1990-03-13 CITY OF SOUTHLAKE
667 N. Carroll Avenue
CITY COUNCIL WORK SESSION
March 13, 1990 7:00 P.M.
CITY COUNCIL PRESENT: Mayor Gary Fickes; Council members: Rick
Wilhelm, Sally Hall, Pamela Muller. Mayor Pro Tem Springer arrived
at 9:15 p.m.
COUNCIL MEMBER ABSENT: Ralph Evans.
CITY STAFF PRESENT: Curtis Hawk, City Manager; Michael Barnes,
Director of Public Works; Renee Wheeler, Finance Officer; Eddie
Cheatham and Mike Monroe, City Engineers; Wayne Olson, City
Attorney; and, Sandra L. LeGrand, City Secretary.
The City Council Work Session was called to order by Mayor Fickes
at 7:20 p.m.
Agenda Item #2. Reviewing the 1988 -89 Audit Report
Renee Wheeler, Finance Officer, led the discussion in regards to
the review of the 1988 -89 Audit Report. She indicated that changes
were made to the audit report at the request of the city. She
presented the replacement pages for the audit, after explaining the
changes to the council.
Agenda Item #3. Water and Sewer Update
Michael Barnes, Director of Public Works, led the discussion in
regards to the update of the water and sewer projects for the City
of Southlake. He presented a memorandum to City Council, outlining
each project. A copy of the information is hereby incorporated
into the minutes of the work session.
Mayor Pro Tem Springer arrived for the meeting at 9:15
p.m. and Councilmember Pamela Muller left the meeting at 9:15 p.m.
As a result of the discussion in regards to Continental Park
Estates, it was suggested that sessions be organized for the
property owners in Continental Park Estates, in an effort to work
out details for providing sewer in that area, and also, in an
effort to get feed -back from the property owners in regards to
financing of the sewer system in Continental Park Estates.
The meeting was adjourned at 10:05 p.m. by M�, r es
anmunrh
�<<� t hv,,�� yor Gary F . ck •
a
Sandra L. LeGrand ZO\ :
City Secretary IV
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CITY OF SOUTHLAKE
COMPARISON OF FY88 -89 BUDGET TO ACTUAL
FISCAL YEAR ENDING, 09 -30 -89
FY88 -89 FY88 -89 FY88 -89
APPROVED REVISED ACTUAL
BUDGET BUDGET EXPENDITURES
(1) (2) (3)
GENERAL GOVERNMENT:
City Secretary $ 96,946 $ 92,773 $ 92,691
City Administration 390,173 568,554 566,870
Court 150,466 155,491 142,964
Total General Gvt $ 637,585 $ 816,818 $ 802,525
PUBLIC SAFETY:
Fire 348,618 361,304 358,221
Police 730,570 742,860 747,368
Building /Zoning 134,020 147,515 148,769
Total Public Saf. $1,213,208 $ 1,251,679 $ 1,254,358
PUBLIC WORKS:
Streets 355,314 183,571 227,172
Parks 52,177 43,587 42,537
Public Works 30,983 36,512 38,097
Total Public Works $ 438,474 $ 263,670 $ 307,806
Other Administration 19,642 26,300 22,799
TOTAL EXPENDITURES: $2,308,909 $ 2,358,467 $ 2,387,488
(1) FY88 -89 Published Budget
(2) & (3) Audit Report page 6 and Detail Expenditure Report pg 2 &3
CITY OF SOUTHL7KE
COMPARISON OF FY88 -89 BUDGET TO ACTUAL
FISCAL YEAR ENDING, 9 -30 -89
FY88 -89 FY88 -89 FY88 -89
APPROVED REVISED ACTUAL
BUDGET BUDGET REVENUE
(1) (2) (3)
TAXES:
Property* $1,679,061 $1,780,000 $1,584,961
Sales 300,000 300,000 311,698
Franchise 165,000 189,681 189,691
CHARGES FOR SERVICES 36,000 26,050 33,835
LICENSES AND PERMITS 120,000 192,862 200,470
FINES AND FORFEITURES 360,000 245,000 230,944
MISCELLANEOUS 23,000 66,700 72,121
TOTAL REVENUE $2,683,061 $2,800,293 $2,623,720
(1) FY88 -89 Published Budget
(2) & (3) Audit Report page 6 and Revenue Report page 1 &2
* $1,584,961 Actual Property Tax Collections - Audit Report
195,879 Plus adjustments to tarnsfer debt services
portion of property tax collections
$1,780,840 Total property tax collections
$2,623,720 Total Revenue - Audit Report
195,879 Adjustment as mentioned above
$2,819,599 Actual collections to compare to budget
$2,800,293 Revised Budget
(2,819,599) Actual tax collections
$ 19,306 Tax collections in excess of revised budget
City of Southlake, Texas
M E M O R A N D U M
March 9, 1990
TO: Curtis E. Hawk, City Manager
FROM: Michael Barnes, Public Works Director
SUBJECT: Sewer Project
1. Sanitary Sewer Line S -4
Line S -4 is the sewer line that serves the Arvida
subdivision and is being paid for by Arvida. All
easements for this sewer line have been obtained. The
contract for this line has been awarded to Wright
Construction, and construction has begun. It is
anticipated that the contractor will be completed in 60
days.
2. Sanitary Sewer Line S -6
Line S -6 is the sewer line that starts at the
Summerplace WWTP and travels south through Mission
Hills and Diamond Estates, crosses FM1709, and
traverses through the Mobil tract to the Big Bear Creek
Interceptor. This is the Interim Denton Creek
Diversion Line that the City contracted with TRA.
When the City entered into this agreement last
December, the original agreement was for the city to
obtain the easements and TRA would sell the bonds,
contract the engineering, and construct the project.
It was our plan at that time to obtain the easements
and design the project so that bids could be awarded at
the April Board Meeting. We knew it was a short time
table, but we believed we could achieve this. It has
not worked out because TRA has to have all easements in
hand before the bidding process starts.
As it stands now, the June board meeting is the
earliest the bids could be awarded. If that were to
happen, it would delay the completion of the project
until November or December of this year.
In order to avoid these delays, we have discussed with
TRA about revising the agreement whereby TRA will
transfer the bond funds to the City and the City would
complete the design and construction of the project
instead of TRA. The only thing this would change would
be that the City would award the contract and manage
the project instead of TRA.
Curtis E. Hawk
Sewer Project
March 9, 1990
Page 2
If the City manages the project the City would have to
do the following but would not incur any additional
expenses:
1. Amend or create a new contract with TRA
2. Perform the construction inspection, or hire it
done
3. Retain the consulting engineers until the project
is finished
4. Make monthly payments to contractor
The staff is recommending that we revise the agreement
with TRA so that the City will manage the project and
save 2 -3 months construction time.
3. Big Bear Interceptor
TRA is still in the process of obtaining easements for
the project. The project has not been bid to date, but
according to TRA, it is anticipated that the project
will be awarded at the June board meeting.
4. SouthRidge Lakes Phase I
Two C.O.'s have been issued, and the City has received
a letter from the State Health Department allowing the
developer to pump sewer. Pumping will continue until
Line S -4, which serves this subdivision, is completed
which is anticipated to be May 1st.
5. Sanitary Sewer Line N -3
This line will extend north from the Summerplace WWTP
to a point near the intersection of Dove Creek and Dove
Road. It is proposed that this line will allow the
High School and Elementary School to abandon their
respective treatment plants and be served with gravity
sewer.
It is anticipated to start planning and design this
line in May or June of this year. Construction would
begin by late Spring 1991 and be completed by late
Summer of 1991. Council will have to approve a bond
with TRA before this can happen.
6. Denton Creek Pressure System and Treatment Plant
The staff and TRA are still in the process of deciding
the best method of phasing this project.
Curtis E. Hawk
Sewer Project
March 9, 1990
Page 3
In 1988, the City authorized TRA to sell $2,250,000 in
bonds to fund the engineering design and right -of -way
acquisition of the Denton Creek Pressure System.
Approximately $1,200,000 of the $2,250,000 has been
spent on engineering design and easement documents. In
the summer of 1989, TRA put a freeze on further
spending because it was clear that the Pressure System
would not be built when the design is completed as was
the original plan.
The $2,250,000 bonds were sold on a 10 year payout and
the scheduled debt payment for this year and next is
June 1990 P &I $180,000, December 1990 P &I $145,500,
June 1991 P &I $306,875, etc. Because of the high debt
payment and because of the uncertainty as to when the
line will be built, it is necessary that the portion of
the unsold bonds be paid toward the principal bond sale
and the money spent on engineering ($1,200,000) be
refinanced.
The only problem is that the bonding agent does not
know if the bonds can be refinanced because Lake Turner
MUD is in bankruptcy. The agreement between Southlake
and Lake Turner MUD is for the City of Southlake to pay
2/3 of the cost of the DCPS and Lake Turner MUD pay
1/3. If the bonds could be refinanced for 20 years the
debt service for Southlake would be approximately
$100,000 and Lake Turner MUD $50,000. All designed
data completed to date would be stored for future use.
The Denton Creek Treatment Plant is complete but has
not been put into service because of insufficient flows
from the participating cities. The City is obligated
to pay our proportioned share of the plant this year
which is $50,000. (This has been included in our
current budget.)
7. Trophy Club WWT Plant
The staff is presently in discussion with Trophy Club
about contracting additional capacity in the plant.
They have indicated to us that they are willing to
allow approximately 300,000 to 400,000 GPD additional
capacity in the plant.
Curtis E. Hawk
Sewer Project
March 9, 1990
Page 4
8. Water and Street Impact Fees
The Impact Fee study is approximately 50% complete.
The Land Use Assumption hearing is scheduled for April
3, 1990 and it is anticipated that the hearing for the
CIP and Impact Fee Ordinance for Water and Sewer will
be held on the second meeting in May.
9. Colleyville Agreement
All aspects of the agreement have been approved. Danny
Vance, Manager of the TRA, has not signed the agreement
because he has been on vacation. He is scheduled to
sign the agreement today, Friday, March 9, 1990, and as
soon as we get the signed agreement, we will take the
agreement and $20,000 and give it to Colleyville which
will then allow Southlake to tie onto the Colleyville
sewer line.
10. Bank Place WWTP
The staff has had a number of discussions with the
owners of the Bank Place Subdivision to work out an
agreement to allow tie -ins to the Bank Place WWTP. The
existing contract is very ambiguous, and if the owners
will agree to a reasonable cost per - gallon ($1.50 - -they
are asking $3.00) the contract would be rewritten
whereby the City would collect the money for the owners
and allow tie -ins to the treatment plant.
11. South View Subdivision
This subdivision is changing their lots from 1 acre to
1/2 acre and providing gravity sewer from the proposed
S -6 line to their subdivision. This will allow City
Hall, the Carroll Oaks Shopping Center, and some of
Lakewood Acres to have gravity sewer available. (It
will also make sewer available to the 0-1 property
across the street from City Hall.)
12. Truelove Property
This is a 43 acre tract located adjacent and north of
Bicentennial Park. We have been requested to sewer a
proposed subdivision at this site through the Chapel
Downs Subdivision.
13. Summary of Sewer Costs that Southlake will have to pay
in 1990 -91 budget year.
Curtis E. Hawk
Sewer Project
March 9, 1990
Page 5
Project Total Annual
Cost Debt
Big Bear Interceptor $2,800,000 $280,000 (estimated)
Denton Creek WWTP 50,000*
Denton Creek Pressure Sys 1,500,000 100,000 **
Sanitary Sewer Line S -6 1,200,000 44,000 * **
TOTAL $474,000
*Southlake's share (Approximately 10 %) of annual debt
* * 2/3 of Annual Debt
** *This figure will be approximately $112,000 in budget year
1991 -92
14. Sewer Service for Continental Estates
Sewer cost for Continental Estates:
Scenic Dr. Sewer Cost $ 55,000 (this cost has
already been paid)
Sewer Cost Remainder Lots 185,000
Street Repair 45,000
$285,600
$285,600/70 lots = $4,080 per lot
The total cost of providing sewer service to Continental
Estates is projected to be $285,600 which is $4,080 per lot.
Four (4) alternatives proposed to fund the project are:
Alternative I. The best alternative would be to have all
the property owners pay their share before construction
begins. This way the City does not have to provide any
funds.
Alternative II. The City could contract with TRA to sell
Bonds (TRA requires a minimum of $500,000 to $1,000,000
Bond Sale) to finance the construction of sewer lines in
several subdivision for a 20 year period. As an example,
if (3) subdivisions having a total of 200 lots cost
$1,000,000 to install sewer lines, the monthly charge to
each home owner would be approximately $45. This fee is
only to pay the bonding indebtedness incurred by the City.
Curtis E. Hawk
Sewer Project
March 9, 1990
Page 6
Alternative III. The City would borrow the money to
install the sewer line and the home owner would pay the
City back on a monthly basis for 3, 5, or 7 years
depending on how long the City wanted to borrow the
money. To borrow $285,600 for 3 years would cost the
home owner approximately $150 per month.
Other Alternatives. There could be many variations of
either alternatives 2 or 3 and the staff would welcome
other alternatives from the Council.
It should be noted that alternatives 2 and 3 would put the
City in a position of having to finance the project if the
citizens did not pay their monthly sewer charge.
Also, an alternative should be selected that would apply to
all future subdivisions requesting sewer service.
MHB /kb
L' 6 i u t
We, the undersigned residents who live on the south border of
Continental Boulevard, would like to make known to the City
Council, the City Manager, and the Public Works Director our
concerns with the widening of Continental Boulevard. Most of
our homes would be greatly impacted if the city proceeds with
its plan to take a 42 ft. easement.
We realize the road will be widened to accommodate increased
traffic from all the new approved subdivisions, however, we
feel that since we are the residents who will have to give
up our land, thereby making our lots much smaller, that the
impact to us be as little as possible.
4
We feel the City does not need an 84 ft. wide road going
through residential neighborhoods. A thoroughfare this
A
wide will only encourage all kinds of traffic, including
industrial and those just passing through who currently
use FM 1709 for their purposes.
4
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We the undersigned residents on the south border of
Continental Boulevard in Continental Park Estates would like
to make known to the City Council, City Manager and the
Public Works Director our concerns with the widening of the 46
road. Most of our homes would be greatly impacted if the
city proceeds with its plan to take a 42' easement. 4.-
r
We realize the road will be widened to accommodate increased
traffic from all the new approved subdivision, but we feel w
since we are the residents who will have to give up our land
thereby making our lots much smaller than 1/2 acre that the 40
impact to us be as little as possible.
We feel the City does not need an 84' wide road going
through residential neighborhoods.
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OFFICIAL STATEMENT
NEW ISSUE
Ratings:
Moody's: "Aaa"
Standard & Poor's: "AAA"
(MBIA Insured; see "Ratings" and
"Bond Insurance" herein.)
In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal
income tax purposes under existing law, subject to the matters described under "Tax Exemption" herein,
including the alternative minimum tax on corporations.
THE CITY WILL DESIGNATE THE BONDS AS
"QUALIFIED TAX - EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS.
$3,076,137
CITY OF SOUTHLAKE, TEXAS
(Tarrant County)
GENERAL OBLIGATION REFUNDING BONDS, SERIES 1990
Dated: March 1, 1990 Due: February 1, as shown below
Interest on the $3,076,137 City of Southlake, Texas (the "City ") General Obligation Refunding Bonds,
Series 1990 (the "Bonds "), other than the Bonds maturing in the years 1999 through 2001 (the "Capital
Appreciation Bonds "), will accrue from the dated date as shown above and will be payable February 1 and
August 1 of each year, commencing February 1, 1991, and will be calculated on the basis of a 360 -day
year of twelve 30 -day months. The Bonds are issued only in fully registered form in the denominations of
$5,000 or any integral multiple thereof within a maturity, except that the Capital Appreciation Bonds will
be issued in the amounts due at maturity of $5,000 or any integral multiple thereof. Interest on the
Capital Appreciation Bonds will accrue from the date of their initial issuance and delivery, will be payable
only at maturity and will compound on February 1 and August 1 of each year commencing August 1, 1990.
The initial Paying Agent /Registrar shall be First City, Texas - Austin, N.A., Austin, Texas (see "Paying
Agent /Registrar ").
These Bonds are issued pursuant to the general laws of the State of Texas, particularly Article 717k,
Vernon's Annotated Civil Statutes (VATCS), as amended, and are direct and general obligations of the
City, payable from an ad valorem tax levied, within the limits prescribed by law, on taxable property
located within the City, as provided in the ordinance authorizing the Bonds (the "Ordinance ").
Proceeds from the sale of the Bonds will be used to provide funds to refund $2,605,000 principal amount of
the callable portion of the City's General Obligation Bonds, Series 1982 and Series 1984 and all the
Combination Tax and Revenue Certificates of Obligation, Series 1985 and to pay the costs related to the
issuance of the Bonds and the refunding.
Payment of the principal of and interest on the Bonds when due will be insured by a municipal bond
insurance policy to be issued by Municipal Bond Investors Assurance Corporation simultaneously with the
delivery of the Bonds.
The Bonds, other than the Capital Appreciation Bonds, are redeemable at the option of the City on and
after February 1, 2000, as described herein.
$1,130,000 Current Interest Serial Bonds
Due Due
Amount February 1, Rate Price Amount February 1, Rate Price
$ 40,000 1992 6.10% 100% $175,000 1997 6.60% 100%
45,000 1993 6.20% 100% 185,000 1998 6.70% 100%
45,000 1994 6.30% 100% 200,000 2002 7.00% 100%
110,000 1995 6.40% 100% 215,000 2003 7.00% 100%
115,000 1996 6.50% 100%
$1,655,000 - 7.1096 Current Interest Term Bonds Due February 1, 2009 - Price 100
$291,137 Capital Appreciation Bonds
Offering Price
Original Per $5,000 Total
Principal Due Amount Due Payment
Amount February 1, at Maturity Yield at Maturity
$104,532.30 1999 $2,750.85 6.90% $190,000
96,753.70 2000 2,546.15 7.00% 190,000
89,851.00 2001 2,364.50 7.05% 190,000
(Accrued interest, other than on the Capital Appreciation Bonds, from March 1, 1990 to be added)
The Bonds are offered for delivery when, as and if issued and received by the Underwriter and subject to
the approving opinion of the Attorney General of the State of Texas and of Fulbright & 7aworski, Bond
Counsel, Dallas, Texas. Certain legal matters will be passed on for the Underwriter by McCall,
Parkhurst & Horton, Dallas, Texas. It is expected that the Bonds will be available for delivery on or about
April 10, 1990.
MERRILL LYNCH CAPITAL MARKETS
Dated: March 6, 1990
No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to give
any information, or to make any representations other than those contained in this Official Statement,
and, if given or made, such other information or representations must not be relied upon as having been
authorized by the City or the Underwriter.
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 Underwriter. Any information and expressions of opinion herein contained are
subject to change without notice, and neither the delivery of this Official Statement nor any sale made
hereunder shall, under any circumstances, create any implication that there has been no change in the
affairs of the City or other matters described herein since the date hereof.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVER -ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
- 2 -
TABLE OF CONTENTS
Page No.
Official Statement
Description of the Bonds 1
Administration 4
Elected Officials 4
Appointed Officials 4
Consultants and Advisors 4
Selected Data from the Official Statement 5
Introduction 6
Plan of Financing
Purpose 6
Refunded Obligations 6/7
Sources and Uses of Funds 7
The Bonds
General 7
Optional Redemption of Bonds 8
Mandatory Redemption 8
Notice of Redemption 8
Paying Agent /Registrar 8
Transfer, Exchange and Registration 8
Security for Bonds 9
Bondholders' Remedies 9
Bond Insurance 9/10
Tax Information
Ad Valorem Tax Law 11
Valuation, Exemptions and Debt Obligations 12
Taxable Assessed Valuations by Category 12
Valuation and Funded Debt History 13
Tax Rate, Levy and Collection History 13
Ten Largest Taxpayers 13
Tax Rate Limitation 14
Assessed Valuations, Tax Rates, Outstanding Debt and Authorized
But Unissued Bonds of Overlapping Taxing Jurisdictions 14
Debt Information
Debt Service Requirements 15
Estimated Direct and Overlapping Funded Debt Payable From Ad Valorem Taxes 16
Interest and Sinking Fund Budget Projection 16
Computation of Self- Supporting Debt 16
Authorized But Unissued General Obligation Bonds 17
Anticipated Issuance of General Obligation Bonds 17
Funded Debt Limitation 17
Other Obligations 17
Pension Fund 17
Self- Insurance 17
Financial Information
General Fund Revenues and Expenditure History 18
Municipal Sales Tax History 19
Financial Policies 19
Other Relevant Information
Ratings 20
Tax Exemption 20
Qualified Tax - Exempt Obligations 20
Tax Accounting Treatment of Capital Appreciation Bonds 21
Litigation 21
Legal Investments and Eligibility to Secure Public Funds in Texas 21
Legal Matters 21
Verification of Arithmetical and Mathematical Computations 22
• Underwriting 22
Financial Advisor 22
Miscellaneous 22
Table of Accreted Values Schedule I
Appendices
General Information Regarding the City A
Excerpts from the City of Southlake Annual Financial Report B
Form of Bond Counsel's Opinion C
Schedule of Refunded Bonds 1�
Specimen of Municipal Bond Insurance Policy E
The cover page hereof, this page, the appendices included herein and any addenda, supplement or
amendment hereto, are part of the Offical Statement.
- 3 -
Administration
Policy making and supervisory functions are the responsibility of and are vested in a five - member City
Council ( "Council "). The Council serves two -year staggered terms with elections being held in May of
each year. The Council delegates administrative responsibilities to the City Manager. Various supporting
services are provided by independent consultants and advisors.
Elected Officials
Length of Term
City Council Service Expires Occupation
Gary Fickes 9 Months May, 1991 Owner, Graphic Sign Company
Mayor
Betty Springer 2 Years, May, 1991 Executive Director, Chamber of Commerce
Mayor Pro -Tem 9 Months
Rick Wilhelm 9 Months May, 1991 Attorney
Councilmember
Pamela Muller 1 Year, May, 1990 Homemaker
Councilmember 9 Months
Sally Hall 1 Year, May, 1990 Homemaker
Councilmember 9 Months
Ralph Evans 1 Year, May 1990 Insurance
Councilmember 9 Months
Appointed Officials
Length of Length of
Service Service in
Name Position With City Present Position
Curtis Hawk City Manager 1 Year, 4 Months 1 Year, 4 Months
Sandra L. LeGrand City Secretary 11 Years 11 Years
Renee Wheeler Finance Director 2 Years 2 Years
Consultants and Advisors
Auditors Weaver and Tidwell
Dallas, Texas
Bond Counsel Fulbright & Jaworski
Dallas, Texas
Financial Advisor First Southwest Company
Dallas, Texas
For additional information regarding the City, please contact:
Curtis Hawk W. Boyd London, Jr.
•
City Manager Patricia D. Gallaher
City of Southlake or First Southwest Company
667 N. Carroll Avenue 500 First City Center
Southlake, Texas 76092 1700 Pacific Avenue
(817) 481 -5581 Dallas, Texas 75201 '
(214) 953 -4000
- 4 -
SELECTED DATA FROM THE OFFICIAL STATEMENT
The selected data on this page is subject in all respects to the more complete information and definitions
contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is
made only by means of this entire Official Statement. No person is authorized to detach this data page
from this Official Statement or to otherwise use it without the entire Official Statement.
This data page was prepared to present the purchasers of the Bonds information concerning the Bonds, the
revenued pledged to payment of the Bonds, the description of the revenue base and other pertinent data,
all as more fuly described herein.
The Issuer The City of Southlake, Texas (the "City ") is a political subdivision located in
Tarrant County, Texas, and was incorporated in 1956. The City's Home Rule
Charter was adopted at a special election held on April, 4, 1987. The City is
governed by a six - member City Council (the "Council ") who serve staggered
two -year terms with elections being held in May of each year. Policy- making
and supervisory functions are the responsibility of, and are vested in, the
Council. The Council delegates administrative responsibilities to the City
Manager who is the chief administrative officer of the City. Support services
are supplied by consultants and advisors.
The City, approximately 23 square miles, is located in northeast Tarrant
County. The City's 1989 population was estimated at 6,450.
The Bonds The Bonds are being issued in the principal amount of $3,076,137 pursuant to
the general laws of the State of Texas, particularly Article 717k, VATCS, and
an Ordinance passed by the City Council of the City (see "Authority for
Issuance ").
Qualified Tax - Exempt
Obligations The City will designate the Bonds as "Qualified Tax - Exempt Obligations" for
financial institutions (see "Qualified Tax - Exempt Obligations ").
Security for the Bonds The Bonds constitute direct and voted obligations of the City payable from a
continuing ad valorem tax levied on all taxable property within the City in an
amount sufficient to provide for payment of principal of and interest on all ad
valorem tax bonds, within the limits prescribed by law (see "Security for
Bonds ").
Optional Redemption The Bonds, other than the Capital Appreciation Bonds, are redeemable at the
option of the City on and after February 1, 2000, as described herein.
Tax Exemption In the opinion of Bond Counsel, the interest on the Bonds will be excludable
from gross income for federal income tax purposes under existing law, subject
to the matters described under "Tax Exemption" herein, including the
alternative minimum tax on corporations.
Use of Bond Proceeds - - -- Proceeds from the sale of the Bonds will be used to provide funds to refund
$2,605,000 principal amount of the callable portion of the City's General
Obligation Bonds, Series 1982 and 1984 and all the Combination Tax and
Revenue Certificates of Obligation, Series 1985 and to pay the costs related to
the issuance of the Bonds and the refunding.
Payment Record The City has never defaulted.
Bond Insurance Payment of the principal of and interest on the Bonds when due will be insured
by a municipal bond guaranty insurance policy to be issued by Municipal Bond
Investors Assurance Corporation simultaneously with the delivery of the
Bonds.
Selected Issuer Indices
Ratio Funded
Fiscal Per Capita Per Capita Debt to
Year Estimated Taxable Taxable Funded Funded Taxable % of
Ended City Assessed Assessed Tax Tax Assessed Total Tax
9/30 Population Valuation Valuation Debt Debt Valuation Collections
1985 4,600 $214,807,784 $46,697 $3,685,000 $801.09 1.72% 98.04%
1986 5,100 248,917,765 48,807 3,570,000 700.00 1.43% 95.26%
1987 5,400 366,024,873 67,782 3,450,000 638.89 0.94% 94.73%
1988 6,100 389,287,099 63,818 5,014,375 822.03 1.29% 100.27%
1989 6,450 432,524,773 67,058 4,859,375 753.39 1.12% 100.65%
- 5 -
OFFICIAL STATEMENT
Relating to
$3,076,137
CITY OF SOUTHLAKE, TEXAS
GENERAL OBLIGATION REFUNDING BONDS, SERIES 1990
INTRODUCTION
This Official Statement, which includes the cover page and the Appendices hereto, provides certain
information regarding the issuance by the City of Southlake (the "City ") of a series of its bonds, styled
City of Southlake, Texas General Obligation Refunding Bonds, Series 1990 (the "Bonds" or the "Series 1990
Bonds "). Capitalized terms used in this Official Statement have the same meanings assigned to such
terms in the Ordinance authorizing the issuance of the Bonds (the "Ordinance "), except as otherwise
indicated herein.
The City, located in Tarrant County, Texas, is a political subdivision and a municipal corporation of the
State of Texas (the "State ") duly organized and existing under the laws of the State. The Bonds are issued
pursuant to the constitution and general laws of the State, particularly Article 717k, Vernon's Texas Civil
Statutes, as amended, and additionally pursuant to an ordinance (the "Ordinance ") adopted by the
Councilmembers (the "City Council ") on the sale date of the Bonds.
There follows in this Official Statement descriptions of the Plan of Financing, the Bonds and certain
information about 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.
PLAN OF FINANCING
Purpose
The Bonds are being issued to refund the City's previously issued General Obligation Bonds, Series 1982
and 1984, maturing on and after February 1, 1995 and August 1, 1997, respectively, and all the outstanding
Combination Tax and Revenue Certificates of Obligation, Series 1985 (collectively, the "Refunded
Obligations "), outstanding in the principal amounts set forth in Appendix D, in order to restructure debt
service payments. The previously issued general obligation bonds will be called for redemption on
February 1, 1994 and August 1, 1996, respectively, at a price of par plus accrued interest. The Bonds are
also being issued to refund all of the City's previously issued combination tax and revenue certificates of
obligation, which will be redeemed on April 1, 1997, at a price of par plus accrued interest.
Refunded Obligations
Certain of the City's general obligations are being refunded by the Bonds. See Appendix D for a list of the
refunded obligations which will be redeemed at par prior to their stated maturity.
The Refunded Obligations, and interest due thereon, are to be paid on the scheduled interest payment
dates and the maturity or redemption dates of such obligations from funds to be deposited pursuant to a
certain Escrow Agreement (the "Escrow Agreement ") between the City and First City, Texas - Austin,
N.A., Austin, Texas, (the "Escrow Agent ").
The Ordinance provides that from the proceeds of the sale of the Bonds to the initial purchasers thereof,
the City will deposit with the Escrow Agent the amount necessary to accomplish the discharge and final
payment of the Refunded Obligations. Such funds will be held by the Escrow Agent in an escrow account
(the "Escrow Fund ") and used to purchase direct obligations of the United States of America (the "Federal
Securities ").
Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of debt service on
the Refunded Obligations.
Ernst & Young, independent certified public accountants, will verify at the time of delivery of the Bonds
to the initial purchasers that the Federal Securities will mature and yield 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 verification shall be based upon information
supplied to Ernst & Young by the City and its representatives. Such maturing principal of and interest on
the Federal Securities will not be available to pay the Bonds.
By the deposit of the Federal Securities and cash with the Escrow Agent pursuant to the Escrow
Agreement, the City will have effected the defeasance of the Refunded Obligations in accordance with
the law. It is the opinion of Bond Counsel that, as a result of such defeasance, the Refunded Obligations
will no longer be payable from ad valorem taxes but will be payable from the principal of and interest on
-6-
the Federal Securities and cash held for such purpose by the Escrow Agent and such Refunded Obligations
will not be deemed to be indebtedness of the City for the purpose of any limitation on debt or the
assessment of taxes.
Sources and Uses of Funds
The proceeds from the sale of the Bonds will be applied approximately as follows:
Sources of Funds:
Principal Amount of the Bonds $3,076,137.00
Accrued Interest 20,917.00
Total Available Funds $3,097,054.00
Uses of Funds:
Deposit to Escrow Fund $2,952,300.00
Deposit to Interest and Sinking Fund 24,571.32
Underwriter's Discount 37,682.68
Cost of Issuance and Insurance Premium 82,500.00
Total Application of Funds $3,097,054.00
THE BONDS
General
The Bonds shall be issued only as fully registered bonds in the denomination of $5,000 or any integral
multiple thereof within a maturity, except that the Capital Appreciation Bonds will be issued in the
amounts due at maturity of $5,000 or any integral multiple thereof. The Bonds shall be dated March 1,
1990 and will bear interest from such date except interest on the Capital Appreciation Bonds will accrue
from the date of their initial issuance and delivery. The Bonds will mature on February 1 in the years and
in the principal amounts and will bear interest at the rates set forth on the cover page of this Official
Statement. Interest on the Current Interest Bonds shall be payable on February 1, 1991, and on each
August 1 and February 1 thereafter until maturity or earlier redemption. Interest on the Capital
Appreciation Bonds will be payable at maturity and will compound on February 1 and August 1 each year
commencing August 1, 1990.
Interest on the Current Interest Bonds is payable by check dated as of the interest payment date mailed
by the Paying Agent /Registrar to the registered owner as shown on the registration books kept by the
Paying Agent /Registrar at the close of business on the fifteenth day of the month next preceding such
interest payment date (the "Record Date ") on or before each interest payment date, or by such other
customary banking arrangement, acceptable to the Paying Agent /Registrar, requested by and at the risk
and expense of the registered owner. The principal of the Current Interest Bonds and the principal of and
interest accrued on the Capital Appreciation Bonds (the "Maturity Amount ") shall be payable upon
presentation and surrender of such Bonds at the principal corporate trust office of the Paying
Agent /Registrar. If the date for the payment of the principal of or interest on the Bonds shall be a
Saturday, Sunday, a legal holiday, or a day on which 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 on
which banking institutions are authorized to close; and payment on such date shall have the same force
and effect as if made on the original date payment was due.
In the event of a non - payment of interest on a Current Interest Bond on a scheduled payment date, and
for 30 days thereafter, a new record date for such interest payment (a "Special Record Date ") will be
established by the Paying Agent /Registrar, if and when funds for the payment of such interest have been
received from the City. Notice of the Special Record Date and of the scheduled payment date of the
past due interest (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 Owner of an affected Bond appearing on the 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.
Interest will accrue on the original principal amount of the Capital Appreciation Bonds from the issuance
date and compound semiannually on February 1 and August 1 in each year, commencing August 1, 1990. A
table of the "Accreted Values" per $5,000 Maturity Amount is included herein as Schedule I. "Accreted
Value" means the original principal amount plus accrued interest thereon compounded semiannually on
each February 1 or August 1 at the compounding rate stated in the Table of Accreted Values in Schedule I.
For any date other than a February 1 or August 1, the Accreted Value shall be determined by a
straight -line interpolation between the values for the applicable semiannual compounding dates, based on
30 -day months.
-7-
Optional Redemption of Bonds
At the option of the City, the Bonds, other than the Capital Appreciation Bonds, maturing on or after
February 1, -2002, may be redeemed on February 1, 2000, or on any date thereafter, at their par value plus
accrued interest to the date fixed for redemption. The Capital Appreciation Bonds shall not be subject to
redemption prior to maturity.
Mandatory Redemption
The Term Bonds maturing on February 1, 2009 will be subject to mandatory redemption prior to maturity
in part at random, by lot or other customary method selected by the Registrar, at 100% of the principal
amount thereof plus accrued interest to the date of redemption in amounts sufficient to redeem the Bonds
on the dates in the years and principal amounts shown on the following schedule:
Bonds Maturing February 1, 2009
Principal
Dates Amounts
February 1, 2004 $230,000
February 1, 2005 245,000
February 1, 2006 265,000
February 1, 2007 285,000
February 1, 2008 305,000
February 1, 2009 (Maturity) 325,000
The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such
mandatory redemption provisions shall be reduced, at the option of the City, by the principal amount of
Term Bonds of such maturity which, at least 50 days prior to the mandatory redemption date, (1) shall
have been acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued
interest to the date of purchase thereof, and delivered to the Paying Agent /Registrar for cancellation,
(2) shall have been purchased and cancelled by the Paying Agent /Registrar at the request of the City at a
price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase, or
(3) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited
against a mandatory redemption requirement.
Notice of Redemption
Not less than thirty (30) days prior to a redemption date for the Bonds, a notice of redemption shall be
sent by United States mail, first class postage prepaid, in the name of the City and at the City's expense,
to each bondholder of a Bond to be redeemed in whole or in part at the address of the bondholder
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, and any notice of redemption so mailed shall be
conclusively presumed to have been duly given irrespective of whether received by the bondholder.
Paying Agent /Registrar
The initial Paying Agent /Registrar is First City, Texas - Austin, N.A., Austin, Texas. In the Ordinance
the City retains the right to replace the Paying Agent /Registrar. The City covenants to maintain and
provide a Paying Agent /Registrar at all times while the Bonds are outstanding and any successor Paying
Agent /Registrar shall be a commercial bank or trust company organized under the laws of the State of
Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services
of Paying Agent /Registrar for the Bonds. Upon any change in the Paying Agent /Registrar for the Bonds,
the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the
Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the
new Paying Agent /Registrar.
Transfer, Exchange and Registration
The Bonds may be transferred and exchanged on the registration books of the Paying Agent /Registrar only
upon presentation and surrender thereof 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. A
Bond may be assigned by the execution of an assignment form on the Bond or by other instrument of
transfer and assignment acceptable to the Paying Agent /Registrar. A new Bond or Bonds will be delivered
by the Paying Agent /Registrar, in lieu of the Bond being transferred or exchanged, at the principal office
of the Paying Agent /Registrar, or sent by United States mail, first class, postage prepaid, to the new
registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of
Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three
business days after the receipt of the Bonds to be cancelled, and the written instrument of transfer or
request for exchange duly executed by the registered owner or his duly authorized agent, in form
satisfactory to the Paying Agent /Registrar. New Bonds registered and delivered in an exchange or
transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal
amount as the Bond or Bonds surrendered for exchange or transfer.
- 8 -
Security for Bonds
All taxable property within the City is subject to a continuing direct annual ad valorem tax levied by the
City sufficient to provide for the payment of principal of and interest on all obligations payable in whole
or in part from ad valorem taxes, which tax must be levied within limits prescribed by law. The City
operates under a home -rule charter as authorized by Article XI, Section 5 of the Constitution of the State
of Texas. The Constitution and City's charter restrict such tax levy to no more than $2.50 per $100 of
Assessed Valuation for all purposes.
The Ordinance obligates the City Council to assess and collect an annual ad valorem tax, within the limits
prescribed by law, sufficient to pay principal and interest when due on the Bonds and it also creates a
pledge of such tax.
Bondholders' Remedies
The Ordinance contains no provisions governing the rights and remedies of the bondholders in the event of
a default by the City nor does the Ordinance provide for the acceleration of the payment of the Bond in
the event of a default.
Should a default occur, the bondholder may seek a mandamus or mandatory injunction proceeding to
compel the City to levy, assess and collect an annual ad valorem tax within the tax rate limitation
sufficient to pay principal of and interest on the Bonds as it becomes due. Any such remedy afforded the
bondholder could be required to be satisfied on a periodic basis.
The enforcement or claim for payment of principal of or interest on the Bonds, including the remedy of
mandamus, and the validity of the pledge of taxes, would be subject to the applicable provisions of the
federal bankruptcy laws and to other laws affecting the rights of creditors of political subdivisions
generally.
BOND INSURANCE
The following information has been furnished by Municipal Bond Investors Assurance Corporation (the
"Insurer ") for use in this Official Statement. Such information has not been independently verified by the
City and is not guaranteed as to completeness or accuracy by the City and is not to be construed as a
representation of the City. Reference is made to Appendix E for a specimen of the Insurer's policy.
The Insurer's policy unconditionally and irrevocably guarantees the full and complete payment required to
be made by or on behalf of the Issuer to the Paying Agent or its successor of an amount equal to (i) the
principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory
sinking fund payment) and interest on, the Bonds as such payments shall become due but shall not be so
paid (except that in the event of any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from default or otherwise, other than any
advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the
Insurer's policy shall be made in such amounts and at such times as such payments of principal would have
been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which
is subsequently recovered from any owner of the Bonds pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such owner within the
meaning of any applicable bankruptcy law (a "Preference ").
The Insurer's policy does not insure against loss of any prepayment premium which may at any time be
payable with respect to any Bond. The Insurer's policy does not, under any circumstance, insure against
loss relating to: (i) optional or mandatory redemption (other than mandatory sinking fund redemptions);
(ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Bonds upon
tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. The Insurer's policy
also does not insure against nonpayment of principal of or interest on the Bonds resulting from the
insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the
Bonds.
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by
registered or certified mail, or upon receipt of written notice by registered or certified mail, by the
Insurer from the Paying Agent or any owner of a Bond the payment of an insured amount for which is then
due, that such required payment has not been made, the Insurer on the due date of such payment or within
one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of
funds, in an account with Citibank, N.A., in New York, New York, or its successor, sufficient for the
payment of any such insured amounts which are then due. Upon presentment and surrender of such Bonds
or presentment of such other proof of ownership of the Bonds, together with any appropriate instruments
of assignment to evidence the assignment of the insured amounts due on the Bonds as are paid by the
Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of
the Bonds in any legal proceeding related to payment of insured amounts on the Bonds, such instruments
being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners or the Paying
Agent payment of the insured amounts due on such Bonds, less any amount held by the Paying Agent for
the payment of such insured amounts and legally available therefor.
-9-
The Insurer is the principal operating subsidiary of MBIA Inc. The principal shareholders of MBIA Inc. are
AEtna Life and Casualty Company, Fireman's Fund Insurance Company, subsidiaries of CIGNA
Corporation, The Continental Insurance Company and one of its affiliates, and Credit Local de France,
CAECL S.A., and they own approximately 85% of the outstanding common stock of MBIA Inc. Neither
MBIA Inc. nor its shareholders are obligated to pay the debts of or claims against the Insurer. The Insurer
is a limited liability corporation rather than a several liability association. The Insurer is domiciled in the
State of New York and licensed to do business in all 50 states, the District of Columbia and the
Commonwealth of Puerto Rico. As of December 31, 1988, the Insurer had admitted assets of $1.146
billion (audited), total liabilities of $770 million (audited), and total capital and surplus of $376 million
(audited) prepared in accordance with statutory accounting practices prescribed or permitted by insurance
regulatory authorities. As of September 30, 1989, the Insurer had admitted assets of $1.247 billion
(unaudited), total liabilities of $848 million (unaudited), and total capital and surplus of $398 million
(unaudited) prepared in accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. Copies of the Insurer's financial statements prepared in accordance with
statutory accounting practices are available from the Insurer. The address of the Insurer is 113 King
Street, Armonk, New York 10504.
On January 5, 1990, the Insurer acquired all of the outstanding stock of Bond Investors Group, Inc., the
parent of Bond Investors Guaranty Insurance Company (BIG). Through a reinsurance agreement, BIG has
ceded all of its net insured risks, as well as its unearned premium and contingency reserves, to the Insurer
and the Insurer has reinsured BIG's net outstanding exposure.
Moody's Investors Service rates all bond issues insured by the Insurer and BIG "Aaa" and short term loans
"MIG 1," both designated to be of the highest quality.
Standard & Poor's Corporation rates all new issues insured by the Insurer and BIG "AAA" Prime Grade.
The Moody's Investors Service rating of the Insurer should be evaluated independently of the Standard &
Poor's Corporation rating of the Insurer. No application has been made to any other rating agency in
order to obtain additional ratings on the Bonds. The ratings reflect the respective rating agency's current
assessment of the creditworthiness of the Insurer and its ability to pay claims on its policies of insurance.
Any further explanation as to the significance of the above ratings may be obtained only from the
applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Bonds, and such ratings may be subject
to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of
either or both ratings may have an adverse effect on the market price of the Bonds.
- 10-
TAX INFORMATION
Ad Valorem Tax Law
The appraisal of property within the City is the responsibility of the Tarrant County Appraisal District.
Excluding agricultural and open -space land, which may be taxed on the basis of productive capacity, the
Appraisal District is required under the Property Tax Code to appraise all property within the Appraisal
District on the basis of 100% of its market value and is prohibited from applying any assessment ratios.
The value placed upon property within the Appraisal District is subject to review by an Appraisal Review
Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The
Appraisal District is required to review the value of property within the Appraisal District at least every
three years. The City may require annual review at its own expense, and is entitled to challenge the
determination of appraised value of property within the City by petition filed with the Appraisal Review
Board.
Reference is made to the VTCA, 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:
(1) An exemption of not less than $3,000 of the market value of the residence homestead of persons
65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political
subdivision;
(2) An exemption of up to 20% of the market value of residence homesteads; minimum exemption
$5,000.
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 $1,500 to a maximum of $3,000.
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 Section 1 -d and 1 -d -1.
Nonbusiness vehicles, 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 of the Texas Constitution authorizing an ad valorem tax exemption for "freeport
property" was approved November 7, 1989. Freeport property is goods detained in Texas for 175 days or
less for the purpose of assembly, storage, manufacturing, processing or fabrication. The amendment
provides that the exemption will be effective for the 1990 -91 fiscal year unless the City takes action to
tax such property prior to January 1, 1990 and that the exemption will be effective for all future tax
years unless the City takes action prior to April 1, 1990 but after January 1, 1990. Decisions to continue
to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal.
The City has taken action to tax freeport property in the 1990 -1991 fiscal year and the City has decided
not to tax freeport property in subsequent fiscal years.
The City grants an exemption to the market value of the residence homestead of persons 65 years of age
or older of $50,000; the disabled are granted an exemption of $50,000.
The City has not granted an additional exemption on residence homesteads.
The City does not tax nonbusiness vehicles; and Tarrant County collects taxes for the City.
- 11 -
Valuation, Exemptions and Debt Obligations
1989 Market Valuation Established by Tarrant County Appraisal District $615,757,984
Less Exemptions /Reductions at 100% Market Value:
Residence Homestead Exemptions $ 7,538,394
Disabled Veterans Exemptions 88,000
Open -Space Land Use Reductions 76, 940, 005 84, 566, 399
1989 Taxable Assessed Valuation $531,191,585 (1)
City Funded Debt Payable From Ad Valorem Taxes (2):
General Obligation Bonds (as of 1 -1 -90) $ 415,000
Certificates of Obligation 110,000
Contract Revenue Bonds 2,954,375
The Series 1990 Bonds 3,076,137(3)
Funded Debt Payable From Ad Valorem Taxes
$ 6,555,512
Interest and Sinking Fund (as of 1 -1 -90) $ 11,437
Ratio Funded Debt to Taxable Assessed Valuation 1.23%
1989 Estimated Population - 6,450 (4)
Per Capita Taxable Assessed Valuation - $80,038.12
Per Capita Funded Debt - $1,016.36
(1) Subsequent adjustments have produced a net taxable assessed valuation of $516,245,844.
(2) The above statement of indebtedness does not include the following revenue bonds, as these bonds are
payable solely from the net revenues of the System, as defined in the bond ordinance authorizing the
bonds: $617,000 Waterworks and Sewer System Revenue Bonds.
(3) Includes the Bonds, excludes the $2,605,000 principal amount of the refunded General Obligation
Bonds, Series 1982 and Series 1984 and the Combination Tax and Revenue Certificates of Obligations,
Series 1985.
(4) Source: North Central Texas Council of Governments.
Taxable Assessed Valuations by Category*
Taxable Appraised Value For
Fiscal Year Ended September 30,
1990 1989
% of % of
Category Amount Total Amount Total
Real, Residential, Single - Family $272,724,959 44.29% $245,922,856 47.65%
Real, Residential, Multi- Family 708,283 0.12% 609,283 0.12%
Real, Vacant Lots /Tracts 35,871,608 5.82% 32,716,241 6.34%
Real, Acreage (Land Only) 153,357,154 24.90% 124,159,066 24.06%
Real, Farm and Ranch Improvements 14,889,701 2.42% 30,478,728 5.91%
Real, Commercial 59,141,898 9.60% 42,415,279 8.22%
Real, Industrial 5,765,209 0.94% 5,352,708 1.04%
Tangible Personal, Nonbusiness Vehicles -0- 0.00% 331,965 0.06%
Real and Tangible Personal, Utilities 10,456,114 1.70% 7,673,310 1.49%
Tangible Personal, Commercial 56,882,984 9.24% 19,609,488 3.80%
Tangible Personal, Industrial 4,578,346 0.74% 5,306,118 1.03%
Tangible Personal, Other 671 ,159 0.11% 257,149 0.05%
Real Property,Inventory(1) 710,569 0.12% 1,216,058 0.23%
Total Appraised Value Before Exemptions $615,757,984 100.00% $516,048,249 100.00%
Less: Total Exemptions /Reductions 84,566,399 78,792,948
Taxable Assessed Value $531,191,585 $437,255,301
(1) Residential inventory properties in the hands of developers or builders; each group of properties in this
category is appraised on the basis of its value as a whole as a sale to another developer or builder. This
category initiated in 1988.
* Note: The above figures reflect the taxable appraised values as stated to the State Property Tax Board
Report. Any difference between these figures and the final taxable assessed valuation are due to
adjustments and corrections to the respective tax rolls.
- 12 -
Valuation and Funded Debt History
Ratio Funded
Fiscal Funded Debt Debt to
Year Taxable Outstanding Taxable
Ended Assessed at End Assessed
9 -30 Valuation of Year Valuation
1983 $ 69,128,802 $ 565,000 0.82%
1984 85,604,834 1,145,000 1.34%
1985 214,807,784(1) 3,685,000 1.72%
1986 248,917,765 3,570,000 1.43%
' 1987 366,024,873(1) 3,450,000 0.94%
1988 389,287,099 5,014,375 1.29%
1989 432,524,773 4,859,375 1.12%
1990 516,245,844(1) 6,348,012 1.23%
(1) Revaluation.
Tax Rate, Levy and Collection History
Fiscal
Year Distribution
Ended Tax General Interest and % Current % Total
9 -30 Rate Fund Sinking Fund Tax Levy Collections Collections
1983 $0.4150 $0.23500 $0.18000 $ 286,885 92.05% 92.99%
1984 0.4150 0.30750 0.10750 355,260 94.42% 97.87%
1985 0.1810 0.14300 0.03800 388,802 97.27% 98.04%
1986 0.2600 0.22900 0.03100 647,186 92.13% 95.26%
1987 0.3200 0.27480 0.04520 1,171,279 90.14% 94.73%
1988 0.3300 0.28831 0.04169 1,284,647 91.56% 100.27%
1989 0.3882 0.34820 0.04000 1,697,413 91.80% 100.65%
1990 0.3882 0.35830 0.02990 2,004,066 91.95%0) 94.81%(1)
(1) Collections for part year only, through February 28, 1990.
Property within the City is assessed as of January 1 of each year (except for business inventory which
may, at the option of the taxpayer, be assessed as of September 1); taxes become due October 1 of the
same year, and become delinquent on February 1 of the following year. Split payments are not permitted.
Discounts are not allowed. 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.
Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Month Penalty Interest Total
February 6% 1% 7%
March 7% 2% 9%
April 8% 3% 11%
May 9% 4% 13%
June 10% 5% 15%
July 12% 6% 18%
After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if
an account is delinquent in July, a 15% attorney's collection fee is added to the total tax penalty and
interest charge.
Ten Largest Taxpayers
1989 % of Total
Taxable Taxable
Assessed Assessed
Name of Taxpayer Nature of Property Valuation Valuation
MTP -IBM Phase II & III, J.V. Office Buildings $36,113,838 6.99%
IBM Corporation Office Buildings 29,205,746 5.66%
Joel Wright Real Estate and Land 7,737,890 1.50%
A.C. Stone Real Estate 5,331,146 1.03%
Equipco, Inc. Industrial 4,213,384 0.82%
Jaimie Harrington, Trust Real Estate 4,135,075 0.80%
J.R. Stacy Land 3,801,442 0.74%
Mesco Metal Building Corporation Metal Building Manufacturing 3,057,751 0.59%
David C. Hardy, Trust Real Estate 2,842,235 0.55%
Champlin Refining Company Oil Company 2,764,313 0.54%
$99,202,820 19.22%
- 13 -
Tax Rate Limitation
All taxable property within the City is subject to the assessment, levy and collection by the City of a
continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest
on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas
Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2.50 per $100
Assessed Valuation for all City purposes. The City operates under a Home Rule Charter which adopts the
constitutional provisions.
By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100
taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of
maintenance and operation expenditures, and (2) a rate for debt service.
Under the Tax Code:
The City must annually calculate and publicize its "effective tax rate" and "rollback tax rate ". The City
Council may not adopt a tax rate that exceeds the lower of the rollback tax rate or 103% of the effective
tax rate until it has held a public hearing on the proposed increase following notice to the taxpayers and
otherwise complied with the Tax Code. If the adopted tax rate exceeds the rollback tax rate the qualified
voters of the City by petition may require that an election be held to determine whether or not to reduce
the tax rate adopted for the current year to the rollback tax rate.
"Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's
total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last
year's taxes and new values are not included in this year's taxable values.
"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 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. The City does not collect the
additional one -half cent sales tax.
Reference is made to the Tax Code for definitive requirements for the levy and collection of ad valorem
taxes and the calculation of the various defined tax rates.
Assessed Valuations, Tax Rates, Outstanding Debt and Authorized But Unissued Bonds of Overlapping
Taxing Jurisdictions
1989 Outstanding Authorized
Taxable 1989 Tax Supported But Unissued
Assessed Tax Debt As of Debt As of
Taxing Jurisdiction Valuation Rate 2 -1 -90 2 -1 -90
Carroll Independent School District $ 667,123,442 $0.920000 $ 9,460,132 $ -0-
Denton County 10,179,922,927 0.241000 10,975,000 -0-
Grapevine- Colleyville Independent
School District 2,889,230,254 0.960000 53,790,000 3,250,000
Keller Independent School District 1,280,878,419 1.170000 38,350,000 7,150,000
Northwest Independent School District 631,951,756 1.299600 8,309,989 -0-
Tarrant County 43,268,325,372 0.181598 109,860,000 34,000,000
Tarrant County Hospital District 43,268,325,372 0.153000 43,275,000 -0-
Tarrant County Junior College District 43,287,082,418 0.032740 45,900,000 6,000,000
Source: "Texas Municipal Reports" published by the Municipal Advisory Council of Texas.
- 14 -
DEBT INFORMATION
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- 15-
Estimated Direct and Overlapping Funded Debt Payable From Ad Valorem Taxes (As of 2 -1 -90)
Expenditures of the various taxing bodies within the territory of the City are paid out of ad valorem taxes
levied by these taxing bodies on properties within the City. These political taxing bodies are independent
of the City and may incur borrowings to finance their expenditures. The following statement of direct
and estimated overlapping ad valorem tax bonds 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. Further-
more, certain of the entities listed below may have issued additional bonds since the date stated in the
table, and such entities may have programs requiring the issuance of substantial amounts of additional
bonds the amount of which cannot be determined. The following table reflects the estimated share of
overlapping funded debt of these various taxing bodies.
Estimated
Total % Overlapping
Taxing Jurisdiction Funded Debt Applicable Funded Debt
City of Southlake $ 6,550,512(1) 100.000% $ 6,550,512
Carroll Independent School District 9,460, 132 76.920% 7,276,734
Denton County 10,975,000 0.004% 439
Grapevine Colleyville Independent School District 53,790,000 0.860% 462,594
Keller Independent School District 38,350,000 1.590% 609,765
Northwest Independent School District 8,309,989 0.090% 7,479
Tarrant County 109,860,000 0.980% 1,076,628
Tarrant County Hospital District 43,275,000 0.980% 424,095
Tarrant County Junior College District 45,900,00 0.980% 449,820
Total Direct and Overlapping Funded Debt $16,858,066
Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation 3.27%
Per Capita Overlapping Funded Debt $2,613.65
(1) Includes the Bonds being issued herein.
Interest and Sinking Fund Budget Projection
Estimated General Purpose Debt Service Requirements, Fiscal Year Ending 9 -30 -90 $223,889(1)
Interest and Sinking Fund, 9 -30 -89 $ 93,578
1989 Interest and Sinking Fund Tax Levy @ 94.5% Collection 157,696(2)
Budgeted Transfers 328,641(3) 579,915
Estimated Balance, 9-30-90 $356,026
(1) Includes the Bonds, excludes debt service in the amount of $285,948 on the Trinity River Authority
Contract Revenue Bonds. Debt service on these bonds in fiscal year 1990 has been capitalized.
(2) This is the budgeted amount for debt service which will be deposited in the Interest and Sinking Fund.
(3) Transfer from Water and Sewer System; see below.
Computation of Self- Supporting Debt
Net Revenue from Water and Sewer System, Fiscal Year Ended 9 -30 -89 $220,182(1)
Less: Revenue Bond Requirements, 1990 Fiscal Year 82,796
Balance Available for Other Purposes $137,386
System Certificates of Obligation Requirements, 1990 Fiscal Year $328,641(2)
Percentage of System General Obligation Bonds Self- Supporting 41.80 %(2)
(1) Unaudited; based on cash figures prepared by City officials.
(2) The excess of system requirements over available revenues will be drawn from the Water and Sewer
System Fund Balance. The City has increased water rates effective February 1990.
- 16-
Authorized But Unissued General Obligation Bonds
The City has no authorized but unissued bonds at this time.
Anticipated Issuance of General Obligation Bonds
The City currently is planning to issue approximately $1,200,000 additional general obligation debt in the
fall of 1990 for road improvements. Additionally the Trinity River Authority is planning to issue an
undetermined amount of bonds on its Denton Creek Wastewater Pressure Interceptor System in the spring
of 1991. The City is a contracting party to the system pledging surplus revenues from its water and sewer
system and ad valorem taxes.
Funded Debt Limitation
No direct funded debt limitation is imposed on the City under current State law or the City's Home Rule
Charter. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its
maximum ad valorem tax rate to $2.50 per $100 assessed valuation for all City purposes. The City
operates under a Home Rule Charter which adopts the constitutional provisions.
Other Obligations
The City has capital lease obligations outstanding as of September 30, 1989, in a combined amount of
$17,191 which are payable from the general fund. The total amount of $17,191 is due in fiscal year 1990.
Pension Fund
The City provides pension benefits for all of its full -time employees through a nontraditional, joint
contributory, defined contribution plan in the state -wide Texas Municipal Retirement System (TMRS), one
of over 500 administered by TMRS, an agent multiple - employer public employee retirement system. The
contribution rate for the employees is 5 %, and the City matching percent is currently 100 %, both as
adopted by the governing body of the City. Under the state law governing TMRS, the City contribution
rate is annually determined by the actuary. Part of the City contribution rate (the normal cost) is to fund
the currently accruing monetary credits, with the other part (the prior service contribution rate)
calculated as the level percent of payroll needed to amortize the unfunded actuarial liability over the
remainder of the plan's 25 year amortization period. (See notes to financial statements included in
Appendix B).
Self- Insurance
In June of 1988, the City adopted a limited self- insurance plan covering employee medical benefits. The
plan is professionally administered and covers substantially all of its employees. Operations are charged
for estimated claim losses based upon prior premium costs and reserved for potential liability in the
internal service fund.
- 17-
FINANCIAL INFORMATION
General Fund Revenues and Expenditure History
For Fiscal Year Ended September 30,
Revenues 1989 1988 1987 1986 1985
Taxes $2,086,350 $1,784,045 $1,519,463 $1,070,314 $ 802,657
Licenses and Permits 200,470 256,837 190,118 160,288 221,472
Fines and Forfeitures (1) 264,779 288,974 300,900 208,461 142,956
Other Revenues 72,121 719,822(2) 173,451 52,061 52,920
Total Revenues $2,623,720 $3,049,678 $2,183,932 $1,491,124 $1,220,005
Expenditures
City Administration $ 659,561 $ 563,960 $ 520,192 $ 258,906 $ 459,003
Police Department 747,368 719,605 656,024 518,284 291,555
Fire Department 358,221 268,213 167,260 100,024 60,148
Building Department 148,769 158,309 151,421 156,108 88,312
Facilities -0- -0- -0- -0- 80,297
Streets and Roads 227,172 209,121 403,029 124,176 86,520
Municipal Court 142,964 136,369 126,679 111,200 -0-
Parks 42,537 52,010 203,527 113,500 15,868
Public Works Department 38,097 81,963 54,348 45,087 -0-
Other Expenditures 22,799 620,111(2) 273,534 -0- -0-
Total Expenditures $2,387,488 $2,809,661 $2,556,014 $1,427,285 $1,081,703
Excess (deficiency) of Revenues
Over Expenditures $ 236,232 $ 240,017 $ (372,082) $ 63,839 $ 138,302
Budgeted Transfers In $ -0- $ -0- $ 33,817 $ -0- $ 35,900
Budgeted Transfers Out (13,848) (240,507) (168,892) (129,304) (168,942)
Total Transfers $ (13,848) $ (240,507) $ (135,075) $ (129,304) $ (133,042)
Net Increase (Decrease) $ 222,384 $ (409) $ (507,157) $ (65,465) $ 5,260
Other Miscellaneous Adjustments 32 28,023 -0- -0- 21,163
Beginning Fund Balance 51,187 23,654 530,811 596,276 569,853
Ending Fund Balance $ 273,603 $ 51,187 $ 23,654 $ 530,811 $ 596,276
(1) Includes category of revenues - "Charges for Services ".
(2) Includes gifts in the amount of $597,175 for the purchase of fire department vehicles.
- 18-
Municipal Sales Tax History
The City has adopted the Municipal Sales and Use Tax Act, VATCS, Tax Code, Chapter 321, which
grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds
are credited to the General Fund and are not pledged to the payment of the Bonds. Collections and
enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas,
who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. Revenue
from this source, for the years shown, has been:
Fiscal
Year % of Equivalent of
Ended Total Ad Valorem Ad Valorem
9 -30 Collected Tax Levy Tax Rate
1984 $268,215 75.50% $0.3133
1985 307,694 79.14% 0.1432
1986 297,747 46.01% 0.1196
1987 233,239 19.91% 0.0637
1988 280,901 21.87% 0.0722
1989 311,698 18.36% 0.0713
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 policy is to maintain surplus and unencumbered fund equal to 10% of
expenditures in the General Fund. This allows the City to avoid interim borrowing pending tax receipts.
Use of Bond Proceeds, Grants, etc.... The City's policy is to use bond proceeds, grants, revenue sharing
or other non - recurring revenues for capital expenditures only. 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.
- 19 -
OTHER RELEVANT INFORMATION
Ratings
Standard &, Poor's Corporation and Moody's Investors Service, Inc. have assigned their municipal bond
ratings of "AAA" and "Aaa ", respectively, to this issue of Bonds with the understanding that upon delivery
of the Bonds, a guaranty insurance policy insuring the timely payment of the principal of and interest on
the Bonds will be issued by Municipal Bond Investors Assurance Corporation.
Tax Exemption
The delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that interest on the
Bonds for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of
the Internal Revenue Code of 1986, as amended to the date of such opinion (the "Code "), pursuant to
section 103 of the Code and existing regulations, published rulings, and court decisions, and (2) will not be
included in computing the alternative minimum taxable income of the owners thereof who are individuals
or, except as hereinafter described, corporations. The statute, regulations, rulings, and court decisions on
which such opinion is based are subject to change.
Interest on all tax - exempt obligations, including the Bonds, owned by a corporation will be included in
such corporation's adjusted net book income for the 1989 tax year, or adjusted current earnings, for tax
years beginning after 1989, for purposes of calculating the alternative minimum taxable income of such
corporation, other than an S corporation, a qualified mutual fund, a real estate investment trust (REIT), or
a real estate mortgage investment conduit (REMIC). A corporation's alternative minimum taxable income
is the basis on which the alternative minimum tax imposed by the Tax Reform Act of 1986 and the
environmental tax imposed by the Superfund Revenue Act of 1986 will be computed.
In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the
City made in a certificate dated the date of delivery of the Bonds pertaining to the use, expenditure, and
investment of the proceeds of the Bonds and will assume continuing compliance by the City with the
provisions of the Ordinance subsequent to the issuance of the Bonds. The Ordinance contains covenants by
the City with respect to, among other matters, the use of the proceeds of the Bonds and the facilities
financed therewith by persons other than state or local governmental units, the manner in which the
proceeds of the Bonds are to be invested, and the reporting of certain information to the United States
Treasury. Failure to comply with any of these covenants would cause interest on the Bonds to be
includable in the gross income of the owners thereof from date of the issuance of the Bonds.
Except as described above, Bond Counsel expresses no other opinion with respect to any other federal,
state or local tax consequences under present law, or proposed legislation, resulting from the receipt or
accrual of interest on, or the acquisition or disposition of, the Bonds. Prospective purchasers of the Bonds
should be aware that the ownership of tax - exempt obligations such as the Bonds may result in collateral
federal tax consequences to, among others, financial institutions, life insurance companies, property and
casualty insurance companies, certain foreign corporations doing business in the United States, S
corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad
Retirement benefits, 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.
Qualified Tax- Exempt Obligations
Section 265 of the Internal Revenue Code of 1986 provides, in general, that interest expense incurred to
acquire or carry tax - exempt obligations is not deductible from the gross income of the holder. For
certain holders that are "financial institutions" within the meaning of such section, complete disallowance
of such expense would apply to taxable years beginning after December 31, 1986, with respect to tax -
exempt obligations acquired after August 7, 1986. Section 265(b) of the Internal Revenue Code of 1986
provides an exception to this rule for interest expense incurred by financial institutions to carry tax -
exempt obligations (other than private activity bonds) which are designated by an issuer, such as the City,
as "qualified tax - exempt obligations ". An issuer may only designate an issue as an issue of "qualified tax -
exempt obligations" where not more than $10 million of tax - exempt obligations are issued by the issuer
• during the calendar year in which the issue so designated is issued.
The City has pursuant to the Ordinance designated the Bonds as "qualified tax - exempt obligations ".
Accordingly, it is anticipated that financial institutions that purchase the Bonds will not be subject to the
100 percent disallowance of interest expense under section 265 of the Internal Revenue Code of 1986.
However, such purchases would be subject to the 20 percent interest disallowance rule applicable under
prior law.
- 20 -
Tax Accounting Treatment of Capital Appreciation Bonds
The initial public offering price to be paid for the Capital Appreciation Bonds is less than the principal
amount payable on such Bond at maturity. An amount equal to the difference between the initial public
offering price of the Capital Appreciation Bond (assuming that a substantial amount of the Capital
Appreciation Bonds of that maturity are sold to the public at such price) and the principal amount payable
at maturity constitutes interest to the initial purchaser of such Capital Appreciation Bonds. A portion of
such interest, allocable to the holding period of such Capital Appreciation Bond by the initial purchaser,
will, upon the disposition of such Capital Appreciation Bonds (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. Such interest is considered to be accrued actuarially in accordance with the
constant interest method over the life of a Capital Appreciation Bond, taking into account the semiannual
compounding of accrued interest, at the yield to maturity on such Capital Appreciation Bond.
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 the Tax Reform Act of 1986 and the environmental tax imposed by the Superfund Revenue Act
of 1986, 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, 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.
In the event of the sale or other taxable disposition of a Capital Appreciation Bond prior to maturity, the
amount realized by the owner in excess of the basis of such Capital Appreciation Bond in the hands of
such owner (adjusted upward by the portion of the original issue discount allocable to the period for which
such Capital Appreciation Bond was held) is includable in gross income.
Owners of Capital Appreciation Bonds should consult with their own tax advisors with respect to the
determination for federal income tax purposes of accrued interest upon disposition of Capital
Appreciation Bonds and with respect to the state and local tax consequences of owning Capital
Appreciation Bonds. It is possible that, under applicable provisions governing determination of state and
local income taxes, accrued interest on Capital Appreciation Bonds may be deemed to be received in the
year of accrual even though there will not be a corresponding cash payment.
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.
Legal Investments and Eligibility to Secure Public Funds in Texas
Section 9 of the Bond Procedures Act of 1981 provides that the Bonds "shall constitute negotiable
instruments, and are investment securities governed by Chapter 8, Texas Uniform Commercial Code,
notwithstanding any provisions of law or court decision to the contrary, and are legal and authorized
investments for banks, savings banks, trust companies, building and loan associations, savings and loan
associations, insurance companies, fiduciaries, and trustees, and for the sinking fund of cities, towns,
villages, school districts, and other political subdivisions or public agencies of the State of Texas ". Such
Act further provides that the Bonds are eligible to secure deposits of any public funds of the state, its
agencies and political subdivisions, and are legal security for those deposits to the extent of their market
value. No review by the City has been made of the laws in other states to determine whether the Bonds
are legal investments for various institutions in those states.
Legal Matters
The City will furnish a complete transcript of proceedings had incident to the authorization and issuance
of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving
the Initial Bond and to the effect that the Bonds are valid and legally binding obligations of the City, and
based upon examination of such transcript of proceedings, the approving legal opinion of Bond Counsel, to
like effect and to the status under the federal tax laws of the interest on the Bonds (see "Tax Exemption"
herein). The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of
the Bonds is contingent on the sale and delivery of the Bonds. The legal opinion will be printed on the
Bonds. Bond Counsel was not requested to participate, and has not participated in the drafting of this
Official Statement except that, in its capacity as Bond Counsel, such firm has reviewed the information
contained under the captions "Plan of Financing ", "The Bonds ", "Tax- Exemption" and "Qualified Tax -
Exempt Obligations" to verify that the information and data contained therein is accurate and complete in
all material respects as to the matters addressed. McCall, Parkhurst & Horton, Dallas, Texas will also
pass upon certain legal matters for the Underwriters.
- 21 -
Verification of Arithmetical and Mathematical Computations
The accuracy of the arithmetical and mathematical computations (a) of the adequacy of the maturing
principal amounts of the Federal Securities together with the interest income thereon and uninvested
cash, if any, to pay when due, the principal, premium, and interest on the Refunded Bonds and (b) relating
to the determination of compliance with the regulations and rulings promulgated under Sections 148 and
149(d) of the Code, will be verified by Ernst & Young, independent certified public accountants. Such
verification of arithmetical accuracy and mathematical computations shall be based upon information and
assumptions supplied by the City and on interpretations of Sections 148 and 149 (d) of the Code provided
by Bond Counsel.
Underwriting
The Underwriter has agreed, subject to certain customary conditions to delivery, to purchase the Bonds
from the City at an aggregate underwriting discount of $37,682.68 from the initial public offering prices
of the Bonds. The Underwriter will be obligated to purchase all the Bonds if any are purchased. The Bonds
may be offered and sold to certain dealers and others at prices lower than such public offering prices, and
such public prices may be changed, from time to time, by the Underwriter.
Financial Advisor
First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of
the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is
contingent upon the issuance and delivery of the Bonds. First Southwest Company, in its capacity as
Financial Advisor, has not verified and does not assume any responsibility for the information, covenants
and representations contained in any of the bond documentation with respect to the federal income tax
status of the Bonds.
Miscellaneous
The financial data and other information contained herein have been obtained from the City's 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 statues, 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.
The Official Statement was approved, and the execution and delivery of this Official Statement
authorized, by the City Council on March 6, 1990.
CITY OF SOUTHLAKE, TEXAS
By GARY FICKES
Mayor
ATTEST:
By SANDRA L. LeGRAND
City Secretary
- 22 -
Schedule I
TABLE OF ACCRETED VALUES
(Per $5,000 Maturity Amount)
YIELD 6.9000% 7.0000% 7.0500%
' VALUE OF VALUE OF VALUE OF
DATE MATURITY 02 TY MATURITY 02/01/2001 ATRY
04/10/90 2,750.85 2,546.15 2,364.50
08/01/90 2,809.00 2,600.78 2,415.57
02/01/91 2,905.91 2,691.81 2,500.72
08/01/91 3,006.16 2,786.02 2,588.87
02/01/92 3,109.88 2,883.53 2,680.13
08/01/92 3,217.17 2,984.45 2,774.60
02/01/93 3,328.16 3,088.91 2,872.41
08/01/93 3,442.98 3,197.02 2,973.66
02/01/94 3,561.76 3,308.92 3,078.48
08/01/94 3,684.64 3,424.73 3,187.00
02/01/95 3,811.76 3,544.59 3,299.34
08/01/95 3,943.27 3,668.65 3,415.64
02/01/96 4,079.31 3,797.06 3,536.04
08/01/96 4,220.05 3,929.95 3,660.69
02/01/97 4,365.64 4,067.50 3,789.73
08/01/97 4,516.26 4,209.87 3,923.32
02/01/98 4,672.07 4,357.21 4,061.61
08/01/98 4,833.25 4,509.71 4,204.79
02/01/99 5,000.00 4,667.55 4,353.00
08/01/99 4,830.92 4,506.45
02/01/2000 5,000.00 4,665.30
08/01/2000 4,829.75
02/01/2001 5,000.00
(THIS PAGE LEFT BLANK INTENTIONALLY)
APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
Location
The City of Southlake is located in northeast Tarrant County. 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
Southlake's estimated 1989 population is 6,450, an increase of 229.78% over the 1980 census population of
2,807.
Economy
The City of Southlake is primarily residential with some commercial and light manufacturing companies.
Southlake'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:
Number of
Company Nature of Business Employees
IBM Marketing /Education 2,500
Carroll Independent School District School District 180
Mesco Metal Building Group Manufacturing 150
Financial Institutions
The City is served by two banks, Texas National Bank and American Bank of Commerce which have
combined deposits of $49,275,000. Additionally the City has one savings and loan.
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. Southlake is approximately 5 miles northwest of
Dallas -Fort Worth International Airport, 19 miles from Dallas Love Field and 10 miles from the new
AllianceAirport.
The City is also served by two railroad lines.
Education
The City of Southlake is served by Carroll Independent School District. There are two elementary
schools, one junior high school and one high school within the City. The combined enrollment for 1988 -89
was 1,732 students.
Higher education is provided by many institutions located within a 25 -mile radius from Southlake, such as:
Texas Christian University, University of North Texas, Texas Woman's University, University of Texas at
Arlington, University of Dallas and Tarrant County Junior College.
Recreation
The City has one municipal park which has two tennis courts, a community center, lighted ballfields and
various playground equipment.
Southlake is approximately 10 miles south of Lake Grapevine which offers swimming, camping, boating
and fishing.
Tarrant County
Tarrant County (the "County ") is located in North Central Texas with an estimated 1990 population of
1,180,800. 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 3.7 million.
A -1
Tarrant County Area Major Employers
Number of Employees
1988 1987 1986 1985
General Dynamics 30,000 27,000 23,000 17,500
American Airlines 20,200 15,822 15,000 13,600
Bell Helicopter- Textron 8,300 7,500 8,000 7,000
Carswell Air Force Base 8,226 8,791 7,000 6,400
Tandy Corporation 8,100 5,000 7,525 6,500
Fort Worth Independent School District 7,200 7,008 7,000 7,000
City of Fort Worth 5,965 5,900 6,000 5,525
Delta Airlines, Inc. 5,000 3,200 3,100 3,085
General Motors Assembly Plant 4,152 2,400 2,500 4,000
Arlington Independent School District 4,150 3,442 3,442 3,442
University of Texas at Arlington 3,725 3,548 3,673 3,600
Winn Dixie 3,000 3,000 2,900 2,800
U. S. Postal Service 3,000 3,000 2,600 2,500
Harris Hospital 2,800 2,500 2,300 2,400
Source: Fort Worth Chamber of Commerce - Economic Development Division.
Historical Employment (Annual Average Data) (1)
Sept.
Area 1989 1988 1987 1986 1985 1984 1983
Fort Worth - Arlington PMSA
Employed 648,900 644,972 631,179 607,428 598,926 576,482 531,218
Unemployed 36,800 42,813 46,799 42,513 31,628 23,983 31,911
% of Unemployment 5.40% 6.20% 6.90% 6.54% 5.02% 3.99% 5.67%
Tarrant County
Employed 575,102 571,615 561,357 541,097 533,524 514,989 474,431
Unemployed 33,183 38,742 42,426 38,412 28,734 21,454 28,948
h of Unemployment 5.50% 6.30% 7.00% 6.63% 5.11% 4.00% 5.75%
(1) Source: Texas Employment Commission.
The following information concerning the water and sewer utilities is for general informational purposes
only.
Waterworks and Sewer System Condensed Statement of Operations
For Fiscal Year Ended September 30,
Revenues 1989 1988 1987 1986 1985
Water Service $1,203,884 $1,390,968 $1,234,511 $1,005,524 $ 888,176
Sewer Service 31,168 21,712 16,935 9,781 5,024
Water Taps -0 -(1) 17,300 21,708 35,675 103,928
Impact Fees -0 -(2) 66,023 40,357 14,000 5,955
Inspection and Service Fees 29,696 71,798 -0- -0-
Interest Income 32,774 85,122 57,056 68,854 111,563
Other Revenues 18,016 4,595 4,208 1,945 904
Total Revenues $ $1,374,775 $1,135,779 $1,115,550
Expenses
Water Purchased $ 709,327 $ 690,529 $ 343,886 $ 167,928 $ 148,427
Other Expenses 502,402 528,389 515,853 361,883 294,586
Total Expenses $1,211,729 $1,218,918 $ 859,739 $ 529,811 $ 443,013
Net Available for Debt Service $ 103,809 $ 438,600 $ 515,036 $ 605,968 $ 672,537
Water Customers 2,054 1,974 1,985 1,900 1,828
Sewer Customers 73 73 65 83 37
(1) Included in revenue category "Water Service ".
(2) The City has discontinued charging an impact fee.
(3) Decline in revenues due to an extremely wet year.
A -2
Coverage and Fund Balances
Waterworks and Sewer Bonds Outstanding (as of 1 -1 -90)
$ 617,000(1)
Average Annual Principal and Interest Requirements, 1990 -2005 1.60 Ti $ 64,760
760
Coverage of Average Requirements by 9 -30 -89 Net Income
Interest and Sinking Fund (as of 1 -1 -90) $ 121,302 $ 82,402
Reserve Fund (as of 1 -1 -90) $ 1,000
Repair and Replacement Fund (as of 1 -1 -90)
(1) Does not include general obligation debt issued for water and sewer purposes.
Revenue Bonds Authorized But Unissued - None
Anticipated Issuance of Revenue Bonds
The City is currently planning to issue approximately $1,100,000 additional revenue bonds for various
sewer system improvements.
Waterworks System
The City has a sixteen year contract, dated February 27, 1984, with the City of Fort Worth for the
purchase of treated water. The current contract is for 2.8 million gallons per day at a rate 10% above the
City of Fort Worth's cost. Additionally the City has four wells with a combined capacity of 2.0 million
gallons per day which are a supplementary source of water. The City has two elevated storage tanks with
a combined capacity of 2,000,000 gallons and two ground storage tanks with a combined capacity of
800,000 gallons.
Water Usage (Gallons)
Average Maximum
Fiscal Day Day Total
Year Usage Usage Usage
1984 690,603 1,696,900 252,070,200
1985 903,988 2,453,900 329,955,700
1986 930,336 4,422,000 339,572,800
1987 1,039,210 4,179,000 379,311,500
1988 1,294,853 4,190,000 472,621,300
1989(1) 806,910 2,833,000 294,522,300
1990(2) 884,794 1,650,000 79,631,500
(1) Lower water usage due to an extremely wet spring and summer in 1989.
(2) Part year only, through December, 1989.
Ten Largest Water Customers (Gallons)
Fiscal 1989 Percentage of
Water Total City
Customer Consumption Consumption
International Business Machines 20,326,000 6.90%
Mid Cities Ready Mix 6,149,900 2.09%
Express Concrete 4,854,100 1.65%
Johnson Elementary 4,089,300 1.39%
Carroll Middle School 3,294,300 1.12%
Carroll High School 2,986,800 1.01%
Carroll Atheletic Facility 2,674,700 0.91%
Yerkey's 1,630,250 0.55%
Metal Structures 1,523,280 0.52%
Don Lovelace 1,054,000 0.36%
48,582,630 16.50%
A -3
Monthly Water Rates (Effective February 1, 1990) (1)
Residential
First 2,000 gallons $23.00 (Minimum)
Next 98,000 gallons 2.76 per 1,000 gallons
Over 100,000 gallons 3.45 per 1,000 gallons
Commercial
Meter Size
Gallons 1.0" 1.5" 2.0" 3.0" 4.0" 6.0" 8.0"
First 3,000 $36.23
First 5,000 $59.80
First 7,000 $83.38
First 10,000 $119.60
First 12,000 $143.18
First 15,000 $179.40
First 18,000 $215.63
Excess required gallons - $2.76 per 1,000 gallons
(1) These new rates represent a 15% increase over the City's old water rates.
Wastewater System
The City owns and operates three small wastewater treatment plants which have a total of 73 customers.
One of the plants has enough capacity to treat an additional 74 connections. One plant serves a small
industrial /commercial park and the other two serve separate residential areas. The majority of the City
is on a septic system or an aerobic system. The City is a contracting party in five projects of the Trinity
River Authority to provide regional sewer service to the City in the near future.
On February 25, 1987, the City contracted with the Trinity River Authority for wastewater treatment at
the Authority's Regional Wastewater Treatment Plant. The City's payments to the Authority have been
deemed to be an operation and maintenance expense of the City's waterworks and sewer system and are
payable monthly. The City's payments are based upon its percentage of the total flow of all contracting
parties into the Regional System applied to total operation and maintenance expenses of the Regional
System, including debt service.
On February 25, 1987, the City has, along with the Cities of Fort Worth, Keller and North Richland Hills,
contracted with the Authority for transportation of the City's effluent to the Regional Plant through the
Big Bear Interceptor System. The City's payments to the authority have been deemed to be an operation
and maintenance expense of its waterworks and sewer system. The City is obligated to pay 33.64% of the
amount necessary to meet requirements and any other costs.
On April 27, 1988, the City, along with the Cities of Fort Worth, Roanoke, Haslet and Lake Turner
Municipal Utility District No. 1, contracted with the Authority for wastewater treatment at the
Authority's Denton Creek Regional Wastewater Treatment Plant. Construction of the Denton Creek
Regional Plant will be completed by the end of March 1990. Payments to the Authority are an operation
and maintenance expense of the City's waterworks and sewer system and are based upon the City's
percentage of the total flow of all contracting parties into the Denton Creek System applied to total
operation and maintenance expenses of the Denton Creek System, including debt service.
Additionally the City has contracted with the Trinity River Authority for transport of wastewater through
the Denton Creek Wastewater Interceptor Pressure System and the City of Southlake Sewer System
Project. The Authority has issued contract revenue bonds for these projects which are payable from
surplus revenues of the City's water and sewer system and ad valorem taxes.
Monthly Sewer Rates (Effective October 1, 1986)
Residential
Summer Place Addition Flat Rate - $10.00
Dove Estate Flat Rate - $25.00
Commercial
Bank Place Flat Rate - $25.00
Plus $1.00 per
1,000 gallons
A -4
APPENDIX B
EXCERPTS FROM THE
CITY OF SOUTHLAKE, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 1989
The information contained in this Appendix consists of excerpts from the City of
Southlake, Annual Financial Report for the Year Ended September 30,
1989, 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.
CITY OF SOUTHLAKE, TEXAS
Comprehensive Annual Financial Report
For The Fiscal Year Ended September 30, 1989
Table of Contents
Page
Independent Auditor's Report 1
Combined Financial Statements
Combined Balance Sheet - All Fund Types and Account Groups 3
Combined Statement of Revenues, Expenditures, and Changes
in Fund Balances - All Governmental Fund Types 5
Combined Statement of Revenues, Expenditures and Changes
in Fund Balance - Budget and Actual - General and
Special Revenue Funds 6
Statement of Revenues, Expenses, and Changes in Retained
Earnings - Enterprise Fund 7
Statement of Cash Flows - Enterprise Fund 8
Notes to Combined Financial Statements 10
WEAVER AND TIDWELL
AFFILIATIONS
CERTIFIED PUBLIC ACCOUNTANTS FORT WORTH OFFICE
SUMMIT INTERNATIONAL MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
1500 COMMERCE BUILDING
TWO GALLERIA TOWER 307 WEST SEVENTH STREET
ASSOCIATES, INC.
ASSOCIATED REGIONAL
13455 NOEL ROAD, SUITE 520 FORT WORTH. TEXAS 76102
ACCOUNTING FIRMS
DALLAS. TEXAS 75240 -9990 (817) 332 - 7905
12141490-1970 METRO 203 -3978 METRO 429-0820
TELECOPIER (214) 702 -8321
To Members of the City Council
and City Manager
City of Southlake, Texas
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying combined financial statements of the
City of Southlake, Texas as of and for the year ended September 30, 1989,
as listed in the table of contents. These financial statements are the
responsibility of the City's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable ,basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of the City
of Southlake, Texas at September 30, 1989, and the results of its operations
and cash flows of its proprietary fund for the year then ended, in conformity
with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the combined
financial statements taken as a whole. The individual fund and account group
financial statements and schedules listed in the table of contents are
presented for purposes of additional analysis and are not a required part of
the combined financial statements of the City of Southlake, Texas. The
individual fund and account group financial statements have been subjected to
the auditing procedures applied in the audit of the combined financial state-
ments and, in our opinion, are fairly stated in all material respects in
relation to the combined financial statements taken as a whole.
m/4/
WEAVER AND TIDWELL
Dallas, Texas
January 2, 1990
117
1
CITY OF SOUTHLAKE, TEXAS
GENERAL PURPOSE FINANCIAL STATEMENTS -
COMBINED FINANCIAL STATEMENTS OVERVIEW
These basic financial statements provide a summary overview of the financial
position of all funds and account groups as well as the operating results
of all funds.
Governmental Funds ...Those through which most Governmental
functions are typically financed. The
measurement focus is upon determination
of financial position and changes in
financial position. The Governmental
funds within the City are: the General,
Special Revenue, Debt Service and Capital
Projects Fund.
Proprietary Funds ...To account for the financing, acquisition
and maintenance of Governmental facilities
and services that are supported by user
charges. The measurement focus is upon
determination of net income, financial
position and changes in financial position.
The Proprietary Funds within the City are the
Enterprise Fund and Internal Service Fund.
Fiduciary Funds ...Used to account for assets held by the City
as an agent for individuals, private
organizations, other governments, and /or
other funds. Agency funds are custodial
in nature and do not involve measurement
or results of operations.
Account Groups ...Used to establish accounting control and
accountability for the City's general fixed
assets and the unmatured principal of the
City's general long -term debt.
2
CITY OF SOUTHLAKE, TEXAS
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
SEPTEMBER 30, 1989
Governmental Fund Types
Debt Capital •
General Special Service Projects
ASSETS
Fund Revenue Fund Fund
Cash and cash equivalents $
307,532 $ 14,358 $ 1,324 $ 15,058
Receivables (net of allowances for
estimated uncollectibles) 156,989 18,565
Taxes 12,508 6,807
Accounts
Unbtlled services 677 34
Accrued interest receivable 1,355 124,661
Interfund
Inventories 6,228
29,793
Prepaid expenses
Restricted cash and cash equivalents 103,769
Street and road maintenance
Revenue bond debt service
Revenue bond construction
Customer deposits
Fixed assets, net of accumulated
depreciation
General fixed assets
Amount available In debt service fund
Amount to be provided for retirement
of general long -term debt
TOTAL ASSETS $ 618,851 $ 21,165 $ 144,550 $ 15,092
LIABILITIES AND FUND EQUITY
Liabilities $ 52,330 $ $ $
Accounts payable
Other accrued liabilities 52,336
154,67
Interfund 13,254
Obligation under capital lease 100,327 18,565
Deferred revenue
Payable from restricted assets
Current portion of revenue bonds payable
Accrued interest payable
Customer deposits
General obligation bonds
Note payable
Revenue bonds
Total liabilities $
345,248 $ $ 18,565 $
Fund Equity: $ $ $ $
Contributed capital
Investment in general fixed assets
Retained earnings:
Reserved for revenue bond retirement
Reserved for construction of
water improvements
Unreserved
Fund balance 125,985
Reserved for debt service
Reserved for street and road maintenance 103,769
Reserved for police expenditures 20,182 83
Reserved for parks and recreation 15,092
Reserved for capital projects
Unreserved 169,834
Undesignated
•
Total fund equity $ 273,603 $
21,165 $ 125,985 $ 15,092
TOTAL LIABILITIES AND FUND EQUITY $ 618,851 $ 21,165 $ 144,550 $ 15,092
The Notes to Combined Financial Statements 3
are an integral part of this statement.
Total
Fiduciary (Memorandum
Proprietary Type Funds Fund Types Account Groups Only)
General General
Enterprise Internal Fixed
Long-Term
Fund Service
Agency Assets Debt 1989
$ 35,703 $ 40,073 $ 5,047 $
$ $ 419,095
219,797 175,554
40,848 239,112
1,258 40,848
304 72 2,442 1,969
128,834
1,457 6,228
31,250
148,619 103,769
220,321 148,619
55,155 220,321
55,155
6,097,929
2,645,547 6,097,929
2,645,547
125,985 125,985
824,256 824,256
$ 6,821,391 $ 40,145 $ 7,489 $ 2,645,547 $ 950,241 r $ 11,264,471
$ 248,288 $ 117 $ $ $ $ 300,735
8,890 26,626 6,165
407 2,442 1,324 25,241 121,598
4,788 128,834
739,897 18,042
858,789
140,000
4,984 140,000
59,624 4,984
59,624
31,123 925,000 925,000
2,707,000 31,123
2,707,000
$ 3,945,001 $ 29,185 $ 7,489 $ $ 950,241 $ 5,295,729
$ 1,550,085 $ $ $
$ $ 1,550,085
2,645,547 2,645,547
3,815
3,815
221,183
1,101,307 10,960 221,183
1,112,267
125,985
103,769
20,182
983
15,092
169,834
i $ 2,876,390 $ 10,960 $ $ 2,645,547 $ $ 5,968,742
$ 6,821,391 $ 40,145 $ 7,489 $ 2,645,547 $ 950,241 $ 11,264,471
4
CITY OF SOUTHLAKE, TEXAS
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES
YEAR ENDED SEPTEMBER 30, 1989
Total
(Memorandum
Governmental Fund Types Only)
Debt Capital
General Special Service Projects
Fund Revenue Fund Fund 1989
Revenues 2,228
Taxes $ 2,086,350 $ $ 195,878 $ $2,2 228
Licenses, permits and fees 200,470
Charges for services 33,835 33,835
Fines and forfeits 230,944 230,944
Miscellaneous 72,121 14,617 1,009 87,747
Total revenues $
2,623,720 $ 14,617 $ 195,878 $ 1,009 $2,835,224
Expenditures
Current 659,561 $ $ $ $ 659,561
General administration $ 142,964
Municipal court 142,964
Police 747,368 2,506 749,874
Fire
358,221 358,221
148,769
Building inspection and zoning 148,769
38,097 38,097
Public works 50,310
Parks and recreation 42,537 7,773
227,172 227,172
Streets and roads 22,799 22,799
Other
Debt service 0 55,000
Principal retirement 155,0 55,000 155,001
Interest and fiscal charged
Total expenditures $
2,387,488 $ 10,279 $ 163,471 $ $2,561,238
Excess (deficiency) of revenues 1,009 $ 273,986
over expenditures $ 236,232 $ 4,338 $ 32,407 $
Other financing sources (uses) $ 13,848 $ $ $ 13,848
Operating transfers in $ 13,848) ( 13,848)
Operating transfers out
Total other financing
sources (uses) ($ 13,848) $ 13,848 $ $ $
Excess (deficiency) of revenues
and other sources over 1,009 $ 273,986
expenditures and other uses $ 222,384 $ 18,186 $ 32,407 $
Fund balance at beginning of year 51,187 2,979 93,578 14,083 161,827
32
Adjustments applicable to prior years 32
Fund balance at end of year $
273,603 $ 21,165 $ 125,985 $ 15,092 $ 435,845
i
The Notes to Combined Financial Statements
are an integral part of this statement. 5
CITY OF SOUTHLAKE, TEXAS
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL -
GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED SEPTEMBER 30, 1989
General Fund Special Revenue Fund
Variance - Variance -
Favorable Favorable
Budget Actual (Unfavorable) Budget Actual (Unfavorable)
Revenues
Taxes $ 2,269,681 $ 2,086,350 ($ 183,331) $ $ $
Licenses, permits and fees 192,862 200,470 7,608
Charges for services 26,050 33,835 7,785
Fines and forfeits 245,000 230,944 ( 14,056)
Miscellaneous 66,700 72,121 5,421 14,617
Total revenues $ 2,800,293 $ 2,623,720 ($ 176,573) $ $ 14,617 $ 14,617
Expenditures
General administration $ 661,327 $ 659,561 $ 1,766 $ $ $
Municipal court 155,491 142,964 12,527
Police 742,860 747,368 ( 4,508) 2,506 ( 2,506)
Fire 361,304 358,221 3,083
Building inspection and zoning 147,515 148,769 ( 1,254)
Public works 36,512 38,097 ( 1,585)
Parke and recreation 43,587 42,537 1,050 7,773 ( 7,773)
Streets and roads 183,571 227,172 ( 43,601)
Other 26,300 22,799 3,501
Total expenditures '$ 2,358,467 $ 2,387,488 ($ 29,021) $ $ 10,279 ($ 10,279)
Excess (deficiency)
of revenues over
expenditures P $ 441,826 $ 236,232 ($ 205,594) $ $ 4,338 $ 4,338
Other financing sources (uses)
Operating transfers in $ $ $ $ $ 13,848 $ 13,848
Operating transfers out ( 176,621) ( 13,848) 162,773
Total other financing
sources (uses) ($ 176,621) ($ 13,848) $ 162,773 $ $ 13,848 $ 13,848
Excess (deficiency) of
revenues and other
financing sources
over expenditures $ 265,205 $ 222,384 ($ 42,821) $ $ 18,186 $ 18,186
Fund balance at beginning of year 51,187 51,187 2,979 2,979
Adjustments applicable
to prior years 32 32
Fund balance at end of year $ 316,392 $ 273,603 ($ 42,789) $ 2,979 $ 21,165 $ 18,186
The Notes to Combined Financial Statements U
are an integral part of this statement.
CITY OF SOUTHLAKE, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN RETAINED EARNINGS - PROPRIETARY FUND TYPE
YEAR ENDED SEPTEMBER 30, 1989
Total
(Memorandum
Internal Only)
Enterprise Service 1989
Operating revenues
Water revenue $1,203,884 $ $1,203,884
Garbage revenue, net 141,337 141,337
Sewer revenue 31,168 31,168
Other miscellaneous revenues 18,016 48,308 66,324
Service fees 29,696 29,696
Total operating
revenues $1,424,101 $ 48,308 $1,472,409
Operating expenses
Personnel services $ 223,856 $ $ 223,856
Contractual services 177,466 177,466
6,056
Lease payments 6,056 10,935
Supplies 10,935
Utilities 678,563 678,563
Miscellaneous 7,501 7,501
Administrative 13,739 44,331 58,070
Maintenance 84,529 84,529
Professional benefits 9,084 9,084
Depreciation 220,278 220,278
Total operating
expenses $1,432,007 $ 44,331 $1,476,338
Operating income (loss) ($ 7,906) $ 3,977 ($ 3,929)
Non - operating revenues (expenses) $ 32,774
Interest income $ 32,774 $ ( 284,672)
Interest expense ( 284,672)
Total non - operating ($ 251,898)
revenues (expenses) ($ 251,898) $
Net income (loss) ($ 259,804) $ 3,977 ($ 255,827)
Retained earnings at
beginning of year 1,722,559 6,983 1,729,542
Adjustments applicable ( 136,450)
to prior years ( 136,450)
Retained earnings at 10 960 $1,337,265
end of year $1,326,305 $ ,
The Notes to Combined Financial Statements
are an integral part of this statement.
7
CITY OF SOUTHLAKE, TEXAS
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1989
Internal Total
Enterprise Service (Memorandum
Fund Fund Only)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers
and users $1,397,131 $ 50,678 $ 1,447,809
Cash payments to suppliers ( 1,101,778) ( 35,491) ( 1,137,269)
Cash payments to employees ( 214,966) ( 214,966)
Net cash provided by
operating activities $ 80,387 $ 15,187 $ 95,574
CASH FLOWS FROM CAPITAL AND
FINANCING ACTIVITIES:
Capital expenditures ($ 179,372) $ ($ 179,372)
Principal payments on bonds notes
and capital lease obligations ( 144,679) ( 144,679)
Interest paid ( 284,882) ( 284,882)
Net cash (used for) capital and
related financing activities ($ 608,933) $ ($ 608,933)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received $ 31,516 $ $ 31,516
Net increase (decrease) in
cash and cash equivalents ($ 497,030) $ 15,187 ($ 481,843)
Cash and cash equivalents at the
beginning of the year 956,828 24,886 981,714
Cash and cash equivalents at the
end of the year $ 459,798 $ 40,073 $ 499,871
RECONCILIATION OF CASH AND CASH
EQUIVALENTS OF STATEMENT OF CASH
FLOWS TO THE BALANCE SHEET:
Current assets $ 35,703 $ 40,073 $ 75,776
Restricted assets 424,095 424,095
Cash and cash equivalents at
the end of the year $ 459,798 $ 40,073 $ 499,871
The Notes to Combined Financial Statements
are an integral part of this statement.
8
CITY OF SOUTHLAKE, TEXAS
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1989
Internal Total
Enterprise Service (Memorandum
Fund Fund Only)
RECONCILIATION OF NET OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Net operating income (loss) ($ 7,906) $ 3,977 ($ 3,929)
Adjustments to reconcile net operating
income (loss) to net cash provided
by operating activities:
Depreciation 220,278 220,278
Decrease (increase) in assets
Receivables (
34,673) ( 72) ( 34,745)
Prepaid ( 848) ( 848)
Increase (decrease) in liabilities
Payables and accrual ( 103,863) 11,282 ( 92,581)
Customer deposits 7,399 7,399
$ 80,387 $ 15,187 $ 95,574
9
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
The financial statements of the City of Southlake are presented in
accordance with generally accepted accounting principles applicable to
state and local governmental units as set forth by the Governmental
Accounting Standards Board. The following is a summary of the more
significant accounting policies:
A. Reporting Entity
The City of Southlake operates under a Council - Manager form
of government. All powers of the City are vested in an
elected council which enacts local legislation, adopts budgets,
determines policies and appoints the City Manager. The City
Manager is responsible for executing the laws and administering
the government of the City.
The City's Comprehensive Annual Financial Report presents the
financial position, results of operations and cash flows
of the applicable fund types and account groups governed by the
City Council. Generally accepted accounting principles require
all funds and account groups that are controlled by or are
dependent on the City Council to be included in its Comprehensive
Annual Financial Report. Control or dependence was determined on
the basis of selection of governing authority, designation of
management, ability to influence operations and accountability
over fiscal matters. The Comprehensive Annual Financial Report
includes the City of Southlake only as no other governmental
entities meet the criteria for inclusion.
B. Fund Accounting
The City's accounting system is organized and operated on the
basis of fund accounting with each fund and account group
being an independent fiscal and accounting entity with a self -
balancing set of accounts that comprise its assets, liabilities,
fund equity, revenues and expenditures or expenses. City
resources are allocated to and accounted for in individual funds
based upon the purposes for which they are to be spent and the
means by which spending activities are controlled. The various
funds and account groups are summarized into seven generic fund
types, three broad fund categories and two account groups as
follows:
10
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
B. Fund Accounting - continued
Governmental Fund Types
General Fund is the general operating fund of the City. It
is utilized to account for all financial resources except
those required to be accounted for in other funds.
Special Revenue Fund is utilized to account for the proceeds
of specific revenue sources (other than special assessments,
expendable trusts or major capital projects) that are legally
restricted to expenditures for specified purposes.
Debt Service Fund is utilized to account for the accumulation
of financial resources for, and the payment of general long-
term debt principal, interest, and related costs arising from
general obligation bonds.
Capital Projects Fund is utilized to account for financial
resources to be used for the acquisition or construction of
capital improvements (other than those financed by proprietary
funds). Such resources are derived from proceeds of general
obligation debt, other sources designated for capital improve
ments and interest earned on such monies.
Proprietary Fund Types
Enterprise Fund is used to account for the operations that
are financed and operated in a manner similar to private
business enterprises - where the intent of the City is that
costs (expenses including depreciation) of providing services
to the general public on a continuing basis be financed or
recovered through user charges.
Internal Service Fund is used to account for the financing of
goods or services provided by one department to other
departments within the City. Activities of the City relating
to its self insurance program is accounted for in the internal
service fund.
11
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
Fiduciary Fund Types
Agency Funds are used to account for assets held by the City
as an agent for individuals, private organizations, other
governments, and /or other funds. Agency funds are custodial
in nature and do not involve measurement of results of
operations.
Account Groups
General Fixed Assets Account Group is utilized to account for
fixed assets in governmental fund type operations.
General Long -Term Debt Account Group is utilized to account
for the long -term liabilities of governmental fund types.
C. Measurement Focus
Measurement focus is the accounting convention which determines
which assets and liabilities are included on the balance sheet
of a fund type and whether a fund type's operating statement
presents "financial flow" or capital maintenance information.
All governmental funds are accounted for on a spending or
"financial flow" measurement focus. This means that only current
assets and current liabilities are generally included on their
balance sheets. Their reported fund balance (net current assets)
is considered a measure of "available spendable resources ".
Governmental fund operating statements present increases (revenues
and other financing sources) and decreases (expenditures and other
financing uses) in net current assets. Accordingly, they are said
to present a summary of sources and uses of "available spendable
resources" during a period. Fixed assets used in governmental
fund type operations and long -term liabilities expected to be
financed from governmental funds are accounted for in the General
Fixed Assets and General Long -Term Debt Account Groups. The two
account groups are not "funds ". They are concerned only with the
measurement of financial position. They are not involved with
measurement of results of operations.
Proprietary funds are accounted for on a "net income and capital
maintenance" measurement focus. This means that all assets,
liabilities, equity, revenues, expenses and transfers relating
to the activity of a proprietary fund are accounted for through
the proprietary fund. The measurement focus is upon the deter-
mination of net income, financial position and cash flows.
12
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
D. Basis of Accounting
Basis of accounting refers to when revenues and expenditures or
expenses are recognized in the accounts and reported in the
financial statements. Basis of accounting relates to the timing
of the measurements made, regardless of the measurement focus
applied.
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, inter-
governmental 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.
E. Budgets and Budgetary Accounting
The City Manager submits to the City Council, between sixty and
ninety days prior to the beginning of each fiscal year, a proposed
budget for all funds of the City. At the meeting of the City
Council at which the budget is submitted, the City Council fixes
the time and place of the public hearing on the budget and causes
to be published a notice of the budget hearing. After the budget
hearing the budget may be adopted by a favorable vote of three of
the members of the City Council. Upon adoption the budget is
filed with the City Secretary, the County Clerk of Tarrant County,
and the State Comptroller of Public Accounts at Austin.
During the fiscal year, the City Council may transfer funds
allocated to a department to another department or re- estimate
revenues or expenditures. Expenditures should not exceed
appropriations at the department level, the classification
level as reported in the combined financial statements.
Unused appropriations lapse at the end of each fiscal year.
13
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
E. Budgets and Budgetary Accounting - continued
The budget for the general fund is adopted on a basis consistent
with generally accepted accounting principles (GAAP). The final
amended version of this budget is used in this report.
Control over the expenditures for the debt service fund and the
capital projects fund are maintained through general obligation
bond indenture agreements„ the related debt service requirements,
and approved and accepted bids and change orders for construction.
Accordingly, formal budgetary integration is not employed for the
debt service and capital projects funds.
F. Cash and Investments
Cash and investments are comprised of demand accounts, imprest
funds and certificates of deposit. All City deposits and
investments are insured or collateralized by the Federal Deposit
Insurance Corporation and pledges of securities issued by the
State of Texas, other Texas municipalities or the Federal
government. The City's cash and investments are considered as
cash equivalents as they can be readily converted to cash at
their carrying value.
G. Property Taxes
Ad valorem taxes are levied from valuations assessed as of
January 1 and are recognized as revenue beginning on the date of
levy, October 1, when they become available. Available means
collected within the current period or expected to be collected
soon enough thereafter to be used to pay current liabilities.
Taxes not expected to be collected within sixty days of the fiscal
year ending are recorded as deferred revenues and are recognized
when they become available. Taxes collected prior to the levy
date to which they apply are recorded as deferred revenues and
recognized as revenue of the period to which they apply.
Current taxes are due on October 1 and become delinquent if unpaid
on February 1. Taxes unpaid as of February 1 are subject to
penalty and interest as the City Council provides by ordinance.
14
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
H. Allowance for Uncollectible Accounts
An allowance for uncollectible taxes including penalties and
interest and water and sewer billed receivables is provided based
on an analysis of historical trends. The allowances for uncollec-
tible taxes and water and sewer billings at September 30, 1989 were
$11,147 and $54,540, respectively.
A lien is created on property from January 1 in each year until
taxes are paid.
I. Unbilled Services
Utility operating revenues (water, sewer and refuse collection) are
billed on monthly cycles. The City records estimated revenues for
services delivered during the current fiscal year which will be
billed during the next fiscal year.
J. Inventories
Inventories are stated at cost (first -in, first -out) and are
determined annually by taking a physical inventory. Inventory
in the general fund consists of gasoline held for consumption
and is reported on the consumption method. Under the consumption
method the cost is recorded as an expenditure at the time individual
inventory items are utilized.
K. Property, Plant and Equipment
Property, plant and equipment of the proprietary fund is stated at
cost (estimated cost for assets contributed). Depreciation expense
is calculated principally on the straight -line method. Depreciation
methods are designed to amortize the cost of the assets over their
estimated useful lives. Estimated useful lives of major categories
of property and as follows:
Estimated
Category Life
Buildings 20 -30 years
Distribution system 30 years
Storage tanks 30 years
Equipment 5-10 years
Maintenance, repairs, renewals and betterments which odoa not
otte enhance
the value or increase the basic productive
charged to expense as incurred.
15
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
L. General Fixed Assets
General fixed assets have been acquired for general governmental
purposes from governmental fund types. Assets purchased in govern-
mental funds are recorded as expenditures in governmental fund types
and capitalized at cost in the general fixed asset account group,
except for infrastructure fixed assets. Infrastructure fixed assets
(roads, bridges, curbs, gutters, streets, lighting systems, and
similar assets that are immovable and of value only to the City) are
not capitalized in the general fixed asset account group. Donated
fixed assets are recorded as general fixed assets at their fair
value at the date donated.
No depreciation is provided on general fixed assets.
M. Accrued Vacation
It is the City's policy to permit employees to accumulate a limited
amount of earned but unused vacation which will be payable to City
employees upon termination from City service.
The City has no other compensated absence obligations except for
vacation benefits.
The City records compensated absences in governmental fund types
for the amount expected to be liquidated with expendable financial
resources. The remainder of the liability from compensated absences
of governmental fund types is reported in the general long -term
debt account group. Proprietary funds accrue compensated absences
in the period for which they are incurred.
N. Contributed Capital
Contributed capital in enterprise funds represents the accumulation
of contributions in the form of cash or other assets which generally
do not have to be returned to the contributor. Such contributions
are recorded directly to contributed capital and, accordingly, are
not recognized as revenue. The following types of transactions are
recorded as contributed capital in the enterprise fund:
16
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies - continued
N. Contributed Capital - continued
o Assets contributed by City.
o Assets contributed by developers.
o Receipts of federal grants specifically designated for
acquisition of assets.
o System development fees charged to fund the costs of
capital improvements to the utilities system.
0. Reserves
Reserves indicate portions of fund equity legally segregated for
a specific future use.
P. Cash Flow Presentation
As of September 30, 1989, the City has elected to adopt early
Governmental Accounting Standards Board Statement No. 9,
"Reporting Cash Flows of Proprietary and Non Expendable Trust
Funds and Governmental Entities That Use Proprietary Fund
Accounting ", which will require a statement of cash flows in
place of a statement of changes in financial position for fiscal
years beginning after December 15, 1989.
Q. Total Columns
Total columns on the combined financial statements are captioned
"Memorandum Only" to indicate they are presented only to facilitate
financial analysis. Data in these columns do not present financial
position, results of operations or cash flows in conformity with
generally accepted accounting principles. Neither are such data
comparable to a consolidation. Interfund eliminations have not
been made in the aggregation of this data.
17
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 2. Deposits and Investments with Financial Institutions
The City deposits collections from all sources in interest bearing
accounts established for each fund. The City's investment policies
are governed by state statutes and City ordinance. Collateral is
required for all deposits and investments not covered by federal
deposit insurance. Excess cash may be invested in the following:
• Obligations of the United States or its agencies and
instrumentalities;
o Direct obligations of the State of Texas or its agencies;
o Other obligations, the principal of and interest on which
are unconditionally guaranteed or insured by the State of
Texas or the United States;
o Obligations of states, agencies, counties, cities, and
political subdivisions of any state having been rated as
to investment quality by a nationally recognized
investment rating firm and have received a rating of not
less than A or its equivalent;
o Certificates of deposits issued by state and national
banks domiciled in this state that are;
(a) Guaranteed or insured by the Federal Deposit
Insurance Corporation; or
(b) Secured by obligations described above.
Maturities on all investments are consistent with the City's cash
flow requirements.
Bank deposits and investments are fully insured or collateralized with
securities held by the City's agent in the City's name.
18
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 2. Deposits and Investments with Financial Institutions - continued
Deposits and investments are carried at cost which approximates market.
Cash and investments at year end were
Special Debt Capital Enter- Internal
Cash and General Revenue Service Projects prise Se rvic e A genc y Total
Investments Fund Fund Fund Fund Fund
Petty cash $ 500 $ $ $ $ $ $ $ 500
Demand
deposits,
net of out-
standing
checks 167,276 14,358 1,324 1,104 98,753 40,073 5,047 327,930
Certificates 618,529
of deposit 243,530 13,954 361,045
$411,301 $ 14,358 $ 1,324 $ 15,058 $459,798 $ 40,073 $5,047 $946,959
Cash and investments are reported as restricted assets as required by debt
issues City ordinances, and other legal restrictions.
Note 3. Interfund Receivables and Payables
The following is a summary of amounts due from and due to other funds:
Due From Due To
General Fund $124,661
Debt Service $
Enterprise Fund 335
Agency Fund 1,020
Debt Service
General Fund 124,661
Enterprise Fund 335
General Fund 72
Internal Fund 304
Agency Fund
Internal Service Fund 72
Enterprise Fund 2,442
Agency Fund
Agency Fund 1,020
General Fund 304
Enterprise Fund 2,442
Internal Fund ---- 2 -----
$128,834 $128,834
19
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 4. General Fixed Assets
All fixed assets acquired for governmental fund type operations are
capitalized at cost or estimated historical cost if actual historical
cost is not available. Donated fixed assets are valued at their
estimated fair value on the date donated.
A summary of changes in general fixed assets follows:
Land Buildings
and and
Total Improvements Improvements Equipment
Balance, beginning $ 2,593,007 $ 24,324 $ 842,868 $ 1,725,815
Additions 75,540 15,273 60,267
Deletions ( 23,000) ( 23,000)
Balance, ending $ 2,645,547 $ 24,324 $ 858,141 $ 1,763,082
Note 5. General Long —Term Debt
General long —term debt of the City consists of general obligation bonds,
and obligations under compensated absence agreements. General obligation
bonds retirement is provided from the debt service tax within the Debt
Service Fund. The retirement of accrued vacation is provided by financial
resources of the General and Enterprise Funds.
The debt service requirements of general obligation bonds are as follows:
Principal
General
Due Fiscal Obligation
Year Ending Bonds Interest Total
1990 $ 55,000 $ 102,696 $ 157,696
1991 60,000 97,271 157,271
1992 70,000 90,240 160,240
1993 80,000 81,515 161,515
1994 90,000 71,465 161,465
1995 -2001 570,000 202,838 772,838
$ 925,000 $ 646,025 $ 1,571,025
20
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 5. General Long -Term Debt - continued
A summary of changes in general long -term debt follows:
General Compensated Capital
Obligation Absences Lease
Total Bonds Obligation Obligation
Balance, 17 191
beginning $1,035,214 $ 980,000 $ 38,023 $
Deletions ( 84,973) ( 55,000) ( 12,782) ( 17,191)
Balance,
ending $ 950,241 $ 925,000 $ 25,241 $
Note 6. Proprietary Long -Term Debt
Land Note Payable
Notes payable consist of an 8% installment note payable in equal annual
installments of $12,077 with the final payment due May, 1992. The
note is payable from the operating income of the utilities system fund.
Principal and interest requirements for the respective fiscal years
ending September 30 are as follows:
Principal Interest Total
1990 $ 9,587 $ 2,490 $ 12,077
1991 10,354 1,723 12,077
1992 11,182 895 12,077
$ 31,123 $ 5,108 $ 36,231
Certificates of Obligations
Combination Tax and Revenue Certificates of Obligation,
Series 1985
On April 1, 1985 the City of Southlake issued in the principal
amount of $2,575,000 tax and revenue certificates of obligation for
the purpose of financing the extension of the water system. The
principal and interest of the certificates are payable from the net
revenues of the utilities system. Principal and interest requirements
for the respective fiscal years ending September 30 are as follows:
21
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 6. Proprietary Long -Term Debt - continued
Certificates of Obligations - continued
Interest
Principal Rate Interest Total
1990 $ 110,000 9.10 -11.10 $ 218,641 $ 328,641
1991 115,000 9.10 -11.10 206,431 321,431
1992 100,000 9.10 -11.10 193,666 293,666
1993 115,000 9.10 -11.10 182,566 297,566
1994 120,000 9.10 -11.10 169,801 289,801
1995 -2005 1,670,000 9.10 -11.10 729,832 2,399,832
$2,230,000 $1,700,937 $3,930,937
Revenue Bonds
Waterworks and Sewer System Revenue Bonds, Series 1984
On May 1, 1984 $500,000 of revenues bonds were issued by the City of
Southlake. The bonds were issued to make improvements to the utility
system and such improvements and obligations relating thereto were
subsequently assumed by the City of Southlake. Principal and interest
requirements for the respective fiscal years ending September 30 are
as follows:
Interest
Principal Rate Interest Total
1990 $ 20,000 9.80 -11.75 $ 45,783 $ 65,783
1991 20,000 9.80 -11.75 43,433 63,433
1992 20,000 9.80 -11.75 41,083 61,083
1993 25,000 9.80 -11.75 38,832 63,832
1994 30,000 9.80 -11.75 36,382 66,382
1995 -2001 315,000 9.80 -11.75 149,395 464,395
$ 430,000 $ 354,908 $ 784,908
22
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 6. Proprietary Long -Term Debt - continued
Waterworks and Sewer System Revenue
Waterworks and Sewer System Revenue Bonds, Series 1987
On March 1, 1987 the City issued bonds in the amount of $217,000
and to make improvements to make improvements to the City's
waterworks and sewer system. The bonds are payable both as to
principal and interest solely from and secured by a pledge of
the net revenues of the utilities system. Principal and interest
requirements for the respective fiscal years ending September 30
are as follows:
Interest
Principal Rate Interest Total
1988 $ 10,000 3.75 $ 7,013 $ 17,013
1989 $ 10,000 3.75 $ 6,638 16,638
1990 10,000 3.75 6,263 16,263
1991 10,000 3.75 5,888 15,888
1992 -1996 10,000 3.75 5,513 15,513
1997 -2005 137,000 3.75 32,925 169,925
$ 187,000 $ 64,240 $ 251,240
Note 7. Retirement Plan
Plan Description
The City provides pension benefits for all of its full -time employees
through a nontraditional, joint contributory, defined contribution plan
in the state -wide Texas Municipal Retirement System (TMRS), one of over
500 administered by TMRS, an agent multiple - employer public employee
retirement system. It is the opinion of the TMRS management that the
plans in TMRS are substantially defined contribution plans, but they have
elected to provide additional voluntary disclosure to help foster a
better understanding of some of the nontraditional characteristics of the
plan.
Benefits depend upon the sum of the employee's contributions to the plan,
with interest, and the city- financed monetary credits, with interest. At
the date the plan began, the City granted monetary credits for service
rendered before the plan began of a theoretical amount equal to two times
what would have been contributed by the employee, with interest, prior to
establishment of the plan. Monetary credits for service since the plan
23
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 7. Retirement Plan - continued
began are a percent (100 %, 150 %, or 200 %) of the employee's accumulated
contributions. In addition, the City can grant as often as annually
another type of monetary credit referred to as an updated service credit
which is a theoretical amount which, when added to the employee's
accumulated contributions and the monetary credits for service since the
plan began, would be the total monetary credits and employee contributions
accumulated with interest if the current employee contribution rate and
city matching percent had always been in existence and if the employee's
salary had always been the average of his salary in the last three years.
At retirement, the benefit is calculated as if the sum of the employee's
accumulated contributions with interest and the employer- financed monetary
credits with interest were used to purchase an annuity.
Members can retire at ages 60 and above with 10 or more years of service
or with 25 years of service regardless of age. The plan also provides
death and disability benefits. A member is vested after 10 years, but
he must leave his accumulated contributions in the plan. If a member
withdraws his own money, he is not entitled to the employer- financed
monetary credits, even if he was vested. The plan provisions are
adopted by the governing body of the City, within the options available
in the state statutes governing TMRS and within the actuarial constraints
also in the statutes.
Contributions
The contribution rate for the employees is 5 %, and the City matching
percent is currently 100 %, both as adopted by the governing body of the
City. Under the state law governing TMRS, the City contribution rate is
annually determined by the actuary. Part of the City contribution rate
(the normal cost) is to fund the currently accruing monetary credits,
with the other part (the prior service contribution rate) calculated as
the level percent of payroll needed to amortize the unfunded actuarial
liability over the remainder of the plan's 25 -year amortization period.
When the City periodically adopts updated service credits and increases
in annuities in effect, the increased unfunded actuarial liability is to
be amortized over a new 25 -year period. Currently, the unfunded actuarial
liability is being amortized over the 25 -year period which began January,
1988. The unit credit actuarial cost method is used for determining the
City contribution rate. Contributions are made monthly by both the
employees and the City. Since the City needs to know its contribution
rate in advance to budget for it, there is a one -year lag between the
actuarial valuation that is the basis for the rate and the calendar year
when the rate goes into effect.
24
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 7. Retirement Plan - continued
Contributions - continued
The City's total payroll in fiscal year 1989 was $1,316,406, and
the City's contributions were based on a payroll of $1,316,406. Both
the City and the covered employees made the required contributions,
amounting to $23,757 (1.79% of covered payroll for the months in
calendar year 1988 and 1.817. for the months in calendar year 1989)
for the City and $65,823 (57.) for the employees. There were no
related -party transactions.
Funding Status and Progress
Even though the substance of the City's plan is not to provide a defined
benefit in some form, some additional voluntary disclosure is appropriate
due to the nontraditional nature of the defined contribution plan which
had an initial unfunded pension benefit obligation due to the monetary
credits granted by the City for services rendered before the plan began
and which can have additions to the unfunded pension benefit obligation
through the periodic adoption of increases in benefit credits and
benefits. Statement No. 5 of the Governmental Accounting Standards Board
(GASB 5) defines pension benefit obligation as a standardized disclosure
measure of the actuarial present value of pension benefits, adjusted for
the effects of projected salary increases, estimated to be payable in
the future as a result of employee service to date. The measure is
intended to help users assess the funding status of public employee
pension plans, assess progress made in accumulating sufficient assets
to pay benefits when due, and make comparisons among public employee
pension plans.
The pension benefit obligation shown below is similar in nature to the
standardized disclosure measure required by GASB 5 for defined benefit
plans except that there is no need to project salary increases since the
benefit credits earned for service to date are not dependent upon future
salaries. The calculations were made as part of the annual actuarial
valuation as of December 31, 1988. Because of the money - purchase nature
of the plan, the interest rate assumption, currently 8.57. per year, does
not have a much impact on the results as it does for a defined benefit
plan. Market value of assets is not determined for each City's plan,
but the market value of assets for TMRS as a whole was 103.67. of book
value as of December 31, 1988.
25
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 7. Retirement Plan - continued
Pension Benefit Obligation
Annuitants currently receiving benefits $ 13,392
Terminated employees 22,405
Current employees
Accumulated employee contributions
including allocated invested earnings 162,880
Employer- financed vested 34,814
Employer- financed nonvested 50,788
Total
$ 284,279
Net assets available for benefits, at book value $ 282,480
Unfunded pension benefit obligation 1,799
$ 284,279
The book value of assets is amortized cost for bonds and original cost
for short -term securities and stocks. The actuarial assumptions used
to compute the actuarially determined City contribution rate are the
same as those used to compute the pension benefit obligation. The
numbers above reflect changes in actuarial assumptions since the previous
actuarial valuation, which had the effect of decreasing the pension benefit
obligation by $18,016. Because of the one -year lag between the actuarial
valuation date and the calendar year when the newly calculated rate goes
into effect, the new actuarial assumptions will first affect the 1990
contribution rate for the City.
Trend information gives an indication of the progress made in accumulating
sufficient assets to pay benefits when due. Ten Year trend information for
TMRS is available in the System's Comprehensive Annual Financial Report for
its fiscal year ending December 31. Trend information as it relates to the
City of Southlake is available for only 1988 and 1987. This information
may be found in the supplementary information of the City's Comprehensive
Annual Financial Report.
For the years ended December 31, 1988 and 1987, respectively, which is the
latest available information, available assets were sufficient to fund
99% and 88% of the pension benefit obligation. The unfunded pension
benefit obligation represented 0.1% and 2% of the payroll for employees
covered by the plan for the years ended December 31, 1988 and 1987.
Showing unfunded pension benefit obligation as a percentage of annual
covered payroll approximately adjusts for the effects of inflation for
analysis purposes.
26
CITY OF SOUTHLAKE, TEXAS
NOTES TO COMBINED FINANCIAL STATEMENTS
Note 8. Commitments and Contingencies
The City has separate contracts with the City of Fort Worth and the
Trinity River Authority of Texas (TRA) for the purchase of treated water
and for the transportation, treatment and disposal of wastewater,
respectively. The contracts require the City to pay varying amounts
based on the costs associated with water purchased and wastewater
transported and /or treated and disposed of. The costs include the City's
proportionate share of TRA's operating and maintenance expenses, related
debt service costs plus certain other miscellaneous charges.
Payments to the City of Fort Worth during 1989 for the purchase of
treated water amounted to approximately $709,327. Payments for the
transportation, treatment and disposal of wastewater by TRA had not
begun as of September 30, 1989.
Note 9. Prior Period Adjustment
During the fiscal year ended September 30, 1989, errors in the previously
issued financial statements for the fiscal year ended September 30, 1988
were discovered. These adjustments have been reflected as adjustments
to beginning fund balances or retained earnings, as applicable. A
summary of the adjustments to beginning fund balance /retained earnings
by fund type is as follows:
General Enterprise
Fund Fund
Unrecorded accounts payable ($ 4,289) ($
16,386)
(
Improper recognition of interests costs 120,064)
Restatement of lease obligation 8,336
Improper recognition of expenses
Adjustments applicable to 32 ($ 136,450)
prior years
Note 10. Self- Insurance
In June of 1988, the City adopted a limited self - insurance plan covering
employee medical benefits. The plan is professionally
are administered
fan
covers substantially all of its employees. Operations
estimated claim losses based upon prior premium costs and reserved for
potential liability in the internal service fund.
27
APPENDIX C
FORM OF BOND COUNSEL'S OPINION
FULBRIGHT & JAWORSKI
2200 Ross AVENUE
HOUSTON
SUITE 2800
WASHINGTON, D.C.
AUSTIN
DALLAS,TEXAS 75201 SAN ANTONIO
DALLAS
TELEPHONE 214855 -8000 LONDON
ZURICH
TELECOPIER 214/855
FULBRIGHT JAWORSKI &
REAVIS MCGRATH
NEW YORK
LOS ANGELES
IN REGARD to the authorization and issuance of the "City
Series
of Southlake, Texas, General Obligation Refunding Bonds, Seri
1990" (the "Bonds "), dated March 1, 1990 (the "Bond Date "),
the aggregate original principal amount of $3,076,137 by the City
of Southlake, Texas (the "City "), which Bonds are issuable in
fully registered form only and in part as "Current Interest
Bonds" (totalling in principal amount $2,785,000) and in part as
"Capital Appreciation Bonds" (totalling in original principal
amount $290,137). The Bonds have stated maturities of
February 1, 1992 through February 1, 2003 and February 1, 2009,
unless redeemed prior to the maturity in accordance with the
mandatory or optional redemption provisions stated on the face of
the Bonds, and interest thereon accrues from the dates, at the
rates, in the manner and is payable on the dates, all as provided
in the ordinance authorizing the issuance of the Bonds (the
"Ordinance ").
WE HAVE SERVED AS BOND COUNSEL for the City solely to pass
upon the legality and validity of the issuance of t e Bonds under
the Constitution and laws of the State of Texas,
and discharge of the City's outstanding obligations being
refunded by the Bonds, and with respect to the exclusion of the
interest on the Bonds from gross income for federal income tax
purposes and none other. We have not been requested to
investigate or verify, and have not independently investigated or
verified, any records, data or other material relating to the
financial condition or capabilities of the City and have not
assumed any responsibility with respect thereto.
OUR EXAMINATIONS into the legality and validity de of
th
Bonds included a review of the applicable
provisions of the Constitution and laws of the State of Texas,
the Special Escrow Agreement (the "Escrow Agreement ") between the
City and First City, Texas- Austin, N.A., Austin, Texas (the
"Escrow Agent "), a special report of Ernst & Young, Certified
Public Accountants (the "Accountants "), a transcript of certified
Page 2 of Legal Opinion of Fulbright & Jaworski
Re: $3,076,137 "City of Southlake, Texas, General Obligation
Refunding Bonds, Series 1990 ", dated March 1, 1990
proceedings of the City relating to the authorization and
issuance of the Bonds, including the Ordinance, customary
certifications and opinions of officials of the City and other
pertinent showings, and an examination of the Bonds executed and
delivered initially by the City, which we found to be in due form
and properly executed.
BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that the
Escrow Agreement has been duly authorized, executed and delivered
and is a binding and enforceable agreement in accordance with its
terms and the outstanding obligations refunded, discharged, paid
and retired with the proceeds of the Bonds have been defeased and
are regarded as being outstanding only for the purpose of
receiving payment from the funds held in trust with the Escrow
Agent, pursuant to the Escrow Agreement and in accordance with
the provisions of Article 717k, V.A.T.C.S., as amended. In
rendering this opinion, we have relied upon the verification by
the Accountants of the sufficiency of cash and investments
deposited with the Escrow Agent pursuant to the Escrow Agreement
for the purposes of paying the outstanding obligations refunded
and to be retired with the proceeds of the Bonds and the interest
thereon.
BASED ON OUR EXAMINATIONS, IT IS OUR OPINION that the
Bonds have been duly authorized by the City in compliance with
the Constitution and laws of the State of Texas now in force, and
the Bonds issued in compliance with the provisions of the
Ordinance are valid, legally binding and enforceable obligations
of the City, payable from the proceeds of an ad valorem tax
levied, within the limitations prescribed by law, upon all
taxable property in the City, except to the extent that the
enforceability thereof may be affected by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting
creditors' rights or the exercise of judicial discretion in
accordance with general principles of equity.
IT IS FURTHER OUR OPINION THAT, assuming continuing
compliance after the date hereof by the City with the provisions
of the Ordinance and in reliance upon representations and
certifications of the City made in a certificate of even date
herewith pertaining to the use, expenditure, and investment of
the proceeds of the Bonds and the report of the Accountants,
interest on the Bonds for federal income tax purposes (1) will be
excludable from gross income, as defined in section 61 of the
Internal Revenue Code of 1986, as amended to the date hereof, of
the owners thereof pursuant to section 103 of such Code, existing
regulations, published rulings, and court decisions thereunder,
and (2) will not be included in computing the alternative minimum
taxable income of individuals or, except as hereinafter
described, corporations. Interest on all tax - exempt obligations,
Page 3 of Legal Opinion of Fulbright & Jaworski
Re: $3,076,137 "City of Southlake, Texas, General Obligation
Refunding Bonds, Series 1990 ", dated March 1, 1990
such as the Bonds, owned by a corporation will be included in
such corporation's adjusted net book income, for the 1989 tax
year, or adjusted current earnings, for tax years beginning after
1989, for purposes of calculating the alternative minimum taxable
income of such corporations, other than an S corporation, a
qualified mutual fund, a real estate mortgage investment conduit
(REMIC), or a real estate investment trust (REIT).
corporation's alternative minimum taxable income is the basis on
which the alternative minimum tax imposed by the Tax Reform Act
of 1986 and the environmental tax imposed by the Superfund
Revenue Act of 1986 will be computed.
WE EXPRESS NO OPINION with respect to any other federal,
state, or local tax consequences under present law or any
proposed legislation resulting from the receipt or accrual of
interest on, or the acquisition or disposition of, the Bonds.
Ownership of tax - exempt obligations such as the Bonds may result
in collateral federal tax consequences to, among others,
financial institutions, property and casualty insurance
companies, life insurance companies, certain foreign corporations
doing business in the United States, S corporations with
subchapter C earnings and profits, individual recipients of
Social Security or Railroad Retirement Benefits, and taxpayers
who may be deemed to have incurred or continued indebtedness to
purchase or carry, or who have paid or incurred certain expenses
allocable to, tax - exempt obligations.
EHE : d f C
593 9 C
APPENDIX D
SCHEDULE OF REFUNDED BONDS
Schedule of Refunded Bonds
Series 1982
Original Principal Principal
Maturity Amount Amount to be
Date Outstanding Refunded
2 -1 -1991 $ 10,000
2 -1 -1992 40,000
2 -1 -1993 45,000
2 -1 -1994 55,000
2 -1 -1995 60,000 $ 60,000*
2 -1 -1996 70,000 70,000*
2 -1 -1997 80,000 80,000*
$360,000 $210,000
* All Refunded Bonds to be called for redemption on February 1, 1994 at par plus
accrued interest.
Series 1984
Original Principal Principal
Maturity Amount Amount to be
Date Outstanding Refunded
8 -1 -1990 $ 25,000
8 -1 -1991 25,000
8 -1 -1992 30,000
8 -1 -1993 35,000
8 -1 -1994 35,000
8 -1 -1995 40,000
8 -1 -1996 45,000
8 -1 -1997 45,000 $ 45,000*
8 -1 -1998 50,000 50,000*
8 -1 -1999 55,000 55,000*
8 -1 -2000 60,000 60,000*
8 -1 -2001 65,000 65,000
$510,000 $275,000
* All Refunded Bonds to be called for redemption on August 1, 1995 at par plus
accrued interest.
Series 1988
Original Principal Principal
Maturity Amount Amount to be
Date Outstanding Refunded
4 -1 -1990 $ 110,000 $
4 -1 -1991 115,000 115,000
4 -1 -1992 100,000 100,000
4 -1 -1993 115,000 115,000
4 -1 -1994 120,000 120,000
4 -1 -1995 135,000 135,000
4 -1 -1996 145,000 145,000
4 -1 -1997 165,000 165,000
4 -1 -1998 265,000 265,000*
4 -1 -1999 290,000 290,000*
•
4 -1 -2000 320,000 320,000*
4 -1 -2001 350,000 350,000*
$2,230,000 $2,120,000
* All Refunded Bonds to be called for redemption on April 1, 1997 at par plus
accrued interest.
APPENDIX E
SPECIMEN OF MUNICIPAL BOND INSURANCE POLICY
FINANCIAL GUARANTY INSURANCE POLICY
Municipal Bond Investors Assurance Corporation
Armonk, New York 10504
Policy No. xxxx
Municipal Bond Investors Assurance Corporation (the "Insurer "), in consideration of the payment of the premium and subject to the terms of this
policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and
complete payment required to be made by or on behalf of the Issuer to [insert name of paying agent/trustee], or its successor (the "Paying Agent")
of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund
p ayment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that
in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from
default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby
shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration):
and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law.
The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts."
"Obligations" shall mean:
[par amount]
[title of obligations]
Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of
written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured
Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business
day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with Citibank, N.A., in New York,
New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such
Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to
evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the
appoinUnent of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the
Obligations, such instruments being in a form satisfactory to Citibank, N.A., Citibank, N.A. shall disburse to such owners, or the Paying Agent
payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts
and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with
respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the
Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer
constitutes the underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10514 and such
service of process shall be valid and binding.
This policy is non - cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to
matunty of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers, this [day]
day of [month, year].
MUNICIPAL BOND INVESTORS
ASSURANCE CORPORATION
COUNTERSIGNED:
Resident Licensed Agent President ` 'i f
City, State
Attest:
Date Assistant Secretary'
STD -RCS -4
Trinity River Authority of Texas 110
Northern Region Office
DATE: January 31, 1990
FILE: 3828.200 /3828.650
TO MEMBERS, ADVISORY COMMITTEE
Denton Creek Pressure System
SUBJECT: Additional Information Concerning Bond Issue and Engineering Services
Following a review of information provided by letter dated January 26, 1990
concerning the $2,525,000 Denton Creek Pressure System Revenue Bonds, Mr. Paul
Phy and Mr. Mike Barnes have requested additional information concerning the
expenditure of these funds. The enclosed Exhibit A provides a line item
accounting of all funds disbursed from the $2,525,000 in Bond Issue. The
disbursement of funds for engineering services is further itemized in
• Exhibit B for Basic Services and Special Services.
If additional information or clarification is needed, please do not hesitate
to contact me.
d (
ROBERT R. STEVENS, Manager
Wastewater Services Planning
/mek
Enclosures
cc: Warren N. Brewer, Northern Region Manager
Wayne K. Hunter, P.E., Manager of Development
DISTRIBUTION:
Mr. Curtis Hawk, City Manager, City of Southlake
Mr. Mike Barnes, Director of Public Works, City of Southlake
Mr. Paul Phy, Lake Turner Municipal Utility District No. 1
Mr. Russell Trenary, Lake Turner Municipal Utility District No. 1
Mr. Mike Burge, P.E., Espey, Huston & Associates, Inc.
1 -30 -90
EXHIBIT A
DENTON CREEK PRESSURE SYSTEM
$2,525,000 SERIES 1988 REVENUE BONDS
Disbursement of Bond Proceeds Through November 30, 1989:
Bond Sale Expense 1 $ 40,625
Transfer to I & S Fund 140,000
Transfer to Reserve Fund 252,500
Administrative Overhead 18,965
Interest Expense on Advance 2 1,633
Engineering - Basic Services 3 817,801
Engineering - Special Services 3 4,757
Other Professional Services 4 2,422
Legal 892
Travel & Misc. - Land Rights 1,226
Land Rights Labor 12,588
Land and Easements 46,907
Total Expenditures $1,340,316
l lncludes Financial Advisor and Bond Attorney Fees.
2 Interest paid to Lake Turner MUD No. 1 for $100,000 advance (pursuant to
Section 10.f. of the April 1988 Denton Creek Pressure System Installation
Sale Contract).
3 Detailed listing of expenditures provided in Exhibit B.
4 Bank custody fees for investments.
1 -30 -90
EXHIBIT B
Denton Creek Pressure System
Engineering Services
BASIC SERVICES
Contract Amount Actual Expenditures
Regional System:
Design Analysis (EHA) $ 24,000 $ 21,600
Survey (EHA) 98,000 98,000
Legal Descriptions & Plats (EHA) 132,250 132,250
Preliminary Design (EHA) 98,000 98,000
Preliminary Design (Cheatham) 40,000 40,000
Final Design (EHA) 226,000 -0-
Final Design (Cheatham) 67,000 -0-
Trench Safety Plan (Rone) 39,000 31,821
Geotechnical Surveys (Haynes) 14,000 6,680
Subtotal $738,250 $428,351
Extensions:
Surveying (EHA) 58,000 58,000
Legal Descriptions and Plats (EHA) 68,250 68,250
Preliminary Design (EHA) 55,500 55,500
Preliminary Design (Cheatham) 62,000 62,000
Final Design (EHA) 57,000 -0-
Final Design (Cheatham) 26,000 -0-
Subtotal $326,750 $243,750
SRF Application (EHA): 155,000 145,700
Grand Total Basic Services $1,220,000 $817,801
SPECIAL SERVICES
Design (EHA) $ 81,000 $ 163
Trench Safety Plan (Rone) 8,000 -0-
Geotechnical Surveys (Haynes) 10,000 1,794
SRF Application (EHA) 35,000 2,800
Grand Total Special Services $ 134,000 $ 4,757
Note: EHA = Espey, Huston & Associates, Inc.
Cheatham = Cheatham & Associates (subcontractor to EHA)
Rone = Rone Engineers, Inc.
Haynes = John H. Haynes & Associates, Inc.
Trinity River Authority of Texas ISO
Northern Region Office
DATE: January 26, 1990
FILE: 3828.200 /3828.650
TO MEMBERS, ADVISORY COMMITTEE
Denton Creek Pressure System
SUBJECT: Status of Bond Issue and Engineering Services
In response to correspondence dated January 24, 1990 from Mr. Paul W. Phy to
Mr. Wayne K. Hunter and as a follow -up to our recent Advisory Committee
meeting, the following information is provided:
1. In June 1988, the Authority issued the Denton Creek Wastewater
Pressure Interceptor System Revenue Bonds in the amount of
$2,525,000 to fund the cost of engineering and land acquisition
associated with the Denton Creek Pressure System. The enclosed
Exhibit A provides information concerning the interest rates and
debt service requirements of this Bond Issue.
2. Exhibit B depicts the funds available to pay debt service including
capitalized interest, accrued interest, and interest income. You
will note that $71,464 are remaining to pay debt service with a
$251,500 principal and interest payment due June 1, 1990.
3. Original budgeted amounts and actual expenditures through
November 30, 1989 for engineering and land acquisition are also
shown in Exhibit B. It is currently estimated that approximately
$345,000 will be expended to finalize design of the original
alignment of the Base System. Assuming that all budgeted funds will
be needed for land acquisition, additional funding may be needed to
finalize this design or to accommodate any revisions in the
alignment.
4. Engineering services completed to date are summarized as follows for
the original alignment of the Base System and the Extensions:
Base System:
Design - 40% to 45% complete for pipeline and 20% to 25%
complete for lift station
Surveying - 100% complete
3828.200/3828.650
January 26, 1990
DCRS ADVISORY COMMITTEE
Page 2
Geotechnical - 100% complete for pipeline and 50% complete
for lift stations
Prepared Legal Descriptions and Plats - 96% complete
Extensions:
Design - 40% to 45% complete
Surveying - 100% complete
Geotechnical - 0% complete
Prepared Legal Descriptions and Plats - 65% complete
As discussed in item 2. above, insufficient funds are remaining in the
construction fund to pay the debt service due June 1, 1990. Two options that
are available to the Authority to secure funding for debt service include
initiating payments from the Contracting Parties pursuant to our April 1988
System Contract or refunding and refinancing our outstanding bonds with bond
proceeds sufficient to fund debt service for an additional period of time.
In order to proceed with the latter option, it will be necessary for the
Authority to issue bonds in April 1990 which necessitates action by the
Authority's Board of Directors in February 1990.
Due to the short time frame available to initiate action necessary for an
April 1990 refunding, it is requested that the recently postponed Advisory
Committee meeting be rescheduled for February 2nd or sooner in order for the
Advisory Committee to provide direction to Authority Management in this
matter. If you should have any questions or require additional information,
please let me know.
ROBERT R. STEVENS, Manager
Wastewater Services Planning
/mek
Enclosures
cc: Warren N. Brewer, Northern Region Manager
Wayne K. Hunter, P.E., Manager of Development
DISTRIBUTION:
Curtis Hawk, City Manager, City of Southlake
Mike Barnes, Director of Public Works, City of Southlake
Paul Phy, Lake Turner Municipal Utility District No. 1
Russell Trenary, Lake Turner Municipal Utility District No. 1
Michael Burge, P.E., Espey, Huston and Associates, Inc.
1 -23 -90
EXHIBIT A
Denton Creek Pressure System
Revenue Bonds
Bond Issue Amount: $2,525,000
Bonds Dated: June 1, 1988
Interest Rates:
June 1, 1988 to Dec. 1, 1989 8.5%
Dec. 1, 1989 to Dec. 1, 1990 12.0%
Dec. 1, 1990 to June 1, 2000 15.0%
Debt Service Requirements:
Fiscal Year Due Dec 1st Due June 1st Total
Interest Interest Principal
1989 $107,312 $107,312 $ -0- $214,624
1990 107,312 151,500 100,000 358,812
1991 145,500 181,875 125,000 452,375
1992 172,500 172,500 125,000 470,000
1993 163,125 163,125 150,000 476,250
1994 151,875 151,875 175,000 478,750
1995 138,750 138,750 200,000 477,500
1996 123,750 123,750 250,000 497,500
1997 105,000 105,000 275,000 485,000
1998 84,375 84,375 325,000 493,750
1999 60,000 60,000 375,000 495,000
2000 31,875 31,875 425,000 488,750
1/23/90
EXHIBIT B
Denton Creek Pressure System
$2,525,000 Series 1988 Revenue Bonds
Funds Available for Debt Service:
Capitalized Interest $140,000
Accrued Interest at Closing 33,400
Interest Income (Construction Fund) 182,000 (thru Jan. 1990)
Interest Income (Reserve /I & S Fund) 38,000 (thru June 1990)
$393,400
Expenditure of Funds for Debt Service:
D/S Requirements Remaining Funds Available for D/S
$393,400
Dec. 1, 1989 $107,312 286,088
June 1, 1989 107,312 178,776
Dec. 1, 1989 107,312 71,464
June 1, 1990 251,500 (180,036)
Total Expenditures to Date:
Amount Budgeted Actual Expenditure Balance
Thru 11 -30 -89
Engineering* $1,000,000 $822,558 $ 177,442
R -0 -W Acquisition ** 996,000 64,034 931,966
Total $1,996,000 $886,592 $1,109,408
* Engineering costs include preliminary design and planning, final design,
design surveys, soils investigations, trench safety design, preparation
of plans and specifications, right -of -way surveys, preparation of plats
and legal descriptions, and preparation of SRF application.
** R -0 -W Acquisition costs include appraisals, title policies, condemnation
expenses, labor, and land costs.