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Series 2017 - General Obligation Refunding Bonds and Certificates of Obligation Bonds aPFirstSouthwest A Division of Hilltop Securities. Southiake, TX General Obligation Refunding Bonds, Series 2017 Tax & WW & SS Revenue Certificates of Obligation, Series 2017 CONTACT: CONTACT: CONTACT: Jim Sabonis, Managing Director Andre Ayala, Director Jorge Delgado, Associate Vice President 1201 Elm Street, Suite 3500 1201 Elm Street, Suite 3500 1201 Elm Street, Suite 3500 Dallas, TX 75270 Dallas, TX 75270 Dallas, TX 75270 Phone: 214-953-4195 Phone: 214-953-4184 Phone: 214-859-1714 Email: Email: Email: jim.sabonis(a�hilltopsecurities.com andre.avala@hilltopsecurities.com forge.delgado(a�hilltopsecurities.com Member FINRA/SIPC/NYSE I©2017 Hilltop Securities Inc. All right reserved. SOUTHLAKE, TEXAS enerat-ObffgatiorrRefunding Bonds;Series 2O Cerificates of Obligation, Series 2017 ISSUER City of Southlake, Texas Telephone. (817) 748-8042 Sharen Jackson Email: 1400 Main Street, Suite 440 sjackson(aci.southlake.tx.us 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 Iim.sabonis(u�hilltopsecurities.com andre.ayala(cilhil ltopsecurities.com penny.brooker(a�hilltopsecurities.com jorge.delgado a(�,hilltopsecurities.com BOND COUNSEL/ DISCLQSURE_COUNSFI 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.hacklera(�nortonrosefulbright.com PURCHASER Telephone Cmail: PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Telephone: (214)468-6411 Michael Moore, Seth Crone Email 2001 Bryan Streets 11th Floor k/• •- its, -€►•s II" Of • I Dallas, TX 75201 `Preliminary,subject to change. SOUTHLAKE, TEXAS Generat`Ob1IgatioTr Refund ng Butts;Series-2017 Cerificates of Obligation, Series 2017 RATING AGENCIES Fitch Ratings Telephone. (512) 215-3726 Jose Acosta Email. 111 Congress Ave., Suite 2010 jose.acosta a(�fitchratings.com Austin, TX 78701 S&P Telephone. (972) 367-3345 Andy Hobbs and Dan Pulter Email 500 North Akard, Suite 3200 andy.hobbs(a spcglobal.com Dallas, TX 75201 Daniel.Pulter(a�spglobal.com VERIFICATION AGENCY Grant Thornton LLP Telephone. (612) 677-5109(Stephanie) Stephanie Seroogy and Jill Vollbrecht (612)677-5166 (Jill) 500 US Bank Plaza N Email: 200 S. 6th Street, Suite 1400 Stephanie.Seroogy(c�us.gt.com Minneapolis, MN 55402 jill.vollbrecht(a us.gt.com Preliminary,subject[o change E FSCConttnuingOistionottServices PRELIMINARY OFFICIAL STATEMENT g Ratin s AWAWA,of Hap:,UNARM : S&P: "AAA" Dated May 26,2017 Fitch: "AAA" (see"OTHER INFORMATION- C Ratings"herein) NEW ISSUE-Book-Entry-Only In the opinion of Bond Counsel,interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law,subject to the matters described under"TAX MATTERS"herein,including the alternative minimum tax on corporations. 1,2 THE BONDS WILL NOT BE DESIGNATED AS c "QUALIFIED TAX-EXEMPT OBLIGATIONS"FOR FINANCIAL INSTITUTIONS -c $8,065,000* CITY OF SOUTHLAKE,TEXAS (Tarrant and Denton Counties) .w GENERAL OBLIGATION REFUNDING BONDS,SERIES 2017 Dated Date: June 1,2017 Due:February 15,as shown on page 2 ,y n Interest Accrues from date of delivery PAYMENT TERMS . Interest on the $8,065,000* City of Southlake, Texas, General Obligation Refunding Bonds, Series 2017 (the "Bonds"),will accrue from the date of delivery(anticipated to be July 6,2017),and will be payable February 15 and August 15 of each o year commencing August 15,2017,until maturity or prior redemption,and will be calculated on the basis of a 360-day year consisting W .t of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The " Depository Trust Company("DTC")pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of$5,000 or integral multiples thereof within a maturity. No physical delivery of the Bonds will be o ° 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 OBLIGATIONS -Book-Entry-Only System" herein). The initial Paying = _ — Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent/Registrar"). 9. r=_ AUTHORITY FOR ISSUANCE ..The Bonds are issued pursuant to the City's Home Rule Charter,the Constitution and general laws of , the State of Texas(the"State"),including particularly Texas Government Code,Chapter 1207,as amended,and are direct obligations of the City payable from a continuing annual ad valorem tax levied on all taxable property within the City,within the limits prescribed fi by law,as provided in the ordinance authorizing the Bonds(the"Bond Ordinance")(see"THE OBLIGATIONS-Authority for Issuance of the Bonds"). PURPOSE. Proceeds from the sale of the Bonds will be used to(i)refund the portion of the City's outstanding debt shown in Schedule I(the"Refunded Obligations")to achieve a present value debt service savings,and(ii)pay costs of professional services including the costs of issuance of the Bonds. See"PLAN OF FINANCING—Purpose for the Bonds"and Schedule I herein. U � ";_-2 c CUSIP PREFIX: 844424 = MATURITY SCHEDULE&9 DIGIT CUSIP Shown on Page 2 - SEPARATE IssUEs...The Bonds are being offered by the City concurrently with the"City of Southlake,Texas,Tax and Waterworks and Sewer System(Limited Pledge) Revenue Certificates of Obligation, Series 2017"(the"Certificates"), under a common Official J1 Statement and such Bonds and Certificates hereinafter sometimes referred to collectively as the "Obligations." The Bonds and Certificates are separate and distinct securities offerings being issued and sold independently except for the common Official Statement, 5, and,while the Bonds and Certificates share certain common attributes,each issue is separate from the other and should be reviewed and analyzed independently,including the type of obligation being offered,its terms for payment,the security for its payment,the rights of C the holders,and other features. LEGALITY. The Bonds are offered for delivery when,as and if issued and received by the Initial Bond Purchaser(defined herein)and subject to the approving opinion of the Attorney General of Texas and the opinion of Norton Rose Fulbright US LLP,Bond Counsel, G .r Dallas,Texas,(see Appendix C,"Form of Bond Counsel's Opinion(THE BONDS)"). DELIVERY It is expected that the Bonds will be available for delivery through DTC on July 6,2017 BIDS DUE TUESDAY,JUNE 6, 2017 AT 10:30 AM, CDT — E 9 *Preliminary,subject to change. c MATURITY SCHEDULE* CUSIP Prefix: 844424(I) Price Principal Interest or CUSIP Amount Maturity Rate Yield Suffix' $ 695,000 2/15/2019 710,000 2/15/2020 735,000 2/15/2021 750,000 2/15/2022 780,000 2/15/2023 810.000 2/15/2024 845,000 2/15/2025 880,000 2/15/2026 910,000 2/15/2027 950,000 2/15/2028 (Interest accrues from the date of delivery) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data set forth herein is provided by CUSIP Global Services managed by S&P Global Market Intelligence on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP services.Neither the City, the Financial Advisor nor the Initial Purchaser shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. OPTIONAL REDEMPTION. . .The City reserves the right,at its option,to redeem Bonds having stated maturities on February 15, 2028, in whole or in part, in principal amounts of$5,000, or any integral multiple thereof, on February 15, 2027, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — Optional Redemption of the Obligations"). *Preliminary,subject to change 2 PRELIMINARY OFFICIAL STATEMENT' Ratings: >s FSCContinul i ureSemces S&P: "AAA" sDh - *OtosSocuntus Dated May 26,2017 Fitch: "AAA" (see"OTHER INFORMATION- _,• NEW ISSUE-Book-Entry-Only Ratings"herein) s In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. THE CERTIFICATES WILL NOT BE DESIGNATED 9 AS"OUALIFIED TAX-EXEMPT OBLIGATIONS"FOR FINANCIAL INSTITUTIONS $5,505,000* 1,2 CITY OF SOUTHLAKE,TEXAS (Tarrant and Denton Counties) TAX AND WATERWORKS AND SEWER SYSTEM(LIMITED PLEDGE)REVENUE • - CERTIFICATES OF OBLIGATION,SERIES 2017 • Dated Date:June 1,2017 Due:February 15,as shown on page 4 Interest accrues from date of delivery • PAYMENT TERMS. Interest on the $5,505,000* City of Southlake, Texas, Tax and Waterworks and Sewer System(Limited Pledge) • r Revenue Certificates of Obligation,Series 2017(the"Certificates")will accrue from the date of delivery(anticipated to be July 6,2017), • a and will be payable February 15 and August 15 of each year commencing February 15,2018,until maturity or prior redemption,and will o.• ti be calculated on the basis of a 360-day year consisting of twelve 30-day months.The definitive Certificates will be initially registered and >,:% delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC")pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof within a maturity • c No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of,premium,if any,and interest on the • Certificates will be payable by the Paying Agent/Registrar to Cede & Co.,which will make distribution of the amounts so paid to the f• s participating members of DTC for subsequent payment to the beneficial owners of the Certificates(see"THE OBLIGATIONS -Book- Entry-Only System"herein). The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company,N.A.,Dallas,Texas 15 (see"THE OBLIGATIONS-Paying Agent/Registrar"). _� AUTHORITY FOR ISSUANCE . The Certificates are issued pursuant to the City's Home Rule Charter,the Constitution and general laws of the State of Texas(the"State"),particularly Subchapter C of Chapter 271,Texas Local Government Code, as amended, and constitute • direct obligations of the City of Southlake,Texas,(the"City"),payable from a combination of(i)the levy and collection of an annual ad valorem tax,within the limits prescribed by law,on all taxable property within the City,and(ii)a limited pledge(not to exceed$1,000) of the Net Revenues from the operation of the City's combined Waterworks and Sewer System,as provided in the ordinance authorizing the Certificates(the"Certificate Ordinance")(see"THE OBLIGATIONS-Authority for Issuance of the Certificates"). • s = PURPOSE. Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for(i) • 5 the construction of public works,to wit:(a)constructing and improving streets and sidewalks,including the acquisition of land and rights- '•-= of-way therefor,and(b)improvements and extensions to the City's combined Waterworks and Sewer System,including the purchase of 1 9 land,rights-of-way,and equipment therefor and(ii)professional services rendered in relation to such projects and the financing thereof • F o CUSIP PREFIX: 844424 • = MATURITY SCHEDULE&9 DIGIT CUSIP • =•=. See Schedule on Page 4 SEPARATE ISSUES. .The Certificates are being offered by the City concurrently with the"City of Southlake,Texas,General Obligation 5 2• g Refunding Bonds, Series 2017" (the "Bonds"), under a common Official Statement, and such Bonds and Certificates are hereinafter 1 sometimes referred to collectively as the"Obligations."The Bonds and Certificates are separate and distinct securities offerings being 3 issued and sold independently except for the common Official Statement, and, while the Bonds and Certificates share certain common attributes,each issue is separate from the other and should be reviewed and analyzed independently,including the type of obligation being • offered,its terms for payment,the security for payment,the rights of the holders and other features. LEGALITY The Certificates are offered for delivery when, as and if issued and received by the Initial Certificate Purchaser(defined herein)and subject to the approving opinion of the Attorney General of Texas and the opinion of Norton Rose Fulbright US LLP,Bond _ - Counsel,Dallas,Texas,(see Appendix D,"Form of Bond Counsel's Opinion(THE CERTIFICATES)"). DELIVER% It is expected that the Certificates will be available for delivery through DTC on July 6,2017. • '= BIDS DUE TUESDAY,JUNE 6, 2017 AT 11:00 AM, CDT 77, • *Preliminary,subject to change. • — c ._ MATURITY SCHEDULE* CUSIP Prefix: 844424(I) Price Price Principal 15-Feb Interest or CUSIP Principal 15-Feb Interest or CUSIP Amount Maturity Rate Yield Suffix(') Amount Maturity Rate Yield Suffix(') $ 180,000 2018 $ 275,000 2028 200,000 2019 290,000 2029 205,000 2020 300.000 2030 215,000 2021 310,000 2031 220,000 2022 320,000 2032 230,000 2023 330,000 2033 235,000 2024 340,000 2034 245,000 2025 350,000 2035 255,000 2026 365,000 2036 265,000 2027 375,000 2037 (Interest to accrue from the date of delivery.) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data set forth herein is provided by CUSIP Global Services managed by S&P Global Market Intelligence on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP services. Neither the City, the Financial Advisor nor the Initial Purchaser shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. OPTIONAL REDEMPTION The City reserves the right,at its option,to redeem Certificates having stated maturities on or after February 15,2028.in whole or in part,in principal amounts of$5,000,or any integral multiple thereof,on February 15,2027,or any date thereafter,at the par value thereof plus accrued interest to the date of redemption(see"THE OBLIGATIONS—Optional Redemption of the Obligations"). *Preliminary,subject to change. 4 For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission,as amended(the"Rede')and in effect on the date of this Prehmmary Official Statement,this document constitutes a Prelinunary Official Statement of the City that has been deemed'final"by the City as of its date except for the omission of no more than the information permitted by the Rule. No dealer,broker,salesman or other person has been authorized by the City or the Initial Purchaser to give any information,or to make any representations other than those contained to this Preliminary Oficial Statement,and if given or made,inch other information or representations must not he relied upon as having been authorized by the City or the Initial Purchaser This Preliminary Official Statement does not conshhite an offer to sell Obligations in any Jurisdiction to any person to whom it is unlawfid to make such offer in such jurisdiction. Certain information set forth herein has been obtained from the City 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 Preliminary Official Statement nor any sale made hereunder shall,under any circumstances,create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof.See"CONTINUING DISCLOSURE OF INFORMATION"for a description of the City's undertaking to provide certain information on a continuing basis. IN CONNECTION WITH THE OFFERING OF THE OBLIGATIONS, THE INITIAL PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINT'AIN THE ILIARKET PRICES OF THE OBLIGATIONS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. THE OBLIGATIONS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES 4ND EXCHANGE COMMISSION AND('ONSEO(IENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION,QUALIFICATION,OR EXEMPTION OF THE OBLIGATIONS IN ACCORDANCE WITH APPLICABLE SEC(IRITIE:S LAW PROVISIONS OF THE JURISDICTION IN WHICH THE OBLIGATIONS HAVE E BEEN REGISTERED,QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION NONE THE CITY,THE INITIAL BOND PURCHASER,THE INITIAL CERTIFICATE 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 VE 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 MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. The agreements of the City and others related to the Obligations 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 Obligations is to be construed as constituting an agreement with the purchasers of the Obligations. 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 PRELIMINARY OFFICIAL STATEMENT SUMMARY 6 OTHER INFORMATION 37 RATINGS 37 CITY OFFICIALS,STAFF AND CONSULTANTS 9 LITIGATION 37 ELECTED OFFICIALS 9 REGISTRATION AND QUALIFICATION OF OBLIGATIONS SELECTED ADMINISTRATIVE STAFF 9 FOR SALE 37 CONSULTANTS AND ADVISORS 9 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC INTRODUCTION 10 FUNDS IN TEXAS 37 LEGAL OPINION AND NO LITIGATION CERTIFICATE 38 PLAN OF FINANCING 10 FINANCIAL ADVISOR 38 INITIAL PURCHASER FOR THE BONDS. 38 THE OBLIGATIONS 12 INITIAL PURCHASER FOR THE CERTIFICATES 38 TAX INFORMATION 17 FORW ARD-LOOKING STATEMETNS DISCLAIMER 39 TABLE 1 - VALUATION,EXEMPTIONS AND GENERAL CERTIFICATE OF THE OFFICIAL STATEMENT 39 OBLIGATION DEBT .21 SCHEDULE OF REFUNDED OBLIGATIONS SCHEDULE I TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY 22 APPENDICES TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT GENERAL INFORMATION REGARDING THE CITY A HISTORY 23 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT B TABLE 4 -TAX RATE,LEVY AND COLLECTION HISTORY .23 FORM OF BOND COUNSEL'S OPINION(THE BONDS) C TABLE 5 -TEN LARGEST TAXPAYERS. 24 FORM OF BOND COUNSEL'S OPINION(THE CERTIFICATES) D TABLE 6 -TAX ADEQUACY .24 TABLE 7 -ESTIMATED OVERLAPPING DEBT 25 The cover pages hereof, this page, the schedule and the appendices included herein and any addenda,supplement or amendment hereto,are DEBT INFORMATION 26 part of the Preliminary Official Statement. TABLE 8 - PRO-FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS .26 TABLE 9- INTEREST AND SINKING FUND BUDGET PROJECTION .27 TABLE 10 -COMPUTATION OF SELF SUPPORTING DEBT 27 TABLE I I-AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS .27 TABLE 12-OTHER OBLIGATIONS 28 FINANCIAL INFORMATION 29 TABLE 13 -CHANGE IN NET ASSETS 29 TABLE 13A-GENERAL FUND REVENUES AND EXPENDITURES .30 TABLE 14-MUNICIPAL SALES TAX HISTORY .31 TABLE 15-CURRENT INVESTMENTS 33 TAX MATTERS 34 CONTINUING DISCLOSURE OF INFORMATION 36 5 PRELIMINARY"OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Preliminary Official Statement. The offering of the Obligations to potential investors is made only by means of this entire Preliminary Official Statement. No person is authorized to detach this summary from this Preliminary Official Statement or to otherwise use it without the entire Preliminary Official Statement. THE CITY ... The City of Southlake,Texas(the"City")is a political subdivision and municipal corporation of the State of Texas(the"State"), located in Tarrant and Denton Counties,Texas. The City covers approximately 23 square miles(see"INTRODUCTION-Description of the City"). THE BONDS ... The Bonds are issued as$8,065,000* General Obligation Refunding Bonds. Series 2017 The Bonds are issued as serial bonds maturing February 15 in the each of the years 2019 through 2028,inclusive(see"THE OBLIGATIONS"—Description of the Obligations"). THE CERTIFICATES The Certificates are issued as $5,505,000* Tax and Waterworks and Sewer System(Limited Pledge) Revenue Certificates of Obligation,Series 2017(the"Certificates"). The Certificates are issued as serial certificates maturing February 15 in each of the years 2018 through 2036, inclusive(see"THE OBLIGATIONS-Description of the Obligations"). PAYMENT OF INTEREST ON THE BONDS .. Interest on the Bonds accrues from the date of delivery(anticipated to be July 6,2017),and is payable August 15,2017,and each August 15 and February 15 thereafter until maturity or prior redemption(see"THE OBLIGATIONS-Description of the Obligations"). PAYMENT OF INTEREST ON THE CERTIFICATES Interest on the Certificates accrues from the date of delivery(anticipated to be July 6, 2017), and is payable February 15 and August 15 of each year,commencing February 15,2018,until maturity or prior redemption(see"THE OBLIGATIONS-Description of the Obligations"). AUTHORITY FOR ISSUANCE OF THE BONDS... .. The Bonds are issued pursuant to the City's Home Rule Charter,the Constitution and general laws of the State of Texas(the"State"),including particularly Chapter 1207,Texas Government Code,as amended,and an ordinance passed by City Council(the"Bond Ordinance")(see"THE OBLIGATIONS—Authority for Issuance of the Bonds"). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES The Certificates are issued pursuant to the City's Home Rule Charter, the Constitution and general laws of the State, including particularly Subchapter C of Chapter 271, Texas Local Government Code,as amended,and an ordinance passed by the City Council(the"Certificate Ordinance")(see"THE OBLIGATIONS-Authority for Issuance of the Certificates"). SECURITY FOR THE BONDS .. The Bonds constitute direct obligations of the City,payable from the levy and collection of a direct and continuing annual ad valorem tax,within the limits prescribed by law,on all taxable property located within the City(see"THE OBLIGATIONS-Security and Source of Payment of the Bonds"). SECURITY FOR THE CERTIFICATES The Certificates constitute direct obligations of the City,payable from a combination of(i)the levy and collection of an annual ad valorem tax, within the limits prescribed by law, on all taxable property located within the City,and(ii)a limited pledge(not to exceed$1.000)of the Net Revenues from the operation of the City's combined Waterworks and Sewer System, as provided in the Certificate Ordinance (see "THE OBLIGATIONS — Security and Source of Payment of the Certificates"). *Preliminary,subject to change. 6 OPTIONAL REDEMPTION FOR THE OBLIGATIONS The City reserves the right,at its option,to redeem Obligations having stated maturities on or after February 15, 2028, in whole or in part, in principal amounts of$5,000, or any integral multiple thereof, on February 15, 2027, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption(see"THE OBLIGATIONS—Optional Redemption of the Obligations"). TAX EXEMPTION .... In the opinion of Bond Counsel,the interest on the Obligations will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption"TAX MATTERS",including the alternative minimum tax on corporations. USE OF PROCEEDS FOR THE BONDS Proceeds from the sale of the Bonds will be used to (i) refund the portion of the City's outstanding debt shown in Schedule I(the"Refunded Obligations")to achieve a present value debt service savings,and(ii)pay costs of professional services including the costs of issuance of the Bonds. See"PLAN OF FINANCING—Purpose for the Bonds"and Schedule I herein. USE OF PROCEEDS FOR THE CERTIFICATES .. Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for(i)the construction of public works,to wit: (a)constructing and improving streets and sidewalks, including the acquisition of land and rights-of-way therefor, and(b)improvements and extensions to the City's combined Waterworks and Sewer System, including the purchase of land, rights-of-way, and equipment therefor and (ii) professional services rendered in relation to such projects and the financing thereof. RATINGS FOR THE OBLIGATIONS The Obligations have been rated"AAA"by S&P Global Ratings,a division of S&P Global Inc. ("S&P"), and "AAA" by Fitch Ratings ("Fitch"), without regard to credit enhancement (see "OTHER INFORMATION-Ratings"). BOOK-ENTRY-ONLY SYSTEM .... The definitive Obligations will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial , ownership of the Obligations may be acquired in denominations of$5,000 or integral multiples thereof within a maturity. No physical delivery of the Obligations will be made to the beneficial owners thereof. Principal of,premium,if any,and interest on the Obligations will be payable by the Paying Agent/Registrar to Cede&Co.,which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Obligations(see"THE OBLIGATIONS-Book-Entry-Only System"). PAYMENT RECORD... .... .. The City has never defaulted in payment of its general obligation tax debt. 7 SELECTED FINANCIAL INFORMATION G 0 Ratio of Fiscal Taxable Tax Debt G O.Tax Debt G 0 Tax Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9/30 Population)) Valuation(2) Per Capita ofYearl8t Valuation Capita 2013 27,045 $ 5,749,713,593 (3) $212,598 $ 153,820,000 2.68% $ 5,688 2014 27,500 5,800.769,814 (4) 210,937 144,995,000 2.50% 5,273 2015 27,833 6,161,479,056 (5) 221,373 126,855,000 2.06% 4,558 2016 28,290 6,262,979,418 (6) 221,385 112,935,000 1 80% 3,992 2017 28,880 6,859,493,846 (7) 237,517 100,770,000 (9) 1.47% (9) 3,489 (9) (1) Source:City officials. (2) As reported by the Appraisal Districts on City's annual State Property Tax Board Reports;subject to change during the ensuing year (3) Includes taxable incremental value of approximately$290,288,909 that was not available for payment of the City's general obligation debt. (4) Includes taxable incremental value of approximately$331,409,142 that was not available for payment of the City's general obligation debt. (5) Includes taxable incremental value of approximately$347,428,074 that was not available for payment of the City's general obligation debt. (6) Includes taxable incremental value of approximately$375,450,283 that is not available for payment of the City's general obligation debt. (7) Includes taxable incremental value of approximately$408,497,765 that was not available for payment of the City's general obligation debt. (8) Includes self-supporting debt. See"Table 10—Computation of Self-Supporting Debt" (9) Preliminary,subject to change For additional information regarding the City,please contact: Sharen Jackson,CPA James 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,Suite3500 1400 Main Street,Suite 440 Dallas,Texas 75270 Southlake,Texas 76092 (214)953-4195 (817)481-1713 8 CITY OFFICIALS,STAFF AND CONSULTANTS ELECTED OFFICIALS Length of Term City Council Service Expires Occupation Laura Hill 4 Years May-18 Business Owner Mayor Shahid Shafi 3 Years May-20 General Surgeon Councilmember Shawn McCaskill 2 Years May-18 Attorney Councilmember Chad Patton 1 Year May-19 Executive Councilmember Randy Williamson 4 Years May-19 Executive Councilmember John Huffman 2 Years May-19 Attorney Councilmember Gary Fawks 3 Years May-20 Executive Councilmember SELECTED ADMINISTRATIVE STAFF Length of Name Position Service Shana Yelverton City Manager 22 Years Sharen Jackson Chief Financial Officer 17 Years Robert Cohen Director of Public Works 1 Year CONSULTANTS AND ADVISORS Auditors Weaver and Tidwell,L.L.P Dallas,Texas Bond Counsel ... Norton Rose Fulbright US LLP Dallas,Texas Financial Advisor .... FirstSouthwest,a Division of Hilltop Securities Inc. Dallas.Texas 9 PRLLIMl\_1R1 OFFICIAL S f\I'EMMLN l' RELATING TO 58,065,000* CITY OF SOUTHLAKE,TEXAS GENERAL OBLIGATION REFUNDING BONDS,SERIES 2017 $5,505,000* CITY OF SOUTHLAKE,TEXAS TAX AND WATERWORKS AND SEWER SYSTEM(LIMITED PLEDGE)REVENUE CERTIFICATES OF OBLIGATION,SERIES 2017 INTRODUCTION This Preliminary Official Statement,which includes the Schedule and Appendices hereto,provides certain information regarding the issuance of the$8,065,000*City of Southlake,Texas,General Obligation Refunding Bonds,Series 2017(the"Bonds")and the $5,505,000* City of Southlake, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation,Series 2017(the "Certificates",and together with the Bonds sometimes referred to collectively as the"Obligations"). Capitalized terms used in this Preliminary Official Statement have the same meanings assigned to such terms in the applicable ordinances to be adopted on the date of sale of the Obligations which will authorize the issuance of the respective Obligations(the "Certificate Ordinance" and the "Bond Ordinance", and sometimes referred to collectively as the "Ordinances"), except as otherwise indicated herein. There follows in this Preliminary Official Statement descriptions of the Obligations and certain information regarding the City of Southlake,Texas(the"City")and its finances.All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, FirstSouthwest,a Division of Hilltop Securities,Inc.("FirstSouthwest"),Dallas,Texas. SEPARATE ISSUES.. The Bonds and the Certificates are being offered concurrently by the City under a common Preliminary Official Statement and are sometimes referred to collectively herein as the "Obligations" The Bonds and the Certificates are separate and distinct securities offerings being issued and sold independently except for the common Preliminary Official Statement,and,while the Bonds and Certificates share certain common attributes,each issue is separate from the other and should be reviewed and analyzed independently,including the type of obligation being offered, its terms for payment,the security for its payment,the rights of holders,and other features. DESCRIPTION OF THE CITY .The City is a political subdivision and municipal corporation of the State of Texas(the"State"), duly organized and existing under the laws of the State,including the City's Home Rule Charter. The City Charter was adopted at an election held in the City for that purpose on April 4, 1987,and said Charter has not been amended since the date of its adoption except for elections held January 19, 1991,January 21, 1995,May 2, 1998,May 5,2001 and November 6,2007.The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and six Councilmembers who are elected for staggered three-year terms. The City Council formulates operating policy for the City while the City Manager is the chief administration officer Some of the services that the City provides are: public safety (police and fire protection),highways and streets, water and sanitary sewer utilities, culture-recreation, public improvements, planning and zoning, and general administrative services. The 2010 Census population for the City was 26,575,while the estimated 2017 population is 28,880. The City covers approximately 23 square miles. PLAN OF FINANCING PURPOSE FOR THE BONDS. Proceeds from the sale of the Bonds will be used to refund a portion of the City's outstanding debt (the "Refunded Obligations") to achieve a present value debt service savings and to pay costs of issuance of the Bonds. See Schedule I for a detailed listing of the Refunded Obligations and their redemption date. PURPOSE FOR THE CERTIFICATES.. Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for(i)the construction of public works,to wit: (a) constructing and improving streets and sidewalks, including the acquisition of land and rights-of-way therefor, and (b) improvements and extensions to the City's combined Waterworks and Sewer System,including the purchase of land,rights-of-way,and equipment therefor and(ii)professional services rendered in relation to such projects and the financing thereof. *Preliminary,subject to change. 10 REFUNDED OBLIGATIONS The principal and interest due on the Refunded Obligations are to be paid on the redemption date of such Refunded Obligations from funds to be deposited pursuant to a certain Escrow Agreement(the"Escrow Agreement")between the City and The Bank of New York Mellon Trust Company,N.A.,Dallas, Texas(the"Escrow Agent"). The Bond Ordinance provides that from the proceeds of the sale of the Bonds received from the Initial Bond Purchaser and other available City funds, if any are necessary,the City will deposit with the Escrow Agent the amount that,together with investment earnings thereon,will be sufficient to accomplish the discharge and final payment of the Refunded Obligations on their redemption date.Such funds will be held by the Escrow Agent in an escrow account(the"Escrow Fund")and used to purchase some or all of the following types of obligations: (a) direct noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that,on the date of their acquisition or purchase by the City,are rated as to investment quality by a nationally recognized investment rating firm not less than"AAA"or its equivalent and/or(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 City, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent (the "Escrowed Securities").Under the Escrow Agreement,the Escrow Fund is irrevocably pledged to the payment of principal of and interest on the Refunded Obligations. Grant Thornton LLP,a nationally recognized accounting firm,will verify at the time of delivery of the Bonds to the Underwriters the mathematical accuracy of the schedules that demonstrate the Escrowed Securities will mature and pay interest in such amounts which,together with uninvested funds,if any,in the Escrow Fund,will be sufficient to pay,when due,the principal of and interest on the Refunded Obligations. Such maturing principal of and interest on the Escrowed Securities will not be available to pay the Obligations(see"Other Information-Verification of Arithmetical and Mathematical Computations"). By the deposit of a portion of the Bond proceeds,cash,if necessary,and the Escrowed Securities purchased with a portion of the Bond proceeds, with the Escrow Agent pursuant to the Escrow Agreement.the City will have effected the defeasance of all of the Refunded Obligations in accordance with the law It is the opinion of Bond Counsel that, as a result of such defeasance and in reliance upon the report of Grant Thornton LLP,the Refunded Obligations will be outstanding only for the purpose of receiving payments from the Escrowed Securities and any cash held for such purpose by the Escrow Agent and such Refunded Obligations will not be deemed as being outstanding obligations of the City In the Escrow Agreement,the City covenants to make timely deposits to the Escrow Fund,from lawfully available funds, of any additional amounts required to pay the principal of and interest on the Refunded Obligations,if for any reason,the cash balances on deposit or scheduled to be on deposit in the Escrow Fund are insufficient to make such payment. SOURCES AND USES OF BOND PROCEEDS...The proceeds from the sale of the Bonds,together with certain available funds from the City,are expected to be expended as follows: SOURCES OF FUNDS: Par Amount of Bonds $Net Premium - TOTAL ISSUES: $ - USES OF FUNDS: Deposit to Escrow Fund $ - Costs of Issuance - TOTAL USES. $ - SOURCES AND USES OF CERTIFICATE PROCEEDS.. . The proceeds from the sale of the Certificates are expected to be expended as follows: SOURCES OF FUNDS: Par Amount of Certificates $Net Premium - TOTAL ISSUES. $ - USES OF FUNDS: Deposit to Project Fund $ - Costs of Issuance - TOTAL USES: $ - 11 THE OBLIGATIONS DESCRIPTION OF THE OBLIGATIONS. . The Obligations are dated June 1,2017(the"Dated Date"),and mature on February 15 in each of the years and in the amounts shown on page 2 with regards to the Bonds and on February 15 in each of the years and in the amounts shown on page 4 hereof, in regard to the Certificates. Interest will accrue from the date of delivery of the Obligations (anticipated to be July 6,2017),will be computed on the basis of a 360-day year of twelve 30-day months,and will be payable on February 15 and August 15 of each year commencing August 15, 2017 with respect to the Bonds and February 15, 2018 with respect to the Certificates, until maturity or prior redemption. The definitive Obligations 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 Obligations will be made to the beneficial owners thereof. Principal of,premium, if any, and interest on the Obligations will be payable by the Paying Agent/Registrar to Cede&Co.,which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Obligations(see"THE OBLIGATIONS -Book-Entry-Only System"). AUTHORITY FOR ISSUANCE OF THE BONDS. The Bonds are issued pursuant to the City's Home Rule Charter,the Constitution and general laws of the State of Texas(the "State"), including particularly Chapter 1207,Texas Government Code,as amended, and an ordinance passed by City Council(the"Bond Ordinance"). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES. The Certificates are being issued pursuant to the City's Home Rule Charter, the Constitution and general laws of the State,particularly Subchapter C of Chapter 271.Texas Local Government, as amended, and an ordinance passed by City Council(the"Certificate Ordinance") SECURITY AND SOURCE OF PAYMENT OF THE BONDS.. All taxable property located within the City is subject to a continuing direct annual ad valorem tax levied by the City,within the limits prescribed by law,sufficient to provide for the payment of principal of and interest on the Bonds. SECURITY AND SOURCE OF PAYMENT OF THE CERTIFICATES. The Certificates are payable from the proceeds of an annual ad valorem tax levied,within the limits prescribed by law,on all taxable property located within the City and from a limited pledge of the Net Revenues (as defined in the Certificate Ordinance) of the City's combined Waterworks and Sewer System (the "System"),such pledge is limited to an amount of$1,000 and is subject to the prior lien on and pledge of the Net Revenues of the System to the payment and security of Prior Lien Obligations(as defined and identified in the Certificate Ordinance)and is on a parity in all respects with any existing liens on and pledges of the Net Revenues of the System to the payment and security of Previously Issued Certificates(as defined in the Certificate Ordinance). In the Certificate Ordinance,the City reserves and retains the right to issue Prior Lien Obligations without limitation as to principal amount but subject to any applicable terms,conditions or restrictions under law or otherwise as well as the right to issue additional obligations payable from the same sources as are the Certificates and, together with the Certificates and Previously Issued Certificates,equally and ratably secured by a parity lien on and pledge of the surplus Net Revenues of the System. TAX RATE LIMITATION. ..All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI,Section 5,of the Texas Constitution is applicable to the City,and provides for a maximum ad valorem tax rate of$2.50 per$100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City allows the constitutionally authorized maximum tax rate of$2.50 per$100 Taxable Assessed Valuation. Administratively,the Attorney General of the State of Texas will permit allocation of the $1.50 of the $2.50 maximum tax rate for all general obligation debt service,as calculated at the time of issuance. OPTIONAL REDEMPTION OF THE OBLIGATIONS The City reserves the right,at its option,to redeem Obligations having stated maturities on or after February 15,2028,in whole or in part, in principal amounts of$5,000,or any integral multiple thereof,on February 15,2027,or any date thereafter,at the par value thereof plus accrued interest to the date of redemption.If less than all of the Obligations are to be redeemed, the City may select the maturities of such Obligations to be redeemed. If less than all the Obligation of any maturity is to be redeemed,the Paying Agent/Registrar(or DTC while the Obligations are in Book-Entry-Only form) shall determine by lot the Obligation, or portions thereof, within such maturity to be redeemed. If a Obligation (or any portion of the principal sum thereof)shall have been called for redemption and notice of such redemption shall have been given, such Obligation (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date,provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION. Not less than 30 days prior to a redemption date for the Obligations,the City shall cause a notice of redemption to be sent by United States mail,first class,postage prepaid.to the registered owners of the Obligations to be redeemed, in whole or in part,at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. 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 OBLIGATIONS CALLED FOR REDEMPTION 12 SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE,AND NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT,INTEREST ON SUCH CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Obligations,unless moneys sufficient to pay the principal of and premium,if any, and interest on the Obligations to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption,such notice may,at the option of the City,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 City shall not redeem such Obligations and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given,to the effect that the Obligations have not been redeemed. DEFEASANCE. The Ordinances provide for the defeasance of the Obligations when the payment of the principal of and premium, if any,on the Obligations,plus interest thereon to the due date thereof(whether such due date be by reason of maturity,redemption, or otherwise), is provided by irrevocably depositing with a paying agent or other authorized escrow agent, in trust(1) money sufficient to make such payment or(2)Government Obligations, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times to insure the availability,without reinvestment, of sufficient money, together with monies deposited therewith, if any, to make such payment. The Ordinances provide 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 America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated, on the date of their acquisition or purchase by the City, 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 are rated,on the date of their acquisition or purchase by the City,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 Obligations under the then applicable laws of the State of Texas. The City 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 City 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 Obligations.Because the Ordinances do 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 for any other Government Obligations will be maintained at any particular rating category Upon making such deposit in the manner described, such defeased obligations shall no longer be deemed outstanding obligations secured by the Ordinances,but will be payable only from the funds and Government Obligations deposited into escrow and will not be considered debt of the City for purposes of taxation or applying any limitation on the City's ability to issue debt for any other purpose. If any of such Obligations are to be redeemed prior to their dates of maturity,provision must have been made for giving notice of redemption as provided in the Ordinances. Upon such deposit as described above,such Obligations shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment or redemption of the Obligations have been made as described above,all rights of the City to initiate proceedings to call the Obligations for redemption,or take any other action amending the terms of the Obligations, are extinguished; provided, however, that the right to call the Obligations for redemption is not extinguished if the City: (i)in the proceedings providing for firm banking and financial arrangements,expressly reserves the right to call the Obligations for redemption,(ii)gives notice of the reservation of that right to the owners of the Obligations immediately following the making of the firm banking and financial arrangements,and(iii)directs that notice of the reservation be included in any redemption notices that it authorizes. BOOK-ENTRY-ONLY SYSTEM. This section describes how ownership of the Obligations is to be transferred and how the principal of,premium,if any,and interest on the Obligations are to be paid to and credited by DTC while the Obligations are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Preliminary Official Statement. The City believes the source of such information to be reliable,but takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurance that(1) DTC will distribute payments of debt service on the Obligations, or redemption or other notices,to DTC Participants,(2)DTC Participants or others will distribute debt service payments paid to DTC or its nominee(as the registered owner of the Obligations),or redemption or other notices,to the Beneficial Owners,or that they will do so on a timely basis,or(3) DTC will serve and act in the manner described in this Preliminary Official Statement. The 13 current rules applicable to DTC are on file with the United States Securities and Exchange Commission,and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will act as securities depository for the Obligations. The Obligations will be issued as fully-registered securities registered in the name of Cede&Co (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Obligations in the aggregate principal amount of each such maturity and will be deposited with DTC. DTC,the world's largest depository,is a limited-purpose trust company organized under the New York Banking Law,a"banking organization"within the meaning of the New York Banking Law,a member of the Federal Reserve System,a"clearing corporation" within the meaning of the New York Uniform Commercial Code,and a"clearing agency"registered pursuant to the provisions of Section 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 of 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 Direct and Indirect Participants are on file with the Securities and Exchange Commission.More information about DTC can be found at www.dtcc.com. Purchases of Obligations under the DTC system must be made by or through direct Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Obligation("Beneficial Owner")is in turn to be recorded on the Direct or 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 interest in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Obligations,except in the event that use of the book-entry system described herein is discontinued. To facilitate subsequent transfers,all Obligations 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 Obligations with DTC and their registration in the name of Cede & Co or such other nominee effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations;DTC's records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited,which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to the Paying Agent/Registrar and request that copies of notices be provided directly to them. Redemption notices relating to the Obligations shall be sent to DTC If less than all of the Obligations within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede&Co (nor such other DTC nominee)will consent or vote with respect to the Obligations unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures,DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date(hereinafter defined). The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Obligations are credited on the Record Date(identified in a listing attached to the Omnibus Proxy). Redemption proceeds,principal and interest payments on the Obligations will be made to Cede&Co.,or such other nominee as may be requested by an authorized representative of DTC DTC's practice is to credit Direct Participants'accounts,upon DTC's receipt of funds and corresponding detail information from the City or the Paying Agent/Registrar on payable date in accordance 14 with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent/Registrar or the City,subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of redemption proceeds,principal and interest payments to Cede&Co (or such other nominee as may be requested by an authorized representative of DTC)is the responsibility of the City or the 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 securities depository with respect to the Obligations at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained,Obligations are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC(or a successor securities depository). In that event,Obligation certificates will be printed and delivered. So long as Cede&Co.is the registered owner of the Obligations,the City will have no obligation or responsibility to the Direct Participants or Indirect Participants,or the persons for which they act as nominees,with respect to the payment to or providing of notice to such Direct Participants,Indirect Participants or the persons for which they act as nominees. 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 Obligations 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 Obligations,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 applicable Ordinance will be given only to DTC. Information concerning DTC and the Book-Entry System has been obtained from DTC and is not guaranteed as to accuracy or completeness by,and is not to be construed as a representation by the City,the Financial Advisor,the Initial Bond Purchaser or the Initial Certificate Purchaser PAVING AGENT/REGISTRAR. The initial Paying Agent/Registrar for the Obligations is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas. In the Ordinances, the City retains the right to replace the Paying Agent/Registrar The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Obligations are duly paid and any successor Paying Agent/Registrar shall be a commercial bank,trust company,financial institution or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Obligations,the City agrees to promptly cause a written notice thereof to be sent to each registered owner of such Obligations by United States mail,first class,postage prepaid,which notice shall also give the address of the new Paying Agent/Registrar Principal of the Obligations will be payable to the registered owner at maturity or prior redemption upon presentation at the principal office of the Paying Agent/Registrar.Interest on the Obligations shall be paid to the registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date(see"THE OBLIGATIONS—Record Date for Interest Payment"herein),and such interest shall be paid(i)by check sent by 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 If the date for the payment of the principal of or interest on the Obligations shall be a Saturday,Sunday,legal holiday or day when banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close,then the date for such payment shall be the next succeeding day which is not such a Saturday,Sunday,legal holiday or day when banking institutions are authorized to close;and payment on such date shall have the same force and effect as if made on the original date payment was due. So long as Cede&Co. is the registered owner of the Obligations,payments of principal and interest on the Obligations will be made as described in"THE OBLIGATIONS-Book-Entry-Only System"herein. TRANSFER, EXCHANGE AND REGISTRATION In the event the Book-Entry-Only System should be discontinued, printed Obligation certificates will be delivered to the registered owners of the Obligations and thereafter the Obligations may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed 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. Obligations may be assigned by the execution of an assignment form on the respective Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Obligations will be delivered by the Paying Agent/Registrar, in lieu of the Obligations being transferred or exchanged, at the 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 Obligations issued in an exchange or transfer of Obligations 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 Obligations to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent,in form satisfactory to the Paying Agent/Registrar. 15 New Obligations 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 Obligations surrendered for exchange or transfer. See "THE OBLIGATIONS-Book-Entry-Only System" for a description of the system to be utilized initially in regard to ownership and transferability of the Obligations. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Obligation called for redemption,in whole or in part,within 45 days of the date fixed for redemption;provided,however,such limitation on transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Obligation. RECORD DATE FOR INTEREST PAYMENT.. The record date(the"Record Date")for the interest payable on the Obligations on any interest payment date means the close of business on the last business day of the month next proceeding each interest payment date for the Obligations. 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 City Notice of the Special Record Date and of the scheduled payment date of the past due interest(the"Special Payment Date",which shall be 15 days after the Special Record Date)shall be sent at least five business days prior to the Special Record Date by United States mail,first class postage prepaid,to the address of each registered owner of an Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. MUTILATED,DESTROYED,LOST AND STOLEN OBLIGATIONS.. If any Obligation is mutilated, destroyed, stolen or lost, a new Obligation in the same principal amount as the Obligation so mutilated,destroyed,stolen or lost will be issued. In the case of a mutilated Obligation,such new Obligation will be delivered only upon surrender and cancellation of such mutilated Obligation. In the case of any Obligation issued in lieu of and substitution for any Obligation which has been destroyed,stolen or lost,such new Obligation will be delivered only (a) upon filing with the Paying Agent/Registrar evidence satisfactory to the Paying Agent/Registrar to the effect that such Obligation has been destroyed,stolen or lost and authenticity of ownership thereof,and(b) upon furnishing the Paying Agent/Registrar with indemnity satisfactory to hold the City and the Paying Agent/Registrar harmless. The person requesting the authentication and delivery of a new Obligation must pay such expenses as the Paying Agent/Registrar may incur in connection therewith. OBLIGATIONHOLDERS'REMEDIES. . If the City defaults in the payment of principal,interest or redemption price,as applicable, on the Obligations when due,or if it fails to make payments into any fund or funds created in the Ordinances,or defaults in the observation or performance of any other covenants, conditions or obligations set forth in the Ordinances, the registered owners may seek a writ of mandamus to compel City officials to carry out their legally imposed duties with respect to the Obligations if there is no other available remedy at law to compel performance of the Obligations or the Ordinances and the City's obligations are not uncertain or disputed. 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. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year The Ordinances do not provide for the appointment of a trustee to represent the interest of the holders of the Obligations upon any failure of the City to perform in accordance with the terms of the Ordinances, or upon any other condition and, accordingly, all legal actions to enforce such remedies would have to be undertaken at the initiative of,and be financed by,the registered owners. On April 1,2016,the Texas Supreme Court ruled in Wasson Interests,Ltd.v City of Jacksonville.489 S.W.3d 427(Tex.2016)that sovereign immunity does not imbue a city with derivative immunity when it performs proprietary, as opposed to governmental, functions in respect to contracts executed by a city Texas jurisprudence has generally held that proprietary functions are those conducted by a city in its private capacity,for the benefit only of those within its corporate limits,and not as an arm of the government or under the authority or for the benefit of the state. If sovereign immunity is determined by a court to exist,then,the Texas Supreme Court has 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 City's sovereign immunity from a suit for money damages,holders of the Obligations may not be able to bring such a suit against the City for breach of the Obligations or the covenants in the Ordinances. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further,the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Obligations. Furthermore,the City is eligible to seek relief from its creditors under Chapter 9 of the United States Bankruptcy Code("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues,the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9 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 Obligations of an entity which has sought protection under Chapter 9. Therefore,should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court(which could require that the action be heard in Bankruptcy Court instead of other federal or state court);and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinions of Bond Counsel will note that all opinions relative to the enforceability of the Ordinances and the Obligations are qualified with respect to the customary rights of debtors relative to their creditors. AMENDMENTS. The City may amend the Ordinances without the consent of or notice to any registered owner in any manner not detrimental to the interest of the registered owners,including the curing of any ambiguity,inconsistency,formal defect,or omission 16 therein. In addition,the City may, with the written consent of the holders of a majority in aggregate principal amount of the respective Obligations then outstanding and affected thereby, amend, add to,or rescind any of the provisions of the respective Ordinances;except that,without the consent of the registered owners of all of the respective Obligations then outstanding,no such amendment,addition,or rescission may(1)extend the time or times of payment of the principal of,premium,if any,and interest on the Obligations,reduce the principal amount thereof,the redemption price,or the rate of interest thereon,or in any other way modify the terms of the payment of the principal of,premium,if any,or interest on the Obligations;(2)give any preference to any Obligation over any other Obligation,or(3)reduce the aggregate principal amount of the Obligations required to be held by the registered owners for consent to any such amendment,addition,or rescission. TAX INFORMATION AD VALOREM TAX LAW .The appraisal of property within the City is the responsibility of the Tarrant Appraisal District and the Denton Central Appraisal District(the"Appraisal Districts"). Excluding agricultural and open-space land,which may be taxed on the basis of productive capacity,the Appraisal Districts are required under Title I of the Texas Tax Code(the"Property Tax Code") to appraise all property within the Appraisal District on the basis of 100%of its market value and is prohibited from applying any assessment ratios. In determining market value of property,different methods of appraisal may be used including the cost method of appraisal,the income method of appraisal and the market data comparison method of appraisal,and the method considered most appropriate by the chief appraiser is to be used.State law requires the appraised value of a residence homestead to be based solely on the property's value as a residence homestead regardless of whether residential use is considered to be the highest and best use of the property. State law further limits the appraised value of a residence homestead for a tax year to an amount that would not exceed the lesser of(1)the property's market value in the most recent tax year in which the market value was determined by the appraisal district or(2)the sum of(a) 10% of the property's appraised value in the preceding tax year, plus (b) the property's appraised value the preceding tax year,plus(c)the market value of all new improvements to the property. The value placed upon property by the Appraisal Districts is subject to review by the Appraisal Review Board,consisting of members appointed by the Board of Directors of each Appraisal District. The Appraisal Districts are required to review the value of property within each Appraisal District at least every three years. The City may require annual review at its own expense,and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the Property Tax Code for identification of property subject to taxation,property exempt or which may be exempted from taxation,if claimed;the appraisal of property for ad valorem taxation purposes;and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open space lands at productivity value,and the exemption of certain personal property from ad valorem taxation. Under Section 1-b,Article VIII,and State law,the governing body of a political subdivision,at its option,may grant an exemption of not less than$3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision.Once authorized,such exemption may be repealed or decreased or increased in amount(i)by the governing body of the political subdivision or(ii)by a favorable vote of a majority of the qualified voters at an election called by the governing body of the political subdivision, which election must be called upon receipt of a petition signed by at least 20%of the number of qualified voters who voted in the preceding election of the political subdivision. In the case of a decrease,the amount of the exemption may not be reduced to less than$3,000 of the market value. The surviving spouse of an individual who qualifies for the foregoing exemption for the residence homestead of a person 65 or older(but not the disabled)is entitled to an exemption for the same property in an amount equal to that of the exemption for which the deceased spouse qualified if(i)the deceased spouse died in a year in which the deceased spouse qualified for the exemption, (ii)the surviving spouse was at least 55 years of age at the time of the death of the individual's spouse and(iii)the property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse. In addition to any other exemptions provided by the Property Tax Code,the governing body of a political subdivision,at its option, may grant an exemption of up to 20%of the market value of residence homesteads,with a minimum exemption of$5,000 In the case of residence homestead exemptions granted under Section 1 b,Article VIII,ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. State law and Section 2,Article VIII,mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces. The exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of$12,000; provided, however, that beginning in the 2009 tax year, a disabled veteran who receives from the from the United States Department of Veterans Affairs or its successor 100 percent disability compensation due to a service-connected disability and a rating of 100 percent disabled or of individual unemployability is entitled to an exemption from taxation of the total appraised value of the 17 veteran's residence homestead. In addition,effective January 1,2012,and subject to certain conditions,the surviving spouse of a deceased veteran who had received a disability rating of 100%will be entitled to receive a residential homestead exemption equal to the exemption received by the deceased spouse until such surviving spouse remarries. Under Article VIII and State law, the governing body of a county, municipality, or junior college district may freeze the total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years of age or older to the amount of taxes imposed in the year such residence qualified for such exemption. Also,upon receipt of a petition signed by five percent of the registered voters of the county, municipality, or junior college district, an election must be held to determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are disabled. Upon providing for such exemption,such freeze on ad valorem taxes is transferable to a different residence homestead. Also,a surviving spouse of a taxpayer who qualifies for the freeze on ad valorem taxes is entitled to the same exemption so long as the property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse and the spouse was at least 55 years of age at the time of the death of the individual's spouse. If improvements(other than repairs or improvements required to comply with governmental requirements)are made to the property, the value of the improvements is taxed at the then current tax rate,and the total amount of taxes imposed is increased to reflect the new improvements with the new amount of taxes then serving as the ceiling on taxes for the following years. Once established, the tax rate limitation may not be repealed or rescinded. Article VIII provides that eligible owners of both agricultural land(Section 1 d)and open space land(Section 1 d 1), including open space land devoted to farm or ranch purposes or open space land devoted to timber production,may elect to have such property appraised for property taxation on the basis of its productive capacity The same land may not be qualified under both Sections 1 d and 1 d 1. Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body of a political subdivision elects to tax this property Boats owned as nonbusiness property are exempt from ad valorem taxation. Article VIII,Section 1 j,provides for"freeport property"to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing,processing or fabrication. Decisions to continue to tax may be reversed in the future;decisions to exempt freeport property are not subject to reversal. Effective for tax years 2008 and thereafter, Article VIII, Section 1-n of the Texas Constitution provides for an exemption from taxation for"goods-in-transit,"which are defined as personal property acquired or imported into the State and transported to another location inside or outside the State within 175 days of the date the property was acquired or imported into the State. The exemption excludes oil,natural gas,petroleum products,aircraft and special inventory,including motor vehicle,vessel and out-board motor, heavy equipment and manufactured housing inventory. After holding a public hearing,a taxing unit may take action by January 1 of the year preceding a tax year to tax goods-in-transit during the following year A taxpayer may obtain only a freeport exemption or a goods-in-transit exemption,but not both,for items of personal property A city or a county may utilize tax increment financing("TIF"), pursuant to the Tax Increment Financing Act, Texas Tax Code, Chapter 311,to encourage development and redevelopment within a designated reinvestment zone.Taxes collected from increases in valuation above the base value(the"captured appraised value")by each taxing unit that levies ad valorem taxes on real property in the reinvestment zone may be used to pay costs of infrastructure or other public improvements in the reinvestment zone and to supplement or act as a catalyst for private development in the defined area of the reinvestment zone.The tax increment base value for a taxing unit is the total appraised value of all real property taxable by the taxing unit and located in the reinvestment zone as of January 1 of the year in which the city created the reinvestment zone.Each taxing unit can choose to dedicate all,any portion or none of its taxes collected from the captured appraised value to the costs of improvements in the reinvestment zone.The amount of a taxing unit's tax increment for a year is the amount of property taxes levied by the taxing unit for that year on the captured appraised value of real property taxable by the taxing unit and located in the reinvestment zone,multiplied by the taxing unit's percentage level of participation. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property The City in turn, agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. The City' is also authorized,pursuant to Chapter 380, Texas Local Government Code, as amended("Chapter 380"),to establish programs to promote state or local economic development and to stimulate business and commercial activity in the City In accordance with a program established pursuant to Chapter 380,the City may make loans or grants of public funds for economic development purposes,however no obligations secured by ad valorem taxes may be issued for such purposes unless approved by voters of the City The City may contract with the federal government, the State, another political subdivision, a nonprofit organization or any other entity,including private entities,for the administration of such a program EFFECTIVE TAX RATE AND ROLLBACK TAX RATE By each September 1 or as soon thereafter as practicable,the City Council adopts a tax rate per$100 taxable value for the current year The City Council will be required to adopt the annual tax rate for the 18 City before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the City If the City Council does not adopt a tax rate by such required date the tax rate for that tax year is the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the City Council for the preceding tax year The tax rate consists of two components: (1)a rate for funding of maintenance and operation expenditures,and(2)a rate for debt service. Under the Property Tax Code,the City must annually calculate and publicize its"effective tax rate"and"rollback tax rate" A tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or the effective tax rate until two public hearings are held on the proposed tax rate following a notice of such public hearings(including the requirement that notice be posted on the City's website if the City owns,operates or controls an internet website and public notice be given by television if the City has free access to a television channel)and the City Council has otherwise complied with the legal requirements for the adoption of such tax rate.If the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted"means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate"means the rate that will produce last year's maintenance and operation tax levy(adjusted)from this year's values (adjusted)multiplied by 1 08 plus a rate that will produce this year's debt service from this year's values(unadjusted)divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied,the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAX PAYMENT...Property within the City is generally assessed as of January 1 of each year Business inventory may, at the option of the taxpayer,be assessed as of September 1. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October 1 of the same year,and become delinquent on February 1 of the following year Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on August 1 PENALTIES AND INTERESTt11 Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative Month Penalty Interest'1) Total February 6% 1 0'0 7° March 7 2 9 April 8 3 I 1 May 9 4 13 June 10 5 15 July 12 6 18 (1) Interest continues to accrue after July 1 at the rate of 1%per month until paid. After July,penalty remains at 12°%o,and interest increases at the rate of one-percent(1'o)for each month or portion of a month the tax remains unpaid. A delinquent tax continues to incur interest as long as the tax remains unpaid,regardless of whether a judgment for the delinquent tax has been rendered. The purpose of imposing such interest is to compensate the taxing unit for revenue lost because of the delinquency. In addition,if an account is delinquent in July,an attorney's collection fee of up to 2000 may be added to the total tax penalty and interest charge. Under certain circumstances,taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8°%o per annum with no additional penalties or interest assessed. In general,property subject to the City's lien may be sold,in whole or in parcels,pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy Federal bankruptcy law provides that an automatic stay of action by creditors and other entities,including governmental units,goes into effect with the filing of any petition in bankruptcy The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition 19 taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. CITY APPLICATION OF TAX CODE ..The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of$75,000;the disabled are also granted an exemption of$75,000 The City has granted an additional exemption of 16%of the market value of residence homesteads;minimum exemption of$5,000. See Table 1 for a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City has adopted the tax freeze for citizens who are disabled or are 65 years of age or older,which became a local option and subject to local referendum on January 1,2004. The City does not tax nonbusiness personal property;and Tarrant County collects taxes for the City. The City does not permit split payments of taxes,and discounts for early payment of taxes are not allowed. The City does tax Freeport property The City does not tax Goods-in-Transit. The City does not collect the additional one-half cent sales tax for reduction of ad valorem taxes. The City has adopted a tax abatement policy,and reviews applications for abatements on a case by case basis. TAX INCREMENT FINANCE ZONES.. The City has established the Tax Increment Financing Reinvestment Zone Number One, comprised of approximately 408 acres in an area of the City bounded by East Highland Street, North Kimball Avenue, East Southlake Boulevard(F.M. 1709)and North Carroll Avenue. The tax increment base for the Reinvestment Zone Number One established on January 1, 1997 is$23,267,804 Taxes assessed and collected against the base value in the Reinvestment Zone may be used for general fund purposes. However,taxes assessed and collected against the assessed valuation of real property in the Reinvestment Zone in excess of the tax increment base("Tax Increment Revenues")are restricted to pay or finance projects within the Reinvestment Zone. The Incremental 2016/17 Taxable Assessed Value for the Reinvestment Zone Number One is $408,497,765. The Tax Increment Revenues are not available to pay the Obligations. [The remainder of this page left blank intentionally] 20 TABLE 1-ASSESSED VALUATION AND EXEMPTION 2016/17 Market Valuation Established by Tarrant and Denton County Appraisal Districts (excluding totally exempt property) $8,008,474,296 Less Exemptions/Reductions at 100%Market Value: Over 65 100,027,648 Disabled Persons 2,625,000 Disabled Veterans 8,089,759 10%Cap 438,003,950 Pollution Control 166,606 Prorated Absolute - Agricultural Use Reductions 80,403,553 Nominal Value 7,922 Freeport Inventory 4,586,552 Homestead 515,069,460 Other - Abatements - 1,148,980,450 2016/17 Taxable Assessed Valuation(1) $6,859,493,846 General Obligation Debt Payable from Ad Valorem Taxes(as of 5/1/2017)(2) $ 87,200,000 The Bonds(3) 8,065,000 The Certificates(3) 5,505,000 $ 100,770,000 Less Self Supporting Debt Water and Sewer System Debt(2) $ 30,846,541 Tax Increment Financing Debt 3,010,038 Southlake Parks Development Corporation Debt 13,770,000 The Bonds(W&S System Debt)(3)( ) 4,160,000 The Certificates(W&S System Debt)(3) 5,505,000 $ 57,291,579 Net General Obligation Debt Payable from Ad Valorem Taxes $ 43,478,421 General Obligation Interest and Sinking Fund(as of 5/1/2017) $ 6,383,168 Ratio General Obligation Tax Debt to Taxable Assessed Valuation 0 63% 2017 Estimated Population - 28,880 Per Capita Taxable Assessed Valuation - $237,517 Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes-$1,505 (1) Includes the 2016/17 taxable incremental value of approximately $408,497,765 that is not available for debt service on the Obligations. (2) Excludes the Refunded Obligations and excludes the Trinity River Authority Contract Revenue Bonds.See Table 12—Other Obligations for more detail. (3) Preliminary,subject to change. (4) Includes a portion of the Bonds. 21 TABLE 2-TAXABLE ASSESSED VALUATIONS B%CATEGORY Taxable Appraised Value for Fiscal Year Ended September 30, 2017 2016 2015 %of %of %of Category Amount Total Amount Total Amount Total Real,Residential,Single-Family $5,926,731,405 74 01% $4,947,514,624 69 32% $4,664,508,900 71 95% Real,Residential,Multi-Family 3,775,832 0 05% 2,301,400 0 03% 2,177,400 0 03% Real,Vacant Lots/Tracts 154,555,685 1 93% 226,937,974 3 18% 160,005,368 2.47% Real,Acreage(Land Only) 80,341,338 1 00% 91,029,908 1.28% 64,317,521 0 99% Real,Farm and Ranch Improvements 38,306,663 0 48% 15,674,086 0 22% 13,783,283 0 21% Real,Commercial 1,306,028,957 16.31% 1,382,603,255 19.37% 1,141,329,011 17 61% Real,Industrial 1,392,755 0 02% 2,269,522 0 03% 2,302,091 0 04% Real and Tangible Personal,Utilities 193,989,003 2.42% 173,776,600 2.43% 49,238,503 0 76% Tangible Personal,Commercial 263,645,645 3.29% 208,193,576 2 92% 308,508,568 4 76% Tangible Personal,Industrial 9,038,595 0 1 I% 9,380,844 0 13% 9,487,984 0 15% Tangible Personal,Mobile Homes 384,132 0 00% 408,585 0 01% 388,060 0 01% Real Property,Inventory 30,284,286 0.38% 77,322,574 1 08% 66,878,871 1 03% Total Appraised Value Before Exemptions $8,008,474,296 100 00% $7,137,412,948 100 00% $6,482,925,560 100 00% Adjustments - - - Less Total Exemptions/Reductions 1,148,980,450 874,433,530 321,446,504 Taxable Assessed Value $6,859,493,846 iu $6,262,979,418 (2) $6,161,479,056 (2) Taxable Appraised Value for Fiscal Year Ended September 30, 2014 2013 2012 %of %of %of Category Amount Total Amount Total Amount Total Real,Residential,Single-Family $4,358,695,950 72.71% $4,226,111,230 71 04% $4,111,842,519 7067% Real,Residential,Multi-Family 2,482,100 0 04% 2,382,000 0 04% 2,229,300 0 04% Real,Vacant Lots/Tracts 129,835,125 2.17% 114,327,744 1 92% 120,473,667 2.07% Real,Acreage(Land Only) 93,915,024 1.57% 122,072,709 2.05% 127,106,917 2.18% Real,Farm and Ranch Improvements 10,817,510 0 18% 15,292,236 0.26% 14,697,528 0.25% Real,Commercial 1,018,718,559 16 99% 976,500,556 16 41% 945,126,317 16 24% Real,Industrial 2,446,545 0 04% 4,010,725 0 07% 5,554,282 0 10% Real and Tangible Personal,Utilities 46,504,595 0 78% 171,791,733 2.89% 180,608,841 3 10% Tangible Personal,Commercial 268,377,323 4 48% 248,420,419 4 18% 233 190,394 4 01% Tangible Personal,Industrial 8,640,798 0 14% 9 073,542 0 15% 11,281,402 0 19% Tangible Personal,Mobile Homes 458,583 0 01% 456,230 0 01% 480,925 0 01% Real Property,Inventory 53,474,009 0 89% 58,543,078 0 98% 65,452,258 1 12% Total Appraised Value Before Exemptions $5,994,366,121 100 00% $5,948,982,202 100 00% $5,818,044,350 100 00% Adjustments - - - Less Total Exemptions/Reductions 193,596,307 199,268,609 235,246,573 Taxable Assessed Value $5,800,769,814 141 $5,749,713,593 ") $5,582,797,777 (6) (1) Includes taxable incremental value of approximately$408,497,765 that is not available for payment of the City's general obligation debt. (2) Includes taxable incremental value of approximately$375,450,283 that is not available for payment of the City's general obligation debt. (3) Includes taxable incremental value of approximately$347,428,074 that is not available for payment of the City's general obligation debt. (4) Includes taxable incremental value of approximately$331,409,142 that is not available for payment of the City's general obligation debt. (5) Includes taxable incremental value of approximately$290,288,909 that is not available for payment of the City's general obligation debt. (6) Includes taxable incremental value of approximately$280,411,181 that is not available for payment of the City's general obligation debt. Note' Valuations shown are certified taxable assessed values reported by the Denton and Tarrant County Appraisal District to the State Comptroller of Public Accounts.Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records 22 TABLE 3—VALUATION AND GENERAL OBLIGATION DEBT HISTORY G 0 Ratio of Fiscal Taxable Tax Debt G.O Tax Debt G O Tax Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9/30 Population(I) Valuation(2) Per Capita ofYear181 Valuation Capita 2013 27,045 $ 5,749,713,593 (3) $212.598 $ 153,820.000 2.68% $ 5,688 2014 27,500 5,800,769,814 (4) 210,937 144.995,000 2.50% 5,273 2015 27,833 6,161,479,056 )5) 221,373 126,855,000 2.06% 4,558 2016 28,290 6,262,979,418 (6) 221,385 112,935,000 1.80% 3,992 2017 28,880 6,859,493,846 (7) 237,517 100,770,000 (9) 1.47% (9) 3,489 (9) (1)Source City officials. (2)As reported by the Appraisal Districts on City's annual State Property Tax Board Reports;subject to change during the ensuing year (3)Includes taxable incremental value of approximately$290,288,909 that was not available for payment of the City's general obligation debt. (4)Includes taxable incremental value of approximately$331,409,142 that was not available for payment of the City's general obligation debt. (5)Includes taxable incremental value of approximately$347,428,074 that was not available for payment of the City's general obligation debt. (6)Includes taxable incremental value of approximately$375,450,283 that is not available for payment of the City's general obligation debt. (7)Includes taxable incremental value of approximately$408,497,765 that was not available for payment of the City's general obligation debt. (8)Includes self-supporting debt. See"Table 10—Computation of Self-Supporting Debt" (9)Projected. TABLE 4—TAX RATE,LEVY AND COLLECTION HISTORY' Interest Year and Ended Tax General Sinking %Current %Total 9/30 Rate Fund Fund Tax Levy(I) Collections Collections 2013 $ 0 4620 $ 0.3200 $ 0 1300 $ 26,563,677 99 48% 101 08% 2014 0 4620 0.3420 0.1200 26,945,723 99.70% 101.28% 2015 0.4620 0.3420 0 1200 28,466,033 99 65% 100.02% 2016 0.4620 0.3620 0.1000 28.934,965 99.56% 99.86% 2017 0 4620 0.3620 0.1000 31.690,862 93 98% (2) 94 05% (2) (1) Includes levy on taxable incremental values,such tax levy is not available for the City's general use. (2) Collections as of April,2017 [The remainder of this page left blank intentionally] 23 1 TABLE 5-TEN LARGEST TAXPAYERS 2016/2017 %of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation Town Square Ventures LP Real Estate $ 158,179,461 2.31% Dallas MTA LP Telecommunications 157,999,838 2.30% Slts Grand Avenue LP Real Estate 85,552,199 1.25% Carroll/1709 Ltd. Land/Improvements 61,040,200 0.89% Wyndham Properties Ltd. Real Estate 57,166,286 0.83% GAHC3 Southlake TX Hospital LLC Land/Improvements 44,000,000 0.64% Sabre Headquarters LLC Technology 43,148,431 0.63% Excell Southlake LP Medical Complex 38,525,000 0.56% H&C Southlake Hilton LLC Hotel 37,250,579 0.54% Inland Western SLake Corners K Land/Improvements 29,500,000 0.43% $ 712,361,994 10.39% GENERAL OBLIGATION DEBT LIMITATION...No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter(see"THE OBLIGATIONS-Tax Rate Limitation"). TABLE 6-TAX ADEQUACY(2) Net Principal and Interest Requirements,2017 $ 7,913,560 $0.1252 Tax Rate at 98%Collections Produces $ 7,913,850 (1) Average Net Principal and Interest Requirements,2017-2030 $ 4,210,332 $0 0666 Tax Rate at 98%Collections Produces $ 4,210,436 (1) Maximum Net Principal and Interest Requirements,2017 $ 7,913,560 $0 1252 Tax Rate at 98%Collections Produces $ 7,913,850 (1) (1) Calculated based on the Net Taxable Assessed Valuation after adjustment for Tax Increment Reinvestment Zone#1 (2) Preliminary,subject to change. [The remainder of this page left blank intentionally] 24 TABLE 7-ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax debt("Tax Debt")was developed from information contained in"Texas Municipal Reports"published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information,and no person should rely upon such information as being accurate or complete. Furthermore,certain of the entities listed may have issued additional Tax Debt since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt,the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City City's Overlapping Taxable Total Estimated G 0 Assessed Tax G O Tax Debt % Tax Debt Taxing Jurisdiction Value(I) Rate(') As of 5/1/2017") Applicable I) as of5/1/2017 City of Southlake $ 6,859,493,846 $ 0 4620 $ 100,770,000 (2) 100 00% $ 100,770,000 Carroll ISD 7,408,797,867 1.3900 192,030,246 93 14% 178,856,971 Denton County 78,259,024,841 0.2480 605,835,000 0 19% 1,151,087 Grapevine-Colleyville ISD 12,302,140,922 1.3970 470,887,687 1 49% 7,016,227 Keller ISD 14,275,467,885 1.5200 727,669,521 2.72% 19,792,611 Northwest ISD 12,620,107,909 1 4530 716,987,028 0.60% 4,301,922 Tarrant County 143,208,841,539 0.2540 344,185,000 4.37% 15,040,885 Tarrant County Hospital District 143,670,377,088 0 1450 20,835,000 4.37% 910,490 Tarrant County Junior College District 143,387,710,471 0.2280 - 4.37% - Total Direct and Overlapping G 0 Tax Debt $ 327,840,191 Ratio of Direct and Overlapping G 0 Tax Debt to Taxable Assessed Valuation 4 78% Per Capita Overlapping G 0 Tax Debt $ 11,352 (1) As reported by the Municipal Advisory Council of Texas. (2) Excludes the Refunded Obligations,includes the Bonds and Certificates. Preliminary,subject to change. [The remainder of this page left blank intentionally] 25 M E ° o 0. O • CY O E M , C E ,_ , R m O �l P o , n .0 v C4 i O °,.'"C7 00N`O-MNor-" TTz .- P 1 O 0 P N CI -- ^ O M P (� O O 0 u ^ C01 0C'Ov! MM WM 00 2 W 00 'I O 0Q Ob , , ' , a VO M PO O O O O PO O O — nr1 — 00W C 0, ,2 O y� - O 8, U N▪ U O O T - Q Q r p V Q TY- F v M p O '^ .„ -' 000 0 0 PO n 0 �O 'O - N co m.— o0 P C O — O W l co — an Q -- O Q Q 00 ,n T N .O M 0l 00 0 00 00 O C •ZZ0� Q't'h Q v," 1,O O h 1�O V P Q"-n `c v " y n '•I 000 O 8 N N P On, ra n g 00 ? N O P P W N .. .O'Q Q M M M M N N CI N N M .p 3 _To - - oo .O P - ^ M Q ,O Q C 0 CON P— C W Fl.. 0o O W i ^O" ,O N T Q C N,O Q Q —.--O n P 00 0°4 mo M n M`Cl M O 'M "- .O O 0 P 0 O V O 00 !O O PP'P`00 CO ,n v ?M CI - - O = Q Vi 69 z K, O 0o oo m co 00 000 r N N P M 0 C . CI Q Q -" , MM h n coR 0, O M Q M IH -a m n 00 cl W m n o0 -P m r r P co' 1 W`,O FI M M M M r" M M M M M M M M M M M M 0o',2f N 0"Ni ',71CN "00 `N 00 n'm O n .O ,O Y rM O P .D Q N - P N e..," O z 69 I� F — O O O O O O O O O O O O O O O O O O O O O • . O o o O o O o 0 0 0 o o O o 0 0 0 o O o O a 0'O - O O ri N , b P O M r o �C — CI CI N 1 CI N Cl CI N M M M M F 1 A M Vi Z G14 `.,00,1 , 000000 „ CT Gs Q r% O Q CI,n 0 - 0` ` oo` P n O M CI a, P a' P P P C C O O, F DJ 00 00 a' " 0 0 o r. 0 00 0 0 0 0 0 . ' ' . , . , ' o V - . O n 0 0 ,rile N Q ,0 0 O N 0 0' O CC - Cl co"N co-0o P r.0.1 b`P ,O P P Gal F co co10 z o F- - 0 0 0 0 0 0 0 0 0 0 ' ' ' ' ' ' ' o c00 OD 0 0 0 0 0 0 0"0 0 0 0 :II - 00 o'n 00 0 0 0 a. O o Z a ea o O r VF mM o o - - M co ,00 lo 00 - ,o M Q v, Q Q N 00 CO 7 R co.nn CO M , c",O 00 N"o0o n 0 M ,QO 00 V 10 o r o a,, oo CO b ,o r O ,i, 00 - — mm o0 7 M - - 00 n co, M .0 1 v, N =r - 0 _ Fo o n`,---. P"oo m oo n n - .- _ 00 sv o 1$i M o 0 P - M ,o ,o ,0 00 - .o M Q Q , . Q 00 W R 00 M O 100 n M P 0 Q r P 0 GT4 L y n CO V Q CO 1T . . N 00 P M . Q Q O � nO NOo c, P v co 00o M -vPv r o O ,$U C . " 1 C — — — — — '2 ca t m o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 , 0 -, 0: 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Cr 0 O O a000000000.0000000000 0 -0 o Gr. " - V _ 7. m �i o , P r o P o o ,ro ^l vM a o � o-r` ? o CL, ..,% .. x N o I Z ao 00 • Ts, C O N 00 P O ' N 00 T ,n 00 n co P o — N r', Q v, '0 n 9 '§ O '5 01 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 r�''r. i W Q LL } Lf, P 1 N ! 1 1 Gr TABLE 9—INTEREST AND SINKING FUND BUDGET PROJECTION Debt Service Requirements,Fiscal Year Ending 9/30/17(1) $ 7,913,560 Interest and Sinking Fund,Fiscal Year Ending 9/30/16 7,247,321 Budgeted Interest and Sinking Fund Tax Levy 6,378,212 Administrative Expenses 18,000 Estimated Investment Income 45,000 $ 13.688,533 Estimated Balance,Fiscal Year Ending 9/30/17 $ 5,774,973 (1) Preliminary,subject to change. TABLE 10—COMPUTATION OF SELF-SUPPORTING DEBT(1) Water and Sewer TIRZ/FIFt2t S PDC Net System Revenue Available Fiscal Year 2016") $ 7,698,975 $ 3,022,353 $ 6,524,210 Less:Requirements for Revenue Bonds - 1,584,040 Balance Available for Other Purposes $ 7,698,975 $ 3,022,353 $ 4,940,170 Self-sup port mgTax Debt Requirements for fiscal year 2017 $ 6,394,182 (4) $ 3,189,243 $ 1,304,763 Percentage of Self-supporting Tax Debt Requirements to be paid from sources shown 100% 95% 100% (1) The City considers the general obligation debt described below to be self-supporting and payable from Net Revenues of the System,available revenues from the TIF Fund,or available revenues of the Southlake Parks Development Corporation("SPDC") as indicated above. However,with the exception of certain limited pledges of System revenues in connection with prior certificates of obligation issues(which may or may not have been fully satisfied),the revenues described above are not pledged to the payment of such general obligation debt.The transfers of System revenues to make debt service payments on the City's general obligation debt is discretionary and may be discontinued by the City,in whole or in part,at any time.The transfers of other revenues may be provided for by contract with the TIF and SPDC In the event the City chooses to discontinue such transfer of System revenues,or should any of the revenues described above be insufficient or otherwise unavailable to pay debt service on such general obligation debt,the City will be required to levy ad valorem taxes or to appropriate other lawfully available funds of the City in amounts sufficient to pay the debt service on such general obligation debt. (2) As of September 30,2016 the Tax Increment Financing District had a Fund Balance of$3,851,783. (3) Net Revenue after operating expenditures;and capital outlay in the case of the TIF Fund. (4) Excludes a portion of the Refunded Obligations.Includes a portion of the bonds and includes the Certificates. First debt service payment on the Certificates is in Fiscal Year 2018. TABLE 11—AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Date Amount Previously Unissued Purpose Authorized Authorized Issued Balance Street Improvements(intersections) 5/1/1999 $ 17,300,000 $ 10,508,179 $ 6,791,821 Street Improvements(design enhancements) 5/1/1999 2,150,000 1,560,000 590,000 Park Improvements(hike and bike trails) 5/1/1999 4,730,000 2,230,000 2,500,000 $ 24,180,000 $ 14,298,179 $ 9,881,821 ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT...The City does not anticipate the issuance of additional general obligation debt within the next six months. 27 TABLE 12—OTHER OBLIGATIONS Trinity River Authority Contract Revenue Bonds(I) Fiscal Year Ending 9/30 Principal Interest Total D/S 2017 $ 385,000 $ 9,625 $ 394,625 $ 385,000 $ 9,625 $ 394,625 (1) Includes the Denton Creek Wastewater Pressure Interceptor System Revenue Refunding Bonds,Series 2001 PENSION FUND...The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System("TMRS"),a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. In addition to providing pension benefits through the Texas Municipal Retirement System,the City has opted to provide eligible retired employees with the following post-employment benefits: The City contributes$125/month toward retiree medical insurance or$225/month for retiree and dependent.Retirees are eligible for city medical insurance until they reach Medicare age or have other insurance available. The City recognizes its share of the costs of providing these benefits when paid,on a"pay-as-you-go"basis. These payments are budgeted annually. The amount budgeted for the fiscal year ending September 30, 2017 is$17,625. The appropriation for the fiscal year ending September 30,2016 was$15,075 As of September 30,2016,there were approximately 9 participants eligible to receive such benefits. Commencing in fiscal 2009,the City implemented the GASB Statement No.45"Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions." The City has performed an actuarial valuation of its post-retirement benefit liability The City established an irrevocable trust for future post retirement benefits. For fiscal year ending September 30,2016, the City invested$40,000 in the trust. (For more detailed information concerning the retirement plan, see Appendix B, "Excerpts from the City's Annual Financial Report"-Note#9) [The remainder of this page left blank intentionally] 28 FINANCIAL INFORMATION TABLE 13—CHANGE IN NET ASSETS Fiscal Years Ended September 30, 2016 2015 2014 2013 2012 Revenues. Program Revenues: Charges for Services $ 34,219,024 $ 33,194,871 $ 31,896,576 $ 30,926,027 $ 30,352,107 Operating Grants and Contributions 310,636 455,575 443,157 639,230 200,434 Capital Grants and Contributions 3,867,705 14,743,904 7,947,282 4,226,319 1,733,012 General Revenues Taxes 66,504,007 66,594,638 62,563,693 57,151,241 53,841,399 Interest on Investments 474,179 636,921 584 076 55,337 278,934 Gain(Loss)on Sales of Fixed Assets 420,236 126,000 99,109 89,923 91,134 Miscellaneous 140,572 1,071,339 646,534 873,595 474,492 Transfers - - - - _ - Total Revenues $105,936,359 $116,823,248 $104,180,427 $ 93,961,672 $ 86,971,512 Expenses General Government $ 12,851,787 $ 14,602,425 $ 13,417,904 $ 12,892,140 $ 13,277,006 Public Safety 19,300,590 18,176,698 18,245,617 18,425,878 15,891,911 Public Works 11,950,671 9,762,184 8,870,998 8,528,331 6,399,819 Culture and Recreation 10,655,763 9,311,006 8,948,841 8,829,394 8,158,291 Intergovernmental - - - - - Interest on Long-Term Debt 3,005,359 2,528,113 5,097,036 6,747,628 5,865,798 Water and Sewer 24,741,428 26,692,373 25,030,426 22,119,518 22,530,688 Total Expenses $ 82,505,598 $ 81,072,799 $ 79,610,822 $ 77,542,889 $ 72,123,513 Increase in Net Assets 23,430,761 35,750,449 24,569,605 16,418 783 14,847,999 Net Assets-Beginning of Year 531,672,444 501,339,589 479,107,321 462,688,538 447,840,539 Cumulative effect of change in accounting principle - (5,417,594) (2,337,337) - - Net Assets-End of Year $555,103,205 $531,672,444 $501,339,589 $479,107,321 $462,688,538 [The remainder of this page left blank intentionally] 29 TABLE 13A-GENERAL FUND REVENUES AND EXPENDITURE HISTORY Fiscal Years Ended September 30, 2016 2015 2014 2013 2012 Revenues. Taxes $ 37,355,948 $36,817,085 $ 34,620,395 $ 31,705,886 $ 29,731,625 Licenses and Permits 2,855,311 2,781,823 2,411,851 2,070,146 2,111,754 Charges for Services 1,797,676 1,849,747 1,778,003 1,876,302 1,805,022 Fines and Forfeitures 1,394,122 1,276,453 1,330,324 1,397,101 1,119,050 Other Revenues 631,132 731,517 765,924 600,458 509,575 Total Revenues $ 44,034,189 $43,456,625 $ 40,906,497 $ 37,649,893 $ 35,277,026 Expenditures. City Administration $ 8,477,819 $ 8,213,559 $ 8,036,963 $ 8,034,790 $ 7,188,993 Police Department 5,930,872 5,756,661 5,875,416 5,808,421 5,621,650 Fire Department 7,761,424 7,790,701 7,550,397 6,849,567 5,597,946 Building Department 1,059,896 1,024,493 909,420 854,804 816,771 Streets and Drainage 2,691,354 1,650,008 1,671,514 1,685,890 1,776,764 Municipal Court 761,432 742,446 586,020 582,436 559,154 Parks 3,842,370 4,123,229 4,256,617 4,579,615 4,297,051 Public Works Department 2,293,902 2,311,442 2,589,186 3,543,818 2,176,991 Public Safety Support 1,244,840 1,187,229 1,213,567 1,513,616 1,516,999 Community Development 1,954,548 2,661,415 1,548,119 1,441,691 1,277,303 Total Expenditures $ 36,018,457 $35,461,183 $ 34,237,219 $ 34,894,648 $ 30,829,622 Excess(deficiency)of Revenues Over Expenditures $ 8,015,732 $ 7,995,442 $ 6,669,278 $ 2,755,245 $ 4,447,404 Sale of Vehicles $ - $ - $ - $ - $ - Bond Proceeds - - - - - Budgeted Transfers In 2,243,888 1,739,763 1,601,613 1,982,670 1,463,738 Budgeted Transfers Out (12,740,000) (8,160,000) (4,490,000) (3,915,000) (3,000,000)_ Total Other Sources(Uses) $(10,496,112) $(6,420,237) $ (2,888,387) $ (1,932,330) $ (1,536,262) Net Increase(Decrease) $ (2,480,380) $ 1,575,205 $ 3,780,891 $ 822,915 $ 2,911,142 Beginning Fund Balance 26,138,618 24,563,413 20,782,522 19,959,607 17,048,465 Equity Transfer/Prior Period Adjustment - - - _ - Ending Fund Balance $ 23,658,238 $26,138,618 $ 24,563,413 $ 20.782,522 $ 19,959,607 [The remainder of this page left blank intentionally] 30 TABLE 14-MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act,Texas Tax Code,Chapter 321,which grants the City the power to impose and levy a 1%Local Sales and Use Tax within the City;the proceeds are credited to the General Fund and are not pledged to the payment ofthe Obligations. Collections and enforcements are effected through the offices ofthe State Comptroller of Public Accounts, who remits the proceeds of the tax,after deduction of a 2%service fee,to the City monthly. Fiscal Equivalent Year %of of Ended 1%City Ad Valorem Ad Valorem Per 9/30 Collections Tax Levy Tax Rate Capita 2013 $11,303,173 42.55% (I) $ 01966 $417.94 2014 12,987,221 48.20% (2) 0.2239 472.26 2015 14,978,033 52.62% (3) 0.2431 538.14 2016 17,204,958 59.46% (4) 0.2747 608.16 2017 10,891,198 (6) 34.37% (5) 01588 37712 (1) Includes taxable incremental value of approximately$290,288,909 that was not available for the City's general use. (2)Includes taxable incremental value of approximately$331,409,142 that was not available for the City's general use. (3) Includes taxable incremental value of approximately$347,428,074 that was not available for the City's general use. (4)Includes taxable incremental value of approximately$375,450,283 that is not available for the City's general use. (5) Includes taxable incremental value of approximately$408,497,765 that was not available for the City's general use. (6) Partial collections through April,2017.As reported by the Texas Comptroller of Public Accounts. FINANCIAL POLICIES BASIS OF ACCOUNTING...All governmental funds and agency funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. The exception to this general rule is that principal and interest on general long-term debt is recognized when due. The more significant revenues which are treated as susceptible to accrual under the modified accrual basis are property taxes, intergovernmental revenues,charges for services,and interest. Other revenue sources are not considered measurable and available, and are not treated as susceptible to accrual. All proprietary funds are accounted for using the accrual basis of accounting. Their revenues are recognized when they are earned and their expenses are recognized when they are incurred. GENERAL FUND BALANCE. The City's goal is to maintain surplus and unencumbered funds equal to 15%25%of expenditures in the General Fund. This allows the City to avoid interim borrowing pending tax receipts. USE OF CERTIFICATE PROCEEDS...The City's policy is to use Certificate proceeds for capital expenditures related to the purposes specified in the Certificate Ordinance and for no other purpose. Such revenues are never to be used to fund City operations. BUDGETARY PROCEDURES. The City Charter establishes the fiscal year as the twelve-month period beginning October 1 The departments submit to the City Manager a budget of estimated expenditures for the ensuing fiscal year by the first of July. The City Manager subsequently submits a budget of estimated expenditures and revenues to the City Council by August 1 The City Council then holds a public hearing on the budget. The Council shall then make any changes in the budget as it deems advisable and shall adopt a budget prior to September 30 FUND INVESTMENTS. The City investment policy parallels State law which governs investment of public funds. The City generally restricts investments to direct obligations of the United States Government and to insured or collateralized bank certificates of deposits. Both state law and the City's investment policies are subject to change. 31 INVESTMENTS The City invests its investable funds in investments authorized by State law in accordance with investment policies approved by the City Council of the City Both State law and the City's investment policies are subject to change. LEGAL INVESTMENTS. Under State law,the City is authorized to invest in investments meeting the requirements of the Texas Public Funds Investment Act (Chapter 2256, Texas Government Code, as amended, the "PFIA"), which may include: (1) obligations of the United States or its agencies and instrumentalities, including letters of credit,(2)direct obligations of the State or its agencies and instrumentalities;(3)collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States,the underlying security for which is guaranteed by an agency or instrumentality of the United States;(4)other obligations,the principal and interest of which is 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)bonds issued,assumed or guaranteed by the State of Israel.(7)certificates of deposit or share certificates(i) that are issued by an institution that has its main office of a branch office in the State of Texas and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund,or their respective successors,and are secured as to principal by obligations described in clauses(1)through(6)or in any other manner and provided for by law for City deposits,or(ii)where(a)the funds are invested by the City through(A)a broker that has its main office or a branch office in the State of Texas and is selected from a list adopted by the City as required by law,or(B)a depository institution that has its main office or branch office in the State of Texas that is selected by the City,(b)the broker or the depository institution selected by the City arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions,wherever located,for the account of the City,(c)the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States,and(d)the City appoints the depository institution selected under(a) above, a custodian as described by Section 2257 041(d) of the Texas Government Code, or a clearing broker-dealer registered with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule 15c3-3(17 C.F.R.Section 240.15c3-3)as custodian for the City with respect to the certificates of deposit;(8)fully collateralized repurchase agreements that(i) have a defined termination date, (ii) are fully secured by a combination of cash and obligations described in clause(1)above,(iii)require the securities being purchased by the City or cash held by the City to be pledged to the City,held in the City's name, and deposited at the time the investment is made with the City or with a third party selected and approved by the City,and(iv)are placed through a primary government securities dealer,as defined by the Federal Reserve,or a financial institution doing business in the State of Texas;(9)certain bankers'acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency,(10)commercial paper with a stated maturity of 270 days or less that is rated at least A- 1 or P-1 or the equivalent by either(a)two nationally recognized credit rating agencies or(b)one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11)no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of$1 for each share,and(12)no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in the this paragraph,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.If specifically authorized in the authorizing document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract,other than the prohibited obligations described in the next succeeding paragraph.The City may also be eligible to invest its funds in additional investments authorized by the Public Funds Investment Act as the same may be amended from time to time. The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating service. The City 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. Governmental bodies in the State are also authorized to implement securities lending programs if(i)the securities loaned under the program are 100%collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by(a)obligations that are described in clauses(1)through(6)of the first paragraph under this subcaption, (b)irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than"A"or its equivalent,or(c)cash invested in obligations that are described in clauses(1)through(6)and (10)through(12)of the first paragraph under this subcaption,or an authorized investment pool, (ii)securities held as collateral under a loan are pledged to the governmental body. held in the name of the governmental body and deposited at the time the investment is made with the City or a third party designated by the City;(iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State of Texas;and(iv)the agreement to lend securities has a term of one year or less. 32 INVESTMENT POLICIES. .Under State law,the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity;that address investment diversification,yield,maturity,and the quality and capability of investment management;and that includes a list of authorized investments for City funds,maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups,methods to monitor the market price of investments acquired with public funds,a requirement for settlement of all transactions,except investment pool funds and mutual funds,on a delivery versus payment basis,and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a formally adopted"Investment Strategy Statement"that specifically addresses each fund's investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment,(5)diversification of the portfolio,and(6)yield. Under State law,City investments must be made"with judgment and care,under prevailing circumstances,that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs,not for speculation,but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing: (1)the investment position of the City on the date of the report,(2)that all investment officers jointly prepared and signed the report,(3)the beginning market value,the ending market value,and the fully accrued interest of of each pooled fund group,(4)the book value and market value of each separately listed asset at the beginning and end of the reporting period,(5)the maturity date of each separately invested asset,(6)the account or fund or pooled fund group for which each individual investment was acquired,and(7)the compliance of the investment portfolio as it relates to (a)adopted investment strategy statements and(b)state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS Under 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 City Council,(4)require the qualified representative of firms offering to engage in an investment transaction with the City to• (a)receive and review the City's investment policy,(b)acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the City and the business organization that are not authorized by the City's investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio and requires an interpretation of subjective investment standards) and (c) deliver a written statement in a form acceptable to the City and the business organization attesting to these requirements;(5)perform an annual audit of the management controls on investments and adherence to the City's investment policy; (6)provide specific investment training for the City'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 City. TABLE 15-CURRENT INVESTMENTS As of December 31,2016 the City's investable funds were invested in the following categories: Book Market Type of Investment Value Percent Value Percent U.S.Government Agency Securities $ 29,996,885 41.52% $ 29,905.305 40 87% TexPool&TexStar&Lone Star 34,041,639 47 12% 35,052,639 47 91% Other - 0 00% - 0 00% Certificates of Deposit 8,211,940 11.37% 8,211,940 11.22% Totals $ 72.250,464 100 00% $ 73.169,884 100 00% 33 TAX MATTERS TAX EXEMPTION The delivery of the Obligations is subject to the opinions of Bond Counsel to the effect that interest on the Obligations 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 opinions(the"Code"),pursuant to section 103 of the Code and existing regulations,published rulings, and court decisions, and(2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described, corporations. Forms of Bond Counsel's opinions are reproduced as Appendix C and Appendix D. The statutes, regulations, rulings, and court decisions on which such opinions are based are subject to change. Interest on the Obligations 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 opinions,Bond Counsel will rely upon representations and certifications of the City made in a certificate dated the date of delivery of the Obligations pertaining to the use,expenditure,and investment of the proceeds of the Obligations and will assume continuing compliance by the City with the provisions of the Ordinances subsequent to the issuance of the Obligations. The Ordinances contain covenants by the City with respect to,among other matters,the use of the proceeds of the Obligations and the facilities financed therewith by persons other than state or local governmental units,the manner in which the proceeds of the Obligations 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 Obligations to be includable in the gross income of the owners thereof from the date of the issuance of the Obligations. Bond Counsel's opinions are not a guarantee of a result,but represent its legal judgment based upon its review of existing statutes, regulations,published rulings and court decisions and the representations and covenants of the City described above.No ruling has been sought from the Internal Revenue Service(the"IRS")with respect to the matters addressed in the opinions of Bond Counsel, and Bond Counsel's opinions are 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 Obligations is commenced,under current procedures the IRS is likely to treat the City as the"taxpayer,"and the owners of the Obligations 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 Obligations, the City may have different or conflicting interests from the owners of the Obligations. Public awareness of any future audit of the Obligations could adversely affect the value and liquidity of the Obligations 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 Obligations. Prospective purchasers of the Obligations should be aware that the ownership of tax-exempt obligations such as the Obligations 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 owners of the Obligations of the exclusion of interest on the Obligations 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 Obligations. Prospective purchasers of the Obligations 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 OBLIGATIONS The initial public offering price of certain Obligations(the"Discount Obligations")may be less than the amount payable on such Obligations at maturity. An amount equal to the difference between the initial public offering price of a Discount Obligation(assuming that a substantial amount of the Obligations of that maturity with the same payment terms 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 Obligation. A portion of such original issue discount allocable to the holding period of such Discount Obligation by the initial purchaser will, upon the disposition of such Discount Obligation(including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Obligations described above under "Tax Exemption." Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Obligation,taking into account the semiannual compounding of accrued interest,at the yield to maturity on such Discount Obligation and generally will be allocated to an 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 34 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 Obligation by the initial owner prior to maturity,the amount realized by such owner in excess of the basis of such Discount Obligation in the hands of such owner(adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Obligation was held)is includable in gross income. Owners of Discount Obligations should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Obligations. It is possible that,under applicable provisions governing determination of state and local income taxes,accrued interest on Discount Obligations may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Obligations(the "Premium Obligations")may be greater than the amount payable on such Obligations at maturity. An amount equal to the difference between the initial public offering price of a Premium Obligation (assuming that a substantial amount of the Obligations of that maturity with the same payment terms are sold to the public at such price)and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Obligations. The basis for federal income tax purposes of a Premium Obligation in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain(or decrease the amount of any loss)to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Obligation. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Obligations should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Obligations. CONTINUING DISCLOSURE OF INFORMATION In the respective Ordinances,the City has made the following agreement for the benefit of the holders and beneficial owners of the Obligations. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Obligations. Under the agreement,the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to the Municipal Securities Rulemaking Board (the"MSRB"), which pursuant to SEC-approved amendments to SEC Rule 15c2-12(the"Rule")that became effective beginning July 1,2009,is now the sole nationally recognized municipal securities information repository("NRMSIR"). The MSRB has established the Electronic Municipal Market Access("EMMA")system to make such continuing disclosure available to investors free of charge.Investors may access continuing disclosure information filed with the MSRB at www.emma.msrb.org. ANNUAL REPORTS The City shall provide annually to the MSRB (1) within six months after the end of each fiscal year (beginning with the fiscal year ending September 30,2017)financial information and operating data with respect to the City of the general type in Tables 1 through 6 and 8 through 15 hereof and(2)if not provided as part of such financial information and operating data in item(1),audited financial statements of the City within 12 months after the end of each fiscal year ending in or after 2017. If the audit of such financial statements is not complete within 12 months after any such fiscal year end,then the City shall file unaudited financial statements within such 12-month period and audited financial statements for such fiscal year when and if the audit report on such statements becomes available. Any financial statements so provided shall be prepared in accordance with the accounting principles described in Appendix B hereof and audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. 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 SEC as permitted by the Rule. The updated information will include audited financial statements,if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time,the City will provide unaudited financial statements 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 described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. 35 The City's current fiscal year end is September 30 Accordingly,it must provide updated information by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year,it will notify the MSRB of the change. NOTICE OF CERTAIN EVENTS...The City will also provide the following to the MSRB,in an electronic format as prescribed by the MSRB,in a timely manner not in excess of ten(10)business days after the occurrence of the event,notice of any of the following events with respect to the Obligations: (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 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 of final determinations of taxability,Notices of Proposed Issue(IRS Form 5702-TEB)or other material notices or determinations with respect to the tax status of the Obligations,or other material events affecting the tax status of the Obligations;(7)modifications to rights of holders of the Obligations,if material,(8) bond calls,if material,and tender offers;(9)defeasances;(10)release,substitution,or sale of property securing repayment of the Obligations, if material, (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City; (13) the consummation of a merger,consolidation,or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into 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 paying agent/registrar or the change of name of a paying agent/registrar,if material. In addition,the City will provide to the MSRB, in a timely manner, notice of any failure by the City to provide the required annual financial information described above under"Annual Reports"and any notices of events in accordance with this section. For these purposes, any event described in(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 City 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 City, 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 City AVAILABILITY OF INFORMATION ..The City has agreed to provide the foregoing financial and operating information only as described above. Investors may access continuing disclosure information filed with the MSRB free of charge at www.emma.msrb.org. LIMITATIONS AND AMENDMENTS .The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations,condition,or prospects or agreed to update any information that is provided,except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Obligations at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement,although holders of Obligations may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law,or a change in the identity,nature,status,or type of operations of the City,if(i)the agreement,as amended,would have permitted an Initial Purchaser to purchase or sell Obligations in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances,and(ii)either(a)the holders of a majority in aggregate principal amount of the respective outstanding Obligations consent to the amendment or(b)any person unaffiliated with the City(such as nationally recognized bond counsel)determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Obligations.The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid,but only if and to the extent that the provisions of this sentence would not prevent an Initial Purchaser from lawfully purchasing or selling Obligations in the primary offering of the Obligations. If the City so amends its continuing disclosure 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. . During the last five years,the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. 36 OTHER INFORMATION RATINGS The Obligations have been rated"AAA"by S&P Global Ratings,a division of S&P Global,Inc. ("S&P"),and"AAA"by Fitch Ratings("Fitch")without regard to credit enhancement. The ratings reflect only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by any or more of such rating companies,if in the judgment of any or more companies,circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Obligations. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE The sale of the Obligations has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2);and the Obligations have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein,nor have the Obligations been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Obligations under the securities laws of any jurisdiction in which the Obligations may be sold,assigned,pledged,hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Obligations shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201 041 of the Public Security Procedures Act(Chapter 1201,Texas Government Code)provides that the Obligations are negotiable instruments and investment securities governed by Chapter 8,Texas Business and Commerce Code,and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State. With respect to investment in the Obligations by municipalities or other political subdivisions or public agencies of the State,the Public Funds Investment Act, Chapter 2256,Texas Government Code, requires that the Obligations be assigned a rating of not less than"A"or its equivalent as to investment quality by a national rating agency(see"OTHER INFORMATION-Ratings"herein). In addition,various provisions of the Texas Finance Code provide that, subject to a prudent investor standard,the Obligations are legal investments for state banks,savings banks,trust companies with capital of one million dollars or more, and savings and loan associations. The Obligations are eligible to secure deposits of any public funds of the State,its agencies,and its political subdivisions,and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Obligations are legal investments for various institutions in those states. No representation is made that the Obligations will be acceptable to public entities to secure their deposits or acceptable to such institutions for investment purposes. The City has made no investigation of other laws,rules, regulations or investment criteria which might apply to any such persons or entities or which might otherwise limit the suitability of the Obligations for any of the foregoing purposes or limit the authority of such persons or entities to purchase or invest in the Obligations for such purposes. LEGAL OPINIONS AND No LITIGATION CERTIFICATE The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Obligations including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Obligations and to the effect that the Obligations are valid and legally binding obligations of the City payable from the proceeds of an annual ad valorem tax levied,within the limitations prescribed by law,upon all taxable property in the City,and(with respect to the Certificates)the limited pledge of the Net Revenues of the System provided in the respective Ordinances, and the approving legal opinions of Norton Rose Fulbright US LLP,Bond Counsel,to like effect and to the effect that the interest on the Obligations 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 to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Obligations will also be furnished. The forms of Bond Counsel's opinions are attached hereto as Appendix C and Appendix D.The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Obligations is contingent upon the sale and delivery of the Obligations. The legal opinions of Bond Counsel will accompany the Obligations deposited with DTC or will be printed on the definitive Obligations in the event of the discontinuance of the Book-Entry-Only System. Bond Counsel was engaged by,and only represents,the City Except as noted below.Bond Counsel did not take part in the preparation of the Official Notice of Sale and Bidding Instructions,the Official Bid Form and the Preliminary Official Statement,and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained herein 37 except that in its capacity as Bond Counsel, such firm has reviewed the information appearing under captions "PLAN OF FINANCING"(except under the subcaptions"Sources and Uses of Bond Proceeds"and"Sources and Uses of Certificate Proceeds"), "THE OBLIGATIONS" (except under the subcaptions "Book-Entry-Only System," and "Obligationholders' Remedies"), "TAX MATTERS," "CONTINUING DISCLOSURE OF INFORMATION" (except under the subcaption "Compliance With Prior Undertakings") and the subcaptions "Legal Opinions and No Litigation Certificate"(except for the last two sentences of the first paragraph thereof),"Registration and Qualification of Obligations for Sale"and"Legal Investments And Eligibility To Secure Public Funds In Texas,"under the caption"OTHER INFORMATION"and such firm is of the opinion that the information relating to the Obligations and legal matters contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and,with respect to the Obligations,such information conforms to the Ordinances. The various legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion,the attorney does not become 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. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records,audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. FINANCIAL ADVISOR FirstSouthwest is employed as Financial Advisor to the City in connection with the issuance of the Obligations. The Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and delivery of the Obligations. 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 Obligations,or the possible impact of any present,pending or future actions taken by any legislative or judicial bodies. The Financial Advisor to the City 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 City 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. VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS Grant Thornton LLP,a firm of independent certified public accountants,will deliver to the Issuer,on or before the settlement date of the Bonds, its verification report indicating that it has verified, in accordance with the Statement on Standards for Consulting Services established by the American Institute of Certified Public Accountants,the mathematical accuracy of(a)the mathematical computations of the adequacy of the cash and the maturing principal of and interest on the Escrowed Securities,to pay,when due or upon early redemption,the principal of,interest on and related call premium requirements, if any,of the Refunded Bonds and (b)mathematical computations of yield. Such report will be relied upon by Bond Counsel in rendering its opinions with respect to the exclusion from gross income of interest on the Obligations for federal income tax purposes and with respect to defeasance of the Refunded Obligations. Grant Thornton LLP relied on the accuracy,completeness and reliability of all information provided by,and on all decisions and approvals of,the Issuer and its retained advisors,consultants or legal counsel. Grant Thornton LLP was not engaged to perform audit or attest services under AICPA auditing or attestation standards or to provide any form of attest report or opinion under such standards in conjunction with this engagement. INITIAL PURCHASER FOR THE BONDS After requesting competitive bids for the Bonds, the City accepted the bid of (the "Initial Bond Purchaser")to purchase the Bonds at the interest rates shown on page 2 of the Official Statement at a price of (%) of par plus a cash premium(if any)of$ . The Initial Bond Purchaser can give no assurance that any trading market will be developed for the Bonds after their sale by the City to the Initial Bond Purchaser The City has no control over the price at which the Bonds are subsequently sold and the initial yield at which the Bonds will be priced and reoffered will be established by and will be the responsibility of the Initial Bond Purchaser. 38 INITIAL PURCHASER FOR THE CERTIFICATES After requesting competitive bids for the Certificates,the City accepted the bid of (the"Initial Certificate Purchaser")to purchase the Certificates at the interest rates shown on page 4 of the Official Statement at a price of (%) of par plus a cash premium(if any)of$ . The Initial Certificate Purchaser can give no assurance that any trading market will be developed for the Certificates after their sale by the City to the Initial Certificate Purchaser. The City has no control over the price at which the Certificates are subsequently sold and the initial yield at which the Certificates will be priced and reoffered will be established by and will be the responsibility of the Initial Certificate Purchaser. FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Preliminary Official Statement,and in any other information provided by the City,that are not purely historical, are forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Preliminary Official Statement are based on information available to the City on the date hereof,and the City assumes no obligation to update any such forward-looking statements. The City's actual results could differ materially from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties,including customers,suppliers, business partners and competitors,and legislative,judicial,and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to,among other things,future economic,competitive,and market conditions and future business decisions,all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Preliminary Official Statement will prove to be accurate. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Obligations,the City will furnish a certificate,executed by a proper officer,acting in their official capacity,to the effect that to the best of his or her knowledge and belief: (a)the descriptions and statements of or pertaining to the City contained in its Official Statement,and any addenda,supplement or amendment thereto,on the date of such Official Statement,on the date of sale of said Obligations and the acceptance of the best bid therefor,and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned,such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein,in the light of the circumstances under which they were made,not misleading;(c)insofar as the descriptions and statements,including financial data,of or pertaining to entities,other than the City,and their activities contained in such Official Statement are concerned,such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any material respect; and(d)there has been no material adverse change in the financial condition of the City since the date of the last audited financial statements of the City. The respective Ordinances authorizing the issuance of the Obligations will also approve the form and content of this Official Statement,and any addenda, supplement or amendment thereto,and authorize its further use in the reoffering of the Obligations by the Initial Bond Purchaser and the Initial Certificate Purchaser,respectively Mayor City of Southlake,Texas ATTEST: City Secretary City of Southlake,Texas 39 SCHEDULE OF REFUNDED OBLIGATIONS SCHEDULE I Tax and Waterworks and Sewer System(Limited Pledge)Revenue Certificates of Obligation,Series 2008 Original Original Principal Dated Maturity Interest Amount Call Date (Feb. 15) Rate Outstanding Date 2/15/2008 2019 4 000% $ 705,000 2/15/2018 2020 4 000% 735,000 2/15/2018 2021 4 125% 765.000 2/15/2018 2022 4.250% 795,000 2/15/2018 2023 4.250% 830,000 2/15/2018 2024 4.375% 865,000 2/15/2018 2025 4.500% 910,000 2/15/2018 2026 4.500% 950,000 2/15/2018 2027 4.625% 990,000 2/15/2018 2028 4.500% 1,040,000 2/15/2018 $ 8.585,000 The Certificates will be redeemed on February 15,2018 at a price of par plus accrued interest to the redemption date. 40 APPENDPK A GENERAL INFORMATION REGARDING THE CITY 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 2017 estimated population is 28.880,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 Employ ees Sabre Holdings Travel Industry 2.700 Carroll Independent School District School District 1,072 Verizon Wireless Telecommunications 619 Central Market 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)(0) 2017(2) 2016 2015 2014 2013 Labor Force 14.240 13,913 13,541 13,495 13,214 Employed 13,725 13,416 13,048 12,896 12,521 Unemployed 515 497 493 599 693 Unemployment Rate 3.6% 3.6% 3 6% 4.4% 5.2% (1)Source:Texas Employment Commission. (2)As of April 2017. BUILDING PERMITS BY CATEGORY Fiscal Year Ended Commercial Residential 9/30 Number Amount Number Amount Grand Total 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 2016 30 178,247,281 223 155,805,084 334,052,365 Source: City Staff. TARRANT COUNTY Tarrant County(the"County")is located in North Central Texas with a 2010 population of 1,809.034 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. A-2 APPENDIX B EXCERPTS FROM THE CITY OF SOUTHLAKE,TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30,2016 The information contained in this Appendix consists of excerpts from the City of Southlake, Texas,Annual Financial Report for the Year Ended September 30,2016,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. OFFICIAL NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $8,065,000* CITY OF SOUTHLAKE,TEXAS (Tarrant and Denton Counties) GENERAL OBLIGATION REFUNDING BONDS,SERIES 2017 Sealed Bids Due Tuesday,June 6,2017 at 10:30 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 City Council(the"Council")of the City of Southlake,Texas(the "City")is offering for sale its 58.065,000*General Obligation Refunding Bonds,Series 2017(the"Bonds"). Bidders may submit bids for the Bonds by any of the following methods: (1) Deliver bids directly to the City as described below in"BIDS DELIVERED TO THE CITY," (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 CIT\ ...Sealed bids,plainly marked"Bid for Bonds", should be addressed to "Sharen Jackson. Chief Financial Officer,City of Southlake,Texas",and delivered to the City at 1400 Main Street,Suite 440,Southlake,Texas 76092(the "City's Meeting Place"), prior to 10:30 AM, Central Time, 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 City 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 City The City 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_thesolerisk nfthe prospective bidder. If any provisions of this Official Notice of Sale and Bidding Instructions shall conflict with information provided by PARITY as the approved provider of electronic bidding services,this Official Notice of Sale and Bidding Instructions shall control. Further information about PARITY,including any fee charged,may be obtained from Parity Customer Support, 40 Nest 23rd Street,5th Floor,New 1 ork,New York 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 City, 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 Bl 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 9:30 AM,Central Time and 10:30 AM, Central Time on Tuesday, June 6,2017 Fax bids must be received between 9:30 AM,Central Time and 10:30 AM Central Time,on Tuesday.June 6,2017 at(214)953- 4050,Attention. Penny Brooker FirstSouthwest,a Division of Hilltop Securities,Inc.will not be responsible for submitting any bids received after the above deadlines. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. The City and FirstSouthwest,as the City'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. 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 11.00 AM.Central Time,on Tuesday.June 6.2017 Aw 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 an ordinance authorizing the Bonds and approving the Official Statement(the"Bond Ordinance"). ADM ANCE MODIFICATION OF PRINCIPAL AMOUNTS The City 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 MODIFICATION OF PRINCIPAL AMOUNTS ..After the receipt of bids, but prior to the award of the Bonds, the City reserves the right to amend the total par amount by up to 15%in order to generate the City'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 June 1.2017(the"Dated Date"). Interest will accrue from the date of the initial delivery (the`Delivery Date"), anticipated to be July 6.2017, and will be due on August 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 55.000 for any one maturity. The Bonds will mature on as follows: MATURIT\ SCHEDULE* Principal Amount Maturity $ 695.000 2/15/2019 710,000 2/15/2020 735,000 2/15/2021 750.000 2/15/2022 780,000 2/15/2023 810.000 2/15/2024 845,000 2/15/2025 880,000 2/15/2026 910,000 2/15/2027 950.000 2/15/2028 OPTIONAL REDEMPTION The City reserves the right,at its option.to redeem Bonds having stated maturities on February 15. 2028. in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on February' 15, 2027. 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"). MANDATOR} 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)day's 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. * Preliminary',subject to change.See"Advance Modification of Principal Amounts"and"Post Bid Modification of Principal Amounts"herein. ii 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 City.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 City 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 City intends to utilize the Book-Entry-Only System of The Depository Trust Company.New York,New York("DTC"). See"THE OBLIGATIONS-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.N.A., Dallas.Texas(see"THE OBLIGATIONS-Paying Agent/Registrar"in the Official Statement). SOURCE OF PAYMENT The Bonds constitute direct obligations of the City, payable from a continuing annual ad valorem tax levied on all taxable property within the City. within the limits prescribed by law, as provided in the ordinance authorizing the Bonds(the"Bond Ordinance").Further details regarding the Bonds are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES The Bonds will be sold in one block,on an"All or None" basis,and at a price of not less than 108%and not more than 112%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 I%or 1/20 of 1°%o 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. 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 AW ARD Subject to the City'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 City 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 City 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 City(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 sella substantial-amount of the Bonds of any-stated maturity at the initial offering price, such certificate may be modified in a manner approved by the City or by Norton Rose Fulbright US LLP. Dallas. Texas. bond counsel to the City("Bond Counsel"). In no event will the City fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery Each bidder,by submitting its bid,agrees to complete,execute,and deliver such a certificate 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. ADDITIONAL CONDITION OF AWARD—DISCLOSURE OF INTERESTED PARTIES. New obligation of the City to receive information from winning bidder Effective January 1, 2016, pursuant to Texas Government Code Section 2252.908 (the"Interested Party Disclosure Act"),the City may not award the Bonds to the winning bidder unless the bidder submits to the City a Certificate of Interested Parties Form 1295 (the "Disclosure Form) as prescribed by the Texas Ethics Commission ("TEC") before the City 'formally'awards the Bonds to the winning bidder In the event that the bidder's bid for the Bonds is the best bid received,the City. acting through its financial advisor,will promptly notify the bidder That notification will serve as the conditional verbal acceptance of the bid,and will obligate the bidder to promptly file a completed Disclosure Form,as described below,in order to complete the award. Process for completing the Disclosure Form. Reference should be made to the Disclosure Form,the rules of the TEC with respect to the Disclosure Form(the"Disclosure Rules")and the Interested Party Disclosure Act. Instructional information regarding such matters are set forth at https://wwwethics.state.tx.us/whatsnew/elf For purposes of completing the Disclosure Form the Purchaser will need the following information. (a)item 2—name of governmental entity. City of Southlake,Texas and (b)item 3—the identification number assigned to this contract by the City"2017 GO Rfg Bonds",and a description of the services to be provided under the contract: Purchase of Bonds. The Interested Party Disclosure Act and the Disclosure Rules require a iii business entity contracting with the City to complete the form at the TEC Internet"portal"that may be accessed at the url set forth above,and then print,sign and deliver the Disclosure Form in physical form to the City Following the award of the Bonds,the City will acknowledge receipt of the completed Disclosure Form through the TEC website,as required by the law GOOD FAITH DEPOSIT A Good Faith Deposit, payable to the "City of Southlake, Texas". in the amount of$161.300 00. is required. Such Good Faith Deposit shall be a bank cashier's check or certified check,which is to be retained uncashed by the City pending the 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 City prior to the opening of the bids,and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the 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 City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be retumed immediately after the bids are opened.and an award of the Bonds has been made. DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS It is anticipated that CUSIP identification numbers will appear on the Bonds,but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the 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 CUSIP numbers on the Bonds shall be paid by the City; provided,however,that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERS OF BONDS. Delivery 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$8,065,000*, 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 City,or as otherwise directed by the City 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 Bond(s)can be made on or about July'6.2017.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 July 6.2017 If for any reason the City is unable to make delivery on or before July 6.2017.the City 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 City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Bonds,provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS TO DELIVERS . 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 the opinion of Bond Counsel,to the effect that the Bonds are valid and binding obligations of the City and that the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law,subject to the matters described under"TAX MATTERS"in the Official Statement,including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATEMENT. At the time of payment for,and Initial Delivery of the Bonds,the City will execute and deliver to the Initial Purchaser a certificate in the form 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 iv GENERAL FINANCIAL ADVISOR FirstSouthwest,a Division of Hilltop Securities Inc.,("FirstSouthwest")is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. 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 SK1 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 City 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 City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL This 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 purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Bonds. Isst ANCE OF ADDITIONAL DEBT The City is concurrently issuing its Tax and Waterworks and Sewer System(Limited Pledge) Revenue Certificates of Obligation.Series 2017. RATINGS The Bonds have been rated"AAA"by S&P Global Rating's,a division of S&P Global Inc. ("S&P")and"AAA"by Fitch Ratings("Fitch").without regard to credit enhancement. THE PRELIIIINARI OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2-12 The City 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 knowledge and belief of the City,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 City 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 City 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 day's from the sale date an aggregate of 30 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. In addition,the City 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 City consents to the distbu ton o suchdocuments in a"designated electronic to-rmai."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 Adv isor by' the close of the next business day after the award. Except as noted above. the City assumes no responsibility' or obligation for the distribution or delivery'of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT The City will agree in the Bond Ordinance 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 Certificate Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS During the last five years,the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. 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 75201,Financial Advisor to the City V On the date of the sale,the City Council will,in the Bond Ordinance authorizing the issuance of the Bonds,confirm its approval of the form and content of the Official Statement,and any addenda,supplement or amendment thereto,and authorize its use in the reoffering of the Bonds by the Initial Purchaser Mayor City of Southlake,Texas ATTEST: City Secretary City of Southlake,Texas May 267017 vi OFFICIAL BID FORM Honorable Mayor and City Council June 6,2017 City of Southlake,Texas Honorable Mayor and Members of the City Council. Reference is made to your Preliminary Official Statement and Official Notice of Sale and Bidding Instructions,dated May 26,2017 of $8,065.000* CITY OF SOUTHLAKE, TEXAS, GENERAL OBLIGATION REFUNDING BONDS. SERIES 2017 (the "Bonds"),both of which constitute a part hereof. For your legally issued Bonds,as described in said Official Notice of Sale and Preliminary Official Statement.we will pay you par. plus a cash premium of$ for Bonds maturing and bearing interest as follows: Principal Interest Maturity Amount Rate 2/15/2019 $ 695.000 2/15/2020 710.000 2/15/2021 735.000 °10 2/15/2022 750.000 2/15/2023 780,000 2/15/2024 810.000 2/15/2025 845.000 2/15/2026 880.000 00 2/15/2027 910.000 2/15/2028 950.000 Of the principal maturities set forth in the table above,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 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. A bank cashier's check or certified check of the Bank. , in the amount of $161,300 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. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. 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,Central Time,on July 6.2017,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 will 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 City,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 Norton Rose Fulbright US LLP,Dallas.Texas,Bond Counsel to the City. We agree to provide a completed,notarized Form 1295 to the City promptly upon notification that our bid is the winning bid, and to provide in writing the initial reoffering prices and other terms,if any,to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, 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 City of Southlake, Texas, subject to and in accordance with the Official Notice of Sale and Bidding Instructions,this the 6th day of June,2017 Mayor City of Southlake.Texas ATTEST City Secretary City of Southlake.Texas ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of CITY OF SOUTHLAKE, TEXAS, GENERAL OBLIGATION REFUNDING BONDS.SERIES 2017(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 City of Southlake.Texas(the"Issuer")at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate.if any,have made a bona fide offering to the public of 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°'0)of the Bonds of such maturity was sold to the public is as set forth below Principal Principal Amount Offering Price Amount Year of Offering Price Maturing Year of Maturity (%/Yield) Maturing Maturity (%/Yield) 2/15/2019 2/15/2024 2/15/2020 2/15/2025 2/152021 2/15/2026 2/152022 2/15/2027 2/15/2023 2/15/2028 4 The term"public,"as used herein,means persons other than bondhouses,brokers,dealers,and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate.as the case may be,(have)(have not)purchased bond insurance for the 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 I986,as amended,_onthe excludabilityofinterest on theBondsfrom the gross income of their owners. EXECUTED and DELIVERED this day of ,2017 (Name of Underwriter or Manager) By (Title) OFFICIAL NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $5,505,000* CITY OF SOUTHLAKE,TEXAS (Tarrant and Denton Counties) TAX AND WATERWORKS AND SEWER SYSTEM(LIMITED PLEDGE)REVENUE CERTIFICATES OF OBLIGATION,SERIES 2017 Sealed Bids Due Tuesday,June 6,2017 at 11:00 AM CDT THE CERTIFICATES WILL NOT BE DESIGNATED AS"QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE CERTIFICATES OFFERED FOR SALE AT COMPETITIVE BIDDING The City Council (the "Council") of the City of Southlake. Texas (the "City") is offering for sale its $5,505,000* Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation.Series 2017(the"Certificates"). Bidders may submit bids for the Certificates by any of the following methods: (1) Deliver bids directly to the City as described below in"BIDS DELIVERED TO THE CITY," (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 CIT Sealed bids,plainly marked "Bid for Certificates", should be addressed to "Sharen Jackson. Chief Financial Officer. City of Southlake, Texas", and delivered to the City at 1400 Main Street. Suite 440. Southlake, Texas 76092(the"City's Meeting Place"),prior to 11:00 AM,Central Time,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 City 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 Certificates 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 City The City 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 PARIT\ as the approved provider of electronic bidding services,this Official Notice of Sale and Bidding Instructions shall control. Further information about PARITY,including any fee charged,may be obtained from Parity Customer Support, 40 West 23rd Street,5th Floor,New York,New ti 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 City, 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 131 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 10.00 AM,Central Time and 11.00 AM.Central Time on Tuesday. June 6.2017 Fax bids must be received between 1000 AM,Central Time and 11.00 AM Central Time,on Tuesday.June 6.2017 at(214)953- 4050,Attention. Penny Brooker FirstSouthwest,a Division of Hilltop Securities,Inc.will not be responsible for submitting any bids received after the above deadlines. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. The City and FirstSouthwest,as the City'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. 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 Certificates will be publicly opened and read at the City Hall, 1400 Main Street,Southlake,TX 76092.at 11.30 AM,Central Time,on Tuesday,June 6.2017 AW ARD OF THE CERTIFICATES The Council will take action to award the Certificates(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 an ordinance authorizing the Certificates and approving the Official Statement(the"Certificate Ordinance"). ADVANCE MODIFICATION OF PRINCIPAL AMOUNTS The City 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 MODIFICATION OF PRINCIPAL AMOUNTS After the receipt of bids.but prior to the award of the Certificates,the City reserves the right to amend the total par amount by up to 15%in order to generate the City'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 Certificates will be adjusted proportionately to the adjustment in principal amount of the Certificates and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. THE CERTIFICATES DESCRIPTION The Certificates will be dated June 1.2017(the"Dated Date"). Interest will accrue from the date of the initial delivery (the "Delivery Date"). anticipated to be July 6, 2017, and will be due on February 15, 2018. and each August 15 and February 15 thereafter until the earlier of stated maturity or prior redemption. The Certificates will be issued only in fully registered form in any integral multiple of$5,000 for any one maturity. The Certificates will mature on February 15 in each year as follows: MATURIT\ SCHEDULE* Princip al 15-Feb Principal 15-Feb Amount Maturity Amount Maturity $ 180.000 2018 $ 275.000 2028 200.000 2019 290,000 2029 205,000 2020 300.000 2030 215,000 2021 310.000 2031 220,000 2022 320.000 2032 230,000 2023 330.000 2033 235.000 2024 340.000 2034 245.000 2025 350.000 2035 255.000 2026 365.000 2036 265,000 2027 375,000 2037 OPTIONAL REDEMPTION The City reserves the right,at its option,to redeem Certificates having stated maturities on and after February 15,2028, in whole or in part in principal amounts of$5,000 or any integral multiple thereof,on February 15.2027.or any date thereafter,at the par value thereof plus accrued interest to the date fixed for redemption. Any Certificates designated as Term Certificates(defined herein)by the Initial Purchaser will also be subject to mandatory sinking fund redemption. SERIAL CERTIFICATES AND/OR TERM CERTIFICATES Bidders may provide that all of the Certificates be issued as serial Certificates or may provide that any two or more consecutive annual principal amounts be combined into one or more term Certificates(the"Term Certificates"). MANDATOR\ SINKING FUND REDEMPTION ..If the successful bidder elects to alter the MATURITY SCHEDULE reflected above and convert the principal amounts of the serial Certificates into Term Certificates,such Term Certificates shall be subject to mandatory redemption the first February 15 next following the last maturity for serial certificates,and annually thereafter on each February 15 until the stated maturity for the Term Certificates at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of the Term Certificates to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the"MATURITY SCHEDULE"shown above had no designation of such maturities as Term Certificates occurred. At least forty-five(45)days prior to each mandatory'date,the Paying Agent/Registrar shall select by lot the Term Certificates to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. * Preliminary,subject to change.See"Advance Modification of Principal Amounts"and"Post Bid Modification of Principal Amounts"herein. The principal amount of the Term Certificates required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced,at the option of the City.by the principal amount of the Term Certificates of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City 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 Certificates in the event the successful bidder elects to convert serial maturities into one or more Term Certificates. BOOK-ENTRN-ONL\SYSTEM...The City intends to utilize the Book-Entry-Only System of The Depository Trust Company.New York.New York("DTC"). See"THE OBLIGATIONS-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.N.A., Dallas,Texas(see"THE OBLIGATIONS-Paying Agent/Registrar"in the Official Statement). SOURCE OF PAYMENT. .The Certificates constitute direct obligations of the City,payable from a combination of(i)the levy and collection of an annual ad valorem tax,within the limits prescribed by law,on all taxable property located within the City.and(ii) a limited pledge(not to exceed$1,000)of the Net Revenues from the operation of the City's Waterworks and Sewer System, as provided in the Certificate Ordinance. Further details regarding the Certificates are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES. The Certificates will be sold in one block,on an "All or None" basis,and at a price of not less than 102.50%and not more than 106.50%of their par value. Bidders are invited to name the rate(s)of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 10/0 or 1/20 of 1°ro 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. 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 Certificates 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 City's right to reject any or all bids and to waive any irregularities except time of filing, the sale of the Certificates 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 City'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 Certificates on the basis of semi-annual compounding.produces an amount equal to the sum of the par value of the Certificates plus any premium bid. 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 City 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 Certificates from the gross income of their owners,the Initial Purchaser will be required to complete.execute,and deliver to the City (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 Certificates of any stated maturity at the initial offering price, such certificate may'be modified in a manner approved by the City or by Norton Rose Fulbright US LLP, Dallas.Texas,bond counsel to the City("Bond Counsel"). In no event will the City fail to deliver the Certificates as a result of the Initial Purchaser's inability to sell a substantial amount of the Certificates at a particular price prior to delivery Each bidder.by submitting its bid,agrees to complete,execute,and deliver such a certificate at least six(6)days prior to the date of delivery of the Certificates. 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. ADDITIONAL CONDITION OF AWARD-DISCLOSURE OF INTERESTED PARTIES. New obligation of the City to receive information from winning bidder Effective January 1, 2016, pursuant to Texas Government Code Section 2252.908 (the"Interested Party Disclosure Act"),the City may not award the Certificates to the winning bidder unless the bidder submits to the City a Certificate of Interested Parties Form 1295 (the "Disclosure Form) as prescribed by the Texas Ethics Commission("TEC")before the City formally awards the Certificates to the winning bidder In the event that the bidder's bid for the Certificates is the best bid received. the City,acting through its financial advisor,will promptly notify the bidder That notification will serve as the conditional verbal acceptance of the bid,and will obligate the bidder to promptly' file a completed Disclosure Form,as described below,in order to complete the award. Process for completing the Disclosure Form. Reference should be made to the Disclosure Form,the rules of the TEC with respect to the Disclosure Form(the"Disclosure Rules")and the Interested Party'Disclosure Act. Instructional information regarding such iii matters are set forth at https:/hvww.ethics.state.tx.us/whatsnew/elf info_form1295.htm.For purposes of completing the Disclosure Form the Purchaser will need the following information.(a)item 2—name of governmental entity. City of Southlake.Texas and (b)item 3—the identification number assigned to this contract by the City:"2017 Certificates",and a description of the services to be provided under the contract: Purchase of Certificates of Obligation. The Interested Party Disclosure Act and the Disclosure Rules require a business entity contracting with the City to complete the form at the TEC Internet"portal"that may be accessed at the url set forth above,and then print,sign and deliver the Disclosure Form in physical form to the City Following the award of the Certificates,the City will acknowledge receipt of the completed Disclosure Form through the TEC website.as required by the law GOOD FAITH DEPOSIT . A Good Faith Deposit. payable to the "City of Southlake. Texas", in the amount of$110,100 00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check,which is to be retained uncashed by the City pending the 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 City prior to the opening of the bids,and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the 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 Certificates. 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 Certificates in accordance with the bid.then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened,and an award of the Certificates has been made DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS It is anticipated that CUSIP identification numbers will appear on the Certificates,but neither the failure to print or type such number on any Certificate nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Certificates 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 CUSIP numbers on the Certificates shall be paid by the City; provided,however,that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVER\ OF CERTIFICATES Delivery' will be accomplished by the issuance of one Initial Certificate (also called the "Certificate"or"Certificates"),either in typed or printed form,in the aggregate principal amount of$5,505,000*,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 Certificate, it shall be immediately cancelled and one definitive Certificate for each maturity will be registered and delivered only to Cede&Co.,and deposited with DTC in connection with DTC's Book-Entry-Only System. Deliver} will be at the principal office of the Paying Agent/Registrar. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City. or as otherwise directed by the City The Initial Purchaser will be given six business days'notice of the time fixed for delivery of the Certificates. It is anticipated that delivery of the Certificate(s)can be made on or about July 6.2017.and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Certificates by 10.00 AM.Central Time.on July 6.2017 If for any reason the City is unable to make delivery'on or before July 6.2017,the City 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 City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Certificates,provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS TO DELIVER% .The obligation of the Initial Purchaser to take up and pay for the Certificates 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 Certificates are offered when,as and if issued,subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Certificates is subject to the receipt by the Initial Purchaser of the opinion of Bond Counsel,to the effect that the Certificates are valid and binding obligations of the City'and that the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law,subject to the matters described under"TAX MATTERS"in the Official Statement,including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATEMENT At the time of payment for, and Initial Delivery of the Certificates,the City will execute and deliver to the Initial Purchaser a certificate in the form described in the Official Statement. CHANGE IN TAX EXEMPT STATUS At any time before the Certificates are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders on Certificates 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 iv GENERAL FINANCIAL ADVISOR . .FirstSouthwest, a Division of Hilltop Securities Inc., ("FirstSoutthwest") is employed as Financial Advisor to the City' in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. 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 Certificates.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 Certificates in states other than Texas will be made only pursuant to exemptions from registration or. where necessary. the Initial Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Initial Purchaser,at the Initial Purchaser's written request and expense.in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary,provided,however,that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL This Official Notice of Sale and Bidding instructions does not alone constitute an offer to sell the Certificates, but is merely notice of the sale of the Certificates. The offer to sell the Certificates is being made by means of the Official Notice of Sale and Bidding Instructions,the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Certificates. ISSUANCE OF ADDITIONAL DEBT The City is concurrently issuing its General Obligation Refunding Bonds.Series 2017 RATINGS The Certificates have been rated"AAA"by S&P Global Ratings.a division of S&P Global Inc.("S&P")and"AAA" by Fitch Ratings("Fitch").without regard to credit enhancement. THE PRELIDIINARI OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15C2-12 The City 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 City.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 Certificates. Representations made and to be made by the City 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 City 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 day's from the sale date an aggregate of 30 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Certificates. In addition,the City'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 City consents to the distribution of such documents in a"designated electronic format."Upon receipt,the Initial Purchaser shall promptly tile 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 City assumes no responsibility or obligation for the distribution or delivery of any'copies of the Official Statement in connection with the otTering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT The City will agree in the Certificate Ordinance 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 Certificates is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Certificate Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS. During the last five years,the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule 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 75201.Financial Advisor to the City. V On the date of the sale,the City Council will,in the Certificate Ordinance authorizing the issuance of the Certificates,confirm its approval of the form and content of the Official Statement,and any addenda,supplement or amendment thereto,and authorize its use in the reoffering of the Certificates by the Initial Purchaser Mayor City of Southlake,Texas ATTEST City Secretary City of Southlake,Texas May 26,2017 vi OFFICIAL BID FORM Honorable Mayor and City Council June 6.2017 City of Southlake,Texas Honorable Mayor and Members of the City Council. Reference is made to your Preliminary Official Statement and Official Notice of Sale and Bidding Instructions,dated May 26,2017 of$5505,000*CITY OF SOUTHLAKE,TEXAS.TAX AND WATERWORKS AND SEWER SYSTEM(LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION,SERIES 2017(the"Certificates").both of which constitute a part hereof. For your legally issued Certificates.as described in said Official Notice of Sale and Preliminary Official Statement,we will pay you par.plus a cash premium of$ for Certificates maturing and bearing interest as follows: Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 2/15/2018 $ 180,000 2/15/2028 $ 275.000 2/15/2019 200.000 2/15/2029 290.000 2/15/2020 205.000 2/15/2030 300,000 2/15/2021 215,000 2/15/2031 310.000 2/15/2022 220,000 2/15/2032 320.000 2/15/2023 230.000 2/15/2033 330,000 2/15/2024 235.000 2/15/2034 340.000 2/15/2025 245,000 2/15/2035 350.000 2/15/2026 255.000 2/15/2036 365,000 2/15/2027 265,000 2/15/2037 375.000 Of the principal maturities set forth in the table above,term Certificates have been created as indicated in the following table(which may include multiple term Certificates,one term certificate or no term certificate if none is indicated). For those years which have been combined into a "Term Certificate". 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 certificate maturity date shall mature in such year The Term Certificates created are as follows: Year of Principal Term Certificate First Mandatory Amount of Interest Maturity Date Redemption Term Certificate Rate $ °/o S $ °u $ °o PREMIUM(DISCOUNT) $ TRUE INTEREST COST The Initial Certificates shall be registered in the name of ,which will,upon payment for the Certificates,be cancelled by the Paying Agent/Registrar The Certificates will then be registered in the name of Cede& Co (DTC's partnership nominee),under the Book-Entry-Only System. A bank cashier's check or certified check of the Bank, , in the amount of $110.100 00.which represents our Good Faith Deposit(is attached hereto)or(has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts"herein. We agree to accept delivery of the Certificates 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,Central Time,on July 6,2017,or thereafter on the date the Certificates are tendered for delivery,pursuant to the terms set forth in the Official Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Certificates to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete,execute,and deliver to the City,at least six business days prior to delivery of the Certificates, a certificate relating to the"issue price"of the Certificates in the form and to the effect accompanying the Official Notice of Sale and Bidding Instructions,with such changes thereto as may be acceptable Norton Rose Fulbright US LLP, Dallas,Texas,Bond Counsel to the City %%e agree to provide a completed,notarized Form 1295 to the City promptly upon notification that our bid is the winning bid, and to provide in writing the initial reoffering prices and other terms,if any,to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, 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 City of Southlake, Texas, subject to and in accordance with the Official Notice of Sale and Bidding Instructions,this the 6th day of June,2017 Mayor City of Southlake,Texas ATTEST City Secretary City of Southlake,Texas ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of CITY OF SOUTHLAKE,TEXAS.TAX AND WATERWORKS AND SEWER SYSTEM(LIMITED PLEDGE)REVENUE CERTIFICATES OF OBLIGATIONS. SERIES 2017(the"Certificates"). 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 Certificates from the City of Southlake,Texas(the"Issuer")at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate,if any.have made a bona fide offering to the public of all of the Certificates 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 Certificates of each maturity at which a substantial amount(at least 10%)of the Certificates 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 2027 2019 2028 2020 2029 2019 2030 2021 2031 2022 2032 2023 2033 2024 2034 2025 2035 2026 2036 4 The term"public."as used herein,means persons other than bondhouses,brokers,dealers.and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5 The offering prices described above reflect current market prices at the time of such sales. 6 The undersigned and/or one or more other members of the underwriting syndicate,as the case may be.(have)(have not)purchased bond insurance for the Certificates. The bond insurance,if any,has been purchased from (the "Insurer")for a premium cost of$ (net of any nonguarantee cost.e.g.,rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions(including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt ser ice savings expected to be realized as a result of such insurance,discounted at a rate equal to the yield on the Certificates which results after recovery of the insurance premium.exceeds the present value of the bond insurance premium. 7 The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986.as amended,on the excludability of interest on the Certificates from the gross income of their owners. EXECUTED and DELIVERED this day of .2017 (Name of Underwriter or Manager) By (Title) S&P Global Ratings RatingsDirect® Summary: Southlake, Texas; General Obligation Primary Credit Analyst: Andy Hobbs,Dallas(972)367-3345,AndyHobbs@spglobal.com Secondary Contact: Daniel P Pulter,Centennial(1)303-721-4646,Daniel.Pulter@spglobal.com Table Of Contents .. ..... .. . .. .. ..... .. .............. .... ... .. .... ........... .. .. ........... . .. ..... ...... Rationale Outlook Related Research WWW STANDARDANDPOORS COM/RATINGSDIRECT MAY 19,2017 1 Summary: Southlake, Texas; General Obligation Credit Profile US$7.945 mil GO rfdg bnds ser 2017 dtd 06/01/2017 due 02/15/2028 Long Term Rating AAA/Stable New US$5.075 mil tax and wtrwks and swr sys(ltd pledge)rev certs of oblig ser 2017 dtd 06/01/2017 due 02/15/2037 Long Term Rating AAA/Stable New Rationale S&P Global Ratings assigned its'AAA'long-term rating to Southlake,Texas'series 2017 general obligation(GO) refunding bonds and series 2017 tax and waterworks and sewer system revenue certificates of obligation.At the same time, S&P Global Ratings affirmed its'AAA'long-term rating and underlying rating(SPUR)on the city's previously issued GO debt.The outlook is stable. The GO refunding bonds will refund certain maturities of the city's debt outstanding for net present value savings. Certificate proceeds will fund the construction of various public works projects. The certificates constitute direct obligations of the city,payable from a combination of levy and collection of annual ad valorem tax and a limited pledge of the net revenues from the city's combined waterworks and sewer system. Given the nominal nature of the utility pledge,we rate the certificates based on the GO pledge. Southlake's'AAA'rated bonds are eligible to be rated above the sovereign because we believe the city can maintain better credit characteristics than the U.S.in a stress scenario.Under our criteria"Ratings Above The Sovereign: Corporate And Government Ratings—Methodology And Assumptions,"published Nov 18, 2013,on RatingsDirect, U.S.local governments are considered to have moderate sensitivity to country risk.The city's locally derived property taxes are the source of security for the bonds, and the institutional framework in the U.S.is predictable with significant U.S.local government autonomy.In a potential sovereign default scenario,U.S.local governments would maintain financial flexibility through the ability to continue collecting locally derived revenues and U.S.local governments have independent treasury management. The rating reflects our view of Southlake's: • Very strong economy,with access to a broad and diverse metropolitan statistical area(MSA); • Very strong management,with"strong"financial policies and practices under our Financial Management Assessment methodology; • Strong budgetary performance,with operating results that we expect could improve in the near term relative to fiscal 2016,which closed with an operating deficit in the general fund but an operating surplus at the total governmental fund level in fiscal 2016; • Very strong budgetary flexibility,with an available fund balance in fiscal 2016 of 65%of operating expenditures; • Very strong liquidity,with total government available cash at 121.9%of total governmental fund expenditures and WWW STANDARDANDPOORS COM/RATINGSDIRECT MAY 19,2017 2 Summary:Southlake, Texas; General Obligation 4.6x governmental debt service,and access to external liquidity we consider exceptional, • Weak debt and contingent liability profile,with debt service carrying charges at 26.7%of expenditures and net direct debt that is 140.9%of total governmental fund revenue,but rapid amortization,with 70.2%of debt scheduled to be retired in 10 years;and • Strong institutional framework score. Very strong economy We consider Southlake's economy very strong.The city,with an estimated population of 28,800,is located in Denton and Tarrant counties in the Dallas-Fort Worth-Arlington,TX MSA,which we consider to be broad and diverse.The city has a projected per capita effective buying income of 245%of the national level,which we view as extremely high and a positive credit factor,and per capita market value of$238,177. Overall,the city's market value grew by 11.8% over the past year to$6.9 billion in 2017.The weight-averaged unemployment rate of the counties was 3.9%in 2016. The city,which is roughly 23 square miles, continues to benefit from its favorable location in the Dallas-Fort Worth Metroplex and close proximity to DFW International Airport.The city's fiscal 2017 market value is composed mainly of single-family residential properties(74%of the total market value)and commercial properties (16%).The city's top 10 taxpayers make up a modest 10.4%of the total market value and include several large commercial developments,a hotel,and medical complex. Major employers in the city include Sabre,a global technology provider to the travel industry;the local school district;Verizon Wireless;and a large grocery store. City officials report several large commercial real estate developments currently underway. Residential building permits have increased in each of the last five years. In 2015,the average home sale price in the city was$748,525. Home sales in the first two quarters of 2017 remain strong at 225. Given the ongoing development in the area,preliminary numbers show upward of a 10% increase in total market value for fiscal 2018 when compared with the previous year. Historically, Southlake's resident wealth levels have remained well above state and national averages.The city's unemployment rate trends below that of the state and nation for the same time period. Very strong management We view the city's management as very strong,with"strong"financial policies and practices under our Financial Management Assessment methodology,indicating financial practices are strong,well embedded,and likely sustainable. Management uses historical trends,departmental needs, and statistical information to forecast revenue and expenditures. Officials monitor the budget monthly and typically make adjustments midyear although they can be made at any time. Management has developed a comprehensive formal long-term financial plan and a formal capital improvement plan with identified funding sources. Southlake has a written,in-depth,and conservative investment policy,and makes monthly updates regarding holdings and earnings to the governing body. It does not have a formalized debt management policy,but does have informal targets for refunding parameters and types of debt that are acceptable for issue.A formal reserve policy targets reserves of at least 25%of operating expenditures for emergencies and has historically been maintained above this target. Strong budgetary performance Southlake's budgetary performance is strong in our opinion.The city had deficit operating results in the general fund of WWW STANDARDANDPOORS COM/RATINGSDIRECT MAY 19,2017 3 Summary:Southlake, Texas; General Obligation 6.9%of expenditures,but a surplus result across all governmental funds of 19.7%in fiscal 2016. Our assessment accounts for the fact that we expect budgetary results could improve from 2016 results in the near term. The city has consistently maintained solid financial performance within its operating budget. In fiscal 2016 the general fund experienced an$8.0 million operating surplus prior to$12.7 million in transfers out that were primarily used to finance future infrastructure and large projects in the capital projects and water and sewer enterprise funds. General fund revenues in 2016 were primarily derived from property taxes(47 5%of general fund revenues)and sales and mixed beverage taxes(30.6%). Smaller portions came from franchise taxes(6.7%)and licenses,permits,and fees (6.48%). Fiscal 2017 year-to-date financial performance remains strong. Sales tax collections are trending up slightly ahead of budget. City officials anticipate stable general fund operations.Any decline in available reserves in 2017 would be the result of money transferred for future capital projects.We anticipate the city's financial performance to remain strong. Very strong budgetary flexibility Southlake's budgetary flexibility is very strong,in our view,with an available fund balance in fiscal 2016 of 65%of operating expenditures,or$23.6 million.We expect the available fund balance to remain above 30%of expenditures for the current and next fiscal years,which we view as a positive credit factor. The city continues to designate funds for strategic initiatives,sourced from reserves in excess of 25%of general fund expenditures.The funds are used for one-time high-impact projects involving infrastructure maintenance, community enhancement,and capital acquisition,and are reported as assigned fund balance in the general fund.At fiscal year-end 2016,the assigned portion of fund balance designated as strategic initiatives was$3 7 million. Given 2016 financial performance and year-to-date 2017 projections,we believe Southlake's reserves will remain very strong over the next two years,well above the city's formal reserve policy of at least 25%of operating expenditures for emergencies. Very strong liquidity In our opinion, Southlake's liquidity is very strong,with total government available cash at 121.9%of total governmental fund expenditures and 4.6x governmental debt service in 2016. In our view,the city has exceptional access to external liquidity if necessary. We do not believe any obligation poses any significant risk to the city's liquidity. The vast majority of investments are in government agency securities,mutual funds,and state investment pools. Given year-to-date financial performance we anticipate Southlake's liquidity position to remain very strong in the near-to-medium term. Weak debt and contingent liability profile In our view,Southlake's debt and contingent liability profile is weak.Total governmental fund debt service is 26.7%of total governmental fund expenditures,and net direct debt is 140 9%of total governmental fund revenue. Approximately 70.2%of the direct debt is scheduled to be repaid within 10 years,which is in our view a positive credit factor. The city's high debt profile is primarily driven by significant overlapping debt of the local school district.The city has WWW STANDARDANDPOORS COM/RATINGSDIRECT MAY 19,2017 4 Summary:Southlake, Texas; General Obligation no variable-rate debt or swaps outstanding. It also has no privately placed debt outstanding or any other obligations that would negatively affect its debt profile or liquidity position. Officials anticipate modest annual issuances of$4 million to$5 million for various improvements throughout Southlake,which would support ongoing development and are in line with the capital plan. Southlake's combined required pension and actual other postemployment benefits(OPEB)contributions totaled 4.1% of total governmental fund expenditures in 2016.The city made its full annual required pension contribution in 2016. The city participates in the Texas Municipal Retirement System.At Dec. 31, 2015,the city's plan fiduciary net position was 85.5%funded,which is down from 91.4%in the prior year. Southlake has routinely made 100%of its annual required contribution to the plan,which was roughly$2.4 million in 2016.The city also provides OPEB in the form of health insurance benefits through a single-employer defined benefit medical plan. It has paid more than its annual required contribution for its OPEB obligation and at fiscal year-end 2016 recorded a net asset position. Strong institutional framework The institutional framework score for Texas municipalities is strong. Outlook The stable outlook reflects Southlake's strong-to-very strong financial metrics,which are supported by formalized and prudent fiscal management practices. The'AAA'rating also reflects the city's very strong economy with access to the Dallas-Fort Worth MSA,and high resident wealth levels.We do not expect to change the rating in the next two years. Downside scenario Although we view it as unlikely within the two-year outlook horizon,we could take a negative rating action if the financial performance and reserves were to materially decline.We could also take a rating action if additional debt issuances were to significantly increase fixed-cost carrying charges to a level we viewed as elevated and unmanageable. Related Research 2016 Update Of Institutional Framework For U.S. Local Governments Ratings Detail(As Of May 19, 2017) Southlake GO Long Term Rating AAA/Stable Affirmed Southlake GO Long Term Rating AAA/Stable Affirmed Southlake GO Long Term Rating AAA/Stable Affirmed Southlake GO Unenhanced Rating AAA(SPUR)/Stable Affirmed WWW STANDARDANDPOOAS COM/RATINGSDIRECT MAY 19,2017 5 Summary:Southlake, Texas; General Obligation Ratings Detail(As Of May 19, 2017)(cont.) Many issues are enhanced by bond insurance. Certain terms used in this report,particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria,and should therefore be read in conjunction with such criteria. 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Southlake, Texas New Issue Report Ratings New Issue Summary Long-Term Issuer Default Rating AAA Sale Date:6/6/2017 New Issues Series:$7,945,000 general obligation refunding bonds, series 2017,$5,07.5,0.00 tax and $7,945,000 General Obligation waterworks and sewer system (limited pledge)revenue certificates of obligation, series 2017, Refunding Bonds,Series 2017 AAA $5,075,000 Tax and Waterworks and $10,360,000 Southlake Community Enhancement and Development Corporation sales tax and Sewer System(Limited revenue bonds, series 2017 Pledge)Revenue Certificates of Obligation,Series 2017 AAA Purpose:Refund outstanding debt for interest cost savings(GOs), finance various public $10,360,000 Southlake Community Enhancement and Development improvements(certificates of obligation [COs]), construct community entertainment and Corporation Sales Tax Revenue recreation center(sales tax bonds) Bonds,Series 2017 AA+ Security:GOs and COs are payable from an annual property tax levy limited to$2.50 per$100 Outstanding Debt assessed valuation COs are additionally payable from a limited pledge(not to exceed$1,000) General Obligation Bonds AAA Certificates of Obligation AAA of the net revenues of Southlake's(the city)waterworks and sewer system Sales tax revenue Southlake Community Enhancement bonds are payable from a priority lien on a%of 1%sales and use tax. and Development Corporation Sales Tax Revenue Bonds AA+ Southlake Parks Development Corporation Sales Tax Revenue Issuer Rating: The 'AAA' Issuer Default Rating (IDR) and GO and CO ratings reflect the city's Bonds AA+ 9 Y' Rating Outlook exceptionally strong gap-closing capabilities, driven by strong revenue growth and sound Stable expenditure flexibility Sales Tax Bonds: The 'AA+' sales tax revenue bond rating reflects the security's resilience to a cyclical downturn in revenues, supported by low expected volatility Key Rating Drivers Economic Resource Base: Southlake, located 15 miles northwest of Dallas and 10 miles northeast of Fort Worth, is an affluent community with a population of about 30,000 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 Ratings 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 Carrying costs, consisting primarily of debt service, are elevated due to heavily front-loaded principal payments. Fitch anticipates expenditures to grow in line with revenues. Long-Term Liability Burden: 'aa' factor assessment. Fitch expects the city's long-term liability burden in relation to personal income, currently less than 9%, to remain modest to moderate, considering limited issuance plans and incorporating the potential for an increase in overlapping debt,which comprises the bulk of overall debt. Analysts Operating Performance: 'aaa' factor assessment. Fitch expects the city to demonstrate Jose Acosta exceptional financial resilience duringan economic downturn based on its stronga closin +1 512 215-3726 p gap g jose.acosta@fitchratings.com capacity and solid reserve levels. Rebecca Moses +1 512 215-3739 e becca.m ose s @fitch ra4 n g s.co m www fitchratings corn May 26, 2017 itchRatings ..... , , ,„,, „,, ,w, Southlake(TX) Scenario Analysis v 202017/03/24 Reserve Safety Margin in an Unaddressed Stress Analyst Interpretation of Scenario Results: Actual 'Scenario Robust planning and prudent cost management support maintenance of a ,700% - strong financial position,evidenced by high reserves in excess of policy 60.0% : targets.The city's fund balance policy targets a minimum 15%of general '50.0% 4 fund budgeted operating expenditures,with the stated optimum goal of 25%applicable to unassigned general fund reserves.Funds in excess of 40 0%-, %eft "No 25%are typically committed for strategic capital initiatives,helping to 300% -, ~ reduce growth in the city's indebtedness.The fiscal 2016 audit posted an unrestricted general fund balance of$23.6 million,equal to a large 49%of 20 0%- general fund spending.The city anticipates outperforming its balanced 100% - budget in fiscal 2017 based on favorable fiscal year-to-date results. 0 0% ---- t . 2010 zoti 2012 2013 2014 2015 2016 Year Year Year Based on historical results,Fitch would expect a moderate economic downturn to result in a modest decline in the first year of a downturn, Financial Resilience Subfactor Assessment, followed by a prompt rebound.Fitch would expect the city's financial Available Fund Balance bbb *a -aa -aaa position to remain solid through economic cycles. Scenario Parameters: Year 1 Year 2 Year 3 GDP Assumption(%Change) (1.0%) 0.5% 2.0% Expenditure Assumption(%Change) 2.0% 2.0% 2.0% Revenue Output(%Change) (1.0%) 4.7% 6.8% Inherent Budget Flexibility super., Id Revenues,Expenditures,and Fund Balance Actuals Scenario Output 2010 2011 2012 2013 2014 2015 2016 Year1 Year2 Year3 Total Revenues 33,289 33,665 35,277 37,649 40,906 43,457 44,034 43,594 45,628 48,735 %changein,Ruvenues _. _-... w..m.__1.1% a,,,,,,4,8% --.-6.7% ____&7% _ 62%._1...3% r -.--- ._. _ -_ Total Expenditures 29,383 31,200 30,830 34,894 34,237 35,461 36,018 36,739 37,474 38,223 %Change in Expenditures - 6.2% (1.2%) 13.2% (1.9%) 3.6% 1.6% 2.0% 2.0% 2.0% Transfers In and Other Sources 920 1,570 1,464 1,983 1,601 1,740 2,244 2,221 2,325 2,483 Transfers Out and Other Uses 2,035 5,133 3,000 3,915 4,490 8,160 12,740 12,995 13,255 13,520 Net Transfers (1,115) (3,563) (1,536) (1,932) (2,889) (6,420) (10,496) (10,773) (10,930) (11,036) Bond Proceeds and Other One-Time Uses Net Operating Surplus(+)/Deficit(-)After Transfers 2,791 (1,098) 2,911 823 3,780 1,575 (2,480) (3,918) (2,775) (525) Net Operating Surplus(+)/Deficit(-)(%of Expend and Transfers Out) 8.9% (3.0%) 8.6% 2.1% 98% 3.6% (5.1%) (7.9%) (5.5%) (1.0%) Unrestricted/Unreserved Fund Balance(General Fund) 17,983 17,012 19,922 20,491 24,517 26,111 23,627 19,709 16,934 16,409 Other Available Funds(Analyst Input) - - - - - - _ - _ Combined Available Funds Balance(GF+Analyst Input) 17,983 17,012 19,922 20,491 24,517 26,111 23,627 19,709 16,934 16,409 Combined Available Fund Bal.(%of Expend.and Transfers Out) 57.2% 46.8% 58.9% 52.8% 63.3% 59.9% 48.5% 39.6% 33.4% 31.7% Reserve Safety Margins Inherent Budget Flexibility Minimal Limited Midrange High Superior Reserve Safety Margin(aaa) 16.0% 8.0% 5.0% 3.0% 2.0% Reserve Safety Margin(aa) 12.0% 6.0% 4.0% 2.5% 2.0% Reserve Safety Margin(a) 8.0% 4.0% 2.5% 2.0% 2.0% Reserve Safety Margin(bbb) 3.0% 2.0% 2.0% 2 0% 2.0% Notes:Scenarioanalysis represents an unaddressed stress on issuerfinances Fitch's downturn scenario assumes a-1.0%GDP decline in the first year,followed by 0.5%and 2.0%GDP growth in Years 2 and 3,respectively Expendituresare assumed togrow at a 2.0%rate of inflation.Inherent budget flexibility isthe analyst'sassessment of the issuer's abilitytodeal with fiscal stress through tax and spending policy choices,and dete rmines the multiples used to calculate the reserve safety margin.For further details,please see Fitch's US Tax-Supported Rating Criteria. Southlake,Texas 2 May 26,2017 s • � hRatings =3 1 041 - Rating History (IDR) Rating Sensitivities Outlook/ Strong Fiscal Health: The IDR and GO and CO ratings are sensitive to shifts in fundamental Rating Action Watch Date AM Affirmed Stable 5/19/17 credit characteristics, most notably the city's continued strong fiscal health and solid economic AM Upgraded Stable 5/5/11 base. AA+ Revised Positive 4/30/10 AA Affirmed Positive 3/29/10 Ample Coverage: The sales tax ratings are sensitive to revenue declines materially larger AA Upgraded Stable 9/25/07 AA- Affirmed Stable 5/14/04 than historical experience AA- Assigned — 3/2/00 Credit Profile Southlake lies on the southern shore of Grapevine Lake within close proximity to Dallas, Fort Worth and the Dallas Fort Worth (DFW)airport. The largely residential area is characterized by exceptionally high wealth. Southlake's high $255,000 market value per capita reflects an average home price of$759,499 Residential properties comprise about 74%of the fiscal 2017 tax base, followed by commercial properties at 16%.While the city calculates it is 84%built-out by population, significant commercial capacity remains in its zoned commercial corridors. The city's tax base has a moderate concentration among technology, real estate, telecommunications, leisure/hotel and distribution interests with the top two taxpayers accounting for 4 6% of fiscal 2017 taxable assessed valuation (TAV) New development underway or in the planning phases include residential properties, hotels, medical and assisted living facilities, and office/industrial/warehouse projects. Revenue Framework The city's diverse general fund revenue stream is driven by property taxes (48% of total fiscal 2016 revenues)and sales taxes(31%) Southlake's strong 10-year general fund CAGR of 4 5% exceeds U S GDP gains. Growth prospects are strong as indicated by the trajectory of sales tax revenue and commercial development trends Fitch expects that ongoing economic growth will be strengthened by recent and near term completion of significant highway transportation improvements currently underway The city of Southlake's fiscal 2017 tax rate, $0 462 per$100 of TAV, provides ample capacity below the statutory cap of $2.50 Healthy growth has allowed the city to hold the tax rate steady for 14 consecutive years Expenditure Framework Public safety consumes about 44%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 provides a sound level of expenditure flexibility Fiscal 2016 carrying costs are elevated at 28% but reflect a heavily front-loaded principal payment schedule, accordingly, the city's 10-year amortization rate is 73%. Related Research Long-Term Liability Burden Fitch Rates Southlake,TX's GOs and COs 'MA',Sales Tax Bonds'AA+';Outlook Stable (May 2017) Fitch expects Southlake's long-term liabilities, currently 8% of personal income, to remain low gelated Criteria to moderate given limited debt issuance plans and well-funded pensions The expectation J S.Tax-Supported Rating Criteria(April incorporates the potential issuance of overlapping debt which currently comprises 65% of the 2016) overall long-term liability burden Southlake,Texas 3 May 26,2017 t Ratin s hnce This SCEDC issue will fund the second and final phase of a community entertainment and recreation center No additional SCEDC debt is currently planned. Future issuance plans are limited to $5 million of property-tax supported debt in approximately five years. Southlake typically funds a portion of its annual capital plan with general fund monies through its Strategic Initiatives Fund(SIF) 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 2016 net pension liability (NPL) of$11 5 million, with fiduciary assets covering 85 5% of total pension liabilities at the plan's 7%investment return assumption Operating Performance Robust planning and prudent cost management support maintenance of a strong financial position, evidenced by high reserves in excess of policy targets For details, see Scenario Analysis, page 2. The SIF, which is included in the overall reserve figure and equaled $3 7 million at fiscal 2016 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, 69% 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 Revenue Bonds The 'AA+' rating on the both the SCEDC and SPDC sales tax bonds, which share the same base and a common 1.25x additional bonds test (ABT), are supported by a solid financial cushion and strong revenue 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 % of 1% to 1/8 of 1% and voted to implement a % of 1% local sales and use tax for the 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 %% equivalent sales tax historical data represented by 75% of the Southlake Crime Control District sales tax revenues SCEDC and SPDC Coverage Cushion Fiscal 2016 SCEDC pledged sales tax revenues of $5 4 million cover MADS ($2.5 million in fiscal 2029) a sound 2.2x. Fiscal 2016 SPDC pledged revenues of $7 3 million cover MADs ($1 586 million in fiscal 2022)a strong 4 6x. 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 Southlake Texas 4 May 26,2017 itchRatings ance supports assessments in the IDR framework) and the largest decline in revenues over the period covered by the revenue sensitivity analysis. Based on the SPDC 15-year pledged revenue history, 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, respectively, for SCEDC and SPDC pledged revenues The largest actual cumulative decline in historical revenues is a 5 5% decline from fiscal years 2009-2010 for SCEDC (8% for SPDC in fiscal 2009) Although the SCEDC and SPDC sales and use taxes are collected on the same base, their collection trends vary modestly due to differences in audits and refunds by the state Assuming issuance to the 1.25x ABT,well below actual current coverage, the structures could tolerate a sizable drop in revenues, 20x the scenario result and 2.5x the largest actual revenue decline in the review period. The special tax bond ratings would be capped by the city's IDR. 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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 dients 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 6 May 26,2017 PARITY Result Screen Page 1 of 1 10 34.24 a m. CDST Upcoming Calendar Overview I Compare Summary Bid Results Southlake $8,065,000 General Obligation Refunding Bonds, Series 2017 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 ❑ Fidelity Capital Markets 1.809678 ❑ Citiurouo Global Markets Inc. 1.819485 ❑ Robert W. Baird & Co., Inc. 1.852125 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields 1981-20021-Deal LLC Ail rights reserved, Trademarks .. // , • I , /r__tom. i --/ • L/L/')l117 PARITY Bid Form Page 1 of 1 Upcoming Calendar Overview Result Excel Fidelity Capital Markets - Boston , MA's Bid ,:4;MR/�r Southlake $8,065,000 General Obligation Refunding Bonds, Series 2017 For the aggregate principal amount of$8,065,000 00, we will pay you $9,025,430 30, plus accrued interest from the date of issue to the date of delivery. The Bonds are to bear interest at the following rate(s). Maturity Date Amount$Coupon %Yield % Dollar Price 02/15/2019 695M 4.0000 0 9000 104.938 02/15/2020 710M 4.0000 1 0000 107 703 02/15/2021 735M 4 0000 1 1000 110.230 02/15/2022 750M 4.0000 1.2500 112.276 02/15/2023 780M 4.0000 1 3800 114 091 02/15/2024 810M 4 0000 1 5300 115 467 02/15/2025 845M 4 0000 1 6800 116.503 02/15/2026 880M 4.0000 1 8800 116.775 02/15/2027 910M 4.0000 2.0000 117.402 02/15/2028 950M 3 0000 2.2500 106 446 Total Interest Cost: $1,964,469 17 Premium. $960,430 30 Net Interest Cost: $1,004,038 87 TIC• 1 809678 Time Last Bid Received On:06/06/2017 10:29:33 CDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder. Fidelity Capital Markets, Boston , MA Contact: Kelli O'Donohue Title: Associate Telephone.617-563-3890 Fax: 617-692-5949 Issuer Name City of Southlake Company Name. Accepted By. Accepted By. Date• Date 1981-2002 i-Deal LLC All rights reserved, Trademarks httnc•//xxnuxu nawiccii 'hnmr i_rlpal rnm/Parity/acn/main acn9frame=rnntent&rnage=naritvRid... 6/6/2017 PARITY Result Screen Page 1 of 1 11.03 55 a m CDST Upcoming Calendar Overview Compare Summary Bid Results Southlake $5,505,000 Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2017 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 El Fidelity Capital Markets 2.752173 El Robert W. Baird &Co., Inc. 2.795200 ❑ Citicroup Global Markets Inc. 2 808260 El SAMCO Capital Markets 2.815869 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. 1981-2002 i-Deal LLC AU rights reserved, Trademarks httnc•//www newiccnehnme i-deal cnm/Parity/acn/main_asn?frame=content&nage=naritvRes... 6/6/2017 PARITY Bid Form Page 1 of 2 Upcoming Calendar Overview Result Excel Fidelity Capital Markets - Boston , MA's Bid Southlake $5,505,000 Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2017 For the aggregate principal amount of$5,505,000.00,we will pay you $5,855,086.25, plus accrued interest from the date of issue to the date of delivery The Bonds are to bear interest at the following rate(s): Maturity Date Amount$Coupon %Yield %Dollar Price 02/15/2018 180M 5 0000 0.8000 102.542 02/15/2019 200M 5 0000 0 9000 106.531 02/15/2020 205M 5 0000 1 0000 110.272 02/15/2021 215M 5 0000 1 1000 113 758 02/15/2022 220M 5.0000 1.2500 116.740 02/15/2023 230M 5 0000 1 3800 119 470 02/15/2024 235M 5 0000 1 5300 121.729 02/15/2025 245M 5.0000 1.6800 123 617 02/15/2026 255M 5 0000 1.8800 124.688 02/15/2027 265M 5 0000 2.0000 126.104 02/15/2028 275M 2.2500 2.3500 99 064 02/15/2029 290M 3.0000 2 5300 103.985 02/15/2030 300M 3.0000 2.6700 102.778 02/15/2031 310M 3.0000 2 8000 101 672 02/15/2032 320M 3 0000 2.9000 100 831 02/15/2033 330M 3 0000 3 0000 100.000 02/15/2034 340M 3 0000 3.0700 99 092 02/15/2035 350M 3 0000 3 1500 97.982 02/15/2036 365M 3 1250 3 2000 98.952 02/15/2037 375M 3.2500 3 2500 100 000 Total Interest Cost: $2,117,134 43 Premium: $350,086 25 Net Interest Cost: $1,767,048 18 TIC. 2.752173 Time Last Bid Received On.06/06/2017 10 59:01 CDST This proposal is made subject to all of the terms and conditions of the Official Bid Form, the Official Notice of Sale, and the Preliminary Official Statement, all of which are made a part hereof. Bidder Fidelity Capital Markets, Boston , MA Contact: Kelli O'Donohue Title Associate Telephone.617-563-3890 Fax: 617-692-5949 Issuer Name City of Southlake Company Name. httnc•//www nP.xTiccnPhnme i-rleal rnm/Parity/acn/main acn9frame=enntentRrnage=naritvRid... 6/6/2017 PARITY Bid Form Page 2 of 2 Accepted By: Accepted By: Date: Date* 1981-2002 I-Deal LLC All rights reserved. Trademarks https://www.newissuehome.i-deal.com/Parity/asn/main.asn?frame=content&nage=naritvfid 6/6/7(117 FirstSouthwest A Division of HOW Scofflaw,. TABLE OF CONTENTS GO Ref Bds,Series 2017&Tax&WW&SS(Ltd Pldg)Rev COs,Series 2017 City of Southlake,Texas --Fidelity Bid--- Final Numbers Report Page GO Ref Bds,Series 2017&Tax&WW&SS(Ltd Pldg)Rev COs.Series 2017 Sources and Uses of Funds . . . . . . . . 1 Form 8038 Statistics . . . 2 Proof of Arbitrage Yield . . . . . 5 General Obligation Refunding Bonds,Series 2017 Savings . . . . . . . 8 Summary of Refunding Results . . 9 Summary of Bonds Refunded . . . . . . . 10 Bond Summary Statistics . . 11 Bond Pricing . . . . . 13 Bond Debt Service . . 14 Unrefunded Bond Debt Service 16 Prior Bond Debt Service • 17 Escrow Requirements . . . . . . . . . . 18 Escrow Descriptions 19 Escrow Cost Detail . . . . 20 Escrow Cash Flow . 21 Escrow Sufficiency . . . . 22 Escrow Statistics . . . . 23 Tax&Waterworks&Sewer System(Limted Pledge)Revenue Certificates of Obligation.Series 2017 Bond Summary Statistics . . . . 24 Bond Pricing . . . . . . . 26 Bond Debt Service . . . . . 28 Jun 6,2017 12.47 pm Prepared by FirstSouthwest Old) FirstSouthwest A Division of Hilltop Securities.. SOURCES AND USES OF FUNDS GO Ref Bds,Series 2017&Tax&WW&SS(Ltd Pldg)Rev COs.Series 2017 City of Southlake,Texas --Fidelity Bid--- Final Numbers Dated Date 07/06/2017 Delivery Date 07/06/2017 Tax& Waterworks& Sewer System (Limted General Pledge) Obligation Revenue Refunding Certificates Bonds.Series of Obligation, Sources: 2017 Series 2017 Total Bond Proceeds: Par Amount 7.910.000 00 5,400,000 00 13,310,000 00 Net Premium/OID 982.833 80 396.777 90 1.379,611 70 8,892,833 80 5,796,777.90 14.689,611 70 Other Sources of Funds: Prior D/S Funds on Hand 152.000 00 152,000 00 9.044.833 80 5.796,777 90 14,841,611 70 Tax& Waterworks& Sewer System (Limted General Pledge) Obligation Revenue Refunding Certificates Bonds.Series of Obligation. Uses: 2017 Series 2017 Total Project Fund Deposits: Project Fund 5.675.000 00 5,675.000 00 Refunding Escrow Deposits: Cash Deposit //g,/S //8 /S Open Market Purchases 8.898.799 84 8.898.799 84 8,899,578.59 8.899,578.59 Delivery Date Expenses: Cost of Issuance 108.281 10 70.734 45 179,015.55 Underwriter's Discount 36.974 11 51.043 45 88.017.56 145.255.21 121,777 90 267,033 11 9,044.833.80 5,796,777 90 14.841,611.70 Note• Final Jun 6,2017 12:47 pm Prepared by FirstSouthwest(jld) Page 1 FirstSouthwest fr, A Division of Hiltop Securities, FORM 8038 STATISTICS GO Ref Bds.Series 2017&Tax&WW&SS(Ltd Pldg)Rei COs,Series 2017 City of Southlake,Texas --Fidelity Bid--- Final Numbers Dated Date 07/06/2017 Delivery Date 07/06/2017 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Bond Component: 02/15/2018 150,000 00 5 000% 102.542 153,813 00 150.000 00 02/15/2019 655,000 00 4 000% 104 938 687.343 90 655,000 00 02/15/2019 185.000 00 5 000% 106.531 197,082.35 185,000 00 02/15/2020 685,000.00 4 000°o 107 703 737,765.55 685.000 00 02/15/2020 190,000 00 5.000% 110.272 209,516.80 190,000 00 02/15/2021 715,000 00 4 000% 110.230 788,144.50 715,000 00 02/15/2021 200.000 00 5 000% 113 758 227.516 00 200,000 00 02/15/2022 740.000 00 4 000% 112.276 830,842.40 740.000 00 02/15/2022 210,000 00 5 000% 116.740 245,154 00 210.000 00 02/15/2023 770,000 00 4.000% 114.091 878,500.70 770,000.00 02/15/2023 225,000 00 5 000% 119 470 268,807.50 225,000 00 02/15/2024 800,000 00 4 000% 115 467 923,736 00 800,000 00 02/15/2024 235,000 00 5 000% 121 729 286,063 15 235,000 00 02/15/2025 835.000 00 4 000°ro 116.503 972,800 05 835.000 00 02/15/2025 245,000.00 5 000°ro 123 617 302.861 65 245.000 00 02/15/2026 870.000 00 4.000°%o 116 775 1.015,942.50 870.000 00 02/15/2026 260,000 00 5.000% 124 688 324,188.80 260.000 00 02/15/2027 905,000 00 4 000% 117 402 1,062,488 10 905,000 00 02/15/2027 270.000 00 5 000°% 126 104 340,480.80 270.000 00 02/15/2028 280,000 00 2.250% 99 064 277,379.20 280,000.00 02/15/2028 935,000 00 3 000% 106.446 995,270 10 935,000 00 02/15/2029 290,000 00 3.000% 103 985 301,556.50 290,000 00 02/15/2030 300,000 00 3 000% 102.778 308.334 00 300,000.00 02/15/2031 310.000 00 3 000°ro 101 672 315,183.20 310,000 00 02/15/2032 315.000 00 3 000% 100 831 317.617 65 315.000 00 02/15/2033 325.000 00 3 000% 100 000 325.000 00 325,000 00 02/15/2034 335,000 00 3 000% 99 092 331,958.20 335.000 00 02/15/2035 345,000 00 3 000% 97 982 338,037.90 345.000 00 02/15/2036 360,000 00 3 125% 98.952 356,227.20 360,000 00 02/15/2037 370,000.00 3.250% 100 000 370.000 00 370,000 00 13.310,000 00 14.689.611 /0 13.310,000 00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 02/15/2037 3.250% 370.000 00 370.000 00 Entire Issue 14.689.611.70 13.310.000.00 8.3053 2.2032% Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 2 aPFirstSouthwest A Division of Hi®op Securities. FORM 8038 STATISTICS GO Ref Bds.Series 2017&Tax&WW&SS(Ltd Pldg)Rew COs,Series 2017 City of Southlake.Texas --Fidelity Bid--- Final Numbers Proceeds used for accrued interest 0.00 Proceeds used for bond issuance costs(including underwriters'discount) 267.033 11 Proceeds used for credit enhancement 0 00 Proceeds allocated to reasonably required reserve or replacement fund 0.00 Proceeds used to currently refund prior issues 0 00 Proceeds used to advance refund prior issues 8,747,578.57 Remaining weighted average maturity of the bonds to be currently refunded - _ - - - 0 0000 Remaining weighted average maturity'of the bonds to be advance refunded 6 4464 Note: Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest(jld) Page 3 7r y 00 CA �Y 47 E, 7 7 ce y y O N Q.n 0 O yO C 0 0 0 O C O 0 0 O U M ✓, O C✓` 7 M oC V1 M N L.Loc M N6 O -• r I 'f M o0 v1 N oc oc C O` O\ oC ken CD C N •7 N r r- rO C O y O v) vc -- 7 N C N C N N N m -- y N N y N C C\ C 1` M C 7 C -- M co c3 co h vn 1` . O M v) 00 v) C M oC -- 00 -J C•,J Q y l— c- c- r- 00 oC C\ O' Cl` O -1..0 y -- oo rl -- .- cc N O O v f y oO U y c .D 7 C N oC N oC M r- 00 N 7 N DM -7 qD C, C O N O J: O Cc c. O: oC oC oC o0 C1 r CJ Co CT O` C.' Ci Com. C` C` '' .T y O V) U CO , g 0 0 0 0 0 0 J 0 0 0 U G O U C6 v) C C O O vi O 00 J �' — C O N v) v.) 1— C c N 0 O ^ O y 0 0 N N M v) v) ,ZD .00C -] N v: CJ U '7 7 7 7 C' 4 7 7 `7 d• N U. F- 1 L ,C y N f,, U• _ :'O _ O C N c3 w E cc y U .0 T •G > C C C C C O O C C C 0 00 3 ; _ 7 y ¢• 0 0 0 O 0 c O O C C C O M 3 p a^ _ 'cj C O O O O O O C O O O CD O 0 O c O O C O 0 C 0 0 C c0 000 .- a .y to C C c O O C C C C c O CU • O L C,,, 'O vi .c vt C v) O O ^ C , i' N C M 6 a` M v) C` 7 00 .9 O CJ 'O 00 O co C �•^ U (V c.. E O\ O N M --f v) 6 N 00 I t y -- O N (`I N N N N N y O O y . C C 0 O O O C C O U U, y T NN N N N N N t\I N \1 y "O rZ N N CC N N N N N N N N N N C y O C C C O c c O C C � c U. ee 0th C. i ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ ¢ .a gC igE5 &D66cE5C1666 nu 3v up ,, ,-: v ;i: v v v v E.- t v T — — O > i U T 0'6 v L v N s. i IA p . co IA O ^ y L D Y .0 4.S a 3� k pp -Z Fc3 Q rl iia E.c. N U.4 N C O c 7 FirstSouthwest IMP A Division of HiNtop Securities_ PROOF OF ARBITRAGE YIELD GO Ref Bds,Series 2017&Tax&WW&SS(Ltd Pldg)Rev COs,Series 2017 City of Southlake,Texas --Fidelity Bid--- Final Numbers Present Value to 07/06/2017 Date Debt Service Total ra 2.2032142102% 08/15/2017 33.263 75 33.263.75 33,184.88 02/15/2018 428,035.63 428,035 63 422,367.94 08/15/2018 252,112.50 252,112.50 -246.063.59 02/15/2019 1.092.112.50 1,092.112.50 1,054,295.34 08/15/2019 234,387.50 234,387.50 223.805 78 02/15/2020 1,109.387.50 1,109.387.50 1,047.760.59 08/15/2020 215,937.50 215,937.50 201,719 93 02/15/2021 1,130.937.50 1,130,937.50 1.044,963.88 08/15/2021 196,637.50 196,637.50 179,709 47 02/15/2022 1,146.637.50 1,146.637.50 1,036.508 09 08/15/2022 176,587.50 176.587.50 157,887 76 02/15/2023 1.171,587.50 1,171.587.50 1.036,108.33 08/15/2023 155,562.50 155,562.50 136,074 67 02/15/2024 1,190,562.50 _ 1,190,562.50 1,030,06947 08/15/2024 133.687.50 133,687.50 114,405.54 02/15/2025 1,213.687.50 1.213.687.50 1,027318.43 08/15/2025 110.862.50 110,862.50 92.816.42 02/15/2026 1.240.862.50 1.240,862.50 1.027.556.57 08/15/2026 86,962.50 86,962.50 71,228.87 02/15/2027 2,786,962.50 2.786.962.50 2,257,860.41 08/15/2027 39,237.50 39,237.50 31,441 93 02/15/2028 319,237.50 319,237.50 253,025 18 08/15/2028 36,087.50 36,087.50 28,291 02 02/15/2029 36,087.50 36,087.50 27,982.76 08/15/2029 36,087.50 36,087.50 27,677.86 02/15/2030 36,087.50 36,087.50 27,376.28 08/15/2030 36,087.50 36,087.50 27,077 99 02/15/2031 346,087.50 346,087.50 256,854.63 08/15/2031 31,43750 31,437.50 23.077 64 02/15/2032 346,437.50 346,437.50 251,541.86 08/15/2032 26.712.50 26.712.50 19,184 12 02/15/2033 351,712.50 351,712.50 249.837.17 08/15/2033 21.837.50 21,837.50 15.343 14 02/15/2034 356.837.50 356,837.50 247,983 98 08/15/2034 16,812.50 16,812.50 11,556.53 U2/1 /2035 .361,812..)0 361,812.0 245.991 // 08/15/2035 11,637.50 11,637.50 7,825 98 02/15/2036 371,637.50 371.637.50 247,195 42 08/15/2036 6,012.50 6,012.50 3.955 65 02/15/2037 -376,012.50 376,012.50 244,684.84 17,270,674.38 17,270.674.38 14,689,611.70 Proceeds Summary Delivery date 07/06/2017 Par Value 13.310,000 00 Premium(Discount) 1 379,611 70 Jun 6.2017 12 47 pm Prepared by FirstSouthwest(jld) Page 5 aPFirstSouthwest A Division of HiCtoo Securities_ PROOF OF ARBITRAGE YIELD GO Ref Bds,Series 2017&Tax&WW&SS(Ltd Pldg)Rev COs,Series 2017 City of Southlake,Texas Fidelity Bid--- Final Numbers Proceeds Summary Target for yield calculation 14,689.611.70 Jun 6,2017 12.47 pm Prepared by FirstSouthwest Old) Page 6 FirstSouthwest TS? A Division of Nikon Securities. PROOF OF ARBITRAGE YIELD GO Ref Bds,Series 2017&Tax&WW&SS(Ltd Pldg)Rei COs.Series 2017 City of Southlake,Texas --Fidelity Bid--- Final Numbers Assumed Call/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Component Date Rate Yield Date Price Call/Maturity BOND 02/15/2028 3 000% 2.250% 02/15/2027 100 000 2.250394% BOND 02/15/2029 3 000% 2.530°ro 02/15/2027 100 000 2.529913% BOND 02/15/2030 3 000°%o 2.670% 02/15/2027 100 000 2.669984% Rejected Call/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Component Date Rate Yield Date Price Call/Maturity BOND 02/15/2028 3.000% 2.250% 2.311191% BOND 02/15/2029 3 000°ro 2.530% 2.599932% BOND 02/15/2030 3 000% 2.670% 2.737805% Note: Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 7 FirstSouthwest A Division of Whop Securities_ SAVINGS City of Southlake,Texas General Obligation Refunding Bonds.Series 2017 Prior Prior Prior Refunding Date Debt Service Receipts Net Cash Flow Debt Service Savings 09/30/2017 186,175 00 152,000 00 34,175.00 33,263 75 911.25 09/30/2018 372,350 00 372,350.00 307,050.00 65,300 00 09/30/2019 1,063,250 00 1.063.250.00 948.950.00 114,300 00 09/30/2020 1,064,450 00 1.064.450 00 952.150 00 112.300 00 09/30/2021 1.063.971.88 1,063.971 88 954.150 00 109,821.88 09/30/2022 1,061,300 01 - 1,061,300 01 950,050 00 111,250 01 09/30/2023 1,061,768 76 1.061.768.76 949,850 00 111,918.76 09/30/2024 1,060.209.38 1,060.209.38 948,450 00 111,759.38 09/30/2025 1.065.812.50 1.065.812.50 950.750 00 115,062.50 09/30/2026 1.063,962.50 1.063,962.50 951.650 00 112,312.50 09/30/2027 1,059,693 75 1,059,693 75 951,150 00 108,543 75 09/30/2028 1.063,400 00 1.063.400.00 949,025.00 114,375 00 11.186.343 78 152,000 00 11.034,343 78 9.846.488.75 1,187.855 03 Savings Summary Savings PV date 07/06/2017 Savings PV rate 2.025735% PV of savings from cash flow 1,056,272.21 Net PV Savings 1.056,272.21 Note Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest Old) Page 8 FirstSauthwest 44110 A DtviSion of Hi®tep Securities. SUMMARY OF REFUNDING RESULTS City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Dated Date 07/06/2017 Delivery Date 07/06/2017 Arbitrage yield 2.203214°%o Escrow yield 1 086119% Value of Negative Arbitrage 58,802.75 Bond Par Amount 7,910,000 00 True Interest Cost — 1.811288% Net Interest Cost 1 946535°%o All-In TIC 2.025735% Average Coupon 3.805101% Average Life 6 434 Par amount of refunded bonds 8,585,000 00 Average coupon of refunded bonds 4 424931°%o Average life of refunded bonds 6.464 PV of prior debt to 07/06/2017(W 2.025735% 9,955,850 80 Net PV Savings 1,056,272.21 Percentage savings of refunded bonds 12.303695% Note• Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 9 FirstSouthwest iii:41P A Division of t4 top Securities_ SUMMARY OF BONDS REFUNDED City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Maturity Interest Par Call Call Bond Date Rate Amount Date Price Tax&Waterworks&Sewer System(Limited Pledge)Revenue Certificates of Obligation.Series 2008 SERIAL 02/15/2019 4 000% 705,000 00 02/15/2018 100 000 02/15/2020 4 000% 735,000 00 02/15/2018 100 000 02/15/2021 4 125% 765,000 00 02/15/2018 100 000 02/15/2022 4.250% 795,000 00 02/15/2018 100 000 02/15/2023 4.250°o 830.000 00 02/15/2018 100 000 02/15/2024 4.375% 865,000 00 02/15/2018 100 000 02/15/2025 4.500% 910,000.00 02/15/2018 100 000 02/15/2026 4.500°i0 950.000 00 02/15/2018 100 000 02/15/2027 4 625% 990,000 00 02/15/2018 100 000 02/15/2028 4.500% 1,040.000 00 02/15/2018 100 000 8.585,000 00 Note: Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest(jld) Page 10 FirstSouthwest A Division of Hilton Securities. BOND SUMMARY STATISTICS City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Dated Date 07/06/2017 Delivery Date 07/06/2017 First Coupon 08/15/2017 Last Maturity 02/15/2028 Arbitrage Yield 2.203214°%o True Interest Cost(TIC) 1 811288% Net Interest Cost(NIC) 1.946535°ro All-In TIC - - 2 025735% Average Coupon 3.805101% Average Life(years) 6.434 Duration of Issue(years) 5.801 Par Amount 7,910.000 00 Bond Proceeds 8,892,833.80 Total Interest 1.936,488.75 Net Interest 990,629 06 Bond Years from Dated Date 50.891,916.67 _- Bond Years from Delivery Date 50,891,916.67 Total Debt Service 9,846.488.75 Maximum Annual Debt Service 954.150 00 Average Annual Debt Service 928,184.33 Underwriter's Fees(per$1000) Average Takedown Other Fee 4 674350 Total Underwriter's Discount 4.674350 Bid Price 111 957771 Par Average Average Bond Component Value Price Coupon Life Bond Component 7.910.000 00 112.425 3.805% 6 434 n innnn L /1411 Alrin Arbitrage TIC TIC Yield Par Value 7.910.000 00 7,910,000 00 7,910,000 00 +Accrued Interest +Premium(Discount) 982.833.80 982,833.80 982,833.80 -Underwriter's Discount -36,974 11 -36,974 11 -Cost of Issuance Expense -108,281 10 -Other Amounts Target Value 8.855.859 69 8,747.578.59 8,892.833.80 Target Date 07/06/2017 07/06/2017 07/06/2017 Yield 1.811288% 2.025735% 2.203214% Jun 6,2017 12:47 pm Prepared by FirstSouthwest(jld) Page 11 FirstSouthwest A Division of Hiltop Securities. BOND SUMMARY STATISTICS City of Southlake.Texas General Obligation Refunding Bonds.Series 2017 Note: Final __m,. Jun 6.2017 12.47 pm Prepared by FirstSouthwest(jld) Page 12 M y COG C ^ C v% C C O O V1 O c C O C C C. vn v.-) '7 N co co; un oC C M 4-1 11 N co qC co, N oC O M C 7 VD 7 '7 O M 0 - oC l— M i u M N oC V1 N oC p, --A- N oC G Q N N M C o0 M N N C N M ul N C co N M `7V) ..0 oC �. C` CD R5CD U c U L_L O c co N N y C N U p v, r1 O \° 8o 0 8° .n C Y o O .n — c OM N .p •y N N N N — V C !` CJ «� N �, V1 o ,- c N N N O — .1-, — y -- — i U N N N co co O — 0, C. V vi y CC M O 'C ,— N M vn N ' — — — co oC oC — O 'L` co Z L M O M N C' .D O N co co co O x C CT N N N C 7 vn N -S f N N N O M M N CT C\ y p C M M 1, oc V1 �% F- — -r � cc�i -r v-, .00 � ,o � v^ � moo occ oc o0 7 ti C7 co C co C O — O N N 'C Vi Vi U co CCC cc x `' x OCC E2 S 'G N OC 00 oC C. c O ,o ° o 0 0 00 0 0 0 0 0 p C ?,' O O C C O C O C C C CG Y C .;. O C O V1 00 M OC oC C O c — N M vn 'C oC O N U b4 C N N L 0 C y o 00 0 0 0 0 0 0 0 O O C O O C O O C O C L! O O C O O O C O C O p C U 1.1 v C O O C O O C 0 0 0 V '7 - 7 `7 '•S 7 '7 'S '7 M Q y N C.) C cn i. s. cn .- 15 CD O o O O o O o 0 00 co O co co O co co co co. co co y U C � p i C y i .n u> C O C C v'. vi O • < y L C �n o0 — 7 l- co M [- c M �, 0 C '' U N C` O — N M -rrN v� ,oN oC -.J > -- N N N N CJ N C C ry C y O C O O O C O O C O y N N N N N N N N N N V) un V1 vn V) un V1 V1 V1 vn L C r7 N N N N N N N N N N -- - -0 t . O C O C C O C O C C U. ',7,-, T L AS C C y w` .F C C 0 4. C. C. a.y 5 5 C !�r p p C Ad UC.) C C a W = MPo LLa N c S z FirstSouthwest A Division of Hilltop Securities. BOND DEBT SERVICE City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Period Ending Principal Interest Debt Service 09/30/2017 33.263 75 33.263 75 09/30/2018 307,050 00 307.050 00 09/30/2019 655,000 293,950 00 948,950 00 09/30/2020 685.000 267,150 00 952,150 00 09/30/2021 715.000 239,150 00 954,150.00 09/30/2022 740,000 210,050.00 950,050.00 09/30/2023 770,000 179,850.00 949.850 00 09/30/2024 800.000 148.450 00 948.450 00 09/30/2025 835.000 115.750 00 950,750 00 09/30/2026 870,000 81,650 00 951,650 00 09/30/2027 905,000 46,150 00 951,150 00 09/30/2028 935,000 14,025.00 949,025.00 7,910,000 1.936.488 75 9.8 46.488 75 Note• Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest Old) Page 14 FirstSouthwest A Division of Hilltop Securities_ BOND DEBT SERVICE City of Southlake.Texas General Obligation Refunding Bonds.Series 2017 Period Annual Ending Principal Interest Debt Service Debt Service 08/15/2017 33,263.75 33,263 75 09/30/2017 33.263 75 02/15/2018 153.525 00 153,525 00 08/15/2018 153.525 00 153.525 00 09/30/2018 307,050.00 02/15/2019 655.000 153.525 00 808.525 00 — - - 08/15/2019 140.425 00 140,425 00 09/30/2019 948,950 00 02/15/2020 685,000 140.425 00 825,425 00 08/15/2020 126.725 00 126,725 00 09/30/2020 952,150 00 02/15/2021 715,000 126.725 00 841.725 00 08/15/2021 112.425 00 112,425 00 09/30/2021 954.150 00 02/15/2022 740,000 112,425 00 852.425 00 08/15/2022 97,625 00 97.625 00 09/30/2022 950 050.00 02/15/2023 770.000 97,625 00 867,625 00 08/15/2023 82.225 00 82.225 00 09/30/2023 949,850 00 02/15/2024 800,000 82.225 00 882,225 00 08/15/2024 66.225 00 66,225 00 09/30/2024 948,450 00 02/15/2025 835,000 66.225 00 901,225 00 08/15/2025 49,525 00 49,525 00 09/30/2025 950,750 00 02/15/2026 870,000 49,525 00 919,525 00 08/15/2026 32.125 00 32,125 00 09/30/2026 951,650 00 02/15/2027 905,000 32,125 00 937,125 00 08/15/2027 14,025 00 14.025 00 09/30/2027 951,150 00 02/15/2028 935,000 14,025 00 949,025 00 09/30/2028 949,025 00 .... • 1 1 1 1 . ,.. • .• a , , .. Note• Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 15 FirstSouthwest A Division of Hi®top Securities. UNREFUNDED BOND DEBT SERVICE City of Southlake.Texas General Obligation Refunding Bonds,Series 2017 Annual Period Debt Debt Ending Principal Interest Service Service 08/15/2017 13,600 13,600 09/30/2017 13.600 02/15/2018 680.000 13.600 693,600 09/30/2018 693,600 680.000 27,200 707.200 707.200 • Note: Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest Old) Page 16 iiltt FirstSouthwest A Division of Hilltop Secures_ PRIOR BOND DEBT SERVICE City of Southlake.Texas General Obligation Refunding Bonds,Series 2017 Period Ending Principal Interest Debt Service 09/30/2017 186,175.00 186,175 00 09/30/2018 372,350.00 372.350 00 09/30/2019 705.000 358.250 00 1,063.250 00 09/30/2020 735.000 329.450 00 1.064.450 00 09/30/2021 765.000 298.971 88 1.063.971.88 09/30/2022 795.000 266.300 01 1.061.300 01 09/30/2023 830,000 231,768 76 1.061,768.76 09/30/2024 865,000 195,209.38 1,060.209.38 09/30/2025 910.000 155,812.50 1.065.812.50 09/30/2026 950.000 113,962.50 1,063.962.50 09/30/2027 990,000 69,693 75 1,059.693 75 09/30/2028 1,040.000 23.400 00 1,063.400 00 8.585.000 2.601.343 78 11,186,343 78 Note: Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 17 FirstSouthwest 411P A Division of Hiltop SEturties_ ESCROW REQUIREMENTS City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Period Principal Ending Interest Redeemed Total 08/15/2017 186,175 00 186,175 00 02/15/2018 186,175.00 8,585,000 00 8,771.175 00 372,350 00 8.585.000 00 8,957,350 00 Note. Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest Old) Page 18 FirstSouthwest 4:SP A Division of HiRoo Seoirrtfes. ESCROW DESCRIPTIONS City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Type of Maturity Par Interest Interest Interest Security Date Amount Rate Yield Price Class Frequency Day Basis Jul 6,2017 TNote 08/15/2017 139,000 4 750°%o 0 748% 100.440340 Periodic Semiannual ACT/ACT TNote 02/15/2018 8,727,000 1 000% 1082°%o 99 949859 Periodic Semiannual ACT/ACT 8,866,000 Note Final Jun 6,2017 12:47 pm Prepared by FirstSouthwest(jld) Page 19 FirstSouthwest A Division of Hop Securities_ ESCROW COST DETAIL City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Type of Maturity Par Accrued Total Security Date Amount Rate Yield Price Cost Interest Cost CASH. TNote 08/15/2017 139,000.00 4 7500/0 0 747795% 100 44034000 139,612.07 2.571 69 142,183.76 TNote 02/15/2018 9,006 93 1 000% 1 082243% 99 94985866 9,002.41 35.08 9.037 49 148,006.93 148,614.48 2,606 77 151,221.25 BP• TNote 02/15/2018 8,717.993.07 1 000% 1 082243% 99 94985866 8.713,621 75 33,956.82 8.747,578.57 8.866,000 00 8,862.236.23 36,563.59 8,898.799.82 Purchase Cost of Cash Total EscroNA Date Securities Deposit Escrow Cost Yield CASH 07/06/2017 151,221.25 778.75 152,000 00 0.848384% BP 07/06/2017 8,747.578.57 8.747,578.57 1 086119% 8.898,799.82 778 75 8.899.578.57 Note- Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 20 FirstSouthwest A Division of Hi®top Securities_ ESCROW CASH FLOW City of Southlake.Texas General Obligation Refunding Bonds.Series 2017 Net Escrow Date Principal Interest Receipts 08/15/2017 139,000 00 46,936.25 185,936.25 02/15/2018 8,727,000 00 43,635 00 8,770.635 00 8.866.000 00 90.571.25 8,956,571.25 Escro‘N Cost Summary Purchase date 07/06/2017 Purchase cost of securities 8.898.799 84 Note: Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 21 FirstSouthwest440 A Division of Hilltop Securities_ ESCROW SUFFICIENCY City of Southlake,Texas General Obligation Refunding Bonds,Series 2017 Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance 07/06/2017 778.75 778.75 778 75 08/15/2017 186,175.00 185,936.25 -238.75 540 00 02/15/2018 8.771.175 00 8.770,635 00 -540.00 8,957,350 00 8,957,350 00 0 00 Note• Final Jun 6.2017 12.47 pm Prepared by FirstSouthwest(jld) Page 22 rN N a 00 c1 C- " - r r` N co 0C N O �, - v) N U O , y O O` u> O > bo M M N 2 O N N c3 c" 0C N O ..L` N iri 00 '> z Q o0 00 - - --_- - -_ - ._ Lc) in 0 3 a - o , 0 0 N r7 U N o oc a rs `r° c o irix ct - .o 00 r` DD DO c N -oC4 EO o4o N -6 ^ c Cr `n I)in een e0 O '7 U / 7 00 N N P H C L GO O o 0 - N of) s N C o N < 'O v, s F. O � .. 3 o �y o C - O L.) oc — >,.0 - rn x v V 7 ca ce 00 ..c o - .a > O ^ ct° L c3 F.! O. ) CC 0C 0 > "�' - O o 0 - C) L 0 — cs N N C O Q C.D4 ..= N N O U . .10 G O O ` M O C 'O E j., O O O 3 c3 ;n O r` r` y O FO o v . U o oO oc s > o r` r` _ r-i r- U v) '7 C' - N 00 Cid 0C 00 LL. c. >, L Ad 2 ~3 N c .� oL E 3g- Qa ..8 E O U.Q - N a.) o E z FirstSouthwest"igt A Division of Hiltop Securities_ BOND SUMMARY STATISTICS City of Southlake,Texas Tax and Waterworks and Sewer System(Limited Pledge)Revenue Certificates of Obligation,Series 2017 Dated Date 07/06/2017 Delivery Date 07/06/2017 First Coupon 02/15/2018 Last Maturity 02/15/2037 Arbitrage Yield 2.203214% True Interest Cost(TIC) 2.752492% Net Interest Cost(NIC) 2.838225% All-In TIC - 2.888104% Average Coupon 3.398664% Average Life(years) 11 424 Duration of Issue(years) 9.285 Par Amount 5,400,000 00 Bond Proceeds 5,796,777.90 Total Interest 2.096.635.63 Net Interest 1,750.901.18 Bond Years from Dated Date 61.690.000 00 Bond Years from Delivery Date 61,690,000.00 Total Debt Service 7,496,635 63 Maximum Annual Debt Service 377,650 00 Average Annual Debt Service 382,318.86 Underwriter's Fees(per$1000) Average Takedown Other Fee 9 452491 Total Underwriter's Discount 9 452491 Bid Price 106 402490 Par Average Average Bond Component Value Price Coupon Life Bond Component 5,400.000 00 107.348 3.399°ro 11 424 5.400.000 00 11 424 All-In Arbitrage TIC TIC Yield Par Value 5,400,000 00 5.400.000 00 5,400.000 00 +Accrued Interest +Premium(Discount) 396,777.90 396,777 90 396.777 90 -Underwriter's Discount -51,043.45 -51.043 45 -Cost of Issuance Expense -70.734 45 -Other Amounts Target Value 5.745,734.45 5,675.000 00 5,796,777.90 Target Date 07/06/2017 07/06/2017 07/06/2017 Yield 2.752492% 2.888104% 2.203214% Jun 6,2017 12.47 pm Prepared by FirstSouthwest Old) Page 24 igtFirstSouthwest A Division of Hi®top Securities_ BOND SUMMARY STATISTICS City of Southlake,Texas Tax and Waterworks and Sewer System(Limited Pledge)Revenue Certificates of Obligation.Series 2017 Note• Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 25 sc N v t0 a G E ^ O O O O O v1 v) 0 0 0 0 0 0 vn O C C O C ..--. C M 00 C O v1 - `O 00 00 00 ..on C N 'C 00 - 00 CT M N 'C C '7 1` M - 00 O C ,6 7 M l- - N N l: E O - 00 - - Ut O �o 4D 00 00 N v1 M 00 - 7 Vo [-- l- v 00 O v1 Ur - 00 C 00 ^ 7 'o 41 M - 'o C CT r- t- o. C M N D 1` v) M - 1: d' C N ^ 00 v1 N M 6 M 6 - - N M ..7r va .In t` CT M - N O C O O cC U O O C C U 0 0 0 0 M. C o 0 0 O o 0 0 o N V V N n n t` n cA N N N N y O O O O N N N N O U Q kin vn v1 vn 0,, oq N N N N C O C O 0 p O0 0 0 0 y. C DD -- O �' -O O O M v) M N co -. 'C N 00 C�i V 2 N N N N cc d] u rn C J (`I - N 00 O O CT N 00 7 -- vn 00 N - O N N N O ce C C1 7 M r- 4-1 "t N N - 00 O '0 00 N N M C CT 00 v1 O Y. O kr) vn N N N 7 1` 'C 'C - O C, n C 00 O O C' C, O 0 • y G N 6 O M 'C C^ - M 7c C' M N - 0 0 C N 00 O 7 L✓ C C ^ - ^ - N N N N CT O C C C O CT C, Chi C - v C s -v 0 0g. V] -p G o 0 0 0 8 Oo 0 0 0 0 0 0 0 0 0 0 0 0 z 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C 0 O O O O C C O O C C C O O O O O O C O O T >,,, C C O 0 v1 00 MCD 00 O Ul M r- O C O - C U1 00 O\ O - Nm VD 00 O M un00 CT O C O - N N u v C O N N N N N N '' M M M M E N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 80 0 0 4: C 0 0 0 C C C C 0 C 0 0 C 0 0 C o C ' C c3 O O O O C C C C O O O C O O O O C C ( C s. C>!. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N O O O O O C O O C O (N N O C O O O C O -- (N N y v) v1 vn v. U1 Ur v1 va v) U1 N M M M M M M M M M cr C C _ O O C C O O O C O O O O C O O C C O O O C C m C C O O C O O O O 0 O C O C 0 0 0 0 0 0 0 C ,1. C O O C O C O O O O O O O O O O O C C O O O C E O vi O O O v. vi vi C C C C C C U1 Ur U, ' C O O M o0 C. C - N M ..7 'D N 00 a O - - N M 4 C N O Q - - - N N N N N N N N N M M M M M M M M 4 N tr. c0 c '0 ._. e5 00 Cr, O -- N M4 vi ,o [- 00 C1 C -- N M 7 vi •D l- E-- > - - N N N N N N N N N N M M M M M Mn Men . O O C C C C O C O C O O O O O O O O C C Q N N N N N N N N N N N N N N N N N N N N = vn V1 un un un V1 V1 V1 Le, V1 Vl 4-, vn V1 V1 (1 un un V1 Le) X�03 Q -- G N N eV N N N N N N N N N N N N N N el N N - - — O -- 11!!1 .. O O O C C C C C C O C O C O O O C O C C L T aD .O y C 'a' i t O O 0.y c. id g 3= o 0 a p = N 'y '_a N C 7 M 0U c3 r N C C CO C o N N ri S 7 O C3 M C` 7 U r C O r- N co O © O •n V V oc C' -r c3 C O C O C r- N M 7 7 X y N N N C s r-V N O r- r- O r- r- C O C — v; �n y` N N N O C C' R r N N 'O Vl V1 V1 �n a - N o c7,ci) •C o O C - E U v C N rzs C _ n .O Y s L Q C. c =o a a ami i C O - O U cs y U E C c i• ccs 2 7 ? L < .G D L E C3 i O` C C U N C] L w as a � ad z C3 C3 'll s C C y -o a y� a C 3a 8 73 maa a 'L O z FirstSouthwest A Division of Hilltop Securities. BOND DEBT SERVICE City of Southlake,Texas Tax and Waterworks and Sewer System(Limited Pledge)Revenue Certificates of Obligation,Series 2017 Period Ending Principal Interest Debt Service 09/30/2018 150,000 223,098.13 373,098.13 09/30/2019 185,000 192.550 00 377,550 00 09/30/2020 190,000 183,175 00 373,175 00 09/30/2021 200.000 173.425 00 373.425 00 09/30/2022 210,000 163.175 00 373,175.00 09/30/2023 225,000 152,300.00 377.300 00 09/30/2024 235,000 140,800 00 375,800 00 09/30/2025 245.000 128,800 00 373,800 00 09/30/2026 260,000 116.175 00 376.175.00 09/30/2027 270,000 102,925.00 372,925.00 09/30/2028 280,000 93,025 00 373.025 00 09/30/2029 290,000 85.525 00 375,525 00 09/30/2030 300.000 76,675 00 376,675 00 09/30/2031 310,000 67.525 00 377,525 00 09/30/2032 315,000 58.150 00 373.150 00 09/30/2033 325,000 48.550 00 373,550 00 09/30/2034 335,000 38,650.00 373,650.00 09/30/2035 345.000 28.450 00 373,450 00 09/30/2036 360.000 17.650 00 377,650 00 09/30/2037 370.000 6,012.50 376,012.50 5.400.000 2,096.635 63 7,496,635 63 Note' Final Jun 6.2017 12 47 pm Prepared by FirstSouthwest(jid) Page 28 FirstSouthwest A Division of Hinton Securities. BOND DEBT SERVICE City of Southlake,Texas Tax and Waterworks and Sewer System(Limited Pledge)Revenue Certificates of Obligation,Series 2017 Period Annual Ending Principal Interest Debt Service Debt Service 02/15/2018 150,000 124,510 63 274,510 63 08/15/2018 98,587.50 98,587.50 09/30/2018 373,098.13 02/15/2019 185,000 98,587.50 283,587.50 08/15/2019 93,962.50 93,962.50 09/30/2019 377,550 00 02/15/2020 190,000 93,962.50 283,962.50 08/15/2020 89,212.50 89,212.50 09/30/2020 373.175 00 02/15/2021 200,000 89,212.50 289,212.50 08/15/2021 84,212.50 84,212.50 09/30/2021 373.425 00 02/15/2022 210.000 84,212.50 294,212.50 08/15/2022 78,962.50 78,962.50 09/30/2022 373.175 00 02/15/2023 225,000 78,962.50 303,962.50 08/15/2023 - 73,337.50 73,337.50 09/30/2023 377,300.00 02/15/2024 235,000 73,337.50 308,337.50 08/15/2024 67,462.50 67,462.50 09/30/2024 375.800.00 02/15/2025 245,000 67,462.50 312,462.50 08/15/2025 61,337.50 61,337.50 09/30/2025 373.800 00 02/15/2026 260,000 61,337.50 321,337.50 08/15/2026 54,837.50 54,837.50 09/30/2026 376.175 00 02/15/2027 270,000 54.83750 324,837.50 08/15/2027 48.087.50 48,087.50 09/30/2027 372,925.00 _ 02/15/2028 280.000 48,087.50 328,087.50 08/15/2028 44,937.50 44,937.50 09/30/2028 373.025 00 02/15/2029 290.000 44,937.50 334,937.50 08/15/2029 40,587.50 40,587.50 09/30/2029 375.525 00 02/15/2030 300.000 40,587.50 340,587.50 08/15/2030 36,087.50 36,087.50 4/3U/203U - 376.6/5 00 02/15/2031 310,000 36,087.50 346.087.50 08/15/2031 31,437.50 31.437.50 09/30/2031 377,525 00 02/15/2032 315,000 - --31,437.50 — 346,437.50 - --_ 08/15/2032 26,712.50 26,712.50 09/30/2032 373.150 00 02/15/2033 325,000 26.712.50 351,712.50 08/15/2033 21,837.50 21,837.50 09/30/2033 373.550 00 02/15/2034 335,000 21,837.50 356,837.50 08/15/2034 16,812.50 16,812.50 09/30/2034 373.650.00 02/15/2035 345,000 16,812.50 361,812.50 08/15/7035 11,637 50 11,617 50 09/30/2035 373.450 00 02/15/2036 360,000 11,637.50 371.637.50 Jun 6.2017 12:47 pm Prepared by FirstSouthwest(jld) Page 29 FirstSouthwest A Division of Hilltop Securities. BOND DEBT SERVICE City of Southlake.Texas Tax and Waterworks and Sewer System(Limited Pledge)Revenue Certificates of Obligation.Series 2017 Period Annual Ending Principal Interest Debt Service Debt Service 08/15/2036 6.012.50 6.012.50 09/30/2036 377.650 00 02/15/2037 370.000 6,012.50 376.012.50 09/30/2037 376.012.50 5,400,000 2.096,635.63 7.496.635 63 7.496.635 63 Note: Final Jun 6,2017 12.47 pm Prepared by FirstSouthwest(jld) Page 30 FirstSouthwest A Division of fh®top Securities_ TABLE OF CONTENTS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds.Series 2017 ---Citigroup Bid--- Final Numbers Report Page Sources and Uses of Funds . . . 1 Bond Summary Statistics . . . . . . . . . . . 2 Bond Pricing — 4 - -- Bond Debt Service6 Form 8038 Statistics . . 9 Proof of Arbitrage Yield . . 10 Jun 6,2017 11:39 am Prepared by FirstSouthwest Old) FirstSouthwest TSIP A Division of fhmtop Securities. SOURCES AND USES OF FUNDS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds,Series 2017 ---Citigroup Bid--- Final Numbers Dated Date 07/06/2017 Delivery Date 07/06/2017 Sources: Bond Proceeds: Par Amount 9.945,000 00 Net Premium409,042.80 10.354.042.80 Uses: Project Fund Deposits: Project Fund 10.100.000 00 Delivery Date,Expenses: Cost of Issuance 113,327.32 Undemriter's Discount 140.715 48 254.042.80 10,354,042.80 Jun 6,2017 11:39 am Prepared by FirstSouthwest(jld) Page 1 rstSouthwest A Division of Hilltop Searraxs_ BOND SUMMARY STATISTICS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds,Series 2017 ---Citigroup Bid--- Final Numbers Dated Date 07/06/2017 Delivery Date 07/06/2017 First Coupon 02/15/2018 Last Maturity 02/15/2036 Arbitrage Yield 2.767387% True Interest Cost(TIC) _ _ 2.930968% Net Interest Cost(NIC) 2.966109% All-In TIC 3 059796% Average Coupon 3.218807% Average Life(years) 10.677 Duration of Issue(years) 8.809 Par Amount 9.945,000 00 Bond Proceeds 10,354.042.80 Total Interest 3.417,886.07 Net Interest 3.149.558.75 Bond Years from Dated Date 106,184,875 00 Bond Years from Delivery Date 106.184.875 00 Total Debt Service 13,362,886 07 Maximum Annual Debt Service 705,859.38 Average Annual Debt Service 718,113.00 Underwriter's Fees(per$1000) Average Takedown Other Fee 14 149370 Total Underwriter's Discount 14 149370 Bid Price 102.698113 Par Average Average Bond Component Value Price Coupon Life Bond Component 8.775.000 00 104 728 3.256% 10.352 Term Bond 1,170,000 00 99.500 3 000% 13 117 9.945.000 00 10 677 Jun 6,2017 11.39 am Prepared by FirstSouthwest(jld) Page 2 ige? Fi stSouthwest A Division of Fkircop Securities. BOND SUMMARY STATISTICS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds.Series 2017 ---Citigroup Bid--- Final Numbers All-In Arbitrage TIC TIC Yield Par Value 9.945.000.00 9.945.000 00 9.945.000 00 +Accrued Interest +Premium(Discount) 409.042.80 409.042.80 409,042.80 -Underwriter's Discount -140,715.48 - -140,715.48 -Cost of Issuance Expense -113.327.32 -Other Amounts Target Value 10.213.327.32 10.100.000 00 10.354.042.80 Target Date 07/06/2017 07/06/2017 07/06/2017 Yield 2.930968% 3 059796°'o 2.767387% Jun 6.2017 11.39 am Prepared by FirstSouthwest(jld) Page 3 t4 m G C ^ co O o C vi O O C C C v) O O C O O O CD O O O O O vD O 00 ni O 7C", N 7 M vD O N O N0 DD O O O 00 '- CO M -- N vn AD r- yr 00 -- -S vn vi v; O 7 O N vn vi O N CT N vn CT N 7 -- -- vD <- N 00 N OC O co yr CT N N vl cr NU L v. CT OC v1 d' N N -- C. o CT N 00 v) vn 00 00 00 Chi 00 C C Q vi M C� -S O -- vi J` vi O M 7 Do. M C` vi C 7 N N V;1 CT N M v) .- oC C O M rM N — -- N O N C O O (J ::E. O O O C O O O O O O O O N N N vC C C co N N N_ U C •n v) vi N N N C O O C C L O O O O , C, O N +C -J• N U M ul 'E' ' N N N • c o N L L CJ > .L I)7 N M CT N 'D N -- N OC M ' o O 0 M. CD C O aD N ,t 00 ,.D C' co. VD 00 VD vn M 7 N C C'' O N O O C 00 N 00 C1 M -- C\ 00 co OC N VD Vn 1` O C O v) v) C CID 1 C. VD Cs N N 00 M -- N vl `7 N OC I- N 1` n CT C z C B '° y O C O — o ^ ^ N C O C O Co, Cr CT CT C, CT CT C..) MG W L, C C = = c- ,1) y z Z = y O 'Y \O \O \O \O \ \O \O \O \° \O \ \O O O O O ' O O 0 0 0 0 0 O o 0 0 0 0 0 0 0 0 0 0 0 0 O m y v 'n, 7- C C O o C O O C 0 O o C CN 00 O M vi vi C1 = L• / �- v' .n �n O ,c O vi O O .n vl v) N oo M O 7 C C _ i C‘ C -- M 7 ,D r- C, -- N 7 ,D -- N M M O C Y, O N N N N M M M M M M M C▪ .n '• U P 01 O O O O O O O O O O O O O O O O O O O F c C a o 0 0 0 C 0 0 0 0 0 0 0 0 0 0 OF 0 0 C C C C C C O C O O O C C O C O v1 v1 O C 0 24 C C C C o 0 0 C C O C C C C C N N C C 0 o C o C C o 0 0 0 0 0 o C 0 - - c o Y -S vn v-, vi N v) 7 1 M rr', M M M C7 M M M M M CS = C C C C O O C C O O o O C O C O O C C O C C CC C C C C C C C O C C C O C C C C C O C O O C ° O O C o o O C C O o o C C C C C o o O O O C © C C vi C C C C C vl C v', C C C vi v� vi v) C v) C vi N 00 O N M V'. N CT -- M -r 'D — M v1 l� CT N N CT C- '7 M CC ' 7 7 V '7 ' vl vi v-, vn AD `O 'D 'D AD r- kr, .n -- C1 00 — CT 3 OC C' O -- N M 7 vl VD N 00 C, N C-+ 7 ..n VD O -- T — N N N N N N N N N N M M M M M M M FA v C O C O O O O C C O O C C O C C O O O y 7. N N N NJ N1 N N N N N N NI N N N N N N N vl V .n v) V% V h V V1 V V vl v7 V V V% .n V h L 4c70. C N N nl N N N N N N N N C`I N N N N No O C O O O C C C C O O O C C O O C O C O Dr le! .. L' T id Ili a) o gP.2. .0 ° 3z C C € U en il 1r-, UM C Q n. C to ca G _ o o 0 0 89 c3 0 o N. M 0 In i = o c U ,- .c cS - N ' o k O GO 0 , r- t- w 00 000 c, .J N N O 00 00 `7 rM , o 0 o kn N Q., N N \1 O rf 7 - N N O p z ; .° o = o N r r? 7 o o ff;-7-." 'O N N N !t O V, O� - - U cz = L: -a O O o 7 M — N N a o G O _ N O 2 - ;•-• 7 c• v c O c° y U C.L • F' = V; _ _ 9 ° U C.) 0 7) U0 tic = s- r S. Ls .i. -0 -6 S. ,EQ a. EEo .� G C ° ° �vE = a) ° v -, U - L ¢ ° � G yL = O G c. icv C1L :L - G GQ 7 -J 1) c t 0 c U. v: _ 47 y ° 11 0 IC r 1 c 3 c M O - i pr a N ii. 0 g ArstSouthvvestfii, A Division of Hilltop Securities_ BOND DEBT SERVICE Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds,Series 2017 ---Citigroup Bid--- Final Numbers Period Ending Principal Interest Debt Service 09/30/2018 325.000 377,489 02 702.489 02 09/30/2019 380,000 323,956.26 703,956.26 09/30/2020 400.000 304,456.26 704,456.26 09/30/2021 420,000 283,956.26 703,956.26 09/30/2022 435.000 269,106.26 704,106.26 09/30/2023 450,000 253,506.26 703,506.26 09/30/2024 470,000 232,856.26 702,856.26 09/30/2025 490,000 211,206.26 701.206.26 09/30/2026 510,000 191,306.26 701,306.26 09/30/2027 530,000 175,706.26 705,706.26 09/30/2028 545.000 159.581.26 704,581.26 09/30/2029 560,000 143,006.26 703,006.26 09/30/2030 575.000 125,981.26 700,981.26 09/30/2031 595.000 108.431.26 703,431.26 09/30/2032 615.000 90,281.26 705,281.26 09/30/2033 630.000 71,606.26 701,606.26 09/30/2034 650.000 52.406.26 702.40626 09/30/2035 670.000 32.187.51 702.187.51 09/30/2036 695,000 10.859.38 705,859.38 9,945,000 3.417,886 07 13,362,886 07 Jun 6,2017 11:39 am Prepared by FirstSouthwest(jld) Page 6 • FirstSouthwest A Iivisi011 of H1 top Securities. BOND DEBT SERVICE Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds.Series 2017 ---Citigroup Bid--- Final Numbers Period Annual Ending Principal Interest Debt Service Debt Service 02/15/2018 325,000 210,760.89 535,760.89 08/15/2018 166,728.13 166.728.13 09/30/2018 702.489 02 02/15/2019 380,000 _ 166,728.13 546,728.13 08/15/2019 157,228.13 157.228 13 09/30/2019 703,956.26 02/15/2020 400.000 157,228.13 557.228 13 08/15/2020 147,228.13 1.47,228 13 09/30/2020 704,456.26 02/15/2021 420.000 147.228 13 567.228 13 08/15/2021 136.728 13 136.728 13 09/30/2021 703,956.26 02/15/2022 435.000 136,728.13 571,728 13 08/15/2022 132,378.13 132.378 13 09/30/2022 704.106.26 02/15/2023 450,000 132,378.13 582,378.13 08/15/2023 121,128.13 121,128.13 09/30/2023 703.506.26 02/15/2024 470.000 121,128.13 591.128 13 08/15/2024 111.728 13 111.728 13 09/30/2024 702,856.26 02/15/2025 490.000 111,728 13 601.728 13 08/15/2025 99.478 13 99,478 13 09/30/2025 701,206.26 02/15/2026 510,000 99,478.13 609.478 13 08/15/2026 91,828.13 91.828 13 09/30/2026 701,306.26 02/15/2027 530,000 91,828.13 621,828.13 08/15/2027 83,878.13 83.878 13 09/30/2027 705,706.26 02/15/2028 545.000 83.878 13 628,878.13 08/15/2028 75.703 13 75.703 13 09/30/2028 704.581.26 02/15/2029 560,000 75.703 13 635,703 13 08/15/2029 67,303 13 67.303 13 09/30/2029 703,006.26 02/15/2030 575.000 67.303 13 642.303 13 08/15/2030 58,678.13 58.678 13 09/30/2030 700,981.26 02/15/2031 595,000 58,678.13 653.678 13 08/15/2031 49,753 13 49,753 13 09/30/2031 703,431.26 02/15/2032 615.000 49.753 13 664.753 13 08/15/2032 40,528.13 40,528.13 09/30/2032 705,281.26 02/15/2033 630.000 40,528.13 670.528 13 08/15/2033 31,078 13 31.078 13 09/30/2033 701,606.26 02/15/2034 650,000 31,078.13 681,078.13 08/15/2034 21.328.13 21.328.13 09/30/2034 702,406.26 02/15/2035 670,000 21,328.13 691.328 13 Jun 6,2017 11.39 am Prepared by FirstSouthwest(jld) Page 7 FirstSouthwest A Division of 1Mo¢Seams_ BOND DEBT SERVICE Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds,Series 2017 ---Citigroup Bid--- Final Numbers Period Annual Ending Principal • Interest Debt Service Debt Service 08/15/2035 10.859.38 10,859.38 09/30/2035 702,187.51 02/15/2036 695,000 10,859.38 705,859.38 09/30/2036 _ 705,859.38 9,9.15,000 3,417.886 07 13.362.886 07 13,362,886 07 Jun 6,2017 11.39 am Prepared by FirstSouthwest(jld) Page 8 c*F'lrstSouthwest A Division of Mitres Securities. FORM 8038 STATISTICS Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds,Series 2017 ---Citigroup Bid--- Final Numbers Dated Date 07/06/2017 Delivery Date 07/06/2017 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Bond Component: 02/15/2018 325.000 00 4 000% 101 844 330,993 00 325.000 00 02/15/2019 380,000 00 5 000% 106.282 403,871 60 380,000 00 02/15/2020 400.000 00 5 000% 109 863 439,452.00 400.000 00 02/15/2021 420,000 00 5 000% 112.999 474.595 80 420,000 00 02/15/2022 435,000 00 2.000% 102.397 445.426 95 435,000 00 02/15/2023 450,000 00 5 000% 118 166 531.747.00 450,000 00 02/15/2024 470,000 00 4 000% 113 982 535.715 40 470.000 00 02/15/2025 490,000 00 5 000% 121 861 597,118 90 490,000 00 02/15/2026 510,000 00 3 000% 107 052 545,965.20 510,000 00 02/15/2027 530.000 00 3 000% 105 838 560,941 40 530,000 00 02/15/2028 545,000 00 3 000% 104.243 568,124.35 545,000 00 02/15/2029 560.000 00 3 000% 102.676 574.985 60 560.000 00 02/15/2032 615.000 00 3 000% 98.500 605.775 00 615.000 00 02/15/2033 630.000 00 3 000°%o 97.796 616.114 80 630.000 00 02/15/2034 650.000 00 3 000% 97.000 630.500 00 650.000 00 02/15/2035 670.000 00 3 125% 97 674 654,415.80 670.000 00 02/15/2036 695.000 00 3 125°ro 97 000 674,150 00 695.000 00 Term Bond: 02/15/2030 575.000 00 3 000% 99.500 572,125 00 575.000 00 02/15/2031 595.000 00 3 000% 99.500 592.025 00 595.000 00 9.945,000 00 10.354.042.80 9,945.000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 02/15/2036 3 125% 674.150 00 695.000 00 Entire Issue 10.354.042.80 9,945.000 00 10 4205 2.7674% Proceeds used for accrued interest 0 00 Proceeds used for bond issuance costs(including underwriters'discount) 254,042.80 Proceeds used for credit enhancement 0 00 Proceeds allocated to reasonably required reserve or replacement fund 0 00 Jun 6,2017 11.39 am Prepared by FirstSouthwest(jld) Page 9 F1rstS©uthwest 4'l0 A Division of F1IMp Securities_ PROOF OF ARBITRAGE YIELD Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds.Series 2017 ---Citigroup Bid--- Final Numbers Present Value to 07/06/2017 Date Debt Service c 2.7673874169% 02/15/2018 535,760.89 526,877 69 08/15/2018 166,728 13 161.725 90 02/15/2019 __ 546,728.13 _ 523,087.09 08/15/2019 157,228 13 148,376.36 02/15/2020 557,228 13 518.679 87 08/15/2020 147,228 13 135,172.72 02/15/2021 567,228 13 513,674.37 08/15/2021 136,728 13 122,129.31 02/15/2022 571.728 13 503,713.37 08/15/2022 132.378 13 115,038.19 02/15/2023 582.378 13 499,186.42 08/15/2023 121.128 13 102,408.17 02/15/2024 591.128 13 492,950.27 08/15/2024 111,728.13 91,900 08 02454025 601,728.13 488,186.29 08/15/2025 99.478 13 79.605 81 02/15/2026 2.244.478.13 1,771.594 90 08/15/2026 67.303 13 52,398.18 02/15/2027 67.303 13 51.683 04 08/15/2027 67,303 13 50,977.67 02/15/2028 67,303 13 50,281 92 08/15/2028 67.303 13 49,595 67 02/15/2029 67,303 13 48,918.78 08/15/2029 67,303 13 48.251 14 02/15/2030 642,303 13 45.4.196 94 08/15/2030 58,678 13 40,927.23 02/15/2031 653,678 13 449,709.33 08/15/2031 49,753 13 33.761.38 02/15/2032 664,753 13 444.930 44 08/15/2032 40,528 13 26,755 94 02/15/2033 670,528 13 436,628 93 08/15/2033 31,078.13 19,961 00 02/15/2034 681,078 13 431,475.58 08/15/2034 21,328 13 13,327.35 02/15/2035 691.328 13 426,095.84 08/15/2035 10,859.38 6,601.76 02/15/2036 705,859.38 423,257.86 13.263.886 07 10,354,042.80 Proceeds Summary Delivery date 07/06/2017 Par Value 9.945,000 00 Premium(Discount) 409.042.80 Target for yield calculation 10,354,042.80 Jun 6.2017 11.39 am Prepared by FirstSouthwest(jld) Page 10 FIrstSouthwest A Division of Hilton Securities. PROOF OF ARBITRAGE YIELD Southlake Community Enhancement and Development Corporation Sales Tax Revenue Bonds.Series 2017 ---Citigroup Bid--- Final Numbers Assumed Call/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Component Date Rate Yield Date Price Call/Maturity BOND _02/15/2027 3.000% 2.250% _02/15/2026 100.000 - __2.249949% _. BOND 02/15/2028 3 000°zo 2.450°%o 02/15/2026 100 000 2.449993% BOND 02/15/2029 3 000% 2.650°%o 02/15/2026 100 000 2.649953% Rejected Call/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Component Date Rate Yield Date Price Call/Maturity BOND 02/15/2027 3 000% 2.250% 2.3185410/0 BOND 02/15/2028 3.000% 2.450% 2.541011% BOND 02/15/2029 3 000°/o 2.650% 2.729302% Jun 6,2017 11.39 am Prepared by FirstSouthwest(jid) Page 11 PARITY Result Screen Page 1 of 1 1001 43 a.m CDST Upcoming Calendar Overview Compare Summary 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 ❑ Citigroup 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 ©1981-2002 i-Deal LLC All rights reserved Trademarks httns://www.newissuehome.i-deal.com/Paritv/asn/main.asn?frame=content&nage=naritvRes... 8/2/2016