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Item 6A rA-ewt (0. A FirstSouthwest 4P A Division of Hilltop Securities. Southlake CEDC Sales Tax Revenue Bonds, Series 2016 CONTACT: CONTACT: Jim Sabonis, Managing Director Andre Ayala,Vice President 1201 Elm Street, Suite 3500 1201 Elm Street, Suite 3500 Dallas,TX 75270 Dallas,TX 75270 Phone: 214-953-4195 Phone: 214-953-4184 Email: Email: jim.sabonis@hilltopsecurities.com andre.ayala@hilltopsecurities.com Member FINRA/SIPC/NYSE I©2016 Hilltop Securities Inc. All right reserved. SOUTHLAKE COMMUNITY ENHANCEMENT & DEVELOPMENT CORPORATION LL] V Q C J N d =0 d `) od LT p N N O N N 0 d} = N r r.p L N /1 \ tP D �� N~ G a 0 c Q Co O O co , N ea co O N .- N O co 0 M x Z U ' IP CO Co co _ L — Lt 00 O Lin o M() ti O o i CO N GZ O 0 O ~ C- \ m E a) dam• CO N 0 co- M M E cc V 1 CO CO CO N N D a ta 6e- C = I a CC N-- U) v o 0 o co o ai O a) O O O 0 CO i N !/) G) d O O in d CO cc N 7) +'. 0) N- N- N LO ( CUM O 0 ,_ = " - = N N N 69 N N oQ CI m 6F} 69 H? 6 9 d? m 0 CoV J M N (0 ra 'E -0 U) <0_:i5 Cl)73 0 c CO J ri' CaCn m N M U c }. c — N 0 D = Cl) U N N 0 V O Q a) m > E O U •U rn N0 a COCt N O O �� CL m 0 IL I- < H < _0m X 00 -0 10 it O CA V) mm CU CD �- s$ ^v y v/ W a Southlake CEDC Sales Tax Revenue Bonds, Series 2016 Table of Contents Tab Preliminary Official Statement 1 POS NOS Rating Report 2 Fitch Report Debt Service Schedule 3 Sales Tax Revenue Bonds, S16 o _ o re E Q tG m V t¢i 'n t t6 to t0 S' e .-- y ¢ O e a o . 7.as u_ m C LL LL >N aU0 p < U (-) o y `- OLC) N N o a �. 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N C a o co L C C C - COur, t0 co COU d N d _ 1•- N N O r t0 O , , .- t0 co O Y Y Y N N 7 N M ,-.) CJ N N U F F F 0 N tD O N ? o N to C 4 ui S:‘,) G 0D j 0 a) 6) C d y O O 5 O O O n 0co 0:, L d 9 j ..t U o s >' 0 >, ›, as to OO O o y .- .- N T o to NL T . '� MN N N N-o -0 ' N O c C .i a) C CO 0'2O C • d 12 C Ca 0 0 0 H F I_ 1- LL F- ~ ¢ ¢ Q Q) >. >. T to a Y Y Y LL SOUTHLAKE 0 • I �_ _ _ • •• • 01, Sales Tax Revenue Bonds, Series 2016 ISSUER Southlake CEDC Telephone (817) 748-8042 City of Southlake, Texas Email: Sharen Jackson sjackson(a�ci.southlake.tx.us 1400 Main Street, Suite 440 Southlake, TX 76092 FINANCIAL ADVISOR FirstSouthwest, a Division of Hilltop Securities Inc Telephone (214) 953-4195 (Jim) Jim Sabonis,Andre Ayala, Penny Brooker (214) 953-4184 (Andre) Jorge Delgado (214) 953-4189 (Penny) 1201 Elm Street, Suite 3500 (214) 859-1714 (Jorge) Dallas, TX 75270 tim.sabonisc hilltopsecurities.corn andre.avala(&hilltopsecurities.com penny.brooker@hilltopsecurities.com jorge.delgado@hilltopsecurities.com BOND COUNSEL/ DISCLOSURE COUNSEL Norton Rose Fulbright US LLP Telephone (214)855-8068 (Bob) Bob Dransfield and Jenny Hackler (214)855-8025 (Jenny) 2200 Ross Ave , Suite 3600 Email Dallas, TX 75201-2784 robert.dransfield(a�nortonrosefulbright.com jenny.hackler(c�nortonrosefulbright.com PURCHASER --TBD PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Telephone (214)468-6411 Sharda Bieganski, Seth Crone Email 2001 Bryan Street, 11th Floor Sharda.Bieganski(a)bnvmellon.com Dallas, TX 75201 Prehmmary subject to change SOUTHLAKE Sales Tax Revenue Bonds, Series 2016 RATING AGENCIES Fitch Ratings Telephone (512) 215-3733 Rebecca Meyer Email. 111 Congress Ave , Suite 2010 Rebecca.meyer(a�fitchratings.com Austin, TX 78701 seth.crone(a�bnymellon.com •Preliminary subject to change u 0 74 o 411, PRELIMINARY OFFICIAL STATEMENT Ratings: c FSCContinuingDisclosureServices Dated:July 22,2016 Fitch: "AA+"(stable outlook) i' A Division of Ni� «urk ppsGes. c . (see"OTHER INFORMATION r -Ratings"herein) czt v NEW ISSUE-Book-Entry-Only JZ i In the opinion of Bond Counsel,interest on the Bonds will be excludable from gross income for federal income tax purposes under existing cr law,subject to the matters described under"TAX MATTERS"herein,including the alternative minimum tax on corporations. ° THE BONDS WILL NOT BE DESIGNATED AS"QUALIFIED TAX-EXEMPT OBLIGATIONS"FOR FINANCIAL w INSTITUTIONS o .6 = 2 $24,240,000* c .3 SOUTHLAKE COMMUNITY ENHANCEMENT AND DEVELOPMENT CORPORATION (Dallas and Tarrant Counties) o Q at "L SALES TAX REVENUE BONDS,SERIES 2016 rn 2 a Dated Date:August 1,2016 Due:February 15,as shown on page 2 F, Interest to accrue from Delivery Date >.. >, PAYMENT TERMS. Interest on the$24,240,000*Southlake Community Enhancement and Development Corporation,Sales Tax Revenue CJ o Bonds, Series 2016 (the "Bonds") will accrue from the "Delivery Date", will be payable February 15 and August 15 of each year .firr s o ^ commencing February 15, 2017,until maturity or prior redemption, and will be calculated on the basis of a 360-day year consisting of G twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede&Co.,the nominee of The Depository iv N T. o •. Trust Company("DTC")pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired o i" 3 in denominations of$5,000 or integral multiples thereof within a maturity No physical delivery of the Bonds will be made to the U. o v beneficial owners thereof.Principal of,premium,if any,and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede r,f. 4 y &Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial • ^c owners of the Bonds. See"THE BONDS - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is The Bank of New y = York Mellon Trust Company,N.A.,Dallas,Texas(see"THE BONDS-Paying Agent/Registrar"). oe AUTHORITY FOR ISSUANCE. The Bonds are being issued by Southlake Community Enhancement and Development Corporation (the y Y 2 "Corporation")pursuant to Texas Local Government Code,Chapters 501,504 and 505,as amended(collectively,the"Act"). The Bonds and a. z .� their terms are governed by the provisions of a resolution(the"Resolution")adopted by the Board of Directors of the Corporation(see"The ^u f L Bonds-Authority for Issuance"). a — o E 5. The Bonds are special obligations of the Corporation,payable from and secured by a first lien on and pledge of certain Pledged Revenues R o G which include the proceeds of a 3/8 of 1%sales and use tax levied within the City of Southlake, Texas(the"City") for the benefit of the c Corporation(see"Selected Provisions of the Bond Resolution"). —Q,"7. c The Bonds do not constitute a legal or equitable,pledge, charge, lien, or encumbrance upon any property of the Corporation or the c • - Corporation except with respect to the"Pledged Revenues': Neither the State,the Corporation,the Counties of Tarrant and Denton,or " L L anypolitical corporation,subdivision, or agency ofthe State shall be obligated topaythe Bonds or the interest thereon and neither the g � - P g Y g faith and credit nor the taxing power of the State, the Corporation, the Counties of Tarrant and Denton, or any political corporation, T` subdivision,or agency thereof except as authorized by the Act,as herein defined,is pledged to the payment of the principal of or interest z _ on the Bonds. r. R - PURPOSE. . Proceeds from the sale of the Bonds will be used to(i)fund a community entertainments and recreation center,including the L ; E maintenance and operation costs of such project and(ii)to pay the costs associated with the issuance of the Bonds. w Eo u c. - •V v7 °-_-_ o CUSIP PREFIX: 844425 c a ? MATURITY SCHEDULE&9 DIGIT CUSIP 3 . Shown on Page 2 E a o L = o LEGALITY. .The Bonds are offered for delivery when,as and if issued and received by the Initial Purchaser and subject to the approving fl c opinion of the Attorney General of Texas and the opinion of Norton Rose Fulbright US LLP,Bond Counsel,Dallas,Texas,(see Appendix r c : C, "Form of Bond Counsel's Opinion"). Certain legal matters will be passed upon by Norton Rose Fulbright US LLP, Dallas, Texas, v Disclosure Counsel for the Corporation. = DELIVERY. It is expected that the Bonds will be available for delivery through The Depository Trust Company on August 24,2016 v_' o TaE v *Preliminary,subject to change • l'• L' ..- iiK .- - o - BIDS DUE TUESDAY,AUGUST 2, 2016 AT 10:00 AM, CDT .a „ L w 0. �L H V CL it h MATURITY SCHEDULE* CUSIP Prefix: 844425(1) Price Principal 15-Feb Interest or CUSIP Amount Maturity Rate Yield Suffix(I) $ 860,000 2018 885,000 2019 915,000 2020 960,000 2021 1,005,000 2022 1,060,000 2023 1,110,000 2024 1,170,000 2025 1,230,000 2026 1,285,000 2027 1,340,000 2028 1,395,000 2029 1,450,000 2030 1,500,000 2031 1,535,000 2032 1,575,000 2033 1,615,000 2034 1,655,000 2035 1,695,000 2036 (Interest to accrue from Delivery Date) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Capital IQ 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. The Corporation,the Financial Advisor and the Initial Purchaser take no responsibility for the accuracy of such numbers. OPTIONAL REDEMPTION. .The Corporation reserves the nght, at its option, to redeem Bonds having stated maturities on and after February 15,2027,in whole or in part in principal amounts of$5,000 or any integral multiple thereof,on Februaryl5,2026,or any date thereafter,at the par value thereof plus accrued interest to the date of redemption(see"THE BONDS-Optional Redemption of the Bonds"). (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) *Preliminary,subject to change For purposes of compliance wa/i Rule 15c2-12 of the United States Securities and Exchange Commission,as amended(the"Rule"),and in effect on the date of this Preliminary Official Statement,this document constitutes a Preliminary Official Statement of the Corporation that has been deemed"final by the Corporation as of its date except for the omission of no more that the information permitted by the Rule. No dealer,broker,salesman or other person has been authorized by the Corporation or the Initial Purchaser to give any information,or to make any representations other than those contained in this Preliminary Official Statement,and,if given or made,such outer information or representations must not be relied upon as having been authorized by the Corporation or the Initial Purchaser This Preliminary Official Statement does not constitute an offer to sell Bonds un any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. Certain information set forth herein has been obtained from the Corporation and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Financial Advisor Any information and expressions of opinion herein contained are subject to change without notice,and neither the delivery of this Prelimina m'Official Statement nor any sale made hereunder shall,under any circumstances,create any implication that there has been no change in the affairs of the Corporation or other matters described herein since the date hereof See"CONTINUING DISCLOSURE OFINFORMATION'for a description of the Corporation s undertaking to provide certain information on a continuing basis. IN CONNECTION WITH THE OFFERING OF THE BONDS,THE INITIAL PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS ATA LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET SUCH STABILIZING,IF COMMENCED MAY BE DISCONTINUED AT ANY TIME. THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION,QUALIFICATION,OR EXEMPTION OF THE BONDS IN ACCORDANCE WITHAPPLIC.4BLE SECURITIES LA WPRO VISIONS OF THE JURISDICTION IN WHICH THE BONDS HAVE BEEN REGISTERED,QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF NONE THE CORPORATION, THE INITIAL PURCHASER, OR THE FINANCIAL ADVISOR MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS PRELIMINARY OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY AS SUCH INFORMATION HAS BEEN PROVIDED BY THE DEPOSITORY TRUST COMPANY THIS PRELIMINARY OFFICIAL STATEMENT CONTAINS "FORWARD-LOOKING' STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,AS AMENDED SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS,UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROM FUTURE RESULTS, PERFORMANCE, AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERL4LLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. The agreements of the Corporation and others related to the Bonds are contained solely in the contracts described herein. Neither this Preliminary Official Statement nor any other statement made in connection with the offer or sale of the Bonds is to be construed as constituting an agreement with the purchasers of the Bonds INVESTORS SHOULD READ THE ENTIRE PRELIMINARY OFFICIAL STATEMENT INCLUDING THE SCHEDULE AND ALL APPENDICES ATTACHED HERETO TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION TABLE OF CONTENTS AUTHENTICITY OF FINANCIAL DATA AND OTHER OFFICIAL STATEMENT SUMMARY 4 INFORMATION 29 CITY OFFICIALS,STAFF AND CONSULTANTS 6 FINANCIAL ADVISOR... ... ... ..29 ELECTED OFFICIALS ... 6 FORWARK-LOOKING STATEMENTS DISCLAIMER 29 SELECTED ADMINISTRATIVE STAFF. ..6 INITIAL PURCHASER ... ... 29 CONSULTANTS AND ADVISORS 6 CERTIFICATION OF THE OFFICIAL STATEMENT 29 INTRODUCTION 7 APPENDICES PLAN OF FINANCING 7 GENERAL INFORMATION REGARDING THE CORPORATION.... ... A THE BONDS 8 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT B DEBT INFORMATION 14 FORM OF BOND COUNSELS OPINION . C TABLE I -DEBT SERVICE REQUIREMENTS 14 The cover page hereof, this page, the schedules, and the TABLE 2 - HISTORICAL CITY RECEIPTS OF 3/8% appendices included herein and any addenda,supplement or EQUIVALENT SALES TAX 17 amendment hereto,are part of the Official Statement. TABLE 3 -CALCULATION OF COVERAGE FOR THE ISSUANCE OF ADDITIONAL OBLIGATIONS17 SELECTED PROVISIONS OF THE RESOLUTION 18 INVESTMENTS 23 CURRENT INVESTMENTS ... ..24 TAX MATTERS 25 CONTINUING DISCLOSURE OF INFORMATION 26 OTHER INFORMATION 28 RATINGS ... 28 LITIGATION ... .28 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE 28 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS... "8 LEGAL OPINIONS AND NO LITIGATION CERTIFICATE 28 3 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CORPORATION .... The Corporation is a non-profit Type A corporation of the State,created by the City of Southlake, Texas(the"City")and,organized and existing under the laws of the State of Texas,particularly the Act(see"Introduction-Description of the Corporation"). THE BONDS The Bonds are issued as$24,240,000* Sales Tax Revenue Bonds, Series 2016 The Bonds are issued as serial bonds to mature on February 15 in each of the years 2018 through 2036,inclusive (see"THE BONDS-Description of the Bonds"). PAYMENT OF INTEREST Interest on the Bonds accrues from the date of the initial delivery of the Bonds,anticipated to be August 24, 2016, and is payable February 15, 2017 and each August 15 and February 15 thereafter until maturity or prior redemption(see"THE BONDS-Description of the Bonds"and "THE BONDS—Optional Redemption of the Bonds"). AUTHORITY FOR ISSUANCE The Bonds are being issued by the Corporation pursuant to Texas Local Government Code, Chapters 501,504 and 505,as amended(collectively,the"Act"),and a resolution adopted by the Board of Directors of the Corporation(the"Resolution"). SECURITY FOR THE BONDS .. The Bonds are special obligations of the Corporation payable solely from a lien on and pledge of the"Pledged Revenues"(as defined in the Resolution) of the Corporation, including the receipts from a sales tax levied for the benefit of the Corporation pursuant to the Act; See"THE BONDS- Security and Source of Payment"herein for a more complete description of the revenues pledged and the security for the payment of the Bonds(see"THE BONDS—Authonty for Issuance"). REDEMPTION OF THE BONDS The Corporation reserves the right, at its option,to redeem Bonds having stated matunties on and after February 15,2027,in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on February 15, 2026 or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see"THE BONDS - Optional Redemption of the Bonds"). TAX EXEMPTION... In the opinion of Bond Counsel,the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption"TAX MATTERS"herein,including the alternative minimum tax on corporations. USE OF PROCEEDS. ... Proceeds from the sale of the Bonds will be used to(i)to fund a community entertainments and recreation center, including the maintenance and operation costs of such project and(ii)to pay the costs associated with the issuance of the Bonds. RATINGS. ... ... The Bonds have been rated"AA+",stable outlook,by Fitch Ratings,Inc.("Fitch")(see"OTHER INFORMATION-Ratings"). BOOK-ENTRY-ONLY SYSTEM The definitive Bonds will be initially registered and delivered only to Cede&Co.,the nominee of DTC pursuant to the Book-Entry-Only System described herein.Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of,premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede& Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see "THE BONDS - Book-Entry- Only System"). *Preliminary,subject to change. 4 For additional information regarding the Corporation,please contact: Sharen Jackson,CPA Jim S. Sabonis Chief Financial Officer Managing Director sjackson(ci.southlake.tx.us Or iim.sabonis@hilltopsecurities.com City of Southlake FirstSouthwest,a Division of Hilltop Securities Inc. Administrative Offices 1201 Elm Street,Suite 3500 1400 Main Street,Suite 440 Dallas,Texas 75270 Southlake,Texas 76092 (214)953-4195 (817)481-1713 (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) 5 CORPORATION ADMINISTRATION THE CORPORATE BOARD OF DIRECTORS Term Board M ember Expires Occupation Jeff Wang Sep-17 Consultant Director 1 Martin Schelling Sep-18 Real Estate Vice-President Director 2 Bob Mundlin Sep-17 Insurance Sales Director 3 John Terrell Sep-18 Commercial Development President Director 4 Suzanne M aisto Sep-17 Realtor Secretary Director 5 Brandon Bledsoe Sep-18 Executive Director 6 John Thane Sep-17 Senior Financial Advisor Director 7 SELECTED ADMINISTRATIVE STAFF Length of Name Position Service Ben Thatcher Assistant City Manager 14 Years Alison Ortowski Assistant City Manager 8 Years Sharen Jackson Chief Financial Officer,CEDC Treasurer 16 Years Chris Tribble Director of Community Services 10 Years CONSULTANTS AND ADVISORS Auditors ....... ... Weaver and Tidwell,LLP Dallas,Texas Bond Counsel.... ... .... .... Norton Rose Fulbright US LLP Dallas,Texas Financial Advisor FirstSouthwest,a Division of Hilltop Securities Inc. Dallas,Texas 6 PRELIMINARY OFFICIAL STATEMENT RELATING TO $24,240,000* SOUTHLAKE COMMUNITY ENHANCEMENT AND DEVELOPMENT CORPORATION SALES TAX REVENUE BONDS,SERIES 2016 INTRODUCTION This Official Statement,which includes the Schedule and Appendices hereto,provides certain information regarding the issuance of$24,240,000* Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Resolution to be adopted on the date of sale of the Bonds(the"Resolution")which will authorize the issuance of the Bonds,except as otherwise indicated herein(see"SELECTED PROVISIONS OF THE RESOLUTION"). There follows in this Official Statement descriptions of the Bonds and certain information regarding the Corporation and its finances.All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the Corporation's Financial Advisor,FirstSouthwest,a Division of Hilltop Securities Inc.(the"FirstSouthwest"),Dallas,Texas. DESCRIPTION OF THE CORPORATION. . .The Corporation is a non-profit corporation duly organized and operating under the laws of the State of Texas, particularly Chapter 504 of the Act. The Corporation was created following an election held by the City of Southlake,Texas(the"City")on May 15,2015,on the question of the levy of a 3/8 of 1%local sales and use tax in the City for the benefit of projects authorized by Chapters 504 and 505 of the Act. The Corporation as currently organized is to specifically act on behalf of the City of Southlake to further the public purpose of promoting economic development and new and expanded business enterprises and funding a community entertainment and recreational center The City Council of the City of Southlake appoints the members of the Board of Directors of the Corporation. Under the provisions of the Act and the Corporation's by-laws, the City is required to approve certain actions of the Corporation,including the issuance of the Bonds by the Corporation and the undertaking of projects. PLAN OF FINANCING PURPOSE The Bonds are being issued for the purpose of(i)to fund a community entertainments and recreation center,including the maintenance and operation costs of such project and(ii)to pay the costs associated with the issuance of the Bonds. USE OF PROCEEDS. The proceeds from the sale of the Bonds will be applied approximately as follows: SOURCES OF FUNDS: Par Amount of Bonds $Net Premium - TOTAL ISSUES. $ - USES OF FUNDS: Deposit to Project Fund $ - Costs of Issuance - TOTAL USES. $ - *Preliminary,subject to change 7 THE BONDS DESCRIPTION OF THE BONDS . The Bonds are dated August 1,2016 and mature on February 15 in each of the years and in the amounts shown on page 2 hereof. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months, and will be payable on February 15 and August 15 in each year,commencing February 15,2017 until maturity or prior redemption. The definitive Bonds will be issued only in fully registered form in any integral multiple of$5,000 for any one maturity and will be initially registered and delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of,premium,if any,and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede&Co.,which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See"THE BONDS-Book-Entry-Only System"herein. AUTHORITY FOR ISSUANCE The Bonds are being issued by the Corporation pursuant to Texas Local Government Code,Chapters 501,504 and 505,as amended(collectively,the"Act").The Bonds and their terms are governed by the provisions of the Resolution. SECURITY AND SOURCE OF PAYMENT. The Bonds are special obligations of the Corporation payable solely from a lien on and pledge of the"Pledged Revenues"(as defined in the Resolution)of the Corporation. The Pledged Revenues include the revenues or receipts from a sales and use tax levied within the City at the rate of 3/8 of 1%pursuant to Chapter 504 of the Act(the"Sales Tax") and an election held May 9,2015,less any amounts due and owed to the Comptroller of Public Accounts of the State of Texas as charges for the collection of the Sales Tax or retention by said Comptroller for refunds and to redeem dishonored checks and drafts,to the extent such charges and retention are authorized or required by law The Bonds do not constitute a debt of the City,the State or any agency,political corporation or subdivision thereof nor do the Bonds constitute a legal or equitable,pledge,charge,lien or encumbrance upon any property of the Corporation or the City except with respect to the"Pledged Revenues". In the Resolution,the Corporation has reserved the right to issue additional revenue obligations payable,in whole or in part,from the "Pledged Revenues" and, subject to satisfying the terms and conditions prescribed therefor, such additional revenue obligations may be equally and ratably secured by a parity first lien on and pledge of such"Pledged Revenues". NEITHER THE FAITH AND CREDIT OF THE CITY,THE STATE,TARRANT AND DENTON COUNTIES,OR ANY AGENCY, POLITICAL CORPORATION OR SUBDIVISION THEREOF, HAS BEEN PLEDGED FOR THE PAYMENT OF THE BONDS,EXCEPT AS DESCRIBED HEREIN. Chapter 504 of the Act contains no provisions which would allow the voters of the City to either reduce or repeal the Sales Tax.Should the Legislature ever enact such an amendment to Chapter 504 to allow for the reduction or repeal of the Sales Tax,the Attorney General of Texas has rendered an Opinion(Opinion No. DM-137)to the effect that a"reduction in the sales tax rate, or a limitation on the amount of time the tax may be collected,may not be applied to any bonds issued prior to the date of the rollback election." In so opining,the Attorney General noted any"subsequent legislation which purports to permit the reduction or other limitation of that tax is ineffective to do so,because such alteration would impair the obligation of the contract between the city and such bondholders,"and in effect be a violation of Article 1,Section 10 of the United States Constitution and Article I,Section 16 of the Texas Constitution. PLEDGE UNDER RESOLUTION .The Corporation covenants and agrees that the Pledged Revenues,with the exception of those in excess of the amounts required for the payment and security of the Parity Obligations,are irrevocably pledged to the payment and security of the Bonds,including the establishment and maintenance of the special funds created and established in the Resolution or in any resolution authorizing the issuance of Additional Bonds. The Resolution further provides that the Bonds shall constitute a first lien on the Pledged Revenues in accordance with the terms of the Resolution and any resolution authorizing the issuance of Additional Bonds,which lien shall be valid and binding and fully perfected from and after the date of adoption of the Resolution without physical delivery or transfer or transfer of control of the Pledged Revenues,the filing of the Resolution or any other act. PLEDGED REVENUE FUND ...The Corporation has previously established the"Pledged Revenue Fund"and the City has previously agreed to promptly collect and remit to the Corporation the Gross Sales Tax Revenues for the deposit in the Pledged Revenue Fund. Under the Resolution, the Corporation covenants and agrees to maintain such Pledged Revenue Fund for so long as any Parity Obligations, including the Bonds, remain Outstanding. All Pledged Revenues deposited to the credit of such Fund shall be accounted for separate and apart from all other revenues, receipts and income of the Corporation and, with respect to the Gross Sales Tax Revenues, the Corporation shall further account for such funds separate and apart from the other Pledged Revenues deposited to the credit of the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of the Pledged Revenue Fund shall be appropriated and expended to the extent required by the Resolution or any resolution authorizing the issuance of any Panty Obligations for the following uses and in the order of priority shown below 8 FLOW OF FUNDS ... The Resolution establishes the following funds and accounts for the payment and security of the Parity Obligations(defined as the Bonds and Additional Obligations,if issued)and for the Pledged Revenues with all revenues flowing first to the Corporation's Pledged Revenue Fund. PRIORITY FUND First Priority To the Bond Fund for the payment of Debt Service on the Bonds and Parity Obligations as the same becomes due and payable; Second Priority To the payment of the amounts required to be deposited in any other fund or account required by the Resolution or any other resolution authorizing the issuance of Parity Obligations, including any reserve fund if established; Third Priority To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of obligations or the creation of debt of the Corporation having a lien on the Pledged Revenues subordinate to the lien created herein on behalf of any Parity Obligations;and Fourth Priority Any Pledged Revenues remaining in the Pledged Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other lawful purpose now or hereafter permitted by applicable law. BOND FUND Under the Resolution,the Corporation agrees and covenants to maintain a separate and special account or fund on the books and records of the for the purpose of providing funds to pay the principal of and interest on Parity Obligations, (the "Bond Fund"),and all monies deposited to the credit of such fund shall be held in a special banking fund or account maintained at a depository of the Corporation.The Corporation further covenants to deposit into the Bond Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per centum(100%)of the interest on and the principal of the Bonds then falling due and payable,and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 10th day of each month,beginning on or before the 10th day of the month next following the delivery of the Bonds to the initial purchasers until(i)the total amount on deposit in the Bond Fund is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or(ii)the Parity Obligations are no longer Outstanding. ADDITIONAL OBLIGATIONS. . Under the Resolution,and subject to the provisions contained therein,the Corporation has reserved the right to issue,from time to time as needed,Additional Obligations for any lawful purpose. Such Additional Obligations may be issued in such form and manner as the Corporation determines,provided,however,prior to issuing or incurring such Additional Obligations,the following conditions precedent for the authorization and issuance of such Additional Obligations are satisfied:(1) the Treasurer of the Corporation(or other officer of the Corporation then having the primary responsibility for the financial affairs of the Corporation)shall have executed a certificate stating that,to the best of his or her knowledge and belief,the Corporation is not in default as to any covenant,obligation or agreement contained in any resolution authorizing the issuance of Parity Obligations; and(2)the Corporation has secured from a certified public accountant a certificate or opinion to the effect that, according to the books and records of the Corporation,the Gross Sales Tax Revenues received by the Corporation for either(i)the last completed Fiscal Year next preceding the adoption of the resolution authorizing the issuance of the proposed Additional Obligations or(ii)any twelve(12)consecutive months out of the previous eighteen(18)months next preceding the adoption of the resolution authorizing the Additional Obligations were equal to not less than 1.25 times the maximum annual Debt Service for all Parity Obligations then Outstanding and after giving effect to the issuance of the Additional Obligations then being issued. GENERAL COVENANT REGARDING THE SALES TAX...The Municipal Sales and Use Tax Act provides that the Sales Tax does not apply to the sale of a taxable item unless the item is also taxable under the Texas Limited Sales,Excise and Use Tax Act. The Sales Tax is therefore subject to broadening and reduction in the base against which it is levied by action of the State Legislature without the consent of the City or the Corporation. In the Resolution,the Corporation covenants and agrees that,while any Bonds are outstanding,it will take all legal means and actions permissible to cause the Sales Tax,at its current rate(3/8 of 1%) or at a higher rate if legally permitted,to be levied and collected continuously throughout the boundaries of the City,as such boundaries may be changed from time to time,in the manner and to the maximum extent legally permitted; and to cause no reduction,abatement or exemption in the Sales Tax until all of the Bonds have been paid in full or until they are lawfully defeased in accordance with the Resolution. The Corporation also covenants and agrees that,if,subsequent to the issuance of the Bonds,the City is authorized by applicable law to impose and levy the Sales Tax on any items or transactions that are not subject to the Sales Tax on the date the Resolution was adopted,then the Corporation will use its best efforts to cause the City to take such action as may be required by applicable law to subject such items or transactions to the Sales Tax. 9 OPTIONAL REDEMPTION..The Corporation reserves the right,at its option,to redeem Bonds having stated maturities on and after February 15,2027, in whole or in part in principal amounts of$5,000 or any integral multiple thereof,on February 15,2026, or any date thereafter,at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bonds are to be redeemed,the Corporation may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be redeemed,the Paying Agent/Registrar(or DTC while the Bonds are in Book-Entry-Only form)shall determine by lot the Bonds, or portions thereof,within such matunty to be redeemed. If a Bond(or any portion of the principal sum thereof)shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION Not less than 30 days prior to a redemption date for the Bonds,the Corporation shall cause a notice of redemption to be sent by United States mail,first class,postage prepaid,to the registered owners of the Bonds to be redeemed, in whole or in part,at the address of each registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY OBLIGATION OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Bonds, unless moneys sufficient to pay the principal of and premium,if any,and interest on the Bonds to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption is conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption, and,if sufficient moneys are not received,such notice shall be of no force and effect,the Corporation shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given,to the effect that the Bonds have not been redeemed. BOOK-ENTRY-ONLY SYSTEM. . . This section describes how ownership of the Bonds are to be transferred and how the principal of,premium,if any,and interest on the Bonds are to be paid to and credited by DTC 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 Preliminary Official Statement. The Corporation believes the source of such information to be reliable,but takes no responsibility for the accuracy or completeness thereof. The Corporation cannot and does not give any assurance that(1)DTC will distribute payments of debt service on the Bonds, or any 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 any 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 Preliminary Official Statement. The current rules applicable to DTC are on file with the 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 Bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount of such issue,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 regulated subsidiaries.Access to the DTC system is also available to others such as both U.S.and non-U S. securities brokers and dealers,banks,trust companies,and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly ("Indirect Participants"). 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.More information about DTC can be found at www.dtcc.com. 10 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 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 transmission to them of notices of significant events with respect to the Bonds, such as 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 the notices be provided directly to them. Neither DTC nor Cede&Co.(nor such other DTC nominee)will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to the Direct Participants to whose accounts the Bonds are credited on the record date(identified in a listing attached to the Omnibus Proxy). All 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 Corporation or Paying Agent/Registrar on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,as is the case with securities held for the accounts of customers in bearer form or registered in"street name,"and will be the responsibility of such Participant and not of DTC nor its nominee,Paying Agent/Registrar,or the Corporation,subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to Cede&Co. (or such other nominee as may be requested by an authorized representative of DTC) are, the responsibility of the Corporation or Paying Agent/Registrar, 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 depository with respect to the Bonds at any time by giving reasonable notice to the Corporation or Paying Agent/Registrar Under such circumstances, in the event that a successor depository is not obtained,Bond certificates are required to be printed and delivered. The Corporation may decide to discontinue use of the system of book-entry only transfers through DTC(or a successor securities depository).In that event,Bond certificates will be printed and delivered(see"THE BONDS-Transfer,Exchange and Registration" herein). Use of Certain Terms in Other Sections of this Preliminary Official Statement. In reading this Preliminary Official Statement it should be understood that while the Bonds are in the Book-Entry-Only System,references in other sections of this Preliminary Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds,but(i)all rights of ownership must be exercised through DTC and the Book-Entry-Only System,and(ii)except as described above,notices that are to be given to registered owners under the Resolution will be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by,and is not to be construed as a representation by the Corporation or the Initial Purchaser Effect of Termination of Book-Entry-Only System. In the event that the Book-Entry-Only System is discontinued,printed Bonds will be issued to the Participants or the Beneficial Owners,as the case may be,and the Bonds will be subject to transfer,exchange and registration provisions as set forth in the Resolution and summarized under "THE BONDS - Transfer, Exchange and Registration"below 11 PAYING AGENT/REGISTRAR. . The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company.N.A.,Dallas, Texas. In the Resolution,the Corporation retains the right to replace the Paying Agent/Registrar The Corporation covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the Corporation agrees to promptly cause a written notice thereof to be sent to each registered owner of such Bonds by United States mail,first class,postage prepaid,which notice shall also give the address of the new Paying Agent/Registrar. Interest on the Bonds shall be paid to the registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date(hereinafter defined),and such interest shall be paid(i)by check sent United States mail, first class,postage prepaid,to the address of the registered owner recorded in the registration books of the Paying Agent/Registrar or(ii)by such other method,acceptable to the Paying Agent/Registrar requested by,and at the risk and expense of,the registered owner Principal of the Bonds will be paid to the registered owner at the stated maturity upon presentation to the designated payment/transfer office of the Paying Agent/Registrar;provided,however,that so long as Cede&Co. (or other DTC nominee)is the registered owner of the Bonds,all payments will be made as described under"THE BONDS-Book-Entry-Only System"herein. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday,Sunday,a legal holiday or a day when banking institutions in the Corporation where the designated payment/transfer office of the Paying Agent/Registrar is located are authorized to close,then the date for such payment shall be the next succeeding day which is not such a day,and payment on such date shall have the same force and effect as if made on the date payment was due. TRANSFER, EXCHANGE AND REGISTRATION. In the event the Book-Entry-Only System should be discontinued, printed certificates will be delivered to the registered owners of the Bonds and thereafter the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner,except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar New Bonds will be delivered by the Paying Agent/Registrar,in lieu of the Bonds being transferred or exchanged, at the principal office of the Paying Agent/Registrar,or sent by United States mail,first class,postage prepaid,to the new registered owner or his designee.To the extent possible,new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled,and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent,in form satisfactory to the Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be in denominations of$5,000 or integral multiples thereof for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer See"THE BONDS-Book-Entry-Only System"for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. RECORD DATE FOR INTEREST PAYMENT .The record date (the "Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such Interest payment(the"Special Record Date")will be established by the Paying Agent/Registrar,if and when funds for the payment of such interest have been received from the Corporation. Notice of the Special Record Date and of the scheduled payment date of the past due interest(the"Special Payment Date", which shall be 15 days after the Special Record Date)shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each registered owner of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. REGISTERED OWNERS'REMEDIES. The Resolution provides that in the event the Corporation (a) defaults in payments to be made to the Bond Fund as required by the Resolution or(b)defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in the Resolution, the Holder or Holders of any Bond shall be entitled to a wnt of mandamus issued by a court of proper jurisdiction compelling and requiring the governing body of the Corporation and other officers of the Corporation to observe and perform any covenant,condition or obligation prescribed in the Resolution.The issuance of a writ of mandamus is controlled by equitable principles and rests with the discretion of the court,but may not be arbitrarily refused. The enforcement of such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. 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 Resolution does not provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the Corporation to perform in accordance with the terms of the Resolution,or upon any other condition and,accordingly,all legal actions to enforce such remedies would have to be undertaken at the initiative of, and financed by,the registered owners. On June 30,2006,the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325(Tex.2006),that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in"clear and unambiguous"language.Because it is unclear whether the Texas legislature has effectively waived the Corporation's sovereign immunity from a suit for money damages, holders of the Bonds may not be able to bring such a suit against the Corporation for breach of the Bond or Resolution covenants.Even if a judgment against the Corporation could be obtained,it could not be enforced by direct levy and execution against the Corporation's property. Furthermore,the Corporation is eligible to seek 12 relief from its creditors under Chapter 9 of the U.S Bankruptcy Code ("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, such as the Pledged Revenues, such provisions are subject to construction.Chapter 9 also includes an automatic stay provision that would prohibit,without Bankruptcy Court approval, the prosecution of any other legal action by creditors or holders of the Bonds of an entity which has sought protection under Chapter 9. Therefore, should the Corporation avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court(which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Resolution and Bonds are qualified with respect to the customary rights of debtors relative to their creditors. DEFEASANCE .. The Resolution provides for the defeasance of the Bonds when the payment of the pnncipal of and premium,if any,plus interest thereon to the due date thereof(whether such due date be by reason of maturity or otherwise), is provided by irrevocably depositing with the Paying Agent/Registrar, or other authorized escrow agent, in trust(1)money sufficient to make such payment or(2)Government Obligations to mature as to principal and interest in such amounts and at such times to insure the availability,without reinvestment,of sufficient money to make such payment,and all necessary and proper fees,compensation and expenses of the paying agent for the Bonds.The Resolution provides that"Government Obligations"means(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 of Amenca,including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that,on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than"AAA"or its equivalent,(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 of their acquisition or purchase by the Corporation,are rated as to investment quality by a nationally recognized investment rating firm not less than"AAA"or its equivalent,and(d)any other then authorized securities or obligations that may be used to defease obligations such as the Bonds under applicable laws of the State of Texas. The Corporation has the right,subject to satisfying the requirements of(1)and(2)above,to substitute other Government Obligations for the Government Obligations originally deposited, to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the Corporation moneys in excess of the amount required for such defeasance. 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 Resolution does not contractually limit such investments,registered 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 Government Obligations or that for any other Government Obligation will be maintained at any particular rating category. Upon such deposit as described above,the Bonds shall no longer be regarded to be outstanding or unpaid.After firm banking and financial arrangements for the discharge and final payment of the Bonds have been made as described above, all rights of the Corporation to take any action amending the terms of the Bonds are extinguished. AMENDMENTS . . The Corporation may amend the Resolution without the consent of or notice to any registered owner in any manner not detrimental to the interests of the registered owners, including the curing of any ambiguity, inconsistency, or formal defect or omission therein. In addition, the Corporation may with the written consent of the Holders of a majority of aggregate principal amount of the Bonds then outstanding affected thereby,amend,add to,or rescind any of the provisions of the Resolution, except that,without the consent of the registered owners of all of the affected Bonds,no such amendment,addition or rescission may(i)extend the time or times of payment of the principal of,premium, if any,and interest on the Bonds,reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of,premium,if any,or interest on the Bonds,(2)give any preference to any Bond over any other Bond,or(3)reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment,addition,or rescission. (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) 13 I DEBT INFORMATION TABLE 1—DEBT SERVICE REQUIREMENTS Fiscal Year %of Ending The Bonds(i) Principal 9/30 Principal Interest Total Retired 2017 $ - $ 843,643 $ 843,643 2018 860,000 856,675 1,716,675 2019 885,000 834,800 1,719,800 2020 915,000 803,225 1,718,225 2021 960,000 760,925 1,720,925 14.93% 2022 1,005,000 711,800 1,716,800 2023 1,060,000 660,175 1,720,175 2024 1,110,000 605,925 1,715,925 2025 1,170,000 548,925 1,718,925 2026 1,230,000 488,925 1,718,925 37.93% 2027 1,285,000 432,475 1,717,475 2028 1,340,000 379,975 1,719,975 2029 1,395,000 325,275 1,720,275 2030 1,450,000 268,375 1,718,375 2031 1,500,000 220,625 1,720,625 66.69% 2032 1,535,000 182,688 1,717,688 2033 1,575,000 143,813 1,718,813 2034 1,615,000 103,938 1,718,938 2035 1,655,000 63,063 1,718,063 2036 1,695,000 21,188 1,716,188 100.00% $24,240,000 $ 9,256,431 $33,496,431 (1) Preliminary,subject to change. (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) 14 THE SALES TAX SOURCE AND AUTHORIZATION The Sales Tax is a 3/8 of 1%limited sales and use tax imposed on all taxable transactions within the City as approved at an election held in the City on May 15,2015.The State Comptroller of Public Accounts(the"Comptroller") began collecting the Corporation's Sales Tax on transactions within the City on October 1,2015 The Sales Tax is authorized to be levied and collected against the receipts from the sale at retail of taxable items within the City. The Sales Tax also is an excise tax on the use,storage or other consumption of taxable tangible personal property purchased,leased or rented from a retailer within the City The City currently levies another sales and use tax for City purposes totaling 1%in accordance with State law and is restricted in use by current law. The imposition,computation,administration,governance,abolition and use of the Sales Tax is governed by the Texas Limited Sales,Excise,and Use Tax Act except to the extent that there is conflict with the Act,in which case the provisions of the Act control as to the Bonds.Reference is made to the Texas Municipal Sales and Use Tax Act,for a more complete description of the Sales Tax. In general,as applied to the Sales Tax,a taxable item includes any tangible personal property and certain taxable services. "Taxable services" include certain amusement services, cable television services, motor vehicle parking and storage services, the repair, maintenance and restoration of most tangible personal property, certain telecommunication services, credit reporting services, debt collection services,insurance services,information services,real property services,data processing services,real property repair and remodeling and security services. Certain items are exempted by State law from sales and use taxes, including items purchased for resale,food products(except food products which are sold for immediate consumption,e.g.by restaurants,lunch counters,etc.),health care supplies(including medicines,corrective lens and various therapeutic appliances and devices),agricultural items(if the item is to be used exclusively on a farm or ranch or in the production of agricultural products),gas and electricity purchased for residential use (unless a city has taken steps to repeal the exemption),certain telecommunications services,newspapers and magazines. In addition, items which are taxed under other State laws are generally exempted from sales taxes. These items include certain natural resources, cement,motor vehicles and insurance premiums. Alcohol and tobacco products are taxed under both State alcohol and tobacco taxes as well as through the sales taxes. In addition,purchases made by various exempt organizations are not subject to the sales and use taxes. Such organizations include the federal and state governments,political subdivisions, Indian tribes,religious institutions and certain charitable organizations and non-profit corporations.Also,State law provides an exemption from sales taxes on items purchased under a contract in effect when the legislation authorizing such tax(or the increase in the rate thereof)is enacted,up to a maximum of three years. In general, a sale of a taxable item is deemed to occur within the municipality, county or special district in which the sale is consummated. The tax levied on the use,storage or consumption of tangible personal property is considered to be consummated at the location where the item is first stored,used or consumed. Thus,the use is considered to be consummated in a municipality,and the tax is levied there if the item is shipped from outside the state to a point within the municipality. In addition to the local sales and use taxes levied,as described above,the State levies and collects a 6.25%sales and use tax against essentially the same taxable items and transactions as the Sales Tax. Under current State law,the maximum aggregate sales and use tax which may be levied within a given area by an authorized political subdivision within such area,including the State,is 8.25%. The current aggregate sales and use tax levied in the City is 8.25%of which 6.25%is levied by the State, 1%is levied by the City, 1/8 of 1%is levied for the Southlake Crime Control&Prevention District,'h of 1%is levied by the Southlake Parks Development Corporation (4B)and 3/8 of 1%is levied by the Southlake Community Enhancement and Development Corporation(4A). See"Other Sales Taxes" below The Comptroller administers and enforces all sales tax laws and collects all sales and use taxes levied by the State,and levying counties, municipalities and other special districts having sales tax powers. Certain limited items are taxed for the benefit of the State under nonsales tax statutes,such as certain natural resources and other items described above,and are not subject to the sales tax base available to municipalities and counties, including the tax base against which the Sales Tax is levied. Municipalities may by local option determine to tax certain telecommunication services on the same basis as the State taxes such services (some aspects of telecommunication services,such as interstate telephone calls and broadcasts regulated by the FCC are not subject to either State or local taxation). The City has opted to repeal the local telecommunication services exemption. With respect to the taxation of the residential use of gas and electricity,the State is not authorized to collect a sales tax,while municipalities,on a local option basis,may tax such use. The City has opted to tax the residential use of gas and electricity. In recent years,several changes in the State sales tax laws have contributed to the growth of local sales tax revenues.These changes have added additional goods and services to the list of taxable items. Other items have been subjected to sales tax on an interim basis or have been taxed pursuant to legislation which includes planned phase-outs of the tax. With certain exceptions,sales and use taxes in the State are collected at the point of sale and are remitted to the Comptroller by the "taxpayer"who is,generally speaking,the business that collects the tax resulting from a taxable transaction. Taxpayers owing$500 or more sales and use tax dollars in a calendar month submit their tax collections to the Comptroller on a monthly basis;taxpayers owing less than$500 sales and use tax dollars in a calendar month but$1,500 or more in a calendar quarter submit their tax collections quarterly;and taxpayers owing less than$1,500 in a calendar quarter submit their tax collections annually Taxpayers are required to report and remit to the Comptroller by the 20th day of the month following the end of the reporting period. The reporting period for yearly filers ends each December 31,for quarterly filers,the reporting period ends at the end of each calendar quarter;and monthly filers report and remit by the 20th of each month for the previous month.The Comptroller is required by law to distribute funds to the 15 receiving political subdivisions periodically and as promptly as feasible as but not less frequently than twice during each fiscal year of the State. Historically,and at the present time,the Comptroller distributes the funds monthly with the largest payments being made quarterly in February,May,August and November. In 1989,the Comptroller initiated a direct deposit program using electronic funds transfers to expedite the distribution of monthly allocation checks. If a political subdivision desires to participate in the electronic funds transfers,it may make application to the Comptroller The City participates in this program. Otherwise,the Comptroller mails the monthly allocation check,which is typically received by the middle of the month following the month in which the taxpayer reports and remits payment on the tax. The Comptroller is responsible for enforcing the collection of sales and use taxes in the State. Under State law,the Comptroller utilizes sales tax permits,sales tax bonds and audits to encourage timely payment of sales and use taxes.Each entity selling,renting,leasing or otherwise providing taxable goods or services is required to have a sales tax permit. Permits are required for each individual location of a taxpayer and are valid for only one year,requiring an annual renewal. As a general rule,every person who applies for a sales tax permit for the first time,or who becomes delinquent in paying the sales or use tax,is required to post a bond in an amount sufficient to protect against the failure to pay taxes. The Comptroller's audit procedures include auditing the largest 2%of the sales and use tax taxpayers(who report about 65%of all sales and use tax in the State annually),each every three or four years. Other taxpayers are selected at random or upon some other basis for audits. The Comptroller also engages in taxpayer education programs and mails a report to each taxpayer before the last day of the month,quarter or year that it covers. Once a taxpayer becomes delinquent in the payment of a sales or use tax,the Comptroller may collect the delinquent tax by using one or more of the following methods;(i)collection by an automated collection center or local field office,(ii)estimating the taxpayers' liability based on the highest amount due in the previous 12 months and billing them for it, (iii)filing liens and requiring a new or increased payment bond,(iv)utilizing forced collection procedures such as seizing assets of the taxpayer(e.g.,a checking account)or freezing assets of the taxpayer that are in the custody of third parties, (v) removing a taxpayer's sales and use tax permit, and(vi) certifying the account to the Attorney General's Office to file suit for collection. A municipality may not sue for delinquent taxes unless it joins the Attorney General as a plaintiff or unless it first receives the permission of the Attorney General and the Comptroller. The Comptroller retains 2% of the tax receipts for collection of the tax, additionally,under State law, a taxpayer may deduct and withhold 1/2%of the amount of taxes due on a timely return as reimbursement for the cost of collecting the sales and use taxes. In addition,a taxpayer who prepays its tax liability on the basis of a reasonable estimate of the tax liability for a month or quarter in which a prepayment is made,may deduct and withhold 1 1/4%of the amount of the prepayment in addition of the 1/2%allowed for the cost of collecting the sales and use tax. INVESTOR CONSIDERATIONS The primary source of security for the Bonds will be certain receipts of the Sales Tax received by the City for the benefit of the Corporation. The amount of revenues from the Sales Tax is closely related to the amount of economic activity in the City. Sales and use tax receipts,unlike other taxes levied by municipalities,immediately reflect changes in the economic conditions of a municipality Histoncally, the Comptroller has remitted sales and use tax allocation checks to municipalities on a monthly basis, but State law currently requires that such allocation be made at least twice annually and such procedures could change in the future. Additionally, the taxable items and services subject to State and local sales and use taxes are subject to legislative action,and have been changed in recent years by the State Legislature. State law provides that the Sales Tax cannot be levied against any taxable item or service unless such item or service is also subject to the State sales and use tax. In recent years the State Legislature has enacted laws permitting the State,together with its political subdivisions,to levy sales and use taxes of up to 8.25%,which is among the highest sales tax rates in the nation(although the State has no personal or corporate income tax),and the current total sales and use tax rate within the City's boundaries is 8.25%(including State and City taxes as well as the Sales Tax). The rate of the sales and use taxes authorized in the State could be further increased by the State Legislature and the Corporation has no way of predicting any such increase or the effect that would have on the Sales Tax the pledge of which secures the Bonds. State leaders have appointed committees to study methods of achieving greater tax equity within the State's tax system. Any changes which may be enacted by the State Legislature could effect the tax base against which the Sales Tax is levied; and the Corporation,except in certain limited instances described below,has no control over the components of the tax base. Tax receipts received by the Corporation are expected to be subject to seasonal variations and to variations caused by the State laws and administrative practices governing the remittance of sales and use tax receipts which authorize different taxpayers to remit the tax receipts at different times throughout the year The Sales Tax is collected by the Comptroller and remitted to the City along with other City sales and use tax receipts. The City allocates a portion of the receipts to the Corporation which represents the 3/8 of 1%tax rate of the Sales Tax.Generally,sales and use taxes in the State are collected at the point of a taxable transaction and remitted by the taxpayer to the Comptroller The Comptroller has the primary responsibility for enforcing sales and use tax laws and collecting delinquent taxes(see"The Sales Tax—Source and Authorization"). The collection efforts of the Comptroller are subject to applicable federal bankruptcy code provisions with respect to the protection of debtors. 16 Changes in the tax base against which a sales and use tax is assessed, as well as changes in the rate of such taxes, make projections of future tax revenue collections very difficult. No independent projections have been made with respect to the revenues available to pay debt service on the Bonds. OTHER CITY SALES TAXES. In 1994 the voters approved a''A or 1%local sales and use tax under Section 4B of the Development Corporation Act of 1979 for the Southlake Parks Development Corporation(4B). In 1998 the voters approved a'h of 1%local sales and use tax under section 363.054 of Chapter 363, Local Government Code for Crime Control and Prevention District("Crime Control Sales Tax"). In May 2015 the voters approved to reduce the Crime Control Sales Tax from `'A of 1%to 1/8 of 1%as provided under Tax Code Section 321 108 and voted to implement a 3/8 of 1%local sales and use tax for the Corporation. TABLE 2 - HISTORICAL CITY RECEIPTS OF 3/8%EQUIVALENT SALES TAX(1) Month Year Year Year Year Year Year Year of Ending Ending Ending Ending Ending Ending Ending Receipt 9/30/2016 9/30/2015 1) 9/30/2014(1) 9/30/2013(1) 9/30/2012") 9/30/2011(1) 9/30/2010(1) October $ 378,153 (1) $ 376,514 $ 334,156 $ 286,240 $ 278,488 $ 248,936 $ 240,119 November 425,479 ") 408,804 352,437 340,102 321,004 296,583 272,497 December 436,466 (2) 413,095 358,681 310,041 239,791 263,474 240,344 January 432,715 '2) 428,282 365,822 308,055 293,189 278,248 252,615 February 598,464 (2) 585,617 545,002 468,271 450,368 397,148 405,151 March 367,666 (2) 374,868 354,343 311,791 252,405 252,257 208,021 April 377,440 (2) 784,743 322,138 299,691 256,820 211,225 219,751 May 374,517 (2) 424,401 432,230 344,926 342,174 330,579 287,379 June 305,943 (2) 414,528 417,172 340,959 305,115 274,818 263,754 July 332,405 )2) 407,139 393,995 366,751 301,958 270,144 240,618 August - 489,590 496,561 403,169 335,489 338,571 309,271 September - 375,733 416,192 338,354 324,561 267,650 248,936 Annual Totals $ 4,029,248 $ 5,483,315 $ 4,788,728 $ 4,118,349 $ 3,701,363 $ 3,429,632 $ 3,188,456 (1) As reported by the Texas Comptroller of Public Accounts based on historical collections which reflect 75%of the total sales tax collections made by the Southlake Crime Control District for illustration purposes only (2) As reported by the Texas Comptroller of Public Accounts which reflect actual collections of the voted Community Enhancement and Development Corporation sales tax. TABLE 3 -CALCULATION OF COVERAGE FOR THE ISSUANCE OF ADDITIONAL OBLIGATIONS lir Sales Tax Collection for the Fiscal Year End 9/30/2015 $ 5,483,315 Maximum Annual Debt Service,2021 $ 1,720,925 Coverage of M aximum Requirements by last fiscal year revenue 3.19x Average Annual Debt Service(2018-2036) $ 1,674,822 Coverage of Average Requirements by last fiscal year revenue 3.27x (1)Sales tax collections based off of 75%of the total Southlake Crime Control District sales tax collections in Fiscal Year 2015 For illustration purposes only. 17 SELECTED PROVISIONS OF THE RESOLUTION The following are selected provisions of the Resolution. These excerpts should be qualified by reference to the exact terms of the Resolution. Unless otherwise indicated, any references to sections listed below are to sections contained in the Resolution and section headings contained in the following excerpts are to sections contained in the Resolution. Section 10. Definitions. For all purposes of this Resolution and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues to the payment of the Bonds,the following definitions are provided. "Act"-The Development Corporation Act,Texas Local Government Code,Title 12,Subtitle Cl,as amended(the "Act"),including specifically Chapters 501 and 504 of the Texas Local Government Code. "Additional Obligations"-Bonds,notes or other evidences of indebtedness which the Corporation reserves the right to issue or enter into, as the case may be, in the future in accordance with the terms and conditions provided in Section 18 hereof and which,together with the Bonds,are equally and ratably secured by a parity pledge of and claim on the Pledged Revenues under the terms of this Resolution and a Supplemental Resolution. "Average Annual Debt Service"-That amount which,at the time of computation,is derived by dividing the total amount of Debt Service to be paid over a period of years as the same is scheduled to become due and payable by the number of years taken into account in determining the total Debt Service. Capitalized interest payments provided from proceeds of borrowings of the Corporation shall be excluded in making the aforementioned computation. "Board"-The Board of Directors of the Corporation. "Bonds"-The"Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016"authorized by this Resolution. "City"-The City of Southlake,Texas. "Corporation"-The Southlake Community Enhancement and Development Corporation,a non-profit corporation organized and existing under and pursuant to the laws of the State of Texas,including the Act and on behalf of the City of Southlake,Texas. "Debt Service"-As of any particular date of computation,with respect to any obligations and with respect to any period,the aggregate of the amounts to be paid or set aside by the Corporation as of such date or in such period for the payment of the principal of,premium,if any,and interest(to the extent not capitalized)on such obligations; assuming,in the case of obligations without a fixed numerical rate,that such obligations bear,or would have borne, interest at the maximum legal per annum rate applicable to such obligations,and further assuming in the case of obligations required to be redeemed or prepaid as to principal prior to maturity,the principal amounts thereof will be redeemed prior to maturity in accordance with the mandatory redemption provisions applicable thereto. "Depository" - A commercial bank or other qualified financial institution eligible and qualified to serve as the custodian of the Corporation's monetary accounts and funds. "Fiscal Year"-The twelve month financial accounting period used by the Corporation ending September 30 in each year,or such other twelve consecutive month period established by the Corporation. "Government Obligations"-(i)direct noncallable obligations of the United States of America,including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States,including obligations unconditionally guaranteed or insured by the agency or instrumentality and on the date of their acquisition or purchase by the Corporation are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (iii)noncallable obligations of a state or an agency or a county,municipality,or other political subdivision of a state that have been refunded and on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent,and(iv)any other then authorized securities or obligations under applicable State law that maybe used to defease obligations such as the Bonds. "Gross Sales Tax Revenues"-All of the revenues or receipts due or owing to,or collected or received by or on behalf of the Corporation by the City or otherwise pursuant to the Act and the election held January 20, 1996,less any amounts due and owed to the Comptroller of Public Accounts of the State of Texas as charges for the collection of the Sales Tax or retention by said Comptroller for refunds and to redeem dishonored checks and drafts,to the extent such charges and retention are authorized or required by law 18 "Outstanding"-When used in this Resolution with respect to Bonds or Parity Obligations, as the case may be, means,as of the date of determination,all Bonds and Parity Obligations theretofore sold,issued and delivered by the Corporation,except: those Bonds or Parity Obligations canceled or delivered to the transfer agent or registrar for cancellation in connection with the exchange or transfer of such obligations;those Bonds or Parity Obligations paid or deemed to be paid in accordance with the provisions of Section 24 hereof or similar provisions of any Supplemental Resolution authorizing the issuance of Additional Obligations;or those Bonds or Parity Obligations that have been mutilated,destroyed,lost,or stolen and replacement obligations have been registered and delivered in lieu thereof. "Parity Obligations"-Collectively,the Bonds and Additional Obligations. "Pledged Revenues" - Collectively (i) Gross Sales Tax Revenues from time to time deposited or owing to the Pledged Revenue Fund and(ii)such other money,income,revenue,receipts or other property as may be specifically dedicated,pledged or otherwise encumbered in a Supplemental Resolution for the payment and security of Parity Obligations. "Sales Tax"-The local sales and use tax authorized under the Act, and approved at an election held on May 9, 2015,with the effective date for the imposition and application of such Sales Tax within the corporate limits of the City by the Comptroller of Public Accounts of the State of Texas being October 1,2015,together with any increases in the rate of such Sales Tax authorized and provided by law "Supplemental Resolution"-Any resolution of the Board supplementing this Resolution for the purpose of authorizing and providing the terms and provisions of the Bonds or Additional Obligations,or supplementing or amending this Resolution for any other authonzed purpose permitted in Section 18 or 25 hereof, including resolutions authorizing the issuance of Additional Obligations or pledging and encumbering income, revenues, receipts or property other than the Gross Sales Tax Revenues to the payment and security of the Parity Obligations. Section 11 Pledge.The Corporation hereby covenants and agrees that the Pledged Revenues,with the exception of those in excess of the amounts required for the payment and security of the Parity Obligations,are hereby irrevocably pledged to the payment and security of the Bonds and Additional Obligations,if issued,including the establishment and maintenance of the special funds created and established in this Resolution and any Supplemental Resolution, all as hereinafter provided. The Corporation hereby resolves the Parity Obligations shall constitute a hen on the Pledged Revenues in accordance with the terms of this Resolution and any Supplemental Resolution,which lien shall be valid and binding and fully perfected from and after the date of adoption of this Resolution without physical delivery or transfer or transfer of control of the Pledged Revenues,the filing of this Resolution or any other act;all as provided in Texas Government Code,Chapter 1208,as amended. Texas Government Code,Chapter 1208,as amended,as amended,applies to the issuance of the Bonds and the pledge of the Pledged Revenues granted by the Corporation under this Section 11,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 Pledged Revenues granted by the Corporation under this Section 11 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 said pledge,the Corporation 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 said pledge to occur Section 12. Pledged Revenue Fund. The Corporation hereby agrees and covenants to establish and maintain a fund or account at a Depository for the deposit of the Pledged Revenues as received by the Corporation, which fund or account shall be known on the books and records of the Corporation as the"Pledged Revenue Fund". All Pledged Revenues deposited to the credit of such Fund shall be accounted for separate and apart from all other revenues,receipts and income of the Corporation and,with respect to the Gross Sales Tax Revenues,the Corporation shall further account for such funds separate and apart from the other Pledged Revenues deposited to the credit of the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of the Pledged Revenue Fund shall be appropriated and expended to the extent required by this Resolution and any Supplemental Resolution for the following uses and in the order of priority shown. First: To the payment of the amounts required to be deposited in the Bond Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable; Second: To the payment of the amounts required to be deposited in any reserve fund to establish and maintain any required reserve in accordance with the provisions of any Supplemental Resolution; Third: To the payment of amounts required to be deposited in any other fund or account required by any Supplemental Resolution authorizing the issuance of Parity Obligations;and 19 Fourth. To any fund or account held at any place or places,or to any payee,required by any other resolution of the Board which authorized the issuance of obligations or the creation of debt of the Corporation having a lien on the Pledged Revenues subordinate to the lien created herein on behalf of the Parity Obligations. Any Pledged Revenues remaining in the Pledged Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other lawful purpose now or hereafter permitted by law Section 13 Bond Fund. For the purpose of providing funds to pay the principal of and interest on Parity Obligations,the Corporation agrees and covenants to maintain a separate and special account or fund on the books and records of the Corporation known as the"Southlake Community Enhancement and Development Corporation Debt Service Fund"(the"Bond Fund"), and all monies deposited to the credit of such Fund shall be held in a special banking fund or account maintained at a Depository of the Corporation.The Corporation covenants that there shall be deposited into the Bond Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per centum(100%)of the interest on and the principal of the Bonds then falling due and payable,and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 10th day of each month,beginning on or before the 10th day of the month next following the delivery of the Bonds to the initial purchasers. The required deposits to the Bond Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until (i)the total amount on deposit in the Bond Fund and Reserve Fund is equal to the amount required to fully pay and discharge all Parity Obligations(principal and interest)then Outstanding or(ii)the Bonds are no longer Outstanding. Section 14 Deficiencies. If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Bond Fund or Reserve Fund,such deficiency shall be cured as soon as possible from the next available Pledged Revenues,or from any other sources available for such purpose. Section 15 Payment of Bonds. While any of the Bonds are Outstanding,the designated financial officer of the Corporation shall cause to be transferred to the Paying Agent/Registrar,from funds on deposit in the Bond Fund amounts sufficient to fully pay and discharge promptly as each installment of interest and principal of the Bonds accrues or matures; such transfer of funds to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date of payment for the Bonds. Section 16. Investments - Security of Funds. Money in any Fund required to be maintained pursuant to this Resolution may, at the option of the Corporation,be invested in obligations and in the manner prescribed by the Public Funds Investment Act(Texas Government Code,Chapter 2256,as amended), including investments held in book-entry form,provided that all such deposits and investments shall be made in such a manner that the money required to be expended from any Fund will be available at the proper time or times. Such investments shall be valued in terms of current market value within 45 days of the close of each Fiscal Year and,with respect to investments held for the account of the Reserve Fund,within 45 days of the date of passage of each authorizing document of the Board pertaining to the issuance of Additional Obligations. All interest and income derived from deposits and investments in the Bond Fund immediately shall be credited to,and any losses debited to,the appropriate account of the Bond Fund. All interest and income derived from deposits in and investments of funds or accounts shall be credited to and deposited in the Pledged Revenue Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Obligations. Money deposited to the credit of the Pledged Revenue Fund, Bond Fund and Reserve Fund,to the extent not invested and not otherwise insured by the Federal Deposit Insurance Corporation or similar agency,shall be secured by a pledge of direct obligations of the United States of America,or obligations unconditionally guaranteed by the United States of America. Section 17. Issuance of Additional Parity Obligations. Subject to the provisions hereinafter appearing as to conditions precedent which must be satisfied,the Corporation reserves the right to issue,from time to time as needed,Additional Obligations for any lawful purpose. Such Additional Obligations may be issued in such form and manner as the Corporation shall determine,provided,however,prior to issuing or incurring such Additional Obligations,the following conditions precedent for the authorization and issuance of the same are satisfied,to wit: (I) The Treasurer of the Corporation (or other officer of the Corporation then having the primary responsibility for the financial affairs of the Corporation) shall have executed a certificate stating that,to the best of his or her knowledge and belief,the Corporation is not then in default as to any covenant,obligation or agreement contained in this Resolution or a Supplemental Resolution. (2) The Corporation has secured from a certified public accountant a certificate or opinion to the effect that,according to the books and records of the Corporation,the Gross Sales Tax Revenues received by the Corporation for either(i)the last completed Fiscal Year next preceding the adoption of the Supplemental Resolution authorizing the issuance of the proposed Additional Obligations or(ii)any 20 twelve(12)consecutive months out of the previous fifteen(15)months next preceding the adoption of the Supplemental Resolution authorizing the Additional Obligations were equal to not less than 1.25 times the maximum annual Debt Service for all Panty Obligations then Outstanding after giving effect to the issuance of the Additional Obligations then being issued. Section 18. Refunding Bonds. The Corporation reserves the right to issue refunding bonds to refund all or any part of the Parity Obligations(pursuant to any law then available)upon such terms and conditions as the Board may deem to be in the best interest of the Corporation, and if less than all such Parity Obligations then Outstanding are refunded, the conditions precedent prescribed(for the issuance of Additional Obligations) set forth in Section 17 hereof shall be satisfied, and shall give effect to the refunding. Section 19 Right to Create Subordinate Debt. Except as may be limited by a Supplemental Resolution, the Corporation shall have the right to issue or create any debt payable from or secured by a lien on all or any part of the Pledged Revenues for any lawful purpose without complying with the provisions of Section 17 or 18 hereof,provided the pledge and the hen securing such debt is subordinate to the pledge and lien established,made and created in Section 11 of this Resolution with respect to the Pledged Revenues to the payment and security of the Parity Obligations. Section 20 Confirmation and Levy of Sales Tax. (a)The Board hereby represents the City has duly complied with the provisions of the Act for the levy of the Sales Tax at the rate voted at the election held by and within the City on May 9, 2015, and such Sales Tax is being imposed within the corporate limits of the City and the receipts of such Sales Tax are being remitted to the City by the Comptroller of Public Accounts on a monthly basis. (b) While any Bonds are Outstanding,the Corporation covenants,agrees and warrants to take and pursue all action permissible to cause the Sales Tax, at said rate or at a higher rate if legally permitted,to be levied and collected continuously,in the manner and to the maximum extent permitted by law,and to cause no reduction,abatement or exemption in the Sales Tax or rate of tax below the rate stated,confirmed and ordered in subsection(a)of this Section to be ordered or permitted while any Bonds shall remain Outstanding. (c) If hereafter authorized by law to apply,impose and levy the Sales Tax on any taxable items or transactions that are not subject to the Sales Tax on the date of the adoption hereof,to the extent it legally may do so,the Corporation agrees to use its best efforts to cause the City to take such action as may be required to subject such taxable items or transactions to the Sales Tax. (d) The Corporation agrees to take and pursue all action legally permissible to cause the Sales Tax to be collected and remitted and deposited as herein required and as required by the Act,at the earliest and most frequent times permitted by law (e) The Corporation agrees to use its best efforts to cause the City to comply with the Act and shall cause the Gross Sales Tax Revenues to be deposited to the credit of the Pledged Revenue Fund in their entirety immediately upon receipt by the City. In the alternative and if legally authorized, the Corporation shall, by appropriate notice, direction, request or other legal method,use its good-faith efforts to cause the Comptroller of Public Accounts of the State of Texas(the"Comptroller")to pay all Gross Sales Tax Revenues directly to the Corporation for deposit to the Pledged Revenue Fund. Section 21 Records and Accounts. The Corporation hereby covenants and agrees that while any of the Bonds are Outstanding, it will keep and maintain complete records and accounts in accordance with generally accepted accounting principles, and following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of certified public accountants. Each such audit,in addition to whatever other matters may be thought proper by the accountant,shall particularly include the following: (I) A statement in reasonable detail regarding the receipt and disbursement of the Pledged Revenues for such Fiscal Year;and (2) A balance sheet for the Corporation as of the end of such Fiscal Year. Such annual audit of the records and accounts of the Corporation shall be in the form of a report(and may be reflected in the audit of the City) and be accompanied by an opinion of the accountant to the effect that such examination was made in accordance with generally accepted auditing standards and contain a statement to the effect that in the course of making the examination necessary for the report and opinion,the accountant obtained no knowledge of any default of the Corporation on the Bonds or in the fulfillment of any of the terms, covenants or provisions of this Resolution, or under any other evidence of indebtedness,or of any event which,with notice or lapse of time,or both,would constitute a failure of the Corporation to comply with the provisions of this Resolution or if, in the opinion of the accountants, any such failure to comply with a covenant or agreement hereof,a statement as to the nature and status thereof shall be included. 21 Copies of each annual audit report shall be furnished upon written request,to any Holders of any of said Bonds. The audits herein required shall be made within 180 days following the close of each Fiscal Year insofar as is possible. The Holders of any Bonds or any duly authorized agent or agents of such Holders shall have the right to inspect such records,accounts and data of the Corporation during regular business hours. Section 22. Representations as to Security for the Bonds. (a) The Corporation represents and warrants that, except for the Parity Obligations,the Pledged Revenues are and will be and remain free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto prior to,or of equal rank with, the pledge and lien created in or authorized by this Resolution except as expressly provided herein. (b) The Bonds and the provisions of this Resolution are and will be the valid and legally enforceable obligations of the Corporation in accordance with their terms and the terms of this Resolution, subject only to any applicable bankruptcy or insolvency laws or to any laws affecting creditors rights generally (c) The Corporation shall at all times,to the extent permitted by law, defend,preserve and protect the pledge of the Pledged Revenues and all the rights of the Holders against all claims and demands of all persons whomsoever (d) The Corporation will take,and use its best efforts to cause the City to take,all steps reasonably necessary and appropriate to collect all delinquencies in the collection of the Sales Tax to the fullest extent permitted by the Act. (e) The provisions, covenants, pledge and lien on and against the Pledged Revenues, as herein set forth, are established and shall be for the equal benefit, protection and security of the owners and holders of Parity Obligations without distinction as to priority and rights under this Resolution. (f) The Parity Obligations shall constitute special obligations of the Corporation,payable solely from,and equally and ratably secured by a parity pledge of and lien on,the Pledged Revenues,and not from any other revenues,properties or income of the Corporation. The Bonds may not be paid in whole or in part from any property taxes raised or to be raised by the City and shall not constitute debts or obligations of the State or of the City,and the Holders,shall never have the right to demand payment out of any funds raised or to be raised by any system of ad valorem taxation. Section 23 Satisfaction of Obligation of Corporation. If the Corporation shall pay or cause to be paid,or there shall otherwise be paid to the Holders,the principal of,premium,if any,and interest on the Bonds,at the times and in the manner stipulated in this Resolution, then the pledge of the Pledged Revenues under this Resolution and all other obligations of the Corporation to the Holders shall thereupon cease,terminate,and be discharged and satisfied. Bonds or any principal amount(s)shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when(i)money sufficient to pay in full such Bonds at maturity or to the redemption date therefor,together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii)Government Obligations shall have been irrevocably deposited in trust with the Paying Agent/Registrar,or an authorized escrow agent,which Government Obligations have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability,without reinvestment, of sufficient money, together with any moneys deposited therewith, if any, to pay when due the Bonds on the Stated Maturities thereof or(if notice of redemption has been duly given or waived or if irrevocable arrangements therefor accepted to the Paying Agent/Registrar have been made)the redemption date thereof Any moneys so deposited with the Paying Agent/Registrar, or an authorized escrow agent, and all income from Government Obligations held in trust by the Paying Agent/Registrar, or an authorized escrow agent,pursuant to this Section in excess of the amount required for the payment of the Bonds shall be remitted to the Corporation or deposited as directed by the Corporation. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity, or applicable redemption date, of the Bonds such moneys were deposited and are held in trust to pay shall, upon the request of the Corporation, be remitted to the Corporation against a written receipt therefor Notwithstanding the above and foregoing,any remittance of funds from the Paying Agent/Registrar to the Corporation shall be subject to any applicable unclaimed property laws of the State of Texas. Section 24. Resolution a Contract-Amendments. This Resolution shall constitute a contract with the Holders from time to time,be binding on the Corporation,and shall not be amended or repealed by the Corporation while any Bond remains Outstanding except as permitted in this Section and in Section 40. The Corporation,may,without the consent of or notice to any Holders,from time to time and at any time, amend this Resolution in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity,inconsistency,or formal defect or omission herein. In addition,the Corporation may,with the written consent from the owners holding a majority in aggregate principal amount of the Parity Obligations then Outstanding affected thereby,amend,add to,or rescind any of the provisions of this Resolution,provided that,without the written consent of all Holders of Outstanding Bonds effected,no such amendment,addition,or rescission shall(1)extend the time or times of payment 22 of the principal of, premium, if any,and interest on the Bonds,reduce the principal amount thereof,the redemption price therefor, or the rate of interest thereon,or in any other way modify the terms of payment of the principal of,premium,if any,or interest on the Bonds, (2)give any preference to any Bond over any other Bond,or(3)reduce the aggregate principal amount of Bonds or Parity Obligations,as the case may be,required to be held for consent to any such amendment,addition,or rescission. INVESTMENTS The Southlake Community Enhancement and Development Corporation is a nonprofit corporation acting on behalf of the City and is subject to the provisions of the Public Funds Investment Act(Texas Government Code,Ch.2256)with respect to the investment of its funds. The Corporation invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the Board of Directors of the Corporation. Both state law and the Corporation's investment policies are subject to change. LEGAL INVESTMENTS Under State law,the Corporation is authorized to invest in obligations meeting the requirements of the Texas Public Funds Investments Act,Texas Government Code,Chapter 2256,as amended,(the"PFA")which may include(1)obligations of the United States or its agencies and instrumentalities,(2)direct obligations of the State of Texas or its agencies and instrumentalities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying secunty for which is guaranteed by an agency or instrumentality of the United States,(4)other obligations,the principal of and interest on which are unconditionally guaranteed or insured by,or backed by the full faith and credit of,the State or the United States or their respective agencies and instrumentalities,(5)obligations of states, agencies,counties,cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent,(6)certificates of deposit that are guaranteed or insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and amount provided by law for Corporation deposits, (7)certificates of deposit and share certificates issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the clauses(1)through(5)or in any other manner and amount provided by law for Corporation deposits,(8) fully collateralized repurchase agreements that have a defined termination date,are fully secured by obligations described in clause (1),and are placed through a primary government securities dealer or a financial institution doing business in the State,(9)bankers' acceptances with the remaining term of 270 days or less,if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency,(10)commercial paper that is rated at least A-1 or P-1 or the equivalent by either(a)two nationally recognized credit rating agencies or(b)one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S.or state bank,(11)no-load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of$1 for each share,(12)no-load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent,(13)bonds issued, assumed, or guaranteed by the State of Israel,and(14)guaranteed investment contracts secured by obligations of the United States of Amenca or its agencies and instrumentalities,other than the prohibited obligations described in the next succeeding paragraph. The Corporation may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service. The Corporation is specifically prohibited from investing in. (1)obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal, (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years;and(4)collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Effective September 1,2003 Governmental bodies in the State are authorized to implement securities lending programs if(i)the securities loaned under the program are 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 (5) and (13) 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(5)and(10)through(13)of the first paragraph under this subcaption,or an authonzed investment pool,(n) 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 Agency or a third party designated by the Agency; (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. INVESTMENT POLICIES Under State law, the Corporation 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 Corporation funds,maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All Corporation funds must be invested consistent with a formally adopted"Investment Strategy Statement"that specifically addresses each 23 funds' investment. Each Investment Strategy Statement will describe its objectives concerning: (I)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 State law,Corporation 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 Corporation shall submit an investment report detailing: (1)the investment position of the Corporation,(2)that all investment officers jointly prepared and signed the report, (3)the beginning market value, any additions and changes to market value and the ending value of each pooled fund group,(4)the book value and market value of each separately listed asset at the beginning and end of the reporting period,(5)the maturity date of each separately invested asset,(6)the account or fund or pooled fund group for which each individual investment was acquired,and(7)the compliance of the investment portfolio as it relates to: (a)adopted investment strategy statements and(b)State law No person may invest Corporation funds without express written authority from the Board of Directors. ADDITIONAL PROVISIONS... Under State 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 entity to disclose the relationship and file a statement with the Texas Ethics Commission and the Board of Directors of the Corporation,(4)require the qualified representative of firms offering to engage in an investment transaction with the Corporation to (a)receive and review the Corporation's investment policy,(b)acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the Corporation and the business organization that are not authorized by the Corporation's investment policy(except to the extent that this authorization is dependent on an analysis of the makeup of the Corporation's entire portfolio and requires an interpretation of subjective investment standards) and(c) deliver a written statement in a form acceptable to the Corporation and the business organization attesting to these requirements;(5)perform an annual audit of the management controls on investments and adherence to the Corporation's investment policy; (6)provide specific investment training for the Corporation's designated Investment Officer;(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 purchase agreement;(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 Corporation. CURRENT INVESTMENTS. .As of April 30,2016 the following percentages of the Corporation's investible funds were invested in the following categories: Market Type of Investment Value Percent Cash and Cash Equivalents $ 1,673,278 100.00% Totals $ 1,673,278 100 00% (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) 24 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 who are individuals or, except as hereinafter described, corporations. 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. Interest on the Bonds owned by a corporation will be included in such corporation's adjusted current earnings for purposes of calculating the alternative minimum taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate investment trust,a real estate mortgage investment conduit,or a financial asset securitization investment trust("FASIT"). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by Section 55 of the Code will be computed. In rendering the foregoing opinion, Bond Counsel will rely upon representations and certifications of the Corporation 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 Corporation with the provisions of the Resolution subsequent to the issuance of the Bonds. The Resolution contains covenants by the Corporation 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 Corporation 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 audit of the Bonds is commenced,under current procedures the IRS is likely to treat the Corporation 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 Corporation 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 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 pnce 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. 25 However, such interest may be required to be taken into account in determining the alternative minimum taxable income of a corporation, for purposes of calculating a corporation's alternative minimum tax imposed by Section 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States,even though there will not be a corresponding cash payment. In addition,the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with 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 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. 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. CONTINUING DISCLOSURE OF INFORMATION In the Resolution,the Corporation has made the following agreement for the benefit of the registered and beneficial owners of the Bonds.The Corporation is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the Corporation will be obligated to provide certain updated financial information and operating data annually,and timely notice of certain events,to the Municipal Securities Rulemaking Board(the"MSRB"). ANNUAL REPORTS. The Corporation will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the Corporation of the general type included in this Preliminary Official Statement under Tables numbered 1 through 3 and in Appendix B The Corporation will update and provide this information within six months after the end of each fiscal year ending in or after 2016. The financial information and operating data to be provided may be set forth in full in one or more documents or may be included by specific reference to any document available to the public on the MSRB's Internet Web site or filed with the Securities and Exchange Commission(the"SEC"),as permitted by SEC Rule 15c2-12(the"Rule"). The updated information will include audited financial statements, if the Corporation commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time,the Corporation will provide unaudited financial statements of the type described in the preceding paragraph by the required time, and audited financial statements when and if such audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting principles the Corporation is required to employ from time to time pursuant to State law or regulation. The Corporation's current fiscal year end is September 30 Accordingly,it must provide updated information by March 31 in each year, unless the Corporation changes its fiscal year If the Corporation changes its fiscal year, it will notify the MSRB of the change. NOTICE OF CERTAIN EVENTS The Corporation will also provide timely notices of certain events to the MSRB The Corporation will provide notice of any of the following events with respect to the Bonds to the MSRB in a timely manner(but not in excess of ten business days after the occurrence of the event): (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on 26 credit enhancements reflecting financial difficulties;(5)substitution of credit or liquidity providers,or their failure to perform,(6) adverse tax opinions,the issuance by the Internal Revenue Service of proposed or final determinations of taxability,Notices of Proposed Issue(IRS Form 5701-TEB),or other material notices or determinations with respect to the tax status of the Bonds,or other material events affecting the tax status of the Bonds;(7)modifications to rights of holders of the Bonds,if material,(8)Bond calls,if material,and tender offers;(9)defeasances;(10)release,substitution,or sale of property securing repayment of the Bonds, if material,(11)rating changes;(12)bankruptcy,insolvency,receivership,or similar event of the Corporation,which shall occur as described below;(13)the consummation of a merger,consolidation,or acquisition involving the Corporation or the sale of all or substantially all of its assets,other than in the ordinary course of business,the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions,other than pursuant to its terms,if material, and(14)appointment of a successor or additional trustee or the change of name of a trustee,if material In addition,the Corporation will provide timely notice of any failure by the Corporation to provide annual financial information in accordance with their agreement described above under"Annual Reports". For these purposes,any event described in clause(12)in the immediately preceding paragraph is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Corporation in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Corporation,or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority,or the entry of an order confirming a plan of reorganization,arrangement,or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Corporation. AVAILABILITY OF INFORMATION.. In connection with its continuing disclosure agreement entered into with respect to the Bonds, the Corporation will file all required information and documentation with the MSRB in electronic format in accordance with MSRB's guidelines. Access to such filings will be provided, without charge to the general public, by the MSRB at www emma.msrb.org. LIMITATIONS AND AMENDMENTS. The Corporation has agreed to update information and to provide notices of certain specified events only as described above. The Corporation has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The Corporation makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. The Corporation disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement,although registered and beneficial owners of Bonds may seek a writ of mandamus to compel the Corporation to comply with its agreement. The Corporation may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Corporation,if(i)the agreement,as amended,would have permitted an Initial Purchaser to purchase or sell Bonds in the offering described herein in compliance with the Rule,taking into account any amendments or interpretations of the Rule to the date of such amendment,as well as such changed circumstances,and(ii)either(a)the registered and beneficial owners of a majority in aggregate principal amount of the outstanding Bonds consent to the amendment or(b)any person unaffiliated with the Corporation(such as nationally recognized bond counsel)determines that the amendment will not materially impair the interests of the registered and beneficial owners of the Bonds.The Corporation may also amend or repeal the provisions of this continuing disclosure agreement If the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid,but only if and to the extent that the provisions of this sentence would not prevent an Initial Purchaser from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the Corporation so amends the agreement,it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under"Annual Reports"an explanation,in narrative form,of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS. The Bonds are the first issuance of securities for the Corporation and consequently there have been no prior undertakings. (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) 27 OTHER INFORMATION RATINGS The Bonds have been rated"AA+", stable outlook, by Fitch Ratings, Inc. ("Fitch). An explanation of the significance of such rating may be obtained from the company furnishing the rating. The rating reflects only the respective views of such organization and the Corporation makes no representation as to the appropriateness of the rating. There is no assurance that such rating will continue for any given period of time or that they will not be revised downward or withdrawn entirely by such rating company,if in the judgment of the company,circumstances so warrant. Any such downward revision or withdrawal of such rating,may have an adverse effect on the market price of the Bonds. LITIGATION It is the opinion of the Corporation Attorney and City Staff that there is no pending litigation against the Corporation that would have a material adverse financial impact upon the Corporation or its operations. 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 jurisdiction. The Corporation 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 INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201 041 of the Public Security Procedures Act(Texas Government Code,Chapter 1201,as amended)provides the Bonds are(i)negotiable instruments, (ii)investment securities to which Texas Business and Commerce Code, as amended,applies and (iii)legal and authorized investments for insurance companies,fiduciaries or trustees and sinking funds of municipalities or other political subdivisions or public agencies of the State. The Texas Finance Code also contains provisions that,subject to a prudent investor standard,provide for the Bonds to be legal investments for state banks,savings banks,trust companies with capital of one million dollars or more,and savings and loan associations.For the Bonds to be an eligible investments for municipalities,political subdivisions or public agencies of the State,the Public Funds Investment Act,Texas,Government Code,Chapter 2256,as amended, provides that a rating of not less than"A"or its equivalent as to investment quality must be assigned by a nationally recognized investment rating agency. Furthermore,the Bonds are eligible to secure the deposits of any public funds of the State,its agencies and its political subdivisions and are legal security for those deposits to the extent of their market value. The Corporation 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. LEGAL OPINIONS AND No LITIGATION CERTIFICATE The Corporation will furnish the Purchaser a complete transcript of proceedings had incident to the authorization and issuance of the Bonds,including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and to the effect that the Bonds are valid and legally binding obligations of the Corporation and,based upon examination of such transcript of proceedings,the approving legal opinion of Bond Counsel,to like effect and to the effect that the interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a)of the Code,subject to the matters described under"TAX MATTERS"herein,including the alternative minimum tax on corporations.The customary closing papers,including a certificate of the Corporation as described under"OTHER INFORMATION-Certification of the Official Statement"will also be furnished to the Purchasers. Though it represents the Financial Advisor and investment banking firms such as the Purchaser from time to time in matters unrelated to the issuance of the Bonds, Bond Counsel has been engaged by and only represents the Corporation in connection with the issuance of the Bonds.Bond Counsel was not requested to participate,and did not take part,in the preparation of the Notice of Sale and Bidding Instructions,the Official Bid Form and the Official Statement,and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that,in its capacity as Bond Counsel,such firm has reviewed the information describing the Bonds in the Official Statement to verify that such description conforms to the provisions of the Resolution. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. 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 the 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. 28 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records,audited financial statements and other sources that are believed to be reliable.There is no guarantee that any of the assumptions or estimates contained herein will be realized.All of the summaries of the statutes,documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes,documents and resolutions.These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information.Reference is made to original documents in all respects. FINANCIAL ADVISOR FirstSouthwest is employed as Financial Advisor to the Corporation in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. FirstSouthwest,in its capacity as Financial Advisor,has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present,pending or future actions taken by any legislative or judicial bodies. In the normal course of business, the Financial Advisor may from time to time sell investment securities to the Corporation for the investment of bond proceeds or other funds of the Corporation upon the request of the Corporation. The Financial Advisor to the Corporation has provided the following sentence for inclusion in this Preliminary Official Statement. The Financial Advisor has reviewed the information in this Preliminary Official Statement in accordance with,and as part of,its responsibilities to the Corporation and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Financial Advisor does not guarantee the accuracy or completeness of such information. FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement,and in any other information provided by the Corporation,that are not purely historical, are forward-looking statements, including statements regarding the Corporation's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the Corporation on the date hereof, and the Corporation assumes no obligation to update any such forward-looking statements. The Corporation's actual results could differ matenally from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties,including customers,suppliers, business partners and competitors,and legislative,judicial,and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to,among other things,future economic,competitive,and market conditions and future business decisions,all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Corporation. Any of such assumptions could be inaccurate and,therefore,there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. INITIAL PURCHASER After requesting competitive bids for the Bonds,the Corporation accepted the bid of (the"Purchaser"or "Initial Purchaser")to purchase the Bonds at the interest rates shown on the(inside)cover page of the Official Statement at a price of (%) of par plus a cash premium(if any)of$ The Initial Purchaser can give no assurance that any trading market will be developed for the Bonds after their sale by the Corporation to the Initial Purchaser. The Corporation has no control over the price at which the Bonds are subsequently sold and the initial yields at which the Bonds will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds, the Corporation will furnish the Purchaser a certificate, executed by an authorized representative of the Corporation,acting in such person's representative capacity,to the effect that to the best of such person's knowledge and belief: (a) the descnptions and statements of or pertaining to the Corporation contained in the Official Statement, and any addenda, supplement or amendment thereto, on the date of the Official Statement, on the date of sale of the Bonds and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects;(b)insofar as the Corporation and its affairs,including its financial affairs,are concerned,the Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein,in light of the circumstances under which they were made,not misleading in any material respect; (c)insofar as the descriptions and statements,including financial data,of or pertaining to entities,other than the Corporation,and their activities contained in the Official Statement are concerned,such statements and data have been obtained from sources which 29 the Corporation believes to be reliable and the Corporation has no reason to believe that they are untrue in any material respect; and(d)there has been no material adverse change in the financial condition of the Corporation since the date of the last audited financial statements of the Corporation. The Resolution authorizing the issuance of the Bonds will also approve the form and content of this Preliminary Official Statement, and any addenda,supplement or amendment thereto,and authorize its further use in the reoffering of the Bonds by the Purchaser. President Southlake Community Enhancement and Development Corporation ATTEST. Secretary Southlake Community Enhancement and Development Corporation 30 APPENDIX A GENERAL INFORMATION REGARDING THE CITY LOCATION The City is located in northeast Tarrant and Denton Counties. The City is approximately 15 miles northwest of the City of Dallas on State Highway 114 and approximately 10 miles northeast of the City of Fort Worth. POPULATION The City's 2016 estimated population is 28,868,a steady increase over the 2010 census population of 26,575 ECONOMY The City is primarily residential with some commercial and light manufacturing companies.The City's growth is due to its proximity to the Dallas-Fort Worth Metroplex and to the Dallas-Fort Worth International Airport. Major employers in the City are: Employer Nature of Business Number of Employees Sabre Holdings Travel Industry 2,700 Carroll Independent School District School District 1,072 Verizon Wireless Telecommunications 619 Central M arket Grocery Store 350 City of Southlake Government 310 Hilton Dallas/Town Square Hotel 218 Century 21 Mike Bowman,Inc. Insurance 200 Tri-Dal,Ltd. Construction 194 Cheesecake Factory Restaurant 161 Lowes Home Improvement Retail 145 Allied Oil&Gas Services Oil Industry 140 Texas Health Harris Methodist Medical Industry 135 Ameristar Information Network Telecommunications 125 Costco Wholesale Retail 107 TRANSPORTATION The City is located on State Highways 114 and 26 providing direct access to the Cities of Dallas and Fort Worth and to Dallas-Fort Worth International Airport. The City is approximately 5 miles northwest of Dallas-Fort Worth International Airport, 19 miles from Dallas Love Field and 10 miles from Alliance Airport. EDUCATION The City is served primarily by Carroll Independent School District,and additionally by Keller,Grapevine-Colleyville and Northwest Independent School Districts.There are four elementary schools,one junior high,two intermediate schools,one high school and one senior high school located within the City Higher education is provided by many institutions located within a 25-mile radius from the City,such as: Texas Christian University, University of North Texas,Southern Methodist University,Texas Woman's University,University of Texas at Arlington,University of Texas at Dallas,University of Dallas and Tarrant County Junior College. RECREATION The City has over 700 total park acres(and growing),47 practice and game fields, 21 lighted tennis courts, lighted in-line hockey facility,3 lighted basketball courts,6 miles of park trials, 12 concession and/or restroom facilities, 10 ponds with aeration features, 13 pavilions,a senior activity center,a nature center,and a full service library The City lies on the southern border of Lake Grapevine which offers additional swimming,camping,boating,and fishing opportunities. The City also provides an assortment of recreational programs with over 50,000 participants taking part annually in classes,programs,athletic leagues,concerts,and special events offered through the Recreation Division. A-1 HISTORICAL EMPLOYMENT(AVERAGE ANNUAL)(1) 2016(2) 2015 2014 2013 2012 Labor Force 13,809 13,541 13,495 13,214 12,730 Employed 13,305 13,048 12,896 12,521 12,119 Unemployed 504 493 599 693 611 Unemployment Rate 3 6% 3 6% 4.4% 5.2% 4.8% (1)Source:Texas Employment Commission. (2)As of June 2016. BUILDING PERMITS BY CATEGORY Fiscal Year Ended Commercial Residential 9/30 Number Amount Number Amount Grand Total 2011 10 $ 18,384,157 90 $ 59,040,985 $ 77,425,142 2012 14 83,728,043 105 58,736,866 142,464,909 2013 20 17,976,714 188 84,028,745 102,005,459 2014 42 42,543,750 197 131,159,495 173,703,245 2015 27 81,215,734 272 196,895,155 278,110,889 Source: City Staff. TARRANT COUNTY Tarrant County(the"County")is located in North Central Texas with a 2015 population of 1,982,498. The County,together with Dallas County,is an integral part of the Dallas-Fort Worth Metroplex,one of the largest and fastest growing metropolitan areas in the nation.The combined Metroplex area has an estimated population in excess of 4 0 million. APPENDIX B EXCERPTS FROM THE CITY OF SOUTH LAKE,TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30,2015 The information contained in this Appendix consists of excerpts from the City of Southlake, Texas Annual Financial Report for the Year Ended September 30,2015,and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. APPENDIX C FORM OF BOND COUNSEL'S OPINION OFFICIAL NOTICE OF SALE AND BIDDING INSTR[CTIONS ON S24,240,000* SOUTHLAKE COMMUNITI ENHANCEMENT AND DEVELOPMENT CORPORATION,TEXAS (Tarrant and Denton Counties) SALES TAX REVENUE BONDS,SERIES 2016 Sealed Bids Due Tuesday,August 2,2016 at 10:00 AM CDT THE BONDS WILL NOT BE DESIGNATED AS"QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING The Board of Directors (the "Board")of the Southlake Community Enhancement and Development Corporation(the"Corporation") is offering for sale its$24,240,000* Sales Tax Revenue Bonds, Series 2016(the"Bonds"). Bidders may submit bids for the Bonds by any of the following methods: (I) Deliver bids directly to the Corporation as described below in"BIDS DELIVERED TO THE CORPORATION." (2) Submit bids electronically as described below, in"ELECTRONIC BIDDING PROCEDURES,"or (3) Submit bids by telephone or facsimile as described below in"BIDS BY TELEPHONE OR FACSIMILE." BIDS DELIVERED TO THE CORPORATION Sealed bids,plainly marked"Bid for Bonds",should be addressed to"Sharen Jackson. Chief Financial Officer. City of Southlake. Texas", and delivered to the Corporation at 1400 Main Street, Suite 440, Southlake, Texas 76092(the"City's Meeting Place"),prior to 10.00 AM.CDT,on the date of the bid opening. All bids must be submitted on the Official Bid Form,without alteration or interlineation. ELECTRONIC BIDDING PROCEDURE Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY Subscription to the i-Deal LLC's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The Corporation will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit the Official Bid Form prior to bidding. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms provided in this Official Notice of Sale and Bidding Instructions, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the Corporation. The Corporation shall not be responsible for any malfunction or mistake made by,or as a result of the use of the facilities of.PARITY.the use of such facilities being the sole risk of the prospective bidder If any provisions of this Official Notice of Sale and Bidding Instructions shall conflict with information provided by PARITI as the approved provider of electronic bidding services,this Official Notice of Sale and bidding instructions shall control. Further information about PARITI,including any fee charged,may be obtained from Parity Customer Support, 40 West 23rd Street,5th Floor,New I ork,New I ork 10010,(212)404-8102. For purposes of the bidding process.regardless of the bidding method,the time as maintained by i-Deal shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the Corporation,as described under"Basis of Award"below. All electronic bids shall be deemed to incorporate the provisions of this Official Notice of Sale and the Official Bid Form. The winning bidder shall submit a signed bid form if not previously submitted. BIDS B1 TELEPHONE OR FACSIMILE Bidders must submit a SIGNED Official Bid Form to Jim Sabonis. FirstSouthwest, a Division of Hilltop Securities Inc. ("FirstSouthwest"), 1201 Elm Street, Suite 3500. Dallas, TX 75270, and submit their bid by telephone or facsimile(fax)on the date of the sale Telephone bids will be accepted at(214)953-4189,between 9.00 AM,CDT and 10.00 AM,Central Time on Tuesday.August 1 2016 Fax bids must be received between 9.00 AM,Central Time and 10.00 AM CDT,on the date of the sale at(214)953-4050,Attention. Penny Brooker FirstSouthwest will not be responsible for submitting any bids received after the above deadlines. The Corporation and FirstSouthwest, as the Corporation's Financial Advisor, are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted on a timely basis. * Preliminary. subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. FirstSouthwest assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if telephone or fax options are exercised. PLACE AND TIME OF BID OPENING The bids for the Bonds will be publicly opened and read at the City Hall. 1400 Main Street. Southlake.TX 76092.at 10:30 AM,Central Time,on Tuesday,August 2.2016 ANN ARD OF THE BONDS .The Council will take action to award the Bonds(or reject all bids)at a meeting scheduled to convene at 5.30 PM,Central Time,on the date of the bid opening.and adopt a resolution authorizing the Bonds and approving the Official Statement(the"Resolution"). ADVANCE MODIFICATION OF PRINCIPAL AMOUNTS . The Corporation reserves the right to change the principal amounts provided below in the`MATURITY SCHEDULE"in each stated maturity by giving notice of such change,via bond buyer wire service,and PARITY at least 18 hours in advance of the time set for receipt of bids. Such notice shall be considered an amendment to this Official Notice of Sale and Bidding Instructions. POST BID NIODIFIC XTION OF PRINCIPAL AMOUNTS After the receipt of bids. but prior to the award of the Bonds, the Corporation reserves the right to amend the total par amount by up to 15%in order to generate the Corporation's target amortization. Such modifications of principal amounts will be disclosed to the winning bidder within two hours after receipt of the bids. The purchase price of the Bonds will be adjusted proportionately to the adjustment in principal amount of the Bonds and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. THE BONDS DESCRIPTION The Bonds will be dated August 1, 2016 (the "Dated Date"). Interest will accrue from August 24. 2016 (the "Delivery Date")and will be due on February 15.2017.and each August 15 and February 15 thereafter until the earlier of stated maturity,or prior redemption. The Bonds will be issued only in fully registered form in any integral multiple of$5.000 for any one maturity The Bonds will mature on February 15 in each year as follows: MATERFFI SCHEERLE* Principal 15-Feb Amount Maturity $ 860.000 2018 885.000 2019 915,000 2020 960.000 2021 1.005.000 2022 1,060.000 2023 1.110.000 202.4 1.170.000 2025 1.230.000 2026 1285.000 2027 1.340.000 2028 1,395.000 2029 1,450.000 2030 1,500.000 2031 1.535.000 2032 1.575.000 2033 1.615.000 2034 1.655.000 2035 1.695,000 2036 OPTIONAL REDEMPTION The Corporation reserves the right, at its option.to redeem Bonds having stated maturities on and after February 15,2027.in whole or in part in principal amounts of$5.000 or any'integral multiple thereof on February 15.2026, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. Any Bonds designated as Term Bonds(defined herein)by the Initial Purchaser will also be subject to mandatory sinking fund redemption. SERIAL BONDS AND/OR TERM BONDS Bidders may provide that all of the Bonds be issued as serial bonds or may provide that any two or more consecutive annual principal amounts be combined into one or more term bonds(the"Term Bonds"). * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. ii MANDATORY SINKING FUND REDEMPTION . If the successful bidder elects to alter the MATURITY SCHEDULE reflected above and convert the principal amounts of the serial bonds into Term Bonds.such Term Bonds shall be subject to mandatory redemption the first February 15 next following the last maturity for serial bonds,and annually thereafter on each February 15 until the stated maturity for the Term Bonds at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the"MATURITY SCHEDULE"shown above had no designation of such maturities as Term Bonds occurred. At least forty-five(45)days prior to each mandatory date,the Paying Agent/Registrar shall select by lot the Term Bonds to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced,at the option of the Corporation,by the principal amount of the Term Bonds of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the Corporation and delivered to the Paying Agent/Registrar for cancellation or(ii)shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final Official Statement will incorporate the mandatory redemption provisions for the Bonds in the event the successful bidder elects to convert serial maturities into one or more Term Bonds. BOOK-ENTRY-ONLY SYSTEM The Corporation intends to utilize the Book-Entry-Only System of The Depository Trust Company.New York,New York("DTC"). See"THE BONDS-Book-Entry-Only System"in the Official Statement. PAYING AGENT/REGISTRAR The initial Paying Agent/Registrar shall be The Bank of New York Mellon Trust Company.NA. Dallas,Texas(see"THE BONDS-Paying Agent/Registrar"in the Official Statement). SCR_RCE OF PAYMENT The Bonds constitute special obligations of the Corporation.payable from and secured solely by Pledged Revenues(as defined in the Resolution)consisting primarily of revenues collected from a 3/8 of 1%sales and use tax levied within the City of Southlake.Texas for the benefit of the Corporation. Further details regarding the Bonds are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES The Bonds will be sold in one block,on an"All or None" basis,and at a price of not less than 105%and not more than 110%of their par value. Bidders are invited to name the rate(s)of interest to be borne by the Bonds,provided that each rate bid must be in a multiple of 1/8 of 1%or 1/20 of 1°zo and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 3.00% in rate. Beginning with the Bonds maturing in the year 2027,the rate of interest must be at least equal to or greater than the rate of interest borne by the Bonds maturing in the immediately preceding year.The high bidder will be required to submit reoffering yields and dollar prices prior to award. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity'must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in the bid the total interest cost in dollars and the True Interest Cost as defined below BASIS FOR AWARD Subject to the Corporation's right to reject any or all bids and to waive any irregularities except time of filing. the sale of the Bonds will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form (the "Initial Purchaser") making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost (defined herein)rate to the Corporation based on the maturity'schedule in the Official Bid Form. The"True Interest Cost"rate is that rate which,when used to compute the total present value as of the Delivery Date of all debt service payments on the Bonds on the basis of semi-annual compounding,produces an amount equal to the sum of the par value of the Bonds plus any premium bid,if any In the event of a bidder's error in interest cost rate calculations,the interest rates,and premium,if any.set forth in the Official Bid Form will be considered as the intended bid. In order to provide the Corporation with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Bonds from the gross income of their owners,the Initial Purchaser will be required to complete,execute,and deliver to the Corporation(on or before the Delivery Date)a certification as to their"issue price" (the Issue Price Certificate")in the form and to the effect attached hereto or accompanying this Official Notice of Sale and Bidding Instructions. In the event the Initial Purchaser is unable to sell a substantial amount of the Bonds of any stated maturity', such certificate may be modified in a manner approved by'the Corporation or by'Norton Rose Fulbright US LLP,Dallas,Texas,bond counsel to the Corporation("Bond Counsel"). In no event will the Corporation fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery Each bidder,by submitting its bid.agrees to complete.execute.and deliver such a certificate at least six(6)days prior to the date of delivery of the Bonds. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements, to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty' Any questions concerning such certification should be directed to Bond Counsel. iii GOOD FAITH DEPOSIT A Good Faith Deposit. payable to the "City of Southlake. Texas", in the amount of$484.800 00. is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the Corporation pending the Initial Purchaser's compliance with the terms of the bid and the Official Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately If submitted separately,it shall be made available to the Corporation prior to the opening of the bids,and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the bid,then said check shall be cashed and accepted by the Corporation as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened,and an award of the Bonds has been made. DELIVER\ OF THE BONDS AND ACCOJIP.AN\ING DOCUMENTS CUSIP NUMBERS It is anticipated that CUSIP identification numbers will appear on the Bonds,but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this Official Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of Ct SIP numbers on the Bonds shall be paid by the Corporation; provided,however,that the Cl.SIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVER i OF BONDS Deliven will be accomplished by the issuance of one Initial Bond(also called the"Bond"or"Bonds"). either in typed or printed form, in the aggregate principal amount of$28240,000*. payable in stated installments to the Initial Purchaser,signed by the Mayor and City Secretary,approved by the Attorney General.and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Bond.it shall be immediately cancelled and one definitive Bond for each maturity will be registered and delivered only to Cede & Co.. and deposited with DTC in connection with DTC's Book-Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar Payment for the Bonds must be made in immediately available funds for unconditional credit to the Corporation.or as otherwise directed by the Corporation. The Initial Purchaser will be given six business days'notice of the time fixed for delivery of the Bonds. It is anticipated that delivery of the Bonds can be made on or about August 24,2016.and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Bonds by 10.00 AM.Central Time,on August 24.2016 If for any reason the Corporation is unable to make delivery on or before August 24.2016.the Corporation shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter,then its Good Faith Deposit will be returned,and both the Corporation and the Initial Purchaser shall be relieved of any further obligation. In no event shall the Corporation be liable for any damages by reason of its failure to deliver the Bonds. provided such failure is due to circumstances beyond the Corporation's reasonable control. CONDITIONS TO DELIVER\ The obligation of the Initial Purchaser to take up and pay for the Bonds is subject to the Initial Purchaser's receipt of(a) the legal opinion of Bond Counsel. (b)the no-litigation certificate, and (c) the certification as to the Official Statement,all as further described in the Official Statement. LEGAL OPINION The Bonds are offered when,as and if issued.subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Initial Purchaser of opinion of Bond Counsel,to the effect that the Bonds are valid and binding obligations of the Corporation and that the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law,subject to the matters described under"TAX MATTERS" in the Official Statement,including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL ST ATEMENT At the time of payment for and Initial Delivery of the Bonds.the Corporation will execute and deliver to the Initial Purchaser a certificate relating to the Official Statement as more fully described in the Official Statement. CHANGE IN TAX EXEMPT STATUS At any time before the Bonds are tendered for delivery,the Initial Purchaser may withdraw its bid if the interest received by private holders on bonds of the same type and character shall be declared to be includable in gross income under present federal income tax laws,either by ruling of the Internal Revenue Service or by a decision of any Federal court,or shall be declared taxable or be required to be taken into account in computing any federal income taxes.by the terms of any federal income tax law enacted subsequent to the date of this Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Pnncipal Amounts"herein. iv GENERAL FINANCIAL ADVISOR.. FirstSouthwest is employed as Financial Advisor to the Corporation in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. FirstSouthwest, in its capacity as Financial Advisor, does not assume any responsibility for the information,covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds,or the possible impact of any present.pending or future actions taken by any legislative or judicial bodies. BLUE SKI. LAWS By submission of its bid,the Initial Purchaser represents that the sale of the Bonds in states other than Texas will be made only pursuant to exemptions from registration or.where necessary.the Initial Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The Corporation agrees to cooperate with the Initial Purchaser,at the Initial Purchaser's written request and expense.in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary,provided.however,that the Corporation shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL This Official Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds,but is merely notice of the sale of the Bonds. The offer to sell the Bonds is being made by means of the Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective Initial Purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Bonds. ISSUANCE OF ADDITIONAL DEBT The Corporation does not anticipate the issuance of additional general obligation debt within the next twelve months. RATINGS The Bonds have been rated"AA+"by Fitch Ratings("Fitch").without regard to credit enhancement. THE PRELIMINAR\ OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RILE 15(2-12 The Corporation has prepared the accompanying Preliminary Official Statement and, for the limited purpose of complying with United States Securities and Exchange Commission Rule 15c2-12(the"Rule"),deems such Preliminary Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the Corporation,the Preliminary Official Statement contains information,including financial information or operating data,concerning every entity.enterprise,fund. account, or person that is material to an evaluation of the offering of the Bonds. Representations made and to be made by the Corporation concerning the absence of material misstatements and omissions in the Preliminary Official Statement are addressed elsewhere in this Official Notice of Sale and Bidding Instructions and in the Preliminary Official Statement. The Corporation will furnish to the Initial Purchaser, acting through a designated senior representative, in accordance with instructions received from the Initial Purchaser,within seven(7)business days from the sale date an aggregate of thirty (30)copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. In addition, the Corporation agrees to provide,or cause to be provided,to the Initial Purchaser.the Preliminary Official Statement and the Official Statement and any amendments or supplements thereto in a"designated electronic format"(or printed format with respect to the final Official Statement)as may be required for the Initial Purchaser to comply with the Rule or the rules of the Municipal Securities Rulemaking Board("MSRB").The Corporation consents to the distribution of such documents in a"designated electronic format." Upon receipt. the Initial Purchaser shall promptly file the Official Statement with the MSRB in accordance with the applicable MSRB rules. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms. if any. to the Financial Advisor by the close of'the next business day after the award. Except as noted above, the Corporation assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT The Corporation will agree in the Resolution to provide certain periodic information and notices of certain events in accordance with the Rule,as described in the Preliminary Official Statement under"CONTINUING DISCLOSURE OF INFORMATION" The Initial Purchaser's obligation to accept and pay for the Bonds is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Resolution containing the agreement described under such heading. COMPLIANCE%%ITH PRIOR UNDERTAKINGS The Bonds are the first issuance of securities for the Corporation and consequently there have been no prior undertakings. ADDITIONAL COPIES OF NOTICE,BID FORM AND STATEMENT A limited number of additional copies of this Official Notice of Sale and Bidding Instructions,the Official Bid Form and the Preliminary Official Statement,as available over and above the normal mailing.may be obtained upon request at the offices of FirstSouthwest.a Division of Hilltop Securities Inc.. 1201 Elm Street.Suite 3500.Dallas,Texas 75270.Financial Advisor to the Corporation. V On the date of the sale, the Board of the Corporation will, in the Resolution authorizing the issuance of the Bonds,confirm its approval of the form and content of the Official Statement,and any addenda,supplement or amendment thereto.and authorize its use in the reoffering of the Bonds by the Initial Purchaser JOHN TERRELL President Southlake Community Enhancement and Development Corporation ATTEST SUZANNE MAISTO Secretary Southlake Community Enhancement and Development Corporation July 22,2016 vi OFFICIAL BID FORM Honorable Mayor and City Council August 2,2016 City of Southlake.Texas President and Members of the Board of Directors.Southlake Community Enhancement and Development Corporation Reference is made to your Preliminary Official Statement and Official Notice of Sale and Bidding Instructions,dated July 22.2016 of$24,240,000* SOUTHLAKE COMMUNITY ENHANCEMENT AND DEVELOPMENT CORPORATION, SALES TAX REVENUE BONDS,SERIES 2016(the"Bonds").both of which constitute a part hereof For your legally issued Bonds,as described in said Official Notice of Sale and Preliminary Official Statement.we will pay you par. plus a cash premium of$ for Bonds maturing and bearing interest as follows: Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 2/15/2018 $ 860,000 °-0 2/15/2028 $ 1,340.000 2/15/2019 885,000 0ro 2/15/2029 1,395.000 2/15/2020 915,000 °'0 2/15/2030 1.450.000 0Po 2/15/2021 960,000 °'0 2/15/2031 1,500,000 °o 2/15/2022 1,005.000 0, 2/15/2032 1.535,000 °-o 2/15/2023 1,060,000 0, 2/15/2033 1,575,000 0% 2/15/2024 1,110,000 °0 2/15/2034 1,615,000 0/0 2/15/2025 1,170.000 0, 2/15/2035 1,655.000 4% 2/15/2026 1.230,000 °0 2/15/2036 1.695.000 2/15/2027 1.285.000 Of the principal maturities set forth in the table aboNe,term bonds have been created as indicated in the following table(which may include multiple term bonds,one term bond or no term bond if none is indicated). For those years which have been combined into a "Term Bond".the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year The Term Bonds created are as follows: Year of Principal Term Bond First Mandatory Amount of Interest Maturity Date Redemption Term Bond Rate $ $ °'o $ o,° PREMIUM(DISCOUNT) $ TRUE INTEREST COST °6 The Initial Bonds shall be registered in the name of ,which will, upon payment for the Bonds, be cancelled by the Paying Agent/Registrar The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee),under the Book-Entry-Only System. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. A bank cashier's check or certified check of the Bank. , in the amount of $484.400 00,which represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this bid). and is submitted in accordance with the terms as set forth in the Official Statement and Official Notice of Sale and Bidding Instructions. We agree to accept delivery of the Bonds utilizing the Book-Entry-Only System through DTC and make payment for the Initial Bond in immediately available funds,not later than 10.00 AM,CDT,on August 24,2016,or thereafter on the date the Bonds are tendered for delivery,pursuant to the terms set forth in the Official Notice of Sale and Bidding Instructions. It vv ill be the obligation of the Initial Purchaser of the Bonds to complete the DTC Eligibility Questionnaire The undersigned agrees to complete, execute, and deliver to the Corporation. at least six business days prior to delivery of the Bonds.a certificate relating to the"issue price"of the Bonds in the form and to the effect accompanying the Official Notice of Sale and Bidding Instructions,with such changes thereto as may be acceptable to Norton Rose Fulbright US LLP.Dallas.Texas.Bond Counsel to the Corporation. Respectfully submitted, Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the Southlake Community Enhancement and Development Corporation of the City of Southlake.Texas.subject to and in accordance with the Official Notice of Sale and Bidding Instructions,this the 2nd day of August.2016 President Southlake Community Enhancement and Development Corporation ATTEST Secretary Southlake Community Enhancement and Development Corporation ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of SOUTHLAKE COMMUNITY ENHANCEMENT AND DEVELOPMENT CORPORATION. SALES TAX REVENUE BONDS, SERIES 2016 (the "Bonds"), issued in aggregate principal amount of$ ,as follows: 1 The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Bonds from the Southlake Community Enhancement and Development Corporation(the"Issuer")at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate,if any,have made a bona fide offering to the public of all of the Bonds of each maturity at the respective prices set forth below 3 The initial offering price(expressed as a percentage of principal amount or yield and exclusive of accrued interest)for the Bonds of each maturity at which a substantial amount(at least 10%)of the Bonds of such maturity was sold to the public is as set forth below Principal Principal Amount Year of Offering Price Amount Year of Offering Price Maturing Maturity (%/Yield) Maturing Maturity (%/Yield) 2018 2028 2019 2029 2020 2030 2021 2031 2022 2032 2023 2033 202.1 2034 2025 2035 2026 2036 2027 4 The term"public."as used herein,means persons other than bondhouses,brokers,dealers,and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5 The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members ofthe underwriting syndicate.as the case may be.(have)(have not)purchased bond insurance for the Bonds. The bond insurance, if any, has been purchased from (the "Insurer")for a premium cost of$ (net of any nonguarantee cost.e.g.,rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions(including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such insurance,discounted at a rate equal to the yield on the Bonds which results after recovery of the insurance premium,exceeds the present value of the bond insurance premium. 7 The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986.as amended,on the excludability of interest on the Bonds from the gross income of their owners. EXECUTED and DELIVERED this day of ,2016. (Name of Underwriter or Manager) By (Title) _ .tchRatin „ _,„, Tax-Supported t U.S.A. Southlake, Texas General Government Full Rating Report Ratings New Issue Details Issuer Default Rating AAA Sale Information: $26,700,000 Southlake Community Enhancement and Development New Issue Southlake Community Enhancement Corporation Sales Tax Revenue Bonds, Series 2016, expected to sell via competition on and Development Corporation June 7 Sales Tax Revenue Bonds, Series 2016 AA+ Outstanding Debt Security: A priority lien on proceeds of a three-eighths of 1% sales and use tax levied within General Obligation Bonds AAA the city for the benefit of the Southlake Community Enhancement and Development Certificates of Obligation MA Corporation (SCEDC) Southlake Parks Development Corporation Sales Tax Revenue Bonds' AA+ Purpose: To fund a community entertainment and recreation center and land, buildings and a Upgraded from'AA—'on May 23,2016 equipment or improvements that provide new or expanded business enterprises that create or retain primary jobs Rating Outlook Final Maturity: Feb 15, 2036 Stable Economic Resource Base: Southlake is an affluent community with a population of about 30,000 located 15 miles northwest of Dallas and 10 miles northeast of Fort Worth Key Rating Drivers Issuer Rating: The 'AAA' Issuer Default Rating (IDR) and GO and certificates of obligation ratings reflect the city's exceptionally strong gap-closing capabilities, driven by strong revenue growth and sound expenditure flexibility Sales Tax Bonds: The 'AA+' rating on the SCEDC sales tax revenue bonds and upgrade to AA+' from 'AA—' on the Southlake Parks Development Corporation (SPDC) sales tax revenue bonds reflect Fitch Ratings' expectation of continued solid growth in sales tax revenues and strong debt service coverage that provides ample cushion to absorb a cyclical downturn in revenues Revenue Framework: 'aaa' factor assessment. Southlake's general fund revenues have grown at a pace well above the rate of U S GDP, and Fitch expects this trend to continue The city has significant independent ability to raise revenues based on ample tax rate capacity Expenditure Framework: 'aa' factor assessment. Solid expenditure flexibility reflects strong control over workforce spending. Fiscal 2015 carrying costs, primarily for debt service, are affordable, and principal amortization is rapid Fitch anticipates expenditures to grow in line Analysts with revenues Rebecca Meyer +1 512 215-3733 Long-Term Liability Burden: 'aa' factor assessment. Fitch expects the city's long-term rebecca meyer@fitchratings corn liability burden in relation to personal income, currently 11%, to remain on the low end of Rebecca Moses moderate, consideringlimited issuanceplans and incorporating the potential for an increase in +1 512 215-3739 P 9 rebecca mosesfltchratngs corn overlapping debt. Operating Performance: 'aaa' factor assessment. Fitch expects the city to demonstrate exceptional financial resilience during an economic downturn based on its strong gap-closing capacity and solid reserve levels. www fitchratings corn May 25 2016 !Le _�/� ,`, a Southlake(TX) Scenario Analysis .toezots,os,s, I Reserve Safety Margin in an Unaddressed Stress .-. - Analyst Interpretation of Stetter°Redacts: Ktaa Scena,,o Southlake is expected to maintain a strong financial position through an 80 0% economic downturn,benefit)ng from expenditure flexibility and healthy 10 cm _i�� 4. reserves Robust planning and prudent cost management support Bo 0°s ++ NM 30014, ..al maintenance of a strong financial posit on,evidenced by high reserves In S°o% f '� excess of policy targets.The city's fund balance policy targets a minimum 40 0% 15%of general fund budgeted operas ng expenditures,with the stated opt mum goal of 25%applicable to unassigned general fund reserves 30 Oro Funds in excess of 25%areI rypeca y committed for strategic capital z°0% initatives,helping to reduce growth in the city s indebtedness.A sizable to o°% fiscal 2015 unrestricted general fund balance of$26 million(60%of general fund spending)was driven by the strength of sales tax revenue zein sale suit zeas 2013 sola sols Year t Year., via B The city anticipates a modest Increase in fiscal 2016 reserves based on favorable fiscal year-to-date results. Finanaal Resilience subfactor Assessment. credible Fund Balance bob a as Sae Seen°Parmeters: Year1 Year2 Year3 GOP Assumption(°5 Change) (1.0%) 0.5% 20% Expenditure Assumption 1%Change) 2.0% 2.0% 2.0% Revenue Output(%Change) (l o%) 4.8% 7.0% Inherent Budget Flexe billty Revenues,Expenditures,and Fuad Balance Actuals Scenario Output 2009 2010 2011 2012 2013 2014 201 Year 1 Year 2 Year 3 Total Revenues 31,071 33,289 33,665 35,277 37,649 40,906 43,457 43,022 45,100 48,217 %Change in Revenues 71% 1-1% 48°0 67°6 87% 62% (1.0%) 4.8% 7.0% Total Expenditures 30,142 29,383 31,200 30830 34,894 34,237 35,461 36,170 36,894 37,632 %Change in Expend)tures (25%) 62°% (12%) 132°6 (19%) 36% 2.0% 20% 20% Transfers In and Other Sources 1,002 920 1,570 1,464 1,983 1,601 1,740 1,722 1,806 1,933 Transfers Out and Other Uses 3,500 2,035 5,133 3.000 3,915 4,490 8,160 8,323 8,490 8,659 Net Transfers (2,498) (1,115) 13,563) (1,536) (1,932) (2,889) (6,420) (6,601) (6,684) (6,727) Bond Proceeds and Other One Time Uses - Net Ope rats ng Surplus(+)/Def)cm()After Transfers (1,569) 2,791 (1,098) 2,911 823 3,780 1,575 251 1,522 3,919 Net Operate ng Surplus(+)/Def)fit(-)(°6 of Expend and Transfers Out) (47°6) 89°5 (30s) 86°° 21°., 98% 36°% 06% 34% 8.5% Unrestricted/Unreserved Fund Balance(General Fund) 15,133 17,983 17,012 19,922 20,491 24,517 26,111 25,362 27,883 31,802 Other(Wadable Funds)Analyst Input) - Combined Available Funds Balance(GF+Analyst Input) 15,133 17,983 17,012 19,922 20,491 24,517 26,111 26,362 27,883 31,802 Combe ned Available Fund Bal 1%of Expend and Transfers Out) 450°% 572°0 468% 589% 523°% 633% 599% 59.2% 614% 687% Reserve Safety Mauro Inherent Budget Flexibility Minima/ limited Midrange Hijh Superior Reserve Safety Margin(aaa) 160', 80% 50% 30% 20% Reserve Safety Margin(aa) 120x° 60% 40% 25% 200 Reserve Safety Margin(a) 80% 40% 25°io 206 201 Reserve Safety Margin(6661 30% 20° 200 20% 205 Notes Scenario analysis represents an unaddressed stress onissuerfinances Fitch,downturn scenario assume"-10%GDP dechne In the firstyear,followed by 0 5%and 20%GDP growth in rears 2 and 3,respectively Expenditures are assumed to grow at a 2 04 rate of inflate on Inherent budget flexibility is the analyst's assessment of the Issuer s ability to deal w th fiscal stress through tax and spends ng polecychoices,and determ Ines the multiples used recalculate the reserve safety margin Forfurtherdetails.please see Fitch s UST.,Supported Rating Critesa Southlake Texas 2 May 25 2015 Wiz. - 1 itehRatings • , w 4 - Credit Profile Rating History — GOs Southlake lies on the southern shore of Grapevine Lake within close proximity to Dallas, Fort and COs Worth and the Dallas/Fort Worth International Airport. The largely residential area is Outlook/ characterized by exceptionally high wealth Southlake's high $241,000 per capita market value Rating Action Watch Date reflects a median home price of$622,900 Residential properties comprise about 70% of the AAA Affirmed Stable 5/23/16 fiscal 2016 tax base, followed by commercial properties at 18%, up from 9% in fiscal 2000 AAA Affirmed Stable 3/28/13 AAA Affirmed Stable 7/17/12 While the city calculates it is 83% built out by population, significant commercial capacity AAA Upgraded Stable 5/11/11 remains in its zoned commercial corridors AA+ Revised Stable 4/30/10 AA Affirmed Stable 3/29/10 The city's tax base has a moderate concentration among technology, real estate, AA Affirmed Stable 2/14/08 AA Upgraded Stable 9/25/07 telecommunications, leisure/hotel and distribution interests, with the top two taxpayers AA– Assigned — 3/2/00 accounting for 7% of fiscal 2016 taxable assessed valuation (TAV) New development underway or in the planning phases includes residential properties, hotels, medical and assisted living facilities and office/industrial/warehouse projects Rating History — SCEDC Sales Tax Revenue Framework Bonds Outlook/ The city's diverse general fund revenue stream is driven by property taxes (44% of total fiscal Rating Action Watch Date 2015 revenues)and sales taxes(33%) AA+ Assigned Stable 5/23/16 Southlake's strong 10-year general fund CAGR reflects an 8%sales tax revenue CAGR and a 5% TAV CAGR over the same period Growth prospects are strong as indicated by the Rating History— trajectory of sales tax revenue and commercial development trends Fitch expects that ongoing SPDC Sales Tax Bonds economic growth will be strengthened by near-term completion of significant transportation Outlook/ improvements currently underway Rating Action Watch Date AA+ Upgraded Stable 5/23/16 The cityof Southlake's fiscal 2016 tax rate, $0 462per$100 of TAV, provides ample capacity AA– Affirmed Stable 4/24/14 p p Y AA– Affirmed Stable 3/28/13 below the statutory cap of $2.50 Healthy growth has allowed the city to hold the tax rate AA– Affirmed Stable 7/17/12 AA– Affirmed Stable 8/1/11 steady for 13 consecutive years AA– Revised Stable 4/30/10 A+ Affirmed Stable 9/24/09 A+ Upgraded Stable 9/25/07 Expenditure Framework A Assigned Stable 1/25/06 Public safety consumes about 45%of the city's general fund operating budget. Fitch expects the city's pace of spending to remain in line with revenue growth Fitch does not anticipate pressure on service levels given anticipated modest population growth. Southlake's full control over workforce spending and affordable carrying costs provide a sound level of expenditure flexibility Moderate fiscal 2015 carrying costs of 22% reflect a rapid 10- year 80%amortization rate, which has slowed to a still-healthy 64%with issuance of the series 2016 SCEDC sales tax bonds Long-Term Liability Burden Fitch expects Southlake's long-term liabilities, currently 11% of personal income, to remain moderate given limited debt issuance plans and well-funded pensions The expectation incorporates the potential issuance of overlapping debt, currently $234 million (compared with $126 million of net direct debt inclusive of this SCEDC issuance) This SCEDC issue will fund a community entertainment and recreation center Southlake's Related Criteria fiscal 2016 long-term general fund capital plan is affordable at about$64 million, to be funded U S Tax-Supported Rating Criteria with a combination of cash and debt. Near-term issuance plans are limited to between (April 2016) $5 million and $8 million in fiscal 2017 Southlake typically funds a portion of its annual capital plan with general fund monies through its Strategic Initiatives Fund (SIF) 3)uthiaKe Texas 3 May 2E. 2013 '':-- '""?--, ---1,-:-_-,-, ,:--ti,,,,,,,,--1-ki:,,,,,, ,,,, - - _„,, , „, 17 ,1,-;:-:----•:;:ii:- itchRatings , ,, =%; _„, - _ , ;,,,,,,,,,,,„„_,,,„..„,-,:,,i--, ;„,, , - - :: ' - --- .- .,_' : !: ! -0 tri .,:-J -, -arice;,, ,-„,,,:,_-:.= - „:„-„,;„,„,_ -,,,,_-_-,,,z1,,,,,,, ,,,,,,KT,,, ,:,,,,,,E_;;,_,,,-,-,, / ,,„_,,,,_,„,f, , Southlake's pensions are provided through the Texas Municipal Retirement System, an agent multiple-employer defined benefit plan Under GASB Statement 68, the city reports a fiscal 2015 net pension liability (NPL) of $6 2 million, with fiduciary assets covering 91 4% of total pension liabilities at the plan's 7% investment return assumption Operating Performance Southlake is expected to maintain a strong financial position through an economic downturn, benefiting from expenditure flexibility and healthy reserves For details, see"Scenario Analysis,"page 2. The SIF, which is included in the overall reserve figure and equaled $7 million at fiscal 2015 year-end, was created in fiscal 2006 to reserve general fund monies in excess of the city's optimal 25% of spending level for infrastructure, community enhancement and technology projects. Since fiscal 2006, 67% of SIF funds have been applied to infrastructure projects, as well as for equipment purchases, to build a facility maintenance reserve, and for other projects Sales Tax Bonds The `AA+' rating on the sales tax bonds, which share the same base and a common 1.25x additional bonds test (ABT), is supported by a solid financial cushion and strong growth prospects The coverage provides ample cushion to absorb a downturn in expected revenues in a moderate recession. SPDC pledged revenues and SCEDC-equivalent pledged revenues have grown at a strong 8% CAGR over the past 10 years Fitch anticipates solid future growth, although potentially at a more moderate pace, based on regional trends, ongoing commercial development and roadway improvements expected to increase traffic through the city Southlake Community Enhancement and Development Corporation In May 2015, voters approved a reduction in the Southlake crime control sales tax (in place since 1998)from one-half of 1%to one-eighth of 1%and voted to implement a three-eighths of 1% local sales and use tax for benefit of the SCEDC The SCEDC was created by the city in October 2015 to promote economic development and new and expanded business enterprises and fund a community and entertainment and recreation center For analytical purposes, Fitch has used three-eighths of 1% equivalent sales tax historical data represented by 75% of the Southlake Crime Control District sales tax revenues SCEDC and SPDC Coverage Cushion The SCEDC equivalent sales tax fiscal 2015 pledged revenues of $5 48 million cover maximum annual debt service (MADS) ($2 million in fiscal 2036) a sound 2.7x. Fiscal 2015 SPDC pledged revenues of $7 4 million cover MADS ($1 586 million in fiscal 2022) a strong 4 7x. To evaluate the sensitivity of the dedicated revenue stream to cyclical decline, Fitch considers both revenue sensitivity results (using the same 1% decline in national GDP scenario that supports assessments in the IDR framework) and the largest decline in revenues over the period covered by the revenue sensitivity analysis Fitch's analytical sensitivity tool (FAST) generates a default 1% scenario decline in SCEDC and SPDC pledged revenues based on Fitch's criteria guidance because actual revenue performance would suggest a modest 0 7% and 0% change for SCEDC and SPDC pledged revenues, respectively The largest actual Soutrake Texas 4 clay 25 2010 JIitchRàtings let cumulative decline in historical revenues is a 5 5% decline during fiscal years 2009 and 2010 for SCEDC (8% for SPDC in fiscal 2009) Assuming issuance to the 1.25x ABT, well below actual current coverage, the structure could tolerate a sizable drop in revenues, 2.0x the scenario results and 2.5x the largest actual revenue decline in the review period. Fitch considers these results consistent with the`AA+' rating outcome The sales tax bond ratings would be capped by the city's IDR. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK. HTTPS//FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT VWWV.FITCHRATINGS.COM. 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For Australia, New Zealand,Taiwan and South Korea only Fitch Australia Pty Ltd holds an Australian financial services license(AFS license no. 337123)which authorizes it to provide credit ratings to wholesale clients only Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001 Southlake Texas 5 May 25 2016 PARITY Result Screen Page 1 of 1 10 01 43 a m CDST Upcoming Calendar Overview Compare Summary I Bid Results Southlake Comm Enhancement $24,240,000 Sales Tax Revenue Bonds, Series 2016 The following bids were submitted using PARITY®and displayed ranked by lowest TIC Click on the name of each bidder to see the respective bids Bid Award* Bidder Name TIC ❑ Bank of America Merrill Lynch 2 541181 ❑ Citicroup Global Markets Inc. 2 589740 Hutchinson, Shockey, Erley& Co.2 637256 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields https://www.newissuehome.i-deal.com/Parity/asp/main.asp?frame=content&page=parityRes... 8/2/2016 FirstSouthwest Pi* A Division of iatop Soowities. TABLE OF CONTENTS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Report Page Sources and Uses of Funds . . . . . . . . . . . . . 1 Bond Debt Service . . . . 2 Bond Pricing . . . 5 Bond Summary Statistics . . . . 7 Form 8038 Statistics . . . 9 Proof of Arbitrage Yield . . 10 Aug 2.2016 10:59 am Prepared by FirstSouthwest Old) (Finance 7 012 Southlake 2016:SCEDC-PRICING) ic*FirstSouthwest A Division of!atop Seconder SOURCES AND USES OF FUNDS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Dated Date 08/24/2016 Delivery Date 08/24/2016 Sources. Bond Proceeds. Par Amount 24,450,000 00 Premium 2,168,153 45 26,618,153 45 Uses Project Fund Deposits: Project Fund 26,250,000 00 Delivery Date Expenses. Cost of Issuance 165,383.24 Underwriter's Discount: Underwriter's Discount 202,770.21 26,618,153 45 Note. Final Aug 2,2016 10:59 am Prepared by FirstSouthwest(jId) (Finance 7.012 Southlake 2016.SCEDC-PRICING) Page 1 aPFirstSouthwest A Division of}Hktop Securities. BOND DEBT SERVICE Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Period Ending Principal Interest Debt Service 09/30/2017 869,748.75 869,748 75 09/30/2018 865,000 874,750.00 1,739,750.00 09/30/2019 900,000 839,450.00 1,739,450 00 09/30/2020 940,000 797,950.00 1,737,950 00 09/30/2021 990,000 749,700.00 1,739,700.00 09/30/2022 1,040,000 698,950 00 1,738,950 00 09/30/2023 1,090,000 645,700.00 1,735,700.00 09/30/2024 1,150,000 589,700 00 1,739,700 00 09/30/2025 1,205,000 530,825 00 1,735,825.00 09/30/2026 1,260,000 475,500.00 1,735,500.00 09/30/2027 1,305,000 430,725 00 1,735,725.00 09/30/2028 1,345,000 390,975.00 1,735,975.00 09/30/2029 1,390,000 349,950 00 1,739,950 00 09/30/2030 1,430,000 307,650.00 1,737,650.00 09/30/2031 1,475,000 264,075.00 1,739,075.00 09/30/2032 1,520,000 219,150.00 1,739,150 00 09/30/2033 1,565,000 172,875.00 1,737,875.00 09/30/2034 1,610,000 125,250.00 1,735,250 00 09/30/2035 1,660,000 76,200.00 1,736,200 00 09/30/2036 1,710,000 25,650 00 1,735,650 00 24,450,000 9,434,773.75 33,884,773.75 Note: Final Aug 2,2016 10 59 am Prepared by FirstSouthwest Old) (Finance 7.012 Southlake 2016:SCEDC-PRICING) Page 2 ArstSouthwest A Division of!Cato,securities.. BOND DEBT SERVICE Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Period Annual Ending Principal Interest Debt Service Debt Service 02/15/2017 423,723.75 423,723 75 08/15/2017 446,025.00 446,025 00 09/30/2017 869,748.75 02/15/2018 865,000 446,025.00 1,31 1,025 00 08/15/2018 428,725 00 428,725.00 09/30/2018 1,739,750.00 02/15/2019 900,000 428,725.00 1,328,725.00 08/15/2019 410,725.00 410,725.00 09/30/2019 1,739,450 00 02/15/2020 940,000 410,725.00 1,350,725.00 08/15/2020 387,225.00 387,225.00 09/30/2020 1,737,950 00 02/15/2021 990,000 387,225.00 1,377,225.00 08/15/2021 362,475.00 362,475.00 09/30/2021 1,739,700 00 02/15/2022 1,040,000 362,475 00 1,402,475.00 08/15/2022 336,475 00 336,475.00 09/30/2022 1,738,950 00 02/15/2023 1,090,000 336,475.00 1,426,475.00 08/15/2023 309,225.00 309,225.00 09/30/2023 1,735,700 00 02/15/2024 1,150,000 309,225 00 1,459225.00 08/15/2024 280,475.00 280,475.00 09/30/2024 1,739,700 00 02/15/2025 1,205,000 280,475.00 1,485,475.00 08/15/2025 250,350.00 250,350.00 09/30/2025 1,735,825.00 02/15/2026 1,260,000 250,350.00 1,510,350 00 08/15/2026 225,150 00 225,150 00 09/30/2026 1,735,500.00 02/15/2027 1,305,000 225,150 00 1,530,150 00 08/15/2027 205,575 00 205,575.00 09/30/2027 1,735,725.00 02/15/2028 1,345.000 205,575 00 1,550,575 00 08/15/2028 185,400 00 185,400 00 09/30/2028 1,735,975.00 02/15/2029 1,390,000 185,400 00 1.575,400 00 08/15/2029 164,550.00 164,550 00 09/30/2029 1.739,950.00 02/15/2030 1,430,000 164,550.00 1,594,550 00 08/15/2030 143,100 00 143,100 00 09/30/2030 1,737,650.00 02/15/2031 1,475,000 143,100.00 1,618,100 00 08/15/2031 120,975 00 120,975 00 09/30/2031 1,739,075.00 02/15/2032 1,520,000 120,975 00 1,640.975 00 08/15/2032 98,175 00 98,175.00 Aug 2,2016 10:59 am Prepared by FirstSouthwest Old) (Finance 7.012 Southlake 2016•SCEDC-PRICING) Page 3 FirstSouthwest TIP A Division of I iitop Securities_ BOND DEBT SERVICE Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Period Annual Ending Principal Interest Debt Service Debt Service 09/30/2032 1,739,150 00 02/15/2033 1,565,000 98,175.00 1,663,175.00 08/15/2033 74,700.00 74,700.00 09/30/2033 1,737,875.00 02/15/2034 1,610,000 74,700 00 1,684,700.00 08/15/2034 50,550.00 50,550 00 09/30/2034 1,735,250 00 02/15/2035 1,660,000 50,550.00 1,710,550.00 08/15/2035 25,650.00 25,650 00 09/30/2035 1,736,200 00 02/15/2036 1,710,000 25,650 00 1,735,650.00 09/30/2036 1,735,650.00 24,450,000 9,434,773.75 33,884,773.75 33,884,773.75 Note. 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Q 7 C) a) 3 O 1 L_ Lc. t >, a) L C- Q a 1 C ade t C C) F - '0 itC N liN Mw$ 1 N {L a y C o 7 Q FlrstSauthwest A Division of itiltop Stourlies, BOND SUMMARY STATISTICS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Dated Date 08/24/2016 Delivery Date 08/24/2016 First Coupon 02/15/2017 Last Maturity 02/15/2036 Arbitrage Yield 2 414944% True Interest Cost(TIC) 2.533889% Net Interest Cost(NIC) 2.637741% All-In TIC 2.600934% Average Coupon 3.331797% Average Life(years) 11.582 Duration of Issue(years) 9 498 Par Amount 24,450,000.00 Bond Proceeds 26,618,153.45 Total Interest 9,434,773.75 Net Interest 7,469,390.51 Total Debt Service 33,884,773.75 Maximum Annual Debt Service 1,739,950.00 Average Annual Debt Service 1,739,911.36 Underwriter's Fees(per$1000) Average Takedown Other Fee 8.293260 Total Underwriter's Discount 8.293260 Bid Price 108 038377 Par Average Average Bond Component Value Price Coupon Life Bond Component 19,470,000 00 111 136 3 492% 9.813 Term Bond 4,980,000.00 100 000 3 000% 18 495 24,450,000 00 11.582 Aug 2,2016 10 59 am Prepared by FirstSouthwest(jld) (Finance 7.012 Southlake 2016•SCEDC-PRICING) Page 7 FirstSouthwest A Nvision of IOW*Samekies. BOND SUMMARY STATISTICS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers All-In Arbitrage TIC TIC Yield Par Value 24,450,000.00 24,450,000.00 24,450,000.00 +Accrued Interest +Premium(Discount) 2,168,153.45 2,168,153 45 2,168,153 45 -Underwriter's Discount -202,770.21 -202,770.21 -Cost of Issuance Expense -165,383.24 -Other Amounts Target Value 26,415,383.24 26,250,000.00 26,618,153.45 Target Date 08/24/2016 08/24/2016 08/24/2016 Yield 2.533889% 2 600934% 2.414944% Note• Final Aug 2,2016 10:59 am Prepared by FirstSouthwest(jld) (Finance 7 012 Southlake 2016:SCEDC-PRICING) Page 8 aPFirstSouthvvest A Division of t//top Secuakies_ FORM 8038 STATISTICS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Dated Date 08/24/2016 Delivery Date 08/24/2016 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Bond Component: 02/15/2018 865,000 00 4.000% 104.849 906,943 85 865,000.00 02/15/2019 900,000 00 4.000% 107.954 971,586.00 900,000.00 02/15/2020 940,000 00 5.000% 114.106 1,072,596.40 940,000 00 02/15/2021 990,000 00 5 000% 117 414 1,162,398 60 990,000 00 02/15/2022 1,040,000.00 5 000% 120.136 1,249,414 40 1,040,000.00 02/15/2023 1,090,000.00 5 000% 122.487 1,335,108.30 1,090,000.00 02/15/2024 1,150,000.00 5 000% 124 821 1,435,441.50 1,150,000 00 02/15/2025 1,205,000 00 5.000% 126.755 1,527,397.75 1,205,000 00 02/15/2026 1,260,000.00 4 000% 119 855 1,510,173 00 1,260,000 00 02/15/2027 1,305,000.00 3 000% 108 862 1,420,649 10 1,305,000 00 02/15/2028 1,345,000.00 3.000% 107.073 1,440,131.85 1,345,000 00 02/15/2029 1,390,000.00 3 000% 105.579 1,467,548 10 1,390,000.00 02/15/2030 1,430,000.00 3.000% 104.108 1,488,744 40 1,430,000 00 02/15/2031 1,475,000.00 3.000% 102.830 1,516,742.50 1,475,000 00 02/15/2032 1,520,000.00 3.000% 101.988 1,550,217.60 1,520,000.00 02/15/2033 1,565,000.00 3 000°ro 101 154 1,583,060.10 1,565,000 00 Term Bond. 02/15/2034 1,610,000.00 3.000% 100.000 1,610,000.00 1,610,000 00 02/15/2035 1,660,000.00 3.000% 100 000 1,660,000 00 1,660,000.00 02/15/2036 1,710,000.00 3.000% 100 000 1,710,000 00 1,710,000 00 24,450,000.00 26,618,153 45 24,450,000 00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 02/15/2036 3.000% 1,710,000 00 1,710,000.00 Entire Issue 26,618,153 45 24,450,000.00 11.2723 2 4149% Proceeds used for accrued interest 0 00 Proceeds used for bond issuance costs(including underwriters'discount) 368,153 45 Proceeds used for credit enhancement 0.00 Proceeds allocated to reasonably required reserve or replacement fund 0 00 Note: Final Aug 2,2016 10:59 am Prepared by FirstSouthwest(jld) (Finance 7 012 Southlake 2016:SCEDC-PRICING) Page 9 FirstSouthwest 4* A Division of/Moo Seturkies_ PROOF OF ARBITRAGE YIELD Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds,Series 2016 Final Numbers Present Value to 08/24/2016 Date Debt Service @ 2.4149440333% 02/15/2017 423,723.75 418,919.77 08/15/2017 446,025.00 435,707 14 02/15/2018 1,31 1,025 00 1,265,417.60 08/15/2018 428,725.00 408,873 66 02/15/2019 1,328,725 00 1,252,082.22 08/15/2019 410,725.00 382,416.22 02/15/2020 1,350,725 00 1,242,623.40 08/15/2020 387,225.00 351,984.39 02/15/2021 1,377,225 00 1,236,950.53 08/15/2021 362,475 00 321,671.75 02/15/2022 1,402,475.00 1,229,751.64 08/15/2022 336,475 00 291,516 07 02/15/2023 1,426,475 00 1,221,128.29 08/15/2023 309,225 00 261,552 66 02/15/2024 1,459,225 00 1,219,534 90 08/15/2024 280,475.00 231,608.00 02/15/2025 1,485,475.00 1,212,026.64 08/15/2025 250,350.00 201,828.20 02/15/2026 8,455,350.00 6,735,242.76 08/15/2026 120,975 00 95,214.86 02/15/2027 120,975 00 94,078.88 08/15/2027 120,975.00 92,956.46 02/15/2028 120,975.00 91,847.43 08/15/2028 120,975 00 90,751.62 02/15/2029 120,975 00 89,668 90 08/15/2029 120,975.00 88,599 09 02/15/2030 120,975 00 87,542.04 08/15/2030 120,975 00 86,497 61 02/15/2031 120,975.00 85,465.64 08/15/2031 120,975.00 84,445 97 02/15/2032 1,640.975.00 1,131,807.86 08/15/2032 98,175.00 66,905.08 02/15/2033 1,663,175 00 1,119,911.06 08/15/2033 74,700 00 49,699.68 02/15/2034 1,684,700.00 1,107,498 14 08/15/2034 50,550.00 32,834.39 02/15/2035 1,710,550 00 1,097,819.78 08/15/2035 25,650 00 16,265 60 02/15/2036 1,735,650.00 1,087,507.54 33,246,973.75 26,618,153.45 Aug 2,2016 10:59 am Prepared by FirstSouthwest(jld) (Finance 7.012 Southlake 2016 SCEDC-PRICING) Page 10 FirstSouthwest 4* A D v#sfon of Whop Securities.. PROOF OF ARBITRAGE YIELD Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 2016 Final Numbers Proceeds Summary Delivery date 08/24/2016 Par Value 24,450,000 00 Premium(Discount) 2,168,153 45 Target for yield calculation 26,618,153.45 Aug 2,2016 10 59 am Prepared by FirstSouthwest(jld) (Finance 7.012 Southlake 2016 SCEDC-PRICING) Page 11 FirstSouthwest 4:411P A Division of taros)Securers.. PROOF OF ARBITRAGE YIELD Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds, Series 20 16 Final Numbers Assumed Call/Computation Dates for Premium Bonds Net Present Value(NPV) Bond Maturity Call Call to 08/24/2016 Component Date Rate Yield Date Price n 2 4149440333% BOND 02/15/2027 3.000% 1.970% 02/15/2026 100.000 -51,326 72 BOND 02/15/2028 3 000% 2.170% 02/15/2026 100 000 -28,837 90 BOND 02/15/2029 3 000% 2.340% 02/15/2026 100 000 -9,036.14 BOND 02/15/2030 3.000% 2.510% 02/15/2026 100 000 11,739 13 BOND 02/15/2031 3.000% 2.660% 02/15/2026 100 000 30,959.04 Rejected Call/Computation Dates for Premium Bonds Net Present Value(NPV) Bond Maturity Call Call to 08/24/2016 Increase Component Date Rate Yield Date Price @ 2.4149440333% to NPV BOND 02/15/2027 3.000% 1.970% -45,353.36 5,973.36 BOND 02/15/2028 3 000% 2.170% -16,671.03 12,166.87 BOND 02/15/2029 3.000% 2.340% 9,60199 18,638.13 BOND 02/15/2030 3.000% 2.510% 37,004.33 25,265.20 BOND 02/15/2031 3.000% 2.660% 63,152.67 32,193.63 Note• Final Aug 2,2016 10:59 am Prepared by FirstSouthwest(jId) (Finance 7.012 Southlake 2016:SCEDC-PRICING) Page 12