HomeMy WebLinkAboutResolution 2019-048 RESOLUTION NO. 2019-048
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORTH
RICHLAND HILLS, TEXAS APPROVING THE FORM AND
AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY LIMITED
OFFERING MEMORANDUM FOR THE CITY OF NORTH
RICHLAND HILLS, TEXAS, SPECIAL ASSESSMENT REVENUE
BONDS, SERIES 2019 (CITY POINT PUBLIC IMPROVEMENT
DISTRICT IMPROVEMENT ZONE A PROJECT); APPROVING THE
FORM AND AUTHORIZING THE DISTRIBUTION OF A
PRELIMINARY LIMITED OFFERING MEMORANDUM FOR THE
CITY OF NORTH RICHLAND HILLS, TEXAS, SPECIAL
ASSESSMENT REVENUE BONDS, SERIES 2019 (CITY POINT
PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE B
PROJECT); AND RESOLVING OTHER MATTERS INCIDENT AND
RELATED THERETO.
WHEREAS, the Public Improvement District Assessment Act, Texas Local Government
Code, Chapter 372, as amended, (the "PID Act") authorizes the City of
North Richland Hills, Texas (the "City") to create a public improvement
district within the corporate limits of the City; and
WHEREAS, pursuant to a resolution adopted by the City Council (the "City Council") of
the City on September 9, 2019, the City has created the "City Point Public
Improvement District" (the "District"); and
WHEREAS, the City Council intends to issue two series of bonds to be designated,
respectively, "City of North Richland Hills, Texas, Special Assessment
Revenue Bonds, Series 2019 (City Point Public Improvement District
Improvement Zone A Project)" (the "Improvement Zone A Bonds") and "City
of North Richland Hills, Texas, Special Assessment Revenue Bonds, Series
2019 (City Point Public Improvement District Improvement Zone B Project)
(the "Improvement Zone B Bonds" and, jointly with the Improvement Zone
A Bonds, the "Bonds") to fund certain improvements in the District as
authorized by the PID Act; and
WHEREAS, there has been presented to this City Council a Preliminary Limited Offering
Memorandum relating to the Improvement Zone A Bonds and a Preliminary
Limited Offering Memorandum relating to the Improvement Zone B Bonds
(jointly, the "Preliminary Limited Offering Memorandums"); and
WHEREAS, the City Council finds and determines that it is necessary and in the best
interests of the City to approve the form and content of the Preliminary
Limited Offering Memorandums and to authorize the use of the Preliminary
Limited Offering Memorandums in the offering and sale of the Bonds by
FMSbonds, Inc. (the "Underwriter"), under the conditions outlined herein;
Resolution No.2019-048
Page 1 of 3
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
NORTH RICHLAND HILLS, TEXAS:
SECTION 1. The recitals set forth above in this Resolution are true and correct and are
hereby adopted as findings of the City Council and are incorporated into the
body of this Resolution as if fully set forth herein.
SECTION 2. The form and content of the Preliminary Limited Offering Memorandums is
hereby approved with such changes, addenda, supplements, or
amendments as may be approved by the City Manager.
SECTION 3. The City hereby authorizes the Preliminary Limited Offering Memorandums
to be used by the Underwriter in connection with the initial marketing and
sale of the Bonds; provided that the Preliminary Limited Offering
Memorandums shall not be released to the public without the approval of
the City Manager, which approval shall be made in consultation with (1) the
City Attorney, (2) Hilltop Securities Inc., the City's Financial Advisor, (3)
Norton Rose Fulbright US LLP, the City's Bond Counsel, and (4) P3 Works,
LLC, the City's PID Administrator.
SECTION 4. The City Council hereby delegates to the City Manager the authority to
approve the release of the Preliminary Limited Offering Memorandums to
the public for use in marketing the Bonds under the conditions outlined
herein, with such approval to be evidenced by the release of the Preliminary
Limited Offering Memorandums to the public.
SECTION 5. The City staff is hereby authorized and directed to do all things proper and
necessary to carry out the intent this Resolution.
SECTION 6. This Resolution shall become effective from and after its date of passage in
accordance with law.
PASSED AND APPROVED on this 28th day of October, 2019.
CITY O ORT IC LA HILLS
By:
1`pStl,►►dddUlQIA1i4. Osc evin ayor
ATTEST: '` ` : '** �''
E
Alicia Richardson,-Cityj e.� a, y�ett ��,�
Resolution No.2019-048
Page 2 of 3
APPROVED AS TO FORM AND LEGALITY:
Maleshia B. McGinnis, City Attorney
AP r 'O14 `,I TO CONTENT:
a
Craig Hu sl conomic Development Director
Resolution No.2019-048
Page 3 of 3
•
NEW ISSUE NOT RATED
PRELIMINARY LIMITED OFFERING MEMORANDUM DATED NOVEMBER_,2019
PROSPECTIVE PURCHASERS ARE ADVISED THAT THE BONDS BEING OFFERED PURSUANT TO THIS LIMITED MEMORANDUM ARE BEING OFFERED TO"QUALIFIED
1E1•a INSTITUTIONAL BUYERS"AS DEFINED IN RULE 144A PROMULGATED THE SECURITIES ACT OF 1933,AS AMENDED(THE"SECURITIES ACT"),AND"ACCREDITED
o INVESTORS"AS DEFINED IN RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT. SEE"LIMITATIONS APPLICABLE TO INITIAL PURCHASERS"
8 HEREIN. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT IN RELIANCE UPON THE EXEMPTION PROVIDED BY SECTION 3(A)(2)THEREIN. NO
R ACTION HAS BEEN TAKEN TO QUALIFY THE BONDS FOR SALE UNDER THE SECURITIES LAWS OF ANY STATE. SEE "LIMITATIONS APPLICABLE TO INITIAL
A? PURCHASERS"HEREIN.
In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for purposes of federal income taxation under existing law,
subject to the matters described under "TAX MATTERS"herein. See "TAX MATTERS—Tax Exemption"herein for a discussion of Bond Counsel's opinion.
$3,540,000*
o I CITY OF NORTH RICHLAND HILLS,TEXAS,
A c (a municipal corporation of the State of Texas located in Tarrant County)
a.s SPECIAL ASSESSMENT REVENUE BONDS,SERIES 2019
((CITY POINT PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE A PROJECT)
oDated Date: December 1,2019 Due: September 1,as shown on the inside cover
se Interest Interest to Accrue from Date of Delivery
a a
The City of North Richland Hills,Texas,Special Assessment Revenue Bonds,Series 2019(City Point Public Improvement District Improvement Zone A
y n Project) (the`Bonds"), are being issued by the City of North Richland Hills,Texas (the"City"). The Bonds will be issued in fully registered form,without
S coupons,in authorized denominations of$100,000 of principal amount and any integral multiple of$1,000 in excess thereof. The Bonds will bear interest at the
rates set forth on the inside cover page hereof,and such interest will be calculated on the basis of a 360-day year of twelve 30-day months,and will be payable on
oeach March 1 and September 1,commencing September 1,2020,until maturity or earlier redemption. The Bonds will be registered in the name of Cede&Co.,as
nominee of The Depository Trust Company("DTC"),New York,New York. No physical delivery of the Bonds will be made to the beneficial owners thereof.
c For so long as the book-entry only system is maintained,the principal of and interest on the Bonds will be paid from the sources described herein by Wilmington
45, o Trust,National Association,as trustee(the"Trustee"),to DTC as the registered owner thereof. See"BOOK-ENTRY ONLY SYSTEM."
] 5 The Bonds are being issued by the City pursuant to the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local
ti
.4 Government Code,as amended(the"PID Act"),an ordinance expected to be adopted by the City Council of the City(the"City Council")on November 12,2019,
G.y and an Indenture of Trust,dated as of December 1,2019(the"Indenture"),to be entered into by and between the City and the Trustee.
, Proceeds of the Bonds will be used to provide funds for(i)paying a portion of the costs of the Improvement Zone A Public Improvements(as defmed
a ° herein)in the City Point Public Improvement District(the"District"),(ii)paying capitalized interest on the Bonds,(iii)funding a reserve account of the Reserve
y Fund and a deposit to the Additional Interest Reserve Account of the Reserve Fund for the Bonds,(iv)paying District formation costs allocable to Improvement
3 Zone A of the District and(v) Bond issuance costs. See "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS" and"APPENDIX A—Form of
Indenture." Capitalized terms not otherwise defmed herein shall have the meanings assigned to them in the Indenture.
b.5 The Bonds,when issued and delivered,will constitute valid and binding special obligations of the City payable solely from and secured by the Pledged
o.2 Revenues,consisting primarily of Assessments(as defined herein)levied against assessable properties in Improvement Zone A of the District in accordance with
z7.4
a Service and Assessment Plan,all to the extent and upon the conditions described herein. The Bonds are not payable from funds raised or to be raised from
0.'; taxation. See"SECURITY FOR THE BONDS."
o The Bonds are subject to redemption at the times, in the amounts, and at the redemption prices more fully described herein under the subcaption
.? "DESCRIPTION OF THE BONDS—Redemption Provisions."
ti•r The Bonds involve a significant degree of risk,are speculative in nature and are not suitable for all investors. See`BONDHOLDERS RISKS"
Sand "SUITABILITY FOR INVESTMENT." Prospective purchasers should carefully evaluate the risks and merits of an investment in the Bonds,
' should consult with their legal and financial advisors before considering a purchase of the Bonds,and should be willing to bear the risks of loss of their
, investment in the Bonds. The Bonds are not credit enhanced or rated and no application has been made for a rating on the Bonds.
a THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS
5 COMPRISING THE TRUST ESTATE,AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE
AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE CITY AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE
S2 INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR
2 TO BE RAISED BY TAXATION,OR OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES,AS AND TO THE EXTENT
w PROVIDED IN THE INDENTURE. NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE CITY'S TAXING
POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE CITY SHALL
72 HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES
a o AND OTHER FUNDS COMPRISING THE TRUST ESTATE. SEE"SECURITY FOR THE BONDS."
p T
. This cover page contains certain information for quick reference only. It is not a summary of the Bonds. Investors must read this entire Limited Offering
o Memorandum to obtain information essential to the making of an informed investment decision.
o The Bonds are offered for delivery when,as,and if issued by the City and accepted by the Underwriter,subject to,among other things,the approval of the
g Bonds by the Attorney General of Texas and the receipt of the opinion of Norton Rose Fulbright US LLP,Bond Counsel,as to the validity of the Bonds and the
..w
° excludability of interest thereon from gross income for federal income tax purposes. See"APPENDIX C—Form of Opinion of Bond Counsel." Certain legal
o.2 matters will be passed upon for the Underwriter by its counsel,Winstead PC,and for the Developer by its counsel,Miklos Cinclair,PLLC. It is expected that the
a Bonds will be delivered in book-entry form through the facilities of DTC on or about December—,2019(the"Date of Delivery").
9,
a0 °
FMSbonds, Inc.
.0 °
o
a.
.4
(-' o
Preliminary;subject to change.
4849-7866-6406v.3
MATURITIES,PRINCIPAL AMOUNTS,INTEREST RATES,PRICES,YIELDS,AND CUSIP NUMBERS
CUSIP Prefix: (a)
$3,540,000*
CITY OF NORTH RICHLAND HILLS,TEXAS,
(a municipal corporation of the State of Texas located in Tarrant County)
SPECIAL ASSESSMENT REVENUE BONDS,SERIES 2019
(CITY POINT PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE A PROJECT)
$ %Term Bonds,Due September 1,20_,Priced to Yield %;CUSIP (a)(b)(c)
$ %Term Bonds,Due September 1,20_,Priced to Yield %; CUSIP (a)(b)(e)
* Preliminary;subject to change.
(a) CUSIP numbers are included solely for the convenience of owners of the Bonds. CUSIP is a registered trademark of the American
Bankers Association. CUSIP data herein is provided by CUSIP Global Services,managed by S&P Global Market Intelligence on
behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a
substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. None of the City,the City's
Financial Advisor or the Underwriter takes any responsibility for the accuracy of such numbers.
ro> The Bonds maturing on or after September 1,20_ are subject to redemption before their scheduled maturity date,in whole or in part,
on any date on or after September 1,20 ,at the redemption price of par plus accrued interest to the date of redemption as described
herein under"DESCRIPTION OF THE BONDS—Redemption Provisions."
(°) The Bonds are also subject to mandatory sinking fund redemption and extraordinary optional redemption as described herein under
"DESCRIPTION OF THE BONDS—Redemption Provisions."
1
CITY OF NORTH RICHLAND HILLS,TEXAS
CITY COUNCIL
Term Expires
Name Place (Mav)
Oscar Trevino Mayor 2020
Tito Rodriguez Place 1 2021
Rita Wright Oujesky Place 2,Mayor Pro Tern 2020
Suzy Compton Place 3 2021
VACANT* Place 4
Mike Benton Place 5 2021
Scott Turnage Place 6 2020
Tim Welch Place 7 2021
*On August 2, 2019 Councilmember Brent Barrow passed away vacating the Place 4 Council seat. The vacancy will
be filled by a special election scheduled to be conducted by the City in November of 2019.
CITY MANAGER CITY SECRETARY DIRECTOR OF FINANCE
Mark Hindman Alicia Richardson Mark Mills
ASSESSMENT CONSULTANT
P3Works,LLC
FINANCIAL ADVISOR TO THE CITY
Hilltop Securities,Inc.
BOND COUNSEL
Norton Rose Fulbright US LLP
UNDERWRITER'S COUNSEL
Winstead PC
For additional information regarding the City,please contact:
Mark Hindman Nick Bulaich
City Manager Hilltop Securities,Inc.
City of North Richland Hills,Texas 777 Main Street
4301 City Point Drive Suite 1200
North Richland Hills,Texas 76180 Fort Worth,Texas 76102
(817)427-6003 (817)322-9710
mhindman@nrhtx.gov nick.bulaich@hilltopsecurities.com
ii
REGIONAL LOCATION MAP OF THE DISTRICT
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AREA LOCATION MAP OF THE DISTRICT
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iv
MAP SHOWING BOUNDARIES OF
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MAP SHOWING IMPROVEMENT ZONE A
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rt "•S�01 . .• • • , . „ -. -� and may change due to Ana
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vi
FOR PURPOSES OF COMPLIANCE WITH RULE 15C2-12 OF THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION AS AMENDED AND IN EFFECT ON THE DATE OF THIS PRELIMINARY
LIMITED OFFERING MEMORANDUM THIS DOCUMENT CONSTITUTES A PRELIMINARY OFFICIAL
STATEMENT OF THE CITY WITH RESPECT TO THE BONDS THAT HAS BEEN DEEMED "FINAL"BY THE
CITY AS OF ITS DATE EXCEPT FOR THE OMISSION OF NO MORE THAN THE INFORMATION PERMITTED
BY RULE 15C2-12.
THE INITIAL PURCHASERS ARE ADVISED THAT THE BONDS BEING OFFERED PURSUANT TO THE
LIMITED OFFERING MEMORANDUM ARE BEING OFFERED AND SOLD ONLY TO "QUALIFIED
INSTITUTIONAL BUYERS"AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT OF 1933") AND "ACCREDITED INVESTORS" AS DEFINED IN
RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933. SEE"LIMITATIONS
APPLICABLE TO INITIAL PURCHASERS" HEREIN. EACH PROSPECTIVE PURCHASER IS RESPONSIBLE
FOR ASSESSING THE MERITS AND RISKS OF AN INVESTMENT IN THE BONDS,MUST BE ABLE TO BEAR
THE ECONOMIC AND FINANCIAL RISK OF SUCH INVESTMENT IN THE BONDS, AND MUST BE ABLE TO
AFFORD A COMPLETE LOSS OF SUCH INVESTMENT. CERTAIN RISKS ASSOCIATED WITH THE
PURCHASE OF THE BONDS ARE SET FORTH UNDER"RISK FACTORS" HEREIN. EACH PURCHASER, BY
ACCEPTING THE BONDS, AGREES THAT IT WILL BE DEEMED TO HAVE MADE THE
ACKNOWLEDGMENTS AND REPRESENTATIONS DESCRIBED UNDER THE HEADING "LIMITATIONS
APPLICABLE TO INITIAL PURCHASERS."
NO DEALER,BROKER,SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE CITY OR THE
UNDERWRITER TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS LIMITED OFFERING MEMORANDUM, AND IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
EITHER OF THE FOREGOING. THIS LIMITED OFFERING MEMORANDUM DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY AND THERE SHALL BE NO OFFER,
SOLICITATION OR SALE OF THE BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER,SOLICITATION OR SALE.
THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS LIMITED OFFERING MEMORANDUM IN
ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE UNITED
STATES FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS
TRANSACTION. THE INFORMATION SET FORTH HEREIN HAS BEEN FURNISHED BY THE CITY AND
OBTAINED FROM SOURCES, INCLUDING THE DEVELOPER, WHICH ARE BELIEVED BY THE CITY AND
THE UNDERWRITER TO BE RELIABLE, BUT IT IS NOT GUARANTEED AS TO ACCURACY OR
COMPLETENESS,AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OF THE UNDERWRITER. THE
INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE,
AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM, 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 THE DEVELOPER SINCE THE DATE HEREOF.
NEITHER THE CITY, THE CITY'S FINANCIAL ADVISOR NOR THE UNDERWRITER MAKE ANY
REPRESENTATION AS TO THE ACCURACY, COMPLETENESS, OR ADEQUACY OF THE INFORMATION
SUPPLIED BY THE DEPOSITORY TRUST COMPANY FOR USE IN THIS LIMITED OFFERING
MEMORANDUM.
THE TRUSTEE HAS NOT PARTICIPATED IN THE PREPARATION OF THIS LIMITED OFFERING
MEMORANDUM AND ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF ANY
INFORMATION CONTAINED IN THIS LIMITED OFFERING MEMORANDUM OR THE RELATED
TRANSACTIONS AND DOCUMENTS OR FOR ANY FAILURE BY ANY PARTY TO DISCLOSE EVENTS THAT
MAY HAVE OCCURRED AND MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF SUCH INFORMATION.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE
INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON
EXEMPTIONS CONTAINED IN SUCH LAWS. THE REGISTRATION OR QUALIFICATION OF THE BONDS
UNDER THE SECURITIES LAWS OF ANY JURISDICTION IN WHICH THEY MAY HAVE BEEN REGISTERED
OR QUALIFIED,IF ANY,SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF SUCH
JURISDICTIONS,OR ANY OF THEIR AGENCIES,HAVE PASSED UPON THE MERITS OF THE BONDS OR THE
ACCURACY OR COMPLETENESS OF THIS LIMITED OFFERING MEMORANDUM.
CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS LIMITED OFFERING
MEMORANDUM CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, SECTION 21E OF THE UNITED
STATES SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND SECTION 27A OF THE SECURITIES
ACT OF 1933. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY THE TERMINOLOGY USED SUCH
vii
AS"PLAN," "EXPECT," "ESTIMATE,""PROJECT,""ANTICIPATE," "BUDGET"OR OTHER SIMILAR WORDS.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-
LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO
BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO
ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF
ITS EXPECTATIONS OR EVENTS,CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE
BASED OCCUR,OTHER THAN AS DESCRIBED UNDER"CONTINUING DISCLOSURE"HEREIN.
viii
TABLE OF CONTENTS
INTRODUCTION 1 Historical Employment in the City of
PLAN OF FINANCE 2 North Richland Hills 37
The District 2 Surrounding Economic Activity 38
Development Plan and Plan of Finance 2 THE DISTRICT 38
The Bonds 3 General 38
DESCRIPTION OF THE BONDS 3 Powers and Authority 39
General Description 3 THE DEVELOPMENT AGREEMENT 39
Redemption Provisions 4 Construction of Improvements 39
BOOK-ENTRY ONLY SYSTEM 5 Economic Development Agreement 40
LIMITATIONS APPLICABLE TO INITIAL THE IMPROVEMENT ZONE A PUBLIC
PURCHASERS 8 IMPROVEMENTS 41
General 41
SECURITY FOR THE BONDS 9 Ownership and Maintenance of
General 9 Improvements 42
Pledged Revenues 10 THE DEVELOPMENT 43
TIRZ Revenues May Reduce Overview 43
Assessments 11 Development Plan 43
Collection and Deposit of Assessments 12 Merchant Builder Lot Purchase and
Unconditional Levy of Assessments 13 Sale Agreements in the District 44
Perfected Security Interest 13 Estimated Home Prices in the
Pledged Revenue Fund 14 Development 45
Bond Fund 14 Expected Commercial Development in
Project Fund 15 the District 45
Reserve Account of the Reserve Fund 16 Expected Multifamily Development in
Administrative Fund 17 the District 45
Defeasance 18 Concept Plan 46
Events of Default 18 Zoning/Permitting 48
Remedies in Event of Default 19 Amenities 48
Restriction on Owner's Actions 20 Education 48
Application of Revenues and Other Existing Mineral Rights,Easements and
Moneys After Event of Default 20
Investment or Deposit of Funds 21 Other Third Party Property Rights 48
Against Encumbrances 22 Environmental 49
Additional Obligations 22 Utilities 49
SOURCES AND USES OF FUNDS 23 T DEVELOPER 49
General 49
DEBT SERVICE REQUIREMENTS 24 Description of the Developer 49
OVERLAPPING TAXES AND DEBT 25 Executive Biography 52
History and Financing of the District 53
ASSESSMENT PROCEDURES 27 THE ASSESSMENT CONSULTANT AND
General 27 ADMINISTRATOR 53
Assessment Methodology 28
Collection and Enforcement of APPRAISAL OF PROPERTY WITHIN
Assessment Amounts 30 IMPROVEMENT ZONE A OF THE DISTRICT..54
Assessment Amounts 31 The Appraisal 54
Prepayment of Assessments 35 Single Family Tracts 54
Priority of Lien 35 Commercial Tracts 54
Foreclosure Proceedings 35 BONDHOLDERS'RISKS 55
THE CITY 36 Assessment Limitations 56
Background 36 Exceedance of Maximum Assessment
City Government 36 Could Trigger Bond Redemption 57
Major Employers 36
ix
Excess TIRZ Revenues Could Trigger UNDERWRITING 71
Bond Redemption 57 REGISTRATION AND QUALIFICATION OF
Competition;Real Estate Market 58 BONDS FOR SALE 71
TIRZ Annual Credit Amount and
Marketing of the Development 58 LEGAL INVESTMENT AND ELIGIBILITY TO
Loss of Tax Exemption 58 SECURE PUBLIC FUNDS IN TEXAS 71
Bankruptcy 59 INVESTMENTS 71
Direct and Overlapping Indebtedness,
Assessments and Taxes 59 INFORMATION RELATING TO THE TRUSTEE74
Depletion of Reserve Account of SOURCES OF INFORMATION 74
Reserve Fund 59
Hazardous Substance 59 General 74
Regulation 60 Source of Certain Information 74
Bondholders'Remedies and Experts 75
Bankruptcy 60 Updating of Limited Offering
No Acceleration 61 Memorandum 75
Bankruptcy Limitation to Bondholders' FORWARD-LOOKING STATEMENTS 75
Rights 61
Management and Ownership 61 AUTHORIZATION AND APPROVAL 75
General Risks of Real Estate Investment
and Development 61 APPENDIX A Form of Indenture
Dependence Upon Developer 62 APPENDIX B Form of Service and
Potential Future Changes in State Law Assessment Plan
Regarding Public Improvement APPENDIX C Form of Opinion of Bond Counsel
Districts 62 APPENDIX D-1 Form of City Disclosure
Use of Appraisal 63 Agreement
Exercise of Third Party Property Rights 64 APPENDIX D-2 Form of Developer Disclosure
Developer Principal Financial Agreement
Relationships and Other Matters APPENDIX E Appraisal of Property in the District
Relating to Developer Affiliates 64 APPENDIX F Form of Construction,
Funding,and Acquisition
TAX MATTERS 66 Agreement
Tax Exemption 66 APPENDIX G Development Agreement
Tax Accounting Treatment of Discount
and Premium on Certain Bonds 67
LEGAL MATTERS 68
Legal Proceedings 68
Legal Opinions 68
Litigation—The City 69
Litigation—The Developer 69
SUITABILITY FOR INVESTMENT 69
ENFORCEABILITY OF REMEDIES 69
NO RATING 70
CONTINUING DISCLOSURE 70
The City 70
The Developer 70
x
(THIS PAGE IS INTENTIONALLY LEFT BLANK.)
PRELIMINARY LIMITED OFFERING MEMORANDUM
$3,540,000*
CITY OF NORTH RICHLAND HILLS,TEXAS,
(a municipal corporation of the State of Texas located in Tarrant County)
SPECIAL ASSESSMENT REVENUE BONDS,SERIES 2019
(CITY POINT PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE A PROJECT)
INTRODUCTION
The purpose of this Limited Offering Memorandum,including the cover page,inside cover and appendices
hereto, is to provide certain information in connection with the issuance and sale by the City of North Richland
Hills, Texas (the "City"), of$3,540,000* aggregate principal amount of its Special Assessment Revenue Bonds,
Series 2019(City Point Public Improvement District Improvement Zone A Project)(the"Bonds").
PROSPECTIVE INVESTORS SHOULD BE AWARE OF CERTAIN RISK FACTORS, ANY OF
WHICH, IF MATERIALIZED TO A SUFFICIENT DEGREE, COULD DELAY OR PREVENT PAYMENT OF
PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, AND/OR INTEREST ON THE BONDS. THE BONDS
ARE NOT A SUITABLE INVESTMENT FOR ALL INVESTORS. SEE "SUITABILITY FOR INVESTMENT"
and"BONDHOLDERS'RISKS."
The Bonds are being issued by the City pursuant to the Public Improvement District Assessment Act,
Subchapter A of Chapter 372, Texas Local Government Code, as amended (the "PID Act"), the ordinance
authorizing the issuance of the Bonds expected to be enacted by the City Council of the City(the"City Council")on
November 12, 2019 (the "Bond Ordinance"), and an Indenture of Trust, dated as of December 1, 2019 (the
"Indenture"),to be entered into by and between the City and Wilmington Trust,National Association as trustee(the
"Trustee"). The Bonds will be secured by assessments (the "Assessments") levied against assessable property
within Improvement Zone A of the City Point Public Improvement District (the "District") pursuant to a separate
ordinance expected to be adopted by the City Council on November 12, 2019 (the"Assessment Ordinance"). The
City created the District pursuant to a resolution adopted by the City Council on September 9,2019 (the"Creation
Resolution").
Reference is made to the Indenture for a full statement of the authority for,and the terms and provisions of,
the Bonds. All capitalized terms used in this Limited Offering Memorandum that are not otherwise defined herein
shall have the meanings set forth in the Indenture. See"APPENDIX A—Form of Indenture."
Set forth herein are brief descriptions of the City, the District, the Administrator (as defined herein), the
Assessment Ordinance, the Bond Ordinance, the Service and Assessment Plan (as defined herein), the TIRZ
Creation Ordinance(as defined herein),the Construction,Funding, and Acquisition Agreement(as defined herein),
the City Point Development Agreement between the City and the Developer dated [DAIL], 2019 (the
"Development Agreement"), MM City Point 53, LLC, a Texas limited liability company (the "Developer"), and
P3Works, LLC (the "Assessment Consultant"), together with summaries of terms of the Bonds and the Indenture
and certain provisions of the PID Act. All references herein to such documents and the PID Act are qualified in
their entirety by reference to such documents or such PID Act and all references to the Bonds are qualified by
reference to the definitive forms thereof and the information with respect thereto contained in the Indenture. Copies
of these documents may be obtained during the period of the offering of the Bonds from the Underwriter,
FMSbonds, Inc., 5 Cowboys Way, Suite 300-V, Frisco, Texas, 75034, Phone: (214) 302-2246. The Form of
Indenture appears in APPENDIX A and the Form of Service and Assessment Plan appears in APPENDIX B. The
information provided under this caption "INTRODUCTION" is intended to provide a brief overview of the
information provided in the other captions herein and is not intended, and should not be considered, fully
representative or complete as to the subjects discussed hereunder.
•Preliminary;subject to change.
1
PLAN OF FINANCE
The District
The PID Act authorizes municipalities,such as the City,to create public improvement districts within their
boundaries or extraterritorial jurisdiction, and to impose assessments within the public improvement district to pay
for certain improvements. The District was created for the purpose of undertaking and financing the cost of certain
public improvements within the District, including the Improvement Zone A Public Improvements, authorized by
the PID Act and approved by the City Council that confer a special benefit on the District.
Development Plan and Plan of Finance
The District is composed of approximately 52.873 acres which are being developed in phases as a master-
planned mixed-use development which is expected to include residential development on approximately acres
(the"Single Family Tracts"),multifamily development on approximately acres(the"Multifamily Tracts"), and
commercial development on acres(the"Commercial Tracts"). Infrastructure in the District will be completed
in one phase consisting of the construction of the Public Improvements(as defined herein). The boundaries of the
District are shown in the "MAP SHOWING BOUNDARIES OF THE DISTRICT" on page v. A portion of the
District consisting of the Single Family Tracts and the Commercial Tracts has been designated as "Improvement
Zone A". A map of Improvement Zone A is shown on page vi. A portion of the District consisting of the Single
Family Tracts and the Multifamily Tracts has been designated as"Improvement Zone B." Improvement Zone A and
Improvement Zone B each overlay the Single Family Tracts.
The Developer purchased the land comprising the District on October 28, 2019. In order to finance the
purchase of land within in the District and development in the District, the Developer obtained a loan (the
"Acquisition and Development Loan") in the amount of$ from Bank (the "Lender"). The
Acquisition Loan is currently outstanding in the amount of$ and secured by all property within the
District. The Developer is the current owner of all property in the District. See"THE DEVELOPER—History and
Financing of the District."
The Developer expects to construct "Public Improvements" consisting of certain roadway improvements,
water distribution system improvements, sanitary sewer collection system improvements, storm drainage collection
system improvements, landscaping, entryway, open space and park improvements that will benefit the entire
District. A portion of such Public Improvements will be allocated to Improvement Zone A of the District (the
"Improvement Zone A Public Improvements"). A portion of such Public Improvements will be allocated to
Improvement Zone B of the District (the "Improvement Zone B Public Improvements"). The Developer plans to
commence development in the District in Q1 2020. The current development schedule for the Public Improvements
is expected to span approximately twenty(20)months.See"THE DEVELOPMENT—Development Plan".
The City will pay the project costs for the Improvement Zone A Public Improvements from proceeds of the
Bonds. See "SOURCES AND USES OF FUNDS". The Developer will submit reimbursement requests on a
monthly basis for costs actually incurred in developing and constructing the Improvement Zone A Public
Improvements and be reimbursed in accordance with the Indenture and the City Point Public Improvement District
Improvement Zone A Construction, Funding, and Acquisition Agreement (the "Construction, Funding, and
Acquisition Agreement"). See"THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS—General," "THE
DEVELOPMENT — Development Plan" and "APPENDIX F - Form of Construction, Funding, and Acquisition
Agreement.
Concurrently with the issuance of the Bonds, the City will issue its $9,005,000*
City of North Richland Hills, Texas, Special Assessment Revenue Bonds, Series 2019 (City Point Public
Improvement District Improvement Zone B Project)(the"Improvement Zone B Bonds")to finance a portion of the
Improvement Zone B Public Improvements. The Improvement Zone B Bonds will be secured by assessments on
property in Improvement Zone B of the District (the "Improvement Zone B Assessments"). Because the Single
Preliminary;subject to change.
2
Family Tracts lie in Improvement Zone A and Improvement Zone B,the Single Family Tracts will be assessed for
the Assessments and a portion of the Improvement Zone B Assessments. The portion of the Improvement Zone B
Assessments allocable to the Single Family Tracts in Improvement Zone B is expected to be $5,680,000*. The
Assessments are expected to be offset by TIRZ Revenues(as defined herein). See"SECURITY FOR THE BONDS
—TIRZ Revenues May Reduce Assessments." The Improvement Zone B Assessments will not be offset by TIRZ
Revenues.
The Bonds
Proceeds of the Bonds will be used to provide funds for (i) paying a portion of the costs of the
Improvement Zone A Public Improvements, (ii) paying capitalized interest on the Bonds, (iii) funding a reserve
account of the Reserve Fund and a deposit to the Additional Interest Reserve Account of the Reserve Fund for the
Bonds, (iv)paying District formation costs allocable to Improvement Zone A of the District and(v)Bond issuance
costs.To the extent that a portion of the proceeds of the Bonds is allocated for the payment of the costs of issuance
of the Bonds and less than all of such amount is used to pay such costs,the excess amount may,at the option of the
City, be transferred to the Improvement Zone A Public Improvement Account of the Project Fund (both defined
herein)or to the Principal and Interest Account of the Bond Fund(both defined herein)to pay interest on the Bonds.
See "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS," "APPENDIX A—Form of Indenture" and
"SOURCES AND USES OF FUNDS."
Payment of the Bonds is secured by a pledge of and a lien upon the Trust Estate, consisting primarily of
Assessments to be levied against the assessable parcels or lots within Improvement Zone A of the District,all to the
extent and upon the conditions described herein and in the Indenture. See "SECURITY FOR THE BONDS,"
"ASSESSMENT PROCEDURES"and"APPENDIX A-Form of Indenture."
The Bonds and the Improvement Zone B Bonds shall never constitute an indebtedness or general
obligation of the City, the State or any other political subdivision of the State, within the meaning of any
constitutional provision or statutory limitation whatsoever,but the Bonds are limited and special obligations
of the City payable solely from the Trust Estate as provided in the Indenture. Neither the faith and credit
nor the taxing power of the City, the State or any other political subdivision of the State is pledged to the
payment of the Bonds. The Improvement Zone B Bonds and any future Bonds to be issued by the City are
not offered pursuant to this Limited Offering Memorandum.
DESCRIPTION OF THE BONDS
General Description
The Bonds will mature on the dates and in the amounts set forth in the inside cover page of this Limited
Offering Memorandum. Interest on the Bonds will accrue from their date of delivery to the Underwriter and will be
computed on the basis of a 360-day year of twelve 30-day months. Interest on the Bonds will be payable on each
March 1 and September 1, commencing September 1, 2020 (each an "Interest Payment Date"), until maturity or
prior redemption. Wilmington Trust,National Association is the initial Trustee,Paying Agent and Registrar for the
Bonds.
The Bonds will be issued in fully registered form, without coupons, in authorized denominations of
$100,000 of principal and any integral multiple of$1,000 in excess thereof("Authorized Denominations"). Upon
initial issuance, the ownership of the Bonds will be registered in the name of Cede & Co., as nominee for The
Depository Trust Company,New York,New York("DTC"),and purchases of beneficial interests in the Bonds will
be made in book-entry only form. See "BOOK-ENTRY ONLY SYS ELM" and "SUITABILITY FOR
INVESTMENT."
`Preliminary;subject to change.
3
Redemption Provisions
Optional Redemption. The City reserves the right and option to redeem Bonds maturing on or after
September 1, 20 before their scheduled maturity date, in whole or in part, on any date on or after September 1,
20 ,at the Redemption Price of par plus accrued interest to the date of redemption.
Extraordinary Optional Redemption. Notwithstanding any provision in the Indenture to the contrary, the
City reserves the right and option to redeem Bonds before their respective scheduled maturity dates, in whole or in
part, on the first day of any month, at the Redemption Price of 100% of the principal amount of such Bonds, or
portions thereof, to be redeemed plus accrued interest to the date of redemption from amounts on deposit in the
Redemption Fund as a result of Prepayments (including related transfers to the Redemption Fund as provided in the
Indenture),transfers to the Redemption Fund made pursuant to the Indenture,or as a result of unexpended amounts
transferred from the Project Fund as provided in the Indenture. See "ASSESSMENT PROCEDURES —
Prepayment of Assessments" for the definition and description of Prepayments" and "APPENDIX A—Form of
Indenture."
Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption prior
to their stated maturity and will be redeemed by the City in part at the Redemption Price of par plus accrued and
unpaid interest to the redemption date from moneys available for such purpose in the Principal and Interest Account
of the Bond Fund pursuant to the Indenture,on the dates and in the respective SinkingFund Installments as set forth
P
in the following schedule:
$ Term Bonds Maturing September 1,20
Redemption Date Sinking Fund Installment
September 1,20_
September 1,201'
$ Term Bonds Maturing September 1,20
Sinking Fund Installment
Redemption Date
September 1,20_
September 1,20—j
t'Stated maturity.
At least forty-five(45)days prior to each mandatory sinking fund redemption date,the Trustee shall select
a principal amount of Bonds of such maturity equal to the Sinking Fund Installment amount of such Bonds to be
redeemed,shall call such Bonds for redemption on such scheduled mandatory redemption date,and shall give notice
of such redemption,as provided in the Indenture.
The principal amount of Bonds of a stated maturity required to be redeemed on any mandatory sinking fund
redemption date pursuant to the Indenture shall be reduced,at the option of the City,by the principal amount of any
Bonds of such maturity which,at least forty-five(45)days prior to the sinking fund redemption date shall have been
acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued unpaid interest to the
date of purchase thereof,and delivered to the Trustee for cancellation.
The principal amount of Bonds required to be redeemed on any mandatory sinking fund redemption date
pursuant to the Indenture shall be reduced on a pro rata basis among Sinking Fund Installments by the principal
amount of any Bonds which, at least forty-five(45)days prior to the sinking fund redemption date, shall have been
redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not
previously credited to a mandatory sinking fund redemption.
4
Notice of Redemption. The Trustee shall give notice of any redemption of Bonds by sending notice by
United States mail,first-class,postage prepaid,not less than thirty(30)days before the date fixed for redemption,to
the Owner of each Bond or portion thereof to be redeemed, at the address shown in the Register. So long as the
Bonds are in book-entry-only form and held by the DTC as security depository, Owner means Cede & Co., as
nominee for DTC. The notice shall state the redemption date, the Redemption Price,the place at which the Bonds
are to be surrendered for payment,and,if less than all the Bonds Outstanding are to be redeemed,and subject to the
Indenture,an identification of the Bonds or portions thereof to be redeemed, any conditions to such redemption and
that on the redemption date,if all conditions,if any,to such redemption have been satisfied,such Bond shall become
due and payable. Any notice given as provided in the Indenture shall be conclusively presumed to have been duly
given,whether or not the Owner receives such notice.
The City has the right to rescind any optional redemption or extraordinary optional redemption described in
the Indenture by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption
shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the
payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of
Default under the Indenture. The Trustee shall mail notice of rescission of redemption in the same manner notice of
redemption was originally provided.
With respect to any optional redemption of the Bonds, unless the Trustee has received funds sufficient to
pay the Redemption Price of the Bonds to be redeemed before giving of a notice of redemption,the notice may state
the City may condition redemption on the receipt of such funds by the Trustee on or before the date fixed for the
redemption, or on the satisfaction of any other prerequisites set forth in the notice of redemption. If a conditional
notice of redemption is given and such prerequisites to the redemption are not satisfied and sufficient funds are not
received,the notice shall be of no force and effect,the City shall not redeem the Bonds and the Trustee shall give
notice,in the manner in which the notice of redemption was given,that the Bonds have not been redeemed.
Additional Provisions with Respect to Redemption. If less than all of the Bonds are to be redeemed
pursuant to the mandatory sinking fund redemption and optional redemption provisions in the Indenture,Bonds shall
be redeemed in minimum principal amounts of$100,000 or any integral of$1,000 in excess thereof by a pro rata
reduction of the outstanding maturities. If less than all of the Bonds of a particular maturity are to be redeemed,the
Bonds of such maturity shall be redeemed by lot or other customary method that results in a random selection. Each
Bond shall be treated as representing the number of Bonds that is obtained by dividing the principal amount of such
Bond by the smallest Authorized Denomination for such Bond.
If less than all of the Bonds are to be redeemed pursuant to the extraordinary optional redemption
provisions in the Indenture, Bonds shall be redeemed in minimum principal amounts of$5,000 or any integral of
$1,000 in excess thereof by a pro rata reduction of the outstanding maturities. If less than all of the Bonds of a
particular maturity are to be redeemed, the Bonds of such maturity shall be redeemed by lot or other customary
method that results in a random selection. Each Bond shall be treated as representing the number of Bonds that is
obtained by dividing the principal amount of such Bond by the smallest Authorized Denomination for such Bond.
A portion of a single Bond of an Authorized Denomination may be redeemed, but only in a principal
amount equal to$1,000 or any integral thereof. The Trustee shall treat each$1,000 portion of such Bond as though
it were a single bond for purposes of selection for redemption. No redemption shall result in a Bond in a
denomination of less than an Authorized Denomination; provided,however, if the amount of Outstanding Bonds is
less than an Authorized Denomination after giving effect to such partial redemption,a Bond in the principal amount
equal to the unredeemed portion,but not less than$1,000,may be issued.
Upon surrender of any Bond for redemption in part, the Trustee in accordance with the Indenture, shall
authenticate and deliver and exchange the Bond or Bonds in an aggregate principal amount equal to the unredeemed
portion of the Bond so surrendered,such exchange being without charge.
BOOK-ENTRY ONLY SYSTEM
This section describes how ownership of the Bonds is to be transferred and how the principal of premium,
if any, and interest on the Bonds are to be paid to and credited by The Depository Trust Company ("DTC"), New
5
York New York, while the Bonds are registered in its nominee name. The information in this section concerning
DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this
Limited Offering Memorandum. The City and the Underwriter believe the source of such information to be reliable,
but neither the City nor the Underwriter takes responsibility for the accuracy or completeness thereof.
The City cannot and does not give any assurance that(1)DTC will distribute payments of debt service on
the Bonds, or redemption or other notices, to DTC Participants, (2)DTC Participants or others will distribute debt
service payments paid to DTC or its nominee(as the registered owner of the Bonds), or redemption or other notices,
to the Beneficial Owners, or that they will do so on a timely basis or (3) DTC will serve and act in the manner
described in this Limited Offering Memorandum. The current rules applicable to DTC are on file with the United
States Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC
Participants are on file with DTC.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities
registered in the name of Cede& Co. (DTC's partnership nominee)or such other name as may be requested by an
authorized representative of DTC. One fully-registered security certificate will be issued for each maturity of the
Bonds,each in the aggregate principal amount of such maturity,and will be deposited with DTC.
DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New
York Banking Law, a"banking organization"within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a"clearing corporation"within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's
participants (`Direct Participants")deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities,through electronic computerized book-
entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement
of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust&Clearing Corporation(`DTCC"). DTCC,is the holding company for DTC,National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC
is owned by the users of its registered subsidiaries. Access to the DTC system is also available to others such as
both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing companies that clear
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). DTC has a Standard&Poor's rating of"AA+". The DTC Rules applicable to its Participants are on
file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond
("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is
discontinued.
To facilitate subsequent transfers,all Bonds deposited by Direct Participants with DTC are registered in the
name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede& Co. or such
other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts
such Bonds are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
6
Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of
significant events with respect to the Bonds,such as redemptions,tenders,defaults,and proposed amendments to the
Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the
Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices be
provided directly to them.
Redemption notices shall be sent to DTC. If less than all Bonds of the same maturity are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant of such maturity to be
redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures,DTC
mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede&
Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record
date(identified in a listing attached to the Omnibus Proxy).
Principal,interest and all other payments on the Bonds will be made to Cede&Co.,or such other nominee
as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants'
accounts upon DTC's receipt of funds and corresponding detail information from the City or Paying
Agent/Registrar, on the payment date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form or registered in"street name," and
will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, 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,interest and payments to Cede&Co.(or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of the Trustee, the Paying Agent/Registrar or the City,
disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time
by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained,Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC(or a successor
securities depository). In that event, Bond certificates will be printed and delivered. Thereafter,Bond certificates
may be transferred and exchanged as described in the Indenture.
The information in this section concerning DTC and DTC's book-entry system has been obtained from
sources that the City believes to be reliable, but none of the City,the City's Financial Advisor or the Underwriter
take any responsibility for the accuracy thereof.
NONE OF THE CITY, THE TRUSTEE, THE PAYING AGENT, THE CITY'S FINANCIAL ADVISOR
OR THE UNDERWRITER WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO THE DTC
PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEE WITH RESPECT TO THE
PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, THE INDIRECT
PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE BONDS. THE CITY CANNOT AND DOES NOT
GIVE ANY ASSURANCES THAT DTC, THE DTC PARTICIPANTS OR OTHERS WILL DISTRIBUTE
PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS PAID TO DTC OR ITS NOMINEE,AS THE
REGISTERED OWNER, OR PROVIDE ANY NOTICES TO THE BENEFICIAL OWNERS OR THAT THEY
WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL ACT IN THE MANNER DESCRIBED IN THIS
LIMITED OFFERING MEMORANDUM. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE
7
WITH THE SECURIIINS AND EXCHANGE COMMISSION, AND THE CURRENT PROCEDURES OF DTC
TO BE FOLLOWED IN DEALING WITH DTC PARTICIPANTS ARE ON FILE WITH DTC.
LIMITATIONS APPLICABLE TO INITIAL PURCHASERS
Each initial purchaser is advised that the Bonds being offered pursuant to this Limited Offering
Memorandum are being offered and sold only to "accredited investors" as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933 and "qualified institutional buyers" as defined in Rule 144A
promulgated under the Securities Act of 1933. Each initial purchaser of the Bonds (each, an "Investor") will be
deemed to have acknowledged,represented and warranted to the City as follows:
Each initial purchaser is advised that the Bonds being offered pursuant to this Limited Offering
Memorandum are being offered and sold only to "qualified institutional buyers" as defined in Rule 501 of
Regulation D promulgated under the Securities Act and"accredited investors"as defined in Rule 144A promulgated
under the Securities Act. Each initial purchaser of the Bonds (each, an "Investor") will be deemed to have
acknowledged and represented to the City as follows:
1) The Investor has authority and is duly authorized to purchase the Bonds and any other instruments
and documents required to be executed by the Investor in connection with the purchase of the
Bonds.
2) The Investor is an"accredited investor"under Rule 501 of Regulation D of the Securities Act or a
"qualified institutional buyer"under Rule 144A of the Securities Act,and therefore,has sufficient
knowledge and experience in financial and business matters, including purchase and ownership of
municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the
investment represented by the Bonds.
3) The Bonds are being acquired by the Investor for investment and not with a view to,or for resale
in connection with, any distribution of the Bonds, and the Investor intends to hold the Bonds
solely for its own account for investment purposes and for an indefinite period of time, and does
not intend at this time to dispose of all or any part of the Bonds. However,the investor may sell at
any time the Investor deems appropriate. The Investor understands that it may need to bear the
risks of this investment for an indefinite time,since any sale prior to maturity may not be possible.
4) The Investor understands that the Bonds are not registered under the Securities Act and that such
registration is not legally required as of the date hereof;and further understands that the Bonds(a)
are not being registered or otherwise qualified for sale under the"Blue Sky" laws and regulations
of any state,(b)will not be listed in any stock or other securities exchange,and(c)will not carry a
rating from any rating service.
5) The Investor acknowledges that it has either been supplied with or been given access to
information, including financial statements and other financial information, and the Investor has
had the opportunity to ask questions and receive answers from knowledgeable individuals
concerning the City, the Improvement Zone A Public Improvements, the Bonds, the security
therefor, and such other information as the Investor has deemed necessary or desirable in
connection with its decision to purchase the Bonds(collectively,the"Investor Information"). The
Investor has received a copy of this Limited Offering Memorandum relating to the Bonds. The
Investor acknowledges that it has assumed responsibility for its review of the Investor Information
and it has not relied upon any advice, counsel, representation or information from the City in
connection with the Investor's purchase of the Bonds. The Investor agrees that none of the City,
its councilmembers, officers,or employees shall have any liability to the Investor whatsoever for,
or in connection with the Investor's decision to purchase the Bonds except for fraud or willful
misconduct,to the extent permitted by law. For the avoidance of doubt, it is acknowledged that
Underwriter is not deemed an officer or employee of the City.
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6) The Investor acknowledges that the obligations of the City under the Indenture are special,limited
obligations payable solely from amounts paid to the City pursuant to the terms of the Indenture
and the City shall not be directly or indirectly or contingently or morally obligated to use any other
moneys or assets of the City for amounts due under the Indenture. The Investor understands that
the Bonds are not secured by any pledge of any moneys received or to be received from taxation
by the City, the District (which has no taxing power), the State of Texas (the "State") or any
political subdivision or taxing district thereof; that the Bonds will never represent or constitute a
general obligation or a pledge of the faith and credit of the City, the State or any political
subdivision thereof; that no right will exist to have taxes levied by the State or any political
subdivision thereof for the payment of principal and interest on the Bonds;and that the liability of
the City and the State with respect to the Bonds is subject to further limitations as set forth in the
Indenture.
7) The Investor has made its own inquiry and analysis with respect to the Bonds and the security
therefor. The Investor is aware that the development of the District involves certain economic and
regulatory variables and risks that could adversely affect the security for the Bonds.
8) The Investor acknowledges that the sale of the Bonds to the Investor is made in reliance upon the
certifications,representations and warranties described in items 1-7 above.
SECURITY FOR THE BONDS
General
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE
PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE
EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST
THE GENERAL CREDIT OR TAXING POWER OF THE CITY AND ARE PAYABLE SOLELY FROM THE
SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE
RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION,
OR OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES AND OTHER FUNDS
COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO
OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE CITY'S
TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INI'iREST OR REDEMPTION
PREMIUM,IF ANY,THEREON. THE CITY SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY
THE BONDS OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES AND OTHER
FUNDS COMPRISING THE TRUST ESTATE.
NOTWITHSTANDING THE FOREGOING, THE CITY HAS CREATED "REINVESTMENT ZONE
NUMBER THREE, CITY OF NORTH RICHLAND HILLS, TEXAS" (THE "TIRZ") WITHIN THE DISTRICT
COTERMINOUS WITH THE BOUNDARIES OF THE DISTRICT AND INTENDS TO USE ANNUAL TAX
INCREMENT REVENUES COLLECTED, WHICH TAX INCREMENT WILL CONSIST OF (1)AN AMOUNT
EQUAL TO 45% OF ALL REAL PROPERTY TAXES LEVIED, ASSESSED AND COLLECTED FOR
MAINIENANCE AND OPERATIONS WITHIN THE TIRZ ON ALL REAL PROPERTY IN THE TIRZ
TAXABLE BY THE CITY THEREIN AND (2) AN AMOUNT EQUAL TO 25% OF ALL REAL PROPERTY
TAXES LEVIED, ASSESSED AND COLLECTED WITHIN THE TIRZ ON ALL REAL PROPERTY IN THE
TIRZ TAXABLE BY TARRANT COUNTY, TEXAS (THE"COUNTY")THEREIN,WHICH REVENUES ARE
AVAILABLE PURSUANT TO A PARTICIAPATION AGREEMENT BETWEEN THE COUNTY AND THE
CITY TO PAY A PORTION OF THE COSTS OF THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS.
SUCH TAX INCREMENT REVENUE,TO THE EXTENT AVAILABLE,IS EXPECTED TO BE USED BY THE
CITY TO OFFSET ASSESSMENTS USED TO PAY PRINCIPAL OF AND INTEREST ON THE BONDS. ANY
AMOUNT OF SUCH TAX INCREMENT REVENUE USED TO PAY PRINCIPAL OF AND INTEREST ON
THE BONDS WILL RESULT IN A REDUCTION IN ANNUAL INSTALLMENTS OF ASSESSMENTS BY A
CORRESPONDING AMOUNT. SUCH TAX INCREMENT REVENUE IS NOT PLEDGED TO THE BONDS
UNDER THE INDENTURE. SEE "TIRZ REVENUES MAY OFFSET ASSESSMENTS" BELOW. THE TAX
INCREMENT REVENUE SHALL NOT OFFSET THE IMPROVEMENT ZONE B ASSESSMENTS.
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The principal of,premium,if any,and interest on the Bonds are secured by a pledge of and a lien upon the
pledged revenues (the "Pledged Revenues"), consisting primarily of Assessments levied against the assessable
parcels or lots within Improvement Zone A of the District and other funds comprising the Trust Estate, all to the
extent and upon the conditions described herein and in the Indenture. Improvement Zone A of the District contains
approximately acres. In accordance with the PID Act,the City has caused the preparation of a Service and
Assessment Plan (as amended and supplemented,the"Service and Assessment Plan"),which describes the special
benefit received by the property within the District, including Improvement Zone A of the District, provides the
basis and justification for the determination of special benefit on such property, establishes the methodology for the
levy of Assessments and provides for the allocation of Pledged Revenues for payment of principal of, premium, if
any,and interest on the Bonds. The Service and Assessment Plan is reviewed and updated annually for the purpose
of determining the annual budget for improvements and the Annual Installments(as defined below)of Assessments
due in a given year. The determination by the City of the assessment methodology set forth in the Service and
Assessment Plan is the result of the discretionary exercise by the City Council of its legislative authority and
governmental powers and is conclusive and binding on all current and future landowners within the District. See
"APPENDIX B—Form of Service and Assessment Plan."
Single Family Tracts which are overlaid by Improvement Zone A and Improvement Zone B will be
assessed for the Assessments and the Improvement Zone B Assessments. See"ASSESSMENT PROCEDURES—
Assessment Methodology" and"OVERLAPPING TAXES AND DEBT." The Assessments and the Improvement
Zone B Assessments are separate and distinct assessments on the applicable assessed parcels. Only the Assessments
are pledged to the payment of the Bonds;the Improvement Zone B Assessments are not pledged to and will not be
available for payment of the Bonds. Partial payment of the Assessments or the Annual Installments thereof could
adversely affect the City's ability to pay debt service on the Bonds. See"BONDHOLDERS' RISKS—Assessment
Limitations".
Pledged Revenues
The City is authorized by the PID Act,the Assessment Ordinance and other provisions of law to finance the
Improvement Zone A Public Improvements by levying Assessments upon properties in Improvement Zone A of the
District benefitted thereby. For a description of the assessment methodology and the amounts of Assessments
anticipated to be levied on Improvement Zone A of the District, see "ASSESSMENT PROCEDURES" and
"APPENDIX B—Form of Service and Assessment Plan."
Pursuant to the Indenture, Pledged Revenues are the sum of(i) the Assessment Revenue, less the Annual
Collection Costs and(ii)any additional revenues that the City may deposit for the payment of Bonds. "Assessment
Revenue" means monies collected by or on behalf of the City from any one or more of the following: (i) an
Assessment levied against Improvement Zone A Assessed Property, or Annual Installment payment thereof,
including any interest on such Assessment or Annual Installment thereof during any period of delinquency, (ii) a
Prepayment, and (iii) Foreclosure Proceeds. "Annual Installments" means, with respect to Improvement Zone A
Assessed Property,each annual payment of the Assessments shown on the Assessment Roll related to the Bonds and
Improvement Zone A's portion of the Public Improvements, in the amounts shown on Exhibit F-1 attached to the
Service and Assessment Plan; which annual payment includes the Annual Collection Costs and the Additional
Interest collected on each annual payment of the Assessments as described in the Indenture and as defined and
calculated in the Service and Assessment Plan or in any Annual Service Plan Update. The City will covenant in the
Indenture that it will take and pursue all actions permissible under Applicable Laws to cause the Assessments to be
collected and the liens thereof enforced continuously. See "SECURITY FOR THE BONDS —Pledged Revenue
Fund,""APPENDIX A—Form of Indenture"and"APPENDIX B—Form of Service and Assessment Plan."
The PID Act provides that the Assessments (including any reassessment, with interest, the expense of
collection and reasonable attorney's fees, if incurred) are a first and prior lien (the"Assessment Lien") against the
property assessed, superior to all other liens or claims, except liens and claims for State, county, school district, or
municipality ad valorem taxes and are a personal liability of and charge against the owners of property,regardless of
whether the owners are named and runs with the land. Pursuant to the PID Act,the Assessment Lien is effective
from the date of the Assessment Ordinance until the Assessments are paid (or otherwise discharged), and is
enforceable by the City Council in the same manner that an ad valorem property tax levied against real property may
be enforced by the City Council. See"ASSESSMENT PROCEDURES"herein. The Assessment Lien is superior
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to any homestead rights of a property owner that were properly claimed after the adoption of the Assessment
Ordinance. However,an Assessment Lien may not be foreclosed upon if any homestead rights of a property owner
were properly claimed prior to the adoption of the Assessment Ordinance("Pre-existing Homestead Rights")for as
long as such rights are maintained on the property. See`BONDHOLDERS RISKS—Assessment Limitations."
TIRZ Revenues May Reduce Assessments
The Assessments to be levied by the City according to the Assessment Ordinance and described in the
Service and Assessment Plan are set at a level sufficient to fund a portion of the costs of the Improvement Zone A
Public Improvements.
Pursuant to Chapter 311 of the Texas Tax Code (the "TIRZ Act"), on October 14, 2019, the City held a
public hearing on the creation of the TIRZ and the preliminary project and financing plan. Pursuant to Ordinance
No. 3617 (the "TIRZ Creation Ordinance"), the City created the TIRZ and was presented with the Reinvestment
Zone Number Three, City of North Richland Hills Preliminary Project and Financing Plan ("Preliminary TIRZ
Project and Finance Plan").
The City Council approved a final Project and Finance Plan for the TIRZ (the"TIRZ Project and Finance
Plan") on , 2019 with the adoption of an ordinance which authorizes the use of the City TIRZ
Revenues (defined below) for project costs under the TIRZ Act, relating to the Improvement Zone A Public
Improvements as provided for in the TIRZ Project and Finance Plan (including amendments or supplements
thereto).
Pursuant to the TIRZ Act,the tax increment base of the City is the total taxable value of all real property
taxable by the City located in the TIRZ as of January 1 in the year in which the TIRZ was designated as a
reinvestment zone (the "Tax Increment Base"). Pursuant to the TIRZ Act, the TIRZ Creation Ordinance and the
Development Agreement,the City will set the amount of the"Tax Increment"for a year as Tax Increment revenues
in the amount equal to 45%of the ad valorem tax increment collected for maintenance and obligation purposes on
all real property in the TIRZ taxable by the City(the"City TIRZ Revenues"). Consistent with Section 311.012(b)of
the TIRZ Act,the Captured Appraised Value of real property taxable by the City for year is the total appraised
value of all real property taxable by the City and located in the TIRZ for that year less the Tax Increment Base(the
"Captured Appraised Value"). Currently,there are no other taxing units other than the County participating in the
TIRZ.
The City expects to use annual Tax Increment revenues collected to offset the costs of the Improvement
Zone A Public Improvements. The City will agree to transfer the City TIRZ Revenues from the tax increment fund
to the Bond Principal and Interest Account of the Bond Fund for the payment of debt service on the Bonds. Such
City TIRZ Revenues, if and when collected and transferred by the City, will result in a reduction in Annual
Installments of Assessments by a corresponding amount. The City intends to dedicate and deposit the City TIRZ
Revenues collected for a period of(i)twenty years or(ii)until the amount of increment placed in the tax increment
fund totals$4,173,032.
The County and the City have entered into a Participation Agreement pursuant to which the County has
agreed to transfer to the City's tax increment fund a portion(25%)of the ad valorem tax increment collected for on
all real property in the TIRZ taxable by the County (the"County TIRZ Revenues and,together with the City TIRZ
Revenues,the"TIRZ Revenues"). The County is expected to transfer the County TIRZ Revenues to the City's Tax
Increment Fund and the City is expected to transfer the County Tax Revenues from the TIRZ Fund to the Bond
Principal and Interest Account of the Bond Fund for the payment of debt service on the Bonds. Such tax increment
revenue, if and when collected and transferred by the City, will result in a reduction in Annual Installments of
Assessments by a corresponding amount. The County intends to dedicate and deposit tax increment revenues
collected for a period(i)ending on December 31,2038(with final year's tax to be collected by September 1,2039),
or an earlier termination date designated by ordinance subsequently adopted by the City Council of the City, (ii)
ending on the date on which all project costs of the TIRZ have been paid or(iii)when$1,707,150 has been placed in
the TIRZ Fund from County TIRZ Revenues.
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It is expected that the TIRZ Revenues will be used to fund the Improvement Zone A Public Improvements
P p p
upto the Maximum Contribution. The "Maximum Contribution" of the TIRZ Revenues is expected to be
P
$5 880 182.
In the Service and Assessment Plan,the City has established a maximum annual credit for each Lot Type in
Improvement Zone A to be generated from the TIRZ Revenues ($405.56 for Lot Type SF1, $426.54 for Lot Type
SF2, $454.51 for Lot Type SF3 and $35,677.54/acre for Lot Type Commercial). See "ASSESSMENT
PROCEDURES—Assessment Amounts—TIRZ Annual Credit Amount". After the TIRZ Annual Credit Amount is
applied to provide a credit towards a portion of the Annual Installment for the Assessed Property, any excess TIRZ
Revenues from the TIRZ Fund shall be held in a segregated account by the City and shall be used either (1) to
prepay a portion of all Assessments on the Assessed Property in a manner determined by the City and the
Administrator to be fair and equitable,and to redeem Bonds pursuant to the extraordinary redemption provisions of
the Indenture,(2)to optionally redeem the Bonds pursuant to the provisions of the Indenture,or(3)to be applied as
a credit towards a portion of Annual Installments in future years in an effort to maintain a level Annual Installment
schedule. See "DESCRIPTION OF THE BONDS — Redemption Provisions" and `BONDHOLDERS RISKS —
Excess TIRZ Revenues Could Trigger Bond Redemption."
THE TIRZ REVENUES, IF AVAILABLE, WILL NOT BE PLEDGED TO THE PAYMENT OF
THE BONDS, AND THERE IS NO GUARANTEE THAT THERE WILL EVER BE SUFFICIENT TIRZ
REVENUES TO GENERATE A TIRZ ANNUAL CREDIT AMOUNT. THE TIRZ ANNUAL CREDIT
AMOUNT WILL NOT BE APPLIED IN ANY MANNER THAT WOULD AFFECT THE COLLECTION AND
CONTINUOUS ENFORCEMENT OF ASSESSMENTS COLLECTED FOR THE PAYMENT OF DEBT
SERVICE ON THE BONDS AND ANNUAL COLLECTION COSTS AND THE FUNDING OF THE
PREPAYMENT AND DELINQUENCY RESERVE REQUIREMENT, IN THE MANNER AND TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS. SUCH TIRZ ANNUAL CREDIT AMOUNT IS
NOT EXPECTED TO BE AVAILABLE TO REDUCE THE ANNUAL INSTALLMENT FOR ANY ASSESSED
PROPERTY UNTIL THE SECOND YEAR THAT A HOME OR STRUCTURE ON SUCH PARCEL IS
ASSESSED. TIRZ REVENUES GENERATED FROM THE CAPTURED APPRAISED VALUE FOR EACH
PARCEL IN THE DISTRICT DURING THE DEVELOPMENT OF SUCH PARCELS WILL NOT BE
SUFFICIENT TO ACHIEVE THE NET TAX RATE EQUIVALENT OF THE AVERAGE ANNUAL
INSTALLMENT OF $0. PER $100 ASSESSED VALUE (THE "TARGETED NET AVERAGE ANNUAL
INSTALLMENT"). THE TIRZ ANNUAL CREDIT AMOUNT IS NOT EXPECTED TO BE SUFFICIENT TO
PROVIDE FOR THE TARGETED NET AVERAGE ANNUAL INSTALLMENT UNTIL THE SECOND YEAR
THAT A HOME OR STRUCTURE ON SUCH PARCEL IS ASSESSED. SEE"OVERLAPPING TAXES AND
DEBT."
Collection and Deposit of Assessments
The Assessments shown on the Assessment Roll,together with the interest thereon,shall first be applied to
the payment of the principal of and interest on the Bonds as and to the extent provided in the Service and
Assessment Plan and the Indenture.
The Assessments assessed to pay debt service on the Bonds,together with interest thereon, are payable in
Annual Installments established by the Assessment Ordinance and the Service and Assessment Plan to correspond,
as nearly as practicable,to the debt service requirements for the Bonds. An Annual Installment of an Assessment
has been made payable in the Assessment Ordinance in each fiscal year of the City preceding the date of final
maturity of the Bonds which, if collected, will be sufficient to first pay debt service requirements attributable to
Assessments in the Service and Assessment Plan. Each Annual Installment is payable as provided in the Service
and Assessment Plan and the Assessment Ordinance.
A record of the Assessments on each parcel,tract or lot which are to be collected in each year during the
term of the Bonds is shown on the Assessment Roll. Sums received from the collection of the Assessments to pay
the debt service requirements (including delinquent installments, Foreclosure Proceeds and penalties) and of the
interest thereon shall be deposited into the Bond Pledged Revenue Account of the Pledged Revenue Fund, except
that amounts received as Prepayments shall be transferred into the Redemption Fund. See"SECURITY FOR THE
BONDS—Pledged Revenue Fund"and APPENDIX A—Form of Indenture.
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The portions of the Annual Installments of Assessments collected to pay Annual Collection Costs shall be
deposited in the Administrative Fund and shall not constitute Pledged Revenues.
Unconditional Levy of Assessments
The City will impose Assessments on the property within Improvement Zone A of the District to pay the
principal of and interest on the Bonds scheduled for payment from Pledged Revenues as described in the Indenture
and in the Service and Assessment Plan and coming due during each Fiscal Year. The Assessments shall be
effective on the date of, and strictly in accordance with the terms of,the Assessment Ordinance. Each Assessment
may be paid immediately in full or in periodic Annual Installments over a period of time equal to the term of the
Bonds,which installments shall include interest on the Assessments. Pursuant to the Assessment Ordinance,interest
on the Assessments will be calculated at the rate of interest on the Bonds plus 0.50%, calculated on the basis of a
360-day year of twelve 30-day months. Such rate may be adjusted as described in the Service and Assessment Plan.
Each Annual Installment, including the interest on the unpaid amount of an Assessment, shall be calculated on
September 1 and shall be billed on or about October 1 of each year. Each Annual Installment together with interest
thereon shall be delinquent if not paid prior to February 1 of the following year. The initial Annual Installments will
be due when billed on or about October 1,2020,and will be delinquent if not paid prior to February 1,2021.
As authorized by Section 372.018(b)of the PID Act,the City will calculate and collect each year while the
Bonds are Outstanding and unpaid an assessment to pay the annual costs incurred by or on behalf of the City in the
administration and operation of the District. The portion of each Annual Installment used to pay such annual costs
shall remain in effect from year to year until all Bonds are finally paid or until the City adjusts the amount of the
levy after an annual review in any year pursuant to Section 372.013 of the PID Act. The assessments to pay annual
expenses shall be due in the manner set forth in the Assessment Ordinance on October 1 of each year and shall be
delinquent if not paid by February 1 of the following year. Such assessments to pay expenses do not secure
repayment of the Bonds.
There will be no discount for the early payment of Assessments.
Assessments,together with interest,penalties, and expense of collection and reasonable attorneys' fees, as
permitted by the Texas Tax Code, shall be a first and prior lien against the property assessed, superior to all other
liens and claims, except liens or claims for State, county, school district or municipality ad valorem taxes and shall
be a personal liability of and charge against the owner of the property regardless of whether the owners are named
and runs with the land. The lien for Assessments and penalties and interest begins on the effective date of the
Assessment Ordinance and continues until the Assessments are paid or until all Bonds are finally paid.
Failure to pay an Annual Installment when due will not accelerate the payment of the remaining Annual
Installments of the Assessments and such remaining Annual Installments (including interest) shall continue to be
due and payable at the same time and in the same amount and manner as if such default had not occurred.
Perfected Security Interest
The lien on and pledge of the Trust Estate shall be valid and binding and fully perfected from and after the
Closing Date,without physical delivery or transfer of control of the Trust Estate,the filing of the Indenture or any
other act; all as provided in Texas Government Code, Chapter 1208, as amended,which applies to the issuance of
the Bonds and the pledge of the Trust Estate granted by the City under the Indenture, and such pledge is therefore
valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the
pledge of the Trust Estate granted by the City under the Indenture is to be subject to the filing requirements of Texas
Business and Commerce Code, Chapter 9, as amended, then in order to preserve to the registered owners of the
Bonds the perfection of the security interest in such pledge,the City agrees to take such measures as it determines
are reasonable and necessary under Texas law to comply with the applicable provisions of Texas Business and
Commerce Code,Chapter 9, as amended, and enable a filing to perfect the security interest in such pledge to occur.
See"APPENDIX A—Form of Indenture."
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Pledged Revenue Fund
The City has created under the Indenture a Pledged Revenue Fund to be held by the Trustee. On or before
February 15 of each year while the Bonds are Outstanding and beginning February 15,2021,the City shall deposit
or cause to be deposited the Pledged Revenues into the Pledged Revenue Fund. From amounts deposited into the
Pledged Revenue Fund,the City shall deposit or cause to be deposited such Pledged Revenues as follows:(i)first,to
the Bond Pledged Revenue Account of the Pledged Revenue Fund in an amount sufficient to pay debt service on the
Bonds coming due in such calendar year, (ii)second,to the Reserve Account of the Reserve Fund in an amount to
cause the amount in the Reserve Account to equal the Reserve Account Requirement, (iii)third, to the Additional
Interest Reserve Account in an amount to cause the Additional Interest Reserve Account to equal the Additional
Interest Reserve Requirement, (iv)fourth,to pay other costs of the Improvement Zone A Public Improvements,and
(v)fifth,to pay other costs permitted by the PID Act.
From time to time as needed to pay the obligations relating to the Bonds,but no later than five(5)Business
Days before each Interest Payment Date,the Trustee shall withdraw from the Bond Pledged Revenue Account and
transfer to the Principal and Interest Account of the Bond Fund,an amount,taking into account any amounts then on
deposit in such Principal and Interest Account and any expected transfers from the Capitalized Interest Account to
the Principal and Interest Account,such that the amount on deposit in the Principal and Interest Account equals the
principal (including any Sinking Fund Installments) and interest due on the Bonds on the next Interest Payment
Date.
If, after the foregoing transfers and any transfer from the Reserve Fund as provided in the Indenture,there
are insufficient funds to make the payments described above, the Trustee shall apply the available funds in the
Principal and Interest Account first to the payment of interest, then to the payment of principal (including any
Sinking Fund Installments)on the Bonds,as described in the Indenture.
Notwithstanding the deposits described in (i)through(v)above,the Trustee shall deposit Prepayments to
the Pledged Revenue Fund and as soon as practicable after such deposit shall transfer such Prepayments to the
Redemption Fund.
Notwithstanding the deposits described in (i) through (v) above, the Trustee shall deposit Foreclosure
Proceeds to the Pledged Revenue Fund and as soon as practicable after such deposit shall transfer such Foreclosure
Proceeds first, to the Reserve Fund to restore any transfers from the Reserve Fund made with respect to the
Improvement Zone A Assessed Property to which the Foreclosure Proceeds relate, and second, to the Redemption
Fund.
After satisfaction of the requirement to provide for the payment of the principal and interest on the Bonds
and to fund any deficiency that may exist in an account of the Reserve Fund,the Trustee shall, as instructed by the
City pursuant to a City Certificate, apply Assessments for any lawful purposes permitted by the PID Act for which
Assessments may be paid,including transfers to the Redemption Fund.
Any additional Pledged Revenues remaining after the satisfaction of the foregoing shall be applied by the
Trustee,as instructed by the City pursuant to a City Certificate,for any lawful purpose permitted by the PID Act for
which such additional Pledged Revenues may be used, including transfers to other Funds and Accounts created
pursuant to the Indenture.
Bond Fund
On each Interest Payment Date,the Trustee shall withdraw from the Principal and Interest Account of the
Bond Fund and transfer to the Paying Agent/Registrar the principal (including any Sinking Fund Installments)
and/or interest then due and payable on the Bonds, less any amount to be used to the pay the interest on the Bonds
on such Interest Payment Date that will be transferred from the Capitalized Interest Account,as provided below.
If amounts in the Principal and Interest Account are insufficient for the purposes set forth above, the
Trustee shall withdraw from the Reserve Fund amounts to cover the amount of such insufficiency in the order
14
described in the Indenture. Amounts so withdrawn from the Reserve Fund shall be deposited in the Principal and
Interest Account and transferred to the Paying Agent/Registrar.
Moneys in the Capitalized Interest Account shall be used for the payment of interest on the Bonds on the
following dates and in the following amounts:
Date Amount
Any amounts on deposit in the Capitalized Interest Account after the payment of interest on the dates and
in the amounts listed above shall be transferred to the Improvement Zone A Public Improvement Account of the
Project Fund,or if the Project Fund has been closed as provided in the Indenture,such amounts shall be transferred
to the Redemption Fund to be used to redeem Bonds and the Capitalized Interest Account shall be closed.
Project Fund
Money on deposit in the Project Fund shall be used for the purposes specified in the Indenture.
Disbursements from the Costs of Issuance Account of the Project Fund shall be made by the Trustee to pay costs of
issuance of the Bonds pursuant to either one or more City Certificates or an executed, completed, and accepted
Closing Disbursement Request.
Disbursements from the Improvement Zone A Public Improvement Account to pay Actual Costs of the
Improvement Zone A Public Improvements shall be made by the Trustee upon receipt by the Trustee of either a
properly executed and completed Certificate for Payment or written direction from the City or its designee
approving the disbursement. The provisions and procedures related to such disbursements contained in the
Construction, Funding, and Acquisition Agreement, and no other provisions of the Construction, Funding, and
Acquisition Agreement, are herein incorporated by reference and deemed set forth herein in full;provided that the
Trustee shall be permitted to rely fully on any City Certificate or other written direction received pursuant to the
Indenture without investigation.
If the City Representative determines in his or her sole discretion that amounts then on deposit in the
Improvement Zone A Public Improvement Account of the Project Fund are not expected to be expended for
purposes of the Project Fund due to the abandonment, or constructive abandonment, of the Improvement Zone A
Public Improvements, such that, in the opinion of the City Representative, it is unlikely that the amounts in the
Improvement Zone A Public Improvement Account of the Project Fund will ever be expended for the purposes of
the Project Fund,the City Representative shall file a City Certificate with the Trustee which identifies the amounts
then on deposit in the Improvement Zone A Public Improvement Account of the Project Fund that are not expected
to be used for purposes of the Project Fund. If such City Certificate is so filed, the amounts on deposit in the
Improvement Zone A Public Improvement Account of the Project Fund shall be transferred to the Redemption Fund
to redeem Bonds on the earliest practicable date after notice of redemption has been provided in accordance with the
Indenture.In making any such determination,the City Representative may conclusively rely upon a certificate of an
Independent Financial Consultant.
Upon the filing of a City Certificate stating that all Improvement Zone A Public Improvements have been
completed and that all Actual Costs of the Improvement Zone A Public Improvements have been paid, or that any
such Actual Costs are not required to be paid from the Project Fund pursuant to either a Certificate for Payment or
written direction from the City or its designee,the Trustee(i)shall transfer the amount,if any,remaining within the
Improvement Zone A Public Improvement Account of the Project Fund to the Bond Fund and (ii) shall close the
Project Fund.
Not later than six(6)months following the Closing Date,upon a determination by the City Representative
that all costs of issuance of the Bonds have been paid,any amounts remaining in the Costs of Issuance Account shall
be transferred to another Account in the Project Fund and used to pay Actual Costs of the Improvement Zone A
Public Improvements, or to the Principal and Interest Account of the Bond Fund and used to pay interest on the
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Bonds, as directed by the City in a City Certificate filed with the Trustee, and following such transfer,the Costs of
Issuance Account shall be closed. See APPENDIX A — Form of Indenture and APPENDIX F — Form of
Construction,Funding and Acquisition Agreement.
Reserve Account of the Reserve Fund
Pursuant to the Indenture,a Reserve Account will be created within the Reserve Fund for the benefit of the
Bonds and held by the Trustee and will be funded with proceeds of the Bonds as outlined in the Indenture in the
amount equal to not less than the Reserve Fund Requirement. Pursuant to the Indenture, the "Reserve Account
Requirement" for the Bonds shall be an amount equal to the least of(i) Maximum Annual Debt Service on the
Bonds as of the Closing Date, (ii) 125% of average Annual Debt Service on the Bonds as of the Closing Date, or
(iii) 10%of the proceeds of the Bonds;provided,however,that such amount shall be reduced by the amount of any
transfers made pursuant to the Indenture; and provided further that as a result of an optional redemption pursuant to
the Indenture, the Reserve Account Requirement shall be reduced by a percentage equal to the pro rata principal
amount of Bonds redeemed by such optional redemption divided by the total principal amount of the Outstanding
Bonds prior to such redemption. As of the Closing Date of the Bonds, the Reserve Account Requirement is
$ which is an amount equal to Maximum Annual Debt Service on the Bonds as of the date of issuance
and the City shall promptly consult with the Trustee to establish any necessary reduction to the Reserve Account
Requirement. All amounts deposited in the Reserve Account of the Reserve Fund shall be used and withdrawn by
the Trustee for the purpose of making transfers to the Principal and Interest Account of the Bond Fund as provided
in the Indenture.
Whenever a transfer is made from the Reserve Account to the Bond Fund due to a deficiency in the Bond
Fund,the Trustee shall provide written notice thereof to the City, specifying the amount withdrawn and the source
of such funds.
Whenever, on any Interest Payment Date, or on any other date at the written request of a City
Representative, the amount in the Reserve Account exceeds the Reserve Account Requirement, the Trustee shall
provide written notice to the City Representative of the amount of the excess. Such excess shall be transferred to the
Principal and Interest Account to be used for the payment of interest on the Bonds on the next Interest Payment Date
in accordance with the Indenture, unless within thirty (30) days of such notice to the City Representative, the
Trustee receives a City Certificate instructing the Trustee to apply such excess: (i)to pay amounts due to the Rebate
Fund created under the Indenture,(ii)to the Administrative Fund in an amount not more than the Annual Collection
Costs for the Bonds,or(iii)to the Project Fund if such application and the expenditure of funds is expected to occur
within three(3)years of the date hereof.
If, after a Reserve Fund withdrawal,the amount on deposit in the Reserve Account of the Reserve Fund is
less than the Reserve Account Requirement, the Trustee shall transfer from the Pledged Revenue Fund to the
Reserve Account of the Reserve Fund the amount of such deficiency,in accordance with the Indenture.
The Trustee, if necessary,will transfer from the Bond Pledged Revenue Account of the Pledged Revenue
Fund to the Additional Interest Reserve Account on March 1 and September 1 of each year,commencing September
1, 2020 an amount equal to the Additional Interest until the Additional Interest Reserve Requirement has been
accumulated in the Additional Interest Reserve Account. Once the Additional Interest Reserve Requirement has
been accumulated in the Additional Interest Reserve Account, all amounts in excess of the Additional Interest
Reserve Requirement shall be transferred by the Trustee to the Redemption Fund to redeem Bonds as provided in
the Indenture;provided,however,that at any time the amount on deposit in the Additional Interest Reserve Account
is less than the Additional Interest Reserve Requirement,the Trustee shall resume depositing the Additional Interest
into the Additional Interest Reserve Account until the Additional Interest Reserve Requirement has accumulated in
the Additional Interest Reserve Account.
Whenever, on any Interest Payment Date, or on any other date at the written request of the City
Representative, the amounts on deposit in the Additional Interest Reserve Account exceed the Additional Interest
Reserve Requirement,the Trustee shall provide written notice to the City Representative of the amount of the excess
(the"Excess Additional Interest Reserve Amount"). The Trustee shall determine the value of cash and investments
on deposit in the Additional Interest Reserve Account as of September 30 of each year. So long as no Event of
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Default(of which the Trustee has received written notice pursuant to the Indenture), shall have occurred under the
Indenture and be continuing,if as of the date of such determination the value of cash and investments on deposit in
the Additional Interest Reserve Account exceeds the Additional Interest Reserve Requirement for the Bonds, the
Trustee shall transfer such Excess Additional Interest Reserve Amount,at the direction of the City pursuant to a City
Certificate, to the Administrative Fund for the payment of Annual Collection Costs. In the event that the Trustee
does not receive a City Certificate directing the transfer of the Excess Additional Interest Reserve Amount to the
Administrative Fund within forty-five(45) days of providing notice to the City of such Excess Additional Interest
Reserve Amount,the Trustee shall transfer the Excess Additional Interest Reserve Amount to the Redemption Fund
to redeem Bonds pursuant to the Indenture.
Whenever,on any Interest Payment Date,the amount on deposit in the Bond Fund is insufficient to pay the
debt service on the Bonds due on such date, the Trustee shall transfer first, from the Additional Interest Reserve
Account of the Reserve Fund and second, from the Reserve Account of the Reserve Fund to the Bond Fund the
amounts necessary to cure such deficiency.
Whenever Bonds are to be redeemed with the proceeds of Prepayments pursuant to the Indenture, a
proportionate amount in the Reserve Account of the Reserve Fund shall be transferred on the Business Day prior to
the redemption date(or any other date specified in a City Certificate)by the Trustee to the Redemption Fund to be
applied to the redemption of the Bonds. The amount so transferred from the Reserve Account of the Reserve Fund
shall be equal to a percentage of the amount of the Bonds redeemed with such percentage equal to the lesser of: (i)
the amount required to be in the Reserve Account of the Reserve Fund, as a percentage of the Outstanding Bonds
prior to the redemption,and(ii)the amount actually in the Reserve Account of the Reserve Fund,as a percentage of
the Outstanding Bonds prior to the redemption. If after such transfer,and after applying investment earnings on the
Prepayment toward the payment of accrued interest, there are insufficient funds to pay the principal amount plus
accrued and unpaid interest on such Bonds to the date fixed for redemption of the Bonds to be redeemed as a result
of such Prepayment,the Trustee shall transfer an amount equal to the shortfall from the Additional Interest Reserve
Account to the Redemption Fund to be applied to the redemption of the Bonds.
If the amount held in the Reserve Fund together with the amount held in the Bond Fund and Redemption
Fund is sufficient to pay the principal amount and of all Outstanding Bonds on the next Interest Payment Date,
together with the unpaid interest accrued on such Bonds as of such Interest Payment Date, the moneys from such
Funds shall be transferred to the Redemption Fund and thereafter used to redeem all Bonds as of such Interest
Payment Date.
At the final maturity of the Bonds, the amount on deposit in the Reserve Account and the Additional
Interest Reserve Account shall be transferred to the Redemption Fund and applied to the payment of the principal of
the Bonds.
Administrative Fund
The City has created under the Indenture an Administrative Fund held by the Trustee and in the
Administrative Fund,the District Administration Account.
The City shall deposit or cause to be deposited to the District Administration Account of the Administrative
Fund the amounts collected each year to pay the Annual Collection Costs. Moneys in the District Administration
Account of the Administrative Fund shall be held by the Trustee separate and apart from the other Funds created and
administered under the Indenture and used as directed by a City Certificate solely for the purposes set forth in the
Service and Assessment Plan, as determined by the City. See"APPENDIX B—Form of Service and Assessment
Plan."
THE ADMINISTRATIVE FUND IS NOT PART OF THE TRUST ESTATE AND IS NOT
SECURITY FOR THE BONDS.
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Defeasance
All Outstanding Bonds shall prior to the Stated Maturity or redemption date thereof be deemed to have
been paid and to no longer be deemed Outstanding if(i) in case any such Bonds are to be redeemed on any date
prior to their Stated Maturity,the Trustee shall have given notice of redemption on such date as provided herein,(ii)
there shall have been deposited with the Trustee either moneys in an amount which shall be sufficient, or
Defeasance Securities the principal of and the interest on which when due will provide moneys which,together with
any moneys deposited with the Trustee at the same time, shall be sufficient to pay when due the principal of and
interest on of the Bonds to become due on such Bonds on and prior to the redemption date or maturity date thereof,
as the case may be, (iii) the Trustee shall have received a report by an independent certified public accountant
selected by the City verifying the sufficiency of the moneys or Defeasance Securities deposited with the Trustee to
pay when due the principal of and interest on of the Bonds to become due on such Bonds on and prior to the
redemption date or maturity date thereof,as the case may be,(iv)if the Bonds are then rated,the Trustee shall have
received written confirmation from each rating agency that such deposit will not result in the reduction or
withdrawal of the rating on the Bonds, and (v)the Trustee shall have received an opinion of Bond Counsel to the
effect that (A) any Bond having been deemed to have been paid as provided in the Indenture is no longer
Outstanding hereunder and is no longer secured by or entitled to the benefits of the Indenture,(B)such defeasance is
in accordance with the terms thereof and(C) such defeasance will not adversely affect the exclusion of interest on
such Bond from gross income for purposes of federal income taxation. Neither Defeasance Securities nor moneys
deposited with the Trustee pursuant to the Indenture nor principal or interest payments on any such Defeasance
Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for,the payment of the
principal of and interest on the Bonds. Any cash received from such principal of and interest on such Defeasance
Securities deposited with the Trustee, if not then needed for such purpose, shall, be reinvested in Defeasance
Securities as directed in writing by the City maturing at times and in amounts sufficient to pay when due the
principal of and interest on the Bonds on and prior to such redemption date or maturity date thereof,as the case may
be. Any payment for Defeasance Securities purchased for the purpose of reinvesting cash as aforesaid shall be made
only against delivery of such Defeasance Securities.
"Defeasance Securities"means Investment Securities then authorized by applicable law for the investment
of funds to defease public securities. "Investment Securities" means those authorized investments described in the
Public Funds Investment Act, Texas Government Code, Chapter 2256, as amended; and provided further
investments are,at the time made,included in and authorized by the City's official investment policy as approved by
the City Council from time to time. Under current State law, Investment Securities that are authorized for the
investment of funds to defease public securities are (a) direct, noncallable obligations of the United States of
America,including obligations that are unconditionally guaranteed by the United States of America;(b)noncallable
obligations of an agency or instrumentality of the United States, including obligations that are unconditionally
guaranteed or insured by the agency or instrumentality, and that, on the date the governing body of the City adopts
or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a
nationally recognized investment rating firm not less than"AAA" or its equivalent; and(c)noncallable obligations
of a state or an agency or a county,municipality,or other political subdivision of a state that have been refunded and
that, on the date the governing body of the City adopts or approves the proceedings authorizing the issuance of
refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than
"AAA"or its equivalent.
There is no assurance that the current law will not be changed in a manner which would permit investments
other than those described above to be made with amounts deposited to defease the Bonds. Because the Indenture
does not contractually limit such investments, Owners may be deemed to have consented to defeasance with such
other investments,notwithstanding the fact that such investments may not be of the same investment quality as those
currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as
Defeasance Securities or that for any other Defeasance Security will be maintained at any particular rating category.
Events of Default
Each of the following occurrences or events shall be and is hereby declared to be an "Event of Default,"
under the Indenture:
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1. The failure of the City to deposit the Pledged Revenues to the Bond Pledged Revenue Account of the
Pledged Revenue Fund;
2. The failure of the City to enforce the collection of the Assessments, including the prosecution of
foreclosure proceedings;
3. The failure to make payment of the principal of or interest on any of the Bonds when the same
becomes due and payable and such failure is not remedied within thirty(30)days;and
4. Default in the performance or observance of any other covenant, agreement or obligation of the City
under the Indenture and the continuation thereof for a period of ninety(90)days after written notice to
the City by the Trustee, or by the Owners of at least twenty-five percent (25%) of the aggregate
outstanding principal of the Bonds with a copy to the Trustee, specifying such default by the Owners
of at least twenty-five percent (25%) of the aggregate outstanding principal of the Bonds requesting
that the failure be remedied.
Notwithstanding the foregoing, none of the foregoing will be viewed to be an Event of Default if it is in
violation of any applicable state law or court order.
Notwithstanding the foregoing, nothing in item 3 above shall require the City to advance any funds other
than the Pledged Revenues that have been received by the City or other funds currently available in the Pledged
Funds to pay the principal of or interest on the Bonds.
Remedies in Event of Default
Upon the happening and continuance of any one or more of the Events of Default,the Trustee may,and at
the written direction of the Owners of at least twenty-five percent(25%) of the aggregate outstanding principal of
the Bonds and its receipt of indemnity satisfactory to it shall,proceed against the City for the purpose of protecting
and enforcing the rights of the Owners under the Indenture,by action seeking mandamus or by other suit,action,or
special proceeding in equity or at law, in any court of competent jurisdiction, for any relief to the extent permitted
by the Indenture or by Applicable Laws, including, but not limited to,the specific performance of any covenant or
agreement contained herein, or injunction; provided, however, that no action for money damages against the City
may be sought or shall be permitted. The Trustee retains the right to obtain the advice of counsel in its exercise of
remedies of default.
THE PRINCIPAL OF THE BONDS SHALL NOT BE SUBJECT TO ACCELERATION UNDER ANY
CIRCUMSTANCES.
If the assets of the Trust Estate are sufficient to pay all amounts due with respect to Outstanding Bonds, in
the selection of Trust Estate assets to be used in the payment of Bonds due under the Indenture, the City shall
determine,in its absolute discretion,and shall instruct the Trustee by City Certificate,which Trust Estate assets shall
be applied to such payment and shall not be liable to any Owner or other Person by reason of such selection and
application. In the event that the City shall fail to deliver to the Trustee such City Certificate,the Trustee shall select
and liquidate or sell Trust Estate assets as provided in the following paragraph,and shall not be liable to any Owner,
or other Person,or the City by reason of such selection,liquidation or sale.
Whenever moneys are to be applied pursuant to the Indenture, irrespective of and whether other remedies
authorized under the Indenture shall have been pursued in whole or in part,the Trustee may cause any or all of the
assets of the Trust Estate,including Investment Securities,to be sold. The Trustee may so sell the assets of the Trust
Estate and all right, title, interest, claim and demand thereto and the right of redemption thereof, in one or more
parts,at any such place or places,and at such time or times and upon suth notice and terms as the Trustee may deem
appropriate and as may be required by law and apply the proceeds thereof in accordance with the provisions of the
Indenture. Upon such sale,the Trustee may make and deliver to the purchaser or purchasers a good and sufficient
assignment or conveyance for the same, which sale shall be a perpetual bar both at law and in equity against the
City, and all other Persons claiming such properties. No purchaser at any sale shall be bound to see to the
application of the purchase money proceeds thereof or to inquire as to the authorization, necessity, expediency, or
19
regularity of any such sale. Nevertheless,if so requested by the Trustee,the City shall ratify and confirm any sale or
sales by executing and delivering to the Trustee or to such purchaser or purchasers all such instruments as may be
necessary or,in the judgment of the Trustee,proper for the purpose which may be designated in such request.
Restriction on Owner's Actions
No Owner shall have any right to institute any action, suit or proceeding at law or in equity for the
enforcement of the Indenture or for the execution of any trust thereof or any other remedy thereunder,unless (i) a
default has occurred and is continuing of which the Trustee has been notified in writing,(ii)such default has become
an Event of Default and the Owners of not less than twenty-five percent(25%)of the aggregate principal amount of
the Bonds then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to
proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name,
(iii)the Owners have furnished to the Trustee indemnity as provided in the Indenture,(iv)the Trustee has for ninety
(90)days after such notice failed or refused to exercise the powers hereinbefore granted,or to institute such action,
suit,or proceeding in its own name,(v)no written direction inconsistent with such written request has been given to
the Trustee during such 90-day period by Owners of a majority of the aggregate principal amount of the Bonds then
Outstanding, and (vi) notice of such action, suit, or proceeding is given to the Trustee in writing; however, all
proceedings at law or in equity shall be instituted and maintained in the manner provided herein and for the equal
benefit of the Owners of all Bonds then Outstanding. The notification,request and furnishing of indemnity set forth
above shall, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of the
Indenture and to any action or cause of action for the enforcement of the Indenture or for any other remedy
thereunder.
Subject to the limitations set forth in the Indenture regarding the liability of the City, nothing in the
Indenture shall affect or impair the right of any Owner to enforce, by action at law, payment of any Bond at and
after the maturity thereof,or on the date fixed for redemption or the obligation of the City to pay each Bond issued
hereunder to the respective Owners thereof at the time and place, from the source and in the manner expressed
herein and in the Bonds.
In case the Trustee or any Owners shall have proceeded to enforce any right under the Indenture and such
proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to
the Trustee or any Owners, then and in every such case the City,the Trustee and the Owners shall be restored to
their former positions and rights thereunder, and all rights,remedies and powers of the Trustee shall continue as if
no such proceedings had been taken.
Application of Revenues and Other Moneys After Event of Default
All moneys, securities, funds and Pledged Revenues and other assets of the Trust Estate and the income
therefrom received by the Trustee pursuant to any right given or action taken under the provisions of the Indenture
shall, after payment of the cost and expenses of the proceedings resulting in the collection of such amounts, the
expenses(including its counsel),liabilities,and advances incurred or made by the Trustee and the fees of the Trustee
in carrying out the Indenture, during the continuance of an Event of Default, notwithstanding certain provisions
under the Indenture,shall be applied by the Trustee,on behalf of the City,to the payment of interest and principal or
Redemption Price then due on Bonds,as follows:
FIRST: To the payment to the registered owners entitled thereto all installments of interest then due in the
direct order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any
installment,then to the payment thereof ratably, according to the amounts due on such installment,to the registered
owners entitled thereto,without any discrimination or preference;and
SECOND: To the payment to the registered owners entitled thereto of the unpaid principal of Outstanding
Bonds, or Redemption Price of any Bonds which shall have become due, whether at maturity or by call for
redemption,in the direct order of their due dates and,if the amounts available shall not be sufficient to pay in full all
the Bonds due on any date,then to the payment thereof ratably,according to the amounts of principal due and to the
registered owners entitled thereto,without any discrimination or preference.
20
Within ten(10)days of receipt of such good and available funds,the Trustee may fix a record and payment
date for any payment to be made to Owners pursuant to the above provisions.
In the event funds are not adequate to cure any of the Events of Default described in the Indenture, the
available funds shall be allocated to the Bonds that are Outstanding in proportion to the quantity of Bonds that are
currently due and in default under the terms of the Indenture.
The restoration of the City to its prior position after any and all defaults have been cured, as provided in
above, shall not extend to or affect any subsequent default under the Indenture or impair any right consequent
thereon.
Investment or Deposit of Funds
Money in any Fund or Account established pursuant to the Indenture shall be invested by the Trustee as
directed by the City pursuant to a City Certificate filed with the Trustee at least two (2) days in advance of the
making of such investment in time deposits or certificates of deposit secured in the manner required by law for
public funds, or be invested in direct obligations of, including obligations the principal and interest on which are
unconditionally guaranteed by, the United States of America, in obligations of any agencies or instrumentalities
thereof, or in such other investments as are permitted under the Public Funds Investment Act Texas Government
Code, Chapter 2256, as amended, or any successor law, as in effect from time to time; provided that all such
deposits and investments shall be made in such manner (which may include repurchase agreements for such
investment with any primary dealer of such agreements)that the money required to be expended from any Fund will
be available at the proper time or times. Such investments shall be valued each year in terms of current market
value as of September 30. For purposes of maximizing investment returns,to the extent permitted by law,money in
such Funds may be invested in common investments of the kind described above, or in a common pool of such
investment which shall be kept and held at an official depository bank,which shall not be deemed to be or constitute
a commingling of such money or funds provided that safekeeping receipts or certificates of participation clearly
evidencing the investment or investment pool in which such money is invested and the share thereof purchased with
such money or owned by such Fund are held by or on behalf of each such Fund. If necessary, such investments
shall be promptly sold to prevent any default.
Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of
such Fund or Account, subject, however, to the requirements of the Indenture for transfer of interest earnings and
profits resulting from investment of amounts in Funds and Accounts. Whenever in the Indenture any moneys are
required to be transferred by the City to the Trustee, such transfer may be accomplished by transferring a like
amount of Investment Securities.
The Trustee and its affiliates may act as sponsor, advisor, depository,principal or agent in the acquisition
or disposition of any investment. The Trustee shall have no investment discretion and the Trustee shall follow the
written instructions of any City Certificate. The Trustee shall not incur any liability for losses arising from any
investments made pursuant to the Indenture. The Trustee shall not be required to determine the suitability or legality
of any investments.
Investments in any and all Funds and Accounts may be commingled in a separate fund or funds for
purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or
holding in or to the credit of particular Funds or Accounts of amounts received or held by the Trustee thereunder,
provided that the Trustee shall at all times account for such investments strictly in accordance with the Funds and
Accounts to which they are credited and otherwise as provided in the Indenture.
The Trustee will furnish the City monthly cash transaction statements which include detail for all
investment transactions made by the Trustee thereunder; and, unless the Trustee receives a written request, the
Trustee is not required to provide brokerage confirmations so long as the Trustee is providing such monthly cash
transaction statements.
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Against Encumbrances
Other than liens created in connection with the indebtedness issued in compliance with or as specified in
the Indenture,the City shall not create and,to the extent Pledged Revenues are timely received, shall not suffer to
remain,any lien,encumbrance or charge upon the Pledged Revenues,or upon any other property pledged under the
Indenture.
So long as Bonds are Outstanding, the City shall not issue any bonds, notes or other evidences of
indebtedness secured by any pledge of or other lien or charge on the Pledged Revenues or other property pledged
under the Indenture,except for the Bonds and other indebtedness issued in compliance with the Indenture.
Additional Obligations
The City reserves the right to issue Additional Obligations under other indentures, assessment ordinances,
or similar agreements or other obligations that do not constitute or create a lien on any portion of the Trust Estate
and are not payable from Pledged Revenues or any other portion of the Trust Estate,provided that such Additional
Obligations shall comply with the requirements of the third paragraph below.
Other than Refunding Bonds,the City will not create or voluntarily permit to be created any debt, lien or
charge on the Trust Estate, and will not do or omit to do or suffer to be or omitted to be done any matter or things
whatsoever whereby the lien of the Indenture or the priority hereof might or could be lost or impaired; and further
covenants that it will pay or cause to be paid or will make adequate provisions for the satisfaction and discharge of
all lawful claims and demands which if unpaid might by law be given precedence over or any equality with the
Indenture as a lien or charge upon the Trust Estate;provided,however,that nothing in the Indenture shall require the
City to apply, discharge, or make provision for any such lien, charge, claim, or demand so long as the validity
thereof shall be contested by it in good faith, unless thereby, in the opinion of Bond Counsel or counsel to the
Trustee,the same would endanger the security for the Bonds.
Additionally, the City has reserved the right to issue bonds or other obligations secured by and payable
from Pledged Revenues so long as such pledge is subordinate to the pledge of Pledged Revenues securing payment
of the Bonds.
Notwithstanding anything to the contrary in the Indenture,no Refunding Bonds,Additional Obligations or
subordinate obligations may be issued by the City unless: (1)the principal (including sinking fund installments)of
such Refunding Bonds, Additional Obligations or subordinate obligations are scheduled to mature on September 1
of the years in which principal is schedule to mature, and (2) the interest on such Refunding Bonds, Additional
Obligations or subordinate obligations must be scheduled to be paid on March 1 and/or September 1 of the years in
which interest is scheduled to be paid.
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SOURCES AND USES OF FUNDS*
The table that follows summarizes the expected sources and uses of proceeds of the Bonds:
Sources of Funds:
Principal Amount
Total Sources
Uses of Funds:
Deposit to Improvement Zone A Public Improvement Account of the Project Fund
Deposit to Capitalized Interest Account of Bond Fund
Deposit to Reserve Account of the Reserve Fund
Deposit to Additional Interest Account of the Reserve Fund
Deposit to District Administration Account of Administrative Fund
Costs of Issuance
Underwriter's Discount(')
Total Uses
(12) Includes Underwriter's Counsel's fee of$
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*Preliminary;subject to change.
23
DEBT SERVICE REQUIREMENTS*
The following table sets forth the anticipated debt service requirements for the Bonds:
Year Ending
(September 1) Principal Interest Total
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Total
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Preliminary;subject to change.
24
OVERLAPPING TAXES AND DEBT
The land within Improvement Zone A of the District has been,and is expected to continue to be,subject to
taxes and assessments imposed by taxing entities other than the City. Such taxes are payable in addition to the
Assessments levied by the City.
In addition to the Assessments described above, the Developer anticipates that each lot owner in
Improvement Zone A of the District will pay a maintenance and operation fee and/or a fee to a homeowner's
association (the "HOA") in the case of Single Family Tracts and to a property owner's association in the case of
Commercial Tracts and Multifamily Tracts (the"POA"), which are expected to be formed by the Developer after
delivery of the Bonds. Single Family Tracts in Improvement Zone A will also be responsible for payment of a
portion of the Improvement Zone B Assessments. See "PLAN OF FINANCE —Development Plan and Plan of
Finance." In addition to the City,Tarrant County,Texas,the Birdville Independent School District,Tarrant County
Hospital District, and the Tarrant County College District may each levy ad valorem taxes upon land in
Improvement Zone A of the District for payment of debt incurred by such governmental entities and/or for payment
of maintenance and operations expenses. The City has no control over the level of ad valorem taxes or special
assessments levied by such other taxing authorities. The following table reflects the overlapping ad valorem tax
rates currently levied on property located in Improvement Zone A of the District. The District is located within the
boundaries of the City,the Birdville Independent School District,the Tarrant County Hospital District,the Tarrant
County College District and within Tarrant County,Texas.
SINGLE FAMILY TRACTS
Tax Year 2018
Taxing Entity Ad Valorem Tax Rate(1)
The City $ 0.5850
Tarrant County,Texas 0.2340
Birdville Independent School District 1.4539
Tarrant County Hospital District 0.2244
Tarrant County College District 0.1361
Total Existing Tax Rate $2.6334
•
Estimated Average Annual Installment in Improvement Zone $.
A of the Assessments
Less Projected TIRZ Annual Credit as a tax rate equivalent $0
Targeted Net Average Annual Installment of
Assessments as tax rate equivalent(2)
Average Annual Installment of Improvement Zone B
Assessments as tax rate equivalent(3)
Estimated Total Tax Rate and Average Annual
Installments on Single Family Tracts in the District as tax
rate equivalent
of As reported by the taxing entities. Per$100 in taxable assessed value.
(2) Source: P3Works, LLC. Derived from information presented in Exhibit J of the Service and Assessment Plan. Includes
Assessments initially levied for payment of the Bonds. See"SECURITY FOR THE BONDS—TIRZ Revenues May Reduce
Assessments." Preliminary,subject to change.
(3) Source: P3Works,LLC. Derived from information presented in Exhibit J of the Service and Assessment Plan. Includes the
Improvement Zone B Assessments levied on the Single Family Tracts. Preliminary,subject to change.
Source: Tarrant Appraisal District and the City.
25
COMMERCIAL TRACTS
Tax Year 2018
Taxing Entity Ad Valorem Tax Rate(1)
The City $ 0.5850
Tarrant County,Texas 0.2340
Birdville Independent School District 1.4539
Tarrant County Hospital District 0.2244
Tarrant County College District 0.1361
Total Existing Tax Rate $2.6334
Estimated Average Annual Installment in Improvement Zone
A of the Assessments
Less Projected TIRZ Annual Credit Amount as tax rate $0
equivalent
Targeted Net Average Annual Installment as tax rate $
equivalent(2)
Net Estimated Total Tax Rate and Average Annual
Installment in Improvement Zone A of the District as tax
rate equivalent per Equivalent Unit S
(') As reported by the taxing entities. Per$100 in taxable assessed value.
a> Source: P3Works, LLC. Derived from information presented in Exhibit J of the Service and Assessment Plan. Includes
Assessments initially levied for payment of the Bonds. See"SECURITY FOR THE BONDS—Amount of Assessments May
be Reduced by TIRZ Annual Credit Amount." Preliminary,subject to change.
Source: Tarrant Appraisal District and the City.
As noted above, Improvement Zone A of the District includes territory located in other governmental
entities that may issue or incur debt secured by the levy and collection of ad valorem taxes or assessments. Set forth
below are overlapping debt tables showing the outstanding indebtedness payable from ad valorem taxes with respect
to Single Family Tracts within Improvement Zone A of the District and Commercial Tracts within Improvement
Zone A of the District,as of October 15,2019:
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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SINGLE FAMILY TRACTS
Gross Estimated Direct and
Outstanding Debt Percentage Estimated
Taxing or Assessing Entity as of 10/15/2019 Applicable(') Overlapping Debt')
The City(Assessments-The Bonds) $ 1,590,000(2) 100.000% $1,590,000
The City(Improvement Zone B Assessments on Single
Family Tracts) $ 5,680,000 100.000% $5,680,000
The City(Ad Valorem Taxes) 121,140,000
Tarrant County,Texas 266,375,000
Birdville Independent School District 397,327,084
Tarrant County Hospital District 17,735,000
TOTAL $808,257,084 $0,000,000
co Based on the Appraisal of property in Improvement Zone A of the District and on the Tax Year 2019 Net Taxable Assessed
Valuations for the taxing entities.
(2) Preliminary,subject to change.
Source: Municipal Advisory Council of Texas
COMMERCIAL TRACTS
Gross Estimated Direct and
Outstanding Debt Percentage Estimated
Taxing or Assessing Entity as of 10/15/2019 Applicable° Overlapping Debt(')
The City(Assessments-The Bonds) $ 1,950,000(2) 100.000% $1,950,000
The City(Ad Valorem Taxes) 121,140,000
Tarrant County,Texas 266,375,000
Birdville Independent School District 397,327,084
Tarrant County Hospital District 17,735,000
TOTAL $804,527,084 $0.000,000
(i) Based on the Appraisal of property in Improvement Zone A of the District and on the Tax Year 2019 Net Taxable Assessed
Valuations for the taxing entities.
(2) Preliminary,subject to change.
Source: Municipal Advisory Council of Texas
ASSESSMENT PROCEDURES
General
Capitalized terms used under this caption and not otherwise defined in this Limited Offering Memorandum
shall have the meanings given to such terms in the Service and Assessment Plan. As required by the PID Act,when
the City determines to defray a portion of the costs of the Improvement Zone A Public Improvements through
Assessments,it must adopt a resolution generally describing the Improvement Zone A Public Improvements and the
land within Improvement Zone A of the District to be subject to Assessments to pay the cost therefor. The City has
caused an assessment roll to be prepared(the"Assessment Roll"),which Assessment Roll will show the land within
Improvement Zone A of the District to be assessed,the amount of the benefit to and the Assessment against each lot
or parcel of land and the number of Annual Installments in which the Assessment is divided. The Assessment Roll
will be filed with the City Secretary and made available for public inspection. Statutory notice was given to the
owners of the property to be assessed and a public hearing was conducted to hear testimony from affected property
owners as to the propriety and advisability of undertaking the Improvement Zone A Public Improvements and
27
funding a portion of the same with Assessments. The City expects to levy the Assessments and adopt the
Assessment Ordinance immediately prior to adopting the Bond Ordinance. After such adoption, the Assessments
will become legal,valid and binding liens upon the property against which the Assessments are made.
Under the PID Act,the Actual Costs of the Improvement Zone A Public Improvements may be assessed by
the City against the assessable property in Improvement Zone A of the District so long as the special benefit
conferred upon the assessed property in Improvement Zone A(the"Assessed Property")by the Improvement Zone
A Public Improvements equals or exceeds the Assessments. The costs of the Improvement Zone A Public
Improvements may be assessed using any methodology that results in the imposition of equal shares of cost on
Assessed Property similarly benefited. The allocation of benefits and assessments to the benefitted land within the
District, including land in Improvement Zone A, is set forth in the Service and Assessment Plan,which should be
read in its entirety. See"APPENDIX B—Form of Service and Assessment Plan."
Assessment Methodology
The Service and Assessment Plan describes the special benefit to be received by each parcel of assessable
property as a result of the Improvement Zone A Public Improvements, provides the basis and justification for the
determination that such special benefit exceeds the Assessments being levied, and establishes the methodology by
which the City allocates the special benefit of the Improvement Zone A Public Improvements to parcels in a manner
that results in equal shares of costs being apportioned to parcels similarly benefited. As described in the Service and
Assessment Plan, a portion of the costs of the Improvement Zone A Public Improvements are being funded with
proceeds of the Bonds, which are payable from and secured by Pledged Revenues, including the Assessment
Revenues. As set forth in the Service and Assessment Plan, the City Council has determined that the Actual Costs
(as defined in the Service and Assessment Plan)associated with the Improvement Zone A Public Improvements will
be allocated to the parcels within Improvement Zone A of the District against which the Assessments are levied pro
rata based on the estimated build-out value of each.
The Service and Assessment Plan allocates the Assessments to the parcels based on four lot types.The lot
types are as follows:
Lot Type SF1: means a Lot in Improvement Zone A of the District designated as such on the Assessment
Roll,marketed to homebuilders as a townhome.
Lot Type SF2: means a Lot in Improvement Zone A of the District designated as such on the Assessment
Roll,marketed to homebuilders as an urban home.
Lot Type SF3: means a Lot in Improvement Zone A of the District designated as such on the Assessment
Roll,marketed to homebuilders as a bungalow home.
Lot Type Commercial: means a Lot in Improvement Zone A of the District designated as such on the
Assessment Roll,shown a final plat approved by the City designated for use as a commercial lot.
The following table provides additional analysis with respect to the assessment methodology, including the
value to assessment burden ratio per unit(lot),equivalent tax rate per unit,and leverage per unit. The information in
the tables was obtained from and calculated using information provided in the Service and Assessment Plan and the
Appraisal. See"APPENDIX B—Service and Assessment Plan"and"APPENDIX E—Appraisal."
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LIEN TO VALUE ANALYSIS,ASSESSMENT ALLOCATION,EQUIVALENT TAX RATE AND ASSESSMENT RATIO PER
RESIDENTIAL LOT TYPE IN THE DISTRICT
"As Complete"Value to Lien per Zone Assessment Value-Single Family Development
Number Number Number "As Complete" Zone A&B
of SF1 of SF2 of SF3 Zone A Zone B Zone A&B Appraised Value
Parcel Name Acres 1 Lots 1 Lots 1 Lots 1 Assessment 2 Assessment 2 Assessment 2 Value 1 to Lien
Single-Family Tract 1 15.17 74 84 - $ 606,857 $ 2,325,925 $ 2,932,782 $ 9,210,000 3.14:1
Single-FamilyTract2 15.08 122 38 - $ 605,439 $ 2,320,490 $ 2,925,929 $ 9,040,000 3.09:1
Single-FamilyTract3 5.90 - - 46 $ 192,704 $ 738,585 $ 931,289 $ 3,690,000 3.96:1
Total/Average 36.15 196 122 46 $ 1,405,000 $ 5,385,000 $ 6,790,000 $ 21,940,000 3.23:1
1.As provided in the Appraisal.The conclusions reached in the Appraisal are subject to certain assumptions,hypothetical conditions and
qualifications,which are set forth therein.None of the City,the Developer,nor the Underwriter makes any representation as to the accuracy,
completeness assumptions or information contained in the Appraisal.
2.Based on information provided in the Preliminary Service and Assessment Plan dated October 14,2019.Values subject to review by the
PID Administrator.
LIEN TO VALUE ANALYSIS,ASSESSMENT ALLOCATION,EQUIVALENT TAX RATE AND ASSESSMENT RATIO PER
COMMERCIAL ACRE IN THE DISTRICT
"As Complete"Value to Lien per Zone Assessment Value-Commercial Development
"As Complete" Zone A&B
Zone A Zone B Zone A&B Appraised Value
Parcel Name 1 Acres 1 Assessment2 Assessment2 Assessment2 Value to Lien
Commercial Tract 1 1.40 $ 533,403 $ - $ 533,403 $ 1,650,000 3.09:1
Commercial Tract 2 1.32 $ 502,923 $ - $ 502,923 $ 1,550,000 3.08:1
Hotel Tract 2.07 $ 788,674 $ - $ 788,674 $ 1,710,000 2.17:1
Total/Average 4.79 $ 1,825,000 $ - $ 1,825,000 $ 4,910,000 2.69:1
1.As provided in the Appraisal.The conclusions reached in the Appraisal are subject to certain assumptions,
hypothetical conditions and qualifications,which are set forth therein.None of the City,the Developer,nor till
Underwriter makes any representation as to the accuracy,completeness assumptions or information contained
forth therein.None of the City,the Developer,nor the Underwriter makes any representation as to the accurac
completeness assumptions or information contained in the Appraisal.
2.Based on information provided in the Preliminary Service and Assessment Plan dated October 14,2019.Values
subject to review by the PID Administrator.
The City has created the TIRZ and adopted the TIRZ Project and Finance Plan providing for the TIRZ
Annual Credit Amount to offset a portion of the Annual Installments attributable to the costs of the Improvement
Zone A Public Improvements within Improvement Zone A of the District on any Parcel within Improvement Zone A
of the District. The Annual Installment for each Assessed Property shall be calculated by taking into consideration
any TIRZ Annual Credit Amount applicable to the Assessed Property. See "-Assessment Amounts—TIRZ Annual
Credit Amount"below.
For further explanation of the Assessment methodology, see "APPENDIX B — Form of Service and
Assessment Plan."
The City has determined that the foregoing method of allocation will result in the imposition of equal
shares of the Assessments on parcels similarly situated within Improvement Zone A of the District. The
Assessments and interest thereon are expected to be paid in Annual Installments as described above. The
determination by the City of the assessment methodology set forth in the Service and Assessment Plan is the result
of the discretionary exercise by the City Council of its legislative authority and governmental powers and is
29
conclusive and binding on the Developer and all future owners and developers within the District. See"APPENDIX
B—Form of Service and Assessment Plan."
Collection and Enforcement of Assessment Amounts
Under the PID Act,the Annual Installments may be collected in the same manner and at the same time as
ad valorem taxes of the City. The Assessments may be enforced by the City in the same manner that an ad valorem
tax lien against real property is enforced. Delinquent installments of the Assessments incur interest,penalties and
attorney's fees in the same manner as delinquent ad valorem taxes. Under the PID Act,the Assessment Lien is a
first and prior lien against the property assessed, superior to all other liens and claims except liens or claims for
State, county, school district or municipality ad valorem taxes. See `BONDHOLDERS' RISKS — Assessment
Limitations"herein.
In the Indenture,the City will covenant to collect,or cause to be collected,Assessments as provided in the
Assessment Ordinance. No less frequently than annually,City staff or a designee of the City shall prepare, and the
City Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual
Installments. Each Annual Service Plan Update shall include an updated Assessment Roll and a calculation of the
Annual Installment for each Parcel. Annual Collection Costs shall be allocated among all Parcels in proportion to
the amount of the Annual Installments for the Parcels.
In the Indenture,the City will covenant,agree and warrant that,for so long as any Bonds are Outstanding,
and amounts are due the Developer to reimburse it for its funds it has contributed to pay costs of the Improvement
Zone A Public Improvements,that it will take and pursue all actions permissible under Applicable Laws to cause the
Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent
permitted by Applicable Laws,and,to the extent permitted by Applicable Laws,to cause no reduction,abatement or
exemption in the Assessments. Notwithstanding the foregoing, the City shall be permitted to reduce the
Assessments by the TIRZ Annual Credit Amount pursuant to the Development Agreement, the TIRZ Project and
Finance Plan and the Service and Assessment Plan; provided, however, that no such reduction shall operate to
reduce the amounts levied for the payment of the Annual Collection Costs.
To the extent permitted by law,notice of the Annual Installments will be sent by,or on behalf of the City,
to the affected property owners on the same statement or such other mechanism that is used by the City,so that such
Annual Installments are collected simultaneously with ad valorem taxes and shall be subject to the same penalties,
procedures,and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the City.
The City will determine or cause to be determined,no later than February 15 of each year,whether or not
any Annual Installment is delinquent and, if such delinquencies exist, the City will order and cause to be
commenced as soon as practicable any and all appropriate and legally permissible actions to obtain such Annual
Installment, and any delinquent charges and interest thereon, including diligently prosecuting an action in district
court to foreclose the currently delinquent Annual Installment. Notwithstanding the foregoing,the City shall not be
required under any circumstances to purchase or make payment for the purchase of the delinquent Assessment or the
corresponding Assessed Property.
The City will implement the basic timeline and procedures for Assessment collections and pursuit of
delinquencies set forth in Exhibit C of the City's Continuing Disclosure Agreement set forth in APPENDIX D-1 and
to comply therewith to the extent that the City reasonably determines that such compliance is the most appropriate
timeline and procedures for enforcing the payment of delinquent Assessments.
The City shall not be required under any circumstances to expend any funds for delinquent collection costs
in connection with its covenants and agreements under the Indenture or otherwise other than funds on deposit in the
Administrative Fund.
Annual Installments will be paid to the City or its agent. Annual Installments are due on October 1 of each
year, and become delinquent on February 1 of the following year. In the event Assessments are not timely paid,
there are penalties and interest as set forth below:
30
Date Payment Cumulative Cumulative
Received 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,the penalty remains at 12%,and interest accrues at the rate of 1%each month. In addition,if an
account is delinquent in July, a 20%attorney's collection fee may be added to the total penalty and interest charge.
In general,property subject to lien may be sold,in whole or in parcels,pursuant to court order to collect the amounts
due. An automatic stay by creditors or other entities, including governmental units, could prevent 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 most
cases,post-petition Assessments are paid as an administrative expense of the estate in bankruptcy or by order of the
bankruptcy court.
Assessment Amounts
Assessment Amounts. The maximum amounts of the Assessments will be established by the methodology
described in the Service and Assessment Plan. The Assessment Roll sets forth for each year the Annual Installment
for each Assessed Property consisting of(i) the annual payment allocable to the Bonds, including the Additional
Interest for the Improvement Zone A Public Improvements for each Assessed Property and(ii)the annual payment
allocable to Annual Collection Costs. The Annual Installments for the Assessments may not exceed the amounts
shown on the Assessment Roll. The Assessments will be levied against the parcels comprising the Assessed
Property as indicated on the Assessment Roll. See"APPENDIX B—Form of Service and Assessment Plan" and
"APPENDIX F—Form of Construction,Funding and Acquisition Agreement."
The Annual Installments shown on the Assessment Roll will be reduced to equal the actual costs of
repaying the Bonds(which amount will include Additional Interest)and actual Annual Collection Costs(as provided
for in the definition of such term),taking into consideration any other available funds for these costs,such as interest
income on account balances. The Annual Installments shall be further reduced by any offset or credit of the
applicable TIRZ Annual Credit Amount.
TIRZ Annual Credit Amount. The City has agreed to use TIRZ Revenues to offset a portion of each
Assessed Property's Assessment and Annual Installment. The Annual Installment for each Assessed Property shall
be calculated by taking into consideration any TIRZ Annual Credit Amount applicable to the Assessed Property.
Pursuant to the Service and Assessment Plan,TIRZ Revenues collected for each tax year within the District will be
used to calculate the TIRZ Annual Credit Amount to be applied to the Annual Installment that will be billed in the
following year (e.g., TIRZ Revenues collected for the tax year 2019 shall be applied as the TIRZ Annual Credit
Amount applicable to Annual Installments to be billed in 2020), and such TIRZ Annual Credit Amount will be
derived only from the TIRZ Revenues but in no event shall the TIRZ Annual Credit Amount exceed the Maximum
TIRZ Annual Credit Amount for each lot type as set forth in the Service and Assessment Plan.
The"Maximum TIRZ Annual Credit Amount"applicable to each Assessed Property was calculated so that
the net total of the Annual Installments of the Assessments, the Improvement Zone B Assessments and the ad
valorem taxes on the Assessed Property did not produce an equivalent tax rate which exceeds the competitive,
composite equivalent ad valorem tax rate taking into consideration(i)the tax rates of all applicable taxing units and
(ii)the equivalent tax rate of the Annual Installments of the Assessments and the Improvement Zone B Assessments
based on assumed buildout values in the District at the time the Assessment Ordinance is approved after application
of the Maximum TIRZ Annual Credit Amount(the"Targeted Net Average Annual Installment.") See"APPENDIX
B—Form of the Service and Assessment Plan."TIRZ Revenues are not pledged as security for the Bonds under the
Indenture.The Maximum TIRZ Annual Credit Amounts are shown in the following table:
Maximum TIRZ Annual Credit Amount per Lot Type in Improvement Zone A of the District
31
Lot type Maximum TIRZ Annual
Credit Amount per
Lot/sq.ft.
SF1 $405.56
SF2 $426.54
SF3 $454.51
Commercial(per acre) $35,677.54
(1) The Maximum TIRZ Annual Credit Amount for the each lot was established based on the Targeted Net Average Annual
Installment.See"OVERLAPPING DEBT AND TAXES"and"APPENDIX B—Service and Assessment Plan."
The TIRZ Revenues are generated only from ad valorem taxes levied and collected by the City and the
County, as applicable, on the captured appraised value of property within the District in the TIRZ in any year.
Consequently,TIRZ Revenues are generated only if the appraised value of real property in the District in any year is
greater than the base value. Any delay or failure of Developer to develop the District may result in a reduced
amount of the TIRZ Revenue being available to credit the Assessments. TIRZ Revenues generated from the
captured appraised value for each lot in the District during the development of such lot will result in a TIRZ
Annual Credit Amount which is not sufficient to achieve the Targeted Net Average Annual Installment. The
TIRZ Annual Credit Amount is not expected to be sufficient to provide for the Targeted Net Average Annual
Installment on a single family residential parcel until the second year that a home on such Lot is assessed.
The TIRZ Annual Credit Amount is not expected to be sufficient to provide for the Targeted Net Average
Annual Installment on a commercial parcel until the second year that a completed structure on such Parcel is
assessed, assuming such parcel is developed under the assumptions provided by the Developer as described
under the heading "THE DEVELOPMENT — Development Plan" and "- Concept Plans." SEE
"OVERLAPPING TAXES AND DEBT." Such TIRZ Revenues, if available, are not pledged as security for
the Bonds under the Indenture.
After the TIRZ Annual Credit Amount is applied to provide a credit towards a portion of the Annual
Installment for the Assessed Property, any excess TIRZ Revenues available from the TIRZ Fund shall be held in a
segregated account by the City and shall be used either(1)to prepay a portion of all Assessments on the Assessed
Property in a manner determined by the City and the Administrator to be fair and equitable, and to redeem bonds
pursuant to the extraordinary redemption provisions of the Indenture, (2) to optionally redeem the outstanding
Bonds pursuant to the provisions of the Indenture, or (3) to be applied as a credit towards a portion of Annual
Installments in future years in an effort to maintain a level Annual Installment schedule. See"DESCRIPTION OF
THE BONDS—Redemption Provisions" and"BONDHOLDERS RISKS—Excess TIRZ Revenues Could Trigger
Bond Redemption."
Method of Apportionment of Assessments. For purposes of the Service and Assessment Plan, the City
Council has determined that the Assessments will be initially allocated to the Assessed Property within
Improvement Zone A of the District pro rata based on the estimated build-out value of each.
Reallocation of Assessments for the Single Family Tracts. Upon the division of any Single Family
Assessed Property(without the recording of subdivision plat),the Administrator shall reallocate the Assessment for
the Single Family Assessed Property prior to the division among the newly divided Single Family Assessed
Properties according to the following formula:
A=Bx(C=D)
Where the terms have the following meanings:
A=the Assessment for the newly divided Single Family Assessed Property
B=the Assessment for the Single Family Assessed Property prior to division
C=the estimated buildout value of the newly divided Single Family Assessed Property
32
D=the sum of the estimated buildout value for all of the newly divided Single Family Assessed
Properties
The calculation of the buildout value of a Single Family Assessed Property shall be performed by the
Administrator based on information from the Owner, homebuilders, market studies, appraisals, official public
records of the County, and any other relevant information regarding the Single Family Assessed Property. The
calculation as confirmed by the City Council shall be conclusive.
The sum of the Assessments for all newly divided Single Family Assessed Properties shall equal the
Assessment for the Single Family Assessed Property prior to subdivision. The calculation shall be made separately
for each newly divided Single Family Assessed Property. The reallocation of an Assessment for a Single Family
Assessed Property that is a homestead under Texas law may not exceed the Assessment prior to the reallocation.
Any reallocation shall be reflected in the next Annual Service Plan Update and approved by the City Council.
Upon Subdivision by a Recorded Subdivision Plat. Upon the subdivision of any Single Family Assessed
Property based on a recorded subdivision plat, the Administrator shall reallocate the Assessment for the Single
Family Assessed Property prior to the subdivision among the new subdivided Lots based on buildout value
according to the following formula:
A=[B x(C-D)]/E
Where the terms have the following meanings:
A=the Assessment for the newly subdivided Lot
B=the Assessment for the Parcel prior to subdivision
C=the sum of the estimated average buildout value of all newly subdivided Lots with same
Lot Type
D = the sum of the estimated average buildout value for all of the newly subdivided Lots
excluding Non-Benefitted Property
E=the number of newly subdivided Lots with same Lot Type
Prior to the recording of a subdivision plat, the Developer shall provide the City an estimated buildout
value as of the date of the recorded subdivision plat for each Lot created by the recorded subdivision plat
considering factors such as density, lot size, proximity to amenities, view premiums, location, market conditions,
historical sales, discussions with homebuilders,and any other factors that may impact value. The calculation of the
estimated average buildout value for a Lot shall be performed by the Administrator and confirmed by the City
Council based on information provided by the Developer,homebuilders,third party consultants, and/or the official
public records of the County regarding the Lot.
The sum of the Assessments for all newly subdivided Lots shall not exceed the Assessment for the portion
of the Single Family Assessed Property subdivided prior to subdivision.The calculation shall be made separately for
each newly subdivided Single Family Assessed Property. The reallocation of an Assessment for a Single Family
Assessed Property that is a homestead under Texas law may not exceed the Assessment prior to the reallocation.
Any reallocation shall be reflected in the next Annual Service Plan Update and approved by the City Council.
Reallocation of Assessments for the Commercial Tracts. The sum of the Assessments for all newly
subdivided Assessed Properties shall equal the Assessment for the subdivided Assessed Property in the Commercial
Tracts prior to subdivision. When the Commercial Tracts Initial Parcel is subsequently platted, subdivided, re-
subdivided or re-platted, the Assessment applicable to each resulting new Assessed Property in the Commercial
Tracts shall be equal to formula below:
33
A=Bx(C=D)
Where the terms have the following meanings:
A=the Assessment for the newly subdivided Assessed Property
B=the Assessment for the Assessed Property prior to subdivision
C=the estimated acreage of the newly divided Assessed Property
D=the sum of the estimated acreage for all of the newly divided Assessed Properties, excluding
Non-Benefitted Property
In order to prevent over or under-burdening due to density changes,the reallocation of an Assessment for
an Assessed Property in the Commercial Tracts may not exceed the Maximum Assessment for Lot Type
Commercial, as measured by acreage,and compliance may require a mandatory Prepayment pursuant to the Service
and Assessment Plan and as described below under"Mandatory Prepayment ofAssessments." See"APPENDIX B
—Form of Service and Assessment Plan." Any reallocation pursuant to the Service and Assessment Plan shall be
calculated by the Administrator and reflected in an Annual Service Plan Update approved by the City. The
reallocation of any Assessments as described in the Service and Assessment Plan shall be considered an
administrative action and will not require any notice or public hearing,as defined in the PM Act,by the City
Upon Consolidation. If two or more Lots or Parcels are consolidated,the Administrator shall allocate the
Assessments against the Lots or Parcels before the consolidation to the consolidated Lot or Parcel,which allocation
shall be reflected in the next Annual Service Plan Update and approved by the City Council.
Mandatory Prepayment of Assessments
Transfer to exempt person or entity: If the Assessed Property is transferred to a person or entity that is
exempt from payment of the Assessment,the owner transferring the Assessed Property shall pay to the City the
full amount of the Assessment,plus Prepayment Costs and Delinquent Collection Costs,prior to the transfer. If
the owner of the Assessed Property causes the Assessed Property to become Non-Benefited Property,the owner
causing the change in status shall pay to the City the full amount of the Assessment,plus Prepayment Costs and
Delinquent Collection Costs,prior to the change in status.
True-Up of Assessments if Maximum Assessment Exceeded at Plat. Prior to the City approving a
final subdivision plat,the Administrator will certify that such plat will not result in the Assessment per Lot for
any Lot Type to exceed the Maximum Assessment. If the Administrator determines that the resulting
Assessment per Lot for any Lot Type will exceed the Maximum Assessment for that Lot Type, then (i) the
Assessment applicable to each Lot Type shall each be reduced to the Maximum Assessment,and(ii)the person
or entity filing the plat shall pay to the City the amount the Assessment was reduced, plus Prepayment Costs
and Delinquent Collection Costs,if any,prior to the City approving the final plat.For a final subdivision plat in
the Single Family Tracts, the total assessment shall be reduced pro rata between the assessment and the
Improvement Zone B Assessment based on the then outstanding Assessment on such Single Family Tracts
Assessed Property. The City's approval of a plat without payment of such amounts does not eliminate the
obligation of the person or entity filing the plat to pay such amounts. See `BONDHOLDERS RISKS —
Exceedance of Maximum Assessment Could Trigger Bond Redemption."
Maximum Assessment. Notwithstanding the foregoing, the Service and Assessment Plan establishes a
"Maximum Assessment"for each Lot Type in Improvement Zone A of the District,which Maximum Assessment is
currently calculated at $ for SF 1 lots, $ for SF 2 lots, $ for SF 3 lots and
$ for Commercial lots in Improvement Area Zone A,and is based on a achieving a targeted total combined
net equivalent tax rate of$ for Lots in Improvement Zone A, taking into account the tax rate of all entities
taxing such lot and the tax equivalent rate of the Annual Installment of the Assessments. See Exhibit J of
34
"APPENDIX B — Form of Service and Assessment Plan" and `BONDHOLDERS RISKS — Exceedance of
Maximum Assessment Could Trigger Bond Redemption."
For further information about apportionment of the Assessments, See"APPENDIX B—Form of Service
and Assessment Plan."
Prepayment of Assessments
Pursuant to the PID Act and the Indenture,the owner of any property assessed may voluntarily prepay (a
"Prepayment") all or part of any Assessment levied against any lot or parcel, together with accrued interest to the
date of payment, at any time. Upon receipt of such Prepayment, such amounts will be applied towards the
redemption or payment of the Bonds. Amounts received at the time of a Prepayment which represent a payment of
principal,interest,or penalties on a delinquent installment of an Assessment are not to be considered a Prepayment,
but rather are to be treated as payment of regularly scheduled Assessments.
Priority of Lien
The Assessments or any reassessment,the expense of collection,and reasonable attorney's fees,if incurred,
constitute a first and prior lien against the property assessed, superior to all other liens and claims except liens or
claims for the State, county, school district or municipality ad valorem taxes, and are a personal liability of and
charge against the owners of the property regardless of whether the owners are named. The lien is effective from the
date of the Assessment Ordinance until the Assessment is paid,and may be enforced by the City in the same manner
as an ad valorem tax levied against real property may be enforced by the City. The owner of any property assessed
may pay the entire Assessment levied against any lot or parcel,together with accrued interest to the date of payment,
at any time.
Foreclosure Proceedings
In the event of delinquency in the payment of any Annual Installment, except for unpaid Assessments on
homestead property(unless the lien associated with the assessment attached prior to the date the property became a
homestead),the City is empowered to order institution of an action in state district court to foreclose the lien of such
delinquent Annual Installment. In such action the real property subject to the delinquent Annual Installments may
be sold at judicial foreclosure sale for the amount of such delinquent Annual Installments, plus penalties and
interest.
Any sale of property for nonpayment of an installment or installments of an Assessment will be subject to
the lien established for remaining unpaid installments of the Assessment against such property and such property
may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non-
delinquent installments of the Assessments against such property as they become due and payable. Judicial
foreclosure proceedings are not mandatory. In the event a foreclosure is necessary, there could be a delay in
payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the
proceeds of the foreclosure sale. It is possible that no bid would be received at the foreclosure sale, and in such
event there could be an additional delay in payment of the principal of and interest on Bonds or such payment may
not be made in full. The City is not required under any circumstance to purchase the property or to pay the
delinquent Assessment on the corresponding Assessed Parcel.
In the Indenture,the City will covenant to take and pursue all actions permissible under Applicable Laws to
cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the
maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the
Assessments, provided that the City is not required to expend any funds for collection and enforcement of
Assessments other than funds on deposit in the Administrative Fund. Pursuant to the Indenture, Foreclosure
Proceeds (excluding Delinquent Collection Costs) constitute Pledged Revenues to be deposited into the Pledged
Revenue Fund upon receipt by the City and distributed in accordance with the Indenture. See "APPENDIX A—
Form of Indenture." See also "APPENDIX D—Form of Disclosure Agreement" for a description of the expected
timing of certain events with respect to collection of the delinquent Assessments.
35
In the Indenture,the City creates the Reserve Account under the Reserve Fund and will fund such account
as provided in the Indenture. The City will not be obligated to fund foreclosure proceedings out of any funds other
than in the Administrative Fund. If Pledged Revenues are insufficient to pay foreclosure costs, the owners of the
Bonds may be required to pay amounts necessary to continue foreclosure proceedings. See"SECURITY FOR THE
BONDS —Reserve Account of the Reserve Fund," "APPENDIX A — Form of Indenture" and "APPENDIX B —
Form of Service and Assessment Plan."
THE CITY
Background
The Cityis located in northeast central Tarrant County,7 miles northeast of the Cityof Fort Worth and 24
tY,
miles west of the City of Dallas. Access to the City is provided by Interstate 820 and State Highway 26. The City
covers approximately 18.29 square miles. The City's location as part of the growing Dallas-Fort Worth Metroplex
has resulted in rapid growth over the last several years. The City's 2010 census population was 63,343. The City's
current population estimate is 71,269.
City Government
The City is a political subdivision and is a home rule municipality of the State,duly organized and existing
under the laws of the State, including the City's Home Rule Charter. The City was incorporated in 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 Council members. The term of office for the Mayor and the
Councilmembers is two years with the terms of the Mayor and three of the Councilmembers'terms expiring in even-
numbered years and the terms of the other four Councilmembers expiring in odd-numbered years. The City Council
formulates operating policy for the City while the City Manager is the chief administrative officer.
The current members of the City Council and their respective expiration of terms of office are as follows:
Term Expires
Name Place (May)
Oscar Trevino Mayor 2020
Tito Rodriguez Place 1 2021
Rita Wright Oujesky Place 2,Mayor Pro Tem 2020
Suzy Compton Place 3 2021
VACANT* Place 4
Mike Benton Place 5 2021
Scott Turnage Place 6 2020
Tim Welch Place 7 2021
'On August 2,2019 Councilmember Brent Barrow passed away vacating the Place 4 Council seat. The vacancy will be filled by
a special election scheduled to be conducted by the City in November 2019.
The principal administrators of the Cityinclude the following:
P P g
Name Position
Mark Hindman City Manager
Alicia Richardson City Secretary
Mark Mills Director of Finance
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36
Major Employers
The primary non-governmental and non-retail employers in the City are set forth in the table below.
Employer Product or Service Employees
Santander Consumer USA,Inc. Automobile 1,500
Medical City North Hills Hospital Hospital/Medical Care 615
HealthMarkets Life/Health Insurance 452
Stericycle Medical Waste Disposal 400
Tyson Prepared Foods Food Processing 380
XPO Logistics •Supply Chain 260
Smurfit Kappa Corrugated Packaging 200
A to Z Management Business Services 185
ESNA Aerospace Texas Aerospace Parts Manufacturing 120
Source: The City
Historical Employment in the City of North Richland Hills
Average Annual(�)
2019(2) 2018 2017 2016 2015
Civilian Labor Force 40,169 39,726 38,804 38,160 37,699
Total Employed 38,934 38,490 37,485 36,796 36,339
Total Unemployed 1,235 1,236 1,3319 1,364 1,360
Unemployment Rate 3.1% 3.1% 3.4% 3.6% 3.6%
(I)Source: Texas Workforce Commission.
(2)Source: Data through August 2019.
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37
Surrounding Economic Activity
The major employers of municipalities surrounding the City are set forth in the table below.
t ,s ""°` City of Arlington City of Grand Prairie
Approximately 8 miles from the City Approximately 1G miles from the City Approximately 15 miles from the City
Employer Employees Employer Employees Employer Employees
AMR Corp./American Airlines 25,000 Arlington ISO 8,200 Grand Prairie ISO 4,100
Lockheed Martin Tactical Aircraft Systems 13,700 University of Texas at Arlington 5,300 Lockheed Martin Missies&Fire Control 2,500
Fort Worth ISO 12,000 General Motors 4,484 Poly-America Inc. 2,000
NAS Fort Worth Joint Reserve Base 10,000 Texas Health Resources 4,063 City of Grand Prairie 1,800
JPS Health Network/JPS Hospital 6,500 Six Flags Over Texas 3,800 Bell Helicopter-Textron,Inc. 1,200
City of Fort Worth 6,200 The Parks at Arlington 3,500 Lone Star Park at Grand Prairie 1,000
Cook Children's Health Care System 6,000 GM Financial 2,965 Hanson Pipe&Products 1,000
Tarrant County College 6,000 City of Arlington 2,509 Triumph Aero Structures-Vought 900
Alcon Laboratories Inc. 5,400 JP Morgan Chase Bank 1,965 Republic National Distribution 700
Bell Helicopter-Textron,Inc. 5,000 Texas Rangers Baseball Club 1,881 Bureau of Prison Administration 700
City of Grapevine
_, Carrollton Approximately 11 miles from the City
Q S as Employer Employees
,.-
Sauthaak. Dallas/Ft.Worth International Airport 14,300
K° ` t Farmers Gamestop 2,400
Branch
Gaylord Texan Resort&Convention Center 2,000
tiO
(,,, Grapevine-Colleyville ISD 1,900
I IN
co cy,eD. ,o„al City of Grapevine 700
mood Baylor Medical Center 700
Watauga
aGreat Wolf Lodge 600
40
North Bedford Electronics Boutique 500
MelalyHA% RicMandWOg ButP9$ �� =") Pavestone Mfg. 400
Hurst co 1111, Texas Toyota 400
40 ;
el Radvand HAW 0 ,x_s
Haltom Gay City of Irvin
OD Approximately 16 miles from the City
mg
Employer Employees
FOR WOriF1 E@ Citigroup,Inc. 7,500
GranB Prams Verizon Communications 3,260
Arlington Irving Mall 2,100
., Pael eyo a Dallas/Ft.Worth International Airport 1,700
.,t
Allstate Insurance 1,650
`e Pioneer Natural Resources 1,400
i " to
p Microsoft Corp 1,351
ruestHr9 Neiman Marcus Direct 1,339
KernMr:„ I,v..canv,e
V Health Management Systems(HMS) 1,299
r.rmar 7-Eleven 800
Source:Municpal Advisory Council of Texas
THE DISTRICT
General
The PID Act authorizes municipalities,such as the City,to create public improvement districts within their
boundaries or extraterritorial jurisdiction, and to impose assessments within the public improvement district to pay
for certain improvements. The District was created by the Creation Resolution for the purpose of undertaking and
financing the cost of certain public improvements within the District, including the Improvement Zone A Public
Improvements, authorized by the PID Act and approved by the City Council that confer a special benefit on the
District property being developed. The District is not a separate political subdivision of the State and is governed by
the City Council. A map of the property within the District is included on page v hereof.
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Powers and Authority
Pursuant to the PID Act, the City may establish and create the District and undertake, or reimburse a
developer for the costs of,improvement projects that confer a special benefit on property located within the District,
whether located within the City limits or the City's extraterritorial jurisdiction. The PID Act provides that the City
may levy and collect Assessments on property in the District, or portions thereof, payable in periodic installments
based on the benefit conferred by an improvement project to pay all or part of its cost.
Pursuant to the PID Act and the Creation Resolution,the City has the power to undertake, or reimburse a
developer for the costs of, the financing, acquisition, construction or improvement of the Improvement Zone A
Public Improvements. See "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS." Pursuant to the
authority granted by the PID Act and the Creation Resolution,the City has determined to undertake the construction,
acquisition or purchase of certain road,water,wastewater, sanitary sewer,park and open space,and drainage public
improvements within Improvement Zone A of the District and outside of the District comprising the Improvement
Zone A Public Improvements and to finance a portion of the costs thereof through the issuance of the Bonds. The
City has further determined to provide for the payment of debt service on the Bonds through Pledged Revenues. See
"ASSESSMENT PROCEDURES"herein and"APPENDIX B—Form of Service and Assessment Plan."
THE DEVELOPMENT AGREEMENT
Pursuant to the Development Agreement, the Developer has agreed to construct certain "Authorized
Improvements" for the benefit of the District in accordance with the conditions therein. Capitalized terms used in
this "THE DEVELOPMENT AGREEMENT" section and not otherwise defined herein shall have the meanings
assigned to them in the Development Agreement. See"APPENDIX G—THE DEVELOPMENT AGREEMENT."
The Developer entered into the Development Agreement with the City effective , 2019.
The Development Agreement provides the scope of the Public Improvements to be constructed, sets forth rules and
regulations for the construction of the Public Improvements,certain private improvements,and provides the process
for the development of all property within the District.
Construction of Improvements
Pursuant to the Development Agreement, the Developer will undertake or cause the undertaking of the
design,development, construction, maintenance,management,use and operation of the"City Point Development,"
including the Public Improvements. Under the Development Agreement,the"City Point Development"is to consist
of the following elements:
• maximum 250 single family townhomes(attached)within the SF Residential Zones;
■ maximum 8 acres of multifamily residential use with a maximum 600 multifamily residential
units within the MF Residential Zones; no multifamily residential units shall be provided a
certificate of occupancy prior to completion of construction of the Authorized Improvements;
• minimum 60,000 sq.ft.of commercial floor area; and
• a hotel as described in the STR, Inc., industry standard chain scale as minimum Upscale and
above hotel or Upper Midscale and below upon approval of the City; with a minimum of 100
keys and a minimum 1,500 sq. ft. meeting space within the hotel; or a minimum 15,000 sq. ft.
grocer within the City East Commercial District of the Commercial Zones.
The Development Agreement further sets forth additional conditions for the Development including the
following:
39
The Developer must construct or cause to be constructed a private amenity center within the single family
residential zones(the"SF Residential Zones")which shall consist of at least: (1)a swimming pool, (2)a clubhouse,
and(3)restroom facilities.
The Developer must complete or cause to be completed the private amenity center within the SF
Residential Zones by the date that is twelve(12)months following the City's issuance of the one hundredth(100th)
single family residential building permit(the"SF Private Amenity Center Completion Date").If the Developer does
not complete or cause to be completed the private amenity center within the SF Residential Zones by the SF Private
Amenity Center Completion Date, the Developer shall remit liquidated damages to the City in the amount of
$1,000.00 per day for each day beyond the SF Private Amenity Center Completion Date,that the private amenity
center with the SF Residential Zones is not completed,until it is completed. The foregoing date may be extended by
written approval of the City Manager.
The Developer, at Developer's cost, must install a network of linear hike and bike trails throughout the
Development to connect JoAnn Johnson Trail,Randy Moresi Trail, and the proposed Richland Hills multi-use trail
within the City. The Developer shall construct or cause to be constructed a dog park within the
Development.
Prior the issuance of the one hundredth (100th) single family residential building permit in the SF
Residential Zones,the Developer shall construct or cause to be constructed entry features,wayfinding signage, and
monuments to be maintained by the POA and/or HOA.
A minimum five percent(5%)of the Property in the District shall be open space.Interactive elements,such
as soft surface play areas,shall be provided within the open spaces.
The Developer shall make best efforts to cause an adjacent property owner to dedicate an access easement
to the City located east of City Point Drive and south of Calloway Creek Medical Office Building for use as a public
open space area with seating, trails, sidewalks, pet waste stations, lighting, landscaping, irrigation, drainage
improvements, signage, and trash receptacles ("Public Park Improvements"). Such dedication shall satisfy the
parkland dedication requirements as provided in the City Regulations.
The Developer shall complete or cause to be completed the publicly accessible amenity space(open space)
within each City West Residential, City East Residential, and City South Residential portion of the SF Residential
Zones by such portion's respective SF Public Amenity Completion Date. If the Developer does not complete or
cause to be completed the publicly accessible amenity space (open space) within the City West Residential, City
East Residential, or City South Residential portions of the SF Residential Zones by such portion's respective SF
Public Amenity Completion Date, the Developer shall remit liquidated damages to the City in the amount of
$1,000.00 per day for each day beyond the SF Public Amenity Completion Date, that the publicly accessible
amenity space (open space) with the identified City West Residential, City East Residential, or City South
Residential portion of the SF Residential Zones is not completed,until it is completed.
The Developer shall construct or cause to be constructed the following amenities for the multifamily
residential units within the MF Residential Zones: a pool,an outdoor cabana/clubhouse, a community outdoor grill,
and an outdoor game area.
The Development Agreement further provides that the maximum overlapping tax rate when including all
taxing entities and after the TIF credit is applied shall be no greater than $3.09 at the time of issuance of the PID
Bonds for single family residential use properties,without prior written consent of the City.
Economic Development Agreement
Prior to the issuance of PM Bonds, the City and the Developer have agreed to enter into an Economic
Development Agreement to provide a grant to the Developer in an amount equal to two percent(2%)of the sales tax
revenue generated from the Commercial Zones of the Property starting in year 2024 for a period of ten(10)years,or
until the amount of the grant reaches$2,400,000,whichever occurs first(the"City Point Grant").The Parties agree
40
that the Economic Development Agreement shall contain only the following performance requirements (the
"Performance Requirements"):
(a) Completion of construction of the pad sites in the City Center Commercial portion of the
Commercial Zones, as evidenced by a temporary certificate of occupancy,green tag,or other form of City
approval,shall occur within one year of approval of the final plat.
(b)The Developer shall construct or cause to be constructed vertical development within the City
Center Commercial portion of the Commercial Zones in two phases as follows:
1. Phase I: Completion of construction of a minimum of 30,000 square feet of
commercial space, as evidenced by a temporary certificate of occupancy,green tag,or other form
of City approval of completion of core and shell is issued by the City, shall occur on or before
December 31,2023 (the"Phase I Deadline");and
2. Phase II: Completion of construction of a minimum of an additional 30,000
square feet of commercial space,providing a total minimum of 60,000 square feet of commercial
space, as evidenced by a temporary certificate of occupancy, green tag, or other form of City
approval of completion of core and shell is issued by the City, shall occur on or before December
31,2026(the"Phase II Deadline")
If the Phase I Deadline or the Phase II Deadline listed above is not met,the City shall reduce the maximum
City Point Grant by the portion of the annual TIF credit applied towards Assessments levied on the property within
the Commercial Zones beginning in tax year 2023,following the Phase I Deadline,and beginning in tax year 2026,
following the Phase II Deadline,as applicable,each year until such Performance Requirements are met.
The City may consider an Economic Development Agreement,or other economic incentive, if parking for
multifamily units in the MF Residential Zones is constructed utilizing podium or structured parking, rather than
surface parking.
THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS
General
The Improvement Zone A Public Improvements consist of certain public improvements that will benefit
Improvement Zone A of the District. The balance of the costs of the Improvement Zone A Public Improvements
will be paid by the Developer pursuant to the terms of the Construction,Funding and Acquisition Agreement. See
"SOURCES AND USES OF FUNDS." The Improvement Zone A Public Improvements will be dedicated to the
City. The Developer is responsible for the completion of the construction, acquisition or purchase of the
Improvement Zone A Public Improvements, and the Developer or its designee will act as construction manager.
The City will pay project costs for the Improvement Zone A Public Improvements from proceeds of the Bonds. The
Developer will submit reimbursement requests on a monthly basis for costs actually incurred in developing and
constructing the Improvement Zone A Public Improvements and be reimbursed in accordance with the Indenture
and the Construction,Funding,and Acquisition Agreement. See"THE DEVELOPMENT—Development Plan".
Improvement Zone A Public Improvements. The Improvement Zone A Public Improvements,a portion of
which are being financed with proceeds of the Bonds, include road, water, sanitary sewer, and storm drainage
collection system improvements benefitting only Improvement Zone A of the District.
Roadway improvements: The roadway improvements within Improvement Zone A of the District include
subgrade stabilization,concrete reinforcing steel for roadways,testing,handicapped ramps and streetlights.
All related earthwork, excavation, erosion control,retaining walls, intersections, signage, lighting and re-
vegetation of all disturbed areas within the right-of-way are included.The street improvements will provide
street access to each Lot within Improvement Zone A of the District.
41
Water distribution system improvements: The water distribution system improvements within
Improvement Zone A of the District include trench excavation and embedment,trench safety,PVC piping,
manholes, service connections, testing, related earthwork, excavation and erosion control all necessary
appurtenances required to provide water service to Lots within Improvement Zone A of the District.
Sanitary sewer collection system improvements: The sanitary sewer collection system improvements
within Improvement Zone A of the District include trench excavation and embedment,trench safety,PVC
piping, ductile iron encasement, boring, manholes, service connections, testing, related earthwork,
excavation, and erosion control all necessary appurtenances required to provide wastewater to all Lots
within Improvement Zone A of the District.
Storm drainage collection system improvements: The storm drainage collection system improvements
within Improvement Zone A of the District include earthen channels, swales, curb and drop inlets, RCP
piping and boxes, headwalls, concrete flumes, rock rip rap, concrete outfalls, and testing as well as al
related earthwork, excavation, and erosion control necessary to provide storm drainage for Lots in
Improvement Zone A of the District.
Landscaping, entryway, open space and park improvements: The landscaping, entryway,open space and
park improvements within Improvement Zone A of the District include installation of landscaping,
including irrigation, in public open spaces, entryway monuments and signs, establishment and
improvement of parks and open space.
The cost of the Improvement Zone A Public Improvements is expected to be approximately$
which is expected to be paid with proceeds of the Bonds.
The following table reflects the total expected costs of the Improvement Zone A Public Improvements.
Type of Improvement Costs*
Roadway Improvements
Water
Sanitary Sewer
Storm Drainage
Landscaping,Entryway,Open Space and Park
Soft Costs
Total Cost of Improvement Zone A Public
Improvements
Additionally, the Developer plans to construct certain private improvements over a period of five years
consisting of landscaping, hardscaping, and amenities and miscellaneous items related thereto to serve the entire
District(collectively,the"Private Improvements") at an approximate cost of$4,678,056*. The costs of the Private
Improvements will be paid entirely by the Developer without reimbursement by the City.
Ownership and Maintenance of Improvements
The Improvement Zone A Public Improvements will be dedicated to and accepted by the City and will
constitute a portion of the City's infrastructure improvements. The City will provide for the ongoing operation,
maintenance and repair of the Improvement Zone A Public Improvements constructed and conveyed,as outlined in
the Service and Assessment Plan. The Private Improvements will be dedicated to and accepted by the HOA or the
POA, as applicable. The HOA or the POA, as applicable will provide for the ongoing operation,maintenance and
repair of the Private Improvements through the administration of a maintenance and operation fee and/or a property
owner's association fee to be paid by each lot owner within the District.
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THE DEVELOPMENT
The following information has been provided by the Developer. Certain of the following information is
beyond the direct knowledge of the City,the City's Financial Advisor and the Underwriter,and none of the City,the
City's Financial Advisor or the Underwriter have any way of guaranteeing the accuracy of such information. The
Developer has reviewed this Limited Offering Memorandum and warrants and represents that neither (i) the
information under the caption"THE DEVELOPMENT"nor(ii)the information relating to the Developer's plan for
developing the land within the District (the "Development") under the subcaption `BONDHOLDERS' RISKS —
Dependence Upon Developer" contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made herein,in the light of the circumstances under which they are made,
not misleading. At the time of delivery of the Bonds to the Underwriter,the Developer will deliver a certificate to
this effect to the City and the Underwriter.
Overview
The Development is an approximately 52.873 acre part of a master planned project located within the city
limits of the City, near the Southeast corner of Boulevard 26 (Grapevine Highway) and Rodger Line Drive. The
City,located in the north central region of the Dallas-Fort Worth-Arlington,Texas Metropolitan Statistical Area(the
"DFW MSA"),is poised for significant growth as the overall DFW MSA continues its growth trajectory.
The land within the Development is owned by the Developer,which is an affiliate of Centurion American
Custom Homes Inc.d/b/a Centurion American Development Group Inc.("Centurion"),as described below in"THE
DEVELOPER — Description of the Developer." See "THE DEVELOPER — History and Financing of the
District".In addition,the Development will include a variety of parks,trails,an amenity center and open space areas
for its residents and others to enjoy. This combination will provide its residents a community environment in which
to live. Furthermore,the Development is located within the Birdville Independent School District.
The Developer develops infrastructure and community improvements (amenities, parks, trails, etc.) and
sells residential lots to high-quality production homebuilders under lot takedown contracts.
The Developer expects to complete development in the District over a twenty(20)month period,with the
expected completion of the infrastructure serving the District by 3Q 2021.
Development Plan
Development of the District is anticipated to include approximately 364 single-family homes in the Single
Family Tracts,400 multifamily units in the Multifamily Tracts,and 150,000 square feet of commercial space in the
Commercial Tracts. Infrastructure in the Development will be completed in one phase consisting of the construction
of the Public Improvements. The Developer plans to commence development in Q1 2020. The current
development schedule is expected to span approximately twenty (20) months with various portions of the Public
Improvements expected to be completed as follows:
Excavation/Retaining:January 2020—June 2020
Utilities:July 2020—October 2020
Paving:October 2020—February 2021
Franchise Utilities:March 2020—May 2020
Landscape/Hardscape/Other:June 2020-August 2021
See "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS" and "APPENDIX B — Form of
Service and Assessment Plan."
43
Merchant Builder Lot Purchase and Sale Agreements in the District
The Developer has entered into a Contract of Sale(the"New Synergy Lot Purchase and Sale Agreement")
with New Synergy, LLC ("New Synergy") for 168 lots in the District consisting of 122 Urban Lots and 46
Bungalow lots. New Synergy is owned and controlled by Mehrdad Moayedi, a Developer principal. See "THE
DEVELOPER—Executive Biography"herein. The base lot price of the Urban Lots is$70,000 per lot and the base
lot price of the Bungalow Lots is$75,000 under the New Synergy Lot Purchase and Sale Agreement.
To date, the Developer has not received earnest money under the New Synergy Lot Purchase and Sale
Agreement. A total of $10,000 in earnest money from New Synergy has been deposited relating to the New
Synergy Lot Purchase and Sale Agreement(October 16, 2019). The feasibility period under the New Synergy Lot
Purchase and Sale Agreement expires on November 15, 2019, and all earnest money deposited with the Developer
to hold the New Synergy Lot Purchase and Sale Agreement will become a hard deposit and no longer refundable.
New Synergy has acknowledged the existence of the District and consented to the levy of the Assessments in the
New Synergy Lot Purchase and Sale Agreement. In addition, under the New Synergy Lot Purchase and Sale
Agreement,the Developer will provide to New Synergy information regarding(i)the maximum levy of assessment
by the PID for each Lot, (ii) the maximum annual payment to be made to amortize such assessment, and (iii)the
maximum term of any assessment to fund the Public Improvements, within fifteen (15) days of the Developer
receiving such information. Prior and neither Purchaser nor Seller will support the City levying any assessment
above such agreed upon maximums.
The Developer has entered into a Contract of Sale(the"CB Jeni Lot Purchase and Sale Agreement")with
CB Jeni ("CB Jeni") for 196 Townhome lots in the District. The base lot price of the Townhome Lots is $63,000
per lot under the CB Jeni Lot Purchase and Sale Agreement.
To date, the Developer has not received earnest money under the CB Jeni Lot Purchase and Sale
Agreement. A total of$ in earnest money is expected from CB Jeni. Immediately prior to the expiration
of the Due Diligence Period under the CB Jeni Lot Purchase and Sale Agreement( ,2019), if CB
Jeni has not terminated the CB Jeni Lot Purchase and Sale Agreement as provided therein. CB Jeni shall deposit as
additional earnest money (the "Additional Earnest Money") with the title company the amount of
$ in cash or immediately available funds. Any and all cash deposited with the title company as
the Initial Earnest Money or the Additional Earnest Money shall be deposited and held in an interest bearing account
for the benefit of the party entitled thereto pursuant to the CB Jeni Lot Purchase and Sale Agreement. The
feasibility period under the CB Jeni Lot Purchase and Sale Agreement expires on , 2019, and all
earnest money deposited with the Developer to hold the CB Jeni Lot Purchase and Sale Agreement will become a
hard deposit and no longer refundable. The Developer will execute an earnest money deed of trust securing such
deposit,which deed of trust will grant CB Jeni a lien on ,subject to permitted exceptions and
any lien for any acquisition or development loan. CB Jeni has acknowledged the existence of the District and
consented to the levy of the Assessments in the CB Jeni Lot Purchase and Sale Agreement. In addition,under the
CB Jeni Lot Purchase and Sale Agreement, the Developer and CB Jeni have agreed that the maximum annual
payment to amortize the Assessments on lots within the District being purchased by CB Jeni is$ .
44
The following table provides a summary of the takedown schedule for the Lot Purchase and Sale
Agreements.
LOT PURCHASE AND SALE AGREEMENTS
Homebnilder Total Lots 'Base price per.lot Lots per.Takedown...
122 Urban Lots $70,000 Minimum ten(10)Lots at Initial Closing;
New Synergy minimum ten(10)Lots per quarter(Subsequent
46 Bungalow Lots $75,000 Closings)
; Minimum ten(10)Lots at Initial Closing; ..
CB Jeni 196 Townhome Lots $63,000 minimum.ten(10)Lots-per quarter(Subsequent
Closings) -
Estimated Home Prices in the Development
The Developer's current expectations regarding estimated home prices in the District are as follows:
ESTIMATED HOME PRICES
Lot Type Full Lot Size(Width in Quantity Base Lot Price Average Base Home Price*
Ft.)
SF1 22'x 70' (Townhome) 196 $63,000 $290,000
SF2 26'x 58' (Urban Lots) 122 $70,000 $305,000
SF3 40'x 75'(Bungalow) 46 $75,000 $325,000
*Developer estimates
EXPECTED ABSORPTION OF SINGLE FAMILY LOTS IN THE DISTRICT
New Svnerev Contract CB Jeni Contract
Expected Final Total Lots Expected Final Total Lots
Sale Date Sale Date
2021 10 2021 10
2022 40 2022 40
2023 40 2023 40
2024 40 2024 40
2025 38 2025 40
2026 26
Expected Commercial Development in the District
It is currently expected that the Development will consist of at least 60,000 sq. feet of retail, commercial
and restaurant space and a 90,000 sq. foot hotel. An affiliate of the Developer intends to construct and lease a
portion of the commercial property consisting of approximately 60,000 sq. feet and sell the remaining portions to
third parties. The Developer will not construct the hotel,but will sell the hotel parcel to a hotel developer.
Expected Multifamily Development in the District
It is currently expected that the Multifamily Tracts, located in Improvement Zone B,will be developed as
multifamily units. The Developer's current expectations are that multifamily development will consist of at least
400 multifamily units,which are expected to rent at an average rate of$1.75/square foot.
45
The Developer has entered into a letter of intent (the "Multifamily Letter of Intent") with an unaffiliated
regional real estate developer based in Denton, Texas (the "Potential Multifamily Developer") for the purchase of
the Multifamily Tracts at a purchase price of$8,500,000. Initial earnest money in the amount of$100,000 is
expected to be deposited at the title company for the benefit of the Developer upon the execution of a contract with
the Potential Multifamily Developer based on the Multifamily Letter of Intent (the "Potential Multifamily
Contract"), and an additional $100,000 is expected to be deposited at the end of the diligence period on the
Multifamily Tracts at the close of the diligence period,which is expected to be 120 days [from the execution of the
Potential Multifamily Contract].
The Multifamily Letter of Intent provides for a maximum of 600 multifamily units to be constructed on the
Multifamily Tracts with zoning that will allow for structured parking. See "THE DEVELOPMENT—Zoning".
Current development projections and analysis provided by the Developer indicate an estimated 400 units to be
constructed on the Multifamily Tracts,and the Service and Assessment Plan has allocated the Assessments allocable
to the Multifamily Tracts based on the construction of 400 multifamily units on the Multifamily Tracts. See
"ASSESSMENT PROCEDURES — Assessment Methodology". The Developer and the City indicate that
development of 600 units on the Multifamily Tracts will likely require the construction of structured parking to
support such density of the Multifamily Tracts, and that the economic feasibility of construction of structured
parking on similar multifamily parcels in the area has required incentive participation from local government units.
The City and the Potential Multifamily Developer have not entered into any discussions or negotiations relating to
development of the Multifamily Tracts or incentives relating thereto.
No assurance can be given that the Potential Multifamily Contract will be executed. The Multifamily
Letter of Intent is a nonbinding proposal between the Developer and the Potential Multifamily Developer and is
subject in all respects to the negotiation and execution of a sales contract between the Developer and the Potential
Multifamily Developer.
Concept Plan
Below is the current concept plan of the Development as approved by the City. The concept plan is
conceptual and subject to change consistent with the City's zoning and subdivision regulations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46
CITY POINT
OVERALL LAYOUT
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47
Zoning/Permitting
The District is currently zoned under pursuant to Ordinance No. 3595 adopted by the City Council on
August 12,2019(the"Zoning Ordinance")as the City Point Planned Development District. The Zoning Ordinance
has approved a non-residential planned development, and allows certain residential and non-residential use and
establishes guidelines pertaining to architectural standards, streets, parking, lighting, signage, landscape, and open '
spaces. The Zoning Ordinance further specifies that the area within the City Point Planned Development District
shall include a maximum of 600 multifamily units,a maximum of 250 townhomes,and a minimum of 60,000 sq.ft.
of commercial floor area(which includes commercial retail,dining,office,hotel and plaza open space). Because the
District lies within the city limits of the City, the City's zoning and subdivision regulations control the aspects of
development not specifically set forth in the Zoning Ordinance.
Amenities
The Developer will construct certain amenities within the development as part of the costs of the Private
Improvements to serve the District, including hike and bike trails, open space improvements, a dog park and an
amenity center. The amenity center will consist of an in-ground swimming pool, a clubhouse and restroom
facilities. The Amenities are expected to cost approximately $2,971,856 and are expected to the funded with the
Acquisition and Development Loan.
Construction of the Private Improvements, including the amenities, is expected to begin in Q1 2021. The
Development Agreement requires completion of the private amenity center by twelve (12) months following the
City's issuance of the 100th single family residential building permit. See"THE DEVELOPMENT AGREEMENT"
herein.
Education
Children in the District will attend schools in the Birdville Independent School District (`BISD") which
encompasses 96 square miles. BISD serves portions of the communities of North Richland Hills, Richland Hills,
Haltom City,Hurst,Watauga, Colleyville and Fort Worth. BISD enrolls over 23,800 students in four high schools,
seven middle schools,twenty one elementary schools,an advanced learning and technology center,and a collegiate
academy. According to the Texas Education Agency, BISD received a"District Accountability Rating" of B from
the TEA. Students in the District will attend Jack C.Binion Elementary School (approximately 0.3 miles from the
District), Richland Middle School (approximately 1.5 miles from the District) and Birdville High School
(approximately 2.5 miles from the District).
Existing Mineral Rights,Easements and Other Third Party Property Rights
Third parties hold title to certain rights applicable to real property within and around the District (the
"Mineral Owners"), including reservations of mineral rights and royalty interests and easements (collectively, the
"Third Party Rights") pursuant to various instruments in the chain of title for various tracts of land within and
immediately adjacent to the District. Some of these reservations of mineral rights include a waiver by the Mineral
Owners of their right to enter onto the surface of the property to explore,develop, drill,produce or extract minerals
within the District. If the waiver is applicable, such Mineral Owners may only develop such mineral interests by
means of wells drilled on land outside of the property of the District.
The Developer is not aware of any ongoing mineral rights development or exploration on or adjacent to the
property within the District. The Developer is not aware of any interest in real property (including mineral rights)
owned by the Mineral Owners adjacent to the District. Certain rules and regulations of the Texas Railroad
Commission may also restrict the ability of the Mineral Owners to explore or develop the property due to well
density,acreage,or location issues.
Although the Developer does not expect the above-described Third Party Rights, or the exercise of such
rights or any other third party real property rights in or around the District,to have a material adverse effect on the
Development,the property within the District, or the ability of landowners within the District to pay Assessments,
48
the Developer makes no guarantee as to such expectation. See `BONDHOLDERS' RISKS —Exercise of Third
Party Property Rights."
Environmental
A Phase One Environmental Site Assessment (a "Phase One ESA") of the land within the District was
completed by Environmental Property Investigations,Inc.on February 6,2019. Based on the information presented
in the Phase One ESA,there were no recognized environmental conditions identified within the District.
According to the website for the United States Fish and Wildlife Service,the whooping crane,bald eagle,
piping plover, least tern, red knot and western chicken turtle are endangered species in Tarrant County. The
Developer is not aware of any endangered species located on District property.
Utilities
The City will provide both water and wastewater service to the District. The City purchases its drinking
water, as well as sewer treatment services,from the City of Fort Worth, Texas and the Trinity River Authority as a
wholesale customer.
The Developer expects additional utilities to be provided by: (1) Phone/Data - AT&T or Spectrum; (2)
Electric-Oncor;(3)Cable—AT&T or Spectrum;and(4)Natural Gas-Atmos Energy.
THE DEVELOPER
The following information has been provided by the Developer. Certain of the following information is
beyond the direct knowledge of the City,the City's Financial Advisor and the Underwriter,and none of the City,the
City's Financial Advisor or the Underwriter have any way of guaranteeing the accuracy of such information. The
Developer has reviewed this Limited Offering Memorandum and warrants and represents that neither (i) the
information herein under the caption"THE DEVELOPER"nor(ii)the information relating to the Developer under
the subcaption `BONDHOLDERS' RISKS" contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made herein, in the light of the circumstances under which
they are made,not misleading.
General
In general,the activities of a developer in a development such as the District include purchasing the land,
designing the subdivision,including the utilities and streets to be installed and any community facilities to be built,
defining a marketing program and building schedule, securing necessary governmental approvals and permits for
development,arranging for the construction of roads and the installation of utilities(including,in some cases,water,
sewer, and drainage facilities, as well as telephone and electric service) and selling improved lots and commercial
reserves to builders,developers,or other third parties. The relative success or failure of a developer to perform such
activities within a development may have a material effect on the security of revenue bonds, such as the Bonds,
issued by a municipality for a public improvement district. A developer is generally under no obligation to a public
improvement district, such as the District, to develop the property which it owns in a development. Furthermore,
there is no restriction on the developer's right to sell any or all of the land which the developer owns within a
development. In addition, a developer is ordinarily the major tax and assessment payer within a district during its
development.
Description of the Developer
The Developer is an affiliate of Centurion American Development Group ("CADG") and was created by
CADG for the purpose of managing and ultimately conveying property in the District to third parties, as described
under the caption "THE DEVELOPMENT." The Developer is a nominally capitalized limited liability company,
the primary asset of which is unsold property within the District. The Developer will have no source of funds with
which to pay Assessments or taxes levied by the City or any other taxing entity other than funds resulting from the
sale of property within the District or funds advanced to the Developer by an affiliated party. The Developer's
49
ability to make full and timely payments of Assessments or taxes will directly affect the City's ability to meet its
obligation to make payments on the Bonds.
Since 1990, CADG has developed over 20,000 single-family lots in dozens of communities surrounding
North Texas. It has worked closely with investors, land-owners, financial institutions, and vendors to acquire over
15,000 acres of land inventory for a diverse mix of developments in size and scope. CADG's communities include
amenities such as parks,golf courses,water parks themes,and hiking and biking trails. Over the past twenty years,
CADG has demonstrated the ability to successfully deliver master-planned communities that have been recognized
in the real estate industry.
Mr. Mehrdad Moayedi has ultimate control of CADG and its affiliates. CADG maintains a staff of
approximately 25 employees. CADG creates single-asset limited liability companies to own development sites and
contracts with developers and other professionals in the delivery of its communities.
In addition, CADG works closely with local municipalities, commercial developers, and public school
systems as part of its overall master plan. CADG works with North Texas'top builders to deliver the latest concepts
ranging from upscale, luxury homes in secluded neighborhoods to affordable housing communities for first-time
home buyers. CADG purchases and develops land in prime locations with the right mix of natural land settings,
strong job growth, good school systems and access to local community shopping. A snapshot of some of the
communities CADG has developed is presented below.
Name Coun Property Type Starting Home Status of Development
Price
*Entrada at Westlake Tarrant Mixed Use $1,100,000 Vertical ongoing
River Walk at Central Park Denton Mixed Use $375,000 Vertical Ongoing
The Villas at Twin Creeks Collin Single Family $230,000 Completed
Kensington Gardens Dallas Single Family $500,000 Phase 1:Started 6/2012*Phase 2:Delivered
12/2018
Water's Edge at Hogan's Denton Single Family $480,000 Completed/Ashton Finishing Construction
Glen
Montalcino Estates Denton Single Family $700,000 Phase 1:Started 1/2012*Delivered Q1
Estancia Estates Denton Single Family $400,000 Completed Built Out
Highlands Glen Denton Single Family $300,000 Completed/Ashton Finishing Up
The Highlands at Trophy Denton Single Family $250,000 Completed/Ashton Finishing Up
Club
Water's Edge Denton Single/Multifamily $300,000 Started 9/2018*Delivered Q4 2019
Williamsburg Rockwall Single Family $150,000 Fee Developer
Crestview at Prosper Creek Collin Single Family $250,000 Complete-Megatel Finishing Construction
Palomar Estates Tarrant Single Family $750,000 Complete
Estancia Tarrant Single Family $450,000 Complete
Verandah Rockwall Single Family $200,000 Development Phase Ongoing
Terracina Denton Single Family $400,000 Development Complete/Toll Brothers Bldg
Phase 3
The Resort on Eagle Tarrant Single $250,000 Development Ongoing-Builder Doing
Mountain Lake Takedowns
Travis Ranch Kaufman Single Family $200,000 Development Ongoing-Builder Doing
Takedowns
Carter Ranch Collin Single Family $150,000 Phasel:Completed*Phase 2CII:Bldg
Completed
Frisco Hills Denton Single Family $200,000 Development Complete/HB Finishing Up
Rolling Meadows Tarrant Single Family $100,000 Phasel:Completed*Phase 2A2&3 FIB
Completed
50
Waterfront at Enchanted Bay Tarrant Single Family $150,000 Phase 1:Started 5/2005*Phase 1:Delivered
2/2007 Phase 2:Being Engineered
Thombury Travis Single Family $150,000 Development Complete/HB Complete
Rough Hollow Travis Single Family $550,000 Development Complete/HB Complete
Lexington Parke Travis Single Family $150,000 Development Complete/HB Complete
Villages of Woodland Tarrant Single Family $150,000 Started Q4 2000*Delivered Q4 2017
Springs
Spring Creek Tarrant Single Family $150,000 Development Complete/HB Complete
Silver Ridge Tarrant Single Family $150,000 Development Complete/HB Complete
Sendera Ranch Tarrant Single Family $150,000 We Own Future Land/Banking Land
Rosemary Ridge Tarrant Single Family $100,000 Development Complete/HB Complete
Llano Springs Tarrant Single Family $150,000 Development Complete/HB Complete
Hills of Lake Country Tarrant Single Family $150,000 Development Complete/HB Complete
Garden Springs Tarrant Single Family $125,000 Development Complete/HB Complete
Dominion Estates Tarrant Single Family $125,000 Development Complete/HB Complete
Deer Creek North Tarrant Single Family $125,000 Development Complete/HB Complete
Creekside of Crowley Tarrant Single Family $150,000 Sold Land/Ashton Building/Also Banking
Bonds Ranch Tarrant Single Family $150,000 Purchased all Finished Lots/All Lots sold in
Q4 2017
Crown Valley Parker Single Family $150,000 Development Complete/Sold Phase/Pod Sale
Windmill Farms Kaufman Single Family $150,000 HB Complete
Knox Ranch Hood Mixed Use $450,000 HB Complete
Windsor Hills Ellis Single Family $250,000 Undeveloped;in the Zoning Process
Saddlebrook Ellis Mixed Use $175,000 Next Phase Going Through Engineering
The Villas of Indian Creek Denton Single Family $150,000 Development Complete/HB Complete
*Valencia on the Lake Denton Single Family $175,000 Next Phase Going Through Engineering
Shale Creek Wise Single Family $100,000 Last Phase Going Through Engineering
Shahan Prairie Denton Single Family $150,000 Sold Land
Frisco Ranch • Denton Single Family $150,000 Development Complete/HB Complete
Brookfield Denton Single Family $180,000 Sold Land
Sweetwater Crossing Collin Single Family $150,000 Development Complete/HB Complete
Prestwyck Collin Mixed Use $190,000 Development Complete/HB Complete
Oak Hollow Collin Single Family $100,000 Development Complete/HB Complete
Northpointe Crossing Collin Single Family $100,000 Development Complete/HB Complete
McKinney Greens Collin Single Family $150,000 Development Complete/HB Complete
The Dominion Dallas Single Family $250,000 Development Complete/HB Ongoing
Residences at the Stoneleigh Dallas Condo $750,000 Unit Sales Ongoing
Mountain Creek Dallas Multifamily $225,000 Development Complete/HB Complete
Chateaus of Coppell Dallas Single Family $350,000 Development Ongoing-HB Building
The Bridges at Preston Parker Single Family $250,000 Development Complete/HB Complete
Crossings
*Winn Ridge Denton Single Family $250,000 Development Complete/HB Complete
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*Sutton Fields Denton Single Family $350,000 Development Complete/HB Complete
*Hillstone Pointe Denton Single Family $250,000 Phase 1:Q3 2016*Phase 1:Delivered 12/2017
Remainder Raw Land Sold to Horton&Lennar
*Northlake Estates Denton Single Family $300,000 Development Ongoing-HB Building
*Creeks of Legacy Denton/Collin Single Family $350,000 Development Ongoing-HB Building
University Place Dallas Single Family $450,000 Development Ongoing-HB Building
*Lakewood Hills Denton Single Family $450,000 Development Ongoing-HB Building
Steeplechase Denton Single Family $500,000 Development Ongoing-FIB Building
*Mercer Crossing Dallas Mixed Use $350,000 Development Ongoing-HB Building
*Ownsby Farms Collin Single Family $300,000 Development Ongoing-FIB Building
*Anna Hurricane Creek Collin Single Family $300,000 Phase 1:Started 9/2018,Currently Being
Developed
*Chalk Hill Collin Single Family $300,000 Phase 1:Started 9/2018,Currently Being
Developed
Windsor Hills Dallas Single Family TBD Pre-development process.
Walden Pond Kaufman Single/Multifamily TBD Pre-development process.
Mobberly Denton Single Family TBD Pre-development process.Confirmation
election May 2019
*Whitewing Collin Single Family TBD PID Bond in the process of being issued.
*NRH Tarrant Mixed Use $300,000 Pre-development process.
Denton-Kings Ridge Denton Single/Multifamily $250,000 Zoning approved.Development should begin
*Collin Creek Mall Collin Mixed Use $400,000 Zoning approved.
*Hickory Farms Dallas Single Family TBD PID bonds issued.
Dove Creek Collin Single Family $275,000 Under Development
Preston Hills Collin Single Family $400,000 Under Development
Founders Park Tarrant Single/Multifamily 300,000 Development Complete-FIB Building
Barcelona Collin Single Family $350,000 Phase 3;Under Development
Bloomridge Collin Single Family $300,000 Phase 2;Under Development
Erwin Farms Collin Single Family $350,000 Phase 3;Under Development
Enchanted Creek Collin Single Family $300,000 Engineering Phase 2
Alpha Ranch Wise/Denton Single Family $225,000 Pre-development process.
Bear Creek Dallas Single Family $250,000 next phase platted-TXDOT Condemnation
Wade Settlement Collin Single Family $350,000 Phase 2;Development
Falls of Prosper Collin Single Family $400,000 Phase 2;Development
*Iron Horse Dallas Mixed Use $250,000 PID bonds issued;Development Ongoing
*Polo Ridge Kaufman Single Family $350,000 PID bonds issued;Development Ongoing
*—developments utilizing public improvement districts
Executive Biography
Mehrdad Moayedi is the President and Chief Executive Officer of CADG. Mr. Moayedi has more than
twenty-five years of direct experience in the development industry. With a background in construction and real
estate,Mr. Moayedi employs a comprehensive approach to each CADG development. Mr.Moayedi has extensive
knowledge of the interconnection of all parts of residential real estate development.
52
Before forming JBM Development in 1986, Mr. Moayedi completed several construction and fee
development projects in Northeast Tarrant County, Texas subdivisions as well as various construction and
remodeling projects. IBM Development, along with Centurion American Custom Homes, formed CADG in 1990.
The company has become broadly diversified, with residential developments ranging from upscale high-rise
residential towers to affordable housing communities for first-time home buyers.
History and Financing of the District
The Developer purchased the land comprising the District on October 28, 2019. In order to finance the
purchase of land within in the District and development in the District,the Developer obtained the Acquisition and
Development Loan in the amount of $ from the Lender. The Acquisition and Development Loan is
currently outstanding in the amount of$ and secured by all property within the District.
The Acquisition and Development Loan bears interest at a rate of %. The Acquisition and
Development currently matures on . Payments under the Acquisition and Development Loan are
interest only payments due quarterly, with the full principal of the Acquisition and Development Loan payable at
maturity. The Acquisition and Development Loan is personally guaranteed by Mehrdad Moayedi.
The PID Act provides that the Assessment Lien is a first and prior lien against an Assessed Property within
the District and is superior to all other liens and claims except liens or claims for state, county, school district, or
municipality ad valorem taxes. Additionally, at or prior to delivery of the Bonds, the Lender shall consent to and
acknowledge the creation of the District,the levy of the Assessments and the subordination of the lien securing the
Acquisition and Development Loan to the assessment liens on property within the District securing payment of the
Assessments. As a result,the lien on the property within the District securing the Assessments will have priority
over the lien on the property within the District securing the Acquisition and Development Loan.
THE ASSESSMENT CONSULTANT AND ADMINISTRATOR
The following information has been provided by the Assessment Consultant and the Administrator. Certain
of the following information is beyond the direct knowledge of the City, the City's Financial Advisor and the
Underwriter, and none of the City, the City's Financial Advisor or the Underwriter have any way of guaranteeing
the accuracy of such information. The Assessment Consultant and the Administrator have reviewed this Limited
Offering Memorandum and warrant and represent that the information herein under the caption "THE
ASSESSMENT CONSULTANT AND ADMINISTRATOR" does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made herein, in the light of the
circumstances under which they are made,not misleading.
P3Works,LLC ("P3Works") is a consulting firm with a specialized consulting practice providing services
related to the formation and administration of special tax and special assessment districts.
The City has selected P3Works as the initial Administrator for the District. The City has entered into an
agreement with the Administrator to provide specialized services related to the administration of the District needed
to support the issuance of the Bonds. The Administrator will primarily be responsible for preparing the annual
update to the Service and Assessment Plan. The Administrator is a consulting firm focused on providing district
services relating to the formation and administration of public improvement districts,and is based in Keller,Texas.
The Administrator's duties will include:
• Preparation of the annual update to the Service and Assessment Plan
• Preparation of assessment rolls for City billing and collection
• Establishing and maintaining a database of all City parcel Ds within the District
• Trust account analysis and reconciliation
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• Property owner inquires
• Determination of Prepayment amounts
• Preparation and review of disclosure notices with Dissemination Agent
• Review of developer draw requests for reimbursement of authorized improvement costs.
APPRAISAL OF PROPERTY WITHIN IMPROVEMENT ZONE A OF THE DISTRICT
The Appraisal
General. Integra Realty Resources —DFW (the "Appraiser"), prepared an appraisal report for the City
dated , 2019 and effective as of March 1, 2021, based upon a physical inspection of the District
conducted on September 16, 2019 (the "Appraisal"). The Appraisal was prepared at the request of the City. The
description herein of the Appraisal is intended to be a brief summary only of the Appraisal as it relates to
Improvement Zone A of the District. The Appraisal is attached hereto as APPENDIX E and should be read in its
entirety. The conclusions reached in the Appraisal are subject to certain assumptions, hypothetical conditions and
qualifications,which are set forth therein. See"APPENDIX E—Appraisal of Property in the District."
The Appraiser estimated the aggregate market value of the fee simple interest in various tracts of land in
Improvement Zone A of the District under the hypothetical condition that the Public Improvements are completed.
See "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS," "PLAN OF FINANCE" and "THE
DEVELOPMENT—Development Plan." The Appraisal does not reflect the as-is condition of Improvement Zone A
of the District as the Public Improvements have not yet been constructed. Moreover,the Appraisal does not reflect
the value of Improvement Zone A of the District as if sold to a single purchaser in a single transaction. The
Appraisal provides the fee simple estate values for Improvement Zone A of the District. See "APPENDIX E—
Appraisal of Property in the District."
The value estimate for the total assessable property within Improvement Zone A of the District, which
includes the Single Family Tracts and the Commercial Tracts, using the methodologies described in the Appraisal
and subject to the limiting conditions and assumptions set forth in the Appraisal, as of March 1, 2021 is
$26,850,000.For further information about the value of the land within Improvement Zone A and the liens relating
to the Assessments and the Improvement Zone B Assessments, see"ASSESSMENT PROCEDURES—Assessment
Methodology".
Single Family Tracts
The Appraiser estimated the aggregate market value of the fee simple interest in various tracts of land
comprising the Single Family Tracts in the District under the hypothetical condition that the Public Improvements
are completed. See"THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS," "PLAN OF FINANCE" and
"THE DEVELOPMENT—Development Plan." The Appraisal does not reflect the as-is condition of the Single
Family Tracts as the Public Improvements have not yet been constructed. Moreover,the Appraisal does not reflect
the value of the Single Family Tracts of the District as if sold to a single purchaser in a single transaction. The
Appraisal provides the fee simple estate values for the Single Family Tracts. See"APPENDIX E—Appraisal of
Property in the District."
The value estimate for the Single Family Tracts using the methodologies described in the Appraisal and
subject to the limiting conditions and assumptions set forth in the Appraisal,as of March 1,2021 is$21,940,000.
The Single Family Tracts are subject to the Assessments and the Improvement Zone B Assessments which
have been assessed in connection with the construction of the Public Improvements and in the issuance of the Bonds
and the Improvement Zone B Bonds. See "ASSESSMENT PROCEDURES — Assessment Methodology" and
"OVERLAPPING TAXES AND DEBT."
54
Commercial Tracts
The Appraiser estimated the aggregate market value of the fee simple interest in various tracts of land
comprising the Commercial Tracts in Improvement Zone A of the District under the hypothetical condition that the
Public Improvements are completed. See"THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS,""PLAN
OF FINANCE" and "THE DEVELOPMENT — Development Plan." The Appraisal does not reflect the as-is
condition of Commercial Tracts as the Public Improvements have not yet been constructed. Moreover, the
Appraisal does not reflect the value of Commercial Tracts as if sold to a single purchaser in a single transaction.
The Appraisal provides the fee simple estate values for the Commercial Tracts. See"APPENDIX E—Appraisal
of Property in the District."
The value estimate of the Commercial Tracts using the methodologies described in the Appraisal and
subject to the limiting conditions and assumptions set forth in the Appraisal,as March 1,2021 is$4,910,000.
Use of Appraisal
None of the City,the Developer,the Financial Advisor,or the Underwriter makes any representation as to
the accuracy, completeness assumptions or information contained in the Appraisal. The assumptions and
qualifications with respect to the Appraisal are contained therein. There can be no assurance that any such
assumptions will be realized and the City, the Developer and the Underwriter make no representation as to the
reasonableness of such assumptions. SEE`BONDHOLDERS'RISKS—Use of Appraisal."
BONDHOLDERS'RISKS
Before purchasing any of the Bonds, prospective investors and their professional advisors should
carefully consider all of the risk factors described below which may create possibilities wherein interest may not
be paid when due or that the Bonds may not be paid at maturity or otherwise as scheduled, or, if paid, without
premium, if applicable. The following risk factors (which are not intended to be an exhaustive listing of all
possible risks associated with an investment in the Bonds)should be carefully considered prior to purchasing any
of the Bonds. Moreover,the order of presentation of the risks summarized below does not necessarily reflect the
significance of such investment risks.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE
PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE
EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST
THE GENERAL CREDIT OR TAXING POWER OF THE CITY AND ARE PAYABLE SOLELY FROM THE
SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE
RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION,
OR OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES AND OTHER FUNDS
COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO
OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE CITY'S
TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION
PREMIUM,IF ANY,THEREON. THE CITY SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY
THE BONDS OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES, AND
OTHER FUNDS COMPRISING THE TRUST ESTATE.
The ability of the City to pay debt service on the Bonds as due is subject to various factors that are beyond
the City's control. These factors include, among others, (a)the ability or willingness of property owners within the
District to pay Assessments levied by the City,(b)cash flow delays associated with the institution of foreclosure and
enforcement proceedings against property within the District,(c)general and local economic conditions which may
impact real property values, the ability to liquidate real property holdings and the overall value of real property
development projects,and(d)general economic conditions which may impact the general ability to market and sell
the lots within the District,it being understood that poor economic conditions within the City, State and region may
slow the assumed pace of sales of such lots.
55
The rate of development of the property in the District is directly related to the vitality of the residential
housing industry. In the event that the sale of the lands within the District should proceed more slowly than
expected and the Developer is unable to pay the Assessments,only the value of the lands,with improvements,will
be available for payment of the debt service on the Bonds, and such value can only be realized through the
foreclosure or liquidation of the lands within the District. There is no assurance that the value of such lands will be
sufficient for that purpose and the liquidation of real property through foreclosure or similar means is generally
considered to yield sales proceeds in a lesser sum than might otherwise be received through the orderly marketing of
such real property.
The Underwriter is not obligated to make a market in or repurchase any of the Bonds,and no representation
is made by the Underwriter,the City or the City's Financial Advisor that a market for the Bonds will develop and be
maintained in the future. If a market does develop,no assurance can be given regarding future price maintenance of
the Bonds.
The City has not applied for or received a rating on the Bonds. The absence of a rating could affect the
future marketability of the Bonds. There is no assurance that a secondary market for the Bonds will develop or that
holders who desire to sell their Bonds prior to the stated maturity will be able to do so.
Assessment Limitations
Annual Installments of Assessments are billed to property owners in the District. Annual Installments are
due and payable,and bear the same penalties and interest for non-payment,as for ad valorem taxes as set forth under
"ASSESSMENT PROCEDURES" herein. Additionally, Annual Installments established by the Service and
Assessment Plan correspond in number and proportionate amount to the number of installments and principal
amounts of Bonds maturing in each year, and the annual collection costs for such year. See "ASSESSMENT
PROCEDURES" herein. The unwillingness or inability of a property owner to pay regular property tax bills as
evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax
payments and Annual Installments of Assessment payments in the future.
In order to pay debt service on the Bonds, it is necessary that Annual Installments are paid in a timely
manner. Due to the lack of predictability in the collection of Annual Installments in the District, the City has
established a Reserve Account in the Reserve Fund, to be funded from the proceeds of the Bonds, to cover
delinquencies. The Annual Installments are secured by the Assessment Lien. However,there can be no assurance
that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Account and
delay in payments of debt service on the Bonds. See `BONDHOLDERS' RISKS —Remedies and Bankruptcy"
herein.
Upon an ad valorem tax lien foreclosure event of a property within the District,any Assessment that is also
delinquent will be foreclosed upon in the same manner as the ad valorem tax lien(assuming all necessary conditions
and procedures for foreclosure are duly satisfied). To the extent that a foreclosure sale results in insufficient funds
to pay in full both the delinquent ad valorem taxes and the delinquent Assessments, the liens securing such
delinquent ad valorem taxes and delinquent Assessments would likely be extinguished. Any remaining unpaid
balance of the delinquent Assessments would then be an unsecured personal liability of the original property owner.
Based upon the language of Texas Local Government Code, §372.017(b), case law relating to other types
of assessment liens and opinions of the Texas Attorney General, the Assessment Lien as it relates to installment
payments that are not yet due should remain in effect following an ad valorem tax lien foreclosure, with future
installment payments not being accelerated. Texas Local Government Code § 372.018(d) supports this position,
stating that an Assessment Lien runs with the land and the portion of an assessment payment that has not yet come
due is not eliminated by foreclosure of an ad valorem tax lien.
The Assessment Lien is superior to any homestead rights of a property owner that were properly claimed
after the adoption of the Assessment Ordinance. However, an Assessment Lien may not be foreclosed upon if any
Pre-existing Homestead Rights were properly claimed prior to the adoption of the Assessment Ordinance for as long
as such Pre-existing Homestead Rights are maintained on the property. It is unclear under Texas law whether or not
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Pre-existing Homestead Rights would prevent the Assessment Lien from attaching to such homestead property or
instead cause the Assessment Lien to attach,but remain subject to,the Pre-existing Homestead Rights.
Under Texas law, in order to establish homestead rights, the claimant must show a combination of both
overt acts of homestead usage and intention on the part of the owner to claim the land as a homestead. Mere
ownership of the property alone is insufficient and the intent to use the property as a homestead must be a present
one, not an intention to make the property a homestead at some indefinite time in the future. As of the date of
adoption of the Assessment Ordinance, no such homestead rights will have been claimed. Furthermore, the
Developer is not eligible to claim homestead rights and the Developer has represented that it owns all property
within the District as of the date of the Assessment Ordinance. Consequently,there are and can be no homestead
rights on the Assessed Parcels superior to the Assessment Lien and, therefore, the Assessment Liens may be
foreclosed upon by the City.
Failure by owners of the parcels to pay Annual Installments when due, depletion of the Reserve Fund,
delay in foreclosure proceedings, or the inability of the City to sell parcels which have been subject to foreclosure
proceedings for amounts sufficient to cover the delinquent installments of Assessments levied against such parcels
may result in the inability of the City to make full or punctual payments of debt service on the Bonds.
THE ASSESSMENTS WILL CONSTITUTE A FIRST AND PRIOR LIEN AGAINST THE PROPERTY
ASSESSED, SUPERIOR TO ALL OTHER LIENS AND CLAIMS EXCEPT LIENS AND CLAIMS FOR STATE,
COUNTY, SCHOOL DISTRICT OR MUNICIPALITY AD VALOREM TAXES AND WILL BE A PERSONAL
OBLIGATION OF AND CHARGE AGAINST THE OWNERS OF ASSESSED PROPERTY LOCATED WITHIN
THE DISTRICT.
The Assessments expected to be levied for payment of the Bonds on the Single Family Tracts and the
Improvement Zone B Assessments which are expected to be levied on the Single Family Tracts and pledged to the
payment of the Improvement Zone B Bonds have a lien of equal priority of the parcels assessed therefor. In the
event of partial payments of the Annual Installments of the Assessments and the Improvement Zone B Assessments
from owners of the parcels in the Single Family Tracts,the Tarrant County Tax Assessor/Collector advises that such
partial payments will be applied to the payment of the Annual Installments of the Assessments and the Improvement
Zone B Assessments on a pro rata basis unless otherwise directed by the payer of such Annual Installments of the
Assessments and the Improvement Zone B Assessments.
Exceedance of Maximum Assessment Could Trigger Bond Redemption
The Service and Assessment Plan establishes a"Maximum Assessment"amount for each Lot Type created
in the District in the Single Family Tracts and the Commercial Tracts. See Exhibit J of"APPENDIX B—Form of
Service and Assessment Plan." In the event that the Maximum Assessment is exceeded at the time of platting, a
mandatory prepayment shall be required as described in See "ASSESSMENT PROCEDURES — Assessment
Amounts—Mandatory Prepayment of Assessments"and"ASSESSMENT PROCEDURES—Assessment Amounts-
Maximum Assessment Amounts." In the event of such prepayments as described thereunder, the City may
optionally redeem the corresponding proportion of the Bonds as provided in the Indenture. See "DESCRIPTION
OF THE BONDS—Redemption Provisions."
Excess TIRZ Revenues Could Trigger Bond Redemption
The City intends to use TIRZ Revenues generated within the District to offset a portion of the Assessments
up to the Maximum Annual TIRZ Credit Amount. In the event that taxable assessed valuation in the District
exceeds the projected values used to calculate the Maximum TIRZ Annual Credit Amount, excess revenues may be
available to the City. Under the Service and Assessment Plan,if the application of the TIRZ Annual Credit Amount
results in excess TIRZ Revenues available in the TIRZ Fund,such excess TIRZ Revenues shall be used either(1)to
prepay a portion of all Assessments on the Assessed Property, and to redeem Bonds pursuant to the extraordinary
redemption provisions of the Indenture,(2)to optionally redeem the outstanding Bonds pursuant to the provisions of
the Indenture,or(3)to be applied in future years in an effort to maintain a level Annual Installment schedule. See
"DESCRIPTION OF THE BONDS — Redemption Provisions" and "APPENDIX B — Form of Service and
Assessment Plan."
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Competition;Real Estate Market
The successful sale of lots to homebuilders and the successful sale of residential units, in turn, by
homebuilders to end users once homes are built within the District, may be affected by unforeseen changes in
general economic conditions, fluctuations in the real estate market and other factors beyond the control of the
Developer. Contracts that the Developer may have with individual homebuilders are subject to a myriad of
contractual conditions and contingencies, all or some of which if not complied with, could precipitate a termination
or winding up of such contractual arrangement for the sale of lots,causing the Developer to possibly need to execute
a different strategy for the development and sale of lots and residential units within the Development. Neither the
Developer nor any other subsequent landowner in the District has any obligation to pay the Assessments. As
described herein, the Assessments are an imposition against the land only. Neither the Developer nor any other
subsequent landowner is a guarantor of the Assessments and the recourse for the failure of the Developer or any
other landowner to pay the Assessments is limited to the collection proceedings against the land as described herein.
TIRZ Annual Credit Amount and Marketing of the Development
Parcels within the Single Family Tracts lie in Improvement Zone A and Improvement Zone B and have
been assessed for the Assessments and the Improvement Zone B Assessments. Single Family Parcels in the District
will thus pay Annual Installments of the Assessments and the Improvement Zone B Assessments. Annual
Installments of only the Assessments shall receive a credit from TIRZ Revenues up to the Maximum TIRZ Annual
Credit Amount as described under"SECURITY FOR THE BONDS—TIRZ Revenues May Reduce Assessments."
The TIRZ Revenues are generated only from ad valorem taxes levied and collected by the City and the County on
the captured appraisal value in the TIRZ in any year. Any delay or failure by the Developer to develop the District
may result in a reduced amount of the T1RZ Revenue being available to credit the Assessments. TIRZ Revenues
generated from the captured appraised value for each parcel in the District during the development of such lot will
result in a TIRZ Annual Credit Amount which is not sufficient to achieve the Targeted Net Average Annual
Installment. The TIRZ Annual Credit Amount is not expected to be sufficient to provide for the Targeted Net
Average Annual Installment on a residential parcel until the second year that a home on such Lot is assessed. The
TIRZ Annual Credit Amount is not expected to be sufficient to provide for the Targeted Net Average Annual
Installment on a commercial parcel until the second year that a completed structure on such Parcel is assessed,
assuming such parcel is developed under the assumptions provided by the Developer as described under the heading
"THE DEVELOPMENT—Development Plan". See"OVERLAPPING TAXES AND DEBT."
It is uncertain what impact, if any,the TIRZ Annual Credit Amount application to the Annual Installments
will have on the underwriting of residential mortgages or in the ability of the Developer to sell or lease commercial
space. If the underwriter of a residential mortgage does not recognize the TIRZ Annual Credit Amount it may make
it more difficult for a borrower to qualify for a home mortgage which could have a negative impact on home sales
and projected absorption. If a potential buyer or lessee of the commercial space, or a lender relating thereto, does
not recognize the TIRZ Annual Credit Amount,it may make it more difficult for such buyer or lessee to purchase or
lease such space,which could have a negative impact on absorption and leasing of commercial development in the
District.
Loss of Tax Exemption
The Indenture contains covenants by the City intended to preserve the exclusion from gross income of
interest on the Bonds for federal income tax purposes. As discussed under the caption"TAX MATTERS" herein,
interest on the Bonds could become includable in gross income for purposes of federal income taxation,retroactive
to the date the Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in
the Indenture.
Tax legislation,administrative actions taken by tax authorities,or court decisions,whether at the Federal or
state level,may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could
affect the market price or marketability of the Bonds. Any such proposal could limit the value of certain deductions
and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted
cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the
foregoing matters.
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Bankruptcy
The payment of Assessments and the ability of the City to foreclose on the lien of a delinquent unpaid
Assessment may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the
laws of the State relating to judicial foreclosure. Although bankruptcy proceedings would not cause the
Assessments to become extinguished, bankruptcy of a property owner in all likelihood would result in a delay in
prosecuting foreclosure proceedings. Such a delay would increase the likelihood of a delay or default in payment of
the principal of and interest on the Bonds,and the possibility that delinquent Assessments might not be paid in full.
Direct and Overlapping Indebtedness,Assessments and Taxes
The ability of an owner of property within the District to pay the Assessments could be affected by the
existence of other taxes and assessments imposed upon the property. Public entities whose boundaries overlap those
of the District currently impose ad valorem taxes on the property within the District and will likely do so in the
future. Such entities could also impose assessment liens on the property within the District. The imposition of
additional liens, or for private financing, may reduce the ability or willingness of the landowners to pay the
Assessments.
Depletion of Reserve Account of Reserve Fund
Failure of the owners of propertywithin the District topaythe Assessments when due could result in the
rapid, total depletion of Reserve Account of the Reserve Fund prior to replenishment from the resale of property
upon a foreclosure or otherwise or delinquency redemptions after a foreclosure sale,if any. There could be a default
in payments of the principal of and interest on the Bonds if sufficient amounts are not available in the Reserve
Account of the Reserve Fund. The Indenture provides that if, after a withdrawal from the Reserve Account of the
Reserve Fund, the amount in the Reserve Account of the Reserve Fund is less than the Reserve Account
Requirement,the Trustee shall transfer an amount from the Pledged Revenue Fund to the Reserve Account of the
Reserve Fund sufficient to cure such deficiency, as described under "SECURITY FOR THE BONDS—Reserve
Account of the Reserve Fund"herein.
Hazardous Substance
While governmental taxes, assessments and charges are a common claim against the value of a parcel,
other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value
that may be realized to the assessment is a claim with regard to a hazardous substance. In general,the owners and
operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of
hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, sometimes referred to as "CERCLA" or"Superfund Act," is the most well-known and widely applicable of
these laws. It is likely that, should any of the parcels of land located in the District be affected by a hazardous
substance,the marketability and value of such parcels would be reduced by the costs of remedying the condition,
because the purchaser,upon becoming owner,will become obligated to remedy the condition just as is the seller.
The value of the land within the District does not take into account the possible liability of the owner(or
operator)for the remedy of a hazardous substance condition of the parcel. The City has not independently verified,
and is not aware,that the owner(or operator) of any of the parcels within the District has such a current liability
with respect to such parcel; however, it is possible that such liabilities do currently exist and that the City is not
aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the land within the
District resulting from the existence, currently, of a substance presently classified as hazardous but which has not
been released or the release of which is not presently threatened, or may arise in the future resulting from the
existence,currently,on the parcel of a substance not presently classified as hazardous but which may in the future be
so classified. Further,such liabilities may arise not simply from the existence of a hazardous substance but from the
method of handling it. The actual occurrence of any of these possibilities could significantly negatively affect the
value of a parcel that is realizable upon a foreclosure.
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See"THE DEVELOPMENT—Environmental" for discussion of the previous Phase One ESA performed
on property within the District.
Regulation
Development within the District may be subject to future federal, state and local regulations. Approval
may be required from various agencies from time to time in connection with the layout and design of development
in the District, the nature and extent of public improvements, land use, zoning and other matters. Failure to meet
any such regulations or obtain any such approvals in a timely manner could delay or adversely affect development in
the District and property values.
Bondholders'Remedies and Bankruptcy
In the event of default in the payment of principal of or interest on the Bonds or the occurrence of any other
Event of Default under the Indenture, and upon the written request of at least 25%the owners of the Bonds, the
Trustee shall proceed to protect and enforce its rights and the rights of the owners of the Bonds under the Indenture
by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or
officer having jurisdiction,either for mandamus or the specific performance of any covenant or agreement contained
therein or in aid or execution of any power granted or for the enforcement of any proper legal or equitable remedy,
as the Trustee shall deem most effectual to protect and enforce such rights. The issuance of a writ of mandamus
may be sought if there is no other available remedy at law to compel performance of the City's obligations under the
Bonds or the Indenture and such obligations are not uncertain or disputed. The remedy of mandamus is controlled
by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no
acceleration of maturity of the Bonds in the event of default and, consequently,the remedy of mandamus may have
to be relied upon from year to year. The owners of the Bonds cannot themselves foreclose on property within the
District or sell property within the District in order to pay the principal of and interest on the Bonds. The
enforceability of the rights and remedies of the owners of the Bonds further may be limited by laws relating to
bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political
subdivisions such as the City. In this regard, should the City file a petition for protection from creditors under
federal bankruptcy laws, the remedy of mandamus or the right of the City to seek judicial foreclosure of its
Assessment Lien would be automatically stayed and could not be pursued unless authorized by a federal bankruptcy
judge. See`BONDHOLDERS'RISKS—Bankruptcy Limitation to Bondholders'Rights"herein.
Any bankruptcy court with jurisdiction over bankruptcy proceedings initiated by or against a property
owner within the District pursuant to the Federal Bankruptcy Code could,subject to its discretion,delay or limit any
attempt by the City to collect delinquent Assessments,or delinquent ad valorem taxes,against such property owner.
In addition, in 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex.
2006) ("Tooke")that a waiver of sovereign immunity must be provided for by statute in"clear and unambiguous"
language. In so ruling,the Court declared that statutory language such as"sue and be sued",in and of itself,did not
constitute a clear and unambiguous waiver of sovereign immunity. In Tooke,the Court noted the enactment in 2005
of sections 271.151-.160, Texas Local Government Code(the"Local Government Immunity Waiver Act"),which,
according to the Court,waives"immunity from suit for contract claims against most local governmental entities in
certain circumstances." The Local Government Immunity Waiver Act covers cities and relates to contracts entered
into by cities for providing goods or services to cities.
On April 1, 2016, the Texas Supreme Court ruled in Wasson Interests, Ltd. v. City of Jacksonville, 489
S.W.3d 427(Tex.2016)that sovereign immunity does not imbue a city with derivative immunity when it performs
proprietary, as opposed to governmental, functions in respect to contracts executed by a city. Texas jurisprudence
has generally held that proprietary functions are those conducted by a city in its private capacity,for the benefit only
of those within its corporate limits, and not as an arm of the government or under the authority or for the benefit of
the state. In its decision, the Court held that since the Local Government Immunity Waiver Act waives
governmental immunity in certain breach of contract claims without addressing whether the waiver applies to a
governmental function or a proprietary function of a city,the Court could not reasonably read the Local Government
Immunity Waiver Act to evidence legislative intent to waive immunity when a city performs a proprietary function.
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The City is not aware of any Texas court construing the Local Government Immunity Waiver Act in the
context of whether contractual undertakings of local governments that relate to their borrowing powers are contracts
covered by such act. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign
immunity from a suit for money damages in the absence of City action,the Trustee or the owners of the Bonds may
not be able to bring such a suit against the City for breach of the Bonds or the Indenture covenants. As noted above,
the Indenture provides that owners of the Bonds may exercise the remedy of mandamus to enforce the obligations of
the City under the Indenture. Neither the remedy of mandamus nor any other type of injunctive relief was at issue in
Tooke, and it is unclear whether Tooke will be construed to have any effect with respect to the exercise of
mandamus, as such remedy has been interpreted by Texas courts. In general, Texas courts have held that a writ of
mandamus may be issued to require public officials to perform ministerial acts that clearly pertain to their duties.
Texas courts have held that a ministerial act is defined as a legal duty that is prescribed and defined with a precision
and certainty that leaves nothing to the exercise of discretion or judgment, though mandamus is not available to
enforce purely contractual duties. However,mandamus may be used to require a public officer to perform legally-
imposed ministerial duties necessary for the performance of a valid contract to which the State or a political
subdivision of the State is a party(including the payment of moneys due under a contract).
No Acceleration
The Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a
payment default or other default under the terms of the Bonds or the Indenture.
Bankruptcy Limitation to Bondholders'Rights
The enforceability of the rights and remedies of the owners of the Bonds may be limited by laws relating to
bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political
subdivisions such as the City. The City is authorized under Texas law to voluntarily proceed under Chapter 9 of the
Federal Bankruptcy Code, 11 U.S.C. 901-946. The City may proceed under Chapter 9 if it (1) is generally not
paying its debts,or unable to meet its debts,as they become due,(2)desires to effect a plan to adjust such debts,and
(3)has either obtained the agreement of or negotiated in good faith with its creditors,is unable to negotiate with its
creditors because negotiation is impracticable, or reasonably believes that a creditor may attempt to obtain a
preferential transfer.
If the City decides in the future to proceed voluntarily under the Federal Bankruptcy Code,the City would
develop and file a plan for the adjustment of its debts, and the Bankruptcy Court would confirm the plan if(1)the
with the applicableprovisions of the Federal Bankruptcy Code, (2) all payments to be made in
plan compliespp p Y P Y
connection with the plan are fully disclosed and reasonable, (3)the City is not prohibited by law from taking any
action necessary to carry out the plan, (4) administrative expenses are paid in full, (5) all regulatory or electoral
approvals required under Texas law are obtained and(6)the plan is in the best interests of creditors and is feasible.
The rights and remedies of the owners of the Bonds would be adjusted in accordance with the confirmed plan of
adjustment of the City's debt.
Management and Ownership
The management and ownership of the Developer and related property owners could change in the future.
Purchasers of the Bonds should not rely on the management experience of such entities. There are no assurances
that such entities will not sell the subject property or that officers will not resign or be replaced. In such
circumstances, a new developer or new officers in management positions may not have comparable experience in
development projects comparable to that of the Development.
General Risks of Real Estate Investment and Development
Investments in undeveloped or developing real estate are generally considered to be speculative in nature
and to involve a high degree of risk. The Development will be subject to the risks generally incident to real estate
investments and development. Many factors that may affect the Development, as well as the operating revenues of
the Developer, including those derived from the Development, are not within the control of the Developer. Such
factors include changes in national,regional and local economic conditions; changes in long and short term interest
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rates; changes in the climate for real estate purchases; changes in demand for or supply of competing properties;
changes in local, regional and national market and economic conditions; unanticipated development costs, market
preferences and architectural trends; unforeseen environmental risks and controls; the adverse use of adjacent and
neighboring real estate;changes in interest rates and the availability of mortgage funds to buyers of the homes to be
built in the Development,which may render the sale of such homes difficult or unattractive;acts of war,terrorism or
other political instability;delays or inability to obtain governmental approvals;changes in laws;moratorium; acts of
God(which may result in uninsured losses);strikes;labor shortages; energy shortages;material shortages;inflation;
adverse weather conditions; contractor or subcontractor defaults; and other unknown contingencies and factors
beyond the control of the Developer. Furthermore, the operating revenues of the Developer may be materially
adversely affected if specific conditions in the lot purchase contracts are not met. Failure to meet the lot purchase
contract's conditions allows the applicable lot purchaser to terminate its obligation to purchase lots from the
Developer and obtain its earnest money deposit back. See "THE DEVELOPMENT — Expected Build-Out
Schedule"herein.
The Development cannot be initiated or completed without the Developer obtaining a variety of
governmental approvals and permits, some of which have already been obtained. Certain permits are necessary to
initiate construction of the Development and to allow the occupancy of residences and to satisfy conditions included
in the approvals and permits. There can be no assurance that all of these permits and approvals can be obtained or
that the conditions to the approvals and permits can be fulfilled. The failure to obtain any of the required approvals
or fulfill any one of the conditions could cause materially adverse financial results for the Developer.
Dependence Upon Developer
The Developer,as the owner of all of the parcels in the District,currently has the obligation for payment of
100%of the Assessments. The ability of the Developer to make full and timely payment of the Assessments will
directly affect the ability of the City to meet its debt service obligations with respect to the Bonds. The only assets
of the Developer are land within the District,related permits and development rights,and minor operating accounts.
The source of funding for future land development activities and infrastructure construction to develop the lots
proposed for the District also consists of proceeds from the Bonds and proceeds of lot sales,as well as possible bank
financing and equity contributions by the Developer. There can be no assurances given as to the financial ability of
the Developer to advance any funds to the City to supplement revenues from the Assessments if necessary,or as to
whether the Developer will advance such funds.
Moreover, the City will pay to the Developer or the Developer's designee costs for a portion of the
Improvement Zone A Public Improvements from proceeds of the Bonds. The Developer will submit reimbursement
requests on a monthly basis for costs actually incurred in developing and constructing the Improvement Zone A
Public Improvements,and be reimbursed in accordance with the Construction,Funding and Acquisition Agreement
and the Indenture. See "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS — General" and "THE
DEVELOPMENT — Development Plan". There can be no assurances given as to the fmancial ability of the
Developer to complete such improvements.
Potential Future Changes in State Law Regarding Public Improvement Districts
In October 2017, the 85th Texas Legislature House of Representatives and the 85th Texas Legislature
Senate issued interim charges to the 85th Texas Legislature House Committee on Special Purpose Districts and the
85th Texas Legislature Senate Intergovernmental Relations Committee (collectively, the "Interim Committees"),
respectively, requesting the study of special purpose districts and potential bond issuance reforms. The charges to
the Interim Committees included review, hearings and testimony related to changes to and oversight of bonds
secured by special assessments.
In December 2018,the 85th Texas Legislature House Committee on Special Purpose Districts released its
Interim Report to the 86th Texas Legislature(the"House SPD Report"). The House SPD Report recommended that
a Senate committee substitute to a bill proposed during the 82nd Texas Legislature in 2011,HB 1400(the"HB 1400
Committee Substitute")which set forth a tiered system for the fmdings required by a county or municipality prior to
the issuance of bonds,be resurrected and re-examined in order to provide oversight for assessment. Under the HB
1400 Committee Substitute:
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• Prior to the issuance of bonds or obligations wholly or partly payable from or secured by
assessments,the governing body of a municipality with a population of 250,000 or less or the governing body of a
county with a population of 1 million or less issuing the bonds or obligations must find and determine the following:
o construction of all underground water, wastewater, and drainage facilities and roadways to
serve the real property liable for assessments necessary to support the payment of the bonds or
obligations is at least 95 percent complete;and
o construction of at least 25 percent of the houses or other buildings on the real property liable
for assessments and necessary to support the bonds or obligations has been completed.
• Prior to the issuance of bonds or obligations wholly or partly payable from or secured by
assessments, a municipality with a population of more than 250,000 or a county with a population of more than 1
million issuing the bonds or obligations must obtain an independent market study from a firm recognized in the area
of real estate market analysis supporting the development projects for the real property liable for assessments and
necessary to support the payment of the bonds or obligations.
The findings of the House SPD Report suggested committee support applying standards similar to those
applied by the Texas Commission of Environmental Quality(the"TCEQ")to bonds issued by municipal utility and
other independent special purpose districts to bonds issued by cities and counties under the PID Act.
In December 2018,the 85th Texas Legislature Senate Intergovernmental Relations Committee released its
Interim Report to the 86th Texas Legislature(the"Senate IGR Report"). The Senate IGR Report found that,based
on testimony received by the committee, standards imposed by cities relating to the issuance of assessment-backed
public improvement district bonds exceeded the standards applied by the TCEQ to bonds issued by municipal utility
and other independent special purpose districts. The Senate IGR Report did not recommend any further action to the
86th Texas Legislature relating to assessment backed bonds.
The Texas Legislature convenes in odd numbered years, and the 86th Texas Legislature convened on
January 8, 2019. The House of Representatives of the 86th Texas Legislature did not convene a House Special
Purpose Districts Committee,and instead transferred portions of its jurisdiction to the 86th Texas Legislature House
Committee on Natural Resources and the 86th Texas Legislature House Committee on Urban Affairs. The Senate of
the 86th Texas Legislature has convened the Intergovernmental Relations Committee. During the session, no
legislation was introduced in the 86th Texas Legislature which proposed the provisions of the HB 1400 Committee
Substitute,and the sine die for the 86th Texas Legislature Regular Session occurred on May 27,2019.
It is impossible to predict what new proposals may be presented regarding the PID Act and the issuance of
special assessment bonds during any upcoming legislative sessions, whether such new proposals or any previous
proposals regarding the same will be adopted by the Texas Senate and House of Representatives and signed by the
Governor,and,if adopted,the form thereof. It is impossible to predict with certainty the impact that any such future
legislation will or may have on the security for the Bonds.
Use of Appraisal
Caution should be exercised in the evaluation and use of valuations included in the Appraisal. The
Appraisal is an estimate of market value as of a specified date based upon assumptions and limiting conditions and
any extraordinary assumptions specific to the relevant valuation and specified therein. The estimated market value
specified in the Appraisal is not a precise measure of value, but is based on a subjective comparison of related
activity taking place in the real estate market. The valuation set forth in the Appraisal is based on various
assumptions of future expectations and while the appraiser's forecasts for properties in the District is considered to
be reasonable at the current time, some of the assumptions may not materialize or may differ materially from actual
experience in the future. The Bonds will not necessarily trade at values determined solely by reference to the
underlying value of the properties in the District.
In performing its analysis, the Appraiser makes numerous assumptions with respect to general business,
economic and regulatory conditions and other matters,many of which are beyond the Appraiser's,Underwriter's and
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City's control,as well as certain factual matters.Furthermore,the Appraiser's analysis,opinions and conclusions are
necessarily based upon market, economic, financial and other circumstances and conditions existing prior to the
valuation and date of the Appraisal.
Exercise of Third Party Property Rights
As described herein under "THE DEVELOPMENT — Existing Mineral Rights, Easements and Other
Third Party Property Rights",third parties hold title to certain Third Party Rights applicable to real property within
and around the District, including reservations of mineral rights and royalty interests and easements, pursuant to
various instruments in the chain of title for various tracts of land within and around the District.
The Developer does not expect the existence or exercise of such Third Party Property Rights or other third
party real property rights in or around the District to have a material adverse effect on the Development,the property
within the District, or the ability of landowners within the District to pay Assessments. However, none of the
District,the City's Financial Advisor,the Underwriter,the Developer or the Administrator provide any assurances
as to such Developer expectations.
Developer Principal Financial Relationships and Other Matters Relating to Developer Affiliates
Investigation of United Development Funding. Mehrdad Moayedi through his company, Centurion, and
various subsidiaries, is involved in the development of master planned residential community and mixed use
projects. Such projects have previously been developed using funding provided by various entities associated with
United Development Funding ("UDF"), including United Development Funding IV, a publicly traded real estate
investment trust,("UDF IV").
Following a series of allegations by Kyle Bass of Hayman Capital Management, L.P., that UDF IV is a
Ponzi scheme, UDF has come under federal investigation. On February 18, 2016, the Federal Bureau of
Investigation(the"FBI")raided the headquarters of UDF in Grapevine,Texas,issued subpoenas to UDF executives,
and removed materials from the UDF offices. No representations or assurances can be made with respect to the
outcome of the FBI's investigation of UDF. The Developer,the City and the Underwriter can make no prediction as
to the ultimate result of the FBI investigation into UDF or, if such enforcement charges are brought, the outcome
thereof, or the affect or the result, if any, the investigation or enforcement may have on the Developer or the
Developer's ability to continue funding the Development.
In connection with governmental investigations of UDF(the"UDF Investigations"), Centurion and certain
of its employees were contacted in mid-2016 to provide certain information to such governmental fact-finders as a
part of an information gathering process on the investigation of UDF. Centurion and its employees fully complied
with the information gathering process. Neither Centurion nor any of its employees or affiliates have received any
information indicating that they are either targets or subjects of any governmental investigation.
Throughout 2016 through 2018, the Centurion entities associated with the Moayedi UDF Projects have
refinanced a portion of the loans made by UDF with financial entities unrelated to UDF and sold certain land
holdings financed by loans from UDF and paid off the related UDF loans with the proceeds of such sales. As of
December 31, 2018, the outstanding balance of loans made by UDF to Centurion entities associated with the
Moayedi UDF Projects is approximately $733,000,000. In addition, Moayedi's personal exposure to the UDF
lending arrangements for the Moayedi UDF Projects is limited to$10,000,000 in the aggregate based on a personal
guarantee. Such guarantee may be called upon in the event of a default under the UDF lending arrangements for the
Moayedi UDF Projects.
No assurances can be given as to the result of the UDF Investigations or any charges related thereto or the
impact, if any, of such result on Moayedi,the operations of Centurion, the Developer's ability to continue funding
the Development.
Public Finance Authority Statler Hilton & Dallas Central Library Bonds (the "Statler Bonds"). An
affiliate of Centurion, Commerce Statler Development, LLC (the "Centurion Affiliate"), is the developer of the
Statler Hilton and Dallas Central Library redevelopment project in Dallas, Texas. The Centurion Affiliate entered
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into a transaction pursuant to which the Centurion Affiliate sold its rights to a grant from the City of Dallas,which
grant was to be funded through a designated portion of ad valorem property tax revenues generated in a tax
increment reinvestment zone located in the City of Dallas(the"TIF Grant"). In connection with the sale transaction,
the Public Finance Authority (Wisconsin) issued its $26,533,298.50 Tax Increment Finance Grant Revenue Bonds
(Statler Hilton&Dallas Central Library), Series 2016 (the"Statler Bonds") secured by an assignment of revenues
from the TIF Grant. In January 2017,the IRS commenced an audit of the Statler Bonds(the"Statler Audit"),and on
July 17, 2017, the Public Finance Authority received a Form 5701-TEB, Notice of proposed Issue (the "Notice")
that contained the proposed conclusion of the IRS that the interest on the Statler Bonds is not excluded from gross
income for federal income tax purposes. In connection with the Statler Audit, the Public Finance Authority
received,responded to, and complied with certain information requests from the IRS. Subsequent to the receipt of
the Notice, the Public Finance Authority continued to challenge the IRS tentative adverse determination.
Discussions with the IRS as to the correctness of its concerns have continued to date. On October 16, 2019, the
Public Finance Authority completed a taxable refunding of the Statler Bonds through the issuance of its
$38,656,615.80 aggregate principal amount of the"Public Finance Authority Tax Increment Grant Revenue Bonds
(Statler Hilton & Dallas Central Library), Taxable Series 2019 (the "Taxable Statler Refunding Bonds"). In
connection with the issuance of the Taxable Statler Refunding Bonds, the Public Finance Authority entered into
settlement discussions with the IRS relating to the Statler Audit and a settlement agreement between the IRS and the
Public Finance Authority is in discussion. No assurance can be given as to the timing of any final settlement
agreement,or whether a settlement agreement will be consummated,relating to the Statler Audit.
While the Developer and the Centurion Affiliate are under the common control of Centurion,the Centurion
Affiliate does not own property in the District and is not associated with the Development or with the Bonds;
however,the Developer,the City,and the Underwriter can make no prediction as to the ultimate result of the Statler
Audit, or the impact, if any, of the Statler Audit may have on the Developer or the Developer's ability to continue
funding the Development. However,the Developer believes that any effect on the Development will be immaterial.
Litigation Involving Developer Principal And Affiliates Relating To Development Projects.
Westlake Entrada Project. Certain separate affiliates of Centurion owned or controlled by Mehrdad
Moayedi(the"Centurion Entrada Entities")are the principal developers of a mixed use project in Westlake,Texas,
known as Entrada (the "Entrada Project"). Funding for the Entrada Project included, among other items in the
capital stack, moneys obtained by the Centurion Entrada Entities through the EB-5 program and Public
Improvement district bonds issued by the Town of Westlake. In August 2018, a minority owner of one Centurion
Entrada Entity, acting through the corporate entity FZ WLRW, LLC (the "Entrada Plaintiff'), brought suit (the
"Entrada Suit") against Centurion, the Centurion Entrada Entities, Mehrdad Moayedi (collectively, the"Centurion
Entrada Defendants") and other parties involved in structuring the financing of the Entrada Project (the "Entrada
Financing Parties") in the District Court in Tarrant County, Texas in the 342"d Judicial District (Cause No. 342-
302221-18). The Entrada Plaintiff alleges that Centurion wrongfully terminated the Entrada Plaintiff as manager of
the Entrada Project, that development of the Entrada Project has slowed due to mismanagement of the Entrada
Project,and that the Centurion Entrada Entities have misused EB-5 loan funds and diverted funds from the Town of
Westlake Public Improvement district bonds to other projects. The Entrada Suit sets forth claims of fraud,
fraudulent inducement,breach of fiduciary duty,and aiding and abetting breach of fiduciary duty as a result of such
actions against the Centurion Entrada Defendants and the Entrada Financing parties relating to the Entrada Project.
The Centurion Entrada Defendants have denied the claims of the Entrada Plaintiff in court filings relating to the
Entrada Suit. Discovery motions continue to be served in the Entrada Suit and a trial date has initially been set for
April 2020.
While the Developer and the Centurion Entrada Entities are under common control of Centurion, the
Centurion Entrada Entities do not own property in the District and are not associated with the Development or with
the Bonds;however,the Developer,the City,and the Underwriter can make no prediction as to the ultimate result of
the Entrada Suit,or the impact,if any, of the Entrada Suit may have on the Developer or the Developer's ability to
continue funding the Development.
Megatel Homes Lawsuit. On June 18, 2019,Megatel Homes,LLC,Megatel Homes II,LLC and Megatel
Homes III, LLC (collectively, the "Megatel Homes Parties") filed a lawsuit styled No. DC-19-08774, Megatel
Homes,LLC et al. v. United Development Funding L.P. et al., in the 160th Judicial District Court, Dallas County,
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Texas against various funds and entities associated with and controlled by UDF, various affiliates of CADG
indirectly owned and controlled by Mehrdad Moayedi(the"Centurion Megatel Defendants"), and various affiliates
of Buffington Land Group, Ltd. (the "Buffington Megatel Defendants") which is not owned and controlled, or
otherwise affiliated with,Mehrdad Moayedi.
The Megatel Homes Lawsuit alleges that Megatel Homes Parties,UDF, CADG(and the various Centurion
Megatel Defendants) and the Buffington Megatel Defendants were in a de facto partnership under which UDF
financed the purchase and development of land to be developed into finished lots by the Centurion Megatel
Defendants and the Buffington Megatel Defendants, which finished lots would in turn be purchased from the
Centurion Megatel Defendants and the Buffington Megatel Defendants by the Megatel Homes Parties with
financing also provided by UDF. The Megatel Homes Lawsuit sets forth five causes of action against various
Centurion Megatel Defendants including breach of fiduciary duties,conspiracy to breach fiduciary duties,breach of
the duty of good faith and fair dealing, and two counts of breach of contract. The causes of action are in part based
on allegations by the Megatel Parties that, primarily during the years 2011-2014, (i) various Centurion Megatel
Defendants and UDF conspired to cut the Megatel Parties out of partnership projects so that the Centurion Megatel
Defendants could liquidate them as unfinished lots to different homebuilders and thereby pay their debts to UDF and
(ii)that in early 2017,various Centurion Megatel Defendants and UDF pressured the Megatel Parties to release their
rights to finished lots that the Megatel Parties were entitled to purchase upon issuance of a notice of substantial
completion,thereby causing substantial lost profits to the Megatel Parties. The Megatel Homes lawsuit seeks over
$100 million dollars in damages. Discovery in the Megatel Homes lawsuit has begun and trial will be initially
scheduled for November 2020.
While the Developer and the Centurion Megatel Defendants are under common control of CADG, the
Centurion Megatel Defendants do not own property in the District and are not associated with the Development or
with the Bonds. The Developer and Centurion Megatel Defendants unequivocally deny any liability and represent
that they will vigorously defend the Megatel Homes Lawsuit however,the Developer,the City,and the Underwriter
can make no prediction as to the ultimate result of the Megatel Homes Lawsuit or the impact,if any,of the Megatel
Homes Lawsuit may have on the Developer or the Developer's ability to continue funding the Development.
TAX MATTERS
Tax Exemption
The delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that 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 of such opinion(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 A form of Bond Counsel's opinion is reproduced as
APPENDIX C. The statutes,regulations,rulings,and court decisions on which such opinion is based are subject to
change.
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 pertaining to the use,expenditure,and investment
of the proceeds of the Bonds and will assume continuing compliance by the City with the provisions of the Indenture
subsequent to the issuance of the Bonds. The Indenture contains covenants by the City with respect to,among other
matters,the use of the proceeds of the Bonds and the facilities financed therewith by persons other than state or local
governmental units,the manner in which the proceeds of the Bonds are to be invested,the periodic calculation and
payment to the United States Treasury of arbitrage"profits" from the investment of proceeds, and the reporting of
certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest
on the Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the Bonds.
Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its
review of existing statutes,regulations,published rulings and court decisions and the representations and covenants
of the City described above. No ruling has been sought from the Internal Revenue Service(the"IRS")with respect
to the matters addressed in the opinion of Bond Counsel, and Bond Counsel's opinion is not binding on the IRS.
The IRS has an ongoing program of auditing the tax-exempt status of the interest on tax-exempt obligations. If an
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audit of the Bonds is commenced,under current procedures the IRS is likely to treat the City as the"taxpayer,"and
the owners of the Bonds would have no right to participate in the audit process. In responding to or defending an
audit of the tax-exempt status of the interest on the Bonds,the City may have different or conflicting interests from
the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and
liquidity of the Bonds during the pendency of the audit,regardless of its ultimate outcome.
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. Prospective purchasers of the Bonds should be aware that
the ownership of tax-exempt obligations such as the Bonds 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, owners of an interest in a financial asset securitization investment trust ("FASIT"), 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.
Existing law may change to reduce or eliminate the benefit to bondholders of the exclusion of interest on
the Bonds from gross income for federal income tax purposes. Any proposed legislation or administrative action,
whether or not taken, could also affect the value and marketability of the Bonds. Prospective purchasers of the
Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law.
Tax Accounting Treatment of Discount and Premium on Certain Bonds
The initial public offering price of certain Bonds (the "Discount Bonds") may be less than the amount
payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a
Discount Bond(assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at
such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such
Discount Bond. A portion of such original issue discount allocable to the holding period of such Discount Bond by
the initial purchaser will, upon the disposition of such Discount Bond (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 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 Bond,taking into account the semiannual compounding of accrued interest,at the yield to
maturity on such Discount Bond and generally will be allocated to an initial purchaser in a different amount from the
amount of the payment denominated as interest actually received by the initial purchaser during the tax year.
However, such interest may be required to be taken into account in determining 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 the earned income tax credit, owners
of an interest in a FASIT,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 Bond by the initial owner prior to maturity, the
amount realized by such owner in excess of the basis of such Discount Bond in the hands of such owner(adjusted
upward by the portion of the original issue discount and downward for the payments denominated as interest
allocable to the period for which such Discount Bond was held)is includable in gross income.
Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of
accrued original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and
local tax consequences of owning and disposing of Discount Bonds. It is possible that,under applicable provisions
governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be
received in the year of accrual even though there will not be a corresponding cash payment.
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The initial public offering price of certain Bonds (the"Premium Bonds")may be greater than the amount
payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a
Premium Bond(assuming that a substantial amount of the Premium Bonds 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 Bonds.
The basis for federal income tax purposes of a Premium Bond 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 Bond. 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 Bonds should consult with their own tax advisors with respect to the
determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to
the state and local tax consequences of owning and disposing of Premium Bonds.
LEGAL MATTERS
Legal Proceedings
Delivery of the Bonds will be accompanied by the unqualified approving legal opinion of the Attorney
General to the effect that the Bonds are valid and legally binding obligations of the City under the Constitution and
laws of the State, payable from the Trust Estate and, based upon their examination of a transcript of certified
proceedings relating to the issuance and sale of the Bonds,the legal opinion of Bond Counsel,to a like effect.
Norton Rose Fulbright US LLP serves as Bond Counsel to the City. Winstead PC serves as Underwriter's
Counsel. The legal fees paid to Bond Counsel and Underwriter's Counsel are contingent upon the sale and delivery
of the Bonds.
Legal Opinions
The City will furnish the Underwriter a transcript of certain certified proceedings incident to the
authorization and issuance of the Bonds. Such transcript will include a certified copy of the approving opinion of
the Attorney General of Texas,as recorded in the Bond Register of the Comptroller of Public Accounts of the State,
to the effect that the Bonds are valid and binding special obligations of the City. The City will also furnish the legal
opinion of Bond Counsel,to the effect that,based upon an examination of such transcript,the Bonds are valid and
binding special obligations of the City under the Constitution and laws of the State. The legal opinion of Bond
Counsel will further state that the Bonds, including principal thereof and interest thereon, are payable from and
secured by a pledge of and lien on the Pledged Revenues. Bond Counsel will also provide a legal opinion to the
effect that interest on the Bonds will be excludable from gross income for federal income tax purposes under
Section 103(a)of the Code, subject to the matters described above under the caption"TAX MATTERS."A copy of
the opinion of Bond Counsel is attached hereto as"APPENDIX C—Form of Opinion of Bond Counsel."
Except as noted below, Bond Counsel did not take part in the preparation of the Limited Offering
Memorandum,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 in the Limited Offering Memorandum under the captions or subcaptions
"PLAN OF FINANCE — The Bonds", "DESCRIPTION OF THE BONDS," "SECURITY FOR THE BONDS"
(except for the last paragraph under the subcaption "General"), "ASSESSMENT PROCEDURES" (except for the
subcaptions "Assessment Methodology" and "Assessment Amounts"), "THE DISTRICT," "TAX MAT1hRS,"
"LEGAL MATTERS — Legal Proceedings," "LEGAL MATTERS — Legal Opinions," "SUITABILITY FOR
INVESTMENT," "CONTINUING DISCLOSURE" (except the subcaption "The Developer"), "REGISTRATION
AND QUALIFICATION OF BONDS FOR SALE,""LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS"and APPENDIX A and such firm is of the opinion that the information relating to the
Bonds, the Bond Ordinance, the Assessment Ordinance and the Indenture contained therein fairly and accurately
describes the laws and legal issues addressed therein and,with respect to the Bonds, such information conforms to
the Bond Ordinance,the Assessment Ordinance and the Indenture.
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The various legal opinions to be delivered concurrently with the delivery of the Bonds express the
professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In
rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional
judgment,of the transaction opined upon,or of the future performance of the parties to the transaction. Nor does the
rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.
Litigation—The City
At the time of delivery and payment for the Bonds, the City will certify that, except as disclosed herein,
there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory
agency,public board or body,pending or overtly threatened against the City affecting the existence of the District,
or seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the proceeds thereof, in
accordance with the Indenture, or the collection or application of Assessments securing the Bonds, or in any way
contesting or affecting the validity or enforceability of the Bonds, the Assessment Ordinance, the Indenture, any
action of the City contemplated by any of the said documents, or the collection or application of the Pledged
Revenues, or in any way contesting the completeness or accuracy of this Limited Offering Memorandum or any
amendment or supplement thereto,or contesting the powers of the City or its authority with respect to the Bonds or
any action of the City contemplated by any documents relating to the Bonds.
Litigation—The Developer
At the time of delivery and payment for the Bonds, the Developer will certify that, except as disclosed
herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,
regulatory body, public board or body pending, or, to the best knowledge of the Developer, threatened against or
affecting the Developer wherein an unfavorable decision,ruling or finding would have a material adverse effect on
the financial condition or operations of the Developer or its general partner or would adversely affect (i) the
transactions contemplated by,or the validity or enforceability of,the Bonds,the Indenture,the Bond Ordinance,the
Service and Assessment Plan,the Construction,Funding,and Acquisition Agreement,the Development Agreement,
or the Bond Purchase Agreement, or otherwise described in this Limited Offering Memorandum, or (ii) the tax-
exempt status of interest on the Bonds(individually or in the aggregate,a"Material Adverse Effect"). Additionally,
Mr. Mehrdad Moayedi and his affiliated entities have been and are parties to pending and threatened litigation
related to their commercial and real estate development activities. Such litigation occurs in the ordinary course of
business and is not expected to have a Material Adverse Effect.
For a description of litigation and other matters related to affiliated entities of CADG, see
"BONDHOLDERS' RISKS — Developer Principal Financial Relationships and Other Matters Relating to
Developer Affiliates."
SUITABILITY FOR INVESTMENT
Investment in the Bonds poses certain economic risks. See`BONDHOLDERS' RISKS". The Bonds are
not rated by any nationally recognized municipal securities rating service. No dealer, broker, salesman or other
person has been authorized by the City or the Underwriter to give any information or make any representations,
other than those contained in this Limited Offering Memorandum, and, if given or made, such other information or
representations must not be relied upon as having been authorized by either of the foregoing. Additional
information will be made available to each prospective investor, including the benefit of a site visit to the City and
the opportunity to ask questions of the Developer,as such prospective investor deems necessary in order to make an
informed decision with respect to the purchase of the Bonds.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Bonds upon an event of default under the Indenture are in
many respects dependent upon judicial actions, which are often subject to discretion and delay. See
"BONDHOLDERS' RISKS —Remedies and Bankruptcy." Under existing constitutional and statutory law and
judicial decisions, including the federal bankruptcy code, the remedies specified by the Indenture and the Bonds
may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the
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delivery of the Bonds will be qualified, as to the enforceability of the remedies provided in the various legal
instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the
rights of creditors and enacted before or after such delivery.
NO RATING
No application for a rating on the Bonds has been made to any rating agency, nor is there any reason to
believe that the City would have been successful in obtaining an investment grade rating for the Bonds had
application been made.
CONTINUING DISCLOSURE
The City
Pursuant to Rule 15c2-12 of the United States Securities and Exchange Commission(the"Rule"),the City
and FSC Continuing Disclosure Services,a division of Hilltop Securities,Inc. (in such capacity,the"Dissemination
Agent")have entered into a Continuing Disclosure Agreement(the"City Disclosure Agreement")for the benefit of
the Owners of the Bonds (including owners of beneficial interests in the Bonds), to provide, by certain dates
prescribed in the City Disclosure Agreement, certain financial information and operating data relating to the City
(collectively,the"City Reports"). The specific nature of the information to be contained in the City Reports is set
forth in"APPENDIX D-1 —Form of City Disclosure Agreement." Under certain circumstances,the failure of the
City to comply with its obligations under the City Disclosure Agreement constitutes an event of default thereunder.
Such a default will not constitute an event of default under the Indenture, but such event of default under the City
Disclosure Agreement would allow the Owners of the Bonds(including owners of beneficial interests in the Bonds)
to bring an action for specific performance.
The City has agreed to update information and to provide notices of certain specified events only as
provided in the City Disclosure Agreement. 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 in this Limited Offering Memorandum, except as provided in the City
Disclosure Agreement. The City makes no representation or warranty concerning such information or concerning
its usefulness to a decision to invest in or sell the Bonds at any future date. The City disclaims any contractual or
tort liability for damages resulting in whole or in part from any breach of the City Disclosure Agreement or from
any statement made pursuant to the City Disclosure Agreement.
The Developer
The Developer,the Administrator, and the Dissemination Agent have entered into a Continuing Disclosure
Agreement(the"Developer Disclosure Agreement") for the benefit of the Owners of the Bonds (including owners
of beneficial interests in the Bonds),to provide,by certain dates prescribed in the Developer Disclosure Agreement,
certain information regarding the Development and the Improvement Zone A Public Improvements(collectively,the
"Developer Reports"). The specific nature of the information to be contained in the Developer Reports is set forth
in"APPENDIX D-2—Form of Developer Disclosure Agreement." Under certain circumstances,the failure of the
Developer or the Assessment Consultant to comply with its obligations under the Developer Disclosure Agreement
constitutes an event of default thereunder. Such a default will not constitute an event of default under the Indenture,
but such event of default under the Developer Disclosure Agreement would allow the Owners of the Bonds
(including owners of beneficial interests in the Bonds)to bring an action for specific performance. The Developer
Disclosure Agreement is a voluntary agreement made for the benefit of the holders of the Bonds and is not entered
into pursuant to the Rule.
The Developer has agreed to provide(i)certain updated information to the Administrator,which consultant
will prepare and provide such updated information in report form and(ii)notices of certain specified events,only as
provided in the Developer Disclosure Agreement. The Developer 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 in this Limited Offering Memorandum, except as provided in
the Developer Disclosure Agreement. The Developer makes no representation or warranty concerning such
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information or concerning its usefulness to a decision to invest in or sell the Bonds at any future date. The
Developer disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of the
Developer Disclosure Agreement or from any statement made pursuant to the Developer Disclosure Agreement.
UNDERWRITING
FMSbonds,Inc. (the"Underwriter")has agreed to purchase the Bonds from the City at a purchase price of
$ (the par amount of the Bonds, less a reoffering discount of$ less an underwriting
discount of $ , which includes Underwriter's Counsel's fee of $ ). The Underwriter's
obligations are subject to certain conditions precedent and if obligated to purchase any of the Bonds the Underwriter
will be obligated to purchase all of the Bonds. The Bonds may be offered and sold by the Underwriter at prices
lower than the initial offering prices stated on the inside cover page hereof, and such initial offering prices may be
changed from time to time by the Underwriter.
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE
The sale of the Bonds 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 have not been qualified under
the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been
qualified under the securities acts of any other jurisdiction. The City assumes no responsibility for qualification of
the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged,
hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other
disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any
exemption from securities registration provisions.
LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
The PID Act and Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas
Government Code, as amended) provide that the Bonds are negotiable instruments and investment securities
governed by Chapter 8,Texas Business and Commerce Code,as amended,and are legal and authorized investments
for insurance companies, fiduciaries, trustees, or for the sinking funds of municipalities or other political
subdivisions or public agencies of the State. With respect to investment in the Bonds by municipalities or other
political subdivisions or public agencies of the State,the PFIA requires that the Bonds be assigned a rating of at least
"A"or its equivalent as to investment quality by a national rating agency. See"NO RATING"above. In addition,
the PID Act and various provisions of the Texas Finance Code provide that, subject to a prudent investor standard,
the Bonds are legal investments for state banks,savings banks,trust companies with capital of one million dollars or
more, and savings and loan associations. The Bonds are eligible to secure deposits to the extent of their market
value. No review by the City has been made of the laws in other states to determine whether the Bonds are legal
investments for various institutions in those states. No representation is made that the Bonds will be acceptable to
public entities to secure their deposits or acceptable to such institutions for investment purposes.
The City made no investigation of other laws,rules,regulations or investment criteria which might apply to
such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or
limit the authority of such institutions or entities to purchase or invest in the Bonds for such purposes.
INVESTMENTS
The City invests its funds in investments authorized by Texas law in accordance with investment policies
approved by the City Council. Both Texas law and the City's investment policies are subject to change.
Under Texas law,the City is authorized to invest in(1)obligations of the United States or its agencies and
instrumentalities, including letters of credit; (2) direct obligations of the State 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 and interest of which are unconditionally guaranteed or insured by or backed by the full
71
faith and credit of; the State or the United States or their respective agencies and instrumentalities, including
obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full
faith and credit of the United States; (5) obligations of states, agencies, counties, cities, and other political
subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less
than A or its equivalent;(6)bonds issued,assumed or guaranteed by the State of Israel;(7)interest-bearing banking
deposits that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National
Credit Union Share Insurance Fund or its successor,(8)certificates of deposit and share certificates(i)issued by or
through an institution that either has its main office or a branch office in the State,and are guaranteed or insured by
the Federal Deposit Insurance Corporation or the National Credit Union Insurance Fund, or are secured as to
principal by obligations described in the clauses(1)through(6)or in any other manner and amount provided by law
for City deposits,or(ii)where(a)the funds are invested by the City through(I)a broker that has its main office or a
branch office in the State and is selected from a list adopted by the City as required by law or (II) a depository
institution that has its main office or a branch office in the State that is selected by the City; (b)the broker or the
depository institution selected by the City arranges for the deposit of the funds in certificates of deposit in one or
more federally insured depository institutions, wherever located, for the account of the City; (c)the full amount of
the principal and accrued interest of each of the certificates of deposit is insured by the United States or an
instrumentality of the United States, and(d)the City appoints the depository institution selected under(a) above, a
custodian as described by Section 2257.041(d)of the Texas Government Code,or a clearing broker-dealer registered
with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule
15c3-3 (17 C.F.R. Section 240.15c3-3) as custodian for the City with respect to the certificates of deposit; (9)fully
collateralized repurchase agreements that have a defined termination date, are fully secured by a combination of
cash and obligations described in clause(1)which are pledged to the City,held in the City's name,and deposited at
the time the investment is made with the City or with a third party selected and approved by the City and are placed
through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing
business in the State; (10) securities lending programs if(i) the securities loaned under the program are 100%
collateralized,a loan made under the program allows for termination at any time and a loan made under the program
is either secured by (a) obligations that are described in clauses (1) through (6) above, (b) irrevocable letters of
credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm
at not less than A or its equivalent or (c) cash invested in obligations described in clauses (1) through (6) above,
clauses(12)through(14)below,or an authorized investment pool; (ii) securities held as collateral under a loan are
pledged to the City,held in the City's name and deposited at the time the investment is made with the City or a third
party designated by the City; (iii) a loan made under the program is placed through either a primary government
securities dealer or a financial institution doing business in the State; and(iv)the agreement to lend securities has a
term of one year or less,(11)certain 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-1 or P-1 or the equivalent by at least one
nationally recognized credit rating agency, (12) commercial paper with a stated maturity of 270 days or less that is
rated at least A-1 or P-1 or the equivalent by either(a)two nationally recognized credit rating agencies or(b) one
nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a
U.S. or state bank, (13) no-load money market mutual funds registered with and regulated by the Securities and
Exchange Commission that comply with federal Securities and Exchange Commission Rule 2a-7, and(14)no-load
mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of
less than two years,and have a duration of one year or more and are invested exclusively in obligations described in
this paragraph or have a duration of less than one year and the investment portfolio is limited to investment grade
securities, excluding asset-backed securities. In addition,bond proceeds may be invested in guaranteed investment
contracts that have a defined termination date and are secured by obligations, including letters of credit, of the
United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds
invested under such contract,other than the prohibited obligations described in the next succeeding paragraph.
The City may invest in such obligations directly or through government investment pools that invest solely
in such obligations provided that the pools are rated no lower than"AAA"or"AAA-m"or an equivalent by at least
one nationally recognized rating service. The City may also contract with an investment management firm
registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.)or with the State Securities
Board to provide for the investment and management of its public funds or other funds under its control for a term
up to two years, but the City retains ultimate responsibility as fiduciary of its assets. In order to renew or extend
such a contract, the City must do so by order, ordinance, or resolution. The City is specifically prohibited from
investing in: (1)obligations whose payment represents the coupon payments on the outstanding principal balance of
72
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.
Political subdivisions such as the City are authorized to implement securities lending programs if(i) the
securities loaned under the program are 100%collateralized, a loan made under the program allows for termination
at any time and a loan made under the program is either secured by (a) obligations that are described in clauses
(1)through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or
national bank that is continuously rated by a nationally recognized investment rating firm not less than"A" or its
equivalent, or(c) cash invested in obligations that are described in clauses (1)through(6) and(10)through(12)of
the first paragraph under this subcaption, or an authorized investment pool; (ii) securities held as collateral under a
loan are pledged to the governmental body,held in the name of the governmental body and deposited at the time the
investment is made with the City or a third party designated by the City; (iii) a loan made under the program is
placed through either a primary government securities dealer or a financial institution doing business in the State;
and(iv)the agreement to lend securities has a term of one year or less.
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, the
maximum allowable stated maturity of any individual investment,the maximum average dollar-weighted maturity
allowed for pooled fund groups, methods to monitor the market price of investments acquired with public funds, a
requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus
payment basis, and procedures to monitor rating changes in investments acquired with public funds and the
liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a
formally adopted "Investment Strategy Statement" that specifically addresses each fund's 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.
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, the ending market value and the fully accrued interest for the reporting
period of each pooled fund group,(4)the book value and market value of each separately listed asset and fund type
invested at the beginning and end of the reporting period by the type of asset and fund type invested,(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.
Under Texas law the City is additionally required to:(1)annually review its adopted policies and strategies;
(2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment
strategies and records any changes made to either its investment policy or investment strategy in the respective rule,
order, ordinance or resolution; (3)require any investment officers' with personal business relationships or relatives
with firms seeking to sell securities to the City to disclose the relationship and file a statement with the Texas Ethics
Commission and the City Council; (4)require the registered principal of firms seeking to sell securities to the City
to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures
have been implemented to preclude investment transactions conducted between the City and the business
organization that are not authorized by the City's investment policy (except to the extent that this authorization is
dependent on an analysis of the makeup of the City's entire portfolio or requires an interpretation of subjective
investment standards), and (c) deliver a written statement attesting to these requirements; (5) perform an annual
audit of the management controls on investments and adherence to the City's investment policy;(6)provide specific
73
investment training for the officers of the City; (7)restrict reverse repurchase agreements to not more than 90 days
and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse
repurchase agreement; (8)restrict the investment in no-load mutual funds in the aggregate 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; (9) require local government investment pools to conform to the new disclosure, rating, net asset value,
yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of
qualified brokers that are authorized to engage in investment transactions with the City.
INFORMATION RELATING TO THE TRUSTEE
The City has appointed Wilmington Trust, National Association, a national banking association organized
under the laws of the United States, to serve as Trustee. The Trustee is to carry out those duties assignable to it
under the Indenture. Except for the contents of this section, the Trustee has not reviewed or participated in the
preparation of this Limited Offering Memorandum and assumes no responsibility for the contents,accuracy,fairness
or completeness of the information set forth in this Limited Offering Memorandum or for the recitals contained in
the Indenture or the Bonds,or for the validity,sufficiency,or legal effect of any of such documents.
Furthermore,the Trustee has no oversight responsibility, and is not accountable, for the use or application
by the City of any of the Bonds authenticated or delivered pursuant to the Indenture or for the use or application of
the proceeds of such Bonds by the City. The Trustee has not evaluated the risks, benefits, or propriety of any
investment in the Bonds and makes no representation, and has reached no conclusions, regarding the value or
condition of any assets or revenues pledged or assigned as security for the Bonds, the technical or financial
feasibility of the project,or the investment quality of the Bonds,about all of which the Trustee expresses no opinion
and expressly disclaims the expertise to evaluate.
Additional information about the Trustee may be found at its website at www.wilmingtontrust.com.
Neither the information on the Trustee's website,nor any links from that website,is a part of this Limited Offering
Memorandum,nor should any such information be relied upon to make investment decisions regarding the Bonds.
SOURCES OF INFORMATION
General
The information contained in this Limited Offering Memorandum has been obtained primarily from the
City's records,the Developer and its representatives and other sources believed to be reliable. In accordance with
its responsibilities under the federal securities law, the Underwriter has reviewed the information in this Limited
Offering Memorandum in accordance with,and as part of,its responsibilities to investors under the federal securities
laws as applied to the facts and circumstances of the transaction, but the Underwriter does not guarantee the
accuracy or completeness of such information. The information and expressions of opinion herein are subject to
change without notice, and neither the delivery of this Limited Offering Memorandum or any sale hereunder will
create any implication that there has been no change in the financial condition or operations of the City or the
Developer described herein since the date hereof. This Limited Offering Memorandum contains, in part, estimates
and matters of opinion that are not intended as statements of fact,and no representation or warranty is made as to the
correctness of such estimates and opinions or that they will be realized. The summaries of the statutes,resolutions,
ordinances, indentures and engineering and other related reports set forth herein are included subject to all of the
provisions of such documents. These summaries do not purport to be complete statements of such provisions and
reference is made to such documents for further information.
Source of Certain Information
The information contained in this Limited Offering Memorandum relating to the description of the
Improvement Zone A Public Improvements, the Development and the Developer generally and, in particular, the
information included in the sections captioned "THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS,"
"THE DEVELOPMENT," "THE DEVELOPER," "BONDHOLDERS' RISKS" (only as it pertains to the
Developer, the Improvement Zone A Public Improvements and the Development) and "LEGAL MATTERS —
Litigation—The Developer"has been provided by the Developer.
74
Experts
The information regarding the Service and Assessment Plan in this Limited Offering Memorandum has
been provided by P3Works,LLC.and has been included in reliance upon the authority of such firm as experts in the
field of development planning and finance.
The information regarding the Appraisal in this Limited Offering Memorandum has been provided by
Integra Realty Resources—DFW,and has been included in reliance upon the authority of such firm as experts in the
field of the appraisal of real property.
Updating of Limited Offering Memorandum
If, subsequent to the date of the Limited Offering Memorandum, the City learns, through the ordinary
course of business and without undertaking any investigation or examination for such purposes,or is notified by the
Underwriter,of any adverse event which causes the Limited Offering Memorandum to be materially misleading,and
unless the Underwriter elects to terminate its obligation to purchase the Bonds,the City will promptly prepare and
supply to the Underwriter an appropriate amendment or supplement to the Limited Offering Memorandum
satisfactory to the Underwriter; provided, however, that the obligation of the City to so amend or supplement the
Limited Offering Memorandum will terminate when the City delivers the Bonds to the Underwriter, unless the
Underwriter notifies the City on or before such date that less than all of the Bonds have been sold to ultimate
customers;in which case the City's obligations hereunder will extend for an additional period of time(but not more
than 90 days after the date the City delivers the Bonds)until all of the Bonds have been sold to ultimate customers.
FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Limited Offering Memorandum constitute
"forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of
1995, Section 21e of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act. Such statements are generally identifiable by the terminology used such as "plan," "expect,"
"estimate,""project,""anticipate,""budget"or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS DESCRIBED HEREIN TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-
LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO
THOSE FORWARD-LOOKING STATLMENTS IF OR WHEN ANY OF ITS EXPECTATIONS, OR EVENTS,
CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER
THAN AS DESCRIBED UNDER"CONTINUING DISCLOSURE"HEREIN.
AUTHORIZATION AND APPROVAL
The City Council has approved by resolution the form and content of this preliminary Limited Offering
Memorandum and the City Council has authorized this preliminary Limited Offering Memorandum to be used by
the Underwriter in connection with the marketing and sale of the Bonds. In the Bond Ordinance,the City Council
will approve the form and content of the final Limited Offering Memorandum.
75
(THIS PAGE IS INTENTIONALLY LEFT BLANK.)
APPENDIX A
FORM OF INDENTURE
(THIS PAGE IS INTENTIONALLY LEFT BLANK.)
APPENDIX B
FORM OF SERVICE AND ASSESSMENT PLAN
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX C
FORM OF OPINION OF BOND COUNSEL
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX D-1
FORM OF CITY DISCLOSURE AGREEMENT
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX D-2
FORM OF DEVELOPER DISCLOSURE AGREEMENT
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX E
APPRAISAL OF PROPERTY IN THE DISTRICT
THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX F
FORM OF CONSTRUCTION,FUNDING,AND ACQUISITION AGREEMENT
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
APPENDIX G
FORM OF DEVELOPMENT AGREEMENT
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
NEW ISSUE • NOT RATED
PRELIMINARY LIMITED OFFERING MEMORANDUM DATED NOVEMBER_,2019
g
• PROSPECTIVE PURCHASERS ARE ADVISED THAT THE BONDS BEING OFFERED PURSUANT TO THIS LIMITED MEMORANDUM ARE BEING OFFERED TO"QUALIFIED
• .� INSTITUTIONAL BUYERS"AS DEFINED IN RULE I44A PROMULGATED THE SECURITIES ACT OF 1933,AS AMENDED (THE"SECURITIES ACT"),AND"ACCREDITED
o 5 INVESTORS"AS DEFINED IN RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT. SEE"LIMITATIONS APPLICABLE TO INITIAL PURCHASERS"
y HEREIN. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT IN RELIANCE UPON THE EXEMPTION PROVIDED BY SECTION 3(A)(2)THEREIN. NO
-o= ACTION HAS BEEN TAKEN TO QUALIFY THE BONDS FOR SALE UNDER THE SECURITIES LAWS OF ANY STATE. SEE "LIMITATIONS APPLICABLE TO INITIAL
A v PURCHASERS"HEREIN.
1.1 In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for purposes of federal income taxation under existing law,
c. subject to the matters described under "TAX MATTERS"herein. See "TAX MATTERS—Tax Exemption"herein for a discussion of Bond Counsel's opinion.
$9,005,000*
o a CITY OF NORTH RICHLAND HILLS,TEXAS,
C
(a municipal corporation of the State of Texas located in Tarrant County)
.s SPECIAL ASSESSMENT REVENUE BONDS,SERIES 2019
(CITY POINT PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE B PROJECT)
o Dated Date: December 1,2019 Due: September 1,as shown on the inside cover
• Interest to Accrue from Date of Delivery
a a
The City of North Richland Hills,Texas,Special Assessment Revenue Bonds,Series 2019(City Point Public Improvement District Improvement Zone B
Project) (the`Bonds"), are being issued by the City of North Richland Hills, Texas (the"City"). The Bonds will be issued in fully registered form,without
r. S coupons,in authorized denominations of$100,000 of principal amount and any integral multiple of$1,000 in excess thereof. The Bonds will bear interest at the
ti.5 rates set forth on the inside cover page hereof,and such interest will be calculated on the basis of a 360-day year of twelve 30-day months,and will be payable on
g each March 1 and September 1,commencing September 1,2020,until maturity or earlier redemption. The Bonds will be registered in the name of Cede&Co.,as
•„ a nominee of The Depository Trust Company("DTC"),New York,New York. No physical delivery of the Bonds will be made to the beneficial owners thereof.
a N For so long as the book-entry only system is maintained,the principal of and interest on the Bonds will be paid from the sources described herein by Wilmington
z o Trust,National Association,as trustee(the"Trustee"),to DTC as the registered owner thereof. See"BOOK-ENTRY ONLY SYSTEM."
] The Bonds are being issued by the City pursuant to the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local
a • Government Code,as amended(the"PID Act"),an ordinance expected to be adopted by the City Council of the City(the"City Council")on November 12,2019,
8.S and an Indenture of Trust,dated as of December 1,2019(the"Indenture"),to be entered into by and between the City and the Trustee.
-04
Proceeds of the Bonds will be used to provide funds for(i)paying a portion of the costs of the Improvement Zone B Public Improvements(as defined
s• 0 herein)in the City Point Public Improvement District(the"District"),(ii)paying capitalized interest on the Bonds,(iii)funding a reserve account of the Reserve
9'I. Fund and a deposit to the Additional Interest Reserve Account of the Reserve Fund for the Bonds,(iv)paying District formation costs allocable to Improvement
o
• Zone B of the District and (v) Bond issuance costs. See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS" and "APPENDIX A—Form of
o
Indenture." Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Indenture.
b.g The Bonds,when issued and delivered,will constitute valid and binding special obligations of the City payable solely from and secured by the Pledged
c.y Revenues,consisting primarily of Assessments(as defined herein)levied against assessable properties in Improvement Zone B of the District in accordance with a
y Service and Assessment Plan, all to the extent and upon the conditions described herein. The Bonds are not payable from funds raised or to be raised from
q'? taxation. See"SECURITY FOR THE BONDS."
o.
o g. The Bonds are subject to redemption at the times, in the amounts, and at the redemption prices more fully described herein under the subcaption
._• "DESCRIPTION OF THE BONDS—Redemption Provisions."
2:a' The Bonds involve a significant degree of risk,are speculative in nature and are not suitable for all investors. See`BONDHOLDERS RISKS"
and "SUITABILITY FOR INVESTMENT." Prospective purchasers should carefully evaluate the risks and merits of an investment in the Bonds,
• °• ,;,' should consult with their legal and financial advisors before considering a purchase of the Bonds,and should be willing to bear the risks of loss of their
investment in the Bonds. The Bonds are not credit enhanced or rated and no application has been made for a rating on the Bonds.
II THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE PLEDGED REVENUES AND OTHER FUNDS
COMPRISING THE TRUST ESTATE,AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE
AGAINST THE GENERAL CREDIT OR TAXING POWER OF THE CITY AND ARE PAYABLE SOLELY FROM THE SOURCES IDENTIFIED IN THE
,o INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR
d TO BE RAISED BY TAXATION, OR OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES,AS AND TO THE EXTENT
w 1 PROVIDED IN THE INDENTURE. NO OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE CITY'S TAXING
POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION PREMIUM, IF ANY, THEREON. THE CITY SHALL
HAVE NO LEGAL OR MORAL OBLIGATION TO PAY THE BONDS OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES
a oo AND OTHER FUNDS COMPRISING THE TRUST ESTATE. SEE"SECURITY FOR THE BONDS."
§. This cover page contains certain information for quick reference only. It is not a summary of the Bonds. Investors must read this entire Limited Offering
• Memorandum to obtain information essential to the making of an informed investment decision.
o The Bonds are offered for delivery when,as,and if issued by the City and accepted by the Underwriter,subject to,among other things,the approval of the
g Bonds by the Attorney General of Texas and the receipt of the opinion of Norton Rose Fulbright US LLP,Bond Counsel,as to the validity of the Bonds and the
° excludability of interest thereon from gross income for federal income tax purposes. See"APPENDIX C—Form of Opinion of Bond Counsel." Certain legal
o matters will be passed upon for the Underwriter by its counsel,Winstead PC,and for the Developer by its counsel,Miklos Cinclair,PLLC. It is expected that the
Bonds will be delivered in book-entry form through the facilities of DTC on or about December_ ,2019(the"Date of Delivery").
g'5
FMSbonds,Inc.
.g °
P.d
a'
o
8w
F o
•Preliminary;subject to change.
4823-9270-5706v.1
MATURITIES,PRINCIPAL AMOUNTS,INTEREST RATES,PRICES,YIELDS,AND CUSIP NUMBERS
• CUSIP Prefix: (a)
$9,005,000*
CITY OF NORTH RICHLAND HILLS,TEXAS,
(a municipal corporation of the State of Texas located in Tarrant County)
SPECIAL ASSESSMENT REVENUE BONDS,SERIES 2019
(CITY POINT PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE B PROJECT)
$ %Term Bonds,Due September 1,20 ,Priced to Yield %;CUSIP (a)(b)(c)
$ %Term Bonds,Due September 1,20 ,Priced to Yield %;CUSIP (a)(b)(c)
* Preliminary;subject to change.
cap CUSIP numbers are included solely for the convenience of owners of the Bonds. CUSIP is a registered trademark of the American
Bankers Association. CUSIP data herein is provided by CUSIP Global Services,managed by S&P Global Market Intelligence on
behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a
substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. None of the City,the City's
Financial Advisor or the Underwriter takes any responsibility for the accuracy of such numbers.
ro� The Bonds maturing on or after September 1,20_ are subject to redemption before their scheduled maturity date,in whole or in part,
on any date on or after September 1,20�at the redemption price of par plus accrued interest to the date of redemption as described
herein under"DESCRIPTION OF THE BONDS—Redemption Provisions."
The Bonds are also subject to mandatory sinking fund redemption and extraordinary optional redemption as described herein under
"DESCRIPTION OF THE BONDS—Redemption Provisions."
1
CITY OF NORTH RICHLAND HILLS,TEXAS
CITY COUNCIL
Term Expires
Name Place (May)
Oscar Trevino Mayor 2020
Tito Rodriguez Place 1 2021
Rita Wright Oujesky Place 2,Mayor Pro Tem 2020
Suzy Compton Place 3 2021
VACANT* Place 4
Mike Benton Place 5 2021
Scott Turnage Place 6 2020
Tim Welch Place 7 2021
*On August 2, 2019 Councilmember Brent Barrow passed away vacating the Place 4 Council seat. The vacancy will
be filled by a special election scheduled to be conducted by the City in November of 2019.
CITY MANAGER CITY SECRETARY DIRECTOR OF FINANCE
Mark Hindman Alicia Richardson Mark Mills
ASSESSMENT CONSULTANT
P3Works,LLC
FINANCIAL ADVISOR TO THE CITY
Hilltop Securities,Inc.
BOND COUNSEL
Norton Rose Fulbright US LLP
UNDERWRITER'S COUNSEL
Winstead PC
For additional information regarding the City,please contact:
Mark Hindman Nick Bulaich
City Manager Hilltop Securities,Inc.
City of North Richland Hills,Texas 777 Main Street
4301 City Point Drive Suite 1200
North Richland Hills,Texas 76180 Fort Worth,Texas 76102
(817)427-6003 (817)322-9710
mhindman@nrhtx.gov nick.bulaich@hilltopsecurities.com
ii
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vi
FOR PURPOSES OF COMPLIANCE WITH RULE 15C2-12 OF THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION, AS AMENDED AND IN EFFECT ON THE DATE OF THIS PRELIMINARY
LIMITED OFFERING MEMORANDUM THIS DOCUMENT CONSTITUTES A PRELIMINARY OFFICIAL
STATEMENT OF THE CITY WITH RESPECT TO THE BONDS THAT HAS BEEN DEEMED "FINAL"BY THE
CITY AS OF ITS DATE EXCEPT FOR THE OMISSION OF NO MORE THAN THE INFORMATION PERMITTED
BY RULE 15C2-12.
THE INITIAL PURCHASERS ARE ADVISED THAT THE BONDS BEING OFFERED PURSUANT TO THE
LIMITED OFFERING MEMORANDUM ARE BEING OFFERED AND SOLD ONLY TO "QUALIFIED
INSTITUTIONAL BUYERS"AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT OF 1933") AND "ACCREDITED INVESTORS" AS DEFINED IN
RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933. SEE"LIMITATIONS
APPLICABLE TO INITIAL PURCHASERS" HEREIN. EACH PROSPECTIVE PURCHASER IS RESPONSIBLE
FOR ASSESSING THE MERITS AND RISKS OF AN INVESTMENT IN THE BONDS,MUST BE ABLE TO BEAR
THE ECONOMIC AND FINANCIAL RISK OF SUCH INVESTMENT IN THE BONDS, AND MUST BE ABLE TO
AFFORD A COMPLETE LOSS OF SUCH INVESTMENT. CERTAIN RISKS ASSOCIATED WITH THE
PURCHASE OF THE BONDS ARE SET FORTH UNDER"RISK FACTORS" HEREIN. EACH PURCHASER, BY
ACCEPTING THE BONDS, AGREES THAT IT WILL BE DEEMED TO HAVE MADE THE
ACKNOWLEDGMENTS AND REPRESENTATIONS DESCRIBED UNDER THE HEADING "LIMITATIONS
APPLICABLE TO INITIAL PURCHASERS."
NO DEALER,BROKER,SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED BY THE CITY OR THE
UNDERWRITER TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS LIMITED OFFERING MEMORANDUM, AND IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
EITHER OF THE FOREGOING. THIS LIMITED OFFERING MEMORANDUM DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY AND THERE SHALL BE NO OFFER,
SOLICITATION OR SALE OF THE BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER,SOLICITATION OR SALE.
THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS LIMITED OFFERING MEMORANDUM IN
ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE UNITED
STATES FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS
TRANSACTION. THE INFORMATION SET FORTH HEREIN HAS BEEN FURNISHED BY THE CITY AND
OBTAINED FROM SOURCES, INCLUDING THE DEVELOPER, WHICH ARE BELIEVED BY THE CITY AND
THE UNDERWRITER TO BE RELIABLE, BUT IT IS NOT GUARANTEED AS TO ACCURACY OR
COMPLETENESS,AND IS NOT TO BE CONSTRUED AS A REPRESENTATION OF THE UNDERWRITER. THE
INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE,
AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM, 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 THE DEVELOPER SINCE THE DATE HEREOF.
NEITHER THE CITY, THE CITY'S FINANCIAL ADVISOR NOR THE UNDERWRITER MAKE ANY
REPRESENTATION AS TO THE ACCURACY, COMPLETENESS, OR ADEQUACY OF THE INFORMATION
SUPPLIED BY THE DEPOSITORY TRUST COMPANY FOR USE IN THIS LIMITED OFFERING
MEMORANDUM.
THE TRUSTEE HAS NOT PARTICIPATED IN THE PREPARATION OF THIS LIMITED OFFERING
MEMORANDUM AND ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF ANY
INFORMATION CONTAINED IN THIS LIMITED OFFERING MEMORANDUM OR THE RELATED
TRANSACTIONS AND DOCUMENTS OR FOR ANY FAILURE BY ANY PARTY TO DISCLOSE EVENTS THAT
MAY HAVE OCCURRED AND MAY AFFECT THE SIGNIFICANCE OR ACCURACY OF SUCH INFORMATION.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAS THE
INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON
EXEMPTIONS CONTAINED IN SUCH LAWS. THE REGISTRATION OR QUALIFICATION OF THE BONDS
UNDER THE SECURITIES LAWS OF ANY JURISDICTION IN WHICH THEY MAY HAVE BEEN REGISTERED
OR QUALIFIED,IF ANY,SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF SUCH
JURISDICTIONS,OR ANY OF THEIR AGENCIES,HAVE PASSED UPON THE MERITS OF THE BONDS OR THE
ACCURACY OR COMPLETENESS OF THIS LIMITED OFFERING MEMORANDUM.
CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS LIMITED OFFERING
MEMORANDUM CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, SECTION 21E OF THE UNITED
STATES SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND SECTION 27A OF THE SECURITIES
ACT OF 1933. SUCH STATEMENTS ARE GENERALLY IDENTIFIABLE BY THE TERMINOLOGY USED SUCH
vii
AS"PLAN," "EXPECT,""ESTIMATE,""PROJECT,""ANTICIPATE,""BUDGET" OR OTHER SIMILAR WORDS.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-
LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO
BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO
ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF
ITS EXPECTATIONS OR EVENTS,CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE
BASED OCCUR,OTHER THAN AS DESCRIBED UNDER"CONTINUING DISCLOSURE"HEREIN.
•
viii
TABLE OF CONTENTS
INTRODUCTION 1 Historical Employment in the City of
PLAN OF FINANCE 2 North Richland Hills 37
The District 2 Surrounding Economic Activity 38
Development Plan and Plan of Finance 2 THE DISTRICT 38
TIRZ Revenues May Reduce General 38
Improvement Zone A Assessments 3 Powers and Authority 39
The Bonds 4 THE DEVELOPMENT AGREEMENT 39
DESCRIPTION OF THE BONDS 5 Construction of Improvements 39
General Description 5 Economic Development Agreement 40
Redemption Provisions 5 THE IMPROVEMENT ZONE B PUBLIC
BOOK-ENTRY ONLY SYSTEM 7 IMPROVEMENTS 41
LIMITATIONS APPLICABLE TO INITIAL General 41
PURCHASERS 9 Ownership and Maintenance of
Improvements 42
SECURITY FOR THE BONDS 10 THE DEVELOPMENT 43
General 10 Overview 43
Pledged Revenues 11. Development Plan 43
Collection and Deposit of Assessments 12 Merchant Builder Lot Purchase and
Unconditional Levy of Assessments 12 Sale Agreements in the District 44
Perfected Security Interest 13 Estimated Home Prices in the
Pledged Revenue Fund 13 Development 45
Bond Fund 14 Expected Commercial Development in
Project Fund 14 the District 45
Reserve Account of the Reserve Fund 15 Expected Multifamily Development in
Administrative Fund 17 the District 45
Defeasance 17 Concept Plan 46
Events of Default 18 Zoning/Permitting 48
Remedies in Event of Default 19 Amenities 48
Restriction on Owner's Actions 19 Education 48
Application of Revenues and Other Existing Mineral Rights,Easements and
Moneys After Event of Default 20 Other Third Party Property Rights 48
Investment or Deposit of Funds 20 p
Against Encumbrances 21 Environmental 49
Additional Obligations 22 Utilities 49
SOURCES AND USES OF FUNDS 23 T DEVELOPER 49
General 49
DEBT SERVICE REQUIREMENTS 24 Description of the Developer 49
OVERLAPPING TAXES AND DEBT 25 Executive Biography 52
History and Financing of the District 53
ASSESSMENT PROCEDURES 27 THE ASSESSMENT CONSULTANT AND
General 27 ADMINISTRATOR 53
Assessment Methodology 27
Collection and Enforcement of APPRAISAL OF PROPERTY WITHIN 1
Assessment Amounts 29 IMPROVEMENT ZONE B OF THE DISTRICT..54
Assessment Amounts 31 The Appraisal 54
Prepayment of Assessments 34 Single Family Tracts 54
Priority of Lien 35 Multifamily Tracts 54
Foreclosure Proceedings 35 BONDHOLDERS'RISKS 55
THE CITY 35 Assessment Limitations 56
Background 35 Exceedance of Maximum Assessment
City Government 36 Could Trigger Bond Redemption 57
Major Employers 36 Competition;Real Estate Market 58
ix
TIRZ Annual Credit Amount and UNDERWRITING 71
Marketing of the Development 58 REGISTRATION AND QUALIFICATION OF
Loss of Tax Exemption 58 BONDS FOR SALE 71
Bankruptcy 58
Direct and Overlapping Indebtedness, LEGAL INVESTMENT AND ELIGIBILITY TO
Assessments and Taxes 59 SECURE PUBLIC FUNDS IN TEXAS 71
Depletion of Reserve Account of INVESTMENTS 71
Reserve Fund 59
Hazardous Substance 59 INFORMATION RELATING TO THE TRUS TLE74
Regulation 60
Bondholders'Remedies and SOURCES OF INFORMATION 74
Bankruptcy 60 General 74
No Acceleration 61 Source of Certain Information 74
Bankruptcy Limitation to Bondholders' Experts 75
Rights 61 Updating of Limited Offering
Management and Ownership 61 Memorandum 75
General Risks of Real Estate Investment FORWARD-LOOKING STATEMENTS 75
and Development 61
Dependence Upon Developer 62 AUTHORIZATION AND APPROVAL 75
Potential Future Changes in State Law
Regarding Public Improvement APPENDIX A Form of Indenture
Districts 62 APPENDIX B Form of Service and
Use of Appraisal 63 Assessment Plan
Exercise of Third Party Property Rights 64 APPENDIX C Form of Opinion of Bond Counsel
APPENDIX D-1 Form of City Disclosure
Developer Principal Financial
Relationships and Other Matters Agreement
Relating to Developer Affiliates 64 APPENDIX D-2 Form of Developer Disclosure
Agreement
TAX MATTERS 66 APPENDIX E Appraisal of Property in the District
Tax Exemption 66 APPENDIX F Form of Construction,
Tax Accounting Treatment of Discount Funding,and Acquisition
and Premium on Certain Bonds 67 Agreement
LEGAL MATTERS 68 APPENDIX G Development Agreement
Legal Proceedings 68
Legal Opinions 68
Litigation—The City 69
Litigation—The Developer 69
SUITABILITY FOR INVESTMENT 69
ENFORCEABILITY OF REMEDIES 69
NO RATING 70
CONTINUING DISCLOSURE 70
The City 70
The Developer 70
x
(THIS PAGE IS INTENTIONALLY LEFT BLANK.)
PRELIMINARY LIMITED OFFERING MEMORANDUM
$9,005,000'
CITY OF NORTH RICHLAND HILLS,TEXAS,
(a municipal corporation of the State of Texas located in Tarrant County)
SPECIAL ASSESSMENT REVENUE BONDS,SERIES 2019
(CITY POINT PUBLIC IMPROVEMENT DISTRICT IMPROVEMENT ZONE B PROJECT)
INTRODUCTION
•
The purpose of this Limited Offering Memorandum,including the cover page,inside cover and appendices
hereto, is to provide certain information in connection with the issuance and sale by the City of North Richland
Hills, Texas (the "City"), of$9,005,000* aggregate principal amount its of Special Assessment Revenue Bonds,
Series 2019(City Point Public Improvement District Improvement Zone B Project)(the"Bonds").
PROSPECTIVE INVESTORS SHOULD BE AWARE OF CERTAIN RISK FACTORS, ANY OF
WHICH, IF MATERIALIZED TO A SUFFICIENT DEGREE, COULD DELAY OR PREVENT PAYMENT OF
PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, AND/OR INTEREST ON THE BONDS. THE BONDS
ARE NOT A SUITABLE INVESTMENT FOR ALL INVESTORS. SEE "SUITABILITY FOR INVESTMENT"
and`BONDHOLDERS'RISKS."
The Bonds are being issued by the City pursuant to the Public Improvement District Assessment Act,
Subchapter A of Chapter 372, Texas Local Government Code, as amended (the "PID Act"), the ordinance
authorizing the issuance of the Bonds expected to be enacted by the City Council of the City(the"City Council")on
November 12, 2019 (the "Bond Ordinance"), and an Indenture of Trust, dated as of December 1, 2019 (the
"Indenture"),to be entered into by and between the City and Wilmington Trust,National Association as trustee(the
"Trustee"). The Bonds will be secured by assessments (the "Assessments") levied against assessable property
within Improvement Zone B of the City Point Public Improvement District(the "District") pursuant to a separate
ordinance expected to be adopted by the City Council on November 12, 2019 (the"Assessment Ordinance"). The
City created the District pursuant to a resolution adopted by the City Council on September 9,2019 (the"Creation
Resolution").
Reference is made to the Indenture for a full statement of the authority for,and the terms and provisions of,
the Bonds. All capitalized terms used in this Limited Offering Memorandum that are not otherwise defined herein
shall have the meanings set forth in the Indenture. See"APPENDIX A—Form of Indenture."
Set forth herein are brief descriptions of the City, the District, the Administrator (as defined herein), the
Assessment Ordinance, the Bond Ordinance, the Service and Assessment Plan (as defined herein), the TIRZ
Creation Ordinance(as defined herein),the Construction,Funding,and Acquisition Agreement(as defined herein),
the City Point Development Agreement between the City and the Developer dated [DATE], 2019 (the
"Development Agreement"), MM City Point 53, LLC, a Texas limited liability company (the "Developer"), and
P3Works, LLC (the "Assessment Consultant"), together with summaries of terms of the Bonds and the Indenture
and certain provisions of the PID Act. All references herein to such documents and the PID Act are qualified in
their entirety by reference to such documents or such PID Act and all references to the Bonds are qualified by
reference to the definitive forms thereof and the information with respect thereto contained in the Indenture. Copies
of these documents may be obtained during the period of the offering of the Bonds from the Underwriter,
FMSbonds, Inc., 5 Cowboys Way, Suite 300-V, Frisco, Texas, 75034, Phone: (214) 302-2246. The Form of
Indenture appears in APPENDIX A and the Form of Service and Assessment Plan appears in APPENDIX B. The
information provided under this caption "INTRODUCTION" is intended to provide a brief overview of the
information provided in the other captions herein and is not intended, and should not be considered, fully
representative or complete as to the subjects discussed hereunder.
.Preliminary;subject to change.
1
PLAN OF FINANCE
The District
The PID Act authorizes municipalities,such as the City,to create public improvement districts within their
boundaries or extraterritorial jurisdiction, and to impose assessments within the public improvement district to pay
for certain improvements. The District was created for the purpose of undertaking and financing the cost of certain
public improvements within the District, including the Improvement Zone B Public Improvements, authorized by
the PID Act and approved by the City Council that confer a special benefit on the District.
Development Plan and Plan of Finance
The District is composed of approximately 52.873 acres which are being developed in phases as a master-
planned mixed-use development which is expected to include residential development on approximately acres
(the"Single Family Tracts"),multifamily development on approximately acres(the"Multifamily Tracts"),and
commercial development on acres(the"Commercial Tracts"). Infrastructure in the District will be completed
in one phase consisting of the construction of the Public Improvements(as defined herein). The boundaries of the
District are shown in the "MAP SHOWING BOUNDARIES OF THE DISTRICT" on page v. A portion of the
District consisting of the Single Family Tracts and the Commercial Tracts has been designated as "Improvement
Zone A". A map of Improvement Zone B is shown on page vi. A portion of the District consisting of the Single
Family Tracts and the Multifamily Tracts has been designated as"Improvement Zone B." Improvement Zone A and
Improvement Zone B each overlay the Single Family Tracts.
The Developer purchased the land comprising the District on October 28, 2019. In order to finance the
purchase of land within in the District and development in the District, the Developer obtained a loan (the
"Acquisition and Development Loan") in the amount of$ from Bank (the "Lender"). The
Acquisition Loan is currently outstanding in the amount of$ and secured by all property within the
District. The Developer is the current owner of all property in the District. See"THE DEVELOPER—History and
Financing of the District."
The Developer expects to construct "Public Improvements" consisting of certain roadway improvements,
water distribution system improvements, sanitary sewer collection system improvements, storm drainage collection
system improvements, landscaping, entryway, open space and park improvements that will benefit the entire
District. A portion of such Public Improvements will be allocated to Improvement Zone A of the District (the
"Improvement Zone A Public Improvements"). A portion of such Public Improvements will be allocated to
Improvement Zone B of the District (the "Improvement Zone B Public Improvements"). The Developer plans to
commence development in the District in Q1 2020. The current development schedule for the Public Improvements
is expected to span approximately twenty(20)months. See"THE DEVELOPMENT—Development Plan".
The City will pay the project costs for the Improvement Zone B Public Improvements from proceeds of the
Bonds. See "SOURCES AND USES OF FUNDS". The Developer will submit reimbursement requests on a
monthly basis for costs actually incurred in developing and constructing the Improvement Zone B Public
Improvements and be reimbursed in accordance with the Indenture and the City Point Public Improvement District
Improvement Zone B Construction, Funding, and Acquisition Agreement (the "Construction, Funding, and
Acquisition Agreement"). See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS—General," "THE
DEVELOPMENT — Development Plan" and "APPENDIX F - Form of Construction, Funding, and Acquisition
Agreement.
Concurrently with the issuance of the Bonds, the City will issue its $3,540,000*
City of North Richland Hills, Texas, Special Assessment Revenue Bonds, Series 2019 (City Point Public
Improvement District Improvement Zone A Project)(the"Improvement Zone A Bonds")to finance a portion of the
Improvement Zone A Public Improvements. The Improvement Zone A Bonds will be secured by assessments on
property in Improvement Zone A of the District (the "Improvement Zone A Assessments"). Because the Single
Preliminary;subject to change.
2
Family Tracts lie in Improvement Zone B and Improvement Zone A,the Single Family Tracts will be assessed for
the Assessments and a portion of the Improvement Zone A Assessments. The portion of the Improvement Zone A
Assessments allocable to the Single Family Tracts in Improvement Zone A is expected to be $1,590,000*. The
Improvement Zone A Assessments will be offset by TIRZ Revenues as describer under"—TIRZ Revenues May
Reduce Improvement Zone A Assessments"below.
TIRZ Revenues May Reduce Improvement Zone A Assessments
Pursuant to Chapter 311 of the Texas Tax Code (the "TIRZ Act"), on October 14, 2019, the City held a
public hearing on the creation of the TIRZ and the preliminary project and financing plan. Pursuant to Ordinance
No. 3617 (the "TIRZ Creation Ordinance"), the City created the TIRZ and was presented with the Reinvestment
Zone Number Three, City of North Richland Hills Preliminary Project and Financing Plan ("Preliminary TIRZ
Project and Finance Plan").
The City Council approved a final Project and Finance Plan for the TIRZ(the"TIRZ Project and Finance
Plan") on , 2019 with the adoption of an ordinance which authorizes the use of the City TIRZ
Revenues (defined below) for project costs under the TIRZ Act, relating to the Improvement Zone A Public
Improvements as provided for in the TIRZ Project and Finance Plan (including amendments or supplements
thereto).
Pursuant to the TIRZ Act,the tax increment base of the City is the total taxable value of all real property
taxable by the City located in the TIRZ as of January 1 in the year in which the TIRZ was designated as a
reinvestment zone (the "Tax Increment Base"). Pursuant to the TIRZ Act, the TIRZ Creation Ordinance and the
Development Agreement,the City will set the amount of the"Tax Increment"for a year as Tax Increment revenues
in the amount equal to 45%of the ad valorem tax increment collected for maintenance and obligation purposes on
all real property in the TIRZ taxable by the City(the"City TIRZ Revenues"). Consistent with Section 311.012(b)of
the TIRZ Act, the Captured Appraised Value of real property taxable by the City for a year is the total appraised
value of all real property taxable by the City and located in the TIRZ for that year less the Tax Increment Base(the
"Captured Appraised Value"). Currently,there are no other taxing units other than the County participating in the
TIRZ.
The City expects to use annual Tax Increment revenues collected to offset the costs of the Improvement
Zone A Public Improvements. The City will agree to transfer the City TIRZ Revenues from the tax increment fund
for the payment of debt service on the Improvement Zone A Bonds. Such City TIRZ Revenues, if and when
collected and transferred by the City,will result in a reduction in Annual Installments of the Improvement Zone A
Assessments by a corresponding amount. The City intends to dedicate and deposit the City TIRZ Revenues
collected for a period of(i)twenty years or(ii)until the amount of increment placed in the tax increment fund totals
$4,173,032.
The County and the City have entered into a Participation Agreement pursuant to which the County has
agreed to transfer to the City's tax increment fund a portion(25%)of the ad valorem tax increment collected for on
all real property in the TIRZ taxable by the County(the"County TIRZ Revenues and,together with the City TIRZ
Revenues,the"TIRZ Revenues"). The County is expected to transfer the County TIRZ Revenues to the City's Tax
Increment Fund and it City is expected to transfer the County Tax Revenues from the TIRZ Fund for the payment of
debt service on the Improvement Zone A Bonds. Such tax increment revenue,if and when collected and transferred
by the City, will result in a reduction in Annual Installments of Improvement Zone A Assessments by a
corresponding amount. The County intends to dedicate and deposit tax increment revenues collected for a period(i)
ending on December 31,2038 (with final year's tax to be collected by September 1,2039),or an earlier termination
date designated by ordinance subsequently adopted by the City Council of the City,(ii)ending on the date on which
all project costs of the TIRZ have been paid or(iii)when$1,707,150 has been placed in the TIRZ Fund from County
TIRZ Revenues.
*Preliminary;subject to change.
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It is expected that the TIRZ Revenues will be used to fund the Improvement Zone A Public Improvements
up to the Maximum Contribution. The "Maximum Contribution" of the TIRZ Revenues is expected to be
$5,880,182.
In the Service and Assessment Plan,the City has established a maximum annual credit for each Lot Type in
Improvement Zone B to be generated from the TIRZ Revenues ($405.56 for Lot Type SF1, $426.54 for Lot Type
SF2, $454.51 for Lot Type SF3 and $35,677.54/acre for Lot Type Commercial). After the TIRZ Annual Credit
Amount is applied to provide a credit towards a portion of the Annual Installments of the Improvement Zone A
Assessments,any excess TIRZ Revenues from the TIRZ Fund shall be held in a segregated account by the City and
shall be used either(1)to prepay a portion of all Improvement Zone A Assessments in a manner determined by the
City and the Administrator to be fair and equitable, and to redeem Improvement Zone A Bonds pursuant to the
extraordinary redemption provisions of the Indenture relating to the Improvement Zone A Bonds, (2)to optionally
redeem the Improvement Zone A Bonds pursuant to the provisions of the Indenture relating to the Improvement
Zone A Bonds,or(3)to be applied as a credit towards a portion of Annual Installments of the Improvement Zone A
Assessments in future years in an effort to maintain a level Annual Installment schedule for the Improvement Zone
A Assessments.
THE TIRZ REVENUES,IF AVAILABLE,WILL NOT BE PLEDGED TO OR AVAILABLE FOR
THE PAYMENT OF THE BONDS OR THE ASSESSMENTS.
WHILE THE CITY HAS AGREED TO MAKE THE TIRZ REVENUES AVAILABLE TO
OFFSET THE IMPROVEMENT ZONE A ASSESSMENTS AS OUTLINED ABOVE, THE TIRZ
REVENUES, IF AVAILABLE, WILL NOT BE PLEDGED TO PAYMENT OF THE IMPROVEMENT
ZONE A BONDS. THERE IS NO GUARANTEE THAT THERE WILL EVER BE SUFFICIENT TIRZ
REVENUES TO GENERATE A TIRZ ANNUAL CREDIT AMOUNT. SUCH TIRZ ANNUAL CREDIT
AMOUNT IS NOT EXPECTED TO BE AVAILABLE TO REDUCE THE ANNUAL INSTALLMENT OF THE
IMPROVEMENT ZONE A ASSESSMENTS FOR ANY PROPERTY UNTIL THE SECOND YEAR THAT A
HOME OR STRUCTURE ON SUCH PARCEL IS ASSESSED. TIRZ REVENUES GENERATED FROM THE
CAPTURED APPRAISED VALUE FOR EACH PARCEL IN THE DISTRICT DURING THE DEVELOPMENT
OF SUCH PARCELS WILL NOT BE SUFFICIENT TO ACHIEVE THE NET TAX RA1'h EQUIVALENT OF
THE AVERAGE ANNUAL INSTALLMENT OF THE IMPROVEMENT ZONE A ASSESSMENTS OF $0.
PER$100 ASSESSED VALUE(THE"TARGETED NET AVERAGE ANNUAL INSTALLMENT"). THE TIRZ
ANNUAL CREDIT AMOUNT IS NOT EXPECTED TO BE SUFFICIENT TO PROVIDE FOR THE TARGETED
NET AVERAGE ANNUAL INSTALLMENT UNTIL THE SECOND YEAR THAT A HOME OR STRUCTURE
ON SUCH PARCEL IS ASSESSED. SEE"OVERLAPPING TAXES AND DEBT."
The Bonds
Proceeds of the Bonds will be used to provide funds for (i) paying a portion of the costs of the
Improvement Zone B Public Improvements, (ii) paying capitalized interest on the Bonds, (iii) funding a reserve
account of the Reserve Fund and a deposit to the Additional Interest Reserve Account of the Reserve Fund for the
Bonds, (iv)paying District formation costs allocable to Improvement Zone B of the District and(v)Bond issuance
costs.To the extent that a portion of the proceeds of the Bonds is allocated for the payment of the costs of issuance
of the Bonds and less than all of such amount is used to pay such costs,the excess amount may, at the option of the
City, be transferred to the Improvement Zone B Public Improvement Account of the Project Fund (both defined
herein)or to the Principal and Interest Account of the Bond Fund(both defined herein)to pay interest on the Bonds.
See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS," "APPENDIX A—Form of Indenture" and
"SOURCES AND USES OF FUNDS."
Payment of the Bonds is secured by a pledge of and a lien upon the Trust Estate, consisting primarily of
Assessments to be levied against the assessable parcels or lots within Improvement Zone B of the District,all to the
extent and upon the conditions described herein and in the Indenture. See "SECURITY FOR THE BONDS,"
"ASSESSMENT PROCEDURES"and"APPENDIX A-Form of Indenture."
The Bonds and the Improvement Zone A Bonds shall never constitute an indebtedness or general
obligation of the City, the State or any other political subdivision of the State, within the meaning of any
4
constitutional provision or statutory limitation whatsoever,but the Bonds are limited and special obligations
of the City payable solely from the Trust Estate as provided in the Indenture. Neither the faith and credit
nor the taxing power of the City, the State or any other political subdivision of the State is pledged to the
payment of the Bonds. The Improvement Zone A Bonds and any future Bonds to be issued by the City are
not offered pursuant to this Limited Offering Memorandum.
DESCRIPTION OF THE BONDS
General Description
The Bonds will mature on the dates and in the amounts set forth in the inside cover page of this Limited
Offering Memorandum. Interest on the Bonds will accrue from their date of delivery to the Underwriter and will be
computed on the basis of a 360-day year of twelve 30-day months. Interest on the Bonds will be payable on each
March 1 and September 1, commencing September 1, 2020 (each an "Interest Payment Date"), until maturity or
prior redemption. Wilmington Trust,National Association is the initial Trustee,Paying Agent and Registrar for the
Bonds.
The Bonds will be issued in fully registered form, without coupons, in authorized denominations of
$100,000 of principal and any integral multiple of$1,000 in excess thereof("Authorized Denominations"). Upon
initial issuance, the ownership of the Bonds will be registered in the name of Cede & Co., as nominee for The
Depository Trust Company,New York,New York("DTC"), and purchases of beneficial interests in the Bonds will
be made in book-entry only form. See "BOOK-ENTRY ONLY SYSTEM" and "SUITABILITY FOR
INVESTMENT."
Redemption Provisions
Optional Redemption. The City reserves the right and option to redeem Bonds maturing on or after
September 1, 20_before their scheduled maturity date, in whole or in part, on any date on or after September 1,
20—,at the Redemption Price of par plus accrued interest to the date of redemption.
Extraordinary Optional Redemption. Notwithstanding any provision in the Indenture to the contrary, the
City reserves the right and option to redeem Bonds before their respective scheduled maturity dates, in whole or in
part, on the first day of any month, at the Redemption Price of 100% of the principal amount of such Bonds, or
portions thereof, to be redeemed plus accrued interest to the date of redemption from amounts on deposit in the
Redemption Fund as a result of Prepayments(including related transfers to the Redemption Fund as provided in the
Indenture),transfers to the Redemption Fund made pursuant to the Indenture,or as a result of unexpended amounts
transferred from the Project Fund as provided in the Indenture. See "ASSESSMENT PROCEDURES —
Prepayment of Assessments" for the definition and description of Prepayments" and "APPENDIX A—Form of
Indenture."
Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption prior
to their stated maturity and will be redeemed by the City in part at the Redemption Price of par plus accrued and
unpaid interest to the redemption date from moneys available for such purpose in the Principal and Interest Account
of the Bond Fund pursuant to the Indenture,on the dates and in the respective Sinking Fund Installments as set forth
in the following schedule:
$ Term Bonds Maturing September 1,20
Redemption Date Sinking Fund Installment
September 1,20
September 1,20t
$ Term Bonds Maturing September 1,20
Sinking Fund Installment
Redemption Date
5
September 1,20_
September 1,20t
t Stated maturity.
At least forty-five(45)days prior to each mandatory sinking fund redemption date,the Trustee shall select
a principal amount of Bonds of such maturity equal to the Sinking Fund Installment amount of such Bonds to be
redeemed,shall call such Bonds for redemption on such scheduled mandatory redemption date,and shall give notice
of such redemption,as provided in the Indenture.
The principal amount of Bonds of a stated maturity required to be redeemed on any mandatory sinking fund
redemption date pursuant to the Indenture shall be reduced,at the option of the City,by the principal amount of any
Bonds of such maturity which,at least forty-five(45)days prior to the sinking fund redemption date shall have been
acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued unpaid interest to the
date of purchase thereof,and delivered to the Trustee for cancellation.
The principal amount of Bonds required to be redeemed on any mandatory sinking fund redemption date
pursuant to the Indenture shall be reduced on a pro rata basis among Sinking Fund Installments by the principal
amount of any Bonds which, at least forty-five(45)days prior to the sinking fund redemption date,shall have been
redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not
previously credited to a mandatory sinking fund redemption.
Notice of Redemption. The Trustee shall give notice of any redemption of Bonds by sending notice by
United States mail,first-class,postage prepaid,not less than thirty(30)days before the date fixed for redemption,to
the Owner of each Bond or portion thereof to be redeemed, at the address shown in the Register. So long as the
Bonds are in book-entry-only form and held by the DTC as security depository, Owner means Cede & Co., as
nominee for DTC. The notice shall state the redemption date,the Redemption Price, the place at which the Bonds
are to be surrendered for payment,and,if less than all the Bonds Outstanding are to be redeemed,and subject to the
Indenture,an identification of the Bonds or portions thereof to be redeemed,any conditions to such redemption and
that on the redemption date,if all conditions,if any,to such redemption have been satisfied,such Bond shall become
due and payable. Any notice given as provided in the Indenture shall be conclusively presumed to have been duly
given,whether or not the Owner receives such notice.
The City has the right to rescind any optional redemption or extraordinary optional redemption described in
the Indenture by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption
shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the
payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of
Default under the Indenture. The Trustee shall mail notice of rescission of redemption in the same manner notice of
redemption was originally provided.
With respect to any optional redemption of the Bonds, unless the Trustee has received funds sufficient to
pay the Redemption Price of the Bonds to be redeemed before giving of a notice of redemption,the notice may state
the City may condition redemption on the receipt of such funds by the Trustee on or before the date fixed for the
redemption, or on the satisfaction of any other prerequisites set forth in the notice of redemption. If a conditional
notice of redemption is given and such prerequisites to the redemption are not satisfied and sufficient funds are not
received,the notice shall be of no force and effect, the City shall not redeem the Bonds and the Trustee shall give
notice,in the manner in which the notice of redemption was given,that the Bonds have not been redeemed.
Additional Provisions with Respect to Redemption. If less than all of the Bonds are to be redeemed
pursuant to the mandatory sinking fund redemption and optional redemption provisions in the Indenture,Bonds shall
be redeemed in minimum principal amounts of$100,000 or any integral of$1,000 in excess thereof by a pro rata
reduction of the outstanding maturities. If less than all of the Bonds of a particular maturity are to be redeemed,the
Bonds of such maturity shall be redeemed by lot or other customary method that results in a random selection. Each
6
Bond shall be treated as representing the number of Bonds that is obtained by dividing the principal amount of such
Bond by the smallest Authorized Denomination for such Bond.
If less than all of the Bonds are to be redeemed pursuant to the extraordinary optional redemption
provisions in the Indenture, Bonds shall be redeemed in minimum principal amounts of$5,000 or any integral of
$1,000 in excess thereof by a pro rata reduction of the outstanding maturities. If less than all of the Bonds of a
particular maturity are to be redeemed, the Bonds of such maturity shall be redeemed by lot or other customary
method that results in a random selection. Each Bond shall be treated as representing the number of Bonds that is
obtained by dividing the principal amount of such Bond by the smallest Authorized Denomination for such Bond.
A portion of a single Bond of an Authorized Denomination may be redeemed, but only in a principal
amount equal to$1,000 or any integral thereof. The Trustee shall treat each$1,000 portion of such Bond as though
it were a single bond for purposes of selection for redemption. No redemption shall result in a Bond in a
denomination of less than an Authorized Denomination;provided,however, if the amount of Outstanding Bonds is
less than an Authorized Denomination after giving effect to such partial redemption,a Bond in the principal amount
equal to the unredeemed portion,but not less than$1,000,may be issued.
Upon surrender of any Bond for redemption in part, the Trustee in accordance with the Indenture, shall
authenticate and deliver and exchange the Bond or Bonds in an aggregate principal amount equal to the unredeemed
portion of the Bond so surrendered,such exchange being without charge.
BOOK-ENTRY ONLY SYSTEM
This section describes how ownership of the Bonds is to be transferred and how the principal of premium,
if any, and interest on the Bonds are to be paid to and credited by The Depository Trust Company ("DTC'), New
York New York, while the Bonds are registered in its nominee name. The information in this section concerning
DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this
Limited Offering Memorandum. The City and the Underwriter believe the source of such information to be reliable,
but neither the City nor the Underwriter takes responsibility for the accuracy or completeness thereof
The City cannot and does not give any assurance that(1) DTC will distribute payments of debt service on
the Bonds, or redemption or other notices, to DTC Participants, (2)DTC Participants or others will distribute debt
service payments paid to DTC or its nominee(as the registered owner of the Bonds), or redemption or other notices,
to the Beneficial Owners, or that they will do so on a timely basis or (3) DTC will serve and act in the manner
described in this Limited Offering Memorandum. The current rules applicable to DTC are on file with the United
States Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC
Participants are on file with DTC.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities
registered in the name of Cede& Co. (DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered security certificate will be issued for each maturity of the
Bonds,each in the aggregate principal amount of such maturity,and will be deposited with DTC.
DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New
York Banking Law, a"banking organization"within the meaning of the New York Banking Law, a member of the
Federal Reserve System,a"clearing corporation"within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's
participants (`Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities,through electronic computerized book-
entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement
of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust&Clearing Corporation(`DTCC"). DTCC,is the holding company for DTC,National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC
7
is owned by the users of its registered subsidiaries. Access to the DTC system is also available to others such as
both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing companies that clear
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). DTC has a Standard&Poor's rating of"AA+". The DTC Rules applicable to its Participants are on
file with the Securities and Exchange Commission.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond
(`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written confirmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is
discontinued.
To facilitate subsequent transfers,all Bonds deposited by Direct Participants with DTC are registered in the
name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede& Co. or such
other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts
such Bonds are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of
significant events with respect to the Bonds,such as redemptions,tenders,defaults,and proposed amendments to the
Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the
Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices be
provided directly to them.
Redemption notices shall be sent to DTC. If less than all Bonds of the same maturity are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct Participant of such maturity to be
redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds
unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC
mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede&
Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record
date(identified in a listing attached to the Omnibus Proxy).
Principal,interest and all other payments on the Bonds will be made to Cede&Co.,or such other nominee
as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants'
accounts upon DTC's receipt of funds and corresponding detail information from the City or Paying
Agent/Registrar, on the payment date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form or registered in"street name," and
will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, 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,interest and payments to Cede&Co.(or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of the Trustee, the Paying Agent/Registrar or the City,
8
disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time
by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained,Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC(or a successor
securities depository). In that event, Bond certificates will be printed and delivered. Thereafter,Bond certificates
may be transferred and exchanged as described in the Indenture.
The information in this section concerning DTC and DTC's book-entry system has been obtained from
sources that the City believes to be reliable, but none of the City,the City's Financial Advisor or the Underwriter
take any responsibility for the accuracy thereof.
NONE OF THE CITY,THE TRUS LEE, THE PAYING AGENT, THE CITY'S FINANCIAL ADVISOR
OR THE UNDERWRITER WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO THE DTC
PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEE WITH RESPECT TO THE
PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, THE INDIRECT
PARTICIPANTS OR THE BENEFICIAL OWNERS OF THE BONDS. THE CITY CANNOT AND DOES NOT
GIVE ANY ASSURANCES THAT DTC, THE DTC PARTICIPANTS OR OTHERS WILL DISTRIBUTE
PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS PAID TO DTC OR ITS NOMINEE,AS THE
REGISTERED OWNER, OR PROVIDE ANY NOTICES TO THE BENEFICIAL OWNERS OR THAT THEY
WILL DO SO ON A TIMELY BASIS, OR THAT DTC WILL ACT IN THE MANNER DESCRIBED IN THIS
LIMITED OFFERING MEMORANDUM. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE
WITH THE SECURIITI S AND EXCHANGE COMMISSION, AND THE CURRENT PROCEDURES OF DTC
TO BE FOLLOWED IN DEALING WITH DTC PARTICIPANTS ARE ON FILE WITH DTC.
LIMITATIONS APPLICABLE TO INITIAL PURCHASERS
Each initial purchaser is advised that the Bonds being offered pursuant to this Limited Offering
Memorandum are being offered and sold only to "accredited investors" as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933 and "qualified institutional buyers" as defined in Rule 144A
promulgated under the Securities Act of 1933. Each initial purchaser of the Bonds (each, an "Investor") will be
deemed to have acknowledged,represented and warranted to the City as follows:
Each initial purchaser is advised that the Bonds being offered pursuant to this Limited Offering
Memorandum are being offered and sold only to "qualified institutional buyers" as defined in Rule 501 of
Regulation D promulgated under the Securities Act and"accredited investors"as defined in Rule 144A promulgated
under the Securities Act. Each initial purchaser of the Bonds (each, an "Investor") will be deemed to have
acknowledged and represented to the City as follows:
1) The Investor has authority and is duly authorized to purchase the Bonds and any other instruments
and documents required to be executed by the Investor in connection with the purchase of the
Bonds.
2) The Investor is an"accredited investor"under Rule 501 of Regulation D of the Securities Act or a
"qualified institutional buyer"under Rule 144A of the Securities Act,and therefore,has sufficient
knowledge and experience in financial and business matters,including purchase and ownership of
municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the
investment represented by the Bonds.
3) The Bonds are being acquired by the Investor for investment and not with a view to, or for resale
in connection with, any distribution of the Bonds, and the Investor intends to hold the Bonds
solely for its own account for investment purposes and for an indefinite period of time, and does
9
not intend at this time to dispose of all or any part of the Bonds. However,the investor may sell at
any time the Investor deems appropriate. The Investor understands that it may need to bear the
risks of this investment for an indefinite time,since any sale prior to maturity may not be possible.
4) The Investor understands that the Bonds are not registered under the Securities Act and that such
registration is not legally required as of the date hereof;and further understands that the Bonds(a)
are not being registered or otherwise qualified for sale under the"Blue Sky"laws and regulations
of any state,(b)will not be listed in any stock or other securities exchange,and(c)will not carry a
rating from any rating service.
5) The Investor acknowledges that it has either been supplied with or been given access to
information, including financial statements and other financial information, and the Investor has
had the opportunity to ask questions and receive answers from knowledgeable individuals
concerning the City, the Improvement Zone B Public Improvements, the Bonds, the security
therefor, and such other information as the Investor has deemed necessary or desirable in
connection with its decision to purchase the Bonds(collectively,the"Investor Information"). The
Investor has received a copy of this Limited Offering Memorandum relating to the Bonds. The
Investor acknowledges that it has assumed responsibility for its review of the Investor Information
and it has not relied upon any advice, counsel, representation or information from the City in
connection with the Investor's purchase of the Bonds. The Investor agrees that none of the City,
its councilmembers, officers,or employees shall have any liability to the Investor whatsoever for,
or in connection with the Investor's decision to purchase the Bonds except for fraud or willful
misconduct, to the extent permitted by law. For the avoidance of doubt, it is acknowledged that
Underwriter is not deemed an officer or employee of the City.
6) The Investor acknowledges that the obligations of the City under the Indenture are special,limited
obligations payable solely from amounts paid to the City pursuant to the terms of the Indenture
and the City shall not be directly or indirectly or contingently or morally obligated to use any other
moneys or assets of the City for amounts due under the Indenture. The Investor understands that
the Bonds are not secured by any pledge of any moneys received or to be received from taxation
by the City, the District (which has no taxing power), the State of Texas (the "State") or any
political subdivision or taxing district thereof; that the Bonds will never represent or constitute a
general obligation or a pledge of the faith and credit of the City, the State or any political
subdivision thereof; that no right will exist to have taxes levied by the State or any political
subdivision thereof for the payment of principal and interest on the Bonds; and that the liability of
the City and the State with respect to the Bonds is subject to further limitations as set forth in the
Indenture.
7) The Investor has made its own inquiry and analysis with respect to the Bonds and the security
therefor. The Investor is aware that the development of the District involves certain economic and
regulatory variables and risks that could adversely affect the security for the Bonds.
8) The Investor acknowledges that the sale of the Bonds to the Investor is made in reliance upon the
certifications,representations and warranties described in items 1-7 above.
SECURITY FOR THE BONDS
General
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE
PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE
EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST
THE GENERAL CREDIT OR TAXING POWER OF THE CITY AND ARE PAYABLE SOLELY FROM THE
SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE
RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION,
OR OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES AND OTHER FUNDS
10
COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO
OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE CITY'S
TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION
PREMIUM,IF ANY,THEREON. THE CITY SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY
THE BONDS OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES AND OTHER
FUNDS COMPRISING THE TRUST ESTATE.
The principal of,premium, if any,and interest on the Bonds are secured by a pledge of and a lien upon the
pledged revenues (the "Pledged Revenues"), consisting primarily of Assessments levied against the assessable
parcels or lots within Improvement Zone B of the District and other funds comprising the Trust Estate, all to the
extent and upon the conditions described herein and in the Indenture. Improvement Zone B of the District contains
approximately acres. In accordance with the PID Act,the City has caused the preparation of a Service and
Assessment Plan(as amended and supplemented, the"Service and Assessment Plan"), which describes the special
benefit received by the property within the District, including Improvement Zone B of the District, provides the
basis and justification for the determination of special benefit on such property,establishes the methodology for the
levy of Assessments and provides for the allocation of Pledged Revenues for payment of principal of, premium, if
any,and interest on the Bonds. The Service and Assessment Plan is reviewed and updated annually for the purpose
of determining the annual budget for improvements and the Annual Installments(as defined below)of Assessments
due in a given year. The determination by the City of the assessment methodology set forth in the Service and
Assessment Plan is the result of the discretionary exercise by the City Council of its legislative authority and
governmental powers and is conclusive and binding on all current and future landowners within the District. See
"APPENDIX B—Form of Service and Assessment Plan."
Single FamilyTracts which are overlaid byImprovement Zone A and Improvement Zone B will be
g P p
assessed for the Assessments and the Improvement Zone A Assessments. See "ASSESSMENT PROCEDURES—
Assessment Methodology" and "OVERLAPPING TAXES AND DEBT." The Assessments and the Improvement
Zone A Assessments are separate and distinct assessments on the applicable assessed parcels.Only the Assessments
are pledged to the payment of the Bonds;the Improvement Zone A Assessments are not pledged to and will not be
available for payment of the Bonds. Partial payment of the Assessments or the Annual Installments thereof could
adversely affect the City's ability to pay debt service on the Bonds. See`BONDHOLDERS' RISKS—Assessment
Limitations".
Pledged Revenues
The Cityis authorized bythe PID Act,the Assessment Ordinance and other provisions of law to finance the
Improvement Zone B Public Improvements by levying Assessments upon properties in Improvement Zone B of the
District benefitted thereby. For a description of the assessment methodology and the amounts of Assessments
anticipated to be levied on Improvement Zone B of the District, see "ASSESSMENT PROCEDURES" and
"APPENDIX B—Form of Service and Assessment Plan."
Pursuant to the Indenture, Pledged Revenues are the sum of(i)the Assessment Revenue, less the Annual
Collection Costs and(ii)any additional revenues that the City may deposit for the payment of Bonds. "Assessment
Revenue" means monies collected by or on behalf of the City from any one or more of the following: (i) an
Assessment levied against Improvement Zone B Assessed Property, or Annual Installment payment thereof,
including any interest on such Assessment or Annual Installment thereof during any period of delinquency, (ii) a
Prepayment, and (iii) Foreclosure Proceeds. "Annual Installments" means, with respect to Improvement Zone B
Assessed Property,each annual payment of the Assessments shown on the Assessment Roll related to the Bonds and
Improvement Zone B's portion of the Public Improvements, in the amounts shown on Exhibit F-1 attached to the
Service and Assessment Plan; which annual payment includes the Annual Collection Costs and the Additional
Interest collected on each annual payment of the Assessments as described in the Indenture and as defined and
calculated in the Service and Assessment Plan or in any Annual Service Plan Update.The City will covenant in the
Indenture that it will take and pursue all actions permissible under Applicable Laws to cause the Assessments to be
collected and the liens thereof enforced continuously. See "SECURITY FOR THE BONDS —Pledged Revenue
Fund,""APPENDIX A—Form of Indenture"and"APPENDIX B—Form of Service and Assessment Plan."
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The PID Act provides that the Assessments (including any reassessment, with interest, the expense of
collection and reasonable attorney's fees, if incurred) are a first and prior lien (the"Assessment Lien") against the
property assessed, superior to all other liens or claims, except liens and claims for State, county, school district, or
municipality ad valorem taxes and are a personal liability of and charge against the owners of property,regardless of
whether the owners are named and runs with the land. Pursuant to the PID Act, the Assessment Lien is effective
from the date of the Assessment Ordinance until the Assessments are paid (or otherwise discharged), and is
enforceable by the City Council in the same manner that an ad valorem property tax levied against real property may
be enforced by the City Council. See"ASSESSMENT PROCEDURES"herein. The Assessment Lien is superior
to any homestead rights of a property owner that were properly claimed after the adoption of the Assessment
Ordinance. However, an Assessment Lien may not be foreclosed upon if any homestead rights of a property owner
were properly claimed prior to the adoption of the Assessment Ordinance("Pre-existing Homestead Rights")for as
long as such rights are maintained on the property. See"BONDHOLDERS RISKS—Assess Limitations."
Collection and Deposit of Assessments
The Assessments shown on the Assessment Roll,together with the interest thereon,shall first be applied to
the payment of the principal of and interest on the Bonds as and to the extent provided in the Service and
Assessment Plan and the Indenture.
The Assessments assessed to pay debt service on the Bonds,together with interest thereon, are payable in
Annual Installments established by the Assessment Ordinance and the Service and Assessment Plan to correspond,
as nearly as practicable, to the debt service requirements for the Bonds. An Annual Installment of an Assessment
has been made payable in the Assessment Ordinance in each fiscal year of the City preceding the date of final
maturity of the Bonds which, if collected, will be sufficient to first pay debt service requirements attributable to
Assessments in the Service and Assessment Plan. Each Annual Installment is payable as provided in the Service
and Assessment Plan and the Assessment Ordinance.
A record of the Assessments on each parcel,tract or lot which are to be collected in each year during the
term of the Bonds is shown on the Assessment Roll. Sums received from the collection of the Assessments to pay
the debt service requirements (including delinquent installments, Foreclosure Proceeds and penalties) and of the
interest thereon shall be deposited into the Bond Pledged Revenue Account of the Pledged Revenue Fund, except
that amounts received as Prepayments shall be transferred into the Redemption Fund. See"SECURITY FOR THE
BONDS—Pledged Revenue Fund"and APPENDIX A—Form of Indenture.
The portions of the Annual Installments of Assessments collected to pay Annual Collection Costs shall be
deposited in the Administrative Fund and shall not constitute Pledged Revenues.
Unconditional Levy of Assessments
The City will impose Assessments on the property within Improvement Zone B of the District to pay the
principal of and interest on the Bonds scheduled for payment from Pledged Revenues as described in the Indenture
and in the Service and Assessment Plan and coming due during each Fiscal Year. The Assessments shall be
effective on the date of, and strictly in accordance with the terms of,the Assessment Ordinance. Each Assessment
may be paid immediately in full or in periodic Annual Installments over a period of time equal to the term of the
Bonds,which installments shall include interest on the Assessments. Pursuant to the Assessment Ordinance,interest
on the Assessments will be calculated at the rate of interest on the Bonds plus 0.50%, calculated on the basis of a
360-day year of twelve 30-day months. Such rate may be adjusted as described in the Service and Assessment Plan.
Each Annual Installment, including the interest on the unpaid amount of an Assessment, shall be calculated on
September 1 and shall be billed on or about October 1 of each year. Each Annual Installment together with interest
thereon shall be delinquent if not paid prior to February 1 of the following year. The initial Annual Installments will
be due when billed on or about October 1,2020,and will be delinquent if not paid prior to February 1,2021.
As authorized by Section 372.018(b)of the PID Act,the City will calculate and collect each year while the
Bonds are Outstanding and unpaid an assessment to pay the annual costs incurred by or on behalf of the City in the
administration and operation of the District. The portion of each Annual Installment used to pay such annual costs
shall remain in effect from year to year until all Bonds are finally paid or until the City adjusts the amount of the
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levy after an annual review in any year pursuant to Section 372.013 of the PID Act. The assessments to pay annual
expenses shall be due in the manner set forth in the Assessment Ordinance on October 1 of each year and shall be
delinquent if not paid by February 1 of the following year. Such assessments to pay expenses do not secure
repayment of the Bonds.
There will be no discount for the early payment of Assessments.
Assessments,together with interest,penalties, and expense of collection and reasonable attorneys' fees, as
permitted by the Texas Tax Code, shall be a first and prior lien against the property assessed, superior to all other
liens and claims, except liens or claims for State, county, school district or municipality ad valorem taxes and shall
be a personal liability of and charge against the owner of the property regardless of whether the owners are named
and runs with the land. The lien for Assessments and penalties and interest begins on the effective date of the
Assessment Ordinance and continues until the Assessments are paid or until all Bonds are finally paid.
Failure to pay an Annual Installment when due will not accelerate the payment of the remaining Annual
Installments of the Assessments and such remaining Annual Installments (including interest) shall continue to be
due and payable at the same time and in the same amount and manner as if such default had not occurred.
Perfected Security Interest
The lien on and pledge of the Trust Estate shall be valid and binding and fully perfected from and after the
Closing Date,without physical delivery or transfer of control of the Trust Estate,the filing of the Indenture or any
other act; all as provided in Texas Government Code, Chapter 1208, as amended,which applies to the issuance of
the Bonds and the pledge of the Trust Estate granted by the City under the Indenture, and such pledge is therefore
valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the
pledge of the Trust Estate granted by the City under the Indenture is to be subject to the filing requirements of Texas
Business and Commerce Code, Chapter 9, as amended, then in order to preserve to the registered owners of the
Bonds the perfection of the security interest in such pledge,the City agrees to take such measures as it determines
are reasonable and necessary under Texas law to comply with the applicable provisions of Texas Business and
Commerce Code,Chapter 9, as amended, and enable a filing to perfect the security interest in such pledge to occur.
See"APPENDIX A—Form of Indenture."
Pledged Revenue Fund
The City has created under the Indenture a Pledged Revenue Fund to be held by the Trustee. On or before
February 15 of each year while the Bonds are Outstanding and beginning February 15,2021,the City shall deposit
or cause to be deposited the Pledged Revenues into the Pledged Revenue Fund. From amounts deposited into the
Pledged Revenue Fund,the City shall deposit or cause to be deposited such Pledged Revenues as follows:(i)first,to
the Bond Pledged Revenue Account of the Pledged Revenue Fund in an amount sufficient to pay debt service on the
Bonds coming due in such calendar year, (ii) second,to the Reserve Account of the Reserve Fund in an amount to
cause the amount in the Reserve Account to equal the Reserve Account Requirement, (iii)third, to the Additional
Interest Reserve Account in an amount to cause the Additional Interest Reserve Account to equal the Additional
Interest Reserve Requirement, (iv)fourth,to pay other costs of the Improvement Zone B Public Improvements,and
(v)fifth,to pay other costs permitted by the PID Act.
From time to time as needed to pay the obligations relating to the Bonds,but no later than five(5)Business
Days before each Interest Payment Date,the Trustee shall withdraw from the Bond Pledged Revenue Account and
transfer to the Principal and Interest Account of the Bond Fund,an amount,taking into account any amounts then on
deposit in such Principal and Interest Account and any expected transfers from the Capitalized Interest Account to
the Principal and Interest Account,such that the amount on deposit in the Principal and Interest Account equals the
principal (including any Sinking Fund Installments) and interest due on the Bonds on the next Interest Payment
Date.
If, after the foregoing transfers and any transfer from the Reserve Fund as provided in the Indenture,there
are insufficient funds to make the payments described above, the Trustee shall apply the available funds in the
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Principal and Interest Account first to the payment of interest, then to the payment of principal (including any
Sinking Fund Installments)on the Bonds,as described in the Indenture.
Notwithstanding the deposits described in(i)through(v) above,the Trustee shall deposit Prepayments to
the Pledged Revenue Fund and as soon as practicable after such deposit shall transfer such Prepayments to the
Redemption Fund.
Notwithstanding the deposits described in (i) through (v) above, the Trustee shall deposit Foreclosure
Proceeds to the Pledged Revenue Fund and as soon as practicable after such deposit shall transfer such Foreclosure
Proceeds first, to the Reserve Fund to restore any transfers from the Reserve Fund made with respect to the
Improvement Zone B Assessed Property to which the Foreclosure Proceeds relate, and second,to the Redemption
Fund.
After satisfaction of the requirement to provide for the payment of the principal and interest on the Bonds
and to fund any deficiency that may exist in an account of the Reserve Fund,the Trustee shall, as instructed by the
City pursuant to a City Certificate, apply Assessments for any lawful purposes permitted by the PID Act for which
Assessments may be paid,including transfers to the Redemption Fund.
Any additional Pledged Revenues remaining after the satisfaction of the foregoing shall be applied by the
Trustee,as instructed by the City pursuant to a City Certificate,for any lawful purpose permitted by the PID Act for
which such additional Pledged Revenues may be used, including transfers to other Funds and Accounts created
pursuant to the Indenture.
Bond Fund
On each Interest Payment Date,the Trustee shall withdraw from the Principal and Interest Account of the
Bond Fund and transfer to the Paying Agent/Registrar the principal (including any Sinking Fund Installments)
and/or interest then due and payable on the Bonds, less any amount to be used to the pay the interest on the Bonds
on such Interest Payment Date that will be transferred from the Capitalized Interest Account,as provided below.
If amounts in the Principal and Interest Account are insufficient for the purposes set forth above, the
Trustee shall withdraw from the Reserve Fund amounts to cover the amount of such insufficiency in the order
described in the Indenture. Amounts so withdrawn from the Reserve Fund shall be deposited in the Principal and
Interest Account and transferred to the Paying Agent/Registrar.
Moneys in the Capitalized Interest Account shall be used for the payment of interest on the Bonds on the
following dates and in the following amounts:
Date Amount
Any amounts on deposit in the Capitalized Interest Account after the payment of interest on the dates and
in the amounts listed above shall be transferred to the Improvement Zone B Public Improvement Account of the
Project Fund,or if the Project Fund has been closed as provided in the Indenture, such amounts shall be transferred
to the Redemption Fund to be used to redeem Bonds and the Capitalized Interest Account shall be closed.
Project Fund
Money on deposit in the Project Fund shall be used for the purposes specified in the Indenture.
Disbursements from the Costs of Issuance Account of the Project Fund shall be made by the Trustee to pay costs of
issuance of the Bonds pursuant to either one or more City Certificates or an executed, completed, and accepted
Closing Disbursement Request.
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Disbursements from the Improvement Zone B Public Improvement Account to pay Actual Costs of the
Improvement Zone B Public Improvements shall be made by the Trustee upon receipt by the Trustee of either a
properly executed and completed Certificate for Payment or written direction from the City or its designee
approving the disbursement. The provisions and procedures related to such disbursements contained in the
Construction, Funding, and Acquisition Agreement, and no other provisions of the Construction, Funding, and
Acquisition Agreement, are herein incorporated by reference and deemed set forth herein in full; provided that the
Trustee shall be permitted to rely fully on any City Certificate or other written direction received pursuant to the
Indenture without investigation.
If the City Representative determines in his or her sole discretion that amounts then on deposit in the
Improvement Zone B Public Improvement Account of the Project Fund are not expected to be expended for
purposes of the Project Fund due to the abandonment, or constructive abandonment, of the Improvement Zone B
Public Improvements, such that, in the opinion of the City Representative, it is unlikely that the amounts in the
Improvement Zone B Public Improvement Account of the Project Fund will ever be expended for the purposes of
the Project Fund,the City Representative shall file a City Certificate with the Trustee which identifies the amounts
then on deposit in the Improvement Zone B Public Improvement Account of the Project Fund that are not expected
to be used for purposes of the Project Fund. If such City Certificate is so filed, the amounts on deposit in the
Improvement Zone B Public Improvement Account of the Project Fund shall be transferred to the Redemption Fund
to redeem Bonds on the earliest practicable date after notice of redemption has been provided in accordance with the
Indenture.In making any such determination,the City Representative may conclusively rely upon a certificate of an
Independent Financial Consultant.
Upon the filing of a City Certificate stating that all Improvement Zone B Public Improvements have been
completed and that all Actual Costs of the Improvement Zone B Public Improvements have been paid, or that any
such Actual Costs are not required to be paid from the Project Fund pursuant to either a Certificate for Payment or
written direction from the City or its designee,the Trustee(i)shall transfer the amount,if any,remaining within the
Improvement Zone B Public Improvement Account of the Project Fund to the Bond Fund and (ii) shall close the
Project Fund.
Not later than six(6)months following the Closing Date,upon a determination by the City Representative
that all costs of issuance of the Bonds have been paid,any amounts remaining in the Costs of Issuance Account shall
be transferred to another Account in the Project Fund and used to pay Actual Costs of the Improvement Zone B
Public Improvements, or to the Principal and Interest Account of the Bond Fund and used to pay interest on the
Bonds, as directed by the City in a City Certificate filed with the Trustee, and following such transfer,the Costs of
Issuance Account shall be closed. See APPENDIX A — Form of Indenture and APPENDIX F — Form of
Construction,Funding and Acquisition Agreement.
Reserve Account of the Reserve Fund
Pursuant to the Indenture,a Reserve Account will be created within the Reserve Fund for the benefit of the
Bonds and held by the Trustee and will be funded with proceeds of the Bonds as outlined in the Indenture in the
amount equal to not less than the Reserve Fund Requirement. Pursuant to the Indenture, the "Reserve Account
Requirement" for the Bonds shall be an amount equal to the least of(i) Maximum Annual Debt Service on the
Bonds as of the Closing Date, (ii) 125% of average Annual Debt Service on the Bonds as of the Closing Date, or
(iii) 10%of the proceeds of the Bonds;provided,however,that such amount shall be reduced by the amount of any
transfers made pursuant to the Indenture; and provided further that as a result of an optional redemption pursuant to
the Indenture, the Reserve Account Requirement shall be reduced by a percentage equal to the pro rata principal
amount of Bonds redeemed by such optional redemption divided by the total principal amount of the Outstanding
Bonds prior to such redemption. As of the Closing Date of the Bonds, the Reserve Account Requirement is
$ which is an amount equal to Maximum Annual Debt Service on the Bonds as of the date of issuance
and the City shall promptly consult with the Trustee to establish any necessary reduction to the Reserve Account
Requirement. All amounts deposited in the Reserve Account of the Reserve Fund shall be used and withdrawn by
the Trustee for the purpose of making transfers to the Principal and Interest Account of the Bond Fund as provided
in the Indenture.
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Whenever a transfer is made from the Reserve Account to the Bond Fund due to a deficiency in the Bond
Fund,the Trustee shall provide written notice thereof to the City, specifying the amount withdrawn and the source
of such funds.
Whenever, on any Interest Payment Date, or on any other date at the written request of a City
Representative, the amount in the Reserve Account exceeds the Reserve Account Requirement, the Trustee shall
provide written notice to the City Representative of the amount of the excess. Such excess shall be transferred to the
Principal and Interest Account to be used for the payment of interest on the Bonds on the next Interest Payment Date
in accordance with the Indenture, unless within thirty (30) days of such notice to the City Representative, the
Trustee receives a City Certificate instructing the Trustee to apply such excess:(i)to pay amounts due to the Rebate
Fund created under the Indenture,(ii)to the Administrative Fund in an amount not more than the Annual Collection
Costs for the Bonds,or(iii)to the Project Fund if such application and the expenditure of funds is expected to occur
within three(3)years of the date hereof.
If, after a Reserve Fund withdrawal,the amount on deposit in the Reserve Account of the Reserve Fund is
less than the Reserve Account Requirement, the Trustee shall transfer from the Pledged Revenue Fund to the
Reserve Account of the Reserve Fund the amount of such deficiency,in accordance with the Indenture.
The Trustee, if necessary,will transfer from the Bond Pledged Revenue Account of the Pledged Revenue
Fund to the Additional Interest Reserve Account on March 1 and September 1 of each year,commencing September
1, 2020 an amount equal to the Additional Interest until the Additional Interest Reserve Requirement has been
accumulated in the Additional Interest Reserve Account. Once the Additional Interest Reserve Requirement has
been accumulated in the Additional Interest Reserve Account, all amounts in excess of the Additional Interest
Reserve Requirement shall be transferred by the Trustee to the Redemption Fund to redeem Bonds as provided in
the Indenture;provided,however,that at any time the amount on deposit in the Additional Interest Reserve Account
is less than the Additional Interest Reserve Requirement,the Trustee shall resume depositing the Additional Interest
into the Additional Interest Reserve Account until the Additional Interest Reserve Requirement has accumulated in
the Additional Interest Reserve Account.
Whenever, on any Interest Payment Date, or on any other date at the written request of the City
Representative, the amounts on deposit in the Additional Interest Reserve Account exceed the Additional Interest
Reserve Requirement,the Trustee shall provide written notice to the City Representative of the amount of the excess
(the"Excess Additional Interest Reserve Amount"). The Trustee shall determine the value of cash and investments
on deposit in the Additional Interest Reserve Account as of September 30 of each year. So long as no Event of
Default(of which the Trustee has received written notice pursuant to the Indenture), shall have occurred under the
Indenture and be continuing, if as of the date of such determination the value of cash and investments on deposit in
the Additional Interest Reserve Account exceeds the Additional Interest Reserve Requirement for the Bonds, the
Trustee shall transfer such Excess Additional Interest Reserve Amount,at the direction of the City pursuant to a City
Certificate,to the Administrative Fund for the payment of Annual Collection Costs. In the event that the Trustee
does not receive a City Certificate directing the transfer of the Excess Additional Interest Reserve Amount to the
Administrative Fund within forty-five(45) days of providing notice to the City of such Excess Additional Interest
Reserve Amount,the Trustee shall transfer the Excess Additional Interest Reserve Amount to the Redemption Fund
to redeem Bonds pursuant to the Indenture.
Whenever,on any Interest Payment Date,the amount on deposit in the Bond Fund is insufficient to pay the
debt service on the Bonds due on such date, the Trustee shall transfer first, from the Additional Interest Reserve
Account of the Reserve Fund and second, from the Reserve Account of the Reserve Fund to the Bond Fund the
amounts necessary to cure such deficiency.
Whenever Bonds are to be redeemed with the proceeds of Prepayments pursuant to the Indenture, a
proportionate amount in the Reserve Account of the Reserve Fund shall be transferred on the Business Day prior to
the redemption date(or any other date specified in a City Certificate)by the Trustee to the Redemption Fund to be
applied to the redemption of the Bonds. The amount so transferred from the Reserve Account of the Reserve Fund
shall be equal to a percentage of the amount of the Bonds redeemed with such percentage equal to the lesser of: (i)
the amount required to be in the Reserve Account of the Reserve Fund, as a percentage of the Outstanding Bonds
prior to the redemption,and(ii)the amount actually in the Reserve Account of the Reserve Fund,as a percentage of
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the Outstanding Bonds prior to the redemption. If after such transfer,and after applying investment earnings on the
Prepayment toward the payment of accrued interest, there are insufficient funds to pay the principal amount plus
accrued and unpaid interest on such Bonds to the date fixed for redemption of the Bonds to be redeemed as a result
of such Prepayment,the Trustee shall transfer an amount equal to the shortfall from the Additional Interest Reserve
Account to the Redemption Fund to be applied to the redemption of the Bonds.
If the amount held in the Reserve Fund together with the amount held in the Bond Fund and Redemption
Fund is sufficient to pay the principal amount and of all Outstanding Bonds on the next Interest Payment Date,
together with the unpaid interest accrued on such Bonds as of such Interest Payment Date, the moneys from such
Funds shall be transferred to the Redemption Fund and thereafter used to redeem all Bonds as of such Interest
Payment Date.
At the final maturity of the Bonds, the amount on deposit in the Reserve Account and the Additional
Interest Reserve Account shall be transferred to the Redemption Fund and applied to the payment of the principal of
the Bonds.
Administrative Fund
The City has created under the Indenture an Administrative Fund held by the Trustee and in the
Administrative Fund,the District Administration Account.
The City shall deposit or cause to be deposited to the District Administration Account of the Administrative
Fund the amounts collected each year to pay the Annual Collection Costs. Moneys in the District Administration
Account of the Administrative Fund shall be held by the Trustee separate and apart from the other Funds created and
administered under the Indenture and used as directed by a City Certificate solely for the purposes set forth in the
Service and Assessment Plan, as determined by the City. See"APPENDIX B—Form of Service and Assessment
Plan."
THE ADMINISTRATIVE FUND IS NOT PART OF THE TRUST ESTATE AND IS NOT
SECURITY FOR THE BONDS.
Defeasance
All Outstanding Bonds shall prior to the Stated Maturity or redemption date thereof be deemed to have
been paid and to no longer be deemed Outstanding if(i) in case any such Bonds are to be redeemed on any date
prior to their Stated Maturity,the Trustee shall have given notice of redemption on such date as provided herein,(ii)
there shall have been deposited with the Trustee either moneys in an amount which shall be sufficient, or
Defeasance Securities the principal of and the interest on which when due will provide moneys which,together with
any moneys deposited with the Trustee at the same time, shall be sufficient to pay when due the principal of and
interest on of the Bonds to become due on such Bonds on and prior to the redemption date or maturity date thereof,
as the case may be, (iii) the Trustee shall have received a report by an independent certified public accountant
selected by the City verifying the sufficiency of the moneys or Defeasance Securities deposited with the Trustee to
pay when due the principal of and interest on of the Bonds to become due on such Bonds on and prior to the
redemption date or maturity date thereof,as the case may be,(iv)if the Bonds are then rated,the Trustee shall have
received written confirmation from each rating agency that such deposit will not result in the reduction or
withdrawal of the rating on the Bonds, and (v)the Trustee shall have received an opinion of Bond Counsel to the
effect that (A) any Bond having been deemed to have been paid as provided in the Indenture is no longer
Outstanding hereunder and is no longer secured by or entitled to the benefits of the Indenture,(B)such defeasance is
in accordance with the terms thereof and(C) such defeasance will not adversely affect the exclusion of interest on
such Bond from gross income for purposes of federal income taxation. Neither Defeasance Securities nor moneys
deposited with the Trustee pursuant to the Indenture nor principal or interest payments on any such Defeasance
Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for,the payment of the
principal of and interest on the Bonds. Any cash received from such principal of and interest on such Defeasance
Securities deposited with the Trustee, if not then needed for such purpose, shall, be reinvested in Defeasance
Securities as directed in writing by the City maturing at times and in amounts sufficient to pay when due the
principal of and interest on the Bonds on and prior to such redemption date or maturity date thereof,as the case may
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be. Any payment for Defeasance Securities purchased for the purpose of reinvesting cash as aforesaid shall be made
only against delivery of such Defeasance Securities.
"Defeasance Securities"means Investment Securities then authorized by applicable law for the investment
of funds to defease public securities. "Investment Securities" means those authorized investments described in the
Public Funds Investment Act, Texas Government Code, Chapter 2256, as amended; and provided further
investments are,at the time made,included in and authorized by the City's official investment policy as approved by
the City Council from time to time. Under current State law, Investment Securities that are authorized for the
investment of funds to defease public securities are (a) direct, noncallable obligations of the United States of
America,including obligations that are unconditionally guaranteed by the United States of America; (b)noncallable
obligations of an agency or instrumentality of the United States, including obligations that are unconditionally
guaranteed or insured by the agency or instrumentality, and that,on the date the governing body of the City adopts
or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a
nationally recognized investment rating firm not less than"AAA"or its equivalent; and(c)noncallable obligations
of a state or an agency or a county,municipality,or other political subdivision of a state that have been refunded and
that, on the date the governing body of the City adopts or approves the proceedings authorizing the issuance of
refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than
"AAA"or its equivalent.
There is no assurance that the current law will not be changed in a manner which would permit investments
other than those described above to be made with amounts deposited to defease the Bonds. Because the Indenture
does not contractually limit such investments, Owners may be deemed to have consented to defeasance with such
other investments,notwithstanding the fact that such investments may not be of the same investment quality as those
currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as
Defeasance Securities or that for any other Defeasance Security will be maintained at any particular rating category.
Events of Default
Each of the following occurrences or events shall be and is hereby declared to be an "Event of Default,"
under the Indenture:
1. The failure of the City to deposit the Pledged Revenues to the Bond Pledged Revenue Account of the
Pledged Revenue Fund;
2. The failure of the City to enforce the collection of the Assessments, including the prosecution of
foreclosure proceedings;
3. The failure to make payment of the principal of or interest on any of the Bonds when the same
becomes due and payable and such failure is not remedied within thirty(30)days;and
4. Default in the performance or observance of any other covenant, agreement or obligation of the City
under the Indenture and the continuation thereof for a period of ninety(90)days after written notice to
the City by the Trustee, or by the Owners of at least twenty-five percent (25%) of the aggregate
outstanding principal of the Bonds with a copy to the Trustee, specifying such default by the Owners
of at least twenty-five percent (25%) of the aggregate outstanding principal of the Bonds requesting
that the failure be remedied.
Notwithstanding the foregoing, none of the foregoing will be viewed to be an Event of Default if it is in
violation of any applicable state law or court order.
Notwithstanding the foregoing,nothing in item 3 above shall require the City to advance any funds other
than the Pledged Revenues that have been received by the City or other funds currently available in the Pledged
Funds to pay the principal of or interest on the Bonds.
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Remedies in Event of Default
Upon the happening and continuance of any one or more of the Events of Default,the Trustee may, and at
the written direction of the Owners of at least twenty-five percent(25%) of the aggregate outstanding principal of
the Bonds and its receipt of indemnity satisfactory to it shall,proceed against the City for the purpose of protecting
and enforcing the rights of the Owners under the Indenture,by action seeking mandamus or by other suit, action,or
special proceeding in equity or at law, in any court of competent jurisdiction, for any relief to the extent permitted
by the Indenture or by Applicable Laws, including, but not limited to,the specific performance of any covenant or
agreement contained herein, or injunction; provided, however, that no action for money damages against the City
may be sought or shall be permitted. The Trustee retains the right to obtain the advice of counsel in its exercise of
remedies of default.
THE PRINCIPAL OF THE BONDS SHALL NOT BE SUBJECT TO ACCELERATION UNDER ANY
CIRCUMSTANCES.
If the assets of the Trust Estate are sufficient to pay all amounts due with respect to Outstanding Bonds, in
the selection of Trust Estate assets to be used in the payment of Bonds due under the Indenture, the City shall
determine,in its absolute discretion,and shall instruct the Trustee by City Certificate,which Trust Estate assets shall
be applied to such payment and shall not be liable to any Owner or other Person by reason of such selection and
application. In the event that the City shall fail to deliver to the Trustee such City Certificate,the Trustee shall select
and liquidate or sell Trust Estate assets as provided in the following paragraph,and shall not be liable to any Owner,
or other Person,or the City by reason of such selection,liquidation or sale.
Whenever moneys are to be applied pursuant to the Indenture, irrespective of and whether other remedies
authorized under the Indenture shall have been pursued in whole or in part,the Trustee may cause any or all of the
assets of the Trust Estate,including Investment Securities,to be sold. The Trustee may so sell the assets of the Trust
Estate and all right, title, interest, claim and demand thereto and the right of redemption thereof, in one or more
parts,at any such place or places,and at such time or times and upon such notice and terms as the Trustee may deem
appropriate and as may be required by law and apply the proceeds thereof in accordance with the provisions of the
Indenture. Upon such sale,the Trustee may make and deliver to the purchaser or purchasers a good and sufficient
assignment or conveyance for the same, which sale shall be a perpetual bar both at law and in equity against the
City, and all other Persons claiming such properties. No purchaser at any sale shall be bound to see to the
application of the purchase money proceeds thereof or to inquire as to the authorization, necessity, expediency, or
regularity of any such sale. Nevertheless,if so requested by the Trustee,the City shall ratify and confirm any sale or
sales by executing and delivering to the Trustee or to such purchaser or purchasers all such instruments as may be
necessary or,in the judgment of the Trustee,proper for the purpose which may be designated in such request.
Restriction on Owner's Actions
No Owner shall have any right to institute any action, suit or proceeding at law or in equity for the
enforcement of the Indenture or for the execution of any trust thereof or any other remedy thereunder, unless (i) a
default has occurred and is continuing of which the Trustee has been notified in writing,(ii)such default has become
an Event of Default and the Owners of not less than twenty-five percent(25%)of the aggregate principal amount of
the Bonds then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to
proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name,
(iii)the Owners have furnished to the Trustee indemnity as provided in the Indenture,(iv)the Trustee has for ninety
(90) days after such notice failed or refused to exercise the powers hereinbefore granted,or to institute such action,
suit,or proceeding in its own name,(v)no written direction inconsistent with such written request has been given to
the Trustee during such 90-day period by Owners of a majority of the aggregate principal amount of the Bonds then
Outstanding, and (vi) notice of such action, suit, or proceeding is given to the Trustee in writing; however, all
proceedings at law or in equity shall be instituted and maintained in the manner provided herein and for the equal
benefit of the Owners of all Bonds then Outstanding. The notification,request and furnishing of indemnity set forth
above shall, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of the
Indenture and to any action or cause of action for the enforcement of the Indenture or for any other remedy
thereunder.
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Subject to the limitations set forth in the Indenture regarding the liability of the City, nothing in the
Indenture shall affect or impair the right of any Owner to enforce, by action at law, payment of any Bond at and
after the maturity thereof,or on the date fixed for redemption or the obligation of the City to pay each Bond issued
hereunder to the respective Owners thereof at the time and place, from the source and in the manner expressed
herein and in the Bonds.
In case the Trustee or any Owners shall have proceeded to enforce any right under the Indenture and such
proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to
the Trustee or any Owners, then and in every such case the City, the Trustee and the Owners shall be restored to
their former positions and rights thereunder, and all rights,remedies and powers of the Trustee shall continue as if
no such proceedings had been taken.
Application of Revenues and Other Moneys After Event of Default
All moneys, securities, funds and Pledged Revenues and other assets of the Trust Estate and the income
therefrom received by the Trustee pursuant to any right given or action taken under the provisions of the Indenture
shall, after payment of the cost and expenses of the proceedings resulting in the collection of such amounts, the
expenses(including its counsel),liabilities,and advances incurred or made by the Trustee and the fees of the Trustee
in carrying out the Indenture, during the continuance of an Event of Default, notwithstanding certain provisions
under the Indenture,shall be applied by the Trustee,on behalf of the City,to the payment of interest and principal or
Redemption Price then due on Bonds,as follows:
FIRST: To the payment to the registered owners entitled thereto all installments of interest then due in the
direct order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any
installment,then to the payment thereof ratably,according to the amounts due on such installment,to the registered
owners entitled thereto,without any discrimination or preference;and
SECOND: To the payment to the registered owners entitled thereto of the unpaid principal of Outstanding
Bonds, or Redemption Price of any Bonds which shall have become due, whether at maturity or by call for
redemption,in the direct order of their due dates and,if the amounts available shall not be sufficient to pay in full all
the Bonds due on any date,then to the payment thereof ratably,according to the amounts of principal due and to the
registered owners entitled thereto,without any discrimination or preference.
Within ten(10)days of receipt of such good and available funds,the Trustee may fix a record and payment
date for any payment to be made to Owners pursuant to the above provisions.
In the event funds are not adequate to cure any of the Events of Default described in the Indenture, the
available funds shall be allocated to the Bonds that are Outstanding in proportion to the quantity of Bonds that are
currently due and in default under the terms of the Indenture.
The restoration of the City to its prior position after any and all defaults have been cured, as provided in
above, shall not extend to or affect any subsequent default under the Indenture or impair any right consequent
thereon.
Investment or Deposit of Funds
Money in any Fund or Account established pursuant to the Indenture shall be invested by the Trustee as
directed by the City pursuant to a City Certificate filed with the Trustee at least two (2) days in advance of the
making of such investment in time deposits or certificates of deposit secured in the manner required by law for
public funds, or be invested in direct obligations of, including obligations the principal and interest on which are
unconditionally guaranteed by, the United States of America, in obligations of any agencies or instrumentalities
thereof, or in such other investments as are permitted under the Public Funds Investment Act Texas Government
Code, Chapter 2256, as amended, or any successor law, as in effect from time to time; provided that all such
deposits and investments shall be made in such manner (which may include repurchase agreements for such
investment with any primary dealer of such agreements)that the money required to be expended from any Fund will
be available at the proper time or times. Such investments shall be valued each year in terms of current market
20
value as of September 30. For purposes of maximizing investment returns,to the extent permitted by law,money in
such Funds may be invested in common investments of the kind described above, or in a common pool of such
investment which shall be kept and held at an official depository bank,which shall not be deemed to be or constitute
a commingling of such money or funds provided that safekeeping receipts or certificates of participation clearly
evidencing the investment or investment pool in which such money is invested and the share thereof purchased with
such money or owned by such Fund are held by or on behalf of each such Fund. If necessary, such investments
shall be promptly sold to prevent any default.
Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of
such Fund or Account, subject, however, to the requirements of the Indenture for transfer of interest earnings and
profits resulting from investment of amounts in Funds and Accounts. Whenever in the Indenture any moneys are
required to be transferred by the City to the Trustee, such transfer may be accomplished by transferring a like
amount of Investment Securities.
The Trustee and its affiliates may act as sponsor, advisor, depository,principal or agent in the acquisition
or disposition of any investment. The Trustee shall have no investment discretion and the Trustee shall follow the
written instructions of any City Certificate. The Trustee shall not incur any liability for losses arising from any
investments made pursuant to the Indenture. The Trustee shall not be required to determine the suitability or legality
of any investments.
Investments in any and all Funds and Accounts may be commingled in a separate fund or funds for
purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or
holding in or to the credit of particular Funds or Accounts of amounts received or held by the Trustee thereunder,
provided that the Trustee shall at all times account for such investments strictly in accordance with the Funds and
Accounts to which they are credited and otherwise as provided in the Indenture.
The Trustee will furnish the City monthly cash transaction statements which include detail for all
investment transactions made by the Trustee thereunder; and, unless the Trustee receives a written request, the
Trustee is not required to provide brokerage confirmations so long as the Trustee is providing such monthly cash
transaction statements.
Against Encumbrances
Other than liens created in connection with the indebtedness issued in compliance with or as specified in
the Indenture,the City shall not create and,to the extent Pledged Revenues are timely received, shall not suffer to
remain, any lien, encumbrance or charge upon the Pledged Revenues,or upon any other property pledged under the
Indenture.
So long as Bonds are Outstanding, the City shall not issue any bonds, notes or other evidences of
indebtedness secured by any pledge of or other lien or charge on the Pledged Revenues or other property pledged
under the Indenture,except for the Bonds and other indebtedness issued in compliance with the Indenture.
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Additional Obligations
The City reserves the right to issue Additional Obligations under other indentures, assessment ordinances,
or similar agreements or other obligations that do not constitute or create a lien on any portion of the Trust Estate
and are not payable from Pledged Revenues or any other portion of the Trust Estate,provided that such Additional
Obligations shall comply with the requirements of the third paragraph below.
Other than Refunding Bonds, the City will not create or voluntarily permit to be created any debt, lien or
charge on the Trust Estate, and will not do or omit to do or suffer to be or omitted to be done any matter or things
whatsoever whereby the lien of the Indenture or the priority hereof might or could be lost or impaired; and further
covenants that it will pay or cause to be paid or will make adequate provisions for the satisfaction and discharge of
all lawful claims and demands which if unpaid might by law be given precedence over or any equality with the
Indenture as a lien or charge upon the Trust Estate;provided,however,that nothing in the Indenture shall require the
City to apply, discharge, or make provision for any such lien, charge, claim, or demand so long as the validity
thereof shall be contested by it in good faith, unless thereby, in the opinion of Bond Counsel or counsel to the
Trustee,the same would endanger the security for the Bonds.
Additionally, the City has reserved the right to issue bonds or other obligations secured by and payable
from Pledged Revenues so long as such pledge is subordinate to the pledge of Pledged Revenues securing payment
of the Bonds.
Notwithstanding anything to the contrary in the Indenture,no Refunding Bonds,Additional Obligations or
subordinate obligations may be issued by the City unless: (1)the principal(including sinking fund installments)of
such Refunding Bonds, Additional Obligations or subordinate obligations are scheduled to mature on September 1
of the years in which principal is schedule to mature, and (2) the interest on such Refunding Bonds, Additional
Obligations or subordinate obligations must be scheduled to be paid on March 1 and/or September 1 of the years in
which interest is scheduled to be paid.
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SOURCES AND USES OF FUNDS
The table that follows summarizes the expected sources and uses of proceeds of the Bonds:
Sources of Funds:
Principal Amount
Total Sources
Uses of Funds:
Deposit to Improvement Zone B Public Improvement Account of the Project Fund
Deposit to Capitalized Interest Account of Bond Fund
Deposit to Reserve Account of the Reserve Fund
Deposit to Additional Interest Account of the Reserve Fund
Deposit to District Administration Account of Administrative Fund
Costs of Issuance
Underwriter's Discount(')
Total Uses
(12) Includes Underwriter's Counsel's fee of$
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DEBT SERVICE REQUIREMENTS"
The following table sets forth the anticipated debt service requirements for the Bonds:
Year Ending
(September 1) Principal Interest Total
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Total
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*Preliminary;subject to change.
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OVERLAPPING TAXES AND DEBT
The land within Improvement Zone B of the District has been,and is expected to continue to be, subject to
taxes and assessments imposed by taxing entities other than the City. Such taxes are payable in addition to the
Assessments levied by the City.
In addition to the Assessments described above, the Developer anticipates that each lot owner in
Improvement Zone B of the District will pay a maintenance and operation fee and/or a fee to a homeowner's
association (the "HOA") in the case of Single Family Tracts and to a property owner's association in the case of
Commercial Tracts and Multifamily Tracts (the "POA"), which are expected to be formed by the Developer after
delivery of the Bonds. Single Family Tracts in Improvement Zone B will also be responsible for payment of a
portion of the Improvement Zone A Assessments. See "PLAN OF FINANCE —Development Plan and Plan of
Finance." In addition to the City,Tarrant County,Texas,the Birdville Independent School District,Tarrant County
Hospital District, and the Tarrant County College District may each levy ad valorem taxes upon land in
Improvement Zone B of the District for payment of debt incurred by such governmental entities and/or for payment
of maintenance and operations expenses. The City has no control over the level of ad valorem taxes or special
assessments levied by such other taxing authorities. The following table reflects the overlapping ad valorem tax
rates currently levied on property located in Improvement Zone B of the District. The District is located within the
boundaries of the City, the Birdville Independent School District,the Tarrant County Hospital District,the Tarrant
County College District and within Tarrant County,Texas.
SINGLE FAMILY TRACTS
Tax Year 2018
Taxing Entity Ad Valorem Tax Ratet'l
The City $ 0.5850
Tarrant County,Texas 0.2340
Birdville Independent School District 1.4539
Tarrant County Hospital District 0.2244
Tarrant County College District 0.1361
Total Existing Tax Rate $2.6334
Average Annual Installment of the Assessments as tax $
rate equivalent(2)
Estimated Average Annual Installment in Improvement Zone $.
B of the Assessments
Less Projected TIRZ Annual Credit as a tax rate equivalent $0
Targeted Net Average Annual Installment of $
Improvement Zone B Assessments as tax rate equivalent'3)
Estimated Total Tax Rate and Average Annual
Installments on Single Family Tracts in the District as tax
rate equivalent
(1) As reported by the taxing entities. Per$100 in taxable assessed value.
(2) Source: P3Works, LLC. Derived from information presented in Exhibit J of the Service and Assessment Plan. Includes
Assessments initially levied for payment of the Bonds levied on the Single Family Tracts. Preliminary,subject to change.
(3) Source: P3Works,LLC. Derived from information presented in Exhibit J of the Service and Assessment Plan. Includes the
Improvement Zone A Assessments levied on the Single Family Tracts. See"PLAN OF FINANCE —TIRZ Revenues May
Reduce Improvement Zone A Assessments." Preliminary,subject to change.
Source: Tarrant Appraisal District and the City.
•
25
MULTIFAMILY TRACTS
Tax Year 2018
Taxing Entity Ad Valorem Tax Rate(1)
The City $ 0.5850
Tarrant County,Texas 0.2340
Birdville Independent School District 1.4539
Tarrant County Hospital District 0.2244
Tarrant County College District 0.1361
Total Existing Tax Rate $2.6334
Estimated Average Annual Installment of the Assessments $.
Net Estimated Total Tax Rate and Average Annual
Installment in Improvement Zone B of the District as tax
rate equivalent
(1) As reported by the taxing entities. Per$100 in taxable assessed value.
(2) Source: P3Works, LLC. Derived from information presented in Exhibit J of the Service and Assessment Plan. Includes
Assessments initially levied for payment of the Bonds on the Multifamily Tracts. Preliminary,subject to change.
Source: Tarrant Appraisal District and the City.
As noted above, Improvement Zone B of the District includes territory located in other governmental
entities that may issue or incur debt secured by the levy and collection of ad valorem taxes or assessments. Set forth
below are overlapping debt tables showing the outstanding indebtedness payable from ad valorem taxes with respect
to Single Family Tracts within Improvement Zone B of the District and Commercial Tracts within Improvement
Zone B of the District,as of October 15,2019:
SINGLE FAMILY TRACTS
Gross Estimated Direct and
Outstanding Debt Percentage Estimated
Taxing or Assessing Entity as of 10/15/2019 Applicable(1) Overlapping Debtt�1
The City(Assessments-The Bonds)(2) $ 5,680,000 100.000% $5,680,000
The City(Improvement Zone A Assessments on Single
Family Tracts)(2) $ 1,590,000 100.000% $1,590,000
The City(Ad Valorem Taxes) 121,140,000
Tarrant County,Texas 266,375,000
Birdville Independent School District 397,327,084
Tarrant County Hospital District 17,735,000
TOTAL $808,257,084 $0.000,000
(1) Based on the Appraisal of property in Improvement Zone B of the District and on the Tax Year 2019 Net Taxable Assessed
Valuations for the taxing entities.
(2) Preliminary,subject to change.
Source: Municipal Advisory Council of Texas
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MULTIFAMILY TRACTS
Gross Estimated Direct and
Outstanding Debt Percentage Estimated
Taxing or Assessing Entity as of 10/15/2019 Applicable(') Overlapping Debt(')
The City(Assessments-The Bonds)(2) $ 3,325,000 100.000% $3,325,000
The City(Ad Valorem Taxes) 121,140,000
Tarrant County,Texas 266,375,000
Birdville Independent School District 397,327,084
Tarrant County Hospital District 17,735,000
TOTAL $805,902,084 $0,000.000
(i) Based on the Appraisal of property in Improvement Zone B of the District and on the Tax Year 2019 Net Taxable Assessed
Valuations for the taxing entities.
(2) Preliminary,subject to change.
Source: Municipal Advisory Council of Texas
ASSESSMENT PROCEDURES
General
Capitalized terms used under this caption and not otherwise defined in this Limited Offering Memorandum
shall have the meanings given to such terms in the Service and Assessment Plan. As required by the HD Act,when
the City determines to defray a portion of the costs of the Improvement Zone B Public Improvements through
Assessments,it must adopt a resolution generally describing the Improvement Zone B Public Improvements and the
land within Improvement Zone B of the District to be subject to Assessments to pay the cost therefor. The City has
caused an assessment roll to be prepared(the"Assessment Roll"),which Assessment Roll will show the land within
Improvement Zone B of the District to be assessed,the amount of the benefit to and the Assessment against each lot
or parcel of land and the number of Annual Installments in which the Assessment is divided. The Assessment Roll
will be filed with the City Secretary and made available for public inspection. Statutory notice was given to the
owners of the property to be assessed and a public hearing was conducted to hear testimony from affected property
owners as to the propriety and advisability of undertaking the Improvement Zone B Public Improvements and
funding a portion of the same with Assessments. The City expects to levy the Assessments and adopt the
Assessment Ordinance immediately prior to adopting the Bond Ordinance. After such adoption, the Assessments
will become legal,valid and binding liens upon the property against which the Assessments are made.
Under the PID Act,the Actual Costs of the Improvement Zone B Public Improvements may be assessed by
the City against the assessable property in Improvement Zone B of the District so long as the special benefit
conferred upon the assessed property in Improvement Zone B (the"Assessed Property")by the Improvement Zone
B Public Improvements equals or exceeds the Assessments. The costs of the Improvement Zone B Public
Improvements may be assessed using any methodology that results in the imposition of equal shares of cost on
Assessed Property similarly benefited. The allocation of benefits and assessments to the benefitted land within the
District, including land in Improvement Zone B, is set forth in the Service and Assessment Plan, which should be
read in its entirety. See"APPENDIX B—Form of Service and Assessment Plan."
Assessment Methodology
The Service and Assessment Plan describes the special benefit to be received by each parcel of assessable
property as a result of the Improvement Zone B Public Improvements, provides the basis and justification for the
determination that such special benefit exceeds the Assessments being levied, and establishes the methodology by
which the City allocates the special benefit of the Improvement Zone B Public Improvements to parcels in a manner
that results in equal shares of costs being apportioned to parcels similarly benefited. As described in the Service and
Assessment Plan, a portion of the costs of the Improvement Zone B Public Improvements are being funded with
proceeds of the Bonds, which are payable from and secured by Pledged Revenues, including the Assessment
27
Revenues. As set forth in the Service and Assessment Plan, the City Council has determined that the Actual Costs
(as defined in the Service and Assessment Plan)associated with the Improvement Zone B Public Improvements will
be allocated to the parcels within Improvement Zone B of the District against which the Assessments are levied pro
rata based on the estimated build-out value of each.
The Service and Assessment Plan allocates the Assessments to the parcels based on four lot types.The lot
types are as follows:
Lot Type SF1: means a Lot in Improvement Zone B of the District designated as such on the Assessment
Roll,marketed to homebuilders as a townhome.
Lot Type SF2: means a Lot in Improvement Zone B of the District designated as such on the Assessment
Roll,marketed to homebuilders as an urban home.
Lot Type SF3: means a Lot in Improvement Zone B of the District designated as such on the Assessment
Roll,marketed to homebuilders as a bungalow home.
Lot Type Multifamily: means a Lot in Improvement Zone B of the District designated as such on the
Assessment Roll,shown a final plat approved by the City designated for use as a multifamily lot.
The following table provides additional analysis with respect to the assessment methodology,including the
value to assessment burden ratio per unit(lot),equivalent tax rate per unit,and leverage per unit. The information in
the tables was obtained from and calculated using information provided in the Service and Assessment Plan and the
Appraisal. See"APPENDIX B—Service and Assessment Plan"and"APPENDIX E—Appraisal."
LIEN TO VALUE ANALYSIS,ASSESSMENT ALLOCATION,EQUIVALENT TAX RATE AND ASSESSMENT RATIO PER
RESIDENTIAL LOT TYPE IN THE DISTRICT
"As Complete"Value to Lien per Zone Assessment Value-Single Family Development
Number Number Number "As Complete" Zone A&B
of SF1 of SF2 of SF3 Zone A Zone B Zone A&B Appraised Value
Parcel Name 1 Acres 1 Lots 1 Lots 1 Lots 1 Assessment 2 Assessment Z Assessment 2 Value 1 to Lien
Single-Family Tract 1 15.17 74 84 - $ 606,857 $ 2,325,925 $ 2,932,782 $ 9,210,000 3.14:1
Single-Family Tract 2 15.08 122 38 - $ 605,439 $ 2,320,490 $ 2,925,929 $ 9,040,000 3.09:1
Single-Family Tract 3 5.90 - - 46 $ 192,704 $ 738,585 $ 931,289 $ 3,690,000 3.96:1
Total/Average 36.15 196 122 46 $ 1,405,000 $ 5,385,000 $ 6,790,000 $ 21,940,090 3.23:1
1.As provided in the Appraisal.The conclusions reached in the Appraisal are subject to certain assumptions,hypothetical conditions and
qualifications,which are set forth therein.None of the City,the Developer,nor the Underwriter makes any representation as to the accuracy,
completeness assumptions or information contained in the Appraisal.
2.Based on information provided in the Preliminary Service and Assessment Plan dated October14,2019.Values subject to review by the
PID Administrator.
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LIEN TO VALUE ANALYSIS,ASSESSMENT ALLOCATION,EQUIVALENT TAX RATE AND ASSESSMENT RATIO PER
MULTIFAMILY ACRE IN THE DISTRICT
"As Complete"Value to Lien per Zone Assessment Value-Multi-Family Development
"As Complete" Zone A&B
Zone A Zone B Zone A&B Appraised Value
Parcel Name 1 Acres 1 Assessment 2 Assessment 2 Assessment 2 Value 1 to Lien
Multi-Family Tract 1 3.99 $ - $ 1,399,881 $ 1,399,881 $ 4,880,000 3.49:1
Multi-FamilyTract2 4.86 $ - $ 1,705,119 $ 1,705,119 $ 5,920,000 3.47:1
Total/Average 8.85 $ - $ 3,105,000 $ 3,105,000 $ 10,800,000 3.48:1
1.As provided in the Appraisal.The conclusions reached in the Appraisal are subject to certain assumptions,
hypothetical conditions and qualifications,which are set forth therein.None of the City,the Developer,northi
Underwriter makes any representation as to the accuracy,completeness assumptions or information contained
forth therein.None of the City,the Developer,nor the Underwriter makes any representation as to the accurac
completeness assumptions or information contained in the Appraisal.
2.Based on information provided in the Preliminary Service and Assessment Plan dated October 14,2019.Values
subject to review by the PID Administrator.
The City has created the TIRZ and adopted the TIRZ Project and Finance Plan providing for the TIRZ
Annual Credit Amount to offset a portion of the Annual Installments attributable to the costs of the Improvement
Zone B Public Improvements within Improvement Zone B of the District on any Parcel within Improvement Zone B
of the District. The Annual Installment for each Assessed Property shall be calculated by taking into consideration
any TIRZ Annual Credit Amount applicable to the Assessed Property. See "-Assessment Amounts—TIRZ Annual
Credit Amount"below.
For further explanation of the Assessment methodology, see "APPENDIX B — Form of Service and
Assessment Plan."
The City has determined that the foregoing method of allocation will result in the imposition of equal
shares of the Assessments on parcels similarly situated within Improvement Zone B of the District. The
Assessments and interest thereon are expected to be paid in Annual Installments as described above. The
determination by the City of the assessment methodology set forth in the Service and Assessment Plan is the result
of the discretionary exercise by the City Council of its legislative authority and governmental powers and is
conclusive and binding on the Developer and all future owners and developers within the District. See"APPENDIX
B—Form of Service and Assessment Plan."
Collection and Enforcement of Assessment Amounts
Under the PID Act,the Annual Installments may be collected in the same manner and at the same time as
ad valorem taxes of the City. The Assessments may be enforced by the City in the same manner that an ad valorem
tax lien against real property is enforced. Delinquent installments of the Assessments incur interest, penalties and
attorney's fees in the same manner as delinquent ad valorem taxes. Under the PID Act,the Assessment Lien is a
first and prior lien against the property assessed, superior to all other liens and claims except liens or claims for
State, county, school district or municipality ad valorem taxes. See `BONDHOLDERS' RISKS — Assessment
Limitations"herein.
In the Indenture,the City will covenant to collect,or cause to be collected,Assessments as provided in the
Assessment Ordinance. No less frequently than annually,City staff or a designee of the City shall prepare, and the
City Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual
Installments. Each Annual Service Plan Update shall include an updated Assessment Roll and a calculation of the
Annual Installment for each Parcel. Annual Collection Costs shall be allocated among all Parcels in proportion to
the amount of the Annual Installments for the Parcels.
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In the Indenture,the City will covenant, agree and warrant that,for so long as any Bonds are Outstanding,
and amounts are due the Developer to reimburse it for its funds it has contributed to pay costs of the Improvement
Zone B Public Improvements,that it will take and pursue all actions permissible under Applicable Laws to cause the
Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent
permitted by Applicable Laws,and,to the extent permitted by Applicable Laws,to cause no reduction,abatement or
exemption in the Assessments. Notwithstanding the foregoing, the City shall be permitted to reduce the
Assessments by the TIRZ Annual Credit Amount pursuant to the Development Agreement, the TIRZ Project and
Finance Plan and the Service and Assessment Plan; provided, however, that no such reduction shall operate to
reduce the amounts levied for the payment of the Annual Collection Costs.
To the extent permitted by law,notice of the Annual Installments will be sent by,or on behalf of the City,
to the affected property owners on the same statement or such other mechanism that is used by the City,so that such
Annual Installments are collected simultaneously with ad valorem taxes and shall be subject to the same penalties,
procedures,and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the City.
The City will determine or cause to be determined, no later than February 15 of each year,whether or not
any Annual Installment is delinquent and, if such delinquencies exist, the City will order and cause to be
commenced as soon as practicable any and all appropriate and legally permissible actions to obtain such Annual
Installment, and any delinquent charges and interest thereon, including diligently prosecuting an action in district
court to foreclose the currently delinquent Annual Installment. Notwithstanding the foregoing,the City shall not be
required under any circumstances to purchase or make payment for the purchase of the delinquent Assessment or the
corresponding Assessed Property.
The City will implement the basic timeline and procedures for Assessment collections and pursuit of
delinquencies set forth in Exhibit C of the City's Continuing Disclosure Agreement set forth in APPENDIX D-1 and
to comply therewith to the extent that the City reasonably determines that such compliance is the most appropriate
timeline and procedures for enforcing the payment of delinquent Assessments.
The City shall not be required under any circumstances to expend any funds for delinquent collection costs
in connection with its covenants and agreements under the Indenture or otherwise other than funds on deposit in the
Administrative Fund.
Annual Installments will be paid to the City or its agent. Annual Installments are due on October 1 of each
year, and become delinquent on February 1 of the following year. In the event Assessments are not timely paid,
there are penalties and interest as set forth below:
Date Payment Cumulative Cumulative
Received Penalty Interest Total
February 6% 1% 7%
March 7% 2% 9%
0 0 0
April 8/0 3/0 11/o
May 9% 4% 13%
June 10% 5% 15%
July 12% 6% 18%
After July,the penalty remains at 12%,and interest accrues at the rate of 1%each month. In addition,if an
account is delinquent in July, a 20%attorney's collection fee may be added to the total penalty and interest charge.
In general,property subject to lien may be sold,in whole or in parcels,pursuant to court order to collect the amounts
due. An automatic stay by creditors or other entities, including governmental units, could prevent 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 most
cases,post-petition Assessments are paid as an administrative expense of the estate in bankruptcy or by order of the
bankruptcy court.
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Assessment Amounts
Assessment Amounts. The maximum amounts of the Assessments will be established by the methodology
described in the Service and Assessment Plan. The Assessment Roll sets forth for each year the Annual Installment
for each Assessed Property consisting of(i) the annual payment allocable to the Bonds, including the Additional
Interest for the Improvement Zone B Public Improvements for each Assessed Property and(ii)the annual payment
allocable to Annual Collection Costs. The Annual Installments for the Assessments may not exceed the amounts
shown on the Assessment Roll. The Assessments will be levied against the parcels comprising the Assessed
Property as indicated on the Assessment Roll. See"APPENDIX B—Form of Service and Assessment Plan" and
"APPENDIX F—Form of Construction,Funding and Acquisition Agreement."
The Annual Installments shown on the Assessment Roll will be reduced to equal the actual costs of
repaying the Bonds(which amount will include Additional Interest)and actual Annual Collection Costs(as provided
for in the definition of such term),taking into consideration any other available funds for these costs,such as interest
income on account balances. The Annual Installments shall be further reduced by any offset or credit of the
applicable TIRZ Annual Credit Amount.
TIRZ Annual Credit Amount (Improvement Zone A Assessments). The City has agreed to use TIRZ
Revenues to offset a portion of the Improvement Zone A Assessments and the Annual Installments thereof. The
Annual Installment for each parcel subject to the Improvement Zone A Assessments shall be calculated by taking
into consideration any TIRZ Annual Credit Amount applicable to such parcel. Pursuant to the Service and
Assessment Plan, TIRZ Revenues collected for each tax year within the TIRZ will be used to calculate the TIRZ
Annual Credit Amount to be applied to the Annual Installment of the Improvement Zone A Assessments that will be
billed in the following year (e.g., TIRZ Revenues collected for the tax year 2019 shall be applied as the TIRZ
Annual Credit Amount applicable to Annual Installments of the Improvement Zone A Assessments to be billed in
2020),and such TIRZ Annual Credit Amount will be derived only from the TIRZ Revenues but in no event shall the
TIRZ Annual Credit Amount exceed the Maximum TIRZ Annual Credit Amount for each lot type as set forth in the
Service and Assessment Plan.
The "Maximum TIRZ Annual Credit Amount" applicable to each the Improvement Zone A Assessments
was calculated so that the net total of Annual Installments of the Improvement Zone A Assessments, the
Assessments and the ad valorem taxes on the Assessed Property did not produce an equivalent tax rate which
exceeds the competitive, composite equivalent ad valorem tax rate taking into consideration (i)the tax rates of all
applicable taxing units and (ii) the equivalent tax rate of the Annual Installments of the Assessments and the
Improvement Zone A Assessments based on assumed buildout values in the District at the time the Assessment
Ordinance is approved after application of the Maximum TIRZ Annual Credit Amount(the"Targeted Net Average
Annual Installment.") See "APPENDIX B —Form of the Service and Assessment Plan." TIRZ Revenues are not
credited to the Assessments, and no TIRZ Revenues shall be applied with respect to the Bonds or the Annual
Installments of Assessments.
The Maximum TIRZ Annual Credit Amounts are shown in the following table:
Maximum TIRZ Annual Credit Amount per Lot Type in Improvement Zone A of the District
Lot type Maximum TIRZ Annual
Credit Amount per
Lot/sq.ft.
SF1 $405.56
SF2 $426.54
SF3 $454.51
Commercial(per acre) $35,677.54
(I) The Maximum TIRZ Annual Credit Amount for the each lot was established based on the Targeted Net Average Annual
Installment.See"OVERLAPPING DEBT AND TAXES"and"APPENDIX B—Service and Assessment Plan."
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The TIRZ Revenues are generated only from ad valorem taxes levied and collected by the City and the
County, as applicable, on the captured appraised value of property within the District in the TIRZ in any year.
Consequently,TIRZ Revenues are generated only if the appraised value of real property in the District in any year is
greater than the base value. Any delay or failure of Developer to develop the District may result in a reduced
amount of the TIRZ Revenue being available to credit the Improvement Zone A Assessments. TIRZ Revenues
generated from the captured appraised value for each lot in the District during the development of such lot
will result in a TIRZ Annual Credit Amount which is not sufficient to achieve the Targeted Net Average
Annual Installment of the Improvement Zone A Assessments. The TIRZ Annual Credit Amount is not
expected to be sufficient to provide for the Targeted Net Average Annual Installment on a single family
residential parcel until the second year that a home on such Lot is assessed. SEE "OVERLAPPING TAXES
AND DEBT."
After the TIRZ Annual Credit Amount is applied to provide a credit towards a portion of the Annual
Installments of the Improvement Zone A Assessments, any excess TIRZ Revenues available from the TIRZ Fund
shall be held in a segregated account by the City and shall be used either (1) to prepay a portion of all of the
Improvement Zone A Assessments in a manner determined by the City and the Administrator to be fair and
equitable, and to redeem bonds pursuant to the extraordinary redemption provisions of the Indenture for the
Improvement Zone A Bonds, (2)to optionally redeem the outstanding Improvement Zone A Bonds pursuant to the
provisions of the Indenture, or (3) to be applied as a credit towards a portion of Annual Installments of the
Improvement Zone A Assessments in future years in an effort to maintain a level Annual Installment schedule for
the Improvement Zone A Assessments.
Method of Apportionment of Assessments. For purposes of the Service and Assessment Plan, the City
Council has determined that the Assessments will be initially allocated to the Assessed Property within
Improvement Zone B of the District pro rata based on the estimated build-out value of each.
Reallocation of Assessments for the Single Family Tracts. Upon the division of any Single Family
Assessed Property(without the recording of subdivision plat),the Administrator shall reallocate the Assessment for
the Single Family Assessed Property prior to the division among the newly divided Single Family Assessed
Properties according to the following formula:
A=Bx(C=D)
Where the terms have the following meanings:
A=the Assessment for the newly divided Single Family Assessed Property
B=the Assessment for the Single Family Assessed Property prior to division
C=the estimated buildout value of the newly divided Single Family Assessed Property
D =the sum of the estimated buildout value for all of the newly divided Single Family Assessed
Properties
The calculation of the buildout value of a Single Family Assessed Property shall be performed by the
Administrator based on information from the Owner, homebuilders, market studies, appraisals, official public
records of the County, and any other relevant information regarding the Single Family Assessed Property. The
calculation as confirmed by the City Council shall be conclusive.
The sum of the Assessments for all newly divided Single Family Assessed Properties shall equal the
Assessment for the Single Family Assessed Property prior to subdivision. The calculation shall be made separately
for each newly divided Single Family Assessed Property. The reallocation of an Assessment for a Single Family
Assessed Property that is a homestead under Texas law may not exceed the Assessment prior to the reallocation.
Any reallocation shall be reflected in the next Annual Service Plan Update and approved by the City Council.
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Upon Subdivision by a Recorded Subdivision Plat. Upon the subdivision of any Single Family Assessed
Property based on a recorded subdivision plat, the Administrator shall reallocate the Assessment for the Single
Family Assessed Property prior to the subdivision among the new subdivided Lots based on buildout value
according to the following formula:
A=[Bx(C_D)]/E
Where the terms have the following meanings:
A=the Assessment for the newly subdivided Lot
B=the Assessment for the Parcel prior to subdivision
C=the sum of the estimated average buildout value of all newly subdivided Lots with same
Lot Type
D = the sum of the estimated average buildout value for all of the newly subdivided Lots
excluding Non-Benefitted Property
E=the number of newly subdivided Lots with same Lot Type
Prior to the recording of a subdivision plat, the Developer shall provide the City an estimated buildout
value as of the date of the recorded subdivision plat for each Lot created by the recorded subdivision plat
considering factors such as density, lot size, proximity to amenities, view premiums, location, market conditions,
historical sales, discussions with homebuilders, and any other factors that may impact value. The calculation of the
estimated average buildout value for a Lot shall be performed by the Administrator and confirmed by the City
Council based on information provided by the Developer,homebuilders,third party consultants, and/or the official
public records of the County regarding the Lot.
The sum of the Assessments for all newly subdivided Lots shall not exceed the Assessment for the portion
of the Single Family Assessed Property subdivided prior to subdivision.The calculation shall be made separately for
each newly subdivided Single Family Assessed Property. The reallocation of an Assessment for a Single Family
Assessed Property that is a homestead under Texas law may not exceed the Assessment prior to the reallocation.
Any reallocation shall be reflected in the next Annual Service Plan Update and approved by the City Council.
Reallocation of Assessments for the Commercial Tracts. The sum of the Assessments for all newly
subdivided Assessed Properties shall equal the Assessment for the subdivided Assessed Property in the Commercial
Tracts prior to subdivision. When the Commercial Tracts Initial Parcel is subsequently platted, subdivided, re-
subdivided or re-platted, the Assessment applicable to each resulting new Assessed Property in the Commercial
Tracts shall be equal to formula below:
A=Bx(C=D)
Where the terms have the following meanings:
A=the Assessment for the newly subdivided Assessed Property
B=the Assessment for the Assessed Property prior to subdivision
C=the estimated acreage of the newly divided Assessed Property
D=the sum of the estimated acreage for all of the newly divided Assessed Properties, excluding
Non-Benefitted Property
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In order to prevent over or under-burdening due to density changes,the reallocation of an Assessment for
an Assessed Property in the Commercial Tracts may not exceed the Maximum Assessment for Lot Type
Commercial, as measured by acreage, and compliance may require a mandatory Prepayment pursuant to the Service
and Assessment Plan and as described below under"Mandatory Prepayment of Assessments." See"APPENDIX B
—Form of Service and Assessment Plan." Any reallocation pursuant to the Service and Assessment Plan shall be
calculated by the Administrator and reflected in an Annual Service Plan Update approved by the City. The
reallocation of any Assessments as described in the Service and Assessment Plan shall be considered an
administrative action and will not require any notice or public hearing,as defined in the PID Act,by the City
Upon Consolidation. If two or more Lots or Parcels are consolidated,the Administrator shall allocate the
Assessments against the Lots or Parcels before the consolidation to the consolidated Lot or Parcel,which allocation
shall be reflected in the next Annual Service Plan Update and approved by the City Council.
Mandatory Prepayment of Assessments
Transfer to exempt person or entity: If the Assessed Property is transferred to a person or entity that is
exempt from payment of the Assessment,the owner transferring the Assessed Property shall pay to the City the
full amount of the Assessment,plus Prepayment Costs and Delinquent Collection Costs,prior to the transfer. If
the owner of the Assessed Property causes the Assessed Property to become Non-Benefited Property,the owner
causing the change in status shall pay to the City the full amount of the Assessment,plus Prepayment Costs and
Delinquent Collection Costs,prior to the change in status.
True-Up of Assessments if Maximum Assessment Exceeded at Plat. Prior to the City approving a
final subdivision plat,the Administrator will certify that such plat will not result in the Assessment per Lot for
any Lot Type to exceed the Maximum Assessment. If the Administrator determines that the resulting
Assessment per Lot for any Lot Type will exceed the Maximum Assessment for that Lot Type, then (i) the
Assessment applicable to each Lot Type shall each be reduced to the Maximum Assessment,and(ii)the person
or entity filing the plat shall pay to the City the amount the Assessment was reduced, plus Prepayment Costs
and Delinquent Collection Costs,if any,prior to the City approving the final plat.For a final subdivision plat in
the Single Family Tracts, the total assessment shall be reduced pro rata between the Improvement Zone B
Assessment and the Improvement Zone A Assessment based on the then outstanding assessment on such Single
Family Tracts Assessed Property. The City's approval of a plat without payment of such amounts does not
eliminate the obligation of the person or entity filing the plat to pay such amounts. See "BONDHOLDERS
RISKS—Exceedance of Maximum Assessment Could Trigger Bond Redemption."
Maximum Assessment. Notwithstanding the foregoing, the Service and Assessment Plan establishes a
"Maximum Assessment"for each Lot Type in Improvement Zone B of the District,which Maximum Assessment is
currently calculated at $ _ for SF 1 lots, $ for SF 2 lots, $ for SF 3 lots and
$ for MF lots in Improvement Area Zone B, and is based on a achieving a targeted total combined net
equivalent tax rate of$ for Lots in Improvement Zone B,taking into account the tax rate of all entities taxing
such lot and the tax equivalent rate of the Annual Installment of the Assessments. See Exhibit J of"APPENDIX B
—Form of Service and Assessment Plan" and`BONDHOLDERS RISKS—Exceedance of Maximum Assessment
Could Trigger Bond Redemption."
For further information about apportionment of the Assessments, See"APPENDIX B—Form of Service
and Assessment Plan."
Prepayment of Assessments
Pursuant to the PID Act and the Indenture,the owner of any property assessed may voluntarily prepay (a
"Prepayment") all or part of any Assessment levied against any lot or parcel, together with accrued interest to the
date of payment, at any time. Upon receipt of such Prepayment, such amounts will be applied towards the
redemption or payment of the Bonds. Amounts received at the time of a Prepayment which represent a payment of
principal,interest,or penalties on a delinquent installment of an Assessment are not to be considered a Prepayment,
but rather are to be treated as payment of regularly scheduled Assessments.
34
Priority of Lien
The Assessments or any reassessment,the expense of collection,and reasonable attorney's fees,if incurred,
constitute a first and prior lien against the property assessed, superior to all other liens and claims except liens or
claims for the State, county, school district or municipality ad valorem taxes, and are a personal liability of and
charge against the owners of the property regardless of whether the owners are named. The lien is effective from the
date of the Assessment Ordinance until the Assessment is paid,and may be enforced by the City in the same manner
as an ad valorem tax levied against real property may be enforced by the City. The owner of any property assessed
may pay the entire Assessment levied against any lot or parcel,together with accrued interest to the date of payment,
at any time.
Foreclosure Proceedings
In the event of delinquency in the payment of any Annual Installment, except for unpaid Assessments on
homestead property(unless the lien associated with the assessment attached prior to the date the property became a
homestead),the City is empowered to order institution of an action in state district court to foreclose the lien of such
delinquent Annual Installment. In such action the real property subject to the delinquent Annual Installments may
be sold at judicial foreclosure sale for the amount of such delinquent Annual Installments, plus penalties and
interest.
Any sale of property for nonpayment of an installment or installments of an Assessment will be subject to
the lien established for remaining unpaid installments of the Assessment against such property and such property
may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non-
delinquent installments of the Assessments against such property as they become due and payable. Judicial
foreclosure proceedings are not mandatory. In the event a foreclosure is necessary, there could be a delay in
payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the
proceeds of the foreclosure sale. It is possible that no bid would be received at the foreclosure sale, and in such
event there could be an additional delay in payment of the principal of and interest on Bonds or such payment may
not be made in full. The City is not required under any circumstance to purchase the property or to pay the
delinquent Assessment on the corresponding Assessed Parcel.
In the Indenture,the City will covenant to take and pursue all actions permissible under Applicable Laws to
cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the
maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the
Assessments, provided that the City is not required to expend any funds for collection and enforcement of
Assessments other than funds on deposit in the Administrative Fund. Pursuant to the Indenture, Foreclosure
Proceeds (excluding Delinquent Collection Costs) constitute Pledged Revenues to be deposited into the Pledged
Revenue Fund upon receipt by the City and distributed in accordance with the Indenture. See "APPENDIX A—
Form of Indenture." See also "APPENDIX D—Form of Disclosure Agreement" for a description of the expected
timing of certain events with respect to collection of the delinquent Assessments.
In the Indenture,the City creates the Reserve Account under the Reserve Fund and will fund such account
i ed in the Indenture. The Citywill not be obligated to fund foreclosure proceedings out of anyfunds other
as provided g p g
than in the Administrative Fund. If Pledged Revenues are insufficient to pay foreclosure costs, the owners of the
Bonds may be required to pay amounts necessary to continue foreclosure proceedings. See"SECURITY FOR THE
BONDS —Reserve Account of the Reserve Fund," "APPENDIX A —Form of Indenture" and "APPENDIX B —
Form of Service and Assessment Plan."
THE CITY
Background
The City is located in northeast central Tarrant County, 7 miles northeast of the City of Fort Worth and 24
miles west of the City of Dallas. Access to the City is provided by Interstate 820 and State Highway 26. The City
covers approximately 18.29 square miles. The City's location as part of the growing Dallas-Fort Worth Metroplex
35
has resulted in rapid growth over the last several years. The City's 2010 census population was 63,343. The City's
current population estimate is 71,269.
City Government
The City is a political subdivision and is a home rule municipality of the State,duly organized and existing
under the laws of the State, including the City's Home Rule Charter. The City was incorporated in 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 Council members. The term of office for the Mayor and the
Councilmembers is two years with the terms of the Mayor and three of the Councilmembers'terms expiring in even-
numbered years and the terms of the other four Councilmembers expiring in odd-numbered years.The City Council
formulates operating policy for the City while the City Manager is the chief administrative officer.
The current members of the City Council and their respective expiration of terms of office are as follows:
Term Expires
Name Place (May)
Oscar Trevino Mayor 2020
Tito Rodriguez Place 1 2021
Rita Wright Oujesky Place 2,Mayor Pro Tem 2020
Suzy Compton Place 3 2021
VACANT* Place 4
Mike Benton Place 5 2021
Scott Turnage Place 6 2020
Tim Welch Place 7 2021
*On August 2,2019 Councilmember Brent Barrow passed away vacating the Place 4 Council seat. The vacancy will be filled by
a special election scheduled to be conducted by the City in November 2019.
The principal administrators of the City include the following:
Name Position
Mark Hindman City Manager
Alicia Richardson City Secretary
Mark Mills Director of Finance
Major Employers
The primary non-governmental and non-retail employers in the City are set forth in the table below.
Employer Product or Service Employees
Santander Consumer USA,Inc. Automobile 1,500
Medical City North Hills Hospital Hospital/Medical Care 615
HealthMarkets Life/Health Insurance 452
Stericycle Medical Waste Disposal 400
Tyson Prepared Foods Food Processing 380
XPO Logistics Supply Chain 260
Smurfit Kappa Corrugated Packaging 200
A to Z Management Business Services 185
ESNA Aerospace Texas Aerospace Parts Manufacturing 120
Source: The City
36
Historical Employment in the City of North Richland Hills
Average Annual(')
2019(2) 2018 2017 2016 2015
Civilian Labor Force 40,169 39,726 38,804 38,160 37,699
Total Employed 38,934 38,490 37,485 36,796 36,339
Total Unemployed 1,235 1,236 1,3319 1,364 1,360
Unemployment Rate 3.1% 3.1% 3.4% 3.6% 3.6%
(1)Source: Texas Workforce Commission.
(2)Source: Data through August 2019.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
37
Surrounding Economic Activity
The major employers of municipalities surrounding the City are set forth in the table below.
' zf« r `" ` City of Arlington City of Grand Prairie
Approximately 8 miles from the City Approximately 10 miles from the City Approximately 15 miles from the City
Employer Employees Employer Employees Employer Employees
AMR Corp./American Airlines 25,000 Arlington ISD 8,200 Grand Prairie ISD 4,100
Lockheed Martin Tactical Aircraft Systems 13,700 University of Texas at Arlington 5,300 Lockheed Martin Missies&Fire Control 2,500
Fort Worth ISD 12,000 General Motors 4,484 Poly-America Inc. 2,000
NAS Fort Worth Joint Reserve Base 10,000 Texas Health Resources 4,063 City of Grand Prairie 1,800
JPS Health Network/JPS Hospital 6,500 Six Flags Over Texas 3,800 Bell Helicopter-Textron,Inc. 1,200
City of Fort Worth 5,200 The Parks at Arlington 3,500 Lone Star Park at Grand Prairie 1,000
Cook Children's Health Care System 6,000 GM Financial 2,965 Hanson Pipe&Products 1,000
Tarrant County College 6,000 City of Arlington 2,509 Triumph Aero Structures-Vought 900
Alton Laboratories Inc. 5,400 JP Morgan Chase Bank 1,965 Republic National Distribution 700
Bell Helicopter-Textron,Inc. 5,000 Texas Rangers Baseball Club 1,881 Bureau of Prison Administration 700
City ofGrapevine
�" Carrollton Approximately 11 miles from the City
i41 al< Employer Employees
e Dallas/Ft.Worth International Airport 14,300
Keller Grapevine Farmers Gamestop 2,400
ararx'h Gaylord Texan Resort&Convention Center 2,000
Grapevine-Colleyville ISO 1,900
OFW
0 (FA r Intimation* ® City of Grapevine 700
caaernta ' c t °X a Baylor Medical Center 700
Sagma.v wasaiya ax , ( Great Wolf Lodge 600
dto{d * R Electronics Boutique 500
Melody k = AAsnA
(land Has Pavestone& Euless 4D G..) Pavestone Mfg. 400
,
cc1 ' ,' Hurst ca Texas Toyota 400
ED Richland Has ®
Haltom Csy City of Irving
0 ay c _ e Approximately 16 miles from the Cit
y
es.r #� Employer Employees
FOR WOrihFD
'°"c`f Citigroup,Inc. 7,500
w
4:111210" Verizon Communications 3,260
Cockrsi I...
Arlingto n
Irving Mall 2,100
pintas's, Dallas/Ft.Worth International Airport 1,700
n ,
s_ -fl Allstate Insurance 1,650
_ Pioneer Natural Resources 1,400
TV ¢e • Q Microsoft Corp 1,351
Forest Hdl artvd!a Neiman Marcus Direct 1,339
Durrc
KwMdale ,,._,..:. Health Management Systems(HMS) 1,299
Evarman 0 0 7-Eleven 800
Source:Municpal Advisory Council of Texas
THE DISTRICT
General
The PID Act authorizes municipalities, such as the City,to create public improvement districts within their
boundaries or extraterritorial jurisdiction, and to impose assessments within the public improvement district to pay
for certain improvements. The District was created by the Creation Resolution for the purpose of undertaking and
financing the cost of certain public improvements within the District, including the Improvement Zone B Public
Improvements, authorized by the PID Act and approved by the City Council that confer a special benefit on the
District property being developed. The District is not a separate political subdivision of the State and is governed by
the City Council. A map of the property within the District is included on page v hereof.
38
Powers and Authority
Pursuant to the PID Act, the City may establish and create the District and undertake, or reimburse a
developer for the costs of,improvement projects that confer a special benefit on property located within the District,
whether located within the City limits or the City's extraterritorial jurisdiction. The PID Act provides that the City
may levy and collect Assessments on property in the District, or portions thereof, payable in periodic installments
based on the benefit conferred by an improvement project to pay all or part of its cost.
Pursuant to the PID Act and the Creation Resolution,the City has the power to undertake, or reimburse a
developer for the costs of, the financing, acquisition, construction or improvement of the Improvement Zone B
Public Improvements. See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS." Pursuant to the
authority granted by the PM Act and the Creation Resolution,the City has determined to undertake the construction,
acquisition or purchase of certain road,water,wastewater,sanitary sewer,park and open space,and drainage public
improvements within Improvement Zone B of the District and outside of the District comprising the Improvement
Zone B Public Improvements and to finance a portion of the costs thereof through the issuance of the Bonds. The
City has further determined to provide for the payment of debt service on the Bonds through Pledged Revenues. See
"ASSESSMENT PROCEDURES"herein and"APPENDIX B—Form of Service and Assessment Plan."
THE DEVELOPMENT AGREEMENT
Pursuant to the Development Agreement, the Developer has agreed to construct certain "Authorized
Improvements" for the benefit of the District in accordance with the conditions therein. Capitalized terms used in
this "THE DEVELOPMENT AGREEMENT" section and not otherwise defined herein shall have the meanings
assigned to them in the Development Agreement. See"APPENDIX G—THE DEVELOPMENT AGREEMENT."
The Developer entered into the Development Agreement with the City effective , 2019.
The Development Agreement provides the scope of the Public Improvements to be constructed, sets forth rules and
regulations for the construction of the Public Improvements,certain private improvements,and provides the process
for the development of all property within the District.
Construction of Improvements
Pursuant to the Development Agreement, the Developer will undertake or cause the undertaking of the
design,development, construction,maintenance, management,use and operation of the"City Point Development,"
including the Public Improvements. Under the Development Agreement,the"City Point Development"is to consist
of the following elements:
• maximum 250 single family townhomes(attached)within the SF Residential Zones;
• maximum 8 acres of multifamily residential use with a maximum 600 multifamily residential
units within the MT' Residential Zones; no multifamily residential units shall be provided a
certificate of occupancy prior to completion of construction of the Authorized Improvements;
• minimum 60,000 sq.ft.of commercial floor area;and
• a hotel as described in the STR, Inc., industry standard chain scale as minimum Upscale and
above hotel or Upper Midscale and below upon approval of the City; with a minimum of 100
keys and a minimum 1,500 sq. ft. meeting space within the hotel; or a minimum 15,000 sq. ft.
grocer within the City East Commercial District of the Commercial Zones.
The Development Agreement further sets forth additional conditions for the Development including the
following:
39
The Developer must construct or cause to be constructed a private amenity center within the single family
residential zones(the"SF Residential Zones")which shall consist of at least: (1)a swimming pool,(2)a clubhouse,
and(3)restroom facilities.
The Developer must complete or cause to be completed the private amenity center within the SF
Residential Zones by the date that is twelve(12)months following the City's issuance of the one hundredth(100th)
single family residential building permit(the"SF Private Amenity Center Completion Date").If the Developer does
not complete or cause to be completed the private amenity center within the SF Residential Zones by the SF Private
Amenity Center Completion Date, the Developer shall remit liquidated damages to the City in the amount of
$1,000.00 per day for each day beyond the SF Private Amenity Center Completion Date, that the private amenity
center with the SF Residential Zones is not completed,until it is completed. The foregoing date may be extended by
written approval of the City Manager.
The Developer, at Developer's cost, must install a network of linear hike and bike trails throughout the
Development to connect JoAnn Johnson Trail,Randy Moresi Trail, and the proposed Richland Hills multi-use trail
within the City. The Developer shall construct or cause to be constructed a dog park within the
Development.
Prior the issuance of the one hundredth (100th) single family residential building permit in the SF
Residential Zones,the Developer shall construct or cause to be constructed entry features,wayfinding signage, and
monuments to be maintained by the POA and/or HOA.
A minimum five percent(5%)of the Property in the District shall be open space.Interactive elements,such
as soft surface play areas,shall be provided within the open spaces.
The Developer shall make best efforts to cause an adjacent property owner to dedicate an access easement
to the City located east of City Point Drive and south of Calloway Creek Medical Office Building for use as a public
open space area with seating, trails, sidewalks, pet waste stations, lighting, landscaping, irrigation, drainage
improvements, signage, and trash receptacles ("Public Park Improvements"). Such dedication shall satisfy the
parkland dedication requirements as provided in the City Regulations.
The Developer shall complete or cause to be completed the publicly accessible amenity space(open space)
within each City West Residential, City East Residential, and City South Residential portion of the SF Residential
Zones by such portion's respective SF Public Amenity Completion Date. If the Developer does not complete or
cause to be completed the publicly accessible amenity space (open space) within the City West Residential, City
East Residential, or City South Residential portions of the SF Residential Zones by such portion's respective SF
Public Amenity Completion Date, the Developer shall remit liquidated damages to the City in the amount of
$1,000.00 per day for each day beyond the SF Public Amenity Completion Date, that the publicly accessible
amenity space (open space) with the identified City West Residential, City East Residential, or City South
Residential portion of the SF Residential Zones is not completed,until it is completed.
The Developer shall construct or cause to be constructed the following amenities for the multifamily
residential units within the MF Residential Zones: a pool,an outdoor cabana/clubhouse,a community outdoor grill,
and an outdoor game area.
The Development Agreement further provides that the maximum overlapping tax rate when including all
taxing entities and after the TIF credit is applied shall be no greater than $3.09 at the time of issuance of the PID
Bonds for single family residential use properties without prior written consent of the City.
Economic Development Agreement
Prior to the issuance of PID Bonds, the City and the Developer have agreed to enter into an Economic
Development Agreement to provide a grant to the Developer in an amount equal to two percent(2%)of the sales tax
revenue generated from the Commercial Zones of the Property starting in year 2024 for a period of ten(10)years,or
until the amount of the grant reaches$2,400,000,whichever occurs first(the"City Point Grant").The Parties agree
40
that the Economic Development Agreement shall contain only the following performance requirements (the
"Performance Requirements"):
(a) Completion of construction of the pad sites in the City Center Commercial portion of the
Commercial Zones, as evidenced by a temporary certificate of occupancy,green tag,or other form of City
approval,shall occur within one year of approval of the final plat.
(b)The Developer shall construct or cause to be constructed vertical development within the City
Center Commercial portion of the Commercial Zones in two phases as follows:
1. Phase I: Completion of construction of a minimum of 30,000 square feet of
commercial space, as evidenced by a temporary certificate of occupancy,green tag,or other form
of City approval of completion of core and shell is issued by the City, shall occur on or before
December 31,2023 (the"Phase I Deadline");and
2. Phase II: Completion of construction of a minimum of an additional 30,000
square feet of commercial space,providing a total minimum of 60,000 square feet of commercial
space, as evidenced by a temporary certificate of occupancy, green tag, or other form of City
approval of completion of core and shell is issued by the City, shall occur on or before December
31,2026(the"Phase II Deadline")
If the Phase I Deadline or the Phase II Deadline listed above is not met,the City shall reduce the maximum
City Point Grant by the portion of the annual TIF credit applied towards Assessments levied on the property within
the Commercial Zones beginning in tax year 2023,following the Phase I Deadline, and beginning in tax year 2026,
following the Phase II Deadline,as applicable,each year until such Performance Requirements are met.
The City may consider an Economic Development Agreement,or other economic incentive, if parking for
multifamily units in the ME Residential Zones is constructed utilizing podium or structured parking, rather than
surface parking.
THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS
General
The Improvement Zone B Public Improvements consist of certain public improvements that will benefit
Improvement Zone B of the District. The balance of the costs of the Improvement Zone B Public Improvements
will be paid by the Developer pursuant to the terms of the Construction,Funding and Acquisition Agreement. See
"SOURCES AND USES OF FUNDS." The Improvement Zone B Public Improvements will be dedicated to the
City. The Developer is responsible for the completion of the construction, acquisition or purchase of the
Improvement Zone B Public Improvements,and the Developer or its designee will act as construction manager. The
City will pay project costs'for the Improvement Zone B Public Improvements from proceeds of the Bonds. The
Developer will submit reimbursement requests on a monthly basis for costs actually incurred in developing and
constructing the Improvement Zone B Public Improvements and be reimbursed in accordance with the Indenture and
the Construction,Funding,and Acquisition Agreement. See"THE DEVELOPMENT—Development Plan".
Improvement Zone B Public Improvements. The Improvement Zone B Public Improvements,a portion of
P P P p
which are being financed with proceeds of the Bonds, include road, water, sanitary sewer, and storm drainage
collection system improvements benefitting only Improvement Zone B of the District.
Roadway improvements: The roadway improvements within Improvement Zone B of the District include
subgrade stabilization,concrete reinforcing steel for roadways,testing,handicapped ramps and streetlights.
All related earthwork, excavation, erosion control, retaining walls, intersections, signage, lighting and re-
vegetation of all disturbed areas within the right-of-way are included.The street improvements will provide
street access to each Lot within Improvement Zone B of the District.
41
Water distribution system improvements: The water distribution system improvements within
Improvement Zone B of the District include trench excavation and embedment,trench safety,PVC piping,
manholes, service connections, testing, related earthwork, excavation and erosion control all necessary
appurtenances required to provide water service to Lots within Improvement Zone B of the District.
Sanitary sewer collection system improvements: The sanitary sewer collection system improvements
within Improvement Zone B of the District include trench excavation and embedment,trench safety,PVC
piping, ductile iron encasement, boring, manholes, service connections, testing, related earthwork,
excavation, and erosion control all necessary appurtenances required to provide wastewater to all Lots
within Improvement Zone B of the District.
Storm drainage collection system improvements: The storm drainage collection system improvements
within Improvement Zone B of the District include earthen channels, swales, curb and drop inlets, RCP
piping and boxes, headwalls, concrete flumes, rock rip rap, concrete outfalls, and testing as well as al
related earthwork, excavation, and erosion control necessary to provide storm drainage for Lots in
Improvement Zone B of the District.
Landscaping, entryway, open space and park improvements: The landscaping, entryway,open space and
park improvements within Improvement Zone B of the District include installation of landscaping,
including irrigation, in public open spaces, entryway monuments and signs, establishment and
improvement of parks and open space.
The cost of the Improvement Zone B Public Improvements is expected to be approximately $
which is expected to be paid with proceeds of the Bonds.
The following table reflects the total expected costs of the Improvement Zone B Public Improvements.
Type of Improvement Costs*
Roadway Improvements
Water
Sanitary Sewer
Storm Drainage
Landscaping,Entryway,Open Space and Park
Soft Costs
Total Cost of Improvement Zone B Public
Improvements $
Additionally, the Developer plans to construct certain private improvements over a period of five years
consisting of landscaping, hardscaping, and amenities and miscellaneous items related thereto to serve the entire
District(collectively,the"Private Improvements") at an approximate cost of$4,678,056*. The costs of the Private
Improvements will be paid entirely by the Developer without reimbursement by the City.
Ownership and Maintenance of Improvements
The Improvement Zone B Public Improvements will be dedicated to and accepted by the City and will
constitute a portion of the City's infrastructure improvements. The City will provide for the ongoing operation,
maintenance and repair of the Improvement Zone B Public Improvements constructed and conveyed,as outlined in
the Service and Assessment Plan. The Private Improvements will be dedicated to and accepted by the HOA or the
POA, as applicable. The HOA or the POA, as applicable will provide for the ongoing operation, maintenance and
repair of the Private Improvements through the administration of a maintenance and operation fee and/or a property
owner's association fee to be paid by each lot owner within the District.
42
THE DEVELOPMENT
The following information has been provided by the Developer. Certain of the following information is
beyond the direct knowledge of the City,the City's Financial Advisor and the Underwriter,and none of the City,the
City's Financial Advisor or the Underwriter have any way of guaranteeing the accuracy of such information. The
Developer has reviewed this Limited Offering Memorandum and warrants and represents that neither (i) the
information under the caption"THE DEVELOPMENT"nor(ii)the information relating to the Developer's plan for
developing the land within the District (the "Development") under the subcaption "BONDHOLDERS' RISKS —
Dependence Upon Developer" contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made herein,in the light of the circumstances under which they are made,
not misleading. At the time of delivery of the Bonds to the Underwriter,the Developer will deliver a certificate to
this effect to the City and the Underwriter.
Overview
The Development is an approximately 52.873 acre part of a master planned project located within the city
limits of the City, near the Southeast corner of Boulevard 26 (Grapevine Highway) and Rodger Line Drive. The
City,located in the north central region of the Dallas-Fort Worth-Arlington,Texas Metropolitan Statistical Area(the
"DFW MSA"),is poised for significant growth as the overall DFW MSA continues its growth trajectory.
The land within the Development is owned by the Developer,which is an affiliate of Centurion American
Custom Homes Inc.d/b/a Centurion American Development Group Inc.("Centurion"),as described below in"THE
DEVELOPER — Description of the Developer." See "THE DEVELOPER — History and Financing of the
District".In addition,the Development will include a variety of parks,trails,an amenity center and open space areas
for its residents and others to enjoy. This combination will provide its residents a community environment in which
to live. Furthermore,the Development is located within the Birdville Independent School District.
The Developer develops infrastructure and community improvements (amenities, parks, trails, etc.) and
sells residential lots to high-quality production homebuilders under lot takedown contracts.
The Developer expects to complete development in the District over a twenty(20)month period,with the
expected completion of the infrastructure serving the District by 3Q 2021.
Development Plan
Development of the District is anticipated to include approximately 364 single-family homes in the Single
Family Tracts,400 multifamily units in the Multifamily Tracts, and 150,000 square feet of commercial space in the
Commercial Tracts. Infrastructure in the Development will be completed in one phase consisting of the construction
of the Public Improvements. The Developer plans to commence development in Q1 2020. The current
development schedule is expected to span approximately twenty (20) months with various portions of the Public
Improvements expected to be completed as follows:
Excavation/Retaining:January 2020 June 2020
Utilities:July 2020—October 2020
Paving:October 2020—February 2021
Franchise Utilities:March 2020—May 2020
Landscape/Hardscape/Other:June 2020-August 2021
See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS" and "APPENDIX B — Form of
Service and Assessment Plan."
43
Merchant Builder Lot Purchase and Sale Agreements in the District
The Developer has entered into a Contract of Sale(the"New Synergy Lot Purchase and Sale Agreement")
with New Synergy, LLC ("New Synergy") for 168 lots in the District consisting of 122 Urban Lots and 46
Bungalow lots. New Synergy is owned and controlled by Mehrdad Moayedi, a Developer principal. See "THE
DEVELOPER—Executive Biography"herein. The base lot price of the Urban Lots is$70,000 per lot and the base
lot price of the Bungalow Lots is$75,000 under the New Synergy Lot Purchase and Sale Agreement.
To date, the Developer has not received earnest money under the New Synergy Lot Purchase and Sale
Agreement. A total of $10,000 in earnest money from New Synergy has been deposited relating to the New
Synergy Lot Purchase and Sale Agreement(October 16, 2019). The feasibility period under the New Synergy Lot
Purchase and Sale Agreement expires on November 15, 2019, and all earnest money deposited with the Developer
to hold the New Synergy Lot Purchase and Sale Agreement will become a hard deposit and no longer refundable.
New Synergy has acknowledged the existence of the District and consented to the levy of the Assessments in the
New Synergy Lot Purchase and Sale Agreement. In addition, under the New Synergy Lot Purchase and Sale
Agreement,the Developer will provide to New Synergy information regarding(i)the maximum levy of assessment
by the PM for each Lot, (ii) the maximum annual payment to be made to amortize such assessment, and (iii) the
maximum term of any assessment to fund the Public Improvements, within fifteen (15) days of the Developer
receiving such information. Prior and neither Purchaser nor Seller will support the City levying any assessment
above such agreed upon maximums.
The Developer has entered into a Contract of Sale(the"CB Jeni Lot Purchase and Sale Agreement")with
CB Jeni("CB Jeni")for 196 lots in the District. The base lot price of the Townhome Lots is$63,000 per lot under
the CB Jeni Lot Purchase and Sale Agreement.
To date, the Developer has not received earnest money under the CB Jeni Lot Purchase and Sale
Agreement. A total of$ in earnest money is expected from CB Jeni. Immediately prior to the expiration
of the Due Diligence Period under the CB Jeni Lot Purchase and Sale Agreement( , 2019), if CB
Jeni has not terminated the CB Jeni Lot Purchase and Sale Agreement as provided therein. CB Jeni shall deposit as
additional earnest money (the "Additional Earnest Money") with the title company the amount of
$ in cash or immediately available funds. Any and all cash deposited with the title company as
the Initial Earnest Money or the Additional Earnest Money shall be deposited and held in an interest bearing account
for the benefit of the party entitled thereto pursuant to the CB Jeni Lot Purchase and Sale Agreement. The
feasibility period under the CB Jeni Lot Purchase and Sale Agreement expires on , 2019, and all
earnest money deposited with the Developer to hold the CB Jeni Lot Purchase and Sale Agreement will become a
hard deposit and no longer refundable. The Developer will execute an earnest money deed of trust securing such
deposit,which deed of trust will grant CB Jeni a lien on ,subject to permitted exceptions and
any lien for any acquisition or development loan. CB Jeni has acknowledged the existence of the District and
consented to the levy of the Assessments in the CB Jeni Lot Purchase and Sale Agreement. In addition, under the
CB Jeni Lot Purchase and Sale Agreement, the Developer and CB Jeni have agreed that the maximum annual
payment to amortize the Assessments on lots within the District being purchased by CB Jeni is$
The following table provides a summary of the takedown schedule for the Lot Purchase and Sale
Agreements.
LOT PURCHASE AND SALE AGREEMENTS
Homebuilder Total Lots Base price per lot, Lots per Takedown_
122 Urban Lots $70,000 Minimum ten(10)Lots at Initial Closing;
New Synergy minimum ten(10)Lots per quarter(Subsequent
46 Bungalow Lots $75,000 Closings)
44
Minimum ten(10)Lots at Initial Closing; -.
CB Jeni 196 Townhome Lots $63,000 minimum ten(10)Lots per quarter(Subsequent
Closings)
, . .
Estimated Home Prices in the Development pent
The Developer's current expectations regarding estimated home prices in the District are as follows:
ESTIMATED HOME PRICES
Lot Type Full Lot Size(Width in Ft.) Quantity Base Lot Price Average Base Home Price*
SF1 22'x 70' (Townhome) 196 $63,000 $290,000
SF2 26'x 58' (Urban Lots) 122 $70,000 $305,000
SF3 40'x 75' (Bungalow) 46 $75,000 $325,000
*Developer estimates
EXPECTED ABSORPTION OF SINGLE FAMILY LOTS IN THE DISTRICT
New Synergy Contract CB Jeni Contract
Expected Final Total Lots Expected Final Total Lots
Sale Date Sale Date
2021 10 2021 10
2022 40 2022 40
2023 40 2023 40
2024 40 2024 40
2025 38 2025 40
2026 26
Expected Commercial Development in the District
It is currently expected that the development of the Commercial Tracts, located in Improvement Zone A,
will consist of at least 60,000 sq. feet of retail, commercial and restaurant space and a 90,000 sq. foot hotel. An
affiliate of the Developer intends to construct and lease a portion of the commercial property consisting of
approximately 60,000 sq.feet and sell the remaining portions to third parties. The Developer will not construct the
hotel,but will sell the hotel parcel to a hotel developer. The Developer has not entered into any contracts or letters o
intent with respect to the Commercial Tracts.
Expected Multifamily Development in the District
It is currently expected that the Multifamily Tracts, located in Improvement Zone B,will be developed as
multifamily units. The Developer's current expectations are that multifamily development will consist of at least
400 multifamily units,which are expected to rent at an average rate of$1.75/square foot.
The Developer has entered into a letter of intent (the "Multifamily Letter of Intent") with an unaffiliated
regional real estate developer based in Denton, Texas (the"Potential Multifamily Developer") for the purchase of
the Multifamily Tracts at a purchase price of$8,500,000. Initial earnest money in the amount of $100,000 is
expected to be deposited at the title company for the benefit of the Developer upon the execution of a contract with
the Potential Multifamily Developer based on the Multifamily Letter of Intent (the "Potential Multifamily
Contract"), and an additional $100,000 is expected to be deposited at the end of the diligence period on the
Multifamily Tracts at the close of the diligence period,which is expected to be 120 days [from the execution of the
Potential Multifamily Contract].
45
The Multifamily Letter of Intent provides for a maximum of 600 multifamily units to be constructed on the
Multifamily Tracts with zoning that will allow for structured parking. See "THE DEVELOPMENT— Zoning".
Current development projections and analysis provided by the Developer indicate an estimated 400 units to be
constructed on the Multifamily Tracts,and the Service and Assessment Plan has allocated the Assessments allocable
to the Multifamily Tracts based on the construction of 400 multifamily units on the Multifamily Tracts. See
"ASSESSMENT PROCEDURES — Assessment Methodology". The Developer and the City indicate that
development of 600 units on the Multifamily Tracts will likely require the construction of structured parking to
support such density of the Multifamily Tracts, and that the economic feasibility of construction of structured
parking on similar multifamily parcels in the area has required incentive participation from local government units.
The City and the Potential Multifamily Developer have not entered into any discussions or negotiations relating to
development of the Multifamily Tracts or incentives relating thereto.
No assurance can be given that the Potential Multifamily Contract will be executed. The Multifamily
Letter of Intent is a nonbinding proposal between the Developer and the Potential Multifamily Developer and is
subject in all respects to the negotiation and execution of a sales contract between the Developer and the Potential
Multifamily Developer.
Concept Plan
Below is the current concept plan of the Development as approved by the City. The concept plan is
conceptual and subject to change consistent with the City's zoning and subdivision regulations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
46
CITY POINT
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47
Zoning/Permitting
The District is currently zoned under pursuant to Ordinance No. 3595 adopted by the City Council on
August 12,2019(the"Zoning Ordinance")as the City Point Planned Development District. The Zoning Ordinance
has approved a non-residential planned development, and allows certain residential and non-residential use and
establishes guidelines pertaining to architectural standards, streets, parking, lighting, signage, landscape, and open
spaces. The Zoning Ordinance further specifies that the area within the City Point Planned Development District
shall include a maximum of 600 multifamily units,a maximum of 250 townhomes,and a minimum of 60,000 sq.ft.
of commercial floor area(which includes commercial retail,dining,office,hotel and plaza open space). Because the
District lies within the city limits of the City,the City's zoning and subdivision regulations control the aspects of
development not specifically set forth in the Zoning Ordinance.
Amenities
The Developer will construct certain amenities within the development as part of the costs of the Private
Improvements to serve the District, including hike and bike trails, open space improvements, a dog park and an
amenity center. The amenity center will consist of an in-ground swimming pool, a clubhouse and restroom
facilities. The Amenities are expected to cost approximately $2,971,856 and are expected to the funded with the
Acquisition and Development Loan.
Construction of the Private Improvements, including the amenities, is expected to begin in Q1 2021. The
Development Agreement requires completion of the private amenity center by twelve (12) months following the
City's issuance of the 100th single family residential building permit. See"THE DEVELOPMENT AGREEMENT"
herein.
Education
Children in the District will attend schools in the Birdville Independent School District (`BISD") which
encompasses 96 square miles. BISD serves portions of the communities of North Richland Hills,Richland Hills,
Haltom City,Hurst,Watauga, Colleyville and Fort Worth. BISD enrolls over 23,800 students in four high schools,
seven middle schools,twenty one elementary schools,an advanced learning and technology center, and a collegiate
academy. According to the Texas Education Agency, BISD received a"District Accountability Rating" of B from
the l'EA. Students in the District will attend Jack C.Binion Elementary School(approximately 0.3 miles from the
District), Richland Middle School (approximately 1.5 miles from the District) and Birdville High School
(approximately 2.5 miles from the District).
Existing Mineral Rights,Easements and Other Third Party Property Rights
Third parties hold title to certain rights applicable to real property within and around the District (the
"Mineral Owners"), including reservations of mineral rights and royalty interests and easements (collectively, the
"Third Party Rights") pursuant to various instruments in the chain of title for various tracts of land within and
immediately adjacent to the District. Some of these reservations of mineral rights include a waiver by the Mineral
Owners of their right to enter onto the surface of the property to explore,develop, drill,produce or extract minerals
within the District. If the waiver is applicable, such Mineral Owners may only develop such mineral interests by
means of wells drilled on land outside of the property of the District.
The Developer is not aware of any ongoing mineral rights development or exploration on or adjacent to the
property within the District. The Developer is not aware of any interest in real property(including mineral rights)
owned by the Mineral Owners adjacent to the District. Certain rules and regulations of the Texas Railroad
Commission may also restrict the ability of the Mineral Owners to explore or develop the property due to well
density,acreage,or location issues.
Although the Developer does not expect the above-described Third Party Rights, or the exercise of such
rights or any other third party real property rights in or around the District,to have a material adverse effect on the
48
Development,the property within the District, or the ability of landowners within the District to pay Assessments,
the Developer makes no guarantee as to such expectation. See `BONDHOLDERS' RISKS —Exercise of Third
Party Property Rights."
Environmental
A Phase One Environmental Site Assessment (a "Phase One ESA") of the land within the District was
completed by Environmental Property Investigations,Inc.on February 6,2019. Based on the information presented
in the Phase One ESA,there were no recognized environmental conditions identified within the District.
According to the website for the United States Fish and Wildlife Service,the whooping crane,bald eagle,
piping plover, least tern, red knot and western chicken turtle are endangered species in Tarrant County. The
Developer is not aware of any endangered species located on District property.
Utilities
The City will provide both water and wastewater service to the District. The City purchases its drinking
water, as well as sewer treatment services,from the City of Fort Worth, Texas and the Trinity River Authority as a
wholesale customer.
The Developer expects additional utilities to be provided by: (1) Phone/Data - AT&T or Spectrum; (2)
Electric-Oncor;(3)Cable—AT&T or Spectrum;and(4)Natural Gas-Atmos Energy.
THE DEVELOPER
The following information has been provided by the Developer. Certain of the following information is
beyond the direct knowledge of the City,the City's Financial Advisor and the Underwriter,and none of the City,the
City's Financial Advisor or the Underwriter have any way of guaranteeing the accuracy of such information. The
Developer has reviewed this Limited Offering Memorandum and warrants and represents that neither (i) the
information herein under the caption"THE DEVELOPER"nor(ii)the information relating to the Developer under
the subcaption `BONDHOLDERS' RISKS" contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made herein, in the light of the circumstances under which
they are made,not misleading.
General
In general,the activities of a developer in a development such as the District include purchasing the land,
designing the subdivision,including the utilities and streets to be installed and any community facilities to be built,
defining a marketing program and building schedule, securing necessary governmental approvals and permits for
development,arranging for the construction of roads and the installation of utilities(including,in some cases,water,
sewer, and drainage facilities, as well as telephone and electric service) and selling improved lots and commercial
reserves to builders,developers,or other third parties. The relative success or failure of a developer to perform such
activities within a development may have a material effect on the security of revenue bonds, such as the Bonds,
issued by a municipality for a public improvement district. A developer is generally under no obligation to a public
improvement district, such as the District, to develop the property which it owns in a development. Furthermore,
there is no restriction on the developer's right to sell any or all of the land which the developer owns within a
development. In addition, a developer is ordinarily the major tax and assessment payer within a district during its
development.
Description of the Developer
The Developer is an affiliate of Centurion American Development Group ("CADG") and was created by
CADG for the purpose of managing and ultimately conveying property in the District to third parties, as described
under the caption "THE DEVELOPMENT." The Developer is a nominally capitalized limited liability company,
the primary asset of which is unsold property within the District. The Developer will have no source of funds with
which to pay Assessments or taxes levied by the City or any other taxing entity other than funds resulting from the
49
sale of property within the District or funds advanced to the Developer by an affiliated party. The Developer's
ability to make full and timely payments of Assessments or taxes will directly affect the City's ability to meet its
obligation to make payments on the Bonds.
Since 1990, CADG has developed over 20,000 single-family lots in dozens of communities surrounding
North Texas. It has worked closely with investors, land-owners,financial institutions, and vendors to acquire over
15,000 acres of land inventory for a diverse mix of developments in size and scope. CADG's communities include
amenities such as parks,golf courses,water parks themes, and hiking and biking trails. Over the past twenty years,
CADG has demonstrated the ability to successfully deliver master-planned communities that have been recognized
in the real estate industry.
Mr. Mehrdad Moayedi has ultimate control of CADG and its affiliates. CADG maintains a staff of
approximately 25 employees. CADG creates single-asset limited liability companies to own development sites and
contracts with developers and other professionals in the delivery of its communities.
In addition, CADG works closely with local municipalities, commercial developers, and public school
systems as part of its overall master plan. CADG works with North Texas'top builders to deliver the latest concepts
ranging from upscale, luxury homes in secluded neighborhoods to affordable housing communities for first-time
home buyers. CADG purchases and develops land in prime locations with the right mix of natural land settings,
strong job growth, good school systems and access to local community shopping. A snapshot of some of the
communities CADG has developed is presented below.
Name Col_ p_t Property Type Starting Home Status of Development
Price
*Entrada at Westlake Tarrant Mixed Use $1,100,000 Vertical ongoing
River Walk at Central Park Denton Mixed Use $375,000 Vertical Ongoing
The Villas at Twin Creeks Collin Single Family $230,000 Completed
Kensington Gardens Dallas Single Family $500,000 Phase 1:Started 6/2012*Phase 2:Delivered
12/2018
Water's Edge at Hogan's Denton Single Family $480,000 Completed/Ashton Finishing Construction
Glen
Montalcino Estates Denton Single Family $700,000 Phase 1:Started 1/2012*Delivered Ql
Estancia Estates Denton Single Family $400,000 Completed Built Out
Highlands Glen Denton Single Family $300,000 Completed/Ashton Finishing Up
The Highlands at Trophy Denton Single Family $250,000 Completed/Ashton Finishing Up
Club
Water's Edge Denton Single/Multifamily $300,000 Started 9/2018*Delivered Q4 2019
Williamsburg Rockwall Single Family $150,000 Fee Developer
Crestview at Prosper Creek Collin Single Family $250,000 Complete-Megatel Finishing Construction
Palomar Estates Tarrant Single Family $750,000 Complete
Estancia Tarrant Single Family $450,000 Complete
Verandah Rockwall Single Family $200,000 Development Phase Ongoing
Terracina Denton Single Family $400,000 Development Complete/Toll Brothers Bldg
Phase 3
The Resort on Eagle Tarrant Single $250,000 Development Ongoing-Builder Doing
Mountain Lake Takedowns
Travis Ranch Kaufman Single Family $200,000 Development Ongoing-Builder Doing
Takedowns
Carter Ranch Collin Single Family $150,000 Phasel:Completed*Phase 2CII:Bldg
Completed
Frisco Hills Denton Single Family $200,000 Development Complete/FIB Finishing Up
Rolling Meadows Tarrant Single Family $100,000 Phasel:Completed*Phase 2A2&3 BIB
Completed
50
Waterfront at Enchanted Bay Tarrant Single Family $150,000 Phase 1:Started 5/2005*Phase 1:Delivered
2/2007 Phase 2:Being Engineered
Thombury Travis Single Family $150,000 Development Complete/HB Complete
Rough Hollow Travis Single Family $550,000 Development Complete/HB Complete
Lexington Parke Travis Single Family $150,000 Development Complete/HB Complete
Villages of Woodland Tarrant Single Family $150,000 Started Q4 2000*Delivered Q4 2017
Springs
Spring Creek Tarrant Single Family $150,000 Development Complete/HB Complete
Silver Ridge Tarrant Single Family $150,000 Development Complete/HB Complete
Sendera Ranch Tarrant Single Family $150,000 We Own Future Land/Banking Land
Rosemary Ridge Tarrant Single Family $100,000 Development Complete/HB Complete
Llano Springs Tarrant Single Family $150,000 Development Complete/HB Complete 1
Hills of Lake Country Tarrant Single Family $150,000 Development Complete/HB Complete .
Garden Springs Tarrant Single Family $125,000 Development Complete/HB Complete
Dominion Estates Tarrant Single Family $125,000 Development Complete/HB Complete
Deer Creek North Tarrant Single Family $125,000 Development Complete/HB Complete
Creekside of Crowley Tarrant Single Family $150,000 Sold Land/Ashton Building/Also Banking
Bonds Ranch Tarrant Single Family $150,000 Purchased all Finished Lots/All Lots sold in
Q4 2017
Crown Valley Parker Single Family $150,000 Development Complete/Sold Phase/Pod Sale
Windmill Farms Kaufman Single Family $150,000 HB Complete
Knox Ranch Hood Mixed Use $450,000 HB Complete
Windsor Hills Ellis Single Family $250,000 Undeveloped;in the Zoning Process
Saddlebrook Ellis Mixed Use $175,000 Next Phase Going Through Engineering
The Villas of Indian Creek Denton Single Family $150,000 Development Complete/HB Complete
*Valencia on the Lake Denton Single Family $175,000 Next Phase Going Through Engineering
Shale Creek Wise Single Family $100,000 Last Phase Going Through Engineering
Shahan Prairie Denton Single Family $150,000 Sold Land
Frisco Ranch Denton Single Family $150,000 Development Complete/HB Complete
Brookfield Denton Single Family $180,000 Sold Land
Sweetwater Crossing Collin Single Family $150,000 Development Complete/HB Complete
Prestwyck Collin Mixed Use $190,000 Development Complete/HB Complete
Oak Hollow Collin Single Family $100,000 Development Complete/HB Complete
Northpointe Crossing Collin Single Family $100,000 Development Complete/HB Complete
McKinney Greens Collin Single Family $150,000 Development Complete/HB Complete
The Dominion Dallas Single Family $250,000 Development Complete/HB Ongoing
Residences at the Stoneleigh Dallas Condo $750,000 Unit Sales Ongoing
Mountain Creek Dallas Multifamily $225,000 Development Complete/HB Complete
Chateaus of Coppell Dallas Single Family $350,000 Development Ongoing-HB Building
The Bridges at Preston Parker Single Family $250,000 Development Complete/HB Complete
Crossings
*Winn Ridge Denton Single Family $250,000 Development Complete/HB Complete
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*Sutton Fields Denton Single Family $350,000 Development Complete/HB Complete
*Hillstone Pointe Denton Single Family $250,000 Phase 1:Q3 2016*Phase 1:Delivered 12/2017
Remainder Raw Land Sold to Horton&Lennar
*Northlake Estates Denton Single Family $300,000 Development Ongoing-HB Building
*Creeks of Legacy Denton/Collin Single Family $350,000 Development Ongoing-HB Building I
University Place Dallas Single Family $450,000 Development Ongoing-HB Building
*Lakewood Hills Denton Single Family $450,000 Development Ongoing-HB Building
Steeplechase Denton Single Family $500,000 Development Ongoing-HB Building
*Mercer Crossing Dallas Mixed Use $350,000 Development Ongoing-HB Building
*Ownsby Farms Collin Single Family $300,000 Development Ongoing-FIB Building
*Anna Hurricane Creek Collin Single Family $300,000 Phase 1:Started 9/2018,Currently Being
Developed
*Chalk Hill Collin Single Family $300,000 Phase 1:Started 9/2018,Currently Being
Developed
Windsor Hills Dallas Single Family TBD Pre-development process.
Walden Pond Kaufman Single/Multifamily TBD Pre-development process.
Mobberly Denton Single Family TBD Pre-development process.Confirmation
election May 2019
*Whitewing Collin Single Family TBD PID Bond in the process of being issued.
*NRH Tarrant Mixed Use $300,000 Pre-development process.
Denton-Kings Ridge Denton Single/Multifamily $250,000 Zoning approved.Development should begin
*Collin Creek Mall Collin Mixed Use $400,000 Zoning approved.
*Hickory Farms Dallas Single Family TBD PID bonds issued.
Dove Creek Collin Single Family $275,000 Under Development
Preston Hills Collin Single Family $400,000 Under Development
Founders Park Tarrant Single/Multifamily 300,000 Development Complete-HB Building
Barcelona Collin Single Family $350,000 Phase 3;Under Development
Bloomridge Collin Single Family $300,000 Phase 2;Under Development
Erwin Farms Collin Single Family $350,000 Phase 3;Under Development
Enchanted Creek Collin Single Family $300,000 Engineering Phase 2
Alpha Ranch Wise/Denton Single Family $225,000 Pre-development process.
Bear Creek Dallas Single Family $250,000 next phase platted-TXDOT Condemnation
Wade Settlement Collin Single Family $350,000 Phase 2;Development
Falls of Prosper Collin Single Family $400,000 Phase 2;Development
*Iron Horse Dallas Mixed Use $250,000 PID bonds issued;Development Ongoing
*Polo Ridge Kaufman Single Family $350,000 PID bonds issued;Development Ongoing
*—developments utilizing public improvement districts
Executive Biography
Mehrdad Moayedi is the President and Chief Executive Officer of CADG. Mr. Moayedi has more than
twenty-five years of direct experience in the development industry. With a background in construction and real
estate,Mr.Moayedi employs a comprehensive approach to each CADG development. Mr. Moayedi has extensive
knowledge of the interconnection of all parts of residential real estate development.
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Before forming JBM Development in 1986, Mr. Moayedi completed several construction and fee
development projects in Northeast Tarrant County, Texas subdivisions as well as various construction and
remodeling projects. JBM Development, along with Centurion American Custom Homes, formed CADG in 1990.
The company has become broadly diversified, with residential developments ranging from upscale high-rise
residential towers to affordable housing communities for first-time home buyers.
History and Financing of the District
The Developer purchased the land comprising the District on October 28, 2019. In order to finance the
purchase of land within in the District and development in the District,the Developer obtained the Acquisition and
Development Loan in the amount of $ from the Lender. The Acquisition and Development Loan is
currently outstanding in the amount of$ and secured by all property within the District.
The Acquisition and Development Loan bears interest at a rate of %. The Acquisition and
Development currently matures on . Payments under the Acquisition and Development Loan are
interest only payments due quarterly, with the full principal of the Acquisition and Development Loan payable at
maturity. The Acquisition and Development Loan is personally guaranteed by Mehrdad Moayedi.
The PID Act provides that the Assessment Lien is a first and prior lien against an Assessed Property within
the District and is superior to all other liens and claims except liens or claims for state, county, school district, or
municipality ad valorem taxes. Additionally, at or prior to delivery of the Bonds,the Lender shall consent to and
acknowledge the creation of the District,the levy of the Assessments and the subordination of the lien securing the
Acquisition and Development Loan to the assessment liens on property within the District securing payment of the
Assessments. As a result, the lien on the property within the District securing the Assessments will have priority
over the lien on the property within the District securing the Acquisition and Development Loan.
THE ASSESSMENT CONSULTANT AND ADMINISTRATOR
The following information has been provided by the Assessment Consultant and the Administrator. Certain
of the following information is beyond the direct knowledge of the City, the City's Financial Advisor and the
Underwriter, and none of the City, the City's Financial Advisor or the Underwriter have any way of guaranteeing
the accuracy of such information. The Assessment Consultant and the Administrator have reviewed this Limited
Offering Memorandum and warrant and represent that the information herein under the caption "THE
ASSESSMENT CONSULTANT AND ADMINISTRATOR" does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made herein, in the light of the
circumstances under which they are made,not misleading.
P3Works,LLC ("P3Works") is a consulting firm with a specialized consulting practice providing services
related to the formation and administration of special tax and special assessment districts.
The City has selected P3Works as the initial Administrator for the District. The City has entered into an
agreement with the Administrator to provide specialized services related to the administration of the District needed
to support the issuance of the Bonds. The Administrator will primarily be responsible for preparing the annual
update to the Service and Assessment Plan. The Administrator is a consulting firm focused on providing district
services relating to the formation and administration of public improvement districts,and is based in Keller,Texas.
The Administrator's duties will include:
• Preparation of the annual update to the Service and Assessment Plan
• Preparation of assessment rolls for City billing and collection
• Establishing and maintaining a database of all City parcel IDs within the District
• Trust account analysis and reconciliation
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• Property owner inquires
• Determination of Prepayment amounts
• Preparation and review of disclosure notices with Dissemination Agent
• Review of developer draw requests for reimbursement of authorized improvement costs.
APPRAISAL OF PROPERTY WITHIN IMPROVEMENT ZONE B OF THE DISTRICT
The Appraisal
General. Integra Realty Resources —DFW (the "Appraiser"), prepared an appraisal report for the City
dated , 2019 and effective as of March 1, 2021, based upon a physical inspection of the District
conducted on September 16, 2019 (the "Appraisal"). The Appraisal was prepared at the request of the City. The
description herein of the Appraisal is intended to be a brief summary only of the Appraisal as it relates to
Improvement Zone B of the District. The Appraisal is attached hereto as APPENDIX E and should be read in its
entirety. The conclusions reached in the Appraisal are subject to certain assumptions, hypothetical conditions and
qualifications,which are set forth therein. See"APPENDIX E—Appraisal of Property in the District."
The Appraiser estimated the aggregate market value of the fee simple interest in various tracts of land in
Improvement Zone B of the District under the hypothetical condition that the Public Improvements are completed.
See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS," "PLAN OF FINANCE" and "THE
DEVELOPMENT—Development Plan." The Appraisal does not reflect the as-is condition of Improvement Zone B
of the District as the Public Improvements have not yet been constructed. Moreover,the Appraisal does not reflect
the value of Improvement Zone B of the District as if sold to a single purchaser in a single transaction. The
Appraisal provides the fee simple estate values for Improvement Zone B of the District. See "APPENDIX E—
Appraisal of Property in the District."
The value estimate for the assessable property within Improvement Zone B of the District,which includes
the Single Family Tracts and the Commercial Tracts,using the methodologies described in the Appraisal and subject
to the limiting conditions and assumptions set forth in the Appraisal, as of March 1, 2021 is $32,740,000. For
further information about the value of the land within Improvement Zone B and the liens relating to the Assessments
and the Improvement Zone A Assessments,see"ASSESSMENT PROCEDURES—Assessment Methodology".
Single Family Tracts
The Appraiser estimated the aggregate market value of the fee simple interest in various tracts of land
comprising the Single Family Tracts in the District under the hypothetical condition that the Public Improvements
are completed. See"THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS,""PLAN OF FINANCE" and
"THE DEVELOPMENT—Development Plan." The Appraisal does not reflect the as-is condition of the Single
Family Tracts as the Public Improvements have not yet been constructed. Moreover,the Appraisal does not reflect
the value of the Single Family Tracts of the District as if sold to a single purchaser in a single transaction. The
Appraisal provides the fee simple estate values for the Single Family Tracts. See"APPENDIX E—Appraisal of
Property in the District."
The value estimate for the Single Family Tracts using the methodologies described in the Appraisal and
subject to the limiting conditions and assumptions set forth in the Appraisal,as of March 1,2021 is$21,940,000.
The Single Family Tracts are subject to the Assessments and the Improvement Zone A Assessments which
have been assessed in connection with the construction of the Public Improvements and in the issuance of the Bonds
and the Improvement Zone A Bonds. See "ASSESSMENT PROCEDURES — Assessment Methodology" and
"OVERLAPPING TAXES AND DEBT."
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Multifamily Tracts
The Appraiser estimated the aggregate market value of the fee simple interest in various tracts of land
comprising the Multifamily Tracts in Improvement Zone B of the District under the hypothetical condition that the
Public Improvements are completed See"THE IMPROVEMENT ZONE A PUBLIC IMPROVEMENTS,""PLAN
OF FINANCE" and "THE DEVELOPMENT — Development Plan." The Appraisal does not reflect the as-is
condition of the Multifamily Tracts in Improvement Zone B of the District as the Public Improvements have not yet
been constructed. Moreover,the Appraisal does not reflect the value of the Multifamily Tracts as if sold to a single
purchaser in a single transaction. The Appraisal provides the fee simple estate values of the fee simple interest in
the land in Improvement Zone B,including the Multifamily Tracts. See"APPENDIX E—Appraisal of Property in
the District."
The prospective value of the fee simple interest in the Multifamily Tracts in Improvement Zone B of the
District as described in the Appraisal and subject to the limiting conditions therein is approximately $10,800,000
(the"Multifamily Tracts Appraised Value"). It is noted that the Multifamily Tracts Appraised Value as outlined in
the Appraisal is predicated on the maximum zoning allowance of 600 multifamily units to be constructed on the
Multifamily Tracts. See"THE DEVELOPMENT—Zoning" and APPENDIX E. The Multifamily Letter of Intent
provides for a maximum of 600 multifamily units to be constructed on the Multifamily Tracts. Current development
projections and analysis provided by the Developer indicate an estimated 400 units to be constructed on the
Multifamily Tracts,and the Service and Assessment Plan has allocated the Assessments allocable to the Multifamily
Tracts based on the construction of 400 multifamily units on the Multifamily Tracts. See "ASSESSMENT
PROCEDURES —Assessment Methodology," "ASSESSMENT PROCEDURES —Assessment Amounts," "THE
DEVELOPMENT—Expected Multifamily Development in the District,""APPRAISAL OF PROPERTY WITHIN
IMPROVEMENT ZONE B OF THE DISTRICT," "BONDHOLDERS' RISKS — Use of Appraisal" and
APPENDIX B and APPENDIX E. No assurance can be given that the maximum allowable number of 600 units
will be built on the Multifamily Tracts. See"THE DEVELOPMENT—Expected Multifamily Development in the
District."
Use of Appraisal
None of the City,the Developer,the Financial Advisor,or the Underwriter makes any representation as to
the accuracy, completeness assumptions or information contained in the Appraisal. The assumptions and
qualifications with respect to the Appraisal are contained therein. There can be no assurance that any such
assumptions will be realized and the City, the Developer and the Underwriter make no representation as to the
reasonableness of such assumptions. SEE`BONDHOLDERS'RISKS—Use of Appraisal."
BONDHOLDERS'RISKS
Before purchasing any of the Bonds, prospective investors and their professional advisors should
carefully consider all of the risk factors described below which may create possibilities wherein interest may not
be paid when due or that the Bonds may not be paid at maturity or otherwise as scheduled, or, if paid, without
premium, if applicable. The following risk factors (which are not intended to be an exhaustive listing of all
possible risks associated with an investment in the Bonds)should be carefully considered prior to purchasing any
of the Bonds. Moreover,the order of presentation of the risks summarized below does not necessarily reflect the
significance of such investment risks.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE
PLEDGED REVENUES AND OTHER FUNDS COMPRISING THE TRUST ESTATE, AS AND TO THE
EXTENT PROVIDED IN THE INDENTURE. THE BONDS DO NOT GIVE RISE TO A CHARGE AGAINST
THE GENERAL CREDIT OR TAXING POWER OF THE CITY AND ARE PAYABLE SOLELY FROM THE
SOURCES IDENTIFIED IN THE INDENTURE. THE OWNERS OF THE BONDS SHALL NEVER HAVE THE
RIGHT TO DEMAND PAYMENT THEREOF OUT OF MONEY RAISED OR TO BE RAISED BY TAXATION,
OR OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES AND OTHER FUNDS
COMPRISING THE TRUST ESTATE, AS AND TO THE EXTENT PROVIDED IN THE INDENTURE. NO
OWNER OF THE BONDS SHALL HAVE THE RIGHT TO DEMAND ANY EXERCISE OF THE CITY'S
TAXING POWER TO PAY THE PRINCIPAL OF THE BONDS OR THE INTEREST OR REDEMPTION
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PREMIUM,IF ANY,THEREON. THE CITY SHALL HAVE NO LEGAL OR MORAL OBLIGATION TO PAY
THE BONDS OUT OF ANY FUNDS OF THE CITY OTHER THAN THE PLEDGED REVENUES, AND
OTHER FUNDS COMPRISING THE TRUST ESTATE.
The ability of the City to pay debt service on the Bonds as due is subject to various factors that are beyond
the City's control. These factors include,among others, (a)the ability or willingness of property owners within the
District to pay Assessments levied by the City,(b)cash flow delays associated with the institution of foreclosure and
enforcement proceedings against property within the District, (c)general and local economic conditions which may
impact real property values, the ability to liquidate real property holdings and the overall value of real property
development projects,and(d)general economic conditions which may impact the general ability to market and sell
the lots within the District, it being understood that poor economic conditions within the City, State and region may
slow the assumed pace of sales of such lots.
The rate of development of the property in the District is directly related to the vitality of the residential
housing industry. In the event that the sale of the lands within the District should proceed more slowly than
expected and the Developer is unable to pay the Assessments,only the value of the lands,with improvements,will
be available for payment of the debt service on the Bonds, and such value can only be realized through the
foreclosure or liquidation of the lands within the District. There is no assurance that the value of such lands will be
sufficient for that purpose and the liquidation of real property through foreclosure or similar means is generally
considered to yield sales proceeds in a lesser sum than might otherwise be received through the orderly marketing of
such real property.
The Underwriter is not obligated to make a market in or repurchase any of the Bonds,and no representation
is made by the Underwriter,the City or the City's Financial Advisor that a market for the Bonds will develop and be
maintained in the future. If a market does develop,no assurance can be given regarding future price maintenance of
the Bonds.
The City has not applied for or received a rating on the Bonds. The absence of a rating could affect the
future marketability of the Bonds. There is no assurance that a secondary market for the Bonds will develop or that
holders who desire to sell their Bonds prior to the stated maturity will be able to do so.
Assessment Limitations
Annual Installments of Assessments are billed to property owners in the District. Annual Installments are
due and payable,and bear the same penalties and interest for non-payment,as for ad valorem taxes as set forth under
"ASSESSMENT PROCEDURES" herein. Additionally, Annual Installments established by the Service and
Assessment Plan correspond in number and proportionate amount to the number of installments and principal
amounts of Bonds maturing in each year, and the annual collection costs for such year. See "ASSESSMENT
PROCEDURES" herein. The unwillingness or inability of a property owner to pay regular property tax bills as
evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax
payments and Annual Installments of Assessment payments in the future.
In order to pay debt service on the Bonds, it is necessary that Annual Installments are paid in a timely
manner. Due to the lack of predictability in the collection of Annual Installments in the District, the City has
established a Reserve Account in the Reserve Fund, to be funded from the proceeds of the Bonds, to cover
delinquencies. The Annual Installments are secured by the Assessment Lien. However,there can be no assurance
that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Account and
delay in payments of debt service on the Bonds. See `BONDHOLDERS' RISKS —Remedies and Bankruptcy"
herein.
Upon an ad valorem tax lien foreclosure event of a property within the District,any Assessment that is also
delinquent will be foreclosed upon in the same manner as the ad valorem tax lien(assuming all necessary conditions
and procedures for foreclosure are duly satisfied). To the extent that a foreclosure sale results in insufficient funds
to pay in full both the delinquent ad valorem taxes and the delinquent Assessments, the liens securing such
delinquent ad valorem taxes and delinquent Assessments would likely be extinguished. Any remaining unpaid
balance of the delinquent Assessments would then be an unsecured personal liability of the original property owner.
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Based upon the language of Texas Local Government Code, §372.017(b), case law relating to other types
of assessment liens and opinions of the Texas Attorney General, the Assessment Lien as it relates to installment
payments that are not yet due should remain in effect following an ad valorem tax lien foreclosure, with future
installment payments not being accelerated. Texas Local Government Code § 372.018(d) supports this position,
stating that an Assessment Lien runs with the land and the portion of an assessment payment that has not yet come
due is not eliminated by foreclosure of an ad valorem tax lien.
The Assessment Lien is superior to any homestead rights of a property owner that were properly claimed
after the adoption of the Assessment Ordinance. However, an Assessment Lien may not be foreclosed upon if any
Pre-existing Homestead Rights were properly claimed prior to the adoption of the Assessment Ordinance for as long
as such Pre-existing Homestead Rights are maintained on the property. It is unclear under Texas law whether or not
Pre-existing Homestead Rights would prevent the Assessment Lien from attaching to such homestead property or
instead cause the Assessment Lien to attach,but remain subject to,the Pre-existing Homestead Rights.
Under Texas law, in order to establish homestead rights, the claimant must show a combination of both
overt acts of homestead usage and intention on the part of the owner to claim the land as a homestead. Mere
ownership of the property alone is insufficient and the intent to use the property as a homestead must be a present
one, not an intention to make the property a homestead at some indefinite time in the future. As of the date of
adoption of the Assessment Ordinance, no such homestead rights will have been claimed. Furthermore, the
Developer is not eligible to claim homestead rights and the Developer has represented that it owns all property
within the District as of the date of the Assessment Ordinance. Consequently,there are and can be no homestead
rights on the Assessed Parcels superior to the Assessment Lien and, therefore, the Assessment Liens may be
foreclosed upon by the City.
Failure by owners of the parcels to pay Annual Installments when due, depletion of the Reserve Fund,
delay in foreclosure proceedings, or the inability of the City to sell parcels which have been subject to foreclosure
proceedings for amounts sufficient to cover the delinquent installments of Assessments levied against such parcels
may result in the inability of the City to make full or punctual payments of debt service on the Bonds.
THE ASSESSMENTS WILL CONSTITUTE A FIRST AND PRIOR LIEN AGAINST THE PROPERTY
ASSESSED,SUPERIOR TO ALL OTHER LIENS AND CLAIMS EXCEPT LIENS AND CLAIMS FOR STATE,
COUNTY, SCHOOL DISTRICT OR MUNICIPALITY AD VALOREM TAXES AND WILL BE A PERSONAL
OBLIGATION OF AND CHARGE AGAINST THE OWNERS OF ASSESSED PROPERTY LOCATED WITTIIN
THE DISTRICT.
The Assessments expected to be levied for payment of the Bonds on the Single Family Tracts and the
Improvement Zone A Assessments which are expected to be levied on the Single Family Tracts and pledged to the
payment of the Improvement Zone A Bonds have a lien of equal priority of the parcels assessed therefor. In the
event of partial payments of the Annual Installments of the Assessments and the Improvement Zone A Assessments
from owners of the parcels in the Single Family Tracts,the Tarrant County Tax Assessor/Collector advises that such
partial payments will be applied to the payment of the Annual Installments of the Assessments and the Improvement
Zone A Assessments on a pro rata basis unless otherwise directed by the payer of such Annual Installments of the
Assessments and the Improvement Zone A Assessments.
Exceedance of Maximum Assessment Could Trigger Bond Redemption
The Service and Assessment Plan establishes a"Maximum Assessment" amount for each Lot Type created
in the District in the Single Family Tracts and the Multifamily Tracts. See Exhibit J of APPENDIX B—Form of
Service and Assessment Plan." In the event that the Maximum Assessment is exceeded at the time of platting, a
mandatory prepayment shall be required as described in See "ASSESSMENT PROCEDURES — Assessment
Amounts—Mandatory Prepayment of Assessments" —and"ASSESSMENT PROCEDURESAssessment Amounts-
Maximum Assessment Amounts." In the event of such prepayments as described thereunder, the City may
optionally redeem the corresponding proportion of the Bonds as provided in the Indenture. See "DESCRIPTION
OF THE BONDS—Redemption Provisions."
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Competition;Real Estate Market
The successful sale of lots to homebuilders and the successful sale of residential units, in turn, by
homebuilders to end users once homes are built within the District, may be affected by unforeseen changes in
general economic conditions, fluctuations in the real estate market and other factors beyond the control of the
Developer. Contracts that the Developer may have with individual homebuilders are subject to a myriad of
contractual conditions and contingencies,all or some of which if not complied with,could precipitate a termination
or winding up of such contractual arrangement for the sale of lots,causing the Developer to possibly need to execute
a different strategy for the development and sale of lots and residential units within the Development. Neither the
Developer nor any other subsequent landowner in the District has any obligation to pay the Assessments. As
described herein, the Assessments are an imposition against the land only. Neither the Developer nor any other
subsequent landowner is a guarantor of the Assessments and the recourse for the failure of the Developer or any
other landowner to pay the Assessments is limited to the collection proceedings against the land as described herein.
TIRZ Annual Credit Amount and Marketing of the Development
Parcels within the Single Family Tracts lie in Improvement Zone A and Improvement Zone B and have
been assessed for the Assessments and the Improvement Zone A Assessments. Single Family Parcels in the District
will thus pay Annual Installments of the Assessments and the Improvement Zone A Assessments. Annual
Installments of the Improvement Zone A Assessments shall receive a credit from TIRZ Revenues up to the
Maximum TIRZ Annual Credit Amount as described under"PLAN OF FINANCE—TIRZ Revenues May Reduce
Improvement Zone A Assessments." The TIRZ Revenues are generated only from ad valorem taxes levied and
collected by the City and the County on the captured appraisal value in the TIRZ in any year. Any delay or failure
by the Developer to develop the District may result in a reduced amount of the TIRZ Revenue being available to
credit the Improvement Zone A Assessments. TIRZ Revenues generated from the captured appraised value for each
parcel in the District during the development of such lot will result in a TIRZ Annual Credit Amount which is not
sufficient to achieve the Targeted Net Average Annual Installment of the Improvement Zone A Assessments. The
TIRZ Annual Credit Amount is not expected to be sufficient to provide for the Targeted Net Average Annual
Installment of the Improvement Zone A Assessments on a residential parcel until the second year that a home on
such Lot is assessed. See"OVERLAPPING TAXES AND DEBT."
It is uncertain what impact,if any,the TIRZ Annual Credit Amount application to the Annual Installments
of the Improvement Zone A Assessments will have on the underwriting of residential mortgages. If the underwriter
of a residential mortgage does not recognize the TIRZ Annual Credit Amount to the Improvement Zone A
Assessments it may make it more difficult for a borrower to qualify for a home mortgage which could have a
negative impact on home sales and projected absorption.
Loss of Tax Exemption
The Indenture contains covenants by the City intended to preserve the exclusion from gross income of
interest on the Bonds for federal income tax purposes. As discussed under the caption"TAX MATTERS"herein,
interest on the Bonds could become includable in gross income for purposes of federal income taxation,retroactive
to the date the Bonds were issued, as a result of future acts or omissions of the City in violation of its covenants in
the Indenture.
Tax legislation,administrative actions taken by tax authorities,or court decisions,whether at the Federal or
state level,may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could
affect the market price or marketability of the Bonds. Any such proposal could limit the value of certain deductions
and exclusions,including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted
cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the
foregoing matters.
Bankruptcy
The payment of Assessments and the ability of the City to foreclose on the lien of a delinquent unpaid
Assessment may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the
58
laws of the State relating to judicial foreclosure. Although bankruptcy proceedings would not cause the
Assessments to become extinguished, bankruptcy of a property owner in all likelihood would result in a delay in
prosecuting foreclosure proceedings. Such a delay would increase the likelihood of a delay or default in payment of
the principal of and interest on the Bonds,and the possibility that delinquent Assessments might not be paid in full.
Direct and Overlapping Indebtedness,Assessments and Taxes
The ability of an owner of property within the District to pay the Assessments could be affected by the
existence of other taxes and assessments imposed upon the property. Public entities whose boundaries overlap those
of the District currently impose ad valorem taxes on the property within the District and will likely do so in the
future. Such entities could also impose assessment liens on the property within the District. The imposition of
additional liens, or for private financing, may reduce the ability or willingness of the landowners to pay the
Assessments.
Depletion of Reserve Account of Reserve Fund
Failure of the owners of property within the District to pay the Assessments when due could result in the
rapid, total depletion of Reserve Account of the Reserve Fund prior to replenishment from the resale of property
upon a foreclosure or otherwise or delinquency redemptions after a foreclosure sale,if any. There could be a default
in payments of the principal of and interest on the Bonds if sufficient amounts are not available in the Reserve
Account of the Reserve Fund. The Indenture provides that if, after a withdrawal from the Reserve Account of the
Reserve Fund, the amount in the Reserve Account of the Reserve Fund is less than the Reserve Account
Requirement, the Trustee shall transfer an amount from the Pledged Revenue Fund to the Reserve Account of the
Reserve Fund sufficient to cure such deficiency, as described under"SECURITY FOR THE BONDS —Reserve
Account of the Reserve Fund"herein.
Hazardous Substance
While governmental taxes, assessments and charges are a common claim against the value of a parcel,
other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value
that may be realized to the assessment is a claim with regard to a hazardous substance. In general,the owners and
operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of
hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, sometimes referred to as"CERCLA" or"Superfund Act," is the most well-known and widely applicable of
these laws. It is likely that, should any of the parcels of land located in the District be affected by a hazardous
substance, the marketability and value of such parcels would be reduced by the costs of remedying the condition,
because the purchaser,upon becoming owner,will become obligated to remedy the condition just as is the seller.
The value of the land within the District does not take into account the possible liability of the owner(or
operator)for the remedy of a hazardous substance condition of the parcel. The City has not independently verified,
and is not aware, that the owner(or operator) of any of the parcels within the District has such a current liability
with respect to such parcel; however, it is possible that such liabilities do currently exist and that the City is not
aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the land within the
District resulting from the existence, currently, of a substance presently classified as hazardous but which has not
been released or the release of which is not presently threatened, or may arise in the future resulting from the
existence,currently,on the parcel of a substance not presently classified as hazardous but which may in the future be
so classified. Further,such liabilities may arise not simply from the existence of a hazardous substance but from the
method of handling it. The actual occurrence of any of these possibilities could significantly negatively affect the
value of a parcel that is realizable upon a foreclosure.
See "THE DEVELOPMENT—Environmental" for discussion of the previous Phase One ESA performed
on property within the District.
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Regulation
Development within the District may be subject to future federal, state and local regulations. Approval
may be required from various agencies from time to time in connection with the layout and design of development
in the District, the nature and extent of public improvements, land use, zoning and other matters. Failure to meet
any such regulations or obtain any such approvals in a timely manner could delay or adversely affect development in
the District and property values.
Bondholders'Remedies and Bankruptcy
In the event of default in the payment of principal of or interest on the Bonds or the occurrence of any other
Event of Default under the Indenture, and upon the written request of at least 25%the owners of the Bonds, the
Trustee shall proceed to protect and,enforce its rights and the rights of the owners of the Bonds under the Indenture
by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or
officer having jurisdiction,either for mandamus or the specific performance of any covenant or agreement contained
therein or in aid or execution of any power granted or for the enforcement of any proper legal or equitable remedy,
as the Trustee shall deem most effectual to protect and enforce such rights. The issuance of a writ of mandamus
may be sought if there is no other available remedy at law to compel performance of the City's obligations under the
Bonds or the Indenture and such obligations are not uncertain or disputed. The remedy of mandamus is controlled
by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no
acceleration of maturity of the Bonds in the event of default and, consequently,the remedy of mandamus may have
to be relied upon from year to year. The owners of the Bonds cannot themselves foreclose on property within the
District or sell property within the District in order to pay the principal of and interest on the Bonds. The
enforceability of the rights and remedies of the owners of the Bonds further may be limited by laws relating to
bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political
subdivisions such as the City. In this regard, should the City file a petition for protection from creditors under
federal bankruptcy laws, the remedy of mandamus or the right of the City to seek judicial foreclosure of its
Assessment Lien would be automatically stayed and could not be pursued unless authorized by a federal bankruptcy
judge. See`BONDHOLDERS'RISKS—Bankruptcy Limitation to Bondholders'Rights"herein.
Any bankruptcy court with jurisdiction over bankruptcy proceedings initiated by or against a property
owner within the District pursuant to the Federal Bankruptcy Code could,subject to its discretion,delay or limit any
attempt by the City to collect delinquent Assessments,or delinquent ad valorem taxes,against such property owner.
In addition, in 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex.
2006) ("Tooke")that a waiver of sovereign immunity must be provided for by statute in"clear and unambiguous"
language. In so ruling,the Court declared that statutory language such as"sue and be sued",in and of itself,did not
constitute a clear and unambiguous waiver of sovereign immunity. In Tooke,the Court noted the enactment in 2005
of sections 271.151-.160, Texas Local Government Code(the"Local Government Immunity Waiver Act"),which,
according to the Court,waives "immunity from suit for contract claims against most local governmental entities in
certain circumstances." The Local Government Immunity Waiver Act covers cities and relates to contracts entered
into by cities for providing goods or services to cities.
On April 1, 2016, the Texas Supreme Court ruled in Wasson Interests, Ltd. v. City of Jacksonville, 489
S.W.3d 427(Tex.2016)that sovereign immunity does not imbue a city with derivative immunity when it performs
proprietary, as opposed to governmental, functions in respect to contracts executed by a city. Texas jurisprudence
has generally held that proprietary functions are those conducted by a city in its private capacity,for the benefit only
of those within its corporate limits, and not as an arm of the government or under the authority or for the benefit of
the state. In its decision, the Court held that since the Local Government Immunity Waiver Act waives
governmental immunity in certain breach of contract claims without addressing whether the waiver applies to a
governmental function or a proprietary function of a city,the Court could not reasonably read the Local Government
Immunity Waiver Act to evidence legislative intent to waive immunity when a city performs a proprietary function.
The City is not aware of any Texas court construing the Local Government Immunity Waiver Act in the
context of whether contractual undertakings of local governments that relate to their borrowing powers are contracts
covered by such act. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign
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immunity from a suit for money damages in the absence of City action,the Trustee or the owners of the Bonds may
not be able to bring such a suit against the City for breach of the Bonds or the Indenture covenants. As noted above,
the Indenture provides that owners of the Bonds may exercise the remedy of mandamus to enforce the obligations of
the City under the Indenture. Neither the remedy of mandamus nor any other type of injunctive relief was at issue in
Tooke, and it is unclear whether Tooke will be construed to have any effect with respect to the exercise of
mandamus, as such remedy has been interpreted by Texas courts. In general, Texas courts have held that a writ of
mandamus may be issued to require public officials to perform ministerial acts that clearly pertain to their duties.
Texas courts have held that a ministerial act is defined as a legal duty that is prescribed and defined with a precision
and certainty that leaves nothing to the exercise of discretion or judgment, though mandamus is not available to
enforce purely contractual duties. However,mandamus may be used to require a public officer to perform legally-
imposed ministerial duties necessary for the performance of a valid contract to which the State or a political
subdivision of the State is a party(including the payment of moneys due under a contract).
No Acceleration
The Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a
payment default or other default under the terms of the Bonds or the Indenture.
Bankruptcy Limitation to Bondholders'Rights
The enforceability of the rights and remedies of the owners of the Bonds may be limited by laws relating to
bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political
subdivisions such as the City. The City is authorized under Texas law to voluntarily proceed under Chapter 9 of the
Federal Bankruptcy Code, 11 U.S.C. 901-946. The City may proceed under Chapter 9 if it (1) is generally not
paying its debts,or unable to meet its debts,as they become due,(2)desires to effect a plan to adjust such debts,and
(3)has either obtained the agreement of or negotiated in good faith with its creditors, is unable to negotiate with its
creditors because negotiation is impracticable, or reasonably believes that a creditor may attempt to obtain a
preferential transfer.
If the City decides in the future to proceed voluntarily under the Federal Bankruptcy Code,the City would
develop and file a plan for the adjustment of its debts, and the Bankruptcy Court would confirm the plan if(1)the
plan complies with the applicable provisions of the Federal Bankruptcy Code, (2) all payments to be made in
connection with the plan are fully disclosed and reasonable, (3)the City is not prohibited by law from taking any
action necessary to carry out the plan, (4) administrative expenses are paid in full, (5) all regulatory or electoral
approvals required under Texas law are obtained and(6)the plan is in the best interests of creditors and is feasible.
The rights and remedies of the owners of the Bonds would be adjusted in accordance with the confirmed plan of
Citadjustmenty's of the Ci 's debt.
Management and Ownership
The management and ownership of the Developer and related property owners could change in the future.
Purchasers of the Bonds should not rely on the management experience of such entities. There are no assurances
that such entities will not sell the subject property or that officers will not resign or be replaced. In such
circumstances, a new developer or new officers in management positions may not have comparable experience in
development projects comparable to that of the Development.
General Risks of Real Estate Investment and Development
Investments in undeveloped or developing real estate are generally considered to be speculative in nature
and to involve a high degree of risk. The Development will be subject to the risks generally incident to real estate
investments and development. Many factors that may affect the Development, as well as the operating revenues of
the Developer, including those derived from the Development, are not within the control of the Developer. Such
factors include changes in national,regional and local economic conditions; changes in long and short term interest
rates; changes in the climate for real estate purchases; changes in demand for or supply of competing properties;
changes in local, regional and national market and economic conditions; unanticipated development costs, market
preferences and architectural trends; unforeseen environmental risks and controls; the adverse use of adjacent and
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neighboring real estate;changes in interest rates and the availability of mortgage funds to buyers of the homes to be
built in the Development,which may render the sale of such homes difficult or unattractive;acts of war,terrorism or
other political instability; delays or inability to obtain governmental approvals;changes in laws;moratorium; acts of
God(which may result in uninsured losses); strikes; labor shortages; energy shortages;material shortages; inflation;
adverse weather conditions; contractor or subcontractor defaults; and other unknown contingencies and factors
beyond the control of the Developer. Furthermore, the operating revenues of the Developer may be materially
adversely affected if specific conditions in the lot purchase contracts are not met. Failure to meet the lot purchase
contract's conditions allows the applicable lot purchaser to terminate its obligation to purchase lots from the
Developer and obtain its earnest money deposit back. See "THE DEVELOPMENT — Expected Build-Out
Schedule"herein.
The Development cannot be initiated or completed without the Developer obtaining a variety of
governmental approvals and permits, some of which have already been obtained. Certain permits are necessary to
initiate construction of the Development and to allow the occupancy of residences and to satisfy conditions included
in the approvals and permits. There can be no assurance that all of these permits and approvals can be obtained or
that the conditions to the approvals and permits can be fulfilled. The failure to obtain any of the required approvals
or fulfill any one of the conditions could cause materially adverse financial results for the Developer.
Dependence Upon Developer
The Developer,as the owner of all of the parcels in the District,currently has the obligation for payment of
100%of the Assessments. The ability of the Developer to make full and timely payment of the Assessments will
directly affect the ability of the City to meet its debt service obligations with respect to the Bonds. The only assets
of the Developer are land within the District,related permits and development rights,and minor operating accounts.
The source of funding for future land development activities and infrastructure construction to develop the lots
proposed for the District also consists of proceeds from the Bonds and proceeds of lot sales,as well as possible bank
financing and equity contributions by the Developer. There can be no assurances given as to the financial ability of
the Developer to advance any funds to the City to supplement revenues from the Assessments if necessary,or as to
whether the Developer will advance such funds.
Moreover, the City will pay to the Developer or the Developer's designee costs for a portion of the
Improvement Zone B Public Improvements from proceeds of the Bonds. The Developer will submit reimbursement
requests on a monthly basis for costs actually incurred in developing and constructing the Improvement Zone B
Public Improvements,and be reimbursed in accordance with the Construction,Funding and Acquisition Agreement
and the Indenture. See "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS — General" and "THE
DEVELOPMENT — Development Plan". There can be no assurances given as to the financial ability of the
Developer to complete such improvements.
Potential Future Changes in State Law Regarding Public Improvement Districts
In October 2017, the 85th Texas Legislature House of Representatives and the 85th Texas Legislature
Senate issued interim charges to the 85th Texas Legislature House Committee on Special Purpose Districts and the
85th Texas Legislature Senate Intergovernmental Relations Committee (collectively, the "Interim Committees"),
respectively,requesting the study of special purpose districts and potential bond issuance reforms. The charges to
the Interim Committees included review, hearings and testimony related to changes to and oversight of bonds
secured by special assessments.
In December 2018,the 85th Texas Legislature House Committee on Special Purpose Districts released its
Interim Report to the 86th Texas Legislature(the"House SPD Report"). The House SPD Report recommended that
a Senate committee substitute to a bill proposed during the 82nd Texas Legislature in 2011,HB 1400(the"HB 1400
Committee Substitute")which set forth a tiered system for the findings required by a county or municipality prior to
the issuance of bonds,be resurrected and re-examined in order to provide oversight for assessment. Under the HB
1400 Committee Substitute:
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• Prior to the issuance of bonds or obligations wholly or partly payable from or secured by
assessments,the governing body of a municipality with a population of 250,000 or less or the governing body of a
county with a population of 1 million or less issuing the bonds or obligations must find and determine the following:
o construction of all underground water, wastewater, and drainage facilities and roadways to
serve the real property liable for assessments necessary to support the payment of the bonds or
obligations is at least 95 percent complete;and
o construction of at least 25 percent of the houses or other buildings on the real property liable
for assessments and necessary to support the bonds or obligations has been completed.
• Prior to the issuance of bonds or obligations wholly or partly payable from or secured by
assessments, a municipality with a population of more than 250,000 or a county with a population of more than 1
million issuing the bonds or obligations must obtain an independent market study from a firm recognized in the area
of real estate market analysis supporting the development projects for the real property liable for assessments and
necessary to support the payment of the bonds or obligations.
The findings of the House SPD Report suggested committee support applying standards similar to those
applied by the Texas Commission of Environmental Quality(the"TCEQ")to bonds issued by municipal utility and
other independent special purpose districts to bonds issued by cities and counties under the PID Act.
In December 2018,the 85th Texas Legislature Senate Intergovernmental Relations Committee released its
Interim Report to the 86th Texas Legislature(the"Senate IGR Report"). The Senate IGR Report found that, based
on testimony received by the committee, standards imposed by cities relating to the issuance of assessment-backed
public improvement district bonds exceeded the standards applied by the TCEQ to bonds issued by municipal utility
and other independent special purpose districts. The Senate IGR Report did not recommend any further action to the
86th Texas Legislature relating to assessment backed bonds.
The Texas Legislature convenes in odd numbered years, and the 86th Texas Legislature convened on
January 8, 2019. The House of Representatives of the 86th Texas Legislature did not convene a House Special
Purpose Districts Committee, and instead transferred portions of its jurisdiction to the 86th Texas Legislature House
Committee on Natural Resources and the 86th Texas Legislature House Committee on Urban Affairs. The Senate of
the 86th Texas Legislature has convened the Intergovernmental Relations Committee. During the session, no
legislation was introduced in the 86th Texas Legislature which proposed the provisions of the HB 1400 Committee
Substitute,and the sine die for the 86th Texas Legislature Regular Session occurred on May 27,2019.
It is impossible to predict what new proposals may be presented regarding the PID Act and the issuance of
special assessment bonds during any upcoming legislative sessions, whether such new proposals or any previous
proposals regarding the same will be adopted by the Texas Senate and House of Representatives and signed by the
Governor,and,if adopted,the form thereof It is impossible to predict with certainty the impact that any such future
legislation will or may have on the security for the Bonds.
Use of Appraisal
Caution should be exercised in the evaluation and use of valuations included in the Appraisal. The
Appraisal is an estimate of market value as of a specified date based upon assumptions and limiting conditions and
any extraordinary assumptions specific to the relevant valuation and specified therein. The estimated market value
specified in the Appraisal is not a precise measure of value, but is based on a subjective comparison of related
activity taking place in the real estate market. The valuation set forth in the Appraisal is based on various
assumptions of future expectations and while the appraiser's forecasts for properties in the District is considered to
be reasonable at the current time, some of the assumptions may not materialize or may differ materially from actual
experience in the future. The Bonds will not necessarily trade at values determined solely by reference to the
underlying value of the properties in the District.
In performing its analysis, the Appraiser makes numerous assumptions with respect to general business,
economic and regulatory conditions and other matters,many of which are beyond the Appraiser's,Underwriter's and
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City's control,as well as certain factual matters.Furthermore,the Appraiser's analysis,opinions and conclusions are
necessarily based upon market, economic, financial and other circumstances and conditions existing prior to the
valuation and date of the Appraisal.
Exercise of Third Party Property Rights
As described herein under "THE DEVELOPMENT — Existing Mineral Rights, Easements and Other
Third Party Property Rights",third parties hold title to certain Third Party Rights applicable to real property within
and around the District, including reservations of mineral rights and royalty interests and easements, pursuant to
various instruments in the chain of title for various tracts of land within and around the District.
The Developer does not expect the existence or exercise of such Third Party Property Rights or other third
party real property rights in or around the District to have a material adverse effect on the Development,the property
within the District, or the ability of landowners within the District to pay Assessments. However, none of the
District,the City's Financial Advisor,the Underwriter,the Developer or the Administrator provide any assurances
as to such Developer expectations.
Developer Principal Financial Relationships and Other Matters Relating to Developer Affiliates
Investigation of United Development Funding. Mehrdad Moayedi through his company, Centurion, and
various subsidiaries, is involved in the development of master planned residential community and mixed use
projects. Such projects have previously been developed using funding provided by various entities associated with
United Development Funding ("UDF"), including United Development Funding IV, a publicly traded real estate
investment trust,("UDF IV").
Following a series of allegations by Kyle Bass of Hayman Capital Management, L.P., that UDF IV is a
Ponzi scheme, UDF has come under federal investigation. On February 18, 2016, the Federal Bureau of
Investigation(the"FBI")raided the headquarters of UDF in Grapevine,Texas,issued subpoenas to UDF executives,
and removed materials from the UDF offices. No representations or assurances can be made with respect to the
outcome of the FBI's investigation of UDF. The Developer,the City and the Underwriter can make no prediction as
to the ultimate result of the FBI investigation into UDF or, if such enforcement charges are brought, the outcome
thereof, or the affect or the result, if any, the investigation or enforcement may have on the Developer or the
Developer's ability to continue funding the Development.
In connection with governmental investigations of UDF(the"UDF Investigations"), Centurion and certain
of its employees were contacted in mid-2016 to provide certain information to such governmental fact-finders as a
part of an information gathering process on the investigation of UDF. Centurion and its employees fully complied
with the information gathering process. Neither Centurion nor any of its employees or affiliates have received any
information indicating that they are either targets or subjects of any governmental investigation.
Throughout 2016 through 2018, the Centurion entities associated with the Moayedi UDF Projects have
refinanced a portion of the loans made by UDF with financial entities unrelated to UDF and sold certain land
holdings financed by loans from UDF and paid off the related UDF loans with the proceeds of such sales. As of
December 31, 2018, the outstanding balance of loans made by UDF to Centurion entities associated with the
Moayedi UDF Projects is approximately $733,000,000. In addition, Moayedi's personal exposure to the UDF
lending arrangements for the Moayedi UDF Projects is limited to $10,000,000 in the aggregate based on a personal
guarantee. Such guarantee may be called upon in the event of a default under the UDF lending arrangements for the
Moayedi UDF Projects.
No assurances can be given as to the result of the UDF Investigations or any charges related thereto or the
impact, if any, of such result on Moayedi,the operations of Centurion,the Developer's ability to continue funding
the Development.
Public Finance Authority Statler Hilton & Dallas Central Library Bonds (the "Statler Bonds"). An
affiliate of Centurion, Commerce Statler Development, LLC (the "Centurion Affiliate"), is the developer of the
Statler Hilton and Dallas Central Library redevelopment project in Dallas, Texas. The Centurion Affiliate entered
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into a transaction pursuant to which the Centurion Affiliate sold its rights to a grant from the City of Dallas,which
grant was to be funded through a designated portion of ad valorem property tax revenues generated in a tax
increment reinvestment zone located in the City of Dallas(the"TIF Grant"). In connection with the sale transaction,
the Public Finance Authority (Wisconsin) issued its $26,533,298.50 Tax Increment Finance Grant Revenue Bonds
(Statler Hilton&Dallas Central Library), Series 2016 (the "Statler Bonds") secured by an assignment of revenues
from the 111. Grant. In January 2017,the IRS commenced an audit of the Statler Bonds(the"Statler Audit"),and on
July 17, 2017, the Public Finance Authority received a Form 5701-1EB,Notice of proposed Issue (the "Notice")
that contained the proposed conclusion of the IRS that the interest on the Statler Bonds is not excluded from gross
income for federal income tax purposes. In connection with the Statler Audit, the Public Finance Authority
received,responded to, and complied with certain information requests from the IRS. Subsequent to the receipt of
the Notice, the Public Finance Authority continued to challenge the IRS tentative adverse determination.
Discussions with the IRS as to the correctness of its concerns have continued to date. On October 16, 2019, the
Public Finance Authority completed a taxable refunding of the Statler Bonds through the issuance of its
$38,656,615.80 aggregate principal amount of the "Public Finance Authority Tax Increment Grant Revenue Bonds
(Statler Hilton & Dallas Central Library), Taxable Series 2019 (the "Taxable Statler Refunding Bonds"). In
connection with the issuance of the Taxable Statler Refunding Bonds, the Public Finance Authority entered into
settlement discussions with the IRS relating to the Statler Audit and a settlement agreement between the IRS and the
Public Finance Authority is in discussion. No assurance can be given as to the timing of any final settlement
agreement,or whether a settlement agreement will be consummated,relating to the Statler Audit.
While the Developer and the Centurion Affiliate are under the common control of Centurion,the Centurion
Affiliate does not own property in the District and is not associated with the Development or with the Bonds;
however,the Developer,the City,and the Underwriter can make no prediction as to the ultimate result of the Statler
Audit, or the impact, if any, of the Statler Audit may have on the Developer or the Developer's ability to continue
funding the Development. However,the Developer believes that any effect on the Development will be immaterial.
Litigation Involving Developer Principal And Affiliates Relating To Development Projects.
Westlake Entrada Project. Certain separate affiliates of Centurion owned or controlled by Mehrdad
Moayedi(the"Centurion Entrada Entities")are the principal developers of a mixed use project in Westlake, Texas,
known as Entrada (the "Entrada Project"). Funding for the Entrada Project included, among other items in the
capital stack, moneys obtained by the Centurion Entrada Entities through the EB-5 program and Public
Improvement district bonds issued by the Town of Westlake. In August 2018, a minority owner of one Centurion
Entrada Entity, acting through the corporate entity FZ WLRW, LLC (the "Entrada Plaintiff'), brought suit (the
`Entrada Suit") against Centurion, the Centurion Entrada Entities, Mehrdad Moayedi (collectively, the"Centurion
Entrada Defendants") and other parties involved in structuring the financing of the Entrada Project (the "Entrada
Financing Parties") in the District Court in Tarrant County, Texas in the 342nd Judicial District (Cause No. 342-
302221-18). The Entrada Plaintiff alleges that Centurion wrongfully terminated the Entrada Plaintiff as manager of
the Entrada Project, that development of the Entrada Project has slowed due to mismanagement of the Entrada
Project,and that the Centurion Entrada Entities have misused EB-5 loan funds and diverted funds from the Town of
Westlake Public Improvement district bonds to other projects. The Entrada Suit sets forth claims of fraud,
fraudulent inducement,breach of fiduciary duty,and aiding and abetting breach of fiduciary duty as a result of such
actions against the Centurion Entrada Defendants and the Entrada Financing parties relating to the Entrada Project.
The Centurion Entrada Defendants have denied the claims of the Entrada Plaintiff in court filings relating to the
Entrada Suit. Discovery motions continue to be served in the Entrada Suit and a trial date has initially been set for
April 2020.
While the Developer and the Centurion Entrada Entities are under common control of Centurion, the
Centurion Entrada Entities do not own property in the District and are not associated with the Development or with
the Bonds;however,the Developer,the City,and the Underwriter can make no prediction as to the ultimate result of
the Entrada Suit,or the impact, if any,of the Entrada Suit may have on the Developer or the Developer's ability to
continue funding the Development.
Megatel Homes Lawsuit. On June 18,2019,Megatel Homes,LLC,Megatel Homes II,LLC and Megatel
Homes III, LLC (collectively, the "Megatel Homes Parties") filed a lawsuit styled No. DC-19-08774, Megatel
Homes,LLC et al. v. United Development Funding L.P. et al., in the 160d' Judicial District Court, Dallas County,
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Texas against various funds and entities associated with and controlled by UDF, various affiliates of CADG
indirectly owned and controlled by Mehrdad Moayedi (the"Centurion Megatel Defendants"), and various affiliates
of Buffington Land Group, Ltd. (the "Buffington Megatel Defendants") which is not owned and controlled, or
otherwise affiliated with,Mehrdad Moayedi.
The Megatel Homes Lawsuit alleges that Megatel Homes Parties,UDF, CADG(and the various Centurion
Megatel Defendants) and the Buffington Megatel Defendants were in a de facto partnership under which UDF
financed the purchase and development of land to be developed into finished lots by the Centurion Megatel
Defendants and the Buffington Megatel Defendants, which finished lots would in turn be purchased from the
Centurion Megatel Defendants and the Buffington Megatel Defendants by the Megatel Homes Parties with
financing also provided by UDF. The Megatel Homes Lawsuit sets forth five causes of action against various
Centurion Megatel Defendants including breach of fiduciary duties, conspiracy to breach fiduciary duties,breach of
the duty of good faith and fair dealing, and two counts of breach of contract. The causes of action are in part based
on allegations by the Megatel Parties that, primarily during the years 2011-2014, (i) various Centurion Megatel
Defendants and UDF conspired to cut the Megatel Parties out of partnership projects so that the Centurion Megatel
Defendants could liquidate them as unfinished lots to different homebuilders and thereby pay their debts to UDF and
(ii)that in early 2017,various Centurion Megatel Defendants and UDF pressured the Megatel Parties to release their
rights to finished lots that the Megatel Parties were entitled to purchase upon issuance of a notice of substantial
completion,thereby causing substantial lost profits to the Megatel Parties. The Megatel Homes lawsuit seeks over
$100 million dollars in damages. Discovery in the Megatel Homes lawsuit has begun and trial will be initially
scheduled for November 2020.
While the Developer and the Centurion Megatel Defendants are under common control of CADG, the
Centurion Megatel Defendants do not own property in the District and are not associated with the Development or
with the Bonds. The Developer and Centurion Megatel Defendants unequivocally deny any liability and represent
that they will vigorously defend the Megatel Homes Lawsuit however,the Developer,the City,and the Underwriter
can make no prediction as to the ultimate result of the Megatel Homes Lawsuit or the impact,if any,of the Megatel
Homes Lawsuit may have on the Developer or the Developer's ability to continue funding the Development.
TAX MATTERS
Tax Exemption
The delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that 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 of such opinion (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. A form of Bond Counsel's opinion is reproduced as
APPENDIX C. The statutes,regulations,rulings,and court decisions on which such opinion is based are subject to
change.
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 pertaining to the use,expenditure, and investment
of the proceeds of the Bonds and will assume continuing compliance by the City with the provisions of the Indenture
subsequent to the issuance of the Bonds. The Indenture contains covenants by the City with respect to,among other
matters,the use of the proceeds of the Bonds and the facilities financed therewith by persons other than state or local
governmental units,the manner in which the proceeds of the Bonds are to be invested,the periodic calculation and
payment to the United States Treasury of arbitrage "profits" from the investment of proceeds, and the reporting of
certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest
on the Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the Bonds.
Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its
review of existing statutes,regulations,published rulings and court decisions and the representations and covenants
of the City described above. No ruling has been sought from the Internal Revenue Service(the"IRS")with respect
to the matters addressed in the opinion of Bond Counsel, and Bond Counsel's opinion is not binding on the IRS.
The IRS has an ongoing program of auditing the tax-exempt status of the interest on tax-exempt obligations. If an
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audit of the Bonds is commenced,under current procedures the IRS is likely to treat the City as the"taxpayer,"and
the owners of the Bonds would have no right to participate in the audit process. In responding to or defending an
audit of the tax-exempt status of the interest on the Bonds,the City may have different or conflicting interests from
the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and
liquidity of the Bonds during the pendency of the audit,regardless of its ultimate outcome.
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. Prospective purchasers of the Bonds should be aware that
the ownership of tax-exempt obligations such as the Bonds 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, owners of an interest in a financial asset securitization investment trust ("FASIT"), 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.
Existing law may change to reduce or eliminate the benefit to bondholders of the exclusion of interest on
the Bonds from gross income for federal income tax purposes. Any proposed legislation or administrative action,
whether or not taken, could also affect the value and marketability of the Bonds. Prospective purchasers of the
Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law.
Tax Accounting Treatment of Discount and Premium on Certain Bonds
The initial public offering price of certain Bonds (the "Discount Bonds") may be less than the amount
payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a
Discount Bond(assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at
such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such
Discount Bond. A portion of such original issue discount allocable to the holding period of such Discount Bond by
the initial purchaser will, upon the disposition of such Discount Bond (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 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 Bond,taking into account the semiannual compounding of accrued interest,at the yield to
maturity on such Discount Bond and generally will be allocated to an initial purchaser in a different amount from the
amount of the payment denominated as interest actually received by the initial purchaser during the tax year.
However, such interest may be required to be taken into account in determining 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 the earned income tax credit, owners
of an interest in a FASIT,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 Bond by the initial owner prior to maturity, the
amount realized by such owner in excess of the basis of such Discount Bond in the hands of such owner(adjusted
upward by the portion of the original issue discount and downward for the payments denominated as interest
allocable to the period for which such Discount Bond was held)is includable in gross income.
Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of
accrued original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and
local tax consequences of owning and disposing of Discount Bonds. It is possible that,under applicable provisions
governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be
received in the year of accrual even though there will not be a corresponding cash payment.
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The initial public offering price of certain Bonds (the"Premium Bonds") may be greater than the amount
payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a
Premium Bond(assuming that a substantial amount of the Premium Bonds 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 Bonds.
The basis for federal income tax purposes of a Premium Bond 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 Bond. 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 Bonds should consult with their own tax advisors with respect to the
determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to
the state and local tax consequences of owning and disposing of Premium Bonds.
LEGAL MATTERS
Legal Proceedings
Delivery of the Bonds will be accompanied by the unqualified approving legal opinion of the Attorney
General to the effect that the Bonds are valid and legally binding obligations of the City under the Constitution and
laws of the State, payable from the Trust Estate and, based upon their examination of a transcript of certified
proceedings relating to the issuance and sale of the Bonds,the legal opinion of Bond Counsel,to a like effect.
Norton Rose Fulbright US LLP serves as Bond Counsel to the City. Winstead PC serves as Underwriter's
Counsel. The legal fees paid to Bond Counsel and Underwriter's Counsel are contingent upon the sale and delivery
of the Bonds.
Legal Opinions
The City will furnish the Underwriter a transcript of certain certified proceedings incident to the
authorization and issuance of the Bonds. Such transcript will include a certified copy of the approving opinion of
the Attorney General of Texas,as recorded in the Bond Register of the Comptroller of Public Accounts of the State,
to the effect that the Bonds are valid and binding special obligations of the City. The City will also furnish the legal
opinion of Bond Counsel,to the effect that,based upon an examination of such transcript,the Bonds are valid and
binding special obligations of the City under the Constitution and laws of the State. The legal opinion of Bond
Counsel will further state that the Bonds, including principal thereof and interest thereon, are payable from and
secured by a pledge of and lien on the Pledged Revenues. Bond Counsel will also provide a legal opinion to the
effect that interest on the Bonds will be excludable from gross income for federal income tax purposes under
Section 103(a)of the Code, subject to the matters described above under the caption"TAX MATTERS."A copy of
the opinion of Bond Counsel is attached hereto as"APPENDIX C—Form of Opinion of Bond Counsel."
Except as noted below, Bond Counsel did not take part in the preparation of the Limited Offering
Memorandum,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 in the Limited Offering Memorandum under the captions or subcaptions
"PLAN OF FINANCE — The Bonds", "DESCRIPTION OF THE BONDS," "SECURITY FOR THE BONDS"
(except for the last paragraph under the subcaption"General"), "ASSESSMENT PROCEDURES" (except for the
subcaptions "Assessment Methodology" and "Assessment Amounts"), "THE DISTRICT," "TAX MATTERS,"
"LEGAL MATTERS — Legal Proceedings," "LEGAL MATTERS — Legal Opinions," "SUITABILITY FOR
INVESTMENT," "CONTINUING DISCLOSURE" (except the subcaption "The Developer"), "REGISTRATION
AND QUALIFICATION OF BONDS FOR SALE,""LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS"and APPENDIX A and such firm is of the opinion that the information relating to the
Bonds, the Bond Ordinance, the Assessment Ordinance and the Indenture contained therein fairly and accurately
describes the laws and legal issues addressed therein and,with respect to the Bonds, such information conforms to
the Bond Ordinance,the Assessment Ordinance and the Indenture.
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The various legal opinions to be delivered concurrently with the delivery of the Bonds express the
professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In
rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional
judgment,of the transaction opined upon,or of the future performance of the parties to the transaction. Nor does the
rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.
Litigation—The City
At the time of delivery and payment for the Bonds,the City will certify that, except as disclosed herein,
there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory
agency,public board or body,pending or overtly threatened against the City affecting the existence of the District,
or seeking to restrain or to enjoin the sale or delivery of the Bonds, the application of the proceeds thereof, in
accordance with the Indenture, or the collection or application of Assessments securing the Bonds, or in any way
contesting or affecting the validity or enforceability of the Bonds, the Assessment Ordinance, the Indenture, any
action of the City contemplated by any of the said documents, or the collection or application of the Pledged
Revenues, or in any way contesting the completeness or accuracy of this Limited Offering Memorandum or any
amendment or supplement thereto,or contesting the powers of the City or its authority with respect to the Bonds or
any action of the City contemplated by any documents relating to the Bonds.
Litigation—The Developer
At the time of delivery and payment for the Bonds, the Developer will certify that, except as disclosed
herein, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,
regulatory body, public board or body pending, or, to the best knowledge of the Developer, threatened against or
affecting the Developer wherein an unfavorable decision,ruling or finding would have a material adverse effect on
the financial condition or operations of the Developer or its general partner or would adversely affect (i) the
transactions contemplated by,or the validity or enforceability of,the Bonds,the Indenture,the Bond Ordinance,the
Service and Assessment Plan,the Construction,Funding, and Acquisition Agreement,the Development Agreement,
or the Bond Purchase Agreement, or otherwise described in this Limited Offering Memorandum, or (ii) the tax-
exempt status of interest on the Bonds(individually or in the aggregate,a"Material Adverse Effect"). Additionally,
Mr. Mehrdad Moayedi and his affiliated entities have been and are parties to pending and threatened litigation
related to their commercial and real estate development activities. Such litigation occurs in the ordinary course of
business and is not expected to have a Material Adverse Effect.
For a description of litigation and other matters related to affiliated entities of CADG, see
"BONDHOLDERS' RISKS — Developer Principal Financial Relationships and Other Matters Relating to
Developer Affiliates."
SUITABILITY FOR INVESTMENT
Investment in the Bonds poses certain economic risks. See"BONDHOLDERS' RISKS". The Bonds are
not rated by any nationally recognized municipal securities rating service. No dealer, broker, salesman or other
person has been authorized by the City or the Underwriter to give any information or make any representations,
other than those contained in this Limited Offering Memorandum, and, if given or made, such other information or
representations must not be relied upon as having been authorized by either of the foregoing. Additional
information will be made available to each prospective investor, including the benefit of a site visit to the City and
the opportunity to ask questions of the Developer,as such prospective investor deems necessary in order to make an
informed decision with respect to the purchase of the Bonds.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Bonds upon an event of default under the Indenture are in
many respects dependent upon judicial actions, which are often subject to discretion and delay. See
"BONDHOLDERS' RISKS —Remedies and Bankruptcy." Under existing constitutional and statutory law and
judicial decisions, including the federal bankruptcy code, the remedies specified by the Indenture and the Bonds
may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the
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delivery of the Bonds will be qualified, as to the enforceability of the remedies provided in the various legal
instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the
rights of creditors and enacted before or after such delivery.
NO RATING
No application for a rating on the Bonds has been made to any rating agency, nor is there any reason to
believe that the City would have been successful in obtaining an investment grade rating for the Bonds had
application been made.
CONTINUING DISCLOSURE
The City
Pursuant to Rule 15c2-12 of the United States Securities and Exchange Commission(the"Rule"),the City
and FSC Continuing Disclosure Services, a division of Hilltop Securities,Inc.(in such capacity,the"Dissemination
Agent")have entered into a Continuing Disclosure Agreement(the"City Disclosure Agreement")for the benefit of
the Owners of the Bonds (including owners of beneficial interests in the Bonds), to provide, by certain dates
prescribed in the City Disclosure Agreement, certain financial information and operating data relating to the City
(collectively,the"City Reports"). The specific nature of the information to be contained in the City Reports is set
forth in"APPENDIX D-1—Form of City Disclosure Agreement." Under certain circumstances,the failure of the
City to comply with its obligations under the City Disclosure Agreement constitutes an event of default thereunder.
Such a default will not constitute an event of default under the Indenture, but such event of default under the City
Disclosure Agreement would allow the Owners of the Bonds(including owners of beneficial interests in the Bonds)
to bring an action for specific performance.
The City has agreed to update information and to provide notices of certain specified events only as
provided in the City Disclosure Agreement. 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 in this Limited Offering Memorandum, except as provided in the City
Disclosure Agreement. The City makes no representation or warranty concerning such information or concerning
its usefulness to a decision to invest in or sell the Bonds at any future date. The City disclaims any contractual or
tort liability for damages resulting in whole or in part from any breach of the City Disclosure Agreement or from
any statement made pursuant to the City Disclosure Agreement.
The Developer
The Developer,the Administrator,and the Dissemination Agent have entered into a Continuing Disclosure
Agreement(the"Developer Disclosure Agreement") for the benefit of the Owners of the Bonds (including owners
of beneficial interests in the Bonds),to provide,by certain dates prescribed in the Developer Disclosure Agreement,
certain information regarding the Development and the Improvement Zone B Public Improvements(collectively,the
"Developer Reports"). The specific nature of the information to be contained in the Developer Reports is set forth
in"APPENDIX D-2—Form of Developer Disclosure Agreement." Under certain circumstances,the failure of the
Developer or the Assessment Consultant to comply with its obligations under the Developer Disclosure Agreement
constitutes an event of default thereunder. Such a default will not constitute an event of default under the Indenture,
but such event of default under the Developer Disclosure Agreement would allow the Owners of the Bonds
(including owners of beneficial interests in the Bonds)to bring an action for specific performance. The Developer
Disclosure Agreement is a voluntary agreement made for the benefit of the holders of the Bonds and is not entered
into pursuant to the Rule.
The Developer has agreed to provide(i)certain updated information to the Administrator,which consultant
will prepare and provide such updated information in report form and(ii)notices of certain specified events,only as
provided in the Developer Disclosure Agreement. The Developer 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 in this Limited Offering Memorandum, except as provided in
the Developer Disclosure Agreement. The Developer makes no representation or warranty concerning such
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information or concerning its usefulness to a decision to invest in or sell the Bonds at any future date. The
Developer disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of the
Developer Disclosure Agreement or from any statement made pursuant to the Developer Disclosure Agreement.
UNDERWRITING
FMSbonds,Inc. (the"Underwriter")has agreed to purchase the Bonds from the City at a purchase price of
$ (the par amount of the Bonds, less a reoffering discount of$ less an underwriting
discount of $ , which includes Underwriter's Counsel's fee of $ ). The Underwriter's
obligations are subject to certain conditions precedent and if obligated to purchase any of the Bonds the Underwriter
will be obligated to purchase all of the Bonds. The Bonds may be offered and sold by the Underwriter at prices
lower than the initial offering prices stated on the inside cover page hereof, and such initial offering prices may be
changed from time to time by the Underwriter.
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE
The sale of the Bonds 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 have not been qualified under
the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been
qualified under the securities acts of any other jurisdiction. The City assumes no responsibility for qualification of
the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged,
hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other
disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any
exemption from securities registration provisions.
LEGAL INVESTMENT AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
The PID Act and Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas
Government Code, as amended) provide that the Bonds are negotiable instruments and investment securities
governed by Chapter 8,Texas Business and Commerce Code,as amended,and are legal and authorized investments
for insurance companies, fiduciaries, trustees, or for the sinking funds of municipalities or other political
subdivisions or public agencies of the State. With respect to investment in the Bonds by municipalities or other
political subdivisions or public agencies of the State,the PFIA requires that the Bonds be assigned a rating of at least
"A"or its equivalent as to investment quality by a national rating agency. See"NO RATING"above. In addition,
the PID Act and various provisions of the Texas Finance Code provide that, subject to a prudent investor standard,
the Bonds are legal investments for state banks,savings banks,trust companies with capital of one million dollars or
more, and savings and loan associations. The Bonds are eligible to secure deposits to the extent of their market
value. No review by the City has been made of the laws in other states to determine whether the Bonds are legal
investments for various institutions in those states. No representation is made that the Bonds will be acceptable to
public entities to secure their deposits or acceptable to such institutions for investment purposes.
The City made no investigation of other laws,rules,regulations or investment criteria which might apply to
such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or
limit the authority of such institutions or entities to purchase or invest in the Bonds for such purposes.
INVESTMENTS
The City invests its funds in investments authorized by Texas law in accordance with investment policies
approved by the City Council. Both Texas law and the City's investment policies are subject to change.
Under Texas law,the City is authorized to invest in(1)obligations of the United States or its agencies and
instrumentalities, including letters of credit; (2) direct obligations of the State 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 and interest of which are unconditionally guaranteed or insured by or backed by the full
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faith and credit of, the State or the United States or their respective agencies and instrumentalities, including
obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full
faith and credit of the United States; (5) obligations of states, agencies, counties, cities, and other political
subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less
than A or its equivalent; (6)bonds issued,assumed or guaranteed by the State of Israel;(7)interest-bearing banking
deposits that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National
Credit Union Share Insurance Fund or its successor, (8) certificates of deposit and share certificates (i)issued by or
through an institution that either has its main office or a branch office in the State,and are guaranteed or insured by
the Federal Deposit Insurance Corporation or the National Credit Union Insurance Fund, or are secured as to
principal by obligations described in the clauses(1)through(6)or in any other manner and amount provided by law
for City deposits,or(ii)where(a)the funds are invested by the City through(I)a broker that has its main office or a
branch office in the State and is selected from a list adopted by the City as required by law or (II) a depository
institution that has its main office or a branch office in the State that is selected by the City; (b)the broker or the
depository institution selected by the City arranges for the deposit of the funds in certificates of deposit in one or
more federally insured depository institutions, wherever located, for the account of the City; (c)the full amount of
the principal and accrued interest of each of the certificates of deposit is insured by the United States or an
instrumentality of the United States, and(d)the City appoints the depository institution selected under(a) above, a
custodian as described by Section 2257.041(d)of the Texas Government Code,or a clearing broker-dealer registered
with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule
15c3-3 (17 C.F.R. Section 240.15c3-3)as custodian for the City with respect to the certificates of deposit; (9) fully
collateralized repurchase agreements that have a defined termination date, are fully secured by a combination of
cash and obligations described in clause(1)which are pledged to the City,held in the City's name, and deposited at
the time the investment is made with the City or with a third party selected and approved by the City and are placed
through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing
business in the State; (10) securities lending programs if (i) the securities loaned under the program are 100%
collateralized,a loan made under the program allows for termination at any time and a loan made under the program
is either secured by (a) obligations that are described in clauses (1) through (6) above, (b) irrevocable letters of
credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm
at not less than A or its equivalent or(c) cash invested in obligations described in clauses (1) through (6) above,
clauses (12)through(14)below,or an authorized investment pool; (ii) securities held as collateral under a loan are
pledged to the City,held in the City's name and deposited at the time the investment is made with the City or a third
party designated by the City; (iii) a loan made under the program is placed through either a primary government
securities dealer or a financial institution doing business in the State; and(iv)the agreement to lend securities has a
term of one year or less,(11)certain 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-1 or P-1 or the equivalent by at least one
nationally recognized credit rating agency, (12) commercial paper with a stated maturity of 270 days or less that is
rated at least A-1 or P-1 or the equivalent by either(a)two nationally recognized credit rating agencies or(b) one
nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a
U.S. or state bank, (13) no-load money market mutual funds registered with and regulated by the Securities and
Exchange Commission that comply with federal Securities and Exchange Commission Rule 2a-7, and(14)no-load
mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of
less than two years,and have a duration of one year or more and are invested exclusively in obligations described in
this paragraph or have a duration of less than one year and the investment portfolio is limited to investment grade
securities, excluding asset-backed securities. In addition,bond proceeds may be invested in guaranteed investment
contracts that have a defined termination date and are secured by obligations, including letters of credit, of the
United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds
invested under such contract,other than the prohibited obligations described in the next succeeding paragraph.
The City may invest in such obligations directly or through government investment pools that invest solely
in such obligations provided that the pools are rated no lower than"AAA"or"AAA-m"or an equivalent by at least
one nationally recognized rating service. The City may also contract with an investment management firm
registered under the Investment Advisers Act of 1940(15 U.S.C. Section 80b-1 et seq.)or with the State Securities
Board to provide for the investment and management of its public funds or other funds under its control for a term
up to two years, but the City retains ultimate responsibility as fiduciary of its assets. In order to renew or extend
such a contract, the City must do so by order, ordinance, or resolution. The City is specifically prohibited from
investing in: (1)obligations whose payment represents the coupon payments on the outstanding principal balance of
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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.
Political subdivisions such as the City are authorized to implement securities lending programs if(i) the
securities loaned under the program are 100%collateralized, a loan made under the program allows for termination
at any time and a loan made under the program is either secured by (a) obligations that are described in clauses
(1)through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or
national bank that is continuously rated by a nationally recognized investment rating firm not less than"A" or its
equivalent, or(c) cash invested in obligations that are described in clauses(1)through(6) and(10)through (12)of
the first paragraph under this subcaption, or an authorized investment pool; (ii) securities held as collateral under a
loan are pledged to the governmental body,held in the name of the governmental body and deposited at the time the
investment is made with the City or a third party designated by the City; (iii) a loan made under the program is
placed through either a primary government securities dealer or a financial institution doing business in the State;
and(iv)the agreement to lend securities has a term of one year or less.
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, the
maximum allowable stated maturity of any individual investment, the maximum average dollar-weighted maturity
allowed for pooled fund groups,methods to monitor the market price of investments acquired with public funds, a
requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus
payment basis, and procedures to monitor rating changes in investments acquired with public funds and the
liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a
formally adopted "Investment Strategy Statement" that specifically addresses each fund's 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.
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,the ending market value and the fully accrued interest for the reporting
period of each pooled fund group,(4)the book value and market value of each separately listed asset and fund type
invested at the beginning and end of the reporting period by the type of asset and fund type invested,(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.
Under Texas law the City is additionally required to:(1)annually review its adopted policies and strategies;
(2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment
strategies and records any changes made to either its investment policy or investment strategy in the respective rule,
order, ordinance or resolution; (3)require any investment officers' with personal business relationships or relatives
with firms seeking to sell securities to the City to disclose the relationship and file a statement with the Texas Ethics
Commission and the City Council; (4)require the registered principal of firms seeking to sell securities to the City
to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures
have been implemented to preclude investment transactions conducted between the City and the business
organization that are not authorized by the City's investment policy (except to the extent that this authorization is
dependent on an analysis of the makeup of the City's entire portfolio or requires an interpretation of subjective
investment standards), and (c) deliver a written statement attesting to these requirements; (5) perform an annual
audit of the management controls on investments and adherence to the City's investment policy;(6)provide specific
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investment training for the officers of the City; (7)restrict reverse repurchase agreements to not more than 90 days
and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse
repurchase agreement; (8)restrict the investment in no-load mutual funds in the aggregate 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; (9) require local government investment pools to conform to the new disclosure, rating, net asset value,
yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of
qualified brokers that are authorized to engage in investment transactions with the City.
INFORMATION RELATING TO THE TRUSTEE
The City has appointed Wilmington Trust, National Association, a national banking association organized
under the laws of the United States, to serve as Trustee. The Trustee is to carry out those duties assignable to it
under the Indenture. Except for the contents of this section, the Trustee has not reviewed or participated in the
preparation of this Limited Offering Memorandum and assumes no responsibility for the contents,accuracy,fairness
or completeness of the information set forth in this Limited Offering Memorandum or for the recitals contained in
the Indenture or the Bonds,or for the validity,sufficiency,or legal effect of any of such documents.
Furthermore,the Trustee has no oversight responsibility, and is not accountable, for the use or application
by the City of any of the Bonds authenticated or delivered pursuant to the Indenture or for the use or application of
the proceeds of such Bonds by the City. The Trustee has not evaluated the risks, benefits, or propriety of any
investment in the Bonds and makes no representation, and has reached no conclusions, regarding the value or
condition of any assets or revenues pledged or assigned as security for the Bonds, the technical or financial
feasibility of the project,or the investment quality of the Bonds,about all of which the Trustee expresses no opinion
and expressly disclaims the expertise to evaluate.
Additional information about the Trustee may be found at its website at www.wilmingtontrust.com.
Neither the information on the Trustee's website,nor any links from that website, is a part of this Limited Offering
Memorandum,nor should any such information be relied upon to make investment decisions regarding the Bonds.
SOURCES OF INFORMATION
General
The information contained in this Limited Offering Memorandum has been obtained primarily from the
City's records,the Developer and its representatives and other sources believed to be reliable. In accordance with
its responsibilities under the federal securities law, the Underwriter has reviewed the information in this Limited
Offering Memorandum in accordance with,and as part of,its responsibilities to investors under the federal securities
laws as applied to the facts and circumstances of the transaction, but the Underwriter does not guarantee the
accuracy or completeness of such information. The information and expressions of opinion herein are subject to
change without notice, and neither the delivery of this Limited Offering Memorandum or any sale hereunder will
create any implication that there has been no change in the financial condition or operations of the City or the
Developer described herein since the date hereof. This Limited Offering Memorandum contains, in part, estimates
and matters of opinion that are not intended as statements of fact,and no representation or warranty is made as to the
correctness of such estimates and opinions or that they will be realized. The summaries of the statutes,resolutions,
ordinances, indentures and engineering and other related reports set forth herein are included subject to all of the
provisions of such documents. These summaries do not purport to be complete statements of such provisions and
reference is made to such documents for further information.
Source of Certain Information
The information contained in this Limited Offering Memorandum relating to the description of the
Improvement Zone B Public Improvements, the Development and the Developer generally and, in particular, the
information included in the sections captioned "THE IMPROVEMENT ZONE B PUBLIC IMPROVEMENTS,"
"THE DEVELOPMENT," "THE DEVELOPER," `BONDHOLDERS' RISKS" (only as it pertains to the
Developer, the Improvement Zone B Public Improvements and the Development) and "LEGAL MATTERS —
Litigation—The Developer"has been provided by the Developer.
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Experts
The information regarding the Service and Assessment Plan in this Limited Offering Memorandum has
been provided by P3Works,LLC.and has been included in reliance upon the authority of such firm as experts in the
field of development planning and finance.
The information regarding the Appraisal in this Limited Offering Memorandum has been provided by
Integra Realty Resources—DFW,and has been included in reliance upon the authority of such firm as experts in the
field of the appraisal of real property.
Updating of Limited Offering Memorandum
If, subsequent to the date of the Limited Offering Memorandum, the City learns, through the ordinary
course of business and without undertaking any investigation or examination for such purposes,or is notified by the
Underwriter,of any adverse event which causes the Limited Offering Memorandum to be materially misleading,and
unless the Underwriter elects to terminate its obligation to purchase the Bonds,the City will promptly prepare and
supply to the Underwriter an appropriate amendment or supplement to the Limited Offering Memorandum
satisfactory to the Underwriter; provided, however, that the obligation of the City to so amend or supplement the
Limited Offering Memorandum will terminate when the City delivers the Bonds to the Underwriter, unless the
Underwriter notifies the City on or before such date that less than all of the Bonds have been sold to ultimate
customers; in which case the City's obligations hereunder will extend for an additional period of time(but not more
than 90 days after the date the City delivers the Bonds)until all of the Bonds have been sold to ultimate customers.
FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Limited Offering Memorandum constitute
"forward-looking statements"within the meaning of the United States Private Securities Litigation Reform Act of
1995, Section 21e of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act. Such statements are generally identifiable by the terminology used such as "plan," "expect,"
"estimate,""project,""anticipate,""budget"or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD LOOKING STA 1'EMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS DESCRIBED HEREIN TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-
LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO
THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ANY OF ITS EXPECTATIONS, OR EVENTS,
CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE BASED OCCUR, OTHER
THAN AS DESCRIBED UNDER"CONTINUING DISCLOSURE"HEREIN.
AUTHORIZATION AND APPROVAL
The City Council has approved by resolution the form and content of this preliminary Limited Offering
Memorandum and the City Council has authorized this preliminary Limited Offering Memorandum to be used by
the Underwriter in connection with the marketing and sale of the Bonds. In the Bond Ordinance,the City Council
will approve the form and content of the final Limited Offering Memorandum.
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APPENDIX A
FORM OF INDENTURE
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APPENDIX B
FORM OF SERVICE AND ASSESSMENT PLAN
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APPENDIX C
FORM OF OPINION OF BOND COUNSEL
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APPENDIX D-1
FORM OF CITY DISCLOSURE AGREEMENT
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APPENDIX D-2
FORM OF DEVELOPER DISCLOSURE AGREEMENT
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APPENDIX E
APPRAISAL OF PROPERTY IN THE DISTRICT
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APPENDIX F
FORM OF CONSTRUCTION,FUNDING,AND ACQUISITION AGREEMENT
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APPENDIX G
FORM OF DEVELOPMENT AGREEMENT
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