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Item 4PM E M O R A N D U M March 26, 2019 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Resolution 19-012, Authorizing the execution and delivery of a continuing disclosure agreement (“CDA”) Action Requested: Approval of Resolution 19-012 to enter into a continuing disclosure agreement with Trinity River Authority of Texas (“TRA”) Background Information: The City has entered into various contractual agreements to unconditionally finance the principal and interest or a fixed percentage of principal and interest of TRA’s Revenue Bonds. Under the agreements, TRA utilized the bond proceeds to administer and construct the various sewer/wastewater treatment projects on the City’s behalf. Such agreements provide the City title to the assets upon retirement of the debt/capacity rights in the use of constructed assets. The Securities and Exchange Commission (“SEC”) Rule 15c2-12 of the Securities Exchange Act requires that municipal security issuers provide certain information to the Municipal Securities Rulemaking Board (“MSRB”) about the municipal securities on an ongoing basis. To meet this requirement, TRA has had CDAs as a part of each bond resolution, as well as with each customer (participating cities). Both TRA and participating cities have responsibilities related to this SEC rule. As an obligated city on TRA bonds, the participating cities is the main credit source for repayment of the obligations on TRA bonds. Because of the revisions to the Rule 15c2-12 over the years but specifically the 2018 revisions, TRA is in the process of updating CDA’s with each participating city. The updated agreement clarifies the information to be provided by each city to MSRB. The rule and therefore the agreement include three items required to be provided to the MSRB by the city: 1.Certain annual financial and operating information and audited financial statements 2.Timely notice of the occurrence of certain events (i.e. material financial obligations, events of debt default, etc.) Item 4P Honorable Mayor and City Council Page 2 of 2 3. Timely notice of the failure of an issuer or participating entity to provide required annual financial information on or before the date specified in the CDA. Historically, TRA staff would obtain the disclosure information from the participating cities and file the continuing disclosure information to MRSB for TRA’s revenue bonds. With the approval of Resolution 19-012 (new CDA), participating cities will now file the required continuing disclosure information to MRSB for TRA’s revenue bonds. The city will file the continuing disclosure information under TRA CUSIP debt numbers. Financial Considerations: The approval of Resolution 19-012 will not have a financial impact to the city. The approval is a process change for reporting continuing disclosure information. Strategic Link: This agenda item is linked to the Southlake Strategy Map through the following objectives: • B2 Collaborate with select partners to implement service solutions • F1 Adhere to financial management principles and budget Citizen Input/ Board Review: None required Legal Review: Consultant with bond counsel and financial advisor Alternatives: N/A Supporting Documents: Resolution 19-012 Staff Recommendation: Staff recommends approval of Resolution 19-012 RESOLUTION 19-012, AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT THE STATE OF TEXAS SOUTHLAKE OF TEXAS WHEREAS, the City of Southlake, Texas (the "City") and the Trinity River Authority of Texas (the "Issuer") have heretofore entered into, and may in the future enter into, contracts relating to the provision of facilities and/or services by the Issuer for the benefit of the City; and WHEREAS, in connection with the financing of the facilities and/or services provided by the Issuer for the benefit of the City, the Issuer has, and/or will, from time to time authorize, issue and deliver bonds (the "Bonds") of the Issuer supported by payments to be made by the City pursuant to such contracts; and WHEREAS, the United States Securities and Exchange Commission has adopted Rule 15c2-12, as amended from time to time (the "Rule"); and WHEREAS, the Rule provides that a broker, dealer or municipal securities dealer of Bonds issued after the effective dates set forth in the Rule, may not purchase or sell Bonds in connection with an offering thereof unless, prior to the purchase or sale thereof, "obligated persons", or entities acting on behalf of "obligated persons", have undertaken to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors; and WHEREAS, the Issuer and the City heretofore entered into a Continuing Disclosure Agreement, as amended, in conformance with the Rule (the "Original CDA"); and WHEREAS, in order to reflect the Rule, as recently amended, and provide adequate flexibility to accommodate any subsequent amendments to the Rule, it is deemed appropriate and necessary to enter into a new Continuing Disclosure Agreement (the "CDA"), which supercedes the Original CDA; and WHEREAS, it is the intent of both the Issuer and the City that any and all obligations and/or duties of the respective party under the Original CDA with respect to any heretofore issued series of Bonds shall continue to be observed as carried forward into the CDA; and WHEREAS, in order to comply with the Rule and facilitate the future issuance of Bonds, the City and the Issuer have agreed that it is deemed appropriate and necessary to enter into the CDA hereinafter authorized to be executed and delivered. THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: Section 1. That the recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. Section 2. That the Mayor of the City is hereby authorized and directed to execute and deliver, and the City Secretary of the City is authorized and directed to attest, the CDA substantially in the form and substance attached hereto. Section 3. That the Mayor of the City is hereby authorized and directed to execute and deliver, and the City Secretary of the City is authorized and directed to attest, any amendment or supplement to the CDA hereinafter required or appropriate in response to further amendment of the Rule in order to maintain compliance with the requirements of the Rule. Section 4. That the CDA, and any amendment or supplement thereof, shall become effective and enforceable in accordance with its terms immediately upon execution and delivery thereof for all intents and purposes. Section 5. That each of the officers and members of the City Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the meeting at which this Resolution was introduced, and that said Resolution would be introduced and considered for passage at said meeting, and each of said officers and members consented, in advance, to the holding of said meeting for such purpose, and that said meeting was open to the public and public notice of the time, place and purpose of said meeting was given, all as required by the Texas Government Code, Chapter 551. PASSED AND APPROVED this day of , 2019. Mayor ATTEST: City Secretary