amount of $48,955,000.
The Certificates mature, bear interest, are subject to redemption prior to maturity and
may be transferred and exchanged as set out in the Certificates and in the ordinance adopted by
the City Council of the City authorizing their issuance ( the "Ordinance") and the Pricing
Certificate executed pursuant to the Ordinance.
VIE HA VE represented the City as it.5 Bond Counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Certificates under the Constitution and
laws of the State of Texas and with respect to the exclusion of interest on the Certificates from
gross income for federal income tax purposes. We have not investigated or verified original
proceedings, records, data or other material, but have relied solely upon the transcript of
proceedings described in the following paragraph. We have not assumed any responsibility with
respect to the financial condition or capabilities of the City or the disclosure thereof in
connection with the sale of the Certificates. Our role in connection with the City's Official
Statement prepared for use in connection with the sale of the Certificates has been limited as
described therein.
IN OUR CAPACITY as Bond Counsel, we ha~e participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Certificates, on which we
have relied in giving our opinion. The transcript contains certified copies of certain proceedings
of the City, customary certificates of officers, agents and representatives of the City and other
Yln$0n & Elklns LLP Attome)'I at I.aw AI.Js~n Beijing Dalles
Dubai HouslOO London Masoow New Yonc Tol(yo Washington
Trammell Crow Center, 2001 Roae A11enue, Suits 3700
Dallas. Tuaa 75201-2975 Tel 214.220.7700 Fu: 214.220.7716
wr1t.Yet.w.ccm
public officials, and other certified showings relating to the authorization and issuance of the
Certificates. We have also examined executed Certificate No. 1 of this issue.
BASED ON SUCH EXAMll'lATION, IT IS OUR OPINION THAT:
(A) Toe transcript of certified proceedings evidences complete legal
authority for the issuance of the Certificates in fuU compliance with the
Constitution and laws of the State of Texas presently effective and, therefore, the
Certificates constitute valid and legally binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property within the
City, necessary to pay the interest on and principal of the Certificates, has been
levied and pledged irrevocably for such purposes, within the limit prescribed by
law, and the total indebtedness of the City, including the Certificates, does not
exceed any constitutional, statutory or other limitations. In addition, the
Certificates are further secured by a limited pledge (not to exceed $1,000) of the
surplus net revem.1es of the City's Waterworks System, as described in the
Ordinance.
THE RIGHTS OF THE OWNERS of the Certificates are subject to the applicable
provisions of the federaJ bankruptcy Jaws and any other similar laws affecting the rights of
creditors of political subdivisions generally, and may be limited by general principles of equity
which pennit the exercise of judicial discretion.
IT IS OUR FURTIIER OPINION TIIAT:
(1) Interest on the Certificates is excludable from gross income for
federal income tax purposes under existing law; and
(2) Interest on the Bonds is not (A} a specific preference item subject
to the alternative minimum tax on individuals and corporations or (B) included in
a corporation• s adjusted current earnings for pwposes of the alternative minimum
tax.
In providing such opinions. we have relied on representations of the City, the City's
financial advisor and the underwriters of the Certificates with respect to matters solely within the
knowledge of the City, the City's financial advisor and the underwriters respectively, which we
have not independently verified, and have assumed continuing compliance with the covenants in
the Ordinance pertaining to those sections of the Internal Revenne Code of 1986, as amended,
that affect the exclusion from gross income of interest on the Certificates for federal income tax
purposes. If such representations are determined to he inaccurate or incomplete or the City fails
to comply with the foregoing provisions of the Ordinance, interest on the Certificates could
become includable in gross income from the date of original delivery, regardless of the date on
which the event causing such inclusion occurs.
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Except as stated above, we express no opinion as to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Certificates.
Owners of the Certificates should be aware that the ownership of tax.-exempt obligations
may result in collateral federal income tax consequences to financial institutions, life insurance
and property and casualty insurance companies, certain S corporations with Subchapter C
earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
tax.payers who may be deemed to have incurred or continued indebtedness to purchase or carry
tax-exempt obligations, and individuals otherwise qualifying for the earned income credit. In
addition, certain foreign corporations doing business in the United States may be subject to the
''branch profits tax" on their effectively-connected earnings and profits (including tax-exempt
interest such as interest on the Certificates).
The opinions set forth above are based on existing law, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement these opinions to reflect any facts or circumstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal
Revenue Service (the "Service"); rather, such opinions represent our legal judgment based upon
our review of existing law and in reliance upon the representations and covenants referenced
above that we deem relevant to such opinions. The Service has an ongoing audit program to
determine compliance with rules that relate to whether interest on state or local obligations is
includable in gross income for federal income tax purposes. No assurance can he given as to
whether or not the Service will commence an audit of the Certificates. If an audit is commenced,
in accordance with its current published procedures the Service is likely to treat the City as the
tax.payer. We observe that the City has covenanted in the Ordinance not to take any action, or
omit to take any action within its control, that if taken or omitted, respectively, may result in the
treatment of interest on the Certificates as includable in gross income for federal income tax
purposes.
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Vinson&Elkins
[FORM OF OPINION OF BOND COUNSEL]
[Closing Date]
$96,540,000
CITY OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
TAXABLE SERIES 201 OB
(BUILD AMERICA BONDS -DIRECT PAYMENT)
WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Counsel in
connection with an issue of certificates of obligation (the 11Certificates") described as follows:
CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, TAXABLE
SERIES 2010B (BUILD AMERJCA BONDS -DIRECT PAntENT}, dated
their date of delivery, issued in the principal amount of $96,540,000.
The Certificates mature, bear interest, are subject to redemption prior to maturity and
may be transferred and exchanged as set out in the Certificates and in the ordinance adopted by
the City Council of the City authorizing their issuance (the "Ordinance") and the Pricing
Certificate executed pursuant to the Ordinance.
WE HA VE represented the City as its Bond Counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Certificates under the Constitution and
laws of the State of Texas. We have not investigated or verified original proceedings, records,
data or other material, but have relied solely upon the transcript of proceedings described in the
following paragraph. We have not assumed any responsibility with respect to the financial
condition or capabilities of the City or the disclosure thereof in connection with the sale of the
Certificates. Our role in connection with the City's Official Statement prepared for use in
connection with the sale of the Certificates has been limited as described therein.
IN OUR CAPACITY as Bond Counsel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Certificates, on which we
have relied in giving our opinion. The transcript contains certified copies of certain proceedings
of the City, customary certificates of officers, agents and representatives of the City and other
public officials, and other certified showings relating to the authorization and issuance of the
Certificates. We have also examined executed Certificate No. 1 of this issue.
Vinson & l!lkln, LLP Attomeys at Ll.w Austin Beijing Dallas
Dub.Ii Houllon London Moscow New York Tok)oo Washlnglon
Trammell Crow Center, 2001 Ross A.,.nue, Suite 3700
Dallas, Texaa 78201-2975 Tel 214.220.7700 Fax 214.220.7716
www.valaw.com
BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Certificates in full compliance with the
Constitution and laws of the State of Texas presently effective and, therefore, the
Certificates constitute valid and legally binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property within the
City, necessary to pay the interest on and principal of the Certificates, has been
levied and pledged inevocably for such purposes, within the limit pre.scribed by
law, and the total indebtedness of the City, including the Certificates, does not
exceed any constitutional, statutory or other limitations. In addition, the
Certificates are further secured by a limited pledge (not to exceed $1,000) of the
surplus net revenues of the City's Waterworks System, as described in the
Ordinance.
THE RIGHTS OF THE OWNERS of the Certificates are subject to the applicable
provisions of the federal bankruptcy laws and any other similar laws affecting the rights of
creditors of political subdivisions generally, and may be limited by general principles of equity
which pennit the exercise of judicial discretion.
IT IS OUR FURTHER OPINION THAT:
Interest on the Certificate.s is not excludable from gross income for federal income tax
purposes under existing law. We express no other opinion as to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Certificates.
The opinions set forth above are based on existing law, which is subject to change. Sucb
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement these opinions to reflect any facts or circumstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective.
-2-
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Q
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S48,95S,OOO
CityorLubbotL, TeULt
PURCHASE CONTRACT
RELATll'liG TO
S96,540,000
CityofLubboek. Ttu1
Tu and Waterw@rks System s,uplus
luveoue Cerlif1eates or Obligation
S.rifflGtOA
T•• and W.atenvorb Sf!ilem Swphu Revenue
Certif1eates ot Ohligadcm
Tuable-Serlea ?OtoD
(Build America Bonds ~ Direct Payment)
Jw,uary 21, 2010
The Honorable Mayor and Mernbero of the City Council
City of Lubbock
P.O. Box 2000
Lubbock, Texas 79457
Dear Mayor and Members of the City Council:
FIRST SolJrHWI!STCOMPANf (the .. Aul.h.orized Representative"),. HUTCHINSON, SHOCKEY,
ERUY & Co., J.P. MORGAN SECUIUTfU /NC, MORGAN KEEGAN & COMPA.Nl', INC., AND
SDIJTHWUT $ECURJTIES, INC (collectively, the "Underwriters"}, offer to enter into this Pwt:.hwie
Contract (the "Purchase Con~act") with the Orr OF LUBBOCK, Ta'.4.r(the "City") for the pmcliw.e
by the Underwriters ofcb.e City's Tw; and Wateni.<Ol'k$ S)IS'tern. Surplus Re-.ienue Ce.rtiflCLJU!'/ of
Obligation, &rie.s 2010A (the "Series 2010A CertificalcS") und the City's Tax and Wate~
System Surplus Re:ve,rue Ccrtifl.rotes of Obligatior1, TambJe Sures 20 I IJB (Build America Bonds -
Direct Payment) (the "Series 2010B Certificates" and together wirh che Series 2010A Certificates,
lite nsecwities"). This offer is made subject to the City's acceptance of this Purchase Contract on
or before 12:00 p.m, Ccntrnl Time on fanu:ncy 211 2010,
L Pun:base and Sale oftbe Sec.urides. (a) The Series 20/0A Cerlifscares. (i} Upon
the terms and conditions and upon the basis of the represeruations set forth herein, the Underwriters,
jointly end severally, hereby agree to purchase from the City, and the City hereby agrees to sell and
deliver to the Urtdenvrite~ IUl aggregate of S48/)55,(JfJ() ic principal nmaunt of the Series 20lDA
Certificates. The Series 201 DA Cc.rtifi~ shall have lhe ma.tUritics,. interest rates and be subject
ro redemption in accordance with lhe provisions ofE,chibit 6 hereto and shall be issued and s:ecun:d
under the provisions of the Ordinance (os de-fined below).
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(ii) The purchase price for the Series 2010A Certificates shall be $51,894,822.24
(representing the principal amount of the Series 201 OA Certificates, plus net original issue premium
on the Series2010A Certificates in the amountofSJ,173,768.25, and less an Underwriters' discount
on the Series 201 OA Certificates of $233,946.01), and no accrued interest.
(b) The Series 2010B Certificates. (i) Upon the tenm and conditions and up:m the basis of
the representations set forth herein, the Undeiwriters,jointly and severally, hereby agree to purchase
from the City, and the City hereby agrees to sell and deliver to the Underwriters an aggregate of
$96,540,000 in principal amount of the Series 201 OB Certificates. The Series 201 OB Certificates
shall have the maturities, interest rates and be subject to redemption in accordance with the
provisions of Exhibit B hereto and shall be issued and secured under the provisions of the Ordinance
(as defined below).
(ii) The purchase price for the Series 2010B Certificates shall be $95,948,277.38
(representing the principal amount of the Series 2010B Certificates and less an Underwriters'
discount on the Series 2010B Certificates of $591,722.62), and no accrued interest.
( C) FIRST SOU11IWEST COMPANY, as the Authorized Representative, represents that it has
been duly authorized to execute this Purchase Contract and has been duly authorized to act
hereunder as the Authorized Representative. All actiom that may be taken by the UndeIWriters
hereunder may be taken by the Authorized Representative alone.
2. Ordinance. The Securities shall be as described in and shall be issued and secured
under the provisions of an ordinance adopted by the City on December 16, 2009 (the "Ordinance"),
authorizing the issuance and sale of the Series 201 0A Certificates and the Series 2010B Certificates.
In the Ordinance, the City Council of the City delegated the authority to the City Manager and the
Chief Financial Officer ( each an "Authorized Officer") to establish the pricing terms for the Series
2010A Certificates and the Series 2010B Certificates, respectively, through the execution of two
separate Pricing Certificates dated the date hereof (collectively referred to herein as the "Pricing
Certificate"). The Securities shall be secured and payable as provided in the Ordinance and the
Pricing Certificate.
3. Public Offering. It shall be a condition of the obligatiom of the City to sell and
deliver the Securities to the Underwriters, and of the obligations of the Underwriters to purchase and
accept delivery of the Securities, that the entire principal amount of the Securities authorized by the
Ordinance and as set forth in the Pricing Certificate shall be sold and delivered by the City and
accepted and paid for by the Underwriters at the Closing. The Underwriters agree to make an initial
public offering of all of the Securities at prices not to exceed the public offering prices set forth in
the Official Statement and may subsequently change such offering prices without any requirement
of prior notice. The Underwriters may offer and sell Securities to certain dealers (including dealers
depositing Securities into investment trusts) and others at prices lower than the public offering prices
stated in the Official Statement; provided that on or before the Closing, the Authorized
Representative shall execute and deliver to Bond Counsel an Is.sue Price Certificate for each series
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of the Securities prepared by Bond Counsel, which in the case of the Series 2010B Certificates will
be in substantially the form attached hereto as Exhibit E.
4. Security Deposit. Delivered to the City herewith is a COipOrate check of the
Authorized Representative payable to the order of the City in the amount oUJ,473,700. Such check
is a common "Good Faith" check for the Securities, and such check may be applied toward any
obligation of the Underwriters owing as a result of the failure of the Underwriters to accept delivery
of the Securities as provided herein. The City agrees to hold such check uncashed until the Closing
to ensure the performance by the Underwriters of their obligation to purchase, accept delivery of and
pay for the Securities at the Closing. Concurrently with the payment by the Underwriters of the
purchase price of the Securities, the City shall return such check to the Authorized Representative
as provided in Paragraphs 7 and 8 hereof. Should the City fail to deliver the Securities at the
Closing, or should the City be unable to satisfy the conditions of the obligations of the Underwriters
to purchase, accept delivery of and pay for the Securities, as set forth in this Purchase Contract
(unless waived by the Authorized Representative), or should such obligations of the Underwriters
be terminated for any reason permitted by this Purchase Contract, such check shall immediately be
returned to the Authorized Representative. In the event the Underwriters fail ( other than for a reason
permitted hereunder) to purchase, accept delivery of and pay for the Securities at the Closing as
herein provided, such check shall be retained by the City as and for full liquidated damages for such
failure of the Underwriters and for any defaults hereunder on the part of the Underwriters. The
Authorized Representative hereby agrees not to stop or cause payment on said check to be stopped
unless the City has breached any of the terms of this Purchase Contract.
5. Official Statement. The Official Statement, including the cover pages and
Appendices thereto, of the City, dated January 21, 2010, with respect to the Securities, as further
amended only in the manner herein provided, is hereinafter called the "Official Statement." The
City hereby authorizes the Ordinance and the Official Statement and the information therein
contained to be used by the Underwriters in connection with the public offering and sale of the
Securities. The City confirms its consent to the use by the Undeiwriters prior to the date hereof of
the Preliminary Official Statement, relative to the Securities, datedJanuwy 8, 2010 (the "Preliminary
Official Statement"), in connection with the preliminary public offering and sale of the Securities,
and it is "deemed final" as of its date, within the meaning, and for the pwposes, of Rule 15c2-12
promulgated under authority granted by the federal Securities and Exchange Act of 1934 (the
"Rule"). The City agrees to cooperate with the Underwriters to provide a supply of final Official
Statements within seven business days of the date hereof which (i) is complete as of the date of its
delivery to the Underwriters in such quantity as the Authorired Representative shall reasonably
request in order for the Underwriters to comply with Section (b)(4) of the Rule and the rules of the
Municipal Securities Rulemaking Board (the "MSRB"), and (ii) is in such printed or electronic form
as may be required by the Rule and the rules of the MSRB. The Underwriters will use their best
efforts to assist the City in the preparation of the final Official Statement in order to ensure
compliance with the aforementioned rules.
If at any time after the date of this Purchase Contract but before the first to occur of (i) the
date upon which the Underwriters notify the City that the period of the initial public offering of the
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Securities has expired or (ii) the date that is 90 days after the date hereof, any event shall occur that
might or would cause the Official Statement to contain any untrue statement of a material fact or to
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, the City shall notify
the Authorized Representative, and if, in the opinion of the Authorized Representative, such event
requires the preparation and publication of a supplement or amendment to the Official Statement,
the City will at its expense supplement or amend the Official Statement in the form and in a manner
approved by the Authorized Representative and furnish to the Underwriters a reasonable number
of copies requested by the Authorized Representative in order to enable the Underwriters to comply
with the Rule.
To the best knowledge and belief of the City, the Official Statement contains information,
including financial information or operating data, as required by the Rule. Except as disclosed in the
Official Statement, the City has not failed to comply with any undertaking specified in paragraph
(b)(5)(i) of the Rule within the last five years.
6. Representations, Warranties and Agreements of the City. On the date hereof, the
City represents, warrants and agrees as follows:
(a) The City is a home rule municipality and a political subdivision of the State
of Texas and a body politic and corporate, and has full legal right, power and authority to
enter into this Purchase Contract, to adopt the Ordinance, to sell the Securities, and to issue
and deliver the Securities to the Underwriters as provided herein and to carry out and
conswnmate all other transactions contemplated by the Ordinance, the Pricing Certificate,
and this Purchase Contract;
(b) By official action of the City prior to or concurrently with the acceptance
hereof, the City has duly adopted the Ordinance, has duly authorized and approved the
execution and delivery of, and the performance by the City of the obligations contained in
the Securities, the Pricing Certificate and this Purchase Contract and has duly authorized and
approved the perfonnance by the City of its obligations contained in the Ordinance,
including, without limitation, the submission of a transcript of proceedings to the Public
Finance Division of the Office of the Attorney General of Texas (the "Attorney General")
for the approval of the Securities; and the Ordinance and this Purchase Contract constitute
legal, valid and binding agreements of the City, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization, moratoriwn and other
similar laws and principles of equity relating to or affecting the enforcement of creditors'
rights or by general principles of equity which permit the exercise of judicial discretion;
(c) The City is not in breach of or default under any law or administrative
regulation of the State of Texas or the United States (including regulations of its agencies)
applicable to the issuance of the Securities or any applicable judgment or decree or any loan
agreement, note, order, agreement or other instrument, except as may be disclosed in the
Official Statement, to which the City is a pwty orto the knowledge of the City it is otheiwise
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subject, that would have a material and adverse effect upon the bus~ or financial
condition of I.he City; and the execution and delivery of the Secwitics and this Pw-ch.ase
Contract by the City and the adoption of the Ordinance by the City and i;ompiiance with the
provisions of each theroof will not violate or constitU!e a breach of or default under an)!
existing law or administrative n;gufotion, or any judgment, d~ o:r agreement or other
instrument to which the City is a party or, to the knowledge of the City, is otherwise subject;
(d) All approvEW.l, i;onsents and order.. of any governmenttl autbority or agency
having jurisdiction of any matter that would comtitut1; a oonditioo precedent to the
performance by the City of its obligations to sell and deliver the Securitieg bereu.ndcr will
have been obLainod prior to the Closing, cx.cept for the approval of the Sec:uritie3 by the
Attorney General and registration of the Secwilies by the Office of the Comptroller of Che
State (the "Com_ptmUer"), and the City shall tirmdy cause a transcript of proceedings to be
filed with the Attorney General in fonn and substance consistent with the administrative
rule:i of the Public Finance Divi&i.on of lhe Attorney General, which will permit the review
of such transcript and the approval of the Securities by the Ab.omey General, and the
regi!itrarion of the Securities bJ thi: Comptroller on or before the Closing,. as required by
Section 8(e)(6) hereof, but subject tD the discretion of the Attorney General with respect to
the LBSUance of his approving opinion;
(e) Atth,: time of the City'sacceplancehm:of llll<I at the time of the Owing, the
Official Sbtcment docs not and will not contain any untrue statement of a material fact or
omit to s.t:ate a mnterial fact required to be stated lhcrein or necessary to make the statemenl<I
therein, in the light of the circumstances under which they were made, not misleading;
(f) Between the date of this Purch8$e Contract and the Closing, the City will not,
wilhout the prior written coruieot of lhe Underwriters, sell or issue any addilional bon~
nou:s or other obligations; for borrowed money payable in whole or in part from 00 va.lorem
tuxes, Mil the City will not incur wiy material liabilities, direct or C(lntingeot, nor will thllm':I
be any adver.;e change of a material rurture in the financial position of the City;
(g) Except as described in the Official Slaterm:nt, no litigation is pending or~ to
the knowledge of the City, threatened in any ooun offccting the corporate exis.tcoce of the
City, the title ofits officers LO their respective office:g, or seeking to n:&train or enjoin the
issuance or delivery of lhe Securities,. the levy, collection or application of the ad valorem
laXes and the swplus net revenues {~ "Pledged Revenues"') of the City'5 Waterworks
S)"lem pledged or to be pledged OJ pay the prinoipal of and -on the S«urities, or in
.any '"'ay conte&ting or affecting the ts:!'lus.nce, CX('.CUtion, delivery\ payment, security or
validity oft.he Securities, or in anJ way cont.esting or affecting the validity or enforceability
of the Ordmwi.ce, or contesting the powm of lhe City, or any 11uthority for the Se(;urities,
the Ord.loo.nee, the Pricing Certificate or thLII Pmcitasc C011fract: or contesting in any way the
completeness, ace\l.nlCy or faimoss of the Prelimimuy Official Starement or the Official
Statement or, to the best knowledge of the City, which in any way ciuc:stions (i) the exclusion
from gross income oflhe o\\"llen-thereof of the interest on lhe Series 201 OA Certificate:!! for
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federal iocomc tax purposes or in any other way questions: the status of the Series 2010A
Certific;a~ under federal or State tax laws or~ or, (ii) the eligibility of the City
to elect to hove the Series 201 OB Certificates treated as obligations described undet Section
54AA(g) rsuikl America Bonds") of the lntemal Revenue Code of 1986, as amended (the
"Cade,,), or to receive federal subsidy payments for the Seric.o; 2010B Certificates under
Section 54AA of the Code;
(h) Toe City will cooperate with the Underwriters m """"ging for the
qualification of the Securities for sale and the deu=rmination of theit iiligibillty for
investment wider the. lows of such jurisdictions as the Authorized Repre,sentativ e designates,
and will use it, best efforts to continue sucli qualifications in effo;t so long as req_uired for
distribution of the Securities; provided, however. thal the City will not be required to execute
a co111:1ent to service of process-or to qualify to do bu.siocss in conocction with any such
quaJification in my jurisdict~
(i) Thedescriptionsoflhe Securities and the Ordinance contained. in the Official
Statement accurately summarize certain pn,vis-ions of such instruments., and the Securities,
when validly executed, WJ.thenricated and delivered in occordanc.e with the Ordinance and
sold to the Undtrwriter.i BB provided herein. will be validly issued and outstanding
obligations of the City entitled to the benefits of, and subject to the limitstiom contained in,
the Ordinance;
G) lf prior to the Closing an event occurs affecting the City tho.t is-materially
adverse for the p'llqlOSe for which the Official Statement is to be used and is not disclosed
in the Official StatelQelll, the City shall notify the Authorized Representative, and if in the
opinion of the City and the Aulhorized Representative such event requirc:5 a supplement or
8Jl'lmdmmt to the Official Stliemc.ot,. the City will !iUJIP}ement or mnend the OfficiaJ
Slatemcnt in a; form and in a manner approved by the Authorized Representative~
(k) The finllncial stnl<ment, contained in tho otlicW Statement present fBirly the
financiulpositioo of the City Wi ofthed.e.teand for the period covered thereby andaresttted
on 'P basis substantially cons.istent with that of the prior )"CBl's lllu.dited financial statements;
(I) Any ccrtiticow signed by any offidal of the City arul &Livered to the
Underwriters shall be deemed a representation and wamnty by che City to the Underwriters
BS to the truth of the statements therein contained;
(m) 'rhe City has not been ootifiod of any li.,ting or proposed listing by the
Internal Revecue Service to the effect llwt it 16 a bond issuer whose arbitrage ccrtifu:.ations
may ncit be rellid upon; and
(n) The City will nof knowingly take or omit to lake any action, which oction or
omission will in any w11y ca.WIC tru: proceeds from the sale oflhe Securities to be applied in
a manner other than as provided in the Ordinance or thaJ. would cause the interest of the
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Series 201 0A Certificates to be includable in gross income of the holders thereof for federal
income tax purposes.
7. Closing. By 10:00 AM., Central Time. on February 4, 2010 (the .,Closing"), the
City will deliver the initial securities certificates of the Securities (as provided for in the Ordinance)
to the Underwriters and the City shall take appropriate steps to provide The Depository Trust
Company ("DTC') with one definite securities certificate for each year of maturity of the Securities,
and to provide the Underwriters with the other documents hereinafter mentioned. On or prior to the
date of Closing, the Underwriters shall make arrangements with DTC for the Securities to be
immobilized and thereafter traded as book-entry only securities and on the date of Closing the
Underwriters will accept such delivery and pay the purchase price of the Series 20 I 0A Certificates
and the Series 20108 Certificates, respectively, as set forth in Paragraph I hereof in immediately
available funds. Concurrently with the payment for the Securities by the Underwriters, the City shall
return to the Authorized Representative the check referred to in paragraph 4 hereof. Delivery and
payment as aforesaid shall be made at the office of the paying agent/registrar for the Securities, as
identified in the Official Statement, or such other place as shall have been mutually agreed upon by
the City and the Authorized Representative.
In addition, the City and the Underwriters agree that there shall be a preliminary closing held
at such place as the City and the Underwriters shall mutually agree, commencing at least 24 hours
prior to the Closing; provided, however, in lieu of this preliminary closing Bond Counsel, as defined
below, may provide the counsel to the Underwriters with a complete Transcript of Proceedings on
the business day preceding the Closing. Drafts of all documents to be delivered at the Closing shall
be prepared and distributed to all parties and their counsel for review at least three business days
prior to the Closing.
8. Conditions. The Underwriters have entered into this Purchase Contract in reliance
upon the representations and wammties of the City contained herein and to be contained in the
documents and instruments to be delivered at the Closing, and upon the performance by the City of
its obligations hereunder, both as of the date hereof and as ofthedateofClosing. Accordingly, the
Underwriters' obligations under this Purchase Contract to purchase and pay for the Securities shall
be subject to the performance by the City of its obligations to be performed hereunder and under
such docwnents and instruments at or prior to the Closing, and shall also be subject to the following
conditions:
(a) The representations and warranties of the City contained herein shall be true,
complete and correct in all material respects on the date hereof and on and as of the date of
Closing, as if made on the date of Closing;
(b) At the time of the Closing, (i) the Ordinance shall be in full force and effect,
and the Ordinance shall not have been amended, modified or supplemented and the Official
Statement shall not have been amended, modified or supplemented, except as may have been
agreed to by the Authorized Representative; and (ii) the net proceeds of the sale of the
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Securities shall be deposited and applied as described in the Official Statement and in the
Ordinance;
(c) At the time of the Closing, all official action of the City related to the
Ordinance shall be in full force and effect and shall not have been amended, modified or
supplemented;
(d) The City shall not have failed to pay principal or interest when due on any
of its outstanding obligations for borrowed money;
(e) At or prior to the Closing, the Underwriters shall have received each of the
following documents:
(I) The Official Statement of the City executed on behalf of the City by
the Mayor and City Secretary, or a conformed copy thereof;
(2) The Ordinance, certified by the City Secretary under the seal of the
City as having been duly adopted by the City and as being in effect, with such
changes or amendments as may have been agreed to by the Underwriters. The
Ordinance shall contain the agreement of the City, in form satisfactory to the
Underwriters, that is described under the caption "Other Information -Continuing
Disclosure of Information" in the Preliminary Official Statement;
(3) the Pricing Certificate, having been duly executed on behalf of the
City by an Authorized Officer,
(4) The Paying Agent/Registrar Agreement (with respect to each or both
series of the Securities), having been duly executed on behalf of the City and The
Bank of New York Mellon Trust Company, National Association, as Paying
Agent/Registrar;
(5) The opinions pertaining to the issuance of the Securities, dated the
date of Closing, ofVUIOOn & Elkins L.L.P. ("Bond Counsel") in substantially the
form and substance set forth in Appendix B to the Official Statement;
(6) Opinions with respect to the Securities, dated on or prior to the date
of Closing, of the Attorney General, approving the Securities as required by law and
the registration certificates of the Comptroller;
(7) The supplemental opinion, dated the date of Closing, of Bond
Counsei addressed to the City and the Underwriters, which provides that the
UndeIWritexs may rely upon the opinion of Bond Counsel delivered in accordance
with the provisions of paragraph 8( e)(5) hereof, and opining to the effect that (a) the
Purchase Contract has been duly authorized, executed and delivered by the City and
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(assuming due authorization by the Underwriters) constitutes a binding and
enforceable agreement of the City in accordance with its terms; (b) in its capacity as
Bonet CoW1Sel, such firm has reviewed the information in the Official Statement
under the captions or subcaptions "The Obligations" (exclusive of the infonnation
under the subcaption "Book-Entry-Only System" and "Sources and Uses of
Proceeds"), "Tax Matters" and the subcaptions "Legal Investments and Eligibility to
Secure Public Funds in Texas," "Legal Matters" and "Continuing Discloswe of
Information" (exclusive of the infonnation under the subcaption "Compliance with
Prior Undertakings") under the caption "Other Infonnation" in the Official
Statement, and such firm is of the opinion that such descriptions present a fair and
accwate swnmary of the provisions of the laws and instruments therein described
and, with respect to the Securities., such information conforms to the Ordinance; and
(c) the Securities are exempt from registration pursuant to the Securities Act of 1933,
as amended, and the Ordinance is exempt from qualification as an indenture pursuant
to the Trust Indenture Act of 1939, as amended;
(8) An opinion or opinions of McCall, Parlchurst & Horton L.L.P.,
Underwriters' Counsel, addressed to the Undenvriters, and dated the date of Closing
in substantially the form attached hereto as Exhibit C;
(9) A certificate, dated the date of Closing, signed by the Mayor and
Chief Financial Officer of the City, to the effect that (i) the representations and
warranties of the City contained herein are true and correct in all material respects
on and as of the date of Closing as if made on the date of Closing; (ii) except to the
extent disclosed in the Official Statement, no litigation is pending or, to the
knowledge of such persons, threatened in any court to restrain or enjoin the issuance
or delivery of the Securities, or the levy, collection or application of the ad valorem
taxes and Pledged Revenues pledged or to be pledged to pay the principal of and
interest on the Securities, or the pledge thereof, or in any way contesting or affecting
the validity of the Securities or the Ordinance, or contesting the powers of the City
or the authorization of the Securities or the Ordinance, or contesting in any way the
accuracy, completeness or fairness of the Official Statement (but in lieu of or in
conjunction with such certificate, the Underwriters may, in their sole discretion,
accept certificates or opinions of the City Attorney that, in the opinion thereof, the
issues raised in any such pending or threatened litigation are without substance or
that the contentions of all plaintiffs therein are without merit); (iii) to the best of their
knowledge, no event affecting the City has occurred since the date of the Official
Statement that should be disclosed in the Official Statement for the purpose for
which it is to be used or that it is necessary to disclose therein in order to make the
statements and information therein not misleading in any respect; and (iv) that there
has not been any material and adverse change in the affairs or financial condition of
the City since September 30, 2008, the latest date as to which audited financial
information is available;
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(I 0) An opinion or opinions of the City Attorney addressed to the
Underwriters and dated the date of Closing substantially in the form and substance
of Exhibit D hereto;
(11) A certificate, dated the date of the Closing, of an appropriate officer
of the City to the effect that, on the basis of the facts, estimates and circwnstances
in effect on the date of delivery of the Securities, it is not expected that the proceeds
of the Series 20 I 0A Certificates will be used in a manner that would cause such
Series 2010A Certificates to be "arbitrage bonds" within the meaning of Section 148
of the Internal Revenue Code of 1986, as amended;
(12) Evidence of the rating on the Securities, which shall be "Aa3" by
Moody's Investors Service, Inc. ("Moody's"), "AA+" by Standard and Poor's
Corporation, a division of the McGraw-Hill Companies, Inc. ("S&P"), and "AA" by
Fitch Ratings ("Fitch"}, shall be delivered in a form acceptable to the Underwriters;
(13) A certificate or other evidence (which may be satisfied as an election
made in the Ordinance or Pricing Certificate) that the City has ma.de the irrevDCable
election to treat the Series 2010B Certificates as "build America bonds" under
section 54AA of the Code and as "qualified bonds" under 54AA(g) of the Code; and
(14) Such additional legal opinions, certificates. instruments and other
documents as Bond Counsel or the Underwriters may reasonably request to evidence
the truth, accuracy and completeness, as of the date hereof and as of the date of
Closing, of the City's representations and warranties contained herein and of the
statements and infonnation contained in the Official Statement and the due
performance and satisfaction by the City at or prior to the date of Closing of all
agreements then to be performed and all conditions then to be satisfied by the City.
All of the opinions, letters, certificates, instruments and other documents mentioned above
or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions
hereof if. but only if, they are satisfactory to the Underwriters.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriters to
purchase. to accept delivery of and to pay for the Securities as set forth in this Purchase Contract,
or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the
Securities shall be terminated for any reason pennitted by this Purchase Contract, this Purchase
Contract shall tenninate, the security deposit referred to in Paragraph 4 of this Purchase Contract
shall be returned to the Authorized Representative and neither the Underwriters nor the City shall
be under further obligation hereunder, except that the respective obligations of the City and the
Underwriters set forth in Paragraphs 10 and 12 hereof shall continue in full force and effect.
9. Termination. The Underwriters may terminate its obligation to purchase at any time
before the Closing if any of the following should occur:
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(a) (i) Legislation shall have been enacted by the Congress of the United States,
or recommended to the Congress for passage by the President of the United States or
favorably reported for passage to either House of the Congress by any Committee of such
House; or (ii) a decision shall have been rendered by a court established under Article III of
the Constirution of the United States or by the United States Ta,; Court; or (iii) an order,
ruling or regulation shall have been issued or proposed by or on behalf of the Treasury
Department of the United States or the Internal Revenue Service or any other agency of the
United States; or (iv) a release or official statement shall have been issued by the President
of the United States or by the Treasury Department of the United States or by the Internal
Revenue Service, the effect of which, in any such case described in clause (i), (ii), (iii), or
(iv), would be to impose, directly or indirectly, federal income taxation upon interest
received on obligations of the general character of the Series 2010A Certificates or upon
income of the general character to be derived by the City, other than any imposition of
federal income taxes upon interest received on obligations of the general character as the
Series 2010A Certificates on the date hereof and other than as disclosed in the Official
Statement, in such a manner as in the judgment of the Authorized Representative would
materially impair the marketability or materially reduce the market price of obligations of
the general character of the Series 201 0A Certificates. ··
(b) Any action shall have been taken by the Securities and Exchange Commission
or by a court that would require registration of any security under the Securities Act of 1933,
as amended, or qualification of any indenture under the Trust Indenture Act of 1939, as
ameuded, in connection with the public offering of the Securities, or any action shall have
been taken by any court or by any governmental authority suspending the use of the
Preliminary Official Statement or the Official Statement or any amendment or supplement
thereto, or any proceeding for that purpose shall have been initiated or threatened in any such
court or by any such authority.
(c) (i) The Constitution of the State of Texas shall be amended or an amendment
shall be proposed, or (ii) legislation shall be enacted, or (iii) a decision shall have been
rendered as to matters of Texas law, or (iv) any order, ruling or regulation shall have been
issued or proposed by oron behalf of the State of Texas by an official, agency or department
thereof, affecting the tax status of the City, its property or income, its securities (including
the Securities) or the interest thereon, that in the judgment of the Authorized Representative
would materially affect the marlcet price of the Securities.
(d) A general suspension of trading in securities shall have occurred on the New
York Stock Exchange.
( e) A material disruption in securities clearance, payment or settlement services
in the United States shall have occwred.
(f) There shall have occurred any (i) material outbreak of hostilities (including.
without limitation, an escalation of hostilities that existed prior to the date hereof or an act
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of terrorism) or (ii) material other national or international calamity or crisis, or any material
adverne change in the financial, political or economic conditions affecting the United States,
the effect of which on U.S. fmancial marlcets of such an event described in clauses (i) or (ii)
shall make it, in the reasonable judgment of the Authorized Representative, impractical or
inadvisable to proceed with the offering or delivery of the Securities as contemplated by the
final Official Statement ( exclusive of any amendment or supplement thereto).
(g) An event described in Paragraph 66) hereof occurs that, in the reasonable
judgment of the Authorized Representative, requires a supplement or amendment to the
Official Statement that is deemed by them, in their discretion, to adversely affect the market
for the Securities.
(h) A general banking moratorium shall have been declared by authorities of the
United States, the State of New York or the State of Texas.
(i) A lowering of the ratings of"Aa3," "AA+" and "AA," initially assigned to
the Securities by Moody's, S&P and Fitch, respectively, shall occur prior to the Closing.
10. Expenses. ( a) Toe City shall pay all expenses incident to the issuance of the
Securities, including but not limited to: (i) the cost of the preparation, printing and distribution of
the Preliminary Official Statement and the Official Statement; (ii) the cost of the preparation and
printing of the Securities; (iii) the fees and expenses of Bond Counsel to the City; (iv) the fees and
disbursements of the City's accountants, advisors, and of any other experts or consultants retained
by the City; and (v) the fees for the bond ratings and any travel or other expenses incurred incident
thereto.
(b) The Underwriters shall pay (i) all advertising expenses in connection with the
offering of the Securities; (ii) the cost of the preparation and printing of all the underwriting
documents; and (iii) the fee of McCall, Parkhurst & Horton L.L.P. for such firm's opinion required
by Paragraph 8(e)(8) hereof.
11. Notices. Any notice or other communication to be given to the City under this
Purchase Contract may be given by delivering the same in writing at the address for the City set
forth above, and any notice or other communication to be given to the Underwriters under this
Purchase Contract may be given by delivering the same in writing to FIRST SOUTHWESTCOMPANY,
777 Main Street, Suite 1200, Ft. Worth, Texas 76102, Attention: Mr. David Medanich.
12. Parties in Interest. This Purchase Contract is made solely for the benefit of the City
and the Underwriters (including the successors or assigns of any Underwriter) and no other person
shall acquire or have any right under this contract. The City's representations, warranties and
agreements contained in this Purchase Contract that exist as of the Closing, and without regard to
any change in fact or circwnstance occurring subsequent to the Closing, shall remain operative and
in full force and effect, regardless of (i) any investigations made by or on behalf of the Underwriters,
and (ii) delivery of any payment for the Securities hereunder; and the City's representations and
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warranties contained in Paragraph 6 of this Purchase Contract shall remain operative and in full
force and effect, regardless of any termination ofthis Purchase Contract.
13. Severability. If any provision of this Purchase Contract shall be held or deemed to
be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any
constitution, statute, rule of public policy, or any other reason, such circwnstances shall not have
the effect of rendering the provision in question invalid, inoperative or unenforceable in any other
case or circwnstances, or of rendering any other provision inoperative or unenforceable to any extent
whatever.
14. Choice of Law. This Purchase Contract shall be governed by and construed in
accordance with the laws of the State of Texas.
15. Execution in Counterparts. This Purchase Contract may be executed in any nwnber
of counterparts, all of which taken together shall constitute one and the same instrument, and any
of the parties hereto may execute ~s Purchase Contract by signing any such counterpart.
16. Section Headings. Section headings have been inserted in this Contract as a matter
of convenience of reference only, and it is agreed that such section headings are not a part of this
Contract and will not be used in the interpretation of any provisions of this Contract.
17. Status of the Underwriten. The City acknowledges that in connection with the
offering of the Securities and the discussions and negotiations relating to the terms of the Securities
set forth in this Contract: (a) the Underwriters have acted at anns length, are not agents of or
advisors to, and owe no fiduciary duties to, the City or any other person, (b) the Under.vriters' duties
and obligations to the City shall be limited to those contractual duties and obligations set forth in
this Contract and (c) the Underwriters may have interests that differ from those of the City. The City
waives to the full extent permitted by applicable law any claims it may have against the
Underwriters arising from an alleged breach of fiduciary duty in connection with the offering of the
Securities.
[Signature page follows.]
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If you agree with the foregoing, please sign the enclosed counterpart of this Purchase
Contract and return it to the Authorized Representative. This Purchase Contract shall become a
binding agreement between you and the Undenvriters when at least the counterpart of this Purchase
Contract shall have been signed by or on behalf of each of the parties hereto.
Very truly yours,
First Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
By: Fint Southwest Company
Authorized Representative
By: i2,t_,tk:
Name: Pete Stare
Title: Senior Vice President
CITY0FLUBB0CK, TEXASTAXANDWATERW0RKSSYSTEMSURPLUSREVENUECERTIFICATES
OF OBLIGATION, SERIES 2010A
CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIF1CATES
OF OBLIGATION, TAXABLE SERIES 2010B {BUILD AMERICA BoNDS -DIRECT PAYMENT)
ACCEPTANCE
ACCEPTED pursuantto a motion adopted by the City Council of the City ofLubbock, Texas
on the 16m day of December, 2009 and executed this ___ day of January, 2010.
By:
Authorized Officer
City of Lubbock, Texas
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If you agree with the foregoing, please sign the enclosed counterpart of this Purchase
Contract and return it to the Authorized Representative. This Purchase Contract shall become a
binding agreement between you and the Underwriters when at least the co1mte,part of this Purcha.se
Contract shall have been signed by or on behalf of each of the parties hereto.
Very truly yours,
First Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
By: First Southwest Company
Authorized Representative
By:
Name: Pete Stare
Title: Senior Vice President
CITY OF LUBBOCK. TEXAS TAX AND WATERWORKS SYSTEM SURPLUS Ri:VENUJ: CERTIFICATES
OF OBLIGATION, SERBS 2010A
CITY OF LUBBOCK. TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CER11FICA TES
OF OBLIGATION, TAXABLE SERIES 20108 (BUILD AMERICA BONDS• DIRECT PAYMENT)
ACCEPTANCE
ACCEPTED pursuant to a motion adopted by the Ci~ Council of the City of Lubbock. Texas
on the 16th day of December, 2009 and executed this /?I I' day of January, 2010.
By, ~~
A~ d Officer
City of Lubbock, Texas
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EXHIBIT A
Schedule of Maturities, Interest Rates, Yields and Redemption Provisions
$48,955,000
City of Lubbock, Texas
Tax and Waterworks System Surplus Revenue Certificates of Obligation,
Series 2010A
Maturity Principal Interest Rate Yield
{!ebruao: 15} Amount {¾} (¾}
2011 $3,010,000 2.000 0.400
2012 2,750,000 1.875 0.880
2012 3,115,000 2.000 0.880
2013 1,150,000 1.875 1.230
2013 4,900,000 5.000 1.230
2014 450,000 2.000 1.590
2014 5,890,000 5.000 1.590
2015 350,000 2.250 2.030
2015 2,775,000 4.000 2.030
2015 3,515,000 5.000 2.030
2016 3,000,000 2.750 2.480
2016 3,925,000 5.000 2.480
2017 3,500,000 3.000 2.800
2017 3,695,000 4.000 2.800
2018 1,215,000 3.250 3.080
2019 1,250,000 3.500 3.350
2020 1,295,000 3.375 3.540
2021 265,000 3.500 3.680
2022 275,000 3.700 3.8IO
2023 285,000 3.750 3.9IO
2024 295,000 3.875 4.010
2025 310,000 4.000 4.120
2026 320,000 4.000 4.190
2027 335,000 4.125 4.260
2028 345,000 4.200 4.320
2029 360,000 4.250 4.390
2030 380,000 4.300 4.450
Optional Redemption. The City reserves the right, at its option, to redeem Series 201 OA Certificates
having a stated maturity on February 15, 2020, in whole or in part in principal amounts of $5,000
or any integral multiple thereof, on February 15, 2019, or any date thereafter, at the par value thereof
plus accrued interest to the date of redemption.
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EXHIBITB
Schi!d.ule o{ Maturities, Interest Rates, Yields and Redemption Prmidons
$96,540,000
City of Lubbock, y...,
Tu 111.ud Wllllet'Works System Surplw Re\'eoue Cerdficat2' of Obligation,
Ta.able Series 2010B
{Build America Bonds -Direct Pa):meot}
Maturity Principal Interest Rat, Yield
{Ftbrua!l 15) Amount (%! {%}
2018 $6,240,000 4.442 4,442
2019 6,425,000 4.542 4,542
2020 6,620,000 4.742 4,742
2021 6,540,000 4,892 4,892
2022 6~7:5.S,000 4.992 4,992
2023 6,985,000 5,242 5,242
2024 7,230,000 S.342 5,342
••• ••• • •• • ••
2030 49,74S,OOO 6,032 6.032
Optlmu,l ~ The City reserves tlu: righ~ ot its option, tott<leem Serie, 2010B Certilicates
haviog a Bt:rterl.marurity on February 15, 2020, in whole or in part in principal amounts orss.ooo
or W1}' integral multiple thereor, on February 15, 2019, or eny date thereafter, at the par value th-creof
plus occrucd inlacst to the dote of redemption.
Extnwrtlinary Opti,malRede,,.ption. Prior to February I 5, 2019, tlu: Series 201 OB Catificllles are
subject lo redemption prior to maturity at the option of the City, in whole or in part, in principal
ainoWll'i of $5,000 or any integral thereof on any dale oo. or after the occum:nce of an
"Extmnrdinary Event" ( defined below) at e. redemption price equal to the greater of:
(a) thi, ilisue price of the principal amount of the Series 2010B Certificates to be
redeemed. provided that such amount must be at least equal to the p&L' amount of the Series
2010B Ccrtifiootes tobe o:d"""1ed; md
(b) the sum of lite po:scnt value of the remaining scheduled peymcnl:5! of principal
and interest to the earlier oflhe swted maturity or the optional redemption dote (February
15, 2019) of the Series 2010B Cenifi.CHLes to be redeemed.not including any portionofth.ose
payments of interest accrued and unpaid as of the redemption date, discounted to the
redemption date on a xmi-annulll basis, assuming a 360-day year coruristing of twelve
30-doy months. w the Tn:aswy Rarc::,plu.s onehundred.(100) basis points, plus, incacbcase,
accrued and unpaid intcres1. to the n:demption date on the Series 2010B Ccrtificlllc3 lo be
redeemed.
"Extraordiruny Event" means anycl>,nge to Section 54M or Section 6431 oftlu: Cod, (a, sw:h
Sections were added by Section 1531 of the llccove,y Act, perlll.iaing to Build America Bonds)
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pursuant to which the Interest Subsidy Payments in connection with the Series 201 OB Certificates
are reduced or eliminated.
The '"Treasury Rate" is, as of any redemption date, the yield to maturity as of such redemption date
ofUnited States Treasury securities with a constant maturity (as compiled and published in the most
recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two
(2) Business Days prior to the redemption date ( excluding inflation indexed securities) ( or, if such
Statistical Release is no longer published, any publicly available source of similar market data))
most nearly equal to the period from the redemption date to the maturity date of the Bonds to be
redeemed; provided, however, that if the period from the redemption date to such maturity date is
less than one (1) year, the weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one (I) year will be used.
Mandatory Sinking F11nd Redemption. The Series 20 I OB Certificates maturing on February 15,
2030 (the "Term Certificates") are subject to mandatory redemption prior to maturity in part by lot,
at a price equal to the principal amount thereof plus accrued interest to the date of redemption. on
February 15 in the respective years and principal amounts shown below:
TERM CERTIFICATES MATURING
FEBRUARY 15, 2030
REDEMPTION
DATE
February 15, 2025
February 15, 2026
February 15, 2027
February 15, 2028
February 15, 2029
February 15, 2030 (maturity)
B-2
REDEMPTION
AMOUNT
$7,500,000
7,800,000
8,110,000
8,435,000
8,775,000
9,125,000
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EXHIBITC
Proposed Form of Underwriten' Counsel Opinion of
McCall, Parkhurst & Horton L.LP.
First Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Ft. Worth, Texas 76102
February 4, 2010
Re: $48,955,000 CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A
$96,540,000 CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS
REVENUE CERTIFICATES OF OBLIGATION, TAXABLE SERIES 20108 {BUILD
AMERICA BONDS -DIRECT PAYMENT)
Ladies and Gentlemen:
We have acted as counsel for you as the underwriters of the securities described above
( collectively, the "Securities"), issued under and pursuant to an ordinance (the "Ordinance") of the
City of Lubbock, Texas (the "Issuer"), authorizing the issuance of the Securities, which Securities
you are purchasing pursuant to a Purchase Contract, dated January 21, 2010. All capitaliz.ed
undefined terms used herein shall have the meaning set forth in the Purchase Contract.
In connection with this opinion letter, we have considered such matters of law and of fact,
and have relied upon such certificates and other information furnished to us, as we have deemed
appropriate as a basis for our opinion set forth below. We are not expressing any opinion or views
herein on the authorization, issuance, delivery, validity of the Securities and we have assumed, but
not independently verified, that the signatures on all documents and Securities that we have
examined are genuine.
Based on and subject to the foregoing, we are of the opinion that, under existing laws, the
Securities are not subject to the registration requirements of the Securities Act of 1933, as amended,
and the Ordinance is not required to be qualified under the Trust Indenture Act of 1939, as amended.
Because the primary purpose of our professional engagement as your counsel was not to
establish factual matters, and be.cause of the wholly or partially nonlegal character of many of the
determinations involved in the preparation of the Official Statement dated. January 21, 2010 (the
"Official Statement") and because the information in the Official Statement under the headings
"THE OBLIGATIONS -Book-Entry-Only System," "TAX MATTERS," "OTHER
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INFORMATION -Continuing Disclosure of Information -Compliance with Prior Undertakings"
and Appendices A and B thereto were prepared by others who have been engaged to review or
provide such information, we are not passing on and do not assume any responsibility for, except
as set forth in the last sentence of this paragraph, the accuracy, completeness or fairness of the
statements contained in the Official Statement (including any appendices, schedules and exhibits
thereto) and we make no representation that we have independently verified the accuracy,
completeness or fairness of such statements. In the course of our review of the Official Statement,
we had discussions with representatives of the City regarding the contents of the Official Statement.
In the course of our participation in the preparation of the Official Statement as your counsel, we
had discussions with representatives of the Issuer, including its City Attorney, Bond Cowisel and
Financial Advisor, regarding the contents of the Official Statement. In the COI.ITTle of such activities,
no facts came to our attention that would lead us to believe that the Official Statement ( except for
the financial statements and other financial and statistical data contained therein, the information set
forth unde,c the headings "THE OBLIGATIONS -Book-Entry-Only System," "TAX MATTERS,"
"OTIIER INFORMATION -Continuing Disclosure of Information -Compliance with Prior
Undertakings" and Appendices A and B thereto, as to which we express no opinion), as of its date
contained any untrue statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
This opinion letter may be relied upon by only you and only in connection with the
transaction to which reference is made above and may not be used or relied upon by any other
person for any purposes whatsoever without our prior written consent.
Respectfully,
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EXHIBITD
Opinion of the City Attorney
February 4, 2010
Fint Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Ft. Worth, Texas 76102
Re: $48,955,000 Cln' OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A
$96,540,000CITYOFLUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS
REVENUE CERTIFICATES OF OBLIGATION, TAXABLE SERIES 2010B (BUU..D
AMERICA BoNDS-DJRECT PAYMENI')
Ladies and Gentlemen:
I am the City Attorney for the City of Lubbock. Texas (the "City") at the time of the issuance
of the above referenced securities (collectively, the "Securities"), pursuant to the provisions of an
ordinance (the "Ordinance") duly adopted by the City Council of the City on December 16, 2009.
Capitalized terms not otherwise defined in this opinion have the meanings assigned in the Purchase
Contract.
In my capacity as City Attorney to the City, I have reviewed sucb agreements, documents,
certificates, opinions, letters, and other papers as I have deemed necessary or appropriate in
rendering the opinions set forth below.
In making my review, I bave assumed the authenticity of all documents and agreements
submitted to me as originals, conformity to the originals of all documents and agreements submitted
to me as certified or photostatic copies, tbe authenticity of the originals of such latter documents and
agreements, and the accuracy of the statement contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set
forth, I am of the opinion that under the applicable laws of the United States of America and the
State of Texas in force and effect on the date hereof:
1. Based on reasonable inquiry made of the responsible City employees and public officials,
the City is not, to the best ofmy knowledge, in breach of or in default under any applicable
law or administrative regulation of the State of Texas or the United States, or any applicable
judgment or decree or any trust agreement, loan agreement, bond, note, resolution.
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ordinance, agreement or other insnument to which the City is party or is or.herwise subject
and, to the best of my knowledge afta due inquiry, no event has oceurred and Is continuing
that, with the passage of time or the giving of notice, or both, would comr.ituJ.e 11uch a. default
by ~ City under any of the foregoing; and the execution and delivery of the PUI"l:hase
Conlrnct, the Securities and the adoption of the Ordinwtce and compliance with the
provisions of eai;b of such agreements or instruments does not constitute: a brcsch of or
default under any 11pplic.ahle law or administrative n=gulation of the Stlltc of Texas or the
United Slates or any applicable judgment or decree or, to the best of my knowledge, any
1rust agreement. loan agreement, bond, note:, resolution, ordinance, agreement or other
insm.unent to which the City is a party or is otherwise suQject; and
2, fu:.ceptas tfu;closed in the Official Statement.no litigation is pending, or, to my knowledge,
threatened, in any court in any way (a) challenging the titles of the Mayor or any of the other
members of the City Council to their respective offices; (bJ seeking to restrain or enjoin the
issuance, sate or delivery of any of the Securities, or the levy, 1;0 Uection or application of the
ad valorem taxes and the Pledged Revenues pledged orto be pledged to pay the principal of
and interest on the Securities; { c) contesting or affecting lhe validity or enforceability of the
Securities, the Ordinance, the Pricing Certificate or the Purchase Contract; { d) contesting the
powers of the City or any authority for the issuance of the Securities, or the adoption of the
Ordinance; or ( e) that would have a materiaJ and adven.ie err ea on the financial condition
of the i;:i1y.
3. I have reviewed the information in theOffidaJ Sta.ternentcontained undertbe caption "Other
lnfoanation-Litigation" mid "lnve:;tige.tioos Rttlating to the City's Health Insurance
Adminiswtor" and sud, information in all material respects accurately and lmrly SUIMlllrize•
the matt= described therein.
This opiniori i.; furnished solely for your benefit and may be relied upoR only by the
addresses hcteof or anyone to whom specific permission is given in writing by me.
Vay truly youn,
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PURCHASE CONTRACT
$8,840,000
Oty of Lubbock, Texas
General Obligation Bonds
Series 2010A
RELATING TO
$15,320,000
City of Lubbock, Texas
General Obligation Bonds
Taxable Series 2010B
(Build America Bonds -Direct Payment)
January 21, 2010
The Honorable Mayor and Members of the City Council
City of Lubbock
P.O. Box 2000
Lubbock, Texas 79457
Dear Mayor and Members of the City Council:
FIRST SOUTHWESTCOMPA.NY(the "Authorized Representative"), HtneHJNSON, SHOCXEY,
ERLEY & Co., J.P. MORGAN SECURITIES INC, MORGAN KEEGAN & COMPANY, INC, AND
SDUTHWESTSECURnlES, INC (collectively, the "Undeiwriters"), offer to enter into this Purchase
Contract (the "Purchase Contra.ct") with the C/71' OF LUBBOCK, TEx.4s(the "City") for the purchase
by the Underwriters of the City's General Obligation Bondr, Series 2010A (the "Series 2010A
Bonds") and the City's General Obligation Bondr, Taxable Series 2010B (Build America Bondr -
Direct Payment) (the "Series 2010B Bonds" and together with the Series 2010A Bonds, the
"Securities"). This offer is made subject to the City's acceptance of this Purchase Contract on or
before 12:00 p.m. Central Time on January 21, 2010.
1. Purchase and Sale of the Securities. (a) The Series 2010A Bonds. (i) Upon the
terms and conditions and upon the basis of the representations set forth herein, the Underwriters,
jointly and severally, hereby agree to purchase from the City, and the City hereby agrees to sell and
deliver to the Underwriters an aggregate of $8,840,000 in principal amount of the Series 201 0A
Bonds. The Series 201 0A Bonds shall have the maturities, interest rates and be subject to
redemption in accordance with the provisions of Exhibit A hereto and shall be issued and secured
under the provisions of the Ordinance (as defined below).
(ii) The purchase price for the Series 201 0A Bonds shall be $9,090,461.17 (representing the
principal amount of the Series 201 0A Bonds, plus net original issue premium on the Series 20 I 0A
Bonds intheamountof $295,967.60, and less an Underwriters' discount on the Series 2010A Bonds
of $45,506.43), and no accrued interest.
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Schedule II
Issuance Costs
Costs oflssuance. Not more than 165,000.00 of the sale proceeds of the Bonds will be
used to pay the costs of issuing the Bonds.
Schedule II
City of Lubbock, Texas., General Obligation Bonds, Taxable Series 20108 (Build America Bonds-Direct Payment)
US 238692v.3
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EXHIBITC
REIMBURSEMENT RESOLlITION
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CITY OF LUBBOCK §
COUNTY OF LUBBOCK §
STATE OF TEXAS §
CERTIFICATE TO COPY OF PUBLIC RECORD
I hereby certify, in the performance of the functions of my office, that the attached
instrument is a full, true and correct copy of the Resolution No. 2009~R0411 as the same
appears of record in my office and that said document is an official record from the public
office of the City Secretary of the City of Lubbock, Lubbock County, State of Texas, and
is kept in said office.
I further certify that I am the City Secretary of the City of Lubbock, that I have
legal custody of said record, and that I am a lawful possessor and keeper and have legal
custody of the records in said office.
In witness whereof I have hereunto set my hand and affixed the official seal of
said office this 30th day of October, 2009.
(City Seal) ~a&~<•~ Rebecca arza
City Secretary
City of Lubbock
Lubbock County, State of Texas
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Resolution Ro. 2009-BD4ll
October 8. 2009
Item !ilo. 5.3
RESOLUTION EXPRESSING INTENT TO
FINANCE EXPENDITURES TO BE INCURRED
WHEREAS, the City of Lubbock, Texas (the "Issuer") is a political subdivision
of the State of Texas authorized to finance its activities by issuing obligations the interest
on which is excludable from gross income for federal income tax purposes ("tax-exempt
obligations'') pursuant to Section 103 of the Internal Revenue Code of 1986, as amended
(the "Code'');
WHEREAS, the Issuer will make, or has made not more than 60 days prior to the
date hereof, payments with respect to the acquisition. construction, reconstruction or
renovation of the property listed on Exhibit A attached hereto;
WHEREAS, the Issuer has concluded that it does not currently desire to issue tax-
exempt obligations to finance the costs associated with the property listed on Exhibit A
attached hereto;
WHEREAS, the Issuer desires to reimburse itself for the costs associated with the
property listed on Exhibit A attached hereto from the proceeds of tax-exempt obligations
to be issued subsequent to the date hereof; and
WHEREAS, the Issuer reasonably expects to issue tax-exempt obligations to
reimburse itself for the costs associated with the property listed on Exhibit A attached
hereto.
NOW, THEREFORE, be it resolved that:
Section 1. The Issuer reasonably expects to reimburse itself for all costs that have
been or will be paid subsequent to the date that is 60 days prior to the date hereof and that
are to be paid in connection with the acquisition, construction, reconstruction or
renovation of the property listed on Exhibit A attached hereto from the proceeds of tax-
exempt obligations to be issued subsequent to the date hereof.
Section 2. The Issuer reasonably expects that the maximwn principal amount of
tax-exempt obligations issued to reimburse the Issuer for the costs associated with the
property listed on Exhibit A attached hereto will not exceed $195,000,000.
A-1
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ADOPTED THIS 8th day of October , 2009, by the City Council of the
City of Lubbock, Texas.
CIJY OF LUBBOCK, TEXAS
Tom Martin, Mayor
APPROVED AS TO CONTENT:
la~
And.Jham,ChiefFinancial Officer
vw:ccdocs/Masler Lease Reimbursement 2010 Projects (2)
A-2
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EXHIBIT A
cm FACILITIES
Municipal Auditorium Renovation•
Civic Center Renovation•
TOTAL GENERAL OBLLGATION B01','DS
a,VIATION
Airport Facilicy lmprovemenls
Replace Passenger Loading Bridges
GATEWAY PROJECTS
Indiana Avenue-103"' to FM 1585
LUBBOCK POWER AND LIGHT
Overhead Distribution
Underground Distribution
Distnbution Transformers
NORTH OVERTON TIF
Rigbt ofWay Acquisition
GGB East
SOLID WASTE
Celi Development
Leachate Pond Landfill 69
STORM W a.TES
Street Maintenance Program
Northwest Lubbock and Maxey Park
McAlister Park Cut and Fill Master Plan
W ,iSTEW a,TER
Sewer Tap Replacement
Water Reclamation Plant Rep!acemenls
I.and Application Office Renovation
Electrical Facilicy
SEWRP Improvements Phase III Solids Handling
Scuth Lubbock Sanitary Sewer System Expansion
SEWRP Improvements Phase IV Plant 3 lmprnvemenls
Sewer Extensions ahead of Gateway Projects
11.esolutiml Sa. 2009-R041L
Cost E,timate
$ 4,500,000
1,450,000
$ 5.950.000
275,000
5,800,000
11,576,000
2,250,000
3,000,000
2,000,000
1,971,67 I
900,000
350,000
3 ll,250
9,065,980
1,500,000
25,000
650,000
300,000
100,000
125,000
9,573,030
10,000,000
3t000t000
3,000,000
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Cost Estimate
WATER
' Supplemental Water Supply for LAH $ 800,000
Bailey County Wellfield Improvements 346,580
Water Treatment Plant Improvements 5,372,000
Pumping System Improvements 884,485
Water Lines Ahead of Street Paving 400,000
' Water Meter Replacements 1,000,000
LAH Raw Water Line/Pump Stations 41,000,000
LAH Water Treatment Plant & Terminal Reservoir 62,000,000
Water Extensions ahead of the Gateway Projects 1,611,761
Parks Backflow Assembly Conversion 1,518,740
' TOTAL CERTIF1CATES OF OBLIGATION $ I 80,706,497
MASTER LEASE PURCHASES
' Scheduled Master Lease purchases for various city $ 7,938,462
departments include the purchase of vehicles,
machinery, electronics, and other necessary equipment.
' TOTAL $ I 94,594.959
'General Obligation Bonds. These projects were approved by the voterS in an clcction held in May 2004.
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Vinson&Elkins
~" H. Gen:ln SGerdes@velaw.com
Tel 713.158.46111 Fu 713,815.5503
CERTIFIED MA.a
RETURN .RECEIPT REQUESTED
70010860 0003 5311 6992
District Director
Internal Revenue Service
Ogden, UT 84201
March S, 20 I 0
Re: $48,955,000 City of Lubbock, Texas Tax and Waterworks System Surplus
Revenue Certificates of Obligation, Series 2010A
Dear Sir:
Enclosed please find an originally executed Fonn 8038-0 (Information Return for
Tax•Exempt Governmental Obligations) for the above-captioned bond issue.,
Please acknowledge receipt of the Form 8038-0 by s.tampirtg and returning the copy
of the Fonn 8038-G attached to the self~addres~ postage-paid envelope that we have
provided.
cc: Meagan Hom
Terri Lambert
Leslie Morgan
YIIISGII & Ellllns UP Miorl'IIJ9 at Law
Austin Beijng Dallas Dul'MI Houston Loman
Moscow lllewYO/k Shanghai Tokyg Wa_shingm
Very truly yours,
~bAdl/J-
Steven H. Gerdes
280'! Via Fortu,,a, Suilll tao
ALISlln. TX7874IH56B
Tel 512.542.8400 FIil 5l2.542.81!12 WMl.maw.com
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F= 8038-G
i Rv,, t.!010!10>1!• 20001
~~OIW111-ry --~ lnfcrmation Return far To-Exempt GD¥arnmentai Obllgidlons • Underlr,tarNI~ CodiuNCIU:an 149(s} • See llllp:lll'l\ta l'rlslrllctlo,a,
Ca1,111on: ff U'lli /$Sue pJt:o is ldl08f' $100.000. 14.e Fotm ~
art I Re Au Ori lf Amen ed Return. check~•
' ---Ci ofLubboc Texas
3 tilumbtr lll'ld•~\OtP.0.t,,:,,iif mailltMl:delfY!rr.od tottt.c~•)
P.O. Box 2000
9 Name 1111d Ii& 0fllfic«6tutp ,~w,tw,mfhe IRSmayi::aililrim'>l'll ~
And Bur<l>Ml CblefFmancial Officer
Patt 1" of l&sutt ¢heck ap box n a cmtef the Issue co ctrons n a
" D """""""" , ......................................... , ..................... ..
1Z O Heelthan<lhospilal,, ....•.. , ... , ...... , . ,. , , .. , •. , . , , •.....• , •••...•.. , , ....•
13 0 Transportatkln .••....• , , . , •..•... ,, ...•..... , •...••••..•.. , •..••. , •.•..•..
14 Of'tit>licsafuty, ............... "., .. , ............. , ................ ,, ..•.••.•
15 0 El'Mffflme:t1t(lndudlng !ewage bondsj ........... , , .• " ..... , , • , . ,. ... ., , .••.•.•• ,
1e 01-1ous111g ••.•••.......•••.•...........••.••••....•••••••...••.•.••....•••.•
17 fil Utflitln .. . . .•. .•. . .•..........•..• , •.•..••••••.....•••••••....••.
18 0 Olher. Desaibe•-=:c-----==---c---=c-:c-------=-19 If oblfgatioos ate TANs or AANs, diedl .bot• D If .oblfgatil)IIS sm BANa. ~ boX ••••• , • D
20 If obligations are in the form of a lease or instalknent sale. obeck box •••••••• , , , , , • , • • •
21 2115/2030 $ 521 $
Put r,,, UNS of Proc.ds of Bond tssue (indudtn
22 ProceedsusedforacQnJedlnt81'11$t .• ,, .•.• , ....••• ,, ... ,., .•••..... , , ••••.•... , . , , , ,
23 l115Uepric.aolenltmheue-{enterarnourd!mm line 21, cakJmn (b)) •• , •. , .•••.•• , ••••..•. , •.
24 Pror,;eeds used fDr bond imuance com {in,;.bJ,amg undenwiler8' rli!ICQl,.mt)
2:5 Proceeds LISa1 for credtt onllancement, , •... , • , ••.
26 Ptoceede nllocalRd ID rea$0nably requited r81J6t'Ve or replacement tund .•
27 Proceeda used tn 1:UJ!'Umly refund p,1or Issues .•.........•.•....•..
28 F'rOc.clids used lo advance refunO prlol issuas .... .
2 12
"
29 Total(addlmea241hrough2B) ..... ,,.,_._, .......................... , .. .. 383 46
30 Nonrefund .of the 1$$\le subtn;d line-29 from line23 and enter amounttlet& .• , •..•• 51 744 22
Part V D of Refunded Bonds Com late this onl tor refund! bonds.
31 Enter 11,e remaining wmghmd awmge maturity 01 !hllil bonds to be c~ r:&Nnded. , ••.•.•.•. • )Wfll
32 Enter ttie-remairdng ~ s\letaga matlil'itr of the bonds t.o-11<3 adl/BnQI. rrifunded • , ••. , . , •• , • }'9'!JEI
33 EntDf the last date on which th8 r&Unded tJMd• .ti be c.Bed ..•...••••. , ••.•• , , • , ...•••• • _____________ _
34 fitter the oa..ra) the refunded bonds Wl'ffl!I issued•
I Part VI I Miscellaneous. .. ... 3.5 en1artM amount of !:ha state vOfumecap slloca!ad to tbe IS5Ue undet seciion 141(b)(5) ...•••...
36a Entn' fie ll1IIOml liQIOS!l"~ lrMllllUd arto be~ ina ~ ~~ (sealnstrucllon8) , •••
b Entl!I' thi, t111af rnahlrity date o1 l1111i.;i1J.aranl1!8d Jn,,ealment ctmtracl•-;;;;;;;;;;;;;;.:;;;;;---:-:--
37 F'talll-!lralcirQS::: a Ptlx:alds cd ihit IS!ilAI N n la W US!id IDftlZRl tMs lcrcl'drgoe,•1,ellal lll!b. ..•. , , , , . . • lc-Ul!J...~~--JJ!J '°'
b If Ws L6&Ue U!l a loan ma6e from the pt(ICl!eds-of anol:l'V!i-bx-ellempt iSSUB, Checlt box.• D tind emer tf.e name of Iha
Muer•----c----~------=-ccc-=-cc-c----c andth,edab! oflfltai$509 • _____ -=c
38 If the iS61Mir has de!iignalscl the iS!Lle under sar.licin 265{1:l)(J)(BJ{i)(III} (smalt ft&iel' ti:.,u~ptic;lfl), checii; bQx , , •• , •. , ,
l'9 If the Issuer 1'1M ~led to pay a pai.ally In Uw of arbitrage rebate. chsck bo:11 •• , ••• , , • , , , ...••••••.••.••.••••.• •
40 rrtt1eissuerhas-ldootltieds-h e,d'teckbox ..•...••.••..• ,... .,, .•.••. , .. , .••.•..•.•.. , ...•. , .• •
Sign
Here
lJrnl« ;,ene!tk,l of !l600, t ~daraw1 I r,;w,; -\ned lll,a ~ ar.a liCW'l'll),ffl\ffl(/ ~C!i ~ ttl!!ert!CM\ JIM h:I lhe li1ISI cl mylmwleo·ourtd bder.
hly,m.~.aM«m;,1m Andy Burcham , • f,b.A..~ ;/0412010 • Chieffimmcial Officer I S19"~1'?P!;"'l>Jll"" ome .,m«pr111t11amaam1tlffl
For Paperworll ReductJQn A.d. )fQtlce, 11.ee page 2 of the lnslruclion&. <;;a "Form B(QS,G {R""-wzoooi
~ftOfl,IC~f
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. .,,. , • u • • Complete lterl'!S 1, 2, and 3.. Al90 cornpfete Item 4 If R~ Dellveiy la delSIPed. . • Prir\ yot11 ,~ and .ecfcnee on the MYerM ~ tt,at wQ can rewrn the card ~o you. V A.$;nlllW,I ,X lJ ' • Attach 1h18 ~ to 1M, b8clt t>f tt1, mallp!eoa. or oo the front If apace permit& 01 i, delllelyedd!e:9!1 clftinnt fitim Item 1, • Yee ti 'r'ES. enter ch!llvllly EICll;jrea belc,,,I; 0 Na · 2. Artlcle Number {JIBftftriPoll,,s,.bllt.llQ PS Form 3811, FAbruary 2004 3. ~n,po ~Mall C ~·M6~ • flogl&tered • ~ Recelpl: fm ~ a Mllmld Mat1 a c.o.o. 7•a2 •ab• •••3 s311 6992 $ ...,. .. ~l"l(U 1-------1. ~!I llil!Oll!IRIClf!'Q)• ~A...o~ 1-----------i~~ ""~~ t "4ai;oc1 -,J Cl C ru Cl ,oi, IT' 0 C 0 C w ~ C CJ N C] D:I tr 0 C CJ [j LU v-01oi. ~s ·oo PllWA."J'H ~ ~ Olldms~Ss:.,.,(l~l•Hi ·I:-'-...-f)lle UJ,. Dx:l.l ')IOIClqlprJ JO ~11:) • t;-" loJ ...,~,11111-!:"."'II••'"' • .,~ tr' D"' ..D ..D ..,p ..u tl.! ru (11c'P'•'''',i ,6L',., •o.;:: .-,;111,:•11.'11' '-'1V .i,110 /IVl'J :11/!Wli/Ofi) ldl:J:JJtl llVV~ 031::H.ll::13:) ;.::i,,,,.,s ,.,1,:,,,1 ·s n
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Vinson&Elkins
Stavtin H. Geid8a SGelClaeOv&l,-w.com
Tel713.758.4516 Fall 713.615.5503
C,ERTIFIED MAIL
RETURN RECEIPf REQUESTED
7002-0860 0003 5311 6961
District Director
lntema1 Revenue Service
Ogden, UT 84201
March 5, 2010
Re: $96,540,000 City of Lubbock, Texas Tax and Waterworks System Surplus
Revenue Certificates of Obligation, Taxable Series 20!0B(BuildAmerica
Bonds -Direct Payment)
Dear Sir:
Enclosed please find an originally executed Fonn 8038-G (Informstion Return for
Tnx"Exempt Governmental Ob1igations) for the above-captioned bond issue.
Please acknowledge receipt of the Form 8038-G by stamping and returning the copy
of the Form 8038-G attached to the self-addressed, postage-paid envelope that we have
provided.
cc: Meagan Horn
Terri Lambert
Leslie Morgan
Yln1,0n a Elkins LLP Atlorni,ya Ill Lll'lll'
All$6n Ba(llng Dall1n Dubel Hruslon L.ordon
~ New Volk Sl"l!nlljlh~ Tolqo Walihlnl,IQl'l
'2801 Via Fortuna, SullB 100
Austin, TX 78748-7588
Tel 512:.542.8400 Fax 512.54a.8812 -• .-etaw.co,n
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'= 8038-G
(Re--. Nowlrrlbll 2000)
O<,parlment er WI T<aUUIY !t0',... Re,etw,, sen;oo
Information Return for Tax-Exempt Governmental Obligation& • Underlnl&mal Revenue Code aecllon 149(1) OMS No. 15'9-0720 • Sea separate lrtStrudfona.
Caution: lfflilil iullfJ price i8 umte,$100,000, use Fann 8038-GG.
1 Part 11 Reporting Authority
1 t,si,e,·:s name
If Amended Return, check here • i
2: IQllar-..mptoytrkltfttlflcatlonnum1>11
Cih, ofLubboclt-Texas 75-6000590
3 Number and street (or P.O. box lf mell 1$ not Ge!M!t&d lo r;troet ~s)
P.O. Box.2000
5 City, lown, or pestoffiee, sta!a, and ZIP code I 01118 d is5UEI
Lubbock. Texas 79457 Februa ... ,4 2010
7 Narnectissuetax and WaterwQt....ks Sy~ti;m Surplus Revenue Certificates of • CIJSIPnumber
Obliuation. Taxable Series 20 lUJ:flBulld Amedca Bonds -Direct Pavmerit' 549188HJ2
9 Name and dUeolollicerorlegalf!lp(ellei,talNlwhOtl'I 1h11 !FIS maycliU fcrll!Qf9lnb'lrlalloo 10 _.,,......IIUIIINl"o!OlllctrorleOlll...--
AndV Burcham Chief Financial Officer (806) 775-2149
I Part 111 Type of Issue {check annllcable box{es) and enter the Issue prlee) See Instructions and attach schedule
11 0 Education .•..•.•............. , ... · · ... · ·• · · · · . · · · · · · · · · • • • · · • • · · • · · · · · • · • • • r''-''4------
12 0 Health end hospital ....•..........................• · · · · • · , · , , • , • • , , • , • • · • • · • , • r1,,;24------
t3 D Transportallon •.•...•.•..•..•....•..........•••••••.•••.•.. , ..•... , . . . • . • . . • "•~•-+------
14 0 Public safety •.•.... , , .... , ..• , .. , , , . , • , , · , , , , · , · • · · , • , · , · · · · · · · · · · · · • • · · · · • · r1'c4+-----
15 D-Environment (including sewage bonds)... . . . . . . . . . • . . .. . . . . . . • . . . . . . • . . . . . . . . .. • .. "•~•'-+-------
18 0 Housing ... , •...... , . , , ....... , · · · · · · · · · · · · • · · · · · · · ·, · · • · · · · · · · · · · · · · · • · • • · r•'-'·'+------
11 0 Utilities ...........•... , ... , ...... ,......................................... 1"7
18 f]i Other. Desaibe • BuiJd America Bonds (payment option} 18
19 If obligations are TANs or RANs, check box • OU obligations ere BAN&, check bOlc ••.••• • 0
20 If obligations are in the form of a lease or installment sale, check box ....•....•...•••. • Fi
1 Part Ill I Description of Obllaatlons. (Comolete for the entire i.ssue for which this form is bel filed.J
{c) Stated redempdon (d) Weighled
prk:e at matwlty 1M,11";1gB maturity l•l Final malul'lly del9 I I•) Yoeld
21 2/15/2030 $ 96.540.000 $ 96 540 000 14.483 rs I 3.6373 %
I Part JV I Uses of Proceeds of Bond Issue (Including undeiwrlters' dlseount)
22 Proceeds used for 8CCOled interest ........................... , . • . . . . • . • . . . . . . • . • . . • . ,_.22..., __ =~==-0,_
23 Issue price of en~re iBBue (enter arnount fl'orn line 21, column (b)) ............... , . . . . . . . . . . . ~23"'-+--~9~6=540=~00=0
25 Proceeds used for credit enhancement. •.•...••.•........•...... , 25
26 ProGeeds allocated to reasonably required rBSefVe or mplacement fund . 26
21 Proceeds used lo rurrenUy refund prior issues . . ... • . . . • .. • • • • • • t~27u====::::j
28 Proceeds u$Bd to advence refund prior issues . . . . . . . . . . . . . . . • • . . 28
24 Proceeds used for bond Issuance costs (including underwriters' dl&eount) 24 ,, .. ,. .. ~,.,.
29 Tolal (add fines 24 through 28) ............... , .................. , . . . . . . . . . . . . . . . . . . ,29~+--=c"8;-;7e,5,.,7,.,2"=3
30 Nonrefundinn nroceeds of the issue /subtract line 29 from Une 23 and enter amount here} ..•• , . • . 130 95 664 211'
I Part VI Description of Refunded Bonds 1Com11lete this Dart onlv for refund Ina bonds.I
31 Enter the remaining weighted average matunty of the boods IO be currenUy refunded •.......... • ------~y~ea=ccrs
32 Enter the remaining 'Mlighted awrage maturity of the bonds lo be advance refunded ••.•••...•. • ------~'""=~"
33 Enter the lest date on which the refunded bonds will be called •.........••.•.. , ...•••.•... •
34 Enter the ctatcJs)the refunded bonds were Issued •
I Part VII Miscellaneous
35 Enter the amount of the state volume cap allocated lo the issue under section 141(b)(5) ... ...... .. ,01
36a Enter tte amotJnt of gross proceeds investee! r.s 10 be invest9:I in a guaranmi lrM!sbnB11. O'.lnlra:t (& lnslndons) •... 36a ,o,
b Enter the final maturity dale of l/1e guaranteed investment contracl •
37 Pooled !lnancill;IS: a Proceeds of this issle 1hal n to be ussd lo make loans to olhet Q[M!ITK'llenlal 1J11if!,; ........... 37a 101
b If this ISSU6 is a loan made from the proceeds of another tax.exempt rssue, check~• Oand enter the name of the
issuer•-.,.--,--,----~---c---c---c--ccc-c-c-cc-,cc-,--,--,-, end the date of the Issue•------=
38 If the issuer has designated the issue under section 265(b){3){B)(i)(III) (small issl.1'8r e,:ception}, chec:lit bo.li: , .•••• , ..• , . • D
39 If the issuer hl!S elected to i,ay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . . . • . • . . . . . . . ...... , . • 0
40 If the issuer has identified a hedge, check box ...............••.•.......•....•.....•...•...•......•.••.. •
Sign
Here
U11dir penattles of perjury, ! deciare Iha! I MW elQITlll!ed lll.s return and ael:,;imp~ aehtldu!es and s!alarrle.nlll, llr.d Iii 1h8 best of my knowledge W'ld behet,
llleya~tnJ<J,eorroo.andcOITllli<lll!. Andy Burcham • 2/04/2010 -• Chief Financial Officer
S~zed 1'!)lresentati,;e Date T or prinl name nnd Utle
For Paperwork ReducUon Act Notice, see page 2 of the lnstructlons. l!lA Form 8038-G (Rel'. 11-2000)
STI' fEO!l<>Olf
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Attachment to Form 8038-G
City or Lubbock, Texas
Attachment to Form 8038-G
City of Lubbock. Texas
EIN: 75~6000590
Tax and Waterworks System Surplus Revenue Certificates of Obllgadon, TaxaJ:,Je Series
l0I0B (Build America Bonds -Dlrect Payment}
E.I.N. 7>6000590
Part II: Type of l11ue
The Certificates of Obligation are issued in the emount of $96,540,000 to finance ..2fl!ll
pwposes, including, in this case. street and utility projects.
F1xed Rate Bond -Debt Service Schedule
2/15/2011 S,454,802.49 96,540,000 1,909,180.87
8/15/2011 2,646,534.90 96,540.,000 926,287.21
2'15/2012 2,646,534.90 96,540,000 92~87.21
8/1Sf2012 2,646,534.90 96,540,000 926..287.21
2/15/2013 2,646,534.90 96,540,000 926,287.21
8/15/2013 2,646,534.90 96,540,000 926,287.21
2/15/2014 2,646,534.90 96,540,000 926,287.21
8/15fl014 2,646,534.90 96,540,000 926..287 .21
2/15fl0l5 2,646,534.90 96,540,000 926,287.21
8/15/2015 2,646,534.90 96,540,000 926,287.21
2/15/2016 2,646,534.90 96,540,000 926,287.21
8/15/2016 2,646,534.90 96,540,000 926,287.21
2/15/2017 2,646,534.90 96,540,000 926,287.21
8/15/2017 2,646,534.90 96,540,000 926t287.21
2/15/2018 2,6%,534.90 96,540,000 926,287.21
8/15/2018 2,507,944.50 90,300,000 877,780.57
2/15/2019 2,507,944.50 90,300,000 877~780.57
8/15/2019 2,362,032.72 83,875,000 826,711.43
2/15/2020 2,362,032.72 83,875,000 826,711.43
8/15/2020 2,205,072.55 77,255,000 771,775.39
2/15/2021 2,205,072.55 77,255~000 771,775.39
8/15/2021 2,045,104.15 70,715,000 715,786.45
2/15/2022 2,045,104.15 70,715,000 715,786.45
8/l5i2022 1,876,499.35 63,960,000 656,774.77
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Attachment to Form 8038-G
City of Lubbock. Texas
ElN: 75-6000590
2/15/2023 1,876,499.35 63,960,000 656,774.77
8/15/2023 1,693,422.50 56,975,000 592,697.87
2/15/2024 1,693,422.50 56,975,000 592,697.87
8/15/2024 1,500,309.20 49,745,000 525,108.22
2115/2025 1,500,309.20 49,745,000 525,108.22
8/15/2025 1,274,109.20 42,245,000 445,938.22
2/15/2026 1,274,109.20 42,245,000 445,938.22
8/15/2026 1,038,861.20 34,445,000 363,601.42
2/15/2027 1,038,861.20 34,445,000 363,601.42
8/15/2027 794,263.60 26,335,000 277,992.26
2/15/2028 794,263.60 26,335,000 277,992.26
8/15/2028 539,864.00 17,900,000 188,952.40
2/15/2029 539,864.00 17,900,000 188,952.40
8/15/2029 215,210.00 9,125,000 96,323.50
2/15/2030 215,210.00 9,1251000 96,323.50
The Certificates of Obligation maturing on or after February 15, 2020 are subject to optional
redemption on February 15, 2019 or any date thereafter.
Further, prior to February 15, 2019, the Certificates of Obligation are subject to redemption prior
to matwity at the option of the City of Lubbock. Texas, in whole or in part, on or after the
occurrence of an Extraordinary Event. "Extraordinary Event" mearuii for these pUtpOses, any
change to Sections 54AA or 6431 of the Internal Revenue Code of 1986, as emended, pursuant
to which the expected credit smounts to be ,equested, as reflected in the chart ahove, are reduced
or eliminated.
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"J J V ,. • u V \.J SENDER· cot,•r>LET[ THr, ~r-cnoN Ct1"'Pti'n 'HIS ,5( //{_j/jrJ'i'''sl\l/71C', •. Comple1e n.ms 1, 2, end>S.AlloCM'lplele , Item 4 If Re$blCl8d Oeflvery It~ • ~ yoUr"Mt'N anci addl'el!» on the~ 110 that WO CIIII rat\n'lc\he,•card' to you, , • t\ltach thls ctlr.d to the badk of the mallp!eee, or on the Jnmt if space pegnl\'$. I.JISlni:I Ul!Ut!Jf lnlatml lt"""fflUe Service Ogdai, VT 84!01 ........... , . ' X B. ~ 'by ( .Prtntod ,,.,_, 'I C. 0... ·(If ~ O. h4tt/Ntily~~f:orn!tmnt? 0 '!'M trVEs. enlff ~tdl1me'~ D ~ Ce,p..~ 0 Alltum.Aacelpf b' ~ oc.o.o. -4. AalrfdadOe!IWMy?/EdntFoeJ O <res t ----2. M!ca~blr (118/ldlll'~-.vbl~ 7002 08bD 0003 S311 b9b1 PS Form 3811, Fetiruary 2004 .$ _. • ...,..,.a, 1---------1~== 1------1,~I!•-~ 1-.i~~ 1-----,'t;::-111 .-.,,i C C OI [p r II'"' C C C C CJ C Cl Cl UJ l\;lJ (Po1W14. ,~ta -ilSVd) Q!)¾Ut , fil ~ ~ wv.1BJJ o.:t~-"'3\f sn,1&ns l,J k-' ~ p11l.11J.SPO.L 'lt?OllqlTI JO·il!::l· ~ k-' I t~ '1•1."0'd ·b•· . ·, 'J :, '(, .. ,,, .,_ .'-.. ~I /1 ,·: -)',,jj,IOQ,l 1dl3:J3U 71\lll\l 0:ll:llJ.tl38 ,:io,"1;511'-• ... -;,.1 s·n a-D"" JI JI g: ::; J '
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Vinson&Elkins
stallWt H, Gel'd98 SG&rdesOvelaw.oom
Tai 713. 758-451(1 flllll' 713.61.5..5503
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
7002 0860 0003 5311 6985
District Director
Internal Revenue Service
Ogden, UT 84201
March 51 20IO
Re: $8.840,000 City of Lubbock, Texas Genera) Obligation Bonds, Seri.es 201 OA
Dear Sic:
Enclosed please find an originally executed Form 803'8-0 (Information Return for
Tax-Exempt Governmental Obligations) for the above-captioned bond issue.
Please acknowledge receipt of the Form 8038-G by stamping and,retuming the copy
of the Form 8038-G attached to the self-addressed, postage-paid eovelQPe thet. we hsve
provided.
cc: Meagan Hom
Terri Lambert
Leslie Morgan
V1n8on Br Elldrm UP Anomep Ill Law
Au$/lri Beijing Callas D.ml l-lolJStOri lor10Dn
Moscow NewYorll Shangha! TokVo Washington
Very truly yours,,
M»t ~
Steven H. Gerdes
2601 Via Fortuna, Su!ID 100
AWIPI. TX 18746-7568
Tel 512.542-8400 Fa 512.542.8612 www.w1aw.C0111
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... Ul II) "° IQ O"" IT" -D ..a I.IS !Jc~L;il S,!1y,1',1 CERTIFIED MAIL RECEIPT (OLJ/l'l't,r/,: r,1:,,1 On1v r,,,, /11'111,,,,-, Ci'1 ,•1,1~11: P,r,1•11h0d) .-=i ,-::i • $,.~9.000 City 1,r L11bback. 'Tcau ,.:i iri Cit'lli:ffll Obli!Jlli11n 5olK!f, ~ U'J Scn\'S l(}IOA lTI 1"11 0 0 Cl CJ C 0 C p J] ..!fl IC(J l(IJ 0 0 ru oJ •I 0 C; ~-r,. r-Po1111ga ..,_ti _____ --1 CettilWJ FM l'------1 AJ'IW1I lla,1elpl .... lEab'Mj'n,ri~i-------1 RlilltlclWl Olll'!f'IIT'-I !\Eiobwllp•l'.~ 1-------'I TOClll~&.f91!1-fi: e . _ _ _____ Dif,Uict [)i!C)(or ltfd.lia.. lnleJU Rewi:1111C s«wtec ,rl'Ohtk . -UT 1-UOl ---·-·--•-•.-•··· ()gJen. Ch)\---ztf'•f -• Complete Items 1. 2. aid 3. Also c:o,nplete Item 4 it Rsstrt~ OeOverv 18 dllislffld. •Agent •Addrel-• Print )iour rrame end addroett (lfl hi~ so that we-can retum l:he caid to ~· • Attach thls-catd to -the back of the mellptece, or on tM front if space permits, IC. Cl!rtll or Ovl1>IW)' D1sttic1 0.ra:lor l111emul RC't'Cllu" St-rvk..: Ogdeo, U'J" 84201 D. 111 ~ .-k:111191!1~11...-n! floll:J 11Ern 1? • Yos 11 Ym. O'f'IW do'INOIY ~ txik:1r. • No •• ~:OQl!wry? (81ra Fe(IJ '• Yee ------------------------7002 08b0 0003 5311 6985 PS Form 3811, F9blualy 2004 ,~1 ~ ~...J _____ __ n n n n r, r, .. t n
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Vinson&Elkins
Steven H, Gardea SGerd8s@velea"".com
Tai 713.758.461e Fu 713.815.5503
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
7002 0860 0003 5311 6978
District Director
Internal Revenue Service
Ogden, UT 84201
March 5, 2010
Re: $15,320,000 City of Lubbock, Texas General Ob1igation Bonds, Taxable
Series 20 l OB (Build America Bonds -Direct Payment)
Dear Sir:
Enclosed please find an originally executed Fonn 803S-G (lnfonnation Return for
Tax~Exempt Governmental Obligations) for the above-captioned bond issue.
Please acknowledge receipt of the Fonn 8038~0 by stamping and returning the co_py
of the Fonn 8038,.G attached to the self-addressed, postage-paid envelope that we have
provided.
cc: Meagan Hom
Terri Lambert
Leslie Morgan
Vlrwon 6 ElldNI UP Attorneys 81 LIIW
Austin ee~-mg Da/185 Dubai Hous101'1 London
Moscow New Yor11 Shanghai Tolqo WashlngfOO
Very tru1y yours.
~~
2801 v1a For1una, SUiia 100
Austtn, TX 7874&-ni68
T8J 512.542,8400 Fa 512,!>42.8612 -.val8w.GOIII
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,_ 8038-G
(lqv ~ 2000,
0...-,,,,..'n<llk'lluAKy -
Information Return for Tax.£.xempt Governmental Dtiltgation1 • Ullderlntarr,a.J Ra-i111n Code 1IMl\ll)TI 149(11') • ... Soflpll"!lfl '-ttudlon11.
Cwtk:111: 11 IIN i$w;.I ~ if U/'ltklr $100,000, use Fc.m S,3JB...GC.
Part Re n Authori
1 tta.,annam•
ff Amended. , check ra •
2 1uucr-.,~l'dilnllflcatlo~
Ci ofLubbock Tex.s 75-.000590
l NllffllmMd$trff( o,?:O,OO.Uml\lli&11Dldefi""""'klli"91~1)
P.O. Box 2000
11 C4!\lowrl,0tll0$folhv,.llltt9,l!fflfl!Pcode t o.lectluue
,.Ll"ub~boc1=::-T:ex:!i"'as'-7""9""45e,7:.....,, _________________ +'i'Fees; 4. 2010
-7 Nemedi-...
General Obli ·on Bon Tax.able Seri 2010B Build America Bonds~ ·rect P:
t Kt!M llnd tille 0J c1li¢lif or regal ~ whom lllt !R$ mty(all for m:.i-.111Mnatior!
And Burcha CbiefF' cial Officer
Part of lslue check ble oxf and enter the Issue e n$U1JCH0rl& emd attach sche
11 0Eduaalion ............. ,., ......... , ........••......•.................... , .. ,_,_11 ______ _
12 0 Heilllh end hO!lpilal. .. , , , ..•..•...•. ,. ,. ........ ,. ., .. , ., , ., •.. , .• ,, , , , , ,. , ,. . ~f"'-+-------
13 0 TrnRllPOrtatian , .• , . , .•. , •.••.• , , •.• , , •.••. , •• , , ••.•••• , .. , •• , • , , , , ... , , • , , • • r.'1 :-t------
14 0 PI.Jbficsafety., •.. ,.,., .••••• , •..• , , , , ., .... , ••..... ,,.,., .•• ,, .•.••••• ,.. 1
15 0 Environm1111t(lnc:fUdlngsaweg,ebonds), .. ,. , , .• , , , ,.,,,.,,., ••. , , , ,, • , . , •.••• , , , ,.
1ft OH.ouslng ...•....•.......••...... ,, ...• ,,., .•.• ,,, ••... , •..••••••.•.•••..•• ,
17 0 Ul!litlos,. ,, .•• , .•.......•. , .. , ,, , , ...• ,, .....•••••.••.••••...•.••..••...•..
1e {xl Otfter. Oesc:rlb& • ·auiJd Amerjca Bond {ru1yment ontion)
19 ff obligations are TANs or RANs. c.hecl. box • 0 Jf obligations ere-BAN:I, cheek. t,.w. ••• , • , .,. D
20 HQbi!gationsal"9in !he form of alw$0or~lsale, ~box . , ...•• , . , , . , , , . , •
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17 ..
Part IR Offeri lion of Obit ations. Complete for the entt're Issue for "'fflCh this form ls~n filed, .. ,_ --· 21 2/15/2-030 $ 15320000 I 0 000 14.Sl
Par!IV UH$ of Proceeds of Bond Issue lncludi
2.2 Proceed&usedforaccn1edintefe$t.. "'',., .... ' .. ' ' ... '.' ....... ',' ..... ' ..... .
23 l'S&L,e price of 8fltif1JI iluoB {errtu' amount from line 21, w\111111 {bi) .•.....•••.••..
24 Proceeds used fat bend ISSWJnCE o:::isls fil"lcludinQ unda'writsra' dl&ooLmt}
25 Pl'OO!lla:ls used tor crediil entwncerftenl ••.••••••. , .... , .....•• , • , •
a Proceeds 1'l~!ed to INSCUISbly requited l'l'l5eMJ or 1epl,Qcemant fund .•
27 Fnx:e,eds U38:1 Ir! CUl11Jl1U)' Mf1uld prior la~, ........ , .. ,, ...... .
28 Procaed::5 used ID BJ:MJIIC& refund prior is.Rue:i 21
18 Totsl(eddllnE!:lll24thl'01Jgh28) .....•.••............•.••.•.. ,, ••• , .....•••.•.•..
30 Norn1tftm · l)f(lceeds of the lssue si,Jhtract lme 29 f.rom lim.t 23: and enter amaurrt here ...... , •
3.6413 %
31 En!er the remaining weighted avnge maturity of lhe borlds to be oorn:<1ny refunded •••••.. , .. , "' ------~""'""'.=
32 Enter 11\6 rnrrt3inlng Wlii9f1te::I e'!arage maturity of Iha bonds ta be advarw! rM.l.nded •..•...•. , , • ------¥""=•~•
3:t Enter lh11 last daU!. oo which lhe refunded bends Will tie caffed ......•..•.•.•....• , •• , .••.. • ______________ _
34 Em.I( lhe dahwsl the refunded bonds war• Issued•
I Part V1 I Miscellaneous
35 Enter the al'flOUrtt of lhemte\!!Jlume ~il el!oe31.ed lo 1ml ts:SUe under sectiM 141(b}(6) •••..
36a EnlfF h: amGl/ltl cl gUlil'il ~ kMSe:I Ol lO be !nl,esta:f 111 i!i Quaralluild J111!!!i11TW!nt tonlfa:( '688 jnslnlcfions} • • • • 38a
b Enle>' ins nnal m.ahllity dale of ttie ~r3rdeed irwEStmsnt cqntrad • _________ _
37 ~bncirg£aPl'Oe8ro$a!'i1Jlllssuelhal6191abeLIS&'llomalr.ebil'l$toQ!ha'~enlalUl\h ••.. ,...... 1 -...I (Oi
b If 1'°1!S 1~8 ID II loan made from IJ,e prai;eedf; I'll another i--emmpt !MUa, check bQx • 0111'1l1 enter the\-"-.Sl.-.-o"Cf"::th_e __ .J2.1 -• _____________________ and trie da:t. oflllEI l:&.IU8•-----~
JR It the iuusr has dESig11$81d the lssue ur.ner ser;;tfon 2tl5(b}f3){B1~}(111) {small 1$.SLRI" s:ception), rl!Gdc to: . , ....... , , . • n
39 Jf the iSJue:r lias eletted kl pay a penalty~ IM.i of arbib-age rebale, i:;he,;k ix.. ... , . , ..... , ..•... , ...... , .... • 0
40 !f !he issuer he idenlifled Utedge, cheek box . .. . ........ , , . ,, , ......... •
Sign
Hare
l.hxfur~atp,~1~:hMlhll•,evxami<™llt,,$~arid~nr~11,~""4S1a1<1m~-:o\Mbatofmy~ledgeancwiiet, "";m•Meomplfllli! Andy Burcham • ~L'." 2.04/2010 Chief Financial Officer
Sil}nalvl'\' o!i'l 's e..thcn:ed "'Pr,;,wnt&!i~ Ollie T or Ml!'lr 8™f Ilk
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Attachment to FoFm 8038-G
City of Lubbock, Texas
Arrachment to Form 8038-G
City of Lubbock, Teras
EIN: 75-6000590
General Obligation Bonds, Taxable Serles 2010B (Build A,m.erica Bonds -Dinct Payment)
E.l.N. 75-6000590
Part II: Type of luue
The Bonds are issued in the amount of $15,320..000 to finance other purposes. Such other
purposes in this case include the financing of various public improvements and other public
purposes.
Fixed Rate Bond .. Debt Senlce Schedule
2/15/2011 866,888.29 15,320,000 303,410.92
8/15/2011 420,592. 7_0 15,320,000 147,207.44
2/15/2012 420,592.70 15.,320,000 147,207.44
8/15'2012 420,592.70 15,320,000 147,207.44
2/15/2013 420,592.70 15,320,000 147,207.44
8/15/2013 420,592.70 15.320,000 147,207.44
2/15/2014 420,592.70 15,320,000 141 ;i.rn .44
8/15/2014 420,592.70 15,320,000 147,207.44
2/15/2015 420,592.70 15,320,000 147,207.44
8/15/2015 420,592.70 15,320,000 147,207.44
2/15/2016 420,592.70 15,320,000 147,207.44
8/15fl016 420,592.70 15,320,000 147,207.44
2/15fl017 420,592.70 15,320,000 147,207.44
8/15/2017 420,592.70 15,320,000 147,207.44
2/15/2018 420,592.70 15,320.000 147,207.44
8/15/2018 399,382.15 14.)65,000 139,783.75
2/15/2019 399,382.15 14,365,000 139,783.75
8/15/2019 377,012.80 13,380,000 131,954.48
2/15/2020 377,012.80 13,380,000 131,954.48
8/15/2020 352,947.15 12,365,000 123,531.50
2/15/2021 352,947.15 12,365,000 123,531.50
8/15/2021 327,386.45 11,320,000 114,585.26
2/15/2022 327,386.45 11,320,000 114,585.26
8/15/2022 300,429.65 10,240,000 105,150.38
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Att,JcJ,,,,.,,t to Fonn 8038-G
CT!Y a/ L,,bbocl<, Te:ras
EIN: 75-{1000590
211512023 300,429.65 10,1411,000 JOS,IS0.38
8/IS/2023 271,074.45 9,120,000 94,876.(16
2l1S/2024 271,074.45 9,120,000 94,1!76.06
8/lS/2024 240,224.40 7,%5,000 84,078.54
211512025 2411,224.411 7,965,000 84,078.54
8!1S1202S 204,032.411 6,765,000 71,4!1.34
2/lS/2026 204,032.411 6,7M,000 71,411.34
8/!S/2026 166,332.411 5,SIS,000 58,216.34
2/15/2027 166,332.411 S,515,000 SS,216.34
8/1512027 127,124.40 4;215-,000 44,49354
211512028 127,124.40 4,215,000 44,49354
8/1512028 86,408.411 2,865,000 30,242.94
211512029 86,408.411 2,865,000 30,242.94
8/1512029 44,033.60 1,460,000 15,411.76
2/IS/2030 44,033.60 1,460,000 IS,4ll.76
The Bonds maturing on or ofter February 15, 2020 an, subject to optional n,dernption on
February IS, 2019 or ony date thereafter.
Further, prior to Februa,y IS, 2019, the Bonds are subje,;:t to redemption prior to maturity at the
option of the City of Lubbock, Te,w, in whole or in part, on or after the oa:um:nce of 1111
&lraordinary Event, "Extraordinmy Event'' means, for these purposes, any change to Soct:ians
54AA or 6431 of the Internal Revenue Code of 1986, as IDllendm, pum,ant to which the
expected credit arnounls to be requested, as reflected in the olwt above, ""' .,..fiJCl'ti or
elimio.ated.
2
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...J ,J • V J t W ~ltoal81,2.Md&Ala()~ IUlm 4JJ1i'laslncled tlellvery Is dealr9CI.. • ~nt your name and -addrel.Js on the rvvl!Jlle so that we can 111tum 1he card to you. • Aftac,~ thla C8ild to the flllcik ot U-te mailplec8, mon the from If~~. i,u,'lneI Ulla.'tllr ln1a1tnl Rn ll'!IU c Service Ogd~n. l1T 84201 ... -••• n.• • V V ,:O','J-'!.L 1• ff-ii'~ ::.,L( T,•J,'.; ru Di-!...1~17,r\ A.~ X J a. ~ tiy ( Mllld /llama) I c. osto .:rt °'811V$Y 0.1$dillMl!ya:klllmtllffilrant"""1'1lternt7 •Yes tt YE$, intw delfv9tY alitla blbw: tl No : 2. Mklle~ ma,:m,,-Jtun~llbeO 7DD2 •8bD 0003 53~1 b~76 I P'S Fom1 3811, Februaty 2004 u ..
,..
RECEIPT AND CERTIFICAlE OF DELIVERY
OF PA YING/ AGENT REGISTRAR
The undersigned, authorized representative of The Bank of New York Mellon Trust
Company, N .A., as Paying Agent/Registrar and Escrow Agent, hereby makes the following
acknowledgments and certifications in connection with the issuance and delivery of $8,840,000
principal amount of City of Lubbock, Texas, General Obligation Bonds, Series 2010A (the
.... "Bonds"). Capitalized terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Ordinance authorizing the issuance then:of adopted by the City Council of
the City of Lubbock, Texas (the "Issuer"). The undersigned hereby:
....
1. Acknowledges receipt of S9,090A61.17 from First Southwest Company. (the
''Underwriter''), representing the par amount of the Bonds of $8,840,000 plus a reoffering
premium ofS295,967.60 minus an underwriting discount of $45,506.43.
2. Acknowledges and certifies the application of the ammmt described in paragraph
1 hereof as required by and in accordance with the Closing Instructions attached hereto as
Exlnbit A prepared by RBC Capital Marlcets, the Issuer's Financial Advisor.
3. Certifies that the Initial Bond for the Bonds, registered by the Comptroller of
Public Accounts of the State of Texas and representing the aggregate principal amount of the
Bonds, was delivered to or upon order of the Underwriter and was duly canceled this date upon
delivery of the definitive Bonds to the Underwriter through The Depository Trust Company.
DATED: Febnwy 4, 2010.
253693v. I LUB200n10I6
THE BANK OF NEW YORK. MELLON . TRUST
COMPANY, N.A.
M Paying Agent/Registrar and Escrow Agent
IU&v By:
Title: Senion\ssociate
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Exhibit A
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253693v.1 LUB200n1016
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•• RBC Capital Markets•
DELIVERY, SE'JTLEMENT & CLOSING PROCEDURES
fo,
Cii:y o!Lubbock, Te:s;u (the .. Cii:y")
$8,840,000 General Obligation Bonde, Setiee 201flA. &
$15,320,000 General Obligarlon Bonde, Tu:able Series 2010B (Build America Bonda -Direcr: Payment)
Bonde Dated! Date of Delivery
Settlement Date: Thu:nday, February 4, 2010
The closing on che abovl:-refercna:d bonds (che "Bondsj will be held on Thunday, February 4, 2010, at 10:00 A.M.
(die ~aosing") via releconferena: by Vinson&. Elkins LLP., ACtn! Julie Partain (214) 220-7904.
Those p:uties apecred ro psrticipare include; -Tide/Bole f&mpany lllilll< -Mr. Andy Burcham Chief Fmanci,,I Officer Cicy of Lubbock (BOIS) 775-2149 aburcliam@myiubbock.us
Ms.. Chelsea Pi~ Senior Financial Anai}'lt Cicy of Lubbock (BOIS) 775-2985 cpigg@mylubbock.us
Mr. Matt Boles Financial Advisor RBC Capi.ttl Mackm (214) 989-1672 maCLboles@rbccm.com
Mr. Derek Honea Financial Advisor RBC Capi.ttl Mackm (214) 989-1671 derek.honea@i:bcem.oom
Mr. Pete Scare Underwrirer Fm11:Soudi.west (214) 953-4040 pea:r.siare@fin!N'.com
Mr. David Medanich Underwriter FirstSouthwcst (81T) ll2-9710 daw:Lmedanich@firscsw.com
Mr.Jason Hughes Underwriter FirstSouthwcsc (214) 953-8707 jason.hughes@fincsw.com
Ms. Julie Parciin Bond Counsel VIIISOn&.FJkinsLLP. (214) 220-7904 jpartain@veJaw.com
Ms. Pat Blue Paying Agent The Bank ofNC\YYork (214)468-6511 paaicia.blud@bnymellon.com
SOl!RCBS AND USES QP'.PJJNDS
Sruarsea of Fund@ 51:tia~J!.l& Si::tisa :ml!.llli L,ml
Principgl Amount of die Bonds s 8,840,000.00 ' 15,320,00J.OO ' 24,160,000.00
Net Original 1"1le Premium on the Bonds 295967.60 295 %7.60
TowS.U... • 9,135,967.60 • l5,320,000.00 • 24.455,967.60
JIHCanfFnnda
Deposit to Project Fund ' 9,045,000.00 I 15,155,000.00 s 24,200,000.00
Underwricers' Discount 45,506.43 95,049.88 140,556.31
Cosl!I oflssU2nce 45461.17 69950.12 115411.29
Total Usee ' 9,135,967.60 ' 15.320,000.00 ' 24,455,967.60
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CilJI of l.Mbb<.d, T~ -GO
P,..1
l. Dli Tbonday, Febrwny-4, 2010, F..n ~west (the •t:~ will ...in-trr1.11Sfet to Tote Bw ofNt1111 Yock, .ABA #OZI000018,
GI.A 211-065, TAS 4.n!!77, Jlr: Ciry of Lubbock GO, Atm; Pal Bl'"" (1.14) 468--15511, W ffl\OlUlt&m:I below-. 'The Um::ktsl.ittt will
oil r:be. clo5mg room with.., Feclazl Wrre Bdnmce Nlll'!lhel' and ~ cf wtli wire ae 500JJ M pou.ihle on lbunday, Fehnw:y 4, 2010.
Sedu2t10A kw2il:10B l:IWll
Proo:,:& af:Bond, $ 9,135,967.60 i 1S,.l20,000.00 3 24,45.5,'.l67.60
L:sl: Under:rrirm1' Discount 45 S06A3 95.()49.88 140 556.31
T-oml W~.AmuaDtfrom Uadctwritc:E: !',22<,9'0J2 ~• _24,3=1~~~4l~U~'I
1. On Thund:!.y, Febrwiq 4, 2010, The Bank of New York will 'Witt tmmfcr~,OIS8,996.7Su a deposit t.o ihe Sai.=s 2010A Project and
Cod~ of lissuance Funds m .SD.:!: Stn::et Bsnl and Trust Compm.y, ~ MA, AP.A #0110000-ZS, BNF :::: J\1m: TaPool
A/C#67573TT4, RFB = Lua:::i.:m JO ifrn~3. OBI= Pool #449, Atcaurtt #,1552100037, Puticipant Name: Oiy of Lubbock, TX..
Dqx,si.t ID Proje.ttFund:
Depoiil. to eo~ orl$Wllil;ePWl-d:
Total Depo:,eit cu Ciry WE 5aic:!I 2.8:IOA:-
'
'
Sffl2010A
l),00,000.00
ZJ9%.78
2. Ou Thu.Jlidar,Fcbzum:y 4, 2010, The Ilw ofNl"W Y-Oft will "wii:r tr.u:nfu: S15,18,9,,118.16 u ad~ ro the~ 20iOB Proj~ 1U1d
Costs of l118UW'.1~ J'unds 10 S::au:c Slreet Bink and TIIJ!lt Compmy, 803Wll, MA, ABA #011000028, 0NF Ame TaPooJ
A/C#6757l774, RFB = Loo.tioo ID #77915J, om = Pool #449, Ao:ouot #155210~9. Puticipant Name: City ofL.ibbock. TX
Depoiir. w ~'Fund:
O"P"'lllt l-0 Co1-t en luwcc:e Fund:
Tami.~ r.o 0.,, lot~ 2Dla.R:
' •
Serie, 2010B
15-,155,000,00
3l118.16
3. On 'Ii:rondty, Feb-rtrll'f 4, 2010., The B-tnk of No!'lll' York will wire transfer $28,92.US m U.S. 8mk, Minneapolis, MN, Al\A
#O§l1000022, AO'.'A'.lw].r Nam,,: R.BC Capiw.l Mad.et\ A/C #1-lll2-3009.72ll8,. FNOOOt 7274, Aon. Dad< Honea (2.14) 9B.9-1671 for rhl=
following parpcse.
4. On 'Thutsday, February 4, 2£110, The Batlk cl New York will wu.._ ~ P,l70.DO to JP Morga.a 0.-Bank, N.A., ABA
#021l'IOOCl21, Auoum Name. VWOD &. E&lru; LLP. Domestic Account, Aw:Juot #001-0l687'9S7, Ref. lavoici:: #2S3279JO, llillirg
Artumcy, Beli Bt-ooks, for tht following ~·
"-""·'"'
5. On~. Fehroary 4,2010, The~ ofNe;r YorJn•ill~ $1,000.00 for thepaymmtof!Ce!l liruxibclaw.
Pmrv.ttrl AMu:al Paying Agem F11:e • Sem, 2010A
Pmratrd Amul>U Paying Agaiz Fi.:e • Si::ria 20106
T<Jb!Payio,g AfJ&Dt Fees:
RETURN OF GOOD FAITH CfffiCK
' sao.oo 500.00
I !JI00.00
8 YJ;15,41L29
'Upon t1oiiina, !U RBC Capiw.l MiuW will ~f =-via ~ lllBil W Go.xi Faiih Depollt Lil il'.l ~ti-ion ro
""""""'-
r
....
No Text
No Text
....
RECEIPT AND CERTIFICATE OF DELIVERY
OF PA YING/AGENT REGISTRAR
The lllldersigned, authoriud representative of The Bank of New York Mellon Trust
Company, N .A., as Paying Agent/Registrar and Escrow Agent, hereby make., the following
acknowledgments and certifications in connection with the issuance and delivery of $15,320,000
principal amount of City of Lubbock, Texas, Geoenl Obligation Bonds, Taxable Series 2010B
(Build America Bonds -Direct Payment) (the 5113onds''). CapitaJiz.ed terms used herein and not
otherwise defined shall have the meaning-s assigned thereto in the Ordinance authorizing the
issuance thereof adopted by the City Council of the City of Lubbock, Texas (the ".Issuer'"). The
undersigned hereby:
1. Acknowledges receipt of $15,224,950.12 from First Southwest Company. (the
0 Underwriter"), representing the par amount of the Bonds of SlS,320,000 minus an underwriting
discount of $95,049.88.
2. Acknowledges and certifies the application of the amount described in paragraph
I hereof as required by and in accordance with the Closing Instructions attached hereto as
Exhibit A prepared by RBC Capital Markets, the Issuer's Financial Advisor.
3. Certifies that the Initial Bond for the Bonds, registered by the Comptroller of
Public Accounts of the State of Texas and representing the aggregate principal amount of the
Bonds, was delivered to or upon order of the Underwriter and was duly canceled this date upon
delivery of the definitive Bonds to the Underwriter through The Depository Trust Company.
DATED: February 4, 2010.
253700v. I LUB200/71016
THE BANK OF NEW YORK MELWN TRUST
COMPANY, N.A.
as Paying Agent/Registrar and Escrow Agent
By:
Title: . • 8eniOf Associate
,,.
,.,
,.
"')
Exhibit A
)
)
..,
253700v. I LUB2001710J6
,..
,,.
,.-
,..
'
'
'
•• RBC Capital Markets•
DELIVERY, SETTLEMENT & CLOSING PROCEDURES ,~
City of Lu~ Tca11 (the "City")
18,840,000 General Obligation Bonda, Series 2010A &
St.5,.U0,000 General Obligation Bonds, Ta:able Series 2010B (Build Amerii::a Bonds-Direct Payment)
Bonds Dated: Date of Delivery
Sen!.ement Dille: Thursday, February 4, 2010
The closing on che above-referenced bonds (che "Bonds") will be held on Thursday, February 4, 2010, at 10:00 A.M.
(che lt0osing'1 via tcleconfcrence by Vinson & EJkins LLP., Ami: Juli£ Partain (214) 220-7904.
Those parties apecced to participa.tt include:
"""' Tidc:/Bolt Compaw ..... -Mr. Andy Burcham ChiefFinancial Officer Cicy of Lubbock (806) 775-2149 aburcluun@mylubboek.us
Ms. Chelsea Pigg Senior Financial Analyst Gey of Lubbock (806) nS-2985 cpigg@mylubbock..lll
Mr. Man: Boles Flllill1CW Advisor RBC Capital Markets (l14) 989-1672 matt.boles@rbcan.com
Mr. Oetek Honea Firumcial AdVUOr RBC Capital Markea (l14) 989-1671 derek.honea@rbccm.com
Mr. Pete Stare Underwticer FintSouchwe.'!t (l14) 953-4040 peter.stare@finaw.com
Mr. David Medanich Undenwritcr FintSouthwcst (817) 332-9710 daYit:l.medanich@fin1SW.com
Mr. Jason Hughes Under;,,ritcr FiruSouthwcst (l14) 953-8707 jason.hll@hes@6nmv.com
Ms. Julie Parcain Bond C.Ouosel Vinson & Elkins LLP. (lt 4) 220-7904 jpan:ain@,re.law.com
Ms. Pat Blue Paying Agent The Bank of New YOik (ll4) 468-6511 patricia.blue@bnymellon.com
SOJ!RCES AND USES OF FUNDS
SpprceH of P:ondH Sm:iu 2i!JIIA Sm:ics20.l!lD l:.ml
Principal Amount of che Bonds ' 8,840,00).00 ' 15)20,00J.OO ' 24,160,oo:>.OO
Net Original Issue Premium on the Bonds 295967.60 295967.60
TIJCll. Souroea • 911351967.60 • 15,320,000.00 • 24,455,967.60
Uses of Puods
Deposit to Project Fund ' 9,045,00).00 ' 15,155,00J.OO ' 24,200,00).00
Underwriren' Discount 45,506.43 95,049.88 140,556.31
Cosa oflssuance 45461.17 69950.12 115411.29
Total Uses • 911351967.60 • 15aooo,oo • 24,455,967.60
,..
.-
,. ,_
'
'
'
'
RECEIPT OF FUNDS
Cityoflwbbock, Texas~GO
Pagel
1. On Thursday, February 4, 2010, Pint Southwest (the "Underwriter") will wire transfer to The Bank of New York, ABA #021000018,
GLA 211-065, TAS 437877, Re: Ory of Lubbock GO, ActJ1: Pat Blue (214) 468-6511, the amount listed below. The Underw:citcr will
call the dosing room with a Federal Wire Reference Number and time of such wire as soon as possible on Thursday, February 4, 2010.
ScrietWOA
Proceeds of Bonds S 9,135,967.60 ' Less: Underwriters' Discount 45 506.43
To1al Wire Amount &om Undetwt:iter. $ 9,090,461.17 •
DISBITBSBMENI Of fUNPS
Seriea2010B
15,320,000.00
95049.88
15,224,950.12
' •
l:<W!I
24,455,967.60
140 556.31
24,315,411.29
1. On Thursday, February 4, 2010, The Bank of New York will wire rmnsfer S9,068,996.78 as a deposit to the Seties 2010A Project and
Costs of Issuance Funds to Seate Street Bank and Trust Company, Boston, MA, ABA #011000028, BNP = A= TexPool
A/C#67573774, RFB = Location ID #77963, OBI = Pool #449, Account #1552100037, Participant Name: Ory of Lubbock, TX.
Deposit to Project Fund: ' Deposit to Cost oflssuance Fund:
To1al Depoei1 to Chy for Series 2010A: •
Seric120lOA
9,045,000.00
23996.78
9,068,996.78
2. On Thursday, February 4, 2010, The Bank of New York. will wire transfer $15,188,118.16 1111 a deposit to the Series 2010B Project and
Com of Issuance Funds to State Street Bank and Trust Company, Boston, MA, ABA #011000028, BNF = Arm: TexPool
A/C#67573774, RFB = Location ID #TI963, OBI = Pool #449, Account #1552100039, Participant Name: Ory of Lubbock, TX.
Deposit to Project Fund: ' Deposit to Cost of Issuance Fund:
To19.I Depoei1 to Chy for Series 20108: •
Ss;ricn 20108
15,155,000.00
33118.16
15,188,118.16
3. On Thursday, February 4, 2010, 'The Bank of New York will wire transfer S28,926.35 to U.S. BanJc, Minneapolis, MN, ABA
#091000022, Account Name: RBC Capical Marken, A/C #1-602-300CJ-7208, FN00017274, Ann. Derek Honea (214) 989-1671 for the
foJ.lowing purpose.
RBC Capital Markels' Fee & Rei.m.bunable &penees: $ 28,926.35
4. On Thursday, February 4, 2010, 1be Bank of New York will wire tnnsfer S28,370.00 to JP Moi:gan Clwe Bank, N.A., ABA
#021000021, Account Name: V1rumn & Elkim LL.P. Domestic Account, Account #001-01687987, Ref. Invoice #25327930, Billing
Arromey: Ben Brooks, for the following purpO$oC.
Vinson & Elkins LL P. Fee & RcimbUt8Bhle EJ::pensea: S 28,.170.00
5. On Thursday, February 4, 2010, The Bank of New York will retain Sl,000.00 for the payment of fees lisced below.
Prornted Annlllll Paying .Agem: Fee -Seties 2010A
Prornced Annlllll Paying Agent Fee -Series 201 OB
Total Paying Agent Feeri:
Total Disbursement of Funds:
REJVRN Of GOOD FAITH CfffiCI
' •
•
500.00
500.00
1,000.00
24.J!5z411.29
Upon closing. the RBC Capital Mukeu will immediately rerum via overnight mail the Good Faich Deposit in iu possession to
Fm;tSouthwcst.
,..
,..
,.
,.
, . ....
No Text
No Text
RECEIPT AND CERTIFICATE OF DELNERY
OF PA YING/ AGENT REGISTRAR
The undersigned, authorized representative of The Bank of New York Mellon Trust
Company, N.A., as Paying Agent/Registrar, hereby makes the following acknowledgments and
certifications in connection with the issuance and delivery of $48,955,000 principal amount of
City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of
Obligation, Series 201 0A (the "Certificates"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned thereto in the Ordinance authorizing the issuance
thereof adopted by the City Council of the City of Lubbock, Texas (the "Issuer"). The
undersigned hereby:
1. Acknowledges receipt of $51,894,822.24 from First Southwest Company (the
"Purchaser"), representing the par amount of the Certificates of $48,955,000 plus a reoffering
premium of $3,173,768.25, minus an undervniting discount of $233,946.01.
2. Acknowledges and certifies the application of amounts described in paragraph 1
hereof as required by and in accordance with the Closing Instructions attached hereto as
Exhibit A prepared by RBC Capital Markets, the Issuer's Financial Advisor.
3. Certifies that the Initial Certificate for the Certificates, registered by the
Comptroller of Public Accounts of the State of Texas and representing the aggregate principal
amount of the Certificates, was delivered to or upon order of the Purchaser and was duly
canceled this date upon delivery of the definitive Certificates to the Purchaser through The
Depository Trust Company.
DA TED: February 4, 2010.
LUB200nt0IS
Dallas 253663_1.doc
US 253663v.1
THE BANK OF NEW YORK MELLON TRUST
COMP ANY, N .A.
as Paying Agent/Registrar
ill & l.id By:
Title: SeniorAssociate
,,,.
,.
'
Ll.JB200/'IJOU
Dslla.t 15'.lM.l_l.i:loc
US 2.53663v. l
Exhibit A
,..
...
,..
·-
• •
RBC Capital Markets"
DELIVERY, SE'ITIEMENI' & CLOSING PROCEDURES
Cm
City of Lubbock, Tema (lhe "City")
$48,955,000 Tu: and Warerworb Syerem Swplua Rnlmuc Catifica1e& a!Obliption. Serice 20111A. &
$96,540,000 Tu: and WatetwOl:ks System Swplwi hn:o.ue Cenifkatee of Obligation, Taxahkl Series 2010B
(Build .America Bonds -Direct Payment)
Bonda Dated: Dare of Delivery
Sertlemeat Date: Thunday, February 4, 2010
The closing on die above-referenced certi&::ates (die nCcrti6c=s'? will be held on Thursday, Febru,u-y 4, 2010, at 10:00
A.M. (die "Closing") Yia releconference by Vinson & FJkins LLP~ Ami: Jillie Pam.in (214) 220-7904.
Those pil!ties expecred to participate include: ,_ Tide/Role Compmy = -Mr. Andy Burcham Chief Financial Officer Gty of Lubbock (806) 775-2149 &brudwn@myiubboclt.us
Ms. Oielsea Pigg Senior Financial Anal)'!lt Gry of Lubbock (B06) 775-2985 cpigg@mylubboclLus
Mr. Matt Boles Financial Advisor RBC Capical Markets (214) 989-1672 matt.bolcs@rbcan.com
Mr. Derek Honea Financial Adviaor RBC Capical Matkm (214) 989-1671 daek.honea@rbcan.com
Mr. Pete Satre Underwricer FicnSouchwest (214) 953----4040 pe=.sca:e@.fiI$t!W.com
Mt. David Me.hnich Un~n:r FintSouchwest (817) 332-9710 david.mcd,mich@5naw.com
Mr. Jason Hughc,i Uodawri= FintSo111:hwest (214) 953-6707 jaeon.hughes@firsaw.com
Ms.Jillie Partain Bond Counsel Vmson & Elkins LLP. (214) 220-7904 jpart:ain@velaw.com
Ms. Pat Blue Paying Agent 'The Bank of New Yo.-lr. (214) 468-6511 pa.tricia.bh1e@bnymdlon.com
SOURCES AND USES OF FUNDS
Soou:a off:lm<k Sf:tia2010A Serie!l2IWIB Tu,!
Principal Amount of the Cettificares ' 48,955,000.00 ' 96,s«l,000.00 ' 145,495,000.00
Net Original Is,ue Premium on che Cettificaccs 3173768.25 3173768.25
Total Sources $ 52,128,768.25 • 96,540.000-00 • 148,668,768.25
Uanoffunds
Deposit to Project Fund $ 51,740,980.00 ' 95,657,611.00 ' 147,)')B,.591.00
Undawritem' Discount 233,946.01 591,722.62 825,668.63
Costs of Issuance 153 842.24 290,666.38 444,508.62
Tot111 Uses • 52,128,768.25 ' 96,540,000.00 • 1~668,768.25
...
,.
mcElPT OF FUNDS
City of lubbod:. Tuar * CD
Pag,1
1. On Than.day, r-ebrwey 4, 2010, Fin&uthweat (!he "Und,,,rn:ifft'') will 'll'll't tn.o.sfer ro lhe Bank of New Yorii.. ARA #021000018,
GU 211-065, TAS 437877, Re: Ciry ofl.i.ibbod: CO, Am,: Pu Blue (2.14) -ta-6511, the amount li!mi ~-The Ubderwrite.: will
<=lD the dosing I00lll 'lllilh II Fcdl:cl Win~ Number and time of Neb. wire II!; socn .as p,::m,ihlt on. Thurii,:hy, Ftbnatr 4, 2010.
Sttm ztJ.!16. ~--· l:.ml
Proceeds ofvrtifiote!. i 52,128,768.25 I %,!i40,000.00 I 14S~76&.25
Le!!f.'. Uoderwrl-.rr1' O~t 233946'°1 5111122.62 52.SIGG&.6)
Total. Wire Amount &nm Oi:idt:,rwri~ ' 51,89;4.m24 • 95,"',211.38 • 147 .M,l,099.§:2
DISBUB~aEFUNDS
L On Thutsda.y, Febiwuy 4, Xl1D, The BEik oi New Yorlr: will ffl D'llllSb 161,795",5,44,17 ae a dt:p;iail to tbe Series 2010A P~
and Cost11 of lstuance Pun..-!£ to Scio:~ Bllllk ft Trus: u:impimy, &ium, MA, AM #01100C02S, !\NF= .'\nn: Te:1:Poof
A/C#67~73n4, RFB = L;w;:aPOn ID #rn63,. OBI= Pool #449, J\[Il]IDJ"t #155210000,S, Putidp:in.t Name: City ofLubboc:k, TX.
Smin:WQA
Deposit ro Project Fund: $ 51,740,980.00
D::porit ro Cos,: ofha= F=d: 54,.5§4.17
Tote! Depoe.it to Qty for Sates 201(li\:
2. On~, ~bnwy 4, 2010, The Dank ofNew-Yorkwill wia t12nsicr $95,752,ll8U5 ae j depooir to tbe Sc:cic5 2010B Project and
~ oi U~ Fuoc'.5 w Snue Smet Bwk and T.rui;t Company, Bos=, MA, ABA #011000028, BNF :: Acm: TaPool
A/C#<'!iT57J174,Rfll = LocacionID #T7963, OBJ= Pool #449,ACICQuntFJ5521000Jli, Psm::ipanr Nri:r=: City ~Lubbod:, TX.
Scrin201B
D::po~ to Project Fund: S 95/457,511.00
Depow: to Co.11: of luuaru:e Pun(r !lS.374.55
Total Depos.lt m Ory Car Seriie& 2010B:
3, 0c Thimday, Fd,nrny 4, 2010, n.: Bank. of New Yaril: will wire mnsfer $174,198.65 to U.S. Bank, M'roneapou, MN, AB.A
#091000022, Arroum: :'.'lllll)P, JlBC c.p;w Mimc1t, A/C #t-002-3009-7208.. FN00017Z74,Amt. o.,m H<me1. (21,4) 9E!~-16Tl kr, the
foUowingpurpooe.
114,198.6!'
4, Ort Th.utB<tty, February 4, 2010, Tur Bd af New York will wire inMkr-$119-,.371.25 tn JP Moqtn ChaJe 8.u:ik, K.A., ABA
#021000021, Mcaunt Nam,c: Vll'll'ion & Elldntl LU'.~ Ao:OIJJl'f, Au:aum ~1--01687987, Rd: Invakl: #25"3279~.3, Billing
Atwmey: Ba, Broolu, for the foJJoi:ringpw:po,e..
V'IDIIDD &Elkins LLP. Pee & ~bk l!y,tu...&r IJ 119,,.371.l.S
5. On Thumhy, February 4, 2010, ~ Bank of New Yodi: 'Will retain ,1.000..00 fut rite ["11-ymc::at a£ f=r Ii~ bdw.
Pron.ted Anrraal. Paying .A@,ent Fee: • 5,:rie, 2010A
Proratw Annual Paying Agent F= • .'it:dr:1 201 OB
Total Paying Agt"Ot Peeii:
RETIIRN OF GOOP FAITH CHECJC
1 1,000.00
Upon ~ lhe lIBC Gpiol Miu:k.ro will lmme&.tdr ~ via ov¢rnignt mlW. the Good Faith Deposit .in ~ pouewotl :v
F"""""""'~
,.
,,.
No Text
No Text
RECEIPT AND CERTIFICATE OF DELIVERY
OF PAYING/AGENT REGIS1RAR
The undersigned, authorized representative of The Bank of New York Mellon Trust
Company, N.A., as Paying Agent/Registrar, hereby makes the following acknowledgments and
certifications in connection with the issuance and delivery of $96,450,000 principal amount of
City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of
Obligation, Taxable Series 201 OB (Build America Bonds -Direct Payment) (the "Certificates',.
Capitalized tenns used herein and not otheiwise defined shall have the meanings assigned
thereto in the Ordinance authorizing the issuance thereof adopted by the City Council of the City
of Lubbock, Texas (the "Issuer''). The undersigned hereby:
1. Acknowledges receipt of $95,948,277.38 from First Southwest Company (the
"Purchaser''), representing the par amount of the Certificates of $96,540,000 minus an
underwriting discount of $591,722.62.
2. Acknowledges and certifies the application of amounts described in paragraph 1
hereof as required by and in accordance with the Closing Instructions attached hereto as
Exhibit A prepared by RBC Capital Marlcets, the Issuer's Financial Advisor.
3. Certifies that the Initial Certificate for the Certificates, registered by the
Comptroller of Public Accounts of the State of Texas and representing the aggregate principal
amount of the Certificates, was delivered to or upon order of the Purchaser and was duly
canceled this date upon delivery of the definitive Certificates to the Purchaser through The
Depository Trust Company.
DATED: February 4, 2010.
LUB200171015
Dalles 253656_1.doc
US 253656v.1
THE BANK OF NEW YORK. MELLON TRUST
COMPANY, N.A.
as Paying Agent/Registrar
Ai~ By:
Title: Senior Associate
.,,
LUB200nl015
DallM lll656_J..di;,,;.
US 2536!16v.1
Exhibit A
, ..
'
•• RBC capital Marbts"
DEU\IEBY, SETTLEMENT&; Cl.05ING PROCED\.TBRS
'" City ofLubboclc,. Texm (llhe "Ciry"}
148,HS.000-Ta:1 and WaMrWWkl Sy!lkm Swplw Revenue CemJicalai of Otd.lpdon,, 8crWI :itJtlM. &
~ Ta:a mid Waterwndw System Surplue Reffn!M. Cen:ifi(ll!!t!I Q{Oblipdon. Ta:ahki S.uiee 20108
(Build Ammoa Bor.da-Ditm: ~
Thund..y, F~ 4, .010
The cio.i.ng on~,~~ cmi!ic:m,,. (rhz ~"'; will be hdd QI!. Thunr::l.y, Februuy 4, 2010, u 10:00
A.M. (the "~j vit ~~ by VN01:1 & Ellci:u LI.P., fl.an: Julie Pan:u,, (214) ZZO-7'}0,t
ThJK pmi,c., opcca::d CO panicipn: ind.J:de:
i,..,. Tilk:(Hnh; '4m::wMY ..... -Mr. Andy Burrnllll7 C..hi.l!f Flfblllcial Offia:r Cily of Lnbboc!r: lt:106) 775-2149 ·-Ms. O,eli.,. p;~ ~ Fllla.lCN! ~ Gtyof_lnbhoek I.IDS) 775-2985 i;,igg@myhibbock-v.
Mr.M.o.a:&lcs F~Ad:ri&Ol RBCC..picilMa.,:kmi (?14') \18\1-1672. mll~XI~
Mr, D111ek H,;inq Fl::lo1.llcial.Adrii;oc RBC C..pial M!Uketa !,114) 989-16'il dc:n::k.h~
Mt. Paz. Smr,,. IW""""' I'"lrlllXlu~,t !_'2t4) 953--4-040 ~ SCtn:@fiiw,w.com
Mt.lJavi.d:M~h Un,:!~ Yin!Xludiwqt tm'TJ 33:!.-'1710 ~~.c,;,m
Mr.J&10n.H.,,gl,,c.1 U~1m: Fll'StSouU\111eu (!14) 95.'.J-S707 juon.h~CSW.COtn
Ml.JlmParr.
"'"'""""' a
V,n,o,, &: Ellwu 1.LP. (ltlf) 22<].7@4. j~w..c,:qn.
M&.Pn~ l'loyingAgm,-t The B;tnkofNiwYo:rk (J:14) 468-6511 pttd,cia.blum@bnymel.loo.a,m
SOU1tCES AND USES Qf FJJNJl$
fuwKtO ot:fnnde ~ ...... l&UIA li:cma2010B """' PriDcip:aJ Am:Juct of mw Cftrifi=,,i= I 48,9S5.000.00 I ~.,540,000,00 $ 145,495,000.00
lfet (),:i@ic.al ]$!UC PrcnJ.wn Oll tho Ca!:i!ic:111:::11 Zzlll,;768..25 :11711768.25
Total SoUNti • 52,1!'1768.l! • Sll!r5:!W22:00 • 1;4¥68,768-25
Usu ofFunde
Deposit co Project Fund I 51,140,980.00 ' 95,657,611,00 I 147,~s .. m.oo
Undtn'Da:n' Disc:ollllt 23-),946.0l 591,722.,62: 82S,661!A'.1
Cost! af!s-,w:¢ 1~842..24 290 666.38 ... -TarnlUSeB I sm1m1.21 • 96,S40,000.00 I .......,,.. ...
.,.
,.
,.
,.
,.
,..
City of Lubbock, Tllm~ CO
Pag,;l
1. On 11:n:iI:&dey, Fi:br.i.uy 4, 20-10, FintSouLhwm (the "Underwritd1 will wire tniNft,r ro The Bank of~ Y""k, A.GA #02100001S,.
GlA 211-065, T.A.5 4J7ffTT, A.-:. C.ry ofLubl.xk CO, Ann: P<\t Blue (2H) 468-6511, the $Jl.\mmtfuu:d l.idovi, Toe Cru.bwticcr \llill
call died~ [ClOlll ~th a Peihal \VU'I' H~ro:t Nwnber and lime of !iUclJ win: u llOOn u ~le: on ll=day, f'e!Jmai:r 4, 2010,
Proc:.eed, of Cr.n:ifia.~
le$s: u~· DiSCOlh'Jt
T<1talWireAmoun1.fmmUndcnvri1t:r.
lkci!:i 2010A
' St,12S,768.25 $
233 94t'i.Dt
I !i!z894-J!.22.24 •
DISBURSEMENT OF FUNUI
hm6itlili Told
"-"".00000 $ 148M,B.71S8.25
591 722.62. ~· 95,948,277.38 • 141~..62
L On Thiur.d.11.y, Feb.nw:y 4, 2010, The BDDk of New Yod-..rill 'WVt' ~ $51,795,544.1"? 111 a dcp:,11it to die Series 2010A Pmfe.ct
trld C.Osts of lsw~ee fund, to St::ite Sm::et Bani: and Trust Ct:mpviy, Bo!lton, MA,. AHA #011000028, IlNF = Attn: Tal'ool
~\/C#67573774, RFB "' Locu:l,:xi ID #rn63, OBI= Pool #449, ACC011Dt #1552100036, Panidi;,ant NIIIJ'le: C.cy of Lubbock, TIC.
St1ita20'JOA
Depot.it to Project fond: 5 51,74<1,980.00
Deposit to Cost oflsslW!Oe F,md: ,?4,51S4.17
Tota.I DepOllit to City fm Sn:i.i':a iOtllA: t !il,795,54'1.17
2. On Th=rlay, February 4, 2010, The B::an.k: of New YMI. will Wlrll l!llllllkr ~5,752,.985.55 liil a. dcposi>, ro mt: 5eixs :Un OB Proj£C( "'Id
~ of ~ Fw:ids to Stue Sttter &Ilk >lM Ti:uat ~. Boston, MA, .AHA ~110000:28,, B:h"F = Artn: 're:d>ocd.
NC#67573774,RFB = loc..tionID #77963, OBI= Pool '144-9,Ai:i::::aunt-,;j1552100038, ~Nanit:-:OtyofLuhbodt, 'IX
5:crkt2f®B
Dcpoat 1:11 Projt!ci: Fund.: s !ls,m,,m.oo
Depom ro Cos:oflwluli;e Fun,± 95 374.55
TOW DepOll.ir w aq fur !ill'fles 20108:
J. On Tiu=rlay, Fehruuy 4, 2010, Tue &nk oI New York will wire tt1nsfer $174,198.6-5 to U.S. BanJr.,. ~5, MN, ABA
#-091000022, Aca:nmt Nwnc 1l.IJC Ca.picil Mai:ut!I,, t,/C r:l-1-00Z-3009-7208, FN00017Tt4, At1n. DCld: HtJne:i. (2.14) 91!9~1671 fut 1hr.
following purpose.
174,1'8,65
4. On Thun&y, Febcuary 4, 2ill0, Toe Bd: rd New York q1 wire ~ft:.: S1l9,.371.Z5 ro JP Morgan Oiaie Bank, N.A.., ABA
#021000021, &"coU11t Name; V.inurm & Elkios LLP. ~ AIXUlllll, Aceounr. #OOT-01087987, &f: hi\lQ>ice #25327933, Billing
Artom~": Ben Brooks, for che followi."lg ~
VIailOl.i & Ellclm, LI..P. Fee & lldmbut5ab!e Ezpeusee: I
Pmnttd Annual Paying Ageri.t Fa. -~ 201 M
Pmmted Anmial. Paying Agent Fi:e • Serici Z010B
TOW PaJini: Agent Fee.:
lllll!lltl OF "®fl ~Al'lll CSJ!CK
I 500.J)J
500.J)J
• J,0!!0.00
Lipan doomg. ~ RBC Capital Mrmi:at,,,i ,u,fil in-mi~ rerurn via ovcmight nm the Good Faidi Dcpo!it .in «:I ~ ID
Finr5oulil.weM.
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Moooy's
INVESTORS SERVICE
January 13, 2010
Mr. Andy Burcham
CFO
City of Lubbock
P. 0. !lox 2000
Lubbock, TX 79457
Dear Mr. Burcham.
l'l.u:i. of thr Americu
(d)O Nonh pc,an Sc., Sulce 2.165
D.111.u, TX 75201
!14.220.4350td
We wish to inform you that on January 11, 2010. Moody's Rating Committee
reviewed and assigned a AaJ rating to the City of Lubbock's Gc:neral Obligation Bonds,
Series 2010A, General Obligation Bonds, Taxable Series 201 OB (lluil<l America Bonds -
Direct Payment). Tax and Waterwork'.'i System Surplus Revenue Certificates of
Obligation. Series 2010A nod Tax and Waterworks System Surplus Revenue: Certificates
of Obligmion, Series 20108 (Build America Bonds -Direct Payment}
In order for U51 to maintain the currency of our ratings, we request that you provide
ongoing di51closure. including annual financial and statisticul information.
Moody's will monitor the rating and reserves the right. at its sole discretioa, to
revise OT withdraw the roting at any time in the future.
The rating es well as any revisions or withdrawals thereof will be publicly
disseminated by Moody's through nonnal print and electronic media and in response to
verbal requests to Moody's rating's desk.
Should you hove any questions regarding the above please do not hesitate to
contact me or the analyst assigned to this transactioa. Kristin Button at 214-220-4383.
\~=\~~\lcL_
Douglas Benton
Vice President/Senior Credit Otlicer
cc: Derek Honea
RBC Capital Markets
2711 N. Haskell Ave
Cityploce. Suite 2400
Dallas, TX 75204
DB/ntjd
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STANDARD
&POOKS
January 6, 2010
City of Lubbock
1625 13th Street
P.O. Box 2000
Lubbock. TX 79457
Attentio~ Mr. Andy Bmcbam, Chief Financial Officer
DNofUIAbrd._
LMDllfnPlm,lulOtDII
.,._,TX7121tt
ill!Wlft-14112
lllawano.: 1Qll8Ba2
Re: USU,840,000 City of L11bbock, Tuas, GMttral ObU,ation B011tls, Series 1010.4, dtded:
Juua,y lJ, 1010, due: Febn1ary 15, 2030
Dear Mr. Burcham:
Purauant to your request for a Standard & Poor's rating on the above-refi:renced obligations, we
have reviewed the information submitted to us and, subject to the enclosed Tenn., aNl Conditions,
have assigned a rating of"AA+". Standard & Poor's views the outlook for this rati1Ja as stable. A
wpy of the rationale supp1rting the rating is enclosed.
The rating is not investment, financial, or other advice and you shouJd not and cannot rely upon
the rating as such. The rating is based on iofonnation supplied to us by you or by your agents but
does not represent an audit. We undertake no may of due diligence or independent verification of
any information The assignment of a rating does not create a fiduciary relationship between us
and you or between us and other recipients of the ta.ting. We have not consented to and will not
consent to beina named an ''expert" under tho applicable se.curities law11 including without
limitation, Section 7 of the Securities Act of 1933. The rating is not a 4'ma:rket ratiag' nor is it a
recommendation IO buy, hold, or sell theobligamns.
This Jetter oomtitutes Standard & Poor's permission to you to disseminate the above-assigned
rating to interested parties. Standard & Poor's reserves the right to infbnn its own clients,
subscnoers, and the public of the rating.
Standard & Poor's relies on the issuer/obligor and its counsei accountants, and other experts fur
the accuracy and completeness of the inronnation submitted in ooonection with tho rating. This
TIiting is based on financial intbrmation and docwneots we received prior to the issuance of this
lett«. Standard & Poor's assumes that the documents you have provided to us are final If any
subsequent changes wen: made in the final docwne:nts. you must notify us of such changes by
sending us the revised final documents with the changes clearly marted.
To maintain the rating. Standard & Poor's rtNSt receive all relevant financial infbnnation as soon
as such inmnnation is available. Placing us on a distribution list '1r this ini>rmation would
mcilitate the process. You must promptly notify us of all material changes in the financial
No Text
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Mr. Andy Burcham
Page2
January 6, 2010
information and the documents. Standard & Poor's may change, suspend, withdraw, or place on
CreditWatch the rating as a result of charlges in, or unavailability o( such information. Standard
& Poor's reserves the right to request additional infofmation if necessary to maintain the rating,
Please send all information to:
Standard & Poot's Ratings Services
'Public Finance Department
55 Water Stt"Cet
New York, NY 10041-0003
Standard & Poor•s is pleased to be of service to you. For nx,re information on Standard & Poor•s.
please visit our website at www.standardandpoors.com If we can be of help in any other way,
please call •or cont"8Ct us at nypublicfinance@etand.ardandpoors.oom Thank you for choosing.
Standard & Poor's and we look forward to working with you again.
Sincerely yours,
Standard & Poof's Ratings Services
a Standard &, Poor's Finanoial Services LLC business
kw
,:-~
enclosures
cc: Ms. Chelsea Pigg
Mr. David K. Medanich
Mr. Jason L. Hughes
Mr. Jeffrey A. Leuschel
Ms. Jennifer Taffe
Mr. Matthew Boles
•
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STANDARD
&POOR'S
Janua,y 6, 2010
City of Lubbock
I 625 13th Street
P.O. Box 2000
Lubbod<, TX 79457
Re•/aed
Al!mtion: Mr. Andy Burcham, Chief Financial Officer
QINortti,......,.
IJlllDla fllm, SlllllJ2118 -Tll-M'11..,_
IIIMllalrw.: 100fl803,
Re: US$15,320,000 City oJLubb«l, T.._ Gene"'1 Obiiptjm, &mtl.r, (B•lld Amuiar Boob},
TaJtllble Serin 1010B, dated: Jam,aty 15, 2010, due: Fe/J-,y 15, 2030
DearMr.Burcbam:
Pw:suont to your n:quest mr a Standard & Poor'• rating on the abov<>-re!l:renced oblisations, we
have reviewod the inmrmation 5UbmiUod to us and, snbject to the eru:losod Te= anti Conditions,
hove assignod • rating of" AA+". Standard & l'oOl's view,, the outlook fur this rating aa stable. A
copy of the rationale OllJIPOrting tho rating is enolooed.
The rating is not investment, financial, or olh,,r advice and you ohculd ool and omu,ot rely upon
the ming as such. The rating is buod on infurmation supplied to us by you or by your agents but
does not repreu:nt an audit. We undertake no duty of due diligence or ind_,dcnt verification or
any infurmatiolL TIie ossignment of a rating does not create • fidooimy relationahip between us
and )<)U or between us and other recipients of the rating. We have not consented ID and will not
consent to being named an "expert" under the applicabh: securilios laws, iocluding without
limitation, Section 7 of the Securities Act of19JJ. The rating is not a ''marltet rating' nor is ~ •
recommendation lO buy, hold, or sell the ohligatiom.
Thi, 11:tter constitutes Standwd & Poor', permission to you to disseminate tho above-BS11ignod
rating to interested partieo. Standard & Poor's r<SerVes the right to infunn its own clients,
subscribers, and the public of the rating.
Standanl & Poor'• relies on the issuer/obligo'r and its oo\lIISe~ accountants, and other experts fur
the accumcy and completeness of the infurmation submitted in connection with tho nting. This
rating is buod on Jinancial infunnation and documents we received prior to the issueJl<eofthis
u:tter. Standard & Poor's ossurnes that the documents J<JU have pmvidod to"" an, final lf1D1y
subsequent changes were made in the final documonts, J<JU must noticy us of such changes by
sending us the revwod final documents with the challges clearly marked.
To moint&in the rating, Standard & Poor's must receive all rel.van! financiol infurma1ion es soon
as such information is available. Placing us on a distribution list fur this infttrmation would
!i,cilftate tho process. You must promptly notify us ofoll material changes in the ~ial
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Mr. Andy Burcham
Page2
J anuery 6, 20 I 0
information and the documents. Standard & Poor's may change, suspend, withdraw, or place on
Credit Watch the rating as a result of changes in, or unavailability o( such infbnnation. Standard
& Poor"s reserves the right to request additional information if necessary to maintain the rating.
Please send all information to:
Standard & Poor's Ratings Servic.es
Public Finance Department
ss Water Street
New York, NY 10041~0003
Standard & Poor's i., pleased to be of service to )')U. For rmre inmnnation on Standard & Poor-~s.
please visit our website al www,standprdan(h>oors.oom lfwe can be of help in any other way,
please call or contact us at f1l'.PUblicfina.nce@standardandpoors.com Thank )')U fbr choosing
Standard & Poor's and we look forward to working with )')U again.
Sincerely yours,
Standard & Poor's Ratingl Services
a Standard & Poor's Financial Servie,es LLC business
kw
;~' -~
enclosures
cc: Ms. Chelsea Pigg
Mr. David K. Medanich
Mr. Jason L. Hughes
Mr. Jeffrey A. Leuschel
Ms. Jennifer Taffe
Mr. Matthew Boles
No Text
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I
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STANDARD
&POOR'S
January 7, 2010
City ofL,d,book
l 625 Uth Street
P.O. Bo• 2000
Lubbock, TX 79457
Attention: Mr. Andy Burcham, Chief Finoncial Officer
!GI IDIIIAl:ml &1n9l
Lb!ccfnPllu,SldrlD»
Dllla, TXl'mt
lid 214 ffl.1.G
l"llarmlol no,; UJllllUO
Re: USJ.IB,9JS,l}(}(J Cizy of Lwbbod; T....,, Tw: anti Wa-rb S,-S•,plu• _,,,,
CtmlJicates o[Obllg,,llott,&ries 2010A, daletl: JIIIIIUll)> 15, 20111, ,b,c Fsbnlar, 15, JOJO
DearMr.Burcllam:
Pw1luant to J<>llr reqll"3t tor a Standard & Poor', rating on the abov1HOfi:reru:ed obliptioos, we
have reviewed the inlimnauon submitted to u, Jllld, subject to the <nelosed Tenns o,,d Co,idJdo.,,
have .,.igned a rating of" AA~". Standard & Poon views the outlook li,r this rating ae stable. A
copy of the rationale mpportiniJ the rating is enclosed.
The rating is not invest men~ financial, or od,er advice and you should oot and amnot rely upon
the roting aa such. The rating i, hosed on inlimnation supplied to us by JOU or by )OUJ' agents but
does not represent an audit. We undertake oo duty of due diligenoe or independent verifi<:llllon of
any infilnnalion. The ... ignmeru of a rating does not .reate a fiduciary relationship bdweeo w,
and )OU or between us and other recipient, of the rating. We have not oo!!5CDl"1 to and will not
conse<Jt to being named an '"'xpert" under the applicable SWITities laws, including without
limitali<>n, Section 7 of the Secwities Act of 1933. The rating is not a ''marled mting" nor!, it a
recommendetion to buy, hold, or sell the obligations.
Thi., kiter CODStitutc, Standard & Poor', permission to )OU to disseminate the abov,..aesigncd
rating to interested parties. Standard & Poor', reserves the right to infilnn its own clients, ,ubscrib..., and the public of the n,ting.
Standard & Poor'• reties on the issuerlobligor and its counse~ accountants, and other e,<perts fur
the accurocy ond oomploto"""' of the intbnnation oubmitted in oo,mection with the rating. 1bill
rating is based on financial infunna1ion and documents we received prior lo the issuance of this
letter. Standard & Poor'• assumes that the documents JOU have provided to us are final If ""Y
subsequent changes were made in the final documents, JOU must notify us of such changes by
oonding us the revised final documents with the changes clearly mad<ed.
To maintain the rating, Stondard & Poor's mu.,t roa:ive all relo,,ant finsm:ial infurmation as soon
as ouch infurmation is availablo. Placing ua on a distribution list tor this intormatlon would
ftwilitato the proceso. You mwt promptly notify u., of all meterial change, in the fuu,ncial
No Text
Mr, Andy Burcham
Pugel
January 7, 2010
infu11111ltion and the documents, Standard & Poor'• may change, suspend, withdraw, or pla<e oo
CreditWatoh !be rating., • resub of ohanges in, or unav•ilability o~ sud! inrormelioo. Sllllldard
& Poor', r,:serves the right to request additional inronnation ifrn:cemry to mamlBin th, rating.
PleBse send all inrolllllllion to:
StaI!llard & Poor's Ratings Services
Public Finance D"l'artmont
SS WIiier Street
New Yori<, NY 10041-0003
Standard & Poor's is pleased to be of service to you.. f;lr more :information on Stundard & Poor's,
please visit our website et www.standardandpooa.co.m, If we can be of help in any other we.y,
please call or oontact us at ll)'lll!bli,ooance@slandm;duwlllOOfS,oo!!J, TI11111k you ror choosing
Standard & Poor'• and we look rorward lo w<Kking wilh you again,
Sincerely yours,
Standard & Poors Ratings SelVices
a Standard & Pool's Financial Services LLC business
Jh
en<losures
cc: Mr, Dcn:l!. HoDCll
Mr, Matthew Boles
,:?~
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STANDARD
&POOR'S
Jamiary 7, 2010
City of Lubbock
I 62S 13th Street
P.0.Box2000
Lubbock, TX 79457
Revised
Attention: Mr. Aildy Burcham, ChiefFinondal Off'"""
~ lbtll A&mdtlnal: uncor.1 Raa. llflll ml
Dialla, TX1'Sl01
181H4ffl.MID
nlalllDClio'lo.:1099838
Re: IJSS96,540,IJ(HJ Ci,;, of Li,bbod, Taas, Tax a,.,J W...,_rb System Srup/119 R<n,e,,u,
Cmifi,;otes o/Obilg-, (Bi,/14 AwerlN Bonds), Seria 2010B. """'4: .f"'1B/117 JS, 1010,
d11e: Fdmuuy 15, 1010
Dear Mr. Burcham:
Pursuant to :,,,ur n:quest fur a Simian! & Poor'• rating on the obove-n,!i,renced obligations, wo
have reviewed the infi>nnation submilted to us and, subject to the eoclased r.,,,., and Condition&.
haYO assigru:d a rating of"AA+", Standard & Paar's views the outlook li>r this rating .. stable. A
copy of the rationale supporting the rating i, enclosed,
The rating i, not investment, financia~ or olher advice and you should oot and cannot roly upon
the rating as such. The ratii,g is based on infurmation supplied to us by you or by your agents but
does not represent on aw!tt, We undenake no duty of due diligonoe or indq,ondenl vmlication of
ony infummtion. The ..,;gnment ofa rating does not cre8le a fiduciary relaiianship between us
and you orbelwecn ua and otbtt recipionts of the rating. We havo not consented to and will not
consent lo being named an ''expert" under the appJicable securities laws. incbxli:ng without
Iimitonon, Section 7 oflhe SeouritieaAct ofl93l. The ming is net a "market rating"mris it•
rerommendation to buy, bold, or sell lhe obligations.
This letter constitutes Standlllil & Poor's permission to you to disseminate the obove-assigDed
rating to interested pmties. Standard & Poor's reserves lhe rigbL to infimn its awn cliOlltll,
subscribers, and the public oflhe rating.
Standard & Poor's reties on the issuerlobligor and us"'"""'"~ accountimls, and otbtt axperts ll:lr
the accuracy and completeness of the infurmation submitted in room:ction with the rating, This
rating is based on financial inll:lnnation and docllll1<Dls we received prior to the issuance of this
letter. Standard & Poor'• assumes 111'11 the documont, }<IU have provided to us are final If any
subsequent changes wen made in the final documents, you must notify us of such cl!angt.s by
sending us the revised final documents wilh the changes clearly marked.
To maintain the mtin& Standard & Poor's must receive all relevant financial infunJ\IWOn as soon
as such information is aVllilable. Placing us on a distribution list fur this information would
No Text
Mr. Andy Burcham
Page2
January 7, 2010
facililate the pro=,;. You rnuot promptly notify us of all material changes in the financial
infomwion and the documents, Standard & Poor's may change:, suspend, withdraw, or place on
CN:di!Watch the rating as a resuk of dlarlges in, or unavailobility o~ such inlbnnation. Standard
& Poor~s reserves the right to request additional infummtion ifncr.;cmsuyto maintain theruti:r,g.
Please send all inlonnation to:
Standard & Poor's Ratings Services
Public Finance Department
SS Wal.er Street
New York, NY 10041-000J
Standard & Poor's is pleased to be of service-lo you. For more infurmation on Standard & Poor~s~
please visit our website at www.standardanqpoors.C()m. Ifwe can be of help in any other way$
please call or contact u, at IOOllll>licfllUlnce@stand!ll'llllllilllru>rn,oom. Thank you lbr c:ooosing
Sbmdard & Poor's EU1d we look forward to wodcing with you ogain.
Sincerely yours,
Standard & Poon Ratings Services •~,7~iness
!h
enclosures
ec: Ms. Chelsea Pi8g
Mr. David K. Medanich
Mr. Jason L. Hughes
Mr. Jolli'ey A. Leusehel
Ms. Jennifer Taffi>
Mr. Matthew Bolci
No Text
CERTIFICATE PURSUANT TO BOND PURCHASE CONTRACT
We, the ooderaigned officials of the City of Lubbock, Texas (the '1ssuer"), acting in our
official capacity, in connection with the issuance and delivay by the hsuer of its City of
Lubbock, Texas, General Obligation Bonds, Series 2010A and City of Lubbock, Te"'1S, General
Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct Payment) (collectively,
the "Securities"), hereby oertify Umt:
I. This Certificate is delivered pu,suant to the Purchase Contract n,laling to the
Securities, doled January 20, 2010 (the "Purehasa Contract"), between the Issuer and First
Southwest Company, Hutchinson, Shockey, Erley & Co., J.P. Morgan Securities Inc., Morgnn
Keegan & Company, Inc. and Southwest Securities, Inc. (collectively, the ''Underwriters"),
Cllj)italized words used herein as defined terms and not otherwise defined herein have the
respective meanings assigned to than in the Purchase Contract.
2. The representations and warrantiCJ of the Issuer contained in the Pnrchase
Contract are true and correct in all material respects on and as of the date hen,of"" though made
on and as of the date hereof,
3. ~cept to the extent disclosed in the Official Statement, oo litigation is pending
or~ to our knowle.dge, threatened in any court lo restrain or enjoin the issuance or delivery of the
Securities, or the levy, ccllectioo or opplicatlon of the ad val0ttm lalles pledged or to be pledged
to pay the principal of and interest on the Securities, or the pledge thereof, or in any w11y
contesting or affecting the validity of the Securities or the O:rdin.ana:; or contesting the pow~ of
the City or the I.IUl:horizalion of the Securities or the Ordinance or contesting in any way the
accuracy, ccmpletene,s or fairness of the Official Slalelllellt.
4, To the best of our knowledge, no event affecting the City has ocrurred since the
date of the Official Statement that should be disclosed in the Official Statement fur the purpose
for which it is to be used or that it is necessary to disclose then:in in order to make the statements
and information themn not misleading in any respect.
5. There has oot been nny moteriol and adve,se change in the affair., or financial
condition of the City since September 30, 2008, the Isles! date as to which audited financial
information is available.
Ll:Bl00/71015
US l36795v,1
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DATED: February~ 2010.
Mayor
City of Lubbock, Texas
ChiefFklancialOfficer
City of Lubbock, Texas
Signature Page for Certificate Pur$uanl lo Bo,uJ Purchase Contract
US 23679Sv. l
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CERTIFICATE PURSUANT TO CERTIFICATE PURCHASE CONTRACT
We, the undersigned officials of the City of Lubbock, Texas (the "Issuer"), acting in our
official capacity, in connection with the issuance and delivery by the Issuer of its City of
Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series
2010A and City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates
of Obligation, Taxable Series 2010B (Build America Bonds -Direct Payment) (collectively, the
"Securities''), hereby certify that:
1. This Certificate is delivered pursuant to the Purchase Contract relating to the
Securities, dated January 20, 2010 (the "Purchase Contract"), between the Issuer and First
Southwest Company, Hutchinson, Shockey, Erley & Co., J.P. Morgan Securities Inc., Morgan
Keegan & Company, Inc. and Southwest Securities, htc. (collectively, the "Underwriters").
Capitalized words used herein as defined tenns and not otherwise defined herein have the
respective meanings assigned to them in the Purchase Contract.
2. The representations and warranties of the Issuer contained in the Purchase
Contract are true and correct in all material respects on and as of the date hereof as though made
on and as of the date hereof.
3. Except to the extent disclosed in the Official Statement, no litigation is pending
or, to our knowledge, threatened in any court to restrain or enjoin the issuance or delivery of the
Securities, or the levy, collection or application of the ad valorem taxes the Pledged Revenues,
pledged or to be pledged to pay the principal of and interest on the Securities, or the pledge
thereof, or in any way contesting or affecting the validity of the Securities or the Ordinance, or
contesting the powers of the City or the authorization of the Securities or the Ordinance or
contesting in any way the accuracy, completeness or fairness of the Official Statement.
4. To the best of our knowledge, no event affecting the City has occurred since the
date of the Official Statement that should be disclosed in the Official Statement for the purpose
for which it is to be used or that it is necessary to disclose therein in order to make the statements
and information therein not misleading in any respect.
5. There has not been any material and adverse change in the affairs or financial
condition of the City since September 30, 2008, the latest date as to which audited financial
information is available.
US 236182v.l
,.
DATED: February~ 2010.
Mayor
City of Lubbock, Texas
ChiefFil'lancial Officer
City of Lubbock, Texas
Signature Page for Certificate Pursuant to Certificate Purchase Contract
US 236182v.1
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Vinson&Elkins
February 4, 2010
$8,840,000
CIIT OF LUBBOCK, TEXAS
GENERAL OBLIGATION BONDS
SERIES 2010A
WE HAVE represented the City of Lubbock, Texas (the "City''), as its Bond Counsel in
connection with an issue of bonds (the "Bonds'') described as follows:
CIIT OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, SERIES
2010A, dated their date of delivery, issued in the principal amount of $8,840,000.
The Bonds mature, bear interest, are subject to redemption prior to maturity and may be
transferred and exchanged as set out in the Bonds and in the ordinance adopted by the City
Council of the City authorizing their issuance (the "Ordinance") and the Pricing Certificate
executed pursuant to the Ordinance.
WE HA VE represented the City as its Bond Counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Bonds under the Constitution and laws of
the State of Texas and with respect to the exclusion of interest on the Bonds from gross income
for federal income tax purposes. We have not investigated or verified original proceedings,
records, data or other material, but have relied solely upon the transcript of proceedings
described in the following paragraph. We have not assumed any responsibility with respect to
the financial condition or capabilities of the City or the disclosure thereof in connection with the
sale of the Bonds. Our role in connection with the City's Official Statement prepared for use in
connection with the sale of the Bonds has been limited as described therein.
IN OUR CAPACIIT as Bond Counsel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Bonds, on which we have
relied in giving our opinion. The transcript contains certified copies of certain proceedings of the
City, customary certificates of officers, agents and representativ~ of the City and other public
officials, and other certified showings relating to the authorization and issuance of the Bonds.
We have also examined executed Bond No. 1 of this issue.
Ylneon I Elkins UP Attamaya at L-Austin Beijing Dallas
Dubai Houston I.J)ndon Mo&co'II' New York Tokyo Wastoington
Trammell Ct0wCenl8r, 2001 ROSB Avenue, Suite 3700
Dallas, T8)185 75201•2975 Tai 214.220.7700 l"U 214.2.20.n16
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BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Bonds in full compliance with the Constitution
and laws of the State of Texas presently effective and, therefore, the Bonds
constitute valid and legally binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property within the
City, necessary to pay the interest on and principal of the Bonds, has been levied
and pledged irrevocably for such purposes, within the limit prescribed by law, and
the total indebtedness of the City, including the Bonds, does not exceed any
constitutional, statutory or other limitations.
THE RIGHTS OF THE OWNERS of the Bonds are subject to the applicable provisions
of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of
political subdivisions generally, and may be limited by general principles of equity which permit
the exercise of judicial discretion.
IT IS OUR FURTHER OPINION THAT:
(1) Interest on the Bonds is excludable from gross income for federal
income tax purposes wider existing law; and
(2) Interest on the Bonds is not (A) a specific preference item subject
to the alternative minimwn tax on individuals and corporations or (B) included in
a corporation's adjusted current earnings for purposes of the alternative minimwn
tax.
In providing such opinions, we have relied on representations of the City, the City's
financial advisor and the widerwriters of the Bonds with respect to matters solely within the
knowledge of the City, the City's financial advisor and the underwriters respectively, which we
have not independently verified, and have assumed continuing compliance with the covenants in
the Ordinance pertaining to those sections of the Internal Revenue Code of 1986, as amended,
that affect the exclusion from gross income of interest on the Bonds for federal income tax
purposes. If such representations are determined to be inaccurate or incomplete or the City fails
to comply with the foregoing provisions of the Ordinance, interest on the Bonds could become
includable in gross income from the date of original delivery, regardless of the date on which the
event causing such inclusion occurs.
Except as stated above, we express no opinion as to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Bonds.
-2-
,,.
,.
,.
V&E
Owners of the Bonds should be aware that the ownership of tax-exempt obligations may
result in collateral federal income tax consequences to financial institutions, life insurance and
piOperty and casualty insurance companies, certain S corporations with Subchapter C earnings
and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers
who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt
obligations, and individuals otherwise qualifying fur the earned income credit. In addition,
certain foreign corporations doing business in the United Stales may be subject to the "branch
profits tax" on their effectively-connected earnings and profits (including tax-exempt interest
such as interest on the Bonds).
The opinions set forth above are based on existing law, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement these opinions to reflect any facts or circumstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal
Revenue Service (the ''Service"); rather, such opinions represent our legal judgment based upon
our review of existing law and in reliance upon the representations and covenants referenced
above that we deem relevant to such opinions. The Service has an ongoing audit program to
determine compliance with rules that relate to whether interest on state or local obligations is
includable in gross income for federal income tax pwposes. No assurance can be given as to
whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in
accordance with its current published procedures the Service is likely to treat the City as the
taxpayer. We observe that the City has covenanted in the Ordinance not to take any action, or
omit to take any action within its control, that if taken or omitted, respectively, may result in the
treatment of interest on the Bonds as includable in gross income fur federal income tax purposes.
-3-
,.
-
,.
No Text
No Text
"\
'
Vinson&Elkins
February 4, 2010
$15,320,000
CITY OF LUBBOCK, TEXAS
GENERAL OBLIGATION BONDS
TAXABLE SERIES 2010B
(BUILD AMERICA BONDS -DIRECT PAYMENT)
WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Counsel in
connection with an issue of bonds (the "Bonds") described as follows:
CITY OF LUBBOC~ TEXAS GENERAL OBLIGATION BONDS, TAXABLE
SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT), dated
their date of delivery, issued in the principal amount of$15,320,000.
The Bonds mature, bear interest, are subject to redemption prior to maturity and may be
transferred and exchanged as set out in the Bonds and in the ordinance adopted by the City
Council of the City authorizing their issuance (the "Ordinance") and the Pricing Certificate
executed pursuant to the Ordinance.
WE HA VE represented the City as its Bond Counsel for the sole puypose of rendering an
opinion with respect to the legality and validity of the Bonds under the Constitution and laws of
the State of Texas. We have not investigated or verified original proceedings, records, data or
other material, but have relied solely upon the transcript of proceedings described in the
following paragraph. We have not assumed any responsibility with respect to the :financial
condition or capabilities of the City or the disclosure thereof in connection with the sale of the
Bonds. Our role in connection with the City's Official Statement prepared for use in connection
with the sale of the Bonds has been limited as described therein.
IN OUR CAPACITY as Bond Cowisel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Bonds, on which we have
relied in giving our opinion. The transcript contains certified copies of certain proceedings of the
City, customary certificates of officers, agents and representatives of the City and other public
officials, and other certified showings relating to the authorization and issuance of the Bonds.
We have also examined executed Bond No. 1 of this issue.
Vlneon & Elkin& L1.P Attornaye at Law Austin Beijing Dallas
Dubai Houst011 London Mosco...-New York Tok)t) Washingion
Trammel Crow Center, 2001 Ross Avenue, Suite 3700
Dallas, Texas 75201-2975 Tel 214.220.77'00 Fu 214.220.7716
-.1181-.IJOIII
,..
.-
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'
V&E
BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Bonds in full compliance with the Constitution
and laws of the State of Texas presently effective and, therefore, the Bonds
constitute valid and legally binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property within the
City, necessary to pay the interest on and principal of the Bonds, 1w been levied
and pledged irrevocably for such pwposes, within the limit prescribed by law, and
the total indebtedness of the City, including the Bonds, does not exceed any
constitutional, statutory or other limitations.
THE RIGHTS OF TIIE OWNERS of the Bonds are subject to the applicable provisions
of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of
political subdivisions generally, and may be limited by general principles of equity which permit
the exercise of judicial discretion.
IT IS OUR FURTIIER OPINION THAT:
Interest on the Bonds is not excludable from gross income for federal income tax
pwposes under existing law. We express no other opinion~ to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Bonds.
The opinions set forth above are based on existing law, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement these opinions to reflect any facts or circumstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective.
-2-
No Text
No Text
No Text
....
"\
'
Vinson&Elkins
Jennifer W. Taffe jtafle@velaw.com
Tet 214.220.7941 Fu 214.999.7941
February 4, 2010
Andy Burcham, Chief Financial Officer
City of Lubbock, Texas
P.O. Box 2000
Lubbock, Texas 79457
Re: $15,320,000 City of Lubbock, Texas (the "Issuer") General Obligation Bonds,
Taxable Series 2010B (Build America Bonds-Direct Payment) (the "Bonds'')
Dear Mr. Burcham:
We have represented the Issuer in connection with the issuance of the above--
referenced Bonds. The Issuer is issuing the Bonds pursuant to the Ordinance, adopted by the
Issuer on December 16, 2009 for the pwposes of financing (a) various public improvements
and (b) the costs of issuing the Bonds.
We have examined, and rely on for pwposes of this opinion, the Ordinance, the
Federal Tax Certificate executed by the Issuer with respect to the Bonds on the date hereof
(the ''Certificate"), and certain proceedings of the Issuer and customary certificates of
officers, agents and representatives of the Issuer and other public officials. We have
examined, in addition to the docwnents described above, such portions of the Internal
Revenue Code of 1986, as amended, (the ''Code"), and to the extent applicable to the Bonds,
court decisions, regulations and published rulings of the Internal Revenue Service as we have
deemed necessary for the pUipose of this opinion. For pUiposes of this opinion, we have
asswned without independent verification (i) the genuineness of certificates, records and
other documents (collectively, "docwnents'') and the accuracy and completeness of the
statements of fact contained therein; (ii) the due authorization, execution and delivery of the
documents described above by the parties thereto other than the Issuer; (iii) that all
docwnents submitted to us as originals are accurate and complete; and (iv) that all docwnents
submitted to us as copies are true and correct copies of the originals thereof.
Based on such examination, we are of the opinion that the Bonds are "qualified
bonds," as such term is defined in Section 54AA(g)(2) of the Code, and, therefore, the Issuer
is eligible to receive the allowable direct-pay credit under Section 6431 of the Code. We
further observe that in addition to meeting the various eligibility requirements described in
the Code and the Certificate, the Issuer must timely file an IRS Fonn 8038-CP, as described
in paragraph 21 of the Certificate, in order to receive the direct-pay credit payment.
Vinson & Elklne UP Anomaya at Law
Au!ltin Beijing Dallas Dubai Houston London
MO&Cow New York Shanghai Tok)'O Wasnlngtor>
2801 Via Fortuna, SuilB 100
Au.s6n, TX 78746-7588
Tel 512.542.8400 FU 512.542.8612 -."119111w.~0111
,..
V&E Ntbruary 4, 2010 Page 2
In providing such opinion, we have relied on the opinions of the Attorney General of
the State of Texas and of our Firm of even date herewith regarding the legality and validity
of the Bonds under the Constitution and laws of the State of Texas. We have further relied
on representations set forth in the Certificate and exhibits and attachments thereto with
respect to matters solely within the knowledge of the Issuer, the Issuer's Financial Advisor
and the Underwriter, which we have not independently verified. In addition, we have
asswned for purposes of this opinion continuing compliance with the covenants in the
Certificate pertaining to those sections of the Code that affect the treatment of the Bonds as
"qualified bonds," as such term is defined in Section 54AA(g)(2) of the Code. In the event
that such representations are determined to be inaccurate or incomplete or the Issuer fails to
comply with the foregoing covenants in the Certificate, the Issuer could be retroactively
disqualified to receive the direct-pay credit otherwise allowable under Section 6431 of the
Code from the date of the original delivery of the Bonds, regardless of the date on which the
event causing such disqualification occurs.
We observe that interest on obligations that are "qualified bonds" under Section
54AA(g)(2) of the Code, such as the Bonds, is not excludable from gross income for federal
income tax purposes.
Except as stated above, we express no opinion as to any federal, state or local tax
consequences resulting from the ownership of, receipt of interest on or disposition of the
Bonds.
The opinions set forth above are based on existing law, which is subject to change.
Such opinions are further based on our knowledge of facts as of the date hereof. We asswne
no duty to update or supplement these opinions to reflect any facts or circwnstances that may
hereafter come to our attention or to reflect any changes in any law that may hereafter occur
or become effective. Moreover, our opinions are not a guarantee of result and are not
binding on the Internal Revenue Service (the "Service"); rather, such opinions represent our
legal judgment based upon our review of existing law and in reliance upon the
representations and covenants referenced above that we deem relevant to such opinions. No
assurance can be given as to whether or not the Service will commence an audit of the
Bonds. If an audit is commenced the Service will treat the Issuer as the taxpayer.
To assure compliance with Internal Revenue Service Circular 230, we are required to
inform you that this opinion is not intended or provided by us to be used, and it cannot be
used by any taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the
taxpayer under federal income tax law or (ii) promoting, marketing or recommending to
another party any transaction or matter addressed herein.
No Text
'
'
February 4, 2010 Page 3
Furthermore, the opinion expressed herein is for the sole benefit of, and may be relied
upon only by, the Issuer, and is not otherwise to be used, reproduced, circulated, quoted, or
referred to, in whole or in part, without the prior written consent of the undersigned in each
and every instance. We observe that we are engaged solely to represent the Issuer in this
matter.
VINSON & ELKINS L.L.P.
us 252101
No Text
"'\
Vinson&Elkins
February 4, 2010
$48,955,000
CIIT OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2010A
WE HA VE represented the City of Lubbock, Texas (the "City''), as its Bond Counsel in
connection with an issue of certificates of obligation (the "Certificates") described as follows:
CIIT OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A,
dated their date of delivery, issued in the principal amount of $48,955,000.
The Certificates mature, bear interest, are subject to redemption prior to maturity and
may be transferred and exchanged as set out in the Certificates and in the ordinance adopted by
the City Council of the City authorizing their issuance (the "Ordinance") and the Pricing
Certificate executed pursuant to the Ordinance.
WE HA VE represented the City as its Bond Counsel for the sole pwpose of rendering an
opinion with respect to the legality and validity of the Certificates under the Constitution and
laws of the State of Texas and with respect to the exclusion of interest on the Certificates from
gross income for federal income tax pwposes. We have not investigated or verified original
proceedings, records, data or other material, but have relied solely upon the transcript of
proceedings described in the following paragraph. We have not asswned any responsibility with
respect to the financial condition or capabilities of the City or the disclosure thereof in
connection with the sale of the Certificates. Our role in connection with the City's Official
Statement prepared for use in connection with the sale of the Certificates has been limited as
described therein.
IN OUR CAPACIIT as Bond Counsel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to the Certificates, on which we
have relied in giving our opinion. The transcript contains certified copies of certain proceedings
of the City, customary certificates of officers, agents and representatives of the City and other
public officials, and other certified showings relating to the authorization and issuance of the
Certificates. We have also examined executed Certificate No. 1 of this issue.
Vinaon & Elldna U.P Attorney& at Law Austin Beijing Dall86
Dubai Hou.ston London Moscow NewYor1c: Tokyo Washington
Trammell Crow Center, 2001 Ross A"Yenue, Suite 3700
Dallas, TeitaS 75201-2875 Tel 214.220.7700 Fu 214.220.7718
-·••.com
,-
V&E
BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Certificates in full compliance with the
Constitution and laws of the State of Texas presently effective and, therefore, the
Certificates constitute valid and legally binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property within the
City, necessary to pay the interest on and principal of the Certificates, has been
levied and pledged irrevocably for such purposes, within the limit prescribed by
law, and the total indebtedness of the City, including the Certificates, does not
exceed any constitutional, statutory or other limitations. In addition, the
Certificates are further secured by a limited pledge (not to exceed $1,000) of the
surplus net revenues of the City's Waterworks System, as described in the
Ordinance.
THE RIGHTS OF THE OWNERS of the Certificates are subject to the applicable
provisions of the federal bankruptcy laws and any other similar laws affecting the rights of
creditors of political subdivisions generally, and may be limited by general principles of equity
which permit the exercise of judicial discretion.
IT IS OUR FURTHER OPINION THAT:
(I) Interest on the Certificates is excludable from gross income for
federal income tax purposes under existing law; and
(2) Interest on the Bonds is not (A) a specific preference item subject
to the alternative minimum tax on individuals and COipOrations or (B) included in
a corporation's adjusted current earnings for purposes of the alternative minimum
tax.
In providing such opinions, we have relied on representations of the City, the City's
financial advisor and the underwriters of the Certificates with respect to matters solely within the
knowledge of the City, the City's financial advisor and the underwriters respectively, which we
have not independently verified, and have assumed continuing compliance with the covenants in
the Ordinance pertaining to those sections of the Internal Revenue Code of 1986, as amend~
that affect the exclusion from gross income of interest on the Certificates for federal income tax
purposes. If such representations are determined to be inaccurate or incomplete or the City fails
to comply with the foregoing provisions of the Ordinance, interest on the Certificates could
become includable in gross income from the date of original delivery, regardless of the date on
which the event causing such inclusion occurs.
-2-
,...
,.
,,.
'"'·
....
V&E
Except as stated above, we express no opinion as to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Certificates.
Owners of the Certificates should be aware that the ownecship of tax-exempt obligations
may result in collateral federal income tax consequences to financial institutions, life insurance
and property and casualty insurance companies, certain S corporations with Subchapter C
earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry
tax-ex.empt obligations, and individuals otherwise qualifying for the earned income credit. In
addition, certain foreign corporations doing business in the United States may be subject to the
"branch profits tax" on their effectively-connected earnings and profits (including tax-exempt
interest such as interest on the Certificates).
The opinions set forth above are based on existing law, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement these opinions to reflect any facts or circumst.ances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal
Revenue Service (the "Service"); rather, such opinions represent our legal judgment based upon
our review of existing law and in reliance upon the representations and covenants referenced
above that we deem relevant to such opinions. The Service has an ongoing audit program to
determine compliance with rules that relate to whether ioterem on state or local obligations is
includable in gross income for federal income tu. pwposes. No assuranc.e can be given as to
whether or not the Service will commence an audit of the c.erti.6c.ates.. If an audit is commenced,
in accordance with its current published procedures the Service is likely to treat the City as the
taxpayer. We observe that the City has covenanted in the Ordinance not to take any action~ or
omit to take any action within its control, that if taken or omitted, respectivdy> may result in the
treatment of interest on the Certificates as inclu.dable in gross income for federal income tax
purposes.
-3-
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....
Vinson&Elkins
February 4, 2010
$96,540,000
CITY OF LUBBOCK, TEXAS
TAX AND WATERWORKS SYSTEM SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
TAXABLE SF.RIES 20108
(BUILD AMERICA BONDS -DIRECT PAYMENT)
WE HA VE represented the City of Lubbock, Texas (the "City''), as its Bond Counsel in
connection with an issue of certificates of obligation (the "Certificates") described as follows:
CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, TAXABLE
SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT), dated
their date of delivery, issued in the principal amount of $96,540,000.
The Certificates ma.tun; bear interest, are subject to redemption prior to maturity and
may be transferred and exchanged as set out in the Certificates and in the ordinance adopted by
the City Council of lhe City authorizing their issuance (the "Ordinance") and the Pricing
Certificate executed pursuant to the Ordinance.
WE HA VE represented the City as its 8-ond Counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Certificates under the Constitution and
laws of the State of Texas. We have not investigated or verified original proceedings, records,
data or other material, but have relied solely upon the lranscript of proceedings described in the
following paragraph. We have not assmned any responsibility with respect to the financial
condition or capabilities of the City or the disclosure thereof in connection with the sale of the
Certificates. Our role in connection with the City's Official Statement prepared for use in
connection with the sale of the Certificates has been limited as described therein.
IN OUR CAP A CITY as Bond Counsel, we have participated in the preparation of and
have examined a transcript of certified proceedings pertaining to lhe Certificates, on which we
have relied in giving our opinion. The transcript contains certified copies of certain proceedings
of the City, customary certificates of officers, agents and representatives of the City and other
public officials, and other certified sbowinp relatiog to the authorization and issuance of the
Cer1ificates. We have also examined executed Certificate No. 1 of this issue.
Vl11110n I l!lldne U.P Altornaya at Law Austin Beijing Dallas
Ollbai Houllan London Moscow NewYortt Tok~ Washington
Tra1T1mell Cri,"' Centar, 2001 Ross~. Sulle 3700
Dallas, Te.1111 7&201-2915 Tel 21•.220.1100 Fu 214.ZZ0.7718 -------
,..,
.....
V&E
BASED ON SUCH EXAMINATION, IT IS OUR OPINION TIIAT:
(A) The transcript of certified proceedings evidences complete legal
authority for the issuance of the Certificates in full compliance with the
Constitution and laws of the State of Texas presently effective and, therefore, the
Certificates constitute valid and legally binding obligations of the City; and
(B) A continuing ad valorem tax upon all taxable property within the
City, necessary to pay the interest on and principal of the Certificates, has been
levied and pledged irrevocably for such purposes, within the limit prescribed by
law, and the total indebtedness of the City, including the Certificates, does not
exceed any constitutional, statutory or other limitations. In addition, the
Certificates are further secured by a limited pledge (not to exceed $1,000) of the
surplus net revenues of the City's Waterworks System, as described in the
Ordinance.
THE RIGHTS OF THE OWNERS of the Certificates are subject to the applicable
provisions of the federal bankruptcy laws and any other similar laws affecting the rights of
creditors of political subdivisions generally, and may be limited by general principles of equity
which permit the exercise of judicial discretion.
IT IS OUR FURTIIER OPINION THAT:
Interest on the Certificates is not excludable from gross income for federal income tax
purposes under existing law. We express no other opinion as to any federal, state or local tax
consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or
disposition of, the Certificates.
The opinions set forth above are based on existing law, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We asswne no duty
to update or supplement these opinions to reflect any facts or circwnstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective.
-2-
,.._
-
,..
No Text
No Text
Vinson&Elkins
JeMlfw W. Tall& jtalle@velaw.com
Tel 214.220.7'941 Fu 214.999.7941
February 4, 2010
Andy Burcham, Chief Financial Officer
City of Lubbock, Texas
P.O. Box 2000
Lubboc~ Texas 79457
Re: $96,540,000 City of Lubbock, Texas (the "Issuer") Tax and Waterworks System
Surplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America
Bonds -Direct Payment) (the ''Certificates of Obligation")
Dear Mr. Burcham:
We have represented the Issuer in connection with the issuance of the above-
referenced Certificates of Obligation. The Issuer is issuing the Certificates of Obligation
pursuant to the Ordinance, adopted by the Issuer on December 16, 2009 for the pmposes of
financing (a) various public improvements, including solid waste, drainage, water, street,
electric and wastewater, and (b) the costs of issuing the Certificates of Obligation.
We have examined, and rely on for purposes of this opinion, the Ordinance, the
Federal Tax Certificate executed by the Issuer with respect to the Certificates of Obligation
on the date hereof (the "Certificate"), and certain proceedings of the Issuer and customary
certificates of officers, agents and representatives of the Issuer and other public officials. We
have examined, in addition to the documents described above, such portions of the Internal
Revenue Code of 1986, as amended, (the "Code"), and to the extent applicable to the
Certificates of Obligation, court decisions, regulations and published rulin~ of the Internal
Revenue Service as we have deemed necessary for the purpose of this opinion. For purposes
of this opinion, we have assumed without independent verification (i) the genuineness of
certificates, records and other documents (collectively, "documents") and the accuracy and
completeness of the statements of fact contained therein; (ii) the due authorization, execution
and delivery of the documents described above by the parties thereto other than the Issuer;
(iii) that all documents submitted to us as originals are accurate and complete; and (iv) that
all documents submitted to us as copies are true and correct copies of the originals thereof.
Based on such examination, we are of the opinion that the Certificates of Obligation
are "qualified bonds," as such tenn is defined in Section 54AA(g)(2) of the Code, and,
therefore, the Issuer is eligible to receive the allowable direct-pay credit under Section 6431
of the Code. We further observe that in addition to meeting the various eligibility
Vinaon & Ellllns LLP Attorneys at Law
Austin Beijing Dalles Dubai Houston London
Moscow New Vorx Shanghai Tok)<o Washinglun
2801 Via Fortuna, Suite 100
Austin. TX 78748-75e8
Tel 512.542.8400 Fa 512.542..8812 -•••.coin
No Text
V&E Februery 4, 2010 Page 2
requirements described in the Code and the Certificate, the Issuer must timely file an IRS
Fonn 8038-CP, as described in paragraph 21 of the Certificate, in order to receive the direct-
pay credit payment.
In providing such opinion, we have relied on the opinions of the Attorney General of
the State of Texas and of our Finn of even date herewith regarding the legality and validity
of the Certificates of Obligation under the Constitution and laws of the State of Texas. We
have further relied on representations set forth in the Certificate and exhibits and attachments
thereto with respect to matters solely within the knowledge of the Issuer, the Issuer's
Financial Advisor and the Underwriter, which we have not independently verified. In
addition, we have assumed for purposes of this opinion continuing compliance with the
covenants in the Certificate pertaining to those sections of the Code that affect the treatment
of the Certificates of Obligation as "qualified bonds," as such term is defined in Section
54AA(g)(2) of the Code. In the event that such representations are determined to be
inaccurate or incomplete or the Issuer fails to comply with the foregoing covenants in the
Certificate, the Issuer could be retroactively disqualified to receive the direct-pay credit
otherwise allowable under Section 6431 of the Code from the date of the original delivery of
the Certificates of Obligation, regardless of the date on which the event causing such
disqualification occurs.
We observe that interest on obligations that are "qualified bonds" under Section
S4AA(g)(2) of the Code, such as the Certificates of Obligation, is not excludahle from gross
income for federal income tax purposes.
Except as stated above, we express no opinion es to any federal, state or local tax
consequences resulting from the ownership of, receipt of interest on or disposition of the
Certificates of Obligation.
The opinions set forth above are based on existing law, which is subject to change.
Such opinions are further based on our knowledge of facts as of the date hereof. We assume
no duty to update or supplement these opinions to reflect any facts or circwnstances that may
hereafter come to our attention or to reflect any changes in any law that may hereafter occur
or become effective. Moreover, our opinions are not a guarantee of result and are not
binding on the Internal Revenue Service (the "Service',; rather, such opinions represent our
legal judgment based upon our review of existing law and in reliance upon the
representations and covenants referenced above that we deem relevant to such opinions. No
assurance can be given as to whether or not the Service will commence an audit of the
Certificates of Obligation. If an audit is commenced the Service will treat the Issuer as the
taxpayer.
,..
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'
F-ebNaiy 4, 2010 Pap 3
To assure compliance with Internal Revenue Service C~ular 230, we are required to
inform you that this opinion is not intended or provided by us to be used, and it cannot be
used by any taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the
taxpayer under federal income tax law or (ii) promoting, marketing or nx:ommending to
another party any transaction or matter addressed herein.
Furthermore, the opinion expressed herein is fur the sole benefit of, and may be relied
upon only by, the Issuer, and is not otherwise to be used, reproduced, circulated, quoted, or
referred to, in whole or in part, without the prior written consent of the undersigned in each
and every instance. We observe that we are engaged solely to represent the Issuer in this
matter.
Very truly yours,
L\)~ v--aL-j;J.f.
VINSON & ELKINS L.L.P.
USlSllll
,.
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Vinson&Elkins
February 4, 2010
City of Lubbock, Texas
P .0. Box 2000
Lubbock, Texas 79457
First Southwest Company
Hutchinson, Shockey, Edey & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Fort Worth, Texas 76102
Re: City of Lubbock, Texas General Obligation Bonds, Series 2010A
City of Lubbock, Tex:as General Obligation Bonds, Taxable Series 20108 (Build
America Bonds -Direct Payment)
Ladies and Gentlemen:
We have served a.s Bond Counsel to th.e City of Lubbock, Texas (the "Issuer'') in
connection with the issuance of its $8,840,000 General Obligation Bonds, Series 2010A and
$15,320,000 General Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct
Payment) (collectively, the "Bonds") issued pursuant to the provisions of an ordinance duly
adopted by the City Council of the Issuer on December 16, 2009 (the "Ordinance''). This
opinion is delivered pursuant to the provisions of Section 8(c){7) of the Purchase Contract
(hereinafter defined). Capitalized tenns not otherwise defined in this opinion have the meanings
assigned in the hereinafter defined Purchase Contract.
In our capacity as Bond Counsel to the Issuer, we have reviewed the following:
(a) a certified copy of the Ordinance;
(b) an executed counterpart of the Purchase Contract dated January 21, 2010 (the
"Purchase Contract'') between the Issuer and the Underwriters named in such Purchase
Contract;
Vinaon & Ellllne UP Adorrwy9 It LA• Austin Beijing Oellat
O\blli 1-!ouetcn Lonc:Jon Molcow NewYork Tokyo Waahlngtcn
US 247235v.1
Trammell Crow Center, 2001 Ross Avenue. Sllllll 3700
Dallas, Tel189 75201-2975 Tel 21•,220.7700 fa 21•.220.n16
-..... .eoil'I
No Text
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(c) a copy of the Pricing Certificate, dated January 21, 2010;
(d) a copy of the Official Statement dated January 21, 2010; and
(e) such other agreements, documents, certificates, opinions, letters, and other papers
as we have deemed necessary or appropriate in rendering the opinions set forth below.
In making our review, we have assumed the authenticity of all documents and agreements
submitted to us as originals, conformity to the originals of all documents and agreements
submitted to us as certified or photostatic copies, the authenticity of the originals of such latter
documents and agreements, and the accuracy of the statements contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set
forth, we are of the opinion that under the applicable laws of the United States of America and
the State of Texas in force and effect on the date hereof:
1. The Bonds are exempted securities under the Securities Act of 1933, as amended (the
"1933 Act") and the Trust Indenture Act of 1939, as amended (the ''Trust Indenture
Act"), and it is not necessary in connection with the offering and sale of the Bonds to
register the Bonds under the 1933 Act or to qualify the Ordinance under the Trust
Indenture Act.
2. Except as to the extent noted herein, we have not verified and are not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of the
information contained in the Official Statement. We have, however, reviewed the
statements and information in the Official Statement under the captions ''The
Obligations" (except for the subcaptions "Book-Entry-Only System" and "Sources and
Uses of Proceeds") and ''Tax Matters" and the subcaptions "Continuing Disclosure of
Information" (except for the subcaption "Compliance with Prior Undertakings''), "Legal
Investments and Eligibility to Secure Public Funds in Texas" and "Legal Matters" under
the caption "Other Information," and we are of the opinion that such statements and
information present a fair and accurate summary of the provisions of the laws and
instruments therein described and, with respect to the Bonds, such information conforms
to the Ordinance.
3. The Purchase Contract has been duly authorized, executed and delivered by the Issuer
and (assuming due authorization by the Underwriters) constitutes a binding and
enforceable agreement of the Issuer in accordance with its terms.
The addressees may rely on our opinions, dated as of the date hereof, delivered in
connection with the issuance of the Bonds to the same extent as if such opinions were
specifically addressed to them .
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US 247235v. l
No Text
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This opinion is furnished solely for your benefit and may be relied upon only by the
addresses hereof or anyone to whom specific permission is given in writing by us.
Very truly yours,
11 \ J,L j)f
'U~~
-3-
US 247235v.l
No Text
...
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Vinson&Elkins
February 4, 2010
City of Lubbock, Texas
P.O. Box 2000
Lubbock, Texas 79457
First Southwest Company
Hutchinson, Shockey, Edey & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Fort Worth, Texas 76102
Re: City of Lubbock, Texas Tax and Waterworks System Surplus Revenue
Certificates of Obligation, Series 201 0A
City of Lubbock, Texas Tax and Wataworlcs System Surplus Revenue
Certificates of Obligation, Taxable Series 2010B (Build America Bonds -Direct
Payment)
Ladies and Gentlemen:
We have served as Bond Counsel to the City of Lubbock, Texas (the "Issuer'') in
connection with the issuance of its $48,955,000 Tax and Waterworks System Surplus Revenue
Certificates of Obligation, Series 2010A and its $96,540,000 Tax and Waterworks System
Surplus Revenue Certificates of Obligation, Taxable Series 201 OB (Build America Bonds -
Direct Payment) (collectively, the "Certificates .. ) issued pursuant to the provisions of an
ordinance duly adopted by the City Council of the Issuer on December 16, 2009 (the
"Ordinance"). This opinion is delivered pursuant to the provisions of Section 8(e)(7) of the
Purchase Contract (hereinafter defined). Capitalized tenns not otherwise defined in this opinion
have the meanings assigned in the hereinafter defined Purchase Contract.
In our capacity as Bond Counsel to the l~ucr, we have reviewed the following:
(a) a certified copy of the Ordinance;
~ 6 EIIDtl8 l1.P AtbWneya at I.aw AuSlln Beijing Oallu
IMiei Housmn London Moscow N-YOII: Tokyo Washlr,gton
us 250987\f .1
Trammell CIQW C.nter, 2001 Ross Avenue, SYl!e 3700
Dallas, Te11:as 75201-21ffli Tel 214.220.7700 Fa 214.2::10.7719
---¥111•.co,n
,..
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(b) an executed counterpart of the Purchase Contract dato::I January 21, 2010 (the
"Purchase Contract") between the Issuer and the Underwriters named in such Purchase
Contract;
(c) a copy of the Pricing Certificate, dated January 21, 201 O;
(d) a copy of the Official Statement dated January 21, 2010; and
(e) such olher agreements, documents, certificates, opinions, letters, and other papers
as we have deemo::1 nece9sacy or appropriate in rendering the opinions set forth below.
In making our review, we have assumed the authenticity of all documents and agreements
submitted to us as originals, conformity to the originals of all documents and agreements
submitted to us as certified or photostatic copies, the authenticity of the originals of such latter
documents and agreements, and the accuracy of the statements contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set
forth, we are of the opinion that under lhe applicable laws of the United States of America and
the State of Texas in force and effect on the date hereof.
1. The Certificates are exempted securities mder the Securities Act of 1933, as amended
(the "1933 Act") and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act''), and it is not necessary in COMection with the offering and sale of the Certificates
to register the Certificates under the 1933 Act or to qualify the Ordinance under the Trust
Indenture Act.
2. Except as to the extent noted herein, we have not verified and are not passing upon and
do not as.,ume any responsibility for the accuracy, completeness or fairness of the
information contained in the Official Statement. We have, however, reviewed the
statements and information in the Official Statement under the captions "The
Obligations" (except for the subcaptions 11Book-Entry-Only System" and "Sow-ces and
Uses of Proceeds") and ''Tax Matters" and the subcaptions "Continuing Disclosure of
Information" (except for the subcaption "Compliance with Prior Undertakings''), "Legal
Investments and Eligibility to Secure Public Funds in Texas .. and .. Legal Matters97 under
the caption "Other Information," and we are of the opinion that such statements and
information present a fair and accurate summary of the provisions of the laws and
instruments therein described and, with respect to the Certificates, such information
conforms to the Ordinance.
3. The Purchase Contract has been duly authorized, executed and delivered by the Issuer
and (asswning due authorization by the Underwriters) constitutes a binding and
en forccable agreement of the Issuer in accordance with its terms.
-2-
US 250987v. I
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V&E
The addressees may rely on our opinions, dated as of the date hereof, delivered in
connection with the issuance of the Certificates to the same extent as if such opinions were
specifically addressed to them.
This opinion is furnished solely for your benefit and may be relied upon only by the
addresses hereof or anyone to whom specific permission is given in writing by us.
Very truly yours,
-3-
US 250987v.l
,,. ....
LAW OFFICES
M\;CALL, PARKHURST & HORTON L.L.P.
717 NORTH HARWOOD
SUITE 900
700 N. ST. MARY'S STRE:E:T
SUITE 1525
DALL.AS, TEXAS 75201-6587 SAN ANTONIO, TEXAS 78205-3503
TELEPHONE: 214 754-9200
FJloCS'MIU:! 21475.4-9250
Fint Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Ft. Worth, Texas 76102
TELEPHONE: 2 ,o 225. 2800
February 4, 2010
600 CONGRESS AVENUE
SUITE 1B00
AUSTIN, TEXAS 78701-324.9
TELEPHONE: ~12 478-3805
F.-CS,MILEC 512 472-0871
Re: $8,840,000 CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, SERIES
2010A
$15,320,000 CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, TAXABLE
SERIES 2010B (BUILD AMERICA BONDS• DIRECT PAYMENT)
Ladies and Gentlemen:
We have acted as counsel for you as the undenvriters of the securities described above
(collectively, the "Securities"), issued under and pursuant to an ordinance (the "Ordinance") of the
City of Lubbock, Texas (the 11lssuer"), authorizing the issuance of the Securities, which Securities
you are purchasing pursuant to a Purchase Contract, dated January 21, 2010. All capitalized
undefined terms used herein shall have the meaning set forth in the Purchase Contract.
In connection with this opinion letter, we bave considered such matters of law and of fact,
and bave relied upon such certificates and other infonnation furnished to us, as we have deemed
appropriate as a basis for our opinion set forth below. We are not expressing any opinion or views
herein on the authorization, issuance, delivery, validity of the Securities and we have asswned, but
not independently verified, that the signatures on all documents and Securities that we have
examined are genuine.
.-
,.
....
'
Based on and subject to the foregoing, we are of the opinion that, under existing laws, the
Securities are not subject to the registration requirements of the Securities Act of 193 3. as amended,
and the Ordinance is not required to be qualified under the Trust Indenture Act of 1939. as amended.
Because the primary purpose of our professional engagement as your counsel was not to
establish factual matters. and because of the wholly or partially nonlegal character of many of the
determinations involved in the preparation of the Official Statement dated January 21, 2010 (the
"Official Statement") and because the information in the Official Statement under the headings "TIIE
OBLIGATIONS -Book-Entry-Only System," "TAX MATIERS," "OTIIER INFORMATION -
Continuing Disclosure of Information -Compliance with Prior Undertalcings'' and Appendices A
and B thereto were prepared by others who have been engaged to review or provide such
information, we ere not passing on and do not asswne any responsibility for. exc.ept a.i set forth in
the l~t sentence of this paragrap~ the accuracy, completeness or fairness of the statements contained
in the Official Statement (including any appendices, schedules and exhibits thereto) and we make
no representation that we have independently verified the accuracy, completeness or fairness of such
statements. In the course of our review of the Official Statement, we had discussions with
representatives of the City regarding the contents of the Official Statement. In the course of our
participation in the preparation of the Official Statement as your counsel, we had discussions with
representatives of the Issuer, including its City Attorney, Bond Counsel and Financial Advisor,
regarding the contents of the Official Statement. In the course of such activities, no facts came to
our attention that would lead us to believe that the Official Statement (except for the financial
statements and other financial and statistical data contained therein, the information set forth under
the headings 1111IE OBLIGATIONS -Book-Entry--Only System," "TAX MATTERS," "OTIIER
INFORMATION -Continuing Disclosure of Infonnation -Compliance with Prior Undertakings"
and Appendices A and B thereto, as to which we express no opinion). as of its date contained any
untrue statement of a material fact or omitted to state any material. fact necessaty to make the
statements there~ in the light of the circumstances under which they were made, not misleading.
This opinion letter may be relied upon by only you and only in connection with the
transaction to which reference is made above and may not be used or relied upon by any other person
for any purposes whatsoever without our prior written consent.
Respectfully,
(U4.ut. u~ : ~ l--~~-
,..
No Text
No Text
LAW OFFICES
M\;;CALL, PARKHURST & HORTON L.L.P.
717 NORTH HARWOOD
SUITE 900
700 N. ST. MARY'S STREET
SUITE 1525
DALL.AS, TEXAS 75201-8587 SAN ANTONIO, TEXAS 79205.3503
TV.EPHONE: 214754-9200
FACSIMOLE: 214 754-9250
First Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Ft. Worth, Texas 76102
TELEPHONE! 210 225-2800
FACSOMIL.E: 210 225-29&4
February 4, 2010
EiOO CONGRESS AVENUE
SUITE 18CO
AUSTIN, T£XAS 78701-3i!48
TELEPHONE: 512 478-3805
FACSIMILE: 512 472-0871
Re: $48,955,000 CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS
Rl:VENUE CERTIFICATES OF OBLIGA TI0N, SERIES 2010A
$96,540,000CITYOFLUBBOCK, TEXASTAXANDWATERWORKSSYSTEMSURPLUS
REVENUE CERTIFICATES OF OBLIGATION, TAXABLE SERIES 2010B (BUILD
AMERICA BONDS -DIRECT PAYMENT)
Ladies and Gentlemen:
We have acted as counsel for you as the underwriters of the securities described above
(collectively, the 11Securities11), issued under and pursuant to an ordinance (the 11Ordinance11) of the
City of Lubbock, Texas (the 11Issuer'1), authorizing the issuance of the Securities, which Securities
you are purchasing pursuant to a Purchase Contract, dated January 21, 2010. All capitalized
undefined terms used herein sh.all have the meaning set forth in the Purchase Contract.
In connection with this opinion letter, we have considered such matters of law and of fact,
and have relied upon such certificates and other information furnished to us, as we have deemed
appropriate as a basis for our opinion set forth below. We are not expressing any opinion or views
herein on the authorization, issuance, delivery, validity of the Securities and we have assumed, but
not independently verified, that the signatures on all documents and Securities that we have
examined are genuine.
,.
..
Based on and subject to the foregoing, we are of the opinion that, wider existing laws, the
Securities are not subject to the registration requirements of the Securities Act of 1933, as amended,
and the Ordinance is not required to be qualified under the Trust Indenture Act of 1939, as amended.
Because the primary purpose of our professional engagement as your cowisel '\VBS not to
establish factual matters, and because of the wholly or partially nonlegal character of many of the
determinations involved in the preparation of the Official Statement dated January 21, 2010 (the
"Official Statement") and because the infonnation in the Official Statement under the headings "TIIB
OBLIGATIONS -Book-Entry-Only System;" "TAX MATTERS/' "OlHER INFORMATION -
Continuing Disclosure of Infonnation -Compliance with Prior Undertakings" and Appendices A
and B thereto were prepared by others who have been engaged to review or provide such
information, we are not passing on and do not asswne any responsibility for, except as set forth in
the last sentence of this paragraph, the accuracy, completeness or fairness of the statements contained
in the Official Statement (including any appendices, schedules and exhibits thereto) and we make
no representation that we have independently verified the accUJ'BCy> completeness or fairness of such
statements. In the co~ of our review of the Official Statement, we bad discussions with
representatives of the City regarding the contents of the Official Statement In the course of our
participation in the preparation of the Official Statement as your counsel, we bad disc~ions with
representatives of the Issuer, including its City Attorney, Bond Counsel and Financial Advisor,
regarding the contents of the Official Statement. In the course of such activities, no facts came to
our attention that would lead us to believe that the Official Statement ( except for the :financial
statements and other financial and statistical data contained therein, the infonnation set forth under
the headings "TIIB OBLIGATIONS -Book-Entry-Only System," "TAX MATIERS," "OTIIER
INFORMATION -Continuing Disclosure of Information -Compliance with Prior Undertakings"
and Appendices A and B thereto. as to which we express no opinion)> as of its date contained any
witrue statement of a material fact or omitted to state any material fact necessacy to make the
statements therein, in the light of the circumstances wider which they were made, not misleading
This opinion letter ma.y be relied upon by only you and only in connection with the
transaction to which reference is made above and ma.y not be used or relied upon by any other person
for any purposes whatsoever without our prior written consent.
Respectfully,
(\\, w . Mw ~ ~ t,.(..P.
No Text
ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
February 4, 2010
TIIIS IS TO CERTIFY that the City of Lubbock, Texas (the "Issuer"), has
submitted to me City of Lubbock, Texas, General Obligation Bond, Series 2010A
(the 11Bond") in the principal amowit of $8,840,000 for approval. The Bond is dated
February 4, 2010, numbered TA-I, and was authorized by Ordinance No. 2009-
00117 passed by the Issuer on December 16, 2009.
I have examined the law and such certified proceedings and other papers as I deem
necessary to render this opinion.
As to questions of fact material to my opinion, I have relied upon representations of the
Issuer contained in the certified proceedings and other certifications of public officials furnished to
me without widertak.ing to verify the same by independent investigation.
I express no opinion relating to any official statement or any other offering material relating
to the Bond.
Based on my examination, I am of the opinion, as of the date hereof and under existing law,
as follows:
No. SOIOI
(I) The Bond has been issued in accordance with law and is a valid and binding general
obligation of the Issuer.
(2) The Bond is payable from the proceeds of an ad valorem tax levied, within the limits
prescribed by law, upon all taxable property in the Issuer.
Therefore, the Bond is approved.
~~ Attom~ ofthe State of Texas
Book No. 2010-A
MA
POST OFFICE Box 12548, AUSTIN, TEXAS 78711-2548 TEL:(512)463-2100 WWW,OAG.STATE.TX.US
Ao E'fu;,/ Em1ioymmt Op,~rtunitJ Empi•J" • Printtd M Rtc:,rf,J 1'1tptr
-. -
,.
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, SUSAN COMBS, Comptroller of Public Accounts of the Stale of Texas,
do hereby certify that the attachment is a true and corTect copy of tt,e opinion of
the Attorney General approving ttie:
City of Lubbock, Texas. General Obligation Bond. Series 201 QA
numbered I8::1. of the denomination of $ 8,840.000, dated February 4. 2010, as
authorized by Issuer, interest various percent, under and by authority of which
said bonds/certtticates were registered electronically in the office of the
Comptroller, on ttie 4th day of February 201 o, under Registration Number 76512.
Given under my hand and seal of office, at Austin, Texas, the 4th day of
February 201 o.
~~~
SUSAN COMBS
ComptroDer of Public Accounts
o1 the State of Texas
No Text
'
'
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, Melissa Mora, 0 Bond Clerk 00 Assistant Bond Clerk in the office of the Comptroller of the State
of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the
4th day of February 2010, I signed the name of the Comptroller to the certificate of registration
endorsed upon the:
City of Lubbock, Texas, General Obligation Bond, Series 201 DA,
numbered TA-1 dated Februa 4 201 , and that in signing the certificate of registration I used the
following signature:
-
I, Susan Combs, Comptroller of Public Accounts of the State of Texas, certify that the person
who has signed the above certificate was duly designated and appointed by me under authority
vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to
all certificates of registration, and/or cancellation of bonds required by law to be registered and/or
cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the
bonds/certificates described in this certificate have been duly registered in the office of the
Comptroller, under Registration Number 76512.
GIVEN under my hand and seal of office at Austin, Texas, this the 4th day of February 2010.
Susan Combs
Comptroller of Public Accounts
of the State of Texas
\_
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,.
,.
No Text
No Text
,.... ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
February 4, 2010
lHIS IS TO CERTIFY that the City of Lubbock, Texas (the 11lssuer11), has
submitted to me City of Lubbock. Texas. General Obligation Bond. Taxable Series
2010B (Build America Bonds -Direct Payment) (the "Bond") in the principal
amount of $15,320,000 for approval. The Bond is dated February 4, 2010,
numbered TB-I, and was authorized by Ordinance No. 2009-00117 passed by the
Issuer on December 16, 2009.
I have examined the law and such certified proceedings and other papers as I deem
necessary to render this opinion.
As to questions of fact material to my opinion, I have relied upon representations of the
Issuer contained in the certified proceedings and other certifications of public officials furnished to
me without undertaking to verify the same by independent investigation.
I express no opinion relating to any official statement or any other offering material relating
to the Bond.
Based on my examination, I am of the opinion, as of the date hereof and under existing law,
as follows:
No. 50102
(I) The Bond has been issued in accordance with law and is a valid and binding general
obligation of the Issuer.
(2) The Bond is payable from the proceeds of an ad valorem tax levied, within the limits
prescribed by law, upon all taxable property in the Issuer.
Therefore, the Bond is approved.
~~-/~ al of the State of Texas
Book. No. 20 I 0-A
MA
POST OFFICE Box 12548, AUSTIN, TEXAS 78711-2548 TEL:(512)463-2100 WWW.OAG.STATE.TX.US
A• £q•al £mploywunr OpponunitJ £mplo.1tr -Prinud on Ru1dtd l'aptr
No Text
'
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, SUSAN COMBS, Comptroller of Public Accounts of the State of Texas,
do hereby certify that the attachment is a true and correct copy of the opinion of
the Attorney General approving the:
City of Lubbock, Texas, General Obligation Bond. Taxable Series 2010B (Build
America Bonds-Direct Payment)
numbered TB-1. of the denomination of$ 15,320,000. dated February 4. 2010,
as authorized by issuer, interest various percent, under and by authority of which
said bonds/certificates were registered electronically in the office of the
Comptroller, on the 4th day of February 2010, under Registration Number 76513.
Given under my hand and seal of office, at Austin, Texas, the 4th day of
February 201 o.
~~
SUSAN COMBS
Comptroller of Public Accounts
of the State of Texas
No Text
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, Melissa Mora, D Bond Clerk [R] Assistant Bond Clerk in the office of the Comptroller of the State
of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the
4th day of February 2010, I signed the name of the Comptroller to the certificate of registration
endorsed upon the:
City of Lubbock, Texas, General Obligation Bond, Taxable Series 2010B (Build America Bonds-
Direct Payment).
numbered TB-1, dated February 4, 201 Q, and that in signing the certificate of registration I used the
following signature:
I, Susan Combs, Comptroller of Public Accounts of the State of Texas, certify that the person
who hes signed the above certificate was duly designated and appointed by me under authority
vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to
all certificates of registration, and/or cancellation of bonds required by law to be registered and/or
cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the
bonds/certificates described in this certificate have been duly registered in the office of the
Comptroller, under Registration Number 76513.
GIVEN under my hand and seal of office at Austin, T exes, this the 4th day of February 2010.
~~
Susan Combs
Comptroller of Public Accounts
ot the State ot Texas
No Text
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0
ATTORNEY GENERAL OF TEXAS
GR.EG ABBOTT
February 4, 2010
THIS IS TO CERTIFY that the City of Lubbock, Texas (the "Issuer"), has
submitted to me City of Lubbock, Texas. Tax and Waterworks System Sw;plus
Revenue Certificate of Obligation. Series 2010A (the "Certificate11
) in the principal
amount of $48,955,000 for approval. The Certificat.e is dated February 4, 2010,
numbered TA-1, and was authorized by Ordinance No. 2009-00114 passed by the
Issuer on December 16, 2009 (the "Ordinance").
I have examined the law and such certified proceedings and other papers as I deem
necessary to render this opinion.
As to questions of fact mat.erial to my opinion, I have relied upon representations of the
Issuer contained in the certified proceedings and other certifications of public officials furnished to
me without undertaking to verify the same by independent investigation.
I express no opinion relating to the official statement or any other offering material relating
to the Certificate.
Based on my examination, I am of the opinion, as of the date hereof and under existing law,
as follows ( capitalized tenns, except as herein defined, have the meanings given to them in the
Ordinance):
(1) The Certificate has been issued in accordance with law and is a valid and binding
obligation of the Issuer.
(2) The Certificate is payable from the proceeds of an ad valorem tax levied, within the
limits prescribed by law, upon all laXable property in the Issuer and is additionally
secured by and payable from a pledge of the Surplus Revenues derived from the
operation oft.he Issuer's Waterworks System, in an amount limited to $1,000.
POST OFFICE Box 12548, AUSTII\I, TEXAS 78711-2548 Tl!L:(512)463-2100 ,.'ll'W.OAG,STATE.TX.US
A~ Ef1<4l £,.,ff-,m,nl O]'pcrtunitJ Employer • P,inrrd .. Rrryrir,i l'11ptr
No Text
City of Lubbock, Texas, Tax and Waterworks System Revenne Certificate of Obligation, Series
2010A-$48,955,000
-P e2-
Therefore, the Certificate is approved.
No. 50009
Book No, 2010-A
MA
No Text
'
•
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, SUSAN COMBS, Comptroller of Public Accounts of lhe State of Texas,
do hereby certify that the attachment is a true and correct copy of the opinion of
the Attorney General approving the:
Citv ot Lubbock, TeXl)s, Tax and. Wmrworks System surplus Revenue
Certificate of Obljga!iOns. Series 201 08
numbered I&1, of the denomination of $ 48,955.000, dated February 4, 2010,
as authorized by issuer, interest various percen~ under and by authority of which
said bond&'cerlificales were registered electronically in lhe office of the
Comptroller, on the 4th day qi February 2010, under Registration Number 76§1 o.
Given under my hand and seal of office, at Austin, Texas, the 4th day of
February 201 O.
~~-
SUSAN COMBS
Comptroller ot Public Accounts
at the State of Texas
No Text
..,
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, Melissa Mora, D Bond Clerk [8] Assistant Bond Clerk in the office of the Comptroller of the State
of Texas, do hereby certtty that, acting under the direction and authority of the Comptroller on the
4th day of February 2010, I signed the name of the Comptroller to the certificate of registration
endorsed upon the:
City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certtficate of Obligations,
Series 2010A,
numbered TA-1 dated February 4, 2010, and that in sig · g the certtficate of registration I used the
following signature:
I, Susan Combs, Comptroller of Public Accounts of the State of Texas, certtty that the person
who has signed the above certificate was duly designated and appointed by me under authority
vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to
all certificates of registration, and/or cancellation of bonds required by law to be registered and/or
cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the
bonds/certificates described in this certificate have been duly registered in the office of the
Comptroller, under Registration Number 76510.
GIVEN under my hand and seal of office at Austin, Texas, this the 4th day of February 201 Q.
~a.~
Susan Combs
Comptroller of Public Accounts
of the State of Texas
No Text
b
b
No Text
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ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
FebN&IY 4, 2010
THIS IS TO CERTIFY that the City of Lubbock, Texas (the "Issuer"), has
submitted to me City of Lubbock. Texas, Tax and Waterworks System Surplus
Revenue Certificate of Obligation, Taxable Series 2010B (Build America Bonds -
Din;ct Payment) (the "Certificate"} in the principal amount of $96,540,000 for
approval. The Certificate is dated February 4, 2010, numbered TB-1, and was
authorized by Ordinance No. 2009-00114 pwed by the Issuer on December 16,
2009 (the "Ordinance").
I have examined the law and such certified proceedings and other papers as I deem
necessary to render this opinion.
As to questions of fact material to my opinion, I have relied upon representations of the
Issuer contained in the certified proceedings and other certifications of public officials furnished to
me without 1.mdertaking to verify the same by independent investigation.
I express no opinion relating to the official statement or any other offering material reJating
to the Certificate.
Based on my examinatio~ I am of the opinion, as of the date hereof and under existing law,
as follows (capitalized tenns, except as herein defined, have the meanings given to them in the
Ordinance):
(1) The Certificate has been issued in accordance with law and is a valid and binding
obligation of the Issuer.
(2) The Certificate is payable from the proceeds of an ad valorem tax levied, within the
limits prescribed by law, upon all taxable property in the Issuer and is additionally
secured by and payable from a pledge of the Surplus Revenues derived from the
operation of the Issuer's Waterworks System, in an amount limited to $1,000.
POSTO Ff!CE Box I 2 548, AUSTIN, TEICAS 787l l-2H8 T£L: (512)463-2 I 00 WWW. OA(l.STAT!. TX, lJS
An El{ul £,nt/•J"''"' o,,,,,.,,.,t, £111,U~•. hinwJ ,n Ruyd,d Pa1tr
No Text
City of Lubbock, Texas, Tax and Waterworks System Revenue Certificate of Obligation, Taxable
Series 20\0B (Build America Bonds -Direct Payment)-$96,540,000
-P e2-
Therefore, the Certificate is approved.
No. 50100
Book No. 2010-A
MA
~tU4dbf' Attom~ oftbe State of Texas
,..
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, SUSAN COMBS, Comptroller of Public Accounts of the State of Texas,
do hereby certify that the attachment is a true and correct copy of the opinion of
the Attorney General approving the:
City of Lubbock. Texas, Tax and Waterworks System Syrglus Revenue
Certificate of ObligaUon Taxable, Sedes 2010B /Build America 6onds-Direct
Payment}
numbered TB· 1, of the denomination of $ 96,540,000, dalad February 4, 2010.
as authorized by issuer, Interest various percent, under and by authority of which
said bonds/certificates were registered electronically In the office of the
Comptroller, on the 4th day of February 2010, under Registration Number 76511.
GIVen under my hand and seal of office, at Austin, Texas, the 4th day of
February 201 o.
~~ ..
SUSAN COMBS
CornptroUer of Public Accounts
o1 the state of Texas
-
-
,,.
,,.
'
OFFICE OF COMPTROLLER
OF THE STATE OF TEXAS
I, Melll!sa Mora, D Bond Clerk [Kl Asoislallt Bond Clerk in the olfice ol the Compuoller ol the State
ot Texas, do hereby certify that, aciing under the direction and authority of 1he Comptroller on the
4th dav of E,brwuy 2010. I signed the name of the Comptroller ta the cef1.ificate of registration
endorsed upon !he:
City ot Lubbock, Texas, T a::it and Waterworits Svstero Surplus R@yenue Certificate of Obligatign
Toxalll!!, Senes 20108 (Byikl America Bonds-Direct f'llymenl),
numbered IB:.L. dated February 4, 201 O, and that In signing the certi1icate of registration I used the
1oltowing signature-:
I, SUsan Combs, Comptroller of Publfc Accounts of the State of Texas, certify that the person
who has signed the above cerHflcH.le was duly designated and appointed by me under authority
vested In me by OJapter 403, Subchapter H, Government Code, with authc(rty to sign my name to
all certH'icates of regletration, ar,d/or cancellation of bOnds required by law to be registered and/or
cancelled by me, and was acting as such on the dale first mentiOned in this certlftcate, and that the
bonds/certificates described in this certificate have been duly registered in the office ol the
Comptroller, under Registration Number 76511.
GIVEN under my hand and seal ol office at Austin, Tb.EIS, lhis the 4th day of February 201 Q,
~~
S"""" Combs
Comptroller of F'ubNc Accounts
of the State ot Texas
,-
,-
,,.
...
P.O. Box 2000 • 1625 13th Street
Lubbock. Texas 79457
(806) 775-2222 • Fax (806) 775-3307
Fint Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Ft. Worth, Texas 76102
Office of the City Attorney
February 4, 2010
Re: $8,840,000 CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, SERIES
2010A
$15,320,000 CJTI' OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS,
T A.XABLE SERIES 20 l OB {BUILD AMERICA BONDS -DIRECT PAYMENT)
Ladjes and Gentlemen:
I am the City Attorney for the City of Lubbock, Texas (the "City") at the time of the
issuance of the above referenced securities (collectively, the "Securities"), pursuant to the
provisions of an ordinance (the "Ordinance11) duly adopted by the City Council of the City on
December 16, 2009. Capitalized terms not otherwise defined in this opinion have the meanings
assigned in the Purchase Contract.
In my capacity as City Attorney to the City, I have reviewed such agreements,
docwnents, certificates, opinions, letters, and other papers as I have deemed necessary or
appropriate in rendering the opinions set forth below.
In making my review, I have nsswned the authenticity of all docwnents and agreements
submitted to me as originaJs. conformity to the originals of all documents and agreements
submitted to me as certified or photostatic copies, the authenticity of the originals of such latter
documents and agreements, and the accuracy of the statement contained in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set
forth, I am oflhe opinion that under the applicable laws of the United States of America and the
State of Texas in force and effect on the date hereof:
--
,.
...
1. Based on reasonable inquiry made of the responsible City employees and public officials,
the City is not, to the best of my knowledge, in breach of or in default wider any
applicable law or administrative regulation of the State of Texas or the United States, or
any applicable judgment or decree or any trust agreement, loan agreement, bond, note,
resolution, orclinance, agreement or other instrument to which the City is party or is
otheIWise subject ~ to the best of my knowledge after due inquiry, no event has
occurred and is continuing that, with the passage of time or the giving of notice, or both,
would constitute such a default by the City under any of the foregoing; and the execution
and delivery of the Purchase Contract, the Securities and the adoption of the Ordinance
and compliance with the provisions of each of such agreements or inmruments does not
constitute a breach of or default under any applicable law or administrative regulation of
the State of Texas or the United States or any applicable judgment or decree or, to the
best of my knowledge. any trust agreement, loan agreement, bond, note, resolution,
orclinance, agreement or other instrument to which the City is a party or is otherwise
subject; and
2. Except as clisclosed in the Official Statement, no litigation is pencling, or, to my
knowledge, threatened, in any court in any way (a) challenging the titles of the Mayor or
any of the other members of the City Cowicil to their respective offices; (b) seeking to
restrain or enjoin the issuance, sale or delivery of any of the Securities, or the levy,
collection or application of the ad valorem taxes pledged or to be pledged to pay the
principal of and interest on the Securities; (c) contesting or affecting the validity or
enforceability of the Securities, the Ordinance, the Pricing Certificate or the Purchase
Contract; (d) contesting the powers of the City or any authority for the issuance of the
Securities, or the adoption of the Ordinance; or (e) that would have a material and
adverse effect on the financial condition of the City.
3. I have reviewed the information in the Official Statement containe.d under the caption
"Other lnfonnation--Litigation" and "Investigations Relating to the City's Health
Insurance Administrator" and such infonnation in all material respects accurately and
fairly summariz.es the matters described therein.
This opinion is furnished solely for your benefit and may be relied upon only by the
addresses hereof or anyone to whom specific permission is given in writing by me.
Very truly yours, 5~µ=
Sam Medina
,.
-
....
P.O. Box 2000 • 1625 13th Street
Lubbock) Texas 79457
(806) 775-2222 • Fax (806) 775-3307
Fint Southwest Company
Hutchinson, Shockey, Erley & Co.
J.P. Morgan Securities Inc.
Morgan Keegan & Company, Inc.
Southwest Securities, Inc.
c/o First Southwest Company
777 Main Street, Suite 1200
Ft. Worth, Texas 76102
Office of the City Attorney
February 4, 2010
Re: $48,955,000 CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A
$96,540,000 CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM
SURPLUS REVENUE CtRTIFICATES OF OBLIGATION, TAXABLE SERIES 2010B
(BUILD AMERICA BONDS -DIRECT PAYMENT)
Ladies and Gentlemen:
I am the City Attorney for the City of Lubbock> Texas (the "City") at the time of the
issuance of the above referenced securities (collectively, the "Securities"), pursuant to the
provisions of an ordinance (the ''Ordinance") duly adopted by the City Council of the City on
December 16, 2009. Capitalized terms not otherwise defined in this opinion have the meanings
assigned in the Purchase Contract.
In my capacity as City Attorney to the City, I have reviewed such agreements,
documents, certificates, opinions, letters, and other papers as I have deemed necessary or
appropriate in rendering the opinions set forth below.
In making my review, I have assumed the authenticity of all documents and agreements
submitted to me as originals, conformity to the originals of all documents and agreements
submitted to me as certified or photostatic copies, the authenticity of the originals of such latter
documents and agreements, and the accuracy of the statement contruned in such documents.
Based upon the foregoing, and subject to the qualifications and exceptions hereinafter set
forth, I am of the opinion that under the applicable laws of the United States of America and the
State of Texas in force and effed on the date hereof:
No Text
'
'
1. Based on reasonable inquiry made of the responsible City employees and public officials1
the City is not, to the best of my knowledge~ in breach of or in default under any
applicable law or adrninistrative regulation of the State of Texas or the United States., or
any applicable judgment or decree or any trust agreement, loM agreement, bond, note,
resolution, ordinance~ agreement or other instrument to which the City is party or is
otherwise subject and, lO the best of my .knowledge after due inquiry, no event ho.s
occurred and is continning that, \lflth the passage of time or the giving of notice, or both,
would constitute such a defuult by the-City under any of the foregoing; and the exe.cution
end delh,ery of the Purch11.Se Contract, the Securities and the adoption of lhe Ordinance
and compliance v.ith the provisions of each of such agreements or instruments does not
constitute a breach of or default under ony applicable law or administrative regulation of
the State of Texas or the United States or any applicable judgment or decree or, to the
best of my knowledge, any trust agreement, loan agreement, bond, note, resolution.
ordinance, agreement or other instrument to "'ttich the City is a party or is otherwise
subject; and
2. Except as disclosed in the Official Statement, no litigation is pending, or, to my
knowledge, threatened, in any court in any way (a) challenging the titles of the Mayor or
any of the other members of the City Council to their respective offices; (b) seeking to
1 restrain or enjoin the issuance, sale or delivery of any of the Securities, or lhe levy.
collection or application of the ad valorem tnxes end the Pledged Revenues pledged or to
be pledged to pay the principal of and interest on lhe Securities; ( c) contesting or
affecting the validity OT enforceability of the Securities, the Ordinance, the Pricing
Certificate or the Purchase Contract; (d) contesting the powers of the <;:ity or any
authority for the issuance of the Securities, or the adoption of the Ordinance; or (e) that
would have n material and adverse effect on the financial condition of lhe City.
3. I have reviewed the information in the Official Statement contained under the caption
'lOther Infonnation--Litigation" and "Investigations Relating to the City's Health
Insurance Administrator" and such information in all material respects accurately and
fairly summarizes the matters described therein.
This opinion is furnished solely for your benefit and may be reJied upon only by the
addre.sses hereof or anyone to whom specific permission is given in writing by me.
Very truly yours,
/~ ~Mi .. ~
Sam Medina ,
,,.