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HomeMy WebLinkAboutCC 1997-04-28 Agendas "., '. " CITY OF~NO~TH:Ru5ALÄND HILLS,,'" \_, -··,j:ÞRE-CX>ttNCIL.AGENOA " . ÃPRILJ2S:' 1S$7 ..~6:1~"p~M; . x, . ,,: :" ForJhe Meetingconducted~t the' North Riçh1and HiII$ cftÝ 'HaU:pÌ:e;;åpµncil Chélmbers, 7301 Northeaslt:ooþ'S20: ," ""',,:: ," ,;., i .,' " .' ,"' ~" ..' .' , .,. . "~ .. ~---. , NUMBIER. ;."'. ,: '. ~. ,.":. : '; . ACTIQN TAt.œN:," GN 97-36 ',,' Consideration of Action··on ~1I.Matters Per:taiJii~' 'to the Award 'and:i$~)eof $4~ 1Qq:,OpO;Ln,.GeQèfat- Obligati9(1~a~9S ~J1tfA\Pprº\{e Ord1~~rtçe"'ffo.' , "2195 (Agenoá',ltemNo. 14) .' :, ConsiderationpfAötiøn órjall' MatterS PértiÜhlng; "to the Award' a~d Sale Of$~f75~,QOOjf.l; ,. Certifièatès ofObtigationarid ÀpproveOrdjnance No.2 f96(AgEmdáltem;.No:15)(5 Mini),tes) . ",' 1. GN 97-35 , ;., . '. ~- Iron Horse (3olfCourse ManagementCon.tract (Agendatterq~o:; 2f})(5.M,inutes) 2. PU 97-35 "¥' , 3. PW97··12 .....,..... , .-'. ,-' Revise Date. for Public Rearing. önstreeta,nd Drainagelnìpro\íêm~ls,fØ(.HJ9~to\\'er;Ðriv~ , (SectionA2 &B)(Agendalterht~o.;26) , 4. GN 97-40 Solid Waste and Recycling Proposal Review (Agenda Item..No';·18) (25 Minutes) - ,.....~ " -. - .. 5. Other'ltems: ' , ,- , Tarrant County Commissioner GlerïWhitley , '(15 Minutes)' . . ".. . "- ,', , . _.___,__,__._..,~,_~___.d_.'_'''_'___' __ ~*__."__..'_m."___~________~-"-'-"~ Page 2 NUMBER ITEM ACTION TAKEN 7. *Executive Session (5 Minutes) - The Council may enter into closed executive session to discuss the following: A. Pending Litigation under Gov. Code §551.071 Bean et al vs. NRH Cause No. 348-162087 B. Deliberation Regarding Real Property Gov. Code §551.052 Teakwood Drainage Project I 8 I Adjournment - 7:20 p.m. I I *Closed due to subject matter as provided by the Open Meetings Law. If any action is contemplated, it will be taken in open session. .=---..,...~'" i.JJ;5JCJ? 7 Date' -- ID·~ V D aM^- Time By ~crri ')R. . 1/. . UJt}1 CITY OF NORTH RICHLAND HillS CITY COUNCil AGENDA APRil 28, 1997 For the Regular Meeting conducted at the North Richland Hills City Council Chambers, 7301 Northeast Loop 820, at 7:30 p.m. The below listed items are placed on the Agenda for discussion and/or action. 1. Items marked with an * are on the consent agenda and will be voted on in one motion unless a Council Member asks for separate discussion. 2. The Council reserves the right to retire into executive session concerning any of the items listed on this Agenda, whenever it is considered necessary and legally justified under the Open Meetings Act. 3. Persons with disabilities who plan to attend this meeting and who may need assistance should contact the City Secretary's office at 581-5502 two working days prior to the meeting so that appropriate arrangements can be made. NUMBER ITEM ACTION TAKEN 1. Call to Order 2. Invocation 3. Pledge of Allegiance 4. Minutes of the Pre-Council Meeting April 14, 1997 5. Minutes of the Regular Meeting April 14, 1997 6. Presentations by Boards & Commissions .~~.__.,._--_._----_._...._. Page 2 NUMBER ITEM ACTION TAKEN 7. Presentation of Proclamation by Mayor Brown 1. National Public Safety Telecommunications Week 2. Adopt-a-thon '97 and Be Kind to Animals Week 8. Presentation of 1996 North Richland Hills Telecommunicator Award - Mayor Brown 9. Removal of Item(s) from the Consent Agenda 10. Consent Agenda Item(s) indicated by Asterisk (12,13,17,19,20,21,22, 23,24,25,26,27, & 28) 11. PZ97-15 Public Hearing to Consider the Request of Western Rim Investors, L.L.C., for Rezoning from R-7 Multifamily & C-1 Commercial to PD Planned Development, Lot 2, Block 2, Walker's Branch Addition. (Located off Emerald Hills Way & Grapevine Hwy) - Ordinance No. 2197 *12. PS 97-09 Consider the Request of Realtex Ventures for a Final Plat of Lots 1, Block 1, Children's Courtyard Addition (Located at the Northwest Corner of the Smithfield Road & Starnes Road Intersection) Page 3 NUMBER ITEM ACTION TAKEN *13. PS 97-11 Consider the Request of Tecnollnc., for a Replat of Lots 6R & 5R, Block 1 Industrial Park Addition. (Located Between the S.L. & S.W. Railroad Tracks and Industrial Park Boulevard, east of Rufe Snow Drive) 14. GN 97-35 Consideration of Action on all Matters Pertaining to the Award and Sale of $4,100,000 in General Obligation B Bonds and Approve Ordinance No. 2195 15. GN 97-36 Consideration of Action on all Matters Pertaining to the Award and Sale of $2,755,000 in Certificates of Obligation and Approve Ordinance No. 2196 16. GN 97-37 Appointment to Board of Adjustment *17. GN 97-38 Approve "No Parking- Loading/Unloading Only" Zone in the 6700 Block of Smithfield Road - Ordinance No. 2193 18. GN 97-40 Solid Waste and Recycling Proposal Review *19. GN 97-41 Purchase of Bellomy Easement - Teakwood Drainage Project Page 4 NUMBER ITEM ACTION TAKEN *20. PU 97-35 Iron Horse Golf Course Management Contract *21. PU 97-36 Award Bid for Lightbars, Sirens and Accessories *22. PU 97-37 Award Bid for Flatbed Trailers *23. PU 97-38 Award Bid for Semi-Annual Contract to Supply Utility Materials *24. PU 97-39 Award Bid for Closed Circuit TV System for the NRH20 Water Park *25. PU 97-40 Authorize Purchase of Computer Equipment for NRH20 *26. PW 97-12 Revise Date for Public Hearing on Street and Drainage Improvements for Hightower Drive (Section A2 & B) *27. PW 97-13 Vacate a Portion of an Existing Utility Easement on Lot 47, Block 2, Shady Oaks Addition - Ordinance No. 2194 *28. PAY 97-06 Approve Final Payment to Lone Star Gas Company for Relocation of Precinct Line Road Measuring Station Page 5 NUMBER ITEM ACTION TAKEN 29. Citizens Presentation I 30. I Adjournment I I ~TED Lfj~ 97 Dat~ /0 .- c¡ D L..0r;~ TIme ~~~~ Present: ITEM CALL TO ORDER MINUTES OF THE PRE-COUNCIL MEETING OF THE CITY OF NORTH RICHLAND HILLS, TEXAS HELD IN THE PRE-COUNCIL ROOM AT CITY HALL, 7301 NORTHEAST LOOP 820 - APRIL 14, 1997 - 6:40 P.M. PUBLIC HEARING TO CONSIDER AMENDMENT TO THE ZONING REGULA TIONS REGARDING COMMUNICA TIONS TOWERS Tommy Brown Mack Garvin Lyle E. Welch Mark Wood Jo Ann Johnson Don Phifer Byron Sibbet Linda Spurlock Sansoucie C.A. Sanford Randy Shiflet Larry Cunningham Patricia Hutson Rex McEntire Greg Dickens Barry LeBaron Terry Kinzie Steve Brown Larry Koonce Richard Albin Mayor Mayor Pro T em Councilman Councilman Councilwoman Councilman Councilman Councilwoman City Manager Assistant City Manager Assistant City Manager City Secretary Attorney Public Works Director Planning/Inspection Director Information Services Director Library Director Finance Director City Engineer DISCUSSION ASSIGNMENT Mayor Brown called the Pre-Council Meeting to order at 6:40 p.m. Mayor Brown asked the Council if they wanted to consider postponing this item. Mayor Pro T em Garvin advised that he received some information concerning this while in Washington. Mayor Pro Tem Garvin advised he felt that the City needed to go ahead and adopt an ordinance regulating communication towers. There was dic::I"" hv thl=' ("nlln,..il that thp- ,. NAN ITEM CONSIDER HISTORICAL COMMITTEE WORK PLAN AND APPROVE BUDGET CONSIDER AMENDMENT TO THE NUISANCE CODE REGARDING THE NUMBER OF DAYS A JUNKED VEHICLE CAN REMAIN DISCUSSION would probably need to be changed after Staff had reviewed the packet of information that Mayor Pro Tem Garvin had received. The Council discussed whether to approve the ordinance as written and amend later or approve after further study. The consensus of the Council was that an ordinance needed to be enacted now and if changes needed to be made later, the ordinance would be amended. Councilwoman Johnson presented to the Council a video promoting the work of the Historical Committee. Mayor Brown advised that Council was being asked to approve Phase II of the project. Council discussed the feasibility of the committee becoming a non-profit organization to allow for more flexibility and financing support. Attorney McEntire advised this would not be in the best interests of the project. Mayor Brown advised before Phase III of the project was approved, the Council would like a more detailed breakdown of the last phase. The consensus of the Council was to go forward with Phase II of the project. Staff advised that this item was placed on the Agenda at Council's request to reduce the time period from 45 days to 15 days for inoperative vehicles on private property. There were no questions from the Council. Pre-Council Minutes 4/14/97 Page 2 ASSIGNMENT LARRY C. NAN Pre-Council Minutes 4/14/97 Page 3 ITEM DISCUSSION ASSIGNMENT DRAINAGE The City Manager advised he had requested C.A.lREX EASEMENTS FOR the Attorney to place this item on the agenda TEAKWOOD so the City could start this drainage project. DRAINAGE He explained that if the City could not reach IMPROVEMENT an agreement, the Staff would like to begin PROJECT condemnation proceedings. Mayor Pro Tem Garvin advised that he would be removing this item from the Consent Agenda at the request of one of the affected property owners. AWARD There were no questions or discussion by NAN CONTRACT FOR the Council. TOP SOIL, SAND AND FLEX BASE OTHER ITEMS None. ADJOURNMENT TO Mayor Brown announced at 7:14 p.m. that EXECUTIVE the Council would adjourn to Executive SESSION Session for consultation with the City Attorney as authorized by the Government Code Section 551.071. Tommy Brown - Mayor ATTEST: Patricia Hutson - City Secretary MINUTES OF THE REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF NORTH RICH LAND HILLS, TEXAS, HELD IN THE CITY HALL, 7301 NORTHEAST LOOP 820 - APRIL 14, 1997 - 7:30 P.M. 1. CALL TO ORDER Mayor Brown called the meeting to order April 14, 1997 at 7:30 p.m. ROLL CALL Present: Tommy Brown Mack Garvin Lyle E. Welch Mark Wood JoAnn Johnson Don Phifer Byron Sibbet Linda Spurlock Sansoucie Staff: C.A. Sanford Randy Shiflet Larry Cunningham Patricia Hutson Rex McEntire Greg Dickens Mayor Mayor Pro T em Councilman Councilman Councilwoman Councilman Councilman Councilwoman City Manager Assistant City Manager Assistant City Manager City Secretary Attorney City Engineer 2. INVOCATION Mayor Pro Tem Garvin gave the invocation. 3. PLEDGE OF ALLEGIANCE 4. MINUTES OF THE PRE-COUNCIL MEETING MARCH 24,1997 APPROVED Councilman Phifer moved, seconded by Councilwoman Johnson, to approve the minutes of the March 24, 1997 Pre-Council Meeting. Motion carried 7-0. April 14, 1997 Page 2 5. MINUTES OF THE REGULAR MEETING MARCH 24, 1997 APPROVED Councilman Sibbet moved, seconded by Councilman Wood, to approve the minutes of the March 24, 1997 City Council Meeting. Motion carried 7-0. 6. PRESENTATIONS BY BOARDS & COMMISSIONS A. PARKS & RECREATION BOARD MINUTES No action necessary. 7. PRESENTATION OF PROCLAMATIONS BY MAYOR BROWN The recipients of the proclamations were not present at this time. The proclamation for "National Organ and Tissue Donor Awareness Week" was presented later in the meeting. 8. REMOVAL OF ITEM(S) FROM THE CONSENT AGENDA Mayor Pro Tem Garvin removed Item No. 18 from the Consent Agenda. 9. CONSENT AGENDA ITEM(S) INDICATED BY ASTERISK (14, 15, 16, 17, 19,20,21, 22, 23, & 24) APPROVED Mayor Pro Tem Garvin moved, seconded by Councilman Wood, to approve the Consent Agenda. Motion carried 7-0. April 14, 1997 Page 3 10. PZ 97-10 - PUBLIC HEARING TO CONSIDER THE REQUEST OF JIM MAKENS OF MAKENS INVESTMENTS FOR REZONING FROM R-1 RESIDENTIAL TO C-1 COMMERCIAL, LOTS 16 & 17, BLOCK 1, THOMPSON PARK ESTATES (LOCATED AT 6417 PRECINCT LINE ROAD) - ORDINANCE NO. 2187 APPROVED Mayor Brown opened the Public Hearing and called for anyone wishing to speak for or against the request to come forward. The following appeared opposing the zoning request. Mr. Fred Rogers, 9128 Nob Hill Ms. Carole Steadham, 6808 North Oaks Drive Ms. Janet Sued meier, 6725 Rolling Hills Mr. Gary Baxter, 6809 North Oaks Drive Ms. Margie Dorman-O'Donnell, 6719 Rolling Hill Drive They expressed concerns about the character of Precinct Line Road, traffic, speeding, and Precinct Line Road becoming a "Rufe Snow." Mr. Jim Makens, applicant, appeared before the Council and spoke in favor of his request. There being no one else wishing to speak Mayor Brown closed the Public Hearing. Mayor Brown directed the City Manager to check on traffic violations on Precinct Line Road. Councilman Phifer moved, seconded by Councilman Wood, to approve Ordinance No. 2187. Councilwoman Johnson expressed concern about protecting the residential area. Councilman Sibbet stated that the nature of the street dictated that it would be a commercial environment. Councilwoman Sansoucie encouraged the Council to look at a planned development for the area. April 14, 1997 Page 4 Motion carried 4-3; Councilmen Wood, Phifer, Sibbet and Councilwoman Johnson voting for and Mayor Pro Tem Garvin, Councilman Welch and Councilwoman Sansoucie voting against. 11. PZ 97-12 - PUBLIC HEARING TO CONSIDER AMENDMENT TO THE ZONING REGULATIONS REGARDING COMMUNICATIONS TOWERS - ORDINANCE NO. 2186 APPROVED Mr. LeBaron, Planning Director, presented the proposed ordinance. Mayor Brown opened the Public Hearing and called for anyone wishing to speak for or against to please come forward. There being no one wishing to speak Mayor Brown closed the Public Hearing. Councilman Wood moved, seconded by Mayor Pro Tem Garvin, to approve Ordinance No. 2186. Motion carried 7-0. 12. PZ 97-13 - PUBLIC HEARING TO CONSIDER THE REQUEST OF THE CHEVRON PRODUCTS COMPANY FOR REZONING FROM LR LOCAL RETAIL TO C-1 COMMERCIAL, BLOCK 4R, SNOW HEIGHTS NORTH ADDITION (LOCATED AT 5100 RUFE SNOW) ORDINANCE NO. 2188 APPROVED Mayor Brown opened the Public Hearing and called for anyone wishing to speak for or against the request to come forward. There being no one wishing to speak Mayor Brown closed the Public Hearing. Mayor Pro Tern Garvin moved, seconded by Councilwoman Johnson, to approve Ordinance No. 2188. Motion carried 7-0. April 14, 1997 Page 5 13. PZ 97-14 - PUBLIC HEARING TO CONSIDER THE REQUEST OF THE CHEVRON PRODUCTS COMPANY FOR A SPECIAL USE PERMIT, BLOCK 4R, SNOW HEIGHTS NORTH ADDITION (LOCATED AT 5100 RUFE SNOW) - ORDINANCE NO. 2189 APPROVED Mayor Brown opened the Public Hearing and called for anyone wishing to speak for or against the request to come forward. There being no one wishing to speak Mayor Brown closed the Public Hearing. Councilwoman Johnson moved, seconded by Councilman Phifer, to approve Ordinance No. 2189. Motion carried 7-0. *14. PS 97-10 - CONSIDER THE REQUEST OF BISD FOR A FINAL PLAT OF BIRDVILLE HIGH SCHOOL ADDITION, LOT 1, BLOCK 1 (LOCATED AT THE SOUTHWEST CORNER OF MID-CITIES BOULEVARD AND PRECINCT LINE ROAD) APPROVED *15. GN 97-30 - CONSIDER HISTORICAL COMMITTEE WORK PLAN AND APPROVE BUDGET APPROVED *16. GN 97-31 - CONSIDER AMENDMENT TO THE NUISANCE CODE REGARDING THE NUMBER OF DAYS A JUNKED VEHICLE CAN REMAIN UNSCREENED - ORDINANCE NO. 2190 APPROVED *17. GN 97-32 - SPEED LIMIT ON MID-CITIES BOULEVARD - ORDINANCE NO. 2191 APPROVED 18. GN 97-33 - DRAINAGE EASEMENTS FOR TEAKWOOD DRAINAGE IMPROVEMENT PROJECT - RESOLUTION NO. 97-19 APPROVED April 14, 1997 Page 6 Mayor Pro Tem Garvin advised he removed this item from the Consent Agenda so that Mr. Bellomy could address the Council. Mr. James Bellomy, 7415 Hightower Drive, appeared before the Council. Mr. Bellomy advised that he owned property affected by the Teakwood Drainage problem. Mr. Bellomy briefed the Council on the history assessment of his property. He advised that his original assessment had been reduced by Council to $7,000 and that it had accrued $3,000 in interest because he had been unable to pay for the improvements to his property. Mr. Bellomy presented pictures to the Council of his property showing the drainage problem that still existed. Mr. Bellomy requested Council to forgive the $3,000 interest and he would accept the offer that the City had made for easements through his property. After discussion by Council, Mayor Pro Tem Garvin moved, seconded by Councilman Wood, to approve GN 97-33. Motion carried 7-0. Staff was directed to place on the next agenda an item authorizing the payment of the appraised value of Mr. Bellomy's property of $13,444 and forgiving the interest of approximately $3,400. 7. PRESENTATION OF PROCLAMATION Mayor Brown presented a proclamation to a representative from the LifeGift Organ Donation Center in recognition of "National Organ and Tissue Donor Awareness Week." *19. GN 97-34 - APPROVE INSTALLATION OF PEDESTRIAN SIGNS AND CROSSWALK ON MEADOWLAKES DRIVE AT MEADOW LAKES RETIREMENT FACILITY - ORDINANCE NO. 2192 APPROVED *20. PU 97-30 - AUTHORIZE PURCHASE OF MOBILE DATA TERMINALS APPROVED *21. PU 97-31 - AWARD ANNUAL FOOD SUPPLY CONTRACT FOR NRH20 APPROVED April 14, 1997 Page 7 *22. PU 97-32 - AWARD PROPOSAL FOR PROJECTION SYSTEM APPROVED *23. PU 97-33 - APPROVE CONTRACT RIGHT-OF-WAY AGENT FOR HIGHTOWER DRIVE WIDENING PROJECT FROM CROSSTIMBERS DRIVE TO MEADOW CREEK ROAD APPROVED 25. CITIZENS PRESENTATION None. 26. ADJOURNMENT Mayor Brown adjourned the meeting. Tommy Brown - Mayor ATTEST: Patricia Hutson - City Secretary NRH C1TY Of' NORTH R1CHtAND H1lLS PROCLAMAT10N WH£REAS. Thows~"'bs of b~bic~t~b I'wb1k s~fct\i t~l~comm\mk~ti011s l'~om1~1 b~ihi s~~ tJ1~ dti:ms of tJ1~ V,.,it~b S~t~s b\i ~,.,swerb1S tJ1cl1- tdepJ1011~ c~11s for 1'01ic~. flr~ ~,.,b emersmC\f m~bic~1 servic~s ~,.,b bisp~tcJ1ms tJ1~ ~J'1'ropri~t~ ~ssist~,.,c~ ~s qwickhi ~s l'ossib1~: ~,.,b WHEREAS. Prof~ssi~1I'wb1ic s~fct\i td~comm\mk~ti011s l'asot1,.,~1 work to improv~ tJ1~ emersmC\f r~sp011S~ c~l'~bi1iti~s of tJ1~s~ comm\mk~tio,., s'istems tJ1rowsJ1 tJ1cir 1~~bersJ1ip ~,.,b l'~rticll'~tio,., m tr~i,.,ms prosr~ms ~,.,b otJ1er ~ctiviti~s provib~b b\i tJ1~ Assod~ti011 ofP\4b1k-S~fct\i Comm1mk~ti011 Offlcl~1s- 1,.,teM1~ti011~1: ~,.,b WH£REAS. Th~ Assocl~ti011 of P\4b1k-S~fct\i Comm1mk~tio,., Offlcl~1s- 1,.,teM1~ti011~11,.,c.. J1~s set ~sib~ tJ1~ tJ1irb w~~k m Apri1 to r~cos,.,i:~ I'wb1k s~fct\i td~comm1mic~ti011s l'ers011,.,d ~,.,b tJ1cir crud~1 r01~ i,., tJ1~ prOt~cti011 of 1if~ ~,.,b I'ropM\i. NOW. TH£REfORE. 1. T omm'i BroWt1. M~'ior of tJ1~ Cit\j of Norð1 RicJ11~,.,b Hi11s bo J1er~b\i prod~im tJ1~ w~~k of A1'ri114 - 18. 1997. M: UNA T10NAl1'VBl1C SAfETY TElECOMMVN1CA T10NS WEEK" i,., tJ1~ Cit\j of Norð1 RkJ11~,.,b Hi11s ~,.,b wrs~ ~n clti:ms to joi,., i,., tJ1is b~'i of r~cos,.,iti011. 1N W1TNESS WHEREOf. 1 J1~v~ J1erem\to set m'i J1~,.,b ~,.,b c~ws~b tJ1~ s~~1 of tJ1~ Cit\j of North Rid11~"'b Hi11s to be ~fflxeb tJ1js tJ1~ 28tJ1 b~\f of Apri1. 19"7. Tomm\f BroWt1. M~\for NRH CITY Of NORTH RICHLAND HilLS l'ROClAMAT10N WHEREAS. boss ~J1b c~ts Siv~ comp~J1imskip to ~J1b sk~1"~ th~ kom~s of OV¢1" ~~.~~~.~~~ iJ1bivib\.t~1s iJ1 th~ VJ1it~b St~t~s: ~J1b WHEREAS. two ~1t¢1"~b c~ts ~J1b thdT kittms C~J1 J'1"ob\.tc~ 42~.OO~ m01"~ kittms iJ1 s¢vm '1~~1"S ~J1b two \m~1t¢1"~b boss ~J1b thd1" p"'1'1'i~s C~J1 J'1"ob\.tc~ 67.~~~ m01"~ boss m six '1~~1"s: ~J1b WHEREAS. th~ J'1"ob1em of I'd oV¢1"J'op\.t1~tim costs th~ ~~'1¢N ofNortk Rick1~J1b Hins tho\.ts~J1bs of bo11~1"s ~J1J1\.t~11"t th1"o\.tsk ~J1im~1 SeMC~S J'1"oS1"~ms tr\iiJ1S to cop~ with th~ tho\.ts~J1bs of \mw~J1t~b pcts: ~J1b WHEREAS. vctmJ1~ri~J1s. k\.m1~J1~ sodcti~s. J1~tim~1 ~J1b 10c~1 ~J1im~1 J'1"ot~cflm o1"S~J1iutims ~1"~ W01"kit1S toSdk¢1" to ms\W~ th~ ~boptim of 1.~~~ pcts it1 th~ Mct'rop1a b\.trit1S Abopt-~- Thm '97 ~J1b B~ Kmb to AJ1im~1s W~~k '97: ~J1b WHEREAS. vctmJ1~ri~J1s. k\.m1~J1~ sodcti~s. J1~tioJ1~1 ~J1b 10c~1 ~J1im~1 J'1"ot~cflm O1"S~J1iz~tims k~v~ ¡oiJ1~b toSctk¢1" ~s~m to ~bvoc~t~ pct ~boptioJ1s ~t 10c~1 ~J1im~1 skdt¢1"s m "Abopt-~- Thm '97· ~J1b B~ KiJ1b to AJ1im~1s W~~k '97. NOW. THEREfORE. 1. T omm'1 B1"oWt1. M~'101" of th~ Ci1'1 of No1"th Rick1~J1b Hins bo k¢1"~b\f J'1"od~im M~'1 2 - 1~. 1997 ~s: UADOPT-A-THON -"7 AND D£ K1ND TO ANU~,tAlS W££K -"7" iJ1 th~ Ci1'1 of No1"th Rick1~J1b Hins ~J1b \41"S~ ~n dtizms to ¡om m this b~'1 of 1"~coSJ1itim. , ,..~\ ,,\,d~\\II/,~'tJ \:',\\1" . l'Ai 1f, , Þ 'I, . " r' h . t , .{"' 1 ~ I.,;." \' I , "'1 .' ,'~\ " f ,',\ IN WITNESS WHEREOf. 1 k~v~ k¢1"C\.tJ1to sct m'1 k~J1b ~J1b c~\.ts~b th~ s~~1 of th~ Ci1'1 of No1"th Rick1~J1b Hins to b~ ~fflx~b this th~ 28th b~'1 of Aprit 1997. c-h~~ -' T omm'1 B1"OWt1 ~'101" 'n) "JI CITY OF NORTH RICHLAND HILLS Department: Planning and Inspections Council Meeting Date: 04-28-97 Subject: Public Hearing to Consider the Request of Western Rim Agenda Number: PZ 97-15 Investors, L.L.C., for Rezoning from R-7 Multifamily & C-1 Commercial to PO Planned Development, Lot 2, Block 2, Walker's Branch Addition. (Located off Emerald Hills Way & Grapevine Hwy) Ordinance Number 2197 Western Rim Investors is the applicant for Steven Hester, the owner of Lot 2, Block 2, Walker's Branch Addition, The property is currently zoned R-7 Multifamily and C-1 Commercial. The applicant proposes to develop the property into a gated, multifamily housing complex, with such amenities as a clubhouse with day care, basketball, tennis & volleyball courts, hiking trails, swimming pools, and picnic areas with gazebos. The property fronts on Grapevine Highway and is situated between Emerald Hills Way and the golf driving range. The property to the north is zoned AG Agricultural, to the east it is zoned OC Outdoor Commercial, to the south U institutional, and to the west C-1 Commercial & R-7 Multifamily. The Comprehensive Land Use Plan shows this property to be used for medium density residential development. The request for the PO Planned Development zoning reflects the proposed mixed use of the property, as seen in the combination of a separate daycare facility within the multifamily housing complex. The request for the variance on the masonry wall requirement is being made to allow the developer to showcase the property by constructing a wrought iron fence with masonry columns. The Planning and Zoning Commission considered this request at its April 10, 1997 meeting and recommended approval. RECOMMENDATION: It is recommended that the City Council hold the required Public Hearing and consider the recommendation of the Planning and Zoning Commission. Source of Funds: Bonds (GO/Rev.) Operating Budget ~Other Finance Review Account Number Sufficient Funds Available ,Finance Director City Manager CITY COUNCIL ACTION ITEM ORDINANCE NO. 2197 AN ORDINANCE OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, AMENDING ORDINANCE NUMBER 1874, THE COMPREHENSIVE ZONING ORDINANCE, TO ESTABLISH PLANNED DEVELOPMENT DISTRICT NUMBER TWENTY-FOUR; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Planning and Zoning Commission has determined that the development conditions of this tract of land do not provide adequate opportunities for mixed use development under available zoning district regulations; and WHEREAS, the developer has indicated an interest in establishing the proposed planned development district; and WHEREAS, after appropriate notice and public hearing, the Planning and Zoning Commission of the City of North Richland Hills as forwarded a recommendation to the City Council for amendment of the Ordinance No. 1874, as amended, by establishing Planned Development District Number Twenty-Four, by changing said Zoning Ordinance as set forth herein; now therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: 1. THAT, in the Case Number PZ 97-15, the following described property shall be rezoned from R-7-MF Multi-family residential and C1 Commercial to establish Planned Development District Number Twenty-Four. ALL of that certain tract or parcel of land situated in and being a portion of Lot 2, Block 2, Walker Branch Addition, an addition to the City of North Richland Hills, Tarrant County, Texas as recorded in Volume 388-154, Page 22 of the Plat Records, Tarrant County, Texas and described by metes and bounds as follows: BEGINNING at a 3/8 inch steel rod found for the northeast corner of said Lot 2; THENCE South 00 degrees 01 minutes 39 seconds west with the Easterly boundary line of said Lot 2 a distance of 638.43 feet to a 1/2 inch capped steel rod stamped "Moak Surv. Inc." set; THENCE South 44 degrees 41 minutes 49 seconds West 629.97 feet to a 1/2 inch capped steel rod stamped "Moak Surv. Inc." set; Ordinance 2197 Page I THENCE South 30 degrees 01 minutes 29 seconds East, 148.71 feet to a 1/2 inch capped steel rod stamped "Moak Surv. Inc." set for the beginning of a curve to the left; THENCE with said curve to the left having a radius of 903.44 feet, a central angle of 15 degrees 10 minutes 54 seconds, an arc length of 239.39 feet and a long chord of South 37 degrees 36 minutes 58 seconds east, 238.69 feet to the southeasterly boundary line of said Lot 2 and the northwesterly right of way line of State Highway No. 26; THENCE south 44 degrees 41 minutes 49 seconds west with said southeasterly boundary line and said northwesterly right of way line 354,00 feet to a 5/8 inch steel rod found for the most southerly corner of said Lot 2 and being in the easterly right of way line of Emerald Hills Way and a curve to the right; THENCE with the Westerly boundary line of said Lot 2 and said easterly right of way line and said curve to the right having a radius of 1257.44 feet, a central angle of 15 degrees 12 minutes 33 seconds, an arc length of 333,79 feet and a long chord of North 37 degrees 37 minutes 45 seconds west, 332.81 feet to a 5/8 inch steel rod found; THENCE north 30 degrees 01 minutes 29 seconds west continuing with said westerly boundary line and said easterly right of way line 118.04 feet to a 5/8 inch steel rod found for the beginning of a curve to the right; THENCE continuing with said westerly boundary line and said easterly right of way line and said curve to the right having a radius of 940,33 feet, a central angle of 29 degrees 59 minutes 59 seconds, an arch length of 492.35 feet and a long chord of north 15 degrees 01 minutes 29 seconds west, 486,75 feet to a 5/8 inch steel rod found for the beginning of a curve to the left; THENCE with said curve to the left having a radius of 545.00 feet, a central angle of 14 degrees 59 minutes 59 seconds, an arc length of 142.68 feet and a long chord of north 07 degrees 31 minutes 29 seconds west, 142.27 feet to a 5/8 inch steel rod found for the most westerly corner of said Lot 2; THENCE north 74 degrees 58 minutes 31 seconds east continuing with said westerly boundary line of said Lot 2 a distance of 90.00 feet to a 5/8 inch steel rod fond for the inner corner of same and being at the beginning of a cure to the right; THENCE continuing with said westerly boundary line and said curve to the right having a radius of 600.76 feet, a central angle of 43 degrees 09 minutes 58 seconds, an arc length of 452,61 feet and a long chord of north 06 degrees 26 minutes 40 seconds east, 441.98 feet to a 5/8 inch steel rod found; THENCE north 28 degrees 01 minutes 39 seconds east continuing with said westerly boundary line 156.58 feet to a 5/8 inch steel rod found for the beginning of a curve to the right; THENCE with the northerly boundary line of said Lot 2 and said curve to the right having a radius of 275.00 feet, a central angle of 79 degrees 59 minutes 58 seconds, an arc length of 383,97 feet and a long chord of north 68 degrees 01 minutes 39 seconds east, 353.53 feet to a 5/8 inch steel rod found for the beginning of a curve to the left; THENCE continuing with said northerly boundary line and said curve to the left having a radius of 1104.90 feet, a central angle of 18 degrees 00 minutes 00 seconds, an arc length of 347.12 feet and a long chord of south 80 degrees 58 minutes 21 seconds east, 345.69 feet to Ordinance 2197 Page 2 the place of beginning and containing 22.353 acres of land, more or less, as surveyed by David C. Moak Surveyors, Inc. during the month of February, 1997. 2. THAT, the purpose of Planned Development District Number Twenty-four is to provide for mixed use development of multi-family residential dwellings and a day care facility in a planned and coordinated manner. The permitted uses and development regulations for this planned development district shall be as follows: 1. Permitted Uses: A. Multi-family Residential - Multi-family dwellings constructed in accordance with the site plan attached as Exhibit NO.1. B. Day Care Facility - A day care facility constructed in accordance with the site plan attached as Exhibit NO.1. 2. Development Regulations - attached as Exhibit NO.2. 3. Site Plan Contents - attached as Exhibit NO.3. 4. In-home Amenities - attached as Exhibit NO.4. 5. Common Amenities - attached as Exhibit NO.5. 6. Trash Pick-up - attached as Exhibit NO.6. 7. Density and Lot Area Requirements - attached as Exhibit No.7. 3. SEVERABILITY CLAUSE. That it is hereby declared to be the intention of the City Council that the section, paragraphs, sentences, clauses and phrases of this ordinance are severable, and if any phrase, clause, sentence, paragraph or section of this ordinance shall be declared invalid or unconstitutional by the valid judgment or decree of any court of competent jurisdiction, such invalidity or unconstitutionality shall not affect any of the remaining phrases, clauses, sentences, paragraphs or sections of this ordinance, since the same would have been enacted by the City Council without the incorporation in this ordinance of any such invalid or unconstitutional phrase, clause, sentence, paragraph or section. Ordinance 2197 Page 3 4. SAVINGS CLAUSE. That Ordinance Number 1874, the Comprehensive Zoning Ordinance of the City of North Richland Hills, Texas, as amended, shall remain in full force and effect, save and except as amended by this ordinance. 5. EFFECTIVE DATE. This ordinance shall be in full force from and after its passage. APPROVED BY THE PLANNING AND ZONING COMMISSION THIS 10TH DAY OF APRIL, 1997. Chairman, Planning and Zoning Commission Secretary, Planning and Zoning Commission PASSED AND APPROVED BY THE CITY COUNCIL THIS 28th DAY OF APRIL, 1997. Mayor, City of North Richland Hills, Texas ATTEST: City Secretary City of North Richland Hills, Texas APPROVED AS TO FORM AND LEGALITY: Attorney for the City Ordinance 2197 Page 4 III !1'11'1 J .~EYS é-? P^~TNE~S ^~CIIITHTS \^\ \' ( ~~I\..\.'i.' -..¿ \\ ~ The ViUas on the Green North Richland Hills, Texas April 1 0, 1997 R-7-MF MULTIFAMILY DISTRICT General Conditions 1. Masonry Screening WaDs and Fences a. A six foot masonry wall with decorative wrought iron sections will be constiucted along the 175 foot frontage on Highway 26. b. Brick columns (every 30') with decorative wrought iron will be installed along the drainage easement surrounding the subject property. A landscape plan along the wrought iron fence will include a "Photenia hedge" using 5-gallon plant material, Additionally, 3 1/2" caliper trees will be planted along the buffer. c. A six foot privacy fence will be installed between the Planned Development and the remaining Commercial Property fronting Highway 26. 2. Parking Each unit will include a one-car garage which satisfies the requirement of one space for each living unit. Additionally, each garage win average 304 sq. ft. of storage area for residents, an added benefit for the resident, allowing management to strictly enforce trash free patios and porches. Residents will be given a garage door opener. The device win also automatically open the access gates. Each resident is required to park in their garage, 3. Accessory Buildings One maintenance building shall be constructed which win conform with Page 6-3 of the City's Zoning Regulations. 4. Customary Home Occupations Not applicable. 5. Garage Requirement Garages are not required for R-7 MF but will be provided at one per unit. The garages are not located in easements, right-of-ways, or rear yards. 6. Masonry Requirement All exterior surfaces will exceed the 65% brick minimum requirement. Furthennore, Hardi-Siding will be used, which is a long-term low-maintenance product. The Hardiboard Siding comes with a 50 year warranty, :;3:;0 ALI'IIA K'l...ì¡\D· DALLAS, TEXAS 7:;240· (l)7.~) 70 ,t)Ö36· (972) 701-9639 FAX , I I P : / / w w w. I, \I 111 P , r c y ~ . c " on / , p . b p <1 (0' 11 II T1l r 11 r (.' y ~ .... \) 111 7. Landscaping Requirement Landscaping will comply with the 15% minimum requirement by a combination of trees, shrubs, and ground cover. Final landscape plans will be completed priòr to submission for a building penllit. 8. Recreation Space Requirement The Recreation Area exceeds the required 10% total lot area (2.235 acres) by providing 2.62 acres for common recreation space. The common area will include: Tennis Court, Basketball Court, Sand Volleyball Court, an Olympic-sized Lap Pool. a Children's Pool, two Gazebos, a Children's Bus Depot, and a Jogging Trail. 9. Signs All signs will meet zoning requlations. 10. Refuse Containers Per attached Western Rim Exhibit, as part of the monthly rent, Western Rim Property Services includes door-to-door refuse pick-up twice weekly. Furthenllore, recycling will be required. II. Gated Entry The access gate will confonn with the gated entry requirement. A Sentex access system wi 11 be used. 12. Site Plan Approval Required The site plan will confonn with all requirements for submission. The developer plans to design, build, and operate an exceptional property which the City of North Richland Hills will be proud to say exists within the community, This first class project, with its low density and list of amenities, will fit well into the lifestyle of North Richland Hills' Entertainment District. .\ (~i{ \-.~ \ ~S Ihr1'-11'IIREYS f; PARTNERS ARCIIITECTS The Villas on the Green North Richland Hills, Texas April 10, 1997 SITE PLAN CONTENTS Submittal Specifications 1. Plot Plan Site plan will confonn with the city regulations. 2. Topographic Information Not required, 3. Elevation Drawings All building elevations win confonn with the city regulations. 4. Landscaping, Lighting, Fencing, Screening, and WaUs All landscape drawings will confonn with the city regulations. 5. Location of aU Ingress and Egress All architectural and civil drawings will confonn with the city regulations. 6. Off-street Parking and Loading Facilities All parking / loading will confonn with the city regulations. 7. AU Pedestrian Walks, MaUs, and Open Areas Landscape drawings will conform to city regulations. 8. Proposed Land Uses All land uses will conform with the city regulations. 9. The Location and Types of AU Signs AU signs will conform with the city regulations, 10. Street Names on Proposed Streets Not applicable, 11. Proposed Water, Wastewater CoUection, and Storm Sewer Line AU civil drawings wiU confonn with city regulations. 12. Engineering Drawings of Public Improvements To be submitted at time of platting. S 1 S () ¡\ LI) II A ¡.: I..ì ,\ ) . ) A I. L ¡\ S, T E X ¡\ S ./ S :2 -+ () . (<¡ ï :2) 7 0 I . 9 h 3 11 . (9 7 2) ï lJ I ,9 6 3 9 ¡: ^ x h t t r : / / WWW.\.1I1ll I' h r c ~' ~ ' c " 111 / hI'" 1\ r <1 ((I \, 11 III P 11 r \" y ~ ç () III 13. Utility and Drainage Easements for Dedicated Infrastructure All civil drawings will confonn with city regulations. 14. Additional Items and Conditions Unknown at this time. ~~,\ .~ ðy ._-,~-----_..~,-'-'--,.,»-_...~'--~.__.~. THE VILLAS ON THE GREEN IN-HOME AMENiTIES T INDIVIDUAL I ST FLOOR GROUND ENTRANCE WITH FOYER INDIVIDUAL I ST FLOOR AlTACHED GARAGES WITH DIRECT ACCESS INTO HOME PLANT SHELVES * CEILING FANS* 2" CUSTOM MINI-BLINDS DOUBLE KITCHEN SINKS WITH DISPOSAL MULTI-CYCLE DISHWASHER FULL SIZE WASHER/DRYER CONNECTIONS DESIGNER COUNTERTOPS KEYLESS DEADBOL TS "INTERACTIVE" CABLE 1Y 91 FOOT CEILINGS VAULTED CEILINGS* OVERSIZED OVAL MARBLE JACUZZI GARDEN TUBS* SIX PHONE LINES WITH ISDN/FIBER-OPTIC CAPABILITY WOODBURNING FIREPLACES WITH CUSTOM MANTEL * DESIGNER KITCHEN CABINETS WITH WHITE-ON-WHITE ApPLIANCES MICROWAVE 17 Cu. FT, FROST-FREE REFRIGERATOR WITH ICE MAKER ONE-CAR PRIVATE AlTACHED GARAGES WITH AUTOMATIC OPENERS FOR EVERY HOME CONTROLLED ACCESS GATES CONVENIENTLY OPERATED FROM YOUR AUTOMOBILE EACH UNIT INDIVIDUALLY METERED FOR WATER CROWN MOLDING IN LIVING AND DINING ROOM* AUDIBLE INTRUSION ALARMS (MONITORING AVAILABLE) MARBLEIZED ITALIAN TILE ENTRIES MARBLE VANITIES MULTI-MEDIA CENTER BUILT-INS* DOUBLE-PANE WINDOWS KITCHEN PANTRIES *11'1 SELECTED UNITS ~,,~ ÍJ~~ <; ~ / THE VILLAS ON THE GREEN COMMON AMENITIES CLUBHOUSE (7,000 SO, fT,) WITH THE FOLLOWING AMENITIES: LIBRARY BUSINESS CENTER AND CONFERENCE FACILITY GAME ROOM, POOL TABLE AND DART GAME BIG SCREEN lV WITH SURROUND SOUND STATE OF THE ART HEALTH CLUB (WITH POOL VIEW) PERSONAL TRAINER AVAILABLE COFFEE/EsPRESSO BAR LIVING ROOM CONCIERGE ON STAFF SAUNA CHILDREN'S POOL AND PLAYGROUND ON-SITE DAYCARE CENTER OTHER AMENITIES INCLUDE: LARGE WATER FEATURE IN ENTRYWAY LIMITED-AcCESS GATES 3-LEVEL OLYMPIC (25-METER) RESORT SWIMMING POOL LIGHTED TENNIS COURT PICNIC AND BAR-B-QUE AREAS JOGGING/WALKING TRAIL AROUND COMMUNITY GREENBELTS PROFESSIONAL SAND VOLLEYBALL COURT FULL-COURT BASKETBALL COURT PRESTIGIOUS BIRDVILLE SCHOOL DISTRICT I wi R I Western Rim p S Property Services, Inc. Inwstment Advisors and Portfolio Mœuzgm ~klf ~G -lephone (817) 355-2500 .ecopler (817) 355-2505 2400 N. Highway 12 t Euless, Texas 76039 Mailing Address: P,O. Box 426 Colleyvllle, Texas 76034 April 10, 1997 Villas on the Green Hwy. 26 North Richland Hills, Texas This property will offer door to door trash pick up twice weekly as part of the monthly rent. WRPS will also participate in a re-cyClingprogram for approximately 4 types of recyclable products. \¡ \ \' ':v '\ \ o ~) /\ III '~\I'IIREYS (,( PARTNERS ARCHITECTS The Villas on the Green North Richland Hills, Texas April 10, 1997 R-7-MF MUL TIF AMIL Y DISTRICT Lot and Area Requirements Description R-7-MF 1. 2. 3, 4. 5, 6. 7, 8, 9, 10. 11. 12, 13. Minimwn Lot Area Minimwn Lot Width Minimwn Lot Depth Minimwn Dwelling Unit Size Minimwn Front Building Line Minjmwn Side Building Line Minimwn Rear Building Line Rear Yard Open Space Area Maximwn Density Maximwn Height Maximwn Number of Stories Maximum Lot Coverage Spacing of Buildings 4 acres 200 ft. 11 0 ft. 650 sq. ft. 25 ft. 20 ft. 25 ft. 5000 sq.ft. 16 units/acre 50 ft. Three 40% 10 ft., 15 ft., 20 ft. Planned Development 15,938 acres· 1350 ft, 1725 ft. 983 sq. ft. 45 ft, 20 ft. 110ft. 161,624 sq.ft 15.81 units/acre· 31ft. Two 39.25% 20 ft. * 15,938 acres is currently zoned R-7-MF. The total Planned Development is 22.53 acres, therefore decreasing density to 11.27 units/acre. 535 () /\ L I' II /\ I~ '" ,\ ) . ) ,\ I. L\ ::::. T E X A S ï 5::!'¡' 0 . (l) ï~) 70 I ,l) () 36 . (97::!) 7 () I ·9639 ¡: ^ X I, t t I' : / / '" '" '" , \, II Il\ r , r L' Y' L'" Il\ / I. I' ., 11 P .1 (a- 11 \I 111 r 11 r t.,' ~'~ \,' P t11 ---~-_._------'_.~-_.,-~---'- levard 6. PZ 97-15 PUBLIC HEARING TO CONSIDER THE REQUEST OF WESTERN RIM INVESTORS, L.L.C., FOR REZONING FROM R-7 MULTIFAMILY & C-1 COMMERCIAL TO A PD PLANNED DEVELOPMENT, ON LOT 2, BLOCK 2, WALKER'S BRANCH ADDITION. (LOCATED OFF OF EMERALD HILLS WAY AND GRAPEVINE HIGHWAY) APPROVED Vice-Chairman Davis opened the public hearing and asked the applicant to come forward. Mr. Rick Simmons, Western Rim Investors, presented this request. He explained that the Planned Development they are proposing is a gated, low density, multifamily housing with amenities such as clubhouse, daycare facility, attached garages for each unit, basketball, tennis and volleybaU courts, hiking trails, swimming pools and picnic areas with gazebos. He explained that the density ends up being approximately 11.3 units to the acre. The property is currently zoned for 16 units to the acre. He stated that there is approximately 15.94 acres for the multi-family portion of this PO and 6.4 acres for the C-1 Commercial portion. Mr. Simmons passed out a revised site plan and six various additional hand-outs regarding this Planned Development. Mr. Simmons went into great detail regarding the amenities offered with this development and the overall project. Some major points brought out were: this will be a one gated community, the minimum dwelling unit size will be 983 square feet. There will be a daycare facility for residents only. Over-sized garages will be provided for each unit. Multiple recreational amenities are included. There will be a business center containing fax machines, copy machines and computers for each resident's use. Some of the in-home amenities offered are double-pane, energy efficient windows, oversized refrigerators, security alarms and marble tub Jacuzzi's. Chairman Barfield asked Mr. Simmons about the engineering on the wrought iron fence with brick columns every 30 feet. His concern is the columns leaning or falling after several years have past; he has seen this repeatedly in other areas. Mr. Simmons stated that they would meet or exceed all engineering requirements for the fence at the time the building permit is applied for. Mr. 4 Simmons stated that the only waiver they are requesting is in the required screening fence. They would prefer the wrought iron fence with brick columns every 30 feet and extra landscaping. They believe this is more aesthetically pleasing. There will be a minimum of one tree for every 30 feet. The trees of his choice are Bradford Pears or Live Oaks. The screening wall shown on the revised site plan is the screening wall they are proposing along the ditch. The fence along the stretch of Grapevine Highway will be constructed per ordinance requirements. The eastern property line will be screened by a 6' wooden privacy fence, but the applicant has no problem putting a wrought iron in this location if the Commission so desires. He explained that the cost difference would be minimal since he stains his stockade fences. In response to a question, Mr. Simmons stated that a turn around will exist for cars that, for what ever reason, are not granted access. The gate will be placed just past the club house, so entry for the club house is not required through the secured gate. A turn lane is proposed on Grapevine Highway to allow for stacking of cars waiting to turn into this complex. In response to a question, Mr. LeBaron explained that emergency access is coordinated with the Fire Marshal. Much discussion ensued regarding there being only one entrance proposed, and the possible traffic congestion that this could cause. The applicant stated that because the property along Emerald Hills Way is in the flood plain, a 175' bridge would be required before a second entrance could be constructed there, that would be a tremendous expense. Vice-Chairman Davis asked for any additional proponents. There being none, Vice-Chairman Davis asked for any opponents. There being none, the public hearing was closed. Vice-Chairman Davis asked the applicant if he was willing to make each handout the Commission received an Exhibit as part of this Planned Development. The applicant agreed and Mr. Davis stated that the following exhibits would be included: Exhibit #1 - Revised Site Plan; Exhibit #2 - General Conditions; Exhibit #3 - Site Plan Contents; Exhibit #4 - In Home Amenities; Exhibit #5 Common Amenities; Exhibit #6 - Letter of Intent for door to door trash pick up and Exhibit #7 - Lot and Area Requirements. Mr. Owen made the motion to approve PZ 97-15 with Exhibits 1 - 7 as outlined by Mr. Davis and the applicant as conditions of the Planned Development, that an emergency entrance be added to the site plan that is approved by the fire marshal and that a wrought iron fence be constructed in place of the stockade fence on the "L" shaped part of the property. 5 Mr. Lueck stated that he has a problem with only one entrance for this community. He likes the lower density and the development overall, but wants the record to reflect that he objects to one entrance. Discussion ensued regarding this and it was determined that because of the location of the lot, a second entrance was not practical. Mr. Miller stated that what the applicant has planned for this property, on paper anyway, is phenomenal. Chairman Barfield seconded the motion and it carried 7 - O. 7. STAFF REPORT Vice-Chairman Davis reminded the Commissioners of the workshop scheduled for April 21. 8. CITIZEN COMMENTS There were none. 9. ADJOURNMENT There being no further business to conduct the meeting adjourned at 8:45 p.m. .J ~;L·? c:7~.f.'''- .. ...~_ _,_'.H ..._. Chairman David Barfield Secretary, Charles Owen 6 City of North Ric.,lan': ;";:::s 7301 NE Leap 320 Ni~H APPLICATION FOR A ZONING DISTRICT CHANGE North Rlc.,:an,: Hiils. -:-exas (?feas~ :r-r-t :r :'¡:::Ie ~II :'ffSOOr"!.seS) 317-581-5500 PART 1, APPLICANT INFORMATION ,Vame of a,::,::;iicanr / agent: Wes:'ern Rim Inves:'ors, L.L.C. S:reec acc;ess of applicant / agem: P.O. Box 42 Ó Cit'¡ / Sta:e I Zip Code of applicant / agent: Teiepnone number of applicant / agent: Colleyville, Texas 76034 817/355-8070 PART 2. PROPERTY OWNER INFORMATION ,Veme of propel7, owner: Steven R. Hester 5tr<:et addr<:ss of properr¡ owner: 8707 Grapevine Highway Cot¡ / State / Zjp Code of property owner: Telephone number of property owner: North Richland Hills, Texas 76180 817/428-8919 Note: Attacl' let:er or affidavIt from pr:;perr¡ owner if cifferent from applicant / agent: S attached letter from ee owner. PART 3. DESCRIPTION OF REQUEST Current zOning classification: Proposed zOning classIfication: I Proposed use of the properr¡: R-7-MF and C-l PO (Planned Development) Gated Low-density Multi-family Housi~.:; I Developmen t =1eason for zoning distni:t change: Planned develooment to allow for a crated low-densitv mu1 ti-fami 1 'i hO\JsinQ nOllE" 1 opT'1on t- w;...~ - amenities including clubhouse with daycare faciE tv, swinuninq pools, olavqround/oicnic areas gazebos, volleyball, basketball and tennis courts, and walking/jogging trails. Legal Description of Property where zoning distni:t change is being requested: See attached property description. Street ¡¡ddress at location where zoning Cistrict change is being requested: 22.353 acres of land being a !?ortion of Lot 2, Block 2, walker Branch Addition, an addi tion to the Citv of N. Richland H~lls, Tarrant Co:.;~. -: . Texas, as recorded in Volume 388-154, Paqe 22 P.R.T.C.T. S(JNey or map attacf1ed as required by application ~~ attached from property owner if applicant is not owner: ~e,-~er ŒJ Yes DNo c::IJ Yes c==J No I hereby certify that I am. or represent. the legal owner of the properr¡ descnbed above and do hereby submIt this request for appro..al of a zoning district change to the Planning and Zoning C<;¡mmission for consideration. Date: 3/Z-4-lcp i'!kJ- 2î,1~ I . Print Name: (Z1~k. Çl MMc: f1,S Signalur<:: PART 4. FOR OFFICE USE ONLY \ ) Date of Plannlr.g & Zonmg CommIssion Public Heanng: Taxes PaId? Case Number: I I Yes I I No Date of City Councd Public Heanng: Liens Paid? Fee: DYes CJ No $300.00 Zoning District Change Approved: Assessments Paid? II Yes D No DYes I I No Citions of Approval: This application will not be scheduled for public hearir.; '0- unlil the application fee is received. I ~ .,., -...,. '/ ::.~ ~ tJ-I = : / - ..... . -':':I"'~"" ;~.¡ l-~·~.-¡~.'-?¿;c: " -' ~: ~¡-; -ill ,- : -; t 1'7"-; '. , . . "1-, ; - f' - . ê.J ,-<¡.c___ "'---=-"'--:--:"'1 '--~'!c:', I J_!:- == --:----;.; I :: :-1~1 8.-::-:- . I .' ~ r----' ',-: I~ ~ _ .--:- : I I "; 'u-.. :-~ ·1-- _ f:; , : ~ f - _' I ~ . I_ ~ . ~. I '... ... I . ... ~" .\" ~ ;rJ!.~ .': ;;ç o -...¡ t,'; ~ ... -:s . . -. - ~~ . . . . . , . . '- " : ,_ I :; ,: : . ... : '::' : .: : : ... : -: ; . . : - : . J' : ~ .. : - : ... : .. . -. . - : .. : a J - i· : .... ; .. í - : ' : , ~" ", " , ',----...---- :; :; ""' --?..,.. ..-:. ~. -¿. ........ ~ ,,/, ð~~y( - ~, "\" £ 5/ "<'" ~ ,) ------- ." " ~ , ^"~ ~ ~"" - /0/ " ~ / . "" "" '''" (! ""'~ l ~ ) , 'M,7S .'. /. ~ "- / -<. "'LLS c,~ _ .. / ~ "- \ // \ ~~ ':;;:;~~y L ,,;, ~s / // / '" \ \- <,./.. . . -. . '/ ~ /, - J/ ;;;0 o-n ... :; > C) ì I I I i i I I I i I I I ~ : ~ : ! _.it_; " :x: ~ ~ ~ D D [J ~ tJ c \ APR- 1-~7 TUE 17:el HOWE/WOOD ~ CO. March 20, 1997 City of North Richland H1lls Community Development Department 7301 Northe3St Loop 820 Nor".h Richland Hills, Texas 76180 Reference: Rezomng Authorization for a Portion of Lot 2, Block 2, Walker Branch Addition L Steven R Hester, owner of the 22.353 acre tract of Land situated in the City ofNortb Richland Hms, Ta.'Tant County, Texas and being out of the Landon C. Walker Survey, Abstract No. 1653 and also being a portion of Lot 2, Block 2, Walker Branch Addition, as recorded in Volume 388- 154, Page 22, of the Plat Records, Tarra:lt County, TeX3.S, do her:by certify t.~t I have given my pcrmission to Western Rim Investors. L~.C., to make this appIiC4tÏon for a zoning district chanse. ~~.l~ StevenR Hester, Owner c/-I-fl Date enclosures OJ2097·I-itr P.Ø2 '> .. l ;t , '... <. f ~ ., ~ i :oø ~}; ,~ ~ .... ~~ ~ ;"j '-' ~ ~ ~ ~ ~ $ ; I ; ~ ~ to ~ ".- T':'I. ..... ~ £"'\.. 1 "-'-~lV-'- U To: From: Subject: Date: Bill Longnecker, Planner Ed Dryden.. Building Offici PZ 97-1S March 27, 1997 I have reviewed the site plan submitted with this zoning application. Since this application has been submitted for a PD, note that the review is with respect to R-7-NfF zoning. Very generally, the site plan is not developed in sufficient detail to deternúne compliance with the following items: 1. Spacing of buildings (varies ITom 10, 15 or 20 depending on situation), 2. Compliance with the exterior masonry requirements(6S% masonry per elevation) 3. Compliance with the landscaping (including the parking areas) and the recreation open space requirements. 4. The use listing "Day Care Center/Kindergarten" is allowed in the 0 I-Office district, the LR-Ioca1 Retail district, the C-I & C-2 Commercial district, and the U Institutional district by right. The use listing "Day Care Center/Kindergarten" is allowed in the R7-Mf district with a SUP only. The following items are not shown on the plans and are required in the R-7-MF district: 1. A six foot perimeter screening fence is required adjacent to State ffighway #26 and Emerald Hills Way. 2. A gated entry with guard stations and/or security gate is required. The following are recommendations regarding the development of the property: 1. A second entrance for emergency access should be required. 2. Only one trash compactor is indicated for the entire development. More dumpsters are recommended for the convenience of the tenants. 3. Much more detail and dimensions should be required on the site plan. 4. The area proposed for day must provide adequate loading/unloading lanes to prevent traffic jams at the entry of the development. Applicant should provide data on peak trips. 5. In addition to the detail and dimensions, the applicant should provide the calculations for landscaping and required open space on the site plan, In general, the site plan submitted should be oIÙY utilized as a conceptual plan and not a development plan. CITY OF NORTH RICHLAND HILLS Department: Planning and Inspections Council Meeting Date: 04-28-97 Subject: Consider the Request of Realtex Ventures for a Final Plat of Agenda Number: PS 97-09 Lots 1, Block 1, Children's Courtyard Addition (Located at the northwest corner of the Smithfield Road & Starnes Road Intersection) Realtex Ventures is the owner & developer of the Children's Courtyard Addition, Lot 1, Block 1, located at the northwest corner of the Smithfield Road & Starnes Road intersection. The property is currently zoned C-1 Commercial. The applicant proposes to build a daycare center at this location. The following issues are associated with this Final Plat. (1) Fire Hydrant Coverage - The proposed fire hydrant coverage leaves a small portion of the site's northwest corner unprotected. However there are no improvements in this area and it is the location of a playground. The owner is requesting a waiver of the fire hydrant coverage requirement. Staff has no objections to this waiver. (2) Drainage Easement - There is a drainage easement which cuts across the southern portion of this property. The developer will be constructing a concrete surface along the drainage easement so that the area can be used as a part of the playground for the daycare facility. The Planning and Zoning Commission recommends a note be placed on the plat requiring maintenance of the easement be the responsibility of the property owner. (3) Masonry Screening Walls - A masonry screening wall is required where this property abuts residential property. The developer has agreed to construct the screening wall. \,--- (4) Sidewalks - Sidewalks are required along Smithfield Road and Starnes Road. The developer has agreed to construct the sidewalks. The Planning and Zoning Commission considered this Final Plat at its March 27 1997 meeting and recommended its approval. RECOMMENDATION: It is recommended that the City Council approve the recommendation of the Planning and Zoning Commission. Finance Review Account Number Sufficient Funds Available ~I Ch h~~:~er CITY COUNCIL ACTION ITEM ,Finance Director 4. ., OR A PRELIMINARY PLAT OF L K 1, AND LOTS 1 - 14, BLOCK 2, NORTHRIDGE MEA ADDITION NORTHWEST OF THE HOLIDAY LANE A GHTOWER DR. INTERSECTION) TABLED Mr. Davis made th Ion to table PS 96-33. Bowen and it d 6 - O. Mr. 5. PS 97-09 REQUEST OF REAL TEX VENTURES, FOR A FINAL PLAT OF CHILDREN'S COURTYARD ADDITION (LOCATED NORTHWEST OF THE INTERSECTION OF SMITHFIELD ROAD AND STARNES ROAD) APPROVED Mr. LeBaron explained this is the final plat on a 4.6 acre tract of land currently zoned C-1. The developer is proposing to put in a daycare facility. There are a couple of issues that Public Works has with this item. A masonry screening wall will be required on two sides, where it abuts residential property; the developer has agreed to this. Sidewalks will be required along two streets and the developer has agreed to this as well. There is a drainage channel that goes through the property and the developer would like to put an eight to ten foot concrete bottom in this channel; Public Works believes this should be twelve feet. Mr. Tim Skinner, General COPltractor for Children's Courtyard, presented this request and stated he would answer any questions the Commission might have. Mr. Barfield explained that it was his understanding that staff wanted a 12' channel instead of a 10' channel so a backhoe could access it and wondered if the applicant had a problem with this. 2 Much discussion ensued regarding the channel size and depth of the water flowing through it. Mr. Kevin Miller, Assistant Director of Public Works, stated that the public works design criteria for channels like this is a fully concrete lined channel. He stated that at the time Public Works met with the applicant, they were requesting an earthen channel. Public Works compromise is a 12' sidewalk in the bottom of the earthen channel. The channel bottom will be approximately 25' wide with 4: 1 or 5: 1 side slopes. In the response letter an 8' - 10' sidewalk was proposed. Mr. Davis made the motion to approve PS 97-09 allowing an earthen channel with a 12' concrete pilot channel and that the owner of Lot 1 be required to fully maintain it. The motion was seconded by Mr. Lueck and it carried 7 - O. 6. NDEPENDENT SCHOOL DISTRICT FOR PLAT OF BIRDVILLE HIGH SCHOOL ADDITION (LOCATED A SO WEST CORNER OF MID-CITIES BOULEVARD AND PR ROAD) APPROVED Mr. LeBaron explain at this is a 69 acre tract for the plat meets all of staffs re . ments and is ready for t consideration. high school. The Commissioners Mr. Lueck made a motion to approve The motion was seconded by Mr. Bo PUBLIC HEARl MAKENS INV COMME 7. PZ 97-10 o CE>NSIDER THE REQUEST OF J ENTS, FOR REZONING FROM R-1 RESID ,ON LOTS 16 & 17, BLOCK 1, THOMPSON PAR DDITION (LOCATED AT AKENS, OF IAL TO C-2 TATES 3 Ni~H City of North Richland Hills APPLICA TION FOR A 7301 Northeast Loop 820 FINAL PLAT North Richland Hills, Texas (PI.ase PMI 0( type all responses) 817-581-5500 Proposed Subdivision Name: CHILDRENS COURTYARD ADDITION Current Legal Description: Tract 1A1 W.O. Barnes Survey Abstract No. 146 Name and Address of Current Property Owner: Realtex Ventures Phone No, ( 817 ) 784-9947 1825 Wimbledon Drive Arl ington, TX 760 17 Contact: Jim Mills Name and Address of Previous Owner:(if purchased dun"ng last twelve months) Ray Brooks 6850 Manha ttan Blvd. Fort Worth, TX 76120 Name and Address of Developer: Same as owner Phone No. Name and Address of Engineer: Garcia and Associates, I nc. Phone No. (817) 446-1800 6850 Manhattan Blvd. #106 Fort Worth, TX 76120 Type of Development Being Proposed: o SF Residential 0 MF Residential o Other o Duplex Residential (Ð Commercial I Industn"al --.. .... Application Fee: 1. Application Fee 2. Number of residential lots @ $ 1.50 per lot: 3. Number of non-residential lots @ $5.00 per acre 4. Number of street intersection signs @ $65,00 each 5. County plat filing fee: TOTAL FEE I hereby certify that I am, or represent. the legal owner of the property descnbed above and do hereby submit this Final Plat to the Planning and Zoning Commission for consideration. Date: Applìcant's Phone No.: (817) 784-9947 Pn"nl Name: James D. Mills Signature' X ;f1/J./lA4 ;{ a j A- 0 L 7 OFFICE USE ONLY I - Taxes Paid liens Paid Case Number Assessments Paid FINAL PLAT CD - 402 (2/96) ~--~-\- ~/:<'\.;\/" //" /""\ ''. Y - ..... ... . ..I' ~ _ ..... \. r"~ ~ ~- r..-~ .; .; I ~ ,,"L~::: ~_.:_ I;; ~=:! I --. --. , : :: ':::: - I =--- ··..··---:.::,---·t 'I .; ~. ". ,'~ '-I 1__. : :"""--;;[,".. , I "; ¡-:-,\ ,.---" .. '~ ----: ~ I 0 : ,.... _.... ~-. ¡ ADA ff. ,-~ ; I' ¡-:-1 . J 0 i ~ ~ ~_:~ G ¡-] ......~(-: .--- r-, . ; ..: ;, ". 1 H~~J L.....:._. : ." . 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ACT:;' --:---:. ..' ~ ".~.. , ¡ :0:.: ~ .~) :; .. ¡ - - I 1 , I ï-:.--: ~ r--~ L._. i - ¡ ,. ~. f··-~-:::: ~ ~> 1 " L___ . ~ I . : ~-Xl- ""- o --""'f1oo ~ I -.\ I I I - i ¡-~ /- I 1 I i >- C) ~ -"" ..... ........ U'I . ?, , ; f\.J.; ..- I::::: .............;;:.. ....----: ~ -.; ;¿¡ ~ n I f\.J ; >- C) .......~.....! ~ :._-=- ..._..~...j:::~. ) --_:.. ....~... .............. ....'" "', ..... . ., '. ". ". " " :r.: " - U""-.2.:;. -l::<,=, , \...1,".> 'JUH i i-r'Ufi ìu b2b,'::";d P. 0':: ... .. ····::1. -.Iml...: . ...... -..- . REALTEX VENTURES, INC. April 22) 1997 Mr. Bill Longnecker Planning & Zoning Coordinator City of North Ricbland Hills 7301 Northeast Loop 820 North Richland Hills, Texas 76180 RE: G&A #94-002; Lot 1, Block 1, The ChiJdrea's Courtyard Additioa Nortb Ricbland 1IiUs, Tens Dear Mr. Longnecker: This letter is in reponse to your request for a waiver letter pertaining to fire hydrant coverage for The Children's Courtyard site at the Northeast comer orner of the intersction ofStames and Smithfield Roads. While both buildings planned for this site are within the required 300' radium of the two existing fire hydrants adjacent to the site, there is a portion of the lot outside the 300' radius. The area at the northwest comer of the lot is outside the 300' tire hydrant radius. No additional buidlings are planned for this site. The area in the northwest comer of the lot is planned as part of the grassed playground. To provide fire hydrant coverage within the maxium 300' radius for the northwest comer oCthe lot, a new fire hydrant will be required. To provide this new hydrant, a new 6' water line must be extended west trom the existing 12' PVC water tine on the east side of Smithfield Road. This will require approximately 280' of Dew 6" water line (including a 55' bored crossing of Smithfield Road), a new 6" water valve and a new fire hydrant. This new 6" water line will add considerably to the expense of this project without adding any sjgnificant ÌInprovemtn in fire protection (both buildings are within the the 300' radius). Therefore, we request that a waiver be granted releasing us ftom the requirement that aD of the lot be within 300' of a fire hydrant. Please call if you have any questions. Sincerely, Þ-~ Rea1Tex Ventures. Inc. U!25WimbiedùnDrivc. Ar!iI1~t()n.TcX3.<7601~. (8 ~784,<)·)4~M~lro. (~ ~)I\t)I:oCC¡'521F;¡" TOTAL P.Ð2 CITY OF N@RTH RICHLAND HILLS Public Works March 13, 1997 MEMO TO: Barry LeBaron, Director of Planning & Inspection Services FROM: Julia W. Skare, P.E., Staff Engineer SUBJECT: PS97-09; CHILDRENS COURTYARD ADDITION; Block 1, Lot 1 Final Plat We have reviewed the subject documents submitted to this office on February 20 and March 5, 1997. The following items are for your consideration. DUE TO THE SIGNIFICANCE OF THE OUTSTANDING ITEMS, WE FEEL THIS PLAT SHOULD NOT BE PLACED ON THE AGENDA FOR P & Z CONSIDERATION. 1. DRAINAGE ANALYSIS The drainage analysis and design will need to be revised and resubmitted. A concrete lined channel will need to be designed as outlined in Section 1-05, Paragraph B, subparagraph 10a. Based on previous plans, the underground system in Starnes Road should be capable of handling approximately 187 cfs. The inlet(s) will need to be designed accordingly. This area has been studied previously and the undeveloped time of concentration at the southeast corner of the lot was 28 minutes. The submitted plans show a time of concentration for the developed state of 32 minutes, Calculations will need to be provided to verify this change. 2. FIRE HYDRANT The Design Manual contains criteria for necessary fire hydrant coverage. Section 1-02, Paragraph B, Subparagraph 2 states "The entire subdivision shall be within three hundred (300) feet radial distance of a fire hydrant." All existing fire hydrants need to be shown on the Utility Layout. The site plan and utility layout were not submitted with the Final Plat. It appears the northwest corner of the lot does not have fire hydrant coverage, This will be reviewed with the submittal of the Site Plan and Final Plat. P.O. Box 820609 . North Richland Hills, Texas· 76182-0609 7301 Northeast Loop 820· 817-581-5521' FAX 817-656-7538 3. UTILITY EASEMENTS All public storm sewer improvements will need to be placed in a drainage easement. All utility and drainage easements shall be shown on the Final Plat. The location and minimum size of the Drainage Easement will be determined when the Drainage Study and Construction Plans have been resubmitted and reviewed. 4. SCREENING WALL For all new construction on property zoned Commercial which abuts any single- family or two-family residential zoning district, a permanent screening wall of masonry type construction shall be erected along the entire common property line between such properties prior to the issuance of a Certificate of Occupancy. The wall plans and application for permit will need to be submitted with the building permit application and plans. 5. SIDEWALKS The Zoning Ordinance requires sidewalks adjacent to all public streets. If and when the property develops, the sidewalks for Smithfield Road will need to be added to the construction plans for coordination purposes. There is an existing sidewalk adjacent to Starnes Road. This review was based on the submitted Final Plat and Drainage Analysis. Article 5, Sections 525 and 530 of the Subdivision Regulations require engineered Construction Plans as defined in the Public Works Design Manual. The intention of this letter is to comment on items of significant importance to the general concept. A more detailed review will be processed when the revised Drainage Study and the Construction Plans are submitted. The marked-up blue lines need to be returned with the next submittal. ~Jr¿bAß- Ju' W. Skare, P t. St ff Engineer JWS\pwm97040 cc: Gregory W. Dickens, P.E., Public Works Director Kevin B. Miller, P.E., Assistant Public Works Director r~h?-2Q:;'i :~: l...l 1=~Cr::GC~·~O L,c.r~O SLP,..,:\r,:;:s 3: -;-":257',:;7':5 i]:31T 55óT538 ,;:'::"GE:'.;2 NiO'·¿· .\(E;Ti?() (>fl 71 .:2Q-\lI\~~ r..x . "~/7) ~2)·7dì~ j2:¡:je::s H. DD~·dl L a TI d 5 11 r y ~ J 0 I' § ¡ 1 TIC , RQU·..D /WD'<fC!.'E7.. ,~?:...;;' 6-'50 .\f,~,·"H4TT.1S ilL ,'0, 1.1 10 10R1· ....·ùRTH. IEX\S 71/2'.) March 20, 1997 &:sponse to Comments From: Roland Rodriguez, RP.L. S. Subject: PS97-06 Children's Courtyard Addition Dear Sirs: We have reviewed your comments in the March 13, 1997 memorandum. We would like to address them as follows: ltem 1: A revised drainage anatysis and design as outlined in the Design Manual Section 1-05, Paragraph D, will be submitted ~-it.h the FiIW Plat. The open channel above the pÎpe win be partially lined with an 8' to 10' meandering sidewalk: (with a slight invert fOT low flows) as was discussed in a mcctÏng with the City staff on Mondsy, March 17, 1997. The inlets will be sized to pick up the approximate 187 cfs capacity of the storm drain doWD5tIeam. The pipe rime of concentrarion (and corresponding nmoff discharges) ~D be adjusted per conversations with City staff A drainage casement will be dedicated which will encompass the width of ch2nncl (design depth ptus 1.0 of freeboard) with an a.ddir.ional 5' on Qch side of the channel Item 2: This COmmc:nI regarding fire hydrant coverage has been forwarded to the developer and is to be corrected with Final Plat. Item J: We acknowledge this comment and wilI10cate aU urifuy and dIamage easements on the Final Plat. Item 4: This comment regarding the screcnmg wall requirement bas been forwarded to the deveWpeT for his information. Item 5: This comment regarding sidewalks has been forwarded to the developer for IDS ÎnfoI1IUitioo. If you have any questions or comments, please contact me at 817-429-9898. ~ cc: Garcia & Associates cc: Reahex Ventures, Inc. a3-2:-1997 09:51AM FR8M TQ 65ó7503 P.01 ... ... 1I.o::.t::I;!f1l .tle',II'-"f. .........:0". .......... . ...~~!: ....', "r;. . RFAtTF.X V E~TLRES, INC. FAX !v1ESSAGE TO: 'fArr1 ~rM COMPANY: tJ~ DATE: ? .. "Z-\ - ~ 1 FAX NlJMBER: lßn)¿,s (, ~ 750?:> FROM: ~ AAdls PHONE N'lTh.1BER: (6'1) 764 -t¡q47 FAX 1'-.'1JMBER: (6 (1) ~ -411tSZ-f NUMBER OF PAGES INCLUDING THE COVER SHEET: P~C(1-ð(, aH\å~" ~¡q-¡J ~ MESSAGE: t'ÜKYi- T~ \.úill ~Y-wt M IN!- fÞrt ~ ÐP, ftu, ~tWM.t f!,y I- ÞM4Mhl ~~ ~. ttwl . ~ 4A~ÞL.- ~-'iikJ IJMJ. t f (~ OIÞf'" ~ ~ r~~ ~~. ~~ l)O(:z~\l.ÎJH~ln.L.'nnn\"~ . .·\rlm:.:tl'fl TC"'xJ.""-(-.c)}~ . PH")-K·.·I.)4.)·4-\h~:I· . ~l\;-)'tC~~~'~;! !";" TO Tot.. P.01 CITY OF NORTH RICHLAND HILLS Department: Planning and Inspections Council Meeting Date: 04-28-97 Subject: Consider the Request of Tecnollnc., for a Replat of Lots 6R & Agenda Number: PS 97-11 5R, Block 1, Industrial Park Addition. (Located Between the S.L. & S. W. Railroad Tracks and Industrial Park Boulevard, east of Rufe Snow Drive) Tecnol is the owner and developer of Lots 6R & 5R, Block 1, Industrial Park Addition. The property encompasses 35.05 acres and is zoned 1-2 Medium Industrial. The property is currently platted into two lots. Tecnol is replatting the property into one lot to accommodate an expansion in their facility. The major issues associated with this plat are: (1) Right-af-Way - An additional right-of-way dedication of 3 foot along Rufe Snow Drive. In addition, a 2 foot utility easement, adjacent to the right-of-way of Tecnol Boulevard and Industrial Park Boulevard, is requested. Tecnol has agreed to these requests. (2) Sidewalks - Tecnol requested a waiver on sidewalk requirements. Tecnol felt that the proposed use of the property and the industrial nature of the surrounding neighborhood is not conducive to pedestrian traffic. Tecnol also cited the absence of sidewalks on the adjacent properties. The Planning and Zoning Commission agreed with this waiver. (3) Street Lights - Tecnol requested a waiver of the Street Light requirement, citing the existing lighting on the parking lot as well as the proposed lighting that will go on the expansion of this parking lot and the existing street "-... lights as being adequate. The Planning and Zoning Commission recommended that street lights be installed as the property is developed. The Planning and Zoning Commission considered this request at its April 10th, 1997 meeting and has recommended approval as follows: (1) 3 feet of right-of-way easement along Rufe Snow Drive, (2) A 2 foot utility easement along each side of Tecnol Boulevard and Industrial Park Boulevard, (3) A waiver of the sidewalk requirement, and (4) Street lights be installed as the property is developed. RECOMMENDATION: It is recommended that the City Council approve the recommendation of the' Planning and Zoning Commission. Source of Funds: Bonds (GO/Rev.) Operating Budget Other Finance Review Account Number Sufficient Funds Available ',- u ~ c:i~r ,Finance Director CITY COUNCIL ACTION ITEM 5. PS 97-11 REQUEST OF TECNOL INC., FOR A REPLA T OF LOT 5R AND TRACT 6R, INDUSTRIAL PARK ADDITION. (LOCATED BETWEEN THE S.L. & S.W. RAILROAD TRACKS AND INDUSTRIAL PARK BLVD., EAST OF RUFE SNOW DRIVE. APPROVED Mr. LeBaron explained this parcel is currently platted into two lots and that they are replatting into one lot. A proposed expansion showed they would be encroaching on some easements; this replat gives them the opportunity to relocate the lot lines. The issues associated with this are: 1) a waiver for the required sidewalks, 2) a waiver of the required street lights, 3) an undetermined amount of Right-of-way dedication for the Rufe Snow expansion. Mr. Gary Vickery, Teague Nail & Perkins, and Mr. Scott Johnson, Tecnol, presented this request. He stated that they were just informed that the right-of- way needed for Rufe Snow is an additional 3', another 5' for a utility easement and a 22' slope easement and they do not have a problem with this. Staff is also requesting additional right-of-way on Industrial Park Boulevard. Mr. Kevin Miller, Assistant Director of Public Works, stated that this is because they don't have enough parkway. Back of curb information from the latest survey shows some places of right-of-way as little as 6' and in other places 8 - 8 1/2 feet. There is sufficient property available to give the city the standard 9 1/2 foot parkway. Discussion ensued regarding the necessity for Tecnol to dedicate additional right-of-way when they are already dedicating 80 feet. It was determined that a 2 foot utility easement adjacent to the existing r-o-w along Industrial Park Boulevard and Tecnol Boulevard would accomplish the same thing, and Tecnol wouldn't have to give up additional land. Staff, applicant and Commission all concurred. Because pedestrian traffic does not currently exist in this industrial park and, there are no additional sidewalks in the area, the applicant is requesting the variance from the required sidewalks and street lights. There will be onsite lighting in the parking lot they plan to construct. Mr. Barfield made the motion to approve PS 97-11, waiving the sidewalk requirement and require that street lights be constructed along that portion of the property that is developed and a covenant be signed for street lights on the undeveloped portion and also the right-of-way dedication of an additional 3 feet, an additional 5 foot for utility easement and an additional 22 foot slope easement 3 for Rufe Snow Drive and the 2 foot utility easement for Industrial Park Boulevard and Tecnol Boulevard. Mr. Lueck seconded the motion and it carried 7 - O. 6. Vice-Chairman D forward. HEARING TO CONSIDER THE REQUEST OF WESTERN ESTORS, L.L.C., FOR REZONING FROM R-7 MUL TIFAMIL RCIAL TO A PD PLANNED DEVELOPMENT, ON LOT BRANCH ADDITION. (LOCATED OFF OF EME AND GRAPEVINE HIGHWAY) APPROVED opened the public hearing and C-1 LOCK 2, HILLS WAY ed the applicant to come Rim Investors, pr nted this request. He explained that the Planned Develop t they are prop, ing is a gated, low density, multifamily housing with ame 'es such as ubhouse, daycare facility, attached garages for each unit, basketb tennis d volleyball courts, hiking trails, swimming pools and picnic areas . h ebos. He explained that the density ends up being approximately 11.3 u to the acre. The property is currently zoned for 16 units to the acre. He s that there is approximately 15.94 acres for the multi-family portion of this P 4 acres for the C-1 Commercial portion. Mr. Simmons passed out a re' d site plan an . various additional hand-outs pment. Mr. Simmo regarding the amenities 0 ed with this developme nd the overall project. Some major points bro t out were: this will be a one ted community, the minimum dwelling uni ze will be 983 square feet. Ther ill be a daycare facility for residents y. Over-sized garages will be provi for each unit. Multiple recreation amenities are included. There will be a siness center containing fax mines, copy machines and computers for ea resident's use. Some of the in- me amenities offered are double-pane, energy Icient windows, ove ed refrigerators, security alarms and marble tub uzzi's. Chairma iron fen or falli are re rfield asked Mr. Simmons about the engineering on the ught ith brick columns every 30 feet. His concern is the columns aning after several years have past; he has seen this repeatedly in ot r. Simmons stated that they would meet or exceed all engineerin 4 TEC 96246 Ní~H :-';:¡'t¡Jf ;r:ó"'::::.r ':/~" ¡II res;:crJ~S) APPLICATION FOR A REPLAT City of No~~ ,"<i:,'ia,"d ,'-',i':; ì301 Nor..'1eas: '.000 320 I\;Or:.' Riçhla:;j ~¡;:3. T~;ca~ ,:;;,-===s=-= S:-·=ci·.tis¡·cn Na.7i:: 3;ì·531·55CC ~orth Richland Hills Industrial Park c:.·t....=...,~ L=;al O-:s=n:~tic.1: ~orth Richland Hills Industrial Park, Lot 6K and Tract 5R (\';.7:= ar.= Acdr!:ss of ClJ~~I7: P;'"=;;~r:y Own~r: Tecnol, Inc. 7201 Industrial Park Blvd. ~orth Richland Hills, Texas 76180 P,':cne No (R I 7) <j 7 7 - 77 9 9 L. Scott Johnson, P.E. Sr. Facility Engineer Na~~ am:: Addr!:ss of Pr!:vious Owner:(ifpur:.'1ased curing :as: ".vef'Ie mcn:,':S) ~/A 1\·3.7;~ and Acéress 01 D-ev~/c;:r: P.":cne No. See Above Na:71e and Address of Engln~r: Teague NaIl and Perkins, Inc. 915 Florence Street Fort Worth, Texas 76102 Pflone No, ( 81 7) 366- 577 J Gary L. Vickery, P.E. iy~e of O'!v~lopment Being Pr:;posed: CJ S;= Residential CJ Ouplex Residential o MF Residenlial rn Commerc:ialllnd:Jslnal CJ OI,'1er Application Fee: 1. Application Fee $120.00 N/A 17').7') N/A 58.00 2. Number of residential lots @ 51.50 per lot 3. Number of non·residentiallo:s @ 55.00 per açre ~. Number of street interse::ion siçns @ 565,00 eac."1 5. County plat filing fee: TOTAL FEE $353.25 I fI!:reby cerrd'f Iflal I am, or r!:;Jr'!!sent. Ifle ie-;al own,!!r of Ifle pr-::p'!!r:y ée:;cnöe<:1 aöov,!! and do fleretJy subml( (filS Repla( 10 I,"e Planning and Zoning C"mmission for consicerø:;on. (:".":ach affica'''1 w'I,~ all pr:;P'!!rty owner's name:; wflen more Ihan on'!! Owner Ir1volv,!':1 ) Oa:~' 3/10/97 ":==ticant's ?t':o,,~ No : (817) 336-5773 '- pnnl Name: Gary L. Vickery S,;,1alure' OFFICE USE ONL Y Cas!! NU:':1ber -1?S q 1::...l.l Taxes Paid Liens Paid AssesSö:lents Paid r- ,-. I: c c (' '- ~ - - - c c C r ,r - --- -- ._---~ ---. - - --- - - - - -- - - SPEED lETTER~ .~ ß-¡ II Lör'ìj N cl! Q,V , -oú Vl n ¡ r13 ct- J' 1/l-&p.( ch 0 Vl :!:; FROM ~Ltì·o.. ~ffl Y.LÙ, . --.----."..-~----~~....---.. ,.' '--.,....--...._____..oro:...-.--'-~-,..--=_~___.".~_.-_.. _ ".'.,' _ ._.__.:_~,_-:~_-¡-...._...........__.._ S~~E'~~1Je\¡~~~j~~:r~~p¿;t::cBJ':;'~~~5~éJ~(~Ûì¿ I ':~~;':-::"<~r~y~~-" ~ -- . . . ,,_. , -., - -- - " . - - I ' '/ - - . '- . ,,' - . "'~"C.i~rtO .. MESSAGE WAk\" -I-D 9..."l fO..UÒ -tz) bn3 V- t1a.r. 3 \ .s~OD P"" ~û Ie{ -b 'CÖpM d in W(ï -\1 (1 t b{ noon on ~'f 2- cj- --b ~ilcle ilÌ\d ¡-ti (\(ì:A./ ~\r\.to t)'(\ D.CD. ~ hlfe. \\N Ù1-~A-t. ,~?O -tölrl hlrŸ\+Õ Yb~\cl» \5 ~+--:> ~ (¿vì ~d fItd-. I-f OK) u.); It ~ (JY\ \D. - \U d \ " c ~ =:> :: '-' « ¡: Q ~ . ~ « c ~ -: ; ... . 'OI: "J.~Q.I . "0'-' =a"IItO HJ ~ WilsonJones.. SENDER: DETACH ANQ RETAIN YEUQW COpy. S~NO WHITE ANQ PINK COPIES. RECIPIENT: RETAIN WHITE COPY. RETURN PINK COPY. DATE SIGNED 44-902 . T riplica[ ! 44-904 . CluadfU1llicaU! _. ________u_____ . --..- .---- .-- -- -_.- -"- ------ -~ ---, -- -. --_. --- CITY OF N®RTH RICHLAND HILLS Public Works March 31, 1997 MEMO TO: Planning and Zoning Commission FROM: Julia W, Skare, P.E., Staff Engineer SUBJECT: PS97-11; NORTH RICHLAND HILL INDUSTRIAL PARK ,Block 1, Lot 5Rlj Final Plat We have reviewed the subject documents submitted to this office on March 28, 1997, The following items are for your consideration, 1. TOPOGRAPHICAL DRAWING A Preliminary Drainage Analysis including a topographical drawing is required by the Subdivision Ordinance, Section 435 and defined in the Public Works Design Manual, Section 1-05, Subsection C. This drawing needs to include sill permanent above ground features as required by the Subdivision Ordinance. The drawing needs to include but not limited to pavement, buildings, poles, sidewalks and labeled contour lines. The drawing also needs to indicate ª-ll existing underground utilities and proposed water and seINer per Section 440 of the Subdivision Regulations. 2. FIRE HYDRANT The Design Manual contains criteria for necessary fire hydrant coverage. All existing fire hydrants need to be shown on the topographical drawing, Appropriate coverage radii for the applicable fire hydrants also need to be included, This will assist Public Works in determining the need for additional fire hydrants. 3. UTILITY EASEMENTS The Subdivision Ordinance requires a 7.5 foot Water line Easement on both sides of the water mains and fire hydrants. 4. DRAINAGE EASEMENTS All storm drain improvements need to be located in a drainage easement. A determination on the need for these improvements will be made after the Drainage Analysis is submitted and reviewed. 5. ROW DEDICATION Tecnol Boulevard is designated as a C4U on the Master Thoroughfare Plan. This designation requires a 68 foot ultimate right-of-way. The ultimate right-of-way requirement is a total of 34 feet west of the existing centerline for Tecnol Boulevard. The plat shows the ROW gradually widening to 80 feet. This transition needs to be clearly shown and dimensioned on the plat. P.O. Box 820609 - North Rich/and Hills, Texas _ 76182-0609 7301 Northeast Loop 820 -817-581-5521 - FAX 817-656-7503 Rufe Snow Drive ~xpansion is currently under design. A preliminary ROW map indicates the future ROW required. This ROW needs to be dedicated and clearly shown on the Plat. Industrial Park Boulevard is shown as an 80 foot ROW. The parkways for all streets shall be 9'-6" from back of curb to ROW line. This needs to be verified and sholNTl on the topographical plans with the next submittal. 6. DRIVEWAY SPACING On streets classified as Collectors, such as Industrial Park Boulevard, a minimum centerline spacing between driveways shall be at least 300 feet. This needs to be clearly sholNTl on the next submittal. 7. SIGNATURES The appropriate signatures need to be added to the Owner's Acknowledgment and Dedication, In addition, the surveyor's seal and signature need to be added to the mylar of the Final Plat. 8. SIDEWALKS The Zoning Ordinance requires sidewalks adjacent to all public streets. The sidewalks will need to be added to the construction plans for coordination purposes. The owner has requested a waiver on the sidewalk requirements. 9. STREET LIGHTING Street Lighting is required by section 1-06 of the Design Manual. The locations of any existing street lights need to be shown on the plans to confirm compliance with current ordinances. Any additional street lights which may be required based on current ordinances need to be coordinated 'Nith Public Works and TU Electric. The cost for installation of any additional street lights will be paid by the developer directly to TU Electric. 10. ENGINEERS CERTIFICATION An Engineers Certification (such as the one included in the Subdivision Ordinance) will need to be added to the drainage calculation sheet in the construction plans. 11. DETAILS The appropriate details for services need to be included in the construction plans. Note that the details included in the Design Manual do not contain any logos other than that of the City of North Richland Hills. It is required that the details be used in their entirety. Public Works has recently updated these details and the new details need to be included in the plans. 12. INSPECTION FEES Inspection fees will be due prior to starting construction. The current rate is four percent for water and sewer and three percent for streets and drainage. 13, NPDES PERMIT Current EPA regulations require that an NPDES permit be obtained prior to beginning construction. The owner and contractor are both responsible for obtaining the permit. The Owner should therefore request information from the EPA to determine the necessary steps for filing an application for an EPA - NPDES Permit. .r ( There are several comments regarding the engineering and construction plans. These comments are recorded on a set of blueline construction plans. These plans were returned to the Engineer on March 27, 1997 for revision. The comments contained herein do not purport to relinquish the design engineer of their responsibility to provide adequate, accurate and buildable construction plans, The City's eventual approval of the construction plans will not signify acceptance of responsibility by the City of North Rich/and Hills for the engineering in the bid documents. The marked-up blue lines need to be returned with the next submittal. (~7l ~.J~LÞt~V-.- 'I / Julia W. Skare, P.E. St~ff Engineer JWS\pwm97048 cc: Kevin B, Miller, P.E., Assistant Public Works Director ~,.~," TEAGUE ''jI, co.... S I.; L r I .\ G NALL AND PERKINS I; .... G { ,," I; I; R S April I, 1997 Ms. Julia W, Skare, P.E. Public Works Department Cicy of North Richland Hills 7301 N,E. Loop 820 North RichJand Hills. TX 76 I 82 Dear Julia: RE: Tecnol Replat N.R.H. Industrial Park, Lot SRI. Block 1 TNP No. TEC96246 We have received your March 3 I, 1997 memo to the Planning and Zoning Commission regarding the referenced replat. Transmined herewith are 15 revised copi~ of this replat for distribution to the Cnmmission. Your comments in that memo are addressed as follows: 1. We are in the process of completing a Preliminary Drainage Analysis of the site in accordance with the Subdivision Ordinance. 2. Existing and proposed fire hydrants will be indicated on the plans, and the 300' coverage radius will be shown as well. 3. To the utility easements have been revised to indicate dedication of IS' wide easements, including widening of the existing easements from 10' to 15'. 4. Drainage improvements are not anticipated, but if such improvements are necessary drainage easements will be provided. 5. To the existing Tecnal BouJevard right-of-way has been clarified on the drawing. With regard to the Rufe Snow right-of-way, we have been in contact with KEF, the consuJtant who is preparing plans for the expansion of Rufe Snow. They have been unable to provide specific right-of-way requirements. Once the necessary right-of-way has been determined, we can add it to the repJat. Alternatively. the right-of-way can be dedicated at a later date by separate instrument if specitk requirements are not yet avaiJable. Industrial Park Boulevard in an existing 80 foot right-of-way. At this point it appears that the distance between the back of curb and the north right-of-way line is nine feet. This will be verified and indicated on the topographic map. 6, One new driveway is proposed for this project, situated juSt over 300' west of the existing driveway Onto Industrial Park Blvd. This will be depicted on the plans. 7. Both the owner and the surveyor will sign the plat prior to submittal for filing. 8. We request a waiver of the sidewalk requirements for this replat. Sidewalks are not in place on adjacent properues along the subject streets, and the proposed development will certainly not generate pedestrian traffic. Given the industrial nature of the area. pedestrian traffic is not anticipated nor is it reasonable to provide for it. '315 FLORENCE STREET FQi1T WOi1TH, TEXAS 76102 18171336-5773 FAX IS 1 7¡ 335-2313 2001 W. IRVING BLVD, IRVING. TEXAS 7506 I (972) 254·1765 METRO (9721 251.1627 = ~'( ~""; - c: . Ms. Julia Skare, PE. April I, 1997 Page 2 9. Existing street lights will be depicted on the topographic map. To the existing parking lot on site is currently lighted, and the proposed parking lOt expansion will be lighted as well. We request a waiver of this requirement as well. 10. An engineer's certification will be added to the Preliminary Drainage Analysis, and of Course. all construction plans will be sealed by a registered professional engineer. 11. It is our intention to use all applicable City details. We will Obtain the most recent version of these details for use in the plans. 12, We understand that inspection fees are due for all public improvements prior to starting constructiun. On this project. we anticipate that only the proposed Water line relocation will be a publií: improvement. We understand that the current inspection fee is 4 % of the construction COSt of the public improvements. 13. An Erosion Control Plan will be included as part of the final construction plans. This plan will be designed to fulfill the requirements of the EPA. An EPA Notice of Intent will also he fIled at the commencement of construction. We have also received your marked-up set of construction plans. and are in the process of revising them accordingly. A number of the items listed above will be addressed directly on the construction plans. Please feel free to contact me if you have any questions or need further information. Thanks for your cooperation. Sincerely, GLV:gv TEAGUE NALL AND PERKINS, INC. ~~.{{il .. CITY OF NORTH RICHLAND HILLS Department: Finance Council Meeting Date: 4/28/97 GN 97-35 Subject: Consideration of Action on all Matters Pertaining to the Agenda Number: Award and Sale of $4,100,000 in General Obligation Bonds and Approve Ordinance No. 2195 Bids will be received on Monday, April 28, 1997 for the sale of $4,100,000 in General Obligation Bonds for projects described and approved by City Council at their March 24, 1997 City Council Meeting. Rating conferences with Standard and Poor's and Moody's were held recently. We received our ratings from both Moody's Investors Service and Standard and Poor's. Moody's upgraded the rating from A to A1. Standard and Poor's upgraded the rating from A+ to AA-. I Bids on the General Obligation Bonds will be evaluated by First Southwest, the Assistant City Manager and the Finance Director, and will be submitted to City Council at the regular meeting on April 28th. Upon acceptance of the best bid, it will be necessary for City Council to award the bid and to approve the ordinance as prepared by our bond counsel, Fu/brigh.t and Jaworski. The enclosed ordinance is for your consideration to be passed on Monday, April 28th. This ordinance also a uthorité!f'a It the other necessary actions such as paying agent/registrar agreements. Recommendation: It is recommended that the City Council accept the best bid for the $4,100,000 in General Obligation Bonds as evaluated and recommended by First Southwest Company and adopt Ordinance 2195 authorizing the issuance of General Obligation Bonds, Series 1997, and approving Bank One, Texas, NA, Fort Worth as Paying Agent/Registrar. Finance Review Source of Funds: Acct. Number Bonds (GO/Rev.) Sufficient Funds Available Operating Budget _ Ot~AA'''''~~ ~ / ....., ~~r'd'ô~partment Head Signat&~ / ......... . CITY COUNCIL ACTION ITEM Finance DlreClor Page 1 of ORDINANCE NO. 2195 AN ORDINANCE authorizing the issuance of "CITY OF NORTH RICHLAND HILLS, TEXAS, GENERAL OBLIGATION BONDS, SERIES 1997"; specifying the terms and features of said bonds; levying a continuing direct annual ad valorem tax for the payment of said bonds; and resolving other matters incident and related to the issuance, sale, payment and delivery of said bonds, including the approval and execution of a Paying Agent/Registrar Agreement and the approval and distribution of an Official Statement pertaining thereto; and providing an effective date. WHEREAS, the City Council hereby finds and determines that $4,100,000 in principal amount of general obligation bonds approved and authorized to be issued at an election held on September 27, 1994 should be issued and sold at this time; a summary of the general obligation bonds authorized at said election, as well as at an election held September 10, 1985, the principal amounts authorized, amounts heretofore issued and being issued pursuant to this Ordinance and amounts remaining to be issued subsequent hereto being as follows: Total Amounts Amounts Date of Amount Heretofore Being Unissued Election Purpose Authorized Issued Issued Balance 9-10-85 Drainage $16,870,000 $15,341,500 $ -0- $1,528,500 9-27-94 Streets 20,000,000 7,868,500 4,100,000 8,031,500 9-27-94 Drainage 1,865,000 -0- -0- 1,865,000 AND WHEREAS, the City Council hereby reserves and retains the right to issue the balance of unissued bonds approved at said elections in one or more installments when, in the judgment of the Council, funds are needed to accomplish the purposes for which such bonds were voted; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: SECTION 1: Authorization - Desiqnation- Principal Amount- Purpose. General obligation bonds of the City shall be and are hereby authorized to be issued in the aggregate principal amount of $4,100,000, to be designated and bear the title "CITY OF NORTH RICHLAND HILLS, TEXAS, GENERAL OBLIGATION BONDS, SERIES 1997" (hereinafter referred to as the "Bonds"), for permanent public improvements and public purposes, to wit: street improvements, including traffic signalization, drainage incidental thereto and the acquisition of land and right-of-way therefor, in accordance G42027~ with authority conferred at the aforesaid election and in conformity with the Constitution and laws of the state of Texas, including Vernon's Ann. civ. st., Article 1175, as amended. SECTION 2: Fullv Reqistered Obliqations - Bond Date - Authorized Denominations-Stated Maturities-Interest Rates. The Bonds shall be issued as fully registered obligations only, shall be dated April 15, 1997 (the "Bond Date"), and, other than the single fully registered Initial Bond referenced in section 8 hereof, shall be in denominations of $5,000 or any integral multiple (within a Stated Maturity) thereof, and shall become due and payable on February 15 in each of the years and in principal amounts (the "Stated Maturities") and bear interest at the rate(s) per annum in accordance with the following schedule: Year of Principal Interest Stated Maturitv Amount Rate(s) 1998 $205,000 % 1999 205,000 % - 2000 205,000 % - 2001 205,000 % - 2002 205,000 % 2003 205,000 % - 2004 205þOOO % - 2005 205,000 % - 2006 205,000 % - 2007 205,000 % - 2008 205,000 % - 2009 205,000 % - 2010 205,000 % - 2011 205,000 % 20 ,000 % 2017 ,000 % The Bonds shall bear interest on the unpaid principal amounts from the Bond Date at the rate(s) per annum shown above in this section (calculated on the basis of a 360-day year of twelve 30-day months). Interest on the Bonds shall be payable on February 15 and August 15 in each year, commencing February 15, 1998. SECTION 3: Terms of payment-payinq Aqent/Reqistrar. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of maturity, redemption or otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter called the "Holders") appearing on the registration and transfer books maintained by the Paying Agent/Registrar and 0420Z71> -2- the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The selection and appointment of Bank One, Texas, N.A., Fort Worth, Texas to serve as Paying Agent/Registrar for the Bonds is hereby approved and confirmed. Books and records relating to the registration, payment, exchange and transfer of the Bonds (the "security Register") shall at all times be kept and maintained on behalf of the City by the Paying Agent/Registrar, all as provided herein, in accordance with the terms and provisions of a "paying Agent/Registrar Agreement", substantially in the form attached hereto as Exhibit A and such reasonable rules and regulations as the Paying Agent/Registrar and the City may prescribe. The Mayor and City Secretary of the City are hereby authorized to execute and deliver such Agreement in connection with the delivery of the Bonds. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause 3. written notice thereof to be sent to each Holder by united States Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of and premium, if any, on the Bonds shall be payable at the Stated Maturities or the redemption thereof, only upon presentation and surrender of the Bonds to the Paying Agent/Registrar at its designated offices in Westerville, Ohio (the "Designated Payment/Transfer Off ice"). Interest on the Bonds shall be paid to the Holders whose name appears in the Security Register at the close of business on the Record Date (the last business day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent united States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Bonds 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 by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on such date 0420270 -3- shall have the same force and effect as if made on the original date payment was due. In the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/ Registrar, if and when funds for the payment of such interest have been received from the city. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. SECTION 4: Redemption. (a) optional Redemption. The Bonds having Stated Maturities on and after February 15, 2008, shall be 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 multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on February 15, 2007 or on any date thereafter at the redemption price of par plus accrued interest to the date of redemption. At least forty-five (45) days prior to a redemption date for the Bonds (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to redeem Bonds, the principal amount of each Stated Maturity to be redeemed, and the date of redemption therefor. The decision of the City to exercise the right to redeem Bonds shall be entered in the minutes of the governing body of the City. (b) Mandatorv Redemption. The Bonds having Stated Maturities of February 15, 20_ and February 15, 2017 ("Term Bonds") shall be subject to mandatory redemption prior to maturity at the redemption price of par and accrued interest to the date of redemption on the respective dates and in principal amounts as follows: (i) Bonds maturing February 15, 20___ are subject to mandatory redemption on the dates and in the principal amounts as follows: Redemption Date Principal Amount February 15, 20 February 15, 20 $205,000 205,000 0<12027~ -4- (ii) Bonds maturing February 15, 2017 are subject to mandatory redemption on the dates and in the principal amounts as follows: Date Principal Amount February 15, 20 February 15, 20 $205,000 205,000 On or prior to each January 1 in each of the years specified above that the Term Bonds are to be mandatorily redeemed, the Paying Agent/Registrar shall select by lot the numbers of the Term Bonds within the applicable stated Maturity to be redeemed on the next following February 15 from moneys set aside for that purpose in the Interest and Sinking Fund (as hereinafter defined). Any Term Bond not selected for prior redemption shall be paid on the date of their Stated Maturity. The principal amount of the Term Bonds for a given stated Maturity required to be redeemed pursuant to the operation of such mandatory redemption provisions shall be reduced, at the option of the City, by the principal amount of Term Bonds of like Stated Maturity which, at least 50 days prior to the mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding the principal aIn.Dunt of such Term Bonds ,p1us "'c~rue(! interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the optional redemption provisions set forth in paragraph (a) of this Section and not theretofore credited against a mandatory redemption requirement. (c) Selection of Bonds for Redemption. If less than all outstanding Bonds of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by dividing the principal amount of such Bonds by $5,000 and shall select the Bonds, or principal amount thereof, to be redeemed within such Stated Maturity by lot. (d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Bonds, a notice of redemption shall be sent by united states Mail, first class postage prepaid, in the name of the City and at the City's expense, to each Holder of a Bond to be redeemed in whole or in part at the address of the Holder appearing on the Security Register at the close of business on the business day next preceding the date of mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Holder. 04202711 -5- All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price, (iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemption date specified, and the interest thereon, or on the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the redemption date, and (v) specify that payment of the redemption price for the Bonds, or the principal amount thereof to be redeemed, shall be made at the Designated Payment/Transfer Office of the Paying Agent/Registrar only upon presentation and surrender thereof by the Ho lder . I f a Bond is subj ect by its terms to pr ior redemption, and has been called for redemption, and notice of redemption thereof has been duly given as hereinabove provided, such Bond (or the principal amount thereof to be redeemed) shall become due and payable and interest thereon shall cease to accrue from and after the redemption date therefor; provided moneys sufficient for the payment of such Bond (or of the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar. SECTION 5: Reqistration -Transfer - Exchanqe.of Bonds- Predecessor Bonds. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the Bonds issued under and pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any Bond may be transferred or exchanged for Bonds of other authorized denominations by the Holder, in person or by his duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. Upon surrender of any Bond (other than the Initial Bond(s) authorized in section 8 hereof) for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar, the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new Bonds of authorized denominations and having the same Stated Maturity and of a like aggregate principal amount as the Bond or Bonds surrendered for transfer. At the option of the Holder, Bonds (other than the Initial Bond(s) authorized in section 8 hereof) may be exchanged for other Bonds of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate o.42027ð -6- principal amount as the Bonds surrendered for exchange, upon surrender of the Bonds to be exchanged at the Designated Payment/Transfer Office of the Paying Agent/Registrar. Whenever any Bonds are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new Bonds to the Holder requesting the exchange. All Bonds issued in any transfer or exchange of Bonds shall be delivered to the Holders at the Designated Payment/Transfer Office of the Paying Agent/Registrar or sent by united states Mail, first class, postage prepaid to the Holders, and, upon the registration and delivery thereof, the same shall be the valid obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the Bonds surrendered in such transfer or exchange. All transfers or exchanges of Bonds pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined, to be "Predecessor- Bonds," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the new Bond or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any mutilated, lost, destroyed, or stolen Bond for which a replacement Bond has been issued, registered, and delivered in lieu thereof pursuant to the provisions of section 11 hereof and such new replacement Bond shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. Neither the City nor the Paying Agent/Registrar shall be required to issue or transfer to an assignee of a Holder any Bond called for redemption, in whole or in part, within 45 days of the date fixed for the redemption of such Bondi provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in part. SECTION 6: Book-Entrv Onlv Transfers and Transactions. Notwithstanding the provisions contained in sections 3, 4 and 5 hereof relating to the payment, and transfer/exchange of the Bonds, the City hereby approves and authorizes the use of "Book-Entry Only" securities clearance, settlement and transfer system provided by The Depository Trust Company (DTC), a limited purpose trust company organized under the laws of the State of New ().42()'l7 ~ -7- York, in accordance with the requirements identified in the Letter of Representation, by City, the Paying Agent/Registrar and DTC Agreement") relating to the Bonds. and procedures and between the (the "Depository Pursuant to the Depository Agreement and the rules of DTC, the Bonds shall be deposited with DTC who shall hold said Bonds for its participants (the "DTC Participants"). While the Bonds are held by DTC under the Depository Agreement, the Holder of the Bonds on the Security Register for all purposes, including payment and notices, shall be Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each Bond (the "Beneficial Owners") being recorded in the records of DTC and DTC Participants. In the event DTC determines to discontinue serving as securities depository for the Bonds or otherwise ceases to provide book-entry clearance and settlement of securities transactions in general or the City determines that DTC is incapable of properly discharging its duties as securities depository for the Bonds, the City covenants and agrees with the Holders of the Bonds to cause Bonds to be printed in definitive form and provide for the Bond certificates to be issued and delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the Bonds in definitive fo::rm sbaTl.,be, a!';signed, transferred and exchanged on the Security Register maintained by the Paying Agent/Registrar and payment of such Bonds shall be made in accordance with the provisions of sections 3, 4 and 5 hereof. SECTION 7: Execution - Reqistration. The Bonds shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Bonds may be manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who are or were the proper officers of the City on the Bond Date shall be deemed to be duly executed on behalf of the city, notwithstanding that such individuals or either of them shall cease to hold such offices at the time of delivery of the Bonds to the initial purchaser(s) and with respect to Bonds delivered in subsequent exchanges and transfers, all as authorized and provided in the Bond Procedures Act of 1981, as amended. No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such Bond either a certificate of registration substantially in the form provided in section 9C, manually executed by the Comptroller of Public Accounts of the State of Texas, or his duly authorized agent, or a certificate of registration substantially in the form provided in section 9D, 0420276 -8- manually executed by an authorized officer, employee or representati ve of the Paying Agent/Registrar, and either such certificate duly signed upon any Bond shall be conclusive evidence, and the only evidence, that such Bond has been duly certified, registered, and delivered. SECTION 8: Initial Bond(s). The Bonds herein authorized shall be initially issued either (i) as a single fully registered bond in the total principal amount of $4,100,000 with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1, or (ii) as (___) fully registered bonds, being one bond for each year of maturity in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward (hereinafter called the "Initial Bond(s) ") and, in either case, the Initial Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial Bond(s) shall be the Bonds submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the Initial Bond(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Bond (s) delivered hereunder and exchange therefor definitive Bonds of authorized d~nominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 9: Forms. A. Forms Generallv. The Bonds, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration certificate of paying Agent/Registrar, and the form of Assignment to be printed on each of the Bonds, shall be substantially in the forms set forth in this section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including insurance legends in the event the Bonds, or any maturities thereof, are purchased with insurance and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Bonds as evidenced by their execution. Any portion of the text of any Bonds may be set forth on the 04202711 -9- reverse thereof, with an appropriate reference thereto on the face of the Bond. The definitive Bonds and the Initial Bond(s) shall be printed, lithographed, or engraved, typewritten, photocopied or otherwise reproduced in any other similar manner, all as determined by the officers executing such Bonds as evidenced by their execution thereof. Form of Definitive Bond. B. REGISTERED NO. REGISTERED $ UNITED STATES OF AMERICA STATE OF TEXAS CITY OF NORTH RICHLAND HILLS, TEXAS GENERAL OBLIGATION BOND, SERIES 1997 Bond Date: April 15, 1997 Interest Rate: Stated Maturity: CUSIP NO: Registered Owner: Principal Amount: DOLLARS The city of North Richland Hills (hereinafter referred to as the "City"), a body corporate and political subdivision in the County of Tarrant, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner named above, or the registered assigns thereof, on the Stated Maturity date specified above the Principal Amount hereinabove stated (or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the unpaid principal amount hereof from the Bond Date 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 being payable on February 15 and August 15 in each year, commencing February 15, 1998. Principal of this Bond is payable at its Stated Maturity or redemption to the registered owner hereof, upon presentation and surrender, at the Designated Payment/Transfer Office of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor; provided, however, while this Bond is registered to Cede & Co., the payment of principal upon a partial redemption of the principal amount hereof may be accomplished 0420Z7:1 -10- wi thout presentation and surrender of this Bond. Interest is payable to the registered owner of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the last business day of the month next preceding each interest payment date, and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the united States of America which at the time of payment is legal tender for the payment of public and private debts. This Bond is one of the series specified in its title issued in the aggregate principal amount of $4,100,000 (herein referred to as the "Bonds") for permanent public improvements and public purposes, to wit: street improvements, including traffic signalization, drainage incidental thereto and the acquisition of land and right-of-way therefor, under and in strict conformity with the Constitution and laws of the state -of Texas and pursuant to an Ordinance adopted by the City Council of the City (herein referred to as the "Ordinance"). The Bonds maturing on dates hereinafter identified (the "Term Bonds") are subject to mandatory redemption prior to maturity with funds on deposit in the Interest and Sinking Fund established and maintained for the payment thereof in the Ordinance, and shall be redeemed in part prior to maturity at the price of par and accrued interest thereon to the date of redemption, and without premium, on the dates and in the amounts set forth in the Ordinance. Bonds maturing February 15, 20___ are subject to mandatory redemption on February 15, 20__ and annually thereafter on February 15 through February 15, 20_ in the amounts set forth in the Ordinance. Bonds maturing on February 15, 2017 are subject to mandatory redemption on February 15, 20 and annually thereafter on February 15 through February 15, 2016 in the amounts set forth in the Ordinance. The particular Term Bonds of a given maturity to be redeemed on each redemption date shall be chosen by lot by the Paying Agent/Registrar; provided, however, that the principal amount of Term Bonds for a given maturity required to be redeemed pursuant to the operation of such mandatory redemption provisions shall be reduced, at the option of the City, by the principal amount of Term Bonds of like maturity which, at least 50 days prior to a mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding the principal amount of such 042027ð -11- Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the optional redemption provisions appearing below and not theretofore credited against a mandatory redemption requirement. The Bonds maturing on and after February 15, 2008, may be redeemed prior to their stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a stated Maturity by lot by the Paying Agent/Registrar), on February 15, 2007, or on any date thereafter, at the redemption price of par, together with accrued interest to the date of redemption. At least thirty days prior to a redemption date, the City shall cause a written notice of such redemption to be sent by United states Mail, first class postage prepaid, to the registered owners of the Bonds to be redeemed in whole or in part, and subject to the terms and provisions relating thereto contained in the Ordinance. If a Bond (or any portion of its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon said redemption date such Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and interest thereon shall cease to accrue from and after the redemption date therefor; provided moneys' for the payment of the redemption price and the interest on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar. In the event a portion of the principal amount of a Bond is to be redeemed and the registered owner is someone other than Cede & Co., payment of the redemption price of such principal amount shall be made to the registered owner only upon presentation and surrender of such Bond to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a new Bond or Bonds of like maturity and interest rate in any authorized denominations provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to the registered owner, without charge. If a Bond is selected for redemption, in whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such Bond to an assignee of the registered owner within 45 days of the redemption date therefor; provided, however, such limitation on transferability shall not be applicable to an exchange by the registered owner of the unredeemed balance of a Bond redeemed in part. The Bonds are payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment/Transfer 042027~ -12- Office of the Paying Agent/Registrar, and to all of the provisions of which the owner or holder of this Bond by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the tax levied for the payment of the Bonds; the terms and conditions relating to the transfer or exchange of this Bond; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which this Bond may be discharged at or prior to its maturity or redemption, and deemed to be no longer Outstanding thereunder; and for other terms and provisions contained therein. Capitalized terms used herein have the meanings assigned in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the Designated Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more new fully registered Bonds of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, shall treat the registered owner whose name appears on the Security Register (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Bond as the owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor the paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In the event of nonpayment of interest on a scheduled payment date and for thirty (30) days thereafter, a new record date for such interest payment (a "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 (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by united States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. 042027ð -13- It is hereby certified, recited, represented and declared that the City is a body corporate and political subdivision duly organized and legally existing under and by virtue of the Constitution and laws of the state of Texas; that the issuance of the Bonds is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the Bonds to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the state of Texas, and the Ordinance; that the Bonds do not exceed any Constitutional or statutory limitation; and that due provision has been made for the payment of the principal of and interest on the Bonds by the levy of a tax as aforestated. In case any provision in this Bond 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. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the state of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this Bond to be duly executed under the official seal of the City as of the Bond Date. CITY OF NORTH RICHLAND HILLS, TEXAS COUNTERSIGNED: Mayor city Secretary (SEAL) ~1i -14- C. *Form of Reqistration certificate of Comptroller of Public Accounts to appear on Initial Bond(s) onlv. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS THE STATE OF TEXAS ( ( ( ( REGISTER NO. OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS I HEREBY CERTIFY that this Bond has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal of office this Comptroller of Public Accounts of the State of Texas -\ SEAL) '" D. Form of certificate of pavinq Aqent/Reqistrar to appear on Definitive Bonds onlv. REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR This Bond has been duly issued and registered under the provisions of the within-mentioned Ordinance; the bond or bonds of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. The designated offices of the paying Agent/Registrar located in Westerville, Ohio, is the "Designated Payment/Transfer Office" for this Bond. Registration Date: BANK ONE, TEXAS, N.A., Fort Worth, Texas, as Paying Agent/Registrar By Authorized Signature *NOTE TO PRINTER: Do Not Print on Definitive Bonds 0420276 -15- E. Form of Assiqnment. 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 thereunder, and hereby irrevocably constitutes and appoints ........... .............. ........ ..... ...... .......... ........ ... ...... attorney to transfer the within Bond on the books kept for registration thereof, 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. Signature guaranteed: F. The Initial Bond(s) shall be in the form set forth in paraqraph B· of this, section, except. that the form of the sinqle fully registered Initial Bond shall be modified as follows: (i) immediately under the name of the bond the headings "Interest Rate " and "Stated Maturity " shall both be omitted. (ii) Paragraph one shall read as follows: Registered Owner: Principal Amount: Dollars The City of North Richland Hills (hereinafter referred to as the "city"), a body corporate and municipal corporation in the County of Tarrant, State of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner named above, or the registered assigns thereof, the Principal Amount hereinabove stated on February 15 in each of the years and in principal installments in accordance with the following schedule: YEAR OF PRINCIPAL MATURITY INSTALLMENTS (Information to be inserted from schedule in section 2 hereof). INTEREST RATE 042027.5 -16- (or so much principal thereof as shall not have been prepaid prior to maturity) and to pay interest on the unpaid Principal Amount hereof from the Bond Date at the per annum rates of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on February 15 and August 15 in each year, commencing February 15, 1998. Principal installments of this Bond are payable in the year of maturity or on a prepayment date to the registered owner hereof by Bank One, Texas, N.A., Fort Worth, Texas, upon presentation and surrender, at its designated offices in Westerville, Ohio (the "Designated Payment/Transfer Office"). Interest is payable to the registered owner of this Bond whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the last business day of the month next preceding each interest payment date, and interest shall be paid by the Paying Agent/Registrar by check sent united States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the united States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 10: Levv of Taxes. To provide for the payment of the "Debt Service Requirements" of the Bonds, being (i) the interest on the Bonds and (ii) a sinking fund for their redemption at maturity or a sinking fund of 2% (whichever amount is the greater), there is hereby levied, and there shall be annually assessed and collected in due time, form, and manner, a tax on all taxable property in the City, within the limitations prescribed by law, and such tax hereby levied on each one hundred dollars' valuation of taxable property in the City for the Debt Service Requirements of the Bonds shall be at a rate from year to year as will be ample and sufficient to provide funds each year to pay the principal of and interest on said Bonds while outstanding; full allowance being made for delinquencies and costs of collection; separate books and records relating to the receipt and disbursement of taxes levied, assessed and collected for and on account of the Bonds shall be kept and maintained by the City at all times while the Bonds are Outstanding, and the taxes collected for the payment of the Debt Service Requirements on the Bonds shall be deposited to the credit of a "Special 1997 Bond Account" (the "Interest and Sinking Fund") maintained on the records of the City and deposited in a special fund maintained at an official depository of the City's funds; and such tax hereby levied, and to be assessed and collected annually, is hereby pledged to the payment of the Bonds. 042027 ð -17- Proper officers of the City are hereby authorized and directed to cause to be transferred to the Paying Agent/ Registrar for the Bonds, from funds on deposit in the Interest and Sinking Fund, amounts sufficient to fully pay and discharge promptly each installment of interest and principal of the Bonds as the same accrues or matures or comes due by reason of redemption prior to maturity; such transfers of funds to be made in such manner as will cause collected funds to be deposited with the Paying Agent/Registrar on or before each principal and interest payment date for the Bonds. SECTION 11: Mutilated-Destroved-Lost and Stolen Bonds. In case any Bond shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying Agent/Registrar of evidence satisfactory to the Paying Agent/Registrar of the destruction, loss or theft of such Bond, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the -Paying Agent/Registrar harlnless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Bond shall be borne by the Holder of the Bond mutilated, or destroyed, lost or stolen. Every replacement Bond issued pursuant to this Section shall be a valid and binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen Bonds. The provisions of this section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost or stolen Bonds. SECTION 12: Satisfaction of Obligation of city. If the City shall payor cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied under this Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and satisfied. 0012027~ -18- Bonds or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized escrow agent, which Government Securities have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the principal of and interest on such Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption date thereof. The City covenants that no deposit of moneys or Government Securities will be made under this section and no use made of any such deposit which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of section 148 of the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent, and all income from Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Bonds, or any principal amount(s) thereof, or interest thereon with respect to which such moneys have been so deposited shall be remitted to the City or deposited as directed by the city. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and remaining unclaimed for a period of four (4) years after the Stated Maturity, or applicable redemption date, of the Bonds such moneys were deposited and are held in trust to pay shall upon the request of the City be remitted to the City against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the state of Texas. The term "Government Securities", as used herein, means direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United states of America, which are non-callable prior to the respective Stated Maturities of the Bonds and may be united States Treasury obligations such as the State and Local Government Series and may be in book-entry form. 042027:\ -19- SECTION 13: Ordinance a Contract - Amendments - outstandinq Bonds. This Ordinance shall constitute a contract with the Holders from time to time, be binding on the city, and shall not be amended or repealed by the City so long as any Bond remains outstanding except as permitted in this section. The city may, without the consent of or notice to any Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the consent of Holders holding a majority in aggregate principal amount of the Bonds then outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of outstanding Bonds, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment, addition, or rescission. The te:r'm "outstanding" when used in this Ordinance with respect to Bonds means, as of the date of determination, all Bonds theretofore issued and delivered under this Ordinance, except: (1) those Bonds cancelled Agent/Registrar or delivered Agent/Registrar for cancellation; by to the the Paying Paying (2) those Bonds deemed to be duly paid by the City in accordance with the provisions of section 12 hereof; and (3) those mutilated, destroyed, lost, or stolen Bonds which have been replaced with Bonds registered and delivered in lieu thereof as provided in section 11 hereof. SECTION 14: Covenants to Maintain Tax-Exempt status. (a) Definitions. When used in this Section, the following terms shall have the following meanings: 042027:1 -20- "Closing Date" means the date on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. "Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any , effective on or before the Closing Date. "Computation Date" has the meaning set forth in section 1.148-1(b) of the Regulations. "Gross Proceeds" means any proceeds as defined in Section 1.148-1(b) of the Regulations, and any replacement proceeds as defined in Section 1.148-1 (c) of the Regulations, of the Bonds. "Investment" has the meaning set forth in section 1.148-1(b) of the Regulations. "Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. "Rebate Amount" has the meaning set forth in section 1.148-1(b) of the Regulations. " Regul a ti ons" means any proposed, temporary, or final Income Tax Regulations issued pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the specific Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in Section 1.148-5 of the Regulations; and (2) the Bonds has the meaning set forth in section 1.148-4 of the Regulations. (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respecti vely , would cause the interest on any Bond to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. 0420276 -21- without limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the field of munIcipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any Bond, the City shall comply with each of the specific covenants in this section. (c) No Private Use or Private Payments. Except as permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of Bonds: (1) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Bonds (including property financed with Gross Proceeds of the Refunded Obligations), and not use or permit the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the united states or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and (2) not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the Bonds or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds (including property financed with Gross Proceeds of the Refunded Obligations), other than taxes of general application within the City or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except t'o the extent permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans to .any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes; 042027~ -22- (2) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. (e) Not to Invest at Hiqher Yield. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace money so invested), if as a result of such investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the Bonds. (f) Not Federallv Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. (g) Information Report. The City shall timely file the information required by section 149 (e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. (h) Rebate of Arbitraqe Profits. otherwise provided in section 148(f) Regulations and rulings thereunder: Except to the extent of the Code and the (1) The City shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last outstanding Bond is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the Bonds with other money of the city, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. 042027 ~ -23- (2) Not less frequently than each Computation Date, the City shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Bonds until six years after the final Computation Date. (3) As additional consideration for the purchase of the Bonds by the Purchasers and the loan of the money represented thereby and in order to induce such purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall pay to the United states out of the Interest and Sinking Fund or its general fund, as permitted by applicable Texas statute, regulation or opinion of the Attorney General of the State of Texas, the amount that when added to the future value of previous rebate payments made for the Bonds equals (i) in the case of a Final Computation Date as defined in Section 1.148-3(e) (2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation pate, ninety p,~rcent ~90.%)of the,. Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place and in the manner as is or may be required by section 148(f) of the Code and the Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required by Section 148(f) of the Code and the Regulations and rulings thereunder. (4) The City shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error wi thin a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the United States of any additional Rebate Amount owed to it,' interest thereon, and any penalty imposed under Section 1.148-3(h) of the Regulations. 0-42027~ -24- (i) Not to Divert Arbitraqe Profits. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the city shall not, at any time prior to the earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that reduces the amount required to be paid to the united states pursuant to Subsection H of this Section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield of the Bonds not been relevant to either party. (j) Elections. The city hereby directs and authorizes the Mayor, City Manager, Assistant city Manager or Director of Finance, individually or jointly, to make elections permitted or required pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate in connection with the Bonds, in the certificate as to Tax Exemption or similar or other appropriate certificate, form or document. SECTION 15: Sale of the Bonds. Pursuant to a public sale for the Bonds, the bid submitted by (herein referred to as the "Purchasers") is declared to be the best bid received producing the lowest true interest cost rate to the city, and the sale of the Bonds to said Purchasers at .tbe price of .par and accrued interest to the date of delivery, plus a premium of $ , is hereby approved and conf irmed. Deli very of the Bonds to the Purchasers shall occur as soon as possible upon payment being made therefor in accordance with the terms of sale. SECTION 16: Control and Custody of Bonds. The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, including the printing and supply of definitive Bonds, and shall take and have charge and control of the Initial Bond(s) pending the approval thereof by the Attorney General, the registration thereof by the comptroller of Public Accounts and the delivery thereof to the Purchasers. Furthermore, the Mayor, city Secretary, City Manager, Assistant city Manager, and Director of Finance, anyone or more of said officials, are hereby authorized and directed to furnish and execute such documents and certifications relating to the city and the issuance of the Bonds, including certifications as to facts, estimates, circumstances and reasonable expectations pertaining to the use, expenditure, and investment of the proceeds of the Bonds, as may be necessary for the approval of the Attorney General, the registration by the comptroller of Public Accounts and the delivery of the Bonds to the Purchasers, and, together with the City's financial advisor, bond counsel and the Paying 0420Z76 -25- · ---~~---~----_._-----_.. Agent/Registrar, make the necessary arrangements for the delivery of the Initial Bond(s) to the Purchasers and the initial exchange thereof for definitive Bonds. SECTION 17: Official Statement. The Official Statement prepared in the initial offering and sale of the Bonds by the City, together with all addendas, supplements, and amendments thereto issued on behalf of the City, is hereby approved as to form and content, and the City Council hereby finds that the information and data contained in said Official Statement pertaining to the City and its financial affairs is true and correct in all material respects and no material facts have been omi tted therefrom which are necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The use of such Official Statement in the reoffering of the Bonds by the Purchasers is hereby approved and authorized. SECTION 18: Proceeds of Sale. The proceeds of sale of the Bonds, excluding the accrued interest and premium, if any, received from the Purchasers, shall be deposited in a construction fund maintained at the City's depository bank. Pending expenditure for authorized projects and purposes, such proceeds of sale may be invested in authorized investments and any investment ea!.~nings realized sha}l be expended for such,. authorized· projects and purposes or deposited in the Interest and Sinking Fund as shall be determined by the City Council. Accrued interest and premium, if any, received from the Purchasers as well as all surplus proceeds of sale of the Bonds, including investment earnings, remaining after completion of all authorized projects or purposes shall be deposited to the credit of the Interest and Sinking Fund. SECTION 19: 'Notices to Holders-Waiver. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and sent by United States Mail, first class postage prepaid, to the address of each Holder appearing in the Security Register at the close of business on the business day next preceding the mailing of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other Bonds. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event with respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying 042027~ -26- -_._-_._._-,_.._----------~.~--_.,-'-- .--,--'.._,-----'""."~-_..<,---,_._------- Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 20: Cancellation. All Bonds surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if surrendered to the City, shall be delivered to the paying Agent/Registrar and, if not already cancelled, shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Bonds held by the Paying Agent/Registrar shall be returned to the city. SECTION 21: Market Opinion. The Purchasers' obligation to accept delivery of the Bonds is subject to being furnished a final opinion of Fulbright & Jaworski, L.L.P., Dallas, Texas, approving the Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for the Bonds. An executed counterpart of said opinion shall accompany the global certificates deposited with The Depository Trust Company or a ~eproduction th~réof~shallbe printed on the definitive Bonds in the event the book entry only system shall be discontinued. SECTION 22: CUSIP Numbers. CUSIP numbers may be printed or typed on the definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving the Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds. SECTION 23: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the city, the paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar and the Holders. SECTION 24: Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to the extent of such conflict, and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. -27- 042027~ ~---- ------ - - - ~-- SECTION 25: Governinq Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 26: Effect of Headinqs. herein are for convenience only and construction hereof. The shall Section headings not affect the SECTION 27: Construction of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, words of the plural number shall be considered to include the singular, and words of the masculine, feminine or neuter gender shall be considered to include the other genders. SECTION 28: Severability. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and the City Council hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 29: Continuinq Disclosure Undertaking. (a) Definitions. As used in this Section, the following terms have th.e meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. (b) Annual Reports. The City shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year (beginning with the fiscal year ending September 30, 1997) financial information and operating data with respect to the City of the general type included in the final Official Statement approved by Section 17 of this Ordinance, being the information described in Exhibit B hereto. Financial statements to be 0420276 -28- provided shall be (1) prepared in accordance with the accounting principles described in Exhibit B hereto and (2) audited, if the city commissions an audit of such statements and the audit is completed within the period during which they must be provided. If audited financial statements are not available at the time the financial information and operating data must be provided, then the city shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and any SID with the financial information and operating data and will file the annual audit report when and if the same becomes available. If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. (c) Material Event Notices. The'City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements ref lecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax- exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasances; 0420270 -29- -'--"'-'--'--~--'-'----,-----~- 10. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such Section. (d) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section while, but only while, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give the notice required by subsection (c) hereof of any Bond calls and defeasance that cause the City to be no longer such an "obligated person." The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. 0420'l7~ -30- -,--_.._~----,- Nothing in this section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances resulting from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (1) the provisions of this section, 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, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a Person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Holders and beneficial owners of the Bonds. The provisions of this section may also be amended from time to time or repealed by the City if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent th~t reserva.t.:ion of the City's right to do so would not prevent underwriters of the initial public offering of the Bonds from lawfully purchasing or selling Bonds in such offering. If the city so amends the provisions of this Section, it shall include with any amended financial information or operating data filed with each NRMSIR and SID pursuant to subsection (b) of this section an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information or operating data so provided. SECTION 30: Public Meetinq. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as amended. 042027~ -31- SECTION 31: Effective Date. This Ordinance shall be in full force and effect from and after its passage on the date shown below and it is so ordained. PASSED AND ADOPTED, this April 28, 1997. CITY OF NORTH RICHLAND HILLS, TEXAS ATTEST: Mayor City Secretary APPROVED AS TO LEGALITY: (City Seal) City Attorney G42027~ -32- EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of April 28, 1997 (this "Agreement"), by and between the City of North Richland Hills, Texas (the "I ssuer"), and Bank One Texas, N. A., Fort Worth, Texas, a national association duly organized and existing under the laws of the united States of America, (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of North Richland Hills, Texas, General Obligation Bonds, Series 1997" (the "Securities") in the aggregate principal amount of $4,100,000, which Securities are scheduled to be delivered to the initial purchasers on or about June 4, 1997; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as paying Agent with respect to the Securities, and, as paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof; all in accordance with this Agreement and the "Bond Resolution" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Bond Resolution". The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. 0420299 _.~---'-~--'--~ .,--'------_.~"--'-'---~~---_.~---------- Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A attached hereto for the first year of this Agreement and thereafter 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. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the offices of the Bank located in Westerville, Ohio at the address appearing in Section 3.01 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Bond Resolution" means the resolution, order, or ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank. "Fiscal Year" means the fiscal year of the Issuer, ending September 30th. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor, City Manager, Assistant City Manager, Director of Finance, or City Secretary, anyone or more of said officials, and delivered to the Bank. 0420299 -2- ~X¡ '!8J1~ ¡Ii, -- ..r1", d ~ ~-. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "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 Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen security for which a replacement Security has been registered and delivered in lieu thereof pursuant to section 4.06 hereof and the Resolution) . "Record Date" means the Record Date as defined in the Bond Resolution. "Redemption Date" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Bond Resolution. "Responsible Oft:icer''- 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 Off icer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" means the securities defined in the recital paragraphs herein. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfers of Securities. "Stated Maturity" means the date specified in the Bond Resolution the principal of a Security is scheduled to be due and payable. 0-420299 -3- EXHIBIT A section 2.02. Other Definitions. The terms "Bank," "Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying Aqent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following offices: Bank One, Texas, N.A. Attention: Securities Transfer 235 West Schrock Road Westerville, Ohio 43081-0393 As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpQse by or. on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and making payment thereof to the Holders of the Securities (or their Predecessor Securities) on the Record Date (as defined in the Resolution). All payments of principal and/or interest on the Securities to the registered owners shall be accompl ished ( 1) by the issuance of checks, payable to the registered owners, drawn on the fiduciary account provided in section 5.05 hereof, sent by United States mail, first class, postage prepaid, to the address appearing on the Security Register or (2) by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities at the dates specified in the Bond Resolution. ART I CLE FOUR REGISTRAR Section 4.01. Security Reqister - Transfers and Exchanqes. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by 0420299 -4- EXHIBIT A the Issuer and subject to such reasonable regulations as the Issuer and Bank may prescribe. The Bank represents and warrants its office in Fort Worth, Texas will at all times have immediate access to the Security Register by electronic or other means and will be capable at all times of producing a hard copy of the security Register at its Fort Worth office for use by the Issuer. All transfers, exchanges and replacement of Securities shall be noted in the security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to -the HO'lder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other governments or corporations for which it serves as registrar, or that is maintained for its own securities. section 4.03. Form of Security Reaister. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. 0420299 -5- EXHIBIT A The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Certificates. The Bank will; at such reasonable intervals as it determines,.. cancel and destroy, pursuant to the Securities and Exchange Act of 1934, all Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. Section 4.06. Mutilated. Destroved. Lost or Stolen Securi- ties. The Issuer hereby instructs the Bank, subject to the provisions of Section 11 of the Bond Resolution, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. 0420299 -6- EXHIBIT :4 section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to section 4.06. ARTICLE FIVE THE BANK section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. section 5.02. Reliance on Documents. Etc. may conclusively rely, as to the truth of the correctness of the opinions expressed therein, on opinions furnished to the Bank. (a) The Bank statements and certificates or (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 fact-s" (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counselor any opinion of counsel shall be full and complete authorization and protection with respect to any action 0-420299 -7- EXHIBIT A taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. section 5.05. Moneys Held by Bank - Fiduciary Account! Collateralization. A fiduciary account shall at all times be kept and maintained by the, Ba.n!c for _the receipt, safekee'ping and disbursement of moneys received from the Issuer hereunder for the payment of the Securities, and money deposited to the credit of such account until paid to the Holders of the Securities shall be continuously collateralized by securities or obligations which qualify and are eligible under both the laws of the State of Texas and the laws of the united States of America to secure and be pledged as collateral for fiduciary accounts to the extent such money is not insured by the Federal Deposit Insurance Corporation. Payments made from such fiduciary account shall be made by check drawn on such fiduciary account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. The Bank shall be under no liability for interest on any money received by it hereunder. Subject to the applicable unclaimed property laws of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for four years after final maturity of the Security has become due and payable will be paid by the Bank to the Issuer, and the Holder of such Security shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such moneys shall thereupon cease. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without 0420299 -8- EXHIBIT A negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the state and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. section 5.08. DTC Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Ope:rational Arrangements", effective December 12, 1994, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. section 6.02. Assiqnment. This Agreement may not be assigned by either party without the prior written consent of the other. section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on page 11. section 6.04. Effect of Headinqs. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 0420299 -9- ,·':X~a8rr A Section 6.05. Successors and Assiqns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. section 6.07. Benefits of Aqreement. 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 Aqreement. This Agreement and the Bond Resolution constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Bond Resolution, the Bond Resolution shall govern. section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (6Ö) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. The 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 such notice of resignation. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. 0420299 -10- -Vi. j¡~'1"f" L.;'\ ;Ä'~,n~h4~ ,-.Î The provisions of Section 1.02 survive and remain in full force termination of this Agreement. and of Article Five shall and effect following the section 6.11. Governinq Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BANK ONE, TEXAS, N.A., Fort Worth, Texas BY Title: [SEAL] Attest: Title: Address: 500 Throckmorton suite 704-West Complex Fort Worth, Texas 76102 CITY OF NORTH RICHLAND HILLS, TEXAS BY Mayor (CITY SEAL) Attest: Address: P. O. Box 820609 North Richland Hills, Texas 76180 City Secretary 00420299 -11- EXHIBIT A Exhibit B to Ordinance DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in section 29 of this Ordinance. Annual Financial statements and operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: 1. The financial statements of the City appended to the Official statement as Appendix B, but for the most recently concluded fiscal year. 2. The information under Tables 1 through 6 and 8 through 15. Accounting principles The accounting principles referred to in such section are the generally accepted accounting principles as applicable to governmental units as prescribed by The Government Accounting Standards Board. 042027ð - CITY OF NORTH RICHLAND HILLS, TEXAS (Tarrant County) $4,100,000 GENERAL OBLIGATION BONDS, SERIES 1997 AND $2,755,000 TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OBLIGATION, SERIES 1997 Sealed Bids Due Monday, April 28, 1997, at 1:00 PM, CDT I ~ NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $4,100,000 CITY OF NORTH RICHLAND HILLS, TEXAS (Tarrant County) GENERAL OBLIGATION BONDS, SERIES 1997 Sealed Bids Due Monday, April 28, 1997, at 1:00 PM, CDT THE BONDS WIll.. NOT BE DESlGNA reo AS "OUALIFIED TAX-EXEMPT OBLIGA nONS" FOR FINANCIAL INSTITUTIONS. THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING. . . The City of North Richland Hills, Texas (the "City") is offering for sale its $4,100,000 General Obligation Bonds, Series 1997 (the "Bonds"). ADDRESS OF BIDS, , . Sealed bids, plainly marked "Bid for Bonds", should be addressed to "Mayor and City Council, City of North Richland Hills, Texas", and delivered to the Financial Advisor at 1700 Pacific A venue, Suite 500, Dallas. Texas, prior to 1:00 PM, COT, on the date of the bid opening. All bids must be submitted on the ùfficial Bid Form, without alteration or interlineation, BIDS BY TELEPHONE OR FACSIMILE, . , Bidders must submit SIGNED Official Bid Forms to David K. Medanich, First Southwest Company. 1700 Pacific Avenue, Suite 500, Dallas, Texas, 75201, and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (214) 953-4054, between 12:00 PM, COT and 12:30 PM, COT. Fax bids will be accepted between 12:00 PM. COT and 12:30 PM, COT, on the date of the sale at (214) 953-4050, attention Rhonda Van Iderstine. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if telephone or fax options are exercised. PLACE AND TIME OF BID OPENING. . , The bids for the Bonds will be publicly opened and read in the offices of the City Manager of the City Hall at 1:00 PM. COT, Monday, April 28, 1997, AWARD OF THE BONDS. , . The City Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to convene at 7:30 PM, COT, on the date of the bid opening, and adopt an ordinance authorizing the Bonds and approving the Official Statement (the "Ordinance"). THE BONDS DESCRIPTION, , . The Bonds will be dated April 15, 1997 (the "Dated Date"), Interest will accrue from the Dated Date and will be due on February 15, 1998, and each August 15 and February 15 thereafter until the earlier of maturity or prior redemption, The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for anyone maturity. The Bonds will mature on February 15 in each year as follows: MATURITY SCHEDULE Principal Principal Principal Year Amount Year Amount Year Amount 1998 $205,000 2005 $205,000 2011 $205.000 1999 205,000 2006 205,000 2012 205.000 2000 205,000 2007 205,000 2013 205,000 2001 205.000 2008 205.000 2014 205,000 2002 205.000 2009 205,000 2015 205,000 2003 205,000 2010 205,000 2016 205,000 2004 205,000 2017 205,000 BOOK-ENTRY-ONLY SYSTEM. . . The City intends to utilize the Book-Entry-Only System of The Depository Trust Company ("DTC"). See "The Bonds - Book-Entry-Only System" in the Official Statement. REDEMPTION. . . The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15,2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2007, or any date thereafter. at the par value thereof plus accrued interest to the date fixed for redemption. SERIAL BONDS OR SERIAL BONDS AND TERM BONDS. . . Bidders may provide that all the bonds be issued as Serial Bonds maturing in accord with the Maturity Schedule shown above (Alternate 1) or as a combination of Serial Bonds and Tenns Bonds (Alternate 2). but a bid with all Tenn Bonds is not permitted. Alternate 1 - Serial Bonds: Serial Bonds maturing on February 15, 1998 through February 15, 2017, Alternate 2 - Serial Bonds and Tenn Bonds: Serial Bonds maturing on February 15. 1998 through February 15. 2011, and one or two tenn bonds consisting of the February 15,2012 through February 15,2017 maturities with each tenn consisting of two or more consecutive annual principal amounts accumulated from the maturity schedule shown above. MANDATORY SINKING FuND. . . If the successful bidder elects to alter the Maturity Schedule reflected above and convert the principal amounts of the Serial Bonds maturing in the years 2012 through 2017 into "Tenn Bonds", such "Tenn Bonds" shall be subjectto mandatory redemption on February 15,2012, or the first February 15 next following the last maturity for Serial Bonds, and annually thereafter on each February 15 until the stated maturity for the Tenn Bonds at the redemption prices of par plus accrued interest to the date of redemption, The principal amounts of the Tenn Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no conversion to Tenn Bonds occurred, At least thirty (30) days prior to each mandatory date, the Paying Agent/Registrar shall select by lot the Tenn Bonds to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Tenn Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced. at the option of the City, by the principal amount of the Tenn Bonds of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Tenn Bonds plus accrued interest to the date of purchase and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar shall be Bank One, Texas, N.A, Fort Worth, Texas (see "The Bonds - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT. . . The Bonds are direct and voted general obligations of the City of North Richland Hills, Texas, payable out of the receipts from an ad valorem tax levied, within the limits prescribed by law, on all taxable property located within the City, as provided in the Ordinance. Further details regarding the Bonds are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES. . . The Bonds will be sold in one block on an "Allor None" basis, and at a price of not less than their par value plus accrued interest from the date of the Bonds to the date of delivery of the Bonds. Bidders are invited to name the rate(s) of interest to be borne by the Bonds, provided that each rate bid must be in a multiple of 1/8 of 1 % or 1/20 of 1 % and the net effective interest rate must not exceed 15%, The highest rate bid may not exceed the lowest rate bid by more than 2% in rate. Interest rates for maturities on or after February 15. 2008 shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest rate for the maturity of the preceding year. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. BASIS FOR AWARD. . . The sale of the Bonds will be awarded to the bidder making a bid that confonns to the specifications herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of all debt service payments on the Bonds on the basis of semi-annual compounding. produces an amount equal to the sum of the par value of the Bonds plus any premium bid (but not interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Fonn will be considered as the official bid. ii Hi GOOD FAITH DEPOSIT. , . A Good Faith Deposit, payable to the "City of North Richland Hills, Texas", in the amount of $82,000.00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Purchaser's compliance with the tenns of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Fonn or it may be submitted separately, If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions, The Good Faith Deposit of the Purchaser will be returned to the Purchaser upon payment for the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Bonds has been made. DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS. . . It is anticipated that CUSIP identification numbers will appear on the Bonds, but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Bonds in accordance with the tenns of this Notice of Sale and Bidding Instructions and the tenns of the Official Bid Fonn. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. DELIVERY OF BONDS. .. Initial Delivery will be accomplished by the issuance of one Initial Bond (also called the "Bond" or "Bonds"), either in typed or printed fonn, in the aggregate principal amount of $4,100,000, payable in stated installments to the Purchaser, signed by the Mayor and City Secretary, approved by the "".torney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Bond, it shall be immediately canceled and one definitive Bond for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book-Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar, Payment for the Bonds must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Purchaser will be given six business days' notice of the time fixed for delivery of the Bonds, It is anticipated that delivery of the Bond(s) can be made on or about June 4, 1997, and it is understood and agreed that the Purchaser will accept delivery and make payment for the Bonds by 10:00 AM, CDT, on June 4, 1997, or thereafter on the date the Bond is tendered for delivery, up to and including June 18, 1996. If for any reason the City is unable to make delivery on or before June 18, 1996, the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend its offer for an additional thirty days. If the Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation, In no event shall the City be liable for any damages by reason of its failure to deliver the Bonds, provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS TO DELIVERY . , , The obligation of the Purchaser to take up and pay for the Bonds is subject to the Purchaser's receipt of (a) the legal opinion of Fulbright & Jaworski LLP., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"), (b) the no-litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the City with infonnation required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exemption of interest on the Bonds from the gross income of their owners, the Purchaser will be required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Bonds) a certification as to their "issue price" substantially in the fonn and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Bonds for sale, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate by the date of delivery of the Bonds, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty, Any questions concerning such certification should be directed to Bond Counsel. LEGAL OPINIONS. , . The Bonds are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Purchaser of opinions of Bond Counsel, to the effèct that the Bonds are valid and binding obligations of the City and that the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Matters" herein, including alternative minimum tax consequences for corporations. CERTIFICATION OF OFFICIAL STATEMENT. . , At the time of payment for and Initial Delivery of the Bonds, the City will execute and deliver to the Purchaser a certificate in the fonn set forth in the Official Statement. CHANGE IN TAX EXEMPT STATUS. . . ,At any time before the Bonds are tendered for delivery, the Purchaser may withdraw its bid if the interest received by private holders on obligations of the same type and character shaIl be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR, , . First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds, The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company may submit a bid for the Bonds, either independently or as a member of a syndicate organized to submit a bid for the Bonds. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. BLUE SKY LAWS. . , By submission of its bid, the Purchaser represents that the sale of the Bonds in states other than Texas wiIl be made only pursuant to exemptions from registration or, where necessary, the Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees to cooperate with the Purchaser, at the Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction, ¡ j ) ì I f f ! NOT AN OFFER TO SELL. . . This Notice of Sale and Bidding Instructions does not alone constitute an offer to seIl the Bonds, but is merely notice of the sale of the Bonds. The offer to seIl the Bonds is being made by means of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefuIly examine the Official Statement to determine the investment quality of the Bonds. IssUANCE OF ADDITIONAL DEBT, , . The City does not anticipate the issuance of additional general obligation debt within the next 12 months. RATINGS, . . The presently outstanding tax supported debt of the City is rated "A" by Moody's Investors Service, Inc. ("Moody's") and "A+" by Standard & Poor's Ratings Services, A Division of McGraw-Hill Companies, Inc. ("S&P"). The City also has ten issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies, Applications for contract ratings on this issue have been made to both Moody's and S&P. The results of their determinations wiIl be provided as soon as possible. MUNICIPAL BOND INSURANCE. . , In the event the Bonds are qualified for municipal bond insurance, and the Purchaser desires to purchase such insurance, the cost therefor will be oaid by the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be oaid by the City. It will be the responsibility of the Purchaser to disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the Bonds. THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2·12 . . The City has prepared the accompanying Official Statement and, for the limited purpose of complying with SEC Rule I 5c2- I 2, deems such Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Bonds. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement. The City will furnish to the Purchaser, or Purchasers, acting through a designated senior representative, in accordance with instructions received from the Purchaser(s), within seven (7) business days from the sale date an aggregate of 100 copies of the Official Statement including a like number of copies of any Supplement(s) reflecting interest rates and other terms relating to the initial reoffering of the Bonds. The cost of a reprinted Official Statement, if the Purchaser(s) shall so elect, and the cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Purchaser(s). The Purchaser(s) shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. iv BOND YEARS Bonds Accumulated Bonds Maturing Amount Bond Years Bond Years Maturing 1998 $ 205,000 170.833 170,833 1998 1999 205,000 375,833 546.667 1999 2000 205,000 580,833 1,127.500 2000 2001 205,000 785,833 1,913.333 2001 2002 205,000 990,833 2,904,167 2002 2003 205,000 1,195.833 4,100,000 2003 2004 205,000 1,400.833 5,500.833 2004 2005 205,000 1,605.833 7,106.667 2005 2006 205,000 1,810.833 8,917.500 2006 2007 205,000 2,015.833 10,933.333 2007 2008 205,000 2,220,833 13,154.167 2008 2009 205,000 2,425.833 15,580.000 2009 2010 205,000 2,630.833 18,210.833 2010 2011 205,000 2,835,833 21,046.667 2011 2012 205,000 3,040.833 24,087,500 2012 2013 205,000 3,245.833 27,333.333 2013 2014 205,000 3,450.833 30,784.167 2014 2015 205,000 3,655.833 34,440.000 2015 2016 205,000 3,860.833 38,300.833 2016 2017 205,000 4,065,833 42,366,667 2017 Average Maturity. . . . . . . . . . . . . . . . . , . , . . . . . . , . . 10.333 Years CONTINUING DISCLOSURE AGREEMENT. . . The City will agree in the Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule l5c2-l2, as described in the Official Statement under "Continuing Disclosure of Information", The Purchaser(s') obligation to accept and pay for the Bonds is conditioned upon delivery to the Purchaser(s) or (their) agent of a certitied copy of the Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS. , . The City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule l5c2-l2. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT, . , A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, Financial Advisor to the City. On the date of the sale, the City Council will, in the Ordinance authorizing the issuance of the Bonds, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Bonds by the Purchaser. TOMMY BROWN Mayor City of North Richland Hills, Texas A TrEST: PAlRICIA HUSTON City Secretary April 14, 1997 v OFFICIAL BID FORM Honorable Mayor and City Council City of North Richland Hills, Texas April 28, 1997 Members ofthe City Council: Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated April 14, 1997, of $4,100,000 CITY OF NORTH RICHLAND HILLS, TEXAS GENERAL OBLIGATION BONDS SERIES 1997, both of which constitute a part hereof. For your legally issued Bonds, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ for Bonds maturing and bearing interest as follows: Principal Interest Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate Maturity Amount Rate 2115/98 $205,000 % 2115/05 $205,000 % 2/15/11 $205,000 % 2/15/99 205,000 % 2115/06 205,000 % 2115/12 205,000 % 2/15/00 205,000 % 2/15/07 205,000 % 2/15/13 205,000 % 2/15/01 205,000 % 2/15/08 205,000 % 2/15/14 205,000 % 2/15/02 205,000 % 2/15/09 205,000 % 2/15/15 205,000 % 2/15/03 205,000 % 2/15/10 205,000 % 2/15/16 205,000 % 2/15/04 205,000 % 2/15/17 205,000 % Bonds maturing on February 15, 1998 through February 15, 2011 shall be Serial Bonds. As indicated below, the Bidder may bid one or two tenn bonds consisting of the February 15, 2012 through February 15, 2017 maturities with each tenn consisting of two or more consecutive annual principal amounts accumulated from the maturity schedule shown above. For those years which have been combined into tenn bonds, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the tenn bond maturity date shall mature in such year. The tenn bonds created are as follows: Maturity Date February 15 Year of First Mandatory Redemption Principal Amount Interest Rate $ $ % % Our calculation (which is not a part of this bid) of the interest cost from the above is: TRUE INTEREST COST % We are having the Bonds of the following maturities insured by at a premium of $ , said premium to be paid bv the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid bv the City. The Initial Bonds shall be registered in the name of , which will, upon payment for the Bonds, be canceled by the Paying AgentlRegistrar, The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book-Entry-Only System, A bank cashier's check or certified check of the Bank" in the amount of $82,000.00, which œpresents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the tenns as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Bonds utilizing the Book-Entry-Only System through DTC and make payment for the Initial Bond in immediately available funds in the Corporate Trust Division, Bank One, Texas, N.A., Fort Worth, Texas, not later than 10:00 AM, CDT, on June 4, 1997, or thereafter on the date the Bonds are tendered for delivery, pursuant to the tenns set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Bonds to complete the DTC Eligibility Questionnaire. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully subnùtted. By Authorized Representative ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of North Richland Hills, Texas, subject to and in accordance with the Notice of Sale and Bidding Instructions, this the 28th day of April, 1997. A TIEST: Mayor City of North Richland Hills, Texas City Secretary ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of CITY OF NORTH RICHLAND HILLS, TEXAS GENERAL OBLIGATION BONDS, SERIES 1997 (the "Bonds"), issued in aggregate principal amount of $4, 100,000, as follows: 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Bonds from the City of North Richland Hills, Texas (the "Issuer") at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to the public of the Bonds of each maturity at the respective prices set forth below. 3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the Bonds of each maturity at which a substantial amount of the Bonds of such maturity was sold to the public is as set forth below: Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%/Yield) Maturing Maturity (%/Yield) $ 205,000 1998 $ 205,000 2008 205,000 1999 205,000 2009 205,000 2000 205,000 2010 205,000 2001 205,000 2011 205,000 2002 205,000 2012 205,000 2003 205,000 2013 205,000 2004 205,000 2014 205,000 2005 205,000 2015 205,000 2006 205,000 2016 205,000 2007 205,000 2017 4. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers, 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased bond insurance for the Certificates, The bond insurance, if any, has been purchased from (the "Insurer") for a premium cost of $ (net of any nonguarantee cost, e,g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the Certificates which results after recovery of the insurance premium, exceeds the present value of the bond insurance premium, 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Certificates from the gross income of their owners. EXECUTED and DELIVERED this day of ,1997. (Name of Underwriter or Manager) By (Title) NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $2,755,000 CITY OF NORTH RICHLAND HILLS, TEXAS (farrant County) TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 Sealed Bids Due Monday, April 28, 1997, at 1:00 PM, CDT THE CERTIFICA1ES WIlL NOT BE DESIGNATED AS "OUALIFlED TAX-EXEMPT OBUGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE CERTIFICATES OFFERED FOR SALE AT COMPETITIVE BIDDING, . , The City of North Richland Hills, Texas (the "City") is offering for sale its $2,755,000 Tax and Waterworks and Sewer System Revenue (Limited Pledge) Certificates of Obligation, Series 1997 (the "Certificates"). ADDRESS OF BIDS. . . Sealed bids, plainly marked "Bid for Certificates", should be addressed to "Mayor and City Council, City of North Richland Hills, Texas", and delivered to the Financial Advisor ¡¡: ~ 700 Pacific A venue, Suite 500, Dallas, Texas, prior to 1:00 PM, CDT, on the date ofthe bid opening. All bids must be submitted on the Official Bid Form, without alteration or interlineation. BIDS BY TELEPHONE OR FACSIMILE. . . Bidders must submit SIGNED Official Bid Forms to David K. Medanich, First Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas, 75201, and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (214) 953-4054, between 12:00 PM, CDT and 12:30 PM, CDT. Fax bids will be accepted between 12:00 PM, CDT and 12:30 PM, CDT, on the date ofthe sale at (214) 953-4050, attention Rhonda Van Iderstine. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if telephone or fax options are exercised. PLACE AND TIME OF BID OPENING . . . The bids for the Certificates will be publicly opened and read in the offices of the City Manager of the City Hall at 1:00 PM, CDT, Monday, April 28, 1997. AWARD OF THE CERTIFICATES. . . The City Council will take action to award the Certificates (or reject all bids) at a meeting scheduled to convene at 7:30 PM, CDT, on the date of the bid opening, and adopt an ordinance authorizing the Certificates and approving the Official Statement (the "Ordinance"), THE CERTIFICATES DESCRIPTION. , . The Certificates will be dated April 15, 1997 (the "Dated Date"), Interest will accrue from the Dated Date and will be due on February 15, 1998, and each August 15 and February 15 thereafter until the earlier of maturity or prior redemption, The Certificates will be issued only in fully registered form in any integral multiple of $5,000 for anyone maturity. The Certificates will mature on February 15 in each year as follows: MATURITY SCHEDULE Principal Principal Principal Year Amount Year Amount Year Amount 1998 $240,000 2005 $ 95,000 2011 $ 60,000 1999 310,000 2006 100,000 2012 65,000 2000 330,000 2007 110,000 2013 70,000 2001 350,000 2008 50,000 2014 75,000 2002 370,000 2009 55,000 2015 75,000 2003 85,000 2010 60,000 2016 80,000 2004 90,000 2017 85,000 - i - BOOK-ENTRY-ONLY SYSTEM. , . The City intends to utilize the Book-Entry-Only System of The Depository Trust Company ("DTC"). See "The Certificates - Book-Entry-Only System" in the Official Statement. REDEMPTION. . . The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15,2007, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. SERIAL CERTIFICATES OR SERIAL CERTIFICATES AND TERM CERTIFICATES... Bidders may provide that all the bonds be issued as Serial Certificates maturing in accord with the Maturity Schedule shown above (Alternate 1) or as a combination of Serial Certificates and Terms Certificates (Alternate 2), but a bid with all Term Certificates is not permitted. Alternate 1 - Serial Certificates: Serial Certificates maturing on February 15, 1998 through February 15,2017. Alternate 2 - Serial Certificates and Term Certificates: Serial Certificates maturing on February 15, 1998 through February 15, 2011, and one or two term bonds consisting ofthe February 15,2012 through February 15, 2017 maturities with each term consisting of two or more consecutive annual principal amounts accumulated from the maturity schedule shown above, MANDATORY SINKING FuND. , , If the successful bidder ell'("s to alter the Maturity Schedule reflected above and convert the principal amounts of the Serial Certificates maturing in the years 2012 through 2017 into "Term Certificates", such "Term Certificates" shall be subject to mandatory redemption on February 15,2012, or the first February 15 next following the last maturity for Serial Certificates, and annually thereafter on each February 15 until the stated maturity for the Term Certificates at the redemption prices of par plus accrued interest to the date of redemption. The principal amounts of the Term Certificates to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no conversion to Term Certificates occurred, At least thirty (30) days prior to each mandatory date, the Paying Agent/Registrar shall select by lot the Term Certificates to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Term Certificates required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of the Term Certificates of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase and delivered to the Paying AgentlRegistrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. PAYING AGENTIREGISTRAR . . . The initial Paying Agent/Registrar shall be Bank One, Texas, N.A., Fort Worth, Texas (see ''The Certificates - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT. , . The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of surplus net revenues of the City's Waterworks and Sewer System (not to exceed $l,oooin the aggregate), as provided in the Ordinance, Further details regarding the Certificates are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES . . . The Certificates will be sold in one block on an "Allor None" basis, and at a price of not less than their par value plus accrued interest from the date of the Certificates to the date of delivery of the Certificates. Bidders are invited to name the rate(s) of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 1 % or 1/20 of 1 % and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 2% in rate. Interest rates for maturities on or after February 15, 2008 shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest rate for th~ maturity of the preceding year. No limitation is imposed upon bidders as to the number of rates or changes which may be used, All Certificates of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered, - ii - BASIS FOR AWARD . . . The sale of the Certificates will be awarded to the bidder making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of all debt service payments on the Certificates on the basis of semi-annual compounding, produces an amount equal to the sum of the par value of the Certificates plus any premium bid (but not interest accrued from the Dated Date to the date of their delivery). In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Fonn will be considered as the official bid. GOOD FAITH DEPOSIT .,. A Good Faith Deposit, payable to the "City of North Richland Hills, Texas", in the amount of $55,100,00, is required. Such Good Faith Deposit shall be a bank: cashier's check or certified check, which is to be retained uncashed by the City pending the Purchaser's compliance with the tenns of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Fonn or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank: on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. The Good Faith Deposit of the Purchaser will be returned to the Purchaser upon payment for the Certificates. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Certificates in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Certificates has been made, DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS , . . It is anticipated that CUSIP identification numbers will appear on the Certificates, but neither the failure to print or type such number on any Certificate nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Certificates in accul!lance with the terms of this Notice of Sale and Bidding Instructions and the terms of the Official Bid Fonn. All expenses in relation to the printing or typing of CUSIP numbers on the Certificates shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. DELIVERY OF CERTIFICATES. . . Delivery will be accomplished by the issuance of one Initial Certificate (also called the "Certificate" or "Certificates"), either in typed or printed fonn, in the aggregate principal amount of $2,755,000, payable in stated installments to the Purchaser, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. (,Jpon delivery of the Initial Certificate, it shall be immediately cancelled and one definitive Certificate for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book-Entry-Only System. Delivery will be at the principal office of the Paying AgentJRegistrar. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Purchaser will be given six business days' notice of the time fixed for delivery of the Certificates. It is anticipated that delivery of the Certificate(s) can be made on or about June 4, 1997, and it is understood and agreed that the Purchaser will accept delivery and make payment for the Certificates by 10:00 AM, CDT, on June 4, 1997, or thereafter on the date the Certificate is tendered for delivery, up to and including June 18, 1997. If for any reason the City is unable to make delivery on or before June 18, 1997, the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend its offer for an additional thirty days. If the Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Certificates, provided such failurejs due to circumstances beyond the City's reasonable controL CONDITIONS TO DELIVERY .. . The obligation of the Purchaser to take up and pay for the Certificates is subject to the Purchaser's receipt of (a) the legal opinion of Fulbright & Jaworski L.L.P., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"), (b) the no-litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the City with infonnation required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exemption of interest on the Certificates from the gross income of their owners, the Purchaser will be required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Certificates) a certification as to their "issue price" substantially in the fonn and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Certificates for sale, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Certificates as a result of the Initial Purchaser's inability to seD a substantial amount of the Certificates at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate by the date of delivery of the Certificates, if its bid is accepted by the City, It will be the responsibility of the Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond CounseL -iii- LEGAL OPINIONS, . . The Certificates are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Certificates is subject to the receipt by the Purchaser of opinions of Bond Counsel, to the effect that the Certificates are valid and binding obligations of the City and that the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Matters" herein, including alternative minimum tax consequences for corporations. CERTIFICATION OF OFFICIAL STATEMENT. . . At the time of payment for and Initial Delivery of the Certificates, the City will execute and deliver to the Purchaser a certificate in the form set forth in the Official Statement CHANGE IN TAX EXEMPT STATUS, . . .At any time before the Certificates are tendered for delivery, the Purchaser may withdraw its bid ifthe interest received by private holders on obligations of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions, GENERAL FINANCIAL ADVISOR, , . First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery ofthe Certificates, First Southwest Company may submit a bid for the Certificates, either independently or as a member of a syndicate organized to submit a bid for the Certificates. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents wIth respect to the federal income tax status of the Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies, BLUE SKY LAWS. , . By submission of its bid, the Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold, The City agrees to cooperate with the Purchaser, at the Purchaser's written request and expense, in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction, NOT AN OFFER TO SELL. , . This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Certificates, but is merely notice of the sale of the Certificates, The offer to sell the Certificates is being made by means of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Certificates. IssUANCE OF ADDITIONAL DEBT. . . The City does not anticipate the issuance of additional general obligation debt within the next 12 months, RATINGS, . . The presently outstanding tax supported debt of the City is rated "A" by Moody's Investors Service, Inc. ("Moody's") and "A+" by Standard & Poor's Ratings Services, A Division of McGraw-Hill Companies, Inc. ("S&P"). The City also has ten issues outstanding which are rated "Aaa" by Moody's and "AM" by S&P through insurance by various commercial insurance companies, Applications for contract ratings on this issue have been made to both Moody's and S&P. The results of their determinations will be provided as soon as possible. MUNICIPAL BOND INSURANCE. . . In the event the Certificates are qualified for municipal bond insurance, and the Purchaser desires to purchase such insurance, the cost therefor will be Daid bv the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be Daid bv the City. It will be the responsibility of the Purchaser to disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the Certificates. THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2-12, . . The City has prepared the accompanying Official Statement and, for the limited purpose of complying with SEC Rule 15c2-12, deems such Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Certificates. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement The City will furnish to the Purchaser, or Purchasers, acting through a designated senior representative, in accordance with instructions received from the Purchaser(s), within seven (7) business days from the sale date an aggregate of 100 copies of the Official Statement including a like number of copies of any Supplement(s) reflecting interest rates and other terms relating to the initial reoffering of the Certificates, The cost of a reprinted Official Statement, if the Purchaser(s) shall so elect, and the cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Purchaser(s). The - iv- BOND YEARS Bonds Accumulated Bonds Maturing Amount Bond Years Bond Years Maturing 1998 $ 240,000 200,000 200.000 1998 1999 310,000 568.333 768,333 1999 2000 330,000 935.000 1,703.333 2000 2001 350,000 1,341.667 3,045.000 2001 2002 370,000 1,788.333 4,833.333 2002 2003 85,000 495.833 5,329,167 2003 2004 90,000 615.000 5,944.167 2004 2005 95,000 744,167 6,688.333 2005 2006 100,000 883,333 7,571.667 2006 2007 110,000 1,081.667 8,653.333 2007 2008 50,000 541.667 9,195.000 2008 2009 55,000 650.833 9,845,833 2009 2010 60,000 770.000 10,615.833 2010 2011 60,000 830.000 11,445.833 2011 2012 65,000 964,167 12,410.000 2012 2013 70,000 1,108.333 13,518,333 2013 2014 75,000 1,262.500 14,780.833 2014 2015 75,000 1,337.500 16,118.333 2015 2016 80,000 1,506.667 17,625.000 2016 2017 85,000 1,685,833 19,310.833 2017 Average Maturity. . , . , , , . . . , . . . . . . . . . . . , . , , . . , 7,009 Years Purchaser(s) shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT. . , The City will agree in the Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule 15c2-12, as described in the Official Statement under "Continuing Disclosure of Information", The Purchaser(s') obligation to accept and pay for the Certificates is conditioned upon delivery to the Purchaser(s) or (their) agent of a certified copy of the Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS. . . The City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT. , . A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, Financial Advisor to the City. On the date of the sale, the City Council will, in the Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Certificates by the Purchaser. TOMMY BROWN Mayor City of North Richland Hills, Texas ATfEST: PAlRICIA HUSTON City Secretary April 14, 1997 - v- OFFICIAL BID FORM Honorable Mayor and City Council City of North Richland Hills, Texas April 28, 1997 Members of the City Council: Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated April 14, 1997, of $2,755,000 CITY OF NORTH RICHLAND HILLS, lEXAS TAX AND WAlERWORKS AND SEWER SYSlEM REVENUE (LIMITED PLEDGE) CERTIFICAlES OF OBLIGATION, SERIES 1997, both of which constitute a part hereof. For your legally issued Certificates, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ for Certificates maturing and bearing interest as follows: Principal Interest Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate Maturity Amount Rate 2/15/98 $240,000 % 2/15/05 $ 95,000 % 2/15/11 $ 60,000 % 2/15/99 310,000 % 2/15/06 100,000 % 2/15/12 65,000 % 2/15/00 330,000 % 2/15/07 110,000 % 2/15/13 70,000 % 2/15/01 350,000 % 2/15/08 50,000 % 2/15/14 75,000 % 2/15/02 370,000 % 2/15/09 55,000 % 2/15/15 75,000 % 2/15/03 85,000 % 2/15/10 60,000 % 2/15/16 80,000 % 2/15/04 90,000 % 2/15/17 85,000 % Certificates maturing on February 15, 1998 through February 15, 2011 shall be Serial Certificates. As indicated below, the Bidder may bid one or two term bonds consisting of the February 15,2012 through February 15,2017 maturities with each term consisting of two or more consecutive annual principal amounts accumulated from the maturity schedule shown above. For those years which have been combined into term certificates, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The term certificates created are as follows: Maturity Date February 15 Year of First Mandatory Redemption Principal Amount Interest Rate $ $ % % Our calculation (which is not a part of this bid) of the interest cost from the above is: TRUE ImEREST COST % We are having the Certificates of the following maturities insured by at a premium of $ , said premium to be paid bv the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance win be paid bv the City, The Initial Certificates shall be registered in the name of , which will, upon payment for the Certificates, be cancelled by the Paying AgentJRegistrar, The Certificates will then be registered in the name of Cede & Co, (DTC's partnership nominee), under the Book-Entry-Only System. A bank cashier's check or certified check of the Bank" in the amount of $55,100,00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as ~et forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Certificates utilizing the Book-Entry-Only System through DTC and make payment for the Initial Certificate in immediately available funds in the Corporate Trust Division, Bank One, Texas, NA, Fort Worth, Texas, not later than 10:00 AM, CDT, on June 4, 1997, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Certificates to complete the DTC Eligibility Questionnaire. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, By Authoózed Representative ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of North Richland Hills, Texas, subject to and in accordance with the Notice of Sale and Bidding Instructions, this the 28th day of Apól, 1997, A TrEST: Mayor City of North Richland Hills, Texas City Secretary CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the sale of $2,755,000 CITY OF NORTH RICHLAND HILLS, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 (the "Certificates "), 1. The undersigned is the underwriter or the manager of the underwriters and selling group (the "Underwriter") which has purchased the Certificates from the City of North Richland Hills, Texas (the "Issuer"). 2, The undersigned has made a bona fide offering of the Certificates to the public, 3. The first price during the initial offering (expressed as a "yield") of each maturity of the Certificates at which a substantial amount hereof (at least 10 percent of the principal amount of each maturity of the Certificates) has been sold to the public is set forth below: Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%/Yield) Maturing Maturity (%Nield) $ 240,000 1998 $ 50,000 2008 310,000 1999 55,000 2009 330,000 2000 60,000 2010 350,000 2001 60,000 2011 370,000 2002 65,000 2012 85,000 2003 70,000 2013 90,000 2004 75,000 2014 95,000 2005 75,000 2015 100,000 2006 80,000 2016 110,000 2007 85,000 2017 4, The tenn "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased bond insurance for the Certificates. The bond insurance, if any, has been purchased from (the "Insurer") for a premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor), The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the Certificates which results after recovery of the insurance premium, exceeds the present value ofthe bond insurance premium. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Certificates from the gross income of their owners. EXECUTED and DELIVERED this day of ,1997. By (Name of Underwriter or Manager) (Title) Dated April 14, 1997 Ratings: Moody's: Applied For S&P: Applied For See ("Other Information Ratings" herein) OFFICIAL STATEMENT NEW ISSUE - Book·Entry·Only In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Exemption" herein, including the alternative minimum tax on corporations. THE BONDS WILL NOT BE DESIGNATED AS "OUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $4,100,000 CITY OF NORTH RICHLAND HILLS, TEXAS (Tarrant County) GENERAL OBLIGATION BONDS, SERIES 1997 Dated Date: April 15, 1997 Due: February 15, as shown below PAYMENT TERMS. . . Interest on the $4,100,000 City of North Richland Hills, Texas General Obligation Bonds, Series 1997 (the "Bonds") will accrue from April 15, 1997, (the "Dated Date") and will be payable August 15 and February 15 of each year commencing February 15, 1998, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book- Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is Bank One, Texas, N.A" Fort Worth, Texas (see "The Bonds - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE. . , The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") including particularly Article 1175, Vernon's Ann. Civ. St., as amended, and are direct obligations of the City of North Richland Hills, Texas (the "City"), payable from a continuing ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds (see "The Bonds - Authority for Issuance"). PURPOSE. . , Proceeds from the sale of the Bonds will be used for street improvements, and to pay the costs of issuance associated with the sale of the Bonds. MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield $ 205,000 1998 $ 205,000 2008 205,000 1999 205,000 2009 205,000 2000 205,000 2010 205,000 2001 205,000 2011 205,000 2002 205,000 2012 205,000 2003 205,000 2013 205,000 2004 205,000 2014 205,000 2005 205,000 2015 205,000 2006 205,000 2016 205,000 2007 205,000 2017 (Accrued Interest from Apri115, 1997 to be added) REDEMPTION OPTION. . . The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15,2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "The Bonds - Optional Redemption"). LEGALITY. . . The Bonds are offered for delivery when, as and if issued and received by the initial purchaser(s) and subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski L.L,P., Bond Counsel, Dallas, Texas (see Appendix C, "Fonn of Bond Counsel's Opinion"). DELIVERY . . . It is expected that the Bonds will be available for delivery through The Depository Trust Company on June 4, 1997. 2 THIS PAGE LEFf BLANK INTENTIONALLY OFFICIAL STATEMENT Dated April 14, 1997 Ratings: Moody's: Applied For S&P: Applied For See ("Other Information Ratings" herein) NEW ISSUE· Book·Entry·Only In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Exemption" herein, including the alternative minimum tax on corporations. THE CERTIFICATES WIU NOT BE DESIGNATED AS "OUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $2,755,000 CITY OF NORTH RICHLAND IllLLS, TEXAS (Tarrant County) TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 Dated Date: April 15, 1997 Due: February 15, as shown below PA YMENT TERMS. . . Interest on the $2,755,000 City of North Richland Hills, Texas, Tax and WateIWorks and Sewer System Revenue (Limited Pledge) Certificates of Obligation, Series 1997 (the "Certificates") will accrue from April 15, 1997, (the "Dated Date") and will be payable February 15 and August 15 of each year commencing February 15, 1998, and will be calculated on the basis of a 360·day year consisting of twelve 30-day months. The definitive Certificates 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. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. See "The Certificates - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is Bank One, Texas, N.A., Fort Worth, Texas (see "The Certificates - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE. , , The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended, and constitute direct obligations of the City of North Richland Hills, Texas (the "City"), payable from a combination of (i) the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of surplus net revenues of the City's WateIWorks and'Sewer System (not to exceed $1,000 in the aggregate), as provided in the ordinance authorizing the Certificates (see "The Certificates - Authority for Issuance"), PURPOSE. . . Proceeds from the sale of the Certificates will be used for the purchase of capital equipment, golf course improvements, and to pay the costs of issuance associated with the sale of the Certificates. MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield $ 240,000 1998 $ 50,000 2008 310,000 1999 55,000 2009 330,000 2000 60,000 2010 350,000 2001 60,000 2011 370,000 2002 65,000 2012 85,000 2003 70,000 2013 90,000 2004 75,000 2014 95,000 2005 75,000 2015 100,000 2006 80,000 2016 110,000 2007 85,000 2017 (Accrued Interest from April 15, 1997 to be added) REDEMPTION OPTION. . . The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption, Additionally, the Certificates may be subject to mandatory redemption in the event the initial purchaser elected to aggregate one or more maturities as a Tenn Certificate (see "The Certificates - Optional Redemption"). LEGALITY. . . The Certificates are offered for delivery when, as and if issued and received by the initial purchaser(s) and subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski L.L.P" Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion"). DELIVERY. . . It is expected that the Certificates will be available for delivery through The Depository Trust Company on June 4, 1997. 3 4 THIS PAGE LEFf BLANK INTENTIONALLY This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial Advisor. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARy....................,.., 6 CITY OFFICIALS, STAFF AND CONSULTANTS...., 8 ELECTED OFFICIALS...,...............,.,."",."..,....,............. 8 SELECTED ADMINISTRATIVE STAFF.,..,.,."",."".,.......,. 8 CONSULTANTS AND ADVISORS.............................,...... 8 INTRODUCTION ...........,.,."""..,...............,.............".,.., 9 THE BONDS AND CERTIFICATES......,....,................. 9 TAX INFORMATION ........,.........:.........,........,....,........ 13 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT ,..,....,....,...................,........ 15 TABLE2 - TAXABLE ASSESSED VALUATIONS BY CA TEGORY..."......,...,.....,.........,..."",.,.....,.,.... 16 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORy..........,......,...........,.................. 16 TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORy........................,..................,............. 17 TABLE 5 - TEN LARGEST TAXPAYERS ..................... 17 TABLE6 - TAX ADEQUACY..................................... 18 TABLE 7 - ESTIMATED OVERLAPPING DEBT ..........., 18 TAX MATTERS ......,................."""""..,...."...,....",.".",25 OTHER INFORMATION..........,.,.,...."......""""",........26 RATINGS.",..."".",.."""..."..",..,...,....",............".."" 26 LITIGATION",."......................................................... 26 REGISTRATION AND QUALIFICATION OF BONDS AND CERTIFICATES FOR SALE .............,..,.................26 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC fuNDS IN TEXAS .................................27 LEGAL OPINIONS AND No-LITIGATION CERTIFICATE.. 27 AUTHENTICITY OF FINANCIAL DATA AND ÛTHER INFORMATION",...".,.",...",........,..,...",.",...,.... 27 CONTINUING DISCLOSURE OF INFORMATION...........,.. 27 FINANCIAL ADVISOR,...."""""",........",....".........,..., 29 CERTIFICATION OF THE OFFICIAL STATEMENT............ 29 APPENDICES GENERAL INFORMATION REGARDING THE CITy...,..... A EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B FORM OF BOND COUNSEL'S OPINION..,..................... C The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement. DEBT INFORMATION .............,....,..........,................., 19 TABLE 8 - GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS,.",....,........ ,.....................,.,.... 19 TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION ERROR! BOOKMARK NOT DEFINED. TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBTERROR! BOOKMARK NOT DEFINED. TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS..,.".,...,...",......,.....,......... 20 TABLE 12 - OTHER OBLIGATIONS .."........,...,............ 20 FINANCIAL INFORMATION ...........,......................... 21 TABLE 13 - GENERAL FUND REVENUES AND EXPENDITURE HISTORy.........".............,.......... 21 TABLE 14 - MUNICIPAL SALES TAX HISTORY.......... 22 TABLE 15 - CURRENT INVESTMENTS......,..,..,............ 24 5 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds and Certificates to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CITY ........."............,..........., The City of North Richland Hills, Texas is a political subdivision and municipal corporation of the State, located in Tarrant County, Texas, The City covers approximately 18.29 square miles (see "Introduction - Description of City"). THE BONDS,...................,..,.......... The Bonds are issued in the principal sum of $4,100,000 and will mature (or are subject to mandatory redemption) on February 15, 1998 through February 15,2017 (see "The Bonds - Description of the Bonds and Certificates"). THE CERTIFICATES '.............,...... The Certificates are issued in the principal sum of $2,755,000 and will mature (or are subject to mandatory redemption) on February 15, 1998 through February 15, 2017 (see "The Certificates -Description of the Bonds and Certificates"). PAYMENT OF INTEREST .......,...... Interest on the Bonds and Certificates accrues from April 15, 1997, and is payable February 15, 1998, and each August 15 and February 15 thereafter until maturity or prior redemption (see "The Bonds and Certificates - Description of the Bonds and Certificates" and "The Bonds and Certificates - Optional Redemption"). AUTHORITY FOR ISSUANCE ......... The Bonds are issued pursuant to the general laws of the State, including particularly Article 1175, V. A. T, C. S., and an ordinance passed by the City Council of the City (see "The Bonds and Certificates - Authority for Issuance"). The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended and an ordinance passed by the City Council of the City (see "The Certificates - Authority for Issuance"). SECURITY FOR THE BONDS.......... The Bonds constitute direct and voted obligations of the City, payable from the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the City (see "The Bonds and Certificates - Security and Source of Payment"). SECURITY FOR THE CERTIFICATES ..............,............... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of surplus Net Revenues of the City's Waterworks and Sewer System (not to exceed $1,000 in the aggregate) as provided in the Ordinance (see "The Certificates - Security and Source of Payment"). OPTIONAL REDEMPTION ....."...... The City reserves the right, at its option, to redeem Bonds and Certificates having stated maturities on and after February 15,2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15,2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption, Additionally, the Bonds and Certificates may be subject to mandatory redemption in the event the initial purchaser elected to aggregate one or more maturities as a Term Bond or Term Certificate (see "The Bonds and Certificates - Optional Redemption"). TAX EXEMPTION ........,................... In the opinion of Bond Counsel, the interest on the Bonds and Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations, USE OF PROCEEDS ,...................... Proceeds from the sale of the Bonds will be used for street improvements, and to pay the costs of issuance associated with the sale of the Bonds.V Proceeds from the sale of the Certificates will be used for the purchase of capital equipment, golf course improvements, and to pay the costs of issuance associated with the sale of the Certificates. 6 RATINGS .................,................... The presently outstanding tax supported debt of the City is rated "A" by Moody's Investors Service, Inc. ("Moody's") and "A+" by Standard & Poor's Ratings Services, A Division of The McGraw-Hill Companies, Inc. ("S&P"). The City also has ten issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on the Certificates have been made to Moody's and S&P (see "Other Information - Ratings"), BOOK·ENTRy·ONL Y SYSTEM ...................................... The definitive Bonds and Certificates will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds and Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds and Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds and Certificates will be payable by the Paying AgentJRegistrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds and Certificates (see "The Bonds and Certificates - Book-Entry-Only System"). PA YMENT RECORD,.,..,...,.,.,....,... The City has never defaulted in payment of its general obligation tax debt. SELECTED FINANCIAL INFORMATION Ratio G.O. Fiscal Per Capita General Per Tax Debt Year Estimated Taxable Taxable Obligation Capita to Taxable %of Ended City Assessed Assessed (G.O.) G. O. Tax Assessed Total Tax 9-30 Population(l) Valuation Valuation Tax Debt Debt Valuation Collections 1993 48,300 $ 1,444,772,574 $ 29,912 $ 41,865,141 $ 867 2.90% 99.96% 1994 50,000 1,430,354,738 28,607 39,505,979 790 2.76% 100.07% 1995 50,650 1,510,391,128 29,820 42,135,141 832 2.79% 101.60% 1996 52,584 (2) 1,653,283,794 31,441 46,125,141 877 2.79% 99.19% 1997 52,800 (4) 1,761,625,478 33,364 49,495,141 (3) 937 2.81% 95.52% (5) (1) Source: Estimates of North Central Texas Council of Governments. (2) Estimate of City Planning Department. (3) Projected, indudes the Bonds and Certificates. (4) Estimate of City Economic Development Department. (5) Partial collections through March 1, 1997. GENERAL FUND CONSOLIDATED STATEMENT SUMMARY Beginning Balance Total Revenue Total Expenditures Net Transfers Net Funds Available Adjustment from prior year Ending Balance 1996 $ 3,620,483 19,427,072 18,461,850 (223,056) 742,166 Fiscal Year Ended September 30, 1995 1994 1993 $ 3,424,783 $ 3,612,219 $ 2,781,035 18,357,272 17,146,141 15,474,721 17,488,785 16,347,172 15,217,432 (672,787) (986,405) 21,627 195,700 (187,436) 278,916 552,268 $ 3,620,483 $ 3,424,783 $ 3,612,219 1992 $ 2,430,348 14,379,409 14,112,005 83,283 350,687 $ 4,362,649 $ 2,781,035 For additional information regarding the City, please contact: Larry Koonce Director of Finance City of North Richland Hills P.O. Box 820609 North Richland Hills, Texas 76180 (817) 581-5535 David Medanich First Southwest Company or 1700 Pacific A venue Suite 500 Dallas, Texas 75201 (214) 953-4000 7 ELECTED OFFICIALS Citv Council Tommy Brown Mayor Mack Garvin Mayor Pro Tern-Place 2 Lyle Welch Councilmember-Place 1 Mark Wood Councilmember-Place 3 JoAnn Johnson Councilmember-Place 4 Don Phifer Councilmember-Place 5 Byron Sibbet Councilmember-Place 6 Linda Spurlock Sansoucie Councilmember-Place 7 SELECTED ADMINISTRATIVE STAFF Name C. A. Sanford Randy Shiflet Larry 1. Cunningham Larry Koonce Rex McEntire Patricia Hutson Jim Browne Greg Dickens CONSULTANTS AND ADVISORS CITY OFFICIALS, STAFF AND CONSULTANTS Year of Tenn Election Expires Occupation 1988 May, 1998 Real Estate Investments 1986 May, 1998 Self-Employed 1988 May, 1997 Retired 1991 May, 1997 Real Estate Broker 1991 May, 1998 Homemaker 1996 May, 1997 Commercial Real Estate Broker 1988 May, 1998 Senior Analyst -- Lockheed 1987 May, 1997 Voting Equipment Company Consultant Position Year of Emplovment 1987 1973 1993 1996 1974 1980 1985 1987 City Manager Assistant City Manager Assistant City Manager Director of Finance City Attorney City Secretary Parks and Recreation Director Director of Public Works Auditors ..".,. ...". ..,... ".,.,...,. ,. ..... ..,.........,........",.,.. ..."".,........,. .,.,... ... .,......."... ......." ,........,.,........,."... ... ...,.,.. KPMG Peat Marwick Fort Worth, Texas Bond Counsel..............,................".....................,.........,...........,...................,................................,....... Fulbright & Jaworski L.L.P. Dallas, Texas Financial Advisor...........,.....,.."...".,......,."......,.........,.,.........,...........,..······,·········,········,··,········, ........",.... Fi rst Southwest Company Dallas, Texas 8 OFFICIAL STATEMENT RELATING TO $4,100,000 CITY OF NORTH RICHLAND HILLS, TEXAS GENERAL OBLIGATION BONDS, SERIES 1997 AND $2,755,000 CITY OF NORTH RICHLAND HILLS, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $4,100,000 City of North Richland Hills, Texas General Obligation Bonds, Series 1997 and $2,755,000 City of North Richland Hills, Texas Tax and Waterworks and Sewer System Revenue (Limited Pledge) Certificates of Obligation, Series 1997, Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the respective ordinances to be adopted on the date of sale of the Bonds and Certificates which will authorize the issuance of the Bonds and Certificates, except as otherwise indicated herein. There follows in this Official Statement descriptions of the Bonds and Certificates and certain information regarding the City and its finances, All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. 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 Stat~, including the City's Home Rule Charter. The City was incorporated in 1953, and first adopted its Home Rule Charter in 1964. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and seven Councilmembers, The term of office is two years with the terms of the Mayor and three of the Councilmembers' terms expiring in even-numbered years and the other terms of the four Councilmembers expiring in odd-numbered years, The City Manager is the chief administrative officer for the City, Some of the services that the City provides are: public safety (police and fire protection), highways and streets, water and sanitary sewer utilities, health, services, culture-recreation, public improvements, planning and zoning, and general administrative services, The 1990 Census population for the City was 45,895, while the estimated 1996 population is 50,650, The City covers approximately 18,29 square miles. THE BONDS AND CERTIFICATES DESCRIPTION OF THE BONDS AND CERTIFICATES ... The Bonds and Certificates are dated April 15, 1997, and mature on February 15 in each of the years and in the amounts shown on the cover page and page 3 hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on February 15 and August 15, commencing February 15, 1998. The definitive Bonds and Certificates will be issued only in fully registered form in any integral multiple of $5,000 for anyone maturity and will be initially registered and delivered only to Cede & Co" the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds and Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds and Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds and Certificates, See "Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE. , . The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, including Vernon's Ann. Civ. St., Article 1175, as amended; and the Ordinance. Additionally, the issuance of the Bonds was approved at an election held September 27, 1994. The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Subchapter C of Chapter 271, V.T.c.A. Local Government Code (the Certificate of Obligation Act of 1971), and an Ordinance passed by the City Council. SECURITY AND SOURCE OF PAYMENT, . , All taxable property within the City is subject to a continuing direct annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on the Bonds and Certificates. Additionally, the Certificates are payable from and secured by a pledge of surplus Net Revenues of the City's Waterworks and Sewer System, as provided in the Ordinance authorizing the Certificates. 9 TAX RATE LIMITATION, , . All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2,50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2,50 per $100 Taxable Assessed Valuation. OPTIONAL REDEMPTION. , , The City reserves the right, at its option, to redeem Bonds and Certificates having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption, If less than all of the Bonds and Certificates are to be redeemed, the City may select the maturities of Bonds and Certificates to be redeemed. If less than all the Bonds and Certificates of any maturity are to be redeemed, the Paying AgentlRegistrar (or DTC while the Bonds and Certificates are in Book-Entry-Only form) shall determine by lot the Bonds and Certificates, or portions thereof, within such maturity to be redeemed, If a Bond and Certificate (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond and Certificate (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 AgentlRegistrar on the redemption date. MANDATORY SINKING FUND REDEMPTION. . . In addition to being subject to optional redemption as provided above, should the Purchaser(s) select Alternate 2 with respect to the purchase of the Bonds or the Certificates, or both (a combination of Serial Bonds or Serial Certificates and Term Bonds or Term Certificates, as the case may be), the Term Bonds or Term Certificates or both, shall be subject to mandatory sinking fund redemption prior to maturity at a price of par plus accrued interest to the redemption date from amounts required to be deposited in the respective Interest and Sinking Funds maintained for their payment with not more than two term maturities for each issue as so designated by the successful bidder as follows: 2012 2013 2014 Term Bonds $ 205,000 2015 205,000 2016 205,000 2017 Term Certificates $ 65,000 2015 70,000 2016 75,000 2017 $ 75,000 80,000 85,000 $ 205,000 205,000 205,000 2012 2013 2014 NOTICE OF REDEMPTION. . . Not less than 30 days prior to a redemption date for the Bonds and Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds and Certificates to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying AgentlRegistrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS AND CERTIFICATES CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND AND CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND AND CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. BOOK-ENTRY-ONLY SYSTEM. . . The Depository Trust Company ("DTC"), New York, New York, will act as secunttes depository for the Bonds and Certificates. The Bonds and Certificates will be issued as fully-registered securities registered in the name of Cede & Co, (DTC's partnership nominee). One fully-registered certificate will be issued for each maturity of the Bonds and Certificates in the aggregate principal amounts of each such maturity for the Bonds and for the Certificates, as the case may be, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934, DTC holds securities that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. 10 Purchases of Bonds and Certificates under the DTC system must be made by or through DTC Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Bond and Certificate ("Beneficial Owner") is in turn to be recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the Bonds and Certificates are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds and Certificates, except in the event that use of the book-entry system described herein is discontinued. To facilitate subsequent transfers, all Bonds and Certificates deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds and Certificates with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds and Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds and Certificates are credited, which mayor may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Bonds and Certificates within an issue are being redeemed, DTC's practice is to detennine by lot the amount of the interest of each Direct Participant in such issue to be redeemed, Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds and Certificates. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined). The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds and Certificates are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds and Certificates will be made to DTC. DTC's practice is to credit Direct Participants' accounts on each payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying AgentJRegistrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds or Certificates, or both, at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds and Certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository) with respect to the Bonds or the Certificates, or both. In that event, the Bonds or Certificates, or both, will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Bonds and Certificates are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds and Certificates, but (i) all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinance will be given only to DTC. Information concerning DTC and the Book-Entry System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City or the Purchasers. PAYING AGENT/REGISTRAR. . . The initial Paying AgentJRegistrar is Bank One, Texas, N.A., Fort Worth, Texas, In the Ordinance, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying AgentJRegistrar at all times until the Bonds and Certificates are duly paid and any successor Paying AgentJRegistrar 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 AgentJRegistrar for the Bonds and Certificates. Upon any change in the Paying AgentJRegistrar for the Bonds and Certificates, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds and Certificates by United States mail, first class, postage prepaid. which notice shall also give the address of the new Paying AgentJRegistrar. II TRANSFER, EXCHANGE AND REGISTRATION. . . In the event the Book-Entry-Only System should be discontinued, the Bonds and Certificates may be transferred and exchanged on the registration books of the Paying AgentlRegistrar only upon their presentation and surrender to the Paying AgentlRegistrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Bonds and Certificates may be assigned by the execution of an assignment form printed on the respective Bonds and Certificates or by other instrument of transfer and assignment acceptable to the Paying AgentlRegistrar. New Bonds or Certificates (as the case may be) will be delivered by the Paying AgentlRegistrar, in lieu of the Bonds or Certificates being transferred or exchanged, at the principal office of the Paying AgentlRegistrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, an exchange or transfer of Bonds or Certificates (as the case may be) will be completed within 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 form satisfactory to the Paying AgentlRegistrar. New Bonds and Certificates registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for anyone maturity and for a like aggregate principal amount as the Bonds and Certificates surrendered for exchange or transfer. See "Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds and Certificates. Neither the City nor the Paying AgentlRegistrar shall be required to transfer or exchange any Bond or Certificate (as the case may be) called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Bond or Certificate. RECORD DATE FOR INTEREST PAYMENT, , , The record date ("Record Date") for the interest payable on the Bonds and Certificates on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying AgentlRegistrar, if and when funds for the payment of such interest have been received from the City, Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond and Certificate appearing on the registration books of the Paying AgentlRegistrar at the close of business on the last business day next preceding the date of mailing of such notice, REMEDIES, " The respective Ordinances authorizing the issuance of the Bonds and the Certificates do not provide for specific events of default with respect to such Obligations. Under State law there is no right to the acceleration of maturity of the Bonds or Certificates upon the failure of the City to observe any covenant under the Ordinances authorizing their issuance. Although a registered owner could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Bonds or Certificates, such judgment could not be satisfied by execution against any property of the City, Such registered owner's only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the City to levy, assess and collect an annual ad valorem tax sufficient to pay principal of and interest on the Bonds or Certificates in default and as it becomes due. The enforcement of any such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. Neither of the ordinances provides for the appointment of a trustee to represent the interests of the bondholders upon any failure of the City to perform in accordance with the terms of such ordinances, or upon any other condition. The enforcement of a claim for payment of principal and interest on the Bonds or Certificates, including the remedy of mandamus and the pledge of ad valorem taxes, would be subject to the applicable provisions of the bankruptcy laws and to other laws affecting the rights of creditors of political subdivisions generally. The opinions of Bond Counsel will note that the enforceability of the respective ordinances and all the Bonds or Certificates, as the case may be, are qualified with respect to the customary rights of debtors relative to their creditors. 12 TAX INFORMATION AD VALOREM TAX LAW. . . The appraisal of property within the City is the responsibility of the Tarrant Appraisal District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under the Property Tax Code to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the detennination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the V.T.C.A., Property Tax Code, for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and lirIÙtations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Section l-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of residence homesteads, The rIÙnimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section l-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. Article VIII provides that eligible owners of both agricultural land (Section I-d) and open-space land (Section I-d-l), including open-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section I-d and l-d-l. 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 this property. Boats owned as nonbusiness property are exempt from ad valorem taxation, Article VIII, Section l-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal, The City and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the tax values on property in the zone are "frozen" at the value of the property at the time of creation of the zone, The City also may enter into tax abatement agreements to encourage econorIÙC development. Under the agreements, a property owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE. .. By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". The City Council may not adopt a tax rate that exceeds the lower of the rollback tax rate or 103% of the effective tax rate until it has held a public hearing on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. 13 "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year, Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates, PROPERTY ASSESSMENT AND TAX PAYMENT. . . Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October 1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on August 1. PENAL TIES AND INTEREST. ., Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative Month Penalty Interest Total February 6% 1% 7% March 7 2 9 April 8 3 \1 May 9 4 13 June 10 5 15 July 12 6 18 After July, penalty remains at 12%, and interest increases at the rate of 1 % each month. In addition, if an account is delinquent in July, a 15% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed, In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due, Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. CITY ApPLICATION OF TAX CODE. . , The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $29,000, The City has granted an additional exemption of 15% of the market value of residence homesteads. See Table 1 for a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City does not tax nonbusiness personal property and Tarrant County collects taxes for the City, The City does not pennit split payments, and discounts are not allowed, The City does not tax freeport property. The City does not collect the additional one-half cent sales tax for reduction of ad valorem taxes. The City has adopted a tax abatement policy. TAX ABA TEMENT POLICY. . , The City has established a tax abatement program to encourage economic development. In 1989, the City Council adopted a resolution setting guidelines and criteria for granting abatements in reinvestment zones created within the City. These guidelines specifically note that incentives are limited to companies which create new wealth and do not adversely affect existing businesses operating within the City. Since 1989, the City has abated taxes for only two companies: 14 (1) The Council voted to abate taxes on 50% of $3,176,871 in new construction by UICI Insurance Center (formerly Aegon) for 10 years beginning in 1989, VICI Insurance Center is a corporate citizen with 660 employees, (2) The Council voted in 1992 to abate for 5 years 100% of the taxes on more than $1.5 million in improvements to two facilities by Tecnol Medical Products, Inc" an existing corporate citizen with 850 employees. The abatement covers the period from 1993 through 1997 (payable in January, 1998), a period designated by TecnoL The abatement agreement does not include personal property or land improvements. Total abatement assessed value for fiscal year 1995/96 is $6,619,456, TABLE 1 . VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 1996/97 Market Valuation Established by Tarrant Appraisal District (excluding totally exempt property) Net General Obligation Debt Payable from Ad Valorem Taxes $ 1,998,648,030 $ 213,148,509 2,899,597 6,510,144 103,100 13,717,193 644,009 237,022,552 $ 1,761,625,478 $ 35,820,141 6,890,000 75,000 75,000 392,858 2,755,000 4,100,000 $ 50,107,999 $ 4,685,000 75,000 4,760,000 $ 45,347,999 Less Exemptions/Reductions at 100% Market Value: Residential Exemptions, Over 65 and Disabled Disabled Veterans Agricultural and Scenic Land Use Indigent Housing Freeport Value Loss Abatement Value Loss 1996/97 Taxable Assessed Valuation General Obligation Debt Payable from Ad Valorem Taxes (as of 4_1_97)(1) General Obligation Debt Certificates of Obligation Public Property Finance Contractual Obligations Contract Revenue Bonds Capital Leases - General Obligation Notes Payable(2) The Certificates The Bonds General Obligation Debt Payable from Ad Valorem Taxes Less: Self Supporting Debt (3) Tax and Golf Course Revenue Refunding Bonds Contract Revenue Bonds Interest and Sinking Fund as of 3-1-97 $ 1,329,516 Ratio Net General Obligation Tax Debt to Taxable Assessed Valuation. , , . . . . . . . . . , . . . . . . , . . . . . . , , , 2.57% 1997 Estimated Population - 52,800 Per Capita Taxable Assessed Valuation - $33,364 Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes - $859 (1) The above statement of indebtedness does not include $12,510,000 Park and Recreation Facilities Development Corporation Sales Tax Revenue Bonds, presently outstanding, which are payable solely from the receipts of a 1/2 of 1 % local sales and use tax, and $11,308,615 Waterworks and Sewer System Revenue Bonds, which are payable solely from the net revenues of the System, as defined in the bond ordinance authorizing the bonds. (2) The Capital Leases have been declared funded debts of the City and are included in the Debt Service Fund Tax Levy. (3) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 10. It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the future. 15 TABLE 2 - TAXABLE ASSESSED VALVA TIONS BY CATEGORY Taxable Appraised Vaue for Fiscal Year Ended September 30, 1997 1996 1995 %of %of %of Category Amount Total Amount Total Amount Total Real, Residential, Single-Family $ 1,167,776,934 58.43% $ 1,068,553,667 58.36% $ 1,051,042,159 60,21% Real, Residential, Multi-Family 132,048,040 6.61% 118,152,848 6.45% 99,684,218 5.71% Real, Vacant Lotsffracts 40,167,994 2.01% 37,886,488 2.07% 40,669,433 2.33% Real, Acreage (Land Only) 6,402,998 0.32% 6,507,665 2.22% 7,406,117 2.15% Real, Farm and Ranch Improvements 49,889,106 2.50% 40,729,493 0.36% 37,599,160 0.42% Real, Commercial 333,949,631 16.71% 310,255,368 16.94% 293,989,010 16.84% Real, Industrial 13,308,318 0.67% 13,127,854 0.72% 13,282,705 0.76% Real and Tangible Personal, Utilities 32,430,278 1.62% 29,287,239 1.60% 30,483,025 1.75% Tangible Personal, Commercial 182,882,171 9.15% 174,010,033 9.50% 144,692,893 8.29% Tangible Personal, Industrial 27,801,887 1.39% 24,797,553 1.35% 19,181,529 1.1 0% Tangible Personal, Other 352,869 0.02% 161,547 0,01% 1,871,381 0.11% Tangible Personal, Mobile Homes 1,715,334 0.09% 1,968,793 0.11% 574,436 0.03% Real Property, Inventory 9,922,470 0.50% 5,618,770 0.31% 5,026,100 0.29% Total Appraised Value Before Exemptions $ 1,998,648,030 100.00% $1,831,057,318 100,00% $ 1,745,502,166 100.00% Less: Total ExemptionslReductions 237,022,552 213,887,630 189,549,869 Add: Minimum Value of Properties under Protest 0 36,114,106 45,561,169 Taxable Assessed Value $1,761,625,478 $ 1,653,283,794 $ 1,510,391,128 Taxable Appraised Value for Fiscal Year Ended September 30, 1994 1993 Category Real, Residential, Single-Family Real, Residential, Multi-Family Real, Vacant Lotsffracts Real, Acreage (Land Only) Real, Farm and Ranch Improvements Real, Commercial Real, Industrial Real and Tangible Personal, Utilities Tangible Personal, Commercial Tangible Personal, Industrial Tangible Personal, Other Tangible Personal, Mobile Homes Real Property, Inventory Total Appraised Value Before Exemptions Less: Total ExemptionslReductions Taxable Assessed Value Amount $ 942,794,081 94,230,497 35,270,625 8,259,268 45,849,567 274,076,310 12,527,955 28,904,152 141,913,645 17,983,556 1,703,582 109,200 16,128,863 $ 1,619,751,301 189,396,563 $ 1,430,354,738 %of Total 58.21% 5.82% 2.18% 2.83% 0.51% 16.92% 0.77% 1,78% 8.76% 1.11 % 0.11% 0.01% 1.00% 100.00% Amount $ 916,427,495 101,070,528 41,970,482 11,537,531 60,793,118 269,532,186 13,930,417 27,311,664 137,607,132 15,360,127 1,759,362 87,500 15,754,802 $ 1,613,142,344 168,329,770 $ 1,444,812,574 %of Total 56.81% 6.27% 2.60% 3.77% 0.72% 16.71% 0,86% 1.69% 8.53% 0.95% 0.11% 0.01% 0.98% 100.00% N01E: Valuations shown are certified taxable assessed values reported by the Tarrant Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resol ved and the Appraisal District updates records. 16 TABLE 3 . V ALVA TION AND GENERAL OBLIGATION DEBT HISTORY ---,. G,O. Ratio of Fiscal Taxable Tax Debt G.O. Tax Debt G.O, Tax Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9-30 Population(l) Valuation Per Capita of Year Valuation Capita 1993 48,300 $ 1,444,772,574 $ 29,912 $41,865,141 2.90% $867 1994 50,000 1,430,354,738 28,607 39,505,979 2.76% 790 1995 50,650 1,510,391,128 29,820 42,135,141 2.79% 832 1996 52,584 (2) 1,653,283,794 31,441 46,125,141 2.79% 877 1997 52,800 (3) 1,761,625,478 33,364 49,495,141 (4) 2,81% 937 (1) Estimates of North Central Texas Council of Governments. (2) Estimate of City Planning Department (3) Estimate of City Economic Development (4) Projected, includes the Bonds and Certificates. TABLE 4 . TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Year Ended Tax General 9-30 Rate Fund 1993 $ 0.52354 $ 0.25225 1994 0.57000 0.28229 1995 0.57000 0.29193 1996 0.57000 0,29177 1997 0.57000 0.29618 (1) Collections for part year only, through March 1, 1997. TABLE 5 - TEN LARGEST T AXPA YERS Name of Taxpayer Richland Center Inc, North Hills Mall Association Meadows NRH Assoc. Texas Utilities Electric Company E-Systems, Inc. Pool Trust Technol, Inc. H&M Food Systems Walden Residential Operation Partnership Walmart Stores Inc, Camco Development Interest and Sinking Fund $ 0.27129 0.28771 0.27807 0.27823 0.27382 Tax Levy $ 7,563,962 8,153,022 8,609,229 9,282,362 10,041,268 % Current Collections 98.91 % 98,69% 100.40% 98.96% 95.03% (1) 1996/97 Taxable Assessed Valuation $ 23,856,844 22,000,000 18,033,700 17,425,338 14,371,214 14,122,828 13,253,248 12,358,000 12,190,143 11,734,398 $ 159,345,713 % Total Collections 99,96% 100.07% 101.60% 99.19% 95.52% (1) % of Total Taxable Assessed Valuation 1.35% 1.25% 1,02% 0.99% 0,82% 0,80% 0,75% 0.70% 0.69% 0.67% 9,05% GENERAL OBLIGATION DEBT LIMITATION. , . No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "Tax Rate Limitation"). Nature of Property Shopping center Shopping center Apartments Electric utility Land and Apartments Medical supplies Food processor Real Estate Shopping center Real estate development 17 r TABLE6 . TAXADEQUACy(l) 1997 Principal and Interest Requirements ... ........................... .......,..,.." ,..., ............................, ,.. ........... ........ ........,........... $0.3593 Tax Rate at 98% Collection Produces .....,........".."............,.....,.......................,......,..,..................................,.... Average Annual Principal and Interest Requirements, 1997-2017 ,.....,..................................,........,..,............................, $0,2363 Tax Rate at 98% Collection Produces ....,................,..............................,......................................,..,................, Maximum Principal and Interest Requirements, 1998 ...........................................,............,..................................,....,.... $0,3942 Tax Rate at 98% Collection Produces ........................................................,..,..........................................,......,.. (1) Projected, includes the Bonds and Certificates. TABLE 7 - EsTIMATED OVERLAPPING DEBT $ 6,201,734 $ 6,202,930 $ 4,078,198 $ 4,079,466 $ 6,805,149 $ 6,805,441 Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City, Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. Tax Jurisdictions Ciyt of North Richland Hi\1s Birdvi\1e Independent School District Hurst-Euless-Bedford Independent School District Keller Independent School District Tarrant County Tarrant County Hospital District Tarrant County Junior College District 1996/97 Taxable Assessed Valuation $ 1,761,625,478 3,490,485,150 4,722,778,074 1,784,426.952 44,553,425,318 44,559,378,718 44,771,877,576 Total Direct and Overlaping Tax Supported Debt Ratio of Direct and Overlapping Tax Supported Debt to Taxable A V Per Capita Overlapping Tax Supported Debt 1996/97 Tax Rate $0.57000 1.50150 1.61690 1.50000 0.26660 0.23980 0.05550 Total Funded Debt $ 45,376,553 (I) 102,045,000 93,441,513 119,814,319 146,055,000 46,789,987 98,596,872 (1) Projected, includes the Bonds and Certificates, less self-supporting debt. 18 Estimated % Applicable 100.00% 42.10% 0.05% 3.50% 3.47% 3.47% 3.47% City's Overlapping Funded Debt As of 4-1-97 $ 45,376,553 42,960,945 46,721 4,193,501 5,068,109 1,623,613 3,421,311 $ 102,690,752 $ Authorized But Unissued Debt as of 4-1-97 $ 15,540,000 7,465,000 -0- 21,535,460 500,000 -0- -0- 5.83% 1,953 DEBT INFORMATION TABLE 8 . GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS Fiscal Year %of Ended Outstanding Debt (I) The Bonds (2) The Certificates (3) Grand Principal 9/30 Principal Interest Principal Interest Principal Interest Total Retired 1997 $ 3,485,000 $ 2,716,734 $ 6,201,734 1998 3,445,000 2,402,393 $ 205,000 $ 308,439 $ 240,000 $ 204,317 6,805,149 1999 3,070,000 2,208,735 205,000 218,069 310,000 135,700 6,147,504 2000 2,860,656 2,470,505 205,000 206,281 330,000 117,300 6,189,742 2001 2,958,203 2,319,041 205,000 194,494 350,000 97,750 6,124,488 33.73% 2002 3,082,157 2,157,632 205,000 182,706 370,000 77,050 6,074,545 2003 3,228,529 1,983,725 205,000 170,919 85,000 63,969 5,737,142 2004 3,376,042 1,796,921 205,000 159,131 90,000 58,937 5,686,031 2005 3,549,622 1,599,758 205,000 147,344 95,000 53,619 5,650,343 2006 1,898,568 2,653,347 205,000 135,556 100,000 48,012 5,040,483 65.63% 2007 2,019,434 2,570,161 205,000 123,769 110,000 41,975 5,070,339 2008 2,026,321 1,889,329 205,000 111,981 50,000 37,375 4,320,006 2009 2,070,609 1,035,669 205,000 100,194 55,000 34,356 3,500,828 2010 2,130,000 467,340 205,000 88,406 60,000 31,050 2,981,796 2011 2,200,000 339,491 205,000 76,619 60,000 27,600 2,908,710 87.91 % 2012 1,550,000 213,461 205,000 64,831 65,000 24,006 2,122,298 2013 1,105,000 140,746 205,000 53,044 70,000 20,125 1,593,915 2014 805,000 90,481 205,000 41,256 75,000 15,956 1,232,693 2015 810,000 47,290 205,000 29,469 75,000 11 ,644 1,178,403 2016 455,000 12,811 205,000 17,681 80,000 7,188 777,680 99.45% 2017 205,000 5,894 85,000 2,444 298,338 100.00% $ 46,125,141 $ 29,115,570 $ 4,100,000 $ 2,436,083 $ 2,755,000 $ 1,110,373 $ 85,642,167 (1) "Outstanding Debt" does not include lease/purchase obligations, (2) Average life of the issue - 12.872 years. Interest on the Bonds has been calculated at the rate of 6.00% for purposes of illustration, TABLE 9 . INTEREST AND SINKING FuND BUDGET PROJECTION Budgeted General Obligation Debt Service Requirements, Fiscal Year Ending 9-30-97 ....,..,.........................'..',..,............ $ 5,886,622 Interest and Sinking Fund, 9-30-96 .........,........,.................,.................................................,.,."""...,... 1996/97 Interest and Sinking Fund Tax Levy ..............,........,..,........................................................,.., Estimated Interest Income"..... ......,.. ,.....,.... ,................ ............"....".....,."."""", .......,..,.., ,.........,... ....... Budgeted Transfers".. ""......... ........ ...... ....". .".",.""" "",....,..,..""". """....,..."... .....,......... ...........,.. ...'", $ 1,329,516 4,800,000 390,000 660.191 7.179,707 Estimated Balance, 9-30-97 ......".."..,................... ,.......................,....... ..................... ......, ,.., ,.... ,..............,.. ,.......'...., ....",..,'.. $ 1 ,293,085 19 TABLE 10 . COMPUTATION OF SELF-SUPPORTING DEBT Waterworks and Sewer Svstem Net Revenues available from Waterworks and Sewer System, Fiscal Year 9-30-96.....,....,......"....,..................................... $ 6,167,073 Less: Revenue Bond Requirements, 1997 Fiscal year...........................,................,............................,...."..,........'........,..... 620.512 Balance Available for other purposes ",.,...,..,..................,."....."............................,.......,........".....,.....................................,. $ 5,546,561 System General Obligation Bond Requirements, 1997 Fiscal Year .............................,......,.............................,................,.. 53.1 75 Percentage of System General Obligation Bonds Self-Supporting,....................................,.....................................,....",..,.. Balance """.. ,.... ......,."...".,. ,.. ...... ,......",.. "...,......... ......,.. "..",.......... ,..,....... ............. ..".,... "".,..... .,............ ........... ,.. ..,..,., ..,.", $ 5 ,493 ,386 100.00% Golf Course Center Net Revenue available from Golf Course Center, Fiscal Year 9-30-96............................................,........".......................... Golf Course Center General Obligation Requirements, 1997 Fiscal Year ..,..,............"........................................................ Balance ".. ,........ .."",.... ... .....""",..,... ........,...,. "",............ ........... ". "",... ,. .,...",........ ..,.,.". ,. """........................ """" ....."... ,.... Percentage of Golf Course Center Tax and Drainage Utility System Surplus Revenue Certificates of Obligation Self-Supporting" ,.,... ....,......... ...........,.. ............. ,............. ...,.....,....,....... .......... .....".., ,..,....,....,. TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Purpose Drainage Improvements Street Improvements Drainage Improvements Date Authorized 9-10-85 9-27-94 9-27-94 Amount Authorized $ 16,870,000 20,000,000 1,865,000 $ 38,735,000 Amount Heretofore Issued $ 15,341,500 7,868,500 Amount Being Issued Unissued Balance $ 1,528,500 8,031,500 1,865,000 $ 11,425,000 $ 4,100,000 $ 23,210,000 $ 4,100,000 $ 876,758 548.627 $ 328,131 100.00% ANTICIPATED IsSUANCE OF GENERAL OBLIGATION DEBT. .. The City does not anticipate the issuance of additional general obligation debt within the next 12 month period. TABLE 12 - OTHER OBLIGATIONS The City has entered into lease-purchase arrangements for an automatic fingerprint identification system and various equipment purchases. The lease/purchases have been declared funded debts of the City and are included in the Debt Service Fund tax m· Payments for the various leases are as follows: Fiscal Year Principal Interest Total 1996-1997 $ 58,080 $ 26,434 $ 84,514 1997-1998 62,087 22,427 84,514 1998-1999 66,371 18,143 84,514 1999- 2000 70,950 13,564 84,514 2000- 200 1 75,845 8,669 84,514 2001-2002 81,077 3,437 84,514 2002-2003 7.002 39 7,041 $ 421412 $ 92713 $ 514125 PENSION FUND. , . The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System ("TMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. (For more detailed information concerning the retirement plan, see Appendix B, "Excerpts from the City's Annual Financial Report".) 20 FINANCIAL INFORMATION TABLE 13 . GENERAL FUND REVENUES AND EXPENDITURE HISTORY For Fiscal Year Ended September 30, Revenues 1996 1995 1994 1993 1992 Taxes, Penalties and Interest $ 14,815,492 $ 14,395,000 $ 12,720,580 $ 11,376,696 $ 10,871,599 Licenses and Permits 855,780 724,870 887,968 939,404 731,539 Intergovernmental 19,536 23,139 Charges for Services 2,332,191 2,077,013 2,428,672 2,090,580 1,882,492 Interest Income 232,641 241,393 166,853 186,458 198,877 Fines and Forfeitures 884,970 747,463 775,510 617,867 534,405 Miscellaneous 305,998 171,533 166,558 244,180 137,358 Total Revenues $ 19,427,072 $ 18,357,272 $17,146,141 $ 15,474,721 $ 14,379,409 Expenditures General Government $ 4,432,868 $ 4,413,618 $ 4,288,662 $ 4,085,564 $ 3,573,394 Public Safety 10,108,971 9,160,080 8,390,486 7,754,569 7,438,826 Public Works 1,609,482 1,928,183 1,623,534 1,466,640 1,385,243 Culture and Recreation 2,310,529 1,986,904 2,044,490 1,910,659 1,714,542 Total Expenditures $ 18,461,850 $17,488,785 $16,347,172 $ 15,217,432 $ 14,112,005 Excess (deficiency) of Revenues over Expenditures $ 965,222 $ 868,487 $ 798,969 $ 257,289 $ 267,404 Net Transfers In (Out) $ (223,056) $ (672,787) $ (986,405) $ 21,627 $ 83,283 Fund Balance - October 1 $ 3,620,483 $ 3,424,783 $ 3,612,219 $ 2,781,035 $ 2,430,348 Adjustments from Prior Year(l), 552,268 Fund Balance - September 30 $ 4,362,649 $ 3,620,483 $ 3,424,783 $ 3,612,219 $ 2,781,035 (1) The September 30, 1992 General Fund balance was increased for a correction in the accrual for sales tax revenue, 21 TABLE 14 - MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, VATCS, Tax Code, Chapter 321, which grants the City the power to impose and levy a 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 Bonds or the Certificates, Collections and enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. In August of 1992 the voters of the City approved the imposition of an additional sales and use tax of one-half of one percent (y2% of 1%) for economic development. Collection for the additional tax went into effect on January I, 1993. The sales tax for economic development is collected solely for the benefit of North Richland Hills Park and Recreation Facilities Development Corporation (the "Corporation "), and may be pledged to secure payment of sales tax revenue bonds issued by the Corporation. In February of 1996 the voters of the City approved the imposition of an additional sales and use tax of one-half of one percent (W7o of 1%) for crime control and prevention, Collection for the additional tax went into effect on July I, 1996, The sales tax for crime control and prevention is collected solely for the benefit of North Richland Hills Crime Control and Prevention District (the "District"), and may be pledged to secure payment for crime control and prevention programs for the District. Fiscal Year %of Equivalent of Ended Total Ad Valorem Ad Valorem 9/30 Collected Tax Levy Tax Rate 1993 $ 4,988,925 65.96% $ 0.3453 1994 5,748,869 70.51 % 0.4019 1995 6,569,755 76.31 % 0.4350 1996 6,738,624 72.60% 0.4076 1997 (I) 1,852,154 18.45% 0.1051 Per Capita $ 103 115 130 128 35 (1) Partial collections through March I, 1997. The sales tax breakdown for the City is as follows: Crime Control and Prevention District Economic and Community Development City Sales & Use Tax State Sales & Use Tax Total 1I2¢ 1I2¢ I¢ 6.25¢ 8.25¢ FINANCIAL POLICIES Basis of AccountinJ! . , .The City's accounting records of the governmental fund revenues and expenditures are recognized on the modified accrual basis, Revenues are recognized in the accounting period in which they are available and measurable. Expenditures are recorded when the related fund liability is incurred except for interest on general long-term obligations, which is recorded when due or when amounts have been accumulated in the Debt Service Funds for payments to be made early in the following year and a portion of accrued vacation leave, which is recorded in the general long-term debt account group. Proprietary Fund revenues and expenses are recognized on the accrual basis. Revenues are recognized in the accounting period in which they are earned, Expenses are recognized in the accounting period incurred. Fiduciary Fund revenues and expenses or expenditures are recognized on the modified accrual basis. Transfers are recognized in the accounting period in which the interfund receivable and payable arise (see Appendix B - "Excerpts from The City of North Richland Hills, Texas Annual Financial Report for the Year Ended September 30, 1996"), General Fund Balance, . . The City's policy is to maintain surplus and unencumbered funds equal to 12% to 15% of the next fiscal year's operating budget. Debt Service Fund Balance. . . The City's policy is to maintain surplus funds equal to a minimum of three (3) months of debt service in the Debt Service Fund, City policy is to pay "first dollar" tax collections into the Debt Service Fund until the levy for debt service has been collected. The City budgets on a 97.5% collections ratio and the 2.5% non-collectible factor is accounted for in the General Fund. Use of Bond Proceeds. , . The City's policy is to use bond proceeds for capital expenditures only. Such revenues are never to be used to fund normal City operations. 22 '"1 Budfœtarv Procedures. . , The City Charter establishes the fiscal year as the twelve-month period beginning October 1. The departments submit to the City Manager a budget of estimated expenditures for the ensuing fiscal year by the middle of March. The City Manager subsequently submits a budget of estimated expenditures and revenues to the City Council by August 15. The City Council shall hold a public hearing on the budget after giving at least 10 days notice of the hearing in the official newspaper of the City, The Council shall then make any changes in the budget as it deems advisable and shall adopt a budget prior to October 1. If the Council fails to adopt a budget then the budget proposed by the City Manager shall deem to have been adopted. During the fiscal year, strict budgetary control is maintained by various methods, including the review of departmental appropriation balances with purchase requisitions prior to their release to vendors. Departmental appropriations that have not been expended lapse at the end of the fiscal year. Therefore, funds that were budgeted and not used by the departments during the fiscal year are not available for their use unless appropriated in the ensuing fiscal year's budget. Fund Investments. , ,The City investment policy parallels the state laws which govem the investment of public funds, The City generally restricts investments to direct obligations of the United States Govemment and its agencies and to insured or collateralized bank certificates of deposit and investment pools. INVESTMENTS The City of North Richland Hills invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City of North Richland Hills. Both state law and the City's investment policies are subject to change. LEGAL INVESTMENTS, . . Under Texas law, the City is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) certificates of deposit that are guaranteed or insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and amount provided by law for City deposits, (7) certificates of deposit and share certificates issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the clauses (1) through (5) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-lor P-l or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper that is rated at least A-lor P-l or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no-load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no-load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. The City may invest in such obligations directly or through govemment investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service, The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. INVESTMENT POLICIES. , , Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes'a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups, All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. 23 r 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 ofthe City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS. . . Under Texas law the City is additionally required to: (1) annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with finns seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the registered principal of finns seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) perfonn an annual audit of the management controls on investments and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the tenn of the reverse repurchase agreement; (7) restrict the investment in mutual funds in the aggregate to no more than 80% of the City's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service and further restrict the investment in non-money market mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; and (8) require local government investment pools to confonn to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements, TABLE 15 . CURRENT INVESTMENTS As of March 20, 1997, the City's investable funds were invested in the following categories: Type of Investment Agency Notes Discount Notes T-Bills T-Notes Texpool (3-1-97) Logic (3-1-97) % of Portfolio 9.80% 31.86% 4,90% 14.70% 29.79% 8.94% 100.00% Maturity Date 12/9/97 - 12/18/98 4/1/97 - 10/27/97 6/26/97 - 8/21/97 11/13/97 - 2/28/99 18 Days 41.88 Days Maturity Value $ 4,000,000 13,000,000 2,000,000 6,000,000 12,157,058 3,648,036 $ 40,805,094 As of such date, the average remaining tenn of such investments was 131.75 days. 24 TAX MATTERS TAX EXEMPTION ,.. The delivery of the Bonds and Certificates is subject to the opinions of Bond Counsel to the effect that interest on the Bonds and Certificates for federal income tax purposes (l) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinions (the "Code"), pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described, corporations. A form of Bond Counsel's opinions is reproduced as Appendix B. The statute, regulations, rulings, and court decisions on which such opinions are based are subject to change, Interest on all tax-exempt obligations, including the Bonds and Certificates, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989, for purposes of calculating the alternative minimum taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate investment trust (REIT), or a real estate mortgage investment conduit (REMIC). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by Section 55 of the Code will be computed. In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the City made in a certificate dated the date of delivery of the Bonds and Certificates pertaining to the use, expenditure, and investment of the proceeds of the Bonds and Certificates and will assume continuing compliance by the City with the provisions of the respective Ordinances subsequent to the issuance of the Bonds and Certificates. The respective ordinances authorizing the issuance of the Bonds and the Certificates, as the case may be, contain covenants by the City with respect to, among other matters, the use of the proceeds of the Bonds or Certificates and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Bonds and Certificates, as the case may be, are to be invested, and the reporting of certain information to the United States Treasury, Failure to comply with any of these covenants would cause interest on the Bonds or Certificates, or both, to be includable in the gross income of the owners thereof from date of the issuance of such Obligations, Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds or the Certiticates, Prospective purchasers of the Bonds and Certificates should be aware that the ownership of tax-exempt obligati0'1s such as the Bonds and Certificates may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations, Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN BONDS AND CERTIFICATES.. . The initial public offering price of certain Bonds or Certificates or both (the "Discount Obligations") may be less than the amount payable on such Bonds or Certificates, or both, at maturity. A portion of such original issue discount allocable to the holding period of such Discount Obligation by the initial purchaser will, upon the disposition of such Discount Obligation (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Bonds and Certificates described above under "Tax Exemption." Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Obligation, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Obligation and generally will be allocated to an original purchaser in a different amount from the amount of the payment denominated as interest actually received by the original purchaser during the tax year. However, such interest may be required to be taken into account in determining the alternative minimum taxable income of a corporation, for purposes of calculating a corporation's alternative minimum tax imposed by Sections 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with "subchapter C" earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Obligation by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Obligation in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Obligation was held) is includable in gross income. Owners of Discount Obligations should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Obligations for federal income tax purposes and with respect to the state and local tax consequences 25 of owning and disposing of Discount Obligations, It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Obligations may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds or Certificates, or both, (the "Premium Obligations") may be greater than the amount payable on such Bonds and Certificates at maturity, An amount equal to the difference between the initial public offering price of a Premium Obligation (assuming that a substantial amount of the Premium Obligations of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Obligations. The basis for federal income tax purposes of a Premium Obligation in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Obligation. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity, Purchasers of the Premium Obligations should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Obligations. OTHER INFORMATION RATINGS The presently outstanding tax supported debt of the City is rated "A" by Moody's and "A+" by S&P. The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflects only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Bonds and Certificates. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS AND CERTIFICATES FOR SALE The sale of the Bonds and Certificates has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds and Certificates have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds and Certificates been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Bonds and Certificates under the securities laws of any jurisdiction in which the Bonds and Certificates may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds and Certificates shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions, 26 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 9 of the Bond Procedures Act provides that the Bonds and Certificates "shall constitute negotiable instruments, and are investment securities governed by Chapter 8, Texas Uniform Commercial Code, notwithstanding any provisions of law or court decision to the contrary, and are legal and authorized investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, and trustees, and for the sinking fund of cities, towns, villages, school districts, and other political subdivisions or public agencies of the State of Texas", The Bonds and Certificates are eligible to secure deposits of any public funds of the state, its agencies and political subdivisions, and are legal security for those deposits to the extent of their market value. For political subdivisions in Texas which have adopted investment policies and guidelines in accordance with the Public Funds Investment Act (V.T.C.A., Government Code, Chapter 2256), the Bonds and Certificates may have to be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency before such obligations are eligible investments for sinking funds and other public funds. No review by the City has been made of the laws in other states to determine whether the Bonds and Certificates are legal investments for various institutions in those states, LEGAL OPINIONS AND No-LITIGATION CERTIFICATE The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds and Certificates, including the unqualified approving legal opinions of the Attorney General of Texas approving the Initial Bond and Initial Certificate and to the effect that the Bonds and Certificates are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the approving legal opinions of Bond Counsel, to like effect and to the effect that the interest on the Bonds and Certificates will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. The customary closing papers, including certificates to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Bonds or Certificates, or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Bonds or Certificates will also be furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds and Certificates in the Official Statement to verify that such description conforms to the provisions of the r~spective Ordinances authorizing the issuance of said Obligations. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds and Certificates is contingent on the sale and delivery of the Bonds and Certificates. The legal opinions will accompany the Bonds and Certificates deposited with DTC or will be printed on the Bonds and Certificates in the event of the discontinuance of the Book-Entry-Only System. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. CONTINUING DISCLOSURE OF INFORMATION In the respective Ordinances authorizing the issuance of the Bonds and the Certificates, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds and Certificates. The City is required to observe such agreements for which it remains obligated to advance funds to pay the Bonds or Certificates, as the case may be, Under such agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors. This information will be available to securities brokers and others who subscribe to receive the information from the vendors, ANNUAL REPORTS . . . The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered I through 6 and 8 through 15 and in Appendix B. The City will update and provide this information within 6 months after the end of each fiscal year ending in or after 1997. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") and to any state information depository ("SID") that is designated by the State of Texas and approved by the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC"). 27 The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule l5c2-12, The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial statements at the time of filing; and then later provide audited financial statements when and if the audit report becomes available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P.O. Box 2177, Austin, Texas 78768- 2177, and its telephone number is 512/476-6947. MATERIAL EVENT NOTICES. . , The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds or Certificates, if such event is material to a decision to purchase or sell Bonds or Certificates: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds or Certificates, or both; (7) modifications to rights of holders of the Bonds or Certificates, or both; (8) Bond calls or Certificate calls, as the case may be; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds or Certificates, or both; and (11) rating changes, (Neither the Bonds and Certificates nor the respective Ordinances authorizing their issuance make any provision for debt service reserves, credit enhancement 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." The City will provide each notice described in this paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board ("MSRB"). AVAILABILITY OF INFORMATION FROM NRMSIRs AND SID. . . The City has agreed to provide the foregoing information only to NRMSIRs and the SID. The information will be available to holders of Bonds and Certificates only if the holders comply with the procedures and pay the charges established by such information vendors or obtain the information through securities brokers who do so, LIMITATIONS AND AMENDMENTS. , . The City has agreed to update information and to provide notices of material events only as described above, The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above, The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds or Certificates at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Bonds and Certificates, as the case may be, may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreements from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds or Certificates, or both, in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds or Certificates, as the case may be, consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds or Certificates, as the case may be. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS. . . The City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-l2. 28 FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds and Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds and Certificates is contingent upon the issuance and delivery of the Bonds and Certificates, First Southwest Company may submit a bid for the Bonds and Certificates, or both, either independently or as a member of a syndicate organized to submit a bid for the Bonds and Certificates. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds and Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds and Certificates, the City will furnish a certificate, executed by proper officers, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of said Bonds and Certificates and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of the last audited financial statements of the City. The respective Ordinances authorizing the issuance of the Bonds and Certificates will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds and Certificates by the Purchaser. A1TEST: TOMMY BROWN Mayor City of North Richland Hills, Texas PATRICIA HUSTON City Secretary 29 THIS PAGE LEFT BLANK INTENTIONALLY GENERAL INFORMATION REGARDING THE CITY APPENDIX A - Amarillo NORTH RICHLAND HILLS Fort Worth'" _Dallas *' Austin - San Antonio THIS PAGE LEFT BLANK INTENTIONALLY LOCATION AND HISTORY, . . The City of North Richland Hills is located in northeast Tarrant County, encompassing approximately 18.29 square miles with 493 employees, The City is approximately 10 miles northeast of downtown Fort Worth and 25 miles northwest of downtown Dallas. It is a part of the mid-cities area of North Central Texas (the "Metroplex"), which includes the Cities of Dallas and Fort Worth with a total population exceeding 4 million. The City was incorporated in 1953 under the general laws of the State of Texas and the current charter was approved by the voters in 1964 and last amended in August of 1992. The City is a home rule city and operates under the CounciVManager fonn of government. The Council is composed of a mayor and seven councilmembers elected at large, All City residents vote for all seven places. The members are elected for two-year staggered tenns and elections are held annually in May. Policy-making and oversight functions are the responsibility of, and are vested in, the City Council. The City Council is required by the charter to appoint a City Manager to serve as the chief administrative and executive officer of the City. The duties of the City Manager include the appointment of City department heads and the daily conduct of City affairs. POPULATION, . , The City has grown steadily since the mid-1950's when it was a small bedroom community. The population of the City has increased approximately 60% since 1982, Population history is as follows: Year 1953 1960 1970 1980 1990 Population 500 8,662 16,514 30,592 45,895 Source (1) (2) (2) (2) (2) Year Population Source 1993 48,300 (3) 1994 50,000 (1) 1995 50,650 (1) 1996 52,584 (1) 1997 52,800 (1) (1) City Staff Estimate. (2) U.S. Census Bureau. (3) North Central Texas Council of Governments, The City has established itself as an innovative leader among Texas municipalities. A steadily growing economy, complete municipal services and prime location deliver the high quality ofliving expected by the residential and business communities, With an estimated current population of 50,000, more than triple the in excess population of 1970, North Richland Hills is the third largest city in Tarrant County. The citizens of the City, with a median age of 31.5, enjoy the small town atmosphere while sharing the many amenities of the Fort W orthIDallas Metroplex. ECONOMICS. . . The City's location in the middle of the Fort WorthIDallas Metroplex provides access to approximately 4 million people - the sixth largest market in the United States. North Richland Hills' proximity to the D/FW International Airport allows local businesses to capitalize on trade opportunities gained through the North American Free Trade Agreement (NAFfA). The approximate economic base of the City at this time is manufacturing and distribution (8.1 %), wholesale and retail trade (32,7%), professional and related services (36.5%), and various other services (22,7%). The City's labor distribution by type includes individuals skilled in technical, sales and administrative functions (39%), management (26%), operators and fabricators (13%) and services (7%), Recent indicators illustrate the City's healthy economic environment: · The local unemployment rate has remained more than two points below state figures and almost two points below U,S. rates, since January 1993, Over the same period, North Richland Hills unemployment rate has stayed from between 1 and 1-1/2% points below figures for the entire Fort Worth/Arlington Metropolitan Statistical Area, · North Richland Hills' 1994/95 sales tax revenue exceeded projections by 6% with an increase of 11.3% over the previous year. The City has enjoyed annual increases in sales tax revenue since the early 1980's · The value of residential construction, including remodeling, was $32,309,977 in 1996, New commercial construction and remodeling of existing facilities were valued at almost $29 million in 1996. A - I ~ I North Richland Hill's status as a "triple Freeport" City (i,e., one with the Freeport exemption available through Tarrant County, the City, and the Birdville Independent School District on qualified in-transit inventories) will benefit manufacturers such as Tecnol and encourage their expansion. In addition, such an incentive enhances North Richland Hills' chances of landing new manufacturing and distribution facilities. With approximately 30% of the City remaining undeveloped, North Richland Hills offers numerous opportunities for commercial, industrial, and residential growth. Other factors contributing to the City's prosperity include: · A location near the center of nine of the ten largest business centers in Tarrant County, · Close proxiuùty to new or expanding employers like Motorola's Global Paging Division (5 uùles), Alliance Airport (9 uùles), Burlington Northern's Corporate Headquarters (8 uùles), Bell Helicopter (4 uùles), Siecor Corporation (8 uùles), AST Research (8 uùles), and Haggar Manufacturing (6 uùles). · The Growth of existing manufacturers such as Tecnol Medical Products, H&M Food Systems, Sealy Mattress Manufacturing, Bates Container, and Arabesque Fragrance Manufacturing. Residential platting activity continues to be strong, especially in the northern areas of the City and near the Iron Horse Golf Course. One of two courses with adjacent residential lots, Iron Horse is achieving critical and financial success - having attracted more than 53,000 rounds of golf in 1996, MUNICIPAL SERVICES. . . With active involvement by the Mayor, a seven member City Council and 14 citizen boards, commissions and committees, the City is assured proper and effective representation. Low crime statistics are maintained by a police force consisting of 68 police officers. The City has four professionally staffed fire stations. Fully equipped to handle most emergencies, the City utilizes its own mobile intensive care ambulance system, staffed with highly trained paramedics, QUALITY OF LIFE, . . Amenities are plentiful in the City. Two privately owned and fully operational hospitals in the region offer City residents excellent health care, The City has a full service central library housing in excess of 93,000 volumes with a circulation of almost 384,000. With over 388 acres of park land, the City offers such facilities as playgrounds, picnic areas, recreation center, a championship golf course, lighted tennis courts, football fields, softball and baseball fields, basketball courts, volleyball courts and two senior citizen centers, Families in the City are served by churches throughout the area representing all denouùnations. EDUCATION. . . Education for the citizens of the City is provided by the Birdville Independent School District (the "District") which encompasses an area of approximately 40 square uùles. The District conducts programs for K-12 and is fully accredited by the Southern Association of Colleges and the Texas Education Agency and operates on a uùddle school structure, i.e. Pre-kindergarten-5, 6-8, 9-12. Physical facilities include: 2 high schools I alternative high school 7 junior high schools 20 elementary schools Coliseum Aduùnistration Building Stadium Transportation Complex Computer Service Center Annex/materials Center All of the school buildings owned by the District are air conditioned. Approximately 35.5% of the teachers in the District hold advanced degrees. The District employs approximately 2,400 total staff as follows: Certified Professionals Others 1,515 885 Teacher salaries in the District are as follows: Degree Level Baccalaureate Masters Minimum Salary $27,250 $28,350 Maximum Salary $42,230 $45,230 A - 2 Selected historical enrollment figures in the District are as follows: Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 0) As of October 30,1996. Source: Birdville Independent School District. Enrollment 15,499 15,376 15,182 15,478 15,490 15,588 16,059 17,039 17,200 Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 -----r Enrollment 17,529 18,505 19,100 19,358 18,929 19,039 20,098 20,454 20,141 (1) Education beyond the high school level is readily available, The Northeast campus of the Tarrant County Junior College District is located partially within the City limits, Additionally, within a radius of 40 miles, there are a number of colleges and universities including Southern Methodist University, Texas Christian University, the University of North Texas and the University of Texas in Arlington. TRANSPORTATION, . . The City has prime positioning for easy access to major local, regional and national markets, Being just 7.5 miles from the Dallas/Fort Worth International Airport and 9 miles from the newly constructed Alliance Airport, the City is located in the hub of business activity and is an integral part of the rapidly growing Northeast Tarrant County Area. The City is strategically positioned on or near five major Interstate Highways, Using Interstate Loop 820, easy access is gained to Interstate 35 (north to Oklahoma and south to Austin, San Antonio and Laredo), Interstate 45 (north to Tulsa and south to Houston), Interstate 20 (west to Midland and El Paso and east to Tyler and Shreveport), and Interstate 30 (east to Texarkana, Little Rock and Memphis). The accessibility factor also includes five rail lines in the Fort Worth area, one of which - St. Louis Southwestern - is located in the City, AGE OF POPULATION (1) Median Income Per Household....."......,......... ,.. ,....,......... ,.. .$43,094 Median Age of Population......,......."..............."........,...........· 31.5 MAJOR EMPLOYERS IN THE CITY (1) Based on Bureau of Census, Department of Commerce, Employer Tecnol Medical Products, Inc, Birdville Independent School District VlCI Insurance Center Columbia North Hills Hospital TCJC-N,E. Campus* City of North Richland Hills Wal-Mart H&M Food Systems, Inc, Bates Container Corporation Foley's Department Stores Estimated Number of Employees 1,010 875 660 615 500 493 360 245 200 180 Product Disposable Medical and Hospital Supplies School District Insurance Medical Care Higher education Municipality Retail Sales Food Processor Corrugated Containers Department Store * Split with Hurst. Source: North Central Texas Council of Governments, Local Media, City of North Richland Hills. A - 3 BUILDING PERMIT INFORMATION Fiscal Year 1992 1993 1994 1995 1996 Construction Commercial Number of Units 14 21 110 128 116 Source: City Records. Value $ 13,326,554 13,579,157 21,895,675 25,106,505 29,200,801 Residential Number of Units 281 420 434 268 346 A-4 Value $ 29,803,814 48,727,412 50,319,939 31,739,218 32,309,977 Total Units 295 441 544 396 462 r- Total Value $ 43,130,368 62,306,569 72,215,614 56,845,723 61,510,778 APPENDIX B EXCERPTS FROM THE CITY OF NORTH RICHLAND HILLS, TEXAS ANNUAL FINANCIAL I<EPORT For the Year Ended September 30, 1996 The infonnation contained in this Appendix consists of excerpts from the City of North Richland Hills, Texas Annual Financial Report for the Year Ended September 30, 1996, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further infonnation. r I I THIS PAGE LEFT BLANK INTENTIONALLY KPMG Peat Marwick LLP 2500 City Center Tower 1/ 301 Commerce Street Fort Worth, TX 76102 INDEPENDENT AUDITORS' REPORT The Honorable Members of City Council City of North Richland Hills, Texas: We have audited the accompanying general purpose financial statements of the City of North Richland Hills, Texas, as of and for the year ended September 30, 1996, as listed in the accompanying table of contents. These general purpose financial statements are the responsibility of the City of North Richland Hills, Texas' management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe City of North Richland Hills, Texas, as of September 30, 1996, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated December 20, 1996 on our consideration of City of North Richland Hills, Texas' internal control structure and a report dated December 20, 1996 on its compliance with laws and regulations. Our audit was made for the purpose of forming an opinion on the 1996 general purpose financial statements taken as a whole. The combining and individual fund and account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of North Richland Hills, Texas. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. The supplemental information as listed under the statistical section in the table of contents has been summarized from the City's records and was not subjected to the auditing procedures that were applied to the general purpose financial statements. Accordingly, we express no opinion on such information. December 20. 1996 K~~b ~~ ~LLQ Member Firm of KPMG International CITY OF NORTH RICHLAND HILLS, TEXAS Combined Balance Sheet - All Fund Types and Account Groups September 30, 1996 with comparative totals for September 30, 1995 Governmental Fund Types Special Debt Capital General Revenue Service Projects Assets and Other Debits Fund Funds Funds Funds Deposits and investments, at cost (note 2) $ 3,266,447 2,251,307 2,582,194 13,973,194 Investments, at market (notes 2 and 13) Receivables (net, where applicable, of allowances for estimated uncollectible amounts of$363,763): Accounts 135,430 30,797 Property taxes (note 3) 208,509 Other taxes 1,362,959 1,201,230 Accrued interest 5,765 19,301 195,442 Special assessments (note 4) 874,192 Intergovernmental 527,327 Other 304,775 Prepaid expenses Due from other funds (note 15) 67,367 Inventories, at cost Restricted assets: Deposits and investments, at cost (note 2) 179,888 Property, plant and equipment (net, where applicable, of accumulated depreciation) (note 5) Other assets (net, where applicable, of accumulated amortization) Advances to other funds (note 15) 505,798 Amount available in debt service fund Amount to be provided for retirement of generallong-tenn debt Total assets and other debits $ 5,715,855 4300,947 2,601,495 15,073,625 3 Exhibit I Proprietary Fund Tvoes Internal Service Funds Fiduciary Fund Tvoe Account Groups General General Fixed Long-term Assets Debt Totals (Memorandum Onlv) 1996 1995 Enterprise Funds Agency Fund 4,687,239 1,888,012 28,648,393 2,985,921 24,779,577 2,552,444 2,985,921 3,395,764 14,193 3,576,184 2,989,647 208,509 251,724 2,564,189 2,096,451 53,455 25,527 299,490 1 88,184 874,192 83 1~8 14 527,327 460,076 304,775 191,861 17,833 69,600 87,433 57,119 17,333 84,700 57,908 298,509 55,228 353,737 284,167 5,665,060 447,986 6,292,934 8,142,156 67,843,311 2,451,534 95,849,783 166,144,628 150,966,999 213.526 213,526 228,961 465,119 970,917 855,927 2,550,674 2,550,674 2,328,884 56.040.335 56.040.335 5 1.956.1 0 1 ,82,657.149 4,952.080 2,985.921 95.849.783 58,591.009 272,727 ,864 249.220.000 (Continued) 4 r CITY OF NORTH RICHLAND HILLS, TEXAS Combined Balance Sheet - All Fund Types and Account Groups, Continued Governmental Fund Types Special Debt Capital General Revenue Service Projects Liabilities Fund Funds Funds Funds Bank overdraft $ 92,860 437,329 Accounts payable 79,748 380,407 134,910 Accrued liabilities (notes 1(1), 7 and 11) 686,513 41,877 50,821 Retainage payable 415,305 Deposits and other liabilities 167,374 46,952 385,484 Due to other funds (note 15) 40,000 Payable from restricted assets: Accrued interest payable Current portion of revenue bonds, golf course obligations and contractual obligation payable (note 7) Accounts payable Retainage payable Customers' deposits Developers' deposits Golf course obligations (note 7) Discount on golf course obligations General obligation bonds payable (note 7) Sales tax revenue bonds (note 7) Certificates of obligation (note 7) Note payable (note 7) Contractual obligation payable (note 7) Revenue bonds payable (note 7) Discount on revenue bonds payable Deferred revenue (notes 3 and 4) 419,571 917,625 Deferred compensation payable (note 13) Advances from other funds (note 15) 160,000 - - Total liabilities 1 ,353,206 762,096 50,821 2290,653 5 Exhibit 1 , Continued Fiduciary Proprietary Fund Types Fund Type Account Groups Internal General General Totals Enterprise Service Agency Fixed Long-tenn (Memorandum Only) Funds Funds Fund Assets Debt 1996 1995 364,342 222,050 1,116,581 1,114,349 1,643,350 99,567 2,337,982 1,977,156 366,446 693,228 705,974 2,544,859 2,544,400 415,305 388,082 32,584 632,394 128,394 44,700 84,700 57,908 77 ,222 77,222 85,596 352,083 352,083 334,167 80,671 101,014 101,014 2,672 1,369,872 1,369,872 1,321,995 7,656 7,656 9,056 4,490,000 4,490,000 4,685,000 (69,176) (69,176) (73,788) 42,468,621 42,468,621 38,772,416 12,510,000 12,510,000 12,880,000 2,485,000 2,485,000 1,600,000 421,414 421,414 475,746 75,000 75,000 110,000 13,224,855 13,224,855 14,257,348 (179,741) (179,741 ) (194,134) 1,337,196 1,012,884 2,985,921 2,985,921 2,552,444 810,917 970,917 855,927 22,71 1.124 1.014,845 2,985,921 58.591.009 89,759,675 84,978,289 (Continued) 6 CITY OF NORTH RICHLAND IDLLS, TEXAS Combined Balance Sheet - All Fund Types and Account Groups, Continued Governmental Fund Types Special Debt Capital General Revenue Service Projects Equity and Other Credits Fund Funds Funds Funds Contributed capital (note 10) $ Investment in general fixed assets Retained earnings: Reserved, principally for revenue bond principal and interest Reserved for rate stabilization Reserved for future construction Reserved for insurance Reserved for future system improvements Unreserved Fund balances: Reserved for encumbrances 249,877 1,076,734 3,685,807 Reserved for debt service 2,550,674 Reserved for advances to other funds 505,798 Unreserved: Designated for capital improvements 1,390,049 9,097,165 Designated for transition 179,888 Unreserved - undesignated 3,606,974 892,180 Total retained earnings/ fund balances 4,362,649 3.538,851 2.550,674 12,782,972 Total equity and other credits 4,362,649 3,538,851 2,550,674 12,782,972 Commitments and contingent liabilities (notes 5, 6, 7, 8, 9, and II) Total liabilities, equity and other credits $ 5,715,855 4,300,947 2,601.495 15,073,625 See accompanying notes to general purpose financial statements. 7 Exhibit 1. Continued Fiduciary ProDriety Fund Tvoes Fund Tvoe Account GrouDs Internal General General Totals Enterprise Service Agency Fixed Long-term (Memorandum On Iv) Funds Funds Fund Assets Debt 1996 1995 35,882,628 1,391,462 37,274,090 35,122,941 95,849,783 95,849,783 84,280,723 2,613,591 2,613,591 2,464,853 300,000 300,000 400,732 400,732 502,814 120,000 151,813 271,813 75,000 296,173 296,173 20,629,074 2,097,787 22,726,861 19,021,248 5,012,418 7,835,892 2,550,674 2,328,884 505,798 375,248 10,487,214 8,484,541 179,888 4.499.154 3.749567 24.063.397 2545.773 49.844.316 44.838.047 59,946,025 3,937,235 95,849,783 182,968,189 164,241,711 82.657.149 4.952.080 2.985.921 95.849.783 58591.009 272.727.864 249.220.000 8 CITY OF NORTH RICHLAND HILLS, TEXAS Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types '. Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 Revenues: Taxes (notes 1(0) and 3) Licenses and permits Charges for services (note 1(0» Fines Contributions Special assessments (note 4) Interest income Intergovernmental Drainage fees Proceeds from forfeiture of contraband Miscellaneous Total revenues Expenditures: Current: General government Public safety Culture and recreation Public works Capital outlay (note 1(0» Debt service: Retirement of general long-term debt (note 7) Interest and fiscal agent charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from bonds (note 7) Gain on sale of fixed assets Operating transfers in Operating transfers out . Total other financing sources (uses) - net Excess (deficiency) of revenues and other sources over expenditures and other uses Fund balances at beginning of year Fund balances at end of year General Fund $ 14,815,492 855,780 2,332,191 884,970 232,641 305.998 19.427.072 4,432,868 10,108,971 2,310,529 1,609,482 18.461.850 965,222 332,314 (555.370) (223.056) 742,166 3.620.483 $ 4.362.649 See accompanying notes to general purpose financial statements. 9 III""'" Special Revenue Funds 4,340,034 115,934 227,191 1,143,956 647,195 57,796 5.192 6.537.298 532,807 916,382 2,533,112 3.982.301 2,554,997 (1.883.510) (1.883.510) 671,487 2.867.364 3.538.851 Exhibit 2 Debt Capital Totals Service Projects (Memorandum Onlv) Funds Funds 1996 1995 4,600,000 23,755,526 22,138,044 855,780 724,870 2,332,191 2,077,013 884,970 747,463 115,934 146,557 183,408 183,408 655,142 92,235 741,562 1,293,629 1,388,946 175,359 1,319,315 838,360 647,195 656,993 57,796 121,007 14 311.204 217.427 4,692,235 1J 00.343 31. 756,948 29,711.822 4,432,868 4,413,618 10,641,778 9,683,689 3,226,911 2,780,291 1,609,482 1,928,183 9,687,235 12,220,347 13,647,313 3,394,609 3,394,609 3,329,485 3,129,143 3,129,143 2,776,259 6,523,752 9,687,235 38,655.138 38,558,838 (1,83 1,517) (8,586,892) (6,898,190) (8,847,016) 7,165,000 7,165,000 8,000,000 29,397 2,053,307 532,688 2,918,309 3,757,187 (285,225) (2,724,105) (3,237,528) 2,053.307 7.412.463 7,359,204 8,549,056 221,790 (1,174,429) 461,014 (297,960) 2,328,884 13,957.401 22,774,132 23,072,092 2,550,674 12,782,972 23.235.146 22,774,132 10 CITY OF NORTH RICHLAND HILLS, TEXAS Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual- General, Special Revenue and Debt Service Fund Types Year ended September 30, 1996 General Fund Variance - Favorable Budget Actual (Unfavorable ) $ 14,779,095 14,815,492 36.397 829,500 855,780 26,280 2,286,917 2,332,191 45,274 732,300 884,970 152,670 186,000 232,641 46,641 321.944 305,998 (15,946) 19,135,756 19,427,072 291.316 Revenues: Taxes Licenses and penn its Charges for services Drainage fees Fines Contributions Interest income Intergovernmental Miscellaneous Total revenues Expenditures: Current: General government Public safety Culture and recreation Public works Debt service: Retirement of generallong-tenn debt Interest and fiscal agent charges Total expenditures Excess (deficiency) of revenues over expenditures 4,659,491 10,253,581 2,341,655 1,793,566 4,432,868 10,108,971 2,3 10,529 1,609,482 226,623 144,610 31,126 184,084 Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) - net Excess of revenues and other sources over expenditures and other uses 19,048,293 18,461 ,850 586,443 87,463 965,222 877,759 308,161 332,314 24,153 (365.3 70) (555,370) (190,000) (57,209) (223,056) (165,847) $ 30,254 742,166 711.912 3,620,483 $ 4,362,649 Fund balances at beginning of year Fund balances at end of year See accompanying notes to general purpose financial statements. II Exhibit 3 Special Revenue Funds Debt Service Funds Variance - Variance - Actual Favorable Favorable Budget (note Hd)) (Unfavorable ) Budget Actual (Unfavorable ) 1 ,060,279 970,924 (89,355) 4,600,000 4,600,000 655,000 647,195 (7,805) 93,300 115,934 22,634 14,108 14,844 736 70,000 92,235 22,235 3,242 3,242 - - 1.822.687 1. 752.139 (70,548) 4,670.000 4.692,235 22,235 80,443 6,079 74,364 351,925 326,612 25,313 3,399,332 3,394,609 4,723 - 3.159,318 3.129.143 30.1 75 - 432,368 332.691 99,677 6,558.650 6,523.752 34,898 1.390,319 1,419,448 29,129 (1,888,650) (1,831,517) 57,133 2,022,501 2,053,307 30,806 ( 626. 724) ( 644,885) (I 8.1 61 ) - - ( 626.724) (644,885) (I 8.1 61 ) 2,022.50 I 2,053.307 30,806 763.595 774,563 10.968 133.851 221,790 87.939 393.549 2,328,884 1.168.112 2,550.674 12 r Exhibit 4 CITY OF NORTH RICHLAND mLLS, TEXAS Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 Totals (Memorandum Onlv) Internal Enterprise Service Funds Funds 1996 1995 Operating revenues: Water and sewer service $ 19,761,916 19,761,916 17,690,846 Water and sewer connections 399,683 399,683 316,370 Sewer transportation 8,026 Service charges 800,087 800,087 485,120 Inspection fees 45,306 45,306 33,675 Golf course fees and charges 2,435,289 2,435,289 2,177,067 Assessment revenue 9,471 9,471 22,881 Insurance premiums (notes 1(0) and 11) 2,812,483 2,812,483 2,590,898 Maintenance services (note 1(0)) 2,135,696 2,135,696 2,144,280 Telephone services 209,028 209,028 Computer services 1,234,014 1,234,014 Aquatic park admissions 1,438,709 1,438,709 1,259,484 Recreation equipment rental 134,823 134,823 151,358 Food, beverage and gifts 313,829 313,829 320,190 Sponsorships 45,000 45,000 20,750 Other income 12.542 16.027 28.569 16.049 Total operating revenues 25.396.655 6.407 .248 31.803.903 27.236.994 Operating expenses: Contractual services (note 9) 9,842,522 803,713 10,646,235 9,453,569 Personal services 3,390,779 1,235,946 4,626,725 3,842,066 Cost of golf course sales and services 1,363,998 1,363,998 1,269,706 Repairs and maintenance 857,163 273,061 1,130,224 1,096,579 Supplies 992,137 358,943 1,351,080 1,221,255 Depreciation 1,966,311 442,186 2,408,497 1,950,046 Franchise fees (note 1(0)) 491,432 491,432 411,206 Payments in lieu of taxes (note 1(0) 273,122 273,122 255,819 Administration fees (note 1(0) and 11) 1,247,846 1,247,846 1,296,860 Claims (note 11) 2.674.339 2.674.339 2.646.304 Total operating expenses 20.425.310 5.788.188 26.213.498 23.443.41 ° Operating income 4.971.345 619.060 5.590.405 3.793.584 (Continued) 13 CITY OF NORm RICHLAND HILLS, TEXAS Exhibit 4. Continued Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 Enterprise Funds Nonoperating revenues (expenses): Interest income (note 15) Interest expense and fiscal agent charges (note 15) Gain (loss) on disposal of fixed assets 463,384 (1,447,558) (23.215) Total nonoperating revenues (expenses)- net Income before operating transfers Operating transfers in Operating transfers out Total operating transfers Net income (1.007.389) 3,963,956 093.204) (393.204) 3,570,752 Retained earnings at beginning of year Retained earnings at end of year 20.492.645 $ 24.063.397 Internal Service Funds 117,268 39.175 156.443 775,503 199,000 199.000 974,503 1.571.270 2.545.773 See accompanying notes to general purpose financial statements. 14 Totals (Memorandum Onlv) 1996 1995 580,652 652,210 (1,447,558) (1,495,696) 15.960 (291.932) (850.946) (1.l35.418) 4,739,459 2,658,166 199,000 282,590 093.204) (802.249) (194.204) (519.659) 4,545,255 2,138,507 22.063.915 26.609.170 19.925.408 22.063.915 ....- CITY OF NORTH RICHLAND IDLLS, TEXAS Exhibit 5 Combined Statement of Cash Flows - All Proprietary Fund Types Year ended Septem ber 30, 1996 with comparative totals for year ended September 30, 1995 Internal Totals Enterprise Service (Memorandum On Iv) Funds Funds 1996 1995 Operating income $ 4,971,345 619,060 5,590,405 3,793,584 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,966,311 442,186 2,408,497 1,950,046 Amortization 16,011 16,011 16,011 Loss on disposal of fixed assets (23,215) (23,215) (293,748) Change in assets and liabilities: Increase in escrow deposit (37,800) (37,800) (Increase) decrease in accounts receivable 330,760 2,923 333,683 (497,901) (Increase) decrease in inventories (61,552) (8,018) (69,570) 54,606 Decrease in prepaid expenses 7,486 7,486 176,681 Decrease in other assets 4,036 4,036 36,064 Increase (decrease) in accounts and retainage payable 198,231 26,138 224,369 (2,820) Increase (decrease) in accrued liabilities (58,417) 39,034 (19,383) 280,967 Increase (decrease) in other current liabilities 30,060 30,060 (23,881 ) Increase in customers' deposits 47.877 47,877 63.963 Total adjustments 2.457.588 464.463 2,922.051 1,759.988 Net cash provided by operating activities 7.428.933 1,083.523 8,512.456 5.553.572 Cash flows from non capital financing activities: Increase (decrease) in bank overdraft (346,271 ) 163,197 (183,074) 61 7.3 16 Operating transfers (to) from other funds (393,204 ) 199,000 ( 194,205) (519,659) Principal paid on amounts due to and advances from other funds (39,474) (39,474) (31,323) (Continued) 15 Exhibit 5. Continued CITY OF NORTH RlCHLAND HILLS, TEXAS Combined Statement of Cash Flows - All Proprietary Fund Types, Continued Internal Totals Enterprise Service (Memorandum Only) Funds Funds 1996 1995 Receipts from collections of amounts due from other funds and advances to other funds 14.152 14.152 7.930 Net cash provided by (used for) noncapital financing activities (764.797) 362.197 (402.601) 74.264 Cash flows from capital and related financing activities: Acquisition and construction of capital assets (4,244,940) (1,314,278) (5,559,218) (4,352,325) Capital grant received 943,236 943,236 1,176,131 Payments made refunding of developers' deposits (1,400) (1,400) 1,019 Principal paid on revenue obligations and note payable (1,590,000) (1,590,000) (1,320,000) Interest paid on revenue and golf course obligations and note payable (1,096,116) (1,096,115) (1,175,902) Proceeds from sale of capital assets 122.314 53.376 175.690 12.815 Net cash used for capital and related financing activities (5.866.906) ( 1.260.902) (7.127.807) (5.658.262) Cash flows from investing activities - interest on investments 418.244 95.395 513.639 640.241 Net increase in cash and cash equivalents 1,215,474 280,213 1,495,687 609,815 Cash and cash equivalents at beginning of year 9.136.825 2.055.785 11.192.610 10.582.795 C~sh and cash equivalents at end of year $ 10.352.299 2.335.998 12.688.297 11.192.610 (Continued) 16 ..- Exhibit 5, Continued CITY OF NORTH RICHLAND HILLS, TEXAS Combined Statement of Cash Flows- All Proprietary Fund Types, Continued Noncash capital and related financing activities: During 1996, bond discount amortization on revenue bonds totalled $359,816 ($345,423 imputed interest on zero coupon bonds and $14,393 amortization of discount on bonds). During 1996, developers contributed utility plant assets in the amount of $594,363. During 1996, the City was awarded capital grants in the amount of $1,556,786 of which $943,236 was received during the year and $613,550 is included in intergovernmental accounts receivable. See accompanying notes to general purpose financial statements. 17 Note (1) Note (2) Note (3) Note (4) Note (5) Note (6) Note (7) Note (8) Note (9) Note (10) Note (1 I) Note (12) Note (13) Note (14) Note (15) Note (16) CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements September 30, 1996 Summary of Significant Accounting Policies Deposits and Investments Property Tax Special Assessments Fixed Assets Operating Leases Long-term Debt Employees' Retirement System Water and Sewer Contracts Contributed Capital Commitments and Contingencies Subsequent Events Deferred Compensation Plan Segment Information - Enterprise Funds Interfund Balances Excess of Expenditures Over Appropriations 18 (This page left blank intentionally) CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (I) Summary of Sie:nificant Accountine: Policies The City of North Richland Hills Home Rule Charter was adopted by the voters at an election held on November 3, 1964. The City operates under a Council-Manager form of government. The City provides a full range of services. These services include police and fire protection; the construction and maintenance of streets and infrastructure; parks, library and recreational activities; the operation of a water and sewer system, the operation of a water park and the operation of a golf course. The accounting policies of the City of North Richland Hills, Texas conform to generally accepted accounting principles as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant of such policies: (a) Reoortine: Entitv As required by generally accepted accounting principles, these financial statements present the primary government and its component units, entities for which the government is considered to be financially accountable. The blended component units, although legally separate entities, are, in substance, part of the primary government's operations and so data from these units are combined with data of the primary government. The blended component units,have a September 30 year end. Blended Component Units - The Parks and Recreation Facilities Development Fund (PRD) serves all the citizens of the City and is used to account for the accumulation and use of resources to build and improve City parks and recreational facilities. The Crime Control and Prevention District Fund (CCD) is used to account for the accumulation and use of half cent sales tax proceeds dedicated for crime reduction programs. The PRD and CCD are reported as special revenue funds. The Board of Directors of both component units is substantively the same as the City Council. Complete financial statements for the individual component units may be obtained at the City's offices. (b) Basis of Presentation - Fund Accountine: The accounts of the City are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts which comprise its assets, liabilities, retained earnings/fund balance, revenues and expenses/expenditures. The various funds are grouped by type in the general purpose financial statements. Account groups are financial reporting devices designed to provide accountability for certain assets and liabilities that are not recorded in funds. The following fund types and account groups are used by the City: 19 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements GOVERNMENTAL FUND TYPES Governmental Funds are those through which most governmental functions of the City are financed. Governmental Fund types are presented using the flow of current financial resources measurement focus. The following are the City's governmental fund types: General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than special assessments) that are legally restricted to expenditures for specified purposes. Debt Service Funds - The Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term and sales tax revenue debt principal, interest, and related costs. Capital Proiects Funds - The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by the proprietary fund types). Financing is provided primarily by the sale of general obligation bonds. Certain projects are partially financed by special assessments. PROPRIETARY FUND TYPES Proprietary Funds are used to account for activities that are similar to those often found in the private sector. The Proprietary Funds are accounted for on the flow of economic resources measurement focus. This measurement focus emphasizes the determination of net income. Under GASB Statement No. 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting", all proprietary funds will continue to follow Financial Accounting Standards Board (F ASB) standards issued on or before November 30, 1989. However, from that date forward, proprietary funds will have the option of either 1) choosing not to apply future F ASB standards (including amendments of earlier pronouncements), or 2) continuing to follow new FASB pronouncements (unless they conflict with GASB guidance). The City has chosen not to apply future FASB standards. Following are the City's proprietary fund types: Enterprise Funds - Enterprise Funds are used to account for operations (a) 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 primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. 20 CITY OF NORTH RICHLANDHll..LS, TEXAS Notes to General Purpose Financial Statements Internal Service Funds - Internal Service Funds are used to account for goods or services provided by one department to other departments of the City on a cost reimbursement basis. FIDUCIARY FUND TYPE Agency Fund - Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent. Agency funds are custodial in nature and do not involve measurement of results of operations. ACCOUNT GROUPS Account groups are used to establish accounting control and accountability for the City's general fixed assets and general long-term debt. The following are the City's account groups: General Fixed Assets Account GrouD - This account group is established to account for all fixed assets of the City, other than those accounted for in proprietary funds. General Long-Term Debt Account GrouD - This account group is established to account for all long-term debt of the City except that accounted for in proprietary funds. (c) Basis of Accounting The modified accrual basis of accounting is followed by governmental funds and the agency fund. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available to finance expenditures of the fiscal period. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues not considered available are recorded as deferred revenue. Expenditures are recorded when the related fund liability is incurred except for (I) interest on general long-term obligations, which is recorded when due or when amounts have been accumulated in the Debt Service Funds for payments to be made early in the following year, and (2) a portion of accrued vacation leave (note 1(1», which is recorded in the general long-term debt account group. Property tax, sales tax, drainage fees, and certain franchise tax revenues are recognized under the susceptible to accrual concept. Other franchise taxes, licenses and permits, charges for services (excluding administration fees), fines, contributions, special assessments, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. Interest income, intergovernmental revenue and administration fees are recorded as earned since they are measurable and available. 21 r CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements The accrual basis of accounting is utilized by the proprietary funds. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. (d) Budgetarv Data The City Council follows these procedures in establishing budgetary data reflected in the general purpose financial statements: (I) Prior to September 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October I. The operating budget includes proposed expenditures and the means of financing them. (2) Public hearings are conducted to obtain taxpayer comments. (3) Prior to September 30, the budget is legally enacted through passage of an ordinance. (4) The City Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council. (5) Fonnal budgetary integration is employed as a management control device during the year for the General Fund, certain Special Revenue Funds (excluding the Special Investigation and Parks and Recreation Facilities Development Funds) and Debt Service Funds. Budgetary control is maintained at the fund level. (6) Legally adopted budgets for the General, certain Special Revenue, and Debt Service Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Budgeted amounts are as originally adopted and amended by the City Councilor as transferred between departments by the City Manager. During the year, several supplementary appropriations of approximately $954,000 were necessary, most of which were attributed to the addition of the CCD. Net revised revenue estimates of approximately $153,000 were necessary. Appropriations lapse at year end. (7) No annual budget was adopted for the Special Investigation and Parks and Recreation Facilities Development Funds (Special Revenue Funds) for the year ended September 30, 1996 as shown below: Special Revenue (Actual) Excess (deficiency) of revenues and other sources over expenditures and other uses: Budgeted funds (budgetary basis) Nonbudgeted funds Total (GAAP basis) $ 774,563 (103,076) $ 671.487 22 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (8) Budgetary data for the Capital Projects Funds, the Special Investigation Fund and the Parks and Recreation Facilities Development Fund has not been presented in the accompanying general purpose financial statements as such funds are either budgeted over the life of the respective projects and not on an annual basis or an annual budget is prohibited by regulatory agencies. Accordingly, formal budgetary integration of these funds is not employed and comparison of actual results of operations to budgetary data for such funds are not presented. (9) Budgetary data for proprietary funds has not been presented since the reporting on such budgets is not legally required. (e) Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable fund balance, is employed in the governmental funds. Encumbrances are reported as reservations of fund balances because they do not constitute expenditures or liabilities. (f) Deposits and Investments Deposits consist of cash and cash equivalents. Investments consist of (I) investments in public fund investment pools, (2) short-term investments with original maturities of three months or less from the date of acquisition and (3) Deferred Compensation Agency Fund investments in mutual funds. Investments are stated at cost, except for investments in the Deferred Compensation Agency Fund which are reported at market value. For the purposes of presenting the statement of cash flows for Proprietary Funds, cash and cash equivalents are defined as demand deposits and pooled deposits and investments (note 2). (g) Inventories Inventories of proprietary funds are valued at cost (first-in, first-out method). (h) Property. Plant and Eauipment - Proprietary Funds Property, plant and equipment owned by proprietary funds is stated at cost or estimated fair market value at the date contributed. Depreciation has been provided on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives are as follows: Building and improvements Land improvements Utility plant in service Machinery and equipment 33 years 50 years 38-50 years 3-10 years 23 JIIIII'" CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (i) General Fixed Assets General fixed assets are recorded as capital outlay expenditures in the General Fund, Capital Projects Funds, or Special Revenue Funds, and capitalized at cost in the General Fixed Assets Account Group. In the case of gifts or contributions, such assets are recorded in the General Fixed Assets Account Group at estimated fair market value at the time received. General fixed assets contributed by developers or other contractors consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems, have not been capitalized, Such assets nonnally are immovable and of value only to the City; therefore, the purpose of stewardship for these items is satisfied without recording these assets. Infrastructure constructed by the City has been capitalized at cost in the General Fixed Assets Account Group. No depreciation has been provided on general fixed assets, and no interest has been capitalized. (j) Other Assets - Enterprise Funds Other assets consist primarily of expenses incurred in connection with the issuance of certain outstanding revenue bonds and golf course obligations. Such charges are amortized on a straight-line basis over the lives of the respective bonds or obligations. (k) Advances to Other Funds - General Fund Noncurrent portions of long-tenn interfund loans receivable are reported as advances and are equally offset by a fund balance reserve account in governmental fund types which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. (I) Vacation and Sick Pay City employees are granted vacation leave in varying amounts dependent upon length of service. Sick leave is also granted to employees after six months of service. In the event of tennination, an employee is reimbursed for all accumulated unused vacation. No reimbursement is made for accumulated unused sick leave upon tennination of employment. Vacation pay is accrued as vested and included in accrued liabilities in the accompanying combined balance sheet. Sick pay is recorded when taken. Accrued vacation pay that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. Amounts of accrued vacation pay that are not expected to be liquidated with expendable available financial resources are reported in the generallong-tenn debt account group. No expenditure is reported for these amounts. Accrued vacation pay of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. 24 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Accrued vacation pay at September 30, 1996 consisted of the following: Governmental Fund Types Proprietary Fund Types General Long-tenn Debt Account Group $ 149,369 177,952 705.974 $ 1.033.295 (m) Restricted Assets Certain proceeds of Enterprise Fund bonds, as well as certain resources set aside for their repayment, are classified as restricted assets because their use is limited by applicable bond covenants. Retained earnings have been reserved for the excess of restricted assets over related liabilities to the extent such restricted assets were accumulated from revenues (i.e., in some cases, restricted assets were obtained in total or in part from bond proceeds). (n) Unbilled Chanzes Unbilled utility service charges of the Water and Sewer (Enterprise) Fund and drainage utility fees of the Drainage Utility (Special Revenue) Fund are estimated and recorded as receivables, net of estimated uncollectibles. (0) Transactions between Funds Quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine pennanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers and are included in the results of operations of both governmental and proprietary funds. The General Fund charges the Water and Sewer (Enterprise) Fund a franchise fee ($379,294 in 1996) and a payment in lieu of tax (i.e., property tax) ($204,832 in 1996). Such charges are recorded as tax revenues by the General Fund and operating expenses by the Water and Sewer (Enterprise) Fund. The General Fund charges the Water and Sewer (Enterprise) Fund, Aquatic Park (Enterprise) Fund, Capital Projects Fund, and the Parks and Recreation Facilities Development Fund (Special Revenue Fund) an administration fee for certain general and administrative services provided to such funds. Such charges are recorded as charges for services revenue by the General Fund ($1,488,5 I 7 in 1996), operating expense by the Water and Sewer (Enterprise) 25 ..... CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Fund ($1,025,000 in 1996), operating expense by the Aquatic Park (Enterprise) Fund ($72,635 in 1996), capital outlay expenditure by the Capital Projects Fund ($210,000 in 1996), and culture and recreation expenditure by the Parks and Recreation Facilities Development Corporation Fund ($180,882 in 1996). The Internal Service Funds record charges to other funds for services rendered as operating revenues (see note II). The respective funds record the related charges as operating expenses or expenditures, as appropriate. (p) Fund Eauity Designated fund balances and certain retained earnings reserves represent tentative plans as determined by the City Council for the future uses of financial resources. The Crime Control and Prevention District equity contains a reserve for transition. Assets have been restricted in an amount equal to the reserve. In the event that the half cent sales tax funding the CCD activities is discontinued, appropriations from the reserve and the associated assets will be used to fund those activities until an alternate funding source can be identified (i.e., during the transition period). The Water and Sewer Fund and the Aquatic Park Fund both contain reserves for future construction. Assets have been restricted in an amount equal to the reserves shown. The purpose of the reserves is to accumulate funds for future capital projects and to reduce the amount of future bond issues for capital projects. The Water and Sewer Fund also contains a reserve for rate stabilization and restricted assets in an amount equal to the reserve. The reserve is intended to lessen the impact of the Watauga sale on future utility rates. The Aquatic Park Enterprise Fund and the Self-Insurance Internal Service Fund both contain reserves for future insurance claims. Assets have been restricted in an amount equal to the reserves shown. Funds will be accumulated and reserved until needed to cover the costs of excessive claims. The Information Services Internal Service Fund contains a reserve for future system improvements. The intended purpose of the reserves and associated assets is to fund major computer system software and hardware replacement and upgrade. (q) Fund Deficit The accumulated deficit of $913,924 reported by the Golf Course (Enterprise) Fund is primarily a result of replanting expenses ($322,769 in 1990), loss on in-substance defeasance of golf course obligations ($217,646 in 1991) and interest expense in excess of operating income for 1990, 1991, 1992, 1994, and 1995. It is management's intent to cure this accumulated deficit through increased operating income in future periods. Should the Golf Course Fund fail to accumulate the necessary resources to meet the current portion of the golf course obligations principal payments of approximately $230,000, management intends to utilize advances from the General Fund. 26 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (r) ComDarative Data Comparative data for the prior year have been presented in the accompanying general purpose financial statements in order to provide an understanding of changes in the City's financial position and operations. However, complete comparative data (i.e., presentation of prior year totals by fund type in each of the statements) have not been presented since their inclusion would make the statements unduly complex and difficult to read. Certain amounts presented in the prior year have been reclassified to confonn to the 1996 presentation. (s) Total Columns Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in confonnity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. (2) DeDosits and Investmehts Substantially all operating deposits and investments are maintained in pooled deposits and investment accounts or are held by a third party administrator (i.e., deferred compensation plan _ note 12). Interest income relating to pooled deposits and investments is allocated to the individual funds monthly based on each fund's pro-rata share of total pooled deposits and investments. Legal provisions generally penn it the City to invest in certificates of deposit, repurchase agreements, public funds investment pools, direct obligations of the United States of America or its subdivisions and state and local government securities. During the year ended September 30, 1996, the City did not own any types of securities other than those pennitted by statute. At September 30, 1996, the carrying amount of the City's cash was $492,348 (exclusive of the bank overdraft of $894,531) and the bank balance was $458,550. The bank balance was entirely covered by Federal depository insurance or by collateral held by the City's agent pledged in the City's name which is considered a category one under provisions of GASB No.3 except $25,678 which was uninsured or uncollateralized which is considered a category three under the provisions ofGASB No.3. All investment securities managed by the City totaling $17,501,3 78 (excluding $14,951,015 in TexPool and $1,996,587 in LOGIC) are insured, registered, or held by the City or the City's agent in the City's name which is çlassified as a category one in accordance with GASB Statement No.3, "Deposits with Financial Institutions, Investments (including Repurchase Agreements) and Reverse Repurchase Agreements." 27 CITY OF NORm RICHLAND IllLLS, TEXAS Notes to General Purpose Financial Statements r- TexPool, a public funds investment pool created by the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Company, is empowered to invest funds and act as custodian of investments purchased with local investment funds. Authorized investments of TexPool include obligations of the United States of America or its agencies, direct obligations of the State of Texas or its agencies, certificates of deposit and repurchase agreements. Texpool investments are not categorized because they are not evidenced by securities that exist in physical or book entry form. At September 30, 1996, the market value of TexPool approximated its carrying value. LOGIC, the Texas Local Government Investment Cooperative, is a privately-managed public funds investment pool created under Texas statues pursuant to the Interlocal Cooperation Act and the statutes authorizing Local Government Investment Pools. LOGIC is owned by its participants and is administered by its contracted General Manager. LOGIC offers the Liquid Asset Portfolio, which maintains a stable $1 net asset value and has a 180-day (or less) weighted average maturity. The portfolio contains only government securities. LOGIC investments are not categorized because they are not evidenced by securities that exist in physical or book entry form. At September 30, 1996, the market value of LOGIC approximated its carrying value. At year-end the City's pooled deposits and investments were as follows: Cash U.S. Treasury Bill U.S. Government agencies' notes Public funds investment pools Total pooled deposits and investments Total Carrying Value $ 492,348 3,799,207 13,702,171 16,947,602 $ 34,941.328 Market Value 492,348 3,876,786 13,918,350 16,947,602 35,235,086 A reconciliation of the City's deposits and investments at September 30, 1996 follows: Carrying Amount Cash and cash equivalents Investments: Public funds investment pool Private funds investment pool Short-term investments Investment in deferred compensation mutual fund (note 12) at market value Total investments Total deposits and investments Unrestricted: Deposits and investments, at cost Investments, at market Total unrestricted $ 1,200,644 14,951,015 1,996,587 16,793,081 2,985,921 36,726,604 $ 37,927,248 $ 28,648,393 2,985,921 31,634.314 Restricted deposits and investments, at cost Total deposits and investments 28 6,292,934 $ 37,927,248 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (3) Prooerty Tax The City's property tax is levied each October I on the assessed value listed as of the prior January I for all real property and certain personal property located in the City. Tax liens attach as of February I. The assessed value, net of exemptions, upon which the fiscal 1996 levy was based was $1,653,283,794. Property taxes are limited by the Texas Constitution to $2.50 per $100 of assessed valuation and by City Charter to $1.50 per $100 valuation. The combined tax rate to finance general governmental service and debt service for the year ended September 30, 1996 was $.57 per $100 of assessed valuation. Taxes are due on receipt of the tax bill. Current tax collections for the year ended September 30, 1996 were 98.96% of the tax levy. Property taxes receivable at September 30, 1996 were $208,509. Property taxes levied for 1996 have been recorded as receivables, net of estimated uncollectibles. The net receivables collected during 1996 and those considered "available" at September 30, 1996 (i.e., property taxes collected within 60 days of year end) have been recognized as revenues in 1996. Prior year levies were recorded using these same principles. The remaining receivables have been reflected as deferred revenue ($186,138 at September 30, 1996). The appraisal of property within the City is the responsibility of a county-wide Appraisal District as required by legislation passed by the Texas Legislature. The Appraisal District is required under such legislation to assess all property within the Appraisal District on the basis of 100% of its appraised value and is prohibited from applying any assessment ratios. The value of property within the Appraisal District must be reviewed every three years; however, the City may, at its own expense, require annual reviews of appraised values. The City may challenge appraised values established by the Appraisal District through various appeals and, if necessary, legal action. (4) Special Assessments Certain street and drainage construction projects are financed partially by special assessments. Such projects are recorded in the General Capital Projects Fund because they benefit the entire community and are financed primarily by general obligation bond proceeds. Special assessments are levied against properties deemed to be specifically benefited by the improvements. Costs of the projects are estimated and property owners are charged a proportionate share. Special assessments are recorded on the levy date and recognized as revenue when collected. Assessments which are not "available" at September 30, 1996 of $874,192 have been reflected as deferred revenue in the General Capital Projects Fund. 29 CITY OF NORTH RICHLAND mLLS, TEXAS Notes to General Purpose Financial Statements (5) Fixed Assets A summary of changes in general fixed assets follows: Balance Balance September 30, Transfers/ Completed September 30, 1995 Additions Retirements Construction 1996 Land $ 6,420,958 6,420,958 Buildings and improvements 11,778,405 246,168 12,024,573 Improvements other than buildings 47,879,170 8,850 4,276,235 52,164,255 Machinery and equipment 8,599,448 462,060 223,198 8,838,310 Construction in progress 9.602.742 11.321.348 (4.522,403) 16,40 1.687 $ 84.280.723 11,792.258 223.198 95,849.783 Construction in progress at September 30, 1996 is composed ofthe following: Project Authorization Expended to September 30, 1996 Committed Street, drainage and park improvements $ 21.543.624 16,401.687 5,141.937 The "project authorization" and "committed" figures above are based on open contracts at September 30, 1996. No future financing is anticipated to complete the above projects. A summary of proprietary fund property, plant and equipment at September 30, 1996 follows: Enterprise Funds Land Land improvements Building and improvements Other improvements Utility plant in service Machinery and equipment Construction in progress $ 2,853,235 2,980,929 4,185,434 7,353,177 61,174,362 2,112,391 4.1 06.564 84,766,092 (16,922.781 ) $ 67.843.311 Less accumulated depreciation 30 Internal Service Funds 750,758 2,822,742 3,573,500 ( 1.121.966) 2,451.534 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements At September 30, 1996 the City was committed under utility construction contracts for approximately $81,000. (6) ODerating Leases The City is committed under various leases for golf course equipment. These leases are considered for accounting purposes to be operating leases. Lease expense for the year ended September 30, 1996 amounted to approximately $61,000. Future minimum lease payments for these leases are $48,972 for 1997. (7) Long-tenn Debt The following is a summary of long-tenn debt transactions of the City for the year ended September 30, 1996 (in thousands of dollars): Amortization of discount on capital September September 30, appreciation 30, 1995 Additions bonds Other Retirements 1996 General Long-tenn Debt Account Group: General Obligation Bonds $ 38,772 6,015 367 2,685 42,469 Sales Tax Revenue Bonds 12,880 370 12,510 Certificates of Obligation 1,600 1,150 265 2,485 Accrued Vacation Pay (note 1(1» 557 149 706 General Obligation Note Payable -lli - - --2.2. -ID - - General Long- tenn Debt Total $ 54.285 7.165 367 149 3.375 58.591 Enterprise Funds: Revenue Bonds $ 14,371 346 1,370 13,347 Golf Course Obligations 4,870 185 4,685 Golf Course Contractual Obligation -ill - ~ ---1.lQ - Enterprise Funds Total $ 19.386 - 346 1.590 18.142 - - 31 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Long-term debt at September 30, 1996 consisted of the following: General Obligation Bonds: $3,720,000 Series 1985 Refunding and Improvement Capital Appreciation Bonds discounted at 8.90% to 9.25%, due in annual installments of $620,000 beginning February 15,2000 through February 15, 2005; net of unamortized discount of$I,511,954 $8,000,000 Series 1987 Serial Bonds, $330,000 due February 15, 1997, interest at 7.0% $5,000,000 Series 1989 Serial Bonds due in annual installments of $200,000 to $230,000 through February 15, 1999; interest at 9.35% to 10.0% $2,735,000 Series 1991 Serial Bonds due in annual installments of $1 00,000 to $225,000 through February 15,2011; interest at 6.0% to 9.0% $17,450,000 Series 1992 Refunding Serial Bonds due in annual installments of $1 ,315,000 to $1,885,000 through February 15,2005; interest at 5.10% to 6.30% $5,440,000 Series 1992 Refunding Capital Appreciation Bonds discounted at 6.80% to 6.90%, due in annual installments of $465,000 to $1,865,000 beginning February 15,2006 through February 15,2009; net of unamortized discount of $2,744,425 $4,400,000 Series B 1992-A Serial Bonds due in annual installments of$155,000 to $385,000 through February 15,2012; interest at 5.20% to 6.75% $3,865,000 Series 1993 Serial Bonds due in annual installments of $130,000 to $305,000 through February 15,2013; interest at 4.25% to 7.25% 32 r $ 2,208,046 330,000 645,000 2,400,000 14,685,000 2,695,575 3,980,000 3,510,000 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements $6,000,000 Series 1995 Serial Bonds due in annual installments of $150,000 to $360,000 through February 15,2015; interest at 5.0% to 7.0% $6,015,000 Series 1996 Serial Bonds due in annual installments of $155,000 to $360,000 beginning February 15, 1998 through February 15,2016; interest at 4.20% to 5.60% Sales Tax Revenue Bonds: $7,500,000 Series 1992 Sales Tax Revenue Bonds due in annual installments of $260,000 to $630,000 through September 1,2012; interest at 5.75% to 8.60% $3,895,000 Series 1994 Sales Tax Revenue Bonds due in annual installments of$130,000 to $330,000 through September 1,2013; interest at 5.30% to 8.30% $2,000,000 series 1995 Sales Tax Revenue Bonds due in annual installments of$105,000 to $110,000 through September 1,2015; interest at 5.25% to 7.25% Certificates of Obligation: $900.000 Series 1992 Revenue Certificates of Obligation due in annual installments of $30,000 to $80,000 through February 15,2012; interest at 5.2% to 6.75% $1,185,000 Series 1993 Revenue Certificates of Obligation due in annual installments of $250,000 to $265,000 through February 15, 1998; interest at 3.5% $1.150,000 Series 1996 Revenue Certificates of Obligation due in annual installments of $35,000 to $95,000 beginning February 15, 1998 to February 15, 1998; interest at 5.25% to 7.25% 33 6,000,000 6.015.000 $ 42.468.621 $ 6,820,000 3,690,000 2.000.000 $ 12.510.000 $ 820,000 515,000 1.150.000 $ 2.485.000 CITY OF NORTH RICHLAND IllLLS, TEXAS Notes to General Purpose Financial Statements General Obligation Note Payable: $615,000 note payable, secured by future ad valorem tax revenues, due on monthly installments of $7,043, including interest at 6.69%, through October, 2002 Revenue Bonds: $8,025,000 Series 1989 Waterworks and Sewer System Improvement and Refunding Revenue Bonds due in annual installments of $690,000 to $915,000 through September 1,2001; interest at 7.25% to 7.375% $4,070,000 Series 1989 Waterworks and Sewer System Improvement and Refunding Capital Appreciation Bonds discounted at 7.60% to 7.75%, due in annual installments of $395,000 to $985,000 beginning September 1, 2002 through September 1, 2008; net of unamortized discount of$I,843,500 $3,500,000 Series 1989-A Waterworks and Sewer System Refunding Revenue Bonds due in annual installments of $300,000 to $400,000 through September 1,2001; interest at 7.25% to 7.375% $1,730,000 Series 1989-A Waterworks and Sewer System Refunding Capital Appreciation Bonds discounted at 7.60% to 7.75%, due in annual installments of $165,000 to $425,000 beginning September 1,2002 through September 1,2008; net of unamortized discount of $781 ,615 $5,715,000 Series 1989-B Waterworks and Sewer System Refunding Revenue Bonds due in annual installments of $475,000 to $620,000 through September I, 200 I; interest at 6.80% to 6.90% $3,020,000 Series 1989-B Waterworks and Sewer System Refunding Capital Appreciation Bonds discounted at 7.10% to 7.20%, due in annual installments of $270,000 to $665,000 beginning September 1, 2002 through September 1, 2008; net of unamortized discount of $1 ,312,947 34 r ~'; ~: ¡, ¡ r" F r' r, W } f I 10; ~' $ , ¡ f: ~ g ~ ! I: ì 421.414 $ 3,995,000 :e ~ ,~' i ~ ~ I f f ~: í I ~ 2,226,500 1,740,000 948,385 i ~ i J; i i 2,730,000 ;~ 1. 707,053 $ 13,346,938 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Golf Course Obligations: $4,870,000 Series 1991 Tax and Golf Course Revenue Refunding Bonds due in annual installments of$195,000 to $470,000 through September 1,2011; interest at 6.00% to 7.00% $ 4.685.000 Golf Course Contractual Obligation: $180,000 Series 1994 Contractual Obligation due in annual installments of $35,000 to $40,000 through through February 15, 1999; interest at 4.75% to 6.70% $ 110.000 The future annual requirements to amortize all debt outstanding as of September 30, 1996, follows: General Golf Year Sales Cenificate Obligation Golf Course ending General Tax of Note Revenue Course Contractual SePtember 30 Obli2ation Revenue Obli2ation Payable Bonds Obli2ations Obli2ation Total 1997 S 5.189,135 1,285,545 434,284 84,514 2.073,283 508,905 39,722 9,615,388 1998 4,821,987 1,274,420 452,344 84,514 2,079,208 507,205 37,731 9,257,409 1999 4.518,161 1,255.678 183,362 84,514 2,076,805 509,700 40,950 8,669,170 2000 4.641.461 1,239,800 183,641 84,514 2,075,126 506,060 8,730,602 2001 4.587,139 1,216,374 183,536 84,514 2,074,763 506,570 8,652,896 2002-2006 21.865,025 5.936,455 912.989 91,557 7,160,000 2,548,310 38,514,336 2007-2011 13,294,062 5,830,240 914.039 1,660,000 2,540,255 24,238,596 2012-2016 4.658.200 1.846.647 571.589 - - 7,076.436 - - 63,575,170 19,885,159 3,835,784 514,127 19,199,185 7,627,005 118,403 114,754,833 Less applicable interest 21.1 06.549 7.375.159 1.350.784 92.713 5.852.247 2,942.005 8.403 38,727.860 S 42.468.621 12,510.000 2.485.000 421.414 13.346.938 4.685.000 110.000 76.026,973 Authorized but unissued debt at September 30, 1996 consisted of general obligation bonds designated as follows: Street improvements $ 12,133,000 Drainage 3.392.000 $ 15.525.000 35 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements The Sales Tax Revenue Bonds are special obligations of the PRD (see note I(a» and are secured by a lien on and pledge of the gross sales tax revenues received from a II2 of I % local sales and use tax levied within the City, which sales and use tax was approved and authorized at an election held within the City on August 8, 1992 for the benefit of the PRD. The Golf Course Obligations are direct obligations ofthe City, and are payable both as to principal and interest from an ad valorem tax levied against all taxable property within the limits prescribed by law and a pledge of the net revenues received from the City's golf course facilities. It is the intent of management to repay these obligations from the net revenues of the golf course. Therefore the debt is reflected as a fund obligation. The ordinances authorizing the issuance of Waterworks and Sewer System Revenue Bonds created the Interest and Sinking Fund and Reserve Fund. The gross revenues of the waterworks and sewer system, after deduction of reasonable expenses of operations and maintenance, are pledged to such funds in amounts equal to the total annual principal and interest requirements of the bonds and amounts required to maintain the Reserve Fund. At September 30, 1996, the City was in compliance with these requirements. In prior years, the City defeased certain general obligation bonds, revenue bonds and golf course obligations by placing the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At September 30, 1996, $29,020,000 of bonds and obligations outstanding are considered defeased. (8) Emolovees' Retirement System (a) Plan Descriotion The City provides pension benefits for all of its full-time employees through a nontraditional, joint contributory, defined contribution plan in the state-wide Texas Municipal Retirement System (TMRS), one of over 670 administered by TMRS, an agent multiple-employer public employee retirement system. It is the opinion of the TMRS management that plans in TMRS are substantially defined contribution plans, but they have elected to provide additional voluntary disclosure to help foster a better understanding of some of the nontraditional characteristics of the plan. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (200%) of the employee's accumulated contributions. In addition, the City can grant as often as annually another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate 36 CITY OF NORTH RlCHLAND HILLS, TEXAS Notes to General Purpose Financial Statements and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 10 or more years of service or with 25 years of service regardless of age. The plan also provides death and disability benefits. A member is vested after 10 years, but he must leave his accumulated contributions in the plan. If a member withdraws his own money, he is not entitled to the employer-financed monetary credits, even if he was vested. The plan provisions are adopted by the City Council, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. (b) Contributions The contribution rate for employees is 7%, and the City's matching percent is currently 200%, both as adopted by the City Council. Under the state law governing TMRS, the City contribution rate is annually detennined by the actuary. This rate consists of the nonnal cost contribution rate 'and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The nonnal cost contribution rate finances the currently accruing monetary credits due to city matching percent, which are the obligation of the city as of an employee's retirement date, not at the time the employee's contributions are made. The nonnal cost contribution rate is the actuarially detennined percent of payroll necessary to satisfy the obligation of the city to each employee at the time his retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-year amortization period. When the City periodically adopts updated service credits and increases in annuities in effect, the increased unfunded actuarial liability is to be amortized over a new 25-year period. Currently, the unfunded actuarial liability is being amortized over the 25-year period which began January, 1996, The unit credit actuarial cost method is used for detennining the City contribution rate. Contributions are made monthly by both employees and the City. Since the City needs to know its contribution rate in advance to budget for it, there is a one-year lag between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. The City's total payroll in fiscal year 1996 was $15,433,170 and the City's contributions were based on a covered payroll of $14, 124,662. Both the City and the covered employees made the required contributions, amounting to $1,677,112 (I 1.30% of covered payroll for the months in calendar year 1995, 9.01% nonnal cost plus 2.29% to amortize the unfunded actuarial liability and .12.04% for the months in calendar year 1996,9.65% nonnal cost plus 2.39% to amortize the unfunded actuarial liability) for the City and $988,827 (7%) for the employees. The required contribution represents $341,689 ofnonnal cost and $335,423 to amortize the unfunded actuarial liability. The City adopted changes in the plan since the previous actuarial valuation, which had the effect of increasing the City's contribution rate for 1996 by 0.04% of covered payroll. There were no related party transactions. 37 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (c) Funding Status and Progress Even though the substance of the City's plan is not to provide a defined benefit in some form, some additional voluntary disclosure is appropriate due to the nontraditional nature of the defined contribution plan which had an initial unfunded pension benefit obligation due to the monetary credits granted by the City for services rendered before the plan began and which can have additions to the unfunded pension benefit obligation through the periodic adoption of increases in benefit credits and benefits. Statement No. 5 of the Governmental Accounting Standards Board (GASB 5) defines pension benefit obligation as a standardized disclosure measure of the actuarial present value of pension benefits, adjusted for the effects of projected salary increases, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of public employee pension plans, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among public employee pension plans. The City's pension benefit obligation shown below is similar in nature to the standardized disclosure measure required by GASB 5 for defined benefit plans except that there is no need to project salary increases since the benefit credits earned for service to date are not dependent upon future salaries. The calculations were made as part of the annual actuarial valuation as of December 31, 1995. Because of the money-purchase nature of the plan, the interest rate assumption, currently 8.0% per year, does not have as much impact on the results as it does for a defined benefit plan. Market value of assets is not determined for each city's plan, but the market value of assets for TMRS as a whole was 114.2% of book value as of December 31,1995. Pension Benefit Obligation Annuitants currently receiving benefits Terminated employees Current employees: Accumulated employee contributions, including allocated invested earnings Employer-financed vested Employer-financed nonvested Total pension benefit obligation $ 1,223,701 1,761,504 10,144,208 15,421,560 3.319.666 31,870,639 Net Assets Available for Benefits. at Book Value 24,565.007 Unfunded Pension Benefit Obligation $ 7.305,632 38 CITY OF NORTH RICBLAND HILLS, TEXAS Notes to General Purpose Financial Statements The book value of assets is amortized cost for bonds and original cost for short-term securities and stocks. The actuarial assumptions used to compute the actuarially determined City contribution rate are the same as those used to compute the pension benefit obligation. The numbers above reflect the adoption of changes in the plan since the previous actuarial valuation, which had the effect of increasing the pension benefit obligation by $97,649. (d) Trend Information Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Additional trend information relating to the City may be found in the required supplementary information in the City's Comprehensive Annual Financial Report. Trend information for the City based upon actuarial computations for the years ended December 31, 1995, 1994 and 1993 is as follows: 1993 1994 1995 Available plan assets as a percentage of the pension benefit obligation Unfunded pension benefit obligation as a percentage of annual covered payroll 72% 76% 77% 56% 52% 61% Employer contribution as a percentage of annual covered payroll 11% 12% ll% The City's contributions to the plan were In accordance with actuarially determined requirements for 1993 through 1995. Ten-year trend information for TMRS as a whole may be found In the TMRS annual financial report. (9) Water and Sewer Contracts The City has several individual contracts with the City of Fort Worth (Fort Worth) and the Trinity River Authority of Texas (TRA) for the purchase of treated water and for the transportation, treatment and disposal of sanitary sewage and other waste. The initial terms of the contracts range from twenty-one to forty-eight years and expire at various dates from 1997 through 2023. While the provisions of each of the contracts vary, each contract basically requires the City to pay varying amounts based on the costs associated with water purchased and sewage transported and/or treated and disposed of. The cost includes the City's proportionate share of Fort Worth's and TRA's operating and mai,ntenance expenses, related debt service costs plus certain other miscellaneous charges. Approximately $20,000 of these debt service costs are included in the general debt service fund expenditures. Purchases of treated water and charges for the transportation, treatment and disposal of sewage and other wastes during 1996 amounted to approximately $5,345,000 and $2,697,000, respectively. 39 r J CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (10) Contributed CaDital The following is a summary of changes in contributed capital for the City's enterprise funds, The internal service funds' contributed capital had no changes during the year: Water and Sewer Golf Course Aquatic Park Total Enterprise Funds Balance at beginning of year Contributions from developers Contributions from capital grants Balance at end of year $ 22,993,412 594,363 1.556.786 $ 25.144.561 1,882,372 8,855,695 33,731,479 594,363 1.556.786 35.882.628 1.882.372 8.855.695 (II) Commitments and Contingencies The City has participated in a number of State and Federally assisted grant programs. These programs are subject to financial and compliance audits by the grantors or their representatives, the purpose of which is to insure compliance with conditions precedent to the granting of funds. City management believes that any liability for reimbursement which may arise as the result of these audits would not materially affect the City's financial position. The City is defendant in several lawsuits, primarily for worker's compensation and general liability claims. City management believes that ultimate liability on these suits, if any, will not materially affect the City's financial position. The U.S. Environmental Protection Agency in 1995 issued an Administrative Order requiring improvements to the City's wastewater collection system to avoid wastewater overflows. The City expects to spend approximately $650,000 through fiscal year 1998 on a study to determine necessary corrective action. Costs of compliance with the Administrative Order are not known at this time. The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City has historically retained these risks except for fire coverage on buildings and contents, general liability insurance on the water park, and life insurance coverage. Under its current stop loss policy, the City pays medical claims up to $]50,000 per individual per year and/or approximately $1,627,000 per year in the aggregate. The Self-Insurance (Internal Service) Fund covers medical expenses, workers' compensation, automobile liability and general liability claims. The Self-Insurance Fund charges the other funds premiums to cover such claims (note 1(0». The Self-Insurance Fund's accrued liabilities at September 30, 1996 include an estimate of the eventual loss on claims arising prior to year end. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. This determination is based on reported pending claims, estimates of claims incurred but not yet reported, actuarial reports, and historical analysis. Changes in the balances of claims liabilities during the past two years are as follows: 40 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements 1996 1995 Unpaid claims, beginning of year Incurred claims (including IBNR) Claim expense Unpaid claims, end of year $ 575,567 2,685,398 (2.674.339) $ 586.626 495,567 2,726,304 (2.646.304) 575.567 The City has a contract with a management company for operations of the city-owned public golf course. The contract expires January 1998, however, the City has the option of canceling the contract anytime after January 1996. In addition to monthly management fees, a contingent management fee is owed if the golf course revenues exceed a certain amount that varies from year to year. Contingent management fees incurred for 1996 were approximately $51,000. Total management fees for operations were approximately $129,000 for the year ended September 30, 1996. (12) Subsequent Events On June 14, 1996, the City and the City ofWatauga, Texas ("Watauga") entered into a "Settlement and Purchase Agreement" (the "Agreement") providing for (i) the settlement of certain litigation between the two cities involving the right of Watauga to acquire certain water and wastewater properties of the City located in Watauga and serving its residents and (ii) the sale and conveyance of such water and wastewater properties to Watauga. Under the term of such Agreement, Watauga has acquired certain water and wastewater transmission mains, distribution and collection lines, facilities and appurtenances used to provide water and wastewater service within the city limits of Watauga at an agreed purchase price of $9,200,000. The Agreement further provided for the date of sale to occur between October 1, 1996 and January 1, 1997. The actual date of sale occurred on October 1, 1996. The Agreement further provides a "Transition Period" of three years for the orderly transfer of the operations and maintenance of the properties purchased by Watauga. Pending Watauga assuming full responsibility for the operation and maintenance of its properties, the City has agreed pursuant to a Facilities Operating Agreement to operate and maintain the facilities conveyed to Watauga for two years in return for cash payments of $1 ,500,000 per year to be paid in equal monthly installments of$125,000. The services to be rendered by the City under the Facilities Operating Agreement include meter reading and billing on behalf of Watauga but does not include the cost of water or charges for wastewater transportation and treatment to be paid the City of Fort Worth. After the two-year operation and maintenance period has concluded, the City has agreed to read meters and bill accounts on behalf of Watauga for an additional year and Watauga has agreed to pay the City the sum of $250,000 in equal monthly payments of$20,833 for such services. Watauga has the option of performing such meter reading and billing services and if such option is exercised, the amount to be paid the City during the third year will be reduced to $140,000. The Agreement further addresses the joint use of certain properties conveyed to Watauga and retained by the City, the cooperation of the parties to obtain for Watauga the necessary water and wastewater operating permits from the State, the use of fire hydrants, the purchase of water from Fort Worth, the cooperation of the parties with respect to studies and investigations and other matters regarding the separation of properties from the City's system to the Watauga system. 41 CITY OF NORm RICHLAND IDLLS, TEXAS Notes to General Purpose Financial Statements At the time of the conveyance of the water and wastewater properties to Watauga, approximately 7,269 customers will be transferred to the Watauga system and the City will continue to provide water and wastewater collection services to approximately 15,594 customers. The City estimates such sale and conveyance of water and wastewater properties will reduce its revenues by approximately $4,397,280 and reduce its overall operation and maintenance expenses by approximately $3,469,683, after complete separation of the systems occurs and Watauga assumes full responsibility for the operations and maintenance of its facilities. From the proceeds of the sale of the properties, the City will use approximately $9,200,000 to defease a portion of its outstanding revenue bond indebtedness. On December 16, 1996, the City issued $5,135,000 in Waterworks and Sewer System Revenue Refunding Bonds, Series 1996 (the "Refunding Bonds") to refund the remaining outstanding bonds not defeased with the proceeds of the sale discussed above. The outstanding indebtedness either defeased or refunded is as follows: $3,995,000 Waterworks and Sewer System Revenue Refunding Bonds, Series, 1989; $1,740,000 Waterworks and Sewer System Revenue Bonds, Series 1989-A; and $2,730,000 Waterworks and Sewer System Revenue Bonds, Series 1989-B. Following the issuance of the Refunding Bonds, the only outstanding revenue bond indebtedness of the City system will be the Refunding Bonds. (13) Deferred Compensation Plan The City offers its employees a deferred compensation plan which falls under Internal Revenue Code Section 457. Virtually all employees are eligible to participate in the plan. The deferred compensation plan allows the deferral of individual Federal income taxes until funds are withdrawn. Funds may be withdrawn at tennination, retirement, death or unforeseeable emergency. Employees may contribute a maximum of 33.33% of salary or $7,500, whichever is less. All amounts deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are legally the property of the City (until paid or made available to the participants), subject only to the claims of the City's general creditors. Participant's rights under the plan are equal to those of the general creditors' of the City in an amount equal to the fair value of the deferred amount for each participant. The City has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. Plan assets have been invested in a mutual fund (note 2). Effective December 31, 1996, in conjunction with recent tax law changes, the City will be required to establish a trust, custodial account, or annuity contract for all amounts deferred which will be for the exclusive benefit of the employees or their beneficiaries. At that time such assets will no longer be the property of the City nor will they be subject to the City's general creditors. 42 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (14) Sel!ment Information - Enterorise Funds The City maintains three enterprise funds which are intended to be self-supporting through user fees charged for services rendered. The Water and Sewer Fund provides water and sewer services to residents of the City and certain nonresidents. The Golf Course Fund accounts for the operations of the City's public golf course. The Aquatic Park Fund accounts for the operations of the City's water park. Financial segment information as of and for the year ended September 30, 1996 is as follows: Water Golf Aquatic and Sewer Course Park Total Operating revenues $ 21,016,463 2,435,289 1,944,903 25,396,655 Depreciation expense 1,425,265 265,057 275,989 1,966,311 Operating income 4,335,781 583,388 52,176 4,971,345 Operating transfers out (393,205) (393,205) Net income 3,257,397 232,135 81,220 3,570,752 Capital contributions 2,151,149 2,151,149 Property, plant and equipment additions 3,998,897 156,665 11,608 4,167,170 Working capital 2,223,332 290,345 254,270 2,767,947 Total assets 66,243,266 6,762,510 9,651,373 82,657,149 Bonds/obligations payable 13,346,938 4,795,000 18,141,938 Retained earnings (accumulated deficit) 24,260,897 (913,924) 716,424 24,063,397 Total fund equity 49,405,458 968,448 9,572,119 59,946,025 (15) Interfund Balances At September 30, 1996, interfund balances consisted of the following: Due from Due to Advances to Advances from other funds other funds other funds other funds Enterprise Funds: Water and Sewer Fund $ 17,333 465,119 Golf Course Fund 44,700 810,917 General Fund 67,367 505,798 Special Investigation Fund 40.000 160.000 $ 84.700 84.700 970.917 970.917 Due to and due from other funds are the short term portion of the advances to and advances from other funds. 43 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Interest on interfund advances approximated $68,000 for 1996. Such interest is included in interest income and interest expense in the accompanying general purpose financial statements. Interest is charged on interfund advances at variable rates that approximate the City's yields on certificates of deposit and investments (4% in 1996). (16) Excess of Exoenditures Over Aoorooriations For the year ended September 30, 1996, expenditures exceeded appropriations in the Promotional (Special Revenue) Fund by $7,281. 44 APPENDIX C FORM OF BOND COUNSEL'S OPINION THIS PAGE LEFT BLANK INTENTIONALLY FULBRIGHT & ..JAWORSKI L. L. P. TELEPHONE: 214/855-8000 FACSIMILE: 214/855-8200 A REGISTERED LiMITED LiABILITY PARTNERSHIP 2200 Ross AVENUE SUITE 2800 DALLAS, TEXAS 75201 HOUSTON WASHINGTON. D.C. AUSTIN SAN ANTONIO DALLAS NEW YORK LOS ANGELES LONDON HONG KONG WRITER'S DIRECT DIAL NUMBER: 214/855-8013 IN REGARD to the authorization and issuance of the "City of North Richland Hills, Texas, General Obligation Bonds, Series 1997" (the "Bonds"), dated April 15, 1997 (the "Bond Date"), in the principal amount of $4,100,000, we have examined into the legality and validity of the issuance thereof by the City of North Richland Hills, Texas (the "City"), which Bonds are issuable in fully registered form only, in denominations of $5,000 or any integral multiple thereof (within a maturity), have stated maturities of February 15, 1998 through February 15, 2017, unless redeemed prior to maturity in accordance with the terms stated on the Bonds, and bear interest on the unpaid principal amount from the Bond Date at the rates per annum stated in the ordinance authorizing the issuance of the Bonds (the "Ordinance"), such interest being payable on February 15 and August 15 in each year, commencing February 15, 1998, to the registered owners thereof shown on the registration books of the Paying AgentIRegistrar on the Record Date (stated on the face of the Bonds). WE HAVE SERVED AS BOND COUNSEL for the City solely to pass upon the legality and validity of the issuance of the Bonds under the Constitution and laws of the State of Texas, and with respect to the exclusion of the interest on the Bonds from gross income for federal income tax purposes and none other. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data or other material relating to the financial condition or capabilities of the City. Our examinations into the legality and validity of the Bonds included a review of the applicable and pertinent provisions of the Constitution and laws of the State of Texas, a transcript of certified proceedings of the City relating to the authorization and issuance of the Bonds, including the Ordinance, customary certifications and opinions of officials of the City and other pertinent showings, and an examination of the Bond executed and delivered initially by the City, which we found to be in due form and properly executed. BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that, under applicable law of the United States of America and the State of Texas now in force and effect that: 1. The Bonds have been duly authorized.by the City, and the Bonds issued in compliance with the provisions of the Ordinance are valid, legally binding and enforceable obligations of the City, payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City, except to the extent that the 0411826 Page 2 of Legal Opinion of Fulbright & Jaworski L.L.P. Re: $4,100,000 "City of North Richland Hills, Texas, General Obligation Bonds, Series 1997", dated April 15, 1997 enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with general principles of equity; and 2. Assuming continuing compliance after the date hereof by the City with the provisions of the Ordinance and in reliance upon representations and certifications of the City made in a certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the Bonds, interest on the Bonds for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date hereof, of the owners thereof pursuant to section 103 of such Code, existing regulations, published rulings, and court decisions thereunder, and (2) will not be included in computing the alternative minimum taxable income of individuals or, except as hereinafter described, corporations. Interest on all tax-exempt obligations, such as the Bonds, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989 for purposes of calculating the alternative minimum taxable income of such corporations, other than an S corporation, a qualified mutual fund, a real estate mortgage investment conduit (REMIC), or a real estate investment trust (REIT). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed. WE EXPRESS NO OPINION with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Ownership of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, property and casualty insurance companies, life insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and_profits, individual recipients of Social Security or Railroad Retirement Benefits, individuals otherwise qualifying for the earned income tax credit and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. EHE:dfc 0411826 FULBRIGHT & JAWORSKI l.l. P. TELEPHONE: 214/855-8000 FACSIM ILE: 214/855-8200 2200 Ross AVENUE SUITE 2800 DALLAS. TEXAS 7S201 HOUSTON WASHINGTON, D.C. AUSTIN SAN ANTONIO DALLAS NEW YORK LOS ANGELES LONDON HONG KONG A REGISTERED LIMITED LIABILITY PARTNERSHIP WRITER'S DIRECT DIAL NUMBER: 214/855-8013 IN REGARD to the authorization and issuance of the "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1997" (the "Certificates"), dated April 15, 1997 (the "Certificate Date"), in the principal amount of $2,755,000, we have examined into the legality and validity of the issuance thereof by the City of North Richland Hills, Texas (the "City"), which Certificates are issuable in fully registered form only, in denominations of $5,000 or any integral multiple thereof (within a maturity), have stated maturities of February 15, 1998 through February 15, 2017, unless redeemed prior to maturity in accordance with the redemption provisions stated on the Certificates, and bear interest on the unpaid principal amount from the Certificate Date at the rates per annum stated in the ordinance authorizing the issuance of the Certificates (the "Ordinance"), such interest being payable on February 15 and August 15 in each year, commencing February 15, 1998, to the registered owners shown on the registration books of the , Paying AgentlRegistrar on the Record Date (stated on the face of the Certificates). WE HAVE SERVED AS BOND COUNSEL for the City solely to pass upon the legality and validity of the issuance of the Certificates under the Constitution and laws of the State of Texas, and with respect to the exclusion of the interest on the Certificates from gross income for federal income tax purposes and none other. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data or other material relating to the financial condition or capabilities of the City. Our examinations into the legality and validity of the Certificates included a review of the applicable and pertinent provisions of the Constitution and laws of the State of Texas, a transcript of certified proceedings of the City relating to the authorization and issuance of the Certificates, including the Ordinance, customary certifications and opinions of officials of the City and other pertinent showings, and an examination of the Certificate executed and delivered initially by the City, which we found to be in due form and properly executed. BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that, under the applicable law of the United States of America and the State of Texas in force and effect on the date hereof: 1. The Certificates have been duly authorized by the City, and the Certificates issued in compliance with the provisions of the Ordinance are valid, legally binding and enforceable obligations of the City, payable from an ad valorem tax levied, within the limits prescribed by law, upon all taxable property in the City and additionally payable from a limited pledge of the Net Revenues (as defined in the Ordinance) of the City's 0411828 Page 2 of Legal Opinion of Fulbright & Jaworski L.L.P. Re: $2,755,000 "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1997", dated April 15, 1997 combined Waterworks and Sewer System in the manner and to the extent provided in the Ordinance; except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with the general principles of equity. 2. Assuming continuing compliance after the date hereof by the City with the provisions of the Ordinance and in reliance upon representations and certifications of the City made in a certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the Certificates, interest on the Certificates for federal income tax purposes (a) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), of the owners thereof pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions thereunder, and (b) will not be included in computing the alternative minimum taxable income of individuals or, except as hereinafter described, corporations. Interest on all tax-exempt obligations, such as the Certificates, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989 for purposes of calculating the alternative minimum taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate mortgage investment conduit (REMIC), or a real estate investment trust (REIT). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by the section 55 of the Code will be computed. WE EXPRESS NO OPINION with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Certificates. Ownership of tax-exempt obligations such as the Certificates may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement Benefits, individuals otherwise qualifying for the earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. EHE:dfc 0411828 INVESTMENT BANKERS Financial Advisory Services Provided By ) FIRST SOUTHWEST COMPANY CITY OF NORTH RICHLAND HILLS $4,100,000 GENERAL OBLIGATION BONDS, SERIES 1997 AND $2,755,000 TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 Sealed Bids Due Monday, April 28, 1997, at 1:00 PM, CDT The following ratings have been assigned: MBIA Insured - G.O. FGIC Insured - C.O. MOODY'S INVESTORS SERVICE. INC. -- "Aaa" STANDARD & POOR'S RATING GROUP -- "AAA" A Division of The McGraw-Hill Companies, Inc. The following underlying ratings have been assigned: MOODY'S INVESTORS SERVICE. INC. Upgrade from "A" to "A 1" STANDARD & POOR'S RATING GROUP A Division of McGraw-Hill, Inc. Upgrade from "A+" to "AA-" 1 FIRST SOUTHWEST COMPANY Moody's Municipal Credit Report North Richland Hills, Texas April 23, 1997 New Issue General Obligation/Special Tax sale: $6.855.000 $4.100.000 General Obligation Bonds. Series 1997 $2.755.000 Ta.-..:: and Waterworks and Sewer System Revenue Certificates of Obligation. Series 1997 date: For bids April 28 Moody's rating: A 1 credit comment: At this time and in conjunction with the cun'ent offering, Moody's has reviewed and assigned as A 1 to the city's general obligation debt. Sound financial position. a trend of tiJX ha~e growth on top of <llready sizable taxable resources which moderates the rela, tively high debt levels. provides above average hand· holder security. 111C following are the key credit factors: Favorable Financial Position Derived From Rev- enue Growth; Ample General Fund Reserves The city's overall financial piCIlU'f; continues to improve as revenue growth exceeded expenditure gro\vth in three of the past four fiscal years. 111e $742.000 operating surplus at year-end 1996 was largely the product of S<lles tax revenues ,,,hich exceeded budget. bringing the General Fund balance to $4.4 million. Current General Fund reserves exceed the city's stated goal. to maintain a minimum fund balance of at least 15°é of the next fiscal year's budgeted expenditures. by $1.3 million, Sales tax growth which was expected to slow in [î~ca 1199r.J because of road construction around major retail cen- ters is expected to pick up again in fiscal I 997 evidenced by the budgeted t0r increase, strong Economy Derived From Favorable Loca- tion In Tarrant County Revaluation of existing property. strong groMh in commercial construction and steady in,,1"eases in resi- ~r'L dential construction spurred the tax base growth for the third consecutive year. Taxable values increased 6.6~ in fiscal 1997 with increases expected at or arounù that level for the foreseeable future, 11lt: city's location in Tarrant County. between Alliance Airport and DFW. and the triple freeport exemption (the city. school district and county all abate "goods in transit") available to industry. make it ideal for industrial expansion and attraction of new industry. City unemployment levels are below the state and the nation and residents display favorable socia eco- nomic profile. High Debt Levels And Future Needs Managea- ble Given Above A verage Payout 111e city's overall debt picture which includes a high debt burden and more importantly direct debt levels which arc more than twice the median, and debt service which comprises more than one quarter of expenditures. is somewhat inconsistent with above average credit quality. However, the cun'ent rate of debt retirement is above average and future borrow· ing is easily affordable. Maintenance of this rela· tively aggressive payout schedule. with future borrowing. will be key in future rating considera- tions. The remaining $11.4 million of authorized unissued debt. scheduled to be issued over the next few years. is not likely to impact debt levels. whereas 2 General Obligation/Special Tax April 23. 1997 North Richland Hills, Texas future tax base gro\'\'th should have a moderating affect. key facts: Debt Burden: Median: Payout, Ten Years: Direct Net Debt as % of Overall Net Debt: Average Annual Growth A,V" 1992·97 : Full Value Per Capita, 1997: General Fund Balance as % of General Fund Revenue, 1994: 1995: 1996: 6.8Cê 2.Sl'f 63.6"c 52.20-;. 3.60ê $38.384 2 ()J) û;" 19.7c-c 22.Fi- 1996 Sources of Revenue, Sales Tax: Property Tax: 1996 Items of Expenditure, Debt Service : Median Family Income, 1990, City: State: Owner Occupied Median Value, 1990, City: State: Unemployment Rate 1/96, Unit: State: Bond Authorization Unissued: 25.S";" 35.1% 25.5% $42.677 $31.553 $82.500 $59.600 3.7o,ê 6.7% analysis: $15.5 million High Debt Levels And Future Needs Manageable ::lIe information: Legal Name of Issuer: City of ì\orth Richland Hills. Texas. Date of Bonds: April 15. 1997. Security: General Obligation. limited tax. Use of Proceeds: Street. golf course improvements and capital equipment purchases Key Contacts: Chief Financial Officer: Larry Koonce. Director of Finance. (817) 581-5535. Advisor: First South Company, Dallas. (214) 953- 4000. Bond Counsel: Fulbright and Jaworski. Dallas. (214) 855-8000. Auditor: KPMG Peat Marwick. Fort W0I1h. (IT 1997): (8J 7) 335-2655. 1ting history: April 1997: January 1981: A 1 January 1973: A May 1968: Baal Baa analyst: Anita Russell (212) 553-0818 April 23. 1997 General Obligation/Special Tax 3 North Richland Hills, Texas Debt statement as of 04/09/97 ($000): debt factors: Amount Bonded debt outstanding General oblig<ltion Sales ta.'\ Waterworks and sewer system revenue bonds Cun-ent offering (4/19/97) Gross bonded debt Capital leases Gross direct debt Less: Waterworks and sewer system revenue bonds Contract revenue bonds Net direct deht Overlapping debt Overall net debt $42.835 12.510 11.309 6.855 $73.509 514 $74.023 11.309 50 $62.ó64 57.402 $120.066 Debt Ratios Net Per 0' Median ,0 Debt Capita Median (!J F,V, (%) [!] Direct $1.365 S 765 3.0 1.5 Overall 2.G1G 1.366 (j.B 3.5 Rate of Retirement [!] Principal Amount Due % of Total 30.0 63.6 Amount ($000) $14.949 31,590 In 5 years In 10 years I!JExchld.s .ale.tax re.·....e bond:;, I!J 1997 m.dian for cities with poplllatioIl15.000 to .f9,999. Structure: Generally declining. following peak debt service in fiscal 1997. until final maturitv in 2016. . '- .. . Shghtly above average amortIzatIOn schedule. CIP/Future Borrowing: TIle remaining $11.4 million bond authorization designated for street and drainage improvements is expected in equal instalhnents over the next several years. administrative factors: Form of Government: Council-manager under home rule charter. Seven-member city council elected to two-year overlapping terms. Appointed city manager responsihle for daily administr<ttion. Public Employees: Approximately 468 employees: members of Texas Municipal Retirement System. 4 General Obligation/Special Tax April 23, 1997 North Richland Hills, Texas property 'aluation and . ax data: North Richland Hills Fiscal Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 Assessed Valuation ($000) $1.458.99~ 1.465.672 1.441.023 1.472.770 1.444.773 1.430.355 1.510.391 1.653.284 1. 761.625 0' Tax Rate/ Levy 0' Collected - 10 -10 Change $1,000 A,V.rn ($000) Current Total ,5.1 $4.40 $6.417 97,7 99.9 0.5 5.05 7.401 96.4 98.6 -1. 7 5.05 7.276 98.8 101.9 .., .., 5.24 7.711 98.4 99.8 ·1.9 5.24 7.564 IÐ98.9 Œl100.0 -1.0 5.70 8.153 98.7 Im.l 5.6 5.70 8.609 100.4 101.6 9,5 5.70 9.282 99.0 99,2 ().6 5.70 10.041 In process In process 1997 Full Valuation: 1997 Equalization Rate: $1. 7ÔU525.000 Joo.or-,. $38.384 Average Annual Growth F.V.. 1992-97: 1997 F.V. Per Capita: 3.6% Largest Taxpayers rn Richland Center Inc. North Hills Mall Association Meadows NRH Assoc. Texas Utilities Electric Company E-Systems. Inc. Pool Trust Technol. Inc. H&M Food Systems Walden Residential Operation Partnl:rship Wal-Mal1 Stores Inc. Cameo Development IDTop I~n lax pay~r~ cOOlpri~t 9.1 ~,. of fi~caJ 199- a»e>~,,1 ".11It.' FY 1997 A,V, ($000) $23.857 22,000 18.034 J 7.425 14.371 14.123 Business Shopping center Shopping center Apartments Utility Land and apartments Medical supplies Food processor Real estate Shopping center Real estate development 13.253 12,358 12.190 11. 734 .,conomic factors: Population: North Rlchland Hills Area % Change Year Population (sq, mi.) Density City County State U,S. 1970 ]6.154 16 1.010 31.9 16.9 13.3 1980 30.59~ 18 1.741 89.4 20.3 27.0 11.4 1990 45.895 m 18 :.518 50.0 35.9 19.4 9.8 Soure:.: u.s. C~nðu5 Bureau [)Land area in 1990 can indicat~ an area d.ang. wilhout . I)ollndary chang', due to now llI~aður~OI~nt t~chnicp~. Location: Northeast Ta!Tant County - --- ~ "--,_._-----~-~._,-~--~-_._--~--"-_._-~--,.- General Obligation/Special Tax April 23. 1997 5 North Richland Hills, Texas Population and Housing Characteristics: State U.S, 1990 1990 1990 Population: Median age 31.0 30.8 32.9 % school age 19.2 20.3 18.2 % working age 65.4 61.4 61.7 % 65 and over 6.8 10.1 12.6 No. persons/household 2,7 2.7 2.6 Income: Median family income $42.677 $31.553 $35.225 % below poverty level 5.1 18.1 13.1 % Children below poverty level 6.4 24.3 18.3 Per capita income $15.912 $12,904 $14.420 Housing: % vacant "" 3.0 % owner occupied 62.8 60.9 64.2 % built before 1939 0.2 7.1 18.4 % built since l<lst census 43.6 29.7 20.7 O\vner'occupied median value $82.500 $59,600 $79,100 Median gross rent $478 $395 $447 Occupied housing units 16.901 Sourœ: u.s. Census Bureau. Labor Market Characteristics: North Richland Hills labor Total 01 Unemployed /0 Year Force Employed City State U.S, 1992 28.437 26.928 5.3 7.5 7.4 1993 28.827 27.441 4.8 7.0 6.8 1994 29.505 28.252 4" 6.4 6.1 1995 29.993 28.876 3.7 6.0 5.6 2/96 :-CL041 28.986 35 6" 6.0 2/97 30.983 30.025 3.1 5.8 5.7 Sourœ: Local Area UnernploymeJt Srari"Ii,-,; ILAlJS I. Burtau of Labor Srarisria;, Monlhly e6limares are nor seasonally adju.red. LAUS e!timatefo e.tartiug in January 1994 art' 4,:»nœpnsally ciifferert 1roßl thofot available for t:arlif;f pf.'riods. Per Capita Income % Change County 140.9 90.6 City as % of State 121.9 123.3 Year 1979 1989 Income $ 8.782 :J 5.912 State 158.0 79.1 U.S, 120.4 110.3 6 General Obligation/ Special Tax April 23. 1997 North Richland Hills, Texas Largest Employers Teenol Medical Products. Inc. Birdville ISD PLF Life Insurance Co. TCJC-N.E. Campus Columbia North Hills Hospital City of North Richland Hills Wal-Mart H&M Food Systems Inc. Bates Container Corporation Foley's Depæ1ment Stores Sourœ: Official Statement Business Medical and hospital supplies Education Insurance Higher education Medical care Municipality Retail sales Food processor Corrugated containers Department store Employees 1995 1.129 875 875 340 430 460 400 250 220 200 ~;nancial factors: Operating Funds Financial Performance (fiscal years ended 9/30 $0(0) III % Change 1993-94 1994-95 1 994 1995 1996 Revenues $21.211 S24.688 Expenditures 22.165 24.268 Operating sUtplus (deficit¡ œ ( 187) 196 IDGeneralandDebl Serviœ Funds. (modified acenlal mtthod of ",'CDllllinf\. o General Fund only. S2Ö.504 25.541 742 6.2 16.4 10.7 9.5 1995-96 7.4 5.2 1996 Sources of Revenue Property tax Sales tax Franchise tax Transfer In Charges for services Fines Licenses and pennits 0' ,0 1996 Items of Expenditure Public safcty Debt service General government Culture and recreation Public works % 39.6 25.5 17.4 9.0 35.1 25.8 11.4 9.0 8.8 6.3 ...~._.... 3.2 General Fund Financial Position (fiscal years ended 9/30 $0(0) 1994 1995 1996 $2.804 $3,266 1.291 1.145 $1.513 $2.121 1. 733 2,241 3.620 4.363 3,156 3,607 19.7 22.1 17.2 18.3 Cash and investments Operating loans Other CUITent liabilities Year-end cash surplus Receivahles Fund balance Undesignated fund balance Fund balance as % of revenues Undesignated fund balance as °ë of revenues $2.587 1.129 $1.458 1.7(',6 3.425 2.825 20.0 16.5 General Obligation/Special Tax April 23, 1997 7 North Richland Hills, Texas Municipal Sales Tax Fiscal Year 1991 1992 1993 1994 1995 1996 1997 rn ID Budget Total Collected ($000) $4.208 $4.503 $4,989 $5.749 $6.570 $7,007 7,207 '}~ Change 7.0 10.8 15.2 14.3 6.7 6.9 15399\'01 . © Copyright 1997 by Moody's Investors Service. Inc.. 99 Church StreH Ntw York. New Y ork 1l1OO~, All rights reselvtd. ALL INFORMATION CONTAINED HEREIN IS COPYRIGHTED IN TIiE NAME OF MOODY'S INVESTORS SERVICE, INC. ("MOODY'S"), AND NONE OF SUC1I INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED. REPACKAGED, FURTIlER TRANSMITTED, TRANSFERRED, DISSEMINATED. REDISTRIBtJTED OR RESOLD. OR STORED FOR SI:BSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER. BY ANY PERSON WITHOUT MOODY'S PRIOR WRlTIEN CONSENT. All information conIDined herein i. obtained by MOODY'S from ;ourc.·, hdi"'ed by it to ht accurate and reliable, Bee,..... of the possibility of human or mecha"ical error a. well .. other faclors. however. slIch information i. provided .... is" withoul warranty of allY kind alld MOODY·S. in particul.r. m.kes no "'pre..ntation or warranty. expre.. or implied. a. to the .cc..r.ry. timeline.s. completene..... n,.rchantabiIi ty or filn". for any parriclIl.r IHlrp<>" of any sllch infomlalion. Under 110 circumstanc"" ""all MOODY'S have any liability to any person or entity for (a) any lœ. or damage in whole 01 in part ca....d by. resulllll; from. or relating to. any error (negligent or otherwi.el or other circumstance or contingency within or outside the conlrol of MOODY'S or any of ils dilectors. office",. employe.. or agellts ill connection with the procurement. collection. compilation, analy.is, interpretation, communication, publication or delivery of any such information, or (bl any direct. illdirel't. special. consequenlial. compensatory or incidental damages whatsoOVtr (including without limilation, lost profits). eVen if MOODY'S is advised in ad\'ance of the possibility of such damages. resulting from the USe of or inability to Use. any such information. The crt.dil rating.. if any. constituting part of the infonnation contained herein ale. and mllst be construed solely as. slatements of opinion and not statement>; of ñct or recommendation. 10 purchase, sell or hold any securities. NO WARRA,'IITY. EXPRESS OR IMPLIED. AS TO THE ACCURACY, TIMELINESS, COMPLETENESS. I\fERCHANTABn..m" OR FITNESS FOR ANY PARTICULAR PURPOSE OF ,~''Y SUCH R.-\TlNG OR OTIiER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Ea"h lalillg or uth.. opilliun ",usl be weighed sololy as olle factor in any inveslment decisioll n.ade by 01 on behalf of any user of the information c.ontailled herein. and each .uch U5<' lIIustaceoldingly make its own stndy and evaluation of each security and of e8ch issuer and guarantor of. 8nd each provider of credit .upport for. each security that il may consider purchasing. holding or selling. Pursuant to Section 17(b) of tbe Securities Act of 1933. MOODY'S hereby discloses that mo<t i..uers of debt secnrities (including corporate and IIIunic'pal bonds. debenhlle.. nol.. and commercial paper) and preferred stock rated by MOODY'S have. prior to assignment of any raling. agreed to pay to MOODY'S for appraiSlI and rating ""'ict> ..nde..d by il fees ronging from $ 1.000 to $350.000. Prepared by: ~ FIRST SO!J1HWlo5T COMPANY TABULATION OF BIDS RECEIVED AT SALE OF $4,100,000 CITY OF NORTH RICHLAND IDLLS, TEXAS GENERAL OBLIGATION BONDS, SERIES 1997 SELLING MONDAY, APRIL 28, 1997, AT 1:00 PM, CDT TRUE INTEREST ACCOUNT MANAGER COST First Southwest Company /' 5.651535% PaineWebber, Inc. 5.665106% Southwest Securities 5.683000% Prudential-Securities Incorporated 5.691200% "--_..",.,._"~~~.-_-,.,--~_.....,...,....,~--~~.~-"-,._,-,----~.,~----"--- Prepared by: t FIRST SO!J'IH\Ve)T COMPANY TABULA TION OF BIDS RECEIVED AT SALE OF $2,755,000 CITY OF NORTH RICHLAND HILLS, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 SELLING MONDAY, APRIL 28, 1997 , AT 1 :00 PM, CDT TRUE INTEREST ACCOUNT MANAGER COST Paine Webber, Inc. ~.591979% First Southwest Company 5.606759% Prudential-Securities Incorporated 5.701000% ,. '_"'"~"__~__~__"._M~~m__~.,~~~~___,__ "Bond Buyer's" Index of 20 Municipal Bonds Basis Valuation of Par Bonds The most important guide as to what the Municipal Bond Market has done in one time period versus another is the "Bond Buyer's" 20 Bond Index. Published on Thursday of each week, it is the accepted guide of the Municipal Bond Industry to detennine trends and movements of interest rates in the market. To compute the index each week a poll is taken of several large investment banking houses on the 20 year price (expressed in tenns of an interest rate) of the outstanding bonds of certain municipalities. Week .l2ßI. 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 January 1 6.85 7,83 7.44 7.03 7.09 6.52 6.17 5.34 6.66 5.37 5.70 2 6,70 7.83 7,40 7.03 7.15 6.40 6.19 5.31 6.53 5.50 5.71 3 6.65 7.61 7.29 7.14 7.10 6.56 6.16 5.29 6.44 5.40 5.72 4 6.54 7.51 7.27 7.19 7.06 6.59 6.10 5.28 6.49 5.46 5.72 5 6.56 7,00 6.65 5,73 February 1 6.57 7.49 7.29 7,24 6.86 6.71 6.04 5.25 6.40 5.40 5.70 2 6,67 7.40 7.38 7.20 6,81 6.74 5.97 5.36 6.18 5.37 5,62 3 6,62 7.55 7.54 7.16 6,97 6.75 5.85 5.42 6.18 5,33 5.56 4 6.59 7.52 7.55 7.27 7.01 6.74 5,60 5.58 6.11 5.48 5.65 5 5.57 March 1 6.54 7.47 7.56 7.25 7.06 6.71 5.47 5.84 6,08 5.59 5.70 2 6.61 7.67 7.52 7.25 7,06 6.76 5.58 5.88 6.18 5.81 5.75 3 6.68 7.75 7.52 7.32 7.13 6.79 5.71 5.84 6.06 5.86 5.78 4 6.79 7.89 7,72 7.31 7.14 6.77 5.78 5.92 6.09 5.90 5.81 5 7.90 7.64 7.33 6,07 6.07 April 1 6.93 7.80 7.56 7.33 7.06 6.73 5.86 6.34 6.03 5.86 5.88 2 7.27 7.81 7.54 7.31 7.02 6,66 5.84 6.22 6,01 6.03 5,88 3 7.90 7.87 7.44 7.39 6,98 6.60 5,70 6.19 5.96 5.94 5.87 4 7.82 7.77 7.40 7.51 7.01 6.68 5,67 6.16 6.06 5.91 5.87 5 7.85 6.69 5,75 May 1 7.86 7.84 7.36 7.54 6,95 6.64 5.71 6.18 6.10 6.06 2 7.82 7.85 7.36 7.39 6.93 6.54 5.69 6.32 5.96 6.08 3 8.31 7.97 7.18 7.29 6,94 6.51 5,77 6.14 5.92 5.96 4 8,03 7.96 7.11 7.26 6,98 6.58 5.73 6.13 5.83 5.87 5 7.26 6.97 5,94 June 1 7.97 7,87 7.15 7.21 7.06 6.57 5.67 6.09 5.79 5.94 2 7,83 7.78 6.95 7,20 7.19 6.52 5.68 5.96 5.75 6.12 3 7,63 7.73 6.88 7.28 7.15 6.46 5.61 6.04 5.86 6,06 4 7.72 7.77 7.08 7.27 7.13 6.42 5.57 6.16 5.82 5,97 5 7.74 7,02 6.28 5.97 July 1 7.81 7.75 7.00 7,24 7.10 6.38 5.55 6.27 5.91 5,94 2 7,67 7.77 6.92 7,21 7.07 6,17 5.55 6.22 5.81 6,00 3 7.66 7.77 6.95 7.17 7.04 6.16 5.50 6.22 5.99 5,88 4 7.72 7.76 6.95 7.15 7.00 6.05 5.61 6.22 5.97 5.86 5 7.73 5.89 5.65 August 1 7,86 7.69 6.86 7.08 6.99 6.06 5.61 6.16 6.03 5,79 2 7.79 7.83 7,02 7.22 6.94 6.05 5.45 6.25 6.07 5.67 3 7,81 7,85 7.09 7,26 6.88 6,21 5.40 6.22 6.12 5.74 4 7.80 7.80 7.15 7.56 6.86 6.31 5.35 6.21 6.08 5,75 5 7.16 7.47 6.85 5.98 5.86 September 1 8.05 7.76 7.15 7.41 6.86 6.24 5.35 6.16 5.90 5,95 2 8.38 7.67 7.16 7.35 6.81 6.16 5.24 6.18 5.83 5.89 3 8.32 7.59 7.33 7.41 6.78 6.27 5.27 6.24 5.91 5.88 4 8.30 7.62 7.40 7.53 6.73 6.33 5.30 6.37 6.00 5.76 5 7,64 5.30 6.43 October 1 8.53 7.53 7.27 7.48 6.64 6.27 5.30 6.50 5.88 5.70 2 8.66 7.52 7.19 7.56 6.66 6,29 5.20 6.44 5,82 5.73 3 9.17 7.45 7.19 7.48 6.67 6,34 5.20 6.49 5,72 5.72 4 8.72 7.36 7.22 7.43 6.73 6.53 5.31 6.64 5,76 5.75 5 8.43 6.69 6.62 5.70 November I 7.90 7.33 7.24 7.29 6.71 6.51 5.45 6.83 5.70 5.67 2 8.03 7.44 7.20 7.24 6.69 6.38 5.46 6.96 5.68 5.60 3 7.91 7.50 7.12 7.15 6.75 6.28 5.46 7.06 5.65 5.55 4 7.96 7.58 7.08 7.13 6.78 6.26 5.49 7.03 5,65 5.54 5 7,04 7.08 5.54 December 1 7.90 7.66 7.00 7.06 6.80 6,28 5.46 6.90 5.35 5.57 2 8.10 7.68 6.99 7.05 6.71 6.22 5.33 6.88 5.51 5.66 3 8.01 7.66 6.96 7.11 6.66 6.25 5.36 6.77 5.51 5.67 4 7.95 7.57 6.97 7.14 6.58 6.19 5.34 6.70 5.44 5.66 5 7.86 7.50 6.17 5.28 6.71 ~ "'<-'>--"~.~^""~-_._~----'-'~'---'"'~~~""-~-------_.-'-'-- '" '" ~ '" '" ~~ ~ ~ ~ ~ < ) < ) ~ < ) < ) :>< :>< :>< :>< !§~~ - - t"- o I.[;) ~ ~ ~ - ~ ~~~ r-; 0 0'\ - N - N N -<e: - - - - .- r/) ~~~ 00 00 - 0'\ .- ~g~ ~ 0 0 ~ 00 \0 \Ó \Ó I/) \Ó ¡:Q E-< ~ ~ ~ ~ ~ r/) I.[;) N - ~I~ I/) t"- \0 0 0 ~ (") (") N I.[;) 0 0 N I/) 00 I/) \0 (") 0 C"J ~ ~ C"J I/) I/) I/) I/) I/) \Ó ~ I.[;) I.[;) I/) (") - 0'\ 0'\ 0;- 0'\ 0'\ r I I I ~ (") (") 0 0 - - - - - .- I I I r I I/) I/) ~ I/) N r/) ~~ ~.¡:: .S < ) E!r/) Q¿ '"§ "tj . 9 '"§ '"§ '"§ I < ) a~ ~ < ) < ) ¡:: ~;.:::: § ¡:: < ) < ) c3 Cj E-<<3 () Cj '" ~4-< '" '" '" ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ < ) < ) '" ~ < ) E-< E-<~ E-< ~ '" ~ ~ '" ,;i '" '" u - =t+: - :::: - - - æ æ·€ æ '.... ..... ::r: ::r: ~ "tj "tj< ) "tj "tj "tj a aU a a a :E\O -< ) - - - r/) f.Jê .J::I/) .J::(") .J::- ~ uo\ uO'\ uO'\ uo\ ÄZ~ ~~ ÄZ~ ..... 0'\ ÄZ~ ~- ~ ,..r::", '€~ ,..r::", .J::'" ,..r::", t:.~ t: .~ t:.~ t: .~ o < ) o '" o < ) ~~ ~< ) 0 ZCI) Z.E Zr/) E-< 'ê)", 4-<8- 'ê)", 4-< 4-<r/) r:Q o = o '" o '" >,"tj >,r/) .ò] >,"tj >,"tj ::r: .... ¡:: :~ S .... ¡:: .... ¡:: ..... 0 ..... 0 ..... 0 ....... 0 U¡:Q u< ) U¡:Q u¡:Q u¡:Q 8.§ §~ 8.§ 8.§ 8,§ ~ .... ~r/) §~ ~ .... ~ .... ~~ 0>, I/)~ I/)~ ~::=\O I.[;) OJ:¡ (") OJ:¡ 0:'::= 00;'= 1:"-;'::: ~.D ~....... 0'\ ~,D ~.D ~,D ~o {Ã:5~ ~o ~o ~o p ". NOTICE OF SALE AND BIDDING INSTRUCTIONS p ON ". $4,100,000 CITY OF NORm RICHLAND HILLS, TEXAS (Tarrant County) GENERAL OBLIGATION BONDS, SERIES 1997 /! III Sealed Bids Due Monday, April 28, 1997, at 1:00 PM, CDT THE BONDS WIU NOT BE DESIGNATED AS "OUALIFIED TAX-EXEMPT OBLIGA nONS" FOR FINANCIAL INSTITUTIONS. ". THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING. . . The City of North Richland Hills, Texas (the "City") is offering for sale its $4,100,000 General Obligation Bonds, Series 1997 (the "Bonds"). p ADDRESS OF BIDS, . , Sealed bids, plainly marked "Bid for Bonds", should be addressed to "Mayor and City Council, City of North Richland Hills, Texas", and delivered to the Financial Advisor at 1700 Pacific Avenue, Suite 500, Dallas, Texas, prior to 1:00 PM, CDT, on the date of the bid opening. All bids must be submitted on the Official Bid Fonn, without alteration or interlineation, ~ BIDS BY TELEPHONE OR FACSIMILE. . . Bidders must submit SIGNED Official Bid Fonns to David K. Medanich, First Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas, 75201, and submit their bid by telephone or facsimile (fax) on the date of the sale. ". Telephone bids will be accepted at (214) 953-4054, between 12:00 PM, CDT and 12:30 PM, CDT. !II< Fax bids will be accepted between 12:00 PM, CDT and 12:30 PM, CDT, on the date of the sale at (214) 953-4050, attention Rhonda Van Iderstine. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. ". First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if telephone or fax options are exercised. ". PLACE AND TIME OF BID OPENING, . , The bids for the Bonds will be publicly opened and read in the offices of the City Manager of the City Hall at 1:00 PM, CDT, Monday, April 28, 1997. ". AWARD OF THE BONDS. . , The City Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to convene at 7:30 PM, CDT, on the date of the bid opening, and adopt an ordinance authorizing the Bonds and approving the Official Statement (the "Ordinance"). THE BONDS ". ". DESCRIPTION, . . The Bonds will be dated April 15, 1997 (the "Dated Date"). Interest will accrue from the Dated Date and will be due on February 15, 1998, and each August 15 and February 15 thereafter until the earlier of maturity or prior redemption. The Bonds will be issued only in fully registered fonn in any integral multiple of $5,000 for anyone maturity. The Bonds will mature on February 15 in each year as follows: ". MATURITY SCHEDULE Principal Principal Principal Year Amount Year Amount Year Amount 1998 $205,000 2005 $205,000 2011 $205,000 1999 205,000 2006 205,000 2012 205,000 2000 205,000 2007 205,000 2013 205,000 2001 205,000 2008 205,000 2014 205,000 2002 205,000 2009 205,000 2015 205,000 2003 205,000 2010 205,000 2016 205,000 2004 205,000 2017 205,000 ". ". ". OFFICIAL STATEMENT Dated April 14, 1997 Ratings: Moody's: Applied For S&P: Applied For See ("Other Information Ratings" herein) NEW ISSUE - Book-Entry-Only In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Exemption" herein, including the alternative minimum tax on corporations. THE BONDS WILL NOT BE DESIGNATED AS "OUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $4,100,000 CITY OF NORTH RICHLAND HILLS, TEXAS (Tarrant County) GENERAL OBLIGATION BONDS, SERIES 1997 Dated Date: April 15, 1997 Due: February 15, as shown below PAYMENT TERMS. .. Interest on the $4,100,000 City of North Richland Hills, Texas General Obligation Bonds, Series 1997 (the "Bonds") will accrue from April 15, 1997, (the "Dated Date") and will be payable August 15 and February 15 of each year commencing February 15, 1998, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company CDTC'") pursuant to the Book- Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is Bank One, Texas, N.A., Fort Worth, Texas (see "The Bonds - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE, . . The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") including particularly Article 1175, Vernon's Ann. Civ. St., as amended, and are direct obligations of the City of North Richland Hills, Texas (the "City"), payable from a continuing ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds (see "The Bonds - Authority for Issuance"). PURPOSE. . . Proceeds from the sale of the Bonds will be used for street improvements, and to pay the costs of issuance associated with the sale of the Bonds. MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield $ 205,000 1998 $ 205,000 2008 205,000 1999 205,000 2009 205,000 2000 205,000 2010 205,000 2001 205,000 2011 205,000 2002 205,000 2012 205,000 2003 205,000 2013 205,000 2004 205,000 2014 205,000 2005 205,000 2015 205,000 2006 205,000 2016 205,000 2007 205,000 2017 (Accrued Interest from April 15, 1997 to be added) REDEMPTION OPTION. . . The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15,2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "The Bonds - Optional Redemption"). LEGALITY. . . The Bonds are offered for delivery when, as and if issued and received by the initial purchaser(s) and subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Fonn of Bond Counsel's Opinion"). DELIVERY. . , It is expected that the Bonds will be available for delivery through The Depository Trust Company on June 4, 1997. THIS PAGE LEFT BLANK INTENTIONALLY 2 Dated April 14, 1997 Ratings: Moody's: Applied For S&P: Applied For See ("Other Information Ratings" herein) OFFICIAL STATEMENT NEW ISSUE - Book·Entry·Only In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Exemption" herein, including the alternative minimum tax on corporations. THE CERTIFICATES WILL NOT BE DESIGNATED AS "OUALIFlED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $2,755,000 CITY OF NORTH RICHLAND IDLLS, TEXAS (Tarrant County) TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 Dated Date: April 15, 1997 Due: February 15, as shown below PAYMENT TERMS, . . Interest on the $2,755,000 City of North Richland Hills, Texas, Tax and Waterworks and Sewer System Revenue (Limited Pledge) Certificates of Obligation, Series 1997 (the "Certificates") will accrue from April 15, 1997, (the "Dated Date") and will be payable February 15 and August 15 of each year commencing February 15, 1998, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Certificates 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. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. See "The Certificates _ Book-Entry-Only System" herein, The initial Paying Agent/Registrar is Bank One, Texas, N,A., Fort Worth, Texas (see "The Certificates - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE. . . The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended, and constitute direct obligations of the City of North Richland Hills, Texas (the "City"), payable from a combination of (i) the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of surplus net revenues of the City's Waterworks and'Sewer System (not to exceed $1,000 in the aggregate), as provided in the ordinance authorizing the Certificates (see "The Certificates - Authority for Issuance"). PURPOSE. . . Proceeds from the sale of the Certificates will be used for the purchase of capital equipment, golf course improvements, and to pay the costs of issuance associated with the sale of the Certificates. MATURITY SCHEDULE Amount Maturity Rate Yield Amount Maturity Rate Yield $ 240,000 1998 $ 50,000 2008 310,000 1999 55,000 2009 330,000 2000 60,000 2010 350,000 2001 60,000 2011 370,000 2002 65,000 2012 85,000 2003 70,000 2013 90,000 2004 75,000 2014 95,000 2005 75,000 2015 100,000 2006 80,000 2016 110,000 2007 85,000 2017 (Accrued Interest from April 15, 1997 to be added) REDEMPTION OPTION. . . The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February IS, 2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. Additionally, the Certificates may be subject to mandatory redemption in the event the initial purchaser elected to aggregate one or more maturities as a Term Certificate (see "The Certificates - Optional Redemption"). LEGALITY. . . The Certificates are offered for delivery when, as and if issued and received by the initial purchaser(s) and subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion"). DELIVERY. . . It is expected that the Certificates will be available for delivery through The Depository Trust Company on June 4, 1997. 3 ---~--'-'---_._-'_.~-'-'--.."'----~------~------ THIS PAGE LEFT BLANK INTENTIONALLY 4 .' --~"--,~~---",--""---,",--,..,-,,,-"-,,,"--,,,'~--~-'~,"'---~-".>-_..._~..~.~,_..-..-.,- This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial Advisor, This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements offact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARy........................ 6 CITY OFFICIALS, STAFF AND CONSULTANTS,.... 8 ELECTED OFFICIALS."....",..........""..........,,··...······..,·· 8 SELECTED ADMINISTRATIVE STAFF ,.........."................ 8 CONSULTANTS AND ADVISORS..,.................,.............., 8 INTRODUCTION ..."....,......".....,.............,..........,',...."... 9 THE BONDS AND CERTIFICATES...............,..."........ 9 TAX INFORMATION ..................:.................,..........,...13 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT ........,..........................,...,.. 15 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CA TEGORY..............,.................."·,··"··,·,,..·,·,, 16 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORy.,.....,.....................,.........,........ 16 TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORy......................,................,..............." 17 TABLES - TEN LARGEST TAXPAYERS ................"...17 TABLE6 - TAX ADEQUACY.........,...........,.........,..... 18 TABLE 7 - ESTIMATED OVERLAPPING DEBT .........,..18 TAX MATTERS ...................,........,.......,...................,...,25 OTHER INFORMATION..",......".....",........",.....",..,..,26 RATINGS.......,.....,..........,.......".. ,.............,......",.....,.26 LITIGATION...."..,.."................"........,.,........".........., 26 REGISTRATION AND QUALIFICATION OF BONDS AND CERTIFICATES FOR SALE ...,..,...........................26 LEGAL INVESTMENTS AND ELlGffiILITY TO SECURE PUBLIC fuNDS IN TEXAS .........,.......................27 LEGAL OPINIONS AND No-LITIGATION CERTIFICATE.. 27 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION.."...,......".. ,...".......""....",...."..27 CONTINUING DISCLOSURE OF INFORMATION..............27 FINANCIAL ADVISOR.........,.....,...............",..... ,...,..,..29 CERTIFICATION OF THE OFFICIAL STATEMENT............ 29 APPENDICES GENERAL INFORMATION REGARDING THE CITy......... A EXCERPTS FROM THE ANNUAL FINANCIAL REPORT., B FORM OF BOND COUNSEL'S OPINION....,......,..,........., C The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement. DEBT INFORMATION .......................................,..,...., 19 TABLE 8 - GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS......,...........",......,...""....,......, 19 TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION ERROR! BOOKMARK NOT DEFINED. TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBTERROR! BOOKMARK NOT DEFINED. TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS............,.....,.............,......, 20 TABLE 12 - OTHER OBLIGATIONS ..,...,...................... 20 FINANCIAL INFORMATION .......,.....,....................,.. 21 TABLE 13 - GENERAL fuND REVENUES AND EXPENDITURE HISTORy................................·.. 21 TABLE 14 - MUNICIPAL SALES TAXHISTORY......,... 22 TABLE 15 - CURRENT INVESTMENTS......................." 24 5 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds and Certificates to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CITY ..............,...............,..... The City of North Richland Hills, Texas is a political subdivision and municipal corporation of the State, located in Tarrant County, Texas, The City covers approximately 18.29 square miles (see "Introduction - Description of City"), THE BONDS..............................,.., The Bonds are issued in the principal sum of $4,100,000 and will mature (or are subject to mandatory redemption) on February 15, 1998 through February 15,2017 (see "The Bonds _ Description ofthe Bonds and Certificates"). THE CERTIFICATES ,.................... The Certificates are issued in the principal sum of $2,755,000 and will mature (or are subject to mandatory redemption) on February 15, 1998 through February 15, 2017 (see "The Certificates -Description of the Bonds and Certificates"). PAYMENT OF INTEREST ........,..... Interest on the Bonds and Certificates accrues from April 15, 1997, and is payable February 15, 1998, and each August 15 and February 15 thereafter until maturity or prior redemption (see "The Bonds and Certificates - Description of the Bonds and Certificates" and "The Bonds and Certificates - Optional Redemption"). AUTHORITY FOR IsSUANCE ......... The Bonds are issued pursuant to the general laws of the State, including particularly Article 1175, V. A. T, C. S" and an ordinance passed by the City Council of the City (see "The Bonds and Certificates - Authority for Issuance"). The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended and an ordinance passed by the City Council of the City (see "The Certificates _ Authority for Issuance"). SECURITY FOR THE BONDS..,....... The Bonds constitute direct and voted obligations of the City, payable from the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the City (see "The Bonds and Certificates - Security and Source of Payment"). SECURITY FOR THE CERTIFICATES ....,..........,..,........... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of surplus Net Revenues of the City's Waterworks and Sewer System (not to exceed $1,000 in the aggregate) as provided in the Ordinance (see "The Certificates - Security and Source of Payment"). OPTIONAL REDEMPTION ..........,.. The City reserves the right, at its option, to redeem Bonds and Certificates having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15,2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. Additionally, the Bonds and Certificates may be subject to mandatory redemption in the event the initial purchaser elected to aggregate one or more maturities as a Term Bond or Term Certificate (see "The Bonds and Certificates - Optional Redemption"), TAX EXEMPTION ..,....,..............,..,.. In the opinion of Bond Counsel, the interest on the Bonds and Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS ...,................... Proceeds from the sale of the Bonds will be used for street improvements, and to pay the costs of issuance associated with the sale of the Bonds, Proceeds from the sale of the Certificates will be used for the purchase of capital equipment, golf course improvements, and to pay the costs of issuance associated with the sale of the Certificates. 6 RATINGS ....,..,..,..,.................,..... The presently outstanding tax supported debt of the City is rated "A" by Moody's Investors Service, Inc. ("Moody's") and "A+" by Standard & Poor's Ratings Services, A Division of The McGraw-Hill Companies, Inc. ("S&P"). The City also has ten issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies, Applications for contract ratings on the Certificates have been made to Moody's and S&P (see "Other Information - Ratings"). BOOK-ENTRy-ONL Y SYSTEM ......................,......,......., The definitive Bonds and Certificates will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds and Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds and Certificates will be made to the beneficial owners thereof, Principal of, premium, if any, and interest on the Bonds and Certificates will be payable by the Paying AgentlRegistrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds and Certificates (see "The Bonds and Certificates - Book-Entry-Only System"), PAYMENT RECORD.....,..,............. The City has never defaulted in payment of its general obligation tax debt. SELECTED FINANCIAL INFORMATION Ratio G.O. Fiscal Per Capita General Per Tax Debt Year Estimated Taxable Taxable Obligation Capita to Taxable %of Ended City Assessed Assessed (G.O.) G. O. Tax Assessed Total Tax 9-30 Population(1) Valuation Valuation Tax Debt Debt Valuation Collections 1993 48,300 $ 1,444,772,574 $ 29,912 $ 41,865,141 $ 867 2.90% 99.96% 1994 50,000 1,430,354,738 28,607 39,505,979 790 2.76% 100.07% 1995 50,650 1,510,391,128 29,820 42,135,141 832 2.79% 101.60% 1996 52,584 (2) 1,653,283,794 31,441 46,125,141 877 2.79% 99.19% 1997 52,800 (4) 1,761,625,478 33,364 49,495,141 (3) 937 2.81% 95.52% (5) (1) Source: Estimates of North Central Texas Council of Governments. (2) Estimate of City Planning Department. (3) Projected, includes the Bonds and Certificates. (4) Estimate of City Economic Development Department. (5) Partial collections through March 1, 1997, GENERAL FuND CONSOLIDATED STATEMENT SUMMARY Beginning Balance Total Revenue Total Expenditures Net Transfers Net Funds Available Adjustment from prior year Ending Balance 1996 $ 3,620,483 19,427,072 18,461,850 (223,056) 742,166 Fiscal Year Ended September 30, 1995 1994 1993 $ 3,424,783 $ 3,612,219 $ 2,781,035 18,357,272 17,146,141 15,474,721 17,488,785 16,347,172 15,217,432 (672,787) (986,405) 21,627 195,700 (187,436) 278,916 552,268 $ 3,620,483 $ 3,424,783 $ 3,612,219 1992 $ 2,430,348 14,379,409 14,112,005 83,283 350,687 $ 4,362,649 $ 2,781,035 For additional information regarding the City, please contact: Larry Koonce Director of Finance City of North RicWand Hills P,O. Box 820609 North Richland Hills, Texas 76180 (817) 581-5535 David Medanich First Southwest Company or 1700 Pacific Avenue Suite 500 Dallas, Texas 75201 (214) 953-4000 7 ELECfED OFFICIALS CITY OFFICIALS, STAFF AND CONSULTANTS Citv Council Tommy Brown Mayor Mack Garvin Mayor Pro Tern-Place 2 Lyle Welch Councilmember-Place I Mark Wood Councilmember-Place 3 JoAnn Johnson Councilmember-Place 4 Don Phifer Councilmember-Place 5 Byron Sibbet Councilmember-Place 6 Linda Spurlock Sansoucie Councilmember-Place 7 SELECTED ADMINISTRATIVE STAFF Name C. A. Sanford Randy Shiflet Larry J. Cunningham Larry Koonce Rex McEntire Patricia Hutson Jim Browne Greg Dickens CONSULTANTS AND ADVISORS Year of Tenn Election Exvires Occuvation 1988 May, 1998 Real Estate Investments 1986 May, 1998 Self-Employed 1988 May, 1997 Retired 1991 May, 1997 Real Estate Broker 1991 May, 1998 Homemaker 1996 May, 1997 Commercial Real Estate Broker 1988 May, 1998 Senior Analyst -- Lockheed 1987 May, 1997 Voting Equipment Company Consultant Position Year of Emplovment 1987 1973 1993 1996 1974 1980 1985 1987 City Manager Assistant City Manager Assistant City Manager Director of Finance City Attorney City Secretary Parks and Recreation Director Director of Public Works Auditors ........................,.,. .....,... ......".,.,.,.............,...........".........". ,."..... ..,. ..,.... .... ."..".......",.. .,... ........ .,. .,.,.. KPMG Peat Marwick Fort Worth, Texas Bond Counsel,.. ...,."......""......... .......,.,... .......,.,...,..,...,......... .....,....,.,.. ..,... ....,.,......., ...,.,... .... .... .....,. .,... Fulbright & Jaworski L,L,P. Dallas, Texas Financial Advisor.,....,..",.,....,.,.......""......".,. ,.....,.."....."" ,.........",.,.......,.,........."..........",............,."..,..., First Southwest Company Dallas, Texas 8 OFFICIAL STATEMENT RELATING TO $4,100,000 CITY OF NORTH RICHLAND HILLS, TEXAS GENERAL OBLIGATION BONDS, SERIES 1997 AND $2,755,000 CITY OF NORTH RICHLAND HILLS, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM REVENUE (LIMITED PLEDGE) CERTIFICATES OF OBLIGATION, SERIES 1997 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $4,100,000 City of North Richland Hills, Texas General Obligation Bonds, Series 1997 and $2,755,000 City of North Richland Hills, Texas Tax and Waterworks and Sewer System Revenue (Limited Pledge) Certificates of Obligation, Series 1997. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the respective ordinances to be adopted on the date of sale of the Bonds and Certificates which will authorize the issuance of the Bonds and Certificates, except as otherwise indicated herein. There follows in this Official Statement descriptions of the Bonds and Certificates and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. 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 Stat~, including the City's Home Rule Charter. The City was incorporated in 1953, and first adopted its Home Rule Charter in 1964. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and seven Councilmembers, The term of office is two years with the terms of the Mayor and three of the Councilmembers' terms expiring in even-numbered years and the other terms of the four Councilmembers expiring in odd-numbered years, The City Manager is the chief administrative officer for the City, Some of the services that the City provides are: public safety (police and fire protection), highways and streets, water and sanitary sewer utilities, health, services, culture-recreation, public improvements, planning and zoning, and general administrative services. The 1990 Census population for the City was 45,895, while the estimated 1996 population is 50,650, The City covers approximately 18,29 square miles, THE BONDS AND CERTIFICATES DESCRIPTION OF THE BONDS AND CERTIFICATES .., The Bonds and Certificates are dated April 15, 1997, and mature on February 15 in each of the years and in the amounts shown on the cover page and page 3 hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on February 15 and August 15, commencing February 15, 1998. The definitive Bonds and Certificates will be issued only in fully registered form in any integral multiple of $5,000 for anyone maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds and Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds and Certificates will be payable by the Paying AgentlRegistrar to Cede & Co" which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds and Certificates, See "Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE, . . The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, including Vernon's Ann. Civ. St., Article 1175, as amended; and the Ordinance. Additionally, the issuance of the Bonds was approved at an election held September 27, 1994. The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Subchapter C of Chapter 271, V,T,C.A Local Government Code (the Certificate of Obligation Act of 1971), and an Ordinance passed by the City Council. SECURITY AND SOURCE OF PAYMENT. , . All taxable property within the City is subject to a continuing direct annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on the Bonds and Certificates, Additionally, the Certificates are payable from and secured by a pledge of surplus Net Revenues of the City's Waterworks and Sewer System, as provided in the Ordinance authorizing the Certificates. 9 ---~---~--._----_._~---_.,---- TAX RATE LIMITATION, . . All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. OPTIONAL REDEMPTION. . . The City reserves the right, at its option, to redeem Bonds and Certificates having stated maturities on and after February 15, 2008, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2007, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. Ifless than all of the Bonds and Certificates are to be redeemed, the City may select the maturities of Bonds and Certificates to be redeemed. If less than all the Bonds and Certificates of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Bonds and Certificates are in Book-Entry-Only form) shall determine by lot the Bonds and Certificates, or portions thereof, within such maturity to be redeemed. If a Bond and Certificate (or any portion of the principal sum thereot) shall have been called for redemption and notice of such redemption shall have been given, such Bond and Certificate (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 AgentlRegistrar on the redemption date. MANDATORY SINKING FUND REDEMPTION. . , In addition to being subject to optional redemption as provided above, should the Purchaser(s) select Alternate 2 with respect to the purchase of the Bonds or the Certificates, or both (a combination of Serial Bonds or Serial Certificates and Term Bonds or Term Certificates, as the case may be), the Term Bonds or Term Certificates or both, shall be subject to mandatory sinking fund redemption prior to maturity at a price of par plus accrued interest to the redemption date from amounts required to be deposited in the respective Interest and Sinking Funds maintained for their payment with not more than two term maturities for each issue as so designated by the successful bidder as follows: 2012 2013 2014 Term Bonds $ 205,000 2015 205,000 2016 205,000 2017 $ 205,000 205,000 205,000 2012 2013 2014 Term Certificates $ 65,000 2015 70,000 2016 75,000 2017 $ 75,000 80,000 85,000 NOTICE OF REDEMPTION, . . Not less than 30 days prior to a redemption date for the Bonds and Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds and Certificates to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying AgentlRegistrar at the close of business on the business day next preceding the date of mailing such notice, ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS AND CERTIFICATES CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND AND CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND AND CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. BOOK-ENTRY-ONLY SYSTEM. . . The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds and Certificates. The Bonds and Certificates will be issued as fully-registered securities registered in the name of Cede & Co, (DTC's partnership nominee), One fully-registered certificate will be issued for each maturity of the Bonds and Certificates in the aggregate principal amounts of each such maturity for the Bonds and for the Certificates, as the case may be, and will be deposited with DTC, DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds securities that its participants ("Direct Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. 10 Purchases of Bonds and Certificates under the DTC system must be made by or through DTC Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Bond and Certificate ("Beneficial Owner") is in turn to be recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction, Transfers of ownership interest in the Bonds and Certificates are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners, Beneficial Owners will not receive certificates representing their ownership interests in the Bonds and Certificates, except in the event that use of the book-entry system described herein is discontinued. To facilitate subsequent transfers, all Bonds and Certificates deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds and Certificates with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds and Certificates; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds and Certificates are credited, which mayor may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Bonds and Certificates within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds and Certificates. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined), The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds and Certificates are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Bonds and Certificates will be made to DTC. DTC's practice is to credit Direct Participants' accounts on each payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds or Certificates, or both, at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds and Certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository) with respect to the Bonds or the Certificates, or both. In that event, the Bonds or Certificates, or both, will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Bonds and Certificates are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds and Certificates, but (i) all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinance will be given only to DTC, Information concerning DTC and the Book-Entry System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City or the Purchasers. PAYING AGENT/REGISTRAR . ., The initial Paying Agent/Registrar is Bank One, Texas, N.A., Fort Worth, Texas, In the Ordinance, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds and Certificates are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Bonds and Certificates. Upon any change in the Paying Agent/Registrar for the Bonds and Certificates, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds and Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. 11 TRANSFER, EXCHANGE AND REGISTRATION. . . In the event the Book-Entry-Only System should be discontinued, the Bonds and Certificates may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon their presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Bonds and Certificates may be assigned by the execution of an assignment form printed on the respective Bonds and Certificates or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds or Certificates (as the case may be) will be delivered by the Paying Agent/Registrar, in lieu of the Bonds or Certificates being transferred or exchanged, at the principal 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, an exchange or transfer of Bonds or Certificates (as the case may be) will be completed within 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 form satisfactory to the Paying Agent/Registrar. New Bonds and Certificates registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for anyone maturity and for a like aggregate principal amount as the Bonds and Certificates surrendered for exchange or transfer. See "Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds and Certificates, Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond or Certificate (as the case may be) called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Bond or Certificate. RECORD DATE FOR INTEREST PAYMENT. . . The record date ("Record Date") for the interest payable on the Bonds and Certificates on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City, Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond and Certificate appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. REMEDIES, " The respective Ordinances authorizing the issuance of the Bonds and the Certificates do not provide for specific events of default with respect to such Obligations. Under State law there is no right to the acceleration of maturity of the Bonds or Certificates upon the failure of the City to observe any covenant under the Ordinances authorizing their issuance. Although a registered owner could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Bonds or Certificates, such judgment could not be satisfied by execution against any property of the City. Such registered owner's only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the City to levy, assess and collect an annual ad valorem tax sufficient to pay principal of and interest on the Bonds or Certificates in default and as it becomes due. The enforcement of any such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis, Neither of the ordinances provides for the appointment of a trustee to represent the interests of the bondholders upon any failure of the City to perform in accordance with the terms of such ordinances, or upon any other condition. The enforcement of a claim for payment of principal and interest on the Bonds or Certificates, including the remedy of mandamus and the pledge of ad valorem taxes, would be subject to the applicable provisions of the bankruptcy laws and to other laws affecting the rights of creditors of political subdivisions generally. The opinions of Bond Counsel will note that the enforceability of the respective ordinances and all the Bonds or Certificates, as the case may be, are qualified with respect to the customary rights of debtors relative to their creditors. 12 TAX INFORMATION AD VALOREM TAX LAW, . . The appraisal of property within the City is the responsibility of the Tarrant Appraisal District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under the Property Tax Code to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios, The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the V.T.C.A., Property Tax Code, for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation, Under Section l-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of residence homesteads, The minimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section l-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. Article VIII provides that eligible owners of both agricultural land (Section I-d) and open-space land (Section I-d-l), including oper.l-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property appnùsed for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section I-d and 1 -<1-1. Nonbu,siness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body of a pol ¡tical subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation, Article VIII, Section I-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods det 'ained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Decisions 1'0 continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal, The City ant t the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the tax values on pR Jperty in the zone are "frozen" at the value of the property at the time of creation of the zone, The City also may enter into tax abate. ment agreements to encourage economic development Under the agreements, a property owner agrees to construct certain improvt ~ments on its property, The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements u. ntil the expiration of the agreement The abatement agreement could last for a period of up to 10 years. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE. ,. By each September 1 or as soon thereafter as practicable, the City Council adopts a t'ax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of maintemmce 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". The City Council may not adopt a tax rate that exceeds the lower of the rollback tax rate or 103% of the effective tax rate until it has held a public hearing on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that wilJ produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values, 13 ~ "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate, The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates, PROPERTY ASSESSMENT AND TAX PAYMENT. . . Property within the City is generally assessed as of January I of each year. Business inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of the daily price of oil and gas f:òr the prior year. Taxes become due October I of the same year, and become delinquent on February I of the following year. Taxpayers 65 years old òr older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on August 1. PENALTIES AND INTEREST. ,. Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative Month Penalty Interest Total February 6% 1% 7% March 7 2 9 April 8 3 11 May 9 4 13 June 10 5 15 July 12 6 18 After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, a 15% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parr.;els, 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 enf,ities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prr~vents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to proper'ty and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. 11 n many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy cc mrt. CITY ApPLICATION OF TAX CODE. . , The City grants an exemption to the market value of the residence homestead (' If persons 65 years of age or older of $29,000, The City has granted an additional exemption of 15% of the market value of residence homesteads. 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 d ,ebt. The City does not tax nonbusiness personal property and Tarrant County coltects taxes for the City_ The City does not pennit split payments, and discounts are notaHowed. The City does not tax freeport property. The City does not collect the additional one-half cent sales tax for redŒtion of ad valorem tMeS. The City has adopted a tax abatement policy. TAX ABATEMENT POLICY, . . The City has established a tax abatement program to el.lcourage economic development. In 1989, the City Council adopted a resolution setting guidelines and criteria for granting abatements in reinvestment zones created within the City. These guidelines specifically note that incentives are limited to companies which create new wealth and do not 1versely affect existing businesses operating within the City. Since 1989, the City has abated taxes for only two companies: 14 (1) The Council voted to abate taxes on 50% of $3,176,871 in new construction by UICI Insurance Center (formerly Aegon) for 10 years beginning in 1989. mCI Insurance Center is a corporate citizen with 660 employees, (2) The Council voted in 1992 to abate for 5 years 100% of the taxes on more than $1.5 million in improvements to two facilities by Tecnol Medical Products, Inc., an existing corporate citizen with 850 employees, The abatement covers the period from 1993 through 1997 (payable in January, 1998), a period designated by Tecno!. The abatement agreement does not include personal property or land improvements, Total abatement assessed value for fiscal year 1995/96 is $6,619,456, TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 1996/97 Market Valuation Established by Tarrant Appraisal District (excluding totally exempt property) $ 1,998,648.030 $ 213,148,509 2,899,597 6,510,144 103,100 13,717,193 644,009 237,022,552 $ 1,761,625,478 $ 35,820,141 6,890,000 75,000 75,000 392,858 2,755,000 4,100,000 $ 50,107,999 $ 4,685,000 75,000 4,760,000 $ 45,347,999 Less Exemptions/Reductions at 100% Market Value: Residential Exemptions, Over 65 and Disabled Disabled Veterans Agricultural and Scenic Land Use Indigent Housing Freeport Value Loss Abatement Value Loss 1996/97 Taxable Assessed Valuation General Obligation Debt Payable from Ad Valorem Taxes (as of 4-1-97)(1) General Obligation Debt Certificates of Obligation Public Property Finance Contractual Obligations Contract Revenue Bonds Capital Leases - General Obligation Notes Payable(2) The Certificates The Bonds General Obligation Debt Payable from Ad Valorem Taxes Less: Self Supporting Debt (3) Tax and Golf Course Revenue Refunding Bonds Contract Revenue Bonds Net General Obligation Debt Payable from Ad Valorem Taxes Interest and Sinking Fund as of 3-1-97 $ 1,329,516 Ratio Net General Obligation Tax Debt to Taxable Assessed Valuation. . . . . . . . . . . . . . . . . . . . , . . . . . . . . 2.57% 1997 Estimated Population - 52,800 Per Capita Taxable Assessed Valuation - $33,364 Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes - $859 (1) The above statement of indebtedness does not include $12,510,000 Park and Recreation Facilities Development Corporation Sales Tax Revenue Bonds, presently outstanding, which are payable solely from the receipts of a 1/2 of 1 % local sales and use tax, and $11,308,615 Waterworks and Sewer System Revenue Bonds, which are payable solely from the net revenues of the System, as defined in the bond ordinance authorizing the bonds. (2) The Capital Leases have been declared funded debts of the City and are included in the Debt Service Fund Tax Levy. (3) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 10, It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the future. 15 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY Taxable Appraised Vaue for Fiscal Year Ended September 30, 1997 1996 1995 %of %of %of Category Amount Total Amount Total Amount Total Real, Residential, Single-Family $ 1,167,776,934 58.43% $ 1,068,553,667 58.36% $1,051,042,159 60.21% Real, Residential, Multi-Family 132,048,040 6.61% 118,152,848 6.45% 99,684,218 5.71% Real, Vacant Lotslfracts 40,167,994 2.01% 37,886,488 2.07% 40,669,433 2.33% Real, Acreage (Land Only) 6,402,998 0.32% 6,507,665 2.22% 7,406,117 2.15% Real, Farm and Ranch Improvements 49,889,106 2.50% 40,729,493 0.36% 37,599,160 0.42% Real, Commercial 333,949,631 16.71% 310,255,368 16.94% 293,989,010 16.84% Real, Industrial 13,308,318 0.67% 13,127,854 0.72% 13,282,705 0,76% Real and Tangible Personal, Utilities 32,430,278 1.62 % 29,287,239 1.60% 30,483,025 1.75% Tangible Personal, Commercial 182,882,171 9.15% 174,010,033 9.50% 144,692,893 8.29% Tangible Personal, Industrial 27,80 I ,887 1.39% 24,797,553 1.35% 19,181,529 1.1 0% Tangible Personal, Other 352,869 0.02% 161,547 0.01% 1,871,381 0.11% Tangible Personal, Mobile Homes 1,715,334 0.09% 1,968,793 0.1 1% 574,436 0.03% Real Property, Inventory 9,922,470 0.50% 5,618,770 0.31% 5,026,100 0.29% Total Appraised Value Before Exemptions $ 1,998,648,030 100.00% $ 1,831,057,318 100.00% $ 1,745,502,166 100.00% Less: Total ExemptionslReductions 237,022,552 213,887,630 189,549,869 Add: Minimum Value of Properties under Protest 0 36,114,1 06 45,561,169 Taxable Assessed Value $ 1,761,625,478 $ 1,653,283,794 $ 1,510,391,128 Taxable Appraised Value for Fiscal Year Ended September 30, 1994 1993 %of % of Category Amount Total Amount Total Real, Residential, Single-Family $ 942,794,081 58.21% $ 916,427,495 56.81 % Real, Residential, Multi-Family 94,230,497 5.82% 101,070,528 6.27% Real, Vacant Lotslfracts 35,270,625 2.1 8% 41,970,482 2.60% Real, Acreage (Land Only) 8,259,268 2.83% 11,537,531 3.77% Real, Farm and Ranch Improvements 45,849,567 0.51% 60,793,118 0.72% Real, Commercial 274,076,310 16.92% 269,532,186 16.71% Real, Industrial 12,527,955 0.77% 13,930,417 0.86% Real and Tangible Personal, Utilities 28,904,152 1.78% 27,311,664 1.69% Tangible Personal, Commercial 141,913,645 8.76% 137,607,132 8.53% Tangible Personal, Industrial 17,983,556 1.11% 15,360,127 0.95% Tangible Personal, Other 1,703,582 0.11% 1,759,362 0.11% Tangible Personal, Mobile Homes 109,200 0.01% 87,500 0.01% Real Property, Inventory 16,128,863 1.00% 15,754,802 0.98% Total Appraised Value Before Exemptions $1,619,751,301 100.00% $ 1,613,142,344 100.00% Less: Total ExemptionslReductions 189,396,563 168,329,770 Taxable Assessed Value $ 1,430,354,738 $ 1,444,812,574 N01E: Valuations shown are certified taxable assessed values reported by the Tarrant Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. 16 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY G.O. Ratio of Fiscal Taxable Tax Debt G.O. Tax Debt G,O. Tax Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9-30 Population(l) Valuation Per Capita of Year Valuation Capita 1993 48,300 $ 1,444,772,574 $ 29,912 $41,865,141 2.90% $867 1994 50,000 1,430,354,738 28,607 39,505,979 2.76% 790 1995 50,650 1,510,391,128 29,820 42,135,141 2.79% 832 1996 52,584 (2) 1,653,283,794 31,441 46,125,141 2.79% 877 1997 52,800 (3) 1,761,625,478 33,364 49,495,141 (4) 2,81% 937 (1) Estimates of North Central Texas Council of Governments. (2) Estimate of City Planning Department. (3) Estimate of City Economic Development. (4) Projected, includes the Bonds and Certificates, TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Year Ended 9-30 1993 1994 1995 1996 1997 Tax Rate $ 0.52354 0,57000 0,57000 0.57000 0.57000 General Fund $ 0.25225 0,28229 0,29193 0,29177 0.29618 (1) Collections for part year only, through March 1, 1997. TABLES - 'fEN LARGEST TAXPAYERS Name of Taxpayer Richland Center Inc, North Hills Mall Association Meadows NRH Assoc. Texas Utilities Electric Company E-Systems, Inc. Pool Trust Techno1, Inc. H&M Food Systems Walden Residential Operation Partnership Walmart Stores Inc. Cameo Development Interest and Sinking Fund $ 0.27129 0.28771 0.27807 0.27823 0,27382 Tax Levy $ 7,563,962 8,153,022 8,609,229 9,282,362 10,041,268 % Current Collections 98,91 % 98.69% 100.40% 98,96% 95.03% (I) 1996/97 Taxable Assessed Valuation $ 23,856,844 22,000,000 18,033,700 17,425,338 14,371,214 14,122,828 13,253,248 12,358,000 12,190,143 11,734,398 $ 159,345,713 % Total Collections 99,96% 100.07% 101.60% 99,19% 95.52% (I) % of Total Taxable Assessed Valuation 1.35% 1,25% 1.02% 0.99% 0,82% 0,80% 0,75% 0,70% 0.69% 0.67% 9,05% GENERAL OBLIGATION DEBT LIMITATION, , . No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "Tax Rate Limitation"). Nature of Property Shopping center Shopping center Apartments Electric utility Land and Apartments Medical supplies Food processor Real Estate Shopping center Real estate development 17 ----"_.._"~-,--_._-'----_._._- TABLE6 - TAXADEQUACy(J) 1997 Principal and Interest Requirements ...............".........,...................,....,.....,...................,......................,..........,......... $0.3593 Tax Rate at 98% Collection Produces .....".......,........,..........".,.................".,......,..,.......,...........,.,..................... Average Annual Principal and Interest Requirements, 1997-2017 ..................................................,................,............... $0.2363 Tax Rate at 98% Collection Produces ,.............................................,.........,..............,......,............,..,................, Maximum Principal and Interest Requirements, 1998 ,....................................,..................".,.............,.........,...,............. $0,3942 Tax Rate at 98% Collection Produces .."........"..,...............,........""................,........................,..".........,.......".. (1) Projected, includes the Bonds and Certificates. TABLE 7 - ESTIMATED OVERLAPPING DEBT $ 6,201,734 $ 6,202,930 $ 4,078,198 $ 4,079,466 $ 6,805,149 $ 6,805,441 Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. Tax Jurisdictions Ciyt of North Richland Hills Birdville Independent School District Hurst-Euless-Bedford Independent School District Keller Independent School District Tarrant County Tarrant County Hospital District Tarrant County Junior College District 1996/97 Taxable Assessed Valuation $ 1.761.625,478 3,490,485,150 4,722.778,074 1,784,426,952 44,553,425,318 44.559,378,718 44,771,877,576 City's Overlapping Funded Debt As of 4-1-97 $ 45,376,553 42,960,945 46,721 4,193,501 5,068,109 1,623,613 3,421,311 Estimated % Applicable 100.00% 42.10% 0.05% 3.50% 3.47% 3.47% 3.47% Total Funded Debt $ 45,376,553 (I) 102,045,000 93,441,513 119,814,319 146,055,000 46,789,987 98,596,872 1996/97 Tax Rate $0.57000 1.50150 1.61690 1.50000 0.26660 0.23980 0.05550 Total Direct and Overlaping Tax Supported Debt $ 102,690,752 Ratio of Direct and Overlapping Tax Supported Debt to Taxable A V Per Capita Overlapping Tax Supported Debt 5.83% 1,953 $ (1) Projected, includes the Bonds and Certificates, less self-supporting debt. 18 Authorized But Unissued Debt as of 4-1-97 $ 15,540,000 7,465,000 -0- 21,535,460 500,000 -0- -0- - ,..' ~'_"_'~''',"",.""M_~_'~''''''N_'.''''_~_''''',,,,____~______,"_ DEBT INFORMA nON TABLE 8 - GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS Fiscal Year %of Ended Outstanding Debt (I) The Bonds (2) The Certificates (3) Grand Principal 9130 Princi pal In terest Principal Interest Principal Interest Total Retired 1997 $ 3,485,000 $ 2,716,734 $ 6,201,734 1998 3,445,000 2,402,393 $ 205,000 $ 308,439 $ 240,000 $ 204,317 6,805,149 1999 3,070,000 2,208,735 205,000 218,069 310,000 135,700 6,147,504 2000 2,860,656 2,470,505 205,000 206,281 330,000 117,300 6,189,742 2001 2,958,203 2,319,041 205,000 194,494 350,000 97,750 6,124,488 33.73% 2002 3,082,157 2,157,632 205,000 182,706 370,000 77,050 6,074,545 2003 3,228,529 1,983,725 205,000 170,919 85,000 63,969 5,737,142 2004 3,376,042 1,796,921 205,000 159,131 90,000 58,937 5,686,031 2005 3,549,622 1,599,758 205,000 147,344 95,000 53,619 5,650,343 2006 1,898,568 2,653,347 205,000 135,556 100,000 48,012 5,040,483 65.63% 2007 2,019,434 2,570,161 205,000 123,769 110,000 41,975 5,070,339 2008 2,026,321 1,889,329 205,000 111,981 50,000 37,375 4,320,006 2009 2,070,609 1,035,669 205,000 100,194 55,000 34,356 3,500,828 2010 2,130,000 467,340 205,000 88,406 60,000 31,050 2,981,796 2011 2,200,000 339,491 205,000 76,619 60,000 27,600 2,908,710 87.91 % 2012 1,550,000 213,461 205,000 64,831 65,000 24,006 2,122,298 2013 1,105,000 140,746 205,000 53,044 70,000 20,125 1,593,915 2014 805,000 90,481 205,000 41,256 75,000 15,956 1,232,693 2015 810,000 47,290 205,000 29,469 75,000 11,644 1,178,403 2016 455,000 12,811 205,000 17,681 80,000 7,188 777,680 99.45% 2017 205,000 5,894 85,000 2,444 298,338 100.00% $ 46,125,141 $ 29,115,570 $ 4,100,000 $ 2,436,083 $ 2,755,000 $ 1,110,373 $ 85,642,167 (1) "Outstanding Debt" does not include lease/purchase obligations, (2) Average life of the issue - 12.872 years. Interest on the Bonds has been calculated at the rate of 6.00% for purposes of illustration. TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION Budgeted General Obligation Debt Service Requirements, Fiscal Year Ending 9-30-97 ...........,......................................,.. $ 5,886,622 Interest and Sinking Fund, 9-30-96 .,..,"",.........,...,...........",.........,..,......................,...........,................. 1996/97 Interest and Sinking Fund Tax Levy ..,......................,.........,....,......................,................,...... Estimated Interest Income...... ................ '..,. ..........,.. '..........,...... ..,....". ........ ........ ......, ...... .......,....... ...... Budgeted Transfers.... ,. ,. ,. ",,'......... ,'......,...., ""... ........."" ,......., ..".... .,..."".. ...",,'.'....., .,.".,.'.......... ...",'. $ 1,329,516 4,800,000 390,000 660.191 7.179,707 Estimated Balance, 9-30-97 ................. ........,.... ........... ,.......,................",......., ,....,.. ....... ....... ........ ....", ............,..,.. ......"" ...... $ 1,293,085 19 TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT Waterworks and Sewer System Net Revenues available from Waterworks and Sewer System, Fiscal Year 9-30-96,.........,......,........................,.....,............ $ 6,167,073 Less: Revenue Bond Requirements, 1997 Fiscal year.............,..,.........................................,....·..,....,........··..·...............,..... 620.512 Balance Available for other purposes ....................,........,........,.........................................,..,........"....................................,.. $ 5,546,561 System General Obligation Bond Requirements, 1997 Fiscal Year ........,......,..,...........................,......,................................ 53.175 Balance, .....,......,..."....",......."......,.,.. ......".,.....".......,......""....,' ........",......,..,.... ",......"......."..... ,..,..... ...."" ,..."............, .,..... $ 5,493,386 Percentage of System General Obligation Bonds Self-Supporting ...,...................................,.........,...................................... 100,00% Golf Course Center Balance ...', .....,.... ......,., ....." ..... .,....'" ....'"... ..".....""....,.,.....",......",.,...., ",.. ... .,.....,....,.'", ,.....".........,........"... .....,.,.. ....."....... $ 876,758 548.627 $ 328,131 100.00% Net Revenue available from Golf Course Center, Fiscal Y ear ..9-30-96.....................,..........,........,..,..,....··..........··..·..,....·.. Golf Course Center General Obligation Requirements, 1997 Fiscal Year .......,.........,........,......."......................................., Percentage of Golf Course Center Tax and Drainage Utility System Surplus Revenue Certificates of Obligation Self-Supporting ......... ..........."..... ................. ..........".......... ,......,..,.. .............,........ ,. ,.... ,........... TABLE 11 _ AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Amount Date Amount Heretofore Being Purpose Authorized Authorized Issued Issued Drainage Improvements 9-10-85 $ 16,870,000 $ 15,341,500 $ Street Improvements 9-27-94 20,000,000 7,868,500 4,100,000 Drainage Improvements 9-27-94 1,865,000 $ 38,735,000 $ 23,210,000 $ 4,100,000 Unissued Balance $ 1,528,500 8,031,500 1,865,000 $ 11,425,000 ANTICIPATED IsSUANCE OF GENERAL OBLIGATION DEBT, " The City does not anticipate the issuance of additional general obligation debt within the next 12 month period. TABLE 12 - OTHER OBLIGATIONS The City has entered into lease-purchase arrangements for an automatic fingerprint identification system and various equipment purchases. The leaselourchases have been declared funded debts of the Citv and are included in the Debt Service Fund tax !m:, Payments for the various leases are as follows: Fiscal Year PrinciDal Interest Total 1996-1997 $ 58,080 $ 26,434 $ 84,514 1997-1998 62,087 22,427 84,514 1998-1999 66,371 18,143 84,514 1999-2000 70,950 13,564 84,514 2000-2001 75,845 8,669 84,514 2001-2002 81,077 3,437 84,514 2002-2003 7.002 39 7.041 $ 421412 $ 92713 $ 514125 PENSION FUND, . . The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System ("TMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense, (For more detailed information concerning the retirement plan, see Appendix B, "Excerpts from the City's Annual Financial Report",) 20 - '~'~"~_'~M'''''^''_-'"''~'''>''^'~'''''__-''''"_~.''__,_,,"._.,_~~~'M",____.~_..-..,_~~.n._~__~____ FINANCIAL INFORMATION TABLE 13 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY For Fiscal Year Ended September 30, Revenues 1996 1995 1994 1993 1992 Taxes, Penalties and Interest $ 14,815,492 $ 14,395,000 $ 12,720,580 $ 11,376,696 $ 10,871,599 Licenses and Permits 855,780 724,870 887,968 939,404 731,539 Intergovernmental 19,536 23,139 Charges for Services 2,332,191 2,077,013 2,428,672 2,090,580 1 ,882,492 Interest Income 232,641 241,393 166,853 186,458 198,877 Fines and Forfeitures 884,970 747,463 775,510 617,867 534,405 Miscellaneous 305,998 171,533 166,558 244,180 137,358 Total Revenues $ 19,427,072 $ 18,357,272 $ 17,146,141 $ 15,474,721 $ 14,379,409 Expenditures General Government $ 4,432,868 $ 4,413,618 $ 4,288,662 $ 4,085,564 $ 3,573,394 Public Safety 10,108,971 9,160,080 8,390,486 7,754,569 7,438,826 Public Works 1,609,482 1,928,183 1,623,534 1,466,640 1,385,243 Culture and Recreation 2,310,529 1,986,904 2,044,490 1,910,659 1,714,542 Total Expenditures $ 18,461,850 $ 17,488,785 $16,347,172 $ 15,217,432 $ 14,112,005 Excess (deficiency) of Revenues over Expenditures $ 965,222 $ 868,487 $ 798,969 $ 257,289 $ 267,404 Net Transfers In (Out) $ (223,056) $ (672,787) $ (986,405) $ 21,627 $ 83,283 Fund Balance - October 1 $ 3,620,483 $ 3,424,783 $ 3,612,219 $ 2,781,035 $ 2,430,348 Adjustments from Prior Year(l), 552,268 Fund Balance - September 30 $ 4,362,649 $ 3,620,483 $ 3,424,783 $ 3,612,219 $ 2,781,035 (I) The September 30, 1992 General Fund balance was increased for a correction in the accrual for sales tax revenue. 21 TABLE 14 - MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, V A TCS, Tax Code, Chapter 321, which grants the City the power to impose and levy a 1 % Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged to the payment of the Bonds or the Certificates. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. In August of 1992 the voters of the City approved the imposition of an additional sales and use tax of one-half of one percent (Yí% of 1%) for economic development. Collection for the additional tax went into effect on January 1, 1993. The sales tax for economic development is collected solely for the benefit of North Richland Hills Park and Recreation Facilities Development Corporation (the "Corporation"), and may be pledged to secure payment of sales tax revenue bonds issued by the Corporation. In February of 1996 the voters of the City approved the imposition of an additional sales and use tax of one-half of one percent (\12% of 1 %) for crime control and prevention. Collection for the additional tax went into effect on July 1, 1996. The sales tax for crime control and prevention is collected solely for the benefit of North Richland Hills Crime Control and Prevention District (the "District"), and may be pledged to secure payment for crime control and prevention programs for the District. Fiscal Year %of Equivalent of Ended Total Ad Valorem Ad Valorem 9/30 Collected Tax Levy Tax Rate 1993 $ 4,988,925 65.96% $ 0.3453 1994 5,748,869 70,51 % 0.4019 1995 6,569,755 76,31 % 0.4350 1996 6,738,624 72.60% 0.4076 1997 (I) 1,852,154 18.45% 0.1051 Per Capita $ 103 115 130 128 35 (1) Partial collections through March 1, 1997. The sales tax breakdown for the City is as follows: Crime Control and Prevention District Economic and Community Development City Sales & Use Tax State Sales & Use Tax Total 1/2¢ 1/2¢ 1¢ 6.25¢ 8.25¢ FINANCIAL POLICIES Basis of Accounting. . .The City's accounting records of the governmental fund revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they are available and measurable. Expenditures are recorded when the related fund liability is incurred except for interest on general long-term obligations, which is recorded when due or when amounts have been accumulated in the Debt Service Funds for payments to be made early in the following year and a portion of accrued vacation leave, which is recorded in the general long-term debt account group, Proprietary Fund revenues and expenses are recognized on the accrual basis, Revenues are recognized in the accounting period in which they are earned, Expenses are recognized in the accounting period incurred, Fiduciary Fund revenues and expenses or expenditures are recognized on the modified accrual basis, Transfers are recognized in the accounting period in which the interfund receivable and payable arise (see Appendix B - "Excerpts from The City of North Richland Hills, Texas Annual Financial Report for the Year Ended September 30, 1996"). General Fund Balance, . . The City's policy is to maintain surplus and unencumbered funds equal to 12% to 15% of the next fiscal year's operating budget. Debt Service Fund Balance. . , The City's policy is to maintain surplus funds equal to a minimum of three (3) months of debt service in the Debt Service Fund. City policy is to pay "first dollar" tax collections into the Debt Service Fund until the levy for debt service has been collected. The City budgets on a 97.5% collections ratio and the 2.5% non-collectible factor is accounted for in the General Fund, Use of Bond Proceeds. , . The City's policy is to use bond proceeds for capital expenditures only. Such revenues are never to be used to fund normal City operations. 22 Budlœtarv Procedures . , , The City Charter establishes the fiscal year as the twelve-month period beginning October 1. The departments submit to the City Manager a budget of estimated expenditures for the ensuing fiscal year by the middle of March, The City Manager subsequently submits a budget of estimated expenditures and revenues to the City Council by August 15, The City Council shall hold a public hearing on the budget after giving at least 10 days notice of the hearing in the official newspaper of the City. The Council shall then make any changes in the budget as it deems advisable and shall adopt a budget prior to October I, If the Council fails to adopt a budget then the budget proposed by the City Manager shall deem to have been adopted. During the fiscal year, strict budgetary control is maintained by various methods, including the review of departmental appropriation balances with purchase requisitions prior to their release to vendors. Departmental appropriations that have not been expended lapse at the end of the fiscal year. Therefore, funds that were budgeted and not used by the departments during the fiscal year are not available for their use unless appropriated in the ensuing fiscal year's budget. Fund Investments, , . The City investment policy parallels the state laws which govern the investment of public funds, The City generally restricts investments to direct obligations of the United States Government and its agencies and to insured or collateralized bank certificates of deposit and investment pools. INVESTMENTS The City of North Richland Hills invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City of North Richland Hills, Both state law and the City's investment policies are subject to change, LEGAL INVESTMENTS, , . Under Texas law, the City is authorized to invest in (I) obligations of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating finn not less than A or its equivalent, (6) certificates of deposit that are guaranteed or insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and amount provided by law for City deposits, (7) certificates of deposit and share certificates issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the clauses (1) through (5) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) bankers' acceptances with the remaining tenn of 270 days or less, if the short-tenn obligations of the accepting bank or its parent are rated at least A-lor P-l or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper that is rated at least A-lor P-l or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no-load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no-load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating finn of not less than AAA or its equivalent. The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service, The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index, INVESTMENT POLICIES. . . Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes'a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a fonnally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification ofthe portfolio, and (6) yield, 23 Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived," At least quarterly the investment officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS. . . Under Texas law the City is additionally required to: (1) annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with finns seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the registered principal of finns seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) perfonn an annual audit of the management controls on investments and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the tenn of the reverse repurchase agreement; (7) restrict the investment in mutual funds in the aggregate to no more than 80% of the City's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service and further restrict the investment in non-money market mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; and (8) require local government investment pools to confonn to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. TABLE 15 - CURRENT INVESTMENTS A£ of March 20, 1997, the City's investable funds were invested in the following categories: Type of Investment Agency Notes Discount Notes T-Bills T-Notes Texpool (3-1-97) Logic (3-1-97) Maturity Date 12/9/97 - 12/18/98 4/1/97 - 10/27/97 6/26/97 - 8/21/97 11/13/97 - 2/28/99 18 Days 41.88 Days Maturity Value $ 4,000,000 13 ,000,000 2,000,000 6,000,000 12,157,058 3,648,036 $ 40,805,094 % of Portfolio 9.80% 31.86% 4.90% 14.70% 29.79% 8.94% 100,00% As of such date, the average remaining tenn of such investments was 131.75 days. 24 TAX MATTERS TAX EXEMPTION ." The delivery of the Bonds and Certificates is subject to the opinions of Bond Counsel to the effect that interest on the Bonds and Certificates for federal income tax purposes (I) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinions (the "Code"), pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described, corporations, A form of Bond Counsel's opinions is reproduced as Appendix B. The statute, regulations, rulings, and court decisions on which such opinions are based are subject to change. Interest on all tax-exempt obligations, including the Bonds and Certificates, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989, for purposes of calculating the alternative minimum taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate investment trust (REIT), or a real estate mortgage investment conduit (REMIC), A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by Section 55 of the Code will be computed, In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the City made in a certificate dated the date of delivery of the Bonds and Certificates pertaining to the use, expenditure, and investment of the proceeds of the Bonds and Certificates and will assume continuing compliance by the City with the provisions of the respective Ordinances subsequent to the issuance of the Bonds and Certificates. The respective ordinances authorizing the issuance of the Bonds and the Certificates, as the case may be, contain covenants by the City with respect to, among other matters, the use of the proceeds of the Bonds or Certificates and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Bonds and Certificates, as the case may be, are to be invested, and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants would cause interest on the Bonds or Certificates, or both, to be includable in the gross income of the owners thereof from date of the issuance of such Obligations. Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds or the Certificates. Prospective purchasers of the Bonds and Certificates should be aware that the ownership of tax-exempt obligatio~s such as the Bonds and Certificates may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations, Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN BONDS AND CERTIFICATES... The initial public offering price of certain Bonds or Certificates or both (the "Discount Obligations") may be less than the amount payable on such Bonds or Certificates, or both, at maturity. A portion of such original issue discount allocable to the holding period of such Discount Obligation by the initial purchaser will, upon the disposition of such Discount Obligation (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Bonds and Certificates described above under "Tax Exemption," Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Obligation, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Obligation and generally will be allocated to an original purchaser in a different amount from the amount of the payment denominated as interest actually received by the original purchaser during the tax year. However, such interest may be required to be taken into account in determining the alternative minimum taxable income of a corporation, for purposes of calculating a corporation's alternative minimum tax imposed by Sections 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with "subchapter C" earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Obligation by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Obligation in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Obligation was held) is includable in gross income, Owners of Discount Obligations should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Obligations for federal income tax purposes and with respect to the state and local tax consequences 25 of owning and disposing of Discount Obligations. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Obligations may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds or Certificates, or both, (the "Premium Obligations") may be greater than the amount payable on such Bonds and Certificates at maturity. An amount equal to the difference between the initial public offering price of a Premium Obligation (assuming that a substantial amount of the Premium Obligations of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Obligations. The basis for federal income tax purposes of a Premium Obligation in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Obligation. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Obligations should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Obligations. OTHER INFORMATION RATINGS The presently outstanding tax supported debt of the City is rated "A" by Moody's and "A+" by S&P. The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and S&P, An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflects only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings, There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings. or either of them, may have an adverse effect on the market price of the Bonds and Certificates. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS AND CERTIFICATES FOR SALE The sale of the Bonds and Certificates has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds and Certificates have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds and Certificates been qualified under the securities acts of any jurisdiction, The City assumes no responsibility for qualification of the Bonds and Certificates under the securities laws of any jurisdiction in which the Bonds and Certificates may be sold, assigned, pledged, hypothecated or otherwise transferred, This disclaimer of responsibility for qualification for sale or other disposition of the Bonds and Certificates shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions, 26 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 9 of the Bond Procedures Act provides that the Bonds and Certificates "shall constitute negotiable instruments, and are investment securities governed by Chapter 8, Texas Uniform Commercial Code, notwithstanding any provisions of law or court decision to the contrary, and are legal and authorized investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, and trustees, and for the sinking fund of cities, towns, villages, school districts, and other political subdivisions or public agencies of the State of Texas". The Bonds and Certificates are eligible to secure deposits of any public funds of the state, its agencies and political subdivisions, and are legal security for those deposits to the extent of their market value. For political subdivisions in Texas which have adopted investment policies and guidelines in accordance with the Public Funds Investment Act (V,T.C.A., Government Code, Chapter 2256), the Bonds and Certificates may have to be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency before such obligations are eligible investments for sinking funds and other public funds. No review by the City has been made of the laws in other states to determine whether the Bonds and Certificates are legal investments for various institutions in those states, LEGAL OPINIONS AND No-LITIGATION CERTIFICATE The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds and Certificates, including the unqualified approving legal opinions of the Attorney General of Texas approving the Initial Bond and Initial Certificate and to the effect that the Bonds and Certificates are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the approving legal opinions of Bond Counsel, to like effect and to the effect that the interest on the Bonds and Certificates will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations, The customary closing papers, including certificates to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Bonds or Certificates, or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Bonds or Certificates will also be furnished, Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds and Certificates in the Official Statement to verify that such description conforms to the provisions of the r~spective Ordinances authorizing the issuance of said Obligations. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds and Certificates is contingent on the sale and delivery of the Bonds and Certificates. The legal opinions will accompany the Bonds and Certificates deposited with DTC or will be printed on the Bonds and Certificates in the event of the discontinuance of the Book-Entry-Only System. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources which are believed to be reliable, There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information, Reference is made to original documents in all respects, CONTINUING DISCLOSURE OF INFORMATION In the respective Ordinances authorizing the issuance of the Bonds and the Certificates, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds and Certificates, The City is required to observe such agreements for which it remains obligated to advance funds to pay the Bonds or Certificates, as the case may be. Under such agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors, This information will be available to securities brokers and others who subscribe to receive the information from the vendors, ANNUAL REPORTS . , , The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 15 and in Appendix B. The City will update and provide this information within 6 months after the end of each fiscal year ending in or after 1997. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") and to any state information depository ("SID") that is designated by the State of Texas and approved by the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC"), 27 The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule l5c2-12. The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial statements at the time of filing; and then later provide audited financial statements when and if the audit report becomes available, Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the City changes its fiscal year, If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID, The address of the Municipal Advisory Council is 600 West 8th Street, P.O. Box 2177, Austin, Texas 78768- 2177, and its telephone number is 512/476-6947. MATERIAL EVENT NOTICES. . . The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds or Certificates, if such event is material to a decision to purchase or sell Bonds or Certificates: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds or Certificates, or both; (7) modifications to rights of holders of the Bonds or Certificates, or both; (8) Bond calls or Certificate calls, as the case may be; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds or Certificates, or both; and (11) rating changes. (Neither the Bonds and Certificates nor the respective Ordinances authorizing their issuance make any provision for debt service reserves, credit enhancement 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." The City will provide each notice described in this paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board ("MSRB"). AVAILABILITY OF INFORMATION FROM NRMSIRs AND SID,. . The City has agreed to provide the foregoing information only to NRMSIRs and the SID. The information will be available to holders of Bonds and Certificates only if the holders comply with the procedures and pay the charges established by such information vendors or obtain the information through securities brokers who do so. LIMITATIONS AND AMENDMENTS. . . The City has agreed to update information and to provide notices of material events only as dèscribed above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds or Certificates at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Bonds and Certificates, as the case may be, may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreements from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds or Certificates, or both, in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds or Certificates, as the case may be, consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds or Certificates, as the case may be. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS, , , The City has complied in all material respects with, all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12, 28 FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds and Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds and Certificates is contingent upon the issuance and delivery of the Bonds and Certificates, First Southwest Company may submit a bid for the Bonds and Certificates, or both, either independently or as a member of a syndicate organized to submit a bid for the Bonds and Certificates. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds and Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds and Certificates, the City will furnish a certificate, executed by proper officers, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of said Bonds and Certificates and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of the last audited financial statements of the City, The respective Ordinances authorizing the issuance of the Bonds and Certificates will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds and Certificates by the Purchaser. TOMMY BROWN Mayor City of North Richland Hills, Texas ATIEST: PA1RICIA HUSTON City Secretary 29 THIS PAGE LEFT BLANK INTENTIONALLY APPENDIX A GENERAL INFORMATION REGARDING THE CITY - Amarillo NORTH RICHLAND HILLS Fort Worth'" _Dallas * Austin - San Antonio THIS PAGE LEFT BLANK INTENTIONALLY LOCATION AND HISTORY. , . The City of North Richland Hills is located in northeast Tarrant County, encompassing approximately 18.29 square miles with 493 employees. The City is approximately 10 miles northeast of downtown Fort Worth and 25 miles northwest of downtown Dallas, It is a part of the mid-cities area of North Central Texas (the "Metroplex"), which includes the Cities of Dallas and Fort Worth with a total population exceeding 4 million, The City was incorporated in 1953 under the general laws of the State of Texas and the current charter was approved by the voters in 1964 and last amended in August of 1992. The City is a home rule city and operates under the Council/Manager form of government. The Council is composed of a mayor and seven councilmembers elected at large, All City residents vote for all seven places, The members are elected for two-year staggered tenns and elections are held annually in May. Policy-making and oversight functions are the responsibility of, and are vested in, the City Council. The City Council is required by the charter to appoint a City Manager to serve as the chief administrative and executive officer of the City, The duties of the City Manager include the appointment of City department heads and the daily conduct of City affairs. POPULATION" , The City has grown steadily since the mid-1950's when it was a small bedroom community. The population of the City has increased approximately 60% since 1982. Population history is as follows: Year 1953 1960 1970 1980 1990 Population 500 8,662 16,514 30,592 45,895 Source (1) (2) (2) (2) (2) Year Population Source 1993 48,300 (3) 1994 50,000 (1) 1995 50,650 (1) 1996 52,584 (1) 1997 52,800 (1) (1) City Staff Estimate. (2) U,S, Census Bureau. (3) North Central Texas Council of Governments. The City has established itself as an innovative leader among Texas municipalities, A steadily growing economy, complete municipal services and prime location deliver the high quality of living expected by the residential and business communities. With an estimated current population of 50,000, more than triple the in excess population of 1970. North Richland Hills is the third largest city in Tarrant County. The citizens of the City, with a median age of 31.5, enjoy the small town atmosphere while sharing the many amenities of the Fort WorthlDallas Metroplex. ECONOMICS. , , The City's location in the middle of the Fort WorthlDallas Metroplex provides access to approximately 4 million people - the sixth largest market in the United States. North Richland Hills' proximity to the DfFW International Airport allows local businesses to capitalize on trade opportunities gained through the North American Free Trade Agreement (NAFfA). The approximate economic base of the City at this time is manufacturing and distribution (8,1 %), wholesale and retail trade (32.7%), professional and related services (36.5%), and various other services (22,7%), The City's labor distribution by type includes individuals skilled in technical, sales and administrative functions (39%), management (26%), operators and fabricators (13%) and services (7%), Recent indicators illustrate the City's healthy economic environment: · The local unemployment rate has remained more than two points below state figures and almost two points below U,S. rates, since January 1993. Over the same period, North Richland Hills unemployment rate has stayed from between 1 and 1-112% points below figures for the entire Fort Worth/Arlington Metropolitan Statistical Area. · North Richland Hills' 1994/95 sales tax revenue exceeded projections by 6% with an increase of 11.3% over the previous year. The City has enjoyed annual increases in sales tax revenue since the early 1980's · The value of residential construction, including remodeling, was $32,309,977 in 1996, New commercial construction and remodeling of existing facilities were valued at almost $29 million in 1996. A-I North Richland Hill's status as a "triple Freeport" City (i.e., one with the Freeport exemption available through Tarrant County, the City, and the Birdville Independent School District on qualified in-transit inventories) will benefit manufacturers such as Tecnol and encourage their expansion. In addition, such an incentive enhances North Richland Hills' chances oflanding new manufacturing and distribution facilities, With approximately 30% of the City remaining undeveloped, North Richland Hills offers numerous opportunities for commercial, industrial, and residential growth. Other factors contributing to the City's prosperity include: · A location near the center of nine of the ten largest business centers in Tarrant County. · Close proximity to new or expanding employers like Motorola's Global Paging Division (5 miles), Alliance Airport (9 miles), Burlington Northern's Corporate Headquarters (8 miles), Bell Helicopter (4 miles), Siecor Corporation (8 miles), AST Research (8 miles), and Haggar Manufacturing (6 miles). · The Growth of existing manufacturers such as Tecnol Medical Products, H&M Food Systems, Sealy Mattress Manufacturing, Bates Container, and Arabesque Fragrance Manufacturing. Residential platting activity continues to be strong, especially in the northern areas of the City and near the Iron Horse Golf Course. One of two courses with adjacent residential lots, Iron Horse is achieving critical and financial success - having attracted more than 53,000 rounds of golf in 1996. MUNICIPAL SERVICES. . , With active involvement by the Mayor, a seven member City Council and 14 citizen boards, commissions and committees, the City is assured proper and effective representation. Low crime statistics are maintained by a police force consisting of 68 police officers. The City has four professionally staffed fire stations. Fully equipped to handle most emergencies, the City utilizes its own mobile intensive care ambulance system, staffed with highly trained paramedics. QUALITY OF LIFE. . . Amenities are plentiful in the City. Two privately owned and fully operational hospitals in the region offer City residents excellent health care, The City has a full service central library housing in excess of 93,000 volumes with a circulation of almost 384,000. With over 388 acres of park land, the City offers such facilities as playgrounds, picnic areas, recreation center, a championship golf course, lighted tennis courts, football fields, softball and baseball fields, basketball courts, volleyball courts and two senior citizen centers, Families in the City are served by churches throughout the area representing all denominations. EOUCATlON. . . Education for the citizens of the City is provided by the Birdville Independent School District (the "District") which encompasses an area of approximately 40 square miles, The District conducts programs for K-12 and is fully accredited by the Southern Association of Colleges and the Texas Education Agency and operates on a middle school structure, i.e, Pre-kindergarten-5, 6-8,9-12. Physical facilities include: 2 high schools 1 alternative high school 7 junior high schools 20 elementary schools Coliseum Administration Building Stadium Transportation Complex Computer Service Center Annex/materials Center All of the school buildings owned by the District are air conditioned. Approximately 35.5% of the teachers in the District hold advanced degrees, The District employs approximately 2,400 total staff as follows: Certified Professionals Others 1,515 885 Teacher salaries in the District are as follows: Degree Level Baccalaureate Masters Minimum Salary $27,250 $28,350 Maximum Salary $42,230 $45,230 A - 2 Selected historical enrollment figures in the Distóct are as follows: Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 (1) As of October 30, 1996, Source: Birdville Independent School Distóct. Enrollment 15,499 15,376 15,182 15,478 15,490 15,588 16,059 17,039 17,200 Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 Enrollment 17,529 18,505 19,100 19,358 18,929 19,039 20,098 20,454 20,141 (I) Education beyond the high schoollevel is readily available. The Northeast campus of the Tarrant County Junior College Distóct is located partially within the City linúts. Additionally, within a radius of 40 núles, there are a number of colleges and universities including Southern Methodist University, Texas Chóstian University, the University of North Texas and the University of Texas in Arlington, TRANSPORTATION. . . The City has póme positioning for easy access to major local, regional and national markets. Being just 7.5 núles from the Dallas/Fort Worth International Airport and 9 núles from the newly constructed Alliance Airport, the City is located in the hub of business activity and is an integral part of the rapidly growing Northeast Tarrant County Area. The City is strategically positioned on or near five major Interstate Highways, Using Interstate Loop 820, easy access is gained to Interstate 35 (north to Oklahoma and south to Austin, San Antonio and Laredo), Interstate 45 (north to Tulsa and south to Houston), Interstate 20 (west to Midland and El Paso and east to Tyler and Shreveport), and Interstate 30 (east to Texarkana, Little Rock and Memphis). The accessibility factor also includes five rail lines in the Fort Worth area, one of which - St. Louis Southwestern - is located in the City, AGE OF POPULATION (1) Median Income Per Household.........................,............ ",... .$43,094 Median Age of Population...",.........."..... .......................,....... 31.5 MAJOR EMPLOYERS IN THE CITY (1) Based on Bureau of Census, Department of Commerce. Employer Tecnol Medical Products, Inc. Birdville Independent School Distóct VICI Insurance Center Columbia North Hills Hospital TCJC-N.E, Campus* City of North Richland Hills Wal-Mart H&M Food Systems, Inc. Bates Container Corporation Foley's Department Stores Estimated Number of Employees 1,010 875 660 615 500 493 360 245 200 180 Product Disposable Medical and Hospital Supplies School District Insurance Medical Care Higher education Municipality Retail Sales Food Processor Corrugated Containers Department Store * Split with Hurst. Source: North Central Texas Council of Governments, Local Media, City of North Richland Hills. A - 3 BUILDING PERMIT INFORMATION Fiscal Year 1992 1993 1994 1995 1996 Construction Commercial Number of Units 14 21 110 128 116 Source: City Records. Value $ 13,326,554 13,579,157 21,895,675 25,106,505 29,200,801 Residential Number of Units 281 420 434 268 346 A-4 Value $ 29,803,814 48,727,412 50,319,939 31,739,218 32,309,977 Total Units 295 441 544 396 462 Total Value $ 43,130,368 62,306,569 72,215,614 56,845,723 61,510,778 APPENDIX B EXCERPTS FROM THE CITY OF NORTH RlCHLAND HILLS, 1EXAS ANNUAL FINANCIAL îŒPORT For the Year Ended September 30, 1996 The infonnation contained in this Appendix consists of excerpts from the City of North Richland Hills, Texas Annual Financial Report for the Year Ended September 30, 1996, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information, THIS PAGE LEFT BLANK INTENTIONALLY KPMG Peat Marwíck LLP 2500 City Center Tower II 301 Commerce Street Fort Worth. TX 76102 INDEPENDENT AUDITORS' REPORT The Honorable Members of City Council City of North Richland Hills, Texas: We have audited the accompanying general purpose financial statements of the City of North Richland Hills, Texas, as of and for the year ended September 30, 1996, as listed in the accompanying table of contents. These general purpose financial statements are the responsibility of the City of North Richland Hills, Texas' management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of North Richland Hills, Texas, as of September 30, 1996, and the results of its operations and the cash flows of its proprietary fund types for the year then ended in confonnity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated December 20, 1996 on our consideration of City of North Richland Hills, Texas' internal control structure and a report dated December 20, 1996 on its compliance with laws and regulations. Our audit was made for the purpose of fonning an opinion on the 1996 general purpose financial statements taken as a whole. The combining and individual fund and account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of North Richland Hills, Texas. Such infonnation has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. The supplemental infonnation as· listed under the statistical section in the table of contents has been summarized from the City's records and was not subjected to the auditing procedures that were applied to the general purpose financial statements. Accordingly, we express no opinion on such infonnation. December 20. 1996 K~~6 ~~ ~LLQ Member Firm of KPMG Internahonal -- -- ---- - CITY OF NORTH RICHLAND HILLS, TEXAS Combined Balance Sheet - All Fund Types and Account Groups September 30, 1996 with comparative totals for September 30, 1995 Governmental Fund Types Special Debt Capital General Revenue Service Projects Assets and Other Debits Fund Funds Funds Funds Deposits and investments, at cost (note 2) $ 3,266,447 2,251,307 2,582,194 13,973,194 Investments, at market (notes 2 and 13) Receivables (net, where applicable, of allowances for estimated uncollectible amounts of $363,763): Accounts 135,430 30,797 Property taxes (note 3) 208,509 Other taxes 1,362,959 1,201,230 Accrued interest 5,765 19,301 195,442 Special assessments (note 4) 874,192 Intergovernmental 527,327 Other 304,775 Prepaid expenses Due from other funds (note 15) 67,367 Inventories, at cost Restricted assets: Deposits and investments, at cost (note 2) 179,888 Property, plant and equipment (net, where applicable, of accumulated depreciation) (note 5) Other assets (net, where applicable, of accumulated amortization) Advances to other funds (note 15) 505,798 Amount available in debt service fund Amount to be provided for retirement of generallong-tenn debt Total assets and other debits $ 5.715.855 4.300.947 2.601.495 15.073.625 3 Exhibit 1 Enterprise Funds Proprietarv Fund Types Internal Service Funds Fiduciary Fund Type Agency Fund Account Groups General General Fixed Long-term Assets Debt Totals (Memorandum Only) 1996 1995 4,687,239 1,888,012 2,985,921 28,648,393 2,985,921 24,779,577 2,552,444 3,395,764 14,193 3,576,184 2,989,647 208,509 251,724 2,564,189 2,096,451 53,455 25,527 299,490 188,184 874,192 831,814 527,327 460,076 304,775 191,861 17,833 69,600 87,433 57,119 17,333 84,700 57,908 298,509 55,228 353,737 284,167 5,665,060 447,986 6,292,934 8,142,156 67,843,311 2,451,534 95,849,783 166,144,628 150,966,999 213,526 213,526 228,961 465,119 970,917 855,927 2,550,674 2,550,674 2,328,884 56,040.335 56,040,335 51.956.101 82,657.149 4,952,080 2,985,921 95,849,783 58,591.009 272,727,864 249,220,000 (Continued) 4 CITY OF NORTH RICHLAND HILLS, TEXAS Combined Balance Sheet - All Fund Types and Account Groups, Continued Governmental Fund Types Special Debt Capital General Revenue Service Projects Liabilities Fund Funds Funds Funds Bank overdraft $ 92,860 437,329 Accounts payable 79,748 380,407 134,910 Accrued liabilities (notes 1(1), 7 and II) 686,513 41,877 50,821 Retainage payable 415,305 Deposits and other liabilities 167,374 46,952 385,484 Due to other funds (note 15) 40,000 Payable from restricted assets: Accrued interest payable Current portion of revenue bonds, golf course obligations and contractual obligation payable (note 7) Accounts payable Retainage payable Customers' deposits Developers' deposits Golf course obligations (note 7) Discount on golf course obligations General obligation bonds payable (note 7) Sales tax revenue bonds (note 7) Certificates of obligation (note 7) Note payable (note 7) Contractual obligation payable (note 7) Revenue bonds payable (note 7) Discount on revenue bonds payable Deferred revenue (notes 3 and 4) 419,571 917,625 Deferred compensation payable (note 13) Advances from other funds (note 15) 160,000 Total liabilities I .353,206 762,096 50,821 2,290,653 5 Exhibit 1. Continued Fiduciary Proprietary Fund Types Fund Tvoe Account Groups Internal General General Totals Enterprise Service Agency Fixed Long-tenn (Memorandum Only) Funds Funds Fund Assets Debt 1996 1995 364,342 222,050 1,116,581 1,114,349 1,643,350 99,567 2,337,982 1,977,156 366,446 693,228 705,974 2,544,859 2,544,400 415,305 388,082 32,584 632,394 128,394 44,700 84,700 57,908 77,222 77,222 85,596 352,083 352,083 334,167 80,671 101,014 101,014 2,672 1,369,872 1,369,872 1,321,995 7,656 7,656 9,056 4,490,000 4,490,000 4,685,000 (69,176) (69,176) (73,788) 42,468,621 42,468,621 38,772,416 12,510,000 12,510,000 12,880,000 2.485,000 2,485,000 1,600,000 421,414 421,414 475,746 75,000 75,000 110,000 13,224,855 13,224,855 14,257,348 (179,741) (179,741 ) (194,134 ) 1,337,196 1,012,884 2,985,921 2,985,921 2,552,444 810.917 970.917 855.927 22,711.124 1.014,845 2,985.921 58.591.009 89.759,675 84,978.289 (Continued) 6 CITY OF NORTH RICHLAND IDLLS, TEXAS Combined Balance Sheet - All Fund Types and Account Groups, Continued Governmental Fund Types Special Debt Capital General Revenue Service Projects EQuity and Other Credits Fund Funds Funds Funds Contributed capital (note 10) $ Investment in general fixed assets Retained earnings: Reserved, principally for revenue bond principal and interest Reserved for rate stabilization Reserved for future construction Reserved for insurance Reserved for future system improvements Unreserved Fund balances: Reserved for encumbrances 249,877 1,076,734 3,685,807 Reserved for debt service 2,550,674 Reserved for advances to other funds 505,798 Unreserved: Designated for capital improvements 1,390,049 9,097,165 Designated for transition 179,888 Unreserved - undesignated 3.606.974 892.180 Total retained earnings/ fund balances 4.362.649 3.538.851 2.550.674 12.782.972 Total equity and other credits 4,362,649 3,538,851 2,550,674 12,782,972 Commitments and contingent liabilities (notes 5, 6, 7, 8,9. and 11) Total liabilities, equity and other credits $ 5.715.855 4.300.947 2.601.495 15.073.625 See accompanying notes to general purpose financial statements. 7 Exhibit 1, Continued Fiduciary Proorietv Fund Tvoes Fund Tvoe Account Grouos Internal General General Totals Enterprise Service Agency Fixed Long-term (Memorandum Onlv) Funds Funds Fund Assets Debt 1996 1995 35,882,628 1,391,462 37,274,090 35,122,941 95,849,783 95,849,783 84,280,723 2,613,591 2,613,591 2,464,853 300,000 300,000 400,732 400,732 502,814 120,000 151,813 271,813 75,000 296,173 296,173 20,629,074 2,097,787 22,726,861 19,021,248 5,012,418 7,835,892 2,550,674 2,328,884 505,798 375,248 10,487,214 8,484,541 179,888 4,499.154 3,749,567 24,063.397 2,545,773 49.844.316 44.838.047 59,946,025 3,937,235 95,849,783 182,968,189 164,241,711 82.657,149 4.952.080 2.985,921 95,849,783 58,591,009 272,727,864 249.220.000 8 CITY OF NORTH RICHLAND HILLS, TEXAS Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 General Fund Revenues: Taxes (notes 1(0) and 3) Licenses and penn its Charges for services (note 1(0» Fines Contributions Special assessments (note 4) Interest income Intergovernmental Drainage fees Proceeds from forfeiture of contraband Miscellaneous Total revenues Expenditures: Current: General government Public safety Culture and recreation Public works Capital outlay (note 1(0» Debt service: Retirement of generallong-tenn debt (note 7) Interest and fiscal agent charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from bonds (note 7) Gain on sale of fixed assets Operating transfers in Operating transfers out . Total other financing sources (uses) - net Excess (deficiency) of revenues and other sources over expenditures and other uses Fund balances at beginning of year Fund balances at end of year $ 14,815,492 855,780 2,332,191 884,970 232,641 305.998 19.427.072 4,432,868 10,108,971 2,310,529 1,609,482 18.461.850 965,222 332,314 (555.370) (223.056) 742,166 3.620.483 $ 4.362.649 See accompanying notes to general purpose financial statements. 9 Special Revenue Funds 4,340,034 115,934 227,191 1,143,956 647,195 57,796 5.192 6.537.298 532,807 916,382 2,533,112 3.982.301 2,554,997 (I ,883.51 0) (1.883.510) 671,487 2.867,364 3,538,851 Exhibit 2 Debt Capital Totals Service Projects (Memorandum Onlv) Funds Funds 1996 1995 4,600,000 23,755,526 22,138,044 855,780 724,870 2,332,191 2,077,013 884,970 747,463 115,934 146,557 183,408 183,408 655,142 92,235 741,562 1,293,629 1,388,946 175,359 1,319,315 83 8~3 60 647,195 656,993 57,796 121,007 14 311.204 217.427 4.692.235 1J 00.343 31. 756.948 29.711.822 4,432,868 4,413,618 10,641,778 9,683,689 3,226,911 2,780,291 1,609,482 1,928,183 9,687,235 12,220,347 13,647,313 3,394,609 3,394,609 3,329,485 3.129.143 3.129.143 2.776.259 6.523.752 9.687.235 38.655.138 38.558.838 (1,831,517) (8,586,892) (6,898,190) (8,847,016) 7,165,000 7,165,000 8,000,000 29,397 2.053,307 532,688 2,918,309 3,757,187 (285.225) (2.724.105) (3.237.528) 2.053.307 7 .412.463 7.359.204 8.549.056 221,790 (1,174,429) 461,014 (297,960) 2.328.884 13.957.401 22.774.132 23.072.092 2.550.674 12.782.972 23.235.146 22.774.132 10 CITY OF NORTH RICHLAND HILLS, TEXAS Combined Statement of Revenues, Expenditures and Change~ in Fund Balances - Budget and Actual - General, Special Revenue and Debt Service Fund Types Year ended September 30, 1996 General Fund Variance - Favorable Budget Actual (Unfavorable) Revenues: Taxes $ 14,779,095 14,815,492 36,397 Licenses and permits 829,500 855,780 26,280 Charges for services 2,286,917 2,332,191 45.274 Drainage fees Fines 732,300 884,970 152,670 Contributions Interest income 186,000 232,641 46,641 Intergovernmental Miscellaneous 321.944 305.998 (15.946) Total revenues 19.135.756 19.427.072 291.316 Expenditures: Current: General government 4,659,491 4,432,868 226,623 Public safety 10,253,581 10,108,971 144,610 Culture and recreation 2,341,655 2,310,529 31,126 Public works 1,793,566 1,609,482 184,084 Debt service: Retirement of general long-term debt Interest and fiscal agent charges Total expenditures 19.048.293 18.461.850 586.443 Excess (deficiency) of revenues over expenditures 87,463 965,222 877,759 Other financing sources (uses): Operating transfers in 308,161 332.314 24,153 Operating transfers out (365.370) (555.370) (190.000) Total other financing sources (uses) - net (57.209) (223.056) (165.847) Excess of revenues and other sources over expenditures and other uses $ 30.254 742,166 711.912 Fund balances at beginning of year 3.620.483 Fund balances at end of year $ 4.362.649 See accompanying notes to general purpose financial statements. II Exhibit 3 Special Revenue Funds Debt Service Funds Variance - Variance - Actual Favorable Favorable Budget (note l(d)) (Unfavorable ) Budget Actual (Unfavorable ) 1 ,060,279 970,924 (89,355) 4,600,000 4,600,000 655,000 647,195 (7,805) 93,300 115,934 22,634 14,108 14,844 736 70,000 92,235 22,235 3.242 3.242 - - 1.822.687 1.752.139 (70.548) 4.670.000 4.692.235 22.235 80,443 6,079 74,364 351,925 326,612 25,313 3~399,332 3,394,609 4,723 3.159.318 3.129.143 30.175 432.368 332.691 99.677 6.558.650 6.523.752 34.898 1.390,319 1,419,448 29,129 (1,888,650) (1,831,517) 57,133 2,022,501 2,053,307 30,806 ( 626. 724) (644.885) (18.161 ) - - ( 626.724) (644.885) (18.161) 2.022.501 2.053.307 30.806 763.595 774,563 10.968 133.851 221,790 87.939 393.549 2.328.884 1.168.112 2.550.674 12 Exhibit 4 CITY OF NORTH RICHLAND IDLLS, TEXAS Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 Totals (Memorandum Onlv) Internal Enterprise Service Funds Funds 1996 1995 Operating revenues: Water and sewer service $ 19,761,916 19,761,916 17,690,846 Water and sewer connections 399,683 399,683 316,370 Sewer transportation 8,026 Service charges 800,087 800,087 485,120 Inspection fees 45,306 45,306 33,675 Golf course fees and charges 2,435,289 2,435,289 2,177,067 Assessment revenue 9,471 9,471 22,881 Insurance premiums (notes 1(0) and 11) 2,812,483 2,812,483 2,590,898 Maintenance services (note 1(0» 2,135,696 2,135,696 2,144,280 Telephone services 209,028 209,028 Computer services 1,234,014 1,234,014 Aquatic park admissions 1,438,709 1,438,709 1,259,484 Recreation equipment rental 134,823 134,823 151,358 Food, beverage and gifts 313,829 313,829 320,190 Sponsorships 45,000 45,000 20,750 Other income 12.542 16.027 28.569 16.049 Total operating revenues 25.396.655 6.407.248 31.803.903 27.236.994 Operating expenses: Contractual services (note 9) 9,842,522 803,713 10,646,235 9,453,569 Personal services 3,390,779 1,235,946 4,626,725 3,842,066 Cost of golf course sales and services 1,363,998 1,363,998 1,269,706 Repairs and maintenance 857,163 273,061 1,130,224 1,096,579 Supplies 992,137 358,943 1,351,080 1,221,255 Depreciation 1,966,311 442,186 2,408,497 1,950,046 Franchise fees (note 1(0» 491,432 491,432 411 ,206 Payments in lieu of taxes (note 1(0» 273,122 273,122 255,819 Administration fees (note 1(0) and II) 1,247,846 1,247,846 1,296,860 Claims (note II) 2.674.339 2.674.339 2.646.304 Total operating expenses 20.425.310 5.788.188 26.213.498 23.443.410 Operating income 4.971.345 619.060 5.590.405 3.793.584 (Continued) 13 CITY OF NORm RICHLAND HILLS, TEXAS Exhibit 4, Continued Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 Enterprise Funds Nonoperating revenues (expenses): Interest income (note 15) Interest expense and fiscal agent charges (note 15) Gain (loss) on disposal of fixed assets 463,384 (1,447,558) (23.215) Total nonoperating revenues (expenses)- net Income before operating transfers Operating transfers in Operating transfers out Total operating transfers Net income (I.007.389) 3,963,956 093.204) (393.204) 3,570,752 Retained earnings at beginning of year Retained earnings at end of year 20.492.645 $ 24.063.397 Internal Service Funds 11 7,268 39.175 156.443 775,503 199,000 199.000 974,503 1.571.270 2.545.773 See accompanying notes to general purpose financial statements. 14 Totals (Memorandum Only) 1996 1995 580,652 652,210 (1,447,558) (1,495,696) 15.960 (291.932) (850.946) (1.135.418) 4,739,459 2,658,166 199,000 282,590 093.204) (802.249) (I 94.204) (519.659) 4,545,255 2,138,507 22.063.915 26.609.170 19.925.408 22.063.915 CITY OF NORTH RICHLAND IßLLS, TEXAS Exhibit 5 Combined Statement of Cash Flows - All Proprietary Fund Types Year ended September 30, 1996 with comparative totals for year ended September 30, 1995 Internal Totals Enterprise Service (Memorandum On Iv) Funds Funds 1996 1995 Operating income $ 4,971,345 619,060 5,590,405 3,793,584 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,966,311 442,186 2,408,497 1,950,046 Amortization 16,011 16,011 16,011 Loss on disposal of fixed assets (23,215) (23,215) (293,748) Change in assets and liabilities: Increase in escrow deposit (37,800) (37,800) (Increase) decrease in accounts receivable 330,760 2,923 333,683 (497,901) (Increase) decrease in inventories (61,552) (8,018) (69,570) 54,606 Decrease in prepaid expenses 7,486 7,486 176,681 Decrease in other assets 4,036 4,036 36,064 Increase (decrease) in accounts and retainage payable 198,23 1 26,138 224,369 (2,820) Increase (decrease) in accrued liabilities (58,417) 39,034 (19,383) 280,967 Increase (decrease) in other current liabilities 30,060 30,060 (23,881) Increase in customers' deposits 47,877 47,877 63,963 Total adjustments 2.457.588 464.463 2,922,051 1,759,988 Net cash provided by operating activities 7.428,933 1,083,523 8.512.456 5,553,572 Cash flows from noncapital financing activities: Increase (decrease) in bank overdraft (346,271 ) 163,197 (183,074) 617,316 Operating transfers (to) from other funds (393,204) 199,000 ( 194,205) (519,659) Principal paid on amounts due to and advances from other funds (39,474) (39,474) (31,323) (Continued) 15 Exhibit 5. Continued CITY OF NORTH RICHLAND mLLS, TEXAS Combined Statement of Cash Flows - All Proprietary Fund Types, Continued Internal Totals Enterprise Service (Memorandum On Iv) Funds Funds 1996 1995 Receipts from collections of amounts due from other funds and advances to other funds 14.152 14.152 7.930 Net cash provided by (used for) noncapital financing activities (764.797) 362.197 (402.601) 74.264 Cash flows from capital and related financing activities: Acquisition and construction of capital assets (4,244,940) (1,314,278) (5,559,218) (4,352,325) Capital grant received 943,236 943,236 1,176,131 Payments made refunding of developers' deposits (1 ,400) (1,400) 1,019 Principal paid on revenue obligations and note payable (1,590,000) (1,590,000) (1,320,000) Interest paid on revenue and golf course obligations and note payable (1,096,116) (1,096,115) (1,175,902) Proceeds from sale of capital assets 122.314 53.376 175.690 12.815 Net cash used for capital and related financing activities (5.866.906) ( 1.260.902) (7.127.807) (5.658.262) Cash flows from investing activities - interest on investments 418.244 95.395 513.639 640.241 Net increase in cash and cash equivalents 1,215,474 280,213 1,495,687 609,815 Cash and cash equivalents at beginning of year 9.136.825 2.055.785 1 1.192.610 10.582.795 Cash and cash equivalents at end of year $ 10.352.299 2.335.998 12.688.297 I 1.192.610 (Continued) 16 Exhibit 5, Continued CITY OF NORTH RICHLAND HILLS, TEXAS Combined Statement of Cash Flows- All Proprietary Fund Types, Continued Noncash capital and related financing activities: During 1996, bond discount amortization on revenue bonds totalled $359,816 ($345,423 imputed interest on zero coupon bonds and $14,393 amortization of discount on bonds). During 1996, developers contributed utility plant assets in the amount of $594,363. During 1996, the City was awarded capital grants in the amount of $1,556,786 of which $943,236 was received during the year and $613,550 is included in intergovernmental accounts receivable. See accompanying notes to general purpose financial statements. 17 Note (1) Note (2) Note (3) Note (4) Note (5) Note (6) Note (7) Note (8) Note (9) Note (I 0) Note (II) Note (12) Note (13) Note (I 4) Note (IS) Note (16) CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements September 30, 1996 Summary of Significant Accounting Policies Deposits and Investments Property Tax Special Assessments Fixed Assets Operating Leases Long-term Debt Employees' Retirement System Water and Sewer Contracts Contributed Capital Commitments and Contingencies Subsequent Events Deferred Compensation Plan Segment Information - Enterprise Funds Interfund Balances Excess of Expenditures Over Appropriations 18 (This page left blank intentionally) CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (1) Summarv of Sismificant Accountine: Policies The City of North Richland Hills Home Rule Charter was adopted by the voters at an election held on November 3, 1964. The City operates under a Council-Manager fonn of government. The City provides a full range of services. These services include police and fire protection; the construction and maintenance of streets and infrastructure; parks, library and recreational activities; the operation of a water and sewer system, the operation of a water park and the operation of a golf course. The accounting policies of the City of North Richland Hills, Texas confonn to generally accepted accounting principles as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant of such policies: (a) Reoortinsz Entitv As required by generally accepted accounting principles, these financial statements present the primary government and its component units, entities for which the government is considered to be financially accountable. The blended component units, although legally separate entities, are, in substance, part of the primary government's operations and so data from these units are combined with data of the primary government. The blended component units,have a September 30 year end. Blended Component Units - The Parks and Recreation Facilities Development Fund (PRO) serves all the citizens of the City and is used to account for the accumulation and use of resources to build and improve City parks and recreational facilities. The Crime Control and Prevention District Fund (CCD) is used to account for the accumulation and use of half cent sales tax proceeds dedicated for crime reduction programs. The PRO and CCD are reported as special revenue funds. The Board of Directors of both component units is substantively the same as the City Council. Complete financial statements for the individual component units may be obtained at the City's offices. (b) Basis of Presentation - Fund Accountinsz The accounts of the City are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts which comprise its assets, liabilities, retained earnings/fund balance, revenues and expenses/expenditures. The various funds are grouped by type in the general purpose financial statements. Account groups are financial reporting devices designed to provide accountability for certain assets and liabilities that are not recorded in funds. The following fund types and account groups are used by the City: 19 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements GOVERNMENTAL FUND TYPES Governmental Funds are those through which most governmental functions of the City are financed. Governmental Fund types are presented using the flow of current financial resources measurement focus. The following are the City's governmental fund types: General Fund - The General Fund is the general operating fund ofthe City. It is used to account for all financial resources except those required to be accounted for in another fund. Soecial Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than special assessments) that are legally restricted to expenditures for specified purposes. Debt Service Funds - The Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term and sales tax revenue debt principal, interest, and related costs. Caoital Proiects Funds - The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by the proprietary fund types). Financing is provided primarily by the sale of general obligation bonds. Certain projects are partially financed by special assessments. PROPRIETARY FUND TYPES Proprietary Funds are used to account for activities that are similar to those often found in the private sector. The Proprietary Funds are accounted for on the flow of economic resources measurement focus. This measurement focus emphasizes the determination of net income. Under GASB Statement No. 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting", all proprietary funds will continue to follow Financial Accounting Standards Board (FASB) standards issued on or before November 30, 1989. However, from that date forward, proprietary funds will have the option of either 1) choosing not to apply future F ASB standards (including amendments of earlier pronouncements), or 2) continuing to follow new FASB pronouncements (unless they conflict with GASB guidance). The City has chosen not to apply future FASB standards. Following are the City's proprietary fund types: Enterprise Funds - Enterprise Funds are used to account for operations (a) 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 primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. 20 '·'___'~"~~·"'"'~_"~__~4C"_'__"'-'_'___'_"~'__',_~~'__~'~æ CITY OF NORTH RICHLANDHILLS, TEXAS Notes to General Purpose Financial Statements Internal Service Funds - Internal Service Funds are used to account for goods or services provided by one department to other departments of the City on a cost reimbursement basis. FIDUCIARY FUND TYPE Agency Fund - Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent. Agency funds are custodial in nature and do not involve measurement of results of operations. ACCOUNT GROUPS Account groups are used to establish accounting control and accountability for the City's general fixed assets and general long-tenn debt. The following are the City's account groups: General Fixed Assets Account GrouD - This account group is established to account for all fixed assets of the City, other than those accounted for in proprietary funds. General Lone:- Tenn Debt Account GrouD - This account group is established to account for alllong-tenn debt of the City except that accounted for in proprietary funds. (c) Basis of Accountine: The modified accrual basis of accounting is followed by governmental funds and the agency fund. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available to finance expenditures of the fiscal period. "Measurable" means the amount of the transaction can be detennined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues not considered available are recorded as deferred revenue. Expenditures are recorded when the related fund liability is incurred except for (1) interest on generallong-tenn obligations, which is recorded when due or when amounts have been accumulated in the Debt Service Funds for payments to be made early in the following year, and (2) a portion of accrued vacation leave (note 1(1», which is recorded in the generallong-tenn debt account group. Property tax, sales tax, drainage fees, and certain franchise tax revenues are recognized under the susceptible to accrual concept. Other franchise taxes, licenses and permits, charges for services (excluding administration fees), fines, contributions, special assessments, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. Interest income, intergovernmental revenue and administration fees are recorded as earned since they are measurable and available. 21 CITY OF NORTH RIC~ HILLS, TEXAS Notes to General Purpose Financial Statements The accrual basis of accounting is utilized by the proprietary funds. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. (d) Budgetary Data The City Council follows these procedures in establishing budgetary data reflected in the general purpose finaJ1cial statements: (1) Prior to September 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. (2) Public hearings are conducted to obtain taxpayer comments. (3) Prior to September 30, the budget is legally enacted through passage of an ordinance. (4) The City Manager is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council. (5) Fonnal budgetary integration is employed as a management control device during the year for the General Fund, certain Special Revenue Funds (excluding the Special Investigation and Parks and Recreation Facilities Development Funds) and Debt Service Funds. Budgetary control is maintained at the fund level. (6) Legally adopted budgets for the General, certain Special Revenue, and Debt Service Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Budgeted amounts are as originally adopted and amended by the City Councilor as transferred between departments by the City Manager. During the year, several supplementary appropriations of approximately $954,000 were necessary, most of which were attributed to the addition of the CCD. Net revised revenue estimates of approximately $153,000 were necessary. Appropriations lapse at year end. (7) No annual budget was adopted for the Special Investigation and Parks and Recreation Facilities Development Funds (Special Revenue Funds) for the year ended September 30, 1996 as shown below: Special Revenue (Actual) Excess (deficiency) of revenues and other sources over expenditures and other uses: Budgeted funds (budgetary basis) Nonbudgeted funds Total (GAAP basis) $ 774,563 (103.076) $ 671.487 22 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (8) Budgetary data for the Capital Projects Funds, the Special Investigation Fund and the Parks and Recreation Facilities Development Fund has not been presented in the accompanying general purpose financial statements as such funds are either budgeted over the life of the respective projects and not on an annual basis or an annual budget is prohibited by regulatory agencies. Accordingly, formal budgetary integration of these funds is not employed and comparison of actual results of operations to budgetary data for such funds are not presented. (9) Budgetary data for proprietary funds has not been presented since the reporting on such budgets is not legally required. (e) Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable fund balance, is employed in the governmental funds. Encumbrances are reported as reservations of fund balances because they do not constitute expenditures or liabilities. (f) Deposits and Investments Deposits consist of cash and cash equivalents. Investments consist of (I) investments in public fund investment pools, (2) short-term investments with original maturities of three months or less from the date of acquisition and (3) Deferred Compensation Agency Fund investments in mutual funds. Investments are stated at cost, except for investments in the Deferred Compensation Agency Fund which are reported at market value. F or the purposes of presenting the statement of cash flows for Proprietary Funds, cash and cash equivalents are defined as demand deposits and pooled deposits and investments (note 2). (g) Inventories Inventories of proprietary funds are valued at cost (first-in, first-out method). (h) PropertY. Plant and Eauipment - Proprietary Funds Property, plant and equipment owned by proprietary funds is stated at cost or estimated fair market value at the date contributed. Depreciation has been provided on a straight-line basis over the estimated useful lives ofthe assets. The estimated useful lives are as follows: Building and improvements Land improvements Utility plant in service Machinery and equipment 33 years 50 years 38-50 years 3-10 years 23 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (i) General Fixed Assets General fixed assets are recorded as capital outlay expenditures in the General Fund, Capital Projects Funds, or Special Revenue Funds, and capitalized at cost in the General Fixed Assets Account Group. In the case of gifts or contributions, such assets are recorded in the General Fixed Assets Account Group at estimated fair market value at the time received. General fixed assets contributed by developers or other contractors consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems, have not been capitalized. Such assets nonnally are immovable and of value only to the City; therefore, the purpose of stewardship for these items is satisfied without recording these assets. Infrastructure constructed by the City has been capitalized at cost in the General Fixed Assets Account Group. No depreciation has been provided on general fixed assets, and no interest has been capitalized. (j) Other Assets - Entemrise Funds Other assets consist primarily of expenses incurred in connection with the issuance of certain outstanding revenue bonds and golf course obligations. Such charges are amortized on a straight-line basis over the lives of the respective bonds or obligations. (k) Advances to Other Funds - General Fund Noncurrent portions of long-tenn interfund loans receivable are reported as advances and are equally offset by a fund balance reserve account in governmental fund types which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. (I) Vacation and Sick Pav City employees are granted vacation leave in varying amounts dependent upon length of service. Sick leave is also granted to employees after six months of service. In the event of tennination, an employee is reimbursed for all accumulated unused vacation. No reimbursement is made for accumulated unused sick leave upon tennination of employment. Vacation pay is accrued as vested and included in accrued liabilities in the accompanying combined balance sheet. Sick pay is recorded when taken. Accrued vacation pay that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. Amounts of accrued vacation pay that are not expected to be liquidated with expendable available financial resources are reported in the general long-tenn debt account group. No expenditure is reported for these amounts. Accrued vacation pay of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. 24 ""--",-,-"~-,---"--------".~--_._-- CITY OF NORTH RICHLAND IßLLS, TEXAS Notes to General Purpose Financial Statements Accrued vacation pay at September 30~ 1996 consisted of the following: Governmental Fund Types Proprietary Fund Types General Long-tenn Debt Account Group $ 149,369 177 ,952 705.974 $ 1.033.295 (m) Restricted Assets Certain proceeds of Enterprise Fund bonds, as well as certain resources set aside for their repayment, are classified as restricted assets because their use is limited by applicable bond covenants. Retained earnings have been reserved for the excess of restricted assets over related liabilities to the extent such restricted assets were accumulated from revenues (i.e., in some cases, restricted assets were obtained in total or in part from bond proceeds). (n) Unbilled Char2es Unbilled utility service charges of the Water and Sewer (Enterprise) Fund and drainage utility fees of the Drainage Utility (Special Revenue) Fund are estimated and recorded as receivables, net of estimated uncollectibles. (0) Transactions between Funds Quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine penn anent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers and are included in the results of operations of both governmental and proprietary funds. The General Fund charges the Water and Sewer (Enterprise) Fund a franchise fee ($379,294 in 1996) and a payment in lieu of tax (i.e., property tax) ($204,832 in 1996). Such charges are recorded as tax revenues by the General Fund and operating expenses by the Water and Sewer (Enterprise) Fund. The General Fund charges the Water and Sewer (Enterprise) Fund, Aquatic Park (Enterprise) Fund, Capital Projects Fund, and the Parks and Recreation Facilities Development Fund (Special Revenue Fund) an administration fee for certain general and administrative services provided to such funds. Such charges are recorded as charges for services revenue by the General Fund ($1,488,517 in 1996), operating expense by the Water and Sewer (Enterprise) 25 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Fund ($1,025,000 in 1996), operating expense by the Aquatic Park (Enterprise) Fund ($72,635 in 1996), capital outlay expenditure by the Capital Projects Fund ($210.000 in 1996), and culture and recreation expenditure by the Parks and Recreation Facilities Development Corporation Fund ($180,882 in 1996). The Internal Service Funds record charges to other funds for services rendered as operating revenues (see note 11). The respective funds record the related charges as operating expenses or expenditures, as appropriate. (p) Fund Eauitv Designated fund balances and certain retained earnings reserves represent tentative plans as determined by the City Council for the future uses of financial resources. The Crime Control and Prevention District equity contains a reserve for transition. Assets have been restricted in an amount equal to the reserve. In the event that the half cent sales tax funding the CCD activities is discontinued, appropriations from the reserve and the associated assets will be used to fund those activities until an alternate funding source can be identified (i.e., during the transition period). The Water and Sewer Fund and the Aquatic Park Fund both contain reserves for future construction. Assets have been restricted in an amount equal to the reserves shown. The purpose of the reserves is to accumulate funds for future capital projects and to reduce the amount of future bond issues for capital projects. The Water and Sewer Fund also contains a reserve for rate stabilization and restricted assets in an amount equal to the reserve. The reserve is intended to lessen the impact of the Watauga sale on future utility rates. The Aquatic Park Enterprise Fund and the Self-Insurance Internal Service Fund both contain reserves for future insurance claims. Assets have been restricted in an amount equal to the reserves shown. Funds will be accumulated and reserved until needed to cover the costs of excessive claims. The Information Services Internal Service Fund contains a reserve for future system improvements. The intended purpose of the reserves and associated assets is to fund major computer system software and hardware replacement and upgrade. (q) Fund Deficit The accumulated deficit of $913,924 reported by the Golf Course (Enterprise) Fund is primarily a result of replanting expenses ($322,769 in 1990), loss on in-substance defeasance of golf course obligations ($217,646 in 1991) and interest expense in excess of operating income for 1990, 1991, 1992, 1994, and 1995. It is mana5ement's intent to cure this accumulated deficit through increased operating income in future periods. Should the Golf Course Fund fail to accumulate the necessary resources to meet the current portion of the golf course obligations principal payments of approximately $230,000, management intends to utilize advances from the General Fund. 26 CITY OF NORTH RICHLAND IßLLS, TEXAS Notes to General Purpose Financial Statements (r) ComDarative Data Comparative data for the prior year have been presented in the accompanying general purpose financial statements in order to provide an understanding of changes in the City's financial position and operations. However, complete comparative data (i.e., presentation of prior year totals by fund type in each of the statements) have not been presented since their inclusion would make the statements unduly complex and difficult to read. Certain amounts presented in the prior year have been reclassified to conform to the 1996 presentation. (s) Total Columns Total columns on the general purpose financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. (2) DeDosits and Investmehts Substantially all operating deposits and investments are maintained in pooled deposits and investment accounts or are held by a third party administrator (i.e., deferred compensation plan _ note 12). Interest income relating to pooled deposits and investments is allocated to the individual funds monthly based on each fund's pro-rata share of total pooled deposits and investments. Legal provisions generally permit the City to invest in certificates of deposit, repurchase agreements, public funds investment pools, direct obligations of the United States of America or its subdivisions and state and local government securities. During the year ended September 30, 1996, the City did not own any types of securities other than those permitted by statute. At September 30, 1996, the carrying amount of the City's cash was $492,348 (exclusive of the bank overdraft of $894,531) and the bank balance was $458,550. The bank balance was entirely covered by Federal depository insurance or by collateral held by the City's agent pledged in the City's name which is considered a category one under provisions of GASB No.3 except $25,678 which was uninsured or uncollateralized which is considered a category three under the provisions ofGASB No.3. All investment securities managed by the City totaling $17,501,378 (excluding $14,951,015 in TexPool and $1,996,587 in LOGIC) are insured, registered, or held by the City or the City's agent in the City's name which is classified as a category one in accordance with GASB Statement No.3, "Deposits with Financial Institutions, Investments (including Repurchase Agreements) and Reverse Repurchase Agreements. " 27 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements TexPool, a public funds investment pool created by the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Company, is empowered to invest funds and act as custodian of investments purchased with local investment funds. Authorized investments of TexPool include obligations of the United States of America or its agencies, direct obligations of the State of Texas or its agencies, certificates of deposit and repurchase agreements, Texpool investments are not categorized because they are not evidenced by securities that exist in physical or book entry form. At September 30, 1996, the market value of TexPool approximated its carrying value. LOGIC, the Texas Local Government Investment Cooperative, is a privately-managed public funds investment pool created under Texas statues pursuant to the Interlocal Cooperation Act and the statutes authorizing Local Government Investment Pools. LOGIC is owned by its participants and is administered by its contracted General Manager. LOGIC offers the Liquid Asset Portfolio, which maintains a stable $1 net asset value and has a 180-day (or less) weighted average maturity. The portfolio contains only government securities. LOGIC investments are not categorized because they are not evidenced by securities that exist in physical or book entry form. At September 30, 1996, the market value of LOGIC approximated its carrying value. At year-end the City's pooled deposits and investments were as follows: Cash U.S. Treasury Bill U.S. Government agencies' notes Public funds investment pools Total pooled deposits and investments Total Carrying Value $ 492,348 3,799,207 13,702,171 16.947.602 $ 34.941.328 Market Value 492,348 3,876,786 13,918,350 16.947,602 35,235,086 A reconciliation of the City's deposits and investments at September 30, 1996 follows: Carrying Amount Cash and cash equivalents Investments: Public funds investment pool Private funds investment pool Short-term investments Investment in deferred compensation mutual fund (note 12) at market value Total investments Total deposits and investments Unrestricted: Deposits and investments, at cost Investments, at market Total unrestricted $ 1,200,644 14,951,015 1,996,587 16,793,081 2,985,921 36,726,604 $ 37.927,248 $ 28,648,393 2,985,921 31.634.314 Restricted deposits and investments, at cost Total deposits and investments 28 6,292,934 $ 37,927,248 CITY OF NORm RlCHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (3) PropertY Tax The City's property tax is levied each October I on the assessed value listed as of the prior January I for all real property and certain personal property located in the City. Tax liens attach as of February 1. The assessed value, net of exemptions, upon which the fiscal 1996 levy was based was $1,653,283,794. Property taxes are limited by the Texas Constitution to $2.50 per $100 of assessed valuation and by City Charter to $1.50 per $100 valuation. The combined tax rate to finance general governmental service and debt service for the year ended September 30, 1996 was $.57 per $100 of assessed valuation. Taxes are due on receipt of the tax bill. Current tax collections for the year ended September 30, 1996 were 98.96% of the tax levy. Property taxes receivable at September 30, 1996 were $208,509. Property taxes levied for 1996 have been recorded as receivables, net of estimated uncollectibles. The net receivables collected during 1996 and those considered "available" at September 30, 1996 (i.e., property taxes collected within 60 days of year end) have been recognized as revenues in 1996. Prior year levies were recorded using these same principles. The remaining receivables have been reflected as deferred revenue ($186,138 at September 30, 1996). The appraisal of property within the City is the responsibility of a county-wide Appraisal District as required by legislation passed by the Texas Legislature. The Appraisal District is required under such legislation to assess all property within the Appraisal District on the basis of 100% of its appraised value and is prohibited from applying any assessment ratios. The value of property within the Appraisal District must be reviewed every three years; however, the City may, at its own expense, require annual reviews of appraised values. The City may challenge appraised values established by the Appraisal District through various appeals and, if necessary, legal action. (4) Special Assessments Certain street and drainage construction projects are financed partially by special assessments. Such projects are recorded in the General Capital Projects Fund because they benefit the entire community and are financed primarily by general obligation bond proceeds. Special assessments are levied against properties deemed to be specifically benefited by the improvements. Costs of the projects are estimated and property owners are charged a proportionate share. Special assessments are recorded on the levy date and recognized as revenue when collected. Assessments which are not "available" at September 30, 1996 of $874,192 have been reflected as deferred revenue in the General Capital Projects Fund. 29 CITY OF NORTH RICHLAND mLLS, TEXAS Notes to General Purpose Financial Statements (5) Fixed Assets A summary of changes in general fixed assets follows: Balance Balance September 30, Transfers/ Completed September 30, 1995 Additions Retirements Construction 1996 Land $ 6,420,958 6,420,958 Buildings and improvements 11,778,405 246,168 12,024,573 Improvements other than buildings 47,879,170 8,850 4,276,235 52,164,255 Machinery and equipment 8,599,448 462,060 223,198 8,838,310 Construction in progress 9.602.742 11.321.348 (4.522.403 ) 16.401.687 $ 84.280.723 11.792.258 223.198 95.849.783 Construction in progress at September 30, 1996 is composed of the following: Project Authorization Expended to September 30, 1996 Committed Street, drainage and park improvements $ 21.543.624 16.401.687 5.141.937 The "project authorization" and "committed" figures above are based on open contracts at September 30, 1996. No future financing is anticipated to complete the above projects. A summary of proprietary fund property, plant and equipment at September 30, 1996 follows: Enterprise Funds Land Land improvements Building and improvements Other improvements Utility plant in service Machinery and equipment Construction in progress $ 2,853,235 2,980,929 4,185,434 7,353,177 61,174,362 2,112,391 4.1 06.564 84,766,092 (16.922.781 ) $ 67.843.311 Less accumulated depreciation 30 Internal Service Funds 750,758 2,822,742 3,573,500 (1.121.966) 2.451.534 CITY OF NORTH RlCHLAND HILLS, TEXAS Notes to General Purpose Financial Statements At September 30, 1996 the City was committed under utility construction contracts for approximately $81,000. (6) Operating Leases The City is committed under various leases for golf course equipment. These leases are considered for accounting purposes to be operating leases. Lease expense for the year ended September 30, 1996 amounted to approximately $61,000. Future minimum lease payments for these leases are $48,972 for 1997. (7) Long-term Debt The following is a summary of long-term debt transactions of the City for the year ended September 30, 1996 (in thousands of dollars): Amortization of discount on capital September September 30, appreciation 30, 1995 Additions bonds Other Retirements 1996 General Long-term Debt Account Group: General Obligation Bonds $ 38,772 6,015 367 2,685 42,469 Sales Tax Revenue Bonds 12,880 370 12,510 Certificates of Obligation 1,600 1, 150 265 2,485 Accrued Vacation Pay (note 1(1» 557 149 706 General Obligation Note Payable --lli - - - ~ -..ill. - - - General Long- term Debt Total $ 54.285 7.165 367 149 3.375 58.591 Enterprise Funds: Revenue Bonds $ 14,371 346 1,370 13,347 Golf Course Obligations 4,870 185 4,685 Golf Course Contractual Obligation ---..ill - --...li ---1!Q - Enterprise Funds Total $ 19.386 - 346 1.590 18.142 - - 31 _._~-----'-------'--~-----"._-~- CITY OF NORTH RICHLAND IDLLS, TEXAS Notes to General Purpose Financial Statements Long-term debt at September 30, 1996 consisted ofthe following: General Obligation Bonds: $3,720,000 Series 1985 Refunding and Improvement Capital Appreciation Bonds discounted at 8.90% to 9.25%, due in annual installments of $620,000 beginning February 15,2000 through February 15, 2005; net of unamortized discount of$I,511,954 $8,000,000 Series 1987 Serial Bonds, $330,000 due February 15, 1997, interest at 7.0% $5,000,000 Series 1989 Serial Bonds due in annual installments of $200,000 to $230,000 through February 15, 1999; interest at 9.35% to 10.0% $2,735,000 Series 1991 Serial Bonds due in annual installments of $100,000 to $225,000 through February 15,2011; interest at 6.0% to 9.0% $17,450,000 Series 1992 Refunding Serial Bonds due in annual installments of$I,315,000 to $1,885,000 through February 15,2005; interest at 5.10% to 6.30% $5,440,000 Series 1992 Refunding Capital Appreciation Bonds discounted at 6.80% to 6.90%, due in annual installments of $465,000 to $1,865,000 beginning February 15,2006 through February 15,2009; net of unamortized discount of $2,744,425 $4,400,000 Series B 1992-A Serial Bonds due in annual installments of$155,000 to $385,000 through February 15,2012; interest at 5.20% to 6.75% $3,865,000 Series 1993 Serial Bonds due in annual installments of $130,000 to $305,000 through February 15,2013; interest at 4.25% to 7.25% 32 $ 2,208,046 330,000 645,000 2,400,000 14,685,000 2,695,575 3,980,000 3,510,000 - -~-.__._--_._----,--,,""~---~^--- CITY OF NORTH RICBLAND BILLS, TEXAS Notes to General Purpose Financial Statements $6,000,000 Series 1995 Serial Bonds due in annual installments of $1 50,000 to $360,000 through February 15,2015; interest at 5.0% to 7.0% $6,0 15,000 Series 1996 Serial Bonds due in annual installments of$155,000 to $360,000 beginning February IS, 1998 through February 15,2016; interest at 4.20% to 5.60% Sales Tax Revenue Bonds: $7,500,000 Series 1992 Sales Tax Revenue Bonds due in annual installments of $260,000 to $630,000 through September 1,2012; interest at 5.75% to 8.60% $3,895,000 Series 1994 Sales Tax Revenue Bonds due in annual installments of$130,000 to $330,000 through September 1,2013; interest at 5.30% to 8.30% $2,000,000 series 1995 Sales Tax Revenue Bonds due in annual installments of $ 105,000 to $110,000 through September 1,2015; interest at 5.25% to 7.25% Certificates of Obligation: $900.000 Series 1992 Revenue Certificates of Obligation due in annual installments of $30,000 to $80,000 through February 15,2012; interest at 5.2% to 6.75% $1,185,000 Series 1993 Revenue Certificates of Obligation due in annual installments of $250,000 to $265,000 through February IS, 1998; interest at 3.5% $1,150,000 Series 1996 Revenue Certificates of Obligation due in annual installments of $35,000 to $95,000 beginning February IS, 1998 to February IS, 1998; interest at 5.25% to 7.25% 33 6,000,000 6.0 I 5.000 $ 42.468.621 $ 6,820,000 3,690,000 2.000.000 $ 12.5 10.000 $ 820,000 515,000 I.I 50.000 $ 2.485.000 ~----"_._---~. CITY OF NORTH RICHLAND lULLS, TEXAS Notes to General Purpose Financial Statements General Obligation Note Payable: $615,000 note payable, secured by future ad valorem tax revenues, due on monthly installments of $7,043, including interest at 6.69%, through October, 2002 Revenue Bonds: $8,025,000 Series 1989 Waterworks and Sewer System Improvement and Refunding Revenue Bonds due in annual installments of $690,000 to $915,000 through September 1,2001; interest at 7.25% to 7.375% $4,070,000 Series 1989 Waterworks and Sewer System Improvement and Refunding Capital Appreciation Bonds discounted at 7.60% to 7.75%, due in annual installments of $395,000 to $985,000 beginning September 1, 2002 through September 1, 2008; net of unamortized discount of$I,843,500 $3,500,000 Series 1989-A Waterworks and Sewer System Refunding Revenue Bonds due in annual installments of $300,000 to $400,000 through September 1,2001; interest at 7.25% to 7.375% $1,730,000 Series 1989-A Waterworks and Sewer System Refunding Capital Appreciation Bonds discounted at 7.60% to 7.75%, due in annual installments of $165,000 to $425,000 beginning September 1,2002 through September 1,2008; net of unamortized discount of $781 ,615 $5,715,000 Series 1989-B Waterworks and Sewer System Refunding Revenue Bonds due in annual installments of $475,000 to $620,000 through September 1, 2001; interest at 6.80% to 6.90% $3,020,000 Series 1989-B Waterworks and Sewer System Refunding Capital Appreciation Bonds discounted at 7.10% to 7.20%, due in annual installments of $270,000 to $665,000 beginning September 1, 2002 through September 1, 2008; net of unamortized discount of $1 ,312,947 34 $ 421A14 $ 3,995,000 2,226,500 1,740,000 948,385 2,730,000 1,707,053 $ 13,346,938 CITY OF NORTH RICHLAND HILLS. TEXAS Notes to General Purpose Financial Statements Golf Course Obligations: $4,870,000 Series 1991 Tax and Golf Course Revenue Refunding Bonds due in annual installments of$195,000 to $470,000 through September 1,2011; interest at 6.00% to 7.00% $ 4.685.000 Golf Course Contractual Obligation: $180,000 Series 1994 Contractual Obligation due in annual installments of $35,000 to $40,000 through through February 15,1999; interest at 4.75% to 6.70% $ 110.000 The future annual requirements to amortize all debt outstanding as of September 30, 1996, follows: General Golf Year Sales Certificate Obligation Golf Course ending General Tax of Note Revenue Course Contractual Seotember 30 Oblie:ation Revenue Oblie:ation Pavable Bonds Oblie:ations Oblie:ation Total 1997 $ 5.189,135 1,285,545 434,284 84,514 2,073,283 508,905 39,722 9,615,388 1998 4,821,987 1,274.420 452,344 84,514 2,079,208 507,205 37,731 9,257,409 1999 4.518,161 1,255,678 183,362 84,514 2,076,805 509,700 40,950 8,669,170 2000 4.641.461 1,239,800 183,641 84.514 2,075,126 506,060 8,730,602 2001 4.587,139 1,216,374 183,536 84,514 2,074,763 506,570 8,652,896 2002-2006 21.865,025 5,936,455 912,989 91,557 7,160,000 2,548,310 38,514,336 2007-2011 13,294,062 5,830,240 914,039 1,660,000 2,540,255 24,238,596 2012-2016 4.658.200 1.846.647 571.589 - - 7,076.436 - - 63,575,170 19,885,159 3,835,784 514,127 19,199,185 7,627,005 118,403 114,754,833 Less applicable interest 21.1 06.549 7.375.159 1.350.784 ~ 5.852.247 2,942.005 8.403 38,727.860 $ 42.468.621 12,510.000 2.485.000 421.414 13.346,938 4,685.000 110.000 76.026,973 Authorized but unissued debt at September 30, 1996 consisted of general obligation bonds designated as follows: Street improvements $ 12,133,000 Drainage 3.392.000 $ 15.525.000 35 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements The Sales Tax Revenue Bonds are special obligations of the PRD (see note l(a» and are secured by a lien on and pledge of the gross sales tax revenues received from a 1/2 of 1 % local sales and use tax levied within the City, which sales and use tax was approved and authorized at an election held within the City on August 8, 1992 for the benefit of the PRD. The Golf Course Obligations are direct obligations of the City, and are payable both as to principal and interest from an ad valorem tax levied against all taxable property within the limits prescribed by law and a pledge of the net revenues received from the City's golf course facilities. It is the intent of management to repay these obligations from the net revenues of the golf course. Therefore the debt is reflected as a fund obligation. The ordinances authorizing the issuance of Waterworks and Sewer System Revenue Bonds created the Interest and Sinking Fund and Reserve Fund. The gross revenues of the waterworks and sewer system, after deduction of reasonable expenses of operations and maintenance, are pledged to such funds in amounts equal to the total annual principal and interest requirements of the bonds and amounts required to maintain the Reserve Fund. At September 30, 1996, the City was in compliance with these requirements. In prior years, the City defeased certain general obligation bonds, revenue bonds and golf course obligations by placing the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At September 30, 1996, $29,020,000 of bonds and obligations outstanding are considered defeased. (8) Emplovees' Retirement System (a) Plan Description The City provides pensIOn benefits for all of its full-time employees through a nontraditional, joint contributory, defined contribution plan in the state-wide Texas Municipal Retirement System (TMRS), one of over 670 administered by TMRS, an agent multiple-employer public employee retirement system. It is the opinion of the TMRS management that plans in TMRS are substantially defined contribution plans, but they have elected to provide additional voluntary disclosure to help foster a better understanding of some of the nontraditional characteristics of the plan. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (200%) of the employee's accumulated contributions. In addition, the City can grant as often as annually another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate 36 CITY OF NORTH RlCHLAND HILLS, TEXAS Notes to General Purpose Financial Statements and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 10 or more years of service or with 25 years. of service regardless of age. The plan also provides death and disability benefits. A member is vested after 10 years, but he must leave his accumulated contributions in the plan. If a member withdraws his own money, he is not entitled to the employer-financed monetary credits, even if he was vested. The plan provisions are adopted by the City Council, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. (b) Contributions The contribution rate for employees is 7%, and the City's matching percent is currently 200%, both as adopted by the City Council. Under the state law governing TMRS, the City contribution rate is annually detennined by the actuary. This rate consists of the nonnal cost contribution rate 'and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The nonnal cost contribution rate finances the currently accruing monetary credits due to city matching percent, which are the obligation of the city as of an employee's retirement date, not at the time the employee's contributions are made. The nonnal cost contribution rate is the actuarially detennined percent of payroll necessary to satisfy the obligation of the city to each employee at the time his retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-year amortization period. When the City periodically adopts updated service credits and increases in annuities in effect, the increased unfunded actuarial liability is to be amortized over a new 25-year period. Currently, the unfunded actuarial liability is being amortized over the 25-year period which began January, 1996. The unit credit actuarial cost method is used for detennining the City contribution rate. Contributions are made monthly by both employees and the City. Since the City needs to know its contribution rate in advance to budget for it, there is a one-year lag between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. The City's total payroll in fiscal year 1996 was $15,433,170 and the City's contributions were based on a covered payroll of $14,124,662. Both the City and the covered employees made the required contributions, amounting to $1,677,112 (11.30% of covered payroll for the months in calendar year 1995, 9.01% nonnal cost plus 2.29% to amortize the unfunded actuarial liability and J2.04% for the months in calendar year 1996, 9.65% nonnal cost plus 2.39% to amortize the unfunded actuarial liability) for the City and $988,827 (7%) for the employees. The required contribution represents $341,689 ofnonnal cost and $335,423 to amortize the unfunded actuarial liability. The City adopted changes in the plan since the previous actuarial valuation, which had the effect of increasing the City's contribution rate for 1996 by 0.04% of covered payroll. There were no related party transactions. 37 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (c) Funding Status and Progress Even though the substance of the City's plan is not to provide a defined benefit in some form, some additional voluntary disclosure is appropriate due to the nontraditional nature of the defined contribution plan which had an initial unfunded pension benefit obligation due to the monetary credits granted by the City for services rendered before the plan began and which can have additions to the unfunded pension benefit obligation through the periodic adoption of increases in benefit credits and benefits. Statement No.5 of the Governmental Accounting Standards Board (GASB 5) defines pension benefit obligation as a standardized disclosure measure of the actuarial present value of pension benefits, adjusted for the effects of projected salary increases, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of public employee pension plans, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among public employee pension plans. The City's pension benefit obligation shown below is similar in nature to the standardized disclosure measure required by GASB 5 for defined benefit plans except that there is no need to project salary increases since the benefit credits earned for service to date are not dependent upon future salaries. The calculations were made as part of the annual actuarial valuation as of December 31, 1995. Because of the money-purchase nature of the plan, the interest rate assumption, currently 8.0% per year, does not have as much impact on the results as it does for a defined benefit plan. Market value of assets is not determined for each city's plan, but the market value of assets for TMRS as a whole was 114.2% of book value as of December 31, 1995. Pension Benefit Obligation Annuitants currently receiving benefits Terminated employees Current employees: Accumulated employee contributions, including allocated invested earnings Employer-financed vested Employer-financed nonvested Total pension benefit obligation $ 1,223,701 1,761,504 10,144,208 15,421,560 3,319.666 31,870,639 Net Assets Available for Benefits. at Book Value 24.565.007 Unfunded Pension Benefit Obligation $ 7.305.632 38 CITY OF NORTH RlCHLAND HILLS, TEXAS Notes to General Purpose Financial Statements The book value of assets is amortized cost for bonds and original cost for short-term securities and stocks. The actuarial assumptions used to compute the actuarially determined City contribution rate are the same as those used to compute the pension benefit obligation. The numbers above reflect the adoption of changes in the plan since the previous actuarial valuation, which had the effect of increasing the pension benefit obligation by $97,649. (d) Trend Information Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Additional trend information relating to the City may be found in the required supplementary infonnation in the City's Comprehensive Annual Financial Report. Trend infonnation for the City based upon actuarial computations for the years ended December 31, 1995, 1994 and 1993 is as follows: 1993 1994 1995 Available plan assets as a percentage of the pension benefit obligation Unfunded pension benefit obligation as a percentage of annual covered payroll 72% 76% 77% 61% 56% 52% Employer contribution as a percentage of annual covered payroll 11% 12% 12% The City's contributions to the plan were In accordance with actuarially detennined requirements for 1993 through 1995. Ten-year trend information for TMRS as a whole may be found In the TMRS annual financial report. (9) Water and Sewer Contracts The City has several individual contracts with the City of Fort Worth (Fort Worth) and the Trinity River Authority of Texas (TRA) for the purchase of treated water and for the transportation, treatment and disposal of sanitary sewage and other waste. The initial tenns of the contracts range from twenty-one to forty-eight years and expire at various dates from 1997 through 2023. While the provisions of each of the contracts vary, each contract basically requires the City to pay varying amounts based on the costs associated with water purchased and sewage transported and/or treated and disposed of. The cost includes the City's proportionate share of Fort Worth's and TRA's operating and maintenance expenses, related debt service costs plus certain other miscellaneous charges. Approximately $20,000 of these debt service costs are included in the general debt service fund expenditures. Purchases of treated water and charges for the transportation, treatment and disposal of sewage and other wastes during 1996 amounted to approximately $5,345,000 and $2,697,000, respectively. 39 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements (IO) Contributed Caoital The following is a summary of changes in contributed capital for the City's enterprise funds. The internal service funds' contributed capital had no changes during the year: Water and Sewer Golf Course Aquatic Park Total Enterprise Funds Balance at beginning of year Contributions from developers Contributions from capital grants Balance at end of year $ 22,993,412 594,363 1.556,786 $ 25.144,561 1,882,372 8,855,695 33,731,479 594,363 1.556,786 35,882,628 1,882,372 8,855,695 (II) Commitments and Contingencies The City has participated in a number of State and Federally assisted grant programs. These programs are subject to financial and compliance audits by the grantors or their representatives, the purpose of which is to insure compliance with conditions precedent to the granting of funds. City management believes that any liability for reimbursement which may arise as the result of these audits would not materially affect the City's financial position. The City is defendant in several lawsuits, primarily for worker's compensation and general liability claims. City management believes that ultimate liability on these suits, if any, will not materially affect the City's financial position. The U.S. Environmental Protection Agency in 1995 issued an Administrative Order requiring improvements to the City's wastewater collection system to avoid wastewater overflows. The City expects to spend approximately $650,000 through fiscal year 1998 on a study to detennine necessary corrective action. Costs of compliance with the Administrative Order are not known at this time. The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City has historically retained these risks except for fire coverage on buildings and contents, general liability insurance on the water park, and life insurance coverage. Under its current stop loss policy, the City pays medical claims up to $150,000 per individual per year and/or approximately $1,627,000 per year in the aggregate. The Self-Insurance (Internal Service) Fund covers medical expenses, workers' compensation, automobile liability and general liability claims. The Self-Insurance Fund charges the other funds premiums to cover such claims (note 1(0». The Self-Insurance Fund's accrued liabilities at September 30, 1996 include an estimate of the eventual loss on claims arising prior to year end. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. This detennination is based on reported pending claims, estimates of claims incurred but not yet reported, actuarial reports, and historical analysis. Changes in the balances of claims liabilities during the past two years are as follows: 40 CITY OF NORTH RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements 1996 1995 Unpaid claims, beginning of year Incurred claims (including IBNR) Claim expense Unpaid claims~ end of year $ 575,567 2,685,398 (2.674.339) $ 586.626 495,567 2,726,304 (2.646.304) 575.567 The City has a contract with a management company for operations of the city-owned public golf course. The contract expires January 1998, however, the City has the option of canceling the contract anytime after January 1996. In addition to monthly management fees, a contingent management fee is owed if the golf course revenues exceed a certain amount that varies from year to year. Contingent management fees incurred for 1996 were approximately $51,000. Total management fees for operations were approximately $129,000 for the year ended September 30, 1996. (12) SubseQuent Events On June 14, 1996, the City and the City ofWatauga, Texas ("Watauga") entered into a "Settlement and Purchase Agreement" (the "Agreement") providing for (i) the settlement of certain litigation between the two cities involving the right of Watauga to acquire certain water and wastewater properties of the City located in Watauga and serving its residents and (ii) the sale and conveyance of such water and wastewater properties to Watauga. Under the tenn of such Agreement, Watauga has acquired certain water and wastewater transmission mains, distribution and collection lines, facilities and appurtenances used to provide water and wastewater service within the city limits of Watauga at an agreed purchase price of $9,200,000. The Agreement further provided for the date of sale to occur between October 1, 1996 and January 1, 1997. The actual date of sale occurred on October 1, 1996. The Agreement further provides a "Transition Period" of three years for the orderly transfer of the operations and maintenance of the properties purchased by Watauga. Pending Watauga assuming full responsibility for the operation and maintenance of its properties, the City has agreed pursuant to a Facilities Operating Agreement to operate and maintain the facilities conveyed to Watauga for two years in return for cash payments of $1,500,000 per year to be paid in equal monthly installments of $125,000. The services to be rendered by the City under the Facilities Operating Agreement include meter reading and billing on behalf of Watauga but does not include the cost of water or charges for wastewater transportation and treatment to be paid the City of Fort Worth. After the two-year operation and maintenance period has concluded, the City has agreed to read meters and bill accounts on behalf of Watauga for an additional year and Watauga has agreed to pay the City the sum of $250,000 in equal monthly payments of $20,833 for such services. Watauga has the option ofperfonning such meter reading and billing services and if such option is exercised, the amount to be paid the City during the third year will be reduced to $140,000. The Agreement further addresses the joint use of certain properties conveyed to Watauga and retained by the City, the cooperation of the parties to obtain for Watauga the necessary water and wastewater operating penn its from the State, the use of fire hydrants, the purchase of water from Fort Worth, the cooperation of the parties with respect to studies and investigations and other matters regarding the separation of properties from the City's system to the Watauga system. 41 CITY OF NORm RICHLAND IDLLS, TEXAS Notes to General Purpose Financial Statements At the time of the conveyance of the water and wastewater properties to Watauga, approximately 7,269 customers will be transferred to the Watauga system and the City will continue to provide water and wastewater collection services to approximately 15,594 customers. The City estimates such sale and conveyance of water and wastewater properties will reduce its revenues by approximately $4,397,280 and reduce its overall operation and maintenance expenses by approximately $3,469,683, after complete separation of the systems occurs and Watauga assumes full responsibility for the operations and maintenance of its facilities. From the proceeds of the sale of the properties, the City will use approximately $9,200,000 to defease a portion of its outstanding revenue bond indebtedness. On December 16, 1996, the City issued $5,135,000 in Waterworks and Sewer System Revenue Refunding Bonds, Series 1996 (the "Refunding Bonds") to refund the remaining outstanding bonds not defeased with the proceeds of the sale discussed above. The outstanding indebtedness either defeased or refunded is as follows: $3,995,000 Waterworks and Sewer System Revenue Refunding Bonds, Series, 1989; $1,740,000 Waterworks and Sewer System Revenue Bonds, Series 1989-A; and $2,730,000 Waterworks and Sewer System Revenue Bonds, Series 1989-8. Following the issuance of the Refunding Bonds, the only outstanding revenue bond indebtedness of the City system will be the Refunding Bonds. (13) Deferred Comoensation Plan The City offers its employees a deferred compensation plan which falls under Internal Revenue Code Section 457. Virtually all employees are eligible to participate in the plan. The deferred compensation plan allows the deferral of individual Federal income taxes until funds are withdrawn. Funds may be withdrawn at tennination, retirement, death or unforeseeable emergency. Employees may contribute a maximum of 33.33% of salary or $7,500, whichever is less, All amounts deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are legally the property of the City (until paid or made available to the participants), subject only to the claims of the City's general creditors. Participant's rights under the plan are equal to those ofthe general creditors' of the City in an amount equal to the fair value of the deferred amount for each participant. The City has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. Plan assets have been invested in a mutual fund (note 2). Effective December 31, 1996, in conjunction with recent tax law changes, the City will be required to establish a trust, custodial account, or annuity contract for all amounts deferred which will be for the exclusive benefit of the employees or their beneficiaries. At that time such assets will no longer be the property of the City nor will they be subject to the City's general creditors. 42 CITY OF NORTH RlCHLANDHlLLS, TEXAS Notes to General Purpose Financial Statements (14) Segment Infonnation - Enterorise Funds The City maintains three enterprise funds which are intended to be self-supporting through user fees charged for services rendered. The Water and Sewer Fund provides water and sewer services to residents of the City and certain nonresidents. The Golf Course Fund accounts for the operations of the City's public golf course. The Aquatic Park Fund accounts for the operations of the City's water park. Financial segment infonnation as of and for the year ended September 30, 1996 is as follows: Water Golf Aquatic and Sewer Course Park Total Operating revenues $ 21,016,463 2,435,289 1,944,903 25,396,655 Depreciation expense 1,425,265 265,057 275,989 1,966,311 Operating income 4,335~ 781 583,388 52,176 4,971,345 Operating transfers out (393,205) (393,205) Net income 3,257,397 232,135 81,220 3,570,752 Capital contributions 2,151,149 2,151,149 Property, plant and equipment additions 3,998,897 156,665 11,608 4,167,170 Working capital 2,223,332 290,345 254,270 2,767,947 Total assets 66,243,266 6,762,510 9,651,373 82,657,149 Bonds/obligations payable 13,346,938 4,795,000 18,141,938 Retained earnings (accumulated deficit) 24,260,897 (913,924) 716,424 24,063,397 Total fund equity 49,405,458 968,448 9,572,119 59,946,025 (15) Interfund Balances At September 30, 1996, interfund balances consisted of the following: Due from Due to Advances to Advances from other funds other funds other funds other funds Enterprise Funds: Water and Sewer Fund $ 17,333 465,119 Golf Course Fund 44,700 810,917 General Fund 67,367 505,798 Special Investigation Fund 40.000 160.000 $ 84.700 84.700 970.917 970.917 Due to and due from other funds are the short tenn portion of the advances to and advances from other funds. 43 CITY OF NORm RICHLAND HILLS, TEXAS Notes to General Purpose Financial Statements Interest on interfund advances approximated $68,000 for 1996. Such interest is included in interest income and interest expense in the accompanying general purpose financial statements. Interest is charged on interfund advances at variable rates that approximate the City's yields on certificates of deposit and investments (4% in 1996). (16) Excess of Expenditures Over Appropriations For the year ended September 30, 1996, expenditures exceeded appropriations in the Promotional (Special Revenue) Fund by $7,281. 44 APPENDIX C FORM OF BOND COUNSEL'S OPINION THIS PAGE LEFT BLANK INTENTIONALLY FULBRIGHT & ~AWORSKI L. L. P. A REGISTERED LIMITED LIABILITY PARTNERSHIP TELEPHONE: 214/855-8000 FACSIMILE: 214/855-8200 2200 Ross AVENUE SUITE 2800 DALLAS, TEXAS 75201 HOUSTON WASHINGTON. D.C, AUSTIN SAN ANTONIO DALLAS NEW YORK LOS ANGELES LONDON HONG KONG WRITER'S DIRECT DIAL NUMBER: 214/855-8013 IN REGARD to the authorization and issuance of the "City of North Richland Hills, Texas, General Obligation Bonds, Series 1997" (the "Bonds"), dated April 15, 1997 (the "Bond Date"), in the principal amount of $4,100,000, we have examined into the legality and validity of the issuance thereof by the City of North Richland Hills, Texas (the "City"), which Bonds are issuable in fully registered form only, in denominations of $5,000 or any integral multiple thereof (within a maturity), have stated maturities of February 15, 1998 through February 15,2017, unless redeemed prior to maturity in accordance with the terms stated on the Bonds, and bear interest on the unpaid principal amount from the Bond Date at the rates per annum stated in the ordinance authorizing the issuance of the Bonds (the "Ordinance"), such interest being payable on February 15 and August 15 in each year, commencing February 15, 1998, to the registered owners thereof shown on the registration books of the Paying AgentlRegistrar on the Record Date (stated on the face of the Bonds), WE HAVE SERVED AS BOND COUNSEL for the City solely to pass upon the legality and validity of the issuance of the Bonds under the Constitution and laws of the State of Texas, and with respect to the exclusion of the interest on the Bonds from gross income for federal income tax purposes and none other. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data or other material relating to the financial condition or capabilities of the City. Our examinations into the legality and validity of the Bonds included a review of the applicable and pertinent provisions of the Constitution and laws of the State of Texas, a transcript of certified proceedings of the City relating to the authorization and issuance of the Bonds, including the Ordinance, customary certifications and opinions of officials of the City and other pertinent showings, and an examination of the Bond executed and delivered initially by the City, which we found to be in due form and properly executed. BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that, under applicable law of the United States of America and the State of Texas now in force and effect that: 1. The Bonds have been duly authorized _ by the City, and the Bonds issued in compliance with the provisions of the Ordinance are valid, legally binding and enforceable obligations of the City, payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City, except to the extent that the 0411826 Page 2 of Legal Opinion of Fulbright & Jaworski L.L.P. Re: $4,100,000 "City of North Richland Hills, Texas, General Obligation Bonds, Series 1997", dated April 15, 1997 enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with general principles of equity; and 2. Assuming continuing compliance after the date hereof by the City with the provisions of the Ordinance and in reliance upon representations and certifications of the City made in a certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the Bonds, interest on the Bonds for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date hereof, of the owners thereof pursuant to section 103 of such Code, existing regulations, published rulings, and court decisions thereunder, and (2) will not be included in computing the alternative minimum taxable income of individuals or, except as hereinafter described, corporations. Interest on all tax-exempt obligations, such as the Bonds, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989 for purposes of calculating the alternative minimum taxable income of such corporations, other than an S corporation, a qualified mutual fund, a real estate mortgage investment conduit (REMIC), or a real estate investment trust (REIT). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by section 55 of the Code will be computed. WE EXPRESS NO OPINION with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Ownership of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, property and casualty insurance companies, life insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement Benefits, individuals otherwise qualifying for the earned income tax credit and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. EHE:dfc 0411826 FULBRIGHT & JAWORSKI l.l. P. TELEPHONE: 214/855-8000 FACSIMILE: 214/855-8200 A REGISTERED LIMITED LIABILITY PARTNERSHIP 2200 Ross AVENUE SUITE 2800 DALLAS. TEXAS 7S201 HOUSTON WASHINGTON. D,C, AUSTIN 5AN ANTONIO DALLAS NEW YORK LOS ANGELES LONDON HONG KONG WRITER'S DIRECT DIAL NUMBER: 214/855-8013 IN REGARD to the authorization and issuance of the "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1997" (the "Certificates"), dated April 15, 1997 (the "Certificate Date"), in the principal amount of $2,755,000, we have examined into the legality and validity of the issuance thereof by the City of North Richland Hills, Texas (the "City"), which Certificates are issuable in fully registered form only, in denominations of $5,000 or any integral multiple thereof (within a maturity), have stated maturities of February 15, 1998 through February 15, 2017, unless redeemed prior to maturity in accordance with the redemption provisions stated on the Certificates, and bear interest on the unpaid principal amount from the Certificate Date at the rates per annum stated in the ordinance authorizing the issuance of the Certificates (the "Ordinance"), such interest being payable on February 15 and August 15 in each year, commencing February 15, 1998, to the registered owners shown on the registration books of the 'Paying AgentlRegistrar on the Record Date (stated on the face of the Certificates), WE HAVE SERVED AS BOND COUNSEL for the City solely to pass upon the legality and validity of the issuance of the Certificates under the Constitution and laws of the State of Texas, and with respect to the exclusion of the interest on the Certificates from gross income for federal income tax purposes and none other. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data or other material relating to the financial condition or capabilities of the City. Our examinations into the legality and validity of the Certificates included a review of the applicable and pertinent provisions of the Constitution and laws of the State of Texas, a transcript of certified proceedings of the City relating to the authorization and issuance of the Certificates, including the Ordinance, customary certifications and opinions of officials of the City and other pertinent showings, and an examination of the Certificate executed and delivered initially by the City, which we found to be in due form and properly executed. BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that, under the applicable law of the United States of America and the State of Texas in force and effect on the date hereof: 1. The Certificates have been duly authorized by the City, and the Certificates issued in compliance with the provisions of the Ordinance are valid, legally binding and enforceable obligations of the City, payable from an ad valorem tax levied, within the limits prescribed by law, upon all taxable property in the City and additionally payable from a limited pledge of the Net Revenues (as defined in the Ordinance) of the City's 0411828 Page 2 of Legal Opinion of Fulbright & Jaworski L.L.P. Re: $2,755,000 "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1997", dated April 15, 1997 combined Waterworks and Sewer System in the manner and to the extent provided in the Ordinance; except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with the general principles of equity. 2. Assuming continuing compliance after the date hereof by the City with the provisions of the Ordinance and in reliance upon representations and certifications of the City made in a certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the Certificates, interest on the Certificates for federal income tax purposes (a) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), of the owners thereof pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions thereunder, and (b) will not be included in computing the alternative minimum taxable income of individuals or, except as hereinafter described, corporations. Interest on all tax-exempt obligations, such as the Certificates, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989 for purposes of calculating the alternative minimum taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate mortgage investment conduit (REMIC), or a real estate investment trust (REIT). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by the section 55 of the Code will be computed. WE EXPRESS NO OPINION with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Certificates. Ownership of tax-exempt obligations such as the Certificates may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement Benefits, individuals otherwise qualifying for the earned income tax credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. EHE:dfc 0411828 Financial Advisory Services Provided By lr FIRST SOUTHWEST COMPANY INVESTMENT BANKERS '- '~ CITY OF NORTH RICHLAND HILLS / Department: Finance Council Meeting Date: 4/28/97 GN 97-36 Subject: Consideration of Action on all Matters Pertaining to the Agenda Number: Award and Sale of $2,755,000 in Certificates of Obligation and Approve Ordinance No. 2196 Bids will be received on Monday, April 28, 1997 for the sale of $2,755,000 in Certificates of Obligation for projects described and approved by City Council at their March 24, 1997 City Council Meeting. Rating conferences with Standard and Poor's and Moody's were held recently. We received our ratings from both Moody's Investors Service and Standard and Poor's. Moody's upgraded the rating from A to A1. Standard and Poor's upgraded the rating from A+ to AA-. Bids on the Certificates of Obligation will be evaluated by First Southwest, the Assistant City Manager and the Finance Director, and, will be submitted to City Council at the regular meeting on April 28th. Upon acceptance of the best bid, it will be necessary for City Council to award the bid and to approve the ordinance as prepared by our bond counsel, Fulbright and Jaworski. The enclosed ordinance is for your consideration to be passed on Monday, April''28ttT:'''Thísördinance also authorizes ail thêother' necessary actions such as paying agent/registrar agreements. , 'I'-' Recommendation: It is recommended that the City Council accept the best bid for the $2,755,000 in Certificates of Obligation as evaluated and recommended by First Southwest Company and adopt Ordinance 2196 authorizing the issuance of Certificates of Obligation, Series 1997, and approving Bank One, Texas, NA, Fort Worth as Paying Agent/Registrar. Finance Review Source of Funds: Acct. Number Bonds (GO/Rev.) Sufficient Funds Available Operating Budget _ Other _ ¿ t ~~ature n -- - CITY COUNCIL ACTION ITEM Finance Director Page 1 of ORDINANCE NO. 2196 AN ORDINANCE authorizing the issuance of "CITY OF NORTH RICHLAND HILLS, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 1997"; specifying the terms and features of said certificates; providing for the payment of said certificates of obligation by the levy of an ad valorem tax upon all taxable property wi thin the City and a limited pledge of the net revenues from the operation of the ci ty' s Waterworks and Sanitary Sewer System; and resolving other matters incident and relating to the issuance, payment, security, sale and delivery of said certificates, including the approval and execution of a Paying Agent/Registrar Agreement and the approval' and distribution of an Official Statement; and providing an effective date. WHEREAS, notice of the City Council's intention to issue certificates of obligation in the maximum principal amount of $2,755,000 for the purpose of paying contractual obligations to be incurred for (i) the purchase of computers, equipment, machinery and vehicles for city departments and facilities, including the p~iblic safety ands'treet departments and the municipal library; (ii) improvements to municipal golf course facilities, and (iii) professional services rendered in relation to such projects and the financing thereof, has been duly published in the Mid-Cities News, a newspaper hereby found and determined to be of general circulation in the City of North Richland Hills, Texas, on , 1997 and , 1997, the date of the first publication of such notice being not less than fifteen (15) days prior to the tentative date stated therein for the passage of the ordinance authorizing the issuance of such certificates; and WHEREAS, no petition protesting the issuance of the certificates of obligation and bearing valid petition signatures of 5% or more of the qualified electors of the City, has been presented to or filed with the Mayor, City Secretary or any other official of the City on or prior to the date of the passage of this ordinance; and WHEREAS, the Council hereby finds and determines that all of the certificates of obligation described in such notice should be issued and sold at this time; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: SECTION 1: Authorization. Desiqnation. Principal Amount. Purpose. certificates of obligation of the City shall be and are 042030 1 hereby authorized to be issued in the aggregate principal amount of $2,755,000, to be designated and bear the title "CITY OF NORTH RICHLAND HILLS, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 1997" (hereinafter referred to as the "Certificates"), for the purpose of paying contractual obligations to be incurred for (i) the purchase of computers, equipment, machinery and vehicles for city departments and facilities, including the public safety and street departments and the municipal library, (ii) improvements to municipal golf course facilities, and (iii) professional services rendered in relation to such projects and the financing thereof, pursuant to authority conferred by and in conformity with the Constitution and laws of the State of Texas, including V.T.C.A., Local Government Code, Subchapter C of Chapter 271, as amended. SECTION 2: FullY Reqistered Obliqations - Authorized Denominations-stated Maturities-Date. The certificates are issuable in fully registered form only; shall be dated April 15, 1997 (the "Certificate Date") and, other than the single fully registered Initial certificate referenced in Section 8 hereof, shall be in denominations of $5,000 or any integral multiple thereof (within a Stated Maturity) and the Certificates shall become due and payable on February 15 in each of the years and in principal amounts (the "Stated Maturities") and bear interest at per annum rates in_,accordance. wi t.h the following scheduJ.,.e: Year of Principal Interest Stated Maturity Amount Rate 1998 $240,000 % - 1999 310,000 % - 2000 330,000 % - 2001 350,000 % - 2002 370,000 % - 2003 85,000 % - 2004 90,000 % - 2005 95,000 % - 2006 100,000 % - 2007 110,000 % - 2008 50,000 % - 2009 55,000 % - 2010 60,000 % - 2011 60,000 % 20 ,000 % 2017 ,000 % Q.420301 -2- The Certificates shall bear interest on the unpaid principal amounts from the certificate Date at the rate per annum shown above in this Section (calculated on the basis of a 36o-day year of twelve 30-day months). Interest on the Certificates shall be payable on February 15 and August 15 of each year, commencing February 15, 1998. SECTION 3: Terms of pavrnent-Pavinq Aqent/Reqistrar. The principal of, premium, if any, and the interest on the Certificates, due and payable by reason of maturity, redemption or otherwise, shall be payable only to the registered owners or holders of the certificates (hereinafter called the "Holders") appearing on the registration and transfer books maintained by the Paying Agent/Registrar and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The selection and appointment of Bank One, Texas, N.A., Fort Worth, Texas to serve as Paying Agent/Registrar for the certificates is hereby approved and confirmed. Books and records relating to the registration, payment, transfer and exchange of the certificates (the "Security Register") shall at all times be _kept and maintain~d on behalf of the City by the Paying Agent/Registrar, as provided herein and in accordance with the terms and provisions of a "Paying Agent/ Registrar Agreement", substantially in the form attached hereto as Exhibit A and such reasonable rules and regulations as the Paying Agent/Registrar and the City may prescribe. The Mayor and City Secretary are authorized to execute and deliver such Agreement in connection with the delivery of the certificates. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the certificates are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity qualified and authorized to serve in such capacity and perform the duties and services' of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each Holder by united States Mail, first class postage prepaid, which notice shall also give the address of the 'new Paying Agent/Registrar. Principal of and premium, if any, on the certificates shall be payable at the Stated Maturities or redemption only upon presentation and surrender of the certificates to the Paying Agent/Registrar at its designated offices in Westerville, Ohio (the "Designated Payment/Transfer Office"). Interest on the certificates shall be paid to the Holders whose names appear in the Security Register at the close of business on the Record Date 0420301 -3- (the last business day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent United states Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the principal of or interest on the Certificates shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the City where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. In the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Daten) will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent i!t Ifli....¡:;¡t five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. SECTION 4: Redemption. (a) optional Redemption. The certificates having Stated Maturities on and after February 15, 2008, shall be 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 multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on February 15, 2007, or on any date thereafter at the redemption price of par plus accrued interest to the date of redemption. At least forty-five (45) days prior to a redemption date for the certificates (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of the decision to redeem Certificates, the principal amount of each Stated Maturity to be redeemed, and the date of redemption therefor. The decision of the City to exercise the right to redeem Certificates shall be entered in the minutes of the governing body of the city. (b) Mandatorv Redemption. The Certificates having Stated Maturities of February 15, 20_ and February 15, 2017 ("Term 0-420301 -4- >,___,_~_.~e.,_,..__,,",.,___·_·_,""'<__~________·"_··__~-"-----,---~-",-_.'_..~- certificates") shall be subject to mandatory redemption prior to maturity at the redemption price of par and accrued interest to the date of redemption on the respective dates and in principal amounts as follows: (i) certificates maturing February 15, 20___ are subject to mandatory redemption on the dates and in the principal amounts as follows: Redemption Date Principal Amount February 15, 20 February 15, 20 $ ,000 ,000 (ii) certificates maturing February 15, 2017 are subject to mandatory redemption on the dates and in the principal amounts as follows: Date Principal Amount February 15, 20 February 15, 20 $ ,000 ,000 On or prior to each January 1 in each of the years specified above that the Term. certificates are to be mandatorily red(~emed, the Paying Agent/Registrar shall select by lot the numbers of the Term certificates within the applicable Stated Maturity to be redeemed on the next following February 15 from moneys set aside for that purpose in the certificate Fund (as hereinafter defined) . Any Term certificate not selected for prior redemption shall be paid on the date of their Stated Maturity. The principal amount of the Term certificates for a given Stated Maturity required to be redeemed pursuant to the operation of such mandatory redemption provisions shall be reduced, at the option of the city, by the principal amount of Term certificates of like Stated Maturity which, at least 50 days prior to the mandatory redemption date, (1) 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 (2) shall have been redeemed pursuant to the optional redemption provisions set forth in paragraph (a) of this section and not theretofore credited against a mandatory redemption requirement. (c) Selection of Certificates for Redemption. If less than all outstanding certificates of the same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/ Registrar shall treat such certificates as representing the number of certificates 042030 1 -5- .~-'"'--"..~~_._--'----_._-~--'---,~-------_._----------- outstanding which is obtained by dividing the principal amount of such certificates by $5,000 and shall select the Certificates to be redeemed within such Stated Maturity by lot. (d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Certificates, a notice of redemption shall be sent by united States Mail, first class postage prepaid, in the name of the City and at the City's expense, to each Holder of a certificate to be redeemed in whole or in part at the address of the Holder appearing on the Security Register at the close of business on the business day next preceding the date of mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Holder. All notices of redemption shall (i) specify the date of redemption for the Certificates, (ii) identify the Certificates to be redeemed and, in the case of a portion of the principal amount to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price, (iv) state that the Certificates, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemption date specif ied and the interest thereon, or on the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the redemption date., provided moneys suff iciéht for the payment of such Certificate (or the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar and (v) specify that payment of the redemption price for the Certificates, or the principal amount thereof to be redeemed, shall be made at the Designated Payment/Transfer Office of the Paying Agent/Registrar only upon presentation and surrender of the Certificates. If a certificate is subject by its terms to prior redemption and has been called for redemption and notice of redemption has been duly given as hereinabove provided, such certificate (or the principal amount thereof to be redeemed) shall become due and payable and interest thereon shall cease to accrue from and after the redemption date therefor. SECTION 5: Reqistration Transfer - Exchanqe of Certificates-Predecessor certificates. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each and every owner of the Certificates issued under and pursuant to the provisions of this Ordinance, or if appropriate, the nominee thereof. Any Certificate may be transferred or exchanged for Certificates of other authorized denominations by the Holder, in person or by his duly authorized agent, upon surrender of such certificate to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by 0420301 -6- the Holder or by his duly authorized agent, in a form satisfactory to the paying Agent/Registrar. Upon surrender of any certificate (other than the Initial certificate(s) authorized in section 8 hereof) for transfer at the Designated Payment/Transfer Office of the Paying Agent/Registrar, the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new certificates of authorized denominations, having the same Stated Maturity and of a like aggregate principal amount as the certificate or certificates surrendered for transfer. At the option of the Holder, Certificates (other than the Initial certificate(s) authorized in section 8 hereof) may be exchanged for other certificates of authorized denominations, having the same Stated Maturity, bearing the same rate of interest and of like aggregate' principal amount as the certificates surrendered for exchange, upon surrender of the certificates to be exchanged at the Designated Payment/Transfer Office of the Paying Agent/Registrar. Whenever any certificates are surrendered for exchange, the Paying Agent/Registrar shall register and deliver new certificates to the Holder requesting the exchange. All certificates issued in any transfer or exchange of Certificates shall be delivered to the ßolders at the Designat~d Payment/Transfer Office of the Paying Agent/Registrar or sent by United States Mail, first class, postage prepaid to the Holders, and, upon the registration and delivery thereof, the same shall be the valid obligations of the city, evidencing the same obligation to pay, and entitled to the same benefits under this Ordinance, as the certificates surrendered in such transfer or exchange. All transfers or exchanges of certificates pursuant to this section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. certificates cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be "Predecessor Certificates," evidencing all or a portion, as the case may be, of the same obligation to pay evidenced by the new certificate or Certificates registered and delivered in the exchange or transfer therefor. Addi tionally, the term "Predecessor certificates" shall include any mutilated, lost, destroyed, or stolen certificate for which a replacement certificate has been issued, registered and delivered in lieu thereof pursuant to the provisions of section 19 hereof and such 0420301 -7- new replacement Certificate shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen certificate. Neither the City nor the Paying Agent/ Registrar shall be required to issue or transfer to an assignee of a Holder any certificate called for redemption, in whole or in part, within 45 days of the date fixed for the redemption of such Certificate; provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance of a certificate called for redemption in part. SECTION 6: Book-Entrv Only Transfers and Transactions. Notwithstanding the provisions contained in Sections 3, 4 and 5 hereof relating to the payment and transfer/exchange of the Certificates, the City hereby approves and authorizes the use of "Book-Entry Only" securities clearance, settlement and transfer system provided by The Depository Trust Company (DTC) , a limited purpose trust company organized under the laws of the. State of New York, in accordance with the requirements and procedures identified in the Letter of Representation by and between the City, the Paying Agent/Registrar and DTC (the "Depository Agreement") relating to the Certificates. Pursuant to the.Depository Agreement and the~ules of DTC, the Certificates shall be deposited with DTC who shall hold said Certificates for its participants (the "DTC Participants") and, while the certificates are held by DTC under the Depository Agreement, the Holder of the Certificates on the Security Register for all purposes, including payment and notices, shall be Cede & Co., as nominee of DTC, notwithstanding the ownership of each actual purchaser or owner of each certificate (the "Beneficial Owners") being recorded in the records of DTC and DTC Participants. In the event DTC determines to discontinue serving as securities depository for the Certificates or otherwise ceases to provide book-entry clearance and settlement of securities transactions in general or the ci ty determines that DTC is incapable of properly discharging its duties as securities depository for the Certificates, the city covenants and agrees with the Holders of the Certificates to cause certificates to be printed in definitive form and provide for the Certificates to be issued and delivered to DTC Participants and Beneficial Owners, as the case may be. Thereafter, the Certificates in definitive form shall be assigned, transferred and exchanged on the Security Register maintained by the Paying Agent/Registrar and payment of such certificates shall be made in accordance with the provisions of Sections 3, 4 and 5 hereof. 0420301 -8- ,~_~_,,_____~~~_'_~~~~~_'~___'¥"'_____>~_'_"'_'_"""_,_".,___.,_",.....__...._,._.....__~__«_._~'__"_'_'_~~',_'_._'n..... SECTION 7: Execution - Reqistration. The certificates shall be executed on behalf of the City by the Mayor under its seal reproduced or impressed thereon and countersigned by the City Secretary. The signature of said officers on the Certificates may be manual or facsimile. certificates bearing the manual or facsimile signatures of individuals who are or were the proper officers of the city on the certificate Date shall be deemed to be duly executed on behalf of the City, notwithstanding that one or more of the individuals executing the same shall cease to be such officer at the time of delivery of the certificates to the initial purchaser(s) and with respect to certificates delivered in subsequent exchanges and transfers, all as authorized and provided in the Bond Procedures Act of 1981, as amended. No certificate shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on'such certificate either a certificate of registration substantially in the form provided in Section 9C, manually executed by the Comptroller of Public Accounts of the State of Texas, or his duly authorized agent, or a certificate of registration substantially in the form provided in section 9D, manually executed by an authorized officer, employee or representative of the Paying Agent/Registrar, and either such certificate duly signed upon any certificate shall be conclusive evidence; and the onJy pvidence¡ that such certificate has been duly certified, registered and delivered. SECTION 8: Initial certificate(s). The certificates herein authorized shall be initially issued either (i) as a single fully registered certificate in the total principal amount of $2,755,000 with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1, or (ii) as ( ) fully registered certificates, being one certificate for each year of maturity in the applicable principal amount and denomination and to be numbered consecutively from T-1 and upward (hereinafter called the "Initial Certificate(s)") and, in either case, the Initial Certificate(s) shall be registered in the name of the initial purchaser (s) or the designee thereof. The Initial Certificate(s) shall be the certificates submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser (s) . Any time after the delivery of the Initial Certificate(s), the Paying Agent/Registrar, pursuant to written instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial certificate(s) delivered hereunder and exchange therefor definitive certificates of authorized denominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant 0420301 -9- to and in accordance with such written instructions from the initial purchaser (s), or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 9: Forms. A. Forms Generallv. The Certificates, the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration Certificate of Paying Agent/Registrar, and the form of Assignment to be printed on each of the Certificates, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including insurance legends in the event the Certificates, or any maturities thereof, are purchased with insurance and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Certificates as evidenced by their execution. Any portion of the text of any Certificates may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the certificate. ,. The Certificates, including the Initial Certificate(s), shall be typewritten, printed, lithographed, or photocopied, or produced in any other similar manner, all as determined by the officers executing such certificates as evidenced by their execution. B. Form of Certificates. REGISTERED NO. REGISTERED $ UNITED STATES OF AMERICA STATE OF TEXAS CITY OF NORTH RICHLAND HILLS, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATE OF OBLIGATION, SERIES 1997 certificate Date: April 15, 1997 Interest Rate: Stated Maturity: CUSIP NO: Registered Owner: Principal Amount: DOLLARS 0420301 -10- The city of North Richland Hills (hereinafter referred to as the "city"), a body corporate and municipal corporation in the County of Tarrant, state of Texas, for value received, acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner named above, or the registered assigns thereof, on the Stated Maturity date specified above the Principal Amount hereinabove stated (or so much thereof as shall not have been paid upon prior redemption), and to pay interest on the unpaid principal amount hereof from the certificate Date 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 being payable on February 15 and August 15 in each year, commencing February 15, 1998. Principal of this certificate is payable at its Stated Maturity or redemption to the registered owner hereof, upon presentation and surrender, at the Designated Payment/Transfer Office' of the Paying Agent/Registrar executing the registration certificate appearing hereon, or its successor; provided, however, while this certificate is registered to Cede & Co., the payment of principal upon a partial redemption of the principal amount hereof may be accomplished without presentation and surrender of this certificate. Interest is payable to the registered owner of this certificate (or one or more Predecessor Certificates, as defined in the Ordinance hereinafter referenced) whose name appeDrson the "security Register" maintained by the Paying Agent/Regist~ar at the close of business on the "Record Date", which is the last business day of the month next preceding each interest payment date, and interest shall be paid by the Paying Agent/Registrar by check sent united states Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this certificate shall be without exchange or collection charges to the owner hereof and in any coin or currency of the united states of America which at the time of payment is legal tender for the payment of public and private debts. This certificate is one of the series specified in its title issued in the aggregate principal amount of $2,755,000 (herein referred to as the "Certificates") for the purpose of paying contractual obligations to be incurred for (i) the purchase of computers, equipment, machinery and vehicles for city departments and facilities, including the public safety and street departments and the municipal library, (ii) improvements to municipal golf course facilities, and (iii) professional services rendered in relation to such projects and the financing thereof, under and in strict conformity with the Constitution and laws of the State of Texas, particularly V.T.C.A., Local Government Code, Subchapter C 042030 1 -11- of Chapter 271, as amended, and pursuant to an Ordinance adopted by the city Council of the City (herein referred to as the "Ordinance") . The Certificates maturing on dates hereinafter identified (the "Term Certificates") are subject to mandatory redemption prior to maturity with funds on deposit in the Certificate Fund established and maintained for the payment thereof in the Ordinance, and shall be redeemed in part prior to maturity at the price of par and accrued interest thereon to the date of redemption, and without premium, on the dates and in the amounts set forth in the Ordinance. Certificates maturing February 15, 20____ are subject to mandatory redemption on February 15, 20__ and annually thereafter on February 15 through February 15, 20_ in the amounts set forth in the Ordinance. Certificates maturing on February 15, 2017 are subject to mandatory redemption on February 15, 20___ and annually thereafter on February 15 through February 15, 2016 in the amounts set forth in the Ordinance. The particular Term Certificates of a given maturity to be redeemed on each redemption date shall be chosen by lot by the Paying Agent/Registrar; provided, however, that the principal amount of Term certificates for a given maturity required to be redeemed pursuant to the operation of such mandatory redemption provisions shall be reduced, at the option of the City, by the principal amount of Term Certificates of like mattÜ"ity which, at least 50 days prior to a mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or (2) shall have been redeemed pursuant to the optional redemption provisions appearing below and not theretofore credited against a mandatory redemption requirement. The certificates maturing on and after February 15, 2008, may be redeemed prior to their Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity by lot by the Paying Agent/Registrar), on February 15, 2007, or on any date thereafter, at the redemption price of par, together with accrued interest to the date of redemption. At least thirty days prior to a redemption date, the City shall cause a written notice of such redemption to be sent by United States Mail, first class postage prepaid, to the registered owners of each Certificate to be redeemed at the address shown on the Security Register and subject to the terms and provisions relating thereto contained in the Ordinance. If a Certificate (or any portion of its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon the redemption date such Certificate (or the portion of its principal 042030 1 -12- sum to be redeemed) shall become due and payable, and, if moneys for the payment of the redemption price and the interest accrued on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar, interest shall cease to accrue and be payable from and after the redemption date on the principal amount redeemed. In the event a portion of the principal amount of a certificate is to be redeemed and the registered owner is someone other than Cede & Co., payment of the redemption price of such principal amount shall be made to the registered owner only upon presentation and surrender of such certificate to the Designated Payment/Transfer Office of the Paying Agent/Registrar, and a new certificate or Certificates of like maturity and interest rate in any authorized denominations provided by the Ordinance for the then unredeemed balance of the principal sum thereof will be issued to the registered owner, without charge. If a certificate is selected for redemption, in whole or in part, the City and the Paying Agent/Registrar shall not be required to transfer such certificate to an assignee of the registered owner within 45 days of the redemption date therefor; provided, however, such limitation on transferability shall not be applicable to an exchange by the registered owner of the unredeemed balance of a Bond redeemed ,. in part. The certif icates are payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the City and from a limited pledge of the Net Revenues (as defined in the Ordinance) of the City's combined Waterworks and Sanitary Sewer system (the "System"), such pledge of the Net Revenues for the payment of the Certificates being limited to an amount not in excess of $1,000 and, together with a parity pledge securing the payment of the Previously Issued certificates, being junior and subordinate to the lien on and pledge of such Net Revenues securing the payment of "Prior Lien obligations" (as defined in the Ordinance) now outstanding and hereafter issued by the city. In the Ordinance, the City reserves and retains the right to issue Prior Lien Obligations without limitation as to principal amount but subject to any applicable terms, conditions or restrictions under law or otherwise. Reference is hereby made to the Ordinance, a copy of which is on file in the Designated Payment/Transfer Office of the Paying Agent/Registrar, and to all the provisions of which the owner or holder of this certificate by the acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent of the tax levied for the payment of the Certificates; the properties constituting the System; the Net 042030 1 -13- Revenues pledged to the payment of the principal of and interest on the certificates; the nature and extent and manner of enforcement of the pledge; the terms and conditions relating to the transfer or exchange of this Certificate; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which the tax levy and the pledges, charges and covenants made therein may be discharged at or prior to the maturity of this Certificate, and this Certificate deemed to be no longer Outstanding thereunder; and for the other terms and provisions contained therein. Capi talized terms used herein have the meanings assigned in the Ordinance. This Certificate, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the Designated Payment/Transfer Office of the Paying Agent/Registrar, with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by, the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more new fully registered Certificates of the same Stated Maturity, of authorized denominations, bearing the same rate of interest, and of the same aggregate principal amount will be issued by the Paying Agent/Registrar to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, shall treat the registered owner whose name appears on the Security Register (i) on the Record Date as the owner entitled to payment of interest hereon, (ii) on the date of surrender of this Certificate as the owner entitled to payment of principal hereof at its Stated Maturity or its redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice to the contrary. In the event of nonpayment of interest on a scheduled payment date and for thirty (30) days thereafter, a new record date for such interest payment (a "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 (which shall be 15 days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. 042030 1 -14- It is hereby certified, recited, represented and declared that the city is a body corporate and political subdivision duly organized and legally existing under and by virtue of the Constitution and laws of the state of Texas; that the issuance of the certificates is duly authorized by law; that all acts, conditions and things required to exist and be done precedent to and in the issuance of the certificates to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the state of Texas, and the Ordinance; that the certificates do not exceed any Constitutional or statutory limitation; and that due provision has been made for the payment of the principal of and interest on the certificates as aforestated. In case any provision in this certificate 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. The terms and provisions of this certificate and the Ordinance shall be construed in accordance with and shall be governed by the laws of the state of Texas. IN WITNESS WHEREOF, the City Council of the City has caused this certificate to be duly executed under the official seal of the City as of the certificate Date. CITY OF NORTH RICHLAND HILLS, TEXAS COUNTERSIGNED: Mayor City Secretary ( SEAL) 0420301 -15- C. *Form of Reqistration Certificate of Comptroller of Public Accounts to a~pear on Initial certificate(s) only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS THE STATE OF TEXAS ( ( ( ( REGISTER NO. I HEREBY CERTIFY that this Certificate has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal of office this Comptroller of Public Accounts of the State of Texas ( SEAL) *NOTE TO PRINTER: Do Not Print on Definitive Certificates .. D. Form of certificate of Payinq Aqent/Reqistrar to appear on Definitive certificates only. REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR This Certificate has been duly issued and registered under the provisions of the within-mentioned Ordinance; the certificate or certificates of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. The designated offices of the Paying Agent/Registrar located in Westerville, Ohio, is the "Designated Payment/Transfer Office" for this Certificate. Registration Date: BANK ONE, TEXAS, N.A., Fort Worth, Texas, as Paying Agent/Registrar By Authorized Signature 00I20301 -16- E. Form of Assiqnment. 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 thereunder, and hereby irrevocably constitutes ............. all rights and appoints ................ ... ...... ..... .......... .................... attorney to transfer the within certificate on the books kept for registration thereof, with full power of substitution in the premises. DATED: .... .............. ............ ....... ............. .. ..... ........... ... NOTICE: The signature on this assign- ment must correspond with the name of the registered owner as it appears on the face of the within certificate in every particular. Signature guaranteed: F. The Initial certificate(s). shall, be in the form set forth in paraqraph B of this section. except that the form of a sinqle fullY reqistered Initial certificate shall be modified as follows: (i) immediately under the name headings .. Interest Rate " shall both be omitted; of the " and certificate the "Stated Maturity (ii) paragraph one shall read as follows: Registered Owner: Principal Amount: Dollars The City of North Richland Hills (hereinafter referred to as the "City"), a body corporate and municipal corporation in the County of Tarrant, state of Texas, for value received, acknowledges itself indebted to and hereby prpmises to pay to the order of the Registered Owner named above, or the registered assigns thereof, the principal Amount hereinabove stated on February 15 in each of the years and in principal installments in accordance with the following schedule: 042030 1 -17- - --- ---~._.------~----~_.'~._._-~-,---,,- ~ -.-..~'--~_.'------_.. .- ~----'-~-----'_._----------- YEAR PRINCIPAL INSTALLMENTS INTEREST RATE (Information to be inserted from schedule in Section 2 hereof). (or so much thereof as shall not have been prepaid prior to maturity) and to pay interest on the unpaid principal amounts hereof from the Certificate Date at the per annum rate(s) of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on February 15 and August 15 of each year, commencing February 15, 1998. Principal installments of this Certificate are payable at its Stated Maturity or on a prepayment date to the registered owner hereof by Bank One, Texas, N.A., Fort Worth, Texas (the "Paying Agent/Registrar"), upon presentation and surrender, at its designated offices in Westerville, Ohio (the "Designated Payment/Transfer Office"). Interest is payable to the registered owner of this Certificate whose name appears on the "Security Register" maintained by the Paying Agent/Registrar at the close of business on the "Record Date", which is the last business day of the month next preceding each interest payment date hereof and interest shall be paid by the Paying Agent/Registrar by check sent United States Mail, first class postage prepaid, to the address of the registered owner recorded in the Security Register or by,such other method, acceptable to the Paying Agent/ Registrar, requested by, and at the risk and expense of, the registered owner. All payments of principal of, premium, if any, and interest on this Certificate shall be without exchange or collection charges to the owner hereof and in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 10: Definitions. That for purposes of this Ordinance and for clarity with respect to the issuance of the Certificates herein authorized, and the levy of taxes and appropriation of Net Revenues therefor, the following words or terms, whenever the same appears herein without qualifying language, are defined to mean as follows: (a) The term "Certificates" shall mean the $2,755,000 "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1997" authorized by this Ordinance. (b) The term "Certificate Fund" shall mean the special Fund created and established under the provisions of Section 11 of this Ordinance. 042030 1 -18- 0420301 (c) The term "Collection Date" shall mean, when reference is being made to the levy and collection of annual ad valorem taxes, the date the annual ad valorem taxes levied each year by the City become delinquent. (d) The term "Fiscal Year" shall mean the twelve month financial accounting period for the System ending September 30th of each year; provided, however, the City, by ordinance, may change the Fiscal Year to another period of not less than twelve calendar months. (e) The term "Government Securities" shall mean direct obligations of the united States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the united States of America, and united States Treasury obligations such 'as its State and Local Government Series in book-entry form. (f) The term "Gross Revenues" shall mean all income and revenues of every nature derived or received from the operation and ownership (excluding refundable meter deposits, restricted gifts and grants in aid of construction, impact fees charged developers and special assessments against landowners) of the system, inclutHng earnings and income der i ved from the investment or deposit of moneys in any special funds or accounts created and established for the payment and security of the Prior Lien Obligations and other obligations payable solely from and secured only by a lien on and pledge of the Net Revenues. (g) The term "Operating and Maintenance Expenses" shall mean all current expenses of operating and maintaining the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service; provided, however, that only such repairs and extensions, as in the judgment of the City Council, reasonably and fairly exercised, are necessary to maintain the operations and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair obligations payable from Net Revenues shall be deducted in determining "Net Revenues". Depreciation charges shall not be considered Operating and Maintenance Expenses. Operating and Maintenance Expenses shall include payments under contracts for the purchase of water supply, treatment of sewage or other materials, goods or -19- services for the System to the extent authorized by law and the provisions of such contract. (h) The term "Net Revenues" shall mean Gross Revenues of the System, with respect to any period, after deducting the System's Operating and Maintenance Expenses during such period. (i) The term "Outstanding" when used in this Ordinance with respect to certificates means, as of the date of determination, all certificates theretofore issued and delivered under this Ordinance, except: (1) those Certificates cancelled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; (2) those certificates for which payment has been duly provided by the City in accordance with the provisions of Section 20 hereof; and (3) those certificates that have been mutilated, destroyed, lost, or stolen and replacement certificates have been.registered and delivered in lieu thereof as provided in Section 19 hereof. (j) The term "Previously Issued Certificates" shall mean the outstanding (i) "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1992", dated February 1, 1992, originally issued in the principal amount of $900,000 and (ii) "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1993", dated May 1, 1993, originally issued in the principal amount of $1,185,000. (k) The term "Prior Lien Obligations" shall mean all revenue bonds or other obligations, now outstanding and hereafter issued, payable from and secured, in whole or in part, by a lien on and pledge of the Net Revenues of the System, including, but not limited to, the outstanding and unpaid: "City of North Richland Hills, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1996", dated December 1, 1996, and originally issued in the principal amount of $5,135,000. 042030 1 -20- (1) The term "System" shall mean all properties, facilities and plants currently owned, operated and maintained by the City for the supply, treatment and transmission of treated potable water and the collection, treatment and disposal of water-carried wastes, together with all future extensions, improvements, replacements and additions thereto; provided, however, that notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law, the term "System" shall not mean to include facilities of any kind which are declared not to be a part of the System and which are acquired or constructed by or on behalf of the ci ty wi th the proceeds from the issuance of "Special Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are not Prior Lien obligations but which are payable from and secured by other liens on and pledges of any revenues, sources or payments, not pledged to the payment of the Prior Lien Obligations including, but not limited to, special contract revenues or payments received from any other legal entity in connection with such facilities. SECTION 11: certificate Fund. That, for the purpose of paying the interest on, and to provide a sinking. fund for the payment, redemption and retirement of the certif icates, there shall be and is hereby created a special account or fund on the books and records of the City known as the "SPECIAL SERIES 1997 TAX AND REVENUE CERTIFICATE OF OBLIGATION FUND", and all moneys deposited to the credit of such Fund shall be kept and maintained in a banking account at the city's depository bank. Authorized officials of the City are hereby authorized and directed to make withdrawals from said Fund sufficient to pay the principal of and interest on the certificates as the same become due and payable, and, shall cause to be transferred to the Paying Agent/Registrar from moneys on deposit in the certificate Fund an amount sufficient to pay the amount of principal and/or interest falling due on the certificates, such transfer of funds to the Paying Agent/Registrar to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent/Registrar on or before the last business day next preceding each interest and principal payment date for the certificates. Pending the transfer of funds to the Paying Agent/Registrar, money in the certificate Fund may, at the option of the City, be invested in obligations identified in, and in accordance with the provisions of the "Public Funds Investment Act" (V.T.C.A., Government Code, Chapter 2256) relating to the investment of "bond proceeds"; provided that all such investments shall be made in such a manner that the money required to be expended from said 042030 1 -21- Fund will be available at the proper time or times. All interest and income derived from deposits and investments in said Certificate Fund shall be credited to, and any losses debited to, the said Certificate Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Certificates. SECTION 12: Tax Levy. That, to provide for the payment of the "Debt Service Requirements" on the Certificates being (i) the interest on said Certificates and (ii) a sinking fund for their redemption at maturity or a sinking fund of 2% (whichever amount shall be the greater), there shall be and there is hereby levied for the current year and each succeeding year thereafter while said Certificates or any interest thereon shall remain Outstanding, a sufficient tax on each one hundred dollars' valuation of taxable property in said City, adequate to pay such Debt Service Requirements, full allowance being made for delinquencies and costs of collection; said tax shall be assessed and collected each year and applied to the payment of the Debt Service Requirements, and the same shall not be diverted to any other purpose. The taxes so levied and collected shall be paid into the Certificate Fund. The City Council hereby declares its purpose and intent to provide and levy a tax legally and fully sufficient to pay the said Debt Service Requirements, it having been determiped .th_at. ,t.þeexisting. and available taxing authority of the City for such purpose is adequate to permit a legally sufficient tax in consideration of all other outstanding indebtedness. Accrued interest and premium, if any, received from the purchasers of the Certificates shall be deposited to the Certificate Fund. In addition, any surplus proceeds from the sale of the Certificates not expended for authorized purposes shall be deposited in the Certificate Fund, and such amounts so deposited shall reduce the sums otherwise required to be deposited in said Fund from ad valorem taxes. SECTION 13: Limi ted Pledqe of Net Revenues. The City hereby covenants and agrees that, subject to the prior lien on and pledge of the Net Revenues of the System to the payment and security of Prior Lien Obligations, the Net Revenues of the System in an aggregate amount not to exceed $1,000 are hereby irrevocably pledged to the payment of the principal of and interest on the Certificates, and the limited pledge of $1,000 of the Net Revenues of the System herein made for the payment of the Certificates shall constitute a lien on the Net Revenues of the System in accordance with the terms and provisions hereof and shall be on an parity in all respects with the lien on the Net Revenues securing the payment of the Previously Issued Certificates. Furthermore, such lien on and pledge of the Net Revenues securing the payment 00I203O 1 -22- of the certificates shall be valid and binding without further action by the City and without any filing or recording except for the filing of this Ordinance in the records of the City. SECTION 14: System Fund. The City covenants and agrees that revenues derived from the operation of the System shall be accounted for separate and apart from all other funds, accounts and moneys of the City, and all such revenues shall be deposited as collected into a fund maintained at an official depository of the City and known on the books of the City as the "Water and Sewer System Fund" (hereinafter called the "System Fund"). All moneys deposited to the credit of the System Fund shall be allocated, appropriated and budgeted to the extent required for the following purposes and in the order of priority shown, to wit: First: To the payment of all necessary and reasonable Operating and Maintenance Expenses of the System as defined herein or required by statute to be a first charge on and claim against the Gross Revenues of the System, Second: To the payment of all amounts required to be deposited in the special Funds created and established f or the payment, secur i ty and benef it of Pr ior Lien OQ.ligations i:1 açcordance with the terms and provisions of the ordinances authorizing the issuance of Prior Lien Obligations. Third: To the payment, equally and ratably, of the limited amounts pledged to the payment of the Previously Issued certificates and the certificates. Any Net Revenues remaining in the System Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other City purpose now or hereafter permitted by law. SECTION 15: Security of Funds. All moneys on deposit in the Funds for which this Ordinance makes provision (except any portion thereof as may be at any time properly invested) shall be secured in the manner and to the fullest extent required by the laws of Texas for the security of public funds, and moneys on deposit in such Funds shall be used only for the purposes permitted by this Ordinance. SECTION 16: Special Covenants. covenants as follows: The City hereby further I 0420301 -23- (a) It has the lawful power to pledge the Net Revenues of the System to the payment of the certificates in the manner herein contemplated and has lawfully exercised such power under the Constitution and laws of the State of Texas, including said power existing under Articles 1111 et seq., V.A.T.C.S. and V.T.C.A., Local Government Code, Sections 271.041, et seq. (b) Other than for the payment of the Certificates, the Previously Issued certificates identified in Section 10(j), and the Prior Lien Obligations identified in Section 10(k) hereof, the Net Revenues of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System. SECTION 17: Issuance of Prior Lien Obliqations. The City expressly reserves the right to hereafter issue Prior Lien Obligations, without limitation as to principal amount but subject to any terms, conditions or restrictions applicable thereto under law or otherwise. Prior Lien Obligations hereafter issued may be payable, in whole or in part, from the Net Revenues (without impairment of the obligation of contract with the Holders of the Certificates) upon such terms and conditions-i'!sthe City Council may determine. Additionally, the City reserves the right to issue obligations payable, in whole or in part, from the Net Revenues of the System and, to the extent provided, secured by a lien on and pledge of the Net Revenues of equal rank and dignity with the lien and pledge securing the payment of the Certificates and the Previously Issued certificates. SECTION 18: Application of Prior Lien Obliqations Covenants and Aqreements. It is the intention of this governing body and accordingly hereby recognized and stipulated that the provisions, agreements and covenants contained herein bearing upon the management and operation~ of the System, and the administering and application of revenues derived from the operation thereof, shall to the extent possible be harmonized with like provisions, agreements and covenants contained in the ordinances authorizing the issuance of the Prior Lien Obligations, and to the extent of any irreconcilable conflict between the provisions contained herein and in the ordinances authorizing the issuance of the Prior Lien Obligations, the provisions, agreements and covenants contained therein shall prevail to the extent of such conflict and be applicable to this Ordinance but in all respects subject to the priority of rights and benefits, if any, conferred thereby to the holders of the Prior Lien Obligations. Notwithstanding the above, any change or modification affecting the application of revenues derived from the operation of the System shall not impair the 042030 1 -24- obligation of contract with respect to the limited pledge of revenues herein made for the payment and security of the certificates. SECTION 19: Mutilated - Destroyed - Lost and Stolen certificates. In case any certificate shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement certificate of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated certificate, or in lieu of and in substitution for such destroyed, lost or stolen Certificate, only upon the approval of the City and after (i) the filing by the Holder thereof with the Paying Agent/Registrar of evidence satisfactory to the Paying Agent/Registrar of the destruction, loss or theft of such certificate, and of the authenticity of the ownership thereof and (ii) the furnishing' to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement certificate shall be borne by the Holder of the certificate mutilated, or destroyed, lost or stolen. Every replacement certif icate issued pursuant to this Section shall be a valid and binding obligation, and shdllbe entitled t.o all the benefits of this Ordinance equally and ratably with all other outstanding certificates; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen certificates. The provisions of this section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost or stolen certificates. SECTION 20: satisfaction of Obliqation of city. If the City shall payor cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on the certif icates, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied under this Ordinance and the Net Revenues of the system (to the extent such limited pledge of Net Revenues shall not have been discharged or terminated by prior payment of principal of or interest on the certificates) and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and satisfied. certificates or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect expressed above in this section when (i) money sufficient to pay 042030 1 -25- in full such Certificates or the principal amount(s) thereof at maturi ty or the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized escrow agent, which Government Securities have been certif ied by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, wi thout reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the principal of and interest on such Certificates, or the principal amount(s) thereof, on and prior to the Stated Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/ Registrar have been made) the redemption date thereof. The City covenants that no deposit of moneys or Government Securities will be made under this Section and no use made of any such deposit which would cause the Certificates to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized· escrow agent, and all~income from Governillênt Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Certificates, or any principal amount(s) thereof, or interest thereon with respect to which such moneys have been so deposited shall be remitted to the City or deposi ted as directed by the City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Certificates and remaining unclaimed for a period of four (4) years after the Stated Maturity, or applicable redemption date, of the Certificates such moneys were deposited and are held in trust to pay shall upon the request of the City be remitted to the City against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State of Texas. SECTION 21: Ordinance a Contract -Amendments. This Ordinance shall constitute a contract with the Holders from time to time, be binding on the City, and shall not be amended or repealed by the City so long as any Certificate remains outstanding except as permitted in this Section. The City may, without the consent of or notice to any Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission 0-420301 -26- herein. In addition, the city may, with the consent of Holders holding a majority in aggregate principal amount of the certificates then outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Certificates, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Certificates, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Certificates, (2) give any preference to any certificate over any other Certificate, or (3) reduce the aggregate principal amount of certificates required to be held by Holders for consent to any such amendment, addition, or rescission. SECTION 22: Covenants to Maintain Tax-Exempt Status. When used in this Section, the following terms have the following meanings: "Closing Date" means the date on which the certificates are first authenticated and delivered to the initial purchasers against payment therefor. "Coqe" ,means the Internal Revenue Coçle of 1986, as amended by all legislation, if any, effective on or before the Closing Date. "Computation Date" has the meaning set forth in Section 1.148-1(b) of the Regulations. "Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of the Regulations, and any replacement proceeds as defined in Section 1.148-1 (c) of the Regulations, of the certificates. "Investment" has the meaning set forth in section 1.148-1(b) of the Regulations. " Nonpurpose Investment" means any investment property, as defined in section 148(b) of the Code, in which Gross Proceeds of the Certificates are invested and which is not acquired to carry out the governmental purposes of the Certificates. "Rebate Amount" has the meaning set forth in Section 1.148-1(b) of the Regulations. 042030 1 -27- "Regul ations" means any proposed, temporary, or final Income Tax Regulations issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, which are applicable to the certificates. Any reference to any specific Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax Regulation designed to supplement, amend or replace the specific Regulation referenced. "Yield" of (1) any Investment has the meaning set forth in section 1.148-5 of the Regulations and (2) the Certificates has the meaning set forth in Section 1.148- 4 of the Regulations. (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use' of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which if made or omitted, respecti vely , would cause the interest on any Certif icate to become includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal income tax purposes. Without limiting the generality of the foregoing, unless and until the City receiveb" a". written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exemption from federal income tax of the interest on any certificate, the City shall comply with each of the specific covenants in this section. (c) No Private Use or Private Payments. Except as permitted by section 141 of the Code and the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of Certificates: (1) exclusively own, operate and possess all property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with Gross Proceeds of the Certificates, and not use or permi t the use of such Gross Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or any property acquired, constructed or improved with such Gross Proceeds in any activity carried on by any person or entity (including the United States or any agency, department and instrumentality thereof) other than a state or local government, unless such use is solely as a member of the general public; and 0420301 -28- (2) not directly or indirectly impose or accept any charge or other payment by any person or entity who is treated as using Gross Proceeds of the certificates or any property the acquisition, construction or improvement of which is to be financed or refinanced directly or indirectly with such Gross Proceeds, other than taxes of general application within the city or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Private Loan. Except to the extent permitted by section 141 of the Code and the Regulations and rulings thereunder, the city shall not use Gross Proceeds of the certificates to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes; (2) capacity in or service from such property is committed to such person or entity under a take-or-pay, output or similar contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any property acquired; constructed or improved'_ with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. (e) Not to Invest at Hiqher Yield. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not at any time prior to the final Stated Maturity of the certificates directly or indirectly invest Gross Proceeds in any Investment (or use Gross Proceeds to replace money so invested), if as a result of such investment the Yield from the Closing Date of all Investments acquired with Gross Proceeds (or with money replaced thereby), whether then held or previously disposed of, exceeds the Yield of the certificates. (f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the certificates to be federally guaranteed within the meaning of section 149(b) of the Code and the Regulations and rulings thereunder. (g) Information ReDort. The City shall timely file the information required by section 149 (e) of the Code with the Secretary of the Treasury on Form 8038-G or such other form and in such place as the Secretary may prescribe. ().(2()301 -29- (h) Rebate of Arbitraqe Profits. otherwise provided in section 148(f) Regulations and rulings thereunder: (1) The city shall account for all Gross Proceeds (including all receipts, expenditures and investments thereof) on its books of account separately and apart from all other funds (and receipts, expenditures and investments thereof) and shall retain all records of accounting for at least six years after the day on which the last outstanding Certificate is discharged. However, to the extent permitted by law, the City may commingle Gross Proceeds of the certificates with other money of the city, provided that the City separately accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired therewith. Except to the extent of the Code and the (2) Not less frequently than each Computation Date, the city shall calculate the Rebate Amount in accordance with rules set forth in section 148(f) of the Code and the Regulations and rulings thereunder. The City shall maintain such calculations with its official transcript of proceedings relating to the issuance of the Certificates until six years after the final Computation-Date. (3) As additional consideration for the purchase of the certificates by the Purchasers and the loan of the money represented thereby and in order to induce such purchase by measures designed to insure the excludability of the interest thereon from the gross income of the owners thereof for federal income tax purposes, the City shall pay to the United states out of the Certificate Fund or its general fund, as permitted by applicable Texas statute, regulation or opinion of the Attorney General of the state of Texas, the amount that when added to the future value of previous rebate payments made for the certificates equals (i) in the case of a Final Computation Date as defined in section 1.148-3(e) (2) of the Regulations, one hundred percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date. In all cases, the rebate payments shall be made at the times, in the installments, to the place and in the manner as is or may be required by section 148(f) of the Code and the Regulations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required by Section 148(f) of the Code and the Regulations and rulings thereunder. 00I203O 1 -30- (4) The city shall exercise reasonable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2) and (3), and if an error is made, to discover and promptly correct such error wi thin a reasonable amount of time thereafter (and in all events within one hundred eighty (180) days after discovery of the error), including payment to the united states of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed under section 1.148-3(h) of the Regulations. (i) Not to Divert Arbitraqe Profits. Except to the extent permitted by section 148 of the Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier of the Stated Maturity or final payment of the certificates, enter into any transaction that reduces the amount required to be paid' to the United states pursuant to Subsection (h) of this section because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Yield of the certificates not been relevant to either party. (j) Elections. The City hereby directs and authorizes the Mayor, City Secretary, City Manager, Assistant city Manager, and Director of Finance, individually or jointly, to make elections permitted or required pursuant to the provisions of the Code or the Regulations, as they deem necessary or appropriate in connection with the Certificates, in the certificate as to Tax Exemption or similar or other appropriate certificate, form or document. SECTION 23: Sale of Certificates. Pursuant to a public sale for the Certificates, the bid submitted by (herein referred to as the "Purchasers") is declared to be the best bid received producing the lowest true interest cost rate to the City, and the sale of the certificates to said Purchasers at the price of par and accrued interest to the date of delivery, plus a premium of $ , is hereby approved and confirmed. Delivery of the certificates to the Purchasers shall occur as soon as possible upon payment being made therefor in accordance with the terms of sale. SECTION 24: Official Statement. The Official Statement prepared in the initial offering and sale of the certificates by the City, together with all addendas, supplements and amendments thereto issued on behalf of the City, is hereby approved as to form and content, and the City Council hereby finds that the information and data contained in said Official Statement pertaining to the City and its financial affairs is true and correct in all material respects and no material facts have been ~l -31- omitted therefrom which are necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The use of such Official statement in the reoffering of the Certificates by the Purchasers is hereby approved and authorized. SECTION 25: Proceeds of Sale. The proceeds of sale of the Certificates, excluding the accrued interest received from the Purchasers, shall be deposited in a construction fund maintained at the City's depository bank. Pending expenditure for authorized projects and purposes, such proceeds of sale may be invested in authorized investments and, subject to the provisions of Section 22(h) hereof, any investment earnings realized shall be expended for such authorized projects and purposes or deposited in the Certificate Fund as shall be determined by the City Council. Accrued int~rest and premium, if any, as well as all surplus proceeds of sale of 'the Certificates, including investment earnings, remaining after completion of all authorized projects or purposes shall be deposited to the credit of the Certificate Fund. SECTION 26: Control and CUstody of Proceedinqs. The Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending the sale of the Certificates, the investigation by the Attorney General of the state of Texas, including the printing and supply of defiuitive Certificates, and shall take and have charge and control of the Initial Certificate(s) pending the approval thereof by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery thereof to the Purchasers. Furthermore, the Mayor, City Secretary, Director of Finance, Assistant City Manager, and City Manager, anyone or more of said officials, are hereby authorized and directed to furnish and execute such documents and certifications relating to the City and the issuance of the Certificates, including a certification as to facts, estimates, circumstances and reasonable expectations pertaining to the use and expendi ture and investment of the proceeds of the Certificates as may be necessary for the approval of the Attorney General and their registration by the Comptroller of Public Accounts. In addition, such officials, together with the City's financial advisor, bond counsel and the Paying Agent/Registrar, are authorized and directed to make the necessary arrangements for the delivery of the Initial Certificate(s) to the Purchasers and the initial exchange thereof for definitive Certificates. SECTION 27: Notices to Holders-Waiver. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and sent by United States Mail, first G42030 1 -32- class postage prepaid, to the address of each Holder appearing in the Security Register at the close of business on the business day next preceding the mailing of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to all other certificates. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event with respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 28: Cancellation. All Certificates surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the paying Agent/Registrar, shall be promptly cancelled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already cancelled, shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time deliver to the Paying __ Þ.gcntíRegistr.ar >,_ for cancellation any ,Certificates previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all certificates so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled certificates held by the Paying Agent/Registrar shall be returned to the City. SECTION 29: Market Opinion. The Purchasers' obligation to accept delivery of the certificates is subject to being furnished a final opinion of Fulbright & Jaworski L.L.P., Dallas, Texas, approving the certificates as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for the certificates. An executed counterpart of said opinion shall accompany the global certificates deposited with The Depository Trust Company or a reproduction thereof shall be printed on the definitive Certificates in the event the book entry only system shall be discontinued. SECTION 30: CUSIP Numbers. CUSIP numbers may be printed or typed on the definitive certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive certificates shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving the certificates as to legality are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive certificates. 0420301 -33- SECTION 31: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City, the Paying Agent/Registrar and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive benefit of the City, the Paying Agent/Registrar and the Holders. SECTION 32: Inconsistent Provisions. All ordinances, orders or resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to the extent of such conflict, and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein. SECTION 33: Governinq Law. This Ordinance shall be construed and enforced in accordance with the laws of the state of Texas and the United States of America. SECTION 34: Effect of Headinqs. herein are for convenience only and construction hereof. The shall Section headings not affect the SECTION 3.5~ .Constructi.Q..!L_of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, words of the plural number shall be considered to include the singular, and words of the masculine, feminine or neuter gender shall be considered to include the other genders. SECTION 36: Severability. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and the City Council hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 37: continuinq Disclosure Undertaking. (a) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. 0420301 -34- "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United states Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. (b) Annual Reports. The City shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year (beginning with the fiscal year ending September 30, 1997) financial information and operating data with respect to the City of the general type included in the final Official Statement approved by Section 24 'of this Ordinance, being the information described in Exhibit B hereto. Financial statements to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit B hereto and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If audited financial statements are not available at the time the financial information and operating data must be provided, then the City Ghall prövide unaudited financial statements fQr"the applicable fiscal year to each NRMSIR and any SID with the financial information and operating data and will file the annual audit report, when and if the same becomes available. If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this section. The financial information and operating data to be provided pursuant to this section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. (c) Material Event Notices. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 042030 1 -35- 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax- exempt status of the Certificates; 7. Modifications to rights of holders of the Certificates; 8. Certificate calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Certificates; and 11.· Rating changes. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b) of this Section by the time required by such Section. (d) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section while, but only while, the City remains an "obligated person" with respect to the certificates within the meaning of the Rule, except that the City in any event will give the notice required by subsection (c) hereof of any Certificate calls and defeasance that cause the City to be no longer such an "obligated person." The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Certificates, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a 042030 1 -36- complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall constitute a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state ~~curities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances resulting from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (1) the provisions of this Section, as so amended, would have permitted underwriters to purchase or sell certificates in the primary offering of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the Outstanding Certificates consent to such amendment or (b) a Person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Holders and beneficial owners of the Certificates. The provisions of this section may also be amended from time to time or repealed by the city if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reservation of the City's right to do so would not prevent underwriters of the initial public offering of the Certificates from lawfully purchasing or selling certificates in such 042030 1 -37- offering.If the city so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection (b) an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information or operating data so provided. SECTION 38: Public Meetinq. It is officially found, determined, and declared that the meeting at which this Ordinance is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Ordinance, was given, all as required by V.T.C.A., Government Code, Chapter 551, as amended. SECTION 39: Effective Date. This Ordinance shall be in full force and effect from and after its passage on the date shown below and it is so ordained. PASSED AND ADOPTED, this April 28, 1997. CITY OF NORTH RICHLAND HILLS, TEXAS Mayor ATTEST: City Secretary APPROVED AS TO LEGALITY: City Attorney (Ci ty Seal) 0420301 -38- EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of April 28, 1997 (this "Agreement"), by and between the City of North Richland Hills, Texas (the "Issuer"), and Bank One Texas, N. A., Fort Worth, Texas, a national association duly organized and existing under the laws of the United States of America, (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of North Richland Hills, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue certificates of Obligation, Series 1997" (the "Securities") in the aggregate principal amount of $2,755,000, which Securities are scheduled to be delivered to the initial purchasers on or about June 4, 1997; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the ~egistered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as paying Agent with respect to the Securities, and, as Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof; all in accordance with this Agreement and the "Bond Resolution" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities and, as Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Bond Resolution". The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. 0420ð26 section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Annex A attached hereto for the first year of this Agreement and thereafter 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. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel) . ARTICLE TWO DEFINITIONS section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: ,- , -- "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the offices of the Bank located in Westerville, Ohio at the address appearing in section 3.01 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Bond Resolution" means the resolution, order, or ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank. "Fiscal Year" means the fiscal year of the Issuer, ending September 30th. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor, City Manager, Ass istant City Manager, Director of Finance, or City Secretary, anyone or more of said officials, and delivered to the Bank. 0420ð26 -2- EXHIBIT A 0-420026 "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "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 Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Resolution). "Record Date" means the Record Date as defined in the Bond Resolution. "Redemption Date" when used with respect to any Security to be redeemed means the, date fixed for such redemption pursuant to the terms of the Bond Resolution. "Responsible Officer.. when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" means the securities defined in the recital paragraphs herein. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfers of Securities. "Stated Maturity" means the date specified in the Bond Resolution the principal of a Security is scheduled to be due and payable. -3- EXHIBIT A section 2.02. Other Def ini tions. The terms "Bank, " "Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT section 3.01. Duties of payinq Aqent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the following offices: Bank One, Texas, N.A. Attention: Securities Transfer 235 West Schrock Road Westerville, Ohio 43081-0393 As Paying Agent, the Bank shall, provided adequate collected funds have been provided ,to it. for ","ueh purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and making payment thereof to the Holders of the Securities (or their Predecessor Securities) on the Record Date (as defined in the Resolution). All payments of principal and/or interest on the Securities to the registered owners shall be accomplished (1) by the issuance of checks, payable to the registered owners, drawn on the fiduciary account provided in section 5.05 hereof, sent by united States mail, first class, postage prepaid, to the address appearing on the Security Register or (2) by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. section 3.02. PaYment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities at the dates specified in the Bond Resolution. ARTICLE FOUR REGISTRAR Section 4.01. Security Register - Transfers and Exchanqes. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by 0420626 -4- EXHIB\T l\ the Issuer and subj ect to such reasonable regulations as the Issuer and Bank may prescribe. The Bank represents and warrants its office in Fort Worth, Texas will at all times have immediate access to the Security Register by electronic or other means and will be capable at all times of producing a hard copy of the Security Register at its Fort Worth office for use by the Issuer. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed ~nd new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. section 4.02. certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other governments or corporations for which it serves as registrar, or that is maintained for its own securities. section 4.03. Form of Security Reqister. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. 0420ð26 -5- EXHIBIT A The security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled certificates. The Bank will, at such reasonable intervals as it determinesf cancel and destroy, pursuant to the Securities and Exchange Act of 1934, all Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. section 4.06. Mutilated. Destroved. Lost or Stolen Securi- ties. The Issuer hereby instructs the Bank, subject to the provisions of section 19 of the Bond Resolution, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only upon the approval of the Issuer and after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated wi th such indemni ty and wi th the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. ~26 -6- EXHIBIT A Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. section 5.02. Reliance on Documents, Etc. may conclusively rely, as to the truth of the correctness of the opinions expressed therein, on opinions furnished to the Bank. (a) The Bank statements and certificates or (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 prov1s1ons of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counselor any opinion of counsel shall be full and complete authorization and protection with respect to any action 0420õ26 -7- EXH!Bfr t\' taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. section 5.04. May' Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held bY Bank - Fiduciarv Accountl Collateralization. A fiduciary account shall at all times be kept and maintained by the Bank for the receipt,. safekeeping and disbursement of moneys received from the Issuer hereunder for the payment of the Securities, and money deposited to the credit of such account until paid to the Holders of the Securities shall be continuously collateralized by securities or obligations which qualify and are eligible under both the laws of the State of Texas and the laws of the united States of America to secure and be pledged as collateral for fiduciary accounts to the extent such money is not insured by the Federal Deposit Insurance Corporation. Payments made from such fiduciary account shall be made by check drawn on such fiduciary account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. The Bank shall be under no liability for interest on any money received by it hereunder. Subject to the applicable unclaimed property laws of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for four years after final maturity of the Security has become due and payable will be paid by the Bank to the Issuer, and the Holder of such Security shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such moneys shall thereupon cease. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without 0420026 -8- EXHiBIT R. negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. DTC Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the !'Operational Arrangements", effective December 12, 1994, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. section 6.02. Assiqnment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on page 11. Section 6.04. Effect of Headinqs. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 0<l201I26 -9- ~~H!tHT ~"\ section 6.05. Successors and Assiqns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legali ty, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. section 6.07. Benefits of Aqreement. 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 Aqreement. This Agreement and the Bond Resolution constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Bond Resolution, the Bond Resolution shall govern. section 6.09. counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. The 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 such notice of resignation. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. 0420626 -10- t:YHIR\T l\ 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. Governinq Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BANK ONE, TEXAS, N.A., Fort Worth, Texas BY Title: [SEAL] Attest: Title: Address: 500 Throckmorton Suite 704-West Complex Fort Worth, Texas 76102 CITY OF NORTH RICHLAND HILLS, TEXAS BY Mayor (CITY SEAL) Attest: Address: P. O. Box 820609 North Richland Hills, Texas 76180 City Secretary 0420626 -11- !t:,. ....¡.f. !.Jìr:w·· r ,I._l~ ~~, ~\" j ,..!\ Exhibit B to Ordinance .... DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in section 37 of this Ordinance. Annual Financial Statements and operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: 1. The financial statements of the City appended to the Official Statement as Appendix B, but for the most recently concluded fiscal year. 2. The information contained in Tables 1 through 6 and 8 through 15 of the Official Statement. Accounting principles The accounting principles referred to in such section are the generally accepted accounting principles as applicable to governmental units as prescribed by The Government Accounting Standards Board. 00I20301 CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 04/28/97 ',- Subject: Appointment to Board of Adjustment Agenda Number: GN 97-37 Place 6 on the Board of Adjustment is vacant. Mr. Don Ferguson has been recommended for appointment. Recommendation: It is recommended that City Council take action on the proposed appointment. "- Finance Review Source of Funds: Acct. Number Bonds (GO/Rev.) Sufficient Funds Available Operating Budget _ I Other - 'Ø~C(~~ , Department Head Signature ! CnYCOUNC~ACnON"EM Finance Dlreelot Page 1 of CITY OF NORTH RICHLAND HILLS Agenda Number: 4/28/97 GN 97-38 Department: Public Works Approve "No Parking - Loading/Unloading Subject: Only" Zone in the 6700 Block of Smithfield Road - Ordinance No. 2193 Council Meeting Date: The Public Works Department has received a request from the Smithfield Elementary School that due to traffic congestion around the school a "No Parking, Loading / Unloading" zone be established in the 6700 block of Smithfield Road from its intersection with Chapman Road north to 6712 Smithfield Road. The Police Department and Public Works Department met with the assistant principal of Smithfield Elementary School and are in agreement. The "No Parking - Loading I Unloading" zone would be for school days during the 7:00 a.m. - 8:00 a.m. and 3:00 p.m. to 4:00 p.m. time periods. This would stop people from leaving their vehicles unattended for periods of time which creates site visibility problems for the students and allows for more ample parking to load and unload students. "No Parking - Loading / Unloading" signs would be placed on both sides of the street. Recommendation: It is recommend Council approve Ordinance No. 2193. \ Finance Review Source of Funds: Bonds (GO/Rev.) Opera!" Budget_ .~ Other Acet. Number Sufficient Funds Available Finance DireClOf Page 1 of ORDINANCE NO. 2193 In order to protect the health and safety of the City and its inhabitants, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, that: 1. It shall hereafter be unlawful for any person to park or leave unattended any motor vehicle along both sides of the 6700 block of Smithfield Road from its intersection with Chapman Road north to 6712 Smithfield Road, between the hours of 7:00 a,m. to 8:00 a.m. and 3:00 p.m. to 4:00 p.m. 2. It is ordained that the appropriate NO PARKING, LOADING I UNLOADING ONLY signs shall be installed upon the right-of-way of the above public street giving the public notice of this parking regulation. 3. Any person violating any portion of this ordinance shall be deemed guilty of a misdemeanor and fined not in excess of $200.00. 4. This ordinance shall be in full force and effect from and after its date of passage and publication as provided by law, PASSED AND APPROVED this the 28th day of April, 1997, APPROVED: Tommy Brown, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: Rex McEntire, Attorney for the City ^,.'__.__"M_'~__~~--'--'-'·"·- u , 808 ,:) 78/2 1 \ I \_ ,:~.\~V~ (ó Ii ~ l __p':~__ -1 ! 79/.1 I \ 792/ \ 7911 \ 792' i t _l ~ j --LU.~ - ~-.~Iþ ,: C4:: 790/ : I I I I I \ --- ,- -~..- \ '\ "~-4\1 ~ I:::::: ' - ~,) ,-, '. ' IV ~~~._-,.............l._~.--~---._.J..-.-.6!Jv~~-.l I 6828 ( ,....i ¡ ~ .:::.::.:::::::r::T:::.:::.:..---:-=ï=--:.--=-r--.-.--=:..r-.---.::.::.:..rtf, ~---"_P_'--'_-P-P_--,.-.., ..L!81-~-'17808 \ 79/2 !I 79/2 'I' 79/2 il: 8000 i" 800~ L! 8'8, I ,,': '-----'1: I I I I 8818. ~\ . . '\ : : : : ____._.L~L..(~---..-L..-L_.-L---L--- .-~'. C~· r- \, -,,'. ;, \ : :"~ 8812 I ',' I "-"-"-'--"----'--"-'-----"----1 I I "-'--"-'---'--------'-"--'-"-", ! -, ..J .,. .. o :1 NO PARKING LOADING I UNLOADING ONLY SCHOOL DAYS 7 -8 A.M. & 3-4 P.M. -"-" .---..-.. 8" r rsttt i 7S20 i 7S24 ¡ 7S2S i 7S32 i 7838 I i ¡ ¡ ¡ ¡ , , : : . . ._...~..~.M_...·....L.----··ì·- ---Î. : -- ..-..-.. i . ' JOMN _uMSC 0 MM/, S "I f;,.\'J ::,\\ I: r-" \ '0 ~\ , \ : .. \ \ I I I, \ I- I 'I :~- "~f1i .~. ~s! :~! ~! !I ¡ ¡ \: __..J ... --- I i I \\. ",,\. : ~_,~,r ,_.._.._.._....J.._.,_,._.._..__..~~._____ " ¡, 'I ¡"1'9&íJi! ! ¡;: I I) :'\ ." \ J r-, t- , L ...' 746 8712 S13 7"7 7821 7826 1828 ! i \ i L_.. ,:_.______ \ I i \ i.._.._.. c. \.9 , ,..... _..\~ \\ c..,"~ E L 15 /II ~ IJ, A r<.1 , (/7°F-¡ \ '\'"' 0 ~ ç~ Q \J.\-~ "" -'.. ~ il: E , 0' ):.,. ......"..;\,,\ I ~,~.._.._.. . . .. i ,'" .~ '.'~._-, ..-..-..-- 1108 I S7~0 i i I I I ! ··T··-·--"-··----·'-··..I..--·-..-··· I I I I I \uool I I I I I ! I I : I I 1 j:~ .re :x< UJ ~- :L"" ,,;-:¡ ;:.~ ,.. ~.. BUM BUn 1"" ; __....--1 , ,---' !. U.JS I ¡ L..-.._..~ : L..~4.~..-1 : I d 6 j ¡ I 5804 \( l ~~ "'" ~. ~ ,'"') z 0 - r\..J ~ c ~'Z: 7'60 I ....1'0.\ di-. \ 0 <: ') \. \\f- ~ 6 " '" CITY OF NORTH RICHLAND HILLS Subject: Solid Waste and Recvcling Proposal Review Agenda Number: 4/28/97 GN 97-40 ~ ,Department: Administration Council Meeting Date: The City's current contract for solid waste and recycling services expires on August 1, 1997. On February 10, 1997, the City Council directed staff to seek proposals for solid waste collection, disposal and recycling services. Council asked staff to include the following components in the RFP: · Twice weekly residential solid waste collection - Monday and Thursday schedule · Holiday make-up days the folloWing collection day - Tuesday and Friday · Take-all service · Financial history of the proposer for 5-years · Owned, leased or contracted landfill/disposal site for the duration of the contract · Evaluation of pending litigation and regulatory compliance · Contract term of 5-years, with costs for services for each year Notices were sent to 13 potential contractors. Nine companies requested RFPs. On March 24, the City received three proposals in response to the RFP. The proposals were from Independent Environmental Services Incorporated (IESI), Laidlaw Waste Systems, and Waste Management. A Solid Waste Proposal Review Committee was formed to review all proposals received. The committee included: Larry J. Cunningham, Assistant City Manager, Larry Koonce, Finance Director, Pam Burney, "'-énvironmental Services Director, Victor Jones, Utility Services Manager, Donna Enos, Purchasing Agent, and Andy Wayman, Assistant to the City Manager. The evaluation was divided into two parts, one for rates (cost for services) and the other for the major components (high priority items) of the RFP. Each proposal was ranked by the Committee using quantifiable. objective measures in order to maintain the integrity of the evaluation process. The evaluation of rates applied the proposed rates to the current North Richland Hills customer base. This method allowed rates to be compared between companies, while reflecting the true cost of each proposal to NRH residential and commercial customers. The analysis was made for the entire contract term of five years. The second part of the analysis evaluated the other major components of the RFP, taking into account areas of high interest to the City Council listed above, The Committee evaluated each of the above major components individually. The results of the individual evaluations were then combined in an overall analysis of the entire committee. Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget ----' Other Acct. Number Sufficient Funds FlMnce Director r Department Head Signature CITY COUNCIL ACTION ITEM Page 1 of CITY OF NORTH RICHLAND HILLS All three companies included some amendments to the draft contract and each submitted either amendments or presented options, IESI proposed two options: Option 1 with a two day a week collection schedule and Option 2 with a six day a week collection schedule. Laidlaw submitted two proposals, both with a two day a week collection schedule, Laidlaw's two proposals only differed in how they calculated rate increases over the term of the contract. Waste Management submitted one proposal with a four day a week collection schedule. Overall, it is believed that favorable proposals were received, even though some provided alternatives to the City's request. The rates of the proposals were very close on a percentage basis. Over a five year period, there was approximately less than a 2% difference between the top three proposals. This is approximately less than 0.4% per year, when averaged over the life of the contract. Both options of Laidlaw meet the high priority areas of Council for two-day residential collection services, adequate landfill, holiday make-up, good customer service program, financially stable company, experienced operators, and favorable rates. Under Option 1, the combined residential rates for regular garbage service and recycling for each of the five years would be: Year One (Base) - Year Two - Year Three- Year Four - Year Five - $8.25 $8.91 $8.91 $9.63 $9.63 , Commercial rates in Option 1 are generally lower for year one (base) than the present rates of NRH. They "-- are also proposed to increase in years two through five by a fixed amount with the exception of some commercial roll-offs that depend on disposal rates for future costs. The proposed Option 1 of Laidlaw is lower overall than current NRH contract prices. Option 2 of the Laidlaw proposal has variable rate increases for years two through five, based on CPI and cost of disposal. Historical data was used to project costs for years two through five. If the CPI and cost of disposal is lower in these years than forecast, then Option 2 could prove lower. Laidlaw also agreed to collect commercial cardboard but other recyclables will be collected on a case by case basis only. Staff was advised that case law currently exists that may prohibit exclusive franchises for commercial recycling. The commercial recycling section of the contract may need to be amended to reflect this and a general City recycling franchise ordinance may need to be established. Recommendation The Committee recommended that Laidlaw's Option 1 proposal be accepted. It is my recommendation that Laidlaw's Option 2 be accepted contingent on annual maximum rates not exceeding those established by Option 1. It is further recommended that City Council authorize the City Manager to enter into final negotiations and that a contract be developed with Laidlaw according to the "draft" contract included in the solid waste RFP. Finally, it is recommended that staff explore developing a separate commercial recycling franchise ordinance. CITY COUNCIL ACTION ITEM 0",..,.... ,...~ CITY OF NORTH RICHLAND HILLS \....... Department: legal Council Meeting Date: 4!2S/Çi7 Subject: Purchase of Bellomy Easement--Teakwood Drainage Project Agenda Number: GN 97-41 Councilman Wood proposed a settlement of the Bellomy case at the last meeting. The Bellomys have accented that settlement offer by making the proposal which is attached. The City Manager accepted the proposal. Recommendation: It is recommended that the Council ratify the action of the City Manager in approving the attached proposal. \....., Finance Review Source of Funds: Bonds (GO/Rev,) Operating Budget Other Acct. Number Sufficient Funds Available epartment Head Signature CITY COUNCIL ACTION ITEM Fln."ce DlrectOf Page 1 of "--~.~----,.,-,._....-...,"-,~~-,~--,~¥~-,~~-------~~._'_._.._----~,~-'~"-~_.~.'.,--,-~-' April 22, 1997 Mark Bradley Right-of-Way Agent City of North Richland Hills 7301 Northeast Loop 820 North Richland Hills, Texas 76182 Dear Mr. Bradley: We agree to execute an east-west twenty foot drainage and utility easement between our east property line and proposed fee simple sale along with a twenty foot temporary construction easement lying south of the above permanent easement. This easement is for the purpose of installing underground drainage and utility pipes. In addition, we agree to sell to the City, in fee simple, a seventy-five foot tract along our west property line following the lines shown on the attached plat along with a temporary construction easement as shown on the attached plat. The total purchase price shall be $13,444,00 paid as follows: (1) $6,422.71 in cash, and (2) The release of the lien against our land assessed by ordinance No. 1513, as amended, and all accrued interest. The release of the lien and interest thereon is to be delivered to the undersigned at the time of payment of the $6,422.71, within 15 days of the date of this instrument. By acceptance of this proposal the City agrees that it will not require the Bellomys or their successors or assigns to complete the drainage channel being built on the above property to be conveyed, nor will they be assessed for the future drainage improvements on said tract. We recognize that the new descriptions must be drawn before the actual documents can be signed. The attached plat shows the fee simple property., the easement property. and the temporary construction easement property Fa. ~ê6¿~ mes A. Bellomy ~j Ifßt Sheryl B omy ~ City Mana9'h Date: 1 vf (97 I ' 'r-..... _:::::: ----.----------.---.- ____._.__h__.____._.··_··.._··'_ ...-.-.-.......-....... ...' .m' -.......... ... t. PLAT I_:J - :. :r_G::K . ì 3~:~~ ..~çcc ::S7 ;-,-:::5 --- S88'39'20"£ 25.01' 588'39'20-£ 75.03' PROP. 25' TEMP. CONSTR. ESMT. (4,071 S.F.) 1" - 200' (0.093 AC.) S::S71,'Ji'~ 7 3.1.50 1/. .353- 2C3, ,::J. 57 J:"\I"S J,. 9IjR=-S~ ::TUX M. VAN::7::: 7124 DOUGLAS LA~i:: ~ORT WORìr-I. EXAS 75180-2701 LOT i, 9LK, 1, TALBOT A~D'~L 'I. 388-160. ? 54 p.a.B. p.a.c. SOOi 4'23-£ 163.13' SOOi 6'3;3-£ 20.00 500i 6'3;3-£ 20.00 N89'58'07-W 272.58' zo' DRt4/IJAGE1 uTILITY , E;1S E/'1 E¡I/ 71 -- ,. Il I R.-. NEw~L:"'J 7112 DOUGLAS LANE ~ORT WORìr-I, TEXAS 75180- 2701 Ii, 53.'~4, P, 745 PROP. VARIABLE WIDTH TEMP. tONSTR. ESMT. (31,69~ S.F.) (0.727\AC.) ALTA LEE JOHNSTON 7110 DOUGLAS LANE FORT WORTH. TEXAS 75180-2701 V. 5175. P. 283 ROBERT L. COX 7108 DOUGLAS LA~E ¡:-ORT WORTH. TEXAS 75188-2701 V, 5.346. P. 520 CHARlES & 3ETTY 3R~OLEY 815 ?RADERA cou:n ::. -aRT WORTH. rrXAS 75180-9595 '1.11205, P. 2:29 I JAM=-S A. 3=-I I 0\1'( 912 UTIL:: RANCH F1::: FORT WORT:-1, TEXAS 76180-.3305 V. 5038, P. 8ô 25' 5.25 ,l:. ¡.J :<ERRy C. 3::~'OI T V. 5358, P. : 72 .. Fiú-fl-r - ðf- yvA.:t MUee S//"1 fLeJ R03ERT & SUSAN :- :'MIGU:Tíl 7305 HIGHTO','i::~ DRI\¡,::: FORT WORTH, TEXAS 75130-33v¿ v. 69.35, P.543 44' 5'37-W 7.01' .fAS El1é,NI R = 1225.34' L = 433.35' .TEf1fOi?f1 ~'1 LC. IS09i6'45-W 431.10' ~^,sí'vCíIÒ I EIl~ el1e-/Vr = 1245.34' = 428.11' 0914'02-W 426.01' :-=-OERAL HOME LOAN MORTG:.çr COR? P.O. 30X 50122 MA!LSTOP 754 ~,1cLEAN. '/1RCINiA 22U2 v. 12197, P. 1533 589'44"8- PROP. V ARt ABLE 3.13' 21.22' WIDTH R IGHT-OF- WAY HIGHTOWER DRIVE ..-___,.. ..... ,AA~I r;:'f CITY OF NORTH RICHLAND HILLS Oepartment: "--.. Subject: Administration Council Meeting Date: 4/28/97 Iron Horse Golf Course Management Contract Agenda Number: PU Q7-~5 Our original contract with Evergreen Alliance Golf Limited (EAGL) stated that we had an option to terminate if the Peterson family were to lose control of their company. This requirement came at a time when President, Michael Lohner, and the Peterson family were unknown to us. We had no idea as to what kind of management they would provide after they took over Marty Streiff's company. Our experience with EAGL has been a very positive one. The Peterson family, which own the company, is never seen. Mike Lohner, President and minority owner in the company, has been our contact. The attached request seems reasonable to me. It is part of a contractual agreement, so Council needs to give permission to change this part of the contract. Recommendation: It is recommended that the City Council authorize the City Manager to sign an agreement related to termination provisions of the Iron Horse Golf Course Contract. ~ Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget _ Other Acct. Number Sufficient Funds Available /1 '- Department Head Signature CITY COUNCIL ACTION "EM FlnllnC8 Director Page 1 of April 14. 1997 Mr. CA. Sanford, City Manager Citv of North Richland Hills 7301 N.E. Loop 820 North Richland Hills, Texas 76180 Dear CA.: As I mentioned at lunch the other day, Evergreen Alliance Golf Limited (EAGL) has been pursuing additional capital in order to grow. This process has led to a variety of options for EAGL and we have now entered into an agreement with an investor group to infuse new capital into our company. We are very excited about this development and believe that it will make our finn better able to serve you. The new capital will allow EAGL to do two things. First, we will purchase more golf courses than we have in the past. We do not intend to become an "American Golf." We do not have a gro~1h target of 3 or 5 or 7 courses per year, and we \-vill be very picky about the courses we purchase: but , we will have the capital available to purchase courses when the opportunity is right. This is important to our finn and to me personally. In addition, a very important part of our business plan includes putting an even greater emphasis on taking our management business to the next level. This means increasing the level of service and commitment to our owners. We have a number of ideas about how to do this, and the capital infusion will help us to accomplish our goal. The new investors are purchasing most of the company. As such, all of Diana Peterson's and other minority interests will be purchased by them, leaving me as the only other owner of EAGL. I am also signing a five-year contract with the company to continue as President and Chief Executive Officer. I guess this means that whether you like it or not, you are stuck with me for the foreseeable future' In addition to providing you with infonnation, we need your approval to proceed with this transaction, Although we are not assigning the contract at Iron Horse, we are asking that you approve this transaction and waive the clause in the contract that gives you an option to tenninate if the Peterson family ever loses control of EAGL. As you can imagine, this clause is of concern to our new investors. Finally, I am enthused about this transaction and sincerely believe that EAGL will be a better company than ever as we move into the future. I would be happy to answer any other questions you might have. Please feel free to call me at any time. Sincerely yours, EVERGREEN ALLIANCE GOLF LIMITED Michael D. Lohner Chainnan and CEO .Jì 8,"'·.\LI1" ~.c~, ,:\ - - > . ;;-. ........ '/'(.t.li'il'''·... TELEPHONE (2'4) 9:5·36': .~,- ~_..._-_:II (2:4) 9:5·36)' ADDRESS 85':5 FREf;JOR~ ;"<1', S L . . i R i "J G T:' /:. MR, c.A. SANFORD APRIL 14, 1997 PAGE 2 OF 2 By signing below, The City of North Richland Hills hereby consents to the assignment of all of the Peterson family interests in EAGL to others and forever waives the tennination provisions contained in paragraph 8(a)(v) of that certain Personal Services Contract for the management of the Iron Horse Golf Course dated September 6, 1995 between Evergreen Alliance Golf Limited. a Texas Limited Partnership, and the City of North Richland Hills, Texas. THE CIIT OF NORm RICHLAND HILLS, TEXAS By: CA. Sanford, City Manager copies to: Jordan Clements Gary Heward Tom Bergman CITY OF NORTH RICHLAND HILLS Department: Finance I Police Department Council Meeting Date: 4/28/97 Subject: Award Bid fðr I ighth~r~. ~irAn~ ~nrf Ar"-CA~~nriA$ Agenda Number: PU 97-36 As part of the Crime Control District budget, Council appropriated funds for the purchase of lightbars, sirens and miscellaneous accessories to be installed on new Police vehicles. Formal bids were solicited for this equipment and the results are outlined below. Emergency Vehicle Equipment :¡f:~¡¡";¡¡::6~ ~bi"~*:A GT Distributors $11,783 This equipment will be installed on the Tahoes that were ordered in January (PU 97-09). Emergency Vehicle Equipment met all the specifications and general conditions of the bid and can deliver the equipment within four weeks. Recommendation: It is recommended City Council award the bid for lightbars, sirens and miscellaneous accessories to Emergency Vehicle Equipment in the amount of $11,421. Source of Funds: Bonds (GO/Rev.) Operating Budget _ ~ Other Finance Review 28-80-02-6600 Acct. Number 28-80-04-6600 Sufficient Funds Available .. , Department Head Signature CITY COUNCIL ACTION "EM FI,*,'" OtreClat Page 1 of CITY OF NORTH RICHLAND HILLS Department: Finance I Support Services Council Meeting Date: 4/28/97 Subject: Award Bid for Flatbed Trailers Agenda Number: PU 97-37 In the 1996/97 approved budget, Council appropriated funds for the replacement of three flatbed trailers. Formal bids were solicited and the results are outlined below. Discount Trailers IWN:>X,"""',....., Ie···,:·.·· , ····:ox·,· .:.' ,': "- ,; ·:··.'·:N;~; Southwest Trailer & Hitch C&S Trailer World $7,737 $7,810 $9,200 Cargo Trailer Sales These trailers will be assigned to the Public Works and Parks and Recreation departments. Discount Trailers met all the specifications and general conditions of the bid and can ,,- deliver the trailers in three weeks. Recommendation: It is recommended City Council award the bid for three flatbed trailers to Discount Trailers in the amount of $7,127. Source of Funds: Bonds (GO/Rev.) Operating Budget Other Finance Review Acet. Number 06-01-03-6600 Sufficient Funds Available Ignature C"Y COUNCIL ACTION "EM FlnMOO DIreClor 1~l ity Manager Page 1 of CITY OF NORTH RICHLAND HILLS Department: Finance / Public Works Council Meeting Date: 4/28/97 Subject: Award Bid for Semi-Annual Contract to Supply Utility Materials As a part of the 1996/97 approved budget, Council appropriated funds for the purchase of various utility materials for the Utility Division and the Utility Construction Division of the Public Work$ Department. Formal bids were solicited for a semi-annual contract to supply utility materials for the balance of this budget year. The results are outlined below. Agenda Number: PU 97-38 Atlas Utility Supply Company I'"''II)''N'''S'''^E;''''S''' .. :: :.' :., ~*... . . .... .. ,....,.' . . .:... ·~'..·Ñ...·.v..:.; Industriallntemational $142,855 $153,580 Texas Water Products Vendors were supplied a list of items to bid on and were required to guarantee the price of each item for a six month period.. PVC pipe, gate valves, fire hydrants, meter boxes, various pipe fittings and various /sizes of clamps are some of the items included under this contract. Materials will be ordered on an as need basis and delivered to various locations. Atlas Utility Supply met all the specifications and general conditions of the bid. '. ~ Fundina Source: 02-11-01-3110 02-11-02-3090 02-08-01-6150 Recommendation: It is recommended City Council award the bid for a semi-annual contract to supply utility materials to Atlas Utility Supply Company in the amount of $141,363. Finance Review See Above Fln8llce Di'ector re CITY COUNCIL ACTION "EM Page 1 of CITY OF NORTH RICHLAND HILLS J Department: Finance / Parks & Recreation Council Meeting Date: 4/28/97 Subject: Award Bid for Closed Circuit TV System for the NRH20 Water Park Agenda Number: PU 97-39 At the December 16,1997 meeting, Council authorized the purchase of a closed circuit TV system to be installed at NRH20 Water Park (GN-150). Formal bids were solicited for a ten camera system to include installation. One bid was received from EBM, Inc. in the amount of $11,204. The cameras will be installed to enable cash register till monitoring throughout the park. EBM met all the specifications and general conditions of the bid and can complete installation of the system in five days. Recommendation: It is recommended City Council award the bid for the closed circuit TV system to be installed at NRH20 Water Park to EBM, Inc. in the amount of $11,204. 1- ''r-- Source of Funds: Bonds (GO/Rev.) Operating Budget _ o er Finance Review Acct. Number 21-01-01-6400 Sufficient Funds Available Fln8ftce Olrecto, Page 1 of CITY OF NORTH RICHLAND HILLS Agenda Number: 4/28/97 PW 97-12 Department: Public Works Revise Date for Public Hearing on Street Subject: ::Inri {1r::linao~ IfTlrro\lE'ments for Hightower Dri"e (Sections Þ:2 & B) Council Meeting Date: It is proposed that the Public Hearing date on the improvements for Hightower Drive from Crosstimbers Lane to Meadow Creek Road be revised to June 9, 1997. The reason for the change is due to a publishing error in the legal notice printed in the newspaper. Correct notices with cover letters will be mailed to all property owners to insure that they are notified at least 15 days prior to the Public Hearing. Following the Public Hearing, the necessity to construct the improvements and levy of assessments will be determined by adoption of ordinances. Recommendation: It is recommended that June 9, 1997 be established as the date for the Public Hearing on the necessity for improving Hightower Drive from Crosstimbers Lane to Meadow Creek Road. Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget Oth Acct. Number Sufficient Funds Available ent He.: Signature lJ..\ ~~::- CnYCOUNC~ACTION"EM Fln8/\C8 DireClor Page 1 of \c CITY OF NORTH RICHLAND HILLS Agenda Number: 4/28/97 PW 97-13 Department: Public Works Vacate a Portion of an Existing Utility Easement on Subject: I ot 47. Rlor.k ?, ~h~rly O~k~ Arlrlition - Ordinance No. 2194 Council Meeting Date: The owner of Lot 47, Block 2, Shady Oaks Addition is requesting the vacation of a 3' x 65' portion of the 7.5' utility easement along his north property line. The purpose of the vacation is for future improvements, including a wall, pool and pool deck. The Public Works Department does not have water or sanitary sewer lines in this easement. All franchised utilities have been contacted and have offered no objections. Recommendation: It is recommended Council approve Ordinance No. 2194. Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget -:-- o ~ Acct. Number Sufficient Funds Availablé Finance Director ign ture cn-v COUNCIL ACTION ITEM ity Manager Page 1 of "___",__~,"_,_.,,_~_.~,_~_,____~__,_,","_______m_._,~__'_..~._y-_,_>~,___,_,~_. ORDINANCE NO. 2194 AN ORDINANCE VACATING AND ABANDONING THE DEDICATION OF 3 FEET X 65 FEET OF A 7.5 FOOT UTILITY EASEMENT IN SHADY OAKS ADDITION. WHEREAS, the plat of Shady Oaks Addition, which is recorded in Plat Cabinet A, Slide 697 of Plat Records of Tarrant County, Texas, shows and identifies the dedication of a 7.5 foot utility easement along the north property line of Lot 47, Block 2, of said addition; and WHEREAS, the owner of Lot 47, Block 2, Shady Oaks Addition, wishes to install a wall, pool and pool deck, which would encroach into a portion of the 7.5 foot utility easement; and WHEREAS, Lone Star Gas Company, Southwestern Bell Telephone Systems, Marcus Cable Systems, TU Electric, and North Richland Hills Public Works have no utilities within the above described 3' x 65' portion of the 7.5' utility easement; NOW, THEREFORE, be it ordained by the City Council of the City of North Richland Hills, Texas, that: 1. The southwest 3' x 65' corner of a 7.5 foot utility easement, as described above and on the attached plat, is hereby vacated in favor of the owner of said Lot 47, Block 2, Shady Oaks Addition, City of North Richland Hilis, Texas, Tarrarit County, Texas, 2. The City Council finds that any right-of-user established by prescription in favor of the public has now been abandoned and that the ownership and use of the portion of the easement in question should revert to the owner of Lot 47, Block 2, Shady Oaks Addition, free and clear of any prescriptive claims or other rights in the public and it is so ordered. PASSED AND APPROVED this the 28th day of April, 1997. APPROVED: Tommy Brown, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: Rex McEntire, Attorney for the City --"._~-----'---~~'_._~."- ljohn F. Firing 8625 Amhurst Ct North Richland Hills, TX 76180 Home: (817) 4282580 Work: (817 871-7814 April 16, 1997 Mr Kevin Miller City Hall, Engineering Department North RicWand Hills A TIN: Kevin Miller Dear Mr. Miller: Subject: Release of Easement, Shady Oaks Addition, Lot 47, Blk 2 As previously discussed, I am planning to have a swimming pool constructed on my lot (Shady Oaks Addition, Lot 47, Blk 2). In order to accomplish this I need to have a portion of the 7Y.' utility ".c"easement released, Le., 3' of the easement. ,}:{:~~)~'!';~~ ~~3 /<f:Âsýbu di~ected, I have gotten the "Request for Release of Easement" fonn executed by the utilities ""(';:ancI~¥r' Jim Kasson, Professional Land Surveyor, prepare an exhibit and description of the ,,':~~i;:~~ànd that portion to be released. , " '.,"i'51t;:2{'~;;~;;;11·f;:f.:~~;;·5 ,;~:.-.c';:~t~~f~"~both the executed "Request For Release Of Easement" and the exhibit. :~" .. .,;/ :".::;; <, :,,'::r,., '~/"~~ ..::'i.. ~.''-. .:. P~~p~~ with the release of easement process. . . Ifyo1i need any additional information, please advise. ·~u John Firing W .. .... ... ........ ...... ..... POINT CF liEa I r 4<J I ( .ú . Ca..M:N: I N3 - p~)l~r oF- CISb I tJ /.J I ^-J6 Nxr23' 14' E 7,5' OR I G' NAL EASEtv£NT N<:::ATH 7 1/2 FEET OF LOT 47 1'89-31' Sl'E 139.05' 4. 5' PCRT I CN CF rn I G I NAL EAse.ENT TO R:MA I N I N PLACE AM-l..RST CT. 133.28' 589-31' 51' W 3' X 65' PORT I ()\J OF EAS8ÆNT TO BE VACATED. LOT 47, BLOCK 2~ Sl-tADY OAKS ADD. CABII\ET A SL I DE 697 .. 1 : ~o Úme~ F. Kasson RPLS 4500 5230 Oak Springs Dr. Arlington, Texas LEGAL DESCRlPTION- ORIGINAL EASEMENT Being a 7-1/2 foot wide Utility Easement along the north line of Lot 47, Block 2, Shady Oaks Addition to the City of North RichIand Hills, Texas as recorded in Plat Cabinet A. Slide 697, of the Plat Records of Tarrant County, Texas, said easement being more particularly described by metes and bounds as follows: . BEGINNlNG at the northwest comer of said Lot 47~ THENCE N89°31'51 "E, 139.05 feet~ THENCE S37°07'37"W, 9.46 feet; THENCE 589°31'51 "W, 133.28 feet~ THENCE NOO023'14"E, 7.5 feet to the POINT OF BEGINNlNG. LEGAL DESCRlPTION- PORTION OF EASEMENT TO BE V ACA1ED Being a portion of that 7 1/2 foot wide utility easement along the north line of Lot 47, Block 2, Shady Oaks Addition to the City of North Richland Hills, Texas, as recorded in Plat Cabinet A. Slide 697, of the Plat Records of Tarrant County, Texas, and being more particularly described by metes and boWlds as follows: COMMENCING at the northwest comer of said Lot 47; THENCE SOQ023'14"W, 4.50 feet to the POINT OF BEGINNlNG; THENCE N89°31 '51 "E, 65.00 feet~ THENCE SOO023'14"W, 3.00 feet to the south line of said 7 1/2 foot easement; THENCE 589°31'51 "W, 65.00 feet along the south line of said easement to the west line of said Lot 47; THENCE NOO023'14"E, 3.00 feet to the POINT OF BEGINNlNG, and containing 195 square feet ofland. - AN EXHIBIT SHOWING A PORTION OF A 7 1/2 FOOT UTILITY EASEMENT TO BE VACATED IN LOT 47, BLOCK 2, SHADY OAKS ADDITION NORTH RICHLAND HILLS, TEXAS -""~,-"-""-------_...~,<,~-<._--"--'_..-._--~... .,--... M ..~ \pr-OB-97 07:5~A NRH PW&PZ Admínístratíon B17 6567538 ~.''II . .~. P;02 C1TY OF NORTH RICH LAND HILLS. TEXAS REQUEST FOR REl.EASE OF EASEMENT ;c I, =-îc,,",Y'\ ~ ~l "': ~ am the curr~nt owner and responsib~e party for the pl'operty loc~ted at ß' 2.S ~~~~~ '\~tt, also descri~ed a~ S~ ~~}....~~ O~ ¥-~ Addition, Lot tf 7 , Block 2.. . I am hereby requestmg the release 01-., pre\(lou~ly dedicate -easement.: The proposed release is more particularly I.!escribed as Tollows: . . (describe the improvements by size, material, location and intended purpose) - "~""~~c.r~ -;-ð f'e.\~...A....~\1Q.c.~') ~--.O. -ry ~t.1 .L\1t;! ~~~:<::~e~- _lð~ __ ~ ~r". ~~~ {\"C~\f'-\--7 \t''''''r o€- __ ª-c,,~ \ rtl " ,_ - . ~~ '\~~f'r-\' l":;~~~+~ \V\~~_taA\\ "~·_þoC' \ ð.~~ Àt'-( ~(~~. " F· ! A9pro\{~..s ¿)¡J.. cubm/tt~ r..:t:fu. Aut I ~9rov~ a& ~ ~ if~-r7-~f/7JJ$: Dat~ T~~II< S«jnature NÐI6fh t"(l/l(¡¡iJD /tis- I D! --,---- ~ AuthorJ1.éd ~~p~e.t:n'oItlvo: n Approv«l U :1 - noted Tit'., ----------------.---....,- U - I I Appfoved...... L-..: cutlmitted Approved u c;ubmttt~ ~p('Qv~ 01$ OQ(ed -'/- q- 97 O~te Date T t:1t:pflQne SIYNture ~ ^\.A ~c:..us ApprQved i1I~ a.... 1I..lIr, Cabl~ submttted ~j¿L~~ Autf\O( l~ Rëpr.,=t'illtlve A¡Jprovedu UZl'-tL'lj ~(2J::)¿MATOR-.__, I noted Title '----2 'ttï:/<:!J7 (~Z:n~~ -~~~~ j)-º!ÜV.q~tJ App('Q,,~ ... noted i./-9'-97 D.ate IV Approv<e( iII& ~ cubmmed - .-:/ ~Lon~;j¡,s --E:P~ C L ~ Au;ro~lz~ ~Cc:n~p~e . --1f:D_.p~f ""')/~ Title'" . . f:Z~~~~ s.?£J4. Ii CITY OF NORTH RICHLAND HILLS Department: Public Works Approve Final Payment to Lone Star Gas Company Subject: fnr RAlnr.::Itinn nf PrAr.inr.t I inA Rn::lrl Measuring Station Council Meeting Date: 4/28/97 Agenda Number: PAY 97-06 The City settled a lawsuit (District Court Cause No. 17-160337-95) with Abel Lajoie and Lone Star Gas Company in April of 1996. The attached agreement describes the City's responsibility to reirnburse Lone Star Gas Company $24,603 for relocation of their existing measuring station on Precinct Line Road at Mr. Lajoie's property. This relocation was necessitated by the widening of Precinct Line Road. All utility relocations from their personal easements or property they hold title to are the City's responsibility to pay per Texas Department of Transportation policies. All relocation work by Lone Star Gas Company d.b.a. Lone Star Pipeline Company has been completed. Funding Source: Sufficient funds are available in Unspecified Utility Balance to pay the $24,603. . "'~. ... Recommendation: It is recommended Council approve final payment to Lone Star Gas Company in the amount of $24,603 for relocation of their Precinct Line Road Measuring Station (also known as the IIColleyville Measuring Station"). Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget _ .:---./ Ot r Acct. Number Sufficient Funds Available 02-23-09-6000 Fin...... DftClGf ent Head Signat re CITY COUNCIL ACTION ITEM ~~ Cit Manager Page 1 of ---------"-,-,'''''_."'-------~-''-'~ _ _ Lone Star - Pipeline Company 301 South Horwood Street Dallas. Texas 75201·5696 RECE!VED AP~ - 8 1997 Right of Way Deportment April 4, 1997 Gregory W. Dickens City of North Richland Hills P.O. Box 820609 North Richland Hills, TX 76182 Re: Line C10-S/12, SL1S10 FM 3029 Tarrant County Dear Mr. Dickens: Enclosed is our itemized Invoice No. 1Q0090 in the amount of $24,603.00, which represents the City's portion of the actual cost incurred to alter our facilities to conform to th€~ubj~ct project. Please place the invoice in line for reimbursement. Please have the check sent to my attention at Room 60S - North Building. Thank you for your cooperation. If you have any questions regarding the enclosed invoice, please advise. Sincerely, ~.~ David L. Cromer Right of Way Agent :dlc Enclosure cc: C.P. Brown J.S. Knights T.A. Martin _..,---.,_._----_.._--',------------'--'--""--...-...~ INVOICE Mr. Gregory W. Dickens City of North Richland Hills P. O. Box 820609 North Richland Hills J Texas 76182 CUSTOMER NO. INVOICE NO, REFERENCE NO, VOUCHER NO, TERMS F.O.B. SHIPPED TO 114329 1QOO9O 101-96-8551 COOO94 LONE STAR GAS COMPANY 301 S. HARWOOD STREET, DALLAS, TEXAS 75201 TO: SHIPPED FROM ROUNTING PREPARED BY: STATION NO: M. A. Motley X-3527 INVOICE DUE FUNCTIO 143-13 DATE 04101/97 DATE 05/09/97 TRANS, CD DISCOUNT AMOUNT $24,603.00 AMOUNT LINE DESIGNATION RIGHT OF WAY NO. CLAIM NO, RATE PRICE AMOUNT DATE SHIPPED DESCRIPTION UNITS Your charges to reiocate anå repiace the Coileyville measuring station approximately 370 feet North of the existing location on Line C10-5 in Tarrant County J Texas. Books are available at 301 South Harwood J Dallas Texas for your inspection. Total Due: $24,603.00 ALL INVOICES PAYABLE AT THE OFFICE OF LONE STAR GAS COMPANY. ATTN: _Right of Way, 6-NORTH 301 SO. HARWOOD ST., DALLAS COUNTY, TEXAS 75201 TELEPHONE NO: 214-741-3711 CO., CORE AREAl CAUSE NO. 17-160337-95 ABEl LAJOIE, Trustee, LAJOIE FAMILY TRUST Plaintiff, Y5. ENSERCH CORPORATION d/b/a LONE STAR GAS COMPANY Defendant! Co unter-Pla intiff/ Third Party Plaintiff Y5. ABEL LAJOIE, Trustee, LAJOIE FAMI L Y TRUST, THE TEXAS DEPARTMENT OF TRANSPORTATION, and THE CITY OF NORTH- RICHLAND HIllS, Counter-Defendant and Third Party-Defendants § § § § § § § § § § § § § § § § § § IN THE DISTRICT COURT OF TARRANT COUNTY, TEXAS 17TH JUDICIAL DISTRICT SETTLEMENT AGREEMENT This Agreement is between Abel Lajoie, Trustee, Lajoie Family Trust, hereinafter referred to as "Lajoie", ENSERCH Corporation d/b/a Lone Star Gas Company and d/b/a Lone Star Pipeline Company, hereinafter referred to as "ENSERCH", The Texas Department of Transportation, hereinafter referred to as "DOT" and The City of North-Richland Hills, hereinafter referred to as "City". RECITALS 1. There is a dispute between the parties to this agreement that arose out of DOT's planned project ("Project") to widen Precind Line Road in front of Lajoie's property described in Exhibit A attached hereto and incorporated herein by reference ("Lajoie Property") within the city limits of the City, and the proposed relocation of ENSERCH's natural gas transmission pipeline in connection with such Project. 2, Litigation was instituted as a result of this dispute. In particular, Lajoie instituted a suit in the District Court of Tarrant County, 17th judicial District, on August 21, 1995 seeking an injunction against ENSERCH. ENSERCH answered and filed a counter claim against Lajoie seeking a Declatory judgement. ENSERCH also filed a third party claim against DOT and City seeking to enjoin the Project. Settlement Agreement Able LJloie Trust Page 1 <.. .-/ ,jp d ~?> cy (. r 3. All parties concede that bona fide disputes and controversies exist among them as to liability and amount of damages, if any, and all parties desire to dispose of the entire controversy and dispute among them, including all claims and causes of adion of any kind that currently exist that relate in any way to the occurrences described in this agreement. 4. Lajoie warrants that it is the lawful owner, in fee simple, of the Lajoie Property. 5. ENSERCH warrants that it is the lawful owner of that certain easement (hereinafter the "Easement") dated August 9, 1963 from Minnie T. Browning and husband Guy Browning to Lone Star Gas Company which is recorded in Volume 3851, Page 649 of the Deed Records of Tarrant County, Texas, and that certain Lease dated August 9, 1963, from Minnie T. Browning and husband Guy Browning to Lone Star Gas Company which is recorded in Volume 3868, Page 288 of the Deed Records of Tarrant County, Texas,. TERMS OF AGREEMENT IN CONSIDERATION OF the mutual promises and agreements contained in this agreement, including the recitals set forth above, the parties agree as follows: 1. At the closing, ENSERCH agrees to execute and deliver to Lajoie the Release of Easement and Lease the form of which is set out in Exhibit B attached hereto and incorporated herein. Further, in due cOurse after the "1995-96 winter heating season, but in no event after May 15, 1996, ENSERCH agrees to begin construction to abandon its pipeline along the eastern border of the Lajoie Property and to relocate its measuring station on the lease described in Exhibit D attached hereto and incorporated herein. ENSERCH shall remove its surface equipment from the current measuring station located on the Lease released in Exhibit B and abandon in place the underground pipeline currently located on the eastern border of the Lajoie Property and within the Right-of-Way for Precinct Line Road. . 2. In exchange, at the closing, Lajoie agrees to execute and deliver to ENSERCH the Release of Easement and Lease the form of which is set out in Exhibit B, and the Lease described in Exhibit D attached hereto and incorporated herein. 3. At the conclusion of the abandonment and relocation described in paragraph 1 of these Terms of Agreement and within thirty (30) days after receipt of an invoice, City agrees to reimburse ENSERCH $24,603.00 for the abandonment and relocation of its facilities. 4. The lawsuit, including all counter claims and third party claims described in this agreement will be mutually dismissed, with prejudice, each party to bear its own costs. Further, except as otherwise provided herein, each party hereby releases the other from any and all claims, known or unknown, that currently exists and that relate in any way to the occurrence described in this Agreement. Sel1lement Agreement Able Lajoie Trust Page 2 5. The "closing" referred to in this agreement will take place on May 1, 1996 at 405 Park Plaza, 2501 Parkview Drive, Fort \/Vorth, Texas. 6. This agreement is a compromise of doubtful and disputed claims. Nothing in this agreement is an admission of liability by any party, and nothing in this agreement may be interpreted as an admission of liability. Each party to this agreement expressly denies liability to every other party to this agreement. 7. This agreement is made according to the laws of the State of Texas. The parties expressly agree that this agreement is governed by, and will be construed and enforced in accordance with Texas law. 8. This agreement is binding on and inures to the benefit of the parties and their respective heirs, representatives, successors, beneficiaries and assigns. 9. This agreement contains the entire agreement between the parties. It supersedes any and all prior agreements, arrangements, or understandings between the parties on all subjects in any way related to the transaction or occurrence described in this agreement. No oral understandings, statements, promises, or inducements contrary to or consistent with the terms of this agreement exist. The parties have executed this ag(E:~ment on the date indicated in the respective Notary acknowledgments. By: 1 ~ Lajoie, Trustee Aþ;ç £-. ENSERCH CORPORATION, D/B/A LONE STAR GAS COMPANY AND D/B/A LONE STAR PIPELINE C07A~'- - . By: . v.../r-:rt·__- QlU1 TEXAS DEPARTMENT TRANSPORTATION By: Se:¡iement Agreement Able LJjoie T rust Page 3 ACKNOWLEDGMENT ST,A, TE OF TEXAS § § § COUNTYOFT~ AtxJ Before me, the undersigned Notary Public, on this day personally appeared ~ Lajoie, Trustee of the Lajoie Family Trust, known to me to be the person and trustee whose name is subscribed to the attached agreement. He acknowledged to me that he executed and is duly authorized to execute the attached agreement in the name of and on behalf of The Lajoie Family Trust, for purposes and consideration expressed in the attached agreement. {:f*:::;'~:~~~~ ... "" .... -. >~'. ..... .....~:.~:?::.:~:... Given under my hand and seal of office on Q¡RJ'O I í 1/99& L~ ßI2MsiM Notary Public in and for the State of Texas LAURIE BAONSTAD M'f COWAISSJQN EXPIRES Sepœmber 18,1997 ACKNOWLEDGMENT STATE OF TEXAS COUNTY oF:/ÀLL~ § § § ~ Before me, t~e undersigned Notary Public, on this day personally appeared r ¡:;.¿¿.J,; ¡;¡ Ze/ ~ , known to me to be the person and officer whose name is subscribed to the attached agreement. He acknowledged to me that he executed and is duly authorized to execute the attached agreement in the name of and on behalf of ENSERCH Corporation d/b/a Lone Star Gas Company and d/b/a Lone Star Pipeline Company, for the purposes and consideration expressed in the attached agreement. GIVEN under my hand and seal of office on ~¿);¿ ~ /990.. ~~,I~~ Notary P ic in and for the State of Texas (Seal) ..~.~.~::;:::.. - - - -.., : <-1 ;~~ VIRGINIA R. CROUCH / . '~/-1 CO,\JMISSION EXPIRES $ . :"'~~-~ Settlement Agreement Able Lajoie Trust Page 4 ACKNOWLEDGMENT STATE OF TEXAS COUNTY OF § § § Before me, the undersigned Notary Public, on this day personally appeared , known to me to be the person and officer whose name is subscribed to the attached agreement. He acknowledged to me that he/she executed and is duly authorized to execute the attached agreement in the name of and on behalf of The Texas Department of Transportation, for purposes and consideration expressed in the attached agreement. GIVEN under my hand and seal of office on (Seal) Notary Public in and Tor the Srate or Texas ACKNOWLEDGMENT STATE OF TEXAS COUNTY OF § § § ~fore me, the undersigned Notary Public, on this day personally appeared C. A ~ q,.¡ F~ cf, , known to me to be the person and officer whose name is subscribed to the attached agreement. He acknowledged to me that he/she executed and is duly authorized to execute the attached agreement in the name of and on behalf of The City of North-Richland Hills, for purposes and consideration expressed in the attached agreement. (Seal) GIVEN under my hand and seal of office on ~ / (' 9/7L dí~~<tL Notary Public ff and for the State of Texas GERRY SHRADER NOTARY PUBLIC State of Texas Comm. Exp. 03-31-97 Settlement Agreement Able Lajoie Trust Page 5 CAUSE NO. 17-160337-95 § § § § § § § § § § § ABEL LAJOIE, Trustee, LAJOIE § FAt\1ILYTRUST, THE TEXAS § DEPARTMENT OF TRANSPORTATION, § and THE CITY OF NORTH- § IUCHLAND HILLS, § Counter-Defendant and § Thirà Party-Defendants g ABEL LAJOIE, Trustee, LAJOIE FAMILY TRUST Plaintiff, VS. ENSERCH CORPORATION d/b/a LONE STAR GAS COMPANY Defen dan tIC 0 u n ter- P la in ti ffJ Third Party Plaintiff VS. IN THE DISTRICT COURT OF T ARR<\NT COUNTY, TEXAS 17TH JUDICIAL DISTRICT ORDER OF DISMISSAL On this court heard the Joint Motion of the parties to this action seeking dismissal of the action with prejudice. The Court finds that all matters in dispute between the parties have been fully and finally compromised and settled. IT IS, THEREFORE, ORDERED that this cause and all claims, cross-claims and third party actions be and are dismissed with prejudice to the rights of the claiming party to refile the action ro any part thereof. All costs of court are taxed against the party incurring the cost. SIGNED D. Nicholas Acuff Attorney for Plaintiff Able Lajoie Paul M, Zeis Attorney for Defendant Enserch Corp, Re cEntire Attorney for The City of North Richland Hills Kirk Kuykendall Attorney for Texas Department of Transportation