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HomeMy WebLinkAboutOrdinance - 2009-O0114 - Tax And Waterworks System Surplus Revnue 2010B Series Obligation Bonds/Certs - 12/16/2009Ordinance No. 2009-00114 ORDINANCE relating to CITY OF LUBBOC~ TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 2010A AND CIIT OF LUBBOC~ TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION TAXABLE SERIES 201 OB (BUILD AMERICA BONDS -DIRECT PAYMENT) Adopted: December 16, 2009 186778v. I LUB200/71016 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MA TIERS Section 1.01. Definitions ................................................................................................................ 2 Section 1.02. Findings .................................................................................................................... 5 Section 1.03. Table of Contents, Titles, and Headings .................................................................. 5 Section 1.04. Interpretation ............................................................................................................ 5 ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND; PRIOR LIEN OBLIGATIONS Section 2.01. Payment of the Certificates ...................................................................................... 5 Section 2.02. Interest and Sinking Fund ........................................................................................ 7 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.01. Authorization ........................................................................................................... 7 Section 3.02. Date, Denomination, Maturities, and Interest .......................................................... 8 Section 3.03. Medh.un, Method, and Place of Payinent. ................................................................ 8 Section 3.04. Execution and Registration of Certificates ........................................................... .10 Section 3.05. Ownership .............................................................................................................. 10 Section 3.06. Registration, Transfer, and Exchange .................................................................... 11 Section 3.07. Cancellation ........................................................................................................... 11 Section 3.08. Temporary Certificates .......................................................................................... 12 Section 3.09. Replacernent Certificates ....................................................................................... 12 Section 3.10. Book-Entry-Only System ....................................................................................... 13 Section 3.11. Successor Securities Depository; Transfer Outside Book-Entry-Only System .... .14 Section 3.12. Payments to Cede & Co ......................................................................................... 14 ARTICLE IV REDEMPTION OF CERTIFlCATES BEFORE MATURITY Section 4.01. Redemption ............................................................................................................ 15 Section 4.02. Optional Redemption ............................................................................................. 15 Section 4.03. Extraordinary Redemption of Taxable Series 2010B Certificates ......................... 15 Section 4.04. Mandatory Sinking Fund Redemption ................................................................... I 5 Section 4.05. Partial Redemption ................................................................................................. 16 (i) l 86778v. I LUB2001710167101S Section 4.06. Notice of Redemption to Owners .......................................................................... 16 Section 4.07. Payment Upon Redemption ................................................................................... 17 Section 4.08. Effect of Redemption ............................................................................................. 17 Section 4.09. Lapse of Payment. .................................................................................................. 17 ARTICLEV PA YING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paying Agent/Registrar ..................................................... 18 Section 5 .02. Qualifications ......................................................................................................... 18 Section 5 .03. Maintaining Paying Agent/Registrar ..................................................................... 18 Section 5.04. Tennination ............................................................................................................ 18 Section 5 .05. Notice of Change to Owners .................................................................................. 18 Section 5.06. Agreement to Perfonn Duties and Functions ......................................................... 18 Section 5.07. Delivery of Records to Successor .......................................................................... 19 ARTICLE VI FORM OF THE CERTIFICATES Section 6.01. Fonn Generally ...................................................................................................... 19 Section 6.02. Fonn of the Certificates ......................................................................................... 19 Section 6.03. CUSIP Registration ................................................................................................ 31 Section 6.04. Legal Opinion ........................................................................................................ 31 Section 6.05. Bond Insurance ...................................................................................................... 31 ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS Section 7.01. Sale of Certificates; Official Statement ................................................................ .31 Section 7.02. Control and Delivery of Certificates ...................................................................... 33 Section 7 .03. Deposit of Proceeds ............................................................................................... 33 ARTICLE VIII INVESTMENTS Section 8.01. Investntents ............................................................................................................ 34 Section 8.02. Investntent Income ................................................................................................. 34 ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Certificates .................................................................................... 34 Section 9.02. Other Representations and Covenants .................................................................. .35 (ii) 186778v. l LU8200/710 I 671015 Section 9.03. Provisions Concerning Federal Income Tax Exclusion for Series 2010A Certificates ............................................................................................................. 3 5 Section 9.04. No Private Use or Payment and No Private Loan Financing ................................. 35 Section 9.05. No Federal Guaranty .............................................................................................. 36 Section 9.06. Series 2010A Certificates Are Not Hedge Bonds .................................................. 36 Section 9.07. No-Arbitrage Covenant. ......................................................................................... 36 Section 9.08. Arbitrage Rebate .................................................................................................... 36 Section 9. 09. Information Reporting. .......................................................................................... 3 7 Section 9 .10. Continuing Obligation ........................................................................................... 3 7 ARTICLEX DEFAULT AND REMEDIES Section I 0.01. Events of Default. .................................................................................................. 37 Section 10.02. Remedies for Default. ............................................................................................ 37 Section 10.03. Remedies Not Exclusive ........................................................................................ 38 ARTICLE XI DISCHARGE Section 11.01. Discharge ............................................................................................................... 38 ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.01. Annual Reports ...................................................................................................... 38 Section 12.02. Material Event Notices .......................................................................................... 39 Section 12.03. Limitations, Disclaimers and Amendments ........................................................... 39 ARTICLE XIII AMENDMENTS; ATTORNEY GENERAL MODIFICATION Section 13. 0 I. Amendntents .......................................................................................................... 41 Section 13.02. Attorney General Modification .............................................................................. 41 ARTICLE XIV EFFECTIVE IMMEDIATELY Section 14.01. Effective Immediately ............................................................................................ 41 Exhibit A ~ Description of Annual Disclosure of Financial Information ................................... A-1 Exhibit B -Sale Paratneters ......................................................................................................... B-1 (iii) 186778v.l LUB200/710167101S AN ORDINANCE PROVIDING FOR THE ISSUANCE OF CITY OF LUBBOCK, TEXAS, TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 201 0A AND CITY OF LUBBOCK, TEXAS, TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT); IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $168,000,000; LEVYING A TAX AND PLEDGING SURPLUS WATERWORKS SYSTEM REVENUES IN PAYMENT THEREOF; APPROVING THE OFFICIAL STATEMENT; APPROVING EXECUTION OF A PURCHASE CONTRACT; AND ENACTING OTHER PROVISIONS RELATING THERETO WHEREAS, under the provisions of Subchapter C, Chapter 271, Texas 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 certificates of obligation (herein defined as the "Certificates") that are secured by and payable from the ad valorem taxes and other revenues specified in Article II of this Ordinance, and that are issued in the amount, for the purposes, and with the provisions set forth in Section 3.01 of this Ordinance; 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 accordance with applicable law; WHEREAS, no petition has been filed with the City Secretary, any member of the City Council or any other official of the City, protesting the issuance of the Certificates; WHEREAS, the City Council is now authorized and empowered to proceed with the issuance and sale of the Certificates, and has found and detennined that it is necessary and in the best interests of the City and its citizens that it authorize the issuance of the Certificates in accordance with the tenns and provisions of this Ordinance at this time; WHEREAS, the City Council desires to delegate, pursuant to Chapter 1371, Texas Government Code, as amended, and the parameters of this Ordinance, to the Authorized Officer, the authority to approve the amount, the interest rate, the price and terms of the Certificates authorized hereby and to otherwise take such actions as are necessary and appropriate to effect the sale of the Cerri ficates; WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and public notice of the time, place, and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; therefore, BE IT ORDAINED BY THE CfIT COUNCIL OF THE CITY OF LUBBOCK: 186778v. l LUB200/71016 ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Ordinance, the following tenns shall have the meanings specified below: "Authorized Officer'' means each of the City Manager and the Chief Financial Officer. "Certificate" means any of the Certificates. "Certificate Date" means the date designated as the initial date of the Certificates by Section 3.02(a) of this Ordinance. "Certificates" means, collectively, the Series 201 0A Certificates and the Taxable Series 2010B Certificates. The word "Certificates" shall be read to mean the Certificates of each Series. "City'' means the City of Lubbock, Texas. "Closing Date" means the date of the initial delivery of and payment for the Certificates. "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings, and court decisions. "Designated Payment/Transfer Office" means (i) with respect to the initial Paying Agent/Registrar named in this Ordinance, the Designated Payment/fransfer Office as designated in the Paying Agent/Registrar Agreement, or at such other location designated by the Paying Agent/Registrar and (ii) with respect to 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. "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC 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. "Event of Default" means any event of default as defined in Section 10.01 of this Ordinance. '•Federal Subsidy" means the cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the Taxable Series 20108 Certificates designated as and ·2· I 86778v. l LUB2oon! 016 meeting the requirements of"build America bonds" under Section 54AA of the Code, where the City has elected to receive the refundable credit under Section 54AA(g). "Fiscal Year'' means such fiscal year as shall from time to time be set by the City Council. ••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, with respect to the Series 201 OA Certificates, the initial Series 2010A Certificate and, with respect to the Taxable Series 2010B Certificates, the initial Taxable Series 2010B Certificate, each authorized by Section 3.04 of this Ordinance. ••Interest and Sinking Fund" means, with respect to the Series 2010A Certificates, the "City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A, Interest and Sinking Fund," and with respect to the Taxable Series 2010B Certificates, the ••city of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B, Interest and Sinking Fund," in each case established by Section 2.02 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 on the date set forth in the Pricing Certificate. "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. "Paying Agent/Registrar'' means initially The Bank of New York: Mellon Trust Company, National Association, or any successor thereto as provided in this Ordinance. "Pricing Certificate" means a certificate or certificates to be signed by the Authorized Officer. -3 - !86778v.l LUB200n1016 "Prior Lien Obligations" means all certificates of obligation, bonds or other similar obligations of the City presently outstanding or that may be hereafter issued, payable in whole or in part from and secured by a first lien on and pledge of the Net Revenues of the System or by a lien on and pledge of the Net Revenues subordinate to a first lien on and pledge of the Net Revenues but superior to the lien on and pledge of the Surplus Revenues made for the Certificates. "Project" means the purposes for which the Certificates are issued as set forth in Section 3.01. "Purchase Contract'' means the purchase contract or purchase contracts described in Section 7.0l(b) of this Ordinance. "Record Date" means the last business day of the month next preceding an Interest Payment Date. "Register" means the Register specified in Section 3.06(a) of this Ordinance. "Representations Letter'' means the Blanket Letter of Representations between the City and DTC. "Representative" means the representative for the Underwriters named in the Purchase Contract. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "Series" means each series of Certificates. "Series 2010A Certificate" means any City of Lubbock, Tex.as, Tax and Waterworks System Surplus Revenue Certificate of Obligation, Series 2010A, identified in the Pricing Certificate as a Certificate, interest on which is excludable from gross income for federal income tax purposes. "Special Record Date" means the Special Record Date prescribed by Section 3.03(b). "Surplus Revenues" means the Net Revenues of the System in an amount not to ex.ceed $1,000 remaining after payment of all debt service, reserve and other requirements in connection with the City's Prior Lien Obligations . .. 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 ex.tensions, improvements, replacements and additions thereto. "Tax.able Series 2010B Certificate" means any City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificate of Obligation, Tax.able Series 20108 (Build -4- 186778v.l LUB200/71016 America Bonds -Direct Payment), identified in the Pricing Certificate as a Certificate, the interest on which is not excludable from gross income for federal income tax purposes. "Term Certificates" has the meaning set forth in Section 4.04 hereof. "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 unclaimed by the Owners of such Certificates after the applicable payment or redemption date. "Underwriters" means the underwriters named in the Purchase Contract. Section 1.02. Findings. The declarations, determinations, and findings declared, made, and found in the preamble to this Ordinance are hereby adopted, restated, and made a part of the operative provisions hereof. Section 1.03. 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 1.04. Inteipretation. (a) 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 number shall be construed to include correlative words of the plural number and vice versa. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND; PRIOR LIEN OBLIGATIONS Section 2.01. 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 unpaid, an ad valorem tax on each one hundred dollars valuation of taxable property within the City, at a rate sufficient, within the limit prescribed by law, to pay the debt service requirements -5 - I 86778v. I LU 8200/71016 of the Certificates of each Series, being (i) the interest on the Certificates of such Series, and (ii) a sinking fund for their redemption at maturity or a sinking fund of two percent per annum (whichever amount is the greater), when due and payable, full allowance 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 appearing 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 for the related Series of Certificates. (c) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and committed irrevocably to the payment of the principal of and interest on the related Series when and as due and payable in accordance with their terms and this Ordinance. ( d) The City hereby covenants and agrees that the Surplus Revenues are hereby irrevocably pledged equally and ratably to the payment of the principal of and interest on the Certificates. The City reserves the right to issue Prior Lien Obligations for any lawful purpose, at any time, in one or more installments. (e) The amount of taxes to be assessed annually for the payment of debt service on the Certificates shall be determined in the following manner: (i) The City's annual budget shall reflect (A) the amount of debt service requirements to become due on the Certificates in the next ensuing Fiscal Year and (B) the am01mt on deposit in the Interest and Sinking Fund on the date such budget is approved. (ii) The amount required to be provided in the next succeeding Fiscal Year from ad valorem taxes shall be the amount, if any, that the debt service requirements on the Certificates to be paid during the next Fiscal Year exceeds the amount then on deposit in the Interest and Sinking Fund. (iii) Following approval of the City's annual budget, the City Council shall, by ordinance, establish a tax rate that is sufficient to produce taxes in an amount which, when added to the amount then on deposit in the Interest and Sinking Fund, will be sufficient to pay debt service on the Certificates when due during the next Fiscal Year. ( f) If the liens and provisions of this Ordinance shall be released in a manner pennitted by Article XI hereof, then the collection of such ad valorem tax may be suspended or appropriately reduced, as the facts may permit, and further deposits to the Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may permit. In determining the aggregate principal amount of outstanding Certificates, there shall be subtracted the amount of any Certificates that have been duly called for redemption and for which money has been deposited with the Paying Agent/Registrar for such redemption. -6 - 186778v.1 we2oomo16 Section 2.02. Interest and Sinking Fund. (a) The City hereby establishes special funds or accounts to be designated the ''City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A, Interest and Sinking Fund," relating to the Series 2010A Certificates, and ''City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B, Interest and Sinking Fund," relating to the Taxable Series 2010B Certificates, said funds to be maintained at an official depository bank of the City separate and apart from all other funds and accounts of the City. (b) Money on deposit in or required by this Ordinance to be deposited to the Interest and Sinking Fund shall be used solely for the purpose of paying the interest on and principal of the related Series of Certificates when and as due and payable in accordance with their terms and this Ordinance. ( c) The City hereby establishes a special fund or account to be designated the '"Taxable Series 2010B Federal Subsidy Subaccount of the City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B, Interest and Sinking Fund" (the '"Federal Subsidy Subaccount"), said funds to be maintained as a subaccount of the Interest and Sinking Fund for the Taxable Series 2010B Certificates at an official depository bank of the City separate and apart from all other funds and accounts of the City. Payments of the Federal Subsidy, if, as and when received, will be deposited to the Federal Subsidy Subaccount and shall be used solely for the purpose of paying the interest on and principal of the Taxable Series 20 I OB Certificates when and as due and payable in accordance with their tenns and this Ordinance. For each interest payment on the Taxable Series 2010B Certificates, the City shall first use funds in the Federal Subsidy Subaccount to pay such interest before using any other funds to pay such interest. Any funds left in the Federal Subsidy Subaccount when the Taxable Series 2010B Certificates are paid or defeased shall be transferred to the general fund of the City and used for any lawful purpose thereof. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.01. Authorization. The City's certificates of obligation to be designated "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 "Certificates"), are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, specifically Subchapter C, Chapter 271, Texas Local Government Code, as amended, Chapter 1371, Texas Government Code, as amended, and Article VIII of the City's Home-Rule Charter. The Authorized Officer is hereby authorized and directed to modify the title of each Series to the extent that, in the judgment of the Authorized Officer, it is necessary or appropriate. The final titles and allocation of principal amount between -7- 186778v.l LUB200mOI6 each Series of Certificates shall be determined by the Authorized Officer based on market conditions in the discretion of the Authorized Officer and set forth in the Pricing Certificate. The Certificates shall be issued in the aggregate principal amount not to exceed $168,000,000, for the purpose of paying contractual obligations to be incurred for the following purposes, to wit: (i) improvements to the City's Solid Waste Disposal System; (ii) improvements and renovations to the City's Municipal Drainage Utility System; (iii) improvements, replacements, relocations and extensions to the City's Waterworks System including acquisition and construction of a raw water transmission line, pump stations, reservoir and water treatment plant and related improvements to enable Lake Alan Henry to serve as a water supply for the City; (iv) improvements and extensions to City streets including sidewalks, street lighting, traffic signals/controllers, landscaping, utility improvements, extensions, relocations and acquisition of land and rights•of-way in connection therewith; (v) improvements and extensions to the City's Electric System, including installation of distribution lines, renovations and relocations of existing distribution lines; (vi) renovations and improvements to the Lubbock Preston Smith International Airport facilities; (vii) improvements, relocations and extensions to the City's Wastewater System including water reclamation plant improvements (collectively, with items (i)-(vi), the "Project'') and (viii) payment of professional services of attorneys, financial advisors, engineers and other professionals in connection with the Project and the issuance of the Certificates. Section 3.02. Date. Denomination. Maturities, and Interest. (a) The Certificates shall be dated the date set forth in the Pricing Certificate (the "Certificate Date"). The Certificates shall be in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof. The Series 2010A Certificates shall be numbered in sequence from 1 upward, except the Initial Certificate of such Series, which shall be numbered TA•l. The Taxable Series 2010B Certificates shall be numbered in sequence from I upward, except the Initial Certificate of such Series, which shall be nwnbered TB-1. (b) The Certificates shall mature on February 15 in the years and in the principal amounts set forth in the Pricing Certificate provided that the maximum maturity for the Certificates shall not exceed twenty-one years. ( c) Interest shall accrue on each Certificate and be paid on each Certificate respectively until its maturity or prior redemption, from the later of the date set forth in the Pricing Certificate for Certificates of such Series or the most recent Interest Payment Date to which interest has been paid or provided for at the rates per annum for each respective maturity specified in the Pricing Certificate. Such interest shall be payable on each Interest Payment Date until maturity or prior redemption. Interest on the Certificates shall be calculated on the basis of a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each. Section 3.03. Medium. Method. and Place of Payment. ( a) The principal of and interest on the Certificates shall be paid in lawful money of the United States of America. - 8 - 186778v.l LUB200/71016 (b) Interest on the Certificates shall be payable to the Owners as shown in the Register at the close of business on the Record Date; provided, however, in the event of nonpayment of interest on a scheduled Interest Payment Date and for 30 days thereafter, a new record date for such interest payment (a .. Special Record Date") shall be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the .. Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each Owner of a Certificate appearing on the Register at the close of business on the last business day next preceding the date of mailing of such notice. (c) Interest shall be paid by check, dated as of the Interest Payment Date, and sent United States mail, first class postage prepaid, by the Paying Agent/Registrar to each Owner, at the address thereof as it appears in the Register, or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, that the 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 amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. (d) The principal of each Certificate shall be paid to the Owner thereof on the due date, whether at the maturity date or the date of prior redemption thereof, upon presentation and surrender of such Certificate at the Designated Payment/l'ransfer Office of the Paying Agent/Registrar. ( e) If the date for the payment of the principal of or interest on the Certificates shall be a Saturday, Sunday: legal holiday, or day on which banking institutions in the city where the Designated Paymentffransfer Office of the Paying Agent/Registrar is located 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 purposes be deemed to have been made on the due date thereof as specified in Section 3.02 of this Ordinance. (f) Unclaimed Payments shall be segregated in a special escrow account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owners of the Certificates to which the Unclaimed Payments pertain. Subject to Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners entitled thereto for three years after the applicable payment or redemption date shall be applied to the next payment on the Certificates thereafter coming due; to the extent any such moneys remain three years after the retirement of all outstanding Certificates, such moneys shall be paid to the City to be used for any lawful purpose. Thereafter, neither the City, the Paying Agent/Registrar, nor any other person shall be liable or responsible to any Owners of such Certificates for any further payment of such unclaimed moneys or on account of any such Certificates, subject to Title 6 of the Texas Property Code. -9- 186778v.l LUB200/7l016 Section 3.04. 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the City had been manually impressed 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 he such officer before the authentication of such Certificates or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. It shall not be required that the same officer or authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Certificates. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Certificate delivered at the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided herein, manually 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 Certificate has been duly approved by the Attorney General of the State of Texas, that it is a valid and binding obligation of the City, and that it has been registered by the Comptroller of Public Accounts of the State of Texas. ( d) On the Closing Date, one Initial Certificate for each Series reflecting the tenns set forth in the Pricing Certificate and representing the entire principal amount of such Series of Certificates, payable in stated installments to the Representative, or its designee, executed by the Mayor and City Secretary of the City by their manual or facsimile signatures, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, will be delivered to the Representative or its designee. Upon payment for the Initial Certificate, the Paying Agent/Registrar shall cancel the Initial Certificate and deliver a single registered, definitive Certificate for each maturity, in the aggregate principal amount thereof, to OTC on behalf of the Underwriters. Section 3.05. Ownership. (a) The City, the Paying Agent/Registrar, and any other person may treat the person 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 Date or Special Record Date, as applicable), and for a1l other 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. -10- 186778v.l LUB200/71016 (b) All payments made to the Owner of a Certificate shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Certificate to the extent of the sums paid. Section 3.06. Registration, Transfer, and Exchange. (a) So long as any Certificates remain outstanding, the City shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the "Register") in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Certificates in accordance with this Ordinance. (b) The ownership of a Certificate may be transferred only upon the presentation and surrender of the Certificate at the Designated Payment/Transfer Office of the Paying Agent/Registrar 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 exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer 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 Agent/Registrar is hereby authorized to authenticate and deliver Certificates exchanged for other Certificates in accordance with this Section. (d) Each exchange Certificate delivered by the Paying Agent/Registrar in accordance with this Section shall constitute an original 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 in lieu of which such exchange Certificate is delivered. (e) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for a different denomination of any of the Certificates. The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer, or exchange of a Certificate. (f) Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer, or e,cchange any Certificate called for redemption, in whole or in part, where such redemption is scheduled to occur within forty-five (45) calendar days after the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Certificate. Section 3.07. Cancellation. All Certificates paid or redeemed before scheduled maturity in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance with this Ordinance, shall be cancelled and proper records made regarding such payment, redemption, exchange, or replacement. The Paying -11 - 186778v.1 LUB200nt016 Agent/Registrar shall then return such cancelled Certificates to the City or may in accordance with law destroy such cancelled Certificates and periodically furnish the City with certificates of destruction of such Certificates. Section 3.08. Temporary Certificates. (a) Following the delivery and registration of the Initial Certificate and pending the preparation of definitive Certificates, the City may execute and, upon the City's request, the Paying Agent/Registrar shall authenticate and deliver, 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 other variations as the officers of the City executing such temporary Certificates may detennine, as evidenced by their signing of such temporary Certificates. (b) Until exchanged for Certificates in definitive form, such Certificates in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The City, without unreasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar; thereupon, upon the presentation and surrender of the Certificate or Certificates in temporary fonn to the Paying Agent/Registrar, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a Certificate or Certificates of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Certificate or Certificates in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.09. Replacement Certificates. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Certificate, the. Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like tenor and principal amount, bearing a nwnber not contemporaneously outstanding. The City or the Paying Agent/Registrar may require the Owner of such Certificate to pay a swn sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Certificate is lost, apparently destroyed or wrongfully taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State 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 amount, bearing a number not contemporaneously outstanding, provided that the Owner first complies with the following requirements: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction, or theft of such Certificate; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar to save it and the City harmless; -12 - I 86778v. I LUB200/7 IO 16 (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar, and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Certificate from the person to whom it was delivered or any person 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 Paying Agent/Registrar in connection therewith. ( d) In the event that any such mutilated, lost, apparently destroyed, or wrongfully taken Certificate has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Certificate, may pay such Certificate when it becomes due and payable. (e) Each replacement Certificate 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 in lieu of which such replacement Certificate is delivered. Section 3.10. Book-Entry-Only System. (a) Notwithstanding 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 in the fonn of a single separate certificate for each of the maturities thereof. (b) With respect to Certificates registered in the name of Cede & Co., as nominee of DTC, the City and the Paying AgenURegistrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Certificates. Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any OTC Participant or any other person, other than an Owner, as shown 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 person, other than an Owner, as shown in the Register of any amount with respect to principal of or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute owner of such Certificate for the purpose of payment of principal of and interest on Certificates, for the purpose of giving notices of redemption and other matters with respect to such Certificate, for the purpose of registering -13 • 186778v.l LUB2001710l6 transfer with respect to such Certificate, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on 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 in writing, and all such payments shall be valid 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 swn or sums so paid. No person other than an Owner, as shown in the Register, shall receive a certificate evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that OTC 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 DTC. (c) The Representations Letter previously executed and delivered by the City, and applicable to the City's obligations delivered in book-entry-only form to OTC as securities depository, is hereby ratified and approved for the Certificates. Section 3.11. Successor Securities Deposit01:y; Transfer Outside Book-Entr:y-Only System. In the event that the City determines that it is in the best interest of the City and the beneficial owners of the Certificates that they be able to obtain certificated Certificates, or in the event OTC discontinues the services described herein, the City shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify OTC and OTC Participants of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository; or (ii) notify OTC and OTC Participants of the availability through OTC of certificated Certificates and cause the Paying Agent/Registrar to transfer one or more separate registered Certificates to OTC Participants having Certificates credited to their OTC accounts. In such event, the Certificates shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of OTC, but 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 accordance 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 Certificates are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of and interest on such Certificates, and all notices with respect to such Certificates shall be made and given, respectively, in the manner provided in the Representations Letter of the City to DTC. -14- 186778v. I LUB200/71016 ARTICLE IV REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.01. Redemption. The Certificates are subject to redemption before their scheduled maturity only as provided in this Article IV. Section 4.02. Optional Redemption. (a) The City reserves the option to redeem Certificates in the manner provided in the Form of Certificate set forth in Section 6.02 of this Ordinance with such changes as are required by the Pricing Certificate. (b) If less than all of the Certificates are to be redeemed pursuant to an optional redemption, the City shall detennine the series, maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the Certificates, or portions thereof,, within such series and maturity or maturities and in such principal amounts for redemption. (c) The City, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Certificates to be redeemed. Section 4.03. Extraordinary Redemption of Taxable Series 2010B Certificates. The Taxable Series 2010B Certificates are subject to extraordinary redemption prior to their respective maturities, at the option of the City, as provided in the Form of Taxable Series 2010B Certificate set forth in Section 6.02 of this Ordinance with such changes as are required by the Pricing Certificate. Section 4.04. Mandatory Sinking Fund Redemption. (a) Certificates designated as "Tenn Certificates," if any, in the Pricing Certificate are subject to scheduled mandatory redemption and will be redeemed by the City, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth in the Pricing Certificate. (b) At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Tenn Certificates equal to the aggregate principal amount of such Tenn Certificates to be redeemed, shall call such Tenn Certificates for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.06. -15 - 186778v. I LUB200/71016 The principal amount of the Term Certificates required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.04 shall be reduced, at the option of the City, by the principal amount of any Tenn Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Section 4.05. Partial Redemption. (a) A portion of a single Certificate of a denomination greater than $5,000 may be redeemed, 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 Agent/Registrar 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 Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and deliver an exchange Certificate or Certificates in an aggregate principal amount equal to the unredeemed portion of the Certificate so sUITendered, such exchange being without charge. (c) The Paying Agent/Registrar shall promptly notify the City in writing of the principal amount to be redeemed of any Certificate as to which only a portion thereof is to be redeemed. Section 4.06. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of Certificates by sending notice by United States mail, first class postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Certificate (or part thereof) to be redeemed, at the address shown on the Register at the close of business on the business day next preceding the date of mailing such notice. (b) The notice shall state the redemption date, the redemption price, the place at which the Certificates are to be surrendered for payment, and, if less than all the Certificates outstanding are to be redeemed, an identification of the Certificates or portions thereof to be redeemed. (c) The City reserves the right to give notice of its election or direction to redeem Certificates under Section 4.02 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 !86778v. I LUB200/71016 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 affected Owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. (d) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Section 4.07. Payment Upon Redemption. (a) Before or on each redemption date, the City shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/Registrar 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 are 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 accrued interest on such Certificate to the date of redemption from the money set aside for such purpose. Section 4.08. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.06 of this Ordinance and subject to any conditions or rights reserved by the City under Section 4.06(c), the Certificates or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, unless the City defaults in its obligation to make provision for the payment of the principal thereof or accrued interest thereon, such Certificates or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Certificates are presented and surrendered for payment on such date. (b) If the City shall fail to make provision for payment of all sums due on a redemption date, then any Certificate or portion thereof called for redemption shall continue to bear interest at the rate stated on the Certificate until due provision is made for the payment of same by the City. Section 4.09. Lapse of Payment. Money set aside for the redemption of Certificates and remaining unclaimed by the Owners of such Certificates shall be subject to the provisions of Section 3.03(f) hereof. -17 - 186778v.l LUB200nl016 ARTICLEV PAYING AGENT/REGISTRAR Section 5.01. A1mointment of Initial Paying Agent/Registrar. The Bank of New York Mellon Trust Company, National Association, is hereby appointed as the initial Paying Agent/Registrar for the Certificates. Section 5.02. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Certificates. Section 5.03. Maintaining Paying Agent/Registrar. (a) At all times while any Certificates are outstanding, the City will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor is hereby authorized and directed to execute an agreement with the Paying Agent/Registrar specifying the duties and responsibilities of the City and the Paying Agent/Registrar. The signature of the Mayor shall be attested by the City Secretary of the City. The fonn of the Paying Agent/Registrar Agreement presented at this meeting is hereby approved with such changes as may be approved by bond counsel to the City. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the City will promptly appoint a replacement. Section 5.04. Termination. The City, upon not less than sixty (60) days notice, reserves the right to tenninate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be tenninated written notice of such termination. Section 5.05. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will cause notice of the change to be sent to each Owner by United States mail, first class postage prepaid, 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. Section 5.06. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar and executing the Paying Agent/Registrar Agreemen~ the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed thereby. -18 - 186778v.1 LUB200/71016 Section 5.07. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent, promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Certificates to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE CERTIFICATES Section 6.01. Fonn Generally. (a) The Certificates, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment fonn to appear on each of the Certificates, (i) shall be generally in the form set forth in this Article, with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and the Pricing Certificate, and (ii) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the City or by the officers executing such Certificates, as evidenced by their execution thereof. (b) Any portion of the text of any Certificates may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Certificates. (c) The definitive Certificates, if any, shall be typewritten, photocopied, printed, lithographed, or engraved, and may be produced by any combination 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 of each Series submitted to the Attorney General of the State of Texas may be typewritten and photocopied or otherwise reproduced. Section 6.02. Form of the Certificates. The fonn 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 form of Assignment appearing on the Certificates, shall be generally as follows, provided. however, that the substantially final fonn of the Certificates shall be set forth in or attached to the Pricing Certificate and shall incorporate and reflect the final tenns of the Certificates set forth in the Pricing Certificate: -19 - 186778v. I LU8200/7I016 (a) Form of Series 2010A Certificate. REGISTERED No. __ _ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 201 0A REGISTERED $ ____ _ INTEREST RA TE: MATURITY DATE: CERTIFICATE DATE: 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 registered assigns, on the Maturity Date specified above, the sum of _________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Certificate Date specified above or the most recent interest payment date to which 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 ____ 2• All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). 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 sUITender of this Certificate at the corporate trust office in Dallas, Texas (the "Designated Payment/Transfer Office"). of The Bank of New York Mellon Trust Company, National Association, or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office of such successor. 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary 1 Information to be inserted from Pricing Certificate. 2 Infonnation to be inserted from Pricing Certificate. I 86778v.1 LUB200/71016 -20· banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. 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 on the '·Record Date," which shall be the last business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the '•Special Payment Date;, which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid. to the address of each owner of a Certificate appearing in the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, 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 have the same force and effect as if made on the original date payment was due. This Certificate is one of a series of fully registered certificates specified in the title hereof issued in the aggregate principal amount of $ ____ 3 (herein referred to as the "Certificates"), issued pursuant to a certain ordinance of the City (the "Ordinance.,), for the purpose of paying contractual obligations to be incurred for authorized public improvements (collectively, the "Project''). as described in the Ordinance, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance. [The Certificates are being issued concurrently with the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bonds -Direct Payment), in the aggregate principal amount of $ ___ ....., which are also being issued pursuant to the Ordinance for the purpose of paying contractual obligations to be incurred for the Project, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance. J4 [The City has reserved the option to redeem the Certificates maturing on or after February 15 _ _, in whole or in part, before their respective scheduled maturity dates, on ___ __;, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall detennine the maturity or maturities and the 3 Information to be inserted from Pricing Certificate. 4 Revise or delete as necessary to conform to the Pricing Certificate. 186778v. I LUB200/71016 amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption. ]5 [Certificates maturing on February 15 in each of the years __ through_, inclusive (the "Tenn Certificates"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date Principal Amount The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Term Certificates (or with respect to Tenn Certificates having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Term Certificates required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. In the Ordinance, the City reserves the right in the case of an optional redemption to give notice of its election or direction to redeem Certificates 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 securitiest 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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding. and the rescission shall not constitute an event of default. Further, in the case of a conditional redemption, the 5 Insert optional redemption provisions, if any, and revise as necessary to conform to the Pricing Certificate. -22 • 186778v. l LUB2oon!0l6 failure of the City to make moneys and/or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. ]6 As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Certificate for transfer at the designated office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Certificates of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within forty five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Certificate is registered on the Record Date or Special Record Date, as applicable) 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; th.at, in addition to said taxes, further provisions have been made for the payment of the debt service requirements of the Certificates by pledging to such purpose Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the Waterworks System in an amount limited to $1,000; that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; and that the total indebtedness of the City, including the Certificates, does not exceed any constitutional or statutory limitation. 6 Insert mandatory siDking fund redemption provisions, if any, and confonn as necessary to the Pricing Certificate. -23- I 86778v.1 LUB200111016 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. Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas [SEAL] (b) Form of Taxable Series 2010B Certificate. REGISTERED No. __ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM REGISTERED $ ___ _ SURPLUS REVENUE CERTIFICATES OF OBLIGATION TAXABLE SERIES 201 OB (BUILD AMERICA BONDS -DIRECT PA YMENn INTEREST RATE: % MATURITY DATE: CLOSING DATE: 7 CERTIFICATE DATE: 8 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 registered assigns, on the Maturity Date specified above, the sum of _________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the _____ 9 specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal 7 Information to be inserted from Pricing Certificate. 8 Information to be inserted from Pricing Certificate. 9 Insert Closing Date or Certificate Date or such other information as is necessary to conform to the Pricing Certificate. -24- 186778v.l LUB200/71016 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 ____ 10• All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). 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 Paymentrrransfer Office''), of The Bank of New York Mellon Trust Company, National Association, or, with respect to a successor Paying Agent/Registrar, at the Designated Paymentrrransfer Office of such successor. 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. 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 on the "Record Date," which shall be the last business day of the month nex.t preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date'') will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date,'' which shall he 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each owner of a Certificate appearing in the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, 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 have the same force and effect as if made on the original date payment was due. This Certificate is one of a series of fully registered certificates specified in the title hereof issued in the aggregate principal amount of $ ____ 11 (herein referred to as the "Certificates''), issued pursuant to a certain ordinance of the City (the "Ordinance"), for the purpose of paying contractual obligations to be incurred for authorized public improvements ( collectively, the "Project"), as described in the Ordinance, and to pay the contractual obligations 10 Information to be inserted from Pricing Certificate. 11 Information to be inserted from Pricing Certificate. 186778v.l LUB200nl016 -25 - for professional services of attorneys, financial advisors and other professionals in connection with the Project and the issuance of the Certificates. [The Certificates are being issued concurrently with the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A, in the aggregate principal amount of$ ___ ..J which are also being issued pursuant to the Ordinance for the purpose of paying contractual obligations to be incurred for the Project, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance.] 12 [The City has reserved the option to redeem the Certificates maturing on or after February 15 _ ____,, in whole or in part, before their respective scheduled maturity dates, on ----" or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the maturity or maturities and the amoWlts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption.] 13 [The Certificates are also subject to extraordinary redemption prior to their respective maturities, at the option of the City, upon the occurrence of an Extraordinary Event (hereinafter defined) from any source of available funds, in whole or in part, by lot, at the Make. Whole Redemption Price (hereinafter defined). "Extraordinary Event" means a change to Sections 54AA or 6431 of the Code (as such Sections were added by Section 1531 of the "American Recovery and Reinvestment Act of 2009," pertaining to "Build America Bonds11 or any other action taken by the United States Congress or federal government, the effect of which causes the Federal Subsidy applicable to the Taxable Series 2010A Certificates to be reduced or eliminated. "Make-Whole Redemption Price" means the amoWlt equal to the greater of the following: (i) the issue price of the Certificates (but not less than 100%) of the principal amoWlt of the Certificates to be redeemed; or (ii) the sum of the present value of the remaining scheduled payments of principal and interest on the Certificates to be redeemed to the maturity date of such Certificates, not including any portion of those payments of interest accrued and unpaid as of the date on which the Certificates are to be redeemed, discoW1ted to the date on which the Certificates are to be redeemed on a semi-annual basis, assuming a 360-day year containing twelve 30-day months, at the Treasury Rate (hereinafter defined), plus 100 basis points, plus in each case accrued interest on the Certificates to be redeemed to the redemption date. ''Treasury Rate" means, with respect to any redemption date for a particular Certificate, 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 two 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 Certificates to be redeemed; provided, however that if the period from the redemption date to the maturity date is less than one year, the weekly average yield on actually 12 Revise or delete as necessary to confonn to the Pricing Certificate. 13 Insert optional redemption provisions, if any, and revise as necessary to confonn to the Pricing Certificate. -26 ~ 186778v.1 LUB2oon!016 traded United States Treasury securities adjusted to a constant maturity of one year shall be used.]'4 [Certificates maturing on February 15 in each of the years __ through_, inclusive (the "Term Certificates''), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium. plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date Principal Amount The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Tenn Certificates (or with respect to Tenn Certificates having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Term Certificates required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of pw-chase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the o'ptional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. In the Ordinance, the City reserves the right in the case of an optional redemption to give notice of its election or direction to redeem Certificates 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an event of default. Further, in the case of a conditional redemption, the 14 Revise or delete as necessary to conform to the Pricing Certificate. -27 - I 86778v. I LUB200/71016 failure of the City to make moneys and/or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. ]15 As provided in the Ordinance. and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Certificate for transfer at the designated office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Certificates of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within forty five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Certificate is registered on the Record Date or Special Record Date, as applicable) 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 performed and have happened in regular and due time, fonn, 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 by pledging to such purpose Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the Waterworks System in an amount limited to $1,000; that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; 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. Mayor, City of Lubbock, Texas 1 s Insert mandatory sinking fund redemption provisions, if any, and conform as necessary to the Pricing Certificate. -28 - I 86778v. I LUB200/71016 City Secretary, City of Lubbock, Texas [SEAL] (c) Form of Comptroller'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 OFIBESTATEOFTEXAS § § § REGISTER NO. ---- I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Certificate has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas; and that this Certificate has this day been registered by me. Witness my hand and seal of office at Austin, Texas, ______ _ [SEAL] 186778v.l LUB200n1016 -29- Comptroller of Public Accounts of the State of Texas (d) Form of Certificate of Paying Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Certificate if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PA YING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Certificate of this series of Certificates was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates referred to in the within~mentioned Ordinance. Dated: (e) Fonn of Assignment. The Banlc of New York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory 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 number: _________ the within Certificate and all rights hereunder and hereby irrevocably constitutes and appoints ________ attorney to transfer the within Certificate on the books kept for registration hereof, with full power of substitution in the premises. Dated: ------------ Signature Guaranteed By: Authorized Signatory 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. (f) The Initial Certificates of each Series shall be in the form set forth in paragraphs (a), (b), (c) and (e) of this Section, except for the following alterations: -30- I 86778v. I LUB200/71016 (i) immediately under the name of the Certificate the headings "INTEREST RATE" and ''MATURITY DATE" shall both be completed with the words "As shown below"; 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 IS 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 the Pricing Certificate pursuant to Section 3.02 of this Ordinance) Section 6.03. CUSIP Registration. The City may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's, A Division of the McGraw-Hill Companies, New York, New York, and may authorize the printing of such numbers on the face of the Certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers 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 numbers incorrectly printed on the Certificates. Section 6.04. Legal Opinion. The approving legal opinion of Vinson & Elkins L.L.P., Bond Counsel, 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 6.05. Bond Insurance. Information pertaining to bond insurance, if any, may be printed on each Certificate. ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS Section 7.01. Sale of Certificates; Official Statement. (a) The Certificates shall be sold at negotiated sale to the Underwriters in accordance with the tenns of this Ordinance, including this Section 7.0l(a) and Exhibit B hereto, provided that all of the conditions set forth in Exhibit B can be satisfied. As authorized by Chapter 1371, Texas Government Code, as amended, the Authorized Officer is authorized to act on behalf of the City upon detennining that the conditions set forth in Exhibit B can be satisfied, in selling and delivering the Certificates and carrying out the other procedures specified in this Ordinance, including detennining whether to acquire bond insurance for the Certificates, the aggregate principal amount of the Certificates of each Series, if any, and price at which each of the -31 - 186778v.l LUB200nI016 Certificates will be sold, the number and designation of series of Certificates to be issued, the fonn in which the Certificates shall be issued, the years in which the Certificates will mature, the principal amount to mature in each of such years, the rate of interest to be borne by each such maturity, the first interest payment date, the initial date from which interest will accrue, the dates, prices and terms upon and at which the Certificates shall be subject to redemption prior to maturity at the option of the City and shall be subject to mandatory sinking fund redemption, and all other matters relating to the issuance, sale and delivery of the Certificates, all of which shall be specified in the Pricing Certificate. In addition to any other authority provided under this Ordinance, the Authorized Officer is hereby further expressly authorized, in connection with the sale of the Taxable Series 20108 Certificates, to make appropriate irrevocable elections under Section 54(AA) or Section 6431 of the Code, to designate the Taxable Series 201 OB Certificates as "build America bonds" ("Build America Bonds") to the extent such Taxable Series 201 OB Certificates are eligible for such designation and the Authorized Officer detennines that such designation is beneficial to the City. In furtherance thereof, the Authorized Officer is hereby expressly authorized and empowered to take all actions necessary to obtain any moneys from the Federal government that may be available to the City if any Taxable Series 2010B Certificates are designated as Build America Bonds. The Authorized Officer is hereby further expressly authorized and empowered from time to time and at any time to perform all such acts and things deemed necessary or desirable and to execute and deliver any agreements, certificates, documents or other instruments, whether or not herein mentioned, to carry out the terms and provisions of this section, including but not limited to, the preparation and making of any filings with the Internal Revenue Service The authority granted to the Authorized Officer under this Section 7.0t(a) shall expire at 5:00 p.m., June 16, 2010, unless otherwise extended by the City Council by separate action. Any finding or determination made by the Authorized Officer relating to the issuance and sale of the Certificates and the execution of the Purchase Contract in connection therewith shall have the same force and effect as a finding or determination made by the City Council. (b) The Authorized Officer is hereby authorized and directed to execute and deliver, and the City Secretary is hereby authorized and directed to attest, one or more certificate purchase contracts ( collectively, the "Purchase Contract'') which shall be in the form approved by the Authorized Officer. Upon completion of the tenns of the Purchase Contract in accordance with the terms of the Pricing Certificate and this Ordinance, the Authorized Officer is authorized and directed to execute such Purchase Contract on behalf of the City and the Authorized Officer and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Certificates. The Certificates shall initially be registered in the name of the Representative. (c) The fonn and substance of the Preliminary Official Statement and any addenda, supplement or amendment thereto, are hereby in all respects approved and adopted and is hereby deemed final as of its date within the meaning and for the purposes of paragraph (b )(I) of Rule 15c2-l2 under the Securities Exchange Act of 1934, as amended. The Authorized Officer and City Secretary are hereby authorized and directed to cause to be prepared a final Official 186778v.t LUB2oon!0l6 Statement (the "Official Statement") incorporating applicable pricing infonnation pertaining to the Certificates, and to execute the same by manual or facsimile signature and deliver appropriate numbers of executed copies thereof to the Underwriters. The Official Statement as thus approved, executed and delivered, with such appropriate variations as shall be approved by the Authorized Officer and the Underwriters, may be used by the Underwriters in the public offering and sale thereof. The City Secretary is hereby authorized and directed to include and maintain a copy of the Official Statement and any addenda, supplement or amendment thereto thus approved among the permanent records of this meeting. The use and distribution of the Preliminary Official Statement, and the preliminary public offering of the Certificates by the Underwriters, is hereby ratified, approved and confinned. ( d) 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 tenns of sale therefor including, without limitation, the Purchase Contract. (e) The obligation of the Underwriters identified in subsection (a) of this Section to accept delivery of the Certificates is subject to the Underwriters 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. 02. Control and Delivery of Certificates. (a) The Authorized Officer 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 Comptroller of Public Accounts of the State of Texas and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Certificates shall be made to the Underwriters thereof under and subject to the general supervision and direction of the Authorized Officer, against receipt by the City of all amounts due to the City under the tenns of sale. (c) In the event the Mayor or City Secretary is absent or otherwise unable to execute any document or take any action authorized herein, the Mayor Pro Tern and the Assistant City Secretary, respectively, shall be authorized to execute such documents and take such actions, and the perfonnance of such duties by the Mayor Pro Tern and the Assistant City Secretary shall for the purposes of this Ordinance have the same force and effect as if such duties were perfonned by the Mayor and City Secretary, respectively. Section 7.03. Deposit of Proceeds. (a) First: All amounts received on the Closing Date as accrued interest on the Certificates from the Certificate Date to the Closing Date shall be deposited to the Interest and Sinking Fund for the related Series. (b) Second: The remaining balance received on the Closing Date shall be deposited to one or more special accounts of the City, such moneys to be dedicated and used solely for the -33 - 186778v.1 LUB200nl016 remaining purposes for which the Certificates are being issued as herein provided, as may be further set forth in the Pricing Certificate. AR TIC LE VIII INVESTMENTS Section 8.01. Investments. (a) Money in the Interest and Sinking Fund created by this Ordinance and the special accounts provided for in Section 7.03(b), at the City's option, may be invested in such securities or obligations as permitted under applicable law. The City's Chief Financial Officer, and any other officer of the City authorized to make investments on behalf of the City, are hereby authorized and directed to execute and deliver, on behalf of the City, any and all investment agreements, guaranteed investment contracts or repurchase agreements in connection with the investment of moneys on deposit in the Interest and Sinking Fund and the special account or accounts provided for in Section 7 .03(b ), but only to the extent such investment agreements, guaranteed investment contracts or repurchase agreements are authorized investments under applicable law. (b) Any securities or obligations in which money in the Interest and Sinking Fund is so invested shall be kept and held in trust for the benefit of the Owners of the related Series and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.02. Investment Income. (a) Interest and income derived from investment of the Interest and Sinking Fund shall be credited to such fund. (b) Interest and income derived from investment of the funds to be deposited pursuant to Section 7.03(b) hereof shall be credited to the account where deposited until the acquisition or construction of said projects is completed or shall be transferred to the Interest and Sinking Fund for the related Series as shall be determined by the City Council. Upon completion of the authorized projects, to the extent such interest and income are present, such interest and income shall be deposite4 to the Interest and Sinking Fund for the related Series. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Certificates. On or before each Interest Payment Date while any of the Certificates are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund for the related Series, money sufficient to pay such principal of and interest on the Certificates as will accrue or mature on the applicable Interest Payment Date or date of prior redemption. -34- 186778v. l LUB200/71016 Section 9.02. Other Representations and Covenants. (a) The City will faithfully perfonn, at all times, any and all covenants, undertakings, stipulations, 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 manner 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. (b) The City is duly authorized under the laws of the State of Texas to issue the Certificates; all action on its part for the creation and issuance of the Certificates has 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 tenns. Section 9.03. Provisions Concerning Federal Income Tax Exclusion for Series 2010A Certificates. The City intends that the interest on the Series 201 0A Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to sections I 03 and 141 through 150 of the Internal Revenue Code of 1986, as 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 take any action within its control, that if taken or omitted, respectively, would cause the interest on the Series 2010A 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 comply with each requirement of Sections 9.03 through 9.09 of this Article IX; provided, however, that the City shall not be required to comply with any particular requirement of Sections 9.03 through 9.09 of this Article IX if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2010A Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in Sections 9.03 through 9.09 of this Article IX will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in Sections 9.03 through 9.09 of this Article IX. Section 9.04. No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer. employee or agent, that, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 201 0A Certificates are delivered, the proceeds of the Series 201 0A Certificates will not be used in a manner that would cause the Series 201 OA Certificates to be "private activity bonds" within the meaning of section 141 of the Code and the Regulations. The City covenants and agrees that it will make such use of the proceeds of the Series 2010A Certificates, including interest or other investment income derived from Series 201 0A Certificate proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Series 2010A Certificates will not be ''private activity bonds" within the meaning of section 141 of the Code and the Regulations. • 35 - I 86778v. I LUB200/71016 Section 9.05. No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Series 20 lOA Certificates to be "federally guaranteed" within the meaning of section 149(b) of the Code and the Regulations, except as pennitted by section 149(b )(3) of the Code and the Regulations. Section 9.06. Series 2010A Certificates Are Not Hedge Bonds. The City covenants and agrees not to take any action, or knowingly omit to take any action, and has not knowingly omitted and will not knowingly omit to take any action, within its control, that, if taken or omitted, respectively, would cause the Series 2010A Certificates to be ••hedge bonds" within the meaning of section 149(g) of the Code and the Regulations. Section 9.07. No-Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 201 OA Certificates are delivered, the City will reasonably expect that the proceeds of the Series 2010A Certificates will not be used in a manner that would cause the Series 2010A Certificates to be "arbitrage bonds" within the meaning of section 148( a) of the Code and the Regulations. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Series 2010A Certificates including interest or other investment income derived from Series 2010A Certificate proceeds, regulate investments of proceeds of the Series 2010A Certificates, and take such other and further action as may be required so that the Series 2010A Certificates will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and the Regulations. Section 9.08. Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148( f) of the Code, the City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Series 201 OA Certificates (within the meaning of section 148(f)(6)(B) 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 Series 201 OA Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Series 20 I OA Certificates separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any Series 2010A Certificates of the City, (ii) calculate at such times as are required by the Regulations, the amount earned from the investment of the gross proceeds of the Series 201 OA Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Series 201 OA Certificates or on such other dates as may be permitted under the Regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant 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 Series 2010A Certificates that might result in a reduction in the amount required to be paid to the federal government because -36- 186778v.l LUB200nJ0l6 such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at ann's length and had the yield on the issue not been relevant to either party. Section 9.09. Infonnation 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 after the close of the calendar quarter in which the Series 2010A Certificates are issued, an infonnation statement concerning the Series 2010A Certificates, all under and in accordance with section 149(e) of the Code and the Regulations. Section 9.10. Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of Sections 9.03 through 9.09 of this Article IX shall survive the defeasance and discharge of the Certificates. ARTICLEX DEFAULT AND REMEDIES Section 10.01. Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Certificates when the same becomes due and payable; or (ii) default in the performance 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 to the City. Section 10.02. Remedies for Default. (a) Upon the happening of any Event of Default, then any Owner or an authorized representative thereof, including but not limited to a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights of the Owners under this Ordinance by mandamus or other suit, action or special proceeding in equity or at law in any court of competent jurisdiction for any relief permitted by law, including the specific perfonnance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. -37 - 186778v.l LUB200nl016 (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Certificates then outstanding. Section 10.03. Remedies Not Exclusive. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy, but each and every such remedy shall be cwnulative and shall be in addition to every other remedy given hereunder or under the Certificates or now or hereafter existing at law or in equity, provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Certificates shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. ARTICLE XI DISCHARGE Section 11.01. Discharge. The Certificates may be defeased, discharged or refunded in any manner pennitted by applicable law. ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.01. Annual Reports. (a) The City shall provide annually to the MSRB, within six (6) months after the end of each fiscal year, financial infonnation and operating data with respect to the City of the general type included in the final Official Statement, being the information described in Exhibit A hereto. Any financial statements so to be provided shall be (i) prepared in accordance with the accounting principles described in Exhibit A hereto, (ii) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided and (iii) submitted through EMMA, in an electronic format with accompany identifying information, as prescribed by the MSRB. If the audit of such financial statements is not complete within such period, then the City shall provide notice that audited financial statements are not available and shall provide unaudited financial statements for the applicable fiscal year to the MSRB. The City shall provide audited financial 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 will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. • 38 - \S6778v.l LUB200171016 (c) The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific referenced to any docwneot (including an official statement or other offering docwnent, if it is available from the MSRB) that theretofore has been provided to the MSRB or filed with the SEC. Section 12.02. Material Event Notices. (a) The City shall notify the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: (i) principal and interest payment delinquencies; (ii) nonpayment 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; (vi) adverse tax opinions or events affecting the tax-exempt status of the Certificates; (vii) modifications to rights of Owners; (viii) redemption calls; (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 an electronic format 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 infonnation or operating data in accordance with Section 12.01 of this Ordinance by the time required by such Section. Section 12.03. Limitations. Disclaimers and Amendments. (a) The City shall be obligated to observe and perform the covenants specified in this Article for so long as, but only for so long as, the City remains an "obligated person" with -39- 186778v.l LUB200/71016 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 defeasances that cause the City to be no longer an "obligated person." (b) The provisions of this Article are for the sole benefit of the Owners and beneficial owners of the Certificates, and nothing in this Article, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial infoanation, operating data, financial 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 relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Article or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such infonnation or its usefulness to a decision to invest in or sell Certificates at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CTIY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS 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. (c) No default by the City in observing or perfonning its obligations under this Article shall constitute a breach of or default under the Ordinance for purposes of any other provisions of this Ordinance. ( d) Nothing in this Article is intended or shall act to disclaim., waive, or othenvise 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 to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (i) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (A) the Owners of a majority in aggregate principal amount ( or any greater amount required by any other provisions of this Ordinance that authorizes such an amendment) of the outstanding Certificates consent to such amendment or (B) an entity or individual person that is unaffiliated with the City (such as nationally recognized bond counsel) detennines that such amendment will not materially 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 any amended financial information or operating data next provided in accordance with Section 12.01 an explanation, in narrative fonn, of the reasons for the amendment and of the impact of any change in type of financial infonnation or operating data so provided. -40- 186778v. I LUB200171016 ARTICLE XIII AMENDMENTS; A ITORNEY GENERAL MODIFICATION Section 13 .01. 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 as permitted in this Section. The City may, 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, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent of the Owners of the Certificates holding a majority in aggregate principal amount of the Certificates then outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Owners of outstanding Certificates, no such amendment, addition, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Certificates, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on the Certificates, (ii) give any preference to any Certificate over any other Certificate, or (iii) reduce the aggregate principal amowit of Certificates required to be held by Owners for consent to any such amendment, addition, or rescission. Section 13.02. Attorney General Modification. In order to obtain the approval of the Certificates by the Attorney General of the State 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. ARTICLE XIV EFFECTIVE IMMEDIATELY Section 14.01. Effective Immediately. Notwithstanding the provisions of the City Charter, this Ordinance shall become effective immediately upon its adoption at this meeting pursuant to Section 1201.028, Texas Government Code. -41 - 186778v.l LUB200nl016 PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE on the 16th day of December, 2009, at a regular meeting of the City Council of the City of Lubbock, Texas. ATTEST: REBECCA GARZA, City S~ [SEAL] APPROVED AS TO CONTENT: By: APPROVED AS TO FORM: By: TOM MARTIN, Mayor Signature Page for Ordinance 186 778v. I LUB200/71016 EXHIBIT A DESCRIPTION OF ANNUAL DISCLOSURE OF FINANCIAL INFORMATION The following information is referred to in Article XII of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or other headings of the Official Statement referred to) below: 1. The portions of the financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. Statistical and financial data set forth in Tables 1-6 and SA-15 of the Official Statement. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in Paragraph 1 above. Exhibit A-1 I 86778v. I LUB200n10167l015 EXBIBITB SALE PARAMETERS In accordance with Section 7.0l(a) of the Ordinance, the following conditions with respect to the Certificates must be satisfied in order for the Authorized Officer to act on behalf of the City in selling and delivering the Certificates to the Underwriters: ( a) the price to be paid for the Certificates shall be not less than 95% of the aggregate principal amount of the Certificates; (b) the Certificates shall not bear interest at a rate greater than the maximum rate allowed by Chapter 1204, Texas Government Code, as amended; (c) the aggregate principal amount of the Certificates shall produce proceeds in an amount sufficient, as detennined by the Authorized Officer, to fund the purposes described in Section 3.01 and such aggregate principal amount shall not exceed the maximum amount authorized in Section 3.01; ( d) the maximum maturity for the Certificates shall not exceed twenty-one years; and (e) the Certificates to be issued, prior to delivery, must have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long term obligations. Exhibit B-1 186778v. I LUB200nl016 a ' ) TRANSCRIPT OF PROCEEDINGS VOLUME ONE pertaining to CITY OF LUBBOCK, TEXAS $8,840,000 GENERAL OBLIGATION BONDS SERIES 2010A CITY OF LUBBOCK, TEXAS $15~20,000 GENERAL OBLIGATION BONDS TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DIRECT PAYMENT) $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 PAYMENT) US 238630v. I Delivered: February 4, 2010 VINSON & ELKINS AITORNEYSATLAW 3700 Trammell Crow Center 2001 Ross Avenue Dallas, Tex•s 7S201-297S Telephone: (214) 220-7700 "I :, CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 2010A AND TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DIRECT PAYMENT) AND CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS SERIES 2010A AND TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DIRECT PAYMENT) TABLE OF DOCUMENTS DOCUMENT TAB NO. I. ELECTION DOCUMENTS 1.1 Certified Ordinance Calling Bond Election 1.2 Affidavit of Posting Notice of Election 1.3 Affidavit of Publication 1.4 Certified Resolution Canvassing Election Results 1.5 DOJ Preclearance Letter 1 2 3 4 5 II. BOND DOCUMENTS 2.1 Certified Resolution Authorizing Publication of Notice of Intent to 6 Issue Certificates and 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 Ordinance Providing for the Issuance of the Bonds 10 2.6 Pricing Certificate Relating to the Bonds 11 2. 7 Paying Agent/Registrar Agreement for the Certificates 12 2.8 Paying Agent/Registrar Agreement for the Bonds 13 US 236254v.l DOCUMENT TAB NO. ... 2.9 Preliminary Official Statement 14 2.10 Official Statement 15 2.11 Purchase Contract for Certificates 16 i 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 'I 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 -2- US 236254v.1 \ \ DOCUMENT 4.6 4.7 4.8 4.9 US 236254v.1 Opinions of ,Attorney General and Comptroller's Registration Certificates -Bonds Opinions of Attorney General and Comptroller's Registration Certificates -Certificates Opinion of City Attorney -Bonds Opinion of City Attorney -Certificates -3- TAB NO. 35 36 37 38 ... MrNUTES AND CERTIFICATION PERTAINING TO PASSAGE OF AN ORDINANCE STATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK § On the 27th day of August, 2009, the City Council of the City of Lubbock, Texas, convened in a regular meeting at the regular meeting place thereof, the meeting being open to the public and notice of ~aid meeting, giving the date, place and subject thereof, having been posted as prescribed by Chapter 551, Texas Government Code, as amended; and the roll was called of the duly constituted officers and members of the City Council, which officers and members are as follows: Tom Martin, Mayor Jim Gilbreath, Mayor Pro Tern Linda DeLeon Floyd Price Todd R. Klein Paul R. Beane John W. Leonard, III ) ) ) ) ) Members of the Council and all of said persons were present, thus constituting a quorum. Whereupon, among other business, a written Ordinance bearing the following caption was introduced: AN ORDINANCE CALLING A BOND ELECTION TO BE HELD WITHIN THE CITY OF LUBBOCK, TEXAS; MAKING PROVISIONS FOR THE CONDUCT AND THE GNING OF NOTICE OF THE ELECTION; CONTAINING OTHER PROVISIONS RELATING THERETO; AND PROVIDING AN EFFECTNE DATE The Ordinance, a full, true and correct copy of which is attached hereto, was read and reviewed by the City Council. Thereupon, it was duly moved and seconded that the Ordinance be passed and adopted. The Presiding Officer put the motion to a vote of the members of the City Council, and the Ordinance was passed and adopted by the following vote: AYES: 5 NOES: 2 ABSTENTIONS: 0 US 236830v. I 'J ) ' MINUTES APPROVED AND CERTIFIED TO BE TRUE AND CORRECT, and to correctly reflect the duly constituted officers and members of the City Council of said City, and the attached and following copy of said Ordinance is hereby certified to be a true and correct copy of an official copy thereof on file among the official records of the City, all on this the 27th day of August, 2009. City of Lubbock, Texas [SEAL] US 236830v. I -2- '\ AN ORDINANCE CALLING A BOND ELECTION TO BE HELD WITHIN THE CITY OF LUBBOCK, TEXAS; MAKING PROVISIONS FOR THE CONDUCT AND THE GIVING OF NOTICE OF THE ELECTION; CONTAINING OTHER PROVISIONS RELATING THERETO; AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City Council (the "City Council") of the City of Lubbock, Texas (the "City"), finds that an election should be held to detennine whether the City Council shall be authorized to issue bonds of the City in the amounts and for the purposes hereinafter set forth; and WHEREAS, the City Council finds and detennines that the meeting at which this Ordinance is considered is open to the public, and that the public notice of the time, place and purpose of the meeting was given, as required by Chapter 551, Texas Government Code, as amended; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK, TEXAS: Section l. Findings. The statements contained in the preamble of this Ordinance are true and correct and are hereby incorporated for all purposes. Section 2. Election Ordered: Date: Propositions. A bond election (the "Election") is hereby ordered and shall be held in the City on Tuesday, November 3, 2009 ("Election Day"), a uniform election date as established by Section 41.00l(a) of the Texas Election Code, as amended (the "Code"). At the Election, the following propositions (the "Propositions") shall be submitted to the qualified voters of the City in accordance with law: PROPOSITION NO. 1 .. Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $43,085,000 for the purpose of providing funds for permanent public improvements, to wit: to acquire, construct and reconstruct street improvements, including but not limited to sidewalks, utility line relocation and traffic signalization, necessary and related storm drainage facilities and the acquisition of land and rights-of-way therefor; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" 1586946v.3 LUB200/l ) PROPOSITION NO. 2 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $7,500,000 for the purpose of providing funds for pennanent public improvements, to wit: to construct, acquire and improve firefighting facilities and equipment, including the acquisition of land and interest in land in connection therewith; said bonds to mature serially over a period of not to exceed forty (40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be detennined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" PROPOSITION NO. 3 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $1,200,000 for the purpose of providing funds for pennanent public improvements, to wit: to construct, acquire and improve water recreation and related park facilities, including the acquisition of land and interests in land in connection therewith; said bonds to mature serially over a period of not to exceed forty (40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" PROPOSITION NO. 4 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $9,000,000 for the purpose of providing funds for permanent public improvements, to wit: to construct, acquire, improve and equip soccer facilities for the youth sports complex, including the acquisition of land and interests in land in connection therewith; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be detennined within the discretion of the City Council under laws in effect at the time of issuance, and to -2- i 586946v.3 LUB200/l ) ) provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" Section 3. Conduct of Election. (a) The Election shall be conducted within the City under the jurisdiction of the Lubbock County Elections Administrator (the "Administrator"), pursuant to an election services contract, in accordance with the Code. In accordance with Section 43.007 of the Code, voting on Election Day shall be conducted at the Vote Center Locations described in Exhibit A hereto between the hours of 7:00 a.m. and 7:00 p.m. The Vote Center Locations described on Exhibit A may be changed or amended with the approval of the City Manager and without further action of the City Council if the Administrator determines that such change is necessary or desirable for the efficient and lawful conduct of the Election. (b) Early voting for the Election shall be held at the locations, on the days and at the times designated in Exhibit B. The Administrator or her designee is appointed Early Voting Clerk. Requests for ballots to vote by mail shall be addressed to: Lubbock County Elections Office, 1308 Crickets Avenue, Lubbock, Texas 79408 or Lubbock County Elections Office, P.O. Box 10536, Lubbock, Texas 79408. ( c) The Administrator is directed to appoint the members of the Early Voting Ballot Board. The Administrator is further directed to designate and submit to the City Council for approval the names of the presiding judge and alternate presiding judge for each polling location. Section 4. Official Ballot. The official ballots for the Election shall be prepared in accordance with the Code so as to permit the electors to vote "FOR" or "AGAINST' the Propositions which shall be set forth on the ballots substantially in the following form: PROPOSITION NO. 1 • FOR ) THE ISSUANCE OF $43,085,000 GENERAL OBLIGATION BONDS FOR STREET IMPROVEMENTS • AGAINST ) PROPOSITION NO. 2 • FOR ) THE ISSUANCE OF $7,500,000 GENERAL OBLIGATION BONDS • AGAINST ) FOR FIREFIGHTING FACILITIES AND EQUIPMENT PROPOSITION NO. 3 • FOR ) THE ISSUANCE OF $1,200,000 GENERAL OBLIGATION BONDS FOR WATER RECREATION FACILITIES • AGAINST ) -3- I 586946v.3 LUB200/ I ) i ') 1 \ PROPOSITION NO. 4 • FOR ) THE ISSUANCE OF $9,000,000 GENERAL OBLIGATION BONDS FOR SOCCER FACILITIES • AGAINST ) Section 5. Bilingual Election Materials. All notices, instructions, and ballots pertaining to the Election shall be furnished to voters in both English and Spanish and persons capable of acting as translators in both English and Spanish shall be made available to assist Spanish language speaking voters in understanding and participating in the election process. Section 6. Notice of Election. Notice of the Election shall be given by posting a notice containing a substantial copy of this Ordinance in both English and Spanish at the City Hall on the bulletin board used for posting notices of the meetings of the City Council and at three (3) other public places within the City not less than twenty-one (21) days prior to the date of the Election, and by publication of said notice on the same day in each of two (2) successive weeks in a newspaper of general circulation published within the City, the date of the first publication to be not less than fourteen (14) days nor more than thirty (30) days prior to the date set for the Election. Section 7. Joint Elections; Modifications to Procedures. The Election shall be conducted as a joint election with other governmental entities ordering elections in the area of the City in Lubbock County in accordance with agreements among the City and such other governmental entities. The City Manager is authorized to approve such changes and modifications in election procedures as may be determined by the Administrator to be necessary or desirable to conduct the Election in an efficient and ]awful manner. Section 8. Effective Date. This Ordinance shall take effect immediately upon its approval. PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE ~n the 27th day of August, 2009, at a regular meeting of the City Council of the City of Lubbock, Texas. -4- 1586946v.3 LUB200/I ") ) ) EXHIBIT A City of Lubbock -Special Bond Election (Eleccion Especial de Banos de la ciudad de Lubbock) Vote Center Locations (Centros de Votacion) Tuesday, November 3rd, 2009 (Martes, 3 dia de Noviembre, 2009) All Locations Open 7:00 A.M. -7:00 P.M. (Todas ubicaciones abiertas de las 7:00 A.M a las 7:00 P.M) (ALL LOCATED IN LUBBOCK UNLESS OTHERWISE SPECIFIED) (J'ODAS UBICACIONES EN LUBBOCK A MENDS QUE DE OTRO MODO NOTADO) Ace Hardware-4426 34th St (Ace Hardware-4426 34th St) All American Cbrysler-8716 E Hwy 84, Slaton (All American Chrysler-8716 E Hwy 84, Slaton) Arnett Elementary School-701 E Queens St (Escue/a Primaria Amett--701 Calle Queens al Este) Bacon Heights Baptist Church-5039 53rd St (Iglesia Bautista Bacon Heights-5039 Calle 53) Broadview Baptist Church-1302 N Frankford Ave (Iglesia Bautista Broadview--1302 avenida Frankford al Norte) Byron Martin A TC-3201 A venue Q (Byron Martin ATC--3201 Avenida Q) Calvary Baptist Church-5301 82nd St (Iglesia Bautista Calvario--5301 Calle 82) Catholic Diocese of Lubbock-4620 4th St (Di6cesis Cat6lica de Lubbock--4620 calle 4 Cavazos Middle Scbool-210 N University Ave (Escue/a Secundaria Menor Cavazos-210 Avenida Universidad) Celebration Christian Center-8001 Upland Ave (Celebration Christian Center --8001 Avenida Upland) Church on the Rock-10503 Slide Rd (Church on the Rock-10503 calle Slide) Elles Lodge No. 1348-3409 Milwaukee Ave (Elks Lodge No. 1348--3409 Avenida Milwaukee) Green Lawn Church of Christ-570119th St (Iglesia de Cristo Green Lawn--5701 calle 19) Hodges Community Center--4011 University Ave (Centro Social Hodges--4011 avenida Universidad) Idalou Clubhouse-202 W 7th St, Idalou (Centro Social de Jdalou--202 Calle 7 al Oeste, Idalou) Indiana Avenue Baptist Church, North Campus-8315 Indiana Ave (Iglesia Bautista Avenida Indiana, Campus Norte-8315 avenida Indiana) A-1 1586946v.3 LUB200/I Koko Palace--5101 Avenue Q (Koko Palace--5101 avenida Q) L2 Auto of Lubbock-6202 Milwaukee Ave (L2 Auto of Lubbock--6202 Avenida Milwaukee) Life/Run Center for Independent Living-4902 34th St (Life/Run Centro para la Vida Independiente--4902 Calle 34) Lubbock-Cooper ISD Administration Office-16302 Loop 493 (Oficinas Administrativas de Distrito Escolar Independiente de Lubbock-Cooper -16302 Loop 493) Lubbock-Cooper North Elementary School-3202108th St (Escue/a Primaria Lubbock-Cooper North--3202 Calle 108) Lubbock-Cooper West Elementary School--10101 Fulton Ave (Escue/a Primaria Lubbock-Cooper West--10101 Avenida Fulton) Mae Simmons Community Center--2004 Oak Avenue (Central Social Mae Simmons--2004 Avenida Oak) Maggie Trejo Supercenter-3200 Amherst St (Centro Social Maggie Trejo--3200 Calle Amherst) New Deal ISD Administration Oftice-401 Auburn St, New Deal (Oficinas Administrativas de Distrito Escolar Independiente de New Deal-401 Calle Auburn al Sur, New Deal) Oakwood Baptist Church Life Center-6002 Avenue U (El Centro de Vida, Iglesia Bautista Oakwood--6002 avenida U) Parkway Sommerville Center--405 N Martin Luther King Blvd (Centro Parkway Sommerville--405 Calle Martin Luther King al Norte) Patterson Library-1836 Parkway Dr (Biblioteca Patterson--1836 Calle Parkway) Redeemer Church-6402 Elgin Ave (Iglesia Redeemer--6402 avenida Elgin) Roberts Elementary School-7901 A venue P (Escue/a Primaria Roberts--7901 Avenida P) Roosevelt Clubhouse-1400 CR 3300 (Centro Social de Roosevelt--1400 CR 3300) Roscoe Wilson Elementary School-2807 25th St (Escue/a Primaria Roscoe Wilson--2807 Calle 25) Shallowater Community Center--902 A venue H, Shallowater (Centro Social de Shallowater--902 Avenida H. Shallowater) Slaton ISD Administration Office-140 E Panhandle, Slaton (Oficinas Administrativas de Distrito Escolar Independiente de Slaton-140 Calle Panhandle al Este, Slaton) St Isidore Catholic Church, Parish Hall-17813 N 1-27, Abernathy (Iglesia Cat6lica San lsidore--17813 N 1-27, Abernathy) St Paul's Episcopal Church-1510 A venue X (Iglesia Episcopal San Pedro--] 510 avenida X) Sunset Church of Christ-3625 34th St (Iglesia de Cristo Sunset--3625 ca/le 34) 1586946v.3 LUB200/l ) ) ) ) Sutherlands Lumber--3701 SOth St (Suther/ands Lumber--3701 calle ~OJ Texas Tech University Recreation Center--Hartford & Main St, TTU Campus (Centro de Recreaci6n de Texas Tech--Calles Hartford y Main, Campus de TTU) Wolfforth Clubhouse-328 E Hwy 62/82, Wolfforth (Centro Social de Wolfforth--328 E Hwy 62/82, Wolfforth) A-3 l 586946v.3 LUB200/ I ) EXHIBITB EARLY VOTING Early Voting by personal appearance for the November 3111, 2009 Election will be conducted at ALL EARLY POLLING LOCATIONS ON THE DATES, TIMES AND LOCATIONS LISTED BELOW: ") (Votaci6n Adelantada para la Eleccion el dia 3 de/ mes de noviembre, 2009, seran conducidas en TODOS LOS CENTROS ELECTORALES EN LAS FECHAS, HORAR/0S Y LOCALIDADES LISTADOSO:) *************************************************************************************************************** Early Voting Dates: October 19~ -October 30th, 2009 (Pecha de Votacion Adelantada: 19 de octubre-30 de octubre, 2009) Main Polling Place: (Lugar principal de la votacion) Lubbock County Elections Office Monday, Oct 19th-Friday, Oct 23rd, 10:00 a.m. -7:00 p.m. (Oficina de Elecciones de/ Condado de Lubbock) (Lunes -Viernes, 19-23 de octubre, 10:00a.m. -7:00 p.m.) Public Room (Salon Publico) Saturday, October 24th -Friday, October 30th, 8:00 a.m. -8:00 p.m. 1308 Crickets Ave (1308 avenida crickets) (Sabado -Viernes, 24 de octubre -30 de octubre, 8:00 a.m. -8:00 p.m.) Except Sunday, October 25th 1 :00 p.m. -6:00 P:m. (A menos el domingo, 25 de octubre, 1:00 p.m. -6:00 p.m.) ......••••........•••.........••..........•••.........••••...........•••••................... , United Supermarkets-Locations listed below: Monday-Friday, October 19th -23rd 10:00 A.M. -7:00 P.M. (Lunes -viernes, 19 a 2 3 de octubre, I 0:00 A.M. -7:00 P.M.) Saturday, October 24th -Friday, October 30th 8:00 A.M. -8:00 P.M. (Sabado, 24 de octubre -viernes, 30 de octubre 8:00 A.M. -8:00 P.M.) Except Sunday, October 25th• 2009 1:00 P.M. -6:00 P.M. (A menos el domingo, 25 de octubre, 2009 1:00 p.m. -6:00 p.m.) 2630 Parkway Dr 29th Dr & Marsha Sharp Frwy 112 North University Ave 2703 8200 St (82nd & Boston Ave) 401 Slide Road ~4th & Slide) 8010 Frankford Ave (82nd & Frankford Ave) 1701 50th St (50 & Ave Q) 4205 9gth St (98th & Quaker Ave) Market Street •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Texas Tech University Student Recreation Center Texas Tech Campus Hartford Ave & Main St Lubbock, Texas I 586946v.3 LUB20O/J Dates: October 19th -October 23"1, 2009 (Monday-Friday) (Fecha: 19 de octubre-23 de octubre, 2009, lunes a viernes) Hours: I 0:00 A.M. -7: 00 P .M. (Horas) Dates: October 26th -October 30th, 2009 (Monday-Friday) (Fecha: 24 de octubre -30 de octubre, 2009, sabado -viemes) Hours: 8:00 A.M. -8:00 P.M. (Horas) CLOSED SATURDAY & SUNDAY (Ce"adosabadoydomingo) B-1 ) '\ ) City of Lubbock, First Floor 1625 13th St Lubbock, Texas Dates: October 19th, 2009 (Monday) (Fecha: 19 de octubre, 2009-Junes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 20'\ 2009 (Tuesday) (Fecha: 20 de octubre, 2009 -martes) Hours: 8:00 A.M. -8:00 P.M. (horas) Dates: October 21st --October 23 rd, 2009 (Wednesday --Friday) (Fecha: 21--23 de octubre, 2009-miercoles a viernes) Hours: 8:00 A.M. -5:00 P.M. {horas) Dates: October 26th, 2009 (Monday) (Fecha: 26 de octubre, 2009-lunes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 2?1h, 2009 (Tuesday) (Fecha: 27 de octubre, 2009 -martes) Hours: 8:00 A.M. -8:00 P.M. (horas) Dates: October 2s1h --October 30th, 2009 (Wednesday--Friday) (Fecha: 28--30 de octubre, 2009 -miercoles a viernes) Hours: 8:00 A.M. -5:00 P.M. (horas) CLOSED SATURDAY & SUNDAY (Cerradosabadoydomingo) Slaton ISD Administration Office 140 E Panhandle Slaton, Texas Dates: October 19th -October 23"1, 2009 (Monday-Friday) (Fecha: 19-23 de octubre, 2009, lunes a viernes) Hours: 8:30 A.M. -4:00 P.M. (horas) Dates: October 24th, 2009 (Saturday) (Fecha: 24 de octubre, 2009, sabado) Hours: 9:00 A.M. -4:00 P.M. (horas) Dates: October 25th, 2009 (Sunday) (Fecha: 25 de octubre, 2009, domingo) Hours: 1:00 P.M. -6:00 P.M. (horas) Dates: October 26th -October 30th, 2009 (Monday-Friday) (Fecha: 26 -30 de octubre, 2009, tunes a viernes) Hours: 8:30 A.M. -4:00 P .M. (horas) Dates: October 19th -October 30th, 2009 (Monday-Friday) Lubbock-Cooper ISD Admin Office 16302 Loop 493 (Fecha: /9-30 de octubre, 2009, lunes a viernes) Hours: 8:00 A.M. -4:00 P .M. (horas) CLOSED SATURDAY & SUNDAY (Ce"ado sahado y domingo) Lubbock, Texas B-2 1586946v.3 LUB200/I ) ) ) ) TEMPORARY BRANCH EARLY VOTING LOCATIONS fUBICACIONES DE CASILLAS ELECTORALES TEMPORARIAS) Early voting by personal appearance will be conducted at the following TEMPORARY BRANCH POLLING LOCATIONS ON THE DATES AND TIMES LISTED BELOW: (La votacion adelantado en persona se llevara acabo en las fechas, los tiempos y las ubicaciones listaron:) October 19, 2009 (19 de octubre, 10091 MONDAY (lunes) October 20, 2009 (20 de octubre1 2009) TUESDAY (martes) October 21, 2009 (21 de oetubre, 2009) WEDNESDAY (miercoles) October 22, 2009 (22 de octubre, 2009) THURSDAY (iueves) October 23. 2009 (23 de octubre1 2009) FRIDAY (viernes) October 26. 2009 (16 de octubre. 2009) MONDAY (tunes) I 586946v.3 LUB200/l University Medical Center 602 Indiana Ave 8:00 a.m. -8:00 p.m. Covenant Medical Center -Lobby (Vestibulo) 3615 19th St 8:00 a.m. -8:00 p.m. Lubbock Community Services for the Deaf (LCSD) 2414 34th St 9:00 a.m. -12:00 p.m. Ransom Canyon City Hall (Oficina Municipal de Ransom Canyon) 24 Lee Kitchens Dr, Ransom Canyon 9:00 a.m. -12:00 p.m. Life/Run Center for Independent Living 4902 34th St 9:00 a.m. -12:00 p.m. All American Chrysler 8716 E Hwy 84, Slaton 2:00 p.m. -4:00 p.m. Cornerstone Courts 2101 Avenue Q 2:00 p.m. -4:00 p.m. Covenant Medical Center-Lakeside Garden Room (Basement) (Cuarto de Jardin, S6tano) 3615 19th St 8:00 a.m. -8:00 p.m. Shallowater City Hall (Oficina Municipal de Shallowater) 801 Avenue G 10:00 a.m. -1:00 p.m. B-3 ) October 2 7, 2009 (2 7 de octubre, 2009) TUESDAY (martes) October 28, 2009 f18 octubre. 2009) WEDNESDAY (miercoles) October 29. 2009 (28 octubre. 2009) THURSDAY (jueves) October 30. 2009 {30 de octubre. 2009) FRIDAY (viernes) l 586946v.3 LUB200/J Carillon Senior Living Campus 1717 Norfolk Ave 9:00 a.m. -4:00 p.m. Ventura Place 3026 54th St 9:00 a.m. -12:00 p.m. Idalou Clubhouse (Centro Social de Idalou) 702 Walnut St, Idalou 9:00 a.m. -12:00 p.m. City of Wolfforth Library (Biblioteca de la Ciudad de Wolfforth) 508 E Hwy 62/82, Wolfforth 9:00 a.m. -12:00 p.m. Elmbrook Estates 5301 661h St 2:00 p.m. -4:00 p.m. All American Chrysler 8716 E Hwy 84, Slaton 9:00 a.m. -4:00 p.m. Abernathy City Hall (Ofzcina Municipal de Abernathy) 811 A venue D, Abernathy 9:00 a.m. -4:00 p.m. B-4 THE STATE OF TEXAS COUNTY OF LUBBOCK CITY OF LUBBOCK AFFIDAVIT OF POSTING § § § § § ~ BEF~ ~ihe undersigned authority, on this day personally appeared \ J.Y,u , RL , Asst. to the City Secretary of the City of Lubbock, Texas, wh3:'after being by me duly swam, says upon oath as follows: 1. A true and correct copy of the "NOTICE OF BOND ELECTION", In English and Spanish, hereto attached, was posted at each of the following places within the City of Lubbock, Texas: ONE COPY at Lubbock City Hall, 1625 13th Street (Bulletin Board); . ONE COPY at Lubbock County Court House, 904 Broadway; ONE COPY at Lubbock Independent School District Administrative Offices, 1628 1 gin Street; ONE COPY at Texas Tech University Student Center; 2. Said notices were posted on October 1, 2009; which date is not less than twenty-one (21) full days prior to the date of the election. 3. AU of said places are public places within the City of Lubbock, Texas. ry SWORN TO AND SUBSCRIBED BEFORE ME, this the 1st day of October, 2009. 1:afllJ £ ~WllD Noa;. Public, State of Texas (Notary Seal) 45428623.1 ) NOTICE OF BOND ELECTION NOTICE IS HEREBY GIVEN that the City Council of the City of Lubbock, Texas (the "City") has called a bond election to be held within the City on November 3, 2009. A substantial copy of the Ordinance Calling a Bond Election is set forth below. GIVEN THIS first day of October, 2009. By Becky Garza, City Secretary, City of Lubbock, Texas. AN ORDINANCE CALLING A BOND ELECTION TO BE HELD WITHIN THE CITY OF LUBBOCK, TEXAS; MAKING PROVISIONS FOR THE CONDUCT AND THE GIVING OF NOTICE OF THE ELECTION; CONTAINING OTHER PROVISIONS RELATING THERETO; AND PROVIDING AN EFFECTIVE DA TE WHEREAS, the City Council (the "City Cowicil") of the City of Lubbock, Texas (the "City"), finds that an election should be held to determine whether the City Council shall be authorized to issue bonds of the City in the amowits and for the purposes hereinafter set forth; and WHEREAS, the City Council finds and determines that the meeting at which this Ordinance is considered is open to the public, and that the public notice of the time, place and purpose of the meeting was given, as required by Chapter 551, Texas Government Code, as amended; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK, TEXAS: Section I. Findings. The statements contained in the preamble of this Ordinance are true and correct and are hereby incorporated for all purposes. Section 2. Election Ordered: Date: Propositions. A bond election (the "Election") is hereby ordered and shall be held in the City on Tuesday, November 3, 2009 ("Election Day''), a unifonn election date as established by Section 41.00I(a) of the Texas Election Code, as amended (the "Code"). At the Election, the following propositions (the .. Propositions") shall be submitted to the qualified voters of the City in accordance with law: PROPOSITION NO. 1 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $43,085,000 for the purpose of providing funds for permanent public improvements, to wit: to acquire, construct and reconstruct street improvements, including but not limited to sidewalks, utility line relocation and traffic signalization, necessary and related storm drainage facilities and the acquisition of land and rights-of-way therefor; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear I 587689v. I LUB200/I ) interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" PROPOSITION NO. 2 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $7,500,000 for the purpose of providing funds for permanent public improvements, to wit: to construct, acquire and improve firefighting facilities and equipment, including the acquisition of land and interest in land in connection therewith; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" PROPOSITION NO. 3 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $1,200,000 for the pmpose of providing funds for permanent public improvements, to wit: to construct, acquire and improve water recreation and related park facilities, including the acquisition of land and interests in land in connection therewith; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" PROPOSITION NO. 4 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $9,000,000 for the purpose of providing funds for permanent public improvements, to wit: to construct, acquire, -2- I 587689v. l LUB200/l ; improve and equip soccer facilities for the youth sports complex, including the acquisition of land and interests in land in connection therewith; said bonds to mature serially over a period of not to exceed forty (40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" Section 3. Conduct of Election. (a) The Election shall be conducted within the City under the jurisdiction of the Lubbock County Elections Administrator (the "Administrator"), pursuant to an election services contract, in accordance with the Code. In accordance with Section 43.007 of the Code, voting on Election Day shall be conducted at the Vote Center Locations described in Exhibit A hereto between the hours of 7:00 a.m. and 7:00 p.m. The Vote Center Locations described on Exhibit A may be changed or amended with the approval of the City Manager and without further action of the City Council if the Administrator determines that such change is necessary or desirable for the efficient and lawful conduct of the Election. (b) Early voting for the Election shall be held at the locations, on the days and at the times designated in Exhibit B. The Administrator or her designee is appointed Early Voting Clerk. Requests for ballots to vote by mail shall be addressed to: Lubbock County Elections Office, 1308 Crickets A venue, Lubbock, Texas 79408 or Lubbock County Elections Office, P .0. Box 10536, Lubbock, Texas 79408. (c) The Administrator is directed to appoint the members of the Early Voting Ballot Board. The Administrator is further directed to designate and submit to the City Council for approval the names of the presiding judge and alternate presidingjudge for each polling location. Section 4. Official Ballot. The official ballots for the Election shall be prepared in accordance with the Code so as to permit the electors to vote "FOR" or "AGAINST" the Propositions which shall be set forth on the ballots substantially in the following form: PROPOSITION NO. 1 • FOR ) THE ISSUANCE OF $43,085,000 GENERAL OBLIGATION BONDS FOR STREET IMPROVEMENTS • AGAINST ) PROPOSITION NO. 2 • FOR ) THE ISSUANCE OF $7,500,000 GENERAL OBLIGATION BONDS FOR FIREFIGHTING FACILITIES AND EQUIPMENT • AGAINST ) -3- 1587689v. l LUB200/l PROPOSITION NO. 3 • FOR ) THE ISSUANCE OF $1,200,000 GENERAL OBLIGATION BONDS • AGAINST ) FOR WATER RECREATION FACILITIES PROPOSITION NO. 4 D FOR ) THE ISSUANCE OF $9,000,000 GENERAL OBLIGATION BONDS FOR SOCCER FACILITIES 0 AGAINST ) Section 5. Bilingual Election Materials. All notices, instructions, and ballots pertaining to the Election shall be furnished to voters in both English and Spanish and persons capable of acting as translators in both English and Spanish shall be made available to assist Spanish language speaking voters in understanding and participating in the election process. Section 6. Notice of Election. Notice of the Election shall be given by posting a notice containing a substantial copy of this Ordinance in both English and Spanish at the City Hall on the bulletin board used for posting notices of the meetings of the City Council and at three (3) other public places within the City not less than twenty-one (21) days prior to the date of the Election, and by publication of said notice on the same day in each of two (2) successive weeks in a newspaper of general circulation published within the City, the date of the first publication to be not less than fourteen (14) days nor more than thirty (30) days prior to the date set for the Election. Section 7. Joint Elections: Modifications to Procedures. The Election shall be conducted as a joint election with other governmental entities ordering elections in the area of the City in Lubbock County in accordance with agreements among the City and such other governmental entities. The City Manager is authorized to approve such changes and modifications in election procedures as may be detennined by the Administrator to be necessary or desirable to conduct the Election in an efficient and lawful manner. Section 8. Effective Date. This Ordinance shall take effect immediately upon its approval. PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE on the 27th day of August, 2009, at a regular meeting of the City Council of the City of Lubbock, Texas. -4- I 587689v. I LUB200/ I ') EXHIBIT A City of Lubbock -Special Bond Election (Eleccion Especial de Bonos de la ciudad de Lubbock) Vote Center Locations (Centros de Votacion) Tuesday, November 3rd, 2009 (Martes, 3 dia de Noviembre, 2009) All Locations Open 7:00 A.M. -7:00 P.M. (Todas ubicaciones abiertas de las 7:00 A.M. a las 7:00 P.M.) (ALL LOCATED IN LUBBOCK UNLESS OTHERWISE SPECIFIED) (TODAS UBICACIONES EN LUBBOCK A MENDS QUE DE OTRO MODO NOTADO) Ace Hardware-4426 34th St (Ace Hardware--4426 34th St) AD American Chrysler-8716 E Hwy 84, Slaton ( All American Chrys/er--8716 E Hwy 84, Slaton) Arnett Elementary School-701 E Queens St (Escue/a Primaria Arnett--701 Calle Queens al Este) Bacon Heights Baptist Church-5039 53rd St (Iglesia Bautista Bacon Heights--5039 Calle 53) Broadview Baptist Church-1302 N Frankford Ave (Iglesia Bautista Broadview--1302 avenida Frankford al Norte) Byron Martin A TC-3201 A venue Q (Byron Martin ATC--3201 Avenida Q) Calvary Baptist Church-5301 82nd St (Iglesia Bautista Calvario--5301 Calle 82) Catholic Diocese of Lubbock-4620 4th St (Di6cesis Cat6lica de Lubbock--4620 ca/le 4 Cavazos Middle School-210 N University Ave (Escue/a Secundaria Menor Cavazos--210 Avenida Universidad) Celebration Christian Center-8001 Upland Ave (Celebration Christian Center--8001 Avenida Upland) Church on the Rock-10503 Slide Rd (Church on the Rock--10503 cal/e Slide) Elks Lodge No.1348-3409 Milwaukee Ave (Elks Lodge No. 1348--3409 Avenida Milwaukee) Green Lawn Church ofChrist--570119th St (Iglesia de Cristo Green Lawn--5701 cal/e 19) Hodges Community Center--4011 University Ave (Centro Social Hodges--4011 av_enida Universidad) Idalou Clubbouse-202 W 7th St, Idalou (Centro Social de ldalou--202 Calle 7 al Oeste, Idalou) Indiana Avenue Baptist Church, North Campus-8315 Indiana Ave (Iglesia Bautista Avenida Indiana, Campus Norte--8315 avenida Indiana) A-1 1587689v.1 LUB200/I Koko Palace--5101 Avenue Q (Koko Palace--5101 avenida Q) L2 Auto of Lubbock-6202 Milwaukee Ave (L2 Auto of Lubbock--6202 Avenida Milwaukee) Life/Run Center for Independent Living-4902 34th St (Life/Run Centro para la Vida Jndependiente--4902 Calle 34) Lubbock-Cooper ISD Administration Office-16302 Loop 493 (Oficinas Administrativas de Distrito Escolar Independiente de Lubbock-Cooper --16302 Loop 493) Lubbock-Cooper North Elementary School-3202 108th St (Escue/a Primaria Lubbock-Cooper North--3202 Calle 108) Lubbock-Cooper West Elementary School-10101 Fulton Ave (Escue/a Primaria Lubbock-Cooper West--10101 Avenida Fulton) Mae Simmons Community Center--2004 Oak Avenue (Central Social Mae Simmons--2004 Avenida Oak) Maggie Trejo Supercenter-3200 Amherst St (Centro Social Maggie Trejo--3200 Calle Amherst) New Deal ISD Administration Office--401 Auburn S~ New Deal (O.ficinas Administrativas de Distrito Escolar Independiente de New Deal-401 Calle Auburn al Sur, New Deal) Oakwood Baptist Church Life Center-6002 A venue U (El Centro de Vida, Iglesia Bautista Oakwood--6002 avenida U) Parkway Sommerville Center--405 N Martin Luther King Blvd (Centro Parkway Sommervil/e--405 Calle Martin Luther King al Norte) Patterson Library--1836 Parkway Dr {Biblioteca Patterson--1836 Calle Parkway) Redeemer Church--6402 Elgin Ave (Iglesia Redeemer--6402 avenida Elgin) Roberts Elementary School-7901 Avenue P (Escue/a Primaria Roberts--7901 Avenida P) Roosevelt Clubhouse-1400 CR 3300 (Centro Social de Roosevelt--1400 CR 3300) Roscoe Wilson Elementary School-2807 25th St (Escue/a Primaria Roscoe Wilson--2807 Calle 25) Shallowater Community Center-902 Avenue H, Shallowater (Centro Social de Sha/lowater--902 Avenida H, Shallowater) Slaton ISD Administration Office-140 E Panhandle, Slaton (Oficinas Administrativas de Distrito Escolar Independiente de Slaton-140 Calle Panhandle al Este, Slaton) St Isidore Catholic Church, Parish Hall-17813 N 1-27, Abernathy (Iglesia Catolica San Isidore-17813 N 1-27, Abernathy) St Paul's Episcopal Church--1510 Avenue X (Iglesia Episcopal San Pedro--1510 avenida X) Sunset Church of Christ-3625 34th St (Iglesia de Cristo Sunset--3625 ca/le 34) A-2 1587689v. l LUB200/l SutherJands Lumber-3701 50th St (Suther/ands Lumber-3701 ca/le 50) Texas Tech University Recreation Center-Hartford & Main St, TTU Campus (Centro de Recreaci6n de Texas Tech--Calles Hartford y Main, Campus de ITU) Wolfforth Clubhouse-328 E Hwy 62/82, Wolfforth (Centro Social de Wo/jforth--328 E Hwy 62182, Wolfforth) A-3 1587689v. l LUB200/l EXHIBITB EARLY VOTING Early Voting by personal appearance for the November 3rd, 2009 Election will be conducted at ALL EARLY POLLING LOCATIONS ON THE DATES, TIMES AND LOCATIONS LISTED BELOW: (Votaci6n Adelantada para la Eleccion el dfa 3 def mes de noviembre, 2009, seran conducidas en TODOS LOS CENTROS ELECTORALES EN LAS FECHAS, HORARIOS Y LOCALfDADES LISTADOSO:) Early Voting Dates: October 19th -October 30th, 2009 (Fecha de Votacion Adelantada: 19 de octubre -30 de octubre, 2009) Main Polling Place: (Lugar principal de Ia votacionJ Lubbock County Elections Office Monday, Oct 19th -Friday, Oct 23n1, 10:00 a.m. -7:00 p.m. (Oflcina de Elecciones del Condado de Lubbock) (Lunes -Viernes. /9-23 de octubre, 10:00 a.m. -7:00 p.m.) Public Room (Salon Publico) Saturday, October 24th -Friday, October 30th, 8:00 a.m. -8:00 p.m. 1308 Crickets Ave (1308 avenida crickets) (Sabado -Viernes, 24 de octubre -30 de octubre, 8:00 a.m. -8:00 p.m.) Except Sunday, October 25th 1 :00 p.m. -6:00 p.m. (A menos el domingo, 25 de octubre, I :00 p.m. -6:00 p.m.) ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 1 United Supermarkets-Locations listed below: Monday-Friday, October 19th -23rd 10:00 A.M. -7:00 P.M. (Lunes -viemes, 19 a 23 de octubre. 10:00 A.M. -7:00 P.M.) Saturday, October 24th -Friday, October 30th 8:00 A.M. -8:00 P.M. (Sabado, 24 de octubre -viernes, 30 de octubre 8:00 A..M. -8:00 P.M.) Except Sunday, October 25th, 2009 1:00 P.M. -6:00 P.M. (A menos el domingo, 25 de octubre, 2009 1:00 p.m. -6:00 p.m.) 2630 Parkway Dr 29th Dr & Marsha Sharp Frwy 112 North University Ave 2703 82nd St (82nd & Boston Ave) 401 Slide Road ~4th & Slide) 8010 Frankford Ave (82nd & Frankford Ave) 1701 50th St (50 & Ave Q) 4205 98th St (98th & Quaker Ave) Market Street •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Texas Tech University Student Recreation Center Texas Tech Campus Hartford Ave & Main St Lubbock, Texas t587689v.l LUB200/1 Dates: October 19th -October 23rd, 2009 (Monday -Friday) {Fecha: 19 de octubre -23 de octubre, 2009, lunes a viemes) Hours: 10:00 A.M. -7:00 P.M. (Horas) Dates: October 26th -October 30th, 2009 (Monday-Friday) (Fecha: 24 de octubre -30 de octubre, 2009, sabado -viemes) Hours: 8:00 A.M. -8:00 P .M. (Horas) CLOSED SATURDAY & SUNDAY (Cttmzdt> s4bado y domingo) B-1 City of Lubbock, First Floor 1625 13th St Lubbock, Texas Dates: October 19th, 2009 (Monday) (Fecha: 19 de octubre, 2009-lunes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 20th, 2009 (Tuesday) (Fecha: 20 de octubre, 2009 -martes) Hours: 8:00 A.M. -8:00 P.M. (horas) Dates: October 21st--October 23 n1, 2009 (Wednesday--Friday) (Fecha: 21--23 de octubre, 2009-miercoles a viernes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 26th, 2009 (Monday) (Fecha: 26 de octubre, 2009 -tunes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 27th, 2009 (Tuesday) (Fecha: 27 de octubre, 2009-martes) Hours: 8:00 A.M. -8:00 P.M. (horas) Dates: October· 28th --October 30th, 2009 (Wednesday --Friday) (Fecha: 28--30 de octubre, 2009 -miercoles a viernes) Hours: 8:00 A.M. -5:00 P.M. (horas) CLOSED SATURDAY & SUNDAY (Ce"adosabadoydomingo) Slaton ISD Administration Office 140 E Panhandle SJaton, Texas Dates: October 19th _ October 23"1, 2009 (Monday-Friday) (Fecha: 19 -23 de octubre, 2009, Junes a viernes) Hours: 8:30 A.M. -4:00 P.M. (horas) Dates: October 241\ 2009 (Saturday) (Fecha: 24 de octubre, 2009, sabado) Hours: 9:00 A.M. -4:00 P.M. (horas) Dates: October 25th, 2009 (Sunday) (Fecha: 25 de octubre, 2009, domingo) Hours: I :00 P.M. -6:00 P.M. (horas) Dates: October 26th -October 301\ 2009 (Monday -Friday) (Fecha: 26 -30 de octubre, 2009, lunes a viernes) Hours: 8:30 A.M. -4:00 P .M. (horas) Dates: October 19th -October 301h, 2009 (Monday -Friday) Lubbock-Cooper ISD Admin Office 16302 Loop 493 (Fecha: 19-30 de octubre, 2009, lunes a viernes) Hours: 8:00 A.M. -4:00 P .M. (horas) CLOSED SATURDAY & SUNDAY (Ce"adosabadoydomingo) Lubbock, Texas B-2 l587689v. I LUB200/I -, ") ) TEMPORARY BRANCH EARLY VOTING LOCATIONS (UBICACIONES DE CASILLAS ELECTORALES TEMPORARIAS) Early voting by personal appearance will be conducted at the following TEMPORARY BRANCH POLLING LOCATIONS ON THE DATES AND TIMES LISTED BELOW: (La votacion adelantado en persona se 1/evara acabo en las fechas, los tiempos y las ubicaciones listaron:) October 19, 2009 /19 de octubre. 2009) MONDAY (lunes) October 20, 2009 (20 de octubre, 2009) TUESDAY (martes) October 21, 2009 (21 de octubre. 2009) WEDNESDAY (miercolesJ October 22. 2009 /22 de octubre, 2009) THURSDAY (iuevesJ October 23. 2009 (23 de octubre. 2009) FRIDAY (viernes) October 26. 2009 (26 de octubre. 2009) MONDAY (lunesJ \587689v. l LUB200/l University Medical Center 602 Indiana Ave 8:00 a.m. -8:00 p.m. Covenant Medical Center -Lobby (Vestibulo) 3615 19th St 8:00 a.m. -8:00 p.m. Lubbock Community Services for the Deaf(LCSD) 2414 34th St 9:00 a.m. -12:00 p.m. Ransom Canyon City Hall (Oficina Municipal de Ransom Canyon) 24 Lee Kitchens Dr, Ransom Canyon 9:00 a.m. -12:00 p.m. Life/Run Center for Independent Living 4902 34th St 9:00 a.m. -12:00 p.m. All American Chrysler 8716 E Hwy 84, Slaton 2:00 p.m. -4:00 p.m. Cornerstone Courts 2101 Avenue Q 2:00 p.m.-4:00 p.m. Covenant Medical Center-Lakeside Garden Room (Basement) (Cuarto de Jardin, Sotano) 3615 191h St 8:00 a.m. -8:00 p.m. Shallowater City Hall (Oficina Municipal de Shallowater) 801 AvenueG 10:00 a.m. -1 :00 p.m. B-3 October 27. 2009 f27 de octubre, 2009) TUESDAY (martes) October 28, 2009 (28 octubre. 2009) WEDNESDAY (miircoles) October 29, 2009 /18 octubre, 2009) THURSDAY (iueves) October 30. 2009 (30 de octubre. 2009) FRIDAY (viernes) I 587689v.1 LUB200/I Carillon Senior Living Campus 1717 Norfolk Ave 9:00 a.m. -4:00 p.m. Ventura Place 3026 54th St 9:00 a.m. -12:00 p.m. Idalou Clubhouse (Centro Social de Idalou) 702 Walnut St, Idalou 9:00 a.m. -12:00 p.m. City of Wolfforth Library (Biblioteca de la Ciudad de Wolfforth) 508 E Hwy 62/82, Wolfforth 9:00 a.m. -12:00 p.m. Elmbrook Estates 5301 661h St 2:00 p.m. -4:00 p.m. All American Chrysler 8716 E Hwy 84, Slaton 9:00 a.m. -4:00 p.m. Abernathy City Hall (Oficina Municipal de Abernathy) 811 A venue D, Abernathy 9:00 a.m. -4:00 p.m. B-4 ' > A VISO DE ELECCION SE NOTIFICA POR EL PRESENTE que el Consejo Municipal de la Ciudad de Lubbock, Texas, (la "Ciudad") ha convocado una elecci6n de bonos a ser celebrada dentro de la Ciudad el dia 3 de noviembre de 2009. Una copia sustancial de la Ordenanza Convocando a Elecci6n de Bonos es presentada a continuaci6n. Por Becky Garza, Secretaria de la Ciudad, Ciudad de Lubbock, Texas. ORDENANZA CONVOCANDO UNA ELECCION DE BONOS A CELEBRARSE DENTRO DE LA CIUDAD DE LUBBOCK, TEXAS; ESTABLECIENDO LAS DISPOSICIONES PARA LA CONDUCCI6N Y LA NOTIFICACION DE LA ELECCION; CONTENIENDO OTRAS DISPOSICIONES RELACIONADAS CON LA MJSMA; Y ESTIPULANDO LA FECHA DE EFECTNIDAD EN VISTA DE QUE, el Consejo Municipal (el "Consejo Municipal") de la Ciudad de Lubbock, Texas (la "Ciudad'') halla necesario que se celebre una elecci6n para determinar si el Consejo Municipal debe ser autorizado a emitir bonos de la Ciudad por las cantidades y con los propositos de aqui en adelante establecidos; EN VISTA DE QUE, el Consejo Municipal halla y determina que la asamblea en que esta Ordenanza es considerada esta abierta al publico, y que se dio aviso publico de la hora, el lugar y el prop6sito de esta asamblea, segun es requerido por el Capftulo 551 del C6digo de Gobiemo de Texas, enmendado; AHORA, POR LO TANTO, EL CONSEJO MUNICIPAL DE LA CIUDAD DE LUBBOCK, TEXAS ORDENA: Secci6n 1. Hallazgos. Las declaraciones contenidas en el preambulo de esta Ordenanza son verdaderas y correctas y son por el presente incorporadas. Secci6n 2. Elecci6n ordenada: Fecha: Proposiciones. Se ordena por el presente la celebraci6n de una elecci6n de bonos (la "Elecci6n") a celebrarse en la Ciudad el martes 3 de noviembre de 2009 ( el "Dia de Elecci6n"), una fecha unifonne de elecciones de acuerdo a lo establecido por la Secci6n 41.00l(a) del C6digo Electoral de Texas, enmendado (el "C6digo"). En la Elecci6n, las siguientes proposiciones (las "Proposiciones") seran presentadas ante los votantes calificados de la Ciudad en confonnidad con la ley: PROPOSICION Nro. 1 "6Se debera autorizar al Consejo Municipal de la Ciudad de Lubbock, Texas para emitir bonos de obligaci6n general de la Ciudad por la cantidad de $43,085,000 con el prop6sito de proveer fondos para mejoras publicas pennanentes, a saber: la adquisici6n, construcci6n y reconstrucci6n de mejoras de calles, incluyendo las aceras pero no limitandose a ellas, la reubicaci6n de lineas de servicios publicos y de la sefializaci6n de trafico, las instalaciones 231402v. l LUB200/I ') de drenaje de agua de tormenta necesarias y relacionadas, y la adquisici6n de terrenos y derechos de paso para las mismas; dichos bonos madurando en serie en un periodo maximo de cuarenta (40) afios a partir de su f echa, a ser emitidos en emisiones y vendidos a algun precio o precios y generando intereses a alguna tasa o tasas segun lo determine a su discreci6n el Consejo Municipal bajo las leyes vigentes al momento de la emisi6n, y para proveer el pago del capital y el interes de dichos bonos mediante la imposici6n de un impuesto suficiente para pagar el interes anual y para crear un fondo de amortizaci6n suficiente para pagar los bonos conforme venzan"? PROPOSICI6N Nro. 2 "i,Se debera autorizar al Consejo Municipal de la Ciudad de Lubbock, Texas para emitir bonos de obligaci6n general de la Ciudad por la cantidad de $7,500,000 con el prop6sito de proveer fondos para mejoras publicas permanentes, a saber: la construcci6n, adquisici6n y mejoramiento de instalaciones y equipo para combatir incendios, incluyendo la adquisici6n de terrenos e intereses en terrenos en conexi6n con las mismas; dichos bonos madurando en serie en un periodo maximo de cuarenta ( 40) afios a partir de su fecha, a ser emitidos en emisiones y vendidos a algun precio o precios y generando intereses a alguna tasa o tasas segun lo determine a su discreci6n el Consejo Municipal bajo las leyes vigentes al momento de la emisi6n, y para proveer el pago del capital y el interes de dichos bonos mediante la imposici6n de un impuesto suficiente para pagar el interes anual y para crear un fondo de amortizaci6n suficiente para pagar los bonos conforme venzan"? PROPOSICION Nro. 3 .. 6Se debera autorizar al Consejo Municipal de la Ciudad de Lubbock, Texas para emitir bonos de obligaci6n general de la Ciudad por la cantidad de $1,200,000 con el prop6sito de proveer fondos para mejoras publicas permanentes, a saber: la construcci6n, adquisici6n y mejoramiento de instalaciones de recreaci6n de agua y las instalaciones de parques relacionadas, incluyendo la adquisici6n de terrenos e intereses en terrenos en conexi6n con las mismas; dichos bonos madurando en serie en un periodo maximo de cuarenta (40) afios a partir de su fecha, a ser emitidos en emisiones y vendidos a algun precio o precios-y generando intereses a alguna tasa o tasas segun lo determine a su discreci6n el Consejo Municipal bajo las leyes vigentes al momenta de la emisi6n, y para proveer el pago del capital y el interes de dichos bonos mediante la imposici6n de un impuesto -2- 231402v.1 LUB200/1 \ ' suficiente para pagar el interes anual y para crear un fondo de amortizaci6n suficiente para pagar los bonos confonne venzan''? PROPOSICION Nro. 4 ";,Se debera autorizar al Consejo Municipal de la Ciudad de Lubbock. Texas para emitir bonos de obligaci6n general de la Ciudad por la cantidad de $9,000,000 con el prop6sito de proveer fondos para mejoras publicas permanentes, a saber: la construcci6n adquisici6n, mejoramiento y equipamiento de instalaciones de filtbol en el complejo deportivo juvenil, incluyendo la adquisici6n de terrenos e intereses en terrenos en conexi6n con las rnismas; dichos bonos rnadurando en serie en un periodo maximo de cuarenta ( 40) afios a partir de su f echa. a ser emitidos en emisiones y vendidos a algun precio o precios y generando intereses a alguna tasa o tasas segun lo determine a su discreci6n el Consejo Municipal bajo las leyes vigentes al mornento de la emisi6n, y para proveer el pago del capital y el interes de dichos bonos mediante la imposici6n de un impuesto suficiente para pagar el interes anual y para crear un fondo de amortizaci6n suficiente para pagar los bonos confonne venzan"? Secci6n 3. Conducci6n de la Elecci6n. (a) La Elecci6n sen\ llevada a cabo dentro de la Ciudad y bajo la jurisdicci6n del Administrador de Elecciones del Condado de Lubbock ( el "Administrador"), conforme a un contrato de servicios electorates, de acuerdo con el C6digo. En conformidad con la Secci6n 43.007 del C6digo, la votaci6n del Dia de Elecci6n se llevara a cabo en las Localidades de Centros de Votaci6n indicadas en el Anexo A del presente, en el horario de 7:00 a.m. a 7:00 p.m. Las Localidades de Centros de Votaci6n que figuran en el Anexo A pueden ser cambiadas o modificadas con la aprobaci6n del Administrador de la Ciudad y sin acci6n previa del Consejo Municipal si el Administrador de Elecciones determina que tal cambio es necesario o deseable para la conducci6n eficiente y legal de la Elecci6n. (b) La votaci6n anticipada de la Elecci6n se realizara en los lugares, fechas y horarios indicados en el Anexo B. El Administrador o su designado es nombrado Oficial de Votaci6n Anticipada. Las solicitudes de boletas de votaci6n por correo deben ser enviadas a: Lubbock County Elections Office, 1308 Crickets A venue, Lubbock, Texas 79408 o bien a Lubbock County Elections Office, P.O. Box 10536, Lubbock. Texas 79408. (c) Se instruye al Administrador a que designe los miembros del Consejo de Boletas de Votaci6n Anticipada. Se instruye ademas al Administrador a que designe al juez presidente y al juez presidente altemo de cada lugar de votaci6n y que presente sus nombres ante el Consejo Municipal para su aprobaci6n. Secci6n 4. Boleta oficial de votaci6n. La preparacion de las boletas de votaci6n oficiales para la Elecci6n se hara en conformidad con el C6digo de manera que se permita a los electores votar "A FAVOR" o "EN CONTRA" de las Proposiciones las cuales apareceran en las boletas de votaci6n sustancialmente en la siguiente forma: -3- 23 !402v.1 LUB200/1 ., ) • • • • • • PROPOSICION Nro. 1 A FAVOR ) LA EMISION DE $43,085,000 EN BONOS DE OBLIGACION GENERAL PARA MEJORAS DE CALLES EN CONTRA) PROPOSICION Nro. 2 AF A VOR ) LA EMISION DE $7,500,000 EN BON OS DE OBLIGACION GENERAL PARA INSTALACIONES Y EQUIPO PARA EN CONTRA ) COMBA TIR INCENDIOS PROPOSICION Nro. 3 AFAVOR ) LA EMISION DE $1,200,000 EN BONOS DE OBLIGACION GENERAL PARA INST ALACIONES DE RECREACION CON EN CONTRA ) AGUA PROPOSICION Nro. 4 • AF A VOR ) LA EMISION DE $9,000,000 EN BONOS DE OBLIGACION • EN CONTRA) GENERAL PARA INSTALACIONES DE FUTBOL Secci6n 5. Materiales bilingiies de la Elecci6n . Todos los avisos, instrucciones y boletas pertin~ntes a la Elecci6n seran suministrados a los votantes en ingles y en espaiiol; y habra a disposici6n personas capaces de actuar coma traductores de ingles y espaiiol para ayudar a los votantes de habla hispana a entender y participar en el proceso electoral. Secci6n 6. A viso de Elecci6n. El A viso de la Elecci6n se dara. mediante la colocaci6n de un aviso que contenga una copia sustancial de esta Ordenanza en ingles y en espaiiol en City Hall, en el tablero de boletines utilizado para publicar los avisos de asambleas del Consejo Municipal yen otros tres (3) lugares publicos dentro de la Ciudad, no menos de veintiun (21) dias antes de la fecha de la Elecci6n, y mediante la publicaci6n de dicho aviso el mismo dia en dos (2) semanas consecutivas en un peri6dico de circulaci6n general dentro de la Ciudad, debiendo ser la fecha de la primera publicaci6n no menos de catorce (14) dias antes ni mas de treinta (30) dias antes de la fecha establecida de la Elecci6n. Secci6n 7. Elecciones conjuntas: Modificaciones de los procedirnientos. La Elecci6n sera conducida como elecci6n conjunta con otros organismos gubemamentales que convoquen elecciones en el area de la Ciudad en el Condado de Lubbock conforme a los convenios existentes entre la Ciudad y tales organismos gubemamentales. El Administrador de la Ciudad esta autorizado para aprobar los cambios y modificaciones de los procedimientos electorales que el Administrador de Elecciones determine que sean necesarios o deseables para la conducci6n eficiente y legal de la Elecci6n. 231402v.l LUB200/\ ) ) ) Secci6n 8. aprobaci6n. Fecha efectiva. Esta Orden sera efectiva irunediatamente despues de su PRESENT ADA, P ASADA Y APROBADA DE FORMA FINAL, Y HECHA EFECTIV A el dia 27 de agosto de 2009, en una asamblea ordinaria del Consejo Municipal de la Ciudad de Lubbock, Texas. -5- 231402v. I LUB2O0/I .., ) ) EXHIBIT A City of Lubbock -Special Bond Election (Eleccion Especial de Bonos de la ciudad de Lubbock) Vote Center Locations (Centros de Votaci6n) Tuesday, November 3rd, 2009 (Martes, 3 dia de Noviembre, 2009) All Locations Open 7:00 A.M.--7:00 P.M. (Todas ubicaciones abiertas de las 7:00 A.M. a las 7:00 P.M) (ALL LOCATED IN LUBBOCK UNLESS OTHER WISE SPECIFIED) (TODAS UBICACIONES EN LUBBOCK A MENOS QUE DE OTRO MODO NOTADO) Ace Hardware--4426 34th St (Ace Hardware-4426 34th St) All American Cbrysler-8716 E Hwy 84, Slaton (All American Chrysler-8716 E Hwy 84, Slaton) Arnett Elementary School-701 E Queens St (Escue/a Primaria Arnett--701 Calle Queens al Este) Bacon Heights Baptist Church-5039 53rd St (Iglesia Bautista Bacon Heights--5039 Calle 53) Broadview Baptist Church-1302 N Frankford Ave (Iglesia Bautista Broadview--1302 avenida Frankford al Norte) Byron Martin ATC--3201 Avenue Q (Byron Martin ATC--3201 Avenida Q) Calvary Baptist Church-5301 82nd St (Iglesia Bautista Calvario--5301 Calle 82) Catholic Diocese of Lubbock-4620 4th St (Di6cesis Cat6/ica de Lubbock--4620 ca/le 4 Cavazos Middle School--210 N University Ave (Escue/a Secundaria Menor Cavazos--210 Avenida Universidad) Celebration Christian Center-8001 Upland Ave (Celebration Christian Center-8001 Avenida Upland) Church on the Rock-10503 Slide Rd (Church on the Rock--10503 ca/le Slide) Elles Lodge No. 1348-3409 Milwaukee Ave (Elks Lodge No. 1348--3409 Avenida Milwaukee) Green Lawn Church of Christ-5701 19th St (Iglesia de Cristo Green Lawn--5701 ca/le 19) Hodges Community Center-4011 University Ave (Centro Social Hodges-401 I avenida Universidad) Idalou Clubbouse--202 W 7th St, Idalou (Centro Social de ldalou--202 Calle 7 al Oeste, Idalou) Indiana Avenue Baptist Church, North Campus-8315 Indiana Ave (Iglesia Bautista Avenida Indiana, Campus Norte--8315 avenida Indiana) A-1 231402v.l LUB200/l ... '\ ) Koko Palace--5101 Avenue Q (Koko Palace--5101 avenida Q) L2 Auto ofLubbock--6202 Milwaukee Ave (L2 Auto of Lubbock--6202 Avenida Milwaukee) Life/Run Center for Independent Living-4902 34th St (Life/Run Centro para la Vida Independiente--4902 Calle 34) Lubbock-Cooper ISD Administration Office-16302 Loop 493 (Oficinas Administrativas de Distrito Escolar lndependiente de Lubbock-Cooper --16302 Loop 493) Lubb~k-Cooper North Elementary School-3202 108th St (Escue/a Primaria Lubbock-Cooper North--3202 Calle 108) Lubbock-Cooper West Elementary School-10101 Fulton Ave (Escue/a Primaria Lubbock-Cooper West--10101 Avenida Fulton) Mae Simmons Community Center--2004 Oak Avenue (Central Social Mae Simmons-2004 Avenida Oak) Maggie Trejo Supercenter-3200 Amherst St (Centro Social Maggie Trejo--3200 Calle Amherst) New Deal ISD Administration Office-401 Auburn St, New Deal (Oficinas Administrativas de Distrito Escolar Independiente de New Dea/--401 Calle Auburn al Sur, New Deal) Oakwood Baptist Church Life Center-6002 Avenue U (El Centro de Vida, Iglesia Bautista Oakwood--6002 avenida U) Parkway Sommerville Center-405 N Martin Luther King Blvd (Centro Parkway Sommerville--405 Calle Martin Luther King al Norte) Patterson Library--1836 Parkway Dr (Biblioteca Patterson--1836 Calle Parkway) Redeemer Churcb--6402 Elgin Ave (Iglesia Redeemer-6402 avenida Elgin) Roberts Elementary School-7901 Avenue P (Escuela Primaria Roberts--7901 Avenida P) Roosevelt Clubhouse-1400 CR 3300 (Centro Social de Roosevelt--1400 CR 3300) Roscoe Wilson Elementary Scbool-2807 25th St (Escue/a Primaria Roscoe Wilson--2807 Calle 25) Shallowater Community Center-902 A venue H, Shallowater (Centro Social de Shallowater--902 Avenida H, Shallowater) Slaton ISD Administration Offlce--140 E Panhandle, Slaton (Oficinas Administrativas de Distrito Escolar Independiente de Slaton--140 Calle Panhandle al Este, Slaton) St Isidore Catholic Church, Parish Hall--17813 N 1-27, Abernathy (Iglesia Catolica San Isidore--17813 N I-27, Abernathy) St Paul's Episcopal Church-1510 Avenue X (Iglesia Episcopal San Pedro--1510 avenida .\) Sunset Church of Christ-3625 34th St (Iglesia de Cristo Sunset--3625 ca/le 34) A-2 231402v. l LUB200/l ) ) ) Sutherlands Lumber--3701 50th St (Suther/ands Lumber--3701 calle 50) Texas Tech University Recreation Center-Hartford & Main St, TTU Campus (Centro de Recreacion de Texas Tech--Calles Hartford y Main, Campus de TTV) Wolfforth Clubhouse--328 E Hwy 62/82, Wolfforth (Centro Social de Wo(fforth-328 E Hwy 62/82, Wolfforth) A-3 231402v.1 LUB200/\ ., EXHIBIT B EARLY VOTING Early Voting by personal appearance for the November 3rd, 2009 Election will be conducted at ALL EARLY POLLING LOCATIONS ON THE DATES, TIMES AND LOCATIONS LISTED BELOW: , (Votacion Adelantada para la Eleccion el dis 3 def mes de noviembre, 2009, seran conducidas en TODOS LOS CENTRO$ ELECTORALES EN LAS FECHAS, HORARIOS Y LOCALIDADES LISTADOSO:) ' ', *************************************************************************************************************** Early Voting Dates: October 19th -October 30th, 2009 (Fecha de Votacion Adelantada: 19 de octubre -30 de octubre, 2009) Main Polling Place: (Lugar principal de la votacion) Lubbock County Elections Office Monday, Oct 19th -Friday, Oct 23n1, 10:00 a.m. -7:00 p.m. (Oficina de Elecciones de/ Condado de Lubbock) (lunes -Viernes, /9-23 de octubre, 10:00a.m. -7:00 p.m.) Public Room (Salon Publico) Saturday, October 24th -Friday, October 30th, 8:00 a.m. -8:00 p.m. 1308 Crickets Ave (1308 avenida crickets) (Sabado -Viernes, 24 de octubre -30 de octubre, 8:00 a.m. -8:00 p.m.) Except Sunday, October 25th 1 :00 p.m. -6:00 p.m. (A menos el domingo, 25 de octubre, l :00 p.m. -6:00 p.m.) ···························································································•·t United Supermarkets-Locations listed below: Monday-Friday, October 19th -23rd 10:00 A.M. -7:00 P.M. (L1.mes -viernes. 19 a 23 de octubre, 10:00 A.M -7:00 P.M) Saturday, October 24th -Friday, October 30th 8:00 A.M. -8:00 P.M. (Sabado, 24 de octubre -viernes, 30 de octubre 8:00 A.M -8:00 P.M) Except Sunday, October 25th, 20091:00 P.M. -6:00 P.M. (A menos el domingo, 25 de octubre, 2009 1 :00 p.m. -6:00 p.m.) 2630 Parkway Dr 29th Dr & Marsha Sharp Frwy 112 North University Ave 2703 82nd St (82nd & Boston Ave) 401 Slide Road ~4th & Slide) 8010 Frankford Ave (82nd & Frankford Ave) 1701 50th St (50 & Ave Q) 4205 98th St (98th & Quaker Ave) Market Street ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 1 Texas Tech University Student Recreation Center Texas Tech Campus Hartford Ave & Main St Lubbock, Texas 231402v. l LUB200/I Dates: October 19th -October 23rd, 2009 (Monday-Friday) {Fecha: 19 de octubre -23 de octubre, 2009, tunes a viemes) Hours: 10:00 A.M. -7:00 P.M. (Horas) Dates: October 26th -October 30th, 2009 (Monday-Friday) (Fecha: 24 de octubre-30 de octubre, 2009, sabado -viernes) Hours: 8:00 A.M. -8:00 P.M. (Horas) CLOSED SATURDAY & SUNDAY (Ce"adosabadoydomingo) B-1 ) City of Lubbock. First Floor 1625 13th St Lubbock, Texas Dates: October 191\ 2009 (Monday) (Fecha: J9de octubre, 1009 -tunes) Hours: 8 :00 AM. -5:00 P .M. (horas) Dates: October 20th, 2009 (Tuesday) (Fecha: 20 de octubre, 2009 -martes) Hours: 8:00 A.M. -8:00 P.M. (horas) Dates: October 21 st --October 23 rd, 2009 (Wednesday--Friday) (Fecha: 21-23 de octubre, 2009 -miercoles a viernes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 26'\ 2009 (Monday) (Fecha: 26 de octubre, 2009 -lunes) Hours: 8:00 A.M. -5:00 P.M. (horas) Dates: October 27th, 2009 (Tuesday) (Fecha: 27 de octubre, 2009-martes) Hours: 8:00 A.M. -8:00 P.M. (horas) Dates: October 281h --October 301\ 2009 (Wednesday --Friday) (Fecha: 28--30 de octubre, 2009-miercoles a viernes) Hours: 8:00 A.M. -5:00 P.M. (horas) CLOSED SATURDAY & SUNDAY (Cemulo sahado y domingo) Slaton ISD Administration Office 140 E Panhandle Slaton, Texas Dates: October 19th -October 23rd, 2009 (Monday -Friday) (Fecha: 19-23 de octubre, 2009, Junes a viernes) Hours: 8:30 A.M. -4:00 P.M. (horas) Dates: October 24th, 2009 (Saturday) (Fecha: 24 de octuhre, 2009, sabado) Hours: 9:00 A.M. -4:00 P.M. (horas) Dates: October 251\ 2009 (Sunday) (Fecha: 25 de octubre, 2009, domingo) Hours: 1:00 P.M. -6:00 P.M. (horas) Dates: October 26th -October 301\ 2009 (Monday-Friday) (Fecha: 26 -30 de octubre, 2009, lunes a viemes) Hours: 8:30 AM. -4:00 P.M. (horas) Dates: October 19th -October 301\ 2009 (Monday -Friday) Lubbock-Cooper ISD Admin Office 16302 Loop 493 (F echa: 19 -30 de octubre, 2009, lunes a viernes) Hours: 8:00 A.M. -4:00 P.M. (horas) CLOSED SATURDAY & SUNDAY (Cerrtulosabtuloydomingo) Lubbock, Texas B-2 231402v.1 LUB200/I "'I TEMPORARY BRANCH EARLY VOTING LOCATIONS (UBICACIONES DE CASILLAS ELECTORALES TEMPORARJAS) Early voting by personal appearance will be conducted at the following TEMPORARY BRANCH POLLING LOCATIONS ON THE DATES AND TIMES LISTED BELOW: (La votaci6n adelantado en persona se lfevara acabo en las Jech as, los tiempos y las ubicaciones /istaron:) October 19, 2009 (19 de octubre. 2009) MONDAY (lunes) October 20, 2009 (20 de octubre. 2009) TUESDAY (martes) October 21, 2009 (21 de octubre1 2009) WEDNESDAY (miercoles) October 22, 2009 (22 de octubre. 2009) THURSDAY (jueves) October 23, 2009 (13 de octubre, 2009) FRIDAY (viernes) October 26. 2009 /26 de octubre1 2009) MONDAY (lunes) 231402v. I LUB200/I University Medical Center 602 Indiana Ave 8:00 a.m. -8:00 p.m. Covenant Medical Center -Lobby (Vest{bulo) 3615 19th St 8:00 a.m. -8:00 p.m. Lubbock Community Services for the Deaf (LCSD) 2414 34th St 9:00 a.m. -12:00 p.m. Ransom Canyon City Hall (Oficina Municipal de Ransom Canyon) 24 Lee Kitchens Dr, Ransom Canyon 9:00 a.m. -12:00 p.m. Life/Run Center for Independent Living 4902 34th St 9:00 a.m. -12:00 p.m. All American Chrysler 8716 E Hwy 84, Slaton 2:00 p.m. -4:00 p.m. Cornerstone Courts 2101 Avenue Q 2:00 p.m. -4:00 p.m. Covenant Medical Center-Lakeside Garden Room (Basement) (Cuarto de Jardin, Sotano) 3615 19th St 8:00 a.m. -8:00 p.m. Shallowater City Hall (Ojicina Municipal de Shallowater) 801 AvenueG 10:00 a.m. -1:00 p.m. B-3 ) October 27, 2009 (27 de octubre. 2009) TUESDAY (martes) October 28, 2009 /28 octubre. 2009) WEDNESDAY (mibcoles) October 29, 2009 (18 octubre, 2009) THURSDAY Oueves) October 30, 2009 (30 de octubre, 2009) FRIDAY (viernes) 23 \4O2v. I LUB20O/1 Carillon Senior Living Campus 1717 Norfolk Ave 9:00 a.m. -4:00 p.m. Ventura Place 3026 54th St 9:00 a.m. -12:00 p.m. Idalou Clubhouse (Centro Social de Idalou) 702 Walnut St, Idalou 9:00 a.m. -12:00 p.m. City of Wolfforth Library (Bib/ioteca de la Ciudad de Wolfforth) 508 E Hwy 62/82, Wolfforth 9:00 a.m.-12:00 p.m. Elmbrook Estates 5301 66th St 2:00 p.m. -4:00 p.m. All American Chrysler 8716 E Hwy 84, Slaton 9:00 a.m. -4:00 p.m. Abernathy City Hall (Oficina Municipal de Abernathy) 811 Avenue D, Abernathy 9:00 a.m. -4:00 p.m. B-4 ' ., THE STA TE OF TEXAS COUNTY OF LUBBOCK AFFIDAVIT OF NEWSPAPER § § § BEFORE Iv1E, the undersigned authority, on this day personally appeared the person whose name is subscribed below, who, being by me first duly sworn, upon oath deposed and said: 1. That this affiant is a duly authorized officer or employee of Lubbock Avalanche Journal, which is a newspaper of general circulation in the City of Lubbock, Lubbock County, Tex.as. 2. That said newspaper is a "newspaper'' as defined by Section 2051.044, Texas Government Code, and as such: (1) devotes not less than 25 percent of its total column lineage to general interest items; (2) is published at least once each week; (3) is entered as second-class postal matter in the county where published; and (4) has been published regularly and continuously for at least 12 months prior to publishing the notice referenced below. C= '.k<'Cth4 ~-~ it.._ Notary Public, State of Texas [NOTARY SEAL] Dallas I 306399v. I CITY OF LUBBOCK AFFIDAVIT OF J>U IJLICATION S'l'Atn 011 tl3XAS § § j eoUNtYoP · 1uBBocK ____ § Betute Ille, llu, Ultdet·slglletl lllJlliotily, Ult lids <lay i,e1so11:1lly nppem e<l Ernesto Barton ,whubcl11gbyll1c~uly ------------------:---------::------;---------(t ia Ill~ of ttelV.tpaJJet l'eptesemat i ,,e) sWutll, Jepuses 1111<l soys Uml {s)he is U1e ___ 0_w_n_e_r ________________ _ (title fJf r1e1Vspaper reJJreu,H1ll{\!r,) utllte WEST TEXAS HISPANIC NEWS ; lhnl suiJ ucwspui,ct Is ---------~-----.------,----------( 11 am e vf t1e\llspope1'} Lubbock tegulruly pu~llshetl ln Cuunty, Tex us, 1111<l ls ur gc11c1:1l chculutlun -------------- ht 1 u b b O ck I TeAmi; that the 11ll11d1cJ uullcc -----------------,------,-------(II e cJ I· es I lfltlllicipallty tu tlle site) Was ~ubltsl1eJ h1 ~ttlJ uewei,dpet un Uie fulluwh1g date(s): October 21, 2009 SubgctlbeJ ttt1J sWUUt lu Letote Ille 1h19 llie 18th WlllleM ttty l11ttld ttud seal ut utflce. Mary l'1fol ut· TY(le Nmue of Nulm-y l'uLlic 8/09/11 My Cu111111issiu11 Expires "I "I MINUTES AND CERTIFICATION PERTAINING TO PASSAGE OF A RESOLUTION STATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK § On the 12th day of November, 2009, the City Council of the City of Lubbock, Texas, convened in a special meeting at the regular meeting place thereof, the meeting being open to the public and notice of said meeting, giving the date, place and subject thereof, having been posted as prescribed by Chapter 551, Texas Government Code, as amended; and the roll was called of the duly constituted officers and members of the City Council, which officers and members are as follows: Tom Martin, Mayor Jim Gilbreath, Mayor Pro Tern Linda DeLeon Floyd Price Todd R. Klein Paul R. Beane John W. Leonard, III ) ) ) ) ) Members of the Council and all of said persons were present except Council Member Leonard, thus constituting a quorum. Whereupon, among other business, a written Resolution bearing the following caption was ·introduced: AN RESOLUTION CANVASSING RETURNS AND DECLARING THE RESULTS OF A BOND ELECTION HELD IN THE CITY OF LUBBOCK, TEXAS, ON NOVEMBER 3, 2009 The Resolution, a full, true and correct copy of which is attached hereto, was read and reviewed by the City Council. Thereupon, it was duly moved and seconded that the Resolution be passed and adopted. The Presiding Officer put the motion to a vote of the members of the City Council, and the Resolution was passed and adopted by the following vote: AYES: 6 NOES: 0 ABSTENTIONS: 0 US 236869v. I ) ' MINUTES APPROVED AND CERTIFIED TO BE TRUE AND CORRECT, and to correctly reflect the duly constituted officers and members of the City Council of said City, and the attached and following copy of said Resolution is hereby certified to be a true and correct copy of an official copy thereof on file among the official records of the City, all on this the 12th day of November, 2009. CityS~cretary City of Lubbock, Texas (SEAL] US 236869v. l -2- ) ) 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-R0504 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 12th day of November, 2009. (City Seal) ~~✓ -370 Rebec Garza City Secretary City of Lubbock Lubbock County, State of Texas ") i ) Resolution No. 2009-1.0504 November 12. 2009 Item Ho. 2.5 A RESOLUTION CANVASSING RETURNS AND DECLARING THE RESULTS OF A BOND ELECTION HELD IN THE CITY OF LUBBOCK, TEXAS, ON NOVEMBER 3, 2009 WHEREAS, the City Council (the .. City Council") of City of Lubbock, Texas (the "City"), duly authorized a bond election (the "Election") to be held within the City on November 3, 2009, for the purpose of submitting to the resident qualified electors of the City the propositions hereinafter set forth; and WHEREAS, the City Council has investigated all matters pertaining to the Election, including the ordinance calling the Election, giving notice, appointing officers, holding and making returns of the Election; the election officers who held the Election have duly made the returns of the results thereof; and said returns have been duly delivered to the City Council for official canvassing of the returns thereof; and WHEREAS, upon the consideration of the returns of the Election, it is hereby found and determined that the same was held in accordance with the authorizing proceedings and was in all respects legally held after due notice had been given, and the returns duly and legally made, and other instruments, showed the following results: PROPOSITION NO. I "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $43,085,000 for the purpose of providing funds for permanent public improvements, to wit: to acquire, construct and reconstruct street improvements, including but not limited to sidewalks, utility line relocation and traffic signalization, necessary and related storm drainage facilities and the acquisition of land and rights-of-way therefor; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be detennined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" US 127029v.2 11,991 VOTES FOR 6,628 VOTES AGAINST J PROPOSITION NO. 2 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $7,500,000 for the purpose of providing funds for pennanent public improvements, to wit: to construct, acquire and improve firefighting facilities and equipment, including the acquisition of land and interest in land in connection therewith; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" PROPOSITION NO. 3 ''Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $1,200,000 for the purpose of providing funds for permanent public improvements, to wit: to construct, acquire and improve water recreation and related park facilities, including the acquisition of land and interests in land in connection therewith; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shalJ be detennined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" US 127029v.2 14,030 VOTES FOR 4,584 VOTES AGAINST 7,610 VOTES FOR I 0,968 VOTES AGAINST ) J ) ') ... , .. .) ) '\ PROPOSITION NO. 4 "Shall the City Council of the City of Lubbock, Texas, be authorized to issue general obligation bonds of the City in the amount of $9,000,000 for the purpose of providing funds for permanent public improvements, to wit: to construct, acquire, improve and equip soccer facilities for the youth sports complex, including the acquisition of land and interests in land in connection therewith; said bonds to mature serially over a period of not to exceed forty ( 40) years from their date, to be issued in such installments and sold at any price or prices and to bear interest at any rate or rates as shall be determined within the discretion of the City Council under laws in effect at the time of issuance, and to provide for the payment of the principal of and interest on said bonds by levying a tax sufficient to pay the annual interest on and to create a sinking fund sufficient to redeem said bonds as they become due?" TOT AL BALLOTS CAST IN ELECTION: 7,778 VOTES FOR I 0,883 VOTES AGAINST NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE ClTY OF LUBBOCK, TEXAS THAT: Section 1. All of the recitals contained in the preamble of this Resolution are found to be true and are adopted as findings of fact by the City Council and as part of its judgment. Section 2. It is found and detennined that the results of the Election as canvassed and tabulated in the preamble hereof reflect the expressed desires of the electors. Based on the results of the Election, the City is authorized to issue its bonds with respect to Propositions No. 1 and 2 in accordance with applicable law. Propositions No. 3 and 4 having received less than a majority vote in favor thereof, no bonds shall be issued for the purposes described therein. Section 3. This Resolution sha!J take effect immediately upon its passage and approval. US 127029v.2 PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE on the 12th day of November, 2009, at a special meeting of the City Council of the City of Lubbock, Texas. TOM MARTIN, Mayor ATTEST: '°~ _g ( BttCA GARZA, City Secre ~ (SEAL] APPROVED AS TO FORM: Bt--~-~ ~~~- LINDA CHAMALES, Economic Development Attorney S 127029v.2 ) ACKNOWLEDGMENT OF NOTICE OF MEETING FOR ABSENTEES The undersigned member of the City Council of the City of Lubbock, Texas, hereby acknowledges and certifies that he was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the meeting of said governing body which was held on November 12, 2009, and that the Resolution described below would be introduced and considered for passage at said meeting; and that he consented, in advance, to the holding of said meeting for such purpose, to wit: A RESOLUTION CANVASSING RETURNS AND DECLARING THE RESULTS OF A BOND ELECTION HELD IN THE CITY OF LUBBOCK, TEXAS, ON NOVEMBER 3, 2009 Signature Date of Signature John W. Leonard, III /--:2 ?--/0 US 236893v.1 CC:RPL:JDH:tst DJ 166-012-3 2009-2868 Jennifer Webster Taffe, Esq. Vinson & Elkins 2001 Ross Avenue, Suite 3700 Dallas, Texas 75201-2975 Dear Ms. Taffe: U.S. Department of Justice Civil Rights Division Voting Section -NW1J 950 Pennsylvania Avenue, NW Washington, DC 20530 October 28, 2009 This refers to the joint election procedures with the county for conducting the November 3, 2009, special bond and tax referendum election, including conduct of the election by t.lie county, the use of the county's voting precincts, polling places, and voting method, and the extended early voting hours, for the City of Lubbock in Lubbock County, Texas, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act of 1965, 42 U.S.C. 1973c. We received your submission on September 3, 2009. With regard to the use of county voting precincts and polling places on the November uniform election date, our analysis indicates that the City of Lubbock exercised no discretion because this change was mandated by previously precleared state legislation (Chapter 1042 (H.B. 1209) (2005)). ( A copy of our letter is enclosed). Accordingly, no further determination by the Attorney General is required or appropriate under Section 5. Procedures for the Administration of Section 5 of the voting Rights Act of 1965, 28 C.F .R.51.35 The Attorney General does not interpose any objection to the remaining specified changes. However, we note that Section 5 expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement of the changes. 28 C.F.R. 51.41. Multiple copies of documents are not necessary when making a Section 5 submission. Enclosure ~;:,~ \r" Christopher Coates Chief, Voting Section .... , -~ JKI :RPL:KL:par DJ 166-012-3 2005-3304 C Ann McGeehan, Esq. Director of Elections Secretary of State's Office P .0. Box 12060 Austin, Texas 78711-2060 Dear Ms. McGeehan: 0 ,- U.S. Depart ,nt of Justice Civil Rights Division l'otini; Sac/Ion -NWB. !J!,O Penn.rylwmla hen~. N. W. W;,shington, DC 20530 September 26, 2005 This refers to Chapter 1042 (House Bill 1209) (2005), which requires that political subdivisions (not located in a county with a population of more than 3 .3 mi.Ilion persons, or adjacent to a county with a population of more thBll 3.3 million persons) must use 001mty voting precincts and regular county polling places on the November uni.fonn election date; provides that in election precincts not located wholly within the territory of a political subdivision holding an election in the precinct or a district used to elect an office at the election, election officials shall take reasonable measures to ensure that a voter voting at that precinct may not vote fu an election in which the voter is not entitled to vote; and requires the Secretary of State to prescribe procedures to impleme;nt these changes for the State of Texas, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act, 42 U.S.C. 1973c. We received your submission on September 2, 2005. The Attorney General does not interpose any objection to the specified changes. However, we note that Section 5 expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement of the changes. In addition, as authorized by Section 5, we reserve the right to reexamine this submission if additional information that would otherwise require an objection comes to our attention during the reinainder of the sixty-day review period. Procedures for the Administration of Section 5 of the Voting Rights Act (28 C.F.R 51.41 and 51.43). Chapter 1042 (2005) includes provisions that are enabling in nature. Therefore, the State of Texas is not relieved of its responsibility to seek Section 5 review of any changes affecting voting proposed to be implemented pursuant to th.is legislation ~ the requirement that the Secretary of State prescribe procedures to implement the specified changes). Also, local jurisdictions are not relieved of their responsibility to seek Section 5 review of any changes i C 0 -2- affecting voting that are adopted pursuant to tlris legislation~ polling place and voting precinct changes). See 28 C.F.R. 51. · \\ Sincerely, ~:"'~'~ John Tanner Chief, Voting Section ) ) '"\ ) J MINUTES AND CERTIFICATION PERTAINING TO PASSAGE OF A RESOLUTION STATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK § On the 5lh day of November, 2009, the City Council of the City of Lubbock, Texas. convened in a regular meeting at the regular meeting place thereof, the meeting being open to the public and notice of said meeting, giving the date, place and subject thereof, having been posted as prescribed by Chapter 551, Texas Government Code, as amended; and the roll was called of the duly constituted officers and members of the City Council, which officers and members are as follows: Tom Martin, Mayor Jim Gilbreath, Mayor Pro Tern Linda Deleon ) Floyd Price ) Todd R. Klein ) Paul R. Beane J John W. Leonard, III ) Members of the Council and all of said persons were present except [N .A. 1 thus constituting a quorum. Whereupon, among other business, a written Resolution bearing the following caption was introduced: A RESOLUTION AUTHORIZING PUBLICATION OF NOTICES OF INTENTION TO ISSUE GENERAL OBLIGATION BONDS AND TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION The Resolution, a full, true and correct copy of which is attached hereto, was read and reviewed by the City Council. Thereupon, it was duly moved and seconded that the Resolution be passed and adopted. The Presiding Officer put the motion to a vote of the members of the City Council, and the Resolution was passed and adopted by the following vote: AYES: _7_ NOES: 0 ABSTENTION: 0 US l 95509v.1 ) .., MINUTES APPROVED AND CERTIFIED TO BE TRUE AND CORRECT, and to correctly reflect the duly constituted officers and members of the City Council of said City, and the attached and following copy of said Resolution is hereby certified to be a true and correct copy of an official copy thereof on file among the official records of the City, all on this the 5th day of November, 2009. City of Lubbock, Texas [SEAL] Signature Page for Certificate for Notice of Intent Resolution US 195509v.l ) .... A RESOLUTION AUTHORIZING PUBLICATION OF NOTICES OF INTENTION TO ISSUE GENERAL OBLIGATION BONDS AND TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION WHEREAS, the City of Lubbock, Texas (the "City"), pursuant to Subchapter C, Chapter 271, Texas Local Government Code, as amended, is authorized to issue its certificates of obligation {the "Certificates") for the purpose of paying contractual obligations to be incurred for the purposes set forth in Exhibit A hereto; WHEREAS, the City Council of the City has found and determined that a notice of intention to issue certificates of obligation should be published in accordance with the requirements of applicable law; WHEREAS, the City desires to reimburse itself for the costs associated with the projects listed on Exhibit A hereto (the "Certificate Projects") from the proceeds of the Certificates to be issued subsequent to the date hereof; WHEREAS, in addition to the Certificates, the City intends to issue general obligation bonds (the "Bonds") to fund various public improvements and, if determined to be in the best interests of the City, to refund outstanding obligations of the City to achieve debt service savings; WHEREAS, the City Council has found and determined that a notice of intention to issue general obligation bonds should be published in accordance with the provisions of the City Charter; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK, TEXAS, THAT: Section I. The findings and determinations set forth in the preambles hereto are hereby incoiporated by reference for all purposes. Section 2. The City Secretary of the City is hereby authorized and directed to issue a notice of intention to issue the Certificates in substantially the form set forth in Exhibit A hereto incorporated herein by reference for all purposes. The notice as set forth in Exhibit A shall be published once a week for two consecutive weeks, the date of the first publication being not less than the day before the (30th) day prior to the date set forth in the notice for passage of the ordinance authorizing the Certificates. Such notice shall be published in a newspaper of general circulation in the area of the City of Lubbock, Texas . Section 3. The City Secretary of the City is hereby authorized and directed to issue a notice of intention to sell general obligation bonds in substantially the form set forth in Exhibit B hereto incorporated herein by reference for all purposes. The notice as set forth in Exhibit B shall be published once a week for a period of thirty {30) days prior to the date set forth in the notice for passage of the ordinance authorizing the Bonds. Such notice shall be published in a newspaper of general circulation in the area of the City of Lubbock, Texas. US 124878v.l ") ) ) ) ) Section 4. The City 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 Certificate Projects, from proceeds of the Certificates. Section 5. The City reasonably expects that the maximum principal amount of the Certificates issued to reimburse the City for the costs associated with the Certificate Projects will not exceed $168,000,000. Section 6. This resolution shall take effect from and after the date of its passage. -2- US 124878v.l ) -, J ) ) ADOPTED THIS 5th day of November, 2009, by the City Council of the City of Lubbock, Texas. CITY OF LUBBOCK, TEXAS Mayor, City ofLubboc~ Texas ATTEST: APPROVED AS TO CONTENT: APPROVED AS TO FORM: -3- US 124878v.1 .. ) ) ' Exhibit A NOTICE OF INTENTION TO ISSUE CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION NOTICE IS HEREBY GIVEN that on December 16, 2009, the City Council of the City of Lubbock, Texas, at 7:30 a.m. at a regular meeting of the City Council to be held in the City Council Chambers at the Municipal Complex, 1625 13th Street, Lubbock, Texas, the regular meeting place of the City Council, intends to pass an ordinance authorizing the issuance of not to exceed $168,000,000 principal amount of certificates of obligation for the purpose of paying contractual obligations to be incurred for the following purposes, to wit: (i) improvements to the City's Solid Waste Disposal System; (ii) improvements and renovations to the City's Municipal Drainage Utility System; (iii) improvements, replacements, relocations and extensions to the City's Waterworks System including acquisition and construction of a raw water transmission line, pump stations, reservoir and water treatment plant and related improvements to enable Lake Alan Henry to serve as a water supply for the City; (iv} improvements and extensions to City streets including sidewalks, street lighting, traffic signals/controllers, landscaping, utility improvements, extensions, relocations and acquisition of land and rights-of-way in connection therewith; (v) improvements and extensions to the City's Electric System, including installation of distribution lines, renovations and relocations of existing distribution lines; (vi) renovations and improvements to the Lubbock Preston Smith International Airport facilities; (vii) improvements, relocations and extensions to the City's Wastewater System including water reclamation plant improvements (collectively, with items (i)-(vi), the "Project") and (viii) payment of professional services of attorneys, financial advisors, engineers and other professionals in connection with the Project and the issuance of the Certificates. The Certificates shall bear interest at a rate not to exceed fifteen percent (15%) per annum and shall have a maximum maturity date of not later than forty ( 40) years after their date. Said Certificates shall be payable from the levy of a direct and continuing ad valorem tax, levied within the limits prescribed by law, against all taxable property within the City sufficient to pay the interest on this series of Certificates as due and to provide for the payment of the principal thereof as the same matures, as authorized by Subchapter .C, Chapter 271, Texas Local Government Code, as amended, and from all or a part of the surplus net revenues of the City's Waterworks System, such pledge of surplus net revenues being limited to $1,000. THIS NOTICE is given in accordance with law and as directed by the City Council of the City of Lubbock, Texas on November 5, 2009. A-1 US \24878v.\ Exhibit B NOTICE OF INTENTION TO ISSUE CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS On the 16th day of December, 2009, during its regular meeting scheduled to begin at 7:30 a.m., the City Council of the City of Lubbock, Texas, plans to pass an ordinance authorizing the sale of (i) general obligation bonds in the maximum amount not to exceed $24,600,000 to fund various public improvements and (ii) general obligation bonds in a maximum amount to be determined by the City Council on such date to refund outstanding obligations of the City. The meeting will be held in the City Council Chambers at the Municipal Complex, 1625 13th Street, Lubbock, Texas. A complete description of the bonds being authorized may be obtained from the Division of Finance, City of Lubbock, P.O. Box 2000, Lubbock, Texas 79457; or from RBC Capital Markets, 2711 N. Haskell Avenue Cityplace, Suite 2500, Dallas, Texas 75204, Financial Advisors to the City. B-1 US 124878v.l Before me day personally appeared __ ln_ez_L_o_.p_e_,z ___________ _ unty, Texas on this of the Southwestern Newspaper Corporation, publishers of the Lubbock Avalanche-Journal -Morning, and Sunday, who being by me duly sworn did despose and say that said newspaper has been cotinuously for more than fifty-two weeks prior to the first insertion of this _L;.;e;.Jig~a_l_N_o_tl_c_e ________________________ -,.-__ _ No. _____________ at Lubbock County, Texas and the attached printed copy of the Legal Notice is a true copy of the original and was printed in the Lubbock Avalanche-Journalonthefollowingdates: ND~errber LP-:\ l~1?:o4fl '-t'?)lwl)nls~~ctS-l:>. ~ Classified Inside Sales Manager NOTARY PUBLIC in and for the State of Texas ~--/ -·,2Clls /• I nc \:I I I'\ I c:;. \Jr I CAl"\V .;ouNTY OF LUBBOCK Before me Susan E. Smith a Notary Public in and for Lubbock County, Texas on this day personally appeared _/n_e_iz_L_o_pe_iz _________ _ of the Southwestern Newspaper Corporation, publishers of the Lubbock Avalanche.Joumal • Morning, and Sunday, who being by me duly sworn did despose and say that said newspaper has been cotinuously for more than fifty.two weeks prior to the first insertion of this _L_eg_a_l_N_o_t_lce __________________________ _ No. _____________ at Lubbock County, Texas and the attached printed copy of the Legal Notice Is a true copy of the original and was printed in the Lu9bock Avalanche-Journal on the foUowing dates: 1\a,i Ip,. J 3 J W t t)f), WOCI t 64 w t},,(d/.) ~ If ~o.iy »SM/&-£{,~ ~ NOT ARY PUBLIC in and for the State of Texas my commission Expires / c-/ 72P' /3 LUBBOCK AVALANCHE-JOURNAL Morris Communication Corporation Subscribed and sworn to before me this FOAM5e·10 I Ht: ::, I A I t Ut" I l:AA;) ~ ~OUNTY OF LUBBOCK ~----. ) Before me Susan E. Smith a Notary Public in and for Lubbock -County, Texas on this day personally appeared _lne"---,z_L ... opez ___________ _ of the Southwestern Newspaper Corporation, publishers of the Lubbock Avalanche-Joumal: Morning, and Sunday, who being by me duly sworn did despose and say that said newspaper has been cotln~ously for more than fifty-two weeks prior to the first insertion of this Legal Notice 1 No. _____________ at Lubboek County, Texas and the attached printed copy of the Legal Notice . is a true ccpy of the original and was printed in the Lubbock Avalanche-Journal on the following.dates: Q o Q L:100:~ 4 1 %09 fzist /. f I 'fl ~4--u,'1:<,CLQ ~ "]O -CJl. Classlfled Inside Sales Ma LUBBOCK AVALANCHE-JOURNAL Morris Communication Corporation Subscribed and swo~_ ~o before me this ~ I• •-• t FORM58-10 0;tlffe .~<:<:~ £ ~ <: NOTARY PUBLIC in and for the State of Texas ion Expires /£'-/1/ ~c:J~s MINUTES AND CERTIFICATION PERTAINING TO PASSAGE OF AN ORDINANCE STATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK § On the 16th day of December, 2009, the City Council of the City of Lubbock, Texas, convened in a regular meeting at the regular meeting place thereof, the meeting being open to the public and notice of said meeting, giving the date, place and subject thereof, having been posted as prescribed by Chapter 551, Texas Government Code, as amended; and the roll was called of the duly constituted officers and members of the City Council, which officers and members are as follows: Tom Martin, Mayor Jim Gilbreath, Mayor Pro Tern Linda DeLeon Floyd Price Todd R. Klein Paul R. Beane John W. Leonard, III ) ) ) ) ) Members of the Council Paul R. Beane> & and all of said persons were present except John V. Leonard, III thus constituting a quorum. Whereupon, among other business, a written Ordinance bearing the following caption was introduced: AN ORDINANCE PROVIDING FOR THE ISSUANCE OF 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); IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $168,000,000; LEVYING A TAX AND PLEDGING SURPLUS WATERWORKS SYSTEM REVENUES IN PAYMENT THEREOF; APPROVING THE OFFICIAL STATEMENT; APPROVING EXECUTION OF A PURCHASE CONTRACT; AND ENACTING OTHER PROVISIONS RELATING THERETO The Ordinance, a full, true and correct copy of which is attached hereto, was read and reviewed by the City Council. Thereupon, it was duly moved and seconded that the Ordinance be passed and adopted. The Presiding Officer put the motion to a vote of the members of the City Council, and the Ordinance was passed and adopted by the following vote: AYES: 5 NOES: O ABSTENTIONS: o US 195516v. I MINUTES APPROVED AND CERTIFIED TO BE TRUE AND CORRECT, and to correctly reflect the duly constituted officers and members of the City Council of said City, and the attached and following copy of said Ordinance is hereby certified to be a true and correct copy of an official copy thereof on file among the official records of the City, all on this the 16th day of December, 2009. [SEAL] US !95516v.l -2- Ordinance No. Z009--00114 ORDINANCE relating to CITY OF LUBBOCK, TEXAS TAX AND WATER WORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 2010A AND CITY OF LUBBOCK, TEXAS TAX AND WATER WORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT) Adopted: December 16, 2009 l86778v. I LUB200/71016 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions ............................................................................................................... 2 Section 1.02. Findings ................................................................................................................... 5 Section 1.03. Table of Contents, Titles, and Headings .................................................................. 5 Section 1. 04. Interpretation ........................................................................................................... 5 ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND; PRIOR LIEN OBLIGATIONS Section 2.01. Paynient of the Certificates ..................................................................................... 5 Section 2.02. Interest and Sinking Fund ....................................................................................... 7 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.01. Authorization ........................................................................................................... 7 Section 3.02. Date, Denomination, Maturities, and Interest. ........................................................ 8 Section 3.03. Medium, Method, and Place of Paynient. ............................................................... 8 Section 3.04. Execution and Registration of Certificates ............................................................ 10 Section 3 .05. Ownership ............................................................................................................. IO Section 3.06. Registration, Transfer, and Exchange ................................................................... 11 Section 3.07. Cancellation ........................................................................................................... 11 Section 3.08. Temporary Certificates .......................................................................................... 12 Section 3.09. Replacement Certificates ....................................................................................... 12 Section 3.10. Book-Entry-Only System ...................................................................................... 13 Section 3 .11. Successor Securities Depository; Transfer Outside Book-Entry-Only System .... 14 Section 3.12. Payinents to Cede & Co ........................................................................................ 14 ARTICLEN REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.01. Redemption ........................................................................................................... 15 Section 4. 02. Optional Redemption ............................................................................................ 15 Section 4.03. Extraordinary Redemption of Taxable Series 2010B Certificates ........................ 15 Section 4.04. Mandatory Sinking Fund Redemption .................................................................. 15 Section 4.05. Partial Redemption ................................................................................................ 16 (i) 186778v.l LUB200/7101671015 ) ") .., ' ') Section 4.06. Notice of Redemption to Owners .......................................................................... 16 Section 4. 07. Payment Upon Rederription .................................................................................. 17 Section 4.08. Effect ofRedeniption ............................................................................................ 17 Section 4.09. Lapse of Payment. ................................................................................................. 17 Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. ARTICLEV PA YING AGENT/REGISTRAR Appointment of Initial Paying Agent/Registrar .................................................... 18 Qualifications ........................................................................................................ 18 Maintaining Paying Agent/Registrar ..................................................................... 18 T ennination. . . .. . . .. . . .. . . .. . . .. . ... . . .. . . .. . . .. . . ... . . .. . ... . ... . ... . ... . .... ... ... . . .. . ... ... . .. .... ... . .. . .. . .. . .. . 18 Notice of Change to Owners ................................................................................. 18 Agreement to Perform Duties and Functions ........................................................ 18 Delivery of Records to Successor ......................................................................... 19 ARTICLE VI FORM OF THE CERTIFICATES Section 6.01. Fonn Generally ..................................................................................................... 19 Section 6.02. Fonn of the Certificates ......................................................................................... 19 Section 6.03. CUSIP Registration ............................................................................................... 31 Section 6.04. Legal Opinion ........................................................................................................ 31 Section 6.05. Bond Insurance ...................................................................................................... 31 ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS Section 7.01. Sale of Certificates; Official Statement.. ............................................................... 31 Section 7.02. Control and Delivery of Certificates ..................................................................... 33 Section 7 .03. Deposit of Proceeds ............................................................................................... 3 3 ARTICLE VIII INVESTMENTS Section 8.01. Investments ............................................................................................................ 34 Section 8.02. Investment Income ................................................................................................ 34 ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Certificates ................................................................................... 34 Section 9.02. Other Representations and Covenants ................................................................... 35 (ii) I 86778v.1 LUB200/7101671015 ) Section 9.03. Provisions Concerning Federal Income Tax Exclusion for Series 2010A Certificates ............................................................................................................ 35 Section 9.04. No Private Use or Payment and No Private Loan Financing ................................ 35 Section 9.05. No Federal Guaranty ............................................................................................. 36 Section 9.06. Series 2010A Certificates Are Not Hedge Bonds ................................................. 36 Section 9.07. No-Arbitrage Covenant. ........................................................................................ 36 Section 9.08. Arbitrage Rebate ................................................................................................... 36 Section 9.09. Information Reporting ........................................................................................... 37 Section 9.10. Continuing Obligation ........................................................................................... 37 ARTICLEX DEFAULT AND REMEDIES Section 10.01. Events ofDefault ................................................................................................... 37 Section 10.02. Reinedies for Default. ........................................................................................... 37 Section 10.03. Reinedies Not Exclusive ....................................................................................... 38 ARTICLE XI DISCHARGE Section 11.01. Discharge ............................................................................................................... 38 ARTICLE XII CONTINUING DISCLOSURE UNDERT AK.ING Section 12.01. Annual Reports ...................................................................................................... 38 Section 12.02. Material Event Notices .......................................................................................... 39 Section 12.03. Limitations, Disclaimers and Amendments .......................................................... 39 ARTICLE XIII AMENDMENTS; ATTORNEY GENERAL MODIFICATION Section 13.01. Amendments .......................................................................................................... 41 Section 13.02. Attorney General Modification ............................................................................. 41 ARTICLE XIV EFFECTIVE IMMEDIATELY Section 14.01. Effective Immediately ........................................................................................... 41 Exhibit A -Description of Annual Disclosure of Financial Information .................................... A-1 Exhibit B -Sale Parruneters ........................................................................................................ B-1 (iii) 186778v.l LUB200/710167101S ) "'I AN ORDINANCE PROVIDING FOR THE ISSUANCE OF 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); IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $168,000,000; LEVYING A TAX AND PLEDGING SURPLUS WATERWORKS SYSTEM REVENUES IN PAYMENT THEREOF; APPROVING THE OFFICIAL STATEMENT; APPROVING EXECUTION OF A PURCHASE CONTRACT; AND ENACTING OTHER PROVISIONS RELATING THERETO WHEREAS, under the provisions of Subchapter C, Chapter 271, Texas 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 certificates of obligation (herein defined as the "Certificates") that are secured by and payable from the ad valorem taxes and other revenues specified in Article II of this Ordinance, and that are issued in the amount, for the purposes, and with the provisions set forth in Section 3.01 of this Ordinance; 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 accordance with applicable law; WHEREAS, no petition has been filed with the City Secretary, any member of the City Council or any other official of the City, protesting the issuance of the Certificates; WHEREAS, the City Council is now authorized and empowered to proceed with the issuance and sale of the Certificates, and has found and determined that it is necessary and in the best interests of the City and its citizens that it authorize the issuance of the Certificates in accordance with the terms and provisions of this Ordinance at this time; WHEREAS, the City Council desires to delegate, pursuant to Chapter 1371, Texas Government Code, as amended, and the parameters of this Ordinance, to the Authorized Officer, the authority to approve the amount, the interest rate, the price and terms of the Certificates authorized hereby and to otherwise take such actions as are necessary and appropriate to effect the sale of the Certificates; WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and public notice of the time, place, and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: 186778v. I LUB200/71016 ) J ) ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Ordinance, the following terms shall have the meanings specified below: "Authorized Officer" means each of the City Manager and the Chief Financial Officer. "Certificate" means any of the Certificates. "Certificate Date" means the date designated as the initial date of the Certificates by Section 3.02(a) of this Ordinance. "Certificates" means, collectively, the Series 2010A Certificates and the Tax.able Series 201 OB Certificates. The word "Certificates" shall be read to mean the Certificates of each Series. "City" means the City of Lubbock, Texas. "Closing Date" means the date of the initial delivery of and payment for the Certificates. "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings, and court decisions. "Designated Paymentff ransfer Office" means (i) with respect to the initial Paying Agent/Registrar named in this Ordinance, the Designated Payment/fransfer Office as designated in the Paying Agent/Registrar Agreement, or at such other location designated by the Paying Agent/Registrar and (ii) with respect to 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. "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC 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. "Event of Default" means any event of default as defined in Section 10.01 of this Ordinance. "Federal Subsidy" means the cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the Taxable Series 2010B Certificates designated as and - 2 - l86778v. I LU8200/7l016 ) ) meeting the requirements of ''build America bonds" under Section 54AA of the Code, where the City has elected to receive the refundable credit under Section 54AA(g). "Fiscal Year" means such fiscal year as shall from time to time be set by the City Council. "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, with respect to the Series 2010A Certificates, the initial Series 2010A Certificate and, with respect to the Taxable Series 2010B Certificates, the initial Taxable Series 2010B Certificate, each authorized by Section 3.04 of this Ordinance. "Interest and Sinking Fund" means, with respect to the Series 2010A Certificates, the "City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A, Interest and Sinking Fund," and with respect to the Taxable Series 2010B Certificates, the "City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B, Interest and Sinking Fund," in each case established by Section 2.02 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 on the date set forth in the Pricing Certificate. "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. "Paying Agent/Registrar'' means initially The Bank of New York Mellon Trust Company, National Association, or any successor thereto as provided in this Ordinance. "Pricing Certificate" means a certificate or certificates to be signed by the Authorized Officer. - 3 - 186778v.1 LUB200171016 .., .., ) "Prior Lien Obligations" means all certificates of obligation, bonds or other similar obligations of the City presently outstanding or that may be hereafter issued, payable in whole OT in part from and secured by a first lien on and pledge of the Net Revenues of the System OT by a lien on and pledge of the Net Revenues subordinate to a first lien on and pledge of the Net Revenues but superior to the lien on and pledge of the Surplus Revenues made for the Certificates. "Project" means the purposes for which the Certificates are issued as set forth in Section 3.01. "Purchase Contract" means the purchase contract or purchase contracts described in Section 7.0l(b) of this Ordinance . "Record Date" means the last business day of the month next preceding an Interest Payment Date. "Register" means the Register specified in Section 3.06(a) of this Ordinance. "Representations Letter" means the Blanket Letter of Representations between the City andDTC. "Representative" means the representative for the Underwriters named in the Purchase Contract. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "Series" means each series of Certificates. "Series 2010A Certificate" means any City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificate of Obligation, Series 2010A, identified in the Pricing Certificate as a Certificate, interest on which is excludable from gross income for federal income tax purposes. "Special Record Date" means the Special Record Date prescribed by Section 3.03(b). "Surplus Revenues" means the Net Revenues of the System in an amount not to exceed $1,000 remaining after payment of all debt service, reserve and other requirements in connection with the City's Prior Lien Obligations . "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. "Taxable Series 2010B Certificate" means any City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificate of Obligation, Taxable Series 2010B (Build -4- 186778v.1 LUB200n1016 ') .. J ) ) '\ America Bonds -Direct Payment), identified in the Pricing Certificate as a Certificate, the interest on which is not excludable from gross income for federal income tax purposes. ''Term Certificates" has the meaning set forth in Section 4.04 hereof. ''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 unclaimed by the Owners of such Certificates after the applicable payment or redemption date. "Underwriters" means the underwriters named in the Purchase Contract. Section 1.02. Findings. The declarations, determinations, and findings declared, made, and found in the preamble to this Ordinance are hereby adopted, restated, and made a part of the operative provisions hereof. Section 1.03. 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 1.04. Interpretation. (a) 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 number shall be construed to include correlative words of the plural number and vice versa (b) 1bis Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND; PRIOR LIEN OBLIGATIONS Section 2.01. 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 unpaid, an ad valorem tax on each one hundred dollars valuation of taxable property within the City, at a rate sufficient, within the limit prescribed by law, to pay the debt service requirements -5- 186778v.1 LUB200nl016 "'I ) ) ) ) '\ ) ) of the Certificates of each Series, being (i) the interest on the Certificates of such Series, and (ii) a sinking fund for their redemption at maturity or a sinking fund of two percent per annum (whichever amount is the greater), when due and payable, full allowance 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 appearing 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 for the related Series of Certificates. ( c) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and committed irrevocably to the payment of the principal of and interest on the related Series when and as due and payable in accordance with their tenns and this Ordinance. ( d) The City hereby covenants and agrees that the Surplus Revenues are hereby irrevocably pledged equally and ratably to the payment of the principal of and interest on the Certificates. The City reserves the right to issue Prior Lien Obligations for any lawful purpose, at any time, in one or more installments. (e) The amount of taxes to be assessed annually for the payment of debt service on the Certificates shall be determined in the following manner: (i) The City's annual budget shall reflect (A) the amount of debt service requirements to become due on the Certificates in the next ensuing Fiscal Year and (B) the amount on deposit in the Interest and Sinking Fund on the date such budget is approved. (ii) The amount required to be provided in the next succeeding Fiscal Year from ad valorem taxes shall be the amount, if any, that the debt service requirements on the Certificates to be paid during the next Fiscal Year exceeds the amount then on deposit in the Interest and Sinking Fund. (iii) Following approval of the City's annual budget, the City Council shall, by ordinance, establish a tax rate that is sufficient to produce taxes in an amount which, when added to the amount then on deposit in the Interest and Sinking Fund, will be sufficient to pay debt service on the Certificates when due during the next Fiscal Year. (f) 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 may pennit, and further deposits to the Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may permit. In determining the aggregate principal amount of outstanding Certificates, there shall be subtracted the amount of any Certificates that have been duly called for redemption and for which money has been deposited with the Paying Agent/Registrar for such redemption. -6- l86778v.1 LUB200nl016 ") ) ) ) ) ) Section 2.02. Interest and Sinking Fund. (a) The City hereby establishes special funds or accounts to be designated the "City of Lubbock, Texas, Tax and Waterworks System Swplus Revenue Certificates of Obligation, Series 2010A, Interest and Sinking Fund," relating to the Series 2010A Certificates, and "City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation., Taxable Series 2010B, Interest and Sinking Fund," relating to the Taxable Series 2010B Certificates, said funds to be maintained at an official depository bank of the City separate and apart from all other funds and accounts of the City. (b) Money on deposit in or required by this Ordinance to be deposited to the Interest and Sinking Fund shall be used solely for the purpose of paying the interest on and principal of the related Series of Certificates when and as due and payable in accordance with their tenns and this Ordinance. ( c) The City hereby establishes a special fund or account to be designated the ''Taxable Series 2010B Federal Subsidy Subaccount of the City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B, Interest and Sinking Fund" (the "Federal Subsidy Subaccount"), said funds to be maintained as a subaccount of the Interest and Sinking Fund for the Taxable Series 201 OB Certificates at an official depository bank of the City separate and apart from all other funds and accounts of the City. Payments of the Federal Subsidy, if, as and when received, will be deposited to the Federal Subsidy Subaccount and shall be used solely for the purpose of paying the interest on and principal of the Taxable Series 20108 Certificates when and as due and payable in accordance with their tenns and this Ordinance. For each interest payment on the Taxable Series 2010B Certificates, the City shall first use funds in the Federal Subsidy Subaccount to pay such interest before using any other funds to pay such interest. Any funds left in the Federal Subsidy Subaccount when the Taxable Series 2010B Certificates are paid or defeased shall be transferred to the general fund of the City and used for any lawful purpose thereof. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.01. Authorization. The City's certificates of obligation to be designated ''City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A" and "City of Lubbock, Texas, Tax and Waterworks System Swplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bonds -Direct Payment)" (collectively, the "Certificates"), are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, specifically Subchapter C, Chapter 271, Texas Local Government Code, as amended, Chapter 1371, Texas Government Code, as amended, and Article VIII of the City's Home-Rule Charter. The Authorized Officer is hereby authorized and directed to modify the title of each Series to the extent that, in the judgment of the Authorized Officer, it is necessary or appropriate. The final titles and allocation of principal amount between -7- 186778v.l LUB20OnlO16 ) ) each Series of Certificates shall be determined by the Authorized Officer based on market conditions in the discretion of the Authorized Officer and set forth in the Pricing Certificate. The Certificates shall be issued in the aggregate principal amount not to exceed $168,000,000, for the purpose of paying contractual obligations to be incurred for the following purposes, to wit: (i) improvements to the City's Solid Waste Disposal System; (ii) improvements and renovations to the City's Municipal Drainage Utility System; (iii) improvements, replacements, relocations and extensions to the City's Waterworks System including acquisition and construction of a raw water transmission line, pump stations, reservoir and water treatment plant and related improvements to enable Lake Alan Henry to serve as a water supply for the City; (iv) improvements and extensions to City streets including sidewalks, street lighting, traffic signals/controllers, landscaping, utility improvements, extensions, relocations and acquisition of land and rights-of-way in connection therewith; (v) improvements and extensions to the City's Electric System, including installation of distribution lines, renovations and relocations of existing distribution lines; (vi) renovations and improvements to the Lubbock Preston Smith International Airport facilities; (vii) improvements, relocations and extensions to the City's Wastewater System including water reclamation plant improvements (collectively, with items (i)-(vi), the "Project") and (viii) payment of professional services of attorneys, financial advisors, engineers and other professionals in connection with the Project and the issuance of the Certificates. Section 3.02. Date. Denomination. Maturities, and Interest. (a) The Certificates shall be dated the date set forth in the Pricing Certificate (the "Certificate Date''). The Certificates shall be in fully registered fonn, without coupons, in the denomination of $5,000 or any integral multiple thereof. The Series 2010A Certificates shall be numbered in sequence from I upward, except the Initial Certificate of such Series, which shall be numbered TA-1. The Taxable Series 2010B Certificates shall be numbered in sequence from 1 upward, except the Initial Certificate of such Series, which shall be numbered TB-1. (b) The Certificates shall mature on February 15 in the years and in the principal amounts set forth in the Pricing Certificate provided that the maximwn maturity for the Certificates shall not exceed twenty-five years. (c) Interest shall accrue on each Certificate and be paid on each Certificate respectively until its maturity or prior redemption, from the later of the date set forth in the Pricing Certificate for Certificates of such Series or the most recent Interest Payment Date to which interest has been paid or provided for at the rates per annum for each respective maturity specified in the Pricing Certificate. Such interest shall be payable on each Interest Payment Date until maturity or prior redemption. Interest on the Certificates shall be calculated on the basis of a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each. Section 3.03. Medium, Method. and Place of Payment. (a) The principal of and interest on the Certificates shall be paid in lawful money of the United States of America. -8- 186778v.1 LU8200nl016 ) ., ) ) (b) Interest on the Certificates shall be payable to the Owners as shown in the Register at the close of business on the Record Date; provided, however, in the event of nonpayment of interest on a scheduled Interest Payment Date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") shall be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each Owner of a Certificate appearing on the Register at the close of business on the last business day next preceding the date of mailing of such notice. (c) Interest shall be paid by check, dated as of the Interest Payment Date, and sent United States mail, first class postage prepaid, by the Paying Agent/Registrar to each Owner, at the address thereof as it appears in the Register, or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, that the 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 amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. (d) The principal of each Certificate shall be paid to the Owner thereof on the due date, whether at the maturity date or the date of prior redemption thereof, upon presentation and surrender of such Certificate at the Designated Payment/Transfer Office of the Paying Agent/Registrar. ( e) If the date for the payment of the principal of or interest on the Certificates shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Paymentffransfer Office of the Paying Agent/Registrar is located 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 purposes be deemed to have been made on the due date thereof as specified in Section 3.02 of this Ordinance. (f) Unclaimed Payments shall be segregated in a special escrow account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owners of the Certificates to which the Unclaimed Payments pertain. Subject to Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners entitled thereto for three years after the applicable payment or redemption date shall be applied to the next payment on the Certificates thereafter coming due; to the extent any such moneys remain three years after the retirement of all outstanding Certificates, such moneys shall be paid to the City to be used for any lawful purpose. Thereafter, neither the City, the Paying Agent/Registrar, nor any other person shall be liable or responsible to any Owners of such Certificates for any further payment of such unclaimed moneys or on account of any such Certificates, subject to Title 6 of the Texas Property Code. -9- 186778v.1 LUB200nI016 ') Section 3.04. 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the City had been manually impressed 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 officer before the authentication of such Certificates or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. It shall not be required that the same officer or authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Certificates. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Certificate delivered at the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the fonn provided herein, manually 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 Certificate has been duly approved by the Attorney General of the State of Texas, that it is a valid and binding obligation of the City, and that it has been registered by the Comptroller of Public Accounts of the State of Texas. ( d) On the Closing Date, one Initial Certificate for each Series reflecting the terms set forth in the Pricing Certificate and representing the entire principal amount of such Series of Certificates, payable in stated installments to the Representative, or its designee, executed by the Mayor and City Secretary of the City by their manual or facsimile signatures, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, will be delivered to the Representative or its designee. Upon payment for the Initial Certificate, the Paying Agent/Registrar shall cancel the Initial Certificate and deliver a single registered, definitive Certificate for each maturity, in the aggregate principal amount thereof, to DTC on behalf of the Underwriters. Section 3.05. Ownership. (a) The City, the Paying Agent/Registrar, and any other person may treat the person 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 Date or Special Record Date, as applicable), and for all other 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. -10 - 186778v.l LUB200m016 ) ) (b) All payments made to the Owner of a Certificate shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Certificate to the extent of the swns paid. Section 3.06. Registration, Transfer, and Exchange. (a) So long as any Certificates remain outstanding, the City shall cause the Paying Agent/Registrar to keep at the Designated Paymentrrransfer Office a register (the "Register") in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Certificates in accordance with this Ordinance. (b) The ownership of a Certificate may be transferred only upon the presentation and surrender of the Certificate at the Designated Payment/fransfer Office of the Paying Agent/Registrar 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 exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer 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 Agent/Registrar is hereby authorized to authenticate and deliver Certificates exchanged for other Certificates in accordance with this Section. ( d) Each exchange Certificate delivered by the Paying Agent/Registrar in accordance with this Section shall constitute an original 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 in lieu of which such exchange Certificate is delivered. (e) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for a different denomination of any of the Certificates. The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer, or exchange of a Certificate. (f) Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer, or exchange any Certificate called for redemption, in whole or in part, where such redemption is scheduled to occur within forty-five ( 45) calendar days after the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Certificate. Section 3.07. Cancellation. All Certificates paid or redeemed before scheduled maturity in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates are authenticated and delivered in accordance with this Ordinance, shall be cancelled and proper records made regarding such payment, redemption, exchange, or replacement. The Paying -11 - I 86778v.1 LUB200/71016 i ) ) Agent/Registrar shall then return such cancelled Certificates to the City or may in accordance with law destroy such cancelled Certificates and periodically furnish the City with certificates of destruction of such Certificates. Section 3.08. Temporary Certificates. (a) Following the delivery and registration of the Initial Certificate and pending the preparation of definitive Certificates, the City may execute and, upon the City's request, the Paying Agent/Registrar shall authenticate and deliver, 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 other variations as the officers of the City executing such temporary Certificates may determine, as evidenced by their signing of such temporary Certificates. (b) Until exchanged for Certificates in definitive form, such Certificates in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The City, without unreasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar; thereupon, upon the presentation and surrender of the Certificate or Certificates in temporary fonn to the Paying Agent/Registrar, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a Certificate or Certificates of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Certificate or Certificates in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.09. Rca,lacement Certificates. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Certificate, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Certificate of like tenor and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying Agent/Registrar may require the Owner of such Certificate to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Certificate is lost, apparently destroyed or wrongfully taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State 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 amount, bearing a number not contemporaneously outstanding, provided that the Owner first complies with the following requirements: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction, or theft of such Certificate; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar to save it and the City hannless; -12 - 186778v. I LUB200nl O 16 ') ) (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar, and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Certificate from the person to whom it was delivered or any person 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 Paying Agent/Registrar in connection therewith. ( d) In the event that any such mutilated, lost, apparently destroyed, or wrongfully taken Certificate has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Certificate, may pay such Certificate when it becomes due and payable. (e) Each replacement Certificate 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 in lieu of which such replacement Certificate is delivered. Section 3 .10. Book-Entry-Only System. (a) Notwithstanding any other provision hereof, upon initial issuance of the Certificates, the Certificates shall be registered in the name of Cede & Co., as nominee of OTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. (b) With respect to Certificates registered in the name of Cede & Co., as nominee of OTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Certificates. Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of OTC, Cede & Co. or any OTC Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any OTC Participant or any other person, other than an Owner, as shown on the Register, of any notice with respect to the Certificates, including any notice of redemption, or (iii) the payment to any OTC Participant or any other person, other than an Owner, as shown in the Register of any amount with respect to principal of or interest on the Certificates. Notwithstanding any other provision ofthis Ordinance to the contrary, the City and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute owner of such Certificate for the purpose of payment of principal of and interest on Certificates, for the purpose of giving notices of redemption and other matters with respect to such Certificate, for the purpose of registering -13 - 186778v.l LUB200/71016 ) ) ) ) ) transfer with respect to such Certificate, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on 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 in writing, and all such payments shall be valid 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 sum or sums so paid. No person other than an Owner, as shown in the Register, shall receive a certificate evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has detennined to substitute a new nominee in place of Cede & Co., the word "Cede & Co." in this Ordinance shall refer to such new nominee of OTC. (c) The Representations Letter previously executed and delivered by the City, and applicable to the City's obligations delivered in book-entry-only form to DTC as securities depository, is hereby ratified and approved for the Certificates. Section 3.11. Successor Securities Depository; Transfer 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 owners of the Certificates that they be able to obtain certificated Certificates, or in the event OTC discontinues the services described herein, the City shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify OTC 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 OTC and DTC Participants of the availability through OTC of certificated Certificates and cause the Paying Agent/Registrar to transfer one or more separate registered Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Owners transferring or exchanging Certificates shall designate, in accordance 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 Certificates are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of and interest on such Certificates, and all notices with respect to such Certificates shall be made and given, respectively, in the manner provided in the Representations Letter of the City to OTC. -14 - 186778v.l LUB200171016 i ) } ARTICLEN REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.01. Redemption. The Certificates are subject to redemption before their scheduled maturity only as provided in this Article IV. Section 4.02. Optional Redemption. (a) The City reserves the option to redeem Certificates in the manner provided in the Form of Certificate set forth in Section 6.02 of this Ordinance with such changes as are required by the Pricing Certificate. (b) If less than all of the Certificates are to be redeemed pursuant to an optional redemption, the City shall detennine the series, maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the Certificates, or portions thereof, within such series and maturity or maturities and in such principal amounts for redemption. (c) The City, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Certificates to be redeemed. Section 4.03. Extraordinary Redemption of Taxable Series 2010B Certificates. The Taxable Series 201 OB Certificates are subject to extraordinary redemption prior to their respective maturities, at the option of the City, as provided in the Form of Taxable Series 2010B Certificate set forth in Section 6.02 of this Ordinance with such changes as are required by the Pricing Certificate. Section 4.04. Mandatory Sinking Fund Redemption. (a) Certificates designated as "Term Certificates," if any, in the Pricing Certificate are subject to scheduled mandatory redemption and will be redeemed by the City, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth in the Pricing Certificate. (b) At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Tenn Certificates equal to the aggregate principal amount of such Term Certificates to be redeemed, shall call such Tenn Certificates for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.06. -15 - 186778v.1 LUB200nl016 ) The principal amount of the Tenn Certificates required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.04 shall be reduced, at the option of the City, by the principal amount of any Tenn Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Section 4.05. Partial Redemption. (a) A portion of a single Certificate of a denomination greater than $5,000 may be redeemed, 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 Agent/Registrar 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 Agent/Registrar, in accordance with Section 3 .06 of this Ordinance, shall authenticate and deliver an exchange Certificate or Certificates in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered, such exchange being without charge. (c) The Paying Agent/Registrar shall promptly notify the City in writing of the principal amount to be redeemed of any Certificate as to which only a portion thereof is to be redeemed. Section 4.06. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of Certificates by sending notice by United States mail, first class postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Certificate ( or part thereof) to be redeemed, at the address shown on the Register at the close of business on the business day next preceding the date of mailing such notice. (b) The notice shall state the redemption date, the redemption price, the place at which the Certificates are to be surrendered for payment, and, if less than all the Certificates outstanding are to be redeemed, an identification of the Certificates or portions thereof to be redeemed. (c) The City reserves the right to give notice of its election or direction to redeem Certificates under Section 4.02 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 -16 - 186778v .1 LUB200nl O I 6 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 affected Owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. ( d) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Section 4.07. Payment Upon Redemption. (a) Before or on each redemption date, the City shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/Registrar 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 are 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 accrued interest on such Certificate to the date of redemption from the money set aside for such purpose. Section 4.08. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.06 of this Ordinance and subject to any conditions or rights reserved by the City under Section 4.06(c), the Certificates or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, unless the City defaults in its obligation to make provision for the payment of the principal thereof or accrued interest thereon, such Certificates or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Certificates are presented and surrendered for payment on such date. (b) If the City shall fail to make provision for payment of all swns due on a redemption date, then any Certificate or portion thereof called for redemption shall continue to bear interest at the rate stated on the Certificate until due provision is made for the payment of same by the City. Section 4.09. Lapse of Payment. Money set aside for the redemption of Certificates and remaining unclaimed by the Owners of such Certificates shall be subject to the provisions of Section 3.03(f) hereof. -17 - 186778v.l LUB200/71016 1 ARTICLEV PA YING AGENT/REGISTRAR Section 5.0 I. Appointment of Initial Paying Agent/Registrar. The Bank of New York Mellon Trust Company, National Association, 1s hereby appointed as the initial Paying Agent/Registrar for the Certificates. Section 5.02. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or other entity duly qualified and legally authorized to serve as and perfonn the duties and services of paying agent and registrar for the Certificates. Section 5.03. Maintaining Paying Agent/Registrar. (a) At all times while any Certificates are outstanding, the City will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor is hereby authorized and directed to execute an agreement with the Paying Agent/Registrar specifying the duties and responsibilities of the City and the Paying Agent/Registrar. The signature of the Mayor shall be attested by the City Secretary of the City. The form of the Paying Agent/Registrar Agreement presented at this meeting is hereby approved with such changes as may be approved by bond counsel to the City. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the City will promptly appoint a replacement. Section 5.04. Tennination. The City, upon not less than sixty (60) days notice, reserves the right to tenninate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be terminated written notice of such termination. Section 5.05. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will cause notice of the change to be sent to each Owner by United States mail, first class postage prepaid, 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. Section 5.06. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar and executing the Paying Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed thereby. -18 - 186778v.l LUB200nl016 i Section 5.07. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent. promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Certificates to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE CERTIFICATES Section 6.01. Form Generally. (a) The Certificates, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment form to appear on each of the Certificates, (i) shall be generally in the form set forth in this Article, with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and the Pricing Certificate, and (ii) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the City or by the officers executing such Certificates, as evidenced by their execution thereof. (b) Any portion of the text of any Certificates may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Certificates. (c) The definitive Certificates, if any, shall be typewritten, photocopied, printed, lithographed, or engraved, and may be produced by any combination 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 of each Series submitted to the Attorney General of the State of Texas may be typewritten and photocopied or otherwise reproduced. Section 6.02. 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 form of Assignment appearing on the Certificates, shall be generally as follows. provided. however, that the substantially final fonn of the Certificates shall be set forth in or attached to the Pricing Certiffoate and shall incorporate and reflect the final terms of the Certificates set forth in the Pricing Certificate: -19- 186778v.l LUB200/71016 (a) Form of Series 2010A Certificate. REGISTERED No. __ _ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 201 OA REGISTERED $ ____ _ INTEREST RA TE: MATURITY DATE: CERTIFICATE DATE: 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 registered assigns, on the Maturity Date specified above, the sum of _________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Certificate Date specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal amount has been paid or provided for, at the per annwn 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 IS of each year, commencing ____ 2• All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). 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 Payment/Transfer Office"), of The Bank of New York Mellon Trust Company, National Association, or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office of such successor. 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary 1 Information to be inserted from Pricing Certificate. 2 Information to be inserted from Pricing Certificate. l86778v.l LUB200nl016 -20- ) ) banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. 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 on the "Record Date," which shall be the last business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each owner of a Certificate appearing in the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, 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 have the same force and effect as if made on the original date payment was due. This Certificate is one of a series of fully registered certificates specified in the title hereof issued in the aggregate principal amount of $ ____ 3 (herein referred to as the "Certificates"), issued pursuant to a certain ordinance of the City (the "Ordinance"), for the purpose of paying contractual obligations to be incurred for authorized public improvements (collectively, the "Project"), as described in the Ordinance, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance. [The Certificates are being issued concurrently with the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 201 OB (Build America Bonds -Direct Payment), in the aggregate principal amount of $ ___ _, which are also being issued pursuant to the Ordinance for the purpose of paying contractual obligations to be incurred for the Project, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance. ]4 [The City has reserved the option to redeem the Certificates maturing on or after February 15 _ __, in whole or in part, before their respective scheduled maturity dates, on ___ __, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the maturity or maturities and the 3 Information to be inserted from Pricing Certificate. 4 Revise or delete as necessary to confonn to the Pricing Certificate. -21 - 186778v.1 LUB200n1016 ) ) amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption. ]5 [Certificates maturing on February 15 in each of the years __ through__, inclusive (the "Tenn Certificates"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City,.in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date Principal Amount The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Tenn Certificates (or with respect to Tenn Certificates having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Term Certificates required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. In the Ordinance, the City reserves the right in the case of an optional redemption to give notice of its election or direction to redeem Certificates 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an event of default. Further, in the case of a conditional redemption, the s Insert optional redemption provisions, if any, and revise as necessary to conform to the Pricing Certificate. -22 - l86778v.l LUB200nl016 ) failure of the City to make moneys and/or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. J6 As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Certificate for transfer at the designated office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Certificates of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within forty five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Certificate is registered on the Record Date or Special Record Date, as applicable) 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 performed 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 by pledging to such purpose Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the Waterworks System in an amount limited to $1,000; that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; and that the total indebtedness of the City, including the Certificates, does not exceed any constitutional or statutory limitation. 6 Insert mandatory sinking fund redemption provisions, if any, and confonn as necessary to the Pricing Certificate. -23 - l86778v.l LUB200/71016 ' ) 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. Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas [SEAL] (b) Form of Taxable Series 201 OB Certificate. REGISTERED No. __ _ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM REGISTERED $ ____ _ SURPLUS REVENUE CERTIFICATES OF OBLIGATION TAXABLE SERIES 201 OB (BUILD AMERICA BONDS -DIRECT PAYMENT) INTEREST RATE: __ % MATURITY DATE: CLOSING DATE: 7 CERTIFICATE DATE: 8 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 registered assigns, on the Maturity Date specified above, the sum of ________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the ______ 9 specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal 7 Infonnation to be inserted from Pricing Certificate. 8 Infonnation to be inserted from Pricing Certificate. 9 Insert Closing Date or Certificate Date or such other infonnation as is necessary to conform to the Pricing Certificate. -24- 186778v.l LUB200nl016 ) 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 ____ 10• All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). 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 Payment/Transfer Office"), of The Bank of New York Mellon Trust Company, National Association, or, with respect to a successor Paying Agent/Registrar, at the Designated Paymentffransfer Office of such successor. 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner, provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. 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 on the "Record Date," which shall be the last business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each owner of a Certificate appearing in the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, 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 have the same force and effect as if made on the original date payment was due. This Certificate is one of a series of fully registered certificates specified in the title hereof issued in the aggregate principal amount of $. ____ 11 (herein referred to as the "Certificates"), issued pursuant to a certain ordinance of the City (the "Ordinance"), for the pwpose of paying contractual obligations to be incurred for authorized public improvements ( collectively, the "Project"), as described in the Ordinance, and to pay the contractual obligations 10 Infonnation to be inserted from Pricing Certificate. 11 Information to be inserted from Pricing Certificate. I 86778v.1 LUB200nI0I6 -25- ) ) for professional services of attorneys, financial advisors and other professionals in connection with the Project and the issuance of the Certificates. [The Certificates are being issued concurrently with the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A, in the aggregate principal amount of$ ____ which are also being issued pursuant to the Ordinance for the purpose of paying contractual obligations to be incurred for the Project, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs ofissuance.]12 [The City has reserved the option to redeem the Certificates maturing on or after February 15 _ _, in whole or in part, before their respective scheduled maturity dates, on ___ _, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall detennine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption.] 13 [The Certificates are also subject to extraordinary redemption prior to their respective maturities, at the option of the City, upon the occurrence of an Extraordinary Event (hereinafter defined) from any source of available funds, in whole or in part, by lot, at the Make-Whole Redemption Price (hereinafter defined). "Extraordinary Event" means a change to Sections 54AA or 6431 of the Code (as such Sections were added by Section 1531 of the "American Recovery and Reinvestment Act of 2009," pertaining to "Build America Bonds") or any other action taken by the United States Congress or federal government, the effect of which causes the Federal Subsidy applicable to the Taxable Series 2010A Certificates to be reduced or eliminated. "Make-Whole Redemption Price" means the amount equal to the greater of the following: (i) the issue price of the Certificates (but not less than 100%) of the principal amount of the Certificates to be redeemed; or (ii) the swn of the present value of the remaining scheduled payments of principal and interest on the Certificates to be redeemed to the maturity date of such Certificates, not including any portion of those payments of interest accrued and unpaid as of the date on which the Certificates are to be redeemed, discounted to the date on which the Certificates are to be redeemed on a semi-armual basis, assuming a 360-day year containing twelve 30-day months, at the Treasury Rate (hereinafter defined), plus I 00 basis points, plus in each case accrued interest on the Certificates to be redeemed to the redemption date. "Treasury Rate" means, with respect to any redemption date for a particular Certificate, 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 two 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 Certificates to be redeemed; provided, however that if the period from the redemption date to the maturity date is less than one year, the weekly average yield on actually 12 Revise or delete as necessary to conform to the Pricing Certificate. 13 Insert optional redemption provisions, if any, and revise as necessary to conform to the Pricing Certificate. -26- 186778v.l LUB200nl016 traded United States Treasury securities adjusted to a constant maturity of one year shall be used.]14 [Certificates maturing on February 15 in each of the years __ through__, inclusive (the "Term Certificates"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date Principal Amount The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Term Certificates (or with respect to Term Certificates having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Term Certificates required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. In the Ordinance, the City reserves the right in the case of an optional redemption to give notice of its election or direction to redeem Certificates 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an event of default. Further, in the case of a conditional redemption, the 14 Revise or delete as necessary to confonn to the Pricing Certificate. -27- 186778v.1 LUB200nt016 failure of the City to make moneys and/or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. ] 15 As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Certificate for transfer at the designated office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Certificates of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within forty five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Certificate is registered on the Record Date or Special Record Date, as applicable) 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 performed 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 by pledging to such purpose Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the Waterworks System in an amount limited to $1,000; that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; 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. Mayor, City of Lubbock, Texas 15 Insert mandatory sinking fund redemption provisions, if any, and confonn as necessary to the Pricing Certificate. -28 - 186778v. I LUB200nI016 City Secretary, , City of Lubbock, Texas [SEAL] (c) Fonn of Comptroller'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 OF THE STATE OF TEXAS § § § REGISTER NO. __ _ I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Certificate has been examined by him as required by law, that he finds that it has been issued in confonnity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas; and that this Certificate has this day been registered by me. Witness my hand and seal of office at Austin, Texas, ______ _ [SEAL] !86778v.1 LUB200/7l016 -29 - Comptroller of Public Accounts of the State of Texas ) (d) Form of Certificate of Paying Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Certificate if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PAYING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Certificate of this series of Certificates was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates referred to in the within-mentioned Ordinance. Dated: (e) Fonn of Assignment. The Bank of New York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory 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 number: _________ the within Certificate and all rights hereunder and hereby irrevocably constitutes and appoints _________ attorney to transfer the within Certificate on the books kept for registration hereof, with full power of substitution in the premises. Dated: ___________ _ Signature Guaranteed By: Authorized Signatory 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. (f) The Initial Certificates of each Series shall be in the form set forth in paragraphs (a), (b), (c) and (e) of this Section, except for the following alterations: -30- 186778v.l LUB200n1016 ) (i) immediately under the name of the Certificate the headings "INTEREST RATE" and "MATURITY DATE" shall both be completed with the words "As shown below"; 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 (Information to be inserted from the Pricing Certificate pursuant to Section 3.02 of this Ordinance) Section 6.03. CUSIP Registration. The City may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's, A Division of the McGraw-Hill Companies, New York, New York, and may authorize the printing of such numbers on the face of the Certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers 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 numbers incorrectly printed on the Certificates. Section 6.04. Legal Opinion. The approving legal opinion of Vinson & Elkins L.L.P., Bond Counsel, 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 6.05. Bond Insurance. Information pertaining to bond insurance, if any, may be printed on each Certificate. ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS Section 7.01. Sale of Certificates: Official Statement. (a) The Certificates shall be sold at negotiated sale to the Underwriters in accordance with the tenns of this Ordinance, including this Section 7.0l(a) and Exhibit B hereto, provided that all of the conditions set forth in Exhibit B can be satisfied. As authorized by Chapter 1371, Texas Government Code, as amended, the Authorized Officer is authorized to act on behalf of the City upon determining that the conditions set forth in Exhibit B can be satisfied, in selling and delivering the Certificates and carrying out the other procedures specified in this Ordinance, including determining whether to acquire bond insurance for the Certificates, the aggregate principal amount of the Certificates of each Series, if any, and price at which each of the -31 - 186778v.1 LUB200nt016 ) ) Certificates will be sold, the number and designation of series of Certificates to be issued, the form in which the Certificates shall be issued, the years in which the Certificates will mature, the principal amount to mature in each of such years, the rate of interest to be borne by each such maturity, the first interest payment date, the initial date from which interest will accrue, the dates, prices and terms upon and at which the Certificates shall be subject to redemption prior to maturity at the option of the City and shall be subject to mandatory sinking fund redemption, and all other matters relating to the issuance, sale and delivery of the Certificates, all of which shall be specified in the Pricing Certificate. In addition to any other authority provided under this Ordinance, the Authorized Officer is hereby further expressly authorized, in connection with the sale of the Taxable Series 2010B Certificates, to make appropriate irrevocable elections under Section 54(AA) or Section 6431 of the Code, to designate the Taxable Series 2010B Certificates as ''build America bonds" ("Build America Bonds") to the extent such Taxable Series 2010B Certificates are eligible for such designation and the Authorized Officer detennines that such designation is beneficial to the City. In furtherance thereof, the Authorized Officer is hereby expressly authorized and empowered to take all actions necessary to obtain any moneys from the Federal government that may be available to the City if any Taxable Series 201 OB Certificates are designated as Build America Bonds. The Authorized Officer is hereby further expressly authorized and empowered from time to time and at any time to perform all such acts and things deemed necessary or desirable and to execute and deliver any agreements, certificates, documents or other instruments, whether or not herein mentioned, to carry out the terms and provisions of this section, including but not limited to, the preparation and making of any filings with the Internal Revenue Service The authority granted to the Authorized Officer under this Section 7.0l(a) shall expire at 5 :00 p.m., June 16, 2010, unless otherwise extended by the City Council by separate action. Any finding or determination made by the Authorized Officer relating to the issuance and sale of the Certificates and the execution of the Purchase Contract in connection therewith shall have the same force and effect as a finding or determination made by the City Council. (b) The Authorized Officer is hereby authorized and directed to execute and deliver, and the City Secretary is hereby authorized and directed to attest, one or more certificate purchase contracts (collectively, the "Purchase Contract") which shall be in the form approved by the Authorized Officer. Upon completion of the tenns of the Purchase Contract in accordance with the tenns of the Pricing Certificate and this Ordinance, the Authorized Officer is authorized and directed to execute such Purchase Contract on behalf of the City and the Authorized Officer and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Certificates. The Certificates shall initially be registered in the name of the Representative. (c) The form and substance of the Preliminary Official Statement and any addenda, supplement or amendment thereto, are hereby in all respects approved and adopted and is hereby deemed final as of its date within the meaning and for the purposes of paragraph (b )(I) of Rule 15c2•12 under the' Securities Exchange Act of 1934, as amended. The Authorized Officer and City Secretary are hereby authorized and directed to cause to be prepared a final Official -32 • I 86778v .1 LUB200nl O 16 ) ') ) ) i Statement (the "Official Statement") incorporating applicable pricing information pertaining to the Certificates, and to execute the same by manual or facsimile signature and deliver appropriate numbers of executed copies thereof to the Underwriters. The Official Statement as thus approved, executed and delivered, with such appropriate variations as shall be approved by the Authorized Officer and the Underwriters, may be used by the Underwriters in the public offering and sale thereof. The City Secretary is hereby authorized and directed to include and maintain a copy of the Official Statement and any addenda, supplement or amendment thereto thus approved among the permanent records of this meeting. The use and distribution of the Preliminary Official Statement, and the preliminary public offering of the Certificates by the Underwriters, is hereby ratified, approved and confirmed. ( d) 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 including, without limitation, the Purchase Contract. (e) The obligation of the Underwriters identified in subsection (a) of this Section to accept delivery of the Certificates is subject to the Underwriters 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 7.02. Control and Delivery of Certificates. (a) The Authorized Officer 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 Comptroller of Public Accounts of the State of Texas and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Acoounts, delivery of the Certificates shall be made to the Underwriters thereof under and subject to the general supervision and direction of the Authorized Officer, against receipt by the City of all amounts due to the City under the terms of sale. (c) In the event the Mayor or City Secretary is absent or otherwise unable to execute any docwnent or take any action authorized herein, the Mayor Pro Tern and the Assistant City Secretary, respectively, shall be authorized to execute such docwnents and take such actions, and the performance of such duties by the Mayor Pro Tern and the Assistant City Secretary shall for the purposes of this Ordinance have the same force and effect as if such duties were performed by the Mayor and City Secretary, respectively. Section 7.03. Deposit of Proceeds. (a) First: All amounts received on the Closing Date as accrued interest on the Certificates from the Certificate Date to the Closing Date shall be deposited to the Interest and Sinking Fund for the related Series. (b) Second: The remaining balance received on the Closing Date shall be deposited to one or more special accounts of the City, such moneys to be dedicated and used solely for the -33 - l86778v.1 LUB200nl0l6 ) remaining purposes for which the Certificates are being issued as herein provided, as may be further set forth in the Pricing Certificate. ARTICLE VIII INVESTMENTS Section 8.0 I. Investments. (a) Money in the Interest and Sinking Fund created by this Ordinance and the special accounts provided for in Section 7.03(b), at the City's option, may be invested in such securities or obligations as pennitted under applicable law. The City's Chief Financial Officer, and any other officer of the City authorized to make investments on behalf of the City, are hereby authorized and directed to execute and deliver, on behalf of the City, any and all investment agreements, guaranteed investment contracts or repurchase agreements in connection with the investment of moneys on deposit in the Interest and Sinking Fund and the special account or accounts provided for in Section 7.03(b), but only to the extent such investment agreements, guaranteed investment contracts or repurchase agreements are authorized investments under applicable law. (b) Any securities or obligations in which money in the Interest and Sinking Fund is so invested shall be kept and held in trust for the benefit of the Owners of the related Series and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.02. Investment Income. (a) Interest and income derived from investment of the Interest and Sinking Fund shall be credited to such fund. (b) Interest and income derived from investment of the funds to be deposited pursuant to Section 7.03(b) hereof shall be credited to the account where deposited until the acquisition or construction of said projects is completed or shall be transferred to the Interest and Sinking Fund for the related Series as shall be detennined by the City Council. Upon completion of the authorized projects, to the extent such interest and income are present, such interest and income shall be deposited to the Interest and Sinking Fund for the related Series. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Certificates. On or before each Interest Payment Date while any of the Certificates are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund for the related Series, money sufficient to pay such principal of and interest on the Certificates as will accrue or mature on the applicable Interest Payment Date or date of prior redemption. -34- 186778v. I LUB200nI O I 6 ) ' Section 9.02. Other Representations and Covenants. (a) The City will faithfully perform, at all times, any and all covenants, undertakings, stipulations, 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 manner 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. (b) The City is duly authorized under the laws of the State of Texas to issue the Certificates; all action on its part for the creation and issuance of the Certificates has 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 9.03. Provisions Concerning Federal Income Tax Exclusion for Series 2010A Certificates. The City intends that the interest on the Series 201 0A Certificates shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as 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 take any action within its control, that if taken or omitted, respectively, would cause the interest on the Series 2010A 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 comply with each requirement of Sections 9.03 through 9.09 of this Article IX; provided, however, that the City shall not be required to comply with any particular requirement of Sections 9.03 through 9.09 of this Article IX if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2010A Certificates or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in Sections 9.03 through 9.09 of this Article IX will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in Sections 9.03 through 9.09 of this Article IX. Section 9.04. No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer, employee or agent, that, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 2010A Certificates are delivered, the proceeds of the Series 2010A Certificates will not be used in a manner that would cause the Series 2010A Certificates to be ''private activity bonds" within the meaning of section 141 of the Code and the Regulations. The City covenants and agrees that it will make such use of the proceeds of the Series 2010A Certificates, including interest or other investment income derived from Series 201 0A Certificate proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Series 201 0A Certificates will not be "private activity bonds" within the meaning of section 141 of the Code and the Regulations. -35 - 186778v. I LUB200n1016 ) ) Section 9.05. No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Series 201 0A Certificates to be "federally guaranteed" within the meaning of section 149(b) of the Code and the Regulations, except as permitted by section 149(b)(3) of the Code and the Regulations. Section 9.06. Series 201 0A Certificates Are Not Hedge Bonds. The City covenants and agrees not to take any action, or knowingly omit to take any action, and has not knowingly omitted and will not knowingly omit to take any action, within its control, that, if taken or omitted, respectively, would cause the Series 201 0A Certificates to be ''hedge bonds" within the meaning of section l 49(g) of the Code and the Regulations. Section 9.07. No-Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 20 I 0A Certificates are delivered, the City will reasonably expect that the proceeds of the Series 20 I OA Certificates will not be used in a manner that would cause the Series 201 0A Certificates to be "arbitrage bonds" within the meaning of section 148(a) of the Code and the Regulations. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Series 2010A Certificates including interest or other investment income derived from Series 2010A Certificate proceeds, regulate investments of proceeds of the Series 201 0A Certificates, and take such other and further action as may be required so that the Series 201 0A Certificates will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and the Regulations. Section 9.08. Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148( f) of the Code, the City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Series 2010A Certificates (within the meaning of section 148(f)(6)(B) 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 Series 2010A Certificates as may be required to calculate the amount earned on the investment of the gross proceeds of the Series 2010A Certificates separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any Series 2010A Certificates of the City, (ii) calculate at such times as are required by the Regulations, the amount earned from the investment of the gross proceeds of the Series 20 I OA Certificates which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Series 201 0A Certificates or on such other dates as may be permitted under the Regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant 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 Series 2010A Certificates that might result in a reduction in the amount required to be paid to the federal government because -36 - 186778v.1 LUB200nl016 ') such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. Section 9.09. Infonnation 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 after the close of the calendar quarter in which the Series 201 OA Certificates are issued, an infonnation statement concerning the Series 2010A Certificates, all under and in accordance with section 149(e) of the Code and the Regulations. Section 9.10. Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of Sections 9.03 through 9.09 of this Article IX shall survive the defeasance and discharge of the Certificates. ARTICLEX DEFAULT AND REMEDIES Section 10.01. Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Certificates when the same becomes due and payable; or (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 to the City. Section 10.02. Remedies for Default. (a) Upon the happening of any Event of Default, then any Owner or an authorized representative thereof, including but not limited to a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights of the Owners under this Ordinance by mandamus or other suit, action or special proceeding in equity or at law in any court of competent jurisdiction for any relief permitted by law, including the specific perfonnance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. -37 - 186778v. I LUB200nt016 (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Certificates then outstanding. Section I 0.03. Remedies Not Exclusive. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Certificates or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Certificates shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. ARTICLE XI DISCHARGE Section 11.01. Discharge. The Certificates may be defeased, discharged or refunded in any manner permitted by applicable law. ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.01. Annual Rmorts. (a) The City shall provide annually to the MSRB, within six (6) months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement, being the information described in Exhibit A hereto. Any financial statements so to be provided shall be (i) prepared in accordance with the accounting principles described in Exhibit A hereto, (ii) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided and (iii) submitted through EMMA, in an electronic format with accompany identifying information, as prescribed by the MSRB. If the audit of such financial statements is not complete within such period, then the City shall provide notice that audited financial statements are not available and shall provide unaudited financial statements for the applicable fiscal year to the MSRB. The City shall provide audited financial 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 will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. -38- 186778v.l LUB200/710l6 ) ) ) ( c) The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific referenced to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to the MSRB or filed with the SEC. Section 12.02. Material Event Notices. (a) The City shall notify the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: (i) (ii) (iii) difficulties; (iv) difficulties; (v) (vi) Certificates; principal and interest payment delinquencies; nonpayment related defaults; unscheduled draws on debt service reserves reflecting financial unscheduled draws on credit enhancements reflecting financial substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions or events affecting the tax-exempt status of the (vii) modifications to rights of Owners; (viii) redemption calls; (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 an electronic format and accompanied by identifying information, 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 12.01 of this Ordinance by the time required by such Section. Section 12.03. Limitations. Disclaimers and Amendments. (a) The City shall be obligated to observe and perform the covenants specified in this Article for so long as, but only for so long as, the City remains an "obligated person" with -39- l86778v.1 LUB200171016 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 defeasances that cause the City to be no longer an «obligated person." (b) The provisions of this Article are for the sole benefit of the Owners and beneficial owners of the Certificates, and nothing in this Article, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial infonnation, operating data, financial 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 relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Article or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such infonnation or its usefulness to a decision to invest in or sell Certificates at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO TIIE OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS 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. (c) No default by the City in observing or performing its obligations under this Article shall constitute a breach of or default under the Ordinance for purposes 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 to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (i) the provisions of this Article, as so amended, would have permitted an undeiwriter to purchase or sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (A) the Owners of a majority in aggregate principal amount ( or any greater amount required by any other provisions of this Ordinance that authorizes such an amendment) of the outstanding Certificates consent to such amendment or (B) an entity or individual person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Owners and beneficial owners of the Certificates. If the City so amends the provisions of this Article, it shall include with any amended financial information or operating data next provided in accordance with Section 12.01 an 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 provided. -40- I 86778v .1 LUB200nI O 16 ) ARTICLE XIII AMENDMENTS; ATTORNEY GENERAL MODIFICATION Section 13.01. 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 as permitted in this Section. The City may, 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, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent of the Owners of the Certificates holding a majority in aggregate principal amount of the Certificates then outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Owners of outstanding Certificates, no such amendment, addition, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Certificates, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on the' Certificates, (ii) give any preference to any Certificate over any other Certificate, or (iii) reduce the aggregate principal amount of Certificates required to be held by Owners for consent to any such amendment, addition, or rescission. Section 13.02. Attorney General Modification. In order to obtain the approval of the Certificates by the Attorney General of the State 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. ARTICLE XIV EFFECTIVE IMMEDIATELY Section 14.01. Effective Immediately. Notwithstanding the provisions of the City Charter, this Ordinance shall become effective immediately upon its adoption at this meeting pursuant to Section 1201.028, Texas Government Code. -41 - 186778v. I LUB200nt0l6 ) l ) PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE on the 16th day of December, 2009, at a regular meeting of the City Council of the City of Lubbock, Texas. ATTEST: [SEAL) APPROVED AS TO CONTENT: By: A~~ DY B~HAM,Chief Financial Officer APPROVED AS TO FORM: Signature Page for Ordinance 186778v.l LUB200/71016 ) "I ) 'I ) ) EXHIBIT A DESCRIPTION OF ANNUAL DISCLOSURE OF FINANCIAL INFORMATION The following information is referred to in Article XII of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified ( and included in the Appendix or other headings of the Official Statement referred to) below: 1. The portions of the financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. Statistical and financial data set forth in Tables 1-6 and 8A-15 of the Official Statement. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in Paragraph 1 above. Exhibit A-1 186778v.1 LUB200m0I67lOl5 ) EXHIBITB SALE PARAMETERS In accordance with Section 7.0l(a) of the Ordinance, the following conditions with respect to the Certificates must be satisfied in order for the Authorized Officer to act on behalf of the City in selling and delivering the Certificates to the Underwriters: (a) the price to be paid for the Certificates shall be not less than 95% of the aggregate principal amount of the Certificates; (b) the Certificates shall not bear interest at a rate greater than the maximum rate allowed by Chapter 1204, Texas Government Code, as amended; (c) the aggregate principal amount of the Certificates shall produce proceeds in an amount sufficient, as detennined by the Authorized Officer, to fund the purposes described in Section 3.01 and such aggregate principal amount shall not exceed the maximum amount authorized in Section 3.01; (d) the maximum maturity for the Certificates shall not exceed twenty-five years; and (e) the Certificates to be issued, prior to delivery, must have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long tenn obligations. Exhibit B-1 186778v.1 LUB200n1016 ) ) ) PRICING CERTIFICATE Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A and Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B {Build America Bonds -Direct Payment) Re: $48,955,000 City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A (the "Series 2010A Certificates") and $96,540,000 City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bonds -Direct Payment) (the "Series 2010B Certificates," and together with the Series 2010A Certificates, the "Certificates") I, the undersigned officer of the City of Lubbock, Texas (the "City"), do hereby make and execute this Pricing Certificate pursuant to an ordinance adopted by the City Council of the City on December 16, 2009 (the ••Ordinance") authorizing the issuance of the Certificates. Capitalized tenns used in this Pricing Certificate shall have the meanings given such terms in the Ordinance. 1. As authorized by Section 7.01 of the Ordinance, I have acted on behalf of the City in selling the Series 2010A Certificates to the Underwriters pursuant to the tenns of a purchase contract in substantially the fonn accepted, approved and authorized pursuant to Section 7.01 of the Ordinance, for the sum of $51,894,822.24 (representing the principal amount of$48,955,000, plus net original issue premiwn of $3,173,768.25 and less an underwriters' discount of $233,946.01), and having the following terms, conditions and provisions, all as authorized pursuant to Section 7.01 of the Ordinance: The Series 2010A Certificates shall be issued in the aggregate principal amount of $48,955,000, shall be dated February 4, 2010 (the "Certificate Date") and bear interest from such date, shall mature on February 15 in the years and in the principal amounts and shall bear interest payable on February 15 and August 15 of each year, commencing February 15, 2011, at the rates set forth in the following schedule: Years Principal Installments Interest Rates 2011 $3,010,000 2.000% 2012 $2,750,000 1.875% 2012 $3,115,000 2.000% 2013 $1,150,000 1.875% 2013 $4,900,000 5.000% 2014 $ 450,000 2.000% 2014 $5,890,000 5.000% 2015 $ 350,000 2.250% 226069v.1 LUB200/71016 ) "'I Years Principal Installments Interest Rates 2015 $2,775,000 4.000% 2015 $3,515,000 5.000% 2016 $3,000,000 2.750% 2016 $3,925,000 5.000% 2017 $3,500,000 3.000% 2017 $3,695,000 4.000% 2018 $1,215,000 3.250% 2019 $1,250,000 3.500% 2020 $1,295,000 3.375% 2021 $265,000 3.500% 2022 $275,000 3.700% 2023 $285,000 3.750% 2024 $295,000 3.875% 2025 $310,000 4.000% 2026 $320,000 4.000% 2027 $335,000 4.125% 2028 $345,000 4.200% 2029 $360,000 4.250% 2030 $380,000 4.300% 2. As authorized by Section 7.01 of the Ordinance, I have acted on behalf of the City in selling the Series 2010B Certificates to the Underwriters pursuant to the terms of a purchase contract in substantially the form accepted, approved and authorized pursuant to Section 7.01 of the Ordinance, for the sum of$95,948,277.38 (representing the principal amount of$96,540,000, less an underwriters' discount of $591,722.62), and having the following terms, conditions and provisions, all as authorized pursuant to Section 7.01 of the Ordinance: The Series 20 I OB Certificates shall be issued in the aggregate principal amount of $96,540,000, shall be dated February 4, 2010 (the "Certificate Date") and bear interest from such date, shall mature on February 15 in the years and in the principal amounts and shall bear interest payable on February 15 and August IS of each year, commencing February 15, 2011, at the rates set forth in the following schedule: 226069v.l LUB200n1016 2018 2019 2020 2021 2022 2023 2024 Serial Series 2010B Certificates Principal Installments $6,240,000 $6,425,000 $6,620,000 $6,540,000 $6,755,000 $6,985,000 $7,230,000 -2- Interest Rates 4.442% 4.542% 4.742% 4.892% 4.992% 5.242% 5.342% ) J Term Series 2010B Certificates 2030 Principal Installments $49,745,000 Interest Rate 6.032% The Tenn Certificates are subject to scheduled mandatory redemption and will be redeemed by the City, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth in the following schedule: 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) Principal Amount $7,500,000 $7,800,000 $8,110,000 $8,435,000 $8,775,000 $9,125,000 3. In accordance with the parameters contained in Section 7.01 and Exhibit B of the Ordinance, the undersigned does hereby find, certify and represent that the foregoing terms of the Certificates satisfy the following requirements and parameters contained within such Section 7.01 and Exhibit B: (i) the price to be paid by the Underwriters for the Certificates is 101.6% of the aggregate principal amount of the Certificates, which is not less than 95% of the aggregate principal amount of the Certificates; (ii) the Certificates do not bear interest at a rate greater than the maximum rate allowed by Chapter 1204, Texas Government Code, as amended; (iii) the aggregate principal amount of the Certificates produces proceeds sufficient to fund the purposes described in Section 3.01 of the Ordinance and such aggregate principal amount does not exceed the maximwn amount authorized in Section 3.01 of the Ordinance; (iv) the maximum maturity for the Certificates is 2030 which does not exceed twenty-five years; (v) the Certificates have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long tenn obligations. -3- 226069v. l LUB200/71016 ) ) ) 4. The proceeds of the Certificates shall be applied as set forth in Section 7.03 of the Ordinance. 5. The Series 2010A Certificates shall be issued substantially in the form attached hereto as Exhibit A, and the Series 2010B Certificates shall be issued substantially in the form attached hereto as Exhibit B. 6. It is hereby determined that it is in the best interest of the City, and the City hereby irrevocably elects pursuant to Section 54AA of the Code, to: (i) designate all of the Series 2010B Certificates as "build America bonds" and "qualified bonds" and (ii) to receive direct payment of the credit provided in Section 6431 of the Code. The Series 2010B Certificates are Taxable Certificates, the interest on which is not excludable from gross income for federal income tax purposes. -4- 226069v.1 LUB200nl016 J ) \lY Executed as of the l:___ day of ..J ~ , 2010. Andy "Burcham Chief Financial Officer City of Lubbock, Texas Signature Page for Pricing Certificate for Certificates of Obligation 226069v. l LUB200/71016 ...... ) ) ) EXHIBIT A The form of the Series 2010A Certificates, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the fonn of Certificate of the Paying Agent/Registrar and the fonn of Assignment appearing on the Series 2010A Certificates, shall be substantially as follows: (a) Form of Series 201 OA Certificates. REGISTERED No. __ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 2010A REGISTERED $ ___ _ INTEREST RA TE: MATURITY DATE: CERTIFICATE DATE: CUSIP NUMBER: __ % February 15, __ February 4, 2010 The City of Lubbock (the "City"), in the County of Lubbock, State of Texas, for value received, hereby promises to pay to or registered assigns, on the Maturity Date specified above, the sum of __________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Certificate Date specified above or the most recent interest payment date to which 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. All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance ( defined below). 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 Paymentffransfer A-1 226069v.l LUB200/710l6 ) ) ) ) ' Office"), of The Bank of New York Mellon Trust Company, National Association, or, with respect to a successor Paying Agent/Registrar, at the Designated Paymentlfransfer Office of such successor. 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. 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 on the "Record Date," which shall be the last business day of the month next preceding such interest payment date. If the date for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Paymentffransfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, 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 have the same force and effect as if made on the original date payment was due. This Certificate is one of a series of fully registered certificates specified in the title hereof issued in the aggregate principal amount of $48,955,000 (herein referred to as the "Certificates"), issued pursuant to a certain ordinance of the City (the "Ordinance") for the purpose of paying contractual obligations to be incurred for authorized public improvements ( collectively, the "Project"), as described in the Ordinance, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and the issuance of the Certificates. The Certificates are being issued concurrently with the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bonds -Direct Payment), in the aggregate principal amount of $96,540,000, which are also being issued pursuant to the Ordinance for the purpose of paying contractual obligations to be incurred for the Project, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance. The City has reserved the option to redeem the Certificates maturing on or after February 15, 2020, in whole or in part, before their respective scheduled maturity dates, on February 15, 2019, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall detennine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of A-2 226069v. I LUB20On1O16 ) 1 ) ) '\ each of the Certificates to be redeemed in whole or in part. In the Ordinance, the City reserves the right in the case of an optional redemption to give notice of its election or direction to redeem Certificates 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Certificate for transfer at the designated office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Certificates of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within forty-five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate is registered as the owner hereof for the purpose of receiving payment as 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 performed 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 by pledging to such purpose Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the Waterworks System in an amount limited to $1,000; that when so collected, such taxes and Surplus Revenues shall be A-3 226069v. I LUB20On\O16 ) ) ) appropriated to such purposes; 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. Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas [SEAL] A-4 226069v. I LUB200nl 016 ) "\ ) (b) Fonn of Comptroller's Registration Certificate. The following Comptroller's Registration Certificate may be deleted from the definitive Series 2010A Certificates if such certificate on the Initial Series 2010A Certificate is fully executed. OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS § § § REGISTER NO. __ _ I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Certificate has been examined by him as required by law, that he finds that it has been issued in confonnity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas; and that this Certificate has this day been registered by me. Witness 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 Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Series 201 0A Certificate if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PA YING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Certificate of this series of certificates was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates referred to in the within-mentioned Ordinance. Dated: A-5 226069v. I LUB200nl O 16 The Bank of New York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory -. ..... ) i ) (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and Zip Code of transferee): ______________ _ (Social Security or other identifying number: -------~ the within Certificate and all rights hereunder and hereby irrevocably constitutes and appoints _________ attorney 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: Authorized Signatory (e) The Initial Series 2010A Certificate shall be in the form set forth in paragraphs (a), (b) and (d) of this Exhibit A, except for the following alterations: (A) immediately under the name of the Certificate the headings "INTEREST RA TE" and "MATURITY DATE" shall both be completed with the expression "As shown below" and the heading "CUSJP NO." shall be deleted; and (B) 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: 226069v.l LUB200nt016 Principal Installments Interest Rate (Information to be inserted from Section 1 of the Pricing Certificate pursuant to Section 3.02 of the Ordinance) A-6 ) ) ""I ) EXHIBITB The form of the Series 201 OB 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 form of Assignment appearing on the Series 2010B Certificates, shall be substantially as follows: (a) Form of Series 2010B Certificate. REGISTERED No. __ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION REGISTERED $'------ TAXABLE SERIES 201 OB (BUILD AMERICA BONDS -DIRECT PAYMENT) INTEREST RA TE: MATURITY DATE: CERTIFICATE DATE: CUSIP NUMBER: __ % February 15, __ February 4, 2010 The City of Lubbock (the "City"), in the County of Lubbock, State of Texas, for value received, hereby promises to pay to or registered assigns, on the Maturity Date specified above, the swn of ________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Certificate Date specified above or the most recent interest payment date to which 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. All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance ( defined below). 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 Payment/Transfer B-1 226069v. l LUB200m O I 6 ) ) ) ) Office"), of The Bank of New York Mellon Trust Company, National Association, or, with respect to a successor Paying Agent/Registrar, at the Designated Paymentffransfer Office of such successor. 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. 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 on the "Record Date," which shall be the last business day of the month next preceding such interest payment date. If the date for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, 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 have the same force and effect as if made on the original date payment was due. This Certificate is one of a series of fully registered certificates specified in the title hereof issued in the aggregate principal amount of $96,540,000 (herein referred to as the "Certificates"), issued pursuant to a certain ordinance of the City (the "Ordinance") for the purpose of paying contractual obligations to be incurred for authorized public improvements (collectively, the "Project"), as described in the Ordinance, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and the issuance of the Certificates. The Certificates are being issued concurrently with the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A, in the aggregate principal amount of $48,955,000, which are also being issued pursuant to the Ordinance for the purpose of paying contractual obligations to be incurred for the Project, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and costs of issuance. The City has reserved the option to redeem the Certificates maturing on or after February 15, 2020, in whole or in part, before their respective scheduled maturity dates, on February 15, 2019, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the City shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption. The Certificates are also subject to extraordinary redemption prior to February 15, 2019, at the option of the City, upon the occurrence of an Extraordinary Event (hereinafter defined) B-2 226069v. I LUB200nJ016 ) ) ) ) ) from any source of available funds, in whole or in part, by lot, at the Make-Whole Redemption Price (hereinafter defined). "Extraordinary Event" means any change to Sections 54AA or 6431 of the Code (as such Sections were added by Section 1531 of the "American Recovery and Reinvestment Act of 2009," pertaining to ''build America bonds") or any other action taken by the United States Congress or federal government, the effect of which causes the Federal Subsidy applicable to the Certificates to be reduced or eliminated. "Make-Whole Redemption Price" means the amount equal to the greater of the following: (i) the issue price of the Certificates (but not less than 100%) of the principal amount of the Certificates to be redeemed; and (ii) the sum of the present value of the remaining scheduled payments of principal and interest on the Certificates to be redeemed to the earlier of the maturity date of such Certificates and February 15, 2019, not including any portion of those payments of interest accrued and unpaid as of the date on which the Certificates are to be redeemed, discounted to the date on which the Certificates are to be redeemed on a semi-annual basis, assuming a 360-day year containing twelve 30-day months, at the Treasury Rate (hereinafter defined), plus 100 basis points, plus in each case accrued and unpaid interest on the Certificates to be redeemed to the redemption date. "Treasury Rate" means, with respect to any redemption date for a particular Certificate, 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 two 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 Certificates to be redeemed; provided, however that if the period from the redemption date to the maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. Certificates maturing on February 15 in the year 2030 (the ''Term Certificates"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date February 15, 2025 February 15, 2026 February 15, 2027 February 15, 2028 February 15, 2029 February 15, 2030 (maturity) Principal Amount $7,500,000 $7,800,000 $8,110,000 $8,435,000 $8,775,000 $9,125,000 The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Tenn Certificates (or with respect to Tenn Certificates having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Tenn Certificates required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Certificates B-3 226069v. I LUB200nt O I 6 .... ) which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. In the Ordinance, the City reserves the right in the case of an optional redemption to give notice of its election or direction to redeem Certificates 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Certificates subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Certificate for transfer at the designated office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Certificates of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within forty-five ( 45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate is registered as the owner hereof for the purpose of receiving payment as 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 B-4 226069v.l LUB200nl016 ) ) "\ ) done precedent to and in the issuance of the Certificates have been properly done and performed 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 by pledging to such purpose Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the Waterworks System in an amount limited to $1,000; that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; 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. Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas [SEAL] B-5 226069v.1 LUB200nl016 (b) Form of Comptroller's Registration Certificate. The following Comptroller's Registration Certificate may be deleted from the definitive Series 2010B Certificates if such certificate on the Initial Series 20108 Certificate is fully executed. OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STA TE OF TEXAS § § § REGISTER NO. __ _ I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Certificate has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas; and that this Certificate has this day been registered by me. Witness my hand and seal of office at Austin, Texas, ______ _, [SEAL] Comptroller of Public Accounts of the State of Texas (c) Fonn of Certificate of Paying Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Series 2010B Certificate if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PA YING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Certificate of this series ) of certificates was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates referred to in the within•mentioned Ordinance. Dated: ) B·6 226069v .1 LUB200nt O 16 The Bank of New York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory "' ., ) (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and Zip Code of transferee): ______________ _ (Social Security or other identifying number: --------....J the within Certificate and all rights hereunder and hereby irrevocably constitutes and appoints _________ attorney 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: Authorized Signatory (e) The Initial Series 2010B Certificate shall be in the form set forth in paragraphs (a), (b) and (d) ofthis Exhibit B, except for the following alterations: (C) immediately under the name of the Certificate the headings "INTEREST RATE" and "MATURITY DATE" shall both be completed with the expression "As shown below" and the heading "CUSIP NO." shall be deleted; and (D) 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: 226069v.l LUB200nI0!6 Principal Installments Interest Rate (Information to be inserted from Section 2 of the Pricing Certificate pursuant to Section 3.02 of the Ordinance) B-7 ) ) i MINUTES AND CERTIFICATION PERTAINING TO PASSAGE OF AN ORDINANCE ST ATE OF TEXAS § COUNTY OF LUBBOCK § CITY OF LUBBOCK § On the 16th day of December, 2009, the City Council of the City of Lubbock, Texas, convened in a regular meeting at the regular meeting place thereof, the meeting being open to the public and notice of said meeting, giving the date, place and subject thereof, having been posted as prescribed by Chapter 551, Texas Government Code, as amended; and the roll was called of the duly constituted officers and members of the City Council, which officers and members are as follows: Tom Martin, Mayor Jim Gilbreath, Mayor Pro Tem Linda Deleon Floyd Price Todd R. Klein Paul R. Beane John W. Leonard, III ) ) ) ) ) Members of the Council and all of said persons were present except Paul R. Beane thus constituting a quorum. Whereupon, among other business, a written Ordinance bearing the following caption was introduced: AN ORDINANCE PROVIDING FOR THE ISSUANCE OF CITY OF LUBBOCK, TEXAS, GENERAL OBLIGATION BONDS, SERIES 201 OA AND CITY OF LUBBOCK, TEXAS, GENERAL OBLIGATION BONDS, TAXABLE SERIES 2010B (BUILD AMERICA BONDS - DIRECT PAYMENT) IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,600,000; LEVYING A TAX IN PAYMENT THEREOF; APPROVING THE OFFICIAL STATEMENT; APPROVING EXECUTION OF A PURCHASE CONTRACT; AND ENACTING OTHER PROVISIONS RELATING THERETO The Ordinance, a full, true and correct copy of which is attached hereto, was read and reviewed by the City Council. Thereupon, it was duly moved and seconded that the Ordinance be passed and adopted. The Presiding Officer put the motion to a vote of the members of the City Council, and the Ordinance was passed and adopted by the following vote: AYES: 6 NOES: o ABSTENTIONS: O US J95513v.l ) MINUTES APPROVED AND CERTIFIED TO BE TRUE AND CORRECT, and to correctly reflect the duly constituted officers and members of the City Council of said City, and the attached and following copy of said Ordinance is hereby certified to be a true and correct copy of an official copy thereof on file among the official records of the City, all on this the 16th day of December, 2009. City Secretary City of Lubbock, Texas [SEAL] US 19S513v.l -2- 1 "\ '.) Ordinance No. 2009--00117 ORDINANCE relating to CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS SERIES 2010A AND CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS TAXABLE SERIES 20108 (BUILD AMERICA BONDS-DIRECT PAYMENT) Adopted: December 16, 2009 I 86821 v. l LUB200/7l O I 6 TABLE OF CONTENTS ') Page Parties .............................................................................................................................................. 1 Article I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions ............................................................................................................... 2 Section 1.02. Findings ................................................................................................................... 4 Section 1.03. Table of Contents, Titles and Headings .................................................................. 4 Section 1.04. Interpretation ........................................................................................................... 4 Article II SECURITY FOR THE BONDS; INTEREST AND SINKING FUND Section 2.01. Tax Levy ................................................................................................................. 5 Section 2.02. Interest and Sinking Fund ....................................................................................... 5 Article III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3.01. Authorization ........................................................................................................... 6 Section 3.02. Date, Denomination, Maturities and Interest. ......................................................... 7 Section 3.03. Medium, Method and Place of Payment. ................................................................ 7 Section 3.04. Execution and Registration of Bonds ...................................................................... 8 Section 3.05. Ownership ............................................................................................................... 9 Section 3.06. Registration, Transfer and Exchange ...................................................................... 9 Section 3 .07. Cancellation ........................................................................................................... 10 Section 3.08. Temporary Bonds .................................................................................................. 10 Section 3.09. Replacement Bonds ............................................................................................... 11 Section 3.10. Book Entry Only System ....................................................................................... 12 Section 3.11. Successor Securities Depository; Transfer Outside Book Entry Only System ................................................................................................................... 12 Section 3.12. Payments to Cede & Co ........................................................................................ 13 Article IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.01. Limitation on Redemption .................................................................................... 13 Section 4.02. Optional Redemption ............................................................................................ 13 Section 4.03. Extraordinary Redemption of Taxable Series 20108 Bonds ................................ 13 (i) 186821 v.1 LUB200/71016 ) "\ ) 'i Section 4.04. Mandatory Sinking Fund Redemption ...... : ........................................................... 14 Section 4.05. Partial Redemption ................................................................................................ 14 Section 4.06. Notice of Redemption to Owners .......................................................................... 14 Section 4.07. Payment Upon Redemption .................................................................................. 15 Section 4.08. Effect of Redemption ............................................................................................ 15 Section 4.09. Lapse of Payment. ................................................................................................. 16 Article V PA YING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paying Agent/Registrar .................................................... 16 Section 5.02. Qualifications ........................................................................................................ 16 Section 5.03. Maintaining Paying Agent/Registrar ..................................................................... 16 Section 5.04. Tennination ........................................................................................................... 16 Section 5.05. Notice of Change to Owners ................................................................................. 16 Section 5.06. Agreement to Perform Duties and Functions ........................................................ 17 Section 5.07. Delivery of Records to Successor. ........................................................................ 17 Article VI FORM OF THE BONDS Section 6.01. Form Generally ..................................................................................................... 17 Section 6.02. Form of the Bonds ................................................................................................. 17 Section 6.03. CUSIP Registration ............................................................................................... 29 Section 6.04. Legal Opinion ........................................................................................................ 30 Section 6.05. Statement of Insurance .......................................................................................... 30 Article VII SALE AND DELIVERY OF BONDS; DEPOSIT OF PROCEEDS Section 7.01. Sale of Bonds; Official Statement.. ....................................................................... 30 Section 7.02. Control and Delivery of Bonds ............................................................................. 32 Section 7.03. Deposit of Proceeds ............................................................................................... 32 Article VIII INVESTMENTS Section 8.01. Investments ............................................................................................................ 32 Section 8.02. Investment Income ................................................................................................ 33 (ii) 186821 v.1 LUB200/71016 ) Article IX ) PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payinent of the Bonds ........................................................................................... 33 Section 9.02. Other Representations and Covenants ................................................................... 33 Section 9.03. Provisions Concerning Federal Income Tax Exclusion of Series 2010A Bonds ..................................................................................................................... 33 Section 9.04. No Private Use or Payment and No Private Loan Financing ................................ 34 Section 9.05. No Federal Guaranty ............................................................................................. 34 Section 9.06. Series 2010A Bonds are not Hedge Bonds ........................................................... 34 Section 9. 07. No Arbitrage Covenant. ........................................................................................ 34 Section 9.08. Arbitrage Rebate ................................................................................................... 35 Section 9.09. Information Reporting ........................................................................................... 35 Section 9.10. Continuing Obligation ........................................................................................... 35 Article X "\ DEFAULT AND REMEDIES Section 10.01. Events of Default. .................................................................................................. 36 Section 10.02. Remedies for Default. ........................................................................................... 36 Section 10.03. Remedies Not Exclusive ....................................................................................... 36 Article XI DISCHARGE Section 11.01. Discharge ............................................................................................................... 37 Article XII CONTINUING DISCLOSURE UNDERTAKING Section 12.01. Annual Reports ...................................................................................................... 3 7 Section 12.02. Material Event Notices .......................................................................................... 3 7 Section 12.03. Limitations, Disclaimers and Amendments .......................................................... 38 Article XIII AMENDMENTS; ATTORNEY GENERAL MODIFICATION Section 13.01. Amendments .......................................................................................................... 39 Section 13.02. Attorney General Modification ............................................................................. 40 ) (iii) 186821 v. l LUB200nt016 ) ) ) Article XIV EFFECTIVE IMMEDIATELY Section 14.01. Effective Immediately ........................................................................................... 40 Signatures ...................................................................................................................................... 36 Exhibit A -Description of Annual Disclosure of Financial Information .................................... A-1 Exhibit B -Sale Parameters ........................................................................................................ B-1 (iv) 186821v.1 LUB200nJ0l6 1 ..., , ') ) ' AN ORDINANCE PROVIDING FOR THE ISSUANCE OF CITY OF LUBBOCK, TEXAS, GENERAL OBLIGATION BONDS, SERIES 2010A AND CITY OF LUBBOCK, TEXAS, GENERAL OBLIGATION BONDS, TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT) IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $24,600,000; LEVYING A TAX IN PAYMENT THEREOF; APPROVING THE OFFICIAL STATEMENT; APPROVING EXECUTION OF A PURCHASE CONTRACT; AND ENACTING OTHER PROVISIONS RELATING THERETO WHEREAS, the bonds hereinafter authorized were duly and favorably voted, as required by the Constitution and laws of the State of Texas, at elections held in the City of Lubbock, Texas (the "City"), on May 15, 2004 and November 3, 2009; WHEREAS, at said elections the following are among the purposes and amounts of the bonds which were authorized, reflecting any amount previously issued pursuant to each voted authorization (including any bond premium allocated against such voted authorization), the amount therefrom being authorized pursuant to this Ordinance, and the balance that remains unissued after the issuance of the bonds herein authorized, to wit: {amounts in thousands} Amount Amount Election Amount Previously Being Unissued Purpose Date Voted Issued Issued Balance Parks 05/15/04 $ 6,395 $6,395 $ -0-$ -0- Streets 05/15/04 9,210 8,764 -0-446 Libraries 05/15/04 2,145 250 1,895 ·0- Animal Shelter 05/15/04 1,045 160 -0-885 Fire 05/15/04 1,405 1,405 -0--0- Police/Municipal Court 05/15/04 3,350 500 -0-2,850 Civic Center/ Auditorium 05/15/04 6,450 500 5,950 -0- Streets 11/3/09 43,085 -0-13,605 29,480 Fire 11/3/09 7,500 .Q-2,750 4,750 Total $80.585 $17,974 $21:.200 $38.~l l WHEREAS, pursuant to a resolution heretofore passed by the City Council, notice of intention to issue the bonds was published in a newspaper of general circulation in the City in accordance with the City's Home-Rule Charter; WHEREAS, the City Council has found and determined that it is necessary and in the best interest of the City and its citizens that it authorize by this Ordinance the issuance and delivery of an amount of bonds in or more series at this time, the proceeds of which will be sufficient to (i) pay costs of issuance of such bonds and (ii) fund the amounts listed in the table above wider "Amount Being Issued" for the related projects; 186821v.l LUB200nl016 ) ) ) ) WHEREAS, the City Council desires to delegate, pursuant to Chapter 1371, Texas Government Code, as amended, and the parameters of this Ordinance, to the Authorized Officer, the authority to approve the amowit, the interest rate, the number of series, the price and terms of the Bonds authorized hereby and to otherwise take such actions as are necessary and appropriate to effect the sale of the Bonds; WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and public notice of the time, place and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Ordinance, the following terms shall have the meanings specified below: "Authorized Officer" means each of the City Manager and the Chief Financial Officer . .. Bond" means any of the Bonds. "Bond Date" means the date designated as the initial date of the Bonds by Section 3.02(a) of this Ordinance. "Bond Purchase Contract" means the bond purchase contract or contracts described in Section 7.0l(b) of this Ordinance. "Bonds" means, collectively, the Series 2010A Bonds and the Taxable Series 2010B Bonds. The word "Bonds" shall be read to mean the Bonds of each Series. "City'' means the City of Lubbock, Texas. "Closing Date" means the date of the initial delivery of and payment for the Bonds. "Code" means the Internal Revenue Code of I 986, as amended, including applicable regulations, published rulings and court decisions. "Designated Paymentffransf er Office" means (i) with respect to the initial Paying Agent/Registrar named in this Ordinance, the Designated Payment/Transfer Office as designated in the Paying Agent/Registrar Agreement, or at such other location designated by the Paying Agent/Registrar and (ii) with respect to any successor Paying Agent/Registrar, the office of such successor designated and located as may be agreed upon by the City and such successor. -2- 186821 v.1 LUB200/71016 ) "DTC" means The Depository Trust Company of New York, New York, or any successor securities depository. "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC 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. "Event of Default" means any event of default as defined in Section 10.01 of this Ordinance. "Federal Subsidy" means the cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the Taxable Series 2010B Bonds designated as and meeting the requirements of"build America bonds" under Section 54AA of the Code, where the City has elected to receive the refundable credit under Section 54AA(g). "Initial Bond" means, with respect to the Series 2010A Bonds, the initial Series 2010A Bond and, with respect to the Taxable Series 2010B Bonds, the initial Taxable Series 2010B Bond, each authorized by Section 3.04 of this Ordinance. "Interest and Sinking Fund" means, with respect to the Series 201 0A Bonds, the "City of Lubbock, Texas, General Obligation Bonds, Series 2010A, Interest and Sinking Fund," and with respect to the Taxable Series 201 OB Bonds, the "City of Lubbock, Texas, General Obligation Bonds, Taxable Series 2010B, Interest and Sinking Fund," in each case established by Section 2.02 of this Ordinance. "Interest Payment Date" means the date or dates on which interest on the Bonds 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 on the date set forth in the Pricing Certificate. "MSRB" means the Municipal Securities Rulemaking Board. "Owner" means the person who is the registered owner of a Bond or Bonds, as shown in the Register. "Paying Agent/Registrar" means initially The Bank of New York Mellon Trust Company, National Association, or any successor thereto as provided in this Ordinance. "Pricing Certificate" means a certificate or certificates to be signed by the Authorized Officer. "Record Date" means the last business day of the month next preceding an Interest Payment Date. "Register" means the Register specified in Section 3.06(a) of this Ordinance. -3 - 18682lv.l LUB200nt016 ) ) ) .... «Representation Letter" means the Blanket Letter of Representations between the City andDTC. "Representative" means the representative for the Underwriters named in the Bond Purchase Contract. "Rule'' means SEC Rule l 5c2-l 2, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "Series" means each series of Bonds. "Series 2010A Bond" means any City of Lubbock, Texas, General Obligation Bonds, Series 2010A, identified in the Pricing Certificate as a Bond, interest on which is excludable from gross income for federal income tax purposes. "Special Record Date" means the Special Record Date prescribed by Section 3.03(b). "Term Bonds" has the meaning set forth in Section 4.04 hereof "Taxable Series 201 OB Bond" means any City of Lubbock, Texas, General Obligation Bond, Taxable Series 2010B (Build America Bonds -Direct Payment), identified in the Pricing Certificate as a Bond, the interest on which is not excludable from gross income for federal income tax purposes. "Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the payment of principal of or interest on the Bonds as the same come due and payable and remaining unclaimed by the Owners of such Bonds after the applicable payment or redemption date. "Underwriters" means the Underwriters named in the Bond Purchase Contract. Section 1.02. Findings. The declarations, determinations and findings declared, made and found in the preamble to this Ordinance are hereby adopted, restated and made a part of the operative provisions hereof. Section 1.03. 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 1.04. Intetpretation. (a) 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 -4- 18682Jv.J LUB200171016 ) ) words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the pwposes set forth herein. ARTICLE II SECURITY FOR THE BONDS; INTEREST AND SINKING FUND Section 2.01. Tax Levy. (a) . Pursuant to the authority granted by the Texas Constitution and the laws of the State of Texas, there shall be levied and there is hereby levied for the current year and for each succeeding year hereafter while any of the Bonds or any interest thereon is outstanding and unpaid, an ad valorern tax on each one hundred 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 Bonds of each Series, being (i) the interest on the Bonds of such Series, and (ii) a sinking fund for their redemption at maturity or a sinking fund of two percent (2%) per annum (whichever amount is greater), when due and payable, full allowance 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 appearing 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 for the related Series of Bonds. (c) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and committed irrevocably to the payment of the principal of and interest on the related Series of Bonds when and as due and payable in accordance with their terms and this Ordinance. ( d) If the lien 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 may pennit, and further deposits to the Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may permit. In determining the aggregate principal amount of outstanding Bonds, there shall be subtracted the amount of any Bonds that have been duly called for redemption and for which money has been deposited with the Paying Agent/Registrar for such redemption. Section 2.02. Interest and Sinking Fund. (a) The City hereby establishes special funds or accounts to be designated the "City of Lubbock, Texas, General Obligation Bonds, Series 2010A, Interest and Sinking Fund" relating to the Series 2010A Bonds and "City of Lubbock, Texas, General Obligation Bonds, Taxable Series 2010B, Interest and Sinking Fund" relating to the Taxable Series 2010B Bonds, or such other designations as are set forth in the Pricing Certificate, said funds to be maintained -5 - l8682lv.1 LUB200nt0!6 i i ) "\ ' ) ', at an official depository bank of the City separate and apart from all other funds and accounts of the City. (b) Money on deposit in or required by this Ordinance to be deposited to the Interest and Sinking Fund shall be used solely for the purpose of paying the interest on and principal of the related Series of Bonds when and as due and payable in accordance with their terms and this Ordinance. (c) The City hereby establishes a special fund or account to be designated the ''Taxable Series 2010B Federal Subsidy Subaccount of the City of Lubbock, Texas, General Obligation Bonds, Taxable Series 2010B, Interest and Sinking Fund" (the "Federal Subsidy Subaccount"), said funds to be maintained as a subaccount of the Interest and Sinking Fund for the Taxable Series 2010B Bonds at an official depository bank of the City separate and apart from all other funds and accounts of the City. Payments of the Federal Subsidy, if, as and when received, will be deposited to the Federal Subsidy Subaccount and shall be used solely for the purpose of paying the interest on and principal of the Taxable Series 2010B Bonds when and as due and payable in accordance with their terms and this Ordinance. For each interest payment on the Taxable Series 2010B Bonds, the City shall first use funds in the Federal Subsidy Subaccount to pay such interest before using any other funds to pay such interest. Any funds left in the Federal Subsidy Subaccount when the Taxable Series 2010B Bonds are paid or defeased shall be transferred to the general fund of the City and used for any lawful purpose thereof. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3.01. Authorization. The City's bonds, to be designated "City of Lubbock, Texas, General Obligation Bonds, Series 2010A" and "City of Lubbock, Texas, General Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct Payment)" or such other designation or designations as set forth in the Pricing Certificate, are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, including specifically Chapters 1331 and 1371, Texas Government Code, as amended, and Article VIII of the Charter of the City. The Authorized Officer is hereby authorized and directed to modify the title of each Series to the extent that, in the judgment of the Authorized Officer, it is necessary or appropriate. The final titles and allocation of principal amount between each Series of Bonds shall be determined by the Authorized Officer based on market conditions in the discretion of the Authorized Officer and set forth in the Pricing Certificate. The Bonds shall be issued in the number of series and aggregate principal amount per series designated in the Pricing Certificate, provided that the aggregate principal amount of all of the Bonds shall not exceed $24,600,000, for the purpose of providing funds for paying the costs of issuing the Bonds and for permanent public improvements, to wit: (i) $5,950,000 for renovations and improvements to the City's civic center/auditorium (2004 election), (ii) $1,895,000 for constructing, renovating, improving and equipping library facilities (2004 election), (iii) $13,605,000 to acquire, construct and reconstruct street improvements, including but not limited to sidewalks, utility line relocation and traffic -6- 18682lv.1 LUB200/71016 ) ) signalization, necessary and related storm drainage facilities and the acquisition of land and rights-of-way therefor (2009 election) and (v) $2,750,000 to construct, acquire and improve firefighting facilities and equipment, including the acquisition of land and interests in land in connection therewith (2009 election). Section 3.02. Date, Denomination, Maturities and Interest. (a) The Bonds shall be dated the date set forth in the Pricing Certificate. The Bonds shall be in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof, and shall be numbered separately from one upward for each Series, except the Initial Bonds, which shall be numbered TA-I for the Series 2010A Bonds and TB-I for the Taxable Series 201 OB Bonds. (b) The Bonds shall mature on February 15 in the years and in the principal amounts set forth in the Pricing Certificate provided that the maximum maturity for the Bonds shall not exceed twenty-five years. (c) Interest shall accrue and be paid on each Bond respectively until its maturity or prior redemption, from the later of the date set forth in the Pricing Certificate for Bonds of such Series or the most recent Interest Payment Date to which interest has been paid or provided for at the rates per annum for each respective maturity specified in the Pricing Certificate. Such interest shall be payable on each Interest Payment Date until maturity or prior redemption. Interest on the Bonds shall be calculated on the basis of a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each. Section 3.03. Medium, Method and Place of Payment. (a) The principal of and interest on the Bonds shall be paid in lawful money of the United States of America. (b) Interest on the Bonds shall be payable to each Owner as shown in the Register at the close of business on the Record Date; provided, however, in the event of nonpayment of interest on a scheduled Interest Payment Date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") shall be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each Owner of a Bond appearing on the Register at the close of business on the last business day next preceding the date of mailing of such notice. (c) Interest shall be paid by check, dated as of the Interest Payment Date, and sent by the Paying Agent/Registrar to each Owner by United States mail, first class postage prepaid, to the address of each Owner as it appears in the Register, or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, the Owner shall bear all risk and expense of such other banking arrangement. At the option of an Owner of at least $1,000,000 principal amom1t of the Bonds, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. - 7 - 186821v.1 LUB200nt016 ) ) ) ( d) The principal of each Bond shall be paid to the Owner thereof on the due date (whether at the maturity date or the date of prior redemption thereof) upon presentation and surrender of such Bond at the Designated Payment/Transfer Office of the Paying Agent/Registrar. (e) If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Swiday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. (f) Unclaimed Payments shall be segregated in a special escrow accowit and held in trust, uninvested by the Paying Agent/Registrar, for the accounts of the Owners of the Bonds to which the Unclaimed Payments pertain. Subject to Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners entitled thereto for three years after the applicable payment or redemption date shall be applied to the next payment or payments on the Bonds thereafter coming due and, to the extent any such money remains three years after the retirement of all outstanding Bonds, shall be paid to the City to be used for any lawful purpose. Thereafter, neither the City, the Paying Agent/Registrar nor any other person shall be liable or responsible to any holders of such Bonds for any further payment of such unclaimed monies or on account of any such Bonds, subject to Title 6 of the Texas Property Code. Section 3.04. Execution and Registration of Bonds. (a) The Bonds 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 Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. (b) In the event that any officer of the City whose manual or facsimile signature appears on the Bonds ceases to be such officer before the authentication of such Bonds or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the fonn provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. It shall not be required that the same officer or authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Bond - 8 - 186821v.l LUB200nI016 ) ) delivered at the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided herein, manually 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 Bond has been duly approved by the Attorney General of the State of Texas, that it is a valid and binding obligation of the City and that it has been registered by the Comptroller of Public Accounts of the State of Texas. ( d) On the Closing Date, one Initial Bond of each Series representing the entire principal amount of all Bonds of such Series and the terms set forth in the Pricing Certificate, payable in stated installments to the Representative, or its designee, executed by the Mayor and City Secretary of the City by their manual or facsimile signatures, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, will be delivered to the Representative or its designee. Upon payment for the Initial Bond, the Paying Agent/Registrar shall cancel the Initial Bond and deliver a single registered, definitive Bond for each maturity, in the aggregate principal amount thereof, to OTC on behalf of the Underwriters. Section 3.05. Ownership. (a) The City, the Paying Agent/Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment as provided herein ( except interest shall be paid to the person in whose name such Bond is registered on the Record Date or Special Record Date, as applicable), and for all other purposes, whether or not such Bond 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 Owner of a Bond shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Bond to the extent of the sums paid. Section 3.06. Registration, Transfer and Exchange. ( a) So long as any Bonds remain outstanding, the City shall cause the Paying Agent/Registrar to keep at the Designated Paymentff ransfer Office a register (the "Register") in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Bonds in accordance with this Ordinance. (b) The ownership of a Bond may be transferred only upon the presentation and surrender of the Bond at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar. No transfer of any Bond shall be effective until entered in the Register. (c) The Bonds shall be exchangeable upon the presentation and surrender thereof at the Designated Paymentffransfer Office of the Paying Agent/Registrar for a Bond or Bonds of the same maturity and interest rate and in any denomination or denominations of any integral multiple of $5,000 and in an aggregate principal amount equal to the unpaid principal amount of the Bonds presented for exchange. The Paying Agent/Registrar is hereby authorized to authenticate and deliver Bonds exchanged for other Bonds in accordance with this Section. -9- 18682lv.1 LUB200nt0l6 ) ) ) ( d) Each exchange Bond delivered by the Paying Agent/ Registrar in accordance with this Section shall constitute an original contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such exchange Bond is delivered. (e) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for any different denomination of any of the Bonds. Toe Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer or exchange of a Bond. (f) Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer, or exchange any Bond called for redemption, in whole or in part, where such redemption is scheduled to occur within forty five ( 45) calendar days after the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Bond. Section 3.07. Cancellation. All Bonds paid or redeemed before scheduled maturity in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance with this Ordinance, shall be cancelled and proper records shall be made regarding such payment, redemption, exchange or replacement. The Paying Agent/Registrar shall then return such cancelled Bonds to the City or may in accordance with law destroy such cancelled Bonds and periodically furnish the City with certificates of destruction of such Bonds. Section 3.08. Temporary Bonds. (a) Following the delivery and registration of the Initial Bond and pending the preparation of definitive Bonds, the proper officers of the City may execute and, upon the City's request, the Paying Agent/Registrar shall authenticate and deliver, one or more temporary Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are delivered, without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers of the City executing such temporary Bonds may determine, as evidenced by their signing of such temporary Bonds. {b) Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The City, without W1Teasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar the Bonds in definitive form; thereupon, upon the presentation and surrender of the Bonds in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Bonds in temporary form and shall authenticate and deliver in exchange therefor Bonds of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Bonds in temporary form -10- 18682lv.l LUB200nt016 1 ) ) ) ) surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.09. Replacement Bonds. ( a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying Agent/Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Bond is lost, apparently destroyed or wrongfully taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner first: (i) :furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Bond; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar to save it and the City harmless; (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking 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 Paying Agent/Registrar in connection therewith. ( d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Bond, may pay such Bond if it has become due and payable or may pay such Bond when it becomes due and payable. (e) Each replacement Bond 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 Bond or Bonds in lieu of which such replacement Bond is delivered. -11 - 186821 v.1 LUB200nt016 ) ) ; Section 3 .10. Book Entry Only System. Notwithstanding any other provision hereof, upon initial issuance of the Bonds, the ownership of the Bonds shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Bonds shall be initially issued in the fonn of a single separate fully registered certificate for each of the maturities thereof. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any OTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than an Owner, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than a Bondholder, as shown in the Register of any amount with respect to principal of or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Register as the absolute owner of such Bond for the purpose of payment of principal of and interest on such Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfer with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bonds 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 in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Register, shall receive a certificate evidencing the obligation of the City to make payments of amounts due pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has detennined to substitute a new nominee in place of Cede & Co., the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. The Representation Letter previously executed and delivered by the City, and applicable to the City's obligations delivered in book-entry-only fonn to DTC as securities depository is hereby ratified and approved for the Bonds. Section 3.11. Successor Securities De_pository; Transfer Outside Book Entry Only System. In the event that the City or the Paying Agent/Registrar detennines that DTC is incapable of discharging its responsibilities described herein and in the Representations Letter of the City to DTC, or in the event DTC discontinues the services described herein, the City or the Paying Agent/Registrar shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify OTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants -12 - 186821v.l LUB200n1016 ) ' of the availability through DTC of Bonds and transfer one or more separate Bonds to OTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but maybe registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Ordinance. Section 3.12. Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bonds are registered in the name of Cede & Co., as nominee ofDTC, all payments with respect to principal of and interest on such Bonds, and all notices with respect to such Bonds, shall be made and giv~ respectively, in the manner provided in the Representation Letter. ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.01. Limitation on Redemption. The Bonds shall be subject to redemption before scheduled maturity only as provided in this Article IV. Section 4.02. Optional Redemption. (a) The City reserves the option to redeem Bonds in the manner provided in the Form of Bond set forth in Section 6.02 of this Ordinance with such changes as are required by the Pricing Certificate. (b) If less than all of the Bonds are to be redeemed pursuant to an optional redemption, the City shall determine the series and maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the Bonds, or portions thereof, within such series and maturity or maturities and in such principal amounts for redemption. (c) The City, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Bonds to be redeemed. Section 4.03. Extraordinary Redemption of Taxable Series 2010B Bonds. The Taxable Series 2010B Bonds are subject to extraordinary redemption prior to their respective maturities, at the option of the City, as provided in the Form of Taxable Series 2010B Bond set forth in Section 6. 02 of this Ordinance with such changes as are required by the Pricing Certificate. -13 - I8682Iv.1 LUB200n1016 ) i ) ) Section 4.04. Mandatory Sinking Fund Redemption. (a) Bonds designated as "Term Bonds," if any, in the Pricing Certificate are subject to scheduled mandatory redemption and will be redeemed by the City, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth in the Pricing Certificate. (b) At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Term Bonds equal to the aggregate principal amount of such Term Bonds to be redeemed, shall call such Tenn Bonds for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.06. The principal amount of the Term Bonds required to be redeemed on any redemption-date pursuant to subparagraph (a) of this Section 4.04 shall be reduced, at the option of the City, by the principal amount of any Term Bonds which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Section 4.05. Partial Redemption. (a) A portion of a single Bond of a denomination greater than $5,000 may be redeemed, but only in a principal amount equal to $5,000 or any integral multiple thereof. If such a Bond is to be partially redeemed, the Paying Agent/Registrar shall treat each $5,000 portion of the Bond as though it were a single Bond for purposes of selection for redemption. (b) Upon surrender of any Bond for redemption in part, the Paying Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and deliver an exchange Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered, such exchange being without charge. (c) The Paying Agent/Registrar shall promptly notify the City in writing of the principal amount to be redeemed of any Bond as to which only a portion thereof is to be redeemed. Section 4.06. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of Bonds by sending notice by United States mail, first class postage prepaid, not less than thirty (30) days before the date fixed for redemption, to the Owner of each Bond ( or part thereof) to be redeemed, at the address shown on the Register at the close of business on the business day next preceding the date of mailing such notice. -14- 18682lv.1 LUB2O0171O16 "\ ) ) (b) The notice shall state the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed. (c) The City reserves the right to give notice of its election or direction to redeem Bonds under Section 4.02 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected Owners. Any Bonds subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. (d) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Section 4.07. Payment Upon Redemption. (a) Before or on each redemption date, the City shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/Registrar shall make provision for the payment of the Bonds to be redeemed on such date by setting aside and holding in trust such amounts as are 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 Bonds being redeemed. (b) Upon presentation and surrender of any Bond 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 accrued interest on such Bond to the date of redemption from the money set aside for such purpose. Section 4.08. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.06 of this Ordinance and subject to any conditions or rights reserved by the City under Section 4.06(c), the Bonds or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, unless the City defaults in its obligation to make provision for the payment of the principal thereof, or accrued interest thereon, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. -15 - 18682Iv.l LUB200nl016 ) (b) If the City shall fail to make provision for payment of all sums due on a redemption date, then any Bond or portion thereof called for redemption shall continue to bear interest at the rate stated on the Bond until due provision is made for the payment of same by the City. Section 4.09. Lapse of Payment. Money set aside for the redemption of Bonds and remaining unclaimed by the Owners of such Bonds shall be subject to the provisions of Section 3.03(f) hereof. ARTICLEV PAYING AGENT/REGISTRAR Section 5.01. A12pointment of Initial Paying Agent/Registrar. The Bank of New York Mellon Trust Company, National Association, is hereby appointed as the initial Paying Agent/Registrar for the Bonds. Section 5.02. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or any other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Bonds. Section 5.03. Maintaining Paying Agent/Registrar. (a) At all times while any Bonds are outstanding, the City will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor is hereby authorized and directed to execute an agreement with the Paying Agent!Registrar specifying the duties and responsibilities of the City and the Paying Agent/Registrar. The signature of the Mayor shall be attested by the City Secretary of the City. The form of the Paying Agent/Registrar Agreement presented at this meeting is hereby approved with such changes as may be approved by bond counsel to the City. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the City will promptly appoint a replacement. Section 5.04. Termination. The City, upon not less than sixty ( 60) days notice, reserves the right to terminate the appointment of any Paying Agent/ Registrar by delivering to the entity whose appointment is to be terminated written notice of such termination. Section 5.05. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will cause notice of the change to be sent to each Owner by United States mail, first class postage -16 - 186821v.1 LUB200nI0l6 prepaid, at the address in the Register thereof, stating the effective date of the change and the name and mailing address of the replacement Paying Agent/Registrar. Section 5.06. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar and executing the Paying Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed thereby. Section 5.07. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Bonds to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE BONDS Section 6.01. Form Generally. (a) The Bonds, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment form to appear on each of the Bonds, (i) shall be generally in the form set forth in this Article, with such appropriate insertions, omissions, substitutions, and other variations as are pennitted or required by this Ordinance and the Pricing Certificate, and (ii) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the City or by the officers executing such Bonds, as evidenced by their execution thereof. (b) Any portion of the text of any Bonds may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Bonds. (c) The definitive Bonds shall be typewritten, photocopied, printed, lithographed, or engraved, and may be produced by any combination of these methods or produced in any other similar manner, all as determined by the officers executing such Bonds, as evidenced by their execution thereof. ( d) The Initial Bond of each Series submitted to the Attorney General of the State of Texas may be typewritten and photocopied or otherwise reproduced. Section 6.02. Form of the Bonds. The form of the Bond, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the fonn of Certificate of the Paying -17 - 186821v.l LUB200m0I6 '\ ) Agent/ Registrar and the form of Assignment appearing on the Bonds, shall be generally as follows, provided, however, that the substantially final fonn of the Bonds shall be set forth in or attached to the Pricing Certificate and shall incorporate and reflect the final terms of the Bonds set forth in the Pricing Certificate: -18 - 186821 v. I LUB200/71016 ) (a) Fonn of Series 2010A Bond. REGISTERED No. __ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BOND SERIES 20 I OA INTEREST RATE: MATURITY DATE: BOND DATE: % -- 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 registered assigns, on the Maturity Date specified above, the sum of _________ DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Bond Date specified above or the most recent interest payment date to which 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 three hundred sixty (360) day year of twelve (12) thirty (30) day months, such interest to be paid semiannually on February 15 and August 15 of each year, commencing ____ 2• All capitalized tenns used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in Dallas, Texas (the "Designated Paymentffransfer Office") of The Bank of New York Mellon Trust Company, National Association, as Paying Agent/Registrar or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office thereof. Interest on this Bond 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expense of such other banking 1 lnfonnation to be inserted from Pricing Certificate. 2 Infonnation to be inserted from Pricing Certificate. 186821v.1 LUB200nt016 -19 - arrangement. At the option of an Owner of at least $1,000,000 principal amowit of the Bonds, interest may be paid by wire transfer to the bank accowit of such Owner on file with the Paying Agent/Registrar. For the purpose of the payment of interest on this Bond, the registered owner shall be the person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the last business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment ( a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each owner of a Bond appearing in the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Bond shall be a Saturday, Swiday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day which 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. This Bond is one of a series of fully registered bonds specified in the title hereof issued in the aggregate principal amount of $ _____ 3 (herein referred to as the "Bonds"), issued pursuant to a certain ordinance of the City (the "Ordinance") for the purpose of providing funds with which to make various pennanent public improvements for the City and to pay costs of issuance. [The Bonds are being issued concurrently with the City's General Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct Payment), in the aggregate principal amount of$ ___ ...., which are also being issued pursuant to the Ordinance for the purpose of payinf providing funds with which to make various pennanent public improvements for the City.] [The City has reserved the option to redeem the Bonds maturing on or after February 15, ___ before their respective scheduled maturities in whole or in part in integral multiples of $5,000 on February 15, __, or on any date thereafter, at a redemption price of par, plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection of the Bonds, or portions thereof, within such maturity or maturities and in such principal amowits, for redemption. ]5 3 Information to be inserted from Pricing Certificate. 4 Revise or delete as necessary to conform to the Pricing Certificate. 5 Insert optional redemption provisions, if any, and revise as necessary to confonn to the Pricing Certificate. -20- 186821v.l LUB200nI016 [Bonds maturing on February 15 in each of the years __ through_, inclusive (the "Term Bonds"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date Principal Amount The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Term Bonds ( or with respect to Term Bonds having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Term Bonds required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Bonds which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation., or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than thirty (30) days before the date fixed for redemption, to the registered owner of each of the Bonds to be redeemed in whole or in part. In the Ordinance, 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Bonds subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. J6 As provided in the Ordinance, and subject to certain limitations therein set forth, this Bond is transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is 6 Insert mandatory sinking fund redemption provisions, if any, and conform as necessary to the Pricing Certificate. -21 - 186821 v. I LUB200nt016 ) ) acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Bonds of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within forty five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Bond is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not this Bond 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 Bond and the series of which it is a part is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and 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 Bonds, within the limit prescribed by law; and that the total indebtedness of the City, including the Bonds, does not exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, the City has caused this Bond 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 Bond. City Secretary, City of Lubbock, Texas [SEAL] 18682lv.l LUB200171016 Mayor, City of Lubbock, Texas -22- .., (b) Form of Taxable Series 2010B Bond. REGISTERED No. __ United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BOND REGISTERED $. __ _ TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PA YMENI) INTEREST RATE: MATURITY DATE: CLOSING DATE: BOND DATE: CUSIP NUMBER: __ % 7 8 The City of Lubbock (the "City"), in the County of Lubbock, State of Texas, for value received, hereby promises to pay to or registered assigns, on the Maturity Date specified above, the sum of ________ DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the ______ 9 specified above or the most recent interest payment date to which 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 speci fled above, computed on the basis of a three hundred sixty (360) day year of twelve (12) thirty (30) day months, such interest to be paid semiannually on February 15 and August 15 of each year, commencing ____ 10• All capitalized tenns used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in Dallas, Texas (the "Designated Paymentffransfer Office") of Toe Bank of New York Mellon Trust Company, National Association, as Paying Agent/Registrar or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office thereof. Interest on this Bond 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking 7 Information to be inserted from Pricing Certificate. 8 Information to be inserted from Pricing Certificate. 9 Insert Closing Date or Bond Date or such other information as is necessary to conform to the Pricing Certificate. 10 Information to be inserted from Pricing Certificate. -23 - 186821v.1 LUB200nt016 arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expense of such other banking arrangement. At the option ofan Owner of at least $1,000,000 principal amount of the Bonds, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. For the purpose of the payment of interest on this Bond, the registered owner shall be the person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the last business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the .. Special Payment Date," which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by first-class United States mail, postage prepaid, to the address of each owner of a Bond appearing in the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day which 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. This Bond is one of a series of fully registered bonds specified in the title hereof issued in the aggregate principal amount of $ _____ 11 (herein referred to as the "Bonds"), issued pursuant to a certain ordinance of the City ( the "Ordinance") for the purpose of providing funds with which to make various permanent public improvements for the City. [The Bonds are being issued concurrently with the City's General Obligation Bonds, Series 2010A, in the aggregate principal amount of $ ___ ....., which are also being issued pursuant to the Ordinance for the purpose of parng providing funds with which to make various permanent public improvements for the City.]1 [The City has reserved the option to redeem the Bonds maturing on or after February 15, ___ before their respective scheduled maturities in whole or in part in integral multiples of $5,000 on February 15,___, or on any date thereafter, at a redemption price of par, plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the maturity or maturities and the amounts thereof to be redeemed. and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a 11 Information to be inserted from Pricing Certificate. 12 Revise or delete as necessary to confonn to the Pricing Certificate. -24- 186821v.1 LUB200n1016 random selection of the Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption.]13 [Bonds maturing on February 15 in each of the years __ through_, inclusive (the "Term Bonds"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date Principal Amount The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Term Bonds (or with respect to Term Bonds having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Term Bonds required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Bonds which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption.] 14 [The Bonds are also subject to extraordinary redemption prior to their respective maturities, at the option of the City, upon the occurrence of an Extraordinary Event (hereinafter defined) from any source of available funds, in whole or in part, by lot, at the Make-Whole Redemption Price (hereinafter defined). "Extraordinary Event" means a change to Sections 54AA or 6431 of the Code (as such Sections were added by Section 1531 of the "American Recovery and Reinvestment Act of 2009," pertaining to "Build America Bonds") or any other action taken by the United States Congress or federal government, the effect of which causes the Federal Subsidy applicable to the Taxable Series 2010A Bonds to be reduced or eliminated. "Make-Whole Redemption Price" means the amount equal to the greater of the following: (i) the issue price of the Bonds (but not less than 100%) of the principal amount of the Bonds to be redeemed; or (ii) the sum of the present value of the remaining scheduled payments of principal and interest on the Bonds to be redeemed to the maturity date of such Bonds, not including any portion of those payments of interest accrued and unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the Bonds are to be redeemed on a semi-annual basis, asswning a 360-day year containing twelve 30-day months, at the Treasury Rate (hereinafter defined), plus 100 basis points, plus in each case accrued interest on the Bonds to be redeemed to the redemption date. "Treasury Rate" means, with respect to any redemption date for a particular Bond, the yield to maturity as of such redemption date of United States Treasury 13 Insert optional redemption provisions, if any, and revise as necessary to conform to the Pricing Certificate. 14 Insert mandatory sinking fund redemption provisions, if any, and conform as necessary to the Pricing Certificate. -25 - 186821v.l LUB200nt016 ) 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 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 the maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than thirty (30) days before the date fixed for redemption, to the registered owner of each of the Bonds to be redeemed in whole or in part. In the Ordinance, 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Bonds subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default.] 15 As provided in the Ordinance, and subject to certain limitations therein set forth, this Bond is transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Bonds of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within forty five ( 45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Bond is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not 15 Revise or delete as necessary to conform to the Pricing Certificate. -26- 186821 v.1 LUB200/710I6 ) this Bond 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 Bond and the series of which it is a part is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and 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 Bonds, within the limit prescribed by law; and that the total indebtedness of the City, including the Bonds, does not exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, the City has caused this Bond 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 Bond. City Secretary, City of Lubbock, Texas [SEAL] Mayor, City of Lubbock, Texas (c) Form of Comptroller's Registration Certificate. The following Comptroller's Registration Certificate may be deleted from the definitive Bonds if such certificate on the Initial Bond is fully executed. OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS § § § REGISTER NO. ___ _ I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas, and that this Bond has this day been registered by me. Witness my hand and seal of office at Austin, Texas, ________ . [SEAL] 186821 v .1 LUB200nJ O I 6 -27- Comptroller of Public Accounts of the State of Texas (d) Form of Certificate of Paying Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Bond if the Comptroller's Registration ) Certificate appears thereon. ) CERTIFICATE OF PAYING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Bond of this series of Bonds was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Bonds referred to in the within mentioned Ordinance. Dated: 186821v.l LUB200n1016 The Bank ofNew York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory -28- (e) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and Zip Code of transferee): (Social Security or other identifying number: -------~ the within Bond and all rights hereunder and hereby irrevocably constitutes and appoints _______ _ attorney to transfer the within Bond on the books kept for registration hereof, with full power of substitution in the premises. Dated: ___________ _ Signature Guaranteed By: Authorized Signatory NOTICE: The signature on this Assignment must correspond with the name of the registered owner as it appears on the face of the within Bond in every particular and must be guaranteed in a manner acceptable to the Paying Agent/Registrar. (f) The Initial Bond of each Series shall be in the form set forth in paragraphs (a), (b), (c) and (e) of this Section, except for the following alterations: (i) immediately under the name of the Bond, the headings "INTEREST RA TE" and "MATURITY DATE" shall both be completed with the words "As shown below"; and (ii) in the first paragraph of the Bond, 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 in accordance with the following schedule: Principal Installments Interest Rate (Information to be inserted from the Pricing Certificate pursuant to Section 3.02 of this Ordinance) Section 6.03. CUSIP Registration. The City may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's, A Division of the McGraw-Hill Companies, New York, New York, and may authorize the printing of such numbers on the face of the Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor the attorneys approving said Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. -29- 186821 v.1 LUB200/71016 ) ) ) ) ) ) ) "\ Section 6.04. Legal Opinion. The approving legal opinion of Vinson & Elkins L.L.P., Bond Counsel, may be attached to or printed on the reverse side of each Bond over the certification of the City Secretary of the City, which maybe executed in facsimile. Section 6.05. Statement oflnsurance. A statement relating to a municipal bond insurance policy, if any, to be issued for the Bonds may be printed on or attached to each Bond. ARTICLE VII SALE AND DELIVERY OF BONDS; DEPOSIT OF PROCEEDS Section 7.01. Sale of Bonds: Official Statement. (a) The Bonds shall be sold at negotiated sale to the Underwriters in accordance with the terms of this Ordinance, including this Section 7.0l(a) and Exhibit B hereto, provided that all of the conditions set forth in Exhibit B can be satisfied. As authorized by Chapters 1371, Texas Government Code, as amended, the Authorized Officer is authorized to act on behalf of the City upon detennining that the conditions set forth in Exhibit B can be satisfied, in selling and delivering the Bonds and carrying out the other procedures specified in this Ordinance, including detennining whether to acquire bond insurance for the Bonds, the aggregate principal amount of the Bonds and price at which each of the Bonds will be sold, the designation of series of Bonds to be issued, the aggregate principal amount of the Bonds of each Series, if any, the fonn in which the Bonds shall be issued, the years in which the Bonds will mature, the principal amount to mature in each of such years, the rate of interest to be borne by each such maturity, the first interest payment date, the initial date from which interest will accrue, the dates, prices and terms upon and at which the Bonds shall be subject to redemption prior to maturity at the option of the City and shall be subject to mandatory sinking fund redemption, and all other matters relating to the issuance, sale and delivery of the Bonds, all of which shall be specified in the Pricing Certificate. In addition to any other authority provided under this Ordinance, the Authorized Officer is hereby further expressly authorized, in connection with the sale of the Taxable Series 201 OB Bonds, to make appropriate irrevocable elections under Section 54(AA) or Section 6431 of the Code, to designate the Taxable Series 2010B Bonds as "build America bonds" ("Build America Bonds") to the extent such Taxable Series 201 OB Bonds are eligible for such designation and the Authorized Officer determines that such designation is beneficial to the City. In furtherance thereof, the Authorized Officer is hereby expressly authorized and empowered to take all actions necessary to obtain any moneys from the Federal government that may be available to the City if any Taxable Series 2010B Bonds are designated as Build America Bonds. The Authorized Officer is hereby further expressly authorized and empowered from time to time and at any time to perform all such acts and things deemed necessary or desirable and to execute and deliver any agreements, certificates, documents or other instruments, whether or not herein mentioned, to -30- 186821 v.1 LUB200nl016 ) ) ) ) ) carry out the terms and provisions of this section, including but not limited to, the preparation and making of any filings with the Internal Revenue Service The authority granted to the Authorized Officer under this Section 7.0l(a) shall expire at 5:00 p.m., June 16, 2010, unless otherwise extended by the City Council by separate action. Any finding or determination made by the Authorized Officer relating to the issuance and sale of the Bonds and the execution of the Bond Purchase Contract in connection therewith shall have the same force and effect as a finding or determination made by the City Council. (b) The Authorized Officer is hereby authorized and directed to execute and deliver, and the City Secretary is hereby authorized and directed to attest, one or more bond purchase contracts (collectively, the "Bond Purchase Contract") which shall be in the form approved by the Authorized Officer. Upon completion of the terms of the Bond Purchase Contract in accordance with the terms of the Pricing Certificate and this Ordinance, the Authorized Officer is authorized and directed to execute such Bond Purchase Contract on behalf of the City and the Authorized Officer and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Bonds. The Bonds shall initially be registered in the name of the Representative. (c) The fonn and substance of the Preliminary Official Statement and any addenda, supplement or amendment thereto, are hereby in all respects approved and adopted and is hereby deemed final as of its date within the meaning and for the purposes of paragraph (b )(1) of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. The Authorized Officer and City Secretary are hereby authorized and directed to cause to be prepared a final Official Statement (the "Official Statement") incorporating applicable pricing information pertaining to the Bonds, and to execute the same by manual or facsimile signature and deliver appropriate nwnbers of executed copies thereof to the Underwriters. The Official Statement as thus approved, executed and delivered, with such appropriate variations as shall be approved by the Authorized Officer and the Underwriters, may be used by the Underwriters in the public offering and sale thereof. The City Secretary is hereby authorized and directed to include and maintain a copy of the Official Statement and any addenda, supplement or amendment thereto thus approved among the permanent records of this meeting. The use and distribution of the Preliminary Official Statement, and the preliminary public offering of the Bonds by the Underwriters, is hereby ratified, approved and confinned. ( d) 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 Bonds in accordance with the terms of sale therefor including, without limitation, the Purchase Contract. (e) The obligation of the Underwriters identified in subsection (a) of this Section to accept delivery of the Bonds is subject to the Underwriters 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. -31 - 186821 v. I LUB200nl016 .., ) ) Section 7.02. Control and Delivery of Bonds. (a) The Authorized Officer of the City is hereby authorized to have control of the Initial Bond 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 Comptroller of Public Accounts of the State of Texas and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Bonds shall be made to the Underwriters thereof under and subject to the general supervision and direction of the Authorized Officer, against receipt by the City of all amounts due to the City under the terms of sale. (c) In the event the Mayor or City Secretary is absent or otherwise unable to execute any document or take any action authorized herein, the Mayor Pro Tern and the Assistant City Secretary, respectively, shall be authorized to execute such documents and take such actions, and the performance of such duties by the Mayor Pro Tern and the Assistant City Secretary shall for the purposes of this Ordinance have the same force and effect as if such duties were performed by the Mayor and City Secretary, respectively. Section 7.03. De,Posit of Proceeds. (a) First: All amounts received on the Closing Date as accrued interest on the Bonds from the Bond Date to the Closing Date shall be deposited to the Interest and Sinking Fund for the related Series. (b) Second: The remaining balance received on the Closing Date shall be deposited to special accounts of the City, as set forth in the Pricing Certificate, such moneys to be dedicated and used solely for the additional purposes for which the Bonds are being issued as herein provided. ARTICLE VIII INVESTMENTS Section 8.01. Investments. (a) Money in the Interest and Sinking Fund created by this Ordinance and accounts provided for in Section 7.03(c), at the City's option, may be invested in such securities or obligations as permitted under appli(?able law. The City's Chief Financial Officer, and any other officer of the City authorized to make investments on behalf of the City, are hereby authorized and directed to execute and deliver, on behalf of the City, any and all investment agreements, guaranteed investment contracts or repurchase agreements in connection with the investment of moneys on deposit in the Interest and Sinking Fund and the accounts provided for in Section 7.03(c), but only to the extent such investment agreements, guaranteed investment contracts or repurchase agreements are authorized investments under applicable law. -32 - 186821 v .I LUB200nI O 16 ) ) ) ) ) (b) Any securities or obligations in which money in the Interest and Sinking Fund is so invested shall be kept and held in trust for the benefit Qf the Owners of the related Series and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.02. Investment Income. ( a) Interest and income derived from investment of the Interest and Sinking Fund shall be credited to such fund. (b) Interest and income derived from the investment of the funds deposited pursuant to Section 7.03(c) hereof shall be credited to the fund or account where deposited until the construction of the projects for which the Bonds are issued is completed or shall be transferred to the Interest and Sinking Fund for the related Series as shall be determined by the City Council. Upon completion of the projects, to the extent such interest and income are present, such interest and income shall be deposited to the Interest and Sinking Fund for the related Series. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Bonds. On or before each Interest Payment Date and while any of the Bonds are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund for the related Series, money sufficient to pay such interest on and principal of the Bonds as will accrue or mature on the applicable Interest Payment Date or date of prior redemption. Section 9.02. Other Representations and Covenants. (a) The City will faithfully perfonn at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance; the City will promptly pay or cause to be paid the principal of and interest on each Bond on the dates and at the places and manner prescribed in such Bond; 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. (b) The City is duly authorized under the laws of the State of Texas to issue the Bonds; all action on its part for the creation and issuance of the Bonds has been duly and effectively taken; and the Bonds in the hands of the Owners thereof are and will be valid and enforceable obligations of the City in accordance with their tenns. Section 9.03. Provisions Concerning Federal Income Tax Exclusion of Series 2010A Bonds. The City intends that the interest on the Series 2010A Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the applicable -33 - 18682lv.l LUB200nt016 ) ) ) ) ) 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 if taken or omitted, respectively, would cause the interest on the Series 201 OA Bonds 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 comply with each requirement of Sections 9.03 through 9.09 of this Article IX; provided, however, that the City shall not be required to comply with any particular requirement of Sections 9.03 through 9.09 of this Article IX if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Series 2010A Bonds or.if the City has received a Counsel's Opinion to the effect that compliance with some other·requirement set forth in this Article IX will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in Sections 9.03 through 9.09 of this Article IX. Section 9.04. No Private Use or Payment and No Private Loan Financing. The City shall certify, through an authorized officer, employee or agent, that, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 2010A Bonds are delivered, and that the proceeds of the Series 2010A Bonds will not be used in a manner that would cause the Series 201 OA Bonds to be ''private activity bonds" within the meaning of section 141 of the Code and the Regulations. The City covenants and agrees that it will make such use of the proceeds of the Series 2010A Bonds, including interest or other investment income derived from Series 201 OA Bond proceeds, regulate the use of property financed, directly or indirectly, with such proceeds, and talce such other and further action as may be required so that the Series 2010A Bonds will not be "private activity bonds" within the meaning of section 141 of the Code and the Regulations. Section 9.05. No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Series 2010A Bonds to be "federally guaranteed" within the meaning of section l 49(b) of the Code and the Regulations, except as permitted by section 149(b)(3) of the Code and the Regulations. Section 9.06. Series 2010A Bonds are not Hedge Bonds. The City covenants and agrees not to talce any action, or knowingly omit to take any action, and has not knowingly omitted and will not knowingly omit to take any action, within its control, that, if taken or omitted, respectively, would cause the Series 2010A Bonds to be ''hedge bonds" within the meaning of section l 49(g) of the Code and the Regulations. Section 9.07. No Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that, based upon all facts and estimates known or reasonably expected to be in existence on the date the Series 2010A Bonds are delivered, the City will reasonably expect that the proceeds of the Series 2010A Bonds will not be used in a manner that would cause the Series 2010A Bonds to be -34 - l8682lv.1 LUB200nl0l6 ) ) \ "arbitrage bonds" within the meaning of section 148(a) of the Code and the Regulations. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Series 2010A Bonds including interest or other investment income derived from Series 2010A Bond proceeds, regulate investments of proceeds of the Series 201 0A Bonds, and take such other and further action as may be required so that the Series 2010A Bonds will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and the Regulations. Section 9.08. Arbitrage Rebate. If the City does not qualify for an exception to the requirements of Section 148( f) of the Code, the City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Series 201 0A Bonds (within the meaning of section 148(f)(6)(B) 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 Series 2010A Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Series 20 I 0A Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by the Regulations, the amount earned from the investment of the gross proceeds of the Series 2010A Bonds which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Series 2010A Bonds or on such other dates as may be permitted under the Regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant 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 Series 2010A Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. Section 9.09. Information Re.porting. 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 after the close of the calendar quarter in which the Series 20 I 0A Bonds are issued, an information statement concerning the Series 2010A Bonds, all under and in accordance with section 149(e) of the Code and the Regulations. Section 9.10. Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of Sections 9.03 through 9.09 of this Article IX shall survive the defeasance and discharge of the Series 2010A Bonds. -35 - J8682lv.l LUB200nl016 ) ) ) "\ ARTICLEX DEFAULT AND REMEDIES Section 10.01. Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Bonds when the same becomes due and payable; or (ii) default in the performance 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 to the City. Section 10.02. Remedies for Default. ( a) Upon the happening of any Event of Default, then any Owner or an authorized representative thereof, including but not limited to, a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights of the Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Bonds then outstanding. Section 10.03. Remedies Not Exclusive. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. -36- 18682lv.1 LUB200nl016 ) ) ) } ) ) '\ Section 11.01. Discharge. ARTICLE XI DISCHARGE The Bonds may be defeased, discharged or refunded m any manner permitted by applicable law. ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.01. Annual Reports. (a) The City shall provide annually to the MSRB, within six (6) months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement, being the information described in Exhibit A hereto. Any financial statements so to be provided shall be (i) prepared in accordance with the accowiting principles described in Exhibit A hereto, and (ii) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided and (iii) submitted through EMMA, in an electronic format with accompany identifying information, as prescribed by the MSRB. If the audit of such financial statements is not complete within such period, then the City shall provide notice that audited financial statements are not available and shall provide unaudited financial statements for the applicable fiscal year to the MSRB. The City shall provide audited financial 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 will notify the MSRB of the change ( and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. (c) The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific referenced to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to the MSRB of filed with the SEC. Section 12.02. Material Event Notices. (a) The City shall notify the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: (i) principal and interest payment delinquencies; (ii) nonpayment related defaults; -37 - 18682lv.l LUB200n1016 ) ) ' ) ) (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; Bonds; and (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adv~e tax opinions or events affecting the tax exempt status of the (vii) modifications to rights of Owners; (viii) redemption calls; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; (xi) rating changes. The City will provide notice of such events to the MSRB in an electronic format and accompanied by identifying information, 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 12.01 of this Ordinance by the time required by such Section. Section 12.03. Limitations. Disclaimers and Amendments. (a) The City shall be obligated to observe and perform the covenants specified in this Article for so long as, but only for so long as, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give notice of any Bond calls and any defeasances that cause the City to be no longer an "obligated person." (b) The provisions of this Article are for the sole benefit of the Owners and beneficial owners of the Bonds, and nothing in this Article, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Article and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any infonnation provided in accordance with this Article or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. -38 - 18682lv.1 LUB200nt016 '\ ) ) ) ) UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS 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. (c) No default by the City in observing or performing its obligations under this Article shall constitute a breach of or default under the Ordinance for purposes 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 to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (i) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, talcing into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (A) the Owners of a majority in aggregate principal amount ( or any greater amount required by any other provisions of this Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (B) an entity or individual person that is unaffiliated with the City (such as nationally recognized bond counsel) detennines that such amendment will not materially impair the interests of the Owners and beneficial owners of the Bonds. If the City so amends the provisions of this Article, it shall include with any amended financial information or operating data next provided in accordance with Section 12.01 an 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 provided. ARTICLE XIII AMENDMENTS; ATTORNEY GENERAL MODIFICATION Section 13.01. 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 Bond remains outstanding except as pennitted in this Section. The City may, 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, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent of the Owners of the Bonds holding a majority in aggregate principal amount of the Bonds then outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Owners of outstanding Bonds, no such amendment, addition, or rescission shall (i) extend the time or times -39- 186821 v. I LUB200/71016 ") ') of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, or interest on the Bonds, (ii) give any preference to any Bond over any other Bond, or (iii) reduce the aggregate principal amount of Bonds required to be held by Owners for consent to any such amendment, addition, or rescission. Section 13.02. Attorney General Modification. In order to obtain the approval of the Bonds by the Attorney General of the State 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 Bonds 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. ARTICLE XIV EFFECTIVE IMMEDIATELY Section 14.01. Effective Immediately. Notwithstanding the provisions of the City Charter, this Ordinance shall become effective immediately upon its adoption at this meeting pursuant to Section 1201.028, Texas Government Code. -40- 186821 v. I LUB20OnlO16 ) ) ) ) PRESENTED, FINALLY PASSED AND APPROVED, AND EFFECTIVE on the 16th day of December, 2009, at a regular meeting of the City Council of the City of Lubbock, Texas. TOM MARTIN, Mayor ATTEST: [SEAL] APPROVED AS TO CONTENT: By: ~£ ~bc-:? DY ~CHAM, Chief Financial Officer APPROVED AS TO FORM: By: Signature Page for Ordinance ) ) .... EXHIBIT A DESCRIPTION OF ANNUAL DISCLOSURE OF F1NANCIAL INFORMATION The following information is referred to in Article XII of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or other headings of the Official Statement referred to) below: 1. The portions of the financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. Statistical and financial data set forth in Tables 1-6 and SA-15 of the Official Statement. Accounting Principles The accoW1ting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in Paragraph l above . Exhibit A-I I 86821 v. l LUB200nI O 16 ) ) ) EXHIBIT B SALE PARAMETERS In accordance with Section 7.0l(a) of the Ordinance, the following conditions with respect to the Bonds must be satisfied in order for the Authorized Officer to act on behalf of the City in selling and delivering the Bonds to the Underwriters: (a) the price to be paid for the Bonds shall be not less than 95% of the aggregate principal amount of the Bonds; (b) the Bonds shall not bear interest at a rate greater than the maximum rate allowed by Chapter 1204, Texas Government Code, as amended; (c) the aggregate principal amount of the Bonds shall produce proceeds in an amount sufficient to fund the purposes described in Section 3.01 and such aggregate principal amount shall not exceed the maximum amount authorized in Section 3.01; (d) the maximum maturity for the Bonds shall not exceed twenty~five years; and (e) the Bonds to be issued, prior to delivery, must have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long tenn obligations. Exhibit B~l 186821v.1 LUB200m016 ~ PRICING CERTIFICATE City of Lubbock, Texas General Obligation Bonds, Series l0l0A and City of Lubbock. Texas General Obligation Bonds, Taxable Series 2010B {Build America Bonds -Direct Payment) Re: $8,840,000 City of Lubbock, Texas General Obligation Bonds, Series 201 0A ( the "Series 2010A Bonds") and $15,320,000 City of Lubbock, Texas General Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct Payment) (the "Series 2010B Bonds," and together with the Series 2010A Bonds, the "Bonds") I, the undersigned officer of the City of Lubboc~ Texas (the "City"), do hereby make and execute this Pricing Certificate pursuant to an ordinance adopted by the City Council of the City on December 16, 2009 (the "Ordinance") authorizing the issuance of the Bonds. Capitalized terms used in this Pricing Certificate shall have the meanings given such terms in the Ordinance. 1. As authorized by Section 7.01 of the Ordinance, I have acted on behalf of the City in selling the Series 2010A Bonds to the Underwriters pursuant to the terms of a bond purchase contract in substantially the form accepted, approved and authorized pursuant to Section 7.01 of the Ordinance, for the sum of $9,090,461.17 (representing the principal amount of $8,840,000, plus net original issue premium of $295,967.60 and less an underwriters' discount of $45,506.43), and having the following tenns, conditions and provisions, all as authorized pursuant to Section 7.01 of the Ordinance: The Series 201 0A Bonds shall be issued in the aggregate principal amount of $8,840,000, shall be dated February 4, 2010 (the "Bond Date") and bear interest from such date, shall mature on February 15 in the years and in the principal amounts and shall bear interest payable on February 15 and August IS of each year, commencing February 15, 2011, at the rates set forth in the following schedule: Years Principal Installments Interest Rates 2011 $ 445,000 2.000% 2012 $ 910,000 2.000% 2013 $ 935,000 3.000% 2014 $ 960,000 3.000% 2015 $ 990,000 4.000% 2016 $1,030,000 4.000% 2017 $1,075,000 3.000% 2018 $ 150,000 3.250% 2019 $ 155,000 3.625% 2020 $ 165,000 3.750% 2021 $ 170,000 3.500% 226071v.1 LUB200n!0l5 ) Years Principal Installments Interest Rates 2022 $175,000 3.700% 2023 $180,000 3.750% 2024 $190,000 3.875% 2025 $195,000 4.000% 2026 $205,000 4.000% 2027 $215,000 4.125% 2028 $225,000 4.200% 2029 $230,000 4.250% 2030 $240,000 4.300% 2. As authorized by Section 7.01 of the Ordinance, I have acted on behalf of the City in selling the Series 2010B Bonds to the Underwriters pursuant to the terms of a bond purchase contract in substantially the form accepted, approved and authorized pursuant to Section 7.01 of the Ordinance, for the sum of $15,224,950.12 (representing the principal amount of $15,320,000 and less an underwriters' discount of $95,049.88), and having the following terms, conditions and provisions, all as authorized pursuant to Section 7.01 of the Ordinance: The Series 2010B Bonds shall be issued in the aggregate principal amount of $15,320,000, shall be dated February 4, 2010 (the "Bond Date") and bear interest from such date, shall mature on February 15 in the years and in the principal amounts and shall bear interest payable on February 15 and August 15 of each year, commencing February 15, 2011, at the rates set forth in the following schedule: Serial Series 2010B Bonds Years Principal Installments Interest Rate 2018 $955,000 4.442% 2019 $985,000 4.542% 2020 $1,015,000 4.742% 2021 $1,045,000 4.892% 2022 $1,080,000 4.992% 2023 $1,120,000 5.242% 2024 $1,155,000 5.342% Term Series 2010B Bonds Principal Interest Year Installment Rate 2030 $7,965,000 6.032% The Series 20108 Term Bonds are subject to scheduled mandatory redemption and will be redeemed by the City, in part at a price equal to the principal amount thereof, without premiwn, plus accrued interest to the redemption date, out of moneys available for such purpose -2- 226071 v. I LUB200nl O I S ) ' ' in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth in the following schedule: Term Bonds 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) Principal Amount $1,200,000 $1,250,000 $1,300,000 $1,350,000 $1,405,000 $1,460,000 3. In accordance with the parameters contained in Section 7.01 and Exhibit B of the Ordinance, the undersigned does hereby find, certify and represent that the foregoing terms of the Bonds satisfy the following requirements and parameters contained within such Section 7.01 and Exhibit B: (i) the price to be paid by the Underwriters for the Bonds is 100.6% of the aggregate principal amount of the Bonds, which is not less than 95% of the aggregate principal amount of the Bonds; (ii) the Bonds do not bear interest at a rate greater than the maximum rate allowed by Chapter 1204, Texas Government Code, as amended; (iii) the aggregate principal amount of the Bonds produces proceeds in an amount sufficient to fund the purposes described in Section 3.01 of the Ordinance and such aggregate principal amount does not exceed the maximum amount authorized in Section 3.01 of the Ordinance; (iv) the maximmn maturity for the Bonds is 2030 which does not exceed twenty-five years; (v) the Bonds have been rated, or will be rated prior to delivery, by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long term obligations. 4. The proceeds of the Bonds shall be applied as set forth in Section 7.03 of the Ordinance. Specifically, (i) premium in the amount of $255,967.60 shall be used to pay costs of issuance and underwriter's discount and (ii) proceeds in the amount of $24,200,000 shall be used to pay costs of the various public improvements and public purposes identified in Section 3.01 of the Ordinance. 5. The Series 2010A Bonds shall be issued substantially in the form attached hereto as Exhibit A, and the Series 201 OB Bonds shall be issued substantially in the form attached hereto as Exhibit B. -3- 226071 v. I LUB200n1015 ) ) 6. It is hereby determined that it is in the best interest of the City, and the City hereby irrevocably elects pursuant to Section 54AA of the Code, to: (i) designate all of the Series 2010B Bonds as "build America bonds" and "qualified bonds" and (ii) to receive direct payment of the credit provided in Section 6431 of the Code. Such Bonds are Taxable Bonds, the interest on which is not excludable from gross income for federal income tax purposes. -4- 226071v.1 LUB200/71015 ) ) 11 <.Y . Executed as of the _(J'_\ _ day of J /lllWj , 2010. 22607!v.l LUBZ00/71015 tttt:= Chief Financial Officer City of Lubbock, Texas Signature Page for Pricing Certificate for Bonds ) ) ) EXHIBIT A The form of the Series 2010A Bonds, 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 form of Assignment appearing on the Series 2010A Bonds, shall be substantially as follows: (a) Form of Series 2010A Bond. REGISTERED No. __ INTEREST RA TE: __ % United States of America State of Texas County of Lubbock CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BOND SERIES 2010A MATURITY DATE: BOND DATE: February 15, __ February 4, 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 registered assigns, on the Maturity Date specified above, the sum of _________ DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Bond Date specified above or the most recent interest payment date to which 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, cpmputed on the basis of a three hundred sixty (360) day year of twelve (12) thirty (30) day months, such interest to be paid semiannually on February 15 and August 15 of each year, commencing February 15, 2011. All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance ( defined below). The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in Dallas, Texas (the "Designated Payment/Transfer Office") of The Bank of New York Mellon Trust Company, National Association, as Paying Agent/Registrar or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office A-1 226071 v. I LUB2001710 I 5 \ ) \ thereof. Interest on this Bond 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expense of such other banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Bonds, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. For the purpose of the payment of interest on this Bond, the registered owner shall be the person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the last business day of the month next preceding such interest payment date. If the date for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day which 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. This Bond is one of a series of fully registered bonds specified in the title hereof issued in the aggregate principal amount of $8,840,000 (herein referred to as the "Bonds"), issued pursuant to a certain ordinance of the City (the "Ordinance") for the purpose of providing funds with which to make various public improvements for the City and to pay the costs of issuing the Bonds. The Bonds are being issued concurrently with the City's General Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct Payment), in the aggregate principal amount of$15,320,000, which are also being issued pursuant to the Ordinance for the purpose of paying providing funds with which to make various pennanent public improvements for the City. The City has reserved the option to redeem the Bonds maturing on February 15, 2020 in whole or in part, before their scheduled maturity date on February 15, 2019, or on any date thereafter, at a redemption price of par, plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Bonds, or portions thereof, within such maturity and in such principal amounts, for redemption. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than thirty (30) days before the date fixed for redemption, to the registered owner of each of the Bonds to be redeemed in whole or in part. In the Ordinance, 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/Registrar, or such other entity as may be authorized by law, no later th.an the redemption date or (ii) that the City retains the right to rescind such notice at any time prior to the scheduled A-2 226071 v.1 LUB200/71015 ) ) \ ) redemption date if the City delivers a certificate 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 affected owners. Any Bonds subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. As provided in the Ordinance, and subject to certain limitations therein set forth, this Bond is transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Bonds of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within forty-five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Bond is registered as the owner hereof for the pwpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Bond is registered on the Record Date) and for all other purposes, whether or not this Bond 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 Bond and the series of which it is a part is duly authorized by law; and has been authorized by a vote of the properly qualified electors of the City; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and 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 Bonds within the limit prescribed by law. A-3 226071v.l LUB20OntOIS ) ) ) ) IN WITNESS WHEREOF, the City has caused this Bond 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 Bond. Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas [SEAL] A-4 226071v.1 LUB200nl015 (b) Form of Comptroller's Registration Certificate. The following Comptroller's Registration Certificate may be deleted from the definitive Series 201 OA Bonds if such ) certificate on the Initial Series 2010A Bond is fully executed. ... ) ' ') OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS § § § REGISTER NO. ___ _ I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas; and that this Bond has this day been registered by me . Witness 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 Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Series 2010A Bond if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PAYING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Bond of this series of bonds was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Bonds referred to in the within-mentioned Ordinance. Dated: A-5 226071v.l LUB200nt0IS The Bank of New York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory ) ) ') ) ) ) (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and Zip Code of transferee): ______________ _ (Social Security or other identifying number: _______ __, the within Bond and all rights hereunder and hereby irrevocably constitutes and appoints ________ _ attorney to transfer the within Bond 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 Bond in every particular and must be guaranteed in a manner acceptable to the Paying AgenVRegistrar. Signature Guaranteed By: Authorized Signatory (e) The Initial Bond shall be in the form set forth in paragraphs (a), (b) and (d) of this Exhibit A, except for the following alterations: (A) immediately under the name of the Bond the headings "INTEREST RA TE" and "MATURITY DATE" shall both be completed with the expression "As shown below" and the heading "CUSIP NO." shall be deleted; and (B) in the first paragraph of the Bond, 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: 226071 v. I LUB200/71015 Principal Installments Interest Rate (Information to be inserted from Section 1 of the Pricing Certificate pursuant to Section 3.02 of the Ordinance) A-6 ) ) ) ) "\ "\ ) EXHIBITB The form of the Series 2010B Bonds, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the fonn of Certificate of the Paying Agent/Registrar and the form of Assignment appearing on the Series 2010B Bonds, shall be substantially as follows: (a) Form of Series 2010B Bond. REGISTERED No. __ United States of America State of Texas County of Lubbock CITY OF LUBBOC~ TEXAS GENERAL OBLIGATION BOND REGISTERED $ ___ _ TAXABLE SERIES 201 OB (BUILD AMERICA BONDS -DIRECT PAYMENT) INTEREST RA TE: MATURITY DATE: BOND DATE: CUSIP NUMBER: __ % February 15, __ February 4, 2010 The City of Lubbock (the "City"), in the County of Lubbock, State of Tex.as, for value received, hereby promises to pay to or registered assigns, on the Maturity Date specified above, the sum of _________ DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amonnt from the later of the Bond Date specified above or the most recent interest payment date to which 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 three hundred sixty (360) day year of twelve (12) thirty (30) day months, such interest to be paid semiannually on February 15 and August 15 of each year, commencing February 15, 2011. All capitalized terms used herein but not defined shall have the meaning assigned to them in the Ordinance (defined below). Toe principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in Dallas, Texas (the "Designated Paymentffransfer Office") of The Bank of New York Mellon Trust Company, National Association, as Paying Agent/Registrar or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office B-1 22607lv.l LUB200nI0IS ) ) ) "\ thereof. Interest on this Bond 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 address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expense of such other banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Bonds, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. For the purpose of the payment of interest on this Bond, the registered owner shall be the person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the last business day of the month next preceding such interest payment date. If the date for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Paymentffransfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day which 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. This Bond is one of a series of fully registered bonds specified in the title hereof issued in the aggregate principal amount of $15,320,000 (herein referred to as the "Bonds''), issued pursuant to a certain ordinance of the City (the "Ordinance") for the purpose of providing funds with which to make various public improvements for the City and to pay the costs of issuing the Bonds. The Bonds are being issued concurrently with the City's General Obligation Bonds, Series 2010A, in the aggregate principal amount of $8,840,000, which are also being issued pursuant to the Ordinance for the purpose of paying providing funds with which to make various pe:nnanent public improvements for the City. The City has reserved the option to redeem the Bonds maturing on February 15, 2020 in whole or in part, before their scheduled maturity date on February 15, 2019, or on any date thereafter, at a redemption price of par, plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Bonds, or portions thereof, within such maturity and in such principal amounts, for redemption. Bonds maturing on February 15, 2030 (the ''Term Bonds"), are subject to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by the City, in part at a redemption price equal to the principal amount thereof, without premium, plus interest accrued to the redemption date, on the dates and in the principal amounts shown in the following schedule: Redemption Date February 15, 2025 226071 v. l LUB200nl015 Principal Amount B-2 ) 1 '\ ) February 15, 2026 February 15, 2027 February 15, 2028 February 15, 2029 February 15, 2030 (maturity) $1,250,000 $1,300,000 $1,350,000 $1,405,000 $1,460,000 The Paying Agent/Registrar will select by lot or by any other customary method that results in a random selection the specific Tenn Bonds ( or with respect to Tenn Bonds having a denomination in excess of $5,000, each $5,000 portion thereof) to be redeemed by mandatory redemption. The principal amount of Tenn Bonds required to be redeemed on any redemption date pursuant to the foregoing mandatory sinking fund redemption provisions hereof shall be reduced, at the option of the City, by the principal amount of any Bonds which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. The Bonds are also subject to extraordinary redemption prior to February 15, 2019, at the option of the City, upon the occurrence of an Extraordinary Event (hereinafter defined) from any source of available funds, in whole or in part, by lot, at the Make-Whole Redemption Price (hereinafter defined). "Extraordinary Event" means any change to Sections 54AA or 6431 of the Code (as such Sections were added by Section 1531 of the "American Recovery and Reinvestment Act of 2009," pertaining to ''build America bonds") or any other action taken by the United States Congress or federal government, the effect of which causes the Federal Subsidy applicable to the Bonds to be reduced or eliminated. "Make-Whole Redemption Price" means the amount equal to the greater of the following: (i) the issue price of the Bonds (but not less than 100%) of the principal amount of the Bonds to be redeemed; and (ii) the sum of the present value of the remaining scheduled payments of principal and interest on the Bonds to be redeemed to the earlier of the maturity date of such Bonds and February 15, 2019, not including any portion of those payments of interest accrued and unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the Bonds are to be redeemed on a semi- annual basis, assuming a 360-day year containing twelve 30-day months, at the Treasury Rate (hereinafter defined), plus 100 basis points, plus in each case accrued and unpaid interest on the Bonds to be redeemed to the redemption date. ''Treasury Rate" means, with respect to any redemption date for a particular Bond, 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 two 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 the maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than thirty (30) days before the date fixed for redemption, to the registered B-3 22607lv.l LU8200nt015 i ) i ' ) owner of each of the Bonds to be redeemed in whole or in part. In the Ordinance, 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/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 prior to the scheduled redemption date if the City delivers a certificate 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 affected owners. Any Bonds subject to conditional redemption where redemption has been rescinded shall remain Outstanding, and the rescission 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 or in whole on or before the redemption date shall not constitute an event of default. As provided in the Ordinance, and subject to certain limitations therein set forth, this Bond is transferable upon surrender of this Bond for transfer at the Designated Paymentffransfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Bonds of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within forty-five (45) calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided ( except interest shall be paid to the person in whose name this Bond is registered on the Record Date) and for all other purposes, whether or not this Bond 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 Bond and the series of which it is a part is duly authorized by law; and has been authorized by a vote of the properly qualified electors of the City; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and 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 Bonds within the limit prescribed by law. B-4 22607lv. I LUB200nI01S ) ) "\ '\ IN WITNESS WHEREOF, the City has caused this Bond 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 Bond. Mayor, City of Lubbock, Texas City Secretary, City of Lubbock, Texas [SEAL] B-5 22607Jv.l LUB200nt015 (b) Fonn of Comptroller's Registration Certificate. The following Comptroller's Registration Certificate may be deleted from the definitive Series 201 OB Bonds if such .., certificate on the Initial Series 201 OB Bond is fully executed. ") OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS § § § REGISTER NO. __ _ I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the City of Lubbock, Texas; and that this Bond has this day been registered by me. Witness 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 Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Series 2010B Bond if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PA YING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Bond of this series of bonds was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Bonds referred to in the within-mentioned Ordinance. Dated: B-6 226071 v .1 LUB200nJ O 15 The Bank of New York Mellon Trust Company, National Association as Paying Agent/Registrar By: Authorized Signatory ) ' J ) ( 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: ---------J the within Bond and all rights hereunder and hereby irrevocably constitutes and appoints ________ _ attorney to transfer the within Bond 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 Bond in every particular and must be guaranteed in a manner acceptable to the Paying Agent/Registrar. Signature Guaranteed By: Authorized Signatory (e) The Initial Series 2010B Bond shall be in the form set forth in paragraphs (a), (b) and ( d) of this Exhibit B, except for the following alterations: (C) immediately under the name of the Bond the headings "INTEREST RA TE" and "MATURITY DATE" shall both be completed with the expression "As shown below" and the heading "CUSIP NO." shall be deleted; and (D) in the first paragraph of the Bond, 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: 226071 v.1 LUB200nl015 Principal Installments Interest Rate (Infonnation to be inserted from Section 2 of the Pricing Certificate pursuant to Section 3.02 of the Ordinance) B-7 ) ") US 236228v. I PA YING AGENT/REGISTRAR AGREEMENT between CITY OF LUBBOCK, TEXAS and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. Pertaining to 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 20108 (Build America Bonds-Direct Payment) Dated as of February 4, 2010 j ) TABLE OF CONTENTS Page Recitals ........................................................................................................................................ 1 ARTICLE I APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. ................................................................................................... I Section 1.02. Compensation .................................................................................................. l ARTICLE II DEFINITIONS Section 2.01. Definitions ....................................................................................................... 2 Section 3.01. Section 3.02. Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 4.06. Section 4.07. Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Section 6.01. US 236228v.1 ARTICLE III PAYING AGENT Duties of Paying Agent ................................................................................... 3 Payment Dates ................................................................................................. 3 ARTICLE IV REGISTRAR Transfer and Exchange .................................................................................... 4 The Certificates ............................................................................................... 4 Form ofRegister .............................................................................................. 4 List of Owners ................................................................................................. 5 Cancellation of Certificates ............................................................................. 5 Mutilated, Destroyed, Lost, or Stolen Certificates .......................................... 5 Transaction Information to Issuer ................................................................... 6 ARTICLEV THE BANK Duties of Bank ................................................................................................. 6 Reliance on Docwnents, Etc ........................................................................... 6 Recitals of Issuer ............................................................................................. 7 May Hold Certificates ..................................................................................... 7 Money Held by Bank ...................................................................................... 7 Indenmification ............................................................................................... 8 Interpleader ...................................................................................................... 8 ARTICLE VI MISCELLANEOUS PROVISIONS Amendment ..................................................................................................... 8 (i) ' Section 6.02. Section 6.03. Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08. Section 6.09. Section 6.10. Section 6.11. Assignment ...................................................................................................... 9 Notices ............................................................................................................. 9 Effect of Headings ........................................................................................... 9 Successors and Assigns ................................................................................... 9 S eparabi Ii ty ...................................................................................................... 9 Benefits of Agreement .................................................................................... 9 Entire Agreement ............................................................................................ 9 Counterparts .................................................................................................... 9 Tennination ..................................................................................................... 9 Governing Law .............................................................................................. I 0 Execution ....................................................................................................................................... 11 AMex A -Schedule of Fees for Service as Paying Agent/Registrar (ii) US 236228v. I ) PA YING AGENT/REGISTRAR AGREEMENT THIS PA YING AGENT/REGISTRAR AGREEMENT (the or this "Agreement"), dated as of February 4, 2010, is by and between CITY OF LUBBOCK, TEXAS (the .. Issuer''), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (the "Bank"), a New York state banking corporation duly organized and existing under the laws of the United States of America. WHEREAS, the Issuer has duly authorized and provided for the issuance of its Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A and Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bonds-Direct Payment) (collectively, the "Certificates"), dated February 4, 2010, to be issued as registered securities without coupons; WHEREAS, all things necessary to make the Certificates the valid obligations of the Issuer, in accordance with their tenns, will be taken upon the issuance and delivery thereof; WHEREAS, the Issuer is desirous that the Bank act as the Paying Agent of the Issuer in paying the principal, redemption premium, if any, and interest on the Certificates, in accordance with the terms thereof, and that the Bank act as Registrar for the Certificates; and WHEREAS, the Issuer has duly authorized the execution and delivery of this Agreement, and all things necessary to make this Agreement the valid agreement of the Issuer, in accordance with its tenns, have been done; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. (a) The Issuer hereby appoints the Bank to act as Paying Agent with respect to the Certificates in paying to the Owners of the Certificates the principal, redemption premium, if any, and interest on all or any of the Certificates. (b) The Issuer hereby appoints the Bank as Registrar with respect to the Certificates. (c) The Bank hereby accepts its appointment, and agrees to act as, the Paying Agent and Registrar. Section 1.02. Compensation. (a) As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A hereto for the first year of this Agreement, or such part thereof as this Agreement shall be in effect, and thereafter while this Agreement is in effect, the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the US 236228v .I ) ) ) Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. (b) In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof, including the reasonable compensation and the expenses and disbursements of its agents and counsel. ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms have the following meanings when used in this Agreement: "Bank" means The Bank of New York Mellon Trust Company, N.A. "Bank Office" means the Ban.k's office in Dallas, Texas. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Certificate" or ·•certificates" means any or all of the Issuer's Tax. and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A and Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (Build America Bonds-Direct Payment), dated February 4, 2010. "Certificate Ordinance" means the ordinance of the City Council of the Issuer authorizing the issuance and delivery of the Certificates. "Fiscal Year" means the 12 month period ending September 30th of each year. "Issuer" means the City of Lubbock, Texas. "Issuer Request" and "Issuer Order'' means a written request or order signed in the name of the Issuer by the Mayor of the Issuer, or any other authorized representative of the Issuer and delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized by applicable law to be closed. "Owner'' means the Person in whose name a Certificate is registered in the Register. "Paying Agent" means the Bank when it is performing the functions associated with the terms in this Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision of a government. 2 US 236228v.l '\ "Predecessor Certificates" of any particular Certificate means every previous Certificate evidencing all or a portion of the same obligation as that evidenced by such particular Certificate (and, for the purposes of this definition, any Certificate registered and delivered under Section 4.06 in lieu of a mutilated, lost, destroyed or stolen Certificate shall be deemed to evidence the same obligation as the mutilated, lost, destroyed or stolen Certificate) . .. Record Date" means the last Business Day of the month next preceding an interest payment date established by the Certificate Ordinance. "Register" means a register in which the Issuer shall provide for the registration and transfer of Certificates. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice Chairman of the Board of Directors, the Chairman or Vice Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Banlc customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Stated Maturity" means the date or dates specified in the Certificate Ordinance as the fixed date on which the principal of the Certificates is due and payable or the date fixed in accordance with the terms of the Certificate Ordinance for redemption of the Certificates, or any portion thereof, prior to the fixed maturity date. ARTICLE III PA YING AGENT Section 3.01. Duties of Paying Agent. (a) The Bank, as Paying Agent and on behalf of the Issuer, shall pay to the Owner, at the Stated Maturity and upon the surrender of the Certificate or Certificates so maturing at the Bank Office, the principal amoW1t of the Certificate or Certificates then maturing, and redemption premiwn, if any, provided that the Banlc shall have been provided by or on behalf of the Issuer adequate funds to make such payment. (b) The Bank, as Paying Agent and on behalf of the Issuer, shall pay interest when due on the Certificates to each Owner of the Certificates (or their Predecessor Certificates) as shown in the Register at the close of business on the Record Date, provided that the Bank shall have been provided by or on behalf of the Issuer adequate funds to make such payments; such payments shall be made by computing the amount of interest to be paid each Owner, preparing the checks, and mailing the checks on each interest payment date addressed to each Owner's address as it appears in the Register on the Record Date. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of, redemption premium, if any, and interest on the Certificates at the dates specified in the Certificate Ordinance. 3 US 236228v. I ) .., ) ) ) ) ARTICLE IV REGISTRAR Section 4.01. Transfer and Exchange. (a) The Issuer shall keep the Register at the Bank Office, and subject to such reasonable written regulations as the Issuer may prescribe, which regulations shall be furnished to the Bank herewith or subsequent hereto by Issuer Order, the Issuer shall provide for the registration and transfer of the Certificates. The Bank is hereby appointed "Registrar" for the purpose of registering and transferring the Certificates as herein provided. The Bank agrees to maintain the Register while it is Registrar. The Bank agrees to at all times maintain a copy of the Register at its office located in the State of Texas . (b) The Bank as Registrar hereby agrees that at any time while any Certificate is outstanding, the Owner may deliver such Certificate to the Registrar for transfer or exchange, accompanied by instructions from the Owner, or the duly authorized designee of the Owner, designating the persons, the maturities, and the principal amounts to and in which such Certificate is to be transferred and the addresses of such persons·; the Registrar shall thereupon, within not more than three (3) business days, register and deliver such Certificate or Certificates as provided in such instructions. The provisions of the Certificate Ordinance shall control the procedures for transfer or exchange set forth herein to the extent such procedures are in conflict with the provisions of the Certificate Ordinance. ( c) Every Certificate surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed in a manner satisfactory to the Bank, duly executed by the Owner thereof or his attorney duly authorized in writing. (d) The Bank may request any supporting documentation it feels necessary to effect a re-registration. Section 4.02. The Certificates. The Issuer shall provide an adequate inventory of unregistered Certificates to facilitate transfers. The Bank covenants that it will maintain the unregistered Certificates in safekeeping and will use reasonable care in maintaining such unregistered Certificates in safekeeping, which shall be not less than the care it maintains for debt securities of other governments or corporations for which it serves as registrar, or which it maintains for its own securities. Section 4.03. Form of Register. (a) The Bank as Registrar will maintain the records of the Register in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Register in any form other than a form which the Bank has currently available and currently utilizes at the time. (b) The Register may be maintained in written fonn or in any other fonn capable of being converted into written form within a reasonable time. 4 US 236228v. I ; ' ., ' Section 4.04. List of Owners. (a) The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the cost, if any, of reproduction, a copy of the information contained in the Register. The Issuer may also inspect the infonnation in the Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the infonnation into written fonn. (b) The Bank will not release or disclose the content of the Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a subpoena or court order or as otherwise required by law. Upon receipt of a subpoena or court order the Bank will notify the [ssuer so that the lssuer may contest the subpoena or court order. Section 4.05. Cancellation of Certificates. All Certificates surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Bank, shall be promptly cancelled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already cancelled, shall be promptly cancelled by the Bank. The Issuer may at any time deliver to the Bank for cancellation any Certificates previously certified or registered and delivered which the Issuer may have acquired in any manner whatsoever, and all Certificates so delivered shall be promptly cancelled by the Bank. All cancelled Certificates held by the Bank shall be disposed of pursuant to the Securities Exchange Act of 1934. Section 4.06. Mutilated, Destroyed, Lost, or Stolen Certificates. (a) Subject to the provisions of this Section 4.06, the Issuer hereby instructs the Bank to deliver fully registered Certificates in exchange for or in lieu of mutilated, destroyed, lost, or stolen Certificates as long as the same does not result in an overissuance. (b) If (i) any mutilated Certificate is surrendered to the Bank, or the Issuer and the Bank receives evidence to their satisfaction of the destruction, loss, or theft of any Certificate, and (ii) there is delivered to the Issuer and the Bank such security or indemnity as may be required by the Bank to save and hold each of them harmless, then in the absence of notice to the Issuer or the Bank that such Certificate has been acquired by a bona fide purchaser, the Issuer shall execute, and upon its request the Bank shall register and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate of the same stated maturity and of like tenor and principal amount bearing a number not contemporaneously outstanding. (c) Every new Certificate issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Certificate shall constitute a replacement of the prior obligation of the Issuer, whether or not the mutilated, destroyed, lost, or stolen Certificate shall be at any time enforceable by anyone, and shall be entitled to all the benefits of the Certificate Ordinance equally and ratably with all other outstanding Certificates. (d) Upon the satisfaction of the Bank and the Issuer that a Certificate has been mutilated, destroyed, lost, or stolen, and upon receipt by the Bank and the Issuer of such indemnity or security as they may require, the Bank shall cancel the Certificate number on the Certificate registered with a notation in the Register that said Certificate has been mutilated, 5 US 236228v. I ... ) ) destroyed, lost,' or stolen; and a new Certificate shall be issued of the same series and of like tenor and principal amount bearing a number, according to the Register, not contemporaneously outstanding. (e) The Bank may charge the Owner the Bank's fees and expenses in connection with , issuing a new Certificate in lieu of or exchange for a mutilated, destroyed, lost, or stolen Certificate. (f) The Issuer hereby accepts the Bank's current blanket bond for lost, stolen, or destroyed Certificates and any future substitute blanket bond for lost, stolen, or destroyed Certificates that the Bank may arrange, and agrees that the coverage under any such blanket bond is acceptable to it and meets the Issuer's requirements as to security or indemnity. The Bank need not notify the Issuer of any changes in the security or other company giving such bond or the terms of any such bond, provided that the amowit of such bond is not reduced below the amount of the bond on the date of execution of this Agreement. The blanket bond then utilized by the Bank for lost, stolen, or destroyed Certificates by the Bank is available for inspection by the Issuer on request. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Certificates it has paid pursuant to Section 3.01; Certificates it has delivered upon the transfer or exchange of any Certificates pursuant to Section4.0l; and Certificates it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Certificates pursuant to Section 4.06 of this Agreement. ARTICLE V THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and in accordance with the Certificate Ordinance and agrees to use reasonable care in the performance thereof. The Bank hereby agrees to use the funds deposited with it for payment of the principal of, redemption premium, if any, and interest on the Certificates to pay the Certificates as the same shall become due and further agrees to establish and maintain all accounts and funds as may be required for the Bank to function as Paying Agent. Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that 6 US 236228v. l "I ' ) ) repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. ( d) The Bank may rely and shall be protected in acting or refraining from acting upon any ordinance, resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, certificate, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Certificates, but is protected in acting upon receipt of Certificates containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Owner or an attorney-in-fact of the Owner. The Bank shall not be bound to make any investigation into the facts or matters stated in an ordinance, resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, certificate, note, security, or other paper or document supplied by Issuer. (e) The Bank is also authorized to transfer funds relating to the closing and initial delivery of the Certificates in the manner disclosed in the closing memorandum as prepared by the Issuer_'s financial advisor or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum acknowledged by the financial advisor or the Issuer as the final closing memorandum. The Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's reliance upon and compliance with such instructions. (f) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (g) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals oflssuer. (a) The recitals contained herein and in the Certificates shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. (b) The Bank shall in no event be liable to the Issuer, any Owner or Owners, or any other Person for any amount due on any Certificate except as otherwise expressly provided herein with respect to the liability of the Bank for its duties under this Agreement. Section 5.04. May Hold Certificates. The Bank, in its individual or any other capacity, may become the Owner or pledgee of Certificates and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Regjstrar, or any other agent Section 5.05. Money Held by Bank. (a) Money held by the Bank hereunder need not be segregated from any other funds provided appropriate accounts are maintained. 7 US 236228v. I ) (b) hereunder. The Bank shall be under no liability for interest on any money received by it (c) Subject to the provisions of Title 6, Texas Property Code, any money deposited with the Bank for the payment of the principal, redemption premium, if any, or interest on any Certificate and remaining unclaimed for three years after final maturity of the Certificate has become due and payable will be paid by the Banlc to the Issuer, and the Owner of such Certificate shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. (d) The Bank will comply with the reporting requirements of Chapter 74 of the Texas Property Code. (e) The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a paying agent capacity for the payment of the Certificates, with such moneys in the account that exceed the deposit insurance, available to the Issuer, provided by the Federal Deposit Insurance Corporation to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent practicable under the laws of the United States of America to secure and be pledged as collateral for trust accounts until the principal and interest on the Certificates have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account unless the owner of such Certificates shall, at its own expense and risk, request such other mediwn of payment. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank, its officers, directors, employees, and agents for, and hold them harmless against, any loss, liability, or expense incurred without negligence or bad faith on their part arising out of or in connection with its acceptance or administration of the Bank's duties hereunder, and under Article V of the Certificate Ordinance, including the cost and expense (including its counsel fees) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demands or controversy over its persons as well as funds on deposit in a court of competent jurisdiction within the State of Texas; waive personal service of any process; and agree that service of process by certified or registered mail, return receipt requested, to the address set forth in this Agreement shall constitute adequate service. Toe Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any person claiming any interest herein. ARTICLE VI MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereof. 8 US 236228v. l ) ) Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown below: (a) if to the Issuer: (b) if to the Bank: City of Lubbock, Texas I 625 13th Street Lubbock, Tex.as 79457 Attention: Chief Financial Officer The Bank of New York Mellon Trust Company, N.A. 2001 Bryan Street, 8th Floor Dallas, Texas 75201 Attention: Corporate Trust Department Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Se_parability. If any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Certificate Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar, and if any conflict exists between this Agreement and the Certificate Ordinance, the Certificate Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Tennination, (a) This Agreement will terminate on the date of final payment by the Bank issuing its checks for the final payment of principal, redemption premium, if any, and interest of the Certificates. 9 US 236228v.1 ) ) ) (b) This Agreement may be earlier tenninated upon sixty (60) days written notice by either party; provided, that, no termination shall be effective until a successor has been appointed by the Issuer and has accepted the duties imposed by this Agreement. A resigning Paying Agent/Registrar may petition any court of competent jurisdiction for the appointment of a successor Paying Agent/Registrar if an instrument of acceptance by a successor Paying Agent/Registrar has not been delivered to the resigning Paying Agent/Registrar within sixty (60) days after the giving of notice of resignation. (c) The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 10 US 236228v.l IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. CI1Y OF LUBBOCK, TEXAS By:<&~ Tom Martin, Mayor ATTEST: Signature Page for Paying Agent/Registrar Agreement US 236228v.J US 236228v.l THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. By: Title: Senior Associate ANNEX"A" SCHEDULE OF FEES FOR SERVICE AS PA YING AGENT/REGISTRAR US 236228v.l ) ) \ • BNY MELLON CORPORATE TRUST Fee Schedule City of Lubbock, TX Tax and Waterworks System Surplus Revenue Certificates of Obligation Series 2010A None Acceptance Fee -'-' _ . _____ ........__...._,,_,_ ........ _,,__. : b sWL A one-time charge covering the Bank Officer's review of governing documents, communication with members of the closing party, including representatives of the issuer, investment banker(s) and attorney(s), establishment of procedures and controls, set-up of trust accounts and tickler suspense items and the receipt and disbursement/investment of bond proceeds. This fee is payable on the closing date. ~~~• Paying Agent Administration ~ee j _ 1;,;, ! ·~::~.Ji.; . :;_ .... · ~ An annual charge covering the normal paying agent duties related to account administration and bondholder services. Our pricing is based on the assumption that the bonds are OTC-eligible/book-entry only. If the bonds are certificated or physical, then we will have to charge an additional $ 1000 per year as a paying agent. This fee is payable annually, in advance. ?I, • ' Extraordinary Services/Misc F~s: ~· .: c' · · ~ At Appraisal • • --sr __ __. _ _., ; ,. '<'"'1i_;..~ ...,~'fell./ '...,...,i._,;-.=., ..... ~ The charges for performing extraordinary or other services not contemplated at the time of the execution of the transaction or not specifically covered elsewhere in this schedule will be commensurate with the service to be provided and may be charged in BNY Mellon's sole discretion. If it is contemplated that the Trustee hold and/or value collateral or enter into any investment contract, forward purchase or similar or other agreement, additional acceptance, administration and counsel review fees will be applicable to the agreement governing such services. If the bonds are converted to certificated form, additional annual fees will be charged for any applicable tender agent and/or registrar/paying agent services. Additional infonnation will be provided at such time. Should this transaction terminate prior to closing, all out-of-pocket expenses incurred, including legal fees, will be billed at cost. If all outstanding bonds of a series are defeased or called in full prior to their maturity, a termination fee may be assessed at that time. These extraordinary services may include, but are not limited to, supplemental agreements, consent operations, unusual releases, tender processing, sinking fund redemptions, failed remarketing processing, the preparation of special or interim reports, custody of collateral, a one-time fee to be charged upon termination of an engagement. Counsel, accountants, special agents and others will be charged at the actual amount of fees and expenses billed, UCC filing fees, money market sweep fees, auditor confirmation fees, wire transfer fees, transaction fees to settle third-party trades and reconcilement fees to balance trust account balances to third- party investment provider statements Annual fees include one standard audit confirmation per year without charge. Standard audit confirmations include the final maturity date, principal paid, principal outstanding, interest cycle, interest paid, cash and asset information, interest rate, and asset statement information. Non-standard audit confirmation requests may be assessed an additional fee. Periodic tenders, sinking fund, optional or extraordinary call redemptions will be assessed at $300 per event. L 0th~ lscellaneous Fees: 200 I Biyan -I I 11, Floor Dallas, TX 75201 • BNY MELLON CORPORATE TRUST FDIC or other governmental charges will be passed along to you as incurred. Terms and Disclosures Terms of Proposal Final acceptance of the appointment under the Indenture is subject to approval of authorized officers of BNYM and full review and execution of all documentation related hereto. Please note that if this transaction does not close, you will be responsible for paying any expenses incurred, including Counsel Fees. We reserve the right to tenninate this offer if we do not enter into final written documents within three months from the date this document is first transmitted to you. Fees may be subject to adjustment during the life of the engagement. Customer Notice Required by the USA Patriot Act To help the US government fight the funding of terrorism and money laundering activities, US Federal law requires all financial institutions to obtain, verify, and record information that identifies each person (whether an individual or organization) for which a relationship is established. What this means to you: When you establish a relationship with BNYM, we will ask you to provide certain information (and documents) that will help us to identify you. We will ask for your organization's name, physical address, tax identification or other government registration number and other information that will help us to identify you. We may also ask for a Certificate of Incorporation or similar document or other pertinent identifying documentation for your type of organization. We thank you for your assistance. 200 I Biyan -11 c11 Floor Dallas, TX 75201 • BNY MELLON CORPORATE TRUST Fee Schedule City of Lubbock, TX Tax and Waterworks System Surplus Revenue Certificates of Obligation (Build America Bonds) Series 201 OB "'~--'f,i':18~;· ''i' ,,, .• '\\' " Acceptance Fee . .., ,. , >I ti· ~~~,7'> · ,\.Jfla,l;i . a _ . Non!.] A one-time charge covering the Bank Officer's review of governing documents, communication with members of the closing party, including representatives of the issuer, investment banker(s) and attorney(s ), establishment of procedures and controls, set-up of trust accounts and tickler suspense items and the receipt and disbursement/investment of bond proceeds. This fee is payable on the closing date. -~-«- ~~!!_!~ytng Agent Ad~inistration Fee . L...:.!.~ ---~~__.~-~ $500 An annual charge covering the normal paying agent duties related to account administration and bondholder services. Our pricing is based on the assumption that the bonds are OTC-eligible/book-entry only. If the bonds are certificated or physical, then we will have to charge an additional $1000 per year as a paying agent. This fee is payable annually, in advance. ,r.:,: .,,..,,_ ""·~ •• -~ e,rtraordlnary Services/Misc: Fees: ,.. · · " . · -• ,#. The charges for perfonning extraordinary or other services not contemplated at the time oftbe execution of the transaction or not specifically covered elsewhere in this schedule will be commensurate with the service to be provided and may be charged in BNY Mellon's sole discretion. If it is contemplated that the Trustee hold and/or value collateral or enter into any investment contract, forward purchase or similar or other agreement, additional acceptance, administration and counsel review fees will be applicable to the agreement governing such services. If the bonds are converted to certificated form, additional annual fees will be charged for any applicable tender agent and/or registrar/paying agent services. Additional information will be provided at such time. Should this transaction terminate prior to closing, all out-of-pocket expenses incurred, including legal fees, will be billed at cost. If all outstanding bonds of a series are defeased or called in full prior to their maturity, a tennination fee may be assessed at that time. These extraordinary services may include, but are not limited to, supplemental agreements, consent operations, unusual releases, tender processing, sinking fund redemptions, failed remarketing processing, the preparation of special or interim reports, custody of collateral, a one-time fee to be charged upon termination of an engagement. Counsel, accountants, special agents and others will be charged at the actual amount of fees and expenses billed, UCC filing fees, money market sweep fees, auditor confirmation fees, wire transfer fees, transaction fees to settle third-party trades and reconcilement fees to balance trust account balances to third• party investment provider statements Annual fees include one standard audit confirmation per year without charge. Standard audit confirmations include the final maturity date, principal paid, principal outstanding, interest cycle, interest paid, cash and asset information, interest rate, and asset statement information. Non.standard audit confinnation requests may be assessed an additional fee. Periodic tenders, sinking fund, optional or extraordinary call redemptions will be assessed at $300 per event. Other Miscellaneous Fees: At Appraisal 200 I Bryan -1 lu. Floor Dallas, TX 7520 I • BNY MELLON CORPORATE TRUST FDIC or other governmental charges will be passed along to you as incurred. Terms and Disclosures Terms of Proposal Final acceptance of the appointment under the Indenture is subject to approval of authorized officers of BNYM and full review and execution of all documentation related hereto. Please note that if this transaction does not close, you will be responsible for paying any expenses incurred, including Counsel Fees. We reserve the right to terminate this offer if we do not enter into final written documents within three months from the date this document is first transmitted to you. Fees may be subject to adjustment during the life of the engagement. Customer Notice Required by the USA Patriot Act To help the US government fight the funding of terrorism and money laundering activities, US Federal law requires all financial institutions to obtain, verify, and record infonnation that identifies each person (whether an individual or organization) for which a relationship is established. What this means to you: When you establish a relationship with BNYM, we will ask you to provide certain information (and documents) that will help us to identify you. We will ask for your organization's name, physical address, tax identification or other government registration number and other information that will help us to identify you. We may also ask for a Certificate of Incorporation or similar document or other pertinent identifying documentation for your type of organization. We thank you for your assistance. 2001 Bryan -I Ith Floor Dallas, TX 75201 US 236225v. l PA YING AGENT/REGISTRAR AGREEMENT between CITY OF LUBBOCK, TEXAS and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. · Pertaining to City of Lubbock, Texas General Obligation Bonds Series· 201 0A and City of Lubbock, Texas General Obligation Bonds Taxable Series 2010B (Build America Bonds-Direct Payment) Dated as of February 4, 2010 TABLE OF CONTENTS Page ARTICLE I APPOINTMENT OF BANK AS PA YING AGENT AND REGISTRAR Section 1.0 I. Appointment .................................................................................................... 1 Section 1.02. Compensation .................................................................................................. 1 ARTICLE II DEFINITIONS Section 2.01. Definitions ....................................................................................................... 2 ARTICLE III PAYING AGENT Section 3.01. Duties of Paying Agent ................................................................................... 3 Section 3.02. Payment Dates ................................................................................................. 3 Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 4.06. Section 4.07. Section 5.01. Section 5.02. Section 5.03. Section 5.04. Section 5.05. Section 5.06. Section 5.07. Section 6.01. Section 6.02. Section 6.03. US 236225v. I ARTICLE IV REGISTRAR Transfer and Exchange .................................................................................... 4 The Bonds ....................................................................................................... 4 Fonn of Register .............................................................................................. 4 List of Owners ................................................................................................. 5 Cancellation of Bonds ..................................................................................... 5 Mutilated, Destroyed, Lost, or Stolen Bonds .................................................. 5 Transaction Infonnation to Issuer ................................................................... 6 ARTICLEV THE BANK Duties of Bank ................................................................................................. 6 Reliance on Documents, Etc ........................................................................... 6 Recitals of Issuer ............................................................................................. 7 May Hold Bonds ............................................................................................. 7 Money Held by Bank ...................................................................................... 7 Indemnification ............................................................................................... 8 Interpleader ...................................................................................................... 8 ARTICLE VI MISCELLANEOUS PROVISIONS Amendment ..................................................................................................... 8 Assignrn ent. ..................................................................................................... 8 Notices ............................................................................................................. 8 (i) Section 6.04. Section 6.05. Section 6.06. Section 6.07. Section 6.08. Section 6.09. Section 6.10. Section 6.11. Effect of Headings ........................................................................................... 9 Successors and Assigns ................................................................................... 9 Separability ...................................................................................................... 9 Benefits of Agreement .................................................................................... 9 Entire Agreement ............................................................................................ 9 Counterparts .................................................................................................... 9 Termination ..................................................................................................... 9 Governing Law .............................................................................................. 10 Execution ....................................................................................................................................... 11 Annex A-Schedule of Fees for Service as Paying Agent/Registrar (ii) US 236225v.J PA YING AGENT/REGISTRAR AGREEMENT THIS PAYING AGENT/REGISTRAR AGREEMENT (the or this "Agreement"), dated as of February 4, 2010, is by and between CITY OF LUBBOC~ TEXAS (the "Issuer"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (the "Bank"), a New York state banking corporation duly organized and existing under the laws of the United States of America. WHEREAS, the Issuer has duly authorized and provided for the issuance of its General Obligation Bonds, Series 2010A and General Obligation Bonds, Taxable Series 2010B (Build America Bonds-Direct Payment) (collectively, the "Bonds"), dated February 4, 2010, to be issued as registered securities without coupons; and WHEREAS, all things necessary to make the Bonds the valid obligations of the Issuer, in accordance with their tenns, will be taken upon the issuance and delivery thereof; and WHEREAS, the Issuer is desirous that the Bank act as the Paying Agent of the Issuer in paying the principal, redemption premium, if any, and interest on the Bonds, in accordance with the tenns thereof, and that the Bank act as Registrar for the Bonds; and · · WHEREAS, the Issuer has duly authorized the execution and delivery of this Agreement, and all things necessary to make this Agreement the valid agreement of the Issuer, in accordance with its terms, have been done; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I APPOINTMENT OF BANK AS PA YING AGENT AND REGISTRAR Section 1.01. Appointment. (a) The Issuer hereby appoints the Bank to act as Paying Agent with respect to the Bonds in paying to the Owners of the Bonds the principal, redemption premiwn, if any, and interest on all or any of the Bonds. (b) The Issuer hereby appoints the Bank as Registrar with respect to the Bonds. (c) The Bank hereby accepts its appointment, and agrees to act as, the Paying Agent and Registrar. Section 1.02. Compensation. (a) As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A hereto for the first year of this Agreement, or such part thereof as this Agreement shall be in effect, and thereafter while this Agreement is in effect, the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. US 236225v. I (b) In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof, including the reasonable compensation and the expenses and disbursements of its agents and counsel. ARTICLE II DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms have the following meanings when used in this Agreement: · "Bank" means The Bank of New York Mellon Trust Company, N.A. "Bank Office" means the Bank's office in Dallas, Texas. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Bond" or "Bonds" means any or all of the Issuer's General Obligation Bonds, Series 2010A and General Obligation Bonds, Taxable Series 2010B (Build America Bonds• Direct Payment), dated February 4, 2010. "Bond Ordinance" means the ordinance of the City Council of the Issuer authorizing the issuance and delivery of the Bonds. "Fiscal Year" means the 12 month period ending September 30th of each year. "Issuer" means the City of Lubbock, Texas. "Issuer Request" and "Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor of the Issuer, or any other authorized representative of the Issuer and delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized by applicable law to be closed. "Owner" means the Person in whose name a Bond is registered in the Register. "Paying Agent" means the Bank when it is performing the functions associated with the terms in this Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision of a government. "Predecessor Bonds" of any particular Bond means every previous Bond evidencing all or a portion of the same obligation as that evidenced by such particular Bond (and, for the purposes of this definition, any Bond registered and delivered under Section 4.06 in· lieu of a ·2· US 236225v. I mutilated, lost, destroyed or stolen Bond shall be deemed to evidence the same obligation as the mutilated, lost, destroyed or stolen Bond). "Record Date" means the last Business Day of the month next preceding an interest payment date established by the Bond Ordinance. "Register" means a register· in which the Issuer shall provide for the registration and transfer of Bonds. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice Chairman of the Board of Directors, the Chairman or Vice Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Banlc customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subjept. "Stated Maturity" means the date or dates specified in the Bond Ordinance as the fixed date on which the principal of the Bonds is due and payable or the date fixed in accordance with the terms of the Bond Ordinance for redemption of the Bonds, or any portion thereof, prior to the fixed maturity date. ARTICLE III PA YING AGENT Section 3.01. Duties of Paying Agent. (a) The Bank, as Paying Agent and on behalf of the Issuer, shall pay to the Owner, at the Stated Maturity and upon the surrender of the Bond or Bonds so maturing at the Bank Office, the principal amount of the Bond or Bonds then maturing, and redemption premium, if any, provided that the Bank shall have been provided by or on behalf of the Issuer adequate funds to make such payment. (b) The Bank, as Paying Agent and on behalf of the Issuer, shall pay interest when due on the Bonds to each Owner of the Bonds (or their Predecessor Bonds) as shown in the Register at the close of business on the Record Date, provided that the Bank shall have been provided by or on behalf of the Issuer adequate funds to make such payments; such payments shall be made by computing the amount of interest to be paid each Owner, preparing the checks, and mailing the checks on each interest payment date addressed to each Owner's address as it appears in the Register on the Record Date. Section 3.02. Payment Dates. The Issuer hereby instructs the Banlc to pay the principal of, redemption premium, if any, and interest on the Bonds at the dates specified in the Bond Ordinance. -3- US 236225v. l ARTICLE IV REGISTRAR Section 4.01. Transfer and Exchange. (a) The Issuer shall keep the Register at the Bank Office, and subject to such reasonable written regulations as the Issuer may prescribe, which regulations shall be furnished to the Banlc herewith or subsequent hereto by Issuer Order, the Issuer shall provide for the registration and transfer of the Bonds. The Banlc is hereby appointed "Registrar'' for the purpose of registering and transferring the Bonds as herein provided. The Bank agrees to maintain the Register while it is Registrar. The Bank agrees to at all times maintain a copy of the Register at its office located in the State of Texas. (b) The Bank as Registrar hereby agrees that at any time while any Bond is outstanding, the Owner may deliver such Bond to the Registrar for transfer or exchange, accompanied by instructions from the Owner, or the duly authorized designee of the Owner, designating the persons, the maturities, and the principal amounts to and in which such Bond is to be transferred aiid the addresses of such persons; the Registrar shall thereupon, within not more than three (3) business days, register and deliver such Bond or Bonds as provided in such instructions. The provisions of the Bond Ordinance shall control the procedures for transfer or exchange set forth herein to the extent such procedures are in conflict with the provisions of the Bond Ordinance. (c) Every Bond surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed in a manner satisfactory to the Banlc, duly executed by the Owner thereof or his attorney duly authorized in writing. (d) The Bank may request any supporting docwnentation it feels necessary to effect a re-registration. Section 4.02. The Bonds. The Issuer shall provide an adequate inventory of unregistered Bonds to facilitate transfers. The Bank covenants that it will maintain the unregistered Bonds in safekeeping and will use reasonable care in maintaining such unregistered Bonds in safekeeping, which shall be not less than the care it maintains for debt securities of other governments or corporations for which it serves as registrar, or which it maintains for its own securities. Section 4.03. Form of Register. (a) The Bank as Registrar will maintain the records of the Register in accordance with the Banlc's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Register in any form other than a form which the Bank has currently available and currently utilizes at the time. (b) The Register may be maintained in written:form or in any other form capable of being converted into written form within a reasonable time. -4- US 236225v.) Section 4.04. List of Owners. (a) The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the cost, if any, of reproduction, a copy of the information contained in the Register. The Issuer may also inspect the information in the Register at any time the Bank is customarily open for business. provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. (b) The Bank will not release or disclose the content of the Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a subpoena or court order or as otherwise required by law. Upon receipt of a subpoena or court order the Bank will notify the Issuer so that the Issuer may contest the subpoena or court order. Section 4.05. Cancellation of Bonds. All Bonds surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Bank, shall be promptly cancelled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already cancelled, shall be promptly cancelled by the Bank. The Issuer may at any time deliver to the Bank for cancellation any Bonds previously certified or registered and delivered which the Issuer may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Bank. All cancelled Bonds held by the Bank shall be disposed of pursuant to the Securities Exchange Act of 1934. Section 4.06. Mutilated, Destroyed, Lost. or Stolen Bonds. (a) Subject to the provisions of this Section 4.06, the Issuer hereby instructs the Bank to deliver fully registered Bonds in exchange for or in lieu of mutilated, destroyed, lost, or stolen Bonds as long as the same does not result in an overissuance. (b) If (i) any mutilated Bond is surrendered to the Bank, or the Issuer and the Bank receives evidence to their satisfaction of the destruction, loss, or theft of any Bond, and (ii) there is delivered to the Issuer and the Bank such security or indemnity as may be required by the Bank to save and hold each of them harmless, then in the absence of notice to the Issuer or the Bank that such Bond has been acquired by a bona fide purchaser, the Issuer shall execute, and upon its request the Bank shall register and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost, or stolen Bond, a new Bond of the same stated maturity and of like tenor and principal amount bearing a number not contemporaneously outstanding. (c) Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Bond shall constitute a replacement of the prior obligation of the Issuer, whether or not the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and shall be entitled to all the benefits of the Bond Ordinance equally and ratably with all other outstanding Bonds. ( d) Upon the satisfaction of the Bank and the Issuer that a Bond has been mutilated, destroyed, lost, or stolen, and upon receipt by the Bank and the Issuer of such indemnity or security as they may require, the Bank shall cancel the Bond number on the Bond registered with a notation in the Register that said Bond has been mutilated, destroyed, lost, or stolen; and a new -5- US 236225v. I Bond shall be issued of the same series and of like tenor and principal amount bearing a number, according to the Register, not contemporaneously outstanding. (e) The Bank may charge the Owner the Bank's fees and expenses in connection with issuing a new Bond in lieu of or exchange for a mutilated, destroyed, lost, or stolen Bond. (f) The Issuer hereby accepts the Bank's current blanket bond for lost, stolen, or destroyed Bonds and any future substitute blanket bond for lost, stolen, or destroyed Bonds that the Bank may arrange, and agrees that the coverage under any such blanket bond is acceptable to it and meets the Issuer's requirements as to security or indemnity. The Bank need not notify the Issuer of any changes in the security or other company giving such bond or the terms of any such bond, provided that the amount of such bond is not reduced below the amount of the bond on the date of execution of this Agreement. The blanket bond then utilized by the Bank for lost, stolen, or destroyed Bonds by the Bank is available for inspection by the Issuer on request. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Bonds it has paid pursuant to Section 3.01; Bonds it has delivered upon the transfer or exchange of any Bonds pursuant to Section 4.01; and Bonds it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Bonds pursuant to Section 4.06 of this Agreement. ARTICLE V THEBANK Section 5.01. Duties of Bank. The Bank widertakes to perfonn the duties set forth herein and in accordance with the Bond Ordinance and agrees to use reasonable care in the perfonnance thereof. The Bank hereby agrees to use the funds deposited with it for payment of the principal of, redemption premium, if any, and interest on the Bonds to pay the Bonds as the same shall become due and further agrees to establish and maintain all accounts and funds as may be required for the Bank to function as Paying Agent. Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for perfonnance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any ordinance, resolution, certificate, statement, instrument, opinion. report, notice, request, -6-us 236225v.1 direction, consent, order, certificate, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Bonds, but is protected in acting upon receipt of Bonds containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Owner or an attorney-in-fact of the Owner. The Bank shall not be bound to make any investigation into the facts or matters stated in an ordinance, resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, certificate, note, security, or other paper or document supplied by Issuer. (e) The Bank is also authorized to transfer funds relating to the closing and initial delivery of the Bonds in the manner disclosed in the closing memorandum as prepared by the Issuer's financial advisor or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum acknowledged by the financial advisor or the Issuer as the final closing memorandwn. The Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's reliance upon and compliance with such instructions. (f) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (g) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals oflssuer. (a) The recitals contained herein and in the Bonds shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. (b) The Bank shall in no event be liable to the Issuer, any Owner or Owners, or any other Person for any amount due on any Bond except as otherwise expressly provided herein with respect to the liability of the Bank for its duties under this Agreement. Section 5.04. May Hold Bonds. The Banlc, in its individual or any other capacity, may become the Owner or pledgee of Bonds and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Money Held by Bank. (a) Money held by the Bank hereunder need not be segregated from any other funds provided appropriate accounts are maintained. (b) hereunder. The Bank shall be under no liability for interest on any money received by it (c) Subject to the provisions of Title 6, Texas Property Code, any money deposited with the Bank for the payment of the principal, redemption premium, if any, or interest on any Bond and remaining unclaimed for three years after final maturity of the Bond has become due and payable will be paid by the Bank to the Issuer, and the Owner of such Bond shall thereafter -7-us 23622Sv.1 look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. (d) The Bank will comply with the reporting requirements of Chapter 74 of the Texas Property Code. (e) The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a paying agent capacity for the payment of the Bonds, with such moneys in the account that exceed the deposit insurance, available to the Issuer, provided by the Federal Deposit Insurance Corporation to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent practicable under the laws of the United States of America to secure and be pledged as collateral for trust accounts until the principal and interest on the Bonds have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account unless the owner of such Bonds shall, at its own expense and risk, request such other medium of payment. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Banlc, its officers, directors, employees, and agents for, and hold them hannless against, any loss, liability, or expense incurred without negligence or bad faith on their part arising out of or in connection with its acceptance or administration of the Bank's duties hereunder, and under Article V of the Bond Ordinance, including the cost and expense (including its counsel fees) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demands or controversy over its persons as well as funds on deposit in a court of competent jurisdiction within the State of Texas; waive personal service of any process; and agree that service of process by certified or registered mail, return receipt requested, to the address set forth in this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any person claiming any interest herein. ARTICLE VI MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereof. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization. direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank. respectively, at the addresses shown below: -8- US 236225v.l (a) if to the Issuer: if to the Banlc CityofLubbock, Texas 1625 13th Street Lubbock, Texas 79457 Attention: Chief Financial Officer The Bank of New York Mellon Trust Company, N.A. 200 I Bryan Street, 8th Floor Dallas, Texas 75201 Attention: Corporate Trust Department Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Separability. If any provision herein shall be invalid, illegal, or wienforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Bond Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar, and if any conflict exists between this Agreement and the Bond Ordinance, the Bond Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Tennination. (a) This Agreement will terminate on the date of final payment by the Bank issuing its checks for the final payment of principal, redemption premium, if any, and interest of the Bonds. (b) This Agreement may be earlier temlinated upon sixty (60) days written notice by either party; provided, that, no termination shall be effective until a successor has been appointed by the Issuer and has accepted the duties imposed by this Agreement. A resigning Paying Agent/Registrar may petition any court of competent jurisdiction for the appointment of a successor Paying Agent/Registrar if an instrument of acceptance by a successor Paying Agent/Registrar has not been delivered to the resigning Paying Agent/Registrar within sixty (60) days after the giving of notice of resignation. -9- US 236225v. I ) ) ) ) (c) The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. -10- US 236225v.l ) ) ) IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. CllY OF LUBBOCK, TEXAS By: -~"--A,,4"-~------'---~--'-'· '--·- Tom Martin, Mayor ATTEST: Rebecca Garza, City Secretary US 236225v. I ) US 236225v.1 THE BANK OF NEW YORK MELLON TRUST COMP ANY, N.A. By: Title: Senior Associate ANNEX"A" SCHEDULE OF FEES FOR SERVICE AS PAYING AGENT/REGISTRAR US 236225v.1 ) ) ) '\ • BNY MELLON CORPORATE TRUST Fee Schedule City of Lubbock, TX General Obligation Bonds, Series 2010A . ' --..J~ -~-.•~ ~~~ # •• .:~?:~>~~liI:~ .·· ;..,, :.:~ -:¾-' ~~~P.i.al)ce ~1!~:·. _ -t~ ,.• : . -~tf:ii~.i.¥/F: ;.,f '''€;~-one,; A one-time charge covering the Bank Officer's review of governing documents, communication with members of the closing party, including representatives of the issuer, investment banker(s) and attomey(s), establishment of procedures and controls, set-up of trust accounts and tickler suspense items and the receipt and disbursement/investment of bond proceeds. This fee is payable on the closing date. ~.'1: ·-~---~·-"-r,.:,,.. .. ,.;:,,,;, ' •• _,~-· • .;-. -· ••••.• =:-!""'"'"'' ' . , . ~ ,Jr.;.··~.:...'t\~i~~:~·~ r~..>tt-,k:.t~.-;... . •( "'~*~,-,:·-:: /i-:-:~~-.. ·: :~... . .. ":~.-~tt .• :..~-df:..~ •~;,(;-~:.<-·~,. , Anm~a1:PaY.ing1Kgefit AaministraJion Fee ;-:~-~k~_ ... ,~..;__~:te~ ,• ·-~-, .. :-:<,~r_"'--~··1~~-:~~l!:$500 . . ~ .. -~,v.~·i~~~i/!$-~_.. .. :••.. . a.:~··. · ...... ~~~~j .. ,:::.. •• ,(·--~-~ -~~r--· ... \ . An annuaJ charge covering the normal paying agent duties related to account administration and bondholder services. Our pricing is based on the assumption that the bonds are DTC-eligible/book-entry only. If the bonds are certificated or physical, then we will have to charge an additional $ 1000 per year as a paying agent This fee is payable annually, in advance. . ·•' :: _:~j: ~~~:::~i~ff~/ r ~~~~f:¼~:.@·:-~?f\.P • Extraordinary S-erv1~9lM1sc.Fees: •r:-.~~-.~:r,l~~t;:,si~>i:~c:· ;. -~--. ;.~¼-~~ ...:l\.Ai"b.+i' . .. + ~ :"" ... ,~ -;;_, ........... -~i:(.l:-'•~·~•,. ( The charges for performing extraordinary or other services not contemplated at the time of the execution of the transaction or not specifically covered elsewhere in this schedule will be commensurate with the service to be provided and may be charged in BNY Mellon's sole discretion. If it is contemplated that the Trustee hold and/or value collateral or enter into any investment contract, forward purchase or similar or other agreement, additional acceptance, administration and counsel review fees will be applicable to the agreement governing such services. If the bonds are converted to certificated form, additional annual fees will be charged for any applicable tender agent and/or registrar/paying agent services. Additional information will be provided at such time. Should this transaction terminate prior to closing, all out-of-pocket expenses incurred, including legal fees, will be billed at cost. If all outstanding bonds of a series are defeased or called in full prior to their maturity, a termination fee may be assessed at that time. These extraordinary services may include, but are not limited to, supplemental agreements, consent operations, unusual releases, tender processing, sinking fund redemptions, failed remarketing processing, the preparation of special or interim reports, custody of collateral, a one-time fee to be charged upon termination of an engagement. Counsel, accountants, special agents and others will be charged at the actual amount of fees and expenses billed, UCC filing fees, money market sweep fees, auditor confirmation fees, wire transfer fees, transaction fees to settle third-party trades and reconcilement fees to balance trust account balances to third- party investment provider statements Annual fees include one standard audit confirmation per year without charge. Standard audit confirmations include the final maturity date, principal paid, principal outstanding, interest cycle, interest paid, cash and asset information, interest rate, and asset statement information. Non-standard audit confirmation requests may be assessed an additional fee. Periodic tenders, sinking fund, optional or extraordinary call redemptions will be assessed at $300 per event. ,. ~:-1~&'\l\~~ :...-..;!_> ~•--,•• Other Miscellan~}>~~!,tiS: · 1·1~ifJ}f ~:- FDIC or other governmental charges will be passed along to you as incurred. 2001 Bryan-11"' Floor Dallas, TX 75201 1 ) ) ) ) ) • BNY MELLON CORPORATE TRUST Terms and Disclosures Terms of Proposal Final acceptance of the appointment under the Indenture is subject to approval of authorized officers of BNYM and full review and execution of all documentation related hereto. Please note that if this transaction does not close, you will be responsible for paying any expenses incurred, including Counsel Fees. We reserve the right to terminate this offer if we do not enter into final written documents within three months from the date this document is first transmitted to you. Fees may be subject to adjustment during the life of the engagement. Customer Notice Required by the USA Patriot Act To help the US government fight the funding of terrorism and money laundering activities, US Federal law requires all financial institutions to obtain, verify, and record information that identifies each person (whether an individual or organization) for which a relationship is established. What this means to you: When you establish a relationship with BNYM, we will ask you to provide certain information (and documents) that will help us to identify you. We will ask for your organization's name, physical address, tax identification or other government registration nwnber and other information that will help us to identify you. We may also ask for a Certificate of Incorporation or similar document or other pertinent identifying documentation for your type of organization. We thank you for your assistance. 200 l Bryan -11 " Floor Dallas, TX 7 520 I • BNY MELLON CORPORATE TRUST Fee Schedule City of Lubbock, TX General Obligation Bonds, Series 2010B Acceptance Fee None A one-time charge covering the Bank Officer's review of governing documents, communication with members of the closing party, including representatives of the issuer, invesbnent bank.er(s) and attomey(s), establishment of procedures and controls, set-up of trust accounts and tickler suspense items and the receipt and disbursement/investment of bond proceeds. This fee is payable on the closing date. Annual Paying Agent Administration Fee $500 An annual charge covering the normal paying agent duties related to account administration and bondholder services. Our pricing is based on the assumption that the bonds are OTC-eligible/book-entry only. If the bonds are certificated or physical, then we will have to charge an additional $1000 per year as a paying agent. This fee is payable annually, in advance. Extraordinary Services/Misc Fees: At Appraisal The charges for performing extraordinary or other services not contemplated at the time of the execution of the transaction or not specifically covered elsewhere in this schedule will be commensurate with the service to be provided and may be charged in BNY Mellon's sole discretion. If it is contemplated that the Trustee hold and/or value collateral or enter into any investment contract, forward purchase or similar or other agreement, additional acceptance, administration and counsel review fees will be applicable to the agreement governing such services. If the bonds are converted to certificated form, additional annual fees will be charged for any applicable tender agent and/or registrar/paying agent services. Additional information will be provided at such time. Should this transaction terminate prior to closing, all out-of-pocket expenses incurred, including legal fees, will be billed at cost. If all outstanding bonds of a series are defeased or called in full prior to their maturity, a termination fee may be assessed at that time. These extraordinary services may include, but are not limited to, supplemental agreements, consent operations, unusual releases, tender processing, sinking fund redemptions, failed remarketing processing, the preparation of special or interim reports, custody of collateral, a one-time fee to be charged upon termination of an engagement. Counsel, accountants, special agents and others will be charged at the actual amount of fees and expenses billed, UCC filing fees, money market sweep fees, auditor confirmation fees, wire transfer fees, transaction fees to settle third-party trades and reconcilement fees to balance trust account balances to third- party investment provider statements Annual fees include one standard audit confirmation per year without charge. Standard audit confirmations include the final maturity date, principal paid, principal outstanding, interest cycle, interest paid, cash and asset information, interest rate, and asset statement information. Non-standard audit confirmation requests may be assessed an additional fee. Periodic tenders, sinking fund, optional or extraordinary call redemptions will be assessed at $300 per event. Other Miscellaneous Fees: At Appraisal -~--'"""'----FDIC or other governmental charges will be passed along to you as incurred. 2001 Bryan -11111 Floor Dallas, TX 75201 • BNY MELLON CORPORATE TRUST Terms and Disclosures Terms of Proposal Final acceptance of the appointment under the Indenture is subject to approval of authorized officers of BNYM and full review and execution of all documentation related hereto. Please note that if this transaction does not close, you will be responsible for paying any expenses incurred, including Counsel Fees. We reserve the right to terminate this offer if we do not enter into final written documents within three months from the date this document is first transmitted to you. Fees may be subject to adjustment during the life of the engagement. Customer Notice Required by the USA Patriot Act To help the US government fight the funding of terrorism and money laundering activities, US Federal law requires all financial institutions to obtain, verify, and record information that identifies each person (whether an individual or organization) for which a relationship is established. What this means to you: When you establish a relationship with BNYM, we will ask you to provide certain infonnation (and documents) that will help us to identify you. We will ask for your organization's name, physical address, tax identification or other government registration number and other information that will help us to identify you. We may also ask for a Certificate of Incorporation or similar document or other pertinent identifying documentation for your type of organization. We thank you for your assistance. 200 I Bryan -1 I .. Floor Dallas, TX 7 520 I ) PRELll\11NAR\' OFFICIAL STATEMENT DA TEO JANUARY 8. 2010 In the opinion of Bond Counsel, under ex isling law, the interesl on the Series 201 0A Bonds will be excludable from gross income for federal income tax purposes, subject to the matters described in "TAX MATTERS -TAX EXEMPTION OF SERIES 20\0A BONDS AND SERIES 2010A CERTIFICATES" below and is not a specific preference item or included in a corporalion's adjusted current earnings for purposes of the alternative minimum tax. See ''TAX MATTERS-TAX EXEMPTION OF SERIES 2010A BONDS AND SERIES 20\0A CERTIFICATES" for a discussion of the opinion of Bond Counsel. Interest on the Series 2010B Bonds is not excludable from gross income for federal income tax pwposes. See "TAX MATTERS-SERIES 20108 BONDS AND SERIES 20108 CERTIFICATES" herein. NEW ISSUE: BOOK-ENTRY-ONLY fl~ Iubb&ck TEXAS Dated: Date of Delivery RATINGS: Moody's lnveston Service, lac. "Aal" Standard & Poor's Ratings Services "AA+" Fitch Ratings "AA" See "OTHER lNFORMATION -RATINGS" herein. CITY OF LUBBOCK, TEXAS $6,330,000* GENERAL OBLIGATION BONDS, SERIES 2010A $17,800,000* GENERAL OBLIGATION BONDS, TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DIRECT PAYMENT) Due: February IS. as shown herein Principal of and interest on the $6,330,000• City of Lubbock, Texas, General Obligation Bonds, Series 2010A (lhe wseries 2010A Bonds") and the $17,800,000• General Obligation Bonds, Taxable Series 20108 (Build America Bonds -Direct Payment) (the "Series 20\0B Bonds", and collectively with the Series 2010A Bonds, the "Bonds") issued by the City of Lubbock, Texas (the "City") are payable by The Bank of New York Mellon Trust Company, National Association, Dallas, Te;,i;as (the "Paying Agent/Registrar''). The Bonds are initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entl)'-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations ofSS,000 or integral multiples thereof. No physlcal delivery of Ille Bonds will be made to the beneficial ownen thereof. Principal of and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the beneficial owners of the Bonds. See "THE OBLIGATIONS -BOOK-ENTRY-ONLY SYSTEM" herein. Interest on the Bonds will be c:alculated on the basis of a 360- day year consisting of twelve 30-<lay months, will accrue from their date of delivery, and is payable on February JS and Aug\lSt 15 of each year, commencing February 15, 201 I, until maturity or earlier redemption, to the registered owners (initially Cede & Co.) appearing on the registration books of the Payiog Agent/Registrar on the last business day of the month preceding each interest payment date (the "Record Date") (see "THE OBLIGATIONS - DESCRIPTION OF THE OBLIGATIONS"). The Bonds are subject to optional redemption prior to their scheduled maturities at the option of the City (see "THE OBLIGATIONS -OPTIONAL REDEMPTION"). In addition, the Series 2010B Bonds are subject to e"traordinary optional redemption prior to their scheduled maturities (see ''THE OBLIGATIONS -EXTRAORDINARY OPTIONAL REDEMPTION"). The Bonds constitute direct obligations of the City and are payable from the proceeds of a continuing, direct annual ad valorem tax, levied within the limits prescribed by law, against all taxable property within the City. The American Recovery and Reinvestment Act of 2009 (the "Recovery Act") authorizes the City to issue taxable obligations known as "Build America Bonds" to finance capital expenditures that could be financed with the issuance of tax-e"empt bonds and to elect to receive a subsidy payment from the federal government equal to 35% of the amount of each interest payment on such taxable bonds. The Cily anticipates and reserves !he right to sell and issue all of the Series 201 OB Bonds as obligations that are not obligations described in section I 03(a) of the Internal Revenue Code (the "Code") and the interest on which is not e"cludable from gross income for federal income tax purposes. The available subsidy for the Series 20108 Bonds would be paid to the City. No holders of Series 20108 Bonds are entitled to such payment or to receive a tax credit with respect to the Series 2010B Bonds. See "THE OBLIGATIONS -DESIGNATION OF SERIES 20108 BONDS AND SERIES 201 OB CERTIFICATES AS BUILD AMERICA BONDS." The Bonds are issued ])lll"SUant to the Constitution and general laws of the State of Texas, particularly Chapter 1331 and 1371, Te,i:as Government Code, as amended, elections held in the City on May IS, 2004 and November 3. 2009, and an ordinance adopted by Ute City Council (the "Bond Ordinance''). The Series 2010A Bonds and the Series 2010B Bonds are being offered by the City concurrently with the "City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series ZOIOA" (the "Series 2010A Certificates") and the "City of Lubbock, Texas, Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 20l0B (Build America Bonds-Direct Payment)" (the "Series 20\0B Certificates" and collectively, with the Series 2010A Certificates, the "Certificates") 1111d such Bonds and Cenificates are hereinafter sometimes rel'em!d to collectively as the "Obligations." The Series 2010A Bonds, the Series 2010B Bonds, the Series 2010A Certificates and the Series 2010B Certificates are separate and distinct securities offerings and each such offering is being issued a~ sold independently except for the Official Statement, and while each offering shares certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including without limitation the type of obligation being offered, its terms for payment, the security for its payment, and the rights of the holders. The Bonds are offered when, as and if issued, subject to the approving opinion of the Anorney General of the State of Texas and the opinion of Vinson & Elkins L.LP., Bond Counsel, Dallas, Te;,i;as, Cenain legal matters will be passed upon for the underwriters named below (the "Underwriters") by their counsel, McCall, Parkhurst & Horton L.L.P., Dallas, Texas. See "OTHER INFORMATION -LEGAL MATTERS." Delivery of lhe Bonds through The Depositoiy Trust Company is expected to be on or about Febroary 4, 2010. Hutcbiosoo, Shockey, Erley & Co. Morgan Keegan & Company, foe. • Preliminary, subject to change. FlntSoutbwest J,P. Morgan Southwest Securides ) ) ) Maturi~ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Maturicy 2011 2012 2013 ) 2014 2015 2016 2017 $ $ Principal Amount• 470,000 900,000 925,000 955,000 985,000 1,025,000 1,070,000 Principal Amount• (c) PRINCIPAL AMOUNTS, INTEREST RATES AND PRICES $6,330,000* General Obligation Bonds, Series 2010A (Due February 15) Interest Offering CUSIP Principal Rate Yield (a) Nos. (b) Maturify Amount• % % 2021 (c) $ 2022 (c) 2023 (c) 2024 (c) 2025 (c) 2026 (c) 2027 (c) 2028 (c) 2029 (c) 2030 (c) (Interest to accrue from the date of delivery) $17,800,000* General Obligation Bonds, Taxable Series 2010B (di (Build America Bonds -Direct Payment) (Due February 15) CUSIP Preftx: 549188 Interest Rate % Offering Yield (a) % Interest Offering CUSIP Principal Interest Offering Rate Yield~a) Nos.~) Maturi~ Amount• Rate Yield (a) % % 2021 (c) $ 1,210,000 % % 2022 (c) 1,255,000 2023 (c) 1,295,000 2024 (c) 1,345,000 2025 (c) 1,405,000 2026 (c) 1,455,000 2027 (c) 1,510,000 2018 1,105,000 2028 (c) 1 ,S75,000 ) ) ) 2019 2020 * 1,135,000 1,170,000 (c) Preliminary, subject to change. 2029 (c) 1,635,000 2030 (c) 1,705,000 (Interest to accrue from the date of delivery) (a) The initial yields will be established by and are the sole responsibility ofllle UndefWriters, and may subsequently be changed. (b) CUSIP numbers have been assigned to the Bonds by Standard and Poor's CUSIP Service Bureau, a Division of The McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered ownefS of the Bonds. Neither the City, the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set fonh herein. (c) The Bonds maturing on February IS, 2020 and thereafter are subject to redemption, at the option of the City, at par value thereof plus accrued interest to the date of redemption, on February 15, 2019 or any date thereafter (see "THE OBLIGATIONS -OPTIONAL REDEMPTION"). (d) The Series 20108 Bonds are also subject to extraordinary optional redemption (see ''THE OBLIGATIONS -EXTRAORDINARY OPTIONAL REDEMPTION"). CUSIP Nos. (b) CUSIP Nos. (b} "'I ' \ PRELIMINARY OFFICIAL ST A TEMENT DA TED JANUARY 8, 2010 In the opinion of Bond Counse 1, under existing law, the interest on the Series 20 IOA Certificates will be excludable &om gross income for federal income tax purposes, subject to the matters described in ''TAX MA ITERS-TAX EXEMPTION OF SERIES 2010A BONDS AND SERIES 201 OA CERTIFICATES" below and is not a specific preference item or included in a corporation· s adjusted eurrer11 earnings for purposes of the alternative mini mum tax. See MT AX MATTERS -TAX EXEMPTION OF SERIES 20\0A BONDS AND SERIES 2010A CERTIFICATES" for a discussion of the opinion of Bond Counsel. Interest on the Series 2010B Certificates is not excludable from gross income for federal income tax purposes. See "TAX MATTERS -SERIES 20!0B BONDS AND SERIES 20108 CERTIFICATES" herein. NEW ISSUE: BOOK-ENTRY-ONLY ' ~"~ ·ty f lubOo~~ Dated: Date or Delivery RA TINGS: Moody's Investors Service, Inc. "Aa3" Standard & Poor's Ratings Services "AA+" Fit&:11 Ratings .. AA" See "OTHER INFORMATION -RATINGS" herein. CITY OF LUBBOCK, TEXAS $39,620,000* TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A $107,750,000* TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, TAXABLE SERIES 2010B (BUILD AMERICA BONDS-DIRECT PAYMENI) Due: February IS, as shown herein Principal of and i nteres1 on the S3 9 ,620,000* City of Lubbock, Texas, Tax and Watenvorks System Surplus Revenue Certificates of Obi igation, Series 20 I OA (the "Series 2010A Certificates") and the $107,750,000• Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 20!0B (Build America Bonds -Direct Payment) (lhe "Series 20108 Certificates", and collectively with the Series 201 OA Certificates, the ~Certificates") issued by the City of Lubbock, Texas (the "City") are payable by The Bank of New York Mellon Trust Company, National Association, Dallas, Texas (the "Paying Agent/Registrar"). The Certificates an: initially registered and delivered only to Cede & Co., the nominee of The Depositoiy Trust Company ("DTC'') pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations ofS5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the beneflcial own en thereof. Principal of and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the beneficial owners of the Certificates. See "THE OBLIGATIONS -BOOK-ENTRY-ONLY SYSTEM" herein. Interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months, will accrue from their date of delivery, and is payable on February 15 and August 15 of each year, commencing February 15, 201 I, until maturity or earlier redemption, to the registered owners (initially Cede & Co.) appearing on the registration books of the Paying Agent/Registrar on the last business day of the month preceding each interest payment date (the "Record Date") (see "TIJE 08LIGA llONS - DESCRIPTION OF THE OBLIGATIONS"). The Certificates are subject to optional redemption prior lo their scheduled maturities at the option of the City (see ''THE OBLIGATIONS -OPTIONAL REDEMPTION"). In addition, the Series 20108 Certificates are subject to exiraordinruy optional redemption prior to their scheduled maturities (see "THE OBLIGATIONS-EXTRAORDINARY OPTIONAL REDEMPTION''). The Certificates are payable from a combination of (i) the proceeds of a continuing, direct annual ad valorem tax, levied within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of suTplus net revenues of the City's Waterworks System, not to exceed Sl,000. The American Recovery and Reinvestment Act of 2009 (the "Recoveiy Act") authorizes the City to issue taxable obligations known as "Build America Bonds" to finance capilal expenditures that could be financed with the issuance of tax-exempt bonds and to elect to receive a subsidy payment from the federal government equal to 3 5% of the amount of each interest payment on such laxable bonds. The City anticipates and reserves the right to sell and issue al I of the Series 2010B Certificates as obligations that are not obligations described in section 103(a) of the lntemal Revenue Code (the ''Code") and the interest on which is not excludab le from gross income for federal income tax purposes. The available subsidy for the Series 20 I OB Certificates would be paid to the City. No holders of Series 20108 Certificates are entitled lo such payment or to receive a tax credit with respect to the Series 20l0B Certificates. See MTIIE OBLIGATIONS -DESIGNATION OF SERIES 20 I DB BONDS AND SERIES 20108 CERTIFICATES AS BUILD AMERICA BONDS." The Certificates are issued pursuant to lhe Constitution and general laws of the State of Texas, particularly subchapter C of Chapter 271, Texas Local Government Code, as amended, Chapter 1371, Texas Government Code, as amended, and an ordin.u,ce adopted by the City Council (the "Certificate Ordinance"). The Series 20 I 0A Certificates and the Series 20 I OB Certificates are being offered by the City concurrently with the ''City of Lubbock, Texas, General Obligation Bonds, Series 20IOA" (the "Series 20!0A Bonds") and the "City of Lubbock, Texas, General Obligation Bonds, Taxable Series 20108 (Build America Bonds -Direct Payment)" (the MSeries 20l0B Bonds" and collectively with the Series 2010A Bonds, the "Bonds'') and such Certificates and Bonds are hereinafter sometimes referred to collectively as the "Obligations." The Series 20 I OA Certificates, the Series 20 I OB Certificates, the Series 20 I 0A Bonds and the Series 201 OB Bonds are separate and distinct securities offerings and each such offering is being issued and sold independently except for the Official Statement, and while each offering shares certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including without limitation the type of obligation being offered, its terms for payment, the security for its payment, and the rights of the holders. The Certificates are offered when, as and if issued, subj~t to the approving opinion of the Attorney General of the State of Texas and the opinion of Vinson & Elkins L.L.P., Bond Counsel, Dallas, Texas. Certain legal matters will be passed upon for the underwriters named below (the "Underwriters'') by their counsel, McCall, Parkhurst & Horton L.L.P., Dallas, Texas. See "OTHER INFORMATION -LEGAL MATTERS." Delivery of the Certificates through The Depository Trust Company is e)(pected to be on or about February 4, 20 I 0. Hutchinson, Shockey, Erley & Co. Morgan Keegan & Company, Inc. • Preliminary, subject 10 change. F1rst8outhwest J.P. Morgan Southwest Securities ) Maturi!l 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Maturio/ 201 I 2012 2013 2014 2015 2016 2017 $ PRINCIPAL AMOUNTS, INTEREST RATES AND PRICES CUSJP Prefix: 549188 $39,620,000* Tax and Waterworks System Surplus Revenue Certificates of Obligation, Serles 2010A Principal Interest Amount• Rate 2,390,000 % 5,695,000 5,895,000 6,110,000 6,305,000 6,515,000 6,710,000 (C) (Due February 15) Offering CUSIP Principal Yield (a) Nos.(b) Maturity Amount• % 2021 (c) $ 2022 (c) 2023 (c) 2024 (c) 2025 (c) 2026 (c) 2027 (c) 2028 (c) 2029 (c) 2030 (c) (Interest to accrue from the date of delivery) Interest Rate % Offering Yield (a) % CUSIP Nos. (b) $107,750,000* Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 2010B (dl (Build America Bonds -Direct Payment) $ Principal Amount• Interest Rate % Offering Yield (a) % (Due February 15) CUSIP Nos. (b) Maturity 2021 (c) 2022 (c) 2023 (c) 2024 (c) 2025 (c) 2026 (c) 2027 (c) Principal Interest Offering CUSIP Amount• Rate Yield !a} Nos. (b) $ 7,280,000 % % 7,530,000 7,795,000 8,080,000 8,390,000 8,735,000 9,085,000 2018 6,895,000 2028 (c) 9,455,000 2019 7,100,000 2029 (c) 9,840,000 2020 7,325,000 (c) 2030 (c) 10,240,000 (Interest to accrue from the date of delivery) • Preliminary, subject to change . (a) The inicial yields will be establisned by and are the sole responsibility of the Underwriters, and may subsequently be changed. (b) CUSIP numbers have been assigned to the Certificates by Standard and Poor's CUSIP Service Bureau, a Division of The McGraw-Hill Companies, Inc., and are included so le!y for the convenience of the registered owners of the Certificates. Neither the City, the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers set fonh herein. ( c) The Certi fie ates maturing on Februaiy 1 S, 2020 and thereafter are subject to redemption, at the option of the City, at par value thereof plus accrued interest to the date of redemption, on February 15, 2019 or any date !hereafter (see ''THE OBLIGATIONS -OPTIONAL REDEMPTION''). (d) The Series 2010B Certificates are also subject to extraordinary optional redemption (see ''THE OBLIGATIONS -EXTRAORDINARY OPTIONAL REDEMPTION''). ) ) ' USE OF INFORMATION IN OFFICIAL STATEMENT For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document may be treated as a Preliminary Official Statement of the City with respect lo the Obligations described herein deemed "final" by the City as of its date except for the omission ofno more than the infonnation pennitted by Rule 15c2-12. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representation other than those contained in this Official Statement, and. if given or made, such other information or representations must not be relied upon as having been authorized by the City. This Official Statement is not to be used in an offer to sell or the solicitation of an offer to buy in any state 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 lo any person 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 likelihood that they will be realized. Any infonnation and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the condition of the City or other matters described herein since the date hereof. See "OTHER INFORMATION -CONTINUING DISCLOSURE OF INFORMATION' for a description of the City's undertaking to provide certain information on a continuing basis. The information 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 infonnation and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder shall create any implication 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 are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinions or that they will be realized. IN CONNECTION WI11I THE OFFERING, THE UNDERWRITERS MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OBLIGATIONS AT A LEVEL ABOVE THAT WHICH MIGHT PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the infonnation in this Official Statement in accordance with, and as part of, their responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. THE COVER PAGES CONTAIN CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY AND ARE NOT INTENDED AS A SUMMARY OF TI-US OFFERING. INVESTORS SHOULD READ TI-US ENTIRE OFFICIAL STATEMENT, INCLUDING THE ATTACHED APPENDICES, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. THE OBLIGATIONS HA VE 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 OBLIGATlONS HAVE 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 21 E OF TI:IE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHrEVEMENTS TO BE DIFFERENT FROM FUTURE RESULTS, PERFORMANCE AND ACHIEVEMENTS EXPRESSED OR IMPLrED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. Neither the City, its financial advisor, nor the Underwriters make any representation or wananty with respect to the information contained in this Official Statement regarding the Depository Trust Company ("OTC") or its book-entry-only system herein, as such information has been provided by DTC. TABLE OF CONTENTS ~ OFFICIAL STATEMENT SUM.MARY .................... 7 INTRODUCTION ....................................................... 11 DESCRIPTION OF THE CITY .......................... 1 I THE OBLIGATIONS ................................................. 12 DESCRIPTION OF THE OBLIGATIONS ........ 12 DESIGNATION OF SERIES 20IOB BONDS AND SERIES 2010B CERTIFICATES AS BUILD AMERICA BONDS ...................... 12 Build America Bonds ........................................... 12 Interest Subsidy Payment ..................................... 12 Series 2010B Bonds and Series 20108 Certificates................................................... 12 AUTHORITY FOR ISSUANCE ......................... 12 SECURITY AND SOURCE OF PAYMENT .... 13 TAXRATELIMITATION ................................. 13 OPTIONAL REDEMPTION ............................... 13 EXTRAORDINARY OPTIONAL REDEMPTION ........................................... 13 NOTICE OF REDEMPTION .............................. 13 AMENDMENTS .................................................. 14 DEFEASANCE .................................................... 14 BOOK-ENTRY-ONLY SYSTEM ...................... 14 Use of Certain Terms in Other Sections of this Official Statement. ....................................... 16 PAYINGAGENT/REGISTRAR ........................ 16 TRANSFER, EXCHANGE AND REGISTRATION ........................................ 16 RECORD DATE FOR INTEREST PAYMENT 17 REMEDIES .......................................................... 17 SOURCES AND USES OF PROCEEDS ........... 18 AD V ALOREM TAX JNFOR'\1A TION .................. 18 ADVALOREMTAXLAW ............................... 18 EFFECTIVE TAX RA TE AND ROLLBACK TAX RATE ................................................. 20 PROPERTY ASSESSMENT AND TAX PAYMENT .................................................. 20 PENAL TIES AND INTEREST .......................... 20 CITY APPLICATION OF TAX CODE ............. 21 TAX ABATEMENT POLlCIES ......................... 21 TAX INCREMENT FINANCING WNES ....... 21 FINANCIAL INFORiVIATlON ................................. 23 FINANCIAL POLICIES ............................................ 37 POLICIES ............................................................. 37 ADMINISTRATION ........................................... 38 INVESTMENTS .......................................................... 39 LEGAL INVESTMENTS .................................... 39 INVESTMENT POLICIES ................................. 40 ADDITIONAL PROVISIONS ............................ 40 TAX MATTERS .......................................................... 4.1 TAX EXEMPTION OF SERIES 20I0A BONDS AND SERIES 201 0A CERTIFICATES ......................................... 41 ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE TAX-EXEMPT OBLIGATIONS ...... 41 Collateral Tax Consequences ............................... 41 Tax Accounting Treatment of Original Issue 6 Premiwn ....................................................... 41 Long First Coupon Consequences ....................... 42 Tax Accounting Treatment of Original Issue Discount Tax-Exempt Obligations ............. 42 SERIES 2010B BONDS AND SERIES 20108 CERTIFICATES ......................................... 43 In General ............................................................. 43 Payinents of Interest ............................................. 43 Long First Coupon Consequences ....................... 43 Original Issue Discount ........................................ 43 Accrual Method Election ..................................... 44 Disposition or Retirement .................................... 44 Defeasance of the Taxable Obligations ............... 44 Information Reporting and Backup Withholding 44 Treasury Circular 230 Disclosure ........................ 44 OTHER I NFO.R.t'\f.A TION ......................................... 45 RATINGS ............................................................. 45 LITIGATION ....................................................... 45 INVESTIGATIONS RELATING TO CITY'S HEAL TH INSURANCE ADMINISTRATOR. ................................... 46 REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE ...................... 46 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLlC FUNDS IN TEXAS ........................................................ 47 LEGAL MATTERS ............................................. 47 CONTINUING DISCLOSURE OF INFORMATION ......................................... 47 Annual Reports; .................................................... 47 Material Event Notices ......................................... 48 Availability of Information .................................. 48 Limitations and Amendments .............................. 48 Compliance with Prior Undertakings .................. 48 FINANCIAL ADVISOR ..................................... 48 UNDERWRITING ............................................... 48 FORWARD-LOOKING STATEMENTS DISCLAIMER ............................................ 49 MISCELLANEOUS ............................................ 49 APPENDICES APPENDIX A -EXCERPTS FROM ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30. 2008 APPENDIX B -FORMS OF BOND COUNSEL OPlNIONS ) ) ) ) OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the 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 corporation of the State, located in Lubbock County, Texas. The City covers approximately 119.1 square miles and has an estimated 2009 population of219,643 (see "INTRODUCTION -DESCRimON Of THE CITY''). THE BONDS ....................................... The Bonds are issued as $6,330,000• General Obligation Bonds, Series 2010A (the "Series 2010A Bonds") and $17,800,000• General Obligation Bonds, Taxable Series 2010B (Build America Bonds -Direct Payment) (the "Series 20108 Bonds" and collectively with the Series 2010A Bonds, the "Bonds''). The Series 2010A Bonds are dated January 15, 2010, and mature on February 15 in each of the years 2011 through 2017•. The Series 2010B Bonds are dated January IS, 2010, and mature on February 15 in each of the years 2018 through 2030•. THE CERTIF1CATES ....................... The Certificates are issued as $39,620,000* Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A (the "Series 2010A Certificates") and $107,750,000"' Tax and Waterworks System Surplus Revenue Certificates of Obligation, Tax.able Series 2010B (Build America Bonds -Direct Payment) (the "Series 2010B Certificates" and collectively with the Series 20 IOA Certificates, the "Certificates"). The Series 2010A Certificates are dated January IS, 2010, and mature on February 15 in each of the years 2011 through 2017*. The Series 2010B Certificates are dated January 15, 20l0, and mature on February IS in each of the years 2018 through 2030*. PAYMENT OF INTEREST ............... Interest on the Bonds and the Certificates (collectively, the ''Obligations") accrues from their date of delivery, and is payable February 15, 2011 and each August IS and February 15 thereafter until maturity or prior redemption (see ''THE OBLIGATIONS - DESCRIPTION OF THE OBLIGATIONS"). AUTHORITY FOR ISSUANCE ....... The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, particularly Chapters 1331 and 1371, Texas Government Code, as amended, elections held in the City on 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 I 371, Texas Government Code, as amended, and 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 continuing, direct annual ad valorem tax, levied within the limits prescribed by law, against all taxable property within the City. SECURITY FOR THE CERTIFICATES ................................ The Certificates are payable from a combination of (i) the proceeds of a continuing, direct annual ad valorem tax, levied within the limits prescribed by law, 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 optij)ll, to redeem Obligations having stated maturities on and after February IS, 2020, in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on Febnwy 15, 20 I 9, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS - OPTIONAL REDEMPTION"). EXTRAORDINARY OPTIONAL REDEMPTION ............. The Series 20l0B Bonds and Series 2010B Certificates are subject to extraordinary optional redemption on any date through February IS, 2019 in whole or in part in principal amounts of $S,000 or any integral multiple thereof (see ''THE OBLIGATIONS -EXTRAORDINARY OPTIONAL REDEMPTION"). • Preliminary, subject to change. 7 ; ) RA TINGS ............................................ The Obligations are rated "Aa3" by Moody's Investors Service, Inc., "AA+" by Standard & Poor's Ralings Services, a Division of The McGraw-Hill Companies, Inc. and "AA .. by Fitch Ratings (see "OTHER INFORMATION· RATINGS"). TAX MATTERS ................................. In the opinion of Bond Counsel, under existing law, the interest on the Series 2010A Bonds and Series 20IOA Certificates will be excludable from gross income for federal income tax purposes, subject to the matters described in "TAX MATTERS -TAX EXEMPTION OF SERIES 2010A 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 MA TIERS -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 MA TIERS -SERIES 20 I OB BONDS AND SERlES 20108 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) lo pay the costs associated with the issuance of the Bonds. BOOK-ENTRY-ONLY Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for (i) various public improvements including solid waste, drainage, water, street, electric, airport, wastewater 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 of issuance of the Certificates. SYSTEM .............................................. The definitive Obligations will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Obligations may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Obligations will be made to the beneficial owners 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 OTC for subsequent payment to the beneficial owners of the Obligations (see "THE OBLIGATIONS - BOOK-ENTRY-ONLY SYSTEM"). PA VMENT RECORD ........................ The City has never defaulted in payment of its general obligation tax debt. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 8 " ' , SELECTED FINANCIAL INFORMATION FlKal Per Capita General Year Estimated Tauble Taxable Purpolle Ended City Assessed Assessed Funded 30-Sep PDJ!:U lation ••J Valuation Val11atlen Tax Debt'" 2005 209,120 $8,634,994,862 $ 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 0,897,2 I0,563 50,721 101,185,953 2009 218,327 11,673,074,132 53,466 106,303,936 2010 219,643 12,002,616,180 54,646 107, I 78,865 '" '" Source: The CilY. ,., Docs not include sclf-supportcd dd>t. l<l Ptl?limimuy, subj0<t lo chMgC. Includes the Bond<. General Fund Coase>llclated Statement Summary Unaudited 2009 2008 2007 Beginning Balance $ 19,962,275 S 19,125,648 $ 19,924,711 Total Revenues I 02,218,639 I 06,57 l ,5 70 l 02,520,653 Tola! Expenditures 124,321,204 120,345,933 I 17,202,093 Ending Balance 19,881,415 19,962,275 19,125.648 Reserves & Designations Undesignated Fund Balance $ 19,881,415 $ I 9,962,275 $ 19,125.648 For additional infonnation regarding the City, please contact: Andy Burcham ChiefFinancial Offi~r City of Lubbock P.O. Box2000 Lubbock, TX 79457 Phone (806) 775-2149 Fax (806) 775-205 I Matthew Boles RBC Capital Markets CoJpOration 2711 N. Hasell Avenue, Suite 2500 Dallas, TX 75204 Phone (214) 989-1672 Fax (214) 989-1650 Per Capita GePeral Purpose Funded TaxDebt"1 $ 383.56 413.06 435.SI 470.97 486.90 487.97 ,., 2006 $ 17,376,420 97,818,207 I 12.2 78,444 19,924,711 S 19,924,711 Ratio Tax Debt to Assessed Valuation,., 0.93% 0.93% 0.92% 0.93% 0.91% 0.89% 200S $ 12,694,525 104,351,116 103,203,269 17,376,420 S 17,376,420 [THE REMAINDER OF THIS PAGE INTENTIONALLY LETT BLANK] 9 %GI Total Tax Tas CoUections Year 100.28% 2004 99.71% 2005 99.02% 2006 99.62% 2007 98.87% 2008 f<) (In~) 2009 ) ') ELECTED OFFICIALS City Council Tom Martin Mayor Linda Deleon Council Member, District I Floyd Price Council Member, District 2 Todd R. Klein°l Council Member, District 3 Paul R. Beane Council Member, District 4 John W. Leonard, Ill Council Member, District 5 Jim Gilbreath Council Member, District 6 CITY OFFICIALS, STAFF AND CONSULT ANTS Date of Tenn Installation to Office Ex2ires Occupation May2008 May 2010 Retired Police Chief May2004 May 2010 Business Owner May2004 May2012 Retired June2007 May 2010 Radio Show Host June 2008 May 2012 Retired May2006 May2010 Business Owner May2003 May2012 Business Owner 0> Todd R. Klein was elected June 9, 2007, to fill the unexpired term ofDistrict3 Councilman Gary 0. Boren. SELECTED ADMINISTRATIVE STAFF Date ofEmployment D.ite of Employment Total Govenurait Name Position in Current Position with City of Lubbock Service Lee Ann Dumbauld City Manager September 2005 July 2004 2o+- Andy Burcham Chief Financial Officer August:2008 Noveimerl998 II Marsha Reed Chief Operating Officer September 2009 February 1993 26 SamMedina City Attorney October 2009 October 2009 14 Rebecca Ga17.a City Secretary January 2001 August 1996 13 CONSULTANTS AND ADVISORS Auditors ....................................................................................................................................... BKD, LLP Little Rock, Arkansas Bond Counsel .............................................................................................................................. Vinson & Elkins L.L.P. Dallas, Texas Financial Advisor ........................................................................................................................ RBC Capital Markets Corporation Dallas, Texas 10 ) i .., i j OFFICIAL ST A TEMENT RELATING TO CITY OF LUBBOCK, TEXAS $6,330,000* GENERAL OBLIGATION BONDS, SERIES 201 0A $17,800,000* GENERAL OBLIGATION BONDS, TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT) $39,620,000* TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A $107,750,000* TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, TAXABLE SERIES 20108 (BUILD AMERICA BONDS-DIRECT PAYMENT) INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance by the City of Lubbock, Te,.;as (the "City") of its $6,330,000'" General Obligation Bonds, Series 2010A (the "Series 2010A Bonds") and $17,800,000• General Obligation Bonds, Taxable Series 20l0B (Build America Bonds -Direct Payment) (the "Series 2010B Bonds", and collectively with the Series 2010A Bonds, the "Bonds") and $39,620,000"' Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010A (the "Series 2010A Certificates") and the $107,750,000"' Tax and Waterworks System Surplus Revenue Certificates of Obligation, Taxable Series 20108 (Build America Bonds -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 terms used in this Official Statement have the same meanings assigned to such tenns in the Ordinances (as defined herein) authorizing the issuance of the Bonds and the Certificates, except as otherwise indicated herein. The Series 2010A Bonds, the Series 20l0B Bonds, the Series 2010A Certificates and the Series 2010B Certificates are separate and distinct securities offerings and each such offering is being issued and sold separate and apart from the other offering and should be reviewed and analyzed independently, including, among other matters, the kind and type of obligations being offered, their terms for payment, the security for their payment and the rights of the holders. All financial and other information presented in lhis Official Statement has been provided by the City from its records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic inforn1ation and is not intended to indicate future or continuing trends in the financial position or other affairs of the City. No representation is made that past experience, as is shown by that financial and other information, will necessarily continue or be repeated in the future (see "OTIIER INFORMATION -FORWARD- LOOKING STATEMENTS DISCLAIMER"). There follows in this Official Statement descriptions of the Obligations and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, RBC Capital Markets CoJporation, Dallas, Texas. DESCRIPTION OF THE CITY The City is a political subdivision and municipal corporation of the State of Texas (the "State"), duly organi:zed and e,.;isting under the laws of the State. including the City's Home Rule Charter. The City was incorporated in 1909, and first adopted its Horne Rule Charter in 1917. The City operates under a Council/Manager 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 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-numbered year. The City Manager is the chief administrative officer for the City. Some of the services that the City provides are: public safety (police and fire protection), highways and streets, electric, water and sanitary sewer utilities, airport, sanitation and solid waste disposal, health and social services, culture-recreation, public transportation, public improvements, planning and zoning, and general administrative services. The 2000 Census population for the City was 199,564; the estimated 2009 population is 219,643. The City covers approximately 119.1 square miles. * Preliminary, subject to change. II ') ') ) THE OBLIGATIONS DESCRIPTION OF THE OBLIGATIONS The Obligations are dated as of their delivery date and shall bear interest on the unpaid principal amounts from such date, and mature on February 15 in each of the years and in the amounts shown on the respective inside cover pages for each series of Obligations described herein. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on Februaiy 15, 2011, and on each August 15 and February 15 thereafter until maturity or prior redemption. The definitive Obligations will be issued only in fully registered foJm in any 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 ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Obligations will be made to the owners 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 owners of the Obligations. See ''THE OBLIGATIONS • BOOK-ENTRY-ONLY SYSTEM" herein. DESIGNATION OF SERIES 20108 BONDS AND SERIES 20108 CERTIFJCA TES AS BUILD AMERICA BONDS Build America Bonds In February 2009, as part of the Recovery Act, Congress added Sections S4AA and 6431 to the Tax Code, which peJmit state or local governments to obtain certain tax advantages when issuing taxable obligations that meet certain requirements of the Tax Code and the relaled Treasury regulations. Such obligations are referred to as Build America Bonds. A Build America Bond is a qualified bond under Section 54AA(g) of the Tax Code (a "Qualified Build America Bond") ifit meets certain requirements of the Tax Code and the related Treasury Regulations and the issuer has made an irrevocable election to have the special rule for qualified bonds apply. Interest on Qualified Build America Bonds is not excluded from gross income for federal income tax purposes, and owners of Qualified Build America Bonds will not receive any tax credits as a result of ownership 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 a Qualified Build America Bond may apply to receive payments (the .. Interest Subsidy Payment") directly from the Secretary of the U.S. Treasury (the "Secretary"). The amount of an Interest Subsidy Payment is set in Section 6431 of the Tax Code at 35% of the corresponding interest payable on the related Qualified Build America Bond. To receive an Interest Subsidy Payment, under currently existing procedures, the issuer will have to file a tax foJm (now designated as FoJm 8038 CP) between 90 and 45 days prior to the corresponding bond interest payment date. The issuer should expect to receive the Interest Subsidy Payment contemporaneously with the interest payment date with respect to the Qualified Build America Bond. Depending on the timing of the filing and other factors, the Interest Subsidy Payment may be received before or after the corresponding interest payment date. Series 2010B Bonds and Series 20108 Certificates Interest on the Series 2010B Bonds and Series 20108 Certificates will be includible in gross income of the holders thereof for federal income tax purposes and the holders of the Series 20 I OB Bonds and Series 20 I OB Certificates will not be entitled 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 20l0B Bonds and Series 2010B Certificates. Holders of the Series 2010B Bonds and Series 2010B Certificates should consult their tax advisors with respect to the inclusion of interest on the Series 2010B Bonds and Series 20 !OB Certificates in gross income for federal income tax purposes. The City intends lo apply for Interest Subsidy Payment from the Secretary under the "Build America Program" pursuant to Section 6431 of the Tax Code. Such credits, if received by the City, will be used under the Bond Ordinance and Certificate Ordinance to pay interest on, or reimburse the City for the payment of interest on, Series 20108 Bonds and Series 2010B Certificates. No assurances are provided that the City will receive the Interest Subsidy Payment regarding the Series 2010B Bonds or Series 2010B Certificates. The amount of any Interest Subsidy Payment is subject to legislative changes by Congress. Interest Subsidy Payments will only be paid if the Series 20IOB Bonds and Series 20108 Certificates are Qualified Build America Bonds. For the Series 2010B Bonds and Series 2010B Certificates to be and remain Qualified Build America Bonds, the City must comply with certain covenants and the City must establish certain facts and expectations with respect to the Series 20108 Bonds and Series 2010B Certificates, the use and investment of proceeds thereof and the use of property financed thereby. There are currently no procedures for requesting an Interest Subsidy Payment after the 45th day prior to an interest payment date; therefore, if the City fails to file the necessary tax return in a timely fashion, it is possible that the City will never receive such Interest Subsidy Payment. Also, Interest Subsidy Payments are subject to offset against certain amounts that may, for unrelated reasons, be owed by the City to an agency of the United States of America. AUTHORITY FOR ISSUANCE The Bonds are issued pursuant to the Constitution and general laws of the State, particularly Chapters 1331 and 1371, Texas Government Code, as amended, elections held in the City on May 15, 2004 and November 3, 2009, and an ordinance adopted by the City Council (the "Bond Ordinance"). 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, and an ordinance adopted by the City Council (the "Certificate Ordinance" and, together with the Bond Ordinance, the "Ordinances"). 12 ) ) SECURITY AND SOURCE OF PAYMENT The Bonds constitute direct obligations of the City and are payable from the proceeds of a continuing, direct annual ad valorem tax, levied within the limits prescribed by law, against all taxable propeny within the City. The Certificates are payable from a combination of (i) the proceeds of a continuing, direct annual ad valorem tax, levied within the limits prescribed by law, 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. TAX RATE LIMITATION All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2.50 per $100 taxable assessed valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $IOO taxable assessed valuation. Administratively, the Attorney General of the State of Texas will pcnnit allocation of $1.50 of the $2.S0 maximum tax rate for all general obligation debt service, as calculated at the time of issuance. OPTIONAL REDEMPTION The City reserves the right, at its option, to redeem Obligations having stated maturities on and after February I 5, 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 lo the date of redemption. If Jess than all of the Obligations are to be redeemed, the City may select the maturities of Obligations to be redeemed. Ifless than all the Obligations of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Obligations are in Book-Entry-Only form) shall detennine by lot the Obligations, or portions thereof, within such maturity to be redeemed. Ifan Obligation (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Obligation (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. EXTRAORDINARY OPTIONAL 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 Extraordinary 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 20l0B Certificates to be redeemed, provided that such amount must be at least equal to the par amount of the Series 2010B 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 earlier of the stated maturity or the optional redemption date (February 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 semi-annual basis, assuming a 360-day year consisting of twelve 30-<lay months, at the Treasury Rate, plus one hundred (100) basis points, plus, in each case, accrued and unpaid interest to the redemption date on the Series 2010B Bonds and Series 201 OB Certificates to be redeemed. "Extraordinary Event" means any change to Section 54AA or Section 6431 of the Code (as such Sections were added by Section 1531 of the Recovery Act, pertaining to Build America Bonds) pursuant to which the Interest Subsidy Payments in connection with the Series 2010B Bonds and 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 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 beoome 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 (I) year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one (I) year will be used. NOTICE OF REDEMPTION Not less than 30 days prior to a redemption date for any Obligation, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Obligations to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. 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 13 -' 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 a certificate 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 affected Owners. Any Bonds subject to conditional redemption and such redemption has been rescinded shall remain Outstanding, and the rescission of such redemption shall not constitute an Event of Default. Further, in the case ofa 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 CONCLUSIVELY PRESUMED TO HA VE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, TIIE OBLIGATIONS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITIISTANDING TIIAT ANY OBLIGATION OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE. AMENDMENTS The City may, without consent of or notice to any owners, from time to time and at any time, amend the Ordinances in any manner not detrimental to the interests of the owners, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent 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 provisions of the Ordinances; provided that, without the consent of all owners of outstanding Obligations, no such amendment, addition, or rescission shall (i) extend the time or limes of payment of the principal of, premium, if any, and interest on the Obligations, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, or interest on the Obligations, (ii) give any preference to any Obligation over any other Obligation, or (iii) reduce the aggregate principal amount of Obligations required to be held by owners for consent to any such amendment, addition, or rescission. DEFEASANCE The Ordinances provide that the City may discharge its obligations to the registered owners of any or all of the Obligations to pay principal, interest and redemption price thereon in any matter permitted by law. Under current Texas law, such discharge may be accomplished by either (i) depositing with the Comptroller of Public 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 maturity or redemption and/or (ii) by depositing with a paying agent or other authorized escrow agent amounts sufficient to provide for the payment and/or redemption of the Obligations; provided that such deposits may be invested and reinvested only in (a) direct, noncal\able obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, or (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a stale that have been refunded and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent The foregoing obligations may be in book- entry-only form, and shall mature and/or bear interest in such amounts as 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 redemption as provided in the respective Ordinances. Under current Texas law, upon the making of a deposit as described above, such Obligations shall no longer be regarded to be outstanding or unpaid. After finn banking and financial arrangements for the discharge and final payment or redemption of the Obligations have been made as described above, all rights of the City to initiate proceedings to call the Obligations for redemption or to take any other action amending the tenns of the Obligations are extinguished; provided however, the right to call the Obligations for redemption is not extinguished if the City: (i) in the proceedings providing for the firm banking and financial arrangements, expressly reserves the right to call the Obligations for redemption; (ii) gives notice of the reservation of that right to the owners of the Obligations immediately following the making of the firm banking and financial arrangements; and (iii) directs that notice of the reservation be included in any redemption notices that it authori:res. BOOK-ENTRY-ONLY SYSTEM This section describes how ownership of the Obligations is to be transfe"ed and how the principal of. premium, if any, and interest on the Obligations are to be paid to and credited by The Depository Trust Company ("DTC'J, New York, New York, while the Obligations are registered in its nominee name. The information in this section concerning DTC and the Book-Entry- Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The City, the Financial Advisor. 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 assurance that (I) DTC will distribute payments of debt service on the Obligations, or redemption or other nolices. to DTC Participants, (l) DTC Participants or others will distribule debt service payments paid to DTC or ils nominee (as the regislered owner of the Obligations), or redemption or other notices, to the Beneficial Owners, or that /hey will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Slatement. The 14 ) ) '\ ) current rules applicable to DTC are on file with the United States Securities and Exchange Commission, and the current procedures of DTC to be foUowed in tkaling with DTC Participants are on file with DTC. DTC will act as securities depository for the Obligations. The Obligations will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be ffi!uested by an authorized representative 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 largest depository, is a limited-purpose trust company organized under the New York Banking Law, a ''banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. OTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities. through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (''DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). OTC 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 infonnation about OTC 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 purchaser of each Obligation ("Beneficial Owner'') is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confinnation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership 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 ownership 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 of DTC. The deposit of Obligations with OTC and their registration in the name of Cede & Co. or such other OTC nominee do not effect any change in beneficial ownership. 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 Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example, Beneficial Owners of Obligations may wish to ascertain that lhe 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. lfless than all of the Obligations within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity lo be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. 's consenting or voting rights to those Direct Participants to whose accounts Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption, principal, and interest payments on 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 information from the City or the Paying Agent/Registrar, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer fonn 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 lo any statutory or regulatory ffijuirements as may be in effect from time to time. Payment 15 .., '\ ) ) i 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 of such payments to Direct Participanls will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the 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 each 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 Obligations will be subject the transfer, exchange and registration provisions as set forth in the respective Ordinances and summarized under "TRANSFER, EXCHANGE AND REGISTRATION" below. The infonnation 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 Terms 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 read 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 Ordinance will be given only to DTC. PA YING AGENT/REGISTRAR The initial Paying Agent/Registrar is The Bank ofNew York Mellon Trust Company, National Association, Dallas, Texas. In 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 until the Obligations of each series are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Obligations. Upon any change in the Paying Agent/Registrar for the Obligations, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Obligations then outstanding and affected by such change by United States mail, first class, postage prepaid, which notice shall give the address of the new Paying Agent/Registrar. Interest on the Obligations shall be paid to the registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date (hereinafter defined), and such interest shall be paid (i) by check sent United States mail, first class, postage prepaid, to the address of the registered owner recorded in the registration books of the Paying Agent/Registrar, or (ii) by such other method acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. Principal of the Obligations will be paid to the registered owner at the stated maturity or earlier redemption upon presentation to the designated payment/transfer office of the Paying Agent/Registrar. If the date for the payment of the principal of, or interest on, the Obligations 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/Registrar is located 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 shall have the same force and effect as if made on the date payment was due. So long as Cede & Co. is the registered owner of the Obligations, 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 Obligations will be issued to the registered owners of the Obligations affected and, thereafter, the Obligations may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed Obligations to the Paying Agent/Registrar. Such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange or transfer. Obligations may be assigned by the execution of an assignment form on the Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Obligations will be delivered by the Paying Agent/Registrar, in lieu of the Obligations being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the registered owner, or assignee of the registered owner, not more than three business days after the receipt of the Obligations to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner, or his duly authorized agent, in a form satisfactory to the Paying Agent/Registrar. New Obligations registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and a like aggregate principal amount as the Obligations surrendered for exchange or transfer. See ''THE OBLIGATIONS -BOOK-ENTRY-ONLY SYSTEM" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Obligations. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Obligation called for redemption. in whole or in part, within 45 days of the dale fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of an Obligation. 16 ) ) ' .J ' ) ') RECORDDATEFORINTERESTPAYMENT The record date ("Record Date") for the interest payable on lhe 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 scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be I 5 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each Holder of an Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. REMEDIES The respective Ordinances establish specific events of default with respect to the Obligations. If the City defaults in the payment of principal of, or interest on, the Obligations when due, or if the City defaults in the observance or performance of any of the covenants, conditions or obligations of the City, the failure to perfonn which materially, adversely affects the rights of 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 wril of mandamus from a court of proper jurisdiction requiring the City to make such payment or observe and perform such covenants, obligations, or conditions. The issuance of a writ of mandamus may be sought if there is no other available remedy at law to compel performance of the Obligations or the respective Ordinance and the City's obligations are not uncertain or disputed. The remedy of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Obligations in the event 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 ofa trustee to represent 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 to be undertaken at the initiative of, and be financed by, the registered owners. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 191 S.W.3d 325 (Tex.2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. In so ruling, the Court declared that statutory language such as "sue and be sued," in and of itself, did nol 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 Obligations may not be able to bring such a suit against the City for breach of the Obligation or the respective Ordinances. In Tooke, the Court noted the enactment in 2005 of sections 271.151-.160, Texas Local Government Code (the "Local Government Immunity Waiver Act"), which, according to the Court, waives "immunity from suit for contract claims against most local governmental entities in certain circumstances." The Local Government Immunity Waiver Act covers cities and relates to contracts 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 undertakings of local governments that relate to their borrowing powers are contracts covered by the Act. As noted above, the respective Ordinances provide that holders of Obligations may exercise the remedy of mandamus to enforce the obligations of the City under the respective Ordinances. Neither the remedy of mandamus nor any other type of injunctive relief was at issue in Tooke, and it is unclear whether Tooke will be construed to have any effect with respect to the exercise of mandamus, as such remedy has been interpreted by Texas courts. In general, Texas courts have held that a writ of mandamus may be issued to require public officials to perform ministerial acts that clearly pertain lo their duties. Texas courts have held that a ministerial act is defined as a legal duty that is prescribed and de fined with a precision and certainty that leaves nothing to the exercise of discretion or judgment, though mandamus is not available to enforce purely contractual duties. However, mandamus may be used to require a public officer to perform legally-imposed ministerial duties necessary for the perfonnance of a valid contract to which the State or a political subdivision of the State is a party (including the payment of monies due under a contract). Chapter 1371, Texas Government Code ("Chapter 1371''), which pertains to the issuance of public securities by issuers such as the City, permits the City to waive sovereign immunity in the proceedings authorizing its bonds, but in connection with the issuance of the Obligations, the City has not waived sovereign immunity in the manner provided by Chapter 13 71. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of, and interest on, the Obligations. Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapler 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by credilors or registered owners of an enlity that has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary pGwers of a Bankruptcy Court in administering any proceeding brought before lhe Court. The opinions of Bond Counsel will note that all opinions relative to the enforceability of the Obligations are qualified with respect to the customary rights of debtors relative to their creditors and that all opinions relative 17 ) ) ) ) to the enforceability of the Ordinances and the Obligations are subject to bankruptcy and other laws affecting creditors rights or remedies generally. SOURCES AND USES OF PROCEEDS The proceeds from the sale of the Bonds will be applied as follows: SOURCES OF FUNDS: Principal Amount of Series 20 I 0A Bonds .......................................................................... . Principal Amount of Series 20 I OB Bonds .......................................................................... . Net Original Issue Premium (Discount) .............................................................................. . Accrued Interest .................................................................................................................. . Total Sources ofFunds .................................................................................................. . USES OF FUNDS: Deposit to Project Fund ....................................................................................................... . Accrued Interest Deposited to Interest & Sinking Fund ...................................................... . Underwriters' Discount ...................................................................................................... . Cost of Issuance .................................................................................................................. . Total Uses of Funds ....................................................................................................... . The proceeds from the sale of the Certificates will be applied as follows: SOURCES OF FUNDS: Principal Amount of Series 20 I 0A Certificates .................................................................. . Principal Amount of Series 2010B Certificates .................................................................. . Net Original Issue Premium (Discount) .............................................................................. . Accrued Interest .................................................................................................................. . Total Sources of Funds .................................................................................................. . USES OF FUNDS: Deposit to Project Fund ....................................................................................................... . Accrued Interest Deposited to Interest & Sinking Fund ...................................................... . Underwriters' Discount ...................................................................................................... . Cost of Issuance .................................................................................................................. . Total Uses of Funds ....................................................................................................... . AD VALOREM TAX INFORMATION AD VALOREM TAX LAW The appraisal of property within Lubbock is the responsibility of the Lubbock Central Appraisal District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under the Property Tax Code (defined below) to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal, and the market data comparison method of appraisal. The method considered most appropriate by the chief appraiser is to be used. The appraised value of a residence homestead for a tax year 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% of the appraised value of the residence homestead for the preceding tax year plus (3) the market value of all new improvements to the property. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least eveiy three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to 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 ofad valorem taxes. Article VIII of the State Constitution ("Anicle VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Anicle VIII, Section 1-b, and State law, the governing body of a political subdivision, at 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 ofa majority of the qualified voters at an election called by the governing body of the political subdivision, which election must be called upon receipt of a petition signed by at least 20% of the number of qualified voters who voted in the preceding election of 18 ) ) ) ) ) the political subdivision. In the case of a decrease, the amount of the exemption may not be reduced to less than $3,000 of the market value. 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 to 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 ofage at the time of the death of the individual's spouse and (iii) the 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 subdivision, at its option, may grant an exemption of up to 20% of the market value of residence homesteads, with a minimum exemption of $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 taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. State law and Section 2, Article vm, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the anned forces; the exemption applies lo either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of$12,000. Under Article VIII 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 pemms 65 years of age or older or of persons who are disabled. Upon providing for such ex.emption, such free7.e 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 years of age. If improvements (other than maintenance or repairs) are 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 rescinded. The City has established such a limitation on ad valorem taxes. Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-l ), including open-space land devoted to fann or ranch purposes or open-space land devoted to timber production, may elect to have such property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d and l-d-1. Nonbusiness personal property, such as 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 ex.empted 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 lo 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 ex.empt 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 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 lhe 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 tax.ation of "goods-in-transit." Under Section I 1.253 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 persona! 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 al 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 prpducts, 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 tax 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 19 ) ) of future ad valorem taxes levied and collected against the value of property in the zone in excess of the "frozen value" to pay or finance the costs of cenain 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 zone. 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 lo levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement may last for a period ofup to IO years. See "TAX ABATEMENT POLICIES"below. Cities are also authorized, pursuant to Chapter 380, Texas Local Government Code ("Chapter 380") to establish programs to promote stale or local economic development and to stimulate business and commercial activity in the City. In accordance with a program established pursuant to Chapter 380, the City may make loans or grant of public fund for economic development purposes, however, no obligations secured by ad valorem taxes may be issued for such purposes unless approved by voters of the City. EFFECTIVE TAX RA TE AND ROLLBACK TAX RA TE By each September 1, 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 1he annual tax rate for the City before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the City. If the City Council does not adopt a tax rate by such required date, the tax rate for that tax year is the lower of the "effective tax rate" calculated for that tax year or the tax rate adopted by the City for the preceding tax year. The lax rate consists of two components: (]) a rate for funding of maintenance and operation 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 "rollback tax rate". A tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or the effective tax rate until two public hearings ace 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 that public notice be given by television if the City has free access to a television channel), and the City Council has otherwise complied with the legal requirements for the adoption of such tax rate. If the adopted tax rate exceeds the rollback tax rate, the qualified voters of the City, by petition, may require that an election be held to detennine whether or not to reduce the tax rate, adopted for the current year, to the rollback tax rate. "Effective tax rate" is defined as the rate that will produce 1he preceding year's total tax levy (adjusted) from the current year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate" is defined as the rate that will produce the preceding year's maintenance and operation tax levy (adjusted) from the current year's values (adjusted) multiplied by 1.08 plus a rate that will produce the current year's debt service from the current year's values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to aulhorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAX PAYMENT Property within the City is generally assessed as of January I each year. Business inventoiy may, at the option of the taxpayer, be assessed as of September I. Oil and gas reserves are assessed on the basis of a valuation process that uses an average of the daily price of oil and gas from the prior year. Taxes become due October I of the same year, and become delinquent on February I of the following year. Taxpayers 65 years of age or older are pennitted by State law to pay taxes on homesteads in four installments with the first due on February I each year and the final installment due on August I. PENALTIES AND INTEREST Charges for penalty and interest on the unpaid balance of delinquent tax.es are made as follows: Cumulative Cumuladve Month Penal~% Interest% Total% February 6 I 7 March 7 2 9 April 8 3 11 May 9 4 13 June IO 5 15 July 12 6 18 20 ) ) After July, the penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, a 15% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, delinquent taxes on the homestead of a taxpayer 65 years of age or older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into eff~t with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. CITY APPLICATION OFT AX CODE The City grants a $ I 6,600 exemption to the market value of the residence homestead of persons 65 years of age or older; the disabled are also granted an exemption of$10,000. The City has not granted any part of the additional exemption of up to 20% of the market value of residence homesteads; the minimum exemption that may be granted under this provision is $5,000. The City has established the tax freeze on residence homesteads of disabled persons and persons 65 of age or older. See Table I for a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City does not tax nonbusiness personal property; and the Appraisal Disttict 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 pennitted 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. The 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 meet several criteria pertaining to job creation and property value enhancement. The City had three enterprise zones that have expired: the Lubbock 2000 North Enterprise Zone and the Lubbock 2000 South Enterprise Zone expired September I, 2008, and the Lubbock International Airport Enterprise Zone that expired September I, 2005. In 2003, the Legislature made changes to the statute governing enterprise zones, including designating zones by block group based on poverty rate. The block groups meeting the criteria become enteiprise 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 sections 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. The 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 tenns 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 (Bl( roll, the number of jobs to be created or retained, and other factors. The policies disallow abatements for certain categories of property including real property, inventories, tools, vehicles, aircraft. and housing. Each abatement policy provides for a recapture of the abated taxes if the business is discontinued during the term 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 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 taxes 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 21 '\ ) Reinvestment Zone (the "'North Overton TIF"). The Downtown TIF covers a 0.71 square-mile area, which includes part 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 tax year 2009, the Downtown TIF had a taxable value of $171,428,178 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 addition to the City, the County, Lubbock County Hospital District, and the High Plains Underground 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 TIF 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 ordinance establishing the North Overton TIF provides that the North Overton TIF will tenninate on December 31, 2031, or at an earlier time designated by a 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 1, 2002, at $26,940,604. For tax year 2009, the North Overton TIF had a taxable value of $279,910,784 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 THIS PAGE INTENTIONALLY LEFT BLANK] 22 ) ) ") FINANCIAL INFORMATION TABLE I-VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 2009 Market Valuation Established by L ubboek Central Appraisal District Less Exemptions/Reductions at I 00% Market Value: Residential Homestead Exemptions Homestead Cap Adjustment Disabled Persons Disabled V cterans Prorated Exempt Property Agricultural/Opcn-SpaC(l Land Use Reductions Pollution Exemptions Lease V chicles Exempt House Bill 366 Energy Freeport Exemptions Tax Abatement Reductions(\) Mixed Use Vehicle Low Income Housing Market Value Reduction for Protested Properties 2009 Ta,cable Assessed Valuation Cily Funded Debt Payable from Ad Valorem Taxes: General Obi igation Debt ( as of 1-1-1 0) (2) ( 3) Plus: The Bonds• Plus: The Certificates• Total Funded Debt Payable from Ad Valorcm Taxes Less: Sdf Supporting Debt (as of 1-1-10) (3)(4) Waterworks System General Obligation Debt Sewer System General Obligation Debt Solid Waste Disposal System General Obligation Debt Drainage Utility System General Obligation Debt Tax Increment Financing General Obligation Debt Electric Light and Power System General Obligation Debt Cemetery General Obligation Debt Gateway General Obligation Debt Hotel Occupancy Tax Debt Auditorium/Coliseum General Obligation Debt Airport General Obligation Debt General Purpose Funded Debt Payable from Ad Valorcm Taxes (S) 219,776,233 43,905,052 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 4,279,460 154,161,841 702,820,000 24,130,000 147,370,000 298,634,755 107,075,162 13,781,845 116,018,847 37,064,073 72,838,162 637,401 98,702,884 1,144,548 500,000 13,757,312 Unaudited General Obligation Interest and Sinking Fund as of September 30, 2009 Ratio Total Funded Debt to Taxable Assessed Valuation Ratio General Purpose Funded Debt to Taxable Assessed Valuation 20 IO Estimated Population (6) Per Capita Taxable Assessed Valuation Per Capita Total Funded Debt Payable from Ad Valorcm Taxes Per Capita General Purpose Funded Debt Payable from Ad Valorem Taxes * Preliminary, subject to change. (I) See "AD V ALOREM TAX INFORMATION -TAX ABATEMENT POLICIES." $12,766,189,105 $ $ s s s 7631572182S 12,002,616,280 874,320,000 760,154,988 114,165,012 1,498,276 7.28% 0.95% 219,643 54,646 3,981 520 (2) The statement of indebtedness does not include the City's outstanding Electric Light and Power System Revenue Bonds, payable solely from the net revenues of the City's Electric Light and Power System. (3) Includes the City's Tax and Waterworks System Surplus Revenue Certificates of Obligation, Series 2010 (the ''Series 2010 23 ') ) Certificates") which are scheduled to be delivered on January 12, 2010. (4) Preliminazy, subject to change. (ncludes the Certificates. As a matter of policy, the City provides debt service on general obligation debt issued to fund 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 SINK.ING 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 Genera! Obligation Debt has been issued to finance or refinance Waterworks System improvements and is being paid, or is expected to be paid, from Waterworks System revenues. The City has no outstanding Waterworks System Revenue Bonds but has obligated revenues of the Waterworks System under water supply contracts. 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 has no outstanding Sewer System Revenue Bonds. The City's Solid Waste Disposal 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 ftom 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 lhe North Overton TIF and is being paid, or is expected to be paid, from revenues derived from the Pledged Tax Increment Revenues. The City has no outstanding TaJ{ Increment Financing Revenue Bonds. For FY 2010, the City anticipates that 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 future years. The North Overton master plan projects additional debt to be issued by the City for infrastructure improvements in the TIF. (f 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 has reached full build-out status. If revenues are insufficient and no interfund 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 outstanding 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 paid, or is expected to be paid, from revenues derived ftom the Cemetery. The City has no outstanding Cemetery Revenue Bonds. The City's Gateway General Obligation Debt has been issued to finance or refinance Gateway Streets improvements and is being paid, or is expected to be paid, from franchise fees. The City has 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 paid, or is expected to be paid, from hotel occupancy taxes. The City has no outstanding Hotel Occupancy Tax Bonds. The City's Auditorium/Coliseum General Obligation Debt has been issued to finance or refinance Auditorium/Coliseum improvements and is being paid, or is expected 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, ftom revenues derived from the Airport. The City has no outstanding Airport Revenue Bonds. (5) Preliminazy, subject to change. Includes the Bonds. (6) Source: City of Lubbock, Texas. [THE REMAINDER OF TH(S PAGE INTENTIONALLY LEFT BLANK] 24 TABLE 2-TAX ABLE ASSESSED VALUATION BY CATEGORY 20!0 T•~•ble Aeeraised Value ror Fbcal Year Ended Seeterober 30 2009 2008 %of %of %of Cate&2!.l': Amount Total Amount Tocal Amount Total Real, Residential, Single-Family $ 6,947,946,941 54.42 6,687,368,655 54.61 6,321,729,050 55.01 Real, Residential, Multi-Family 997,043,862 7.81 922,530,900 7.53 931,507,661 8.11 Real, Vacant lots/rracts 189,296,95 I 1.4& 20 I, 167,097 1.64 202,703,022 1.76 Real, Acreage (Land Only) 104,927,547 0.82 I 06,628,87 8 0.87 103,474,361 0.90 Real, Fann and Ranch Improvements 13,502,162 0.11 11,977,889 0.10 10,948,790 0.10 Real, Commercial and Industrial 2,686,373,355 21.04 2,476,922,746 20.23 2,246,869,059 19.55 Real, Oil, Gas and Other Mineral RcSCl'Vcs 32,632,310 0.26 39,976,390 0.33 26,864,150 0.23 Real and Tangible Personal, Utilities 168,123,979 1.32 173,239,955 1.41 181,023,472 l.58 Tangible Personal, Business 1,502,932,704 l 1.77 l,494,921,128 12,21 1,340,911,089 11.67 Tangible Personal, Other 10,943,476 0.09 11,981,462 0.10 13,018,766 0.11 Real Property, Inventory 43,022,634 0.34 43,435,213 0.35 41,291,828 0.36 Special Inventory 69,422,082 0.54 76,063,260 0.62 72,685,000 0.63 ) Otha-/ Adj ustmcnts 2!,102 0.00 2161600 0.00 (IIS,001} (0.00~ Tota 1 A ppraiscd Value Before Elccmptions 12,766,189,105 100.00 12,246,430,173 100.00 ! 1,492,911,247 100.00 Less: Total Exemptions/Reductions (763,572,825) 1sn,Js6,041 l (5951700,684) Taxable Assessed Value $ 12,002,616,280 11,673,074,132 I 0,897 ,2 I 0,563 Taxable Al?eralffll Value ror Fiscal Year Ended Seetember 30 2007 2006 2005 %of %of %of ) Cateso~ Amount Total Amount Total Amount Total Real, Residential, Single-Family s 5,889,918,195 55.53 5,5 I 7,769,306 ss.ss S,169,490,706 56.09 Real, Residential, Multi-Family 873,394,391 8.23 795,689,400 8.01 615,453,250 6.68 Real, Vacant Lots/Tracts I 86,939,508 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 Real, Farm and Ranch Improvements ID,601,986 0.10 11,038,895 0.11 10,406,299 0.11 Real, Commercial and Industrial I, 968,271,689 18.56 1,827,901,763 18.40 1,712,457,490 18.58 ) Real, Oil, Gas and Other Mineral Reserves 28,446,0SO 0.27 17,526,510 0.18 12,167,754 0.13 Real and Tangible Personal, Utilities 179,562,657 l.69 177,838,907 1.79 173,908,469 1.89 Tangible Personal, Business 1,245,600,988 11.74 1,228,428,632 12.37 1,226,369,118 13.31 Tangible Pcrsonal, Odler 13,940,265 0.13 !4,527,171 0.15 15,465,413 0.17 Real Property, Inventory 37,577,657 0.35 26,685,491 0.27 9,863,035 0.11 Special Inventory 68,621,321 0.65 67,329,545 0.68 68,232,264 0.74 Other/ Adjustments 220,192 0.00 1,499,616 0.02 Total Appraised Value Before Exemptions I 0,607,538 ,316 100.00 9,932,392,406 100.00 9,215,758,015 100.00 Less: Total Exemptions/Reductions !604,812,679) !585,778,455) (580,763,l53l Taxable Assessed Value s 10,002,725,637 9 ,3461613 ,95 I 8,634,994,862 NOTE: Valuations shown are certified taxable assessed values reported by the Appraisal District to the City for purposes of establishing and levying the City's annual ad va\orem tax rate and to the State Comptroller or Public Acc01mts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. ) ) 25 "\ j ) ) ) TABLE 3A -VALUATION AND GENERAL OBLIGATION DEBT HISTORY Fiscal Per Capita Genenl Ratio Year Estimaled Ta:itable Taxable Purpose Tu Debt to Ended City Assessed Assessed Funded Assessed Funded Debt Tu 30-SeJ! PoJ!lllatiou ••> ValuaUon Valuation Tu Debt"" Valuation "' PerCal!!ta Year 200$ 209,120 $ 8.634.994,862 $ 41,292 $ SOJI0,269 0.93¾ $ 384 2004 2006 211,187 9,346,613,951 44,258 87,231,945 0.93% 413 2005 2007 212,365 10,002,725,637 47,102 92,487,363 0.92% 436 2006 2008 214,847 10,897,2!0,S63 S0,121 101,ISS,953 0.93% 471 2007 2009 218,327 11,673,074,132 53,466 I 06,303,936 0.91% 487 2008 2010 219,643 12,002,616,180 54,646 107,178,865 "' 0.89% ,., 488 ~) 2009 fal Sou~: The City. 4\ll Docs oat include sc-lr-,wppor1cd debt. (,) Preliminary, subjecl IO change. lnoludcs the Boods, TABLE 38 -DERIVATION OF GENERAL PURPOSE FUNDED TAX DEBT The following table sets forth certain information 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 lo issue additional self- supporting general obligation debt within a three to five year time frame. See "ANTICIPATED lSSUANCE OF GENERAL OBLIGATION DEBT' below. Fise.al Less: Gene ... 1 Purpose Year Funded Tu Debt SeJf-Supporttng Funded Tu Debt Ended Outstanding at Funded Tall Outstanding 30-See EndofYesr Debt at End of Year 2006 s 447,275,000 $ 360,043,055 $ 87,231,945 2007 512,250,000 419,762,637 92,487,363 2008 633,065,000 531,879.047 JOl,18S,9S3 2009 682,875,000 576,571,064 I 06,303,936 2010"' 839,255,000 732,076,135 I 07, 178,865 "1 Prdimimry, subjcot to c!m,gc. Includes the Obligations, TABLE 4 -TAX RA TE, LEVY AND COLLECTION ms TORY Fiscal Tax Rate Distn1111tioa Year End General Economic lutes-est and Tu Tu Percent Collected 09/30 Fund Develoement Sinki5 Fund Rate Le!l C11rreat Total 200S $ 0.33474 $ 0.03000 $ 0.09496 s 0.45970 $ 39, 777,866 97.73% 100.28% 2006 0.3$626 0.03000 0.06094 0.44720 41,968,431 98.15¾ 99.71% 2007 0.36074 0.03000 0.07125 0.46199 46,068, 744 98.12% 99.02% 2008 0.35380 0.03000 0.07125 0.45505 49,195,247 98.41% 99.62% 2009 0.32540 0.03000 0.09100 0.44640 51,616,589 97.78% 98.87% 2010 0.33240 0.03000 0.08400 0.44640 53,455,322 (Ia process of collection) 26 Tu Year 2004 200S 2006 2007 2008 2009 J ) ) ) ) ) TABLE 5 -TEN LARGEST TAXPAYERS 1009 % of Total Taxable Taxable Name Assessed Valuation AygKd Val!!!!!!tn Macerich Lubbock Ltd. Southwestern Bell Telephone United Supennarkets OFC PYCO Industries. Inc. Southwestern Public Services Co. Wal-Mart Real Estate Business Trust Atmos Energy West Texas Division Wal-Man Stores Inc. TYCO Fire Products Lubbock Property LLC TABLE 6-TAX ADEQUACY $ 123,830,275 53,972,632 53,174,661 47,553,556 40,037,280 38,609,000 34,339,220 31,325,211 29,471,236 27,483,903 $ 479,796,974 Average Annual Debt Seivice Requirements All General Obligation Debt (2010-2034): $0.4376 per $100 AV against the 2009 Taxable AV, at 99% collection, produces Maximum Annual Debt Service Requirements All General Obligation Debt (2011 ): $0.7160 per $100 AV against the 2009 Taxable AV, at 99% collection, produces <•l Includes the Series 20 l O Cen ificates, th.e Obligations and self-supp0rted debt. Preliminary, subj~t to change. TABLE 7-ESTIMATED OVERLAPPING DEBT 1.03% 0.45% 0.44% 0.40% 0.33% 0.32% 0.29% 0.26% 0.25% 0.23% 4.00o/o $ s 1,924,253 (I) $51,998,214 $85,075,481 (,) $85,079,345 Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax debt ("Tax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such infonnation, and no person should rely upon such information as being accurate 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 of substantial amounts of additional Tax Debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. Ta,cing Jurisdiction Frenship ISO Idalou JSO Lubbock County Lubbock ISO Lubbock-Cooper ISD New Deal !SD Roosevelt ISO Estimated Overlapping Debt The City Gross Deht (As of 9/30/09) $ 157,389,717 78,005,000 118,S0S,113 124,259,959 11,909,998 $ 874,320,000 i•l Total Direct & Estimated Overlapping Debt As a% of2009 Ta~le Assessed Valuation Per Capita Total Direct & Estimated Overlapping Debt Estimated% Overlapping 66.S3% 3.92% 83.13% 98.70% 57.09% 25.44% 2.98% \O(l.00% !•> lnclw!es the Series 2010 Certificates, the Obligatioos and self-supported debt. Prclimioary. subj eel to cbaogc. 27 Overlapping Debt $ 104,711,378 64,845,557 116,964,546 70,940,010 354 918 $ 357,816,409 874,320,000 S 1,232,136,409 10.27% $ 5,610 ../ Is) 00 u LJ _,) TABLE SA -GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS J'YE Outnudhal Otbt Ca> Th, s..t .. lOIOA Bondi"' Tb, S.rlet :leHB BoDII, "'"' ~ Prio<~ ln~rttl T,.tl 1'11~1 lattl'ffl TOlal Prlttdf!! ··-Tot.II 2010 l JS,Olil.000 33 .. 2U,004 61!,347,004 2-0ll )8,425.000 J0,071.371 63,497,J71 470,000 lll,100 801,100 1,622,909 l,6l2/l09 2012 lS,lll.000 21,385,7-0 66.920,745 900,000 188,600 1,083,600 l.000.42A l.000.424 2011 39,895,000 26,641,0Sl 46.SlMll 92l,OOO l6S,72l 1,090,lll 1,000,414 1,000,424 2014 40,46S.OOO 24,Bll.Jl4 65,290,324 9lS,OOO m.m 1.092,lll 1,000.424 1,000,424 2015 39,081.000 23,057,958 62,142,918 98$,000 IOl.SOO 1,018,SOO 1.000,424 1.000.424 20)6 l8,78M(I() 21,347,674 60,127,674 1,025,000 6).)()0 1.088.JOO 1,000,424 1.000,424 2017 39,560.000 19,Sll,7ll l9,IJ5,73l 1,070,000 21,400 1,091,400 1,000,424 1,000,424 2018 40,J8S,000 17,738,08) l3.S2l.081 1,105,000 97l.882 2,080,182 20)9 19,405.000 ll,Ul,951 ll,2J7,9SI l.lll,000 925.280 2,060.210 2020 lMJ0.000 14,049,941 S0.679,941 1.1,0.000 870,602 l,040,602 2021 ll,840.000 12,)24.387 41.164,387 1.210,000 810,87S 2,020,175 2022 l4.0Jo.000 10,637.219 44,667,219 l,lll.000 7-16,ll8 2,001.sss 2023 l4,01S,OOO 8,993,06\ O,OOS,061 1,295,000 678,438 1,971,4]8 2024 lJ,080.000 7.l6J,44S 40,443,4-0 1,l4l.000 606.llS 1,9Sl.lSl 2025 ll,005.000 S,78l.22l JS,787,223 l,4-0l,000 SlS,936 l,9l0,9l6 2026 lO,ISl.000 4.250,086 34,405,086 1,455.000 08,JOS 1,89l.JOS 2027 ll,18'.000 2,912,658 28,0l7,6S8 1,,io,000 347,458 1,857,458 2028 20,4,0.000 l,8l2.J44 ll,lOl,344 l,Sll.000 2S2,9ll 1,827,933 2029 I0,565,000 1,117.)99 11,682,399 1,635,000 154,579 l,7a9.Sl9 20}0 1.oio.000 7JO.S86 7.770,SB6 1,705,000 Sl.241 1,757.241 2031 6,000.000 44S,949 6,445,949 20J2 2,195,000 260,438 l.4SS.4)8 20ll l.290.000 U9,lll l,449,lll 2004 l,400,000 54.000 2,454,000 S 102,120,000 lll,674,ISl 1.014,494,lSJ 6,J)0,000 1,011,150 7,]41,150 17,800.000 !S,OJ0,791 32,110,792 A-Am,ual lltbl Savio, R"!Uittmeol& AU G<,,o,al Obliplioo Dtbl{2010-2Gl4): MaxinwmA>n"'11 Debi S<n,lco ft.oquil<mt1lll AH Genclli Oblipuoo Dd,1(2011); ''' Doa:111111:illlclOOll~<i&lli--Qll!I, bc:luda.lllcSairi!-201.0Cffli~ tlol l'ffl.im:l,.,..dp:ltodwlp. "' Pniijec1cd~«m.Ca'dor.snotrefl~tllieel4)C!Qedabsidypa,mm1&om-1Kredm.l~·\oJl%0(1kim1mm.pa.)111ttQ«10eSerieslOlOBlbldl.aDdS,erie,Ut08CMi~ TABLE 8B -INTEREST AND SINKING FUND BUDGET General l'urpo$e0eoeral Obligation Debt Seivice Requirements, September 30, 2010 Fiscal Agent Fee1 Interest and Sinking Fund, September 30, 2009 Interest and Sinking Funcl Tax Levy@99.0% Estima~ Interest Earnings Projected Balance, September 30, 20IO S 10,005,953 15,000 1,498,276 9,560,023 I 561814 ll.215.113 S 1.194.160 J J v ,.) ) TIie Stt1eti 2018A Ctrfl.6tjittfi "1 Tbt Strin J.0108 Cfflifl<.,lfl "'"' Toca.I Prl0<l~ol ·-Total l'rm<a>al lottrne Total DtbtStnlc:t 68,347,004 l,)90.000 l.9lJ.JOS 4J4l.m 9,810,l9J 9.110,.)93 S!,07l.481 5,695,000 1.114.lOO 6,809.200 6,047.626 6,047,626 81,866,S94 l,895,000 909,lPS 6,804.171 6.()47,626 6,047.626 81,481,702 6.110,000 697,581 6,807,SBI 6,047,626 6,047,626 80,2]1,480 6,105.000 S06,S6l 6.811,163 6,047,626 6,047,626 77,091!)70 6,l ll,000 290,181 6,80$,181 6,047,626 6,047,626 75,(169,904 6.710.000 100,650 6.810,650 6,047,626 61041,626 74,03S,8l4 6,1195,000 S,894,481 ll,789,488 73.]91,450 7,100,000 l,57!.ll4 ll,678.]34 69,976,565 1,llS,000 $,236,148 12,561,141 6.l.l81,69l 7,280,000 4,169,810 ll.149,110 62,lll.072 7,530,000 4,48l,l97 ll,Oll.l\17 58,6821175 1,19S.000 4,074.000 11,869,000 S6,8l0,41>9 8,0l!0,000 3,6)9,9)(1 11,719,95-0 54,I 14,6l0 8,)90.000 l,151,984 11,548,984 Sl.267,141 8,7ll,OOO 2,634.274 I 1,369,274 47,667,665 9.085,000 2,088.269 11,171,269 41.()48,lBS 9,455,000 1,120.204 10,9JS,204 JS,IOS,481 9,840.000 929.00l 10.769.(IO! l4,l40,98l 10,240.000 Jll,7l4 10,SSJ,lj,I 20J)81,!SI 6,445,949 2,4ll,4J8 2,449,SlS 2,4.14.000 lM20,000 S,lH.258 4S,19J,2S8 \07,750,000 90.516,964 l 9a,266, \164 l.298,106.l" s Sl,924.253 s '5.0,l,481 J ...., J lJ u u .J ._J .> ) TABLE 9 -DIVISION OF GENERAL OBLIGATION DEBT SERVICE C•l Solid Wutr Dralnate TH Elerntc Llpt Waterworks Sew,r 01,i,o..i UttQty Ioncmalt &Powrr A.ud.Uorlam/ GClltral TGUJ JYE Syltetn Syrt,m Syltem Sy"'111 Fln•ada,e Sy,IHII Cermtcry Gu,way HOT Airport Colbemn. hrpose G.O. ~ D<btSem« DebtS.n'1c, Dtbt Service Del>IS-D<lr!Semee DebtSeMC< Debt Senk• D<btSmi« DelltSenire --O.bf Senf«, Debt SeMC< Debt Serna 2010 s 17,274,941 11,m.1n 1.314,322 8,704,945 l.119,S,8 6,948,169 SS.23S 1.m.ss9 97,31) 2.417,686 41.&88 IO,OOS,9SJ 68,347,004 2011 29,001,736 11,41',098 1.346,914 9,665,899 3.298,863 7.422,757 SS,224 8,001,261 97.274 2.408.627 19.243 12.322.S8l 8S.07S.481 2012 27.161,963 11.178.880 1.)11,180 9,S70,678 3.279,816 7,287.827 SS.213 7,922.848 97,248 2,405,973 39.314 11,535,656 81,866,594 2013 27.126,614 10.997,353 1.)20,711 9.SH.9n J,U0,836 7,219,112 SS.234 7,918,514 97J23 2.393,5!7 39,337 ll,.1~71194 81,481,702 2014 27,118.095 10.832.977 UOol.777 9.569,01' 3.281,770 7.140,SSS SS.217 7,923,079 97,280 l,484MS 39,314 ll.392,3ll 811,238,480 2015 26.908.580 11.994.212 1.288.850 9.570,590 l.280,790 7,064,JlS lS.227 7,919,760 97.328 1,J48,C3S 39,425 10.523,948 77.091,070 2016 26,869,629 8,200,873 1.)08,228 9,602,443 J,281.592 6,9U,6J7 55,223 7,916.618 97,248 4SS,27S 311.723 10,261,415 75,06'1,904 2017 26,852,386 8,161,996 1,285,210 9,622,383 3,286,874 6,11$1.799 SS,206 7,918.017 97,248 457,940 38.897 H27,878 74,08S,834 2018 26,002,140 7,891.107 1.272,77S 9,628,121 3,280,Sll 6.81J.6ll8 15,204 7,916,974 97.317 ,s6,04S 38.980 9,J40.S86 7J,J9l,4SO 2019 26.0SS,956 7,850,437 1.082.198 11.54!,128 l,282,2SS S,267.01 I SS,217 7,906,20S 97,290 4S4,02S 311.970 9.llS,873 69,976,565 2020 2l,20l,2S8 7,127,467 1,075.317 7,475,172 l.283,812 S,262,JJ6 SS.222 7.897.459 97,242 4SS,823 lll.906 9.309.677 65.281,692 2021 21,0S2,7SS 6.998.SS2 l,067,6H 7.4S3.687 l.275.893 5.255,108 5S.2IO 7,894,219 97,327 4S6,969 l&.802 8,688,917 62,lJS,072 2022 18,278.710 6.995.242 932.847 7,458,439 3.273.440 5.2SJ,457 SS.238 7.88).425 97.339 4S7,8S6 39.SSO 7.956.632 SB,682,175 2023 17.632.186 6.663,780 935,147 7.441.081 3,274,498 l.240,043 SS,204 7,87S,9J2 97,258 457.80 ]9.258 7,llB.262 S6,8S0.499 2024 17,516,91 l MS9,745 932,114 7,406,145 3,270.349 3.578.400 55.202 7,865,536 97,289 457,317 ]11.796 6.236,845 S4, l 14.6SO 201S 16,657,340 6,609.727 660,081 7.)96,786 2,980,041 3,576.Bl Sl.207 7.850,9U 97.308 457,137 39.099 S,887.270 52,267,142 2026 16,Z3S,Zl9 6.027,827 659Jll 7.387.739 2,264,715 l,()87,112 SS.212 6,699,2SI 97,305 232,352 39.343 4,882 . .168 47,667,66S 2027 14,770.172 4,853,292 294,777 6.127,112 1,754,-039 2.590.569 15,689 6,466.280 97,270 32,797 39,532 3,406,857 41.048,385 2028 13,200,980 4,633,087 186,782 6,250,562 )81.830 l,Sll.024 6.4S0.886 lll.70S 2.431.625 JS, 105,481 2029 10,111,899 242,0ll 84,101 5,674,-027 223,514 1,002.424 4.81U7S 38.752 2,045,360 24,240.983 2010 9.SS0,8Sl 237,19) 48,141 S,512.013 143.SO 4)7,605 2.394,995 l,7S7.241 20,081,SS! 2031 4,740.044 1.705,90S 6,44S,949 N 2032 2,455.,38 2,4SS,438 ,0 2033 2,449,525 2.4'9,52S 2034 2,454,000 2,454,000 439,212,121 lSl.686.0ll 19,731,llS 182,332,925 56.798,844 IOS,842.222 954,384 1S4J98.Sll 1,751.204 17,289,280 7114,SJJ 165,324.456 I ,298, l 06,321 uo locludrs lbeObllpliooo IDd obe Serie, 2010 c.r,;uc,1r,, l'l<limldaq-. 1Ubjc,;t"' <llueo, ) ) ) 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<•1 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 General Obligation Debt, Fiscal Year Ending 9-30-10 Percentage of System General Obligation Debt Self-Supporting $ 31,363,712 31,363,712 17,274,941 100.00% f•l Each Fiscal Year the City lraIISfers an amount equal 10 debt service requirements on the Waterworl<s Fund general obligation debt to a segregated a<>eount in the Wataworks Fund. FY2009 revenue is unaudited. THE SEWER FUND <-1 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 General Obligation Debt, Fiscal Year Ending 9-30-10 Percentage of System General Obligation Debt Self-Supporting $ 20,304,764 20,304,764 11,115,135 100.000/o ''1 Each Fiscal Year lbe City transfeis 11n amount equal to debt service requirements on the s.e-..:r Fund gcaeral obligation deb! to a segregated IICCOWII in the Sewer Fund. FY2009 revenue includes a planned transfer of $4,680,S I 3 from !!"'neral sewer fund balance. FY2009 revffllle is unaudited. THE SOLID WASTE FUND 1'1 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 General Obligation Debt, Fiscal Year Ending 9-30-10 Percentage of System General Obligation Debt Self-Supporting $ 7,507,723 7,507,723 1,314,322 100.00% r,i Each Fiscal Year the City tnmsfcrs an amount equal to debt service requirements on the Solid Waste Fund gcncnd obligation debt u:, a segreptcd account in the Solid Waste Fund. fY2()09 revenue includes a planned transfer ofSl ,794,032 from general solid waste fund balanct. FY2009 revenue is unaudited. THE DRAINAGE FUND 1'1 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 General Obligation Debt, Fiscal Year Ending 9-30-10 Percentage of System General Obligation Debt Self-Supporting 8,792,176 8,792,176 8,704,945 100.00% "1 Each Fiscal Year the City transfers an amount equal to debt service requirements on the Drainage Fund gencntl obligation debt IO a segrepted account in the Drainage Fund. fY2009 revenue includes a planned transfer ofS3,fi74.9IO from gener,iJ drainage fund balance. FY2009 n:venue is unaudited. THE ELECTRIC LIGHT AND POWER FUND 1•1 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 9-30-10 Percentage of Electric System General Obligation Debt Self.Supporting $ 37,107,074 2,415,945 34,691,129 6,948,169 100.00% !a) Each Fiscal Year the City transfers an amount equal 10 debt service RqUimnents on lhe Electric Light IUld Power Fund gcncml obligation debt to a segregated account in the Electric Ught and Power Fund. FY2009 reve1me is unaudited. 30 ) THE GATEWAY FUND <•> 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 Fund General Obligation Debt, Fiscal Year Ending 9-34}-J0 Percentage of Fund General Obligation Debt Self-Supporting $ 4,213,532 4,213,532 7,251,559 58.11% [•l Each Fi~ Year the City traasfets an arnouot equal to debt seivice requirements 011 the Gateway Fund general obligation debt to a ~ted account in the Gateway Fund. The remainder of the revenue needed to support the Gateway Fund will be lrallSferred from the Electric Light and Power Fund. FY2009 revenue is unaudited. THE Al RPORT FUND to> 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 Fund General Obligation Debt, Fiscal Year Ending 9-30-10 Percentage of Fund General Obligation Debt Self-Supporting <•l Each Fisc..:I Year the Cil)I transfers an amount equal to debt service requirements on the Auport Fund gen<?l!l obligoli<ln debt to a segregated account in the Airport Fund. FY 2009 revenue is unaudited. THE NORTH OVERTON TAX INCREMENT FINANCING FUND c•> 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 Fund General Obligation Debt, Fiscal Year Ending 9-30.10 Percent.age of Fund General Obligation Debt Self-Supporting $ $ 5,093,11S 5,093,115 2,417,686 100.00% 1,692,773 1,692,773 3,119,858 100.00% [•l Each Fiscal Year the City transfers an amount equal to debt service requiremenis on the Tax Increment Financiog Fwid general obligalioa debt to a segregated account i11 tbe Tax Increment Financing fund. fY2009 revenue mcludes a planned transfer of SISS,833 from Tax illcrement F"mancing Fund general fund balance. The remainder of revenue needed to support !be Tax Jncremenl Financing Fwid geaeral obligation debt is transfened &om !be City's Solid Waste Fund. FY2009 is unaudited. TABLE 11 -AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Date Amo11nl lsaued The Pareose Authorized Authorized To Date Bonds Unissued Sewer System s121m $ 3.303,000 2,175,000 1,128.000 Waterworlcs System I 0117/87 2,810,000 200.000 2,610,000 Street Improvements 511193 10,170,000 10,166,000 4,000 Sneet lmprovcm<:nts S/15/04 9,210,000 8,764,000 446,000 Civic Center/ Auditoriwn Renovation 1111d Improvements 5/15/04 6.450.000 500,000 5,950.000 Park Improvements 5/15/04 6,395,000 6,395,000 Police/Municipal Court Facilities 5/15/04 3,350,000 500,000 2,850,000 Library Improvements 5/IS/04 2,145,000 250,000 1,895,000 Fi«: Stations 5115/04 1.40S.OOO 1,405.000 Animal Sheller RtnQvations & Improvements 5/15/04 1,045.000 160,000 885,000 Street Improvements 1113/09 43,085,000 13,605,000 29,480,000 Fire Sta1ions 11/3/09 7,500,000 2,750,000 4,750,000 S 96,868.000 30,515,000 24,200,000 42,153,000 31 ) ) ) ) ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ... The City Council adopted a resolution during the 1984-85 budget process establishing capital maintenance funds for capital projects. A capital improvement plan is made for planning purposes and may identify projects that will be deferred or omitted entirely in future years. In addition, as conditions change, new projects may be added that are not currently identified. Under current City policy, for a project to be funded as a capital project it must have a cost of $25,000 or more and a life of seven or more years. For FY2009· IO, the City Council approved $240.5 million in total expenditures for capital projects for all general purpose projects, as well as projects for the electric fund, water fund, sewer fund, solid waste fund, storm water funds and airport. The Capital Projects Fund budget for FY2009-10 also included an additional $490.8 million in future improvements for all City departments over the five succeeding fiscal years. The improvements included in the City's capital improvement plan are generally funded from a blend of bond proceeds, reserves or current year revenue sources. As shown in Table 11, upon issuance 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 the November 3, 2009 bond election. The City typically issues voted bonds for general purpose City projects, such as streets, parks, libraries, civic centers and public safety improvements. However, the City has incurred substantial unvoted tax supported debt, such as the Cetificates, to fund portions of the capital budget of the Electric Fund, Waler Fund, Sewer Fund, Solid Waste Fund, Storm Water Fund, Tax Increment Fwui, Cemetery Fund, Auditorium/Coliseum Fund, Hotel Occupancy Tax Fund, Gateway Fund and Airport Fund. As described elsewhere in the Official Statement, such enterprise fund indebtedness is generally anticipated to be self-supporting from enterprise fund revenues. The City plans to issue $ I 07,602,000 in additional general obligation debt within the next 12 months. TABLE 12-0THEROBLIGATIONS The City has various capital leases outstanding. The deb1 service requirements of the leases are detailed below. Governmenta1 Business-Type Total Capital Lease Capital Lease Capital Lease FYE Minimum Minimum Minimum 30-See Pa;i,:ment Pa:tment Pal'.ment 2010 $ 4,680,633 6,953,062 11,633,694 2011 3,621,468 6,219,873 9,841,341 2012 3,019,946 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 3,61S,S61 7,806,898 Interest F,326,751) (2,363,7952 [ 4,690,5462 s 18,005,903 23,709,725 41,715,628 The City also has obligations to pay various contract revenue bonds issued through the Department of Housing and Urban Development and the Canadian Municipal River Authority. The debt service requirements of the contract revenue bonds are detailed below. FYE Contract Revenue Bonds JD-See Prlneleal Interest Totsl 2010 $ 1,442,600 1,636,951 3,079,551 2011 1,494,093 1,573,481 3,067,574 2012 1,5S6,264 1,504,834 3,061,098 2013 1,495,327 1,433,120 2,928,447 2014-2027 27,809,227 10,184,132 37,993,359 $ 33,797,511 16,332,517 50,130,028 PENSION FUND ... TEXAS MUNICIPAL RETIREMENT SYSTEM<•~> ... All pennanent full-time City employees who are not firefighters are covered by the Texas Municipal Retirement System (''TMRS"). TMRS is an agent, multiple-employer, public employee retirement system covered by a State statute and administered by six trustees appointed by the Governor of Texas. TMRS 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 current, prior and antecedent service credits, five year vesting, updated service credit, occupational disability benefits, and survivor benefits for the spouse of a vested employee. An employee who retires receives an annuity based on the amount of the employee's contributions over-matched two for one by the City. Since October 11, I 997, the employee contribution rate has been 7% of gross salary. The City's contribution rate is calculated each year using actuarial techniques applied to experience. Enabling statutes prohibit any member city from adopting options which impose liabilities that cannot be amortized over 25 years within a specified statutory rate. On December 31, 2008, the actuarial value of assets held by TMRS (not including those of the Supplemental Disability Fund, 32 ) "\ ) which is "pooled") for the City were $205 million. Unfunded actuarial accrued liabilities on December 31, 2008, were $135 million and amonized over a 30-year closed period. FlRE PENSION FUND (al_ •• 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 firefighters, by vote of the department, in I 941 . Firefighters are not covered by Social Security. The Fund is 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 thereof: Execution of the act is monitored by the Firemen's Pension Commissioner who is appointed by the Governor. Benefits of retired firemen are detennined on a "fonnu\a'' or a "final salary" plan. Actuarial reviews are performed every two years, and the fund is audited annually. Firefighters contribute a percentage of full salary into the fund. Based on the plan effective December I, 2005, the Fund's funding policy requires contributions equal to 12.43% of the firefighters' pay. The City contributes on a basis of the percentage of salary, which is an annually adjusted ratio that bean the same relationship to the firefighter's contribution rate that the City's rate paid into the TMRS and FICA bears 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 December 31, 2008, the most recent actu.arial 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 years needed to amortize the unfunded actuarial liability is detennined using an open, level percent.age of payroll method, assuming that the payroll will increase 4% per year. The December 31, 2008 actuarial valuation needed 30 years to amortize the unfunded actuarial accrued liability. OTHER POST-EMPLOYMENT BENEFITS ... The City currently provides certain post-employment benefits to its employees. The City's annual OPEB expense is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. For further information regarding the City's OPEB obligation, see Note Ill. F (Notes to the Basic Financial Statements) set forth in Appendix A. (•\ For historical infonnation concerning the retirement plans, see "APPENDIX A, EXCERPTS FROM ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2008 -Note Ill, Subsection E -Retirement Plans". lb> Source: Texas Municipal Retirement System, Comprehensive A111111a/ Fi11aricial Repcrtfor Year Emkd December JI, 1008. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 33 ) TABLE 13 -CHANGES IN NET ASSETS Fiscal Year Ended Seetember 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 51399 10!316 9 787 11 !292 5,742 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-Term Debt 9,840 8 367 6,968 4,326 3,195 Total Expenditures 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/;IJ7 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 I 101628 <•1 Uni ts are in thousands. Note: Data shown in Table 13 reflects general governmental activities reported in accordance with GASB Statement No. 34. The financial statements include a management discussion and analysis of the operating results of such fiscal year, including restatements to beginning fund balances and net assets. 34 ) TABLE 13A-GENERAL FUND REVENUES AND EXPENDITURES HISTORY Fiscal Year Ended Se2tember 30 Unaudited ~ ml am aW!i ~ REVENUES Taxes $ 84,711,760 85,345,082 80,266,416 75,999,624 68,716,601 Franchise Taxes 6,459,207 7,786,611 7,429,660 8,008,973 6,693,209 Licenses and Permits 2,213,041 2,663,139 2,531,032 2,250,635 1,953,666 Intergovernmental 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 Miscclla11eous 1,757,534 2,574,448 2,582,509 1,465,215 1,506,315 Interest 327,401 1,052,842 1,469,083 921,742 349,236 Operating Transfers 16,565,397 Total Revenues and Transfers $ I 02,218,639 I 06,571,570 I 02,520,653 97,818,207 104,3S 1,116 EXPENDITURES General GovcmntCT1t $ 6,159,536 Financial Services 2,139,492 Cultural and Recreation 11,515,865 12,253,380 15,251,742 13,986,576 Economic & Business Development 966,068 1,215,978 1,122,880 1,146,267 Non-departmental 1,882,255 445,251 Admin/Gcncra\ Govcmmcnt 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 Health 4,069,411 4,133,917 4,004,913 3,738,790 Other Public Safety 4,872,418 4,703,249 4,508,394 4,287,806 Planning and Transportation 8,120,727 Streets and Traffic 8,013,700 8,168,462 7,663,278 7,439,045 2,214,291 Human Resources 740,826 Debt Service 2,840,461 2,396,605 1,694,844 1,154,226 Capital Outlay 8,412,831 3,966,065 4,256,705 7,184,866 5,277,100 Operating Transfers 3,912,645 Total Expenditures $ 124,321,204 120,345,933 117,202,093 112,278,444 103,203,269 Excess (Deficiency) of Revenues and Transfers over Expenditures (22, I 02,565) (13,774,363) {14,681,440) (14,460,237) 1,147,847 Capital Leases 8,714,556 3,011,141 3,721,262 S,119,980 3,534,048 Transfer In 19,303,155 17,729,361 14,536,071 13,325,046 Transfer Out (5,996,006) (6,129,512) (4,374,956) (1,436,498) Fund Balance at Beginning of Year 19,962,275 19,125,648 19,924,711 17,376,420 12,694,525 Fund Balance at End of Year s 19,881,415 19,962,275 19,125,648 19,924,711 17,376,420 Undesignatcd Fund Balance 1"' $ 19,881,415 19,962,275 19,125,648 19,924,711 17,376,420 <•l The City's financial policies target a General Fund undesignated balance of at least 20% of General Fund revenues. The widesignated fund balance is at 97 .25% of the target established by the City· s financial policies. 35 ) TABLE 14-MUNICIPALSALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, Chapter 321, Tellas 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 pledged to the payment of the Obligations or other debt of the City. In addition, in January 1995, Lubbock approved the imposition of an additional sales and use tax of one-eighth of a cent as authorized by Chapter 323 Tellas Tax Code, as amended. Collection for the additional tax commenced in October 1995 with the proceeds from the onwighth cent sales tax designated for the use and benefit of the City to replace property tax revenues lost as a result of the adoption of the tax. At an election held in the City on November 4, 2003, voters approved an additional one-quarter cent sales and use tax, with the proceeds to be dedicated to the reduction of ad valorem taxation, and an additional one-eighth cent sales and use tax under Section 4A of the Texas Development Cmporation Act (Article 5190.6, Texas Revised Civil Statutes), to be used for economic development in Lubbock. The City began to receive proceeds of these taxes in October 2004. Collection and enforcement of the City's sales tax is effected through the offices of the Comptroller of Public Accounts, State of Texas. The Comptroller remits the proceeds of the tax to the City on a monthly basis after the deduction of a 2% service fee. Historical collections of the City's local Sales and Use Tax arc shown below: %of Equivalent of FYE Total Ad VaJorem Ad VaJorem Per 30-SeJ! Collected <•1 TnLe~ Tax Rate Ca2ita<bl 2004 $ 30,554,632 70.67 $ 0.3819 148.11 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 I•> Excludes bingo tax receipts and mixed beverage tax. (bJ Bllscd on population estimates of the City. Effective as of October 1, 2006, the sales tax allocation for the City is as follows: City Sales & Use Tax City Sales & Use Tax for Property Tax Relief City Sales & Use Tax for Economic Development County Sales & Use Tall State Sales & Use Tax Total 36 Sales Tax Allocation % 1.000 0.375 0.125 0.500 6.250 8.250 ) ) FINANCIAL POLICIES POLICIES Basis of Accounting . . . The accounting policies of the City conform to generally accepted accounting principles of the Governmental Accounting Standards Board and program standards adopted by the Government Finance Officer's Association of the United States and Canada ("GFOA"). The GFOA has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City 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 its eligibility for another certificate. Comprehensive Annual Financial Report (CAFR) ... 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 Management's Discussion and Analysis -for State and Local Governments, GASB Statement No. 37, Basic Financial Statements -and Management's Discussion and Analysis -for State and Local Governments: Omnibus, and GASB Statement No. 38, Certain Financial Note Disclosures. For additional information regarding 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 fluctuations in revenue. The City's General Fund currently has an unreserved/undesignated fund balance that is at 97.2% of the target established by the City's financial policies. Water. Wastewq,er. Storm Water, Solid Waste and Airport Enterprise Fund Balances ... It is the policy of the City to maintain appropriable net assets in the Water and Wastewater funds in an amount equal to 25% of operating revenues for unforeseen contingencies. The City's goal of appropriable net assets in the Solid Waste, Airport, and Storm Water fimds is an amount equal to 15% of regular operating revenues. The City currently exceeds its policy on appropriable net assets and unrestricted net assets for its various enterprise funds. According to unaudited numbers for FY 2009, the target net assets by policy and current appropriable net assets for the Water, Wastewater, Storm Water, Solid Waste and Airport enterprise funds are as follows: Ente!]!rise Fond Taa:et Net Assets hI Policr Aeero2riable Net Assets Water $13.0 million $16.3 million Wastewater $6.1 million $10.3 million Storm Water $1.2 million $6.7 million Solid Waste $2.5 million $7.6 million Airport $1.0 million $4.S million Electric Enterprise Fund Balance ... II is the policy of LP&L lo maintain unrestricted net ai,sets set by the City Charter. The LP&L Governance Ordinance was amended in November of 2008 to include, among other things, changes to the requirements regarding the reserve funds LP&L maintains. The LP&L Governance Ordinance requires the Electric Utility Board to (i) maintain sufficient operating cash to satisfy all current accounts payable and (ii) maintain a general reserve fund that is equal to the greater of four months gross retail electric revenue (GRR) as determined by taking the average monthly GRR from the previous fiscal year or $50 million dollars. This general reserve fund shall be used 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 target net assets by ordinance and current unrestricted net assets for LP&L are as follows: Enten,rise Fund LP&L Target Net Assets by Policy $50.0 million Unrestricted Net Assets $62.5 million At the end of FY 2009, LP&L fully funded its general reserve fund of$50 million. Enterprise Fund Revenues ... It is the policy of the City that each of the Electric, Water, Solid Waste and Sewer funds be operated in a manner that results in self sufficiency, without the need for additional monetary transfers from other funds (although the Electric System received transfers fl-om 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 detennining self sufficiency, cost recovery for each enterprise fund inc !udes direct operating and maintenance expense, as well as indirect cost recovery, in-lieu of transfers 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 cost of providing service. Debt Service Fund Balance ... A reasonable debt service fund balance is maintained in order to compensate for unexpected contingencies. 37 ) Budgetary Procedures ... The City follows these procedures in establishing operating budgets: I) Prior to August I, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October I. The operating budget includes proposed e;,i:penditures and the means of financing them. 2) Public hearings are conducted lo obtain ta;,i:payer comments. 3) Prior lo October I the budget is legally enacted through passage of an ordinance. 4) The City Manager is authorized to transfer budgeted amounts between accounts below the department level. Any transfer 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 as a management control device during the year for the Convention and Tourism, Criminal Investigation, and Capital Projects Funds. Budgets are adopted on an annual basis. Fonnal budgetary integration is not employed for Debt Service funds because effective budgelary control is alternatively achieved through general obligation bond indenture and other contract provisions. 6) The Budget for the General Fund is adopted on a basis consistent with generally accepted accounting principles. 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 received the Distinguished Budget Presentation Award from the GFOA for the following budget years beginning October I, 1983-88 and 1990-08. Insurance and Risk Management ... The City is self-insured for public entity liability and 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 workers' compensation is insured under guaranteed cost policies. The Health Benefits are covered by a 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 machinery coverage. An Insurance Fund has been established in the Internal Service Fund to account for insurance programs and budgeted transfers are made to this fund based upon estimated payments for claim losses. At September 30, 2009 the unaudited total Net Assets of these insurance 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 mSJ1agement fund (the "Risk Fund") 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 insurance. The 2009 actuarial review recommended that the liabilities of the Risk Fund be increased to $3,371,451 from $2,845,679 to the minimum expected confidence level of the Government Accounting Standard Board Statement Number IO ("GASB 10"), which requires maintenance of risk management assets at a level representing at least a 50% confidence level that all liabilities, if presented for payment immediately, could be paid. The Risk Fund has net assets restricted for insurance claims of$ I ,042,459 over the recommended funding level. Given the risk net assets balance, the City exceeds the minimum GASB IO requirement. ADMINISTRATION Since FY 2004, the City has implemented a number of significSJ1t 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 are described below. Establishment of Audit and Investment Committee ... Through the adoption of a resolution in June 2003, the City Council established an independent Audit and Investment Committee composed of five members. The Audit and Investment Committee is charged with maintaining an open avenue of communication between the City Council, City Manager, internal auditor and independent external auditor to assist the City in fulfilling its fiduciary responsibility to its citizens. The committee has the power to conduct or authorize investigations into the City's financial perfonnances, internal fiscal controls, exposure and risk assessment. The committee is appointed by the City Council and infonnally reports to the City Manager. The 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 status 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 and Chief Financial Officer for the Texas Tech University System; Richard Griffith, owner of Richard Griffith Investments; R.J. Givens, a real estate agent in the City; Kim Turner, the Director of Internal Audit at Te;,i:as Tech; and John Zwiachcr, a member of the Board of Directors ofLP&L. Mr. Zwiacher is the chair of the committee. Monthly Assessments of Revenues and Expenditures . . . Since FY 2006, City management assesses monthly the budgeted expenditures and revenues of the City, and incorporates budget adjustments as necessary to better match expenditures with revenues. Transfers within the various Funds of the City are implemented on an as-needed basis to take into account changes in 38 ) revenues projected to be received throughout a fiscal year as well as efficiencies realiud 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 al $0.44640 per $100 taxable assessed valuation, the same as in FY 2008. The City's tax roll increased $329.5 million, or 2.8%, from FY 2008 to FY 2009. The City Council, on June 12, 2003, 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 necessary. 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. rn addition, the City Council recognized the need for the City to be autonomous in its ability to provide the public safety, health, and quality of life for its citizens. INVESTMENTS 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"), 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 authori:z.ed to invest in ( 1) obligations, including letters of credit, of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) coUaterali:z.ed mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) bonds issued, assumed, or guaranteed by the State of Israel, (7) certificates of deposit that are issued by a state or national bank domiciled in the State ofTexas, 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 insured by the Federal Deposit Insurance Corporation or the National Credit Union share Insurance Fund, or are secured as to principal by obligations described in clauses (1) 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 institution that has a main office or branch office in the State and that is selected by the City; (b) the depository institution selected by the City arranges for the deposit of funds in one or more federally insured depository institutions. 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 deposit; 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 collateralized repurchase agreements that have a defined tennination date, are fully secured by obligations described in clause (I), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) securities lending programs if(i) the securities loaned under the program are 100% collateraliud, a loan made under the program allows for termination 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 slate or national bank that is continuously rated by a nationally recognized investment rating finn at not less than "A" or its equivalent or ( c) cash invested in Bonds described in clauses (I) through (6) above, clauses (11) through ( 13} below, or an authoriud investment pool; (ii) securities held as collateral under a 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, (10) bankers' acceptances with the remaining tenn of 270 days or less, if the short-tenn obligations oflhe accepting bank or its parent are rated at least A-I or P-1 or the equivalen1 by at least 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 ir the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, {12) no-load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $ I 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 proceeds may be invested in guaranteed investment contracts secured by obligations of the Uni1ed States of America or its agencies and instrumentalities, other than the prohibited obligations 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 are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service. The City is specifically prohibited from investing in; (I) obligations whose payment represents the coupon payments on 39 ) the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. INVESTMENT POLICIES Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield. maturity, and the quality and capability of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each lnveshnent Strategy Statement will describe its objectives concerning: (I) suitability of investment type, (2) preservation and safety of principal, (J) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an inveshnent report detailing: (I) the investment position of the City; (2) that all investment officers jointly prepared and signed the report; (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group; ( 4) the book value and market value of each separately listed asset at the beginning and end of the reporting period; (5) the maturity date of each separately invested asset; (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS Under Texas law, the City is additionally required to: (I) annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose: the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the 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) deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on iovestments and adherence to the City's investment policy; (S) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers; ( 6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict its investment in mutual funds in the aggregate to no more than IS percent of its monthly average fund balance, excluding bond proceeds and reserves Estimated Fair Book Value Market Value and other funds held for debt service, and to invest no portion of bond 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 stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the said ordinance or resolution; and (IO) at least annually review, revise and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. TABLE15-CURRENTINVESTMENTS As of October 31, 2009, the City's investable funds were invested in the following categories: Type United Stales Agency Obligations Money Market Mutual Funds "' Local Government Investment Pools'" Par Value $ 77,000,000 3,724,955 264,977,250 $ 345, 702.,205 Book Value % efTotal Value Book Value 77,211,464 22.32 3,724,955 1.08 264,977,250 76.60 345,913,669 100.00 Estimated Market Value o,) % of Total Value Market Value 77,812,950 22.46 3,724,955 1.07 264,977,250 76.47 346,SIS,155 100.00 t•J Market prices are obtained from Wells Fargo Brokerage. No funds are invested in mortgage backed securities. The City holds all investments to maturity which minimizes the risk of market price volatility. (b) Money Markel Funds are held at Wells Fargo Bank, Texas N.A. (•> Local government investment pools consist of entities whose investment objectives are preservation and safety of principal, liquidity and yield. The pools seek to maintain a $1.00 value per share as required by the PFIA, 40 TAX MATTERS TAX EXEMPTION OF SERIES 2010A BONDS AND SERIES 2010A CERTIFICATES 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 purposes under existing law and (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 the Tax-Exempt Obligations, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure, a requirement that excess arbitrage earned on the investment of bond proceeds be paid periodically to the United States and a requirement that the issuer file an information repon 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 representations by lhe 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, respectively, 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 determined to be inaccurate 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 to any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or disposition of, the Tax-Exempl Obligations. Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions are further based on Bond Counsel's knowledge of facts as of the date thereof. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances that may thereatler come to Bond Counsel's attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, Bond Counsel's opinions are not a 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 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 be given regarding whether or not the Service will commence an audit of the Tax-Exempt Obligations. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the City as the taxpayer and the Owners may not have a right to participate in such audit. Public awareness of any future audit of the Tax-Exempt Obligations could adversely affect the value and liquidity of the Tax- Exempt Obligations regardless of the ultimate outcome of the audit ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE TAX-EXEMPT OBLIGATIONS Collateral Tax Consequences Prospective pw-chasers of the Tax-Exempt Obligations 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, taxpayers who may be deemed to have incuned 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 Tax-Exempt Obligations. These categories of prospective purchasers should consult their own tax advisors as to 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 interest, such as interest on the Tax-Exempt Obligations, received or accrued during the year. TH Accounting Treatment of Original Issue Premium The issue price of all or a portion of the Tax-Exempt Obligations may exceed the stated redemption price payable at maturity of such Tax-Exempt Obligations. Such Tax-Exempt Obligations (the "Premium Obligations") 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 Premium Obligation) is detennined using the yield to maturity on the Premium Obligation based on the initial offering price of such Obligation. 41 'I ) The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of Premium Obligations that are not purchased in the initial offering al 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 wilh respect to the federal, state, local, and foreign tax consequences of the purchase, ownership, and sale, redemption or other disposition of such Premium Obligations. Long First Coupon Consequences Because the first interest payment on the Tax-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 TreasW"y Regulations. Although the interest on the Tax-Exempt Obligations will be excludab!e from gross income as discussed above, the interest on the Tax-Exempt Obligations may be considered "original issue discount" for federal tax purposes. As a result, special tax accounting rules for "original issue discount" may require a portion of certain interest payments to be taken into account for the taxable year or years prior to the taxable year during which the interest payment is received for purposes of any alternative minimum taxable income consequences for corporations and any collateral federal income tax conse.quences for certain purch= (referred to in the preceding paragraph of this section). In addition, this treatment may also give rise to taxable "market discount" 10 secondary market purchasers of Tax-Exempt Obligations. Prospective purchasers should consult their tax advisors regarding the application of the "market discount" rules to the Tax-Exempt Obligations. For a discussion of the tax accounting treatment of"original issue discount" on the Tax-Exempt Obligations in the hands of the initial purchasers that acquire Tax-Exempt Obligations at their issue pri~, see the discussion 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 Tax-Exempt Obligations may be less than lhe stated redemption price payable at maturity of such Tax-Exempt Obligations (the "Original Issue Discount Tax-Exempt Obligations"). In such case, the difference between {i) the amount payable at the maturity of each Original Issue Discount Tax-Exempt Obligation, and (ii) the initial offering price to the public of such Original Issue Discowit Tax-Exempt Obligation constitutes original issue discount with respect to such Original Issue Discount Tax-Exempt Obligation in the hands of any owner who has purchased such Original Issue Discount Tax- Exempt Obligation in the initial public offering of the Tax-Exempt Obligations. Generally, such initial owner is entitled to exclude from gross income (as defined in Section 61 of the Code) an amount of income with respect to such Original Issue Discount Tax-Exempt Obligation equal to that portion of the amount of such original issue discount allocable to the period that such Original Issue Discount Tax-Exempt Obligation continues to be owned by such owner. Because original issue discount is treated as interest for federal income tax purposes, the discussion regarding interest on the Tax-Exempt Obligations under the captions "TAX MATTERS -TAX EXEMPTION OF SERIES 2010A BONDS AND SERIES 2010A CERTIFICATES" and "TAX MATrERS -ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE TAX-EXEMPT OBLIGATIONS • Collateral Tax Consequences" generally applies, and should be considered in connection with the discussion in this portion of the Official Statement. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Tax-Exempt Obligations prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Tax-Exempt Obligations in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Tax-Exempt Obligation was held by such initial owner) is includable in gross income. The foregoing discussion assumes that (i) the Underwriters have purchased the Tax-Exempt Obligations for contemporaneous sale to the public and (ii) all of the Original Issue Discowit Tax-Exempt Obligations have been initially offered, and a substantial amount of each maturity thereof has 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 offering prices thereof stated in this Official Statement. Neither the City nor Bond Counsel has made any investigation or offers any comfort that the Original Issue Discount 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 date before the semiannual anniversary dates of the date of the Tax-Exempt Obligations and ra.tably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Tax-Exempt Obligation for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (i) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (ii) the amowits payable as current interest during such accrual period on such Tax-Exempt Obligation. The federal income tax consequences 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 1he initial offering price may be determined according to rules that differ from those described above. All owners of Original Issue Discount Tax-Exempt Obligations should consult their own tax advisors with respect to the determination for federal, state, and local income tax purposes of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Tax-Exempt Obligations and with respect to the federal, state. local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Tax-Exempt Obligations. 42 ) SERIES 2010B BONDS AND SERIES 20108 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 20\0B Certificates (the 4'axable Obligations"). This discussion is based upon the provisions of the Code, applicable Treasury Regulations promulgated and proposed thereunder, judicial authority and administrative inlerpretations, 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 has 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 cash at their "issue price" (which will equal the first price at which a substantial portion of the Taxable Obligations is sold for cash to persons other than bondhouses, brokers, or similar persons or organizations 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 lo original interest discount, acquisition premium, market discount or amortizable premium. Except as stated herein, this summary describes no federal, state or local tax consequences resulting 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 purchase the Taxable Obligations. The Code generally defines a "United States person" 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 lo 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 (including an entity 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 Owner of the Taxable Obligation that is a partner of a partnership that will hold Taxable Obligations should consult its tax advisor. This discussion does not address any tax considerations arising under the laws of any foreign, state, local or other jurisdiction. In General Interest on a Taxable Obligation generally will be taxable in each year the Taxable Obligation is held by the Owner as ordinary income without regard to the time it otherwise accrues or is received in accordance with such Owner's regular method of 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 otherwise 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. Long First Coupon Consequences 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 accoWlting treatment of"original issue discount" on the Taxable Obligations in the hands of the initial purchasers that acquire Taxable Obligations at their issue price, see the discussion below under .. -Original Issue Discount" 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 the "stated redemption price at maturity" (as 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 staled redemption price at maturity multiplied by the number ofcomplele 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 rata basis as principal payments are made on the Taxable Obligation. The stated redemption price at maturity of an Taxable Obligation includes all payments on lhe Taxable Obligations other than the stated interest amounts, which are based on a fixed rate and payable unconditionally at the end 43 ) of each six-month accrual period. Except as described below, Owners 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 attributable will not be receive until maturity of the Original Issue Discount Taxable Obligations. The amount of original issue discount included in income for each year will be calculated under a constant yield to maturity formula that results in the allocation of less original issue discount to earlier years of the terms of Original Issue Discount Taxable Obligations and more original issue 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 purposes, (ii) all oflhe Taxable Obligations have been offered, and a substantial amount of each maturity thereof has been sold, to the general public in arm's-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, and (iii) the respective initial offering prices of the Taxable Obligations to the general public are equal to the fair market value thereof. Neither the City nor Bond Counsel has made any investigation or offers and assurance that the Taxable Obligations will be offered and sold in accordance with such assumptions. Accrual Method Election Under the Treasury Regulations relating to original issue discount, an Owner that uses an accrual method of accounting would be permitted to elect to include in gross income its entire return on a Taxable Obligation (i.e., the excess of all remaining payments to be received on the Taxable Obligation over the amount paid for the Taxable Obligation by such Owner}, based on the compounding of interest at a constant rate. Such an election for an Taxable Obligation with amortizable bond premiwn (or market discount) would result in a deemed election for all of the Owner's debt instruments, with amortizable bond premiwn (or market discount) and could be revoked only with the permission of the Service with respect to debt instruments acquired after revocation. Disposition or Retirement Upon 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 will equal the difference, if any, between the Owner's adjusted tax basis in the Taxable Obligation and the proceeds the Owner receives, excluding any proceeds attributable to accrued interest, which will be recognized as ordinary interest income to the extent the owner has not previously included in the accrued interest income. The proceeds an Owner receives will include the amount of any cash and the fair market value of any other property received for the Taxable Obligation. Notwithstanding the discussion under ''Original Issue Discount," an Owner's tax basis in the Taxable 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-tenn capital gains of individuals, estates and trusts currently are subject to a reduced tax rate. The deductibility of capital losses may be subject to limitation. Defeasance oftbe Taxable Obligations Defeasance of any of the Taxable Obligations may result in a reissuance thereof, for U.S. federal income tax purposes, in which event an Owner may recognize taxable gain or loss as described above, even if such Owner does not receive any cash in such defeasance transaction. Information Reporting and Backup Withholding Information 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, and backup withholding may apply unless such Owner provides the appropriate intermediazy with a taxpayer identification number, certified under penalties of perjury, as well as certain other infonnation or otherwise establishes an exemption from backup withholding. Any amount withheld under the backup withholding rules is allowable as a credit against the Owner's actual U.S. federal income tax liability and such Owner timely provides the required infonnation or appropriate claim form to the Service. Treasury Circular 230 Disclosure The tax discussion set forth above was written to support the marketing of the Taxable Obligations and 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 that 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 CoWlsel will receive a non-refundable fee contingent upon the successful marketing of the Taxable Obligations, but not contingent on any taxpayer's realization of tax benefits from the Taxable Obligations. AU taxpayers should seek advice based on such taxpayer's particular circwnstances from an independent tax advisor. This disclosure is provided to comply with Treasury Circular 230. IN ADDIDON, THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON AN OWNER'S PARTICULAR SITIJATION. INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX IMPLICATIONS OF HOLDING AND DISPOSING OF THE TAXABLE OBLIGATIONS UNDER APPLICABLE STATE OR LOCAL LAWS. FOREIGN 44 ) '\ INVESTORS SHOULD ALSO CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES UNIQUE TO INVESTORS WHO ARE NOT U.S. PERSONS. OTHER INFORMATION RATINGS The Obligations are rated "Aa3" by Moody's Investors Service, Inc., "AA+" by Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. and "AA" by Fitch Ratings. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the City makes no representation as to the approprialeness 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 any or all companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Obligations. LmGATION 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 against the City that exceed $500,000. State law limits municipal liability for personal injury at $250,000/$500,000 and property damage at $100,000 per claim. The following represents the significant litigation against the City at this time. For purposes of this report, included are only suits in which the City has exposure greater 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 a children's basketball game. The matter has been dismissed on a plea to the jurisdiction, and the plaintiff appealed the court's decision. The Court of Appeals reversed the trial court's decision and remanded the case back to the trial court. The plaintiff did not seek monetary damages except for attorney's fees. The trial was held in August and the jury found in the plaintiff's favor and awarded $116,000 in attorney's fees. The City is appealing the case. The City and a police officer have been sued by an individual on behalf of himself and his children 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 asserted that the driver of the vehicle carrying the plaintiff's children was negligent in failing to yield the right- of-way to the police officer. The City filed a motion for summary 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 case to the Texas Supreme Court but the Court refused to hear the case. The case is now back in the trial court. The City Attorney believes there is insurance covering the claims. The City, Garza County, Kenl County, and the Texas Attorney General's Office has been sued by Templeton Mortgage for certain rights regarding the restrictive easements at Lake Alan Henry 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 has yet lo be argued before the Court. The City has been sued by Templeton Mortgage and Mark Brown for damages to his property because of the rising and falling of water at Lake Alan Henry. He argues that if the restrictive easements are strictly enforced as interpreted by the City of Lubbock, he 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$ I 00,000. The City is being sued by a lady who fell at the Civic Center. She alleges that the bleachers were defective in that they were unstable, causing her to fall. The lessor of the event procured insurance in which the City was named as an additional insured. The City is being defended by the insurer in this case. The City is being sued by a City employee in two separate lawsuits pertaining to auto accidents he was involved in while working for the City. In one case, he was 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, purs\Wlt to its workers' compensation coverage, has paid for most of the Plaintitrs 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 the 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 former police officer under the Texas Whistleblower Act. She claims that she was lerminated 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 case with a $500,000 self- insured retention. 45 ) The City is involved in a lawsuit in which the owner of a car wash is asserting that the City improperly performed an abatement as to his car wash. He alleges that the City's contractor damaged equipment in the car wash while taking down the roof. The City is asserting that the equipment was already damaged due to the storm that damaged the roof. The City has also been put on notice ofa possible lawsuit by the estate of Tim Cole who was wrongfully convicted of rape back in the i 980's. At this time, the estate desires to depose a number of officers that were working on the investigation during the l 980's. There is no question that Tim Cole was innocent of the rapes for which he was convicted. He later died while he was in prison. Given that the incident occurred during the 1980's, the City has insurance with the Texas Municipal League ("TML "} in the amount of $11,000,000. TML has hired Bill Wade, with Crenshaw, Dupree & Milam, to defend this potential lawsuit. The City also has three employee matters under current litigation. These matters are being handled by Craig, Tenill, Hale, and Grantham, LLP. The City intends to vigorously defend itself on all claims, although no assurance can be given that the City will prevail in all cases. However, the City Attorney and City management are of the opinion that the City's available sources for payment of any 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 the Underwriters, the City will execute and deliver 10 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 issuance 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. INVESTIGA TJONS RELATING TO CITY'S HEAL TH 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 contract (the "Administration Contract") with its then current health insurance administrator, American Administrative Group, Inc. ("AAG"). The Administration Contract provided for AAG's administration of all City employee claims on the City's self-insured health insurance. The Auditor found numerous possible overcharges and elTOrs by AAG during the term of the Administration Contract, including overcharges possibly arising from unauthorized commissions taken by AAG and possible payments to AAG by phannacies as rebates. The outside Auditor estimated the aforementioned errors and overcharges to be approximately $2 million. The Administration Contract tenninated by its own terms in December 2006, and AAG has ceased to administer any claims for the City. The City has hired another third party administrator to administer the run-out claims that accrued prior to December 2006. The City selected Blue Cross Blue Shield to be the City's new health insurance administrator beginning Januazy 2007. In March 2007, the City filed an application wilh the State district court to compel AAG to preserve and provide documentation relating 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 Partners ofits contract with AAG to determine whether any further overcharges have occurred. The trial court never issued a ruling as to the City's application and instead referred the matter to arbitration. The City will continue to pursue the documents and any damages it may be entitled in the arbitration. AAG also sued the City for damages to its business in the amount of$450,000. Arbitration has been scheduled in these matters for March-April 2010. In an attempt to obtain the necessary documents to conduct the audit, the City attempted to obtain the necessary documents directly from Covenant Health System. Covenant was unsure it could release the documents to the City as it opined such could be a violation ofHIPAA. The City filed a declaratory judgment action in federal court against Covenant seeking a declaration as to whether Covenants release of these documents violated HIPAA. HealthSmart 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 lawsuit has been filed by AAG against Lee Ann Dumbauld, City Manager; Scott Snider, 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 administrator instead of AAG. The City employees were sued for civil conspiracy, misappropriation, tortious interference with existing and prospective contracts, business disparagement; and defamation. The City is providing a defense for the employees and is seeking money from Travelers Insurance. 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 that federal authorities, including the Federal Bureau of Investigation, have conducted investigations with respect to matters relating lo AAG, the Administration Contract, and the selection by the City of Blue Cross Blue Shield as its health insurance administrator. On May 14, 2008, a search wanant issued by the U.S. District Court for the Northern District of Texas Lubbock Division required that FBI agents search and seize various 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 to these investigations. The City believes these investigations may still be ongoing. REGISTRA TJON AND QUALIFICATION OF OBLIGATIONS FOR SALE The sale of the Obligations has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Obligations have not been qualified under the Securities Act of Texas 46 ) ) in reliance upon various exemptions contained therein; nor have the Obligations been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Obligations under the securilies laws of any jurisdiction in which the Obligations may be sold, assigned, pledged, hypcthecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Obligations shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides lhat the Obligations are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalilies 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 agencies of the State of Texas, the PFIA, requires that the Obligations be assigned a rating of "A., or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION -RATINGS" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Obligations are legal investments for state banks, savings banks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Obligations are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states lo determine whether the Obligations are legal investments for various institutions in those 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 and the approving legal opinions of Bond Counsel. The fonns of Bond Counsel's opinions are attached hereto in Appendix B. The legal fee lo be paid Bond Counsel for services rendered in connection with the issuance of the Obligations is contingent upon the sale and delivery of the Obligations. The legal opinions of Bond Counsel will accompany the Obligations deposited with DTC or will be printed on the definitive Obligations in the event of the discontinuance of the Book-Entry-Only System. Certain legal matters 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 finn is contingent upon the sale and 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, and such finn has not assumed any responsibility with respect !hereto or undertaken independently to verify any of lhe infonnation contained herein except that in its capacity as Bond Counsel, such firm has reviewed the infonnation 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 PROCEEDS" and "REMEDIES") and "TAX MATTERS" and under the subcaptions "LEGAL MATTERS," "LEGAL INVESTMENTS AND ELIGIBJLITY TO SECURE PUBLIC FUNDS IN TEXAS" and "CONTINUING DISCLOSURE OF INFORMATION" (except for the subsection "Compliance with Prior Undertakings") under the caption "OTHER INFORMATION'' atid such finn is of the opinion that such descriptions present a fair and accurate summary of the provisions of the laws and instJUments therein described and such information confonns to the Ordinances. The legal opinions to be delivered concurrently with the delivery of the Obligations eitpress the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, lhe attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future perfonnance of the panies to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that 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 Rulemaking Board ("MSRB"). This information will be available free of charge via the Electronic Municipal Market Access ("EMMA'') system at www.emma.msrb.org. Annual Reports The City will provide certain updated financial information and operating data to the MSRB annually via EMMA in accordance with the provisions of Rule 1Sc2-12 (the "Rule"), promulgated by the SEC. The infonnation to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8A through 15 and in Appendix A. The City will update and provide this infonnation within six months after the end of each fiscal year. The financial information and operating data to be provided may be set forth in one or more documents or may be included by specific reference to any documenl 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 47 when and if such audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix A or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated infonnation by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify the MSRB via EMMA. Material Event 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: (I) principal and interest payment delinquencies; (2) non-paymen1 related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions; (7) modifications to rights of holders of the Obligations; (8) early redemption of the Obligations; (9) defeasances; ( I 0) release, substitution, or sale of property securing repayment of the Obligations; and (11) rating changes. (Neither the Obligations nor the Ordinances make any provision for debt service reserves or liquidity enhancement.) In addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports.'' Availability oflnformation The City has agreed to provide the foregoing information only as described above. The information will be available free of charge via the EMMA system at www .emma.msrb.org. Limitations and Amendments The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any infonnation that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Obligations at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Obligations may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Obligations, in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Obligations consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Obligations. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to lhe extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling the Obligations in the primary offering of such Obligations. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports .. an explanation, in nanative form, of the reasons for the amendment and of the impact of any change in the type of financial infonnation and operating data so provided. Compliance with Prior Undertakings During the last five years, the City has not failed to comply in any material respect with any continuing disclosure agreement made by it in accordance with the Rule. FINANCIAL ADVISOR RBC Capital Markets Corporation is employed as Financial Advisor to the City in connection with the issuance of the Obligations. The Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and delivery of the Obligations. The Financial Advisor has not independently verified any of the data contained herein or conducted a detailed investigation of the affairs of the City to determine the accuracy or completeness of this Official Statement. UNDERWRITING The Underwriters 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 official statement, at an underwriting discount of$ _____ _ The Underwriters have agreed, subject to certain conditions, to purchase the Series 2010B Bonds from the City at a price equal to the initial offering prices as shown on page 2 of this official statement, at an underwriting discount of$ _____ _ The Underwriters have agreed, subject to certain conditions, to purchase the Series 2010A Certificates from the City at a price 48 equal to the initial offering prices as shown on page 4 of this official statement, at an underwriting discount of$ _____ _ The Underwriters have agreed, subject to certain conditions, to purchase the Series 2010B 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 of$ _____ _ The Underwriters will be obligated to purchase all of the Obligations if any Obligations are purchased. The Obligations to be 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 responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. J.P. Morgan Securities [nc., one of the underwriters of the 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 Obligations, at the original issue prices. Pursuant to the Distribution Agreement, J.P. Morgan 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 information provided by the City, that are not purely historical, are forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information 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-looking statements. The forward-looking statements included herein are necessarily based on 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 assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial, and other governmental 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 decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. MISCELLANEOUS The financial data and other information 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 subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further infonnation. Reference is made to original documents in al I respects. The Ordinances authorizing the issuance of the Obligations also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the Underwriters. II Mayor City of Lubbock, Texas ATTEST: Isl City Secretary City of Lubbock, Texas 49 APPENDIX A EXCERPTS FROM ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2008 APPENDIXA EXCERPTS FROM ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2008 \ ) ) ' Office of the City Manager February 1 3, 2009 P .0. Box2000 • 1625 13th Street• Lubbock, TX 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 perfonnance. In addition, independent auditors have verified that the City has fairly presented its financial position, in all material respects. The CAFR satisfies Section l 03.001 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 financial 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 management 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 financial 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 financial statements will be free from material misstatement. The City's financial statements have been audited by BK.D, 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 financial statements, • assessing the accounting principles used and significant estimates made by management, and • evaluating the overall financial statement presentation. 1 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 of a 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 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-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-numbered 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 boWldaries. 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. The City covers approximately 119.9 square miles. City Services The City provides a full range of services including public safety {police and fire protection), electric, water and wastewater, stonn water, solid waste, public transportation, health and social services, culture- recreation, highways and streets, airport, planning and zoning, and general administrative services. Public 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. The 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 a Class 2 on a measurement of 10 with Class 1 representing the best public protection. 2 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 Electric Utility: 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 has 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 with the strategic development of additional water supplies, the City Council established the Lubbock Water Advisory Commission in July 2003, with the primary objective of developing a I 00-year water supply plan. In July of 2007, with the recommendation of the Lubbock Water Advisory Commission, the City Council approved the Strategic Water Supply Plan for Lubbock. The City has also worked closely with the Region O Planning Group in preparing the State Water Plan, which includes the City's water supply needs and alternatives. The City has initiated five major water and wastewater studies over the past four years in order to help develop the Strategic Water Supply Plan. The Water Texas study was completed in 2004 and laid the foundation for additional work so the City could document both 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 10 billion 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 CRMW 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. In addition to Lubbock, the City also services the communities of Shallowater, 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 an 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 10 billion gallons of water to the City annually. Lake Alan Henry, built by the City in 1993, is in development as a future water source. 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 has secured 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 provide groundwater supplies utilizing existing infrastructure 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 of996 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 has completed Phase I and begun construction of Phase II of a four phase project to upgrade the Southeast Water Reclamation 3 Honorable Mayor, City Council, And Citizens 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 disinfection 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 stonn drainage is primarily conveyed through the City's street system that discharges into more than 115 playa lakes. The subsurface drainage, via storm sewer 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, 555 linear miles of paved and unpaved alleys, 1,188 stonn sewer inlets, 70 miles of subsurface storm sewer pipe, three detention basins, 115 playa lakes, and one pwnp station. Maintenance of all of the stonn sewers and street cleaning are funded through storm water fees. During FY 2007-08, a primary focus of the storm water utility was the completion of the South Lubbock Drainage Project -Phase I Main Trunk Line. This project was substantially completed approximately one year ahead of schedule and has connected six playa lakes. Construction for Phase IA 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: • • • • • • 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 Stonn Water Ordinance in order to comply with the provisions set forth in the new MS4permit. Completed and submitted information to the Federal Emergency Management Agency (FEMA) for the Flood Insurance Restudy of two of the playa lake systems. The 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 at Maxey Park Lake . Continued video inspection and cleaning of the downtown area storm sewer pipelines . Continued the design of drainage improvements at Mose Hood and Stumpy Hamilton Parks . Solld Waste Utility: The 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 North Avenue P Landfill and includes a citizen's transfer station. The second site is the West Texas Regional Disposal Facility. The 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 Transportatwn: 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. The 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 4 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 Texas Tech University. Finally, Citibus is the contracted agent for passenger sales and freight shipping and receiving for Greyhound Lines, Inc. operating out of the Downtown Transfer Plaza. Hea/,th and Social Services: The City has a housing and community development program implemented and administered through funding from the Federal Community Development Block Grant Program, HOME Investment Partnership Program, and Emergency Shelter Grant Program. Through these programs, the City has completed work on over 196 houses and 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 Infonnation and Referral Hotline. Culture-Recreation: 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 community centers, and five senior centers. To further enhance quality of life and to provide support to tourism, the City operates the Memorial Civic Center, City Bank Coliseum, City Bank Auditorium, the Buddy Hotly 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 presented component units. Additional information on these legally separate entities can be found in the notes to the financial 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 in other parts of the City. The City streets portion of the Northwest Passage consists of the widening of Erskine Street from Frankford Avenue to Salem Road, and the construction of Slide Road from 4111 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 103rd Street to FM 1585; Quaker Avenue from 98th Street to FM 1585; I 14th Street from Quaker Avenue to Slide Road; Frankford Avenue from 98th Street to 114th Street; 98th 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 business district on 3,000 acres of land adjacent to Interstate 27. The Airport is operated as a department of the 5 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 City, with the guidance of an advisory board, and includes a 220,000 square foot passenger tenninal building. The Airport has two commercial service runways, 11,500 and 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 Process 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 and Capital Program to the City Council for review, as required by City Charter. The City Cowtcil is required to hold a public hearing on the proposed Operating Budget and Capital Program and to adopt it no later than 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 GAAP, 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 the City's operations. Local Economy 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, Texas County Data - Crops, retrieved from http://www.nass.usda.gov/QuickStats/PullData_US_CNTY.jsp ). The City has strong manufacturing, wholesale and retail trade, services, and government sectors. Manufacturing includes a diverse group of employers who support approximately 5,200 workers. A 6 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 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 million 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. Percent Employment Base by Industry Category Transportation Wholesale Tiade 4.7% Manufacturing 4.0% N atur~ 1 Resources. Mining & Construction 4.8% Ware housing & Utilties ·\ 3.1% Information 4.1% Financial A tliv iii es 5.6% Other Services 4.1% P rofessiona I & Business Services 8.6% E dll.cationa 1 & Kea 1th Services 15.2% l...eislll'C and Hospitality 12.4% (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 home 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. The 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://censtats.census.gov/cgi-binlcbpnaiclcbpsect.pl (2-year delay in publication)). Lubbock Economic Index 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 and 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. 7 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 Lubbock Economic Index Eleven Year Trend by Month 100 +-------------,.-------.-----,.----.---....... --.....------.,....__, Jan-98 Jan-99 Jan-00 Jan-0 I Jan-02 Jan-03 Jan-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 Valuations 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 $412.3 million in building pennits issued through the first nine months of 2008 are near the record setting levels that have been seen during the last few years 500 450 400 e 350 ! 300 ,= ~ 250 200 150 Total Building Permit Valuations (Calendar Year) -f--------------ws:i---$314. . _______________ $2 .. j~~:..1:.--------..-.-11!~ 5'52.S $453.S $454.7 f-------------·•--•·----·--~------------------1 100 -1---.------,---·--·,-·-----.---~---~----1 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 8 Honorable Mayor, City Council, And Citizens of the City of Lubbock, 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.l million, or 27.9 percent, higher than 2007 valuations (City of Lubbock Building Inspection Department, September 2008, Building Inspection Statistical Report). The average home sale price, through September 2008, has increased l 0.3 percent over the September 2007 average home sale price {Texas A&M University Real Estate Center, Lubbock Residential 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). Tourism/Visitor Related Indicators Lodging tax receipts increased from $2.9 million in September 2007 to $3.0 million in September 2008, a 3.9 percent increase. Airline boardings at Lubbock Preston Smith International Airport 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, Texas: Karr Ingham). Employment The total 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 has had a low rate of unemployment that is one to two percent below the national rate and about one percent below the state rate (Texas Workforce Commission, LMCI Economic Profiles, retrieved from http://www.tracer2.corn/admin/uploadedpublications/1724_1ubbockmsa.pdf). Unemployment Rates -Lubbock MSA 1999 2000 2001 2002 2003 2004 200S 2006 2007 2008 Note: The methodology for calculating the unemployment rate was changed in 2005 and the last four years were recalculated based on the new method. The Lubbock MSA also changed in 2005 to include both Lubbock and Crosby Counties. 9 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 Economic 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 l/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 their business retention, expansion, and attraction programs, LEDA assisted 12 companies in the creation of 589 new jobs with an annual payroll of $17.9 million and capital investment of$34.8 million. The City's Business Development Department works closely with LEDA to provide assistance in their economic development 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 Overton Park: Overton Park, a fonner blighted area called North Overton, is a 300-acre revitali7.ation 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 Bank, Starbucks, Super Wal-Mart, a retail center adjacent to Wal-Mart, and the 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 apartment 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 20 I 0. 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-year old infrastructure. According to the latest Project and Finance Plan for the North Overton Tax Increment Financing Reinvestment Zone (TIP), 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. The 2008 appraised value of the North Overton TIF was $209.9 million, which is a $183 million increase over the 2002 base year value. North and East Lubbock Community Development Corporation: 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. In response to the deterioration of north and east Lubbock, the City created the North and East Lubbock Community Development Corporation IO Honorable Mayor, City Council, And Citizens of the City ofLubbock, Texas February 13, 2009 (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-family housing project, consists of fifteen homes with a sixteenth presently under construction. The NELCDC has also placed twenty- 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 $1,914,301 for scattered site developments. Downtown Redevelopment: The City of Lubbock Central Business District (CBD) has developed over the years 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 effort 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 (Plan) 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 ResidentiaVCommercial Development: Growth in commercial and residential construction 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 development will have an expected $350 million investment. Development along Milwaukee A venue is expected to generate a total investment in commercial/residential development of approximately $844 million in the next five to ten years. FINANCIAL INFORMATION Long-term financial planning 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 tenn 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. 11 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Te,i;as 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 \\\as 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 bold to maturity. Risk management During 2007, the City continued its use of third party workers' compensation coverage on an initial dollar coverage basis. The City is primarily self-insured for va1fous liability coverages with an attachment point of $500,000 per occurrence and $10,000,000 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 information 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 defined 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 are provided through a single-employer defined benefit pension 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 fonnula 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. Additional infonnation on the City's pension arrangements and post employment benefits can be found in the notes to the financial statements. AWARDS 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 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 Honorable Mayor, City Council, And Citizens of the City of Lubbock, Texas February 13, 2009 and efficiently organized comprehensive annual financial report whose contents confonn to program standards. Such repor1S must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one-year only. We believe our current report continues to confonn to the Certificate of Achievement Program requirements and we are submitting it to the GFOA to detennine 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 would particularly like to thank the Senior Accountants and 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, /ftJJ~~ Lee Ann Dumbauld City Manager !tJ~ Chief Financial Officer 13 ~~ Pamela Moon. CPA Director of Accounting I 14 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 Excellence iD Financial Reporting is presented by the Goverr...nent Finance Officers Association of1hc United States and Canada to government units and public employee retirement systems whose comprehensive annua1 financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. President ~/.~ . Executive Director 15 ,, '\ ,!· JC. j Comprehensive Annual Financial Re port for the Fiscal Year Ended September 30, 2008 16 BKD .. CPAs & Advisors .i()(J W -!ap,:i)tAv..-r~"-!,,,,i-, L',,10 PO I.lo, Ji,!,! li,.J_. ltot•. ~P. l;>2\Jl,3667 Sd.1.'~'l 1040 F~,. SOl .37:Z 1250 www.bkd.ec,m Independent Accountants I Report on Financial Statements and Supplementary Information The Honorable Mayor and Members of the Cily Council City of Lubbock, Texas We have audited the accompanying financial statements of the governmental activities, the business.-type activities, the aggregate discreteJy presented component uni~ each m11jor fund and the aggregate remaining fund infonnation of the City of Lubbock, Texas (the City), as of and for the year ended Scplcmber 30, 2008, which collectively comprise the Ci~y' s basic financial statements as li~tcd in the table of conta1ts. These financial statements arc the rcspoIWbility of the City's managcrn'-l)t. Our responsibility is to express opinions on these financial statements based on our al,ldit. We did not audit the financial statcmcnlS of Civic Lubbock, Inc., M l!tkci Lubbock .Economic Devdopment Corporatipn d/b/a Market Lubbock, lnc. and Lubbock Economic Development Alliance. component units of the City. which statements reflect total assets and program revenues of $30,119.969 and $16. 769,680, respectively, and represenl 93.0% and 99 .5% of the aggregate discretely presented component mits' total assets and program revenues, respectively, at SeptembeT 30. 2008, and for the year th@ ended. The financial slatements of these entities were audited by other accountants whose reports thereon have been furnished to us, and ow-opinion, insofar as it rela1cs to the amounts included for such entities. is based solely on the reports of the other accountants. We conducted our audit in accordan<:e with auditing standards generally accepted in the United States of America and the standards~pplicable to financial audits contained in Governmenl Auditing Standards, issued by the Comptroller General of the United States. Those standiuds require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements arc free .of material misstatement. The finan~ial statements of the component units Civic Ulhbock. Inc., Market Lubbock Economic Development Corporation d/b/a Market Lubbock, Inc., Lubbock Economic Development Alliance and the m~ior fond West Texa~ Muujcipal Powe::r Agency. w~ not audited in ae<.0rdance with Government Auditing Stundards. An audit includes examining, on a test basis;, evidence supporting the amounts and disclosures in the financial statements. An audit also ;nc1udes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overalJ financiaJ s1atement presentation. We believe 1bat our audit and the reports oftbe other accountants provide a, reasonable basis for our opinions. In our opinion. based on our audit and the reports of the other accountants, the. financial statements refened to above ~ent fairly, in all material respects, the respecti~e financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, e:1c.b major fund, and the aggregate remaining fund information oft}leCity ofl,ubpcx:k, Tel(llS, as of September 30, 2008, and 1he re$pective changes in fifl!ll)C:i~) position at>d cash f1QW$, where applicable,. thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. experience BKD 17 ) The Honorable Mayor and Members of the City Council City of Lubbock, Texas Page2 As discussed in Note J.J., in 2008, the City changed its method of accounting for post employment benefits other than pensions and its method of disclosures of pension information by implementing Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemp/oyment Benefits Other than Pensions and Statement No. 50, Pensions Disclosures. In accordance with Govemmem 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 its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial 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 perfonned in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The accompanying management's discussion and analysis, budgetary infonnation 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 information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary infonnation. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of fonrnng opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying 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 subjected 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. The accompanying information 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. February 13, 2009 18 ) 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 of the financial activities of the City of Lubbock for the fiscal year ended September 30, 2008. Readers of 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 Highlights 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. • The City's total net assets increased by $26.5 million as a result of operations during the 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 million from the prior year. • The City's governmental funds reported combined ending fund balances of $130.5 million, of 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 $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 components: 1) 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. The 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 liabilities), 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-fmancing, 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, Stonn 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 arc 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. Afund is defined as a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial 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 minimum 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 nonmajor funds are included in the CAFR following the RSI. All funds of the City can be divided into two categories: governmental funds and proprietary funds. Gollernmental FFS. Governmental funds are used to account for essentially the same functions reported as governmental activities in the GWFS. However, unlike the GWFS, governmental FFS focus on near- tenn 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 information is useful in evaluating the City's near.term financing requirements. Because the focus of governmental funds is natTOwer than that of the GWFS (modified accrual versus accrual basis of accowiting, and current financial resources versus economic resources), it is useful to compare the infonnation presented for governmental funds with similar information presented for 20 ) ) City of Lubbock, Texas Management's Discussion and Analysis For the Year Ended September 30, 2008 governmental activities in the GWFS. By doing so, the reader may better understand the long-tenn impact of near-term financing 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. Infonnation 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 Fwid, 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. The City adopts a budget annually for the Genera] Fund and all other funds. In the RSI section, a budgetary comparison statement for the Genera] Fund has been provided to demonstrate compliance with the budget. Proprietary FFS. The City maintains two different types of proprietary funds. Enterprise funds 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, Aiq>0rt, 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 considered non-major funds and are combined into a single aggregated presentation. Internal service funds are an accowiting 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 provided 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. Al] 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 Basic Financial Statements. The notes provide additional infonnation that is essential to a full understanding of the data provided in the GWFS and FPS. The notes can be found on pages 55-94 of the CAFR. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain Required Supplementary Information (RSI) 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. 21 ) ) 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. City of Lubbock Net Assets For the Year Ended September 30 (in thousands) Governmental Business-type Activities Activities Total 2008 2007 2008 2007 2008 2007 Current and other assets $ 161,688 $ 141,205 $ 314,011 $ 220,133 $ 475,699 $ 361,338 Capital assets 237~03 2131679 787,522 7381066 110241725 9Slt745 Total assets 3981891 354,884 1,101,533 9581199 1,5001424 1,313,083 Current liabilities 41,496 38,303 66,249 56,939 107,745 95,242 Noncurrent liabilities 217,462 174,853 5081748 4031003 7261210 577,856 Total liabilities 2581958 21311 56 5741997 . 4591942 8331955 6731098 Net assets: Invested in capital assets, net of related debt 96,275 102,925 400,552 384,516 496,827 487,441 Restricted 11,956 5,128 21,275 17,730 33,231 22,858 Unrestricted 311701 331676 104?09 961011 1361410 1291687 Total net assets $ 139,932 $ 1411729 $ 526,536 S 4981257 $ 666,468 $ 639,986 Approximately 74.5% 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 pwposes. The remaining balance of unrestricted net 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. 22 City of Lubbock, Texas Management's Discussion and Analysis For the Year Ended September 30, 2008 Oty of Lubbock Chana,et In Net Assets For die Year Ended Septeni,er 30 (in thousands) Bllsiness- Govemmtntal type Activities Activities Totals Rewnues: 2008 2007 lOCll 2007 2008 .2007 Program Rewnues: Charges fur services $ 12,677 $ 10,636 $ :ui0,494 $ 243,835 $ 273,171 $ 254,471 Operating grants and contributions 9,232 10,323 5,133 5,813 14,365 16,136 Capital grarts and cootribttions 15,922 4,322 5,953 8,792 21,875 13,114 General Revenues: Property taxes 50,330 47,0C17 50,330 47,007 Sales taxes 50,549 47,7'il/J 50,549 47,780 Other taxes 5,370 4,909 5,3?0 4,909 Franchise i,es 12,978 12,378 12,978 12,378 lnvestm:nt earnings 5,505 6,118 8,284 7,146 13,789 13,264 Other 4,811 3,669 31lll7 §:i004 8,618 9,673 Total revenues 167,374 147,142 283,671 271,590 451,045 418,732 Expenses: Adninistrati~ services/general govt 12,372 12,155 12,371 12,155 Ccmnunity services 6,874 6,951 6,874 6,951 Cultural aoo recreatioo 16,660 19,671 16,660 19,671 Economic and business dewlqment 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 Police 46,850 43,022 46,850 43,022 Other public safety 6,678 5,886 6,678 5,886 Streets aoo traffic 16,357 26,870 16,357 26,870 Interest oo long-term debt 8,367 6,968 8,367 6,968 Electric 153,108 145,832 153,l~ 145,&32 Water 38,424 32,125 38,42A 32,125 Wastewater 19,001 18,048 19,001 18,048 Solid Waste 16,261 14,454 16,261 14,454 Stam Water 7,677 3,933 7,677 3,933 Transit 11,338 11,004 11,338 11,004 Airpat 9,465 8,524 9,465 8,524 Civic Centers 4,(.)1}9 4,099 Cemetety 722 619 722 619 Total expenses 164,467 166,3'il/J 260,(.)1}5 234,539 424,562 400,919 Ot~e in net assets befa-e transfers 2,907 (19,238) 23,576 37,051 26,483 17,813 Transfers i4i703) 10,571 4,703 il0,572) Ch~e in net assets (1,796) (8,666) 28,279 26,479 26,483 17,813 Net assets -bep~ofyear Net~ -end of year $ 141,729 I~~!,~~ $ 1501395 l<tI,'7~ $ 4981257 3~l>.~l, $ 47k778 ~ ~3'7 $ 639.986 o~.m $ 6221173 ~~.imo Changes in Net Assets. Details of the above summarized infonnation can be found on pages 36-37 of theCAFR. 23 ' ) 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 miltion during the prior fiscal year. Key elements of the operational decrease include: • Revenues increased approximately $20.3 million, from $14 7 .1 million to $167 .4 million. o Capital grants and contributions accounted for the largest increase, rising from $4.3 million in FY 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 property tax rate was $0.45505 per $100 of assessed value in FY 2008, compared to $0.46 I 99 per $100 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. ln 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 of GASB 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 (TxDOT), 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 govenunental 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 $1 3.8 million of on~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 24 ) City of Lubbock, Texas Management's Discussion and 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 1ieu 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. Expenses and Program Revenues -Governmental Activities S50,000 S4S,OOO i $40,000 $35,000 :I II • $30,000 i! • ~ $25,000 a II $20,000 J SIS.000 $10,000 $5,000 so &Expense •Program revenue 25 ) ) ) ) ) ) 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 Services 7.5% Grants& Contributions----1: 15.0% Investment Earnings 3.3% 7.8% Miscellaneous 2.9% 30.2% Property Taxes 30.08/o 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: • Revenues for business-type activities totaled $283.7 million in FY 2008, an increase of $12.1 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. 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 the 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 million decline in revenues related to gas sales to a third party wholesaler. LP&L's gas supplier 26 ) ) City of Lubbock, Texas Management's Discussion and Analysis For the Year Ended September 30, 2008 exhausted its supply during 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 mandatory 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 has 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 during 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 $4.1 million, with an offsetting increase in Water. Wastewater, Solid Waste, and Stonn 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 Fwid 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 has 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 permit and video inspections of storm sewers were perfonned. The Storm Water Fund continued to issue debt to pay for capital improvements to the stonn 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 the 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 and WTMPA (Electric), Water, Wastewater, Stonn Water, Solid Waste, Transit, Airport, Civic Centers, and Cemetery. Revenues by Source -Business-type Activities Cllargesfor Services 91.9% Financial Analysis of the City's Funds Miscellaneous 1.3o/o Grants and Contributions 3.9% Investment earnings 2.9% Governmental funds. The focus of the City's governmental.funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such infonnation 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 reported combined ending fund balances of $130.5 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 Capital 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 l 6. 7% of ending governmental fund balance, reported in unreserved fund balance designated in special revenue funds. 28 ) ) ) ) ) ) ) ) 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. The 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 capital 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 $19.1 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 thousands: 2008 2007 LP&L $ 62,540 $ 51,020 Water Fund 2,764 9,663 Wastewater Fund 5,829 8,270 WfMPA 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 manner 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 WTMPA Fund had 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 unrestricted 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 encwnbrances 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 Capital assets. The City's investment in capital assets for its governmental and business-type activities at September 30, 2008, totaled $1.0247 billion net of accwnulated 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. Land Buildings Improvements other than buildings Machinery and equipment Construction in progress Total $ s City of Lubbock Capital Assets (Net of Accumulaled Depreciation) September 30 (In thousands) Business- Governmental type Activities Activities 2008 2007 2008 2007 9,034 $ 9,056 $ 33,112 $ 31,963 23,141 32,029 68,150 62,459 120,298 111,293 477,402 476,269 17,915 20,541 8 I, 185 76,859 66,816 40,760 127,673 90,516 237,204 $ 213,679 $ 787,522 $ 738,066 Major capital asset projects during the fiscal year included the following: Totals 2008 $ 42,146 $ 91,291 597,700 99,100 J 941489 $ 1,024,726 $ • The City spent $12.4 million on a youth sports complex, and 2 new Little League complexes. 2007 41,019 94,488 587,562 97,400 131,276 951,745 • The City spent $9.0 million on projects that included street improvements, drainage, curbs, gutters, and other improvements. 30 } 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, filtration, 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 transfonners, 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 (CRMWA) projects, and new water lines throughout the City wiJl 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: General obligation bonds $ Revenue bonds Total s City of Lubbock Outstanding Debt General Obliptien and Revenue Bonds September 30 (in theutands) Buslne,s- Governmental type Activides Activities 2008 2007 2008 199.054 s 160,388 s 457,126 $ 199,054 $ 160,388 s 501431 S071SS7 ! 1007 352,487 S41208 406,69S Totals 2008 $ 656,180 $ s 50143 I 706,611 s 1007 S 12,87S s4aos 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 pennits 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 $ l 00 of assessed valuation 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 Lubboc~ 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 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 determine whether it is economically prudent to purchase bond insurance. ln April 2008, the City received from Standard & Poor's a rating upgrade from "AA" to "AA+". Concurrently, the ratings of "Aa3" and "AA" were confirmed by Moody's lnvestors Service and Fitch Ratings, Inc., respectively. All three rating agencies characterize the City's rating outlook as stable. During FY 2008, there were no changes in the ratings for LP&L. The 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 infonnation 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 the Lubbock area was 4.0%. This is a 0.2% 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. • The 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 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 $ I 00 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 financially prudent at this time. Total General Fund revenue projections are $0.89 million over FY 2008 amowits. • 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 Stonn 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 information 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 . . ' . ,. --.. ~ ... ,..,. ,... "'~- "I Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2008 34 ) City of Lubbock, Texas Statement of Net Assets September 30, 2008 Prlamy Govern-t ) Gevernmenhl Businas~type Compoaent Activities Activities Total Unlts ~ETS Cash and cash eqoivalenls $ 37S,546 $ 2,092,480 s 2,468,026 $5,059,563 lnveslmentJ 47,092,702 92,621,585 139,714,287 100,408 Receivables (net of allowallCe for 1111COIJectib!cs) 11,573,206 31,880,880 43,454,086 1,762,0l6 Internal balan~ (99,681) 99,681 Due rrom odler govemmems 4,480,115 4,480,115 Due rrom others 2,509,088 1,351,244 3,860,332 bwmtories 205,454 3,342,792 3,548,246 126,950 IIWtsanmt in property 208,213 208,213 Pnpa.id expenses 882,298 60,261 942,559 106,308 Ra1rictedas5el&: Cash and caah eqUMlents 2,562,46S hweslmelll& 88,668,725 179,596,581 268,265,306 .Rec:eiwblc5 178,571 154,648 333,219 5,000,000 Mortgage ~Vlbla S,612,742 S,612,742 Capilal aSSC1B (net of ac,,;umuwed do:precialion): Non-dq,=iablc 75,849,966 160,785,542 236,63S,508 17,430,818 l)epm:iable 161,353,736 626,736,918 788,090,654 252,020 Detenalwrges ~811:110 218111110 Tola\ assets 398,890,681 1,101,533,722 1,500,4242403 32,4001548 LIABILl11ES Accounlspa)'llble 10,088,992 20,394,740 30,483,732 1,148,361 Ac:cnu:dliabililies 6,382,994 3,279.222 9,662,216 320,139 Accrued inten:st payable 1,432,711 3,950,697 5,383,408 C-rdcposils 3,655,481 3,655,481 Unearned m>al~ 2,772,640 81,621 2,854,261 5,264,793 Noncurrem JiabiHlies d11e within one _ynr, Ccmpmsaled •bsealles 6,806,236 2,838,245 9,644,481 A~ UISUl'U1ce claims 1,599,299 1,420,757 3,020,056 Contracts and leases payable 2,934,588 4,164,910 7,099,498 2,539,123 Bonds pa}'llble 9,478,486 26,463,446 35,941,932 Non&:wrent liabililie$ due in more man one year. Compensated •bsenca& ll,117,607 2,769,439 13,887,046 Post empll)yffleltl benefits 2,813,759 1,541,761 4,355,520 Amued insunmce claims 156,407 1,424,922 1,581,329 R.ebalable ari,iuage 570,747 571,274 1,142,021 Landfill ~lollUle and pasklosuR l'llR 3,770,566 3,770,566 Contracts and ie.ses payable 9,287,918 14,417,486 23,705,404 6,724,275 Bonds ]lllyable 193,515,885 484,252.822 67717681707 3,3941000 Toial liabilitles 258195BJ69 57419971389 83329551658 1913901691 NET ASSETS Invested in capilal asseu. 11e, or 11>latcd debt 96,274,734 400,552,048 496,826,782 8,696,339 Restricted for. Passenger lacitity charlC$ 2,318,723 2,318,723 Ddll~ 4,676,551 18,956,448 23,632,999 Grantpmg,mns 7,156,393 7,156,393 Primary~ agreement 100,000 Non-apclldable perpdllll l'llR 123,462 123,462 UllffSDicted 31,701,272 104,709,114 13~410,386 42213,518 Total net asset$ 139,932,412 526,536,333 ~468,745 1310091857 See accompanying Notes to S.Sic Financial Sta~ 35 ) City of Lubboc~ Texas Statement of Activities For the Year Ended September 30, 2008 ) PrognmReveaues Operating Capital Charges for Graatsand Grutsaad Expenses Services Contributions Contribudons Primary government: Governmental activities: Administrative services and general government $ 12,372,316 $ 35,766 $ $ 200,289 Community services 6,874,065 5,990,797 Cultural and ~ion 16,660,378 1,589,515 692,460 1,534,716 Economic and 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 Other public safety 6,677,751 7,307,182 601,245 101,497 Streets and traffic 16,357,025 2,291,900 5,293,806 Interest on long-term debt 8,367,167 Total governmental activities 164,467,472 121676,752 9,2311749 15,921,953 Business-type activities: Electric 153,108,050 161,329,847 Water 38,424,263 42,527,445 198,400 1,073,098 Wastewater 19,000,488 21,095,745 1,030,539 Solid Waste 16,260,630 16,754,438 Stonn Wat.er 7,676,456 6,633,255 Transit 11,338,463 4,306,204 3,231,060 Airport 9,465,392 6,793,829 1,703,632 3,849,200 Civic Centers 4,098,873 717,494 Cemetery 722,393 335,884 Total business-type activities 260,0951008 260,4941141 521331092 5,952!837 .. Total primary government $ 424,562,480 $ 273,170,893 $ 1413642841 $ 211874,790 .J Component aoits: Civic Lubbock, Inc. $ 2,491,456 $ 2,018,527 $ 512,975 $ 30,000 Market Lubbock, Inc. 5,837,232 59,746 6,817,752 Lubbock Economic Development Alliance 4,293,560 6,102,185 1,228,495 Vintage Township Public Facilities Corporation 1~02,311 781993 Total component units $ 13,924,559 $ 2,078,273 $ 13,432,912 $ 11337,488 General revenues: Property taxes Sales wees Occupancy taxes ') Other taxes Franchise taxes Investment earnings Miscellaneous Transfers, net Total genr:ral revenues and transfers Change in net assets Net assets -beginning Net assets -ending See accompanying Notes to Basic Financial Statements 36 Net (Es:peoses) Revmua and Cbanges In Net Assets i-rtmary Goverameat GewnunentaJ Basiaess-type Activities Actmties Total Compo11ent Units $ (12,136,261) $ $ (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) (8,771,319) (8,3671167} {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 ( 1,043,20 I) (1,043,201) (3,801,199) (3,801,199) 2,881,269 2,881,269 (3,381,379) (3,381,379) {386,s09l ps61509} 11,485,062 11,485,062 (126,637,018) 11,485,062 (115,151,956) 70,046 1,040,266 3,037,120 {1,223,318) 2,924,114 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 28,213 4,810,900 3,806,864 8,617,764 (1,396,145) {4,703,3tZl 4,703,317 t24,8401sso 16,794~39 1411634,789 {1,367,932} (1,796,468) 28,279,301 26,482,833 1,556,182 141,728,880 498.257,032 6391985,912 11,453,675 $ 139,932,412 $ 526,536.333 $ 666,468,745 $ 131009,857 37 City of Lubbock, Te:xas Balance Sheet Govenmental Funds September 30, 2008 Nonmajor Total Goverameatal Govern.mental Governmental General Fund captta1 ProJects Funds Funds ASSETS Cash and cash equivalents $ 120,449 $ 68,.267 $ 164,560 $ 353,276 lnveslmel'lts 14,747,933 8,358,699 21,259,261 44,365,893 Taxes receiwble (net) 9,711,930 376,629 10,088,559 Accounts receivable (net) 1,109,105 1,109,105 Interest receiwble 177,748 14,078 150,733 342,559 JI Due from other funds 3,266,168 152,000 3,418,168 Due from other governments 4,480,115 4,480,115 Due from others 882,879 1,528,818 2,411,697 Investment in property 208,213 208,213 Inventory 168,657 168,657 Restricted investments 18,200,686 60,975,583 79,176,269 ·~ Mortgage receivables 5,612,742 5,612,742 Total assets $ 30,184,869 $ 26,641.730 $ 94,908,654 $151,735,253 LIABILITIES Accounts payable $ 3,522,540 $ 1,233,491 $ 4,172,472 $ 8,928,503 Due to other funds 2,073,164 2,073,164 Ac:crued liabilities 4,695,067 18,633 238,782 4,952,482 Ac.crued interest payable 191,702 191,702 Deferred revenue 2,004,987 455.724 2,595,236 5,055,947 Total liabilities 10,222,594 1,707,848 9,271.,356 21,201,798 FUND BALANCES Reserved for: Prq,aid items/inventmy 168,657 168,657 ) Debt service 2,104,697 2,104,697 Capital projects 24,933,882 53,855,061 78,788,943 Special revenue -Civic Center facilities 650,080 650,080 Special revenue -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 Permanent fund 6,876 6,876 Total fimd balances 19,962,275 24,933,882 85,637,298 130,533,4S5 Total I iabil ities and fund balances $ 30,184,869 $ 26,641.730 s 94,908,654 $ 151,735,2S3 See accompanying Notes to Basic Financial Statements ·1 38 ) City of Lubbock, Texas Reconciliation of the Balance Sb.eet of Governmental Funds To the Statement of Net Assen September 30, 2008 Total fund balance -governmental funds s 130,533,455 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities ate not financia1 resources and therefore are not reported in the funds. 237,203,702 Intemal service funds (ISFs) ace used by management to chalge the costs of certain ., activities, such as insurance and telecommunications, to individual funds. The portion of the assets and liabilities of the ISF's primarily serving governmental funds are included in governmental activities in the statement of net assets as follows: Net assets 10,157,898 Net book value of capital assets (2,204,710) '\ Capital leases payable 1,110,125 Compensated absences 403,091 Post retirement benefits 129,867 Amounts due from business-type ISFs for amounts undercharged (1,444,685) Certain liabilities are not due and payable in the current period ) and therefore are not reported in the funds. Those liabilities are as foJlows: General obligation bonds (199,053,653) Capital leases payable (12,222,506) Compensated absences (17,923,843) Post retirement benefits (2,813,759) ) Accrued interest on general obligation bonds (1,237,703) Arbitrage payable (570,747) EnvironmeotaJ remediation (1,290,280) Bond premiwm are recognized as an other financing source in the fund statements but the premiums are amortized over the life of the bonds in the govemment-wide statements. (3.940,718) Actual City contributions to the tirefighter's pension trust fund is greater than the actuarially detennined required contnlmtion. This will reduce future funding requirements and is not recognized as an asset at the fund level but is a prepaid expense in the Statement of Net Assets. 813,571 Revenue earned but unavailable in the funds is deferred. 2,283,307 Net assets of governmental activities $ 139,932,412 ) See accompanying Notes to Basic Financial Statements. 39 City of Lubbock, Texas Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds ) For the Year Ended September 30, 2008 Noomajor Total Governmental Gevenuneata.l Governme11tal General Fund Capita.I Projects Funds Fnndl REVENUES Tues $ 85,345,082 s s 20,971,596 $ 106,.316,678 Franchise taxes 7,786,611 5,191,075 12,977,686 Special assessments 296,482 296,482 Fees and fines 3,279,911 521,391 3,801,302 Licenses and permits 2,663,139 2,663,139 Intergovernmental 530,389 215,561 16,733,463 17,479,413 ~ Charges for services 3,339,148 2,290,160 466,131 6,095,439 ✓ Interest 1,052,842 1,259,842 2,375,665 4,688,349 Miscellaneous 2,5741448 2,3931465 4,967,913 Total revenues 106,571,570 3,7651563 48,949,268 159,286,401 EXPENDITURES Current: Administrative services and general government 11,047,039 63,697 11,110,736 Commllllity services 6.586,711 6.586,711 Cultural and recreation 12,253,380 95,598 927,430 13,276,408 Economic and business development 1,215,978 10,663,287 11,879,265 ) Health 4,133,917 1,671,071 5,804,988 Fire 29,630,222 45,856 57,231 29,733,309 Police 42,831,016 1,034,256 43,865,272 Other public safety 4,703,249 1,401,664 6,104,913 Streets and traffic 8,168,462 324,850 8,493,312 lntergovenuneotal 123,852 123,852 Debt service: 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 3,9661065 28,3571960 1413591347 46,683,372 Total expenditures 120,3451933 2910391008 5216181806 202,003,747 Deficiency of revenues under expenditures {13,774,363} i25,273,445} !31669,538} (421717~46} OTHER F1NANCING SOURCES (USES) Long-term debt issued 10,690,376 35,914,775 46,605,151 Bond prcmiUIJ1 625,760 1,218,259 1.844,019 Capital leases 3,011,141 345,878 3,357,019 Transfersin 17,729,361 1,019,009 7,394,572 26,142,942 Transfers out ( 61129,512} p14691423} '7,277,103} {14,876,038} Net other financing sources (uses) 142610,990 11,211,600 37,250,503 6310731093 Net change in fund balances 836,627 (14,061,845) 33,580,965 20,355,747 Fund balances -beginning of year 19,125,648 38,995,727 52,056,333 110,177,708 Fund balances-end of year $ 19,962,275 $ 24,933,882 s 85,637,298 $130,533,455 See accompaning Notes to Basic Financial Statements 40 \ ) ) i City of Lubbock. Texas Reeonciliation of the Statement of Revenues, Expenditures and Changes In Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended September 30, 2008 Net change in fund balances -total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays of$46,683,372 exceeded depreciation ofS 16,912,331 in the current period. Bond proceeds provide cum::nt financial resources to governmental funds, but issuing debt increases long- term liabilities in the Statement of Net Assets, Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. This is the amount by which proceeds of $46,605,151 exceeded repayments and debt defeasence ofS? ,939,868. Capital lease transactions provide cutrent financial resources to governmental funds and repayment of principal is an expenditure. This is the amount by which proceeds of$3,357,019 exceeded repayments of $2,069,461. Bond premiums are recognized as an other financing source in the governmental ftmds. but are considered deferred assets on the Statement of Net Assets. Premiums are amortized over the life of the bonds. This is the amount by which bond premium issued ofSl,844,019 exceeded amortization ofS219,22S. Estimated long-term liabilities are recognized as expenses in the Statement of Activities as earned, but are recognized when current financial resources are used in the governmental funds. Arbitrage payable Compensated absences Post retirement benefits Environmental remediation Property taxes levied and court fines and fees earned, but not available, are deferred in the governmental funds, but are recognized when earned (net of estimated uncollectibles) in the Statement of Activities. This amount is the net change in def med property taxes and court fines and fees for the year. Actual City contributions to the firefighters pension trust fund are greater than the actuarially determined Net Pension Obligat_ion (NPO). This amount is recognized as an expenditure at the fund level but is accrued when overpaid and reduces expenses on the Statement of Activities. Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The net revenue (expense} of certain internal service funds is reported with govc:mmental activities. Accrued interest is reoogllized as expenses in the Statement of Activities as incurred, but is recognized when current financial resources are used in the governmental funds. This amount is the net change in the accrued interest this year. The net effect of various miscellaneous transactions involving capital usets. This amount includes $7,474,000 developer donated streets and parks, Jess $13,775,023 equipment transfers out to business-type activities, less $304,282 sales and trade-in. Change in net assets of governmental activities See accompanying Notes to Basic Financial Statements. 41 $ 20,3S5,747 29,771,041 (38,665,283) (1,287,558) (1,624,794) 105,305 (640,671) (2,683,892) (497,611) (246,393) (48,740} 596,996 (325,310) (6,605,305) $ {I, 796,468l ) ) '\ 'I ) ) ) ) City of Lubbock, Texas Statement of Net Assets Proprietary Fuods September 30, 2008 ASSETS Current assets: Cash and .cash equivalents Investments Accounts receivable Interest receivable Due from others Due from other funds Prepaid expenses Inventories Total current assets Nonc111Tent assets: Restricted investments Restricted interest receivable Restricted accounts receivable Deferred charges Capital assets: Land Construction in progress Buildings Improvements other than buildings Machinery and equipment Less w:wm11Iatcd depreciation Total capital assets Total nonCUJff:nt assets Total assets See accompanying Notes to Basi<: Financial Statements LP&L $ 491,892 61.),227, 7 62 18,870,298 378,414 223,661 80,192,027 9,847,790 2,8111110 12,658,900 756,714 14,207,964 8,0S4,8ll 199,561,578 56,974,517 { 1261673,526} 152,882,058 165,540,958 $245,732,985 42 Enterprise Funds Water Wastewater wrMPA $ 24,093 s 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 9,009,713 226,079 8,287,211 10,089,238 11,608,539 68,831,234 65,861,577 934 3,309 68,834,543 65,862,511 12,724,350 12,578,774 27,600,824 21,654,174 22,240,589 24,018,814 291,969,454 127,470,376 34,681,932 18,054,744 {104,898,89Q !73,516,931 ~ 284,318,258 130,259,951 353,152,801 196,122,462 $361,440,012 $206,211,700 $ 11,608,539 ) ) Enterprise Funds Nonmajor Enterprise Total Eaterprlse Internal Service \ Storm Water Funds Fuads Funds $ 56,878 $ 152,745 $ 2,087,243 $ 27,507 6,964,191 14,036,081 91,980,361 3,368,033 825,365 3,280,713 31,171,786 65,631 39,636 703,553 38,524 1,153,009 1,348,868 99,767 511,996 9,521,709 60,261 60,261 68,727 735,614 1,185,354 21194J35 ) 7,912,065 19,970,0SS 138,059,135 S,7961793 15,278,471 12,018,048 171,837,120 17,251,917 70,787 71,721 99,817 3,309 158,372 2,811,110 15,278,471 12!088,835 174,723,260 17,510,106 283,337 6,768,963 33,112,138 65,343 50,127,279 14,083,163 127,673,404 180,942 ' 64,580 64,773,414 119,152,208 1,637,054 47,834,412 125,785,894 792,621,714 649,868 4,126,314 65,317,750 179,155,257 9,309,071 11116141025} {1482322,SOQ (465,025,874) (8,803,955} 90,821,897 128,406,683 78~688,847 3,038,323 \ 1061100,368 140,495,518 961,412,107 20,548,429 $114,012,433 S 160,465,573 $ 1,099,471,242 $ 26!345,222 43 City of Lubbock, Texas Statement of Net Assets Proprietary Fonds ) September 30, 2008 LIABIL1TIES Current liabilities: Accounts payable Accrued liabilities ) Accrued interest payable Due to other funds Customer deposits Deferred revenue Compensated absences Accrued insurance claims ) Leases payable Bonds payable Total cummt liabilities Noncum:nt liabilities: ) Accrued insurance claims Rebatable arbitrage Landfill closure and post closure care Compensated absences Post employment benefits ' Leases payable Bonds payable Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Passenger facility charges Debt service Unrestricted Total net assets ) LP&L $ 1,946,626 1,761,681 1,217,841 9,009,713 3,499,752 1,183,514 1,067,930 511211977 24,809,034 72,702 1,264,172 506,873 2,975,882 74,699,158 79,518,787 104,327,821 72,858,231 6,006,670 62,540,263 $ 141,405,164 44 Enterprise Funds Water Wastewater WTMPA $ 2,402,156 $ 2,760,545 $ 9,725,988 361,733 200,251 1,193,544 654,239 80,340 494,183 241,390 675,290 473,734 10,3501270 616201942 15,557,516 10,951,101 9,725,988 163,965 184,351 527,861 257,841 302,TIS 130,082 2,583,912 1,114,259 189,849,751 10614541669 193,428.267 108,141,202 208,985,783 119,092,303 9,725,988 143,586,818 76,784,510 6,103,451 4,506,302 21763,960 5,828,585 1,882,551 $152,454,229 $ 87,119.397 $ 1,8821551 ) ) ED!!!J!rlse Funds Noamajor Enterprise Tolal Enterprise Internal Service '\ Storm Water Funds Funds Funds $ 619,990 $ 2,346,355 $ 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 75,389 3,655,481 81,621 81,621 89,428 773,453 2,781,968 209,323 3,020,056 ' 76,176 1,857,189 4,150,319 461,361 211771520 2,192,737 26,463,446 3,606,642 101328,727 74.979.008 51639,966 1,581,329 64,050 86,206 571,274 3,770,566 3,770,566 95,522 563,389 2,708,785 310,699 82,021 431,986 1,459,740 211,888 566,829 7,148,t 15 14,388,997 691,844 85,216,981 28,032,263 484,252,822 86,025,403 40,038,525 507,152,184 2,795,760 89,632,045 5013671252 582,131,192 8,435,726 16,321,372 90,210,584 399,761,515 1,885,118 2,318,723 2,318,723 1,741,490 598,535 18,956,448 6,317,526 16,970,479 96,303,364 16,024,378 $ 24!3801388 $ 110,098,321 $ 517,340,050 $ 171909,496 45 Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2008 46 ) ) ) ) ) ) City of Lubbock, Texas Reconciliation of the Statement of Net Assets-Proprietary Funds To the Statement of Net Assets September 30, 1008 Total net assets ~ proprietary funds Amounts reported for busine•type activities in the Statement of Net Assets are different because: Internal service funds (ISFs) are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. The portion of assets and liabilities of the ISFs primarily serving enterprise funds are included in business- type activities in the Statement of Net Assets as follows: Net assets of business-type ISFs Amounts due to govemmenta.l ISFs for amounts overcharged Net assets of business-type activities See accompanying Notes to Basic Financial Statements. 47 $ S 17,340,050 7,751,598 1,444,685 S 526,536,333 City or Lubbock, Texas Statement of Reven11es, Expenses and Changes in Fund Net Assets Proprietary Funds ) For The Year Ended September 30, 2008 Enterprise Fuads LP&L Water Wastewater WfMPA ) OPERATING REVENUES Charges for services (net) $ 153,071,017 s 42,527,445 $21,095,745 S 121,111,798 Misoellaneous 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 Insurance Supplies 1,196,956 1,674,784 1,028,572 Materials Maintenance 1,841,172 2,309,434 1,290,050 ) Purchase of fuel and power 112,852,968 121,005,410 Collection expense 1,742,590 1,074,669 Other services and charges 3,819,293 10,023,600 4,191,443 563,666 Depreciation and amortization 9,7321413 8,387,182 5,432,048 Total operating expenses 141,748,255 31,931,044 17,137~04 121,569,076 ) Operating income (loss) 11,322,762 10,596,401 3,958,541 (457,278) NONOPERATING REVENUES (EXPENSES) Interest earnings 2,765,622 1,648,913 1,837,589 12,628 Passenger facility charges/Federal grants 198,400 Disposition ofMScts 284,272 (61,505) 9,393 Miscellaneous 2,316,917 338,045 107,762 200,000 Interest expense (3,3521470} {6,683,456} (2,02213&ol Net nonoperating revenues (eitpenses) 2,014,341 (4,559,603) (67,636) 212,628 ) Income (loss) before conaibutions and transfers 13,337,103 6,036,798 3,890,905 {244,650) Capital contributions 175,075 1,713,804 1,672,990 Transfer!; in 2,186,447 409,574 30,344 613,612 Transfers out !2,409,997) (6,386,649) p,094,350} Change in net assets 13,288,628 1,773,527 2,499,889 368,962 Tola! net assets -beginning of~ 128,116,536 I 50,680,702 84,619,508 1,513,589 Total net assets -ending $ 141,405,164 $ 152,454,229 $87,119.397 $ 1,882,551 See acoompanying Notes to Basic Financial Statements. 48 \ ) En!!!J!rise Funds Nonmajor Total Enterprise Internal Service Storm Water Enterprise Funds Funds Fwuls ) $ 6,633,255 $ 28,907,849 $ 373,347,109 $ 47,945,658 1251486 125,486 6,633,255 29,033,335 373,472,595 47,9451658 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 2,110,429 233,858,378 629,302 694,832 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 5,612,473 41,3641159 359~621211 4510671258 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 1,566 15,537 249,263 (40,770) 775,173 3,737,897 133,580 (2,107,878} {sss1s3sl !151051,722} {36,167) (1,155,975) 5,552,663 1,996.418 1,229,850 (135,193) (6,778,161) 16,106,802 4,108,250 16,165,991 19,727,860 200,289 4,519,160 7,759,137 320,880 p,066,358) p.876,215) (l 61833,569) (2,513,352) (1,201,551) 10,030,775 26,760,230 2,116,067 25,581,939 100,067,546 490.579,820 15,793,429 $ 24,3801388 $ 110,098,321 $ 51713401050 $ 17,909,496 49 Comprehensive Annual Financial Report for the Fiscal Year Ended Septernber 30, 2008 ) 50 ) ) ) ) ) ) City of Lubbock, Texas Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Net Assets -Proprietary Funds To the Statement of Activities For the Year Ended September 30, 2008 Net change in fund net assets -total enterprise funds Amounts reported for business-type activities in the statement of activities an: different because: Internal seivice funds (ISFs} are used by management to charge the costs of certain activities such as fleet services, ccutral warehousing activities, management information activities, etc. to individual funds. The net revenue (expense) of certain ISFs is reported with business-type activities. Change in net assets of business-type activities Sec accompanying Notes to Basic Financial Statements. 51 $ 26, 760.230 1,519,071 $ 28,279,301 City or Lubbock. Teus Statement of Cash Flows Proprietary Funds For tbe Year Ended September 30, 1008 ) ll!aterpl'IM FDQcb LP&L Water Wntewater WTMPA CASH FLOWS FROM OPERATING AC'I1Vl11ES Re,;eip1s ~~ s I !i0,857 ,330 s 42,426,063 s 21,147,248 s 120,812,497 Payments IO IU]lplien (117,607,449) (I 4,68!i, 716) (5,836,312) {121,459,026) ) Pa)'UIEDIII lo anplo)llell ( I 2,570,948) (8, I SS, I 87) (4,320,673) Other receip!S 2,601,189 S361445 1071762 200,000 Net cub provided (med) by opending activitie5 23J801122 20,121~5 11.0981025 {446J29) CASH FLOWS FROM NONCAPlTAL AND R£LATED FINANCING ACTMTIIS Traasfffl in Iran other fllnds 2,186,447 409,574 30,344 613,612 Tnmsfas out to odtcr funds (2,409,997) (6,386,649) (3,094,350) ) Shol1-mm intedund born,win,p (43,662) Pa)'fflll'l!S received en advames m1111 other funds Ne! caah providod ( used) by IIOll,:apital and relaled financing aclivities i2231SSO) iS.977,07Sl _ p11071668) 613,612 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACl'IVITIES Purchases of cepiUl wets (16,023,497) (12,924,246) {14,005,819) Sale of capital usas 540,244 2,873 9,393 Principal paid on capital leases (789,245) (391,881) (364,072) Principal paid on bonds 811d otbcf debt (5,855,576) (8,673,559) (4,814,663) Bond issuance cost paid (125,866) (364,615) (761,278) lntel"e8t paid on -,ive bonds (899,060) (2,928,491) (187,546) Interest paid on bonds and Olhw debt .(2,523,S74) (4,875,957) (1,725,452) ~ o!nMnUe and G.O. bonds 7,041,314 43,5~,276 59,949,300 ) •-of "Pila! Jea.11 1,239,763 1,868,123 586,738 Pusenger fal:ility chqu/capital grams R.ebetable .ut,itnrp 509 2,419 869 Net -'i provided (used) for mpital ll!>d related financing activities { 17139419881 15~81942. 3816871470 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales and Ullllmities of investrnems 52, 768,2.4 7 35,479,002. 19,541,109 Purchase or investmen!S (61,380,798) (66,626, 779} (68,004,177) (12,682) Interest eaminp on cash 111d illvestmmts 2,765,622 1,652,%0 1.731,838 12,682 Net cash provided (used) for investing lldivities ,s1846,929l !29,494.s 1 n ,461731.230! Net incluse (dc:\mlse) in cull 1111d cash eqllivalenls (185,345) (101,345) (53,403) 167,083 Cash and cash equivalems. begiMing of' )'elll' 677J;l.7 125,438 1131870 1,134,085 Cash and cash equivalents. end of )UI" i 4911892 5 24.~ 5 60,467 5 1~012168 a-adl.1111'on ot operating la.come (lllu) to ult cull ) pro~ (nlled) by opel"lda& adMtia: Operating income (loss) $ 11,322,762 $ 10,596,401 s 3,9S8,S41 s (457,278) AdjllSlmentS lo m:oneil~ operating ineome {loss) IO net cub provided {uaed) by opmring activities: Dc:preciatioo. &lid ammtimion 9,732,413 8,387,182 5,432,048 Other income: (expense) 2,601,189 .536,44.5 107,762 200,000 Change in cunent assets 111d liabilities: ) Ac:counts n,c::eivabh, (2,213,687) (101,382) 51,.503 (180,057) Inventory S,802. (4,649) Due ftom other goVffllllllTlts (187) Aa:ounts payable 869,426 330,877 1,398,846 110,051 Due tG'1rom other .limds 119,245 (119,245) OtherlMlC1uecl~ 74,823 82,258 24,552 c-deposits 296,268 18,025 Change in~ abitencies and~ beuef!ls 471,881 276.635 12.4,773 Net cash provided (used) byopaating aetivilies s 23,280.122 s 20,121,605 s 111098,025 s {446.529} Supple,ntGtlll casb llow Wonnalmll: Noncash capital conlrlbuliOIIS and Other c:hilrge5 s 175,075 s 1,713,804 s 1,672,990 s Sec: accxxnpanying Notes 10 Basic Financial Stalemmt& ' 52 ' Eute!J!rile Pods Noo-.r b.tenaal ) Eoterprile Senke StormW1ter F1111ds Totalt Faadl s 6,567,486 $ 29,072,631 $ 370,883,255 s 47,914,017 (3,024,665) (8,973, 720) (271,586,888) (41,212,271) (1,663,955) (15,994,690) (42,705,4S3) (4,585.319) ) 9051910 4,351,306 133,580 1.878,&66 S,OI0,131 60,942,220 2,250,007 4,519,160 7,759,137 320,880 ( 1,066,358) (3 ,876,21 5) (16,833,569) (2.S 13,352) (2,659,996) (2,703,658) 24,357 1,100,000 1,100,000 (1,066.358) (917,051) (10,678,090) (2, 1681 11 S} (9,390,965) (14,652,034) (66,996,561 ) (488,984) 1,566 1,374,442 1,928,SIS 23,698 (38,175) {l,161,S26) (2,744,899) (422,409) (1,952,507) (1,157,563) (22,453,868) (98,928) (147,515) (1,498,202) (I ,958, 798) (5,973,895) (820,474) (9,945,457) (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 1,738 724 6,259 (5,584,949) 3,617,625 34,574,100 (496,043) 24,395,925 15,777,259 147,961,542 12,971,953 (20,645,455) (24,) 83,226) (240,853, II 7) (13,778,695) 9311,913 700,199 7,802,214 1,163,728 4,689J83 p.705,768) (85,089,361~ 361,986 (83,058) 4,937 (251,131) (52,165) 139,936 147,808 2~38,374 79,672 s 56,878 s 152,745 $ 2,087,243 $ 27,507 s 1,020,782 s (12,330,824) s 14,110,384 s 2,878,400 1,274,719 10,780,827 35,607,189 323,558 775,173 4,220,569 133,580 (65,769) 39,296 (2,470,096) (31,152) (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) 68,017 382,310 157,750 741,706 1,772,745 216.853 $ 1,878,866 s 5,010,131 $ 60,942.220 s 2,250,007 s $ 16,165,991 s 19,727,860 s 53 • .1 -,,, "I.. ,._"_~ .. t~'- ~'#' .... 54 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Basic Financial Statements (BFS) of the City of Lubbock, Texas (City) have been prepared in confonnity with accounting principles generally accepted in the United States of America (GAAP) as applied to govcrmncnt units, including specialized industry practices as specified in the American Institute of Certified Public AccountanlS audit and accounting guide titled State and Local Governments. The Governmental Accounting Standards Board (GASB) is the acknowledged standard-setting body for establishing govemmental accounting and financial reporting principles. With respect to proprietary activities related to business-type activities and enterprise funds, including component units, the City applies all applicable GASB pronouncements as well as Financial Accounting Standards Board (FASB) Statements and Interpretltions, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins of the Committee on Accounting Procedme, issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The more significant accounting policies are described below. A. REPORTINGENTITY Toe City is a municipal corporation governed by a Council-Manager form of government The City, incotporated in 1909, is located in the northwestern part of the state. The City currently occupies a land area of 119.9 square miles and serves a population approximating 215,000. The City is empowered to levy a property tax on both IW and personal properties located within its boundaries. It is also empowered by state statute to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the City Council. The City provides a full range of services, including police and fire protection; rccrcati01l41 activities and cultural events; construction and maintenance of highways, streets, airport and other infrastructure; and sanitation services. The City also provides utilities for electricity, water, wastewater, and storm water as well as a public traosportatiOD system. The BFS present the City and its component units and include all activities, wganizations, and functions for which the City is considered to be financially accountable. The criteria considered in detennining activities to be reported within the City's BFS are based upon and consistent with those set forth in the Codification of Gc>yemmenml Accounting Standards, Section 2100, "Defining the Financial Reporting Entity." The criteria includes whether: • The organization is legally separate ( can sue and be sued in its own name); • Toe City holds the corporate powers of the organization; • The City appoints a voting majority of the organization's board; • The City is able to impose its will on the organization; • The organization bas the potential to impose a financial benefit or burden on the City; or • There is fiscal dependency by the organization on the City. As required by GA.AP, the BFS present the reporting entity which consists of the City (the primary government), organiutions for which the City is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion could cause the City's BFS to be misleading or incomplete. 55 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE L SUMMARY OF SIGNIFICANT ACCOUNTING POUCIES (Continued) A. REPORTING ENTITY (Continued} BLENDED COMPONENT UNITS The Urban Renewal Agency (URA) bas been included in the City's primal)' government financial reporting entity using the blended method because, although it is legally separate, the URA is an arm of the City. The URA is governed by State law and was formed to help eliminate slum and blight within the City. The URA board oversees acquisition and disposition of real property and also designates and approves Url>an Renewal Plans. The URA Board is composed of Dine members appointed by the City Council. There are no separate financial statements available for the URA. West Tens Municipal Power Agency (WTMPA) is a legally separate municipal cotporation, a political subdivision of Texas, iiDd body politic and corporate, formed in 1983, governed by an eight member Board of Directors. The board consists of two directors from each participating city. One member is elected as the president who presides over monthly meetings, Directors serve without compensation. WTMP A has no eDllloyees and instead contracts for services to meet its general operating needs. WT.MP A may engage in the business of generation, transmission, sale, and exchange of electric energy to the four participating public entities: Lubbock, Tulia, Brownfield. and Floydada. WTMP A may also participate in power pooling and power exchange agreements with other entities. WTMPA provjdes electricity to its four member cities with the City having a 92. 7% interest in its operations. Each member city appoints two membeJ's to the WTMP A board, however an affinnative vote of the "majority in int.crest" is required t.o approve the operating budget, approve capital projects, approve debt issuance, and approve any amendments to WTMP A rules and regulations. The City maintains the "majority in interest" vote based on kilowatt purchases. and consequently has majority voting control As the City purchases approximately 92. 7% of the electricity broketcd, WTMP A provides services almost exclusively to the City and is therefore presented as a blended enterprise fund. Separate audited financial statements may be obtained through the City. DISCRETELY PRESENTED COMPONENT UNITS The financial data for the Component Units are shown in the Government-Wide Financial Statements. They are reported in a separate column to emphasize that they are legally separate from the City. The following Component Units are included in the reporting entity because the primary government is financially accountable, is able to impose its will on the organization, or can significantly influence operations and/or activities of the organization. Civic Lubbock, Inc. is a legally separate entity that was organized to foster and promote the presentation of wholesome edw:ational, cultural, and entertainment programs for the general moral, intcllcctuai physical improvement. and welfare of the citi2ens of Lubbock and its surrounding area. The eleven-member board is appointed by the City CoWlCil. City Council reviews and accepts the annual budget. Separate audited financial statements for Civic Lubbock may be obtained from Civic Lubbock, Iru;:, at 1501 6tb. Street, Lubbock, Texas. Market Lubbock. Economic Development Corporation, dba Market Lubback, is a legally separate entity that was formed on October 10. 1995 by the City Council to create, manage, operate, and supervise programs and activities to promote, usist, and enhance economic development within and around the City. The City Council appoints the seven-member board and its operation., are fimded primarily through budgeted allocations of the City's property and hotel occupancy taxes. Separate audited financial statements may be obtained from Maiket Lubbock at 1500 Broadway, Sixth Floor, Lubbock, Texas. 56 City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. REPORTING ENTITY (Continued) Lubbock Economic Development Alliance is a legally separate entity that was formed on June 1. 2004 by the City of Lubbock to create, manage and supervise programs and activities to promote, wist, and enhance economic development within and around the City. The City Council appoints the seven-member board and its operations are funded primarily through budgeted allocatiom of the City's sales and use taxes. Separate audited financial statements may be obwned from Lubbock Economic Development Alliance, Inc. at 1500 Broadway, Sixth Floor, Lubbock, Texas. The Vintage Township Public Facilities Corporation is a legally separate entity that was formed on January 12, 2007 by the City Council to assist the City in financing, refinancing. providing or otherwise assisting in the acquisition, construction and maintenance of certain public facilities benefiting the Vintage Township Public Improvement District. The three-member board is appointed by the City Council. City Council reviews and accepts the annual budget. Separate audited tinaocial statements are not available. RELATED ORGANIZATIONS The City Council is responsible for appointing the board membets of other organizations and the City's accountability for these organiz.ations does not extend beyond board appointments. The City Council is not able to impose its will on these entities and there is no financial benefit or burden relationship. Bonds issued by these organi7.ations do not constitute indebtedness of the City. The following related organizations are not included in the reporting entity: The Housing Authority of the City of Lubbock is a legally separate entity. The Mayor appoints the five- member board. The Lubbock Health FaclUttes Development Corporation promotes health facilities development. The City Council appoints the seven-member board. The Lubbock Housing Finance Corporation, Inc. was fonned pursuant to the Texas Housing Finance Corporation Act to finance the cost of decent. safe, and affordable residential housing. The City Council appoints the seven-member board. The North and East Lubbock Community ~velopment Corporation (CDC) was incorporated in February 2004 to effectuate change in North and East Lubbock. The North and East Lubbock CDC is a local entity that drives social change and promotes autonomy and empowerment by increasing the supply of quality and affordable housing, generating economic activity, and coordinating the efficient delivery of social services. The Lubbock Education FadHdes Authority, Inc. is a non-profit corporation and instrumentality of the City and was created pursuant to the Higher Education Authority Act, Chapter 53 Texas Education Code for the pmpose of aiding institutions of higher education, secondazy schools, and primary schools in providing educational facilities and housing facilities. The seven-member board is appointed by the City CoWlCil. The Lubbock Fire Pension Fund (LFPF) operates wtder provisions of the Texas Local Fire Fighters' Retirement Act for purposes of providing retirem=t benefits for the City's firefighters. The Mayor's designee, the Chief Financial Officer, three firefighters elected by active firefighters and two at-large. members elected by the LFPF Board, govern its affairs. The Pension Fund is funded by contributions 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, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. REPORTING ENTITY {Continued) responsibility to the LFPF is limited to matching bi-weekly contnoutions made by the membeIS. 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 relirement 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. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The City's financial statements arc prepared using the reporting model specified in GASB Statement No. 34 - Basic Financial Statements -and Management's Discussion and Analysis -for State and Local Governments, GASB Statement No. 37 -Basic Financial StaJements -and Management's Discussion and Analysis -For State and Local Governments -Ormubus, GA.SB Statement No. 38 -Certain Financial Statement Note Disclosures, and GASB Intetpretation No. 6 -Recognition and Measurement of Cerulin Liabilities and Expenditures in Governmental Fund FinanciJJI Statements. As specified by S1atement No. 34, the BFS include both Government• Wide and Ftmd Financial Statements. The Government-Wide Financial Statements (GWFS) (i.e., the Statement ofNet Assets and the Statement of Activities) report infonnation on all of the non-fiduciary activities of the City and its blended component units as a 'Whole. The discretely presented component units are also aggregately presented within these statements. The effect of interfund activity has been removed from. these statements by allocation of the activities of the various internal service funds to the governmental and busines&-type activities on a nmd basis based on the predominant users of the services. Governmental activities, which are primarily supported by taxes and intergovernmeutal revenues, arc reported separately from business-type activities, which rely to a significant extent on fees and charges for support. All activities, both governmental and business-type, are reported in the GWFS using the economic resources measurement focus and the accrual basis of accounting, which includes long-term assets and receivables as well as long-term debt and obligations. The GWFS focus more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The Government-Wide Statement of Net Assets reports all financial and capital resources of the City. It is displayed in the format of assets 1~ liabilities equals net assets, with the assets and liabilities shown in order of their relative liquidity. Net assets are required to be displayed in three components: (1} invested in capital assets net of related debt, (2) restricted, and (3) unrestricted. Invested in capital assets net of related debt equals capital assets net of accumnlated depreciation and reduced by outstanding balances of any bonds, mortgages, notes. or other bonowings that are attn'butable to the acquisition, construction, or improvement of those assets. Restricted net assets are those with constraints placed on their use by either: (1) externally imposed by creditors (such as through debt covenants), grantors, contnl>utors, or laws or regulations of other governments; or (2) imposed by law through constitutional provisions or enabling legislation. All net assets not otherwise classified as invested in capital assets net of related debt or restricted, are shown as unrestricted. Resexvations or designations of net assets imposed by the City, whether by administrative policy or legislative actions of the City Council that do not otherwise meet the definition of restricted net assets, are considered unrestricted in 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 expenses are those that are clearly identifiable with a specific function or segment Program revenues include: ( 1) charges to customers or applicants who purchase, use, or directly benefit from goods, seryices, or privileges provided by a given 58 City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. GOVERNMENT•WIDE AND FUND FINANCIAL STATEMENTS (Continued) function or segment; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment Taxes and other items not properly included among program revenues are reported instead as general revenues. The general revenues support the net costs of the functions and segments not covered by program revenues. Fund Financial Statements (FFS) for governmenla1 and proprietary funds are also part of the BFS. The focus of the FFS is on major funds, as defined by GASB Statement No. 34. GASB Statement No. 34 sets forth minimum criteria for determination of major funds, i.e., a percentage of assets, liabilities, revenue, or expenditures/expenses of fund category and of the governmental and enterprise funds combined. However, it also gives governments the option of displaying other funds as major funds. The City can elect to add some funds as major funds because of outstanding debt or community focus. Major individual governmental funds and major individual enterprise funds are reported as separate colWllDS in the FFS. Other non-major funds are combined in a single column in the appropriate FPS. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Fund Financial Statements The GWFS are reported using the economic reso\ll'Ces measurCIIICllt focus and the accrual basis of accounting. as are the proprietary FFS. Revenues are recorded when earned and expenses are recorded when a liability is incuned, regardless of the timing of related cash flows. Property taxes are recognized as revemies in the year for which they are levied. Grants and 5imilar items are n,cognizcd as revenue as soon as all eligibility requirements have been met. Because the enteiprise funds are combined into a single business-type activities column on the GWFS, certain interfund activities between these funds are eliminated in the consolidation for the GWFS, but are included in the fund columns in the p1oprictary FFS. The effect of interfund activity has been eliminated from the GWFS. For instance, 92.7% of the operations ofWTMPA representing transactions between WTMPA and Lubbock Power & Light (LP&L) have been eliminated for the GWFS presentation and for the electric business-type activities (BTA). Exceptions to this general rule are payments-in-lieu of taxes and olhcr charges between the City's electric, water and wastewater functions and various other functions of the govemment. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental FFS are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This is the traditional basis of accounting for govemmentaJ funds. This presentation is necessary (I) to demonstrate legal and covenant compliance. (2) to demonstrate the sources and uses ofliquid resources, and (3) to demonstrate how the City's actual revenues and expenditures conform to the annual budget. Revenues are recognized as soon as they are both measurable and available. Revenues arc considered to be available when they are collecbole within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available, generally, if they are collected within 45 days of the end of the current fiscal period. The City considers the grant availability period to be one year for revenue recognition. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments are recorded only when the liability bas matured. Because the governmental FFS are presented on a different basis of accounting than the GWFS, 59 City of Lubbock, Texas Notes to Basic Flnandal Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. MEASUREMENT FOCUS. BASJS OF ACCOUNTING. AND FINANCIAL STATEMENT PRESENTATION (Continued} reconciliations are provided immediately following each fund statement. These reconciliations explain the adjustments necessary to convert the FFS into the governmental activities cohmm of the GWFS. Property taxes, sales taxes, franchise taxes, occupancy tax.es, grants, licenses, court :tints, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Only the portion of speciaJ assessments receivable due within the cmrent fJScal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when the City receives cash. Fund Accounting The City uses funds to report its financial position and the results of its operations. Fund accounting segregates funds according to their intended pUJPOse and is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts, which includes assets, liabilities, fund balance/net assets, revenues and expenditures/expenses. ' Governmental Funds are those through which most of the governmental functions of the City are financed. The City reports two major governmental funds: The General Fund, as the City's primary operating fund, accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Governmental Capital Projects Fund accounts for financing and construction of government capital projects, except for North Overton Tax Increment Financing Reinvestment Zone (TIF} capital projects and Gateway Streets Fund capital projects. Projects include public safety improvements, park improvements, street improvements, purchase and construction of municipal buildings, and major maintenance, repair, and replacement of public buildiDgs and fucilities. Enterprise Funds are 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 or services to the general public on a continuing basis be financed or recovered through user charges; or (2) where the governing body bas decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management conttol, accountability, or other pw:poses. The City reports the following major enterprise funds: LP&L accounts for the activities of the City-ovmed electric production and distribution system. The Water Fund accounts for the activities of the City's water system. The Wastewater Fund accounts for the activities of the City's sanitary wastewater system. The WTMP A Fund accounts for the activities of power generation and power brokering to member cities. Member cities include Lubbock with 92.7% ownership, and Tulia, Brownfield. and Floydada comprising the remaining 7.3% ownership. 60 ) ' City of Lubbo~ Texas Notes to Basic Financial Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued.) c. MEASUREMENT FOCUS, BASIS OF ACCOUNTING. AND F]NANCIAL STATEMENT PRESENTATION (Continued) The Storm Water Fund accounts for the activities oftbc storm water utility. The City reports the following non-major funds: Governmental Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources ( other than special assessments or major capital projects) that are legally restricted to expenditures for specified purposes. The Debt Service Fund is used to account for the accumulation of reSOUICes for and the payment o( general long-term obligation principal and interest ( other than debt service payments made by proprietary funds). The Permanent Fand is used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that benefit the City and its citizens. The Cemetery Permanent Care Fund accounts for interest earned on principal funds and authorized disbursements for cemetery maintenance and improvements. Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital improvements (other than those recorded in the proprietary funds). Proprietary Funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expemes generally 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 enterprise funds and of the City's internal service funds are charges to customen for sales and services, Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Enterprise Funds are used to account for services to outside users where the full cost of providing services, including capital, is to be recovered through fees and charges, e.g., Lubbock Preston Smith International Aiiport (Airport Fund), Citibus (Transit Fund), Solid Waste, Cemetery, and Civic Centers. Internal Service Funds are used to accoUDt for services provided to other departments, agencies of the deparUnents or to other governments on a cost reimbursement basis (i.e., Fleet Maintenaocc Fund. Print Shop and Warehouse 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 citizen comments, and the budget is legally enacted through passage of an ordinance 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 original budget and the amended budget. which have been adjusted for legally authorized supplemental appropriations to the ammal budget during the fiscal year. The operating budget is adopted on 61 City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. BUDGETARY ACCOUNTING (Continued} a basis other than GAAP for 1be General Fund, with the main difference being that capital lease proceeds and related capital outlay are not budgeted. Budgetary control is maintained at the department level in the following expenditure categories: personnel services, supplies. other charges, and capital outlay. 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, shall be presemed 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 budgets do not lapse at fi.sca) year end but rt:main in effect until the project is completed and closed. In addition to the tax levy for general operations, in accordance with State law, the City Council sets an ad valorem tax levy for a sinldng fund (General Obligation and Certificates of Obligation Debt Setvice) which, with cash and investments in the fund, is sufficient to pay all debt service due dwiJJg the fiscal year. E. ENCUMBRANCES At the end of the fiscal year, encumbrances for goods and services 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 had no significant amounts of open encumbrances. F. ASSETS. LIABILITIES AND FUND BALANCE/NET ASSETS Equity in Cash and Investments -The City pools the resources of the various funds in order to facilitate the management of cash and enhance investment earnings. Records are main1ained which reflect each fund's equity in the pooled account. The City's investments are stated at fair value, which is based on quoted market prices as of the valuation date. Cash Equivalents -Cash equivalents are defined as short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less when purchased. These investments present an insignificant risk of change in value due to changes in interest rates. Investments -Investments include securities in the Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, U S Treaswy Notes. and Farm Credit Notes. Restricted in~tments include investments that have bem restricted for bond financed capital projects and money RStricted for claims in the Risk and Health Insurance FWJds. Restricted investments also include funds that have been restricted by bond covenants for debt service requimnents and for passenger iacility charges. Property Tax Receivable -The value of all real and business property located in the City is assessed annually on January 1 in conformity with Subtitle E of the Texas Property Code. Propct1y taxes are levied on October 1 on those assessed values and the taxes are due on receipt of the tax bill. On the following January 1, a tax lien attaches to property to secure the payment of all Illes, penalties, and interest ultimately imposed. The taxes are considered delinquent if not paid before February 1. Therefore, at fiscal year end all property taxes receivable are delinquent. but are SCCW"Cd by a tax lien. At the GWFS level, property tax revenue is recognized upon levy. In governmental funds, the City records property taxes receivable upon levy and defers tax revenue until the taxes are collected or available. For each fiscal year, the City recognizes revenue in the amount of taxes collected during the year plus an estimate of 62 ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. ASSETS. LIABILITIES, AND FUND BALANCE/NET ASSETS (Continued) taxes to be collected in the subsequent 45 days. The City allocates property tax revenue between the General, certain Special Revenue. and Debt Service Funds based on tax rates adopted for the year of levy. The Lubb<x:k Central Appraisal District assesses property values, bills, collects, and remits the property taxes to the City. Toe City adjusts the allowance for uncollectible taxes and defcm:d tax revenue at fiscal year end based upon historical collection experience. To write off property taxes receivable, the City eliminates the receivable and reduces the allowance for uncollectible accounls.. Enterprise Funds Reuivables -Within the LP&L, Water, WasteWlltcr, Storm Water, and WTMPA Enterprise Funds, services rendered but not billed as of the close of the fiscal year are accrued and this amount is reflected in the accoUDts receivable balances of each fund. Amounts billed are reflected as accounts receivable net of an allowance for uncolleciJ."ble accounts. Inventories -Inventories consist of expendable supplies held for conswDption. Inventories are valued using the average cost method of valuation, and are accounted for using the consumption method of accounting, i.e., inventory is expensed when used rather than when purchased. Prepaid Ite.m • Prepaid items are accounted for under the consumption method. Mortgage Receivables -Mortgage receivables consist of loans made to Lubbock residents and businesses under the City's Community Development loan program These loans were originally funded through grants received from the U.S. Department of Housing and Urban Development. Capital AsselS and Depreciation -Capital assets, including public domain infrastructure ( streets, bridges, sidewalks and other assets that are immovable and of value only to the City) are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of three years. These capital assets are reported in the GWFS and the proprietary funds. Capital assets are m:orded at cost or estimated historical cost if purchased or constructed. Donated assets are recorded at the estimated fair value on the date of donation. Major outlays for capital assets and improvements are capitalized as the projects are comtructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset lives are not capitalized. Major improvements are capitalized and depreciat.ed 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: Infrastructure/Improvements Buildinga Equipmem Water rights I0-5Oyears 15-50 years 3-IS years 8Syears Interest Capitalization -Because the City issues general-pwpose capital improvement bonds, which are recorded within the propriewy funds, the City capitalizes int.erest costs for business-type activities and entetprise funds according to the F ASB Statement No. 34 Capitalu.ation of Interest Cost and F ASB Statement No. 62 Capitalization of Interest Costs. The City capitali7.ed interest of approximately $4,190,000 net of interest earned, for the business-type activities and the enterprise funds during the current fiscal year. 63 City of Lubbock, Texas Notes to Basic Financial Statementl September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. ASSETS, LIABlLITIES, AND FUND BALANCE/NET ASSETS (Continued) Fund Balanc:es -In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative: management plans that are subject to change. · Restricted Net Assets -Certain enterprise fund and governmental activities assets are restricted for debt and federal requirements; consequently, net assets have been restricted for these ammmts. The excess of other restricted assets over related liabilities are included as restricted net assets for bond indenture requirements and passenger facility charges. Use of Estimates -The preparation of financial statements in conformity with GAAP requires management to make 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 EXPENDITIJRES Interest Income on pooled cash and investments is allocated monthly based on the percentage of a fund's six- month rolling average monthly balance: in pooled cash and investments to the total City-wide six-month rolling average monthly balance in pooled cash and investments. Bond Funds and other separate nonpooled cash are distn'buted to the fund where the cash and investment is recorded. Sales Tai Revenue for the City results from an allocation of 1.5% of the total sales tax levy of 825%, which is collected by the State of Texas and remitted to the City monthly. The tax is collected by the vendor and is required to be remitted to the State by !he 20th of the month following collection. The tax is then paid to the City by the Friday following the second Wednesday of the: month. Grant Revenue fiom feden.l 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. lnterfund Transactions are accounted for as revenues, expenditures, expenses, or other financing soun:es or uses. Transactions that constitute reimbursements to a fund for expenditmes/expenses initially made from that fund that are properly applicable to another fund, arc recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses 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 authoriud to expend the revenue. Compensated Absences consists of vacation leave and sick leave. Vacation leave of I 0-20 days is granted to all regular employees dependent upon the date employed. years of service:, and civil service status. CUJTeJ1tly, 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 accmed at 1 l/4 days per month with a maximum accrual status of 200 days. After 15 years of continuous full time service for non-civil service pen;onnel, vested sick leave is paid on retirement or termination at the current hourly rate for up to 90 days. Upon retirement or termination. Police Civil Service Personnel are paid for up to 90 days accrued sick leave after one year of employment. Firefight.er Civil Service Personnel are paid for up to 90 days of accrued sick leave upon retirement or 64 .., City of Lubbock. Texas Notes to Basic Financial Statements September 30, 2008 NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. REVENUES. EXPENSES AND EXPENDITURES (Continued) termination. The Texas Civil Service laws dictate certain benefits and pezsonnel 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 proprietary fund employees when earned. The liability is recorded in the governmental FFS to the extent it is due and payable. Post Empleyment Benefits for retirees of the City include the option to purchase health and life insurance benefits at a subsidized premium. However, employees that retire with 15 years of service or Civil Service employees that retire who have a sick.leave balance in excess of 90 days will be able to elect to continue receiving medical coverage in fuJI 30..day periods for the term of the balance of their sick leave. Amounts to cover premiums and administrative costs, with an incremental cbarge for reserve funding, are determined by the City's health care administrator. Employer contn'butions are funded on a pay..as--you.go basis and approximated $2.3 million for FY 2008. These contributions are included in the amount of iDsunmce expense reflected in the financial activity reported in the Health Benefits Internal Service Fund. H. NEW PROUNCEMENTS The City will implement the: following new financial accounting and reportiag standards issued by the GASB. • Statement No. 49, .. Accounting 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 unknown. I. CHANGE IN ACCOUNTING PRINCIPLES Effective October 1, 2007, the City implemented the following new financial accounting and reporting standards issued by GASB: • Statement No. 45, Accounting and Financial Reporting by Employers for Post.employment Benefits Other than Pensions. Statement No. 45 establishes uniform firumcial reporting standards for other postemployment benefits (OPEB) plans. improves the relevance and usefulness of fmancial reporting. and supersedes portions of statements No. 12 and 27. The financial impact of the implementation on the City during the year is discussed in Note m. F. • Statement No. 50, Pension Disclosures. Statoment No. 50 amends the note disclosure and required supplementary information standards of Statements No. 25 and 27. The pension footnote disclosure is discussed in Note Ill. E. NOTE ll. STEWARDSHIP, COMPLIANCE Ai'ffi ACCOUNT ABil,ITY A. RESTRICTED NET ASSETS Restricted net assets are only used for their intended purpose. For the majority of projects funded by tax exempt debt proceeds, the debt proceeds are used first, followed by unrestricted resomces. 65 City of Lubbock, Te:xas Notes to Basic Financial Statements September 30, 2008 NOTED. STEW ARDSRJP, COMPLIANCE AND ACCOUNTABILITY (Con1inued) B. GENERAL FUND BUDGET COMPARISON The Geneial Fund FY 2008 amended budgeted expenditures and transfers out were S 122,506,503 and actual expenditures and transfers out were $122,874,160, a difference of$367,657. NOTE m. DETAIL NOTES ON ALL ACTMTIES AND FUNDS A. DEPOSITS AND INVESTMENTS Deposits On September 30, 2008, the bank balance of the City's deposits was $3,018,670. All of the b8Jlk balances are covered by federal depository insurance or are fully collateralized. Custodial credit risk is the risk that in the event of a bank failure, a govemmeot's deposits may not be retumed. The City's deposit policy for custodial credit risk requires compliance with the provisions of Texas Public Funds Investment Act. State law requires collateralization of aJI deposits with federal deposit.ory insurance, eligible securities, or a surety bond having an aggregate value at least equal to ttl.e amount of the deposits. The City's Investment Policy requires the minimwn collateral level to be 102% of market value of principal and accrued interest At September 30, 2008, bank balances were exposed to custodial credit risk as follows: Insured Uninsured and uncollateraliz.ed Uninsured and collateral held by pledging financial institution Uninsured and collateral held by pledging financial institution's tnJSt depaib,ICllt or agent in other than the City's name Investments S 750,000 2,268,670 S 3,018,670 At September 30, 2008, the City had the following investments and maturities: September 30., 2008 Maturities In Years Money Markets Fedenil Home Loan Banks Federal Home Loan Mortgage Corporation Federal National Mortgage Association Farm Credit Note US Treasuiy Note State Investment Pools • Lea Fair Value Than I 1-S S 21 .520,865 S 21,520,865 s - 72,100,888 37,685,274 34,415,614 22,026,380 9,011,960 13,014,420 9,240,630 S,035,630 4,205,000 15,012,510 6,987,510 8,025,000 150,797 150,797 2§7,2i7,S23 267,921J2l ~~2Z2~~ ~~8 Jli:i:i2 ~jl.660.0~ •state Investment Pools are considered investments for financial reporting. 66 ) ) ) ;· City of Lubbock, Texas Notes to Basic Financial Statemenu September 30, 2008 NOTE DI. 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 rates, 1he City's investment policy limits investments to those that can be held to maturity and by limiting final maturity to no more than five (5) years. The money market accounts and investment pools are presented as an invcsbnent with a maturity ofless than one year because 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. Toe City's policy allows investment in direct obligations of and other obligations guaranteed as to principal of the U.S. Treasury and U.S. agencies and instrmru:ntalities with the exception of mortgage backed securities. It aJlows obligations of investment in the State of Texas or its agencies and obligations of states, agencies, cowities, cities, and other political subdivisions rated not less than A or its equivalent. It may also invest in fully collateralized repurchase agreemen1S, fully collateralized certificates of deposit, commercial paper and bank acceptances with a sured maturity of270 days or fewer from the date of issuance, AAA-rated. no-load money market mutual funds regulated by the Securities and Exchange C'..nmmjs.tjon, and AAA-rated, constant dollar investments pools authorized by the City Council. At September 30, 200&, Standard &. Poor•s rated the investment pools and the money market lDl1tUal funds AAAm. The senior unsecured debt for investments in FNMA and FHLMC are rat.cd AAA by Standard & Poor's and Aaa by Moody's. Custodial Credit Risk -For an investment. custodial credit risk is the risk that, in the event of the mi.lure of the couotciparty, the City will not be able to recover the value of its investment or collateral securities that m in the possession of an outside party. The City requires that deposits and repurchase agreements be held in an institution that bas a minimum collateral level of 102% of the market value. FFCB, Flll,B. FHLMC, 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/dealers and financial institutions, which are approved by the Audit and Invcstmcllt Committee for investment pUipOses. 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 Treaslll')' obligations. As of September 30, 2008, the City's investments constituted the following percentages of total investments: Investment Pereentace State Investment Pools 65.67 FHLB 17.67 FHLMC 5.40 Money Markets 5.28 FFCB 3.68 FNMA 2.26 U.S. Treasury 0.04 Foreign Currency Risk • This risk relates to adverse affects on the fair value of an investment from changes in exchange rates. The City has DO foreign currency risk. 67 City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) B. INTERFUNO TRANSACTIONS Interfund balances, specifically the due to and due from other funds, are shorMcrm loans to cover temporary ca.sh deficits in various funds. This occasionally occurs prior to bond sales or grant reimbursements. These outstanding balances are repaid within the following fiscal year. Interfimd balances, specifically advances to and trom other funds, are longer-term loans to cover Council directed in1ema1 financing of certain projects. At September 30, 2008 the City had $12,938,877 in internal financing. These balances arc assessed an interest charge and are repaid over time through operations and transfers. The following amounts due to other funds or due from other funds, including advances, ue included in the ti.Ind financial statements (all amounb in thousands): latlrftmd Receivables (Thoma.ads) Goverameotal Funds Pro!rit!!!X Funds lnterf1111d Payables (Tllousands) Nonmajor Nonmajor General Government WTMPA Enterprise Toials Governmental Funds: Nonmajor Governmental $ 1,409 s 152 s s 512 s 2,073 Proprietlll}' F11ud1: LP&L 9,009 9,009 Nonmajor Enterprise 1,857 1,857 Tom.ls s 3,266 s 152 s 9,009 s 512 s 12,939 Transfers include l) debt service payments made from the debt service fund. but funded from an operating fund; 2) subsidy transfers from unrestricted funds; and 3) transfers to move indirect cost allocations, payments in lieu of iaxes (PILOT), and franchise fees to the general fund or other funds as appropriate. The following interfund transfers are reflected in the fund fioancial statements ( all amounts in thousands): 68 ) City of Lubbock, Tens Notes to Buie Financial ·statements September 3~ 2008 NOTE BL DETAIL NOTES ON ALL ACTMTIES AND FUNDS (Continued) B. INTERFUND TRANSACTIONS (Continued) lntnfand Translers la: (Thous•Dds) Govemmental Fandl: FHdl Proprietary Funds Govt. Nomnajor Wasto-StEum-Ncmmajor iltemal General Capital Govt Electric Water water watt:r En!!J>rise Service Totals GeneralFund S -S -S 315 $1,796 $5,987 S2,894 $1,066 S 3.624 S 2,047 $17,729 Govt. capital Projects 759 25 125 110 1,019 NonmajorGovemmcntal 221 1,444 5,729 7,394 Proprietary Funds: LP&L Water Wastewater WTMPA 1,013 574 282 30 614 400 200 128 2,187 410 30 614 N onmajor Enterprise Internal Service 4,137 347 35 4,519 321 321 Totals 56,130 S 1,469 S 7;1.77 $2,410 $6,387 S3,094 51,066 S 3$77 S 2,513 $34,223 Net transfers on the GWFS amounted to $4,703,317 from govemmental activities to business-type activities. In FY 2008 the Civic Centers Emerprise Fund was created and $12,299,692 in capital assets net oflong-term liability was contn'buted from governmental funds to the Civic Center Enterprise Fund This was netted against transfers of indirect cost allocations and PILOT transfers from business-type activities to govemmental activities. c. DEFERRED CHARGES The total deferred charge of $2,811, l l O in ~ LP&L Enterprise Fund represents an advertising contract 'With the United Spirit Arena. The advertising (and amortization) began with the opening of the sports arena in fiscal year 2000 and will continue for 30 years. 69 ) ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE m. DETAil.. NOTES ON ALL ACTMTIES AND FUNDS (Continued) D, CAPITAL ASSETS Capital asset activity for the year ended September 30, 2008, was as follows: Primary Government: Governmental Activities Beginning Balance Increases Decreases Capital Assets Not Depreciated: Land $ 9,056,284 $ 1,216,338 s 1,238,454 Construction in Progress 40,759,945 4~767,016 16,711,163 Total Capital Assets Not Depreciated 49,816,229 43,983,354 17,949,617 C apltal Assets Depredated: Buildings 65,604,748 148,293 21,352,638 Improvements O1her than Buildings 231,108,317 19,979,475 4,264,979 Machinery and Equipment 68,762,656 7,807,656 12,382,438 Total Capi1al Assets Deprecialcd 365,475,721 27,935,424 38,000,055 Less Ac:mmalated Depreciation: Buildings 33,575,928 1,784,067 14,100,591 lmprovementsO1her than Buildings 119,815,172 9,505,742 2,795,500 Machinery and Equipm:nt 48,221,912 6,667,058 8,616,434 T ot1.I Aa:u milated Depreciation 201,613,012 17,956,867 25,512,525 Total Capital Assets Depreciated, Net 163,862,709 9,978,S57 12,487,530 Governmental Activities Capital A$CtS, Net $ 213,678,938 $ 53,961,911 $ 30,437,147 Depreciation expense was charged to functions/programs of the govemmental activities as follows: Governmenral ac1ivities: Ad ministrativc Scrvic:cs and General Govcmmm. t $ 524,279 Community Services 138,044 Cultural and Rcacalion Services 3,245,553 Economic and Business Developmmt 481,235 Fire 1,359,866 Health 313,159 0fi.a-Public Safety 532,832 Police 2,545,551 Streets and Traffic 7,771,812 Internal Service Funds 265,779 T olal depreciation expense -governmental activiti~ 17,178,110 Transfer in ID accwmlated dq,n,cialion -governmental activities 778,757 Increase in accumulated depreciation -governmental activities S 17~56,867 70 Endiag Balances $ 9,034,168 66,815,798 75,849,966 44,400,403 246,822,813 64,187,874 355,411,090 21,259,404 126,525,414 46,272,536 194,057,354 161,353,736 S 237,203,702 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE DI. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) D, CAPITAL ~ETS (Continued) Business-type Activities Beglnalag BaJaoc:e Increases Decreases Capital Assets Not Depreciated: Land $ 31,962,807 $ 1,238,453 $ 89,122 Construction in Progress 90,515,665 61,225,550 241067,811 Total Capital Assets Not Depreciated 122,478,472 62,464,003 24,156,933 Capital Assets Depreciated: Buildings 98,005,752 22,755,074 Improvementl Other than Buildings 769,665,416 25,525,413 2,569,115 Mac:hinery and Equipment 166,693,910 19,712,468 6,447,317 Total capital Assets Depreciated 1,034,365,078 67,992,955 9,016,432 Less Accumalated Depn:c:iation: Buildings 35,546,976 17,063,888 Improvements Other than Buildings 293,396,223 22,518,048 694,486 Machinery and Equipment 89,834,350 15,183,983 6,244,299 Total Acwmulated Depreciation 418,777,549 54,765,919 6,938,785 Total Capital Assets Depreciated, Net 615,587,529 13~7.036 2,077,647 Business-type Activities Capital Assets, Net $ 738,066,001 $ 75,691,039 $ 26,234,580 Depreciation expense was charged to functions./programs of the business.type activities as follows: Business-Type Activitii:lii: LP&L Water Wastewater Stonnwater Solid Waste Airport Transit Civic Cinters Cemetery r ntcrnal Service Tola 1 dcprecia tio n expmse • bu sioess-type acti vilies Transfer in lo a~lllJIUlated depreciation -business-type activities Increase in a<leun'll lated dq,n:ciatioo -business-type activities 71 S 9,599,079 8,387,182 5,432,048 1,274,719 4,233,675 4,205,461 1,509,962 813,674 18,055 S7,779 35,531,634 19,234,285 $ 54,765,919 Ending Balances s 33,112,138 127,673,404 160,785,542 120,760,826 792,621,714 179,959,061 1,093,341,601 52,610,864 315,219,785 98,774,034 466,604,683 626,736,918 $ 787,522,460 ) ) ) } ) ' City of Lubbock, Texas Notes to Basic Financial Statements September 30~ 2008 NOTE III. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) D. CAPITAL ASSETS (Continued} Constructictn Commitments The City of Lubbock has active construction projects at fiscal year end. Water Projects include the acquisition of the right-of-way necessary for the construction of a pipeline to transport water from the Lake Alan Hemy reservoir to the City. Another ptoject related to bringing Lake Alan Hemy online are costs associated with the final design of an intala: pump station, a 65 mile transmission line, transmission 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 Plant. These improvements will produce stream quality effluent to be discharged into the North Fork of the Double Mountain Fork of the Brazos River for potential reuse. Construction of Fire Station #17 bas begun. This new fu:e station will maintain the current service level of our fire protection services throughout the city. Work continued on a Gateway Street Project that will construct a T-2 thoroughfare street on Erskine Street from Frankford to Salem. The completed projeot will provide for three lanes of traffic in each direction plus a continuous left tum lane. Projeds Commitments S2!nt-to-Date Commltlments Governmental Capital Projects s 92,714,556 $ 56,632,482 $ 36.082.074 TIF Capital Projeas 38,520,171 17,106,456 21,413,715 Gateway Street Projects 26,795,200 3,443,571 23,.351,629 LP&L 21,497,813 17,341,462 4,1.56,351 Water 89,249,756 40,635,808 48,613,948 Wastewater 87,688,073 30,488,082 57,199,991 Solid Warte 3,503,900 818,893 2,685,007 Airport 23,157,941 13,097,475 10,060,466 Stonnwater 56,729,500 45,744,166 10,985,334 Internal Service Fund 1,600,000 835,799 764,201 Total s 441,456,910 $ 226,144,194 $ 215,312,716 E. RETIREMENT PLANS Each qualified employee is included in one of two retirement plans in which the City participates. These are the Texas Municipal Retirement System and the Lubbock Fire Pension Fund. The City does not maintain the accounting records, hold the investments or administer either retirement plan. Summary of significant data for each retirement plan follows: TEXAS MUNICIPAL RETIREMENT SYSTEM (TMRS) Plan Description The City provides pension benefits for all of its full-time employees (with the exception of firefighters) through a non-traditional, joint contnbutory, hybrid defined benefit plan in the state-wide TMRS, an agent multiple-employer public employee retirement system. 72 ) ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE ID, DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continaed) E. RETIREMENT PLANS (Continued) Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary cn:dits, with inteicst At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 1500/4, or 200%) of the employee's accumuJatcd contnbutions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began. would be the total monetary credits and employee contnmtti.ons accumulated with inteJ"cst if the current employee contribution rate and City matching percent bad always been in existence and if the employee's salary bad always been the average of bis salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if1he sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. The plan provisions are adopted by City Council, within the options available in the State statutes governing TMRS and withln the actuarial constraints also in the statutes. Members can retire at ages 60 and above with 5 or more years of semce or with 20 years of service regardless of age. A member is vested after 5 years. Contnbutions The contribution rate for employees is 'l°/4 and the City matching ratio is currently 2-to-l, both as adopted by the City Council. Under the State law governing TMRS, the actuary annually determines the City contnbution rate. This rate consists of the nonnal cost contnbution rate and the prior service cost contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the cum:ntly accrumg monetary credits due to the City matching percent, which is the obligation of the City as of an employee's retirement date, not at the time the employee's contnbutions are made. The normal cost contnbution rate is the actuarially detennined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contn'bution rate amortizes the unfunded (overfundcd) actuarial liability (asset) over the remainder of the plan's 30-year amortization period. The projected unit credit actuarial cost method is used for determining the City contn'bution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contnbution rate in advance for budgetary purposes, there is a one- year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e. December 31, 2007 valuation is effective for rates beginning January 2009). Actuarial Assumptions The actuarial assumptions for the December 31, 2007 valuations are as follows: Actuarial cost method: Amortization method: Remaining amortization period: Asset valuation method: Investment rate of return; Projected salary increases: lncludes inflation at: Cost of Living adjus1me11ts: Projected unit credit Level percent of payroll 30 years-closed period Amortized cost 7% Varies by age and service 3¾ 2.1 % (3% CPI) 73 ) ) ) ) \ ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE ID. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) E. RETIREMENT PLANS (Continued) Payroll Glowth Withdrawal rates for Male/Female F1scal Year EDdlng 9/30/06 9/30/07 9/30/08 Annual Pension Cost $ 10,904,031 10,903,717 11,369,691 3% Mid/Mid Percentage ofAPC Contributed 100 100 100 Net Pension ObllgatioD 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 million. and lhe actuarial value of assets was $200.0 million, resultillg in an unfunded actuarial accrued liability (UAAL) of $126.0 million. The covered payroll (annual payroll of active employees covered by the plan) was $70.9 million, and 1be ratio of the: UAAL to the covered payroll was 177 ,5%. The schedule of funding progress, presented as required supplemcnt.uy information following the notes to the financial statements, will present nmltiyear trend infonnation about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The City of Lubbock is one of827 municipalities having the benefit plan administered by TMRS. Each of the municipalities has an annual, individual actuarial valuation performed. All assumptions for the December 31, 2007 valuations are contained in the 2007 TMRS Comprehensive Annual Financial Report. a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153. LUBBOCK FIRE PENSION FUND (LFPF) Plan Deseription The Board of Trustees of the LFPF is the administrator of a single-employer defined benefit pension plan. This pension fund is a trust fund. It is reported by the City as a related organiz.ation and is not considered to be a part of the City financial reporting entity. Firefighters in the Lubbock Fire Department are covered by theLFPF. The LFPF provides service retirement, death, disability aDd withdrawal benefits. These benefits fully vest after 20 years of credited service. A partially vested benefit is provided for firefighters who termillat.e employment with at least 10 but less than 20 years of service. Employees may retire at age 50 with 20 years of service. A reduced early service retirement benefit is provided for employees who terminate employment with 20 or more years of service. The LFPF Plan. effective December 1, 2005, provides a monthly normal service retirement benefit, payable in a Joint and Two-Thirds to Spouse form of amwity, equal to 68.92% of final 48-month average salary plus $335 .05 per month for each year of service in excess of 20 years. A firefighter has the option to participate in a Retroactive Deferred Retirement Option Plan (RETRO DROP) which provides a lump sum benefit and a reduced annuity upon termination of employment. Firefighters must be at least S 1 years of age with 21 years of service at the selected "RETRO DROP benefit calculation date" (which is prior to date of employment termination). Early RETRO DROP with benefit teductions is available 74 ) ) "\ ) ) ) ) ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE W. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) E. RETIREMENT PLANS {Continued) at age 50 with 20 years of service for the selected "early RETRO DROP benefit calculation date". A Partial Lump S\Dil option is also available where a reduced monthly benefit is determined based on an elected lump sum amount 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. Optional fo:nm are also available at varying levels of surviving spouse benefits instead of the standard two-thirds form. There is no provision for automatic postretirement benefit increases.· LFPF bas the authority to provide, and bas periodically provided for in the past, ad hoc postretirement benefit increases. The benefit provisions of this plan are authorized by the Texas Local Fire Fighters Retirement Act (TLFFRA). TLFFRA provides the authority and procedure to amend benefit provisions. Contributions Required and Contributions Made The con1n"bution provisions of this plan are authorized by TLFFRA. TLFFRA provides the authority and procedure to change the amount of contributions determined as a percentage of pay by each firefighter and a percentage of payroll by the City. While the actual contnbution rates are not actuarially determined, state law requires that ea.ch plan of benefits adopted by LFPF be approved by an eligible actuary. The actuary certifies that the contnbution commitment by the firefighters and the City provides an adequate financing arrangement. Using the entry age actuarial cost method. LFPF's normal cost contnl>ution rat,e is determined as a percentage of payroll The excess of the total contribution rate over the normal cost contribution rate is used to amortize LFPFs unfunded actuarial accrued liability (UAAL), if any, and the number of years needed to amortize LFPFs llllfunded actuarial liability, if any, is determined usmg a level percentage of payroll method. The costs of administering the plan are financed by LFPF. Annul Pension Cost For the fiscal year ended September 30, 2008, the City Annual Pension Cost (APC) for the LFPF was equal to $3,889,208 as described in item 4 in the 1able below. Based on the results of the December 31, 2006 actuarial valuation of the Plan effective December I, 2005, the most recent biennial actuarial valuation, the Board's actuary found that the fund had an adequate financing arrangement based on the current level of the firefighter contribution rates and on the asswned average of City contribution rates. The funding policy of the Fund requires firefighlers to contribute 12.43% of pay. The City contributes based on a formula which causes the City's contribution rate to fluctuate from year to year. The December 31, 2006 actuarial valuation assumes diatthe City's contributions will average 19.75% of payroll m the future. The Annual Required Contribution {ARC) by the City for the fiscal year ending Septmnber 30, 2008 w~ based on the results of the actuarial valuations as of December 31, 2004 and as of December 31, 2006 using the entry age actuarial cost method arui were determined in compliance with the GASB Statement No. 27 parameters. The actuarial methods and assumptions used for these two valuations as follows: 75 ' ) ) ) ) City of Lubb~ Tens Notes to Basic Financial Statements September 30, 2008 NOTE ID. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) E. RETIREMENT PLANS {Continued} Valuation Date Actuarial cost method Amortization method Amortization period of ARC Asset valuation method Actuarial assumptions: Investment return Projected salary inm:ases Inflation Cost-of-living increase Payroll increases ARC as percent of payroll 12/31/2004 Entry age Level percent of payroll, open 21 years S-year adjusted market value 8% 4% plus promotion and longevity 4% 0% 4% Budget rates 12/31/2006 Entry age Level percent of payroll, open 30 years 5-year adjusted market value 8% 4% plus promotion and longevity 4% 0% 4% 20.42% The following shows the development of the Net Pension Obligation (NPO) as of September 30, 2008 I. Annual Required Contn'butions (ARC) 2. Interest on NPO 3. Adjustment to ARC 4. Annual Pension Cost (APC) 5. Actual City contributions made 6. Increase (Decrease) in NPO/(asset) 7. NPO/(asset) at October 1, 2007 8. NPO/(asset) at September 30, 2008 S 3,908,048 (68,985) 50,145 3,889,208 (3,840,468) 48,740 (862,311} S (813,571) Further details concerning the f"mancial position of the LFPF and the latest actuarial valuation are available by contacting the Board of Trustees, LFPF, City of Lubbock. P.O. Box 2000, Lubbock, Texas 79457. A stand- alone financial report is available by contacting the LFPF. Fiscal Year Encled 9/30/06 9/30/07 9/30/08 Trend Infonnation Annual Pension Cost(APC) $ 3,208,595 3,530,944 3,889,208 Percentage of APC Centrlbuted 100.0% 98.4 98.8 Net Pension Obligatiorl (Asset) $(920,722) (862,31 I) (813,571) As of December 31, 2006, the most recent actuarial valuation date, the plan was 84% funded. The actuarial accrued liability for benefits was $164.4 million, and the actuarial value of assets was $138.1 million. resulting in an unfunded actuarial accrued liability (UAAL) of $26.3 million. The covered payroll (annual payroll of active employees covered by the plan) was S 17 .3 million, and the ratio of the UAAL to the covered payroll was 152.1%. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present mwtiyear ttend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 76 ) ) ) ) ) ) City ofLubb~k, Texas Notes to Basic Financial Statements September 30, 2008 NOTE Ill. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) F. OTHER POST EMPLOYMENT BENEFITS (OPEBl Plan Description: The City sponsors and administers an imonnal single-employer health/dental plan. Texas statute provides that retirees from a municipality with a population of 25,000 or more and that receive retirement benefits from a nnmicipal retirement plan are entitled to purchase continued health benefits coverage for the person and the person's dependents unless the person is eligt"blc for group health benefits coverage through another employer. The State of Texas bas the authority to establish and amend the requirements of this statute. The City does not issue stand alone financial statements of the health/dental plan. however, all required information is presented in this report. Funding Policy: The contnbution requirements of plan members are established by the City and may be amended as needed. Retiree medical/dental coverage levels for retirees is the same as coverage provided to active City employees in accordance with the tenm 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 term of their sick leave balance. Toe City contributes 33.89% to 58.83% of the monthly premium for the retiree only health premium and 7 .88% for the retiree only den1al premium. Plan members may purchase ret:ircc health/dental care coverage for eligible spouses and dependents at their own expense and receive a benefit from the blended premium rate from all of the employees participating in the City's health insurance plans. The City is not required to make contn'butioos to the plan on behalf of the retirees and funds the plan on a projected pay-as-you-go financing method. The plan bas 499 active participants who pay monthly premiwm between $272/$22 (medical/dental) for sing]e coverage and ($320/$27) medical/deDtaJ for family coverage. Annual OPEB Cost and Net OPEB Obligation: The City's annual OPEB expense is calculated based on the annual required comnbution (ARC) of the employer, an amount actuarially determined 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 amortize any unfunded actuarial liabilities over a period not to exc~ thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contnbuted to the plan, and changes in the City's net OPEB obligation: Ammal required contnbution Interest on net OPEB obligation Annual OPEB Cost Total annual employer contribution (pay-as-you.go) Increase in net OPEB obligation Net OPEB obligation -beginning of year Net OPEB obligation -end of year $6,636,899 6,636,899 (2.281,3 79) 4,355,520 s 4.355.520 The components of the ARC calculation reflecting a 30 year amortization period is as follows: Normal Cost Amortmilion of transition obligation Interest cost ARC 77 $3,221,541 3,415,358 $ 6.636.899 ) ) ) ) ) ) City of Lubbock, Texas Notes to Basic Finac.cial Statements September 30, 2008 NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Contmued) F. OTHER POST EMPLOYMENT BENEFITS (Continued) The City's annual OPEB cost, the percentage of aonua1 OPEB cost contnbuted to the plan, and the net OPEB obligation for 2008 is as follows: FasealYear Ended 09/30/2008 AnnualOPEB Cost $6,636,899 Percentage of Annual OPEBCost Contributed 34.4% NetOPEB Obligation $4,355,520 Funded Status and Funding Progress: As of October 1, 2007, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits was $81,918,738, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $81,918,738. The covered payroll (annual payroll of active employees covered by the plan) was $88,185,412, and the ratio of the UAAL to the covered payroll was 92.9%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into 1he future. Examples include assumptions about future employment, mortality, and the healthcare cost trend Amounts determined regardmg the funded status of the plan and the ARC of the employer are subject to continual revision as aclU.al results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multi-year trend infonnation about whether the actuarial value of plan assets is increasing or decreasing over time relative to the acnwial accrued liabilities for benefits. However, since this is the fint year of implementation . there is no trend information to report. Actuarial Methods and Assumptions: Projections ofbenefrts for financial reporting purposes 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 costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques lhat are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the October 1, 2007, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return based on a long term rate of investment. a 3% annual salary increase projection, and an annual healthcare cost trend rate of 10% for 2007 and then reduced by decrements to an ultimate rate of 4.5% after fifteen years. The UAAL is beiDg amortized as a level percentage of projected payroll on a closed basis. The remaining amortiz.ation period at September 30, 2008, was twenty-nine years. G. DEFERRED COMPENSATION The City offers its employees five deferred compensation plans in accordance with Intemal Revenue Code ("IRC'') Section 457. The plans. available to all City employees, permit them to defer a portion of their salary until future years. The defem:d compensation is not available to etll)loyees until termination, retirement, death, or unforeseeable emergency. The plans' assets are held in trust for the exclusive benefits of the participanlS and their beneficiaries. 78 .., ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 · NOTE m. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) G. DEFERRED COMPENSATION {Continued) The City does not provide administrative services or have any fiduciary responsibilities for these plans; therefore, they are not imsentcd in the BFS. H. SURFACE WATER SUPPLY Canadian River Municipal Water Authority The Canadian River Municipal Water Authority (CRMWA) is a Conservation and Reclamation Authority established by the Texas Legislature to construct a dam. water :reservoir, and aqueduct system for the purpose of supplying water to surrounding cities. The Authority was created in 1953 and comprises eleven cities, including the City of Lubbock. The budget, financing, and operations of the Authority are governed by a Board of Directors selected by the governing bodies of each of the member cities, each city being entitled to one or two members dependent upon population. At September 30, 2008, the Board was comprised of 18 members, two of which represented the City. The City contracted with the CRMW A to reimburse it for a portion of the cost of the Canadian River Dam and aqueduct system in exchange for surface water. The City's pro rata share of annual fixed and variable operating and reserve assessments are recorded as an expense of obtaining surface water. Prior to fiscal year 1999, long-tenn debt was owed to the U.S. Bureau of Reclamation for the cost of construction of the facility, which was completed in 1969. The City's allocation of project costs was $32,905,862. During fiscal year 1999, bonds in the principal amount of$12,300,000 were issued to pay off the construction obligation owed to the U.S. Bureau of Reclamation via CRMW A in the IIDIOunt of $20,809,067. Toe difference of $8,509,067 was a discount in the mnaining principal provided by the U.S. Bureau of Reclamation to the member cities. This discount bas been recorded as a deferred gain on. refundiJlg and is being amortized over the life of the refunding bonds. At September 30, 2008, $1,363,690 mnains unamortized. Toe annual principal and interest payments are included in the disclosures for other City related long-term debt The above cost for the rights are recorded as capital assets and are being amortized over 85 years. The cost and debt arc recorded in the Wa~ Enterprise Fund. In 2005, the Canadian River Municipal Authority issued $48,125,000 in Contract Revenue Bonds. The City of Lubbock shared in this issue in the amount of $17,960,000. The Canadian River Municipal Authority issued a new Contract Revenue Bond, Series 2006 in April 2006 in the amount of $49,075,000. The City of Lubbock shared in the issue for $18,573,906 and other costs of $492,465, and received depreciable assets (water rights) valued at $19,066,371. These assets and liabilities are recorded in the Water Enteiprise Fund. Brazos RJver Authority -Lake Alan Henry During 1989, the City entered into an agreement with the Brazos River Authority (BRA) for the construction. maintenance, and operation of the facilities known as Lake Alan Henry. The BRA, which is authorized by the State of Texas to provide for the conservation and development of surface waters in the Brazos River Basin. issued bonds for the construction of a dam and Jake facilities on the South Fork of the Double Mountain Fork of the Brax.os River. The BRA issued $16,970,000 in revenue bonds in 1989 and $39,685,000 in revenue bonds in 1991. The BRA revenue bonds were refunded in 1995 and 2005, legally def'easiog the BRA debt. The new debt is in the City's name and is no longer BRA debt The Lake Alan Hemy dam and facilities assets are recorded as capital assets and are being depreciated over 50 years. The financial activity, along with related obligation, is accounted for in the Water Enterprise Fund. 79 ) ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE m. DETAIL NOTES ON ALL ACTMTIES A.~ FUNDS (Continued) L LONG-TERM DEBT GENERAL OBUGATION BONDS AND CERTIFICATES OF OBLIGATION: Interest Maturity Amount Outstanding Jbteo/• Dated ~ Issued 09.JG-08 S.39 10-01-93 02-lS-14 S 2,SS0,000 S 780,000 S.20 10-01-93 02-15-14 1,470,000 22S,000 5.14 10-01-93 02-15-14 19,21S,OOO 2,89S,000 4.71 01-01-98 02-15-18 10,260,000 1,545,000 4.36 01-15-99 02-15-14 20,835,000 12,900,000 4.58 01-15-99 02-15-19 15,355,000 770,000 4.77 04-01-99 02-15-19 6,100,000 30S,000 4.71 04-01-99 02-15-19 12,300,000 6,820,000 5.37 09-15-99 02-15-20 24,800,000 1,085,000 S.54 03-15-00 02-IS-20 7,000,000 310,000 4.90 02-01-01 02-1S-2I 9,100,000 815,000 4.81 02-01-01 02-1S-21 2,770,000 280,000 5.25 06-01--01 02-15-31 35,000,000 2,335,000 4.6& 02-IS-02 02-15-22 9,400,000 3,700,000 4.71 02-IS-02 02-1S-22 6,4S0,000 2,535,000 4.70 02-IS-02 02-1S-22 1,545,000 1,270,000 4.62 07-01-02 02-15-22 2,605,000 2,045,000 3.18 07-01-02 02-15-10 10,810,000 1,855,000 4.42 07-1S-03 02-15-23 11,855,000 3,655,000 4.47 07-15-03 02-15-24 9,765,000 8,425,000 4.48 07-15-03 02-15-24 680,000 S8S,000 4.47 07-15-03 02-1S-24 3,590,000 3,095,000 4.87 07-15-03 02-15-34 40,13S,OOO 6,060,000 4.47 07-15-03 02-15-24 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 13,270,000 4,810,000 4.37 06-30-04 08-01-12 1,000,000 500,000 4.09 09-15-04 02-15-24 2,025,000 1,590,000 4.08 09-28-04 02-15-24 3,100,000 2,370,000 3.58 09-28-04 02-15-20 22,620,000 18,385,000 3.89 02-1S-05 04-15-25 23,055,000 18,040,000 3.94 06-15-05 02-15-21 49,615,000 49,615,000 4.26 08-15.05 02-15-25 46,525,000 41,700,000 4.82 07-01-05 02-15-21 43,080,000 37,215,000 4.27 07-15-0S 02-15•25 7,265,000 6,510,000 4.58 04-15-06 02-15-26 76,950,000 73,435,000 4.58 04-15--06 02-15-26 2,740,000 2,645,000 4.84 os-1s-06 02-15-31 1s,s30,ooo 1s,no,ooo 4.42 01-01-07 02-15-34 54,020,000 Sl,485,000 4.42 01-01-07 02-15-34 2S,25.S,000 24,625,000 4.88 08-15-07 08-1S-27 l,l 5S,000 1,125,000 4.88 08-15-07 08-15-27 60,820,000 58,82S,000 6.45 12-15-07 08-15-27 11,805,000 11,805,000 4.22 01-1S-08 08-15-27 Sl,900,000 52,900,000 4.80 04-15-08 08-1S-27 2,035,000 2,035,000 4.42 04-1S-08 08-15-27 80,485,000 80,48S,OOO 2.4S 06-01-08 08-15-27 22,61S,OOO 22,615,000 Total $ 902,750,000 $ 656,180,000 (A) (A) Ext;ludes ($7,841,525) net deferred losses on advance reftmdings, net bond premiums and discounts, and bond issuance costs -($3,900,807) business-type and ($3,940,718) governmental. Additionally, this amount includes $457,126,347 of bonds used to finance enterprise fund activities. 80 ) ) ) ) ) ) ) City of Lubbock, Teus Notes to Basic Financial Statements September 30, 2008 NOTE m. DETAD.. NOTES ON ALL ACTIVITIES AND FUNDS (Continued) I. LONG-TERM DEBT {Continued} At September 30, 2008, management of the City believes that it was in compliance with all financial bond covenants on outstanding general obligation bonded debt. certificates of obligation, and water revenue bonded debt. LP&L REVENUE BONDS Balance Final A.mount Olrtstandlng Interest Ra!!(%} Issue Date Mata!:!!l:Date Issued 09-30-08 4.25 to6.2S 1-01-98 4-15-18 S 9,170,000 s 4,600,000 3.I0to S.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 Total $ 33134S,OOO $ 1614801000 • * Balance outstanding acludes $376,493 of net defem:d losses on advance refundings, bond premiums and discounts. and bond issuance costs. Interest Rate{%) 3.983 4.25 to s.o Issue Date 09-30-05 04-30-06 OTHER REVENUE BONDS Final Maturity Date 09-30-25 02-lS-27 Amount Issued S 17,960,000 18,573,906 S 36,533,906 Balance Outstanding 09-30-08 $ 16,299,167 17.651,677 S 33,950,844 * *Balance outstanding excludes $365,241 discount and defem:d losses on bonds sold or refunded. The annual requirements to amortiz.e all outstanding debt of the City as of September 30, 2008 are as follows: Governmental Acdvltles Bml_.Type Adlvlies Fiscal General Obligation Bonds General Obligation Bonds RevaneBonds Year Priocipal 1111:a"est Prloclpal Iaterest Principal Interest 2009 $ 9,478,486 $ 9,832,982 $ 23,446,514 $ 21,319,399 s 3,Q16,932 s 2,448,196 2010 9,876,223 8,853,219 24,3tS.m 19,.572,5S3 3,062,637 2,315,474 2011 10,249,465 8,407,095 25,010,535 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 29,805,852 124,025,575 64,730,247 15,694,414 7,414,609 2019-2023 S3,170,7IO 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).29,607 2034-2038 2,400,000 S4J)OO Totals $ 199,053,653 $ 94,413,430 S 457,126,347 $210,188.592 S 50,430,844 S 22,580,013 81 ) ) ) ) City of Lubbock, Teu.s Notes to Basic Financial Statements September 30, 2008 NOTE III. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) I. LONG-TERM DEBT {Continued) Capital leases were used to acquire equipment and vehicles. The interest mte on 1he leases ranged from 1.5% to 3.8%. The annual requin:mcnts on capital leases of the City as of September 30, 2008, including interest payments ofS3,052,943 are as follows: Governmental B n slae•-Type Total Capital Lease Capital Lease Capital Lea• Fl11.:al Minimum Mimmum Minimum Year Pai:ment Pai:ment Pai:ment 2009 s 3,316,870 s 4,715,877 s 8,032,747 2010 3,090,580 4,697,081 7,787,661 2011 2,031,415 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 5,238,457 Less: Interest (1,325,252) ii, 727,692) l3,os2,944l Toial $ 12,222,506 $ 18,582,396 s 30,804,902 The canying values on the leased assets of the City as of September 30, 2008 are as follows: Accumulated Net Book Gross Value Depreciation Value GOvtn11Dental Aclivities s 16,813,621 s 3,144,099 $ 13,669,522 Busine&Hype Activities 27,085,294 2,713,112 24,372,182 To1al Leased A!&Cts s 43,898,9 IS s S,857,211 $ 38,041,704 82 ) ) ) City of Lubbock, Tex:as Notes to Basic Finaodal Statements September 3~ 2008 NOTE UL DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) I. LONG-TERM DEBT iContinuecl} Long-term obligatiOJls (net of discounts and premiums) for govcmmental and business-type activities for the year ended September 30, 2008 are as follows: Dd:lt Payable Debt Payable Daetn 09/30/07 Adlldons Delftloas 09/30/08 one year Gove mmen, tal adivltles: Tax-Supported - Obligation Bonds $ 160,388,370 $ 46,605,151 $ 7,939,868 $ I 99,053,653 s 9,478,486 Bond Discounts/Praniwns 2,315,924 1,844,019 219,225 3,940,718 capital Leases 10,916,970 3,783,379 2,477,843 12,222,506 2,934,588 Compensated Absences 17,228,753 8,002,065 7,306,975 17,923,843 6,806,236 Post RctmuentBenclits 2,813,759 2,813,759 lnslnnc:e Oaim Payable 2,469,382 19,333,o90 20,()46,766 1,755.706 1,599,299 Albimge Payable 676,052 IOSJOS 570,747 Total GoYerameldal aclivllies S 193,995,4.51 s 82,381,463 s 38 ,()9S ,982 S 238,280,932 s 20,818,609 811IIIMu-type actlvil:I•: Self-Supported - Obligation Bonds 352,486,630 I 23,234,849 18,595,132 457,126,347 23,446,S 14 Revenue Bonds S4,208,174 J,m,330 50.430,844 3,016,932 Bond Discounts/Pn:miums 314,988 4,182,809 1,338,720 3,159,077 Ca pita! Leases 13,049,379 8,273,303 2,740,286 18,582,396 4,164,910 OosurdPost Closure 3,531,611 238,955 3,no,S66 Compensated Absences 5,357,820 2,977.390 2,727,526 S,607,684 2,838,245 Pl>st R.etwment Benefits 1,541,761 1,541,761 lnswance Oliln Payable 3,258,788 4,443,470 4,856,579 2,845,679 1,420,7S7 Albitrage Piiyable 565,015 6,613 354 571,274 Tobi Bllllaess-type 1cllvHles S 432,772,405 S 144,899,1 so s 34,035,927 $ 543,635,628 s 34,,8 87,3 58 Payments on bonds payable for governmental activities are made in the Debt Service Fund. Bonded debt is subject to the applicability of federal arbitrage regulations. Accrued compensated absences that pertain to governmental activities will be liquidated by the Gener.al Fund and Special Revenue Funds. The Risk Management Inremal Service Fund wm liquidate insurance claims payable that pertain to governmental activities. Payments for the capital leases that pena.in to the govemmental activities will be liquidated by the General Fund and Capital Projeds F\mds. The total long-term debt is reconciled to the total annual requirements to amortize long-term debt as foll0W5: Long-term debt -G~mment:al Acti.,.;cics $ 238,280,933 ~-term debt -Business-type Activities 5-0,635,628 Interest 3Z7,182,Q35 Total amount of debt Less: Bond discouois/premiwns Less: upiw leases Less: Oosure/post closure Less: Co~emaffilabsenses Less: Post retinment benefits Less: Insurance claims payable Less: Ami trage payable Tobi other debt Total Ntwe bonded debt requirements 83 (7,099,795) (30,804,902) (3,770,566) (23,531,528) (4,355,520) (4,601,385) (t,142,0'Zl) $ 1,109,098,596 (75,305,717) $ 1,013,792,879 ) ) City of Lubbock, Tens Notes to Basic Financial Statements September 30, 2008 NOTE BL DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (CGntinued) L LONG-TERMDEBT (Continued) New Bond Issuances In January 2008, the City issued $11,805,000 Tax and Waterworks System Surplus Revenue Certificates of Obligation. Taxable Series 2008. Toe Certificates were issued at a discount of $185,703. After paying isswmce coS'ts of$219,297, 1he net proceeds were $11,400,000. Proceeds ftom the sale of these certificates will be used for the purpose of paying contractual obligatiom to be incurred for constniction of a Civic/Conference Center. The proceeds of the debt are recorded in a Capital Projects Fund In February 2008, the City issued $52,900,000 Tax and Wastewater System Surplus Revenue Certificate of Obligation. Series 2008. The Certificates were issued at a premium ofS2,851,567. After paying issuance costs of $686,897, the net proceeds were $55,064,670. Proceeds from the sale of these certificates will be used for the purpose of paying contractual obligatioIJS to be incurred for W astewatm Syst.em extension and improvements. The proceeds of the debt are recorded in the Wastewater Fund. In May 2008, the City issued $2,035,000 General Obligation Bonds, Series 2008 and $80,485,000 Tax and Waterworks System SUiplus Revenue Certificates of Obligation, Series 2008. The General Obligation Bonds were issued at a premium of $110,554. After paying issuance 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 Certificates of Obligation were i~ued at a premium of$4,714,285. After paying issuance 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 of paying contractual obligations to be incurred for i) various public improvements including tire, parks. IIlllDicipal building. solid waste, drainage, street, electrical, water and wastewater improvements and ii) professional services rendered in connection therewith and costs associated with the issuance of the Certificates. The proceeds of the debt are recorded in various Capital Projects Funds. In June 2008, the City issued $22,615,000 Tax and Waterworks System Surplus Revenue Ccrtificaws of Obligation. Series 2008A. After paying issuance costs of $76,733, the net proceeds were $22,538,267. Proceeds from the sale of these certificates v.ill be used for the purpose of paying OOll1I1ICtual obligations to be incurred for comtruction of Lake Alan Henry Pipeline. The proceeds of the debt are recorded in the Water Fund and 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 RefUDdings The City issued advance refundings to retire a portion of the City's ou1standing debt to lower the debt service requirements. The net proceeds from the issuance of the Refunding Bonds were deposited. with the Escrow Agent in an amount necessary to accomplish the discharge and fiDal payment of the Refunded Bonds on their scheduled ICdemption date. These funds will be held by the Escrow Agent in a special escrow fund and will be used to purchase direct obligations of the United States of America. Under the escrow agreements, between the City and the Escrow Agent, the escrow funds are irrevocably pledged to the payment of principal and interest on the Refunded Bonds. 84 "I ) ' ' "I "\ City of Lubbock, Tens Notes to Basic Financial Statements September 30, 2008 NOTE III. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) J. CONDUIT DEBT The City issued Housing Finance Corporation Bonds, Health Facilities Development Corporation Bonds, and Education Facilities Authority Bonds to provide financial assistance to private sector entities for the acquisition and comtruction of public facilities. The bonds are secured by the property financed. Upon repayment of the bonds, ownership of the acquired facilities transfers to the privat.e-scctor entity served by the bond issuance. Neither the City, the State, nor any political subdivision theICOf is obligated in any rna.mier for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of Sept.ember 30, 2008 there were seven series of Lubbock Health Facilities Development Corporation Bonds outstanding with an aggregate principal amount payable of $260,695,343. The bonds were issued betwcc:n 1993 and 2008. Also as of September 30, 2008, there was one series of Lubbock Education Facilities Authority Inc. Bonds outstanding with an aggregate principal amount payable of $8,455,000. The bonds were issued in 1999. K. SPECIAL ASSESSMENT DEBT Toe Vintage Township PFC, a discretely presented component unit of the City, issued special assessment debt for acquisition and construction of certain public :facilities benefiting Vintage Township. The PFC issued $3,472,000 in special assessment debt and bad $3,394,000 outstanding special assessment debt as of September 30, 2008. The City collects assessments and forwar& the collections to 1he bondholders. The City is not obligated in any manner for special assessment debt and is not liable for repayment of the debt As the PFC completes constntction of certain public facilities, the assets are donated to the City. As of September 30, 2008, $1,200,000 in completed construction costs was contnouted to the City. The PFC has a deficit in net assets invested in capital assets, net of related debt which is a result of the debt held in the PFC name while the assets are donated to the City and held in the City name. L. RISK MANAGEMENT The Risk Management Fund was established to account for liability claims, worker's compensation claum, and premiwns for property/casualty iDsmance coverage. The Risk Management Fund generates its revenue through charges to other departments, which are based on costs. In April 1999, the City purchased workers' compemation coverage, with no deductible, from a third party. Prior to April 1999 the City was self-insured for worker's compensation clai!m. A.D.y cl.aims outstanding prior to April 1999 continue to be the City's responslbility. The City's self-insurance liability program is on a cash £low basis, which means that the servicing conttactor processes, adjusts and pays claim. from a deposit provided by the City. The City accounts for the liability program by charging premiwns based upon losses, administrative fees and reserve requirements. In order to control the risks associated with liability claims, the City purchased excess liability coverage in September 1999, which is renewed annually. The policy has a $10 million amwal aggregate limit and is subject to a $250,000 deductl"ble per claim prior to October 1, 2005, and a $500,000 deductible per claim since October I, 2005. For self-insured coverage, the Risk Management Fund establishes claim liabilities based on estimates of the ultimate cost of claum (including future claim adjustment expenses) that have been reported but not settled, and of c]aims that have been incUil'ed but not reported (IDNR). The length of time for which such costs rmst be estimated varies depending on the coverage involved. Because ac,tual claim costs depend on such complex 85 ) '\ ) ) ) ) ... City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE Ill. DETAIL NOTES ON ALL AcnvITIES AND FUNDS (Continued) L. RISK MANAGEMENT (Continued) factors as inflation, changes in doctrines oflegal liability, and damage awards, the process used in computing claim liabilities does not necessarily result in an exact amount, particularly for liability coventge. Claim liabilities are recomp\11l!d periodically using a variety of actuarial and statistical techniques to produce current estimates that reflect recent settlements, claim frequency, and other economic and social factors. Adjustments to claim liabilities are charged or credited to expeme in 1he period in which they are incurred. Additionally, property and boiler coverage is accounted for in the Risk Management Fund. The property insurance policy was purchased from an outside insurance carrier. The policy bas a $250,000 deductil>le per occurrence, and the boiler coverage insurance deductible is up to $500,000 dependent upon the unit. Premiums are charged to funds based upon estimated premiwm for the upcoming year. 0th.er small insurance policies, such as surety bond coverage and miscellaneous floaters, are also accounted for in the Risk Management Fund Funds are charged based on premium amounts and administtative charges. The City has bad no significant reductions in insurance coverage during the fiscal year. Settlements in the current year and preceding two years have not exceedc:d insw1mce coverage. The City 4':counts for all insurance activity in the Internal Service Funds. M. HEALTH INSURANCE 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 premiums are generated from each cost center based upon the number of active full.timl: miployees. The City's plan is self-insured under an Administrative Services Only {ASO) Agreement The City purchases excess coverage of $175,000 per covered individual annually and an aggregate cap of $19,188,006. The insurance vendm based on medical trend, claum history, and utilization detennines the aggregate deductible. The actuarially determined calculation of the claim liability is $1.45 million at September 30, 2008 fm all health coverages including medical. prescription drags and dental. The City also provides full-time employees basic tenn life insurance. The life insurance policy has a face value ofSl0,000 per employee. Full-time employees may elect to purchase medical and dental insurance for eligible dependents at a reduced rate. Employees may also elect, at their cost, to participate in several voluntary insurance programs such as a cancer income policy, voluntary life and personal accident insurance. N. ACCRUED INSURANCE CLAIMS The Risk Management and Health Benefits Funds establish a liability for self.insurance for both reported and unreported insured events, which includes estimates of future payments of losses and related claim adjustment expenses. The following represents changes in those aggregate liabilities for these funds during the past two years ended September 30: 86 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE IIl. DETAIL NOTES ON ALL ACTIVITIES AND FUNDS (Continued) N. ACCRUED INSURANCE CLAIMS (Continued} FY 2008 FY 2007 Worbrs' compensation and liability reserves at bcgiming offiscal year s 3,258,788 s 5,260,976 Claims expenses 4,443,470 2,901,0S0 Claims payments Worm!/ compensation and liability reserves at (4,856,579) (4,909,238) end of fi seal year 2,845,679 3,258,788 Medical and dental claims liability at beginning of fiscal year 2,469,382 2,761,156 Claims expenses 19,.333,090 17,307,683 Claims payments (20,D46. 766) {I 7,599,4S2l Medical and dental claims liability at end of fiK8.l year 1,755,706 2,469,382 Total self-insurance liability at end of fiscal year 4,601,385 5,728,170 Total assets to pay claims at end of fiscal year 17,SI0,106 14,293,590 Accrued imurance claims payable -cunent 3,020,056 4,344,914 Accrued insurance clajms payable -nonc1nrent 1,581,329 1,383,256 Tota] accrued insurance claims s 4,601,385 s 5,728,170 o. LANDFILL CLOSURE AND POSTCLQSURE 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 maintenance and monitoring functions for thirty years thereafter. Although cl<l$ure and postclosure care costs will be paid only near or after the date that the 1andfills stop accepting waste, the City reports a portion of these closure and post.closure costs as operating expenses ( and recognizes a corresponding liability) in each period based on landfill capacity used as of each balance sheet date. The $3,770,566 illcluded in landfill closure and postclosure care liability at September 30, 2008, represents the cumulative amount expemed by the City to date for its two landfills that are registered under TCEQ pennit numbers 69 (Landfill 69) and 2252 (Landfill 2252), less amounts that have been paid. Approximately 93.3 percent of the estimated capacity of Landfill 69 bas been used. with $780,S72 remaining to be recognized over the remaining closure period, an estimated two years. Approximately 3.6 percent of the estimated capacity of Landfill 2252 has been used to date, with $25,055,779 remaining to be recognized over the remaining closure period, estimatM at over 80 years. Postclosure care costs are based on prior estimates and have been adjusted for inflation. Actual costs may differ due to inflation. deflation. changes in technology, or other regulatory changes. The Crty is required by state and federal laws md regulations to provide assurance that financial resources will be available for landfill closme, post.closure care, and remediation or containment of enviromnental hazards. The City is in compliance with these requirements and bas cho6en the Local Government Financial Test mechanism far providing assurance. The City expects to finance costs through normal operations. 87 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE DJ. DETAll, NOTES ON ALL ACTIVITIES AND FUNDS (Continued) P. DISAGGREGATION OF ACCOUNTS -FUND FINANCIAL STATEMENTS Govenmeaml Faads: General Fund Total Proprietary Faads: LP&L Water Wastewater WTMPA Stormwater Noumajor Total Accoaals Receivable SUIIIIDll!I Co•rt Property Fiaes D•ma;e Pavi!!I $ 3.2291541 $ 268.333 S 283,795 s $ 3,229,541 S 268,333 S 283!795 $ Acco•ts Receivable Suaamag: Geaenl Credit Couamer Card Mis. $ 21,226,784 $ . $ 367.212 6,081,279 2,7S9,263 899,013 1,031,468 319181170 546 $ 35,915,977 $ 546 $ 367,212 Allowance ror Doubtful Accouots Summary Balance at 09/30/08 GoverameJ1tal Fuads: General Fund Pnlprletary Funds: LP&L Water Wastewater Storm Water Nonmajor Total 88 $ 2,798,969 2,723,698 1,082,716 461,429 206,103 638,003 s $ Misc. 126,405 126,405 Balaaceat 09/30/08 .21,593,996 6,081,279 2,759,263 899,013 1,031,468 3,918,716 36,283,735 s $ B•Jance at 09/30/0I 319()81074 3,908,074 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE m. DETAIL NOTES ON ALL ACTIVlmS AND FUNDS (Continued) P. DISAGREGATION OF ACCOUNTS-FUND FINANCIAL STATEMENTS (Continued.} Covemmmtal Funck: Go:tc:ra!Fund Govt. Capital Project$ Nonmajor Proprietary Funds: LP&L Water Wastewater Wl'MPA Stormwatcr Nonmajor Internal Service Total Voudlers S 833,893 120,890 463,522 1,619,115 687,152 413,535 132,188 384,802 865,053 $ 5,520,150 Aecountl Payable Sammry $ 1,952.776 1,112,601 3,707.404 211,428 1,533,108 2,246,435 9,725,988 487,802 1,951,474 888,516 S 23,817,532 $ $ 735,871 1,546 116,083 181,896 100,575 10,079 1,146,050 Balance at 09/30/08 $ 3,522,540 1,233,491 4,172,472 1,946,626 2,402,156 2,760,545 9,725,988 619,990 2,346,355 1,753,569 $ 30,483,732 Q. DISAGGREGATION OF ACCOUNTS -GOVERNMENT-WIDE Governmental Accoants .Renl.vable Int.-est lhceivabJe Net Receivables Tues Iuterml Service Balance at Recdvable Receivables 09/.30/08 ActMtiH $ 1,1 O'), l 05 $ 342,559 $ 10,088,559 $ 32,983 $ 11,.573,206 BusineP.t)'pe ActMtlH 31,171,786 703,553 5,541 31,880,880 Total $ 32,.280,891 S 1,046,112 $ 10,088,559 $ 38,524 S 43,454,086 Ac:m1tnts Payable Accoants Internal Service Balance at Payable Payabla 09/30/08 GovernmmaaJ Activities $ 8,92~503 $ 1,160,489 $ I0,081lt992 Buslne•type Activities 19,801,660 593,080 20,394,740 Total $ 28,730,163 $ 1,753,569 $ 30,483,732 R. FUND CLOSURES In fiscal year 2008, City Council terminated the automated traffic signal enforcement program. As a result, the Red Light camera fund was closed. 89 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE IV. CONTINGENT LIABILITIES A. FEDERAL GRANTS In the nonnal course of operations, the City receives grant funds from state and federal agencies. The grant progJ'lUIIS are subject to audits by agents of the granting authority to ensure compliance with conditions precedent to the granting of fimds. Any liability for reimbursement which may arise as the result of audits of grants is not believed to be significant B. LITIGATION The City is involved in various legal proceedings related to alleged personal and property damag~, breach of contract and civil rights cases, some of which involve claims against the City that exceed $500,000. St.at.e law limits municipal liability for personal inJury to S250,000/S500,000 and property damage to $100,000 per claim. The following rcprese11ts the significant litigation agaimt the City at this time. Depending on the date of the occurrence, the City's insurance coverage, if available, contains either a $250,000 or a $500,000 self-insured retention depending on the date of the occurrence. As of September 30, 2008, the City has $1,048,856 reserved on general liability claims. Oscar Renda Contracting, Inc., et al v. City of Lubbock: The Plaintiff is a contractor who bid to perfonn a contract for the City of Lubbock. Oscar Renda asserts that they were not awarded the contract because they bad filed a suit against another public entity. City of Lubbock filed a motion for summary judgment and it was granted by the bial court. However, the Fifth Circuit of Appeals reversed the decision of the tria1 court and remanded the case back to trial in a split decision in August 2006. The City of Lubbock has filed a petition with the United St.at.es Supreme Court in an effort to get them to review the case. The City's request was denied. The City filed a motion for summary judgment and it was granted in April 2008. The case is on appeal to the Fifth Circuit of Appeals. Charles Emmanuel Bosler, as Surviving Parent of Courtney Nicole Bosler, as Guardian of Colton Bosler v. Travis Riddle and The City of Lubbock: Plaintiff sued the City of Lubbock and Officer Travis Riddle on behalf of himself and his children arising out of the death of his teenage daughter and injuries to his son from an automobile accident with Officer Travis Riddle. Plaintiff alleges that the officer was operating his vehicle in a negligent ll1llllller. The City filed a motion for summary judgment based on the fact that the Plaintiff did not present his notice of claim to the City of Lubbock within six ( 6) months of the date of the accident. The PlaintifJ never filed a notice of claim and filed suit seven (7) months after the date of the accident The Plaintiff claims that notice was not necessary in that the Defendants bad actual notice of the incident The trial court granted the City's summary judgment based on the fact that the Plaintiff did not file a clabn with the City of Lubbock within six (6) months from the dat.e of the accident The Plaintiff appealed this decision to the Court of Appeals and the Court of Appellate reversed the trial court ruling as to the City of Lubbock but affirmed the ruling as to Officer Riddle. The case is set for trial on June 1, 2009. 90 ) \ ) "I City of Lubbock, Texas Notes to Basic Financial Statements· September 30, 2008 NOTE IV. CONTINGENT LIABILITIES (Continued) C. LITIGATION (Continued} L.J. McCallan, Jr. v, City ofLubboe~ et al: A lawsuit was filed in late November against the City of Lubbock and three Lubbock police officers pertaining to an incident in which a suspect was injured with a taser utilized by one of the Lubbock police officers. Plaintiff is suing the City and the officers under the Civil Rights Act and is also suing the City under the Texas Tort Claims Act. Toe case is in federal court and has not been set for trial Plaintiff does not appear to have suffered lasting physical injuries as a result of the tasing. Two of the individual officers have been dismissed. Ackers v. City of Lubbock. et al Plaintiff sued the City, its Police Chief and two police officers for violation of bis First Amendment rights. Plaintiff alleges that his First Amendment righls were violated when the film from his camem was oonfiscated by police while be was photographing a children's basketball game. The City filed a Plea to the Jurisdiction which was granted by the trial court. Plaintiff appealed the case to the appellate court and the appellate court remanded the case to the trial court reasoning that a Plea to the Jurisdiction was not the proper procedural mecbaoism. The case is set for trial in August 2009. Estate of Tommy Zobor v. City of Lubbock and Atmos Energy A lawsuit was filed in October 2008 by the Estate of Tommy .ZOhor. Z-ohor died as a result of an accident with an Atmos Energy truck. A City patrol car was responding to a call with his lights on. As the patrol car came up behind the Atmos Energy truck the officer "bumped" his siren and the Atmos Energy truck made a left turn to move out of the patrol car's path. The motorcyclist, Tommy Zohor, was proceeding in the opposite direction and collided with the Atmos truck. Templeton Mortgage v. City of LubbMk, Garza County, Kent County and tbe Teus Attorney General's Office Plaintiff seeks a declaration as to certain rights reguding the restrictive easements at Lake Alan Henry as well as other areas such as the use of water. The City will file a motion for summary judgment by February 2009. This is not a damages case, but the court has the authority to grant attorneys' fees to the prevailing party. The trial is set for spring 2009. Templeton Mortgage Corporation & Mark Brown v. City of Lubbock This case involves some of the same facts and aiguments as the Templeton Mortgage v. City of Lubbock, Garza County, Kent County and the Texas Attorney General's Office. In addition, the Plaintiff is seeking $100,000 in damages to bis property because of the rising and falling of the water at Lake Alan Henry. The City is waiting for the outcome of the Templeton Mortgage v. City of Lubbock, Garza County, Kent County and the Texas Attorney General's Office case. 91 ') ) ) ) "I ... 1 City of Lubbock. Texas Notes to Basic Financial Statements September 30, 2008 NOTE IV. CONTINGENT LIABILITIES (Continued) B. LITIGATION lCoptipuedl In Re: ICON Benefit Administraton, L.P., American Administrative Group, Inc., Health Smart Prererred Care, LP. and The Parker Group, Inc. v. City of Lubbock In the fall of 2006, the City requested an audit of the claims administtation performed by the above-named entities on behalf of the City of Lubbock. American Administration Group, Inc (AAG) and ICON refused to give the City the necessary documents to perform the audit. The City filed a pre-.arbitration discovery petition in March 2007 in an attempt to obtain the documents nccessacy to perform this audit. Prior to a hearing scheduled in February 2008, the court referred matters to arbitration. The arbitration is scheduled for October 26, 2009. ICON and the other Parker companies are claiming that the City breached its contract with them by hiring an insurance broker in 2006 and by providing confidential information from ICON/AAG to third parties. The City is also being sued for disparagement, harassment. performing an inappropriate audit, seeking confidential information, and other allegations which the City believes are not actionable. The City claims that ICON/AAG and HcalthSmart breached the contract with the City by not providing the City with the same discounts and prices as provided by Blue Cro$.$ as agreed to in the conttact and for applying the discounts and administering the contract improperly. ICON and AAG v. Joella Mullin, Stanley Self, Andrea Davenport, Lee Ann Dumbauld, Scott Snider, Leisa Hutcheson, David Miller, and unknown othen ICON and AAG sued the defendants for various torts including civil conspiracy, misappropriation by preparing an unlawful proposal to the City of Lubbock, wrongful interference with contract, interference with prospective contractuaJ relations, business disparagement, defamation and violations of the Local Govemmcm Code. Dumbauld, Snider and Hutcheson are employees of the City of Lubbock and David Miller is the former Mayor of Lubbock. Discovery has begun. Robert Smith v. City of Lubbock Robert Smith is an employee of the City of Lubbock who was involved in an auto accident with another vehicle. Mr. Smith suffered injuries in this accident and filed a claim against the other driver. The other driver bad only minimnro limits of insurance as required by the State of Texas and the insurance company tendered the policy limits to Mr. Smith. However, Smith claims this money was insufficient to cover his damages. Smith sued the City of Lubbock lllldet the City's UIM coverage claiming thal the City owes him for his damages under that insurance. He asserts he is entitled to over $600,000. Jerry R. Avery, Erika Cleveland, Joy Elliott, Donna McMillian., and Diana Melcher v. City of Lubbock (Lubbock Power & Light) Plaintiff's filed suit in December 2008 against the City of Lubbock/Lubbock Power & Light alleging damage to personal property from an electrical surge (electric appliances. computers, etc.) and related expenses (spoiled food, hotel e,cpenses, etc.). The estimate of damages received by LP & L from the Plaintiffs is approximately $39,300 but could reach $60,000. The lawsuit is in its initial stages and the City (LP&L) has answered the Plaintiffs' petition. 92 ) ) City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE IV. CONTINGENT LIABILITIES (Continued) s. LITIGATION (Condnu.edl Weatherbee d/bla Sudsy Springs Car Wash v. G. Greenstreet, Inc. and City of Lubbock Plaintiff filed suit against the City of Lubbock, along with the con1Iactor who constructed the building, for the destruction of a bwlding. The plaintiff's building was damaged after a wind s1onn. It was damaged to the extent that the City believed that it constituted a hazard to the public and after giving notice to the plaintiff; tore it down. Plaintiff docs not seem to dispute that the building was dama.ged and that some work needed to be performed to alleviate any hazards. However, plaintiff contends that the City should not have tom the entire building down in otdcr to alleviate any danger. The City's damages should be limited to $250,000 Diaz v, City of Lubbock Diaz is a City police officer who was suspended without pay in May 2007 after an indictment was entered against her. This indictment was dismissed in late 2008. Diaz, pursuant to civil service law, bas petitioned the Civil Service Commissioc for back pay. The back pay is approximately $ J 00,000. Lamont Veatch Lamont Veatch tripped and fell over a rope at the Coliseum resulting in a broken shoulder. Mr. Veatch died during surgery to repair his shoulder. The roping was a barricade set up by ABC Rodeo. Senon Enterprises Sexton Enterprises allege that the City of Lubbock Council wrongfully awarded a contract that Sexton bid for to another company. C. SITE REMEDIATION The City has identified specific location,; requiring site remediation relative to underground fuel storage tanks and historical fire training sites. One of the sites referred to below as LP&L Plaut 1, represents a liability equally shared by both the City and LP&L. As of September 30, 2008 the City identified three locations that pose a probable liability. The City recorded the liabilities for the three locations in the enterprise funds as follows: • LP&L Plant 1 $173,909-tbis represents LP&L's portion of the liability only • LP&L Cooke Plant $467,869 • WesTcx Aircraft $100,000 The City m:orded the probable liabilities in the government-wide governmental statmlents as follows: • LP&L Plant 1 $173,909 -this represents the City's portion only • CFR Training Facility $124,706 • Fiie Training Academy $854,918 • South Fueling Facility $136,748 93 ' , ' J ) ) , City of Lubbock, Texas Notes to Basic Financial Statements September 30, 2008 NOTE IV. CONTINGENT LIABILITIES (Continued) C. SITE REMEDIATION <Condnped) The City has identified elevated levels of nitrates in the ground water beneath the Lubbock Land Application Site (LLA.S), which is attnbuted to the historical land application of treated wastewater effluent and also impacted by the activities of individuals and other entities. As a result, the Texas Commission on Environmental Quality has issued an Agreed Order that requires the City to remedy the situatiOII.. The Order calls for, among other requirements, pwq,ing an annual average of 1,580 gallons per minute from 16 groundwater wells on thc LLAS in order to eliminate a mound of groundwater under the LLAS. The groUDdwater, that is hi.sh in nitrates, is discharged into a surface water lake system where it is remediated naturally. An effluent land application management plan and groundwater monitoring prog..im was also established as a result of the Order. Phase 1 of 1he project to construct additions and improvements to the City's wastewater reclamation plant that will treat the sewage to higher quality in the future and address the nitrate issue is complete. Phase II began in the spring of 2008 and will be complete by 2011. During FY 08, the City held discussions with TCEQ to consider terminating the Agreed Order and to incOipOrate the remaining 1:equirements for remediation into the main wastewater treatment permit. Because the groundwater mound under the LLAS has been eliminated in accordance with the requirements of the Order, there is an opportunity to terminate the Agreed Order and to continue addressing any residual concerns as part of the pennit. The City is encouraged by the initial discussiom and believes TCEQ will approve this in the near future. The City expects that the remediation of nitrates will continue for some time after the new plant is built, but the length of time and total expense are not estimable. Since the remediation is probable, but not esumable and it is likely that we will terminate the Agreed Order, the City has not accrued this remediation. The remediation and monitoring costs for the next fiscal year arc included in die FY 2009 budget. The City plans to implement GASB Statement No. 49, Accounting and Financial ReportiDg for Pollution Remediation Obligations, in FY 2009. This authoritative guidance requires that remediation liabilities be measured and recoided as 1he sum of probability, weighted amounts in a range of possible estimated amounts. Comequently, the City pl.ans to secure an engineering firm to detennine the amount of the potential exposure. exploring various methods of addre5.$ing the remediation. The potential exposure for one remaining location is not readily determinable as of September 30, 2008. In the opinion of management, the ultimate liability for this location will not have a materially adverse effect on the City's financial position. 94 ) APPENDIXB FORMS OF BOND COUNSEL OPINIONS ) 'I ) ) ) 1--·-· .. ·----···-·-···-·--------- [FORM OF OPINION OF BOND COUNSEL] [Closing Date] $. ___ _ CITY OF LUBBOCK, TEXAS 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 January 15, 2010, issued in the principal amount of $ ____ ~ 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 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. Vinson & Elklne LLP Attorneys at Law Austin Beijing Dallas Dubai Houston Londoo Moscow New York Tokyo Washington Trammell Crow Center, 2001 Ross Avenue, Suite :3700 Dallas, Te~as 75201-2975 Tel 214.220.noo Fax 214.220.n16 www.V8l11Y1.eom ) ) ) 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 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 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 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- ) ) ) ) ) ) ) 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 property and casualty insurance companies, certain S cor.porations 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 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 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 purposes. -3- ) 'j ) ) ) ) ) ,--------·-····--· [FORM OF OPINION OF BOND COUNSEL] [Closing Date] $, ___ _ CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PA YMENn WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Counsel in connection with an issue of bonds (the "Bonds") described as follows: CITY OF LUBBOCK, TEXAS GENERAL OBLIGATION BONDS, TAXABLE SERIES 2010B (BUILD AMERICA BONDS -DIRECT PAYMENT), dated their date of delivery, issued in the principal amount of$, _____ _ 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 pmpose 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 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. I of this issue. Vinson & Elkins LLP Attorneys Ill Law Austin Beijing Dallas Dubai Houston London Moscow New York Tokyo Washington Trammell Crow Center, 2001 Ross Avenue, Suite 3700 Dallas. Texas 75201-2975 Tel 214.220.n00 Fax 214.220.7716 www.V8law.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 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 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 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: Interest on the Bonds 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 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- ) ) ) ) ) [FORM OF OPINION OF BOND COUNSEL] [Closing Date] $. ____ _ CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION SERIES 201 OA WE HA VE represented the City of Lubbock, Texas (the "City"), as its Bond Counsel in connection with an issue of certificates of obligation (the "Certificates") described as follows: CITY OF LUBBOCK, TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2010A, dated January 15, 2010, issued in the principal amount of$. ____ _ 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 assumed any responsibility with respect to the financial condition or capabilities of the City or the disclosme 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 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 Vinson & Elkins U.P Attorney& at Law Austin Beij Ing Dallas Dubai Houston London Moscow New York Tokyo Waslllngton Trammell Crow Center, 2001 Ross Avenue, Suite 3700 Dallas, Texas 75201-2975 Tel 214.220.noo Fax 214.220.nl& www.v9law.com ) ) ) ) ) ) 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 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 genera1ly, 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 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 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 amended, that affect the exclusion from gross income of interest on the Certificates for federal income tax pwposes. 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- ) ) "\ ., ) ) 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, 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 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 incluclable 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 Certificates. 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 Certificates as includable in gross income for federal income tax purposes. -3· ) ) ) ) ) [FORM OF OPINION OF BOND COUNSEL] [Closing Date] $ ___ _ CITY OF LUBBOCK., TEXAS TAX AND WATERWORKS SYSTEM SURPLUS REVENUE CERTIFICATES OF OBLIGATION 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 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$'------· 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 CAP A CITY 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. Vi11$0n & Elkins LLP Attorneys at Law Austin Beijing Dallas Dijbai Houston London Moscow New Yoril Tokyo Washington Trammell Crow Center, 2001 Ross Avenue, Suite 3700 Dallas, Texas 75201-2975 Tel 214.220.7700 Fax 214.220.7716 www.wlaw.eom ) ) ) ) ) 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 puiposes, within the limit prescribed by law, and the total indebtedness of the City, includihg 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 WateIWorks System, as described in the Ordinance. THE RJGHTS 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: Interest on the Certificates is not excludable from gross income for federal income tax plllJ)oses 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 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-