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1998-10-20REGULAR CITY COUNCIL MEETING 667 NORTH CARROLL AVENUE SOUTHLAKE, TEXAS 76092 OCTOBER 20, 1998 MINUTES COUNCILMEMBERS PRESENT: Mayor Rick Stacy; Mayor Pro Tem W. Ralph Evans; Deputy Mayor Pro Tem Scott Martin. Members: Debra Edmondson, Gary Fawks, and Rormie Kendall. COUNCILMEMBER ABSENT: Wayne Moffat. STAFF PRESENT: Curtis E. Hawk, City Manager; Shana Yelverton, Assistant City Manager; Shelli Siemer, Assistant to the City Manager; Lou Ann Heath, Director of Finance; Bob Whitehead, Director of Public Works; Kevin Hugman, Director of Community Services; Lauren Safranek, Director of Human Resources; Billy Campbell, Director of Public Safety; Greg Last, Director of Community Development; Karen Gandy, Zoning Administrator; Charlie Thomas, Deputy Director of Public Works; Ron Harper, Deputy Director of Public Works; Sean Leonard, Court Administrator; Chuck Ewings, Assistant to the Public Works Director; Shawn Poe, Capital Projects Coordinator; E. Allen Taylor Jr., City Attorney; and, Sandra L. LeGrand, City Secretary. WORK SESSION: The work session began at 5:15 p.m., whereby Councilmembers and City Staff members reviewed items on the agenda. The work session was video taped and a tape recording was made for future reference. Council and staff discussed the following items: Agenda Item #9-A, was added to the consent agenda and will be tabled until the November 17, 1998 City Council meeting. Agenda Item #5-D, Ordinance No. 725, ist reading, Smoking Regulations. Repealing Ordinance No. 537. Mayor Stacy asked if the restaurants have been informed about the amended Smoking Regulations? Councilmember Edmondson stated one of the things that we did not want to do is make the ordinance so restrictive that new restaurants would not want to come into Southlake, as such, the work group used the City of Arlington and City of Plano ordinances as a guide. Mayor Stacy asked the Assistant City Manager Shana Yelverton to talk with Kirby Steak House people prior to their 2na reading. Councilmember Scott Martin stated both Arlington and Plano are big restaurant centers and they have no problems with the ordinance the way it is written. Agenda Item ~t-D, Parks and Recreation Board Report. Dick Anderson, a member of the Southlake Parks and Recreation Board, gave the report this evening. Mr. Anderson reference a request they received fi.om Buddy Lute, President of the CISD Board of Trustees, asking that the Southlake Parks Development Corporation (SPDC) Regular City Council Meeting Minutes of October 20, 1998 page 1 of 27 partially support the "Natatorium" for the City. Mr. Anderson stated after the Park Board talked about it, they decided not to include the natatorium in the five year plan. He stated this will be a "full" discussion item at the next Park Board meeting and then on to the SPDC for approval. Cotmcilmember Gary Fawks commented on the conversation from the JUC meeting, noting they encouraged the school board and Mr. Luce to come to the Parks Board meeting and discuss their plans for the stadium and natatorium and get input from the the Park Board and what would make them viable projects for the Parks Board. If they work close enough, both of the projects could become joint use projects and could eventually be funded by SPDC funds. There was never a discussion that the Park Board should feel compelled to rearrange their priorities and eventually (in 4-5 years) maybe it could be funded by the SPDC. Mr. Anderson stated the Park Board looks forward to getting the Tennis Center open. They made a recommendation to have a "tennis director" who will be hired from a company, and that position will be funded partially by the City. Mr. Anderson stated the Park Board looked at the building being donated by "Monticello" and they all agreed to accept the building for a nature center. Mr. Anderson stated he and Sherry Berman are on a committee to revise the park dedication policy and that Councilmember Debra Edmondson is working on that committee with them. Agenda Item #7-1, Ordinance No. 714, 2na reading, Granting a License to Metricom, Inc., for the installation of a wireless digital data communications radio network within certain portions of City rights-of-way. JLm Howerton referenced the changes made between the first and second readings of the ordinance. He noted they will have full deployment before June, 1999. He stated he will have 9,000 boxes in the metroplex, and within the City ofSouthlake, a total of approximately 135-140 radios (4 to 6 per mile). He stated the company has been operational for approximately three years. Councilmember Edmondson asked if this is an "Interact Service" and if it is necessary to have Metricom modems to access it. Mr. Howerton replied, "yes." Agenda Item #7-J, Ordinance No. 715, 2nd reading, Granting a license to American Communications Services of Texas, Inc., for the installation of telecommunications equipment within certain portions of city rights-of-ways. Assistant City Manager Shana Yelverton answered questions of Councilmembers, noting before they operate under this agreement, they need to complete the franchise agreement. Agenda Item #5-K, Resolution No. 98-71, Canceling the November 3, 1998 City Council Meeting. This item was removed from the consent agenda at the request of Councilmember Gary Fawks. Agenda Item #7-K, Ordinance No. 719, 2~a reading, Amending Chapter 10, Article III, Section 10-81, of the Southlake City Code, providing changes to regulate food manager certification and food handler training. Councilmember Gary Fawks had questions about the ordinance and the length of time a person could go without a food handler permit. David Jefferson, Tarrant County Health Department representative explained the issues in the ordinance. Regular City Council Meeting Minutes of October 20, 1998 Page 2 of 27 The work session ended at 6:05 p.m. REGULAR SESSION Agenda Item #1, Call to order. Mayor Rick Stacy called the Regular City Council meeting to order at 6:10 p.m. Agenda Item #2-A, Executive Session Mayor Rick Stacy advised the audience that the City Council would be going into executive session pursuant to the Open Meetings Act, Chapter 551 of the Texas Government Code, Sections 551.071, 551.072, 551.073, 551.074, 551.075, 551.076 to seek consultation with the City Attorney regarding pending and contemplated litigations, to deliberate the purchase, exchange, lease or sale of real property, a negotiated contract for a prospective gift or donation to the City, to deliberate the appointment and evaluation of public of/~cials, to confer with one or more employees to receive information from or to question the employees, and to deliberate the deployment of specific occasions for implementation of security personnel or devices. Council adjourned into executive session at 6:12 p.m. Council returned to open session at 7:20 p.m. Agenda Item #2-B, Action Necessary/Executive Session No action was necessary as the result of the executive session. Agenda Item #3, Invocation: Toby Slough, Southlake Church of Christ Toby Slough, Southlake chaplain of the month for October, from the Southlake Church of Christ led the invocation. Slough stated they are real excited at the Southlake Church of Christ as they just dedicated their new education facility. They will be having their fall festival the end of the month and are expecting over 3,000 people from the community to be present. They have doubled their efforts by trying to find new families in this community that are looking for a church home. Serving as a chaplain for the City, he has had the opportunity to meet many of the police officers in the City. He stated he is very proud to be working with this community and work with the police officers. He stated he and the other pastors are very struck by the professionalism and courtesy of the officers in our community. Agenda Item O4-A, Mayor's Report Mayor Stacy stated we have special guests present for our meeting tonight that will be introduced by former Mayor Gary Fickes. Regular City Council Meeting Minutes of October 20, 1998 Page 3 of 27 Gary Fickes, president of Southlake Sister City, introduced Mayor Julian Vega of E1 Fuerte, Sinaloa, Mexico, Rene Zazuetz, a rancher who grows all types of fruits and raises cattle, and Miguel Castillo who is a former professor there and works for the Mayor and the City. He noted their Mayor is different from ours, it is more of a County type government. Their particular area or district has about 125,000 people but the City of E1 Fuerte has about 25,000. It is a city about 400 years old, a former silver mining area and it has a very beautiful downtown area. It is a very picturesque location in what is known as the Copper Canyon which is in the foothills of the Sierra Nevada mountains. Mayor Rick Stacy read the following proclamation in English, followed by Councilmember Debra Edmondson, reading the proclamation in Spanish. Gary Fickes invited everyone to La Casa Restaurant in Grapevine tomorrow night (October 21, 1998) at 7:30 p.m. for dinner with our guests from E1 Fuerte, Mexico. Councilmember Scott Martin thanked everyone for coming. He commented on his visit with President Vega while visiting Mexico with the Sister City group from Southlake last year. Mayor Stacy made the following announcements during the Mayor's Report: October 21, 1998, the Youth Action Commission will meet at 7:00 p.m. in the Community Center at Bicentennial Park. October 23, 1998, the Parks and Recreation Department will be hosting the annual Harvest Fest and Carnival, with a theme of"Make a Difference Day." October 26, 1998, at 11:30 a.m. the monthly Chamber of Commerce luncheon will be held at Solana. October 26, 1998, at 7:00 p.m. in the Senior Activities Center, SPIN #8 will meet to hear the plans for the proposed Harris Methodist Doctor's Office, with day surgery and imaging center. October 27, 998, at 7:00 p.m. in the Senior Activities Center, a meeting on a proposed PUD zoned subdivision to be called "Chesapeake Place" which will be located at Pearson and Union Church area. } TML Conference is San Antonio will be held October 28-30. The City Manager will be attending. October 28, 1998, at 7:00 p.m. in the Senior Activities Center, the community is invited to attend a meeting to learn about the proposed redevelopment of the Food Lion Store and relocation of the Eckerds Store. Regular City Council Meeting Minutes of October 20, 1998 Page 4 of 27 November 10, 1998, the SPIN Planning and Zoning Academy will be held in the City Council Chambers of City Hall. Community Services has become a department. The Community Services Division has now become a department that will include: Parks and Recreation, Library Services, Seniors, KSB, SYAC and Public Information. Congratulations to Kevin Hugman who has been promoted to the position of Director of Community Services. Agenda Item #4-B, City Manager's Report Curtis Hawk, City Manager, stated Ron Harper, Deputy Director of Public Works, will present an update on Town Square. Town Square Progress continues on the infrastructure and commercial elements of this project. Six buildings are currently under construction. All buildings have had steel erected. Buildings lA and lB have had all the scaffolding removed and work continues on the interior system in preparation for release to tenants for £mish out. Elevators have been installed on both buildings, lA has had second floor windows installed and work is progressing on the first floor storefronts. Second floor windows are being installed on 2A. Buildings 5A and 5B have had exterior framing and sheathing installed. Stucco has been completed and brick work continues on 5B. Both of these buildings have had mechanical, plumbing and electrical rough-in work substantially completed. Interior framing of both buildings is progressing. Building 4C has had first and second floor concrete poured. Rough-in of mechanical, plumbing and electrical systems is proceeding. Building 2C has had steel erected and first and second floor concrete poured. Curbs and sidewalks have been poured at the rear of lA and lB. Work will begin on front sidewalks within the next several weeks. State Street and Fountain Place have been lime stabilized. The Landscape Administrator is finalizing species selection for the trees and plantings proposed for this project. Staff has again reminded the Developer that any requests for sign variance need to be submitted within the next month in order to allow Council sufficient time to review the merits of the variances and to allow for the manufacture and production of the signs prior to grand opening. Post Office Square There is no change from the last report on this phase of the project. Town Hall Staff met with Mayor Stacy, Councilmembers Kendall and Martin, and P&Z Commissioner LeVrier on October 13, 1998, to discuss the architectural contracts with Schwarz and Urban. The City Manager was requested by Council to speak with the architects relative to the level of services and suggested fees. In addition, staff was directed to discuss the scope of a construction management contract with Beck. The Regular City Council Meeting Minutes of October 20, 1998 Page 5 of 27 Beck discussions have progressed to the point that information relative to services provided and contractual terms will be available at the November 3, 1998 City Council meeting. As staff has mentioned over the past several report periods, the Town Square grand opening is scheduled for March 20, 1999. In conjunction with the grand opening, staff has hoped that the City would schedule the dedication of the Town Hall cornerstone. This dedication is a fairly involved activity which needs to be planned starting as soon as possible. Due to the visibility of this event, staff would like to have City Councilmembers involved in the planning. The selected Councilmembers would work with Kevin Hugman, Tracy Southers, Shelli Siemer and Ron Harper to insure that the event is planned properly. Agenda Item #4-C, SPIN Report Pattie Minder, Representative for SPIN #8 made the report tonight stated SPIN will hold their Planning and Zoning Academy on November 10, at 7:p.m. in the City Council Chambers. She stated all SPIN representative have put their information about SPIN meetings on the Web-page at their own expense. SPIN notices are also on Channel 25. Ms. Minder noted a problem exists with the Woodland Heights residents, in that they cannot get in and out of the subdivision as the traffic is so heavy. She stated something has to be done as it is extremely dangerous to the people coming in and out off F.M. 1709. Ms. Minder stated there has been no less than a dozen meetings held regarding the Miron Water Tower Site, and the paint scheme for the tower. She noted she feels they have come down to a conculsion on the paint scheme. Agenda Item O4-D, Parks and Recreation Board Report Mayor Stacy announced that Dick Anderson, a Park Board member, made the report during the work session tonight. Agenda Item #5, Consent Agenda Mayor Stacy stated this is the time of the evening when Council votes on several items at one time. He informed citizens present of the procedure Council follows in voting on the "consent agenda" and asked if anyone had any comments or opposition to express regarding any items listed in this section of the agenda. Mayor Stacy read the consent agenda items into the record: 5-A. Approval of the Minutes of the Regular City Council meeting held on October 6, 1998. 5-B. Approve FY 1998-99 Scope of Services Agreement with Keep Southlake Beautiful (KSB). Regular City Council Meeting Minutes of October 20, 1998 Page 6 of 27 ~.- 5-C. Approve FY 1998-99 Scope of Services Agreement with Metroport Meals on Wheels (MMOW). 5-D. Ordinance No. 725, 1st reading, Smoking Regulations. Repealing Ordinance No. 537. 5-E. Authorization to advertise for bids for installation of sanitary sewer in the Cedar Creek Plantation Addition. Authorization to advertise for bids for road and sanitary sewer improvements on Lilac Lane. 5-G. Authorize the Mayor to enter into a developer's agreement for Georgetown Park, Phase III. 5-H. Authorization to advertise for bids for water, sanitary sewer, and road improvements on Lake Drive. 5-1. This item was removed from the agenda. Award of contract to Sefco, Inc., for the construction of a second five-million gallon ground storage tank at F.M. 1709 and Pearson Lane. 5-K. Resolution No. 98-71, Canceling the November 3, 1998, Regular City Council meeting. 9-A. Resolution No. 98-70, Amending the Fee Schedule. Motion was made to approve the consent agenda as follows: #5-A, #5-B, #5-C, #5-D, establishing the public hearing for November 17, 1998; #5-E, #5-F, #5-G, #5-H, #5-J, tabling #9-A, Resolution No. 98-70. Motion: Martin Second: Fawks Ayes: Martin, Fawks, Kendall, Edmondson, Evans, Stacy Nays: Mayor Stacy voted "no" on Item #5-J only Abstention: Councilmember Debra Edmondson abstained on Item #5-E only. Approved: 6-0 vote (With the exception of the votes noted above) ADDITIONAL INFORMATION ON CONSENT AGENDA ITEMS 5-A. Approval of the Minutes of the Regular City Council meeting held on October 6, 1998. The Minutes were approved as presented. Approve FY 1998-99 Scope of Services Agreement with Keep Southlake Beautiful (KSB). The Fiscal Year 1998-99 Annual Budget allocated $4,500 for Keep Southlake Beautiful, an organization committed to keeping Southlake a clean Regular City Council Meeting Minutes of October 20, 1998 Page 7 of 27 community. This agreement outlines those services which will be provided to the citizens of Southlake by KSB, including litter pick-ups, education programs, and beautification projects. The term of this agreement is for one year commencing October 1, 1998. Approve FY 1998-99, Scope of Services Agreement with Metroport Meals on }Yheels (MMOW). The Fiscal Year 1998-99 Annual Budget allocated $10,000 for Metroport Meals on Wheels in exchange for the provision of services by that organization. This scope of services agreement outlines those services which MMOW will provide to the citizens of Southlake. The term of the agreement is for one year commencing October 1, 1998. Ordinance No. 725, Ist reading, Smoking Regulations, Repealing Ordinance No. 537. During the June Retreat, Councilmember Edmondson expressed her desire to address this ordinance as quickly as possible to ensure that our regulations are in place before the City experiences an increase in the number of restaurants within the City. Staff has conducted research into ordinances in place in other cities. The goals of revising the ordinance are two-fold. First, the ordinance should provide for clean indoor air, protecting non-smokers from the effects of second hand smoke and providing for a comfortable environment in facilities frequented by the public. Second, recognizing that Southlake residents favor the development of restaurants in the city, the ordinance should not contain regulations which are so onerous as to discourage restaurants or other facilities from locating in Southlake. Staff and Council agree that no retrofitting should be required for existing restaurants. Authorization to advertise for bids for the installation of sanitary sewer in the Cedar Creek Plantation Addition. Cedar Creek Plantation Addition is scheduled to receive sanitary sewer improvements this year as part of the Neighborhood Sewer Program as shown in the C1P budget. The design of the proposed sanitary sewer was completed during the previous fiscal year. The total estimated cost of the project is $120,400, with $410,000 for the engineering and $100,400 for the construction. The construction is proposed to be funded from the 1998-1999 Capital Improvements Budget. Staff recommends Council authorize advertisement for the bids. Authorization to advertise for bids for road and sanitary sewer improvements on Lilac Lane. This project originally included only road improvements. In June 1998, Council authorized the design of sanitary sewer improvements as well. This was done so that new pavement would not be disturbed should sanitary sewer be installed at a future date, therefore, minimizing the overall cost of both improvements. The design of this project is complete and has been reviewed by staff. A total of $234,600 has been included in the Capital Improvements Budget for this project; this includes the engineering cost of $44,465 approved by Council in June. The design includes Pine Drive, which is scheduled to receive Regular City Council Meeting Minutes of October 20, 1998 Page 8 of 27 improvements during the next fiscal year. Staff recommends Council authorize advertisement for the bids. Authorize the Mayor to enter into a developer's agreement for Georgetown Park, Phase III. The Developer's Agreement for Georgetown Park, Phase III, is a standard developer agreement. The agreement covers the extension of a public water line and storm sewer line to serve this portion of the development. Authorization to advertise for bids for water, sanitary sewer, and road improvements on Lake Drive. Proposed improvements to Lake Drive include a new water line, a new sanitary sewer line, and rehabilitation of the pavement. The current water line is undersized and the sewer line will serve residents located on the east side of the street. The residents of Lake Drive requested that the reconstmctiun of their street be completed with a pavement width of 18-ff. rather than the standard 22-ff. cross-section as they believe that the narrower roadway will discourage traffic from speeding. Additionally, the speed limit on Lake Drive was reduced to 25 mph at the October 6, 1998 City Council meeting since the narrower roadway may cause safety hazards at faster speeds of travel. Staffis recommending that Council authorize Lake Drive to be built only 18-ft. wide rather than the standard 22-ft width. The CIP budget provides $169,000 for this project. Award of bid to Sefco, Inc., for the construction ora second five million gallon ground storage tank at F.M. 1709 and Pearson Lane. Due to the recent water supply situation, it has been requested that the second five million gallon ground storage tank at Pearson Lane and F.M. 1709 programmed for future construction be moved up in priority. On September 1, 1998 Council authorized staff to advertise for bids for this project. Low bidder for the project is Sefco, Inc., with a bid of $1,469,351. The estimated cost of the proposed tank is $1,687,400. This cost estimate included the tank, grading, fencing, additional pipe, and some engineering as most of the engineering is complete. The engineering contract was for $68,594.40, therefore, this bid brings the total project cost to $1,755,994.40. 9-A. Resolution No. 98-70, Amending the Fee Schedule. This item was tabled until the November 17, 1998, City Council agenda at the request of Couneilmembers. Agenda Item #5-K, Resolution No. 98-71~ Canceling the November 3, 1998, Regular City Council Meeting Curtis Hawk, City Manager, stated Proposition Two on the May 2, 1998 Charter Election ballot was approved to authorize the City Council to cancel or move the date ora regular city council meeting by posting a 72-hour notice. This proposition was overwhelmingly approved by the voters (1,591/828). He noted this item is on the agenda because November 3, 1998 is election day. Council approval of this resolution will provide for cancellation of the meeting with proper posting. Regular City Council Meeting Minutes of October 20, 1998 Page 9 of 27 Councilmember Ronnie Kendall asked what will the November 17, 1998 City Council meeting look like if we cancel the November 3, 1998 meeting? Councilmember Gary Fawks stated he would rather go on with the regular meeting than cancel it. He commented on the fact that the City Council Chamber will not be used during the election. Councilmember Debra Edmondson stated she has no problem starting the meeting later in the evening if parking during the election will become an issue. Motion was made to direct the City Secretary to post an agenda for the November 3, 1998, City Council meeting, beginning at 7:00 p.m. and not including a work session for that meeting. Motion: Fawks Second: Kendall Ayes: Fawks, Kendall, Martin, Edmondson, Evans, Stacy Nays: None Approved: 6-0 vote Agenda Item #6~ Public Forum Bill Runyan, 979 Shady Oaks Drive, Southlake. Mr. Runyan stated he has come before the City Council concerning a water problem next to him with the construction of Durham Elementary School and the new junior high school. Mr. Runyan presented pictures, giving an overview of what happened to his property since the schools have been built on the site. He stated he had a large problem when Durham Elementary School was built and now has a greater problem with the water now that the new junior high school is built. Mr. Runyan stated he has approached Bob Whitehead, Curtis Hawk and Eddie Cheatham, engineer, for the school district and the problem still exists. Mr. Runyan stated seventeen years ago he had a water problem and he and Les Clow corrected it. He did not have any more problems until Durham Elementary School was built. He stated he has talked and talked to Eddie Cheatham and the CISD officials. Mr. Runyan alledged that the City and school district has changed the flow of water from running east to running west. It is unlawful to change the flow of water from one man's property to another mans property, according to Mr. Runyan. He stated he cannot get anyone to work on this problem and he does not know what to do. He stated he cannot use his property any longer. Mr. Runyan stated if we had a 5" to 8" rain, his property would go away. He stated Councilmember Gary Fawks came onto his property and walked in the water with him. He stated he does not know the answer to the problem, and commented that there is not an easement on the property. Mr. Runyan stated, "The bottom line is, I need help and I pay taxes, and its not fair!" Mayor Stacy stated he will put this issue on the Council agenda each meeting until there is a resolution to the problem. Regular City Council Meeting Minutes of October 20, 1998 Page 10 of 27 Councilmember Debra Edmondson stated she was on the property yesterday and the City needs to find a solution to this problem. She stated, "When you see two huge schools, I understand what Mr. Runyan is saying." Agenda Item #7-A, ZA 98-105, Revised Concept Plan for St. Martin-in-the-Fields ZA 98-105, Revised Concept Plan for St. Martin-In-The-Fields, on property legally described as being Lot 1, Block 1, St. Martin-in-The-Fields Addition, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded in Cabinet A, Slide 1346, Plat Records, Tarrant County, Texas, and being approximately 7.044 acres. Current zoning is "CS" Community Service District. Applicant: D.B. Constructors, Inc. Owners: St. Martin-In-The-Fields. Karen Gandy, Zoning Administrator, stated four (4) written notices were sent to properties within the 200' notification area and one (1) written response was received from, Rev. Frank B. Reeves (St. Martin-In-The-Fields Episcopal Church) 223 South Pearson Lane, Southlake, in favor. Ms. Gandy stated the applicant has met all requirements in Concept Plan Review Summary No. 1, dated October 2, 1998, with the exception of those listed in Concept Plan Review Summary No. 2, dated October 16, 1998. Councilmember Ronnie Kendall asked to have pointed out on the map, the property that is currently being used by the Parks and Recreation Department. Kevin Hugman, Director of Community Services, pointed to the location on the map. Allen Jackson, DB Constructors, Inc. Mr. Jackson stated he works with the church and asked the City Council for approval of the Revised Concept Plan as approved by the Planning and Zoning Commission. Greg Last, Director of Community Development, clarified for Council that Mr. Jackson has asked for IA and lB in accordance with the P & Z recommendation, and would like a deferral on the north and east bufferyards. Councilmember Gary Fawks asked why the contractor wants to defer the buffyards on the north and east. Mr. Jackson stated it is because he does not want to be the only one planting at this time, adding, if they do plant, the cows will eat the plants. Fawks commented on the fact that they have a master plan on file for the future so that there is no question what they are doing with the property. PUBLIC HEARING: Robert Bess, 7600 Ridgeway Avenue, North Richland Hills. Mr. Bess stated he is in support of this proposal. He just wanted to clarify the plat, noting, they are willing to do more landscaping and that installing a berm would be expensive at this time. They want to be good neighbors. Regular City Council Meeting Minutes of October 20, 1998 Page 11 of 27 Margaret Barlett, 6872 Hickory Hills, North Richland Hills. Ms. Barlett expressed support of this the case, but did not wish to speak. Miriam Moore, 6637 Ridgetop Drive, Watauga. Ms. Moore expressed support of this case, but did not wish to speak. Councilmember Rome Kendall commented that perhaps staff could go to different churches in Southlake to see if they have property the City could use for practice fields. Motion was made to approve ZA 98-105, Revised Concept Plan for St. Martin-In-The- Fields until future construction on this property. Motion: Fawks Second: Martin Ayes: Fawks, Martin, Edmondson, Evans, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #10-A~ Approval of the Paint Concept for Miron Elevated Water Storage Tank Bob Whitehead, Director of Public Works, stated staff has conducted several public meetings to present different paint concepts for the proposed Miron elevated storage tank. Prior to taking action, it was suggested by City Council that residents have the opporUmity to provide input and discuss the different options. Mr. Whitehead stated the cost for either the solid blue color or the traditional scheme with green stripes and "Southlake" is $185,000, of which $85,000 is for the interior of the tank. If blue is used, the contractor would be purchasing paint that could not be utilized for anything other than this proposed tank. If a solid white color is selected, the cost of painting may be lower. The estimated cost of architectural enhancements is $278,700. This amount would be additional to the $100,000 paint cost for a total of $378,700. The low bid approved by the City Council for the Miron elevated water tower is $1,485,000 of which $185,000 is for the painting. If Council approves a single color format, there will be no impact on the approved bid amount. Councilmember Scott Martin stated the City should consider a clear-coat color being added to the paint that has a natural organic pigment. Arthur Weiman, architect, outlined the time frame for the project and stated we need a vote fi.om the City so that the contractor can move forward. Motion was made to approve the paint scheme for the Miron Water Tower using the arched design dated October 20, 1998, with the rawhide brown color. Motion: Kendall Second: Martin Ayes: Kendall, Martin, Edmondson, Evans, Fawks, Stacy Nays: None Approved: 6-0 vote Regular City Council Meeting Minutes of October 20, 1998 Page 12 of 27 Councilmember Debra Edmondson stated a neighbor is concerned about the tank in her yard and would like the City to plant fast growing plants around the bottom of the tank. She thanked Laura Roach for her time on this issue and hopefully everyone is satisfied with the outcome. Pattie Minder, 223 EastwoodDrive, $outhlake. Ms. Minder stated the residents in SPIN #8 appreciate Bob Whitehead and Shawn Poe for their efforts on this project. Agenda Item #7-B, Ordinance No. 480-BB~ 2nd reading, Impervious Coverage Ordinance No. 480-BB, 2"d reading, Impervious Coverage, Revising certain maximum lot coverage requirements and establishing maximum impervious coverage requirements was commented on by Karen Gandy, Zoning Administrator. A copy of the memorandum from Ms. Gandy dated October 15, 1998, is hereby attached to the minutes of this meeting. PUBLIC HEARING: David McMahan, 1335 Hidden Glen, $outhlake. Mr. McMahan stated he served as a member of the work group committee on Ordinance No. 480-BB and he is in support of the ordinance. It was a unanimous consent of all the developers who worked on the ordinance. McMahan said, "The members of this committee who were preparing this ordinance were well prepared and showed the developers the error of their ways and convinced them that it was not only "doable" but that we are already doing it." Mayor Stacy commented that he too has been the balancing obstacle against this ordinance fi.om the beginning and sometimes he feels like that is his job. He commended Gary Fawks for chairing this committee and he thanked all those who worked on this committee, including: Councilmembers Fawks, Martin, Edmondson; P & Z Members, Ann Creighton, F.C. LeVrier, and Jim Murphy. Developers: Terry Wilkinson, David McMahan, John Drews, Steve Yetts, Joe Wright, Richard Kuhlman, Martin Schelling, Richard Myers. Staff: Karen Gandy and Greg Last. He stated the reason he was so obstinate about this, is he wanted it to be right. Councilmember Scott Martin also thanked Councilmember Fawks stating it was tough and heated at times, but they all came to a compromise in favor of this ordinance. Motion was made to approve Ordinance No. 480-BB, 2nd reading. Motion: Edmondson Second: Fawks Ayes: Edmondson, Fawks, Kendall, Martin, Evans, Stacy Nays: None Approved: 6-0 vote Regular City Council Meeting Minutes of October 20, 1998 Page 13 of 27 Agenda Item #7-C, Ordinance No. 722, 2nd reading, Authorizing the Issuance of $4,275,000 City of Southlake Tax Notes, Series 1998. Lou Ann Heath, Director of Finance, stated the Southlake Crime Control and Prevention District Plan and Budget adopted in September 1997 outlined strategies to address public safety issues. The primary and most critical of these strategies is to enhance community safety through modem efficient facilities. To that end, the Crime Control District Board has been evaluating the location and size of parcels needed for three public safety facilities. In order to proceed quickly to purchase land, it is necessary to have funds on hand and available. Staff is recommending a $4.275 million tax note be issued by the City, which will provide $4.2 million for land and $75,000 for accrued interest, underwriters' discount and issuance costs. The tax note will be dated October 15, with a five year payout schedule. The Crime Control District will repay the annual debt service with Crime Control District sales tax collected in subsequent years. The most recent estimate of Crime Control District sales tax over its initial five year period is $8.7 million. Jim Sabonis, First Southwest Company. Mr. Jim Sabonis, financial advisor for the City of Southlake, stated we had a very successful bid today (October 20, 1998) at 3:00 p.m. in their office. He stated bids were received from the following: Account Manager True Interest Cost Prudential-Securities Incorporated Southwest Securities Dean Witter Reynolds Morgan Keegan & Co. & Everen Securities Legg Mason Wood Walker, Inc. SAMCO Capital Markets Chase Securities of Texas, Inc. 3.8522% 3.8557% 3.8933% 3.9059% 3.9195% 3.9255% 3.9281% A copy of the information provided by First Southwest Company is hereby attached to the minutes of this meeting. Mr. Sabonis stated the issuance is set to close in 28 days from today and the City should receive the funds on November 17, 1998. The 5 year bonds are to be the same as the life of the Crime Control and Prevention District. Councilmember Ralph Evans stated in ten years he has seen a lot of numbers, but never an interest rage like this at under 4%. PUBLIC HEARING: No comments were received during the public hearing. Motion was made to approve Ordinance No. 722, 2nd reading, and accepting the low bid fi.om Prudential-Securities Incorporated, at 3.8522% interest rate. Motion: Martin Regular City Council Meeting Minutes of October 20, 1998 Page 14 of 27 Second: Evans Ayes: Martin, Evans, Fawks, Kendall, Edmondson, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-D, ZA 98-106, Site Plan for Kirby's Steakhouse ZA 98-106, Site Plan for Kirby's Steakhouse, on property legally described as Lot 9, Block A, of the approved Plat Revision of Southlake Bank Place and being a portion of Lot 4R-2R-3, Block A, Southlake Bank Place, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded in Cabinet A, Slide 2242, Plat Records, Tarrant County, Texas, according to the plat recorded in Cabinet A, Slide 2242, Plat Records, Tarrant County, Texas, and being approximately 2.00 acres. Current zoning is "C-3" General Commercial District. Applicant: Kirby's Steakhouse. Owner: Southlake Investments, L.L.C. Karen Gandy, Zoning Administrator, stated three (3) notices were sent to property owners within the 200' notification area and no written responses have been received. Ms. Gandy stated the applicant has met all requirements in Site Plan Review Summary No. 1, dated October 2, 1998, with the exception of those listed in Site Plan Review Summary No. 2, dated October 16, 1998. John Levitt, Levitt Engineers, 726 Commerce, Ste. 104, Southlake. Mr. Levitt was present to answer questions of Council. A discussion was held regarding the driveway circulation. Mayor Stacy had questions about parking for the restaurant. James Ingland, Southlake Investments, Inc. Mr. Ingland stated they have planned for 300 seats and I00 parking spaces. They plan to have 20 employees for the restaurant. This plan has fifteen spaces more than the other Kirby's Steakhouse restaurants. Mr. Ingland stated they can add more spaces than in other cities, but they are limited by the ordinance in Southlake. They do not have over flow parking at this store. He stated that as development occurs he feels he will have some over flow parking at this location. PUBLIC HEARING: No comments were received during the public hearing. Motion was made to approve ZA 98-106, pursuant to the Site Plan Review Summary No. 2, dated October 10, 1998; allowing the actions as accepted by the Planning and Zoning Commission. Motion: Martin Second: Fawks Mayor Stacy asked if we can put more parking spaces and still meet the requirements of the ordinance. Greg Last, stated, "no." They can use the parking spaces on the adjacent property to the west if they need more parking. Ayes: Martin, Fawks, Kendall, Edmondson, Evans, Stacy Regular City Council Meeting Minutes of October 20, 1998 Page 15 of 27 Nays: None Approved: 6-0 vote Agenda Item #7-E, Resolution No. 98-69, Specific Use Permit (ZA 98-107) for Kirby's Restaurant Resolution No. 98-69, ZA 98-107, Specific Use Permit for the Sale of Alcoholic Beverages for On-Premises Consumption per Zoning Ordinance No. 480, Section 45.1 (1) for Kirby's Steakhouse, on property legally described as Lot 9, Block A, of the approved Plat Revision of Southlake Bank Place, and being a portion of Lot 4R-2R-3, Block A, Southlake Bank Place, an addition to the City of Southlake, Tarrant County, Texas, according to the plat recorded in Cabinet A, Slide 2242, Plat Records, Tarrant County, Texas, and being approximately 2.00 acres. Current zoning is "C-3" General Commercial District. Applicant: Kirby's Steakhouse. Owner: Southlake Investments, L.L.C. Karen Gandy, Zoning Administrator, stated three (3) notices were sent to property owners within the two hundred foot notification area and no written responses have been received. No new review letter was generated for this item. This site is subject to all conditions of the Site Plan proposed under City Case No. ZA 98-106. ,lames Ingland. Mr. Ingland stated the Planning and Zoning Commission tied the SUP to the operator instead of to the property. He stated fi.om the operational stand point he asked it to be tied to the property. Mayor Stacy asked Mr. Ingland if he had reviewed the new Smoking Ordinance. Mr. Ingland stated they will comply with our Smoking Ordinance. PUBLIC HEARING: No comments were made during the public hearing. Motion was made to approve Resolution No. 98-69 (ZA 98-107), as the Planning and Zoning Commission passed it. Motion: Martin Second: Edmondson Ayes: Martin, Edmondson, Evans, Fawks, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-F, ZA 98-108, Site Plan for Campus Circle Parking Lot ZA 98-I08, Site Plan for Campus Circle Parking Lot, on property legally described as being Lot 1, Block 1, Westlake/Southlake Park Addition No. 1, according to the plat recorded in Volume 388-214, Pages 78 and 79, Plat Records, Tarrant Cunty, Texas, and being approximately 75.206 acres. Current zoning is "NR-PUD" Non-Residential Planned Unit Development District for a Mixed Use Business Complex, known as Solana, to include the following uses: "0-2" Office District, "C-3" General Commercial Regular City Council Meeting Minutes of October 20, 1998 Page 16 of 27 District, "B-i" Business Service Park District, "CS" Community Service District, and "HC" Hotel District. Owner and Applicant: Maguire Partners. Karen Gandy, Zoning Administrator, stated three (3) notices were sent to property owners within the 200' notification area and no written responses have been received. The applicant has met all requirements in Site Plan Review Summary No. 1, dated October 2, 1998, with the exception of those in Site Plan Review Summary No. 2, dated October 16, 1998. Richard Kuhlman, Maguire Partners, 9 Village Circle, Solana. Mr. Kuhlman stated they are asking for the west parking first. They also want to convert part of the cafeteria building into office space and need parking for that building. He stated they are asking for one variance which is a reduced stacking distance. PUBLIC HEARING: No comments were made during the public hearing. E. Allen Taylor, Jr., City Attorney, reminded Council that staff is asking if this should be approved subject to an order by Judge Davis allowing construction to proceed and for Maguire Parmers to bring to the City of Southlake staff a written agreement from the Town of Westlake which allows construction to proceed. Taylor stated, "As you will recall this is in the disputed zone in which we are in litigation with the Town of Westlake." Motion was made to approve ZA 98-108, pursuant to Site Plan Review Summary No. 2 dated October 15, 1998; allowing a 140' stacking depth as shown on item #lA; with the record showing that this approval is for planning only and no decisions are being made on construction permitting at this time with this action being taken, and subject to Judge Davis' order or written agreement from the Town of Westlake. Motion: Martin Second: Evans Ayes: Martin, Evans, Fawks, Kendall, Edmondson, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-G, ZA 98-109, Revised Site Plan for Campus Circle Parking Lot ZA 98-109, Revised Site Plan for Campus Cimle Parking Lot, on property legally described as being Lot 1, Block 1, Westlake/Southlake Park Addition No. 1, according to the plat recorded in Volume 388-214, Pages 78 and 79, Plat Records, Tarrant County, Texas, and being approximately 75.206 acres. Current zoning is "NR-PUD" Non- Residential Planned Unit Development District for a Mixed Use Business Complex, known as Solana, to include the following uses: "0-2" Office District, "C-3" General Commercial District, "B-I" Business Service Park District, "CS" Community Service District, and "HC" Hotel District. Owner and Applicant: Maguire Partners. Regular City Council Meeting Minutes of October 20, 1998 Page 17 of 27 Karen Gandy, Zoning Administrator, stated three (3) notices were sent to property owners within the 200' notification area and no written responses have been received. On October 8, 1998, the Planning and Zoning Commission approved (7-0 vote) subject to the Site Plan Review Summary No. 1, dated October 2, 1998, and approved the revised plan dated October 8, 1998. The applicant has met all requirements in Site Plan Review Summary No. 1, dated October 2, 1998, with the exception of those in Site Plan Review Summary No. 2, dated October 6, 1998. Richard Kuhlrnan, Maguire Partners, 9 Village Cirlce, Solana. Mr. Kuhlman stated this lot will be the best parking lot anywhere. This part on the northern end is a future phase and they will take the jogging path around the end and relocate it within the other plan. He stated they will save as many trees as possible. PUBLIC HEARING: The public hearing resulted with no comments from the audience. Motion was made to approve ZA 98-109, with the record showing that this approval is for planning only and no decisions are being made on construction permitting at this time with this action being taken, and subject to Judge Davis' order or written agreement from the Town of Westlake. Motion: Martin Second: Evans Ayes: Martin, Evans, Fawks, Kendall, Edmondson, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-H, Ordinance No. 718, 2"a reading, Granting a License to Metricom, Inc. Ordinance No. 718, 2nd reading, Granting a license to Metricom, Inc., for the installation of a wireless digital data communications radio network within certain portions of the City's fights-of-way. Shana Yelverton made the presentation of this 2nd reading of the ordinance, stating, Metricom, Inc., is a wireless carrier that provides both mobile information access and Interact services in one package called Ricochet. Metficom is in the process of building their information network in the Dallas/Fort Wo~h metroplex and has approached about 42 cities in the area to acquire the use of the public rights-of-way for installation of small radio transceivers on existing utility and light poles. Metricom has proposed placement of the shoe-box size transceivers on light poles within the community, using the photocell on the pole as a constant source of power. Total installation time is estimated at 15-20 minutes each trait. Jim Holliton, Metricom, Inc. Mr. Holliton was present to answer questions concerning the wireless interact access. PUBLIC HEARING: No comments were received during the public hearing. Motion was made to approve Ordinance No. 718, 2na reading. Regular City Council Meeting Minutes of October 20, 1998 Page 18 of 27 Motion: Fawks Second: Martin Ayes: Fawks, Martin, Kendall, Edmondson, Evans, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-I, Ordinance No. 714~ 2nd reading~ Granting a Franchise to Millennium Teleom, L.L.C. Ordinance No. 714, 2nd reading, Granting a franchise to Millennium Telcom, L.L.C. for the provision of cable television service within the city. Shana Yelverton, Assistant City Manager, stated Millennium is a corporation formed in April of this year, headquartered in Denison. It was formed to provide voice, video, and data to subscribers in various portions of Tan'ant, Denton and Parker counties. The corporation is partially owned by Value Choice, Inc., a wholly owned subsidiary of Tri-County Electric Cooperative. Their business plan notes that they are working to become a Competitive Local Exchange Company (CLEC), but are taking the approach of targeting business and residential developments before construction is initiated. They will be building a fiber network through proprietary marketing arrangements with developers and builders who will assist in marketing their products and services. John Belcher. Mr. Belcher was present to answer questions for Council PUBLIC HEARING: No comments were made during the public hearing. Councilmember Ronnie Kendall stated in this particular contract there are fines for the cable company not handling customer complaints properly. There is not a lot we can do with our current cable company for poor services, and she would like the public to know that there is something we can do with this cable company. Motion was made to approve Ordinance No. 714, 2nd reading. Motion: Fawks Second: Martin Ayes: Fawks, Martin, Edmondson, Evans, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-J, Ordinance No. 715, 2nd reading~ Granting a License to American Communications Services of Texas, Inc. Ordinance No. 715, 2nd reading, Granting a license to American Communications Services of Texas, Inc., for the installation of telecommunications equipment within certain portions of city rights-of-way. Shana Yelverton, Assistant City Manager, informed Council that American Communications Services of Texas, Inc., (ACSI) has requested this license to construct a telecommunications network within the City of Southlake's right-of-way. ACSI is an integrated communications provider licensed and Regular City Council Meeting Minutes of October 20, 1998 Page 19 of 27 doing business in the state of Texas. ACSI of Texas, Inc., is the local operating subsidiary of e. Spire Communications, Inc., a Maryland based telecommunications company providing integrated communication services throughout the United States. Their intention with Southlake at this time is to install fiber along Shady Oaks and Randol Mill Boulevard and through the area which was formerly Westlake in order to serve Solana. They need to negotiate a fi:anchise agreement immediately if they wish to serve the Solana complex. Ms. Yelverton said, "Since no such agreement has ever been executed for the City of Southlake, I took the time to discuss this company and the proposed license agreement with contacts in other cities. It is a standard to charge $1 per linear foot as rental for use of the right-of-way in instances where the provider offers no services within the jurisdiction." Steve }Yilson, Project Manager, American Communications Services of Texas, Inc. Mr. Wilson was present to answer questions for Council. PUBLIC HEARING: No comments were made during the public hearing. Motion was made to approve Ordinance No. 715, 2nd reading. Motion: Martin Second: Evans Ayes: Martin, Evans, Fawks, Kendall, Edmondson, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-K, Ordinance No. 719, 2nd reading, Amending Southlake Cit~ Code Billy Campbell, Director of Public Safety, presented Ordinance No. 719, 2nd reading, Amending Chapter 10, Article III, Section 10-81, of the Southlake City Code, providing changes to regulate food manager certification and food handler training. This item was discussed in work session tonight, therefore, no discussion was held at this time. PUBLIC HEARING: No comments were received during the public heating. Motion was made to approve Ordinance No. 719, 2"a reading. Motion: Martin Second: Edmondson Ayes: Martin, Edmondson, Evans, Fawks, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #8-A, ZA 98-110, Revised Preliminary Plat of SheltonWood ZA 98-110, Revised Preliminary Plat of SheltonWood, on property legally described as being Tracts lA and 1C1A situated in the Joel W. Chivers Survey, Abstract No. 350, and Tract 2B1 situated in the James L. Chivers Survey, Abstract No. 348, and being approximately 24.225 acres. Current zoning is "SF-1A" Single Family Residential Regular City Council Meeting Minutes of October 20, 1998 Page 20 of 27 District. Applicant: Four Peaks Development, Inc. Owner: Charles and Elaine Bell and John Shelton. Karen Gandy, Zoning Administrator, stated twenty-seven (27) notices were sent to property owners within the 200' notification area and no written responses have been received. David McMahan, 1335 Hidden Glen, Southlake, representing Four Peaks Development. Mr. McMahan stated he is asking for a gated community. He stated they want pre- approval for gates. He noted the policy is if75% of the owners occupants agree, they can request private streets. He stated what they are asking for tonight is for the City Council to preapprove this subdivision. He stated they have changed the plan to move the gates further back so that the gate is 300' back from the right-of-way. McMahan stated they will deed restrict where the gates are only closed in the night time hours. He commented that they are asking for a better development with saving the trees. Greg Last, Director of Community Development, reviewed for Council the provisions in the ordinance regarding gated communities. David McMahan stated there is one of the provisions in the text that he commented on. Under the ordinance, it calls for the homeowners association to purchase the streets from the city. In this particular instance, the bond will have not run out before that point in time. They asked that that condition be waived, noting they are paying for the streets, and don't want to have to come back and buy the streets back fi'om the city when the city never put any money into them. They are willing to meet all the other requirements. Allen Taylor, City Attorney, stated, there is a legal impediment with that. If the City owns the right-of-way easement for the roadway at the time the plat is approved and dedicated to the City, State Law requires that to dispose of that right-of-way easement, the city has to acquire something of value for it. Council can set what they believe to be the fair market value, but has to receive something for it. Mayor Rick Stacy stated, "Why don't we go ahead and approve the gated community and not play the preapproved game." Allen Taylor stated Council will have to amend the ordinance. PUBLIC COMMENTS: John Shelton, 570 East Dove Road, Southlake. Mr. Shelton stated the way the gated community is designed it will not be a site problem. He encourages the City Council to find a way to gate the community. Councilmember Scott Martin stepped down for this item citing he has a vested interest in this case. Regular City Council Meeting Minutes of October 20, 1998 Page 21 of 27 Councilmember Debra Edmondson commented on what Mr. McMahan agreed to do at a previous meeting, in placing real estate sized signs on the property in english and spanish, hitting the high points of the tree ordinance. She noted this will be the beginning of a precedent on heavily treed sites. Agenda Item #2-A, Executive Session Mayor Stacy advised the audience that the City Council would be going back into executive session pursuant to the Open Meetings Act, Chapter 551 of the Texas Government Code, Section 551.071, to seek consultation with the City Attorney regarding pending and contemplated litigations. Council adjourened into executive session at 10:40 p.m. Council returned to open session at 10:50 p.m. Agenda Item #2-B, Action Necessary/Executive Session No action was taken as the result of the executive session. Due to the unique circumstances involving this particular development, noting that the gates are set 300' back fi.om the right-of-way on the property, Council believes that there is sufficient justification in granting preapproval for gating this development. Motion was made granting the preapproval, to comply with Section 5.04 of the Ordinance No. 483, as of this date, October 20, 1998, noting that Council will allow the street to be purchased from the City at a reasonable cost. Council will resale the public right-of-way to property owners for $200 per lot if done within the next twenty-four (24) months; and after that the cost will escalate at $100 per year per lot. Also, with the requirement that the developer will place deed restrictions on the property that state that the gates will be open during day light and closed only at night; also, require that there be signs detailing the tree ordinance in English and Spanish scattered throughout the development; subject to the Plat Review Summary No. 2, dated October 16, 1998; and as per the recommendations of the Planning and Zoning Commission. Motion: Kendall Second: Fawks Ayes: Kendall, Fawks, Edmondson, Evans, Stacy Nays: None Abstention: Martin Approved: 5-0-1 vote Agenda Item No. 7-L. Ordinance No. 723, 2~a reading, Amending Chapter 2~ Article V, Section 2-216 through 2-223 of the Southlake City Code, Relating to Southlake Youth Advisory Commission Curtis Hawk, City Manager, presented Ordinance No. 723, 2na reading, amending Chapter 2, Article V, Section 2-216 through 2-223 of the Southlake City Code, relating to Regular City Council Meeting Minutes of October 20, 1998 Page 22 of 27 Southlake Youth Advisory Commission, changing the name, relating to appointments of the members, and relating to membership. He pointed out that a change needs to be made in Section 2-219 (page 7-3) adding, junior high, after high school. PUBLIC HEARING: No comments were made during the public hearing. Motion was made to approve Ordinance No.723, 2nd reading. Motion: Edmondson Second: Martin Ayes: Edmondson, Martin, Evans, Kendall, Stacy Nays: None Approved: 5-0 vote (Councilmember Gary Fawks was out of the room and did not vote) Agenda Item #7-M~ Ordinance No. 716, 2na reading, Establishing a Library Board Kevin Hugman, Director of Community Services, presented for second reading, Ordinance No. 716, establishing a Library Board. Mr. Hugman stated in creating this ordinance, staff reviewed library board ordinances from the following cities: Grapevine, Keller, Denton, North Richland Hills, and Fort Worth. The ordinance is also modeled aRer the Southlake Park Board ordinance. Hugman stated, this week, staff also obtained copies of ordinances from Hurst, Euless, Mansfteld, Arlington, Coppell and Flower Mound. A matrix was developed to compare the duties and responsibilities of library boards in the various cities with the ordinance drafted for the City Council. PUBLIC HEARING: No comments were made during the public hearing. Motion was made to approve Ordinance No. 716, 2nd reading. Motion: Martin Second: Edmondson Ayes: Martin, Edmondson, Evans, Fawks, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #7-N, Ordinance No. 721, 2"d reading, Changing Street Names Bob Whitehead, Director of Public Works, led the discussion regarding Ordinance No. 721, 2na reading, changing the street names of Rainbow Drive to Rainbow Street and Windsor Drive to Chatham Court. Mr. Whitehead stated Paul Spain of Terra Companies has requested the street names be changed. The plat for Cambridge Place Phase I and the proposed plat for Phase II are inconsistent concerning the names of these two streets. Additionally, Windsor Drive is being changed as there is another street within the City with a similar name. PUBLIC HEARING: No comments were made during the public hearing. Regular City Council Meeting Minutes of October 20, 1998 Page 23 of 27 Motion was made to approve Ordinance No. 721, 2na reading. Motion: Fawks Second: Martin Ayes: Fawks, Martin, Edmondson, Evans, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #10-By Authorization to Advertise for Bids for Repairs to Streets in Timarron~ Phase I Bob Whitehead, Director of Public Works, stated during the October 6, 1998, City Council meeting, the City Council authorized the advertisement of bids for repair of concrete streets on Creekway Bend. This slurry grouting treatment on Creekway Bend appears to have stopped any additional settling of the pavement. As stipulated previously, the cost for this project was estimated at $331,000 leaving only $165,986 in the project budget. The total cost for repair of the remaining sections is estimated at $635,000 if each portion of the project is bid separately as recommended last year by the City Council. The separation of the bids was recommended to ensure the reliability of the grouting process. Since this has proven successful in the Creekway Bend portion, the City Council may direct staff to move fonvard and bid the grouting and street rehabilitation for Bent Creek Drive, Bent Trail Drive, and Bent Trail Circle, as a single project. We believe this approach will reduce the estimated costs within a range of $50,000 to $100,000. Staff is currently reviewing the CIP budget to determine which project could be delayed until the next issuance of CIP bonds in early 1999, in order to provide funds for this proposed (combined) project. Councilmember Debra Edmondson stated to complete all the street failures that are referenced in the report by WJE, it would be $866,000. She asked, if there is an issue with the sewer contractor and the developer picking up a portion of these costs. She asked the City Manager if he has any report on this issue. Mr. Hawk commented that does not have any confirmation that either one has agreed to do that. He stated he talked with Timarron developers and they indicated that there are some things that they would be willing to do. He stated he talked with Wright Development and he does not feel there is anything that they would be willing to do. What staff recommended is that the City go ahead with this project, recognizing that there may be an oppommity to recover some dollars. Councilmember Edmondson asked the City Manager, unless the majority of Council objects, to send a form letter to both parties asking them if they are interested in picking up a third of the cost. Councilmember Gary Fawks stated he supports taking a very aggressive stance on this issue. He said, "We need to be serious about our position and if it takes additional steps to sending out a letter, it is appropriate." Councilmember Edmondson stated she feels very strongly and if anyone has read the conclusion to the report, it is pretty clear what happened. She stated she feels very strongly that the City Regular City Council Meeting Minutes of October 20, 1998 Page 24 of 27 should not have to bear the burden on the repairs on these particular streets alone. Councilmember Fawks stated he agrees with Ms. Edmondson. Ms. Edmondson commented on some of the issues that were outlined in the report from WJE. Councilmember Gary Fawks stated he wants to see the city bid the entire package. At the very least we have got to get the grouting done before we incur any further damage. Mayor Stacy expressed concern over the City bidding the entire package and then not getting the cooperation to pay for it. Curtis Hawk suggested that we go ahead the bid the entire package. When the bids come back, they we will see if we have to shift some things around to get it done. "Then we will deal with the other issue separately and let staff deal with the other issues." Motion was made to authorize staff to advertise for bids for the grouting of sanitary sewer pipe embedment and repair of concrete street pavement for Bent Creek Drive, Bent Trail Drive, and Bent Trail Circle in Timarron, Phase I. Motion: Fawks Second: Martin Ayes: Fawks, Martin, Edmondson, Evans, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item # 10-C, Authorization to Advertise for bids for a Traffic Signal at F.M. 1709 and Central Avenue (Town Square). Curtis Hawk, City Manager, stated the provisions in the developer agreement for Town Square stipulates a cost sharing between the developer and the City for the traffic signal at Southlake Boulevard and Central Avenue. The agreement calls for a 50/50 split with the City not to exceed $40,000. The cost for the traffic light will be paid for by TIF funds, as adopted by the TIF financing plan. He stated, the design work is completed (paid by the developer) and the City is now ready to advertise for bids. As indicated by Ron Harper, the project needs to be publicly bid because this project is outside the typical reimbursement agreement as identified in the TIF plan. Since the City is sharing the costs for the traffic light, the City is responsible for obtaining bids for the project. Mr. Hawk stated staff would like to advertise this project in conjunction with the traffic light at Southlake Boulevard and Commerce Street to take advantage of potential lower unit pricing. The original estimate for this project was $80,000 to $90,000. The City will possibly reduce the overall costs of the project by reusing some of the materials from the existing traffic light at Carroll Avenue and Southlake Boulevard. Councilmember Debra Edmondson stated she is concerned about adding another traffic signal on F.M. 1709. Regular City Council Meeting Minutes of October 20, 1998 Page 25 of 27 Motion was made to authorize staff to advertise for bids for the traffic signal at F.M. 1709 and Central Avenue (Town Square). Motion: Martin Second: Evans Ayes: Martin, Evans, Stacy Nays: Fawks, Kendall, Edmondson Denied 3-3 vote Agenda Item #10-D, Sign Variance Appeal for Crestwood Office Building Billy Campbell, Director of Public Safety, stated Crestwood Park Development has placed two requests regarding signage for the office building. The first request is a variance to the sign ordinance for the sign already in place at their office building located at the comer of Southlake Boulevard and Carroll Avenue (Ebby Halliday). The existing monument sign was erected early this summer without a permit. The sign meets the size and height requirements, but it does not meet the setback requirement with placement only two feet north of the right-of-way. As a result, the sign is located too close to the underground utilities with a sanitary sewer line less than five feet away from the sign and an electrical line located between the sign and the sewer. The second request is to erect a wall sign, which is not defined in the Sign Ordinance. This proposed wall sign will replace all the signage currently placed on the building itself. The wall will be placed approximately fifteen feet south of the building and be equal to the length of the building. The height of the wall will be three feet high, except the sign panels which would project an additional one and one-half foot higher. This wall sign will advertise the tenants located within the office building and the existing sign will state the office building name and address. Mayor Stacy asked the developer to work with staff to try and come to some conclusions on this request. Agenda Item #2-A, Executive Session Mayor Rick Stacy advised the audience that the City Council wouM be going back into executive session pursuant to the Open Meetings Act, Chapter 551 of the Texas Government Code, Sections 551.071, 551.072, 551.073, 551.074, 551.075, 551.076 to seek consultation with the City Attorney regarding pending and contemplated litigations, to deliberate the purchase, exchange, lease or sale of real property, a negotiated contract for a prospective gift or donation to the City, to deliberate the appointment and evaluation of public officials, to confer with one or more employees to receive information from or to question the employees, and to deliberate the deployment of specific occasions for implementation of security personnel or devices. Council adjourned to executive session at 11:45 p.m. Council returned to open session at 1:17 a.m. Regular City Council Meeting Minutes of October 20, 1998 Page 26 of 27 Agenda Item #2-B, Action Necessary/Executive Session No action was taken as the result of the executive session. Agenda Item #10-D, Continued Motion was made to table the request for a variance to the sign ordinance for Crestwood Office Building, time certain November 3, 1998. Motion: Fawks Second: Martin Ayes: Fawks, Martin, Edmondson, Evans, Kendall, Stacy Nays: None Approved: 6-0 vote Agenda Item #12, Adjournment The Regular City Council meeting was adjourned by Mayor Rick Stacy at 1:18 a.m. ATTEST: Shxidra L. LeGrand City Secretary M:\WP-FILESWI1NUTES\CC-Min- 10-20-98.doc\si Regular City Council Meeting Minutes of October 20, 1998 Page 27 of 27 CONFLICT OF INTEREST AFFIDAVIT THE STATE OF TEXAS § COUNTY OF ti I, 5e0,71r, j'✓l fZT 1 JJ as a member of the Soo T tfj6 di e0 Ci i`rake this affidavit and hereby on oath state the following: I have a substantial interest in a business entity or real property as defined in Chapter 171, Texas Local Government Code, and a vote is to be taken or a decision is to be made that will have a special economic effect on this business entity or real property. p1 The agenda item affecting this business entity or real property is: 'PO ITi. -- /1002-ex-se h� yA1u COMPLETE (A) or (B): (A) The business entity is (name); or (B) The real property is located at: cy/ C - Poc./& fe_40. I have a substantial interest for the following reasons: (check all which are applicable) Ownership of 10% or more of the voting stock or shares of the business entity. Ownership of 10% or more or $15,000 or more of the fair market value of the business entity. Funds received from the business entity exceed 10% of gross income for the previous year. Real property is involved and I have an equitable or legal ownership of the property with a fair market value of at least $2,500. A relative of mine has a substantial interest in the business entity or real property that would be affected by a decision of the public body of which I am a member. Upon filing of this affidavit with the City Secretary, I affirm that I will abstain from voting on any decision involving this business entity or real property and from any further participation on this matter by discussion or debate. Signed this 20 day of COB , 19 ?A Signature of Official The State of +, _ 1 ,./ § County of i y , § j e me )4 44444-11---"1 on this day personally appeared / I t t 1 known to me (or proved to me on the oath of t , or through (description of identity card or other document) to be the per�dn whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. Given under my hand and seal of office this AD day of 'E1 b.4) , A.D. /4 . (SEAL) p,�PPV P`/e SANDRA L. LeGRAND * �� * Noiary Public / f‘. a STATE OF TEXAS 4 11 - c017 rn C3tnm. Exp 62ti4/2001 ary 'ublic in and for the State of Texas H:\ LIBRARY\Municipal\MERGE\ConflictofinterestAffidavit.wpd City of Southlake, Texas MEMORANDUM October 15, 1998 TO: Curtis E. Hawk, City Manager FROM: Karen P. Gandy, Zoning Administrator SUBJECT: Second Reading, Ordinance No. 480 -BB, Revising Certain Maximum Lot Coverage Requirements and Establishing Maximum Impervious Coverage Requirements Attached is Draft Three of Ordinance No. 480 -BB. No changes have been made since first reading which was approved on consent with a (6 -1) vote. This draft reflects the final recommendations of the Impervious Coverage Work Group and the Planning and Zoning Commission. The Commission recommended approval with a (7 -0) vote at their September 3, 1998 meeting. Recall that the work group was comprised of Councilpersons Fawks (Chair), Martin, and Edmondson; Commissioners Creighton, Murphy, and LeVrier; Developers Wilkinson, McMahan, Drews, Yetts, Kuhlman, Wright, Schelling, and Myers and staff members Gandy and Last. Discussions on this topic began last summer in combination with residential adjacency. Five meetings, beginning in May, 1998, were specifically devoted to impervious coverage (although the developers held several additional meetings to work on their proposal). This ordinance amendment proposes changes to the maximum lot coverage regulations for the MF -2, B -1, B -2, and HC zoning districts. It proposes decreasing MF -2's maximum lot coverage from 50% to 40% and establishes 50% maximum lot coverage for the remaining three districts. Previously, the B -1, B -2, and HC districts' maximum lot coverage was determined by the Commission and the Council at the time of site plan approval. Ordinance 480 -BB also establishes new regulations for maximum impervious coverage in all non - single family residential districts. Also provided within the amendment is a sliding scale whereby all non - single family residentially -zoned properties (except I -1 and I -2) may "earn" additional impervious coverage (+ 5% max.) if additional bufferyard depths, larger parking islands, or increased interior landscaping areas are provided in the front or sides of the proposed buildings. Maximum impervious coverages for properties zoned I -1 and I -2 are determined by the geographic location of the property. Typically, maximum impervious coverage for industrial properties shall not exceed eighty percent (80 %) of the total lot area; unless the property is designated as Industrial on the currently adopted Land Use Plan and is bounded by East Continental Blvd. and the proposed S. Kimball Avenue extension on the North; Brumlow Avenue on the West, and S.H. 26 on the South, then the maximum impervious coverage shall not exceed eighty -five (85 %) of the total lot area. Recall that the work group's objective for drafting this amendment was to preserve natural areas and/or create areas of open space in an effort 1) to lessen the impacts of parking areas, 2) to increase the survivability of existing native trees by keeping the critical root zone open for water and gas exchange, and 3) to lessen the impact of drainage run -off City of Southlake, Texas Three (3) definitions which are pertinent to this discussion are as follows: "IMPERVIOUS COVERAGE - the combined area occupied by all principal and accessory buildings, structures, and paved parking, sidewalks, and driveway areas." LOT COVERAGE - the percentage of the total area of a lot occupied by the base (first story or floor) of buildings located on the lot. OPEN SPACE - an area of a lot either left in a natural state or receiving permeable vegetative landscape treatment (e.g., ponds and lakes, either natural or manmade, and water features, grass, shrubs, flowers, trees, ground cover, etc.). (As approved with the adoption of Ordinance No. 480 -Y)" Should you have questions regarding any of the above of the attachments, please call me at (817) 481 -5581, extension 743. KPG : :::, ......:...........::.::::... ........ ............::.:...........:.:.:........::.........:.........:. ............:.::::::::::::::.:. . ::::..:..::::::::..:.:.:::::: li:::.::::::::...:::::::.: :::::::::::: :.................. ... i to ::. > J verag,°..iiii .... # iiii '' >` ?» fillig tii1:I ?. ><: ::: - i: ii:i:: i - ::!! { ii } } } }ii:4 } } ........ w. :3 , ;� . �7. •.•.44urwro � � .f�J• ?'•:4c. I f '•"E�l. •r. <..:'t�f:::::.,,', -w /•:atn;. •'.•'.':iiS:ri;;fi { {• }:>_:::::4 . ............. ................... ......................... •: r:::::.�::: rr:::.v v •.4 .. .. . ..n.. .. � :n 4 ! .. 4 . ; t ,n ,.:t•: tv,' y ......� :::: � ..;. } . , n , ;:•; { ' . }i w: :::. :,v: :;.... v �n ' v�:� �" • : .'.•.nw:: ... vv4.}: C �: +� ..:!•.J .. :. /'y.. 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No Recom. 40 ::MP.W. s >`. > > :' 50 (40) 50 50 ( ) Na Recom. No Recom. 50 > € 1:> : :::: ":: 50 65 65 70 75 65 50 65 ... -- 65 70 75 65 50 65 70 75 80 70 60 ( ) 65 75 80 N/A 75 ": 4 ::: >:: >:::`.::`'> ::: 60 70 75 80 N/A 75 P&Z/CC Anal „a at 65 70 70 75 70 ti...,.. .,f sit., rla.i (50) P &Z/CC A..al >: >B'.- �:<z' :::':> >. „a t 65 70 70 75 70 r ti .,,., .,f S;t PI if (50) f\.. C,...— 1 70 Cm, of Zv.....tl, (50) Area At Area Bt 50 70 80 80 85 `:?Z�;�€:.:::z: :::::::::::: ::::::::::::::: Area A: 80 Area B: 85 50 7 0 80 N / A 85 Area A: 80 Area B: 85 Addthiot.4]. ::::;:::: N/A N/A N/A In front buferyards, require For all noted districts : tiftVO landscape berms and double except I -1 and I -2: the number of canopy trees. Variances may be granted to increase a the impervious coverage g up to a maximum of 0 5 /o if the following criteria is met: for each 1 °° of impervious granted, a covera g the applicant shall add an additional 2 feet to the depth of the required P q bufferyard(s) adjacent �' to any street and an additional 1 foot of t required depth to the red r i P q sideand rear buff ands * Area 1: The property adjacent to Southlake Blvd., Highway 114, Davis Blvd. and East of Carroll Ave. between Southlake Blvd. & Hwy 114. ' Area 2: All other property. t Area A: The areas more likely to have residential traffic nearby. $ Area B: Property shown on the Land Use Plan as Industrial: East of Brumlow and South of Continental Blvd. and a line extending East to Hwy 26. "7B -3 w O X'" p O O 0 0 0 0 0 0 O v en en en U 11°211111M re 4 r, w - u QS 7•�+�.• c � O N Q G L " ^ N srs w o — N S crl N N ON N H d O w _ to G 7 s. �. 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P c c y cd W 2 a: U 0 0 U 0 U 0 W W �- x V] v) 0 (] 3 3 3 0 118 - 5 . , . City of Southlake, Texas MEMORANDUM October 16. 1998 TO: Curtis E. Hawk, City Manager FROM: Bob Whitehead, Director of Public Works SUBJECT: Authorization to advertise for bids for the grouting of sanitary sewer pipe embedment and repair of concrete street pavement for Bent Creek Drive, Bent Trail Drive. and Bent Trail Circle in Timarron, Phase I Background In 1994, street failures were observed in the Phase I section of Timarron. Over the course of approximately 12 months discussions were held between staff and the contractors to determine the possible causes of failures. In 1995, Wiss, Janney, Elstner Associates, Inc. was awarded a contract to investigate the possible causes of the failures with Alpha Testing doing the actual testing. In May 1996, a report was issued by Wiss, Janney, Elstner Associates, Inc. with the findings and recommended repairs. The project was authorized by City Council for implementation in the 96 -97 budget, which allocated $650,000.00 for the entire project. The project, which originally included grouting around the sewer pipe and replacing or repairing the concrete streets, was first bid in June 1997, with a low bid of $682,024.00 by Hayward Baker Co. Council chose to reject all bids for the project and divide it into phases to spread the cost over several years. As a result, the project was divided in the following phases and, again, included grouting. around the sewer and repairing or replacing the concrete streets: Phase I- Creekway Bend Phase II- Bent Creek Drive Phase III- Bent Creek Drive (West), Bent Trail Drive, Bent Trail Circle Bids for Phase I of the project were advertised on August 24 and 31, 1997. Bids were publicly opened and read aloud on September 15, 1997. The low bidder for this project was Denver Grouting, with a low base bid of $436,440.30. This bid was rejected by Council during the October 7, 1997 Regular City Council Meeting. Council then directed staff to bid the slurry grouting portion of the project only due to concerns of the reliability of the grouting and possible damage to replaced pavement. Essentially, Council wanted to y see if the grouting would be successful in supporting the existing pavement prior to its replacement. 10B -1 Staff bid the three phases of the project for the slurry grouting only. The project was advertised on October 19 and 26, 1997. Bids were publicly opened and read aloud on November 5, 1997. Council awarded the contract to Denver Grouting in the amount of $153,013.61 for the grouting of Creekway Bend, or Phase I, in the Timarron Bent Creek subdivision. The project was completed in February of 1998 and, to date, the grouting that has been completed appears to have stopped any additional settling of the pavement. Currently, the project budget has $496,986 remaining. Council authorized the advertisement for bids for the repair of concrete streets on Creekway Bend during the October 6, 1998. The estimated cost of this project is $331,000, leaving $165,986 in the project account. The estimated cost of the additional street sections is as follows: Bent Creek Drive A. Grouting- $180,000 B. Street rehabilitation- $170,000 Bent Creek Drive (West), Bent Trail Drive, Bent Trail Circle A. Grouting- $170,000 B. Street rehabilitation- $115,000 The total cost for repair of the remaining sections is $635,000, which reflects bidding each portion of the project separately. Should Council decide to bid all street repairs as a single project the costs should be reduced due to the economy of scale, possibly in the range of $50,000 to $100,000. This economy of scale should be reflected in the proposed bids received by staff. Funding /Fiscal Impact Staff is reviewing the CIP budget to determine which project could be delayed to provide funds for this proposed project. Recommendation Staff seeks Council authorization to advertise for bids for the grouting of sanitary sewer pipe embedment and repair of concrete street pavement for Bent Creek Drive, Bent Trail Drive, and Bent Trail Circle in Timarron, Phase I. Please place this item on the October 20, 1998 Regular City Council Agenda for City Council review and consideration. BW /cre Attachment: Map Exhibit 10B -2 MIRON WATER TOWER SURVEY Design Preference (please check all that apply) ❑ I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): Cif The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. ❑ I prefer another color (please specify): Comments About Design or Color 1J f u ra / Color 4-o Wen a12. 1 fv c,>ooded a wet, ��ncSl M orn c .S Address: /.,;/..S / ores-- h%' /r Or. MIRON WATER TOWER SURVEY Design Preference (please check all that apply) VI ., I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): ❑ The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. I prefer another color (please specify): ��C , El,. Comments About Design or Color P -V,97_: CA- d ES t(, -f-o n !,t, i 10-W t $r'N. - ad '4-0 r+ pnie)i5- 1 icaS d 00--lens f ez kvk Th-rz ch rl- c-t- Address: i 3og ) / IU6S 14-00 a MIRON WATER TOWER SURVEY Design Preference (please check all that apply) I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): ❑ The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. I prefer another color (please specify): p ed Comments About Design or Color Address: / S '_s /1/ • MIRON WATER TOWER SURVEY Design Preference (please check all that apply) ki I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): ❑ The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. • Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. I prefer another color (please specify): at - J eJ Comments About Design or Color Z -ifu ir e_A..4_) . 02001--e cam. I:244 ? 0A-r j 1 = l�v c2( a� d 5 , n/,- Cos-' S Add s: cL / - / 6a / i54.1J MIRON WATER TOWER SURVEY Design Preference (please check all that apply) Ei 1 prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): ❑ The decoration should be visible only from Southlake Blvd., not from any residence. ❑ it doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference Cir I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. ❑ I prefer another color (please specify): Comments About Design or Color Wo u.I U 11 ke more 4i rm. 4o c ons ider- $he idea.. oo Sorr+c +hi r15 as 1 61 9h4-house idea, Address: 12 1 CInc3s 3rO °k b rive MIRON WATER TOWER SURVEY Design Preference (please check all that apply) ❑ I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): ❑ The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. ❑ I prefer another color (please specify): Comments About Design or Color < `Y . ! ! 1, ! 1 iii. .� 0. .4 .1_ 4. +'1 N1 O. ev wQA & aitthimAdce, 4D Ikkittit, 4)LPAO_, U A - 1-KumcLQM , 4 -lung L (q)--kuLAQ,amfugt-DoLeal ..fitt Address: 1 (03 Ytita� ) invivv\J r . r k-th-erta-&-e, WALC/t. L-ciw-eztiensti 6 4 1 -P64)-4 MIRON WATER TOWER SURVEY Design Preference (please check all that apply) ❑ I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): a re The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference C( I prefer a neutral color for the bowl that approximates the color of the bas s n an light brown) providing as little contrast between the base an bowl as possible. ❑ I prefer another color (please specify): Comments About Design or Color 7)9/1/ cm--VX37 /&;e5 j7,; (e,0 n 7 �•'> • S v7 6_,71 Off//l<- /iL k..,.i 4 j d ti� y /-,2v,-) /7 7 - 69g- a3n2) 5 Gift Address: / 2 / Z et 04 / 6 zs7 - s6/Y MIRON WATER TOWER SURVEY Design Preference (please check all that apply) ❑ I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. 3 I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): 5 The decoration should be visibl only rom Southlake Blvd., not from any residence. ❑ it doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference Ei I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, Tight brown) providing as little contrast between the base and bowl as possible. ❑ I prefer another color (please specify): Comments About Design or Color Address: sa.0 4- izlotwh a h '10 2( MIRON WATER TOWER SURVEY Design Preference (please check all that apply) ❑ I prefer architectural enhancements to the bowl of the water tower through steel ornamentation. ❑ 1 prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, Tight brown) providing as little contrast between the base and bowl as possible. ❑ I prefer another color (please specify): Comments About Design or Color o us- , Address: 13t1) kj - r on 3' C± MIRON WATER TOWER SURVEY Design Preference (please check all that apply) Li I prefer architectural enhancem nts to the bowl of the water tower through steel ornamentation. Se. 6 &�d+v ) ❑ I prefer a bowl without steel ornamentation but decorated as follows (for example, city name or logo): ❑ The decoration should be visible only from Southlake Blvd., not from any residence. ❑ It doesn't matter whether or not the decoration is visible from residences. ❑ I prefer a plain bowl without steel ornamentation or painted decoration of any kind. Color Preference ❑ I prefer a neutral color for the bowl that approximates the color of the base (sand, tan, light brown) providing as little contrast between the base and bowl as possible. ❑ I prefer another color (please specify): C - nts Abo t, esi n or Col r �1- 1 1/. 1 - e >11 '0�i 1 �� ? �: �►tr /�: 4 I / ff I � / L a ( e S) )-e.S d A , S r '?"Qv5 - h Co!' ._, til.5 a vrkb ed ai' -I+a cowl? , ► Q��o �n�n ho�t.e3 -F -�ivh � �1-e�� d�/e�� Address: ! v 2 1 r�' rJe -F M O(t4 r(r-e— CITY OF SOUTHLAKE, TEXAS (Tarrant and Denton Counties) $4,275,000 TAX NOTES, SERIES 1998 Sealed Bids Due Tuesday, October 20, 1998, at 3:00 PM, CDT c NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $4,275,000 CITY OF SOUTHLAICE, TEXAS (Tarrant and Denton Counties) TAX NOTES, SERIES 1998 Sealed Bids Due October 20, 1998 at 3:00 P.M., CDT THE NOTES WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE NOTES OFFERED FOR SALE AT COMPETITIVE BIDDING . . . The City of Southlake, Texas (the "City") is offering for sale its $4,275,000 Tax Notes, Series 1998 (the "Notes "). ADDRESS OF BIDS ... Sealed bids, plainly marked "Bid for Notes ", should be addressed to "Mayor and City Council, City of Southlake, Texas", and delivered to the office of the Financial Advisor, First Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas, prior to 3:00 P.M., CDT, on the date of the bid opening. All bids must be submitted on the Official Bid Form, without alteration or interlineation. BIDS BY TELEPHONE OR FACSIMILE ... Bidders must submit SIGNED Official Bid Forms to James S. Sabonis, First Southwest Company, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (214) 953 -4037, between 2:30 P.M. and 3:00 P.M. Fax bids must be received between 2:15 P.M. and 2:45 P.M., on the date of the sale at (214) 953 -4050, attention James S. Sabonis. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. First Southwest Company assumes no responsibility or liability with respect to any irregularities associated with the submission of bids if telephone or fax options are exercised. PLACE AND TIME OF BID OPENING ... The bids for the Notes will be publicly opened and read in the office of the Financial Advisor at 3:00 P.M., CDT, Tuesday, October 20, 1998. AwARD OF THE NOTES ... The City Council will take action to award the Notes (or reject all bids) at a meeting scheduled to convene at 7:00 P.M., CDT, on the date of the bid opening, and adopt an ordinance authorizing the Notes and approving the Official Statement (the "Ordinance "). THE NOTES DESCRIPTION ... The Notes will be dated October 15, 1998 (the "Notes Date "). Interest will accrue from the Notes Date and will be due and payable on August 15, 1999 and each February 15 and August 15 thereafter until the earlier of maturity or prior redemption. The Notes will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Notes will mature on February 15, in each year as follows: MATURITY SCHEDULE Principal Year Amount 2000 $ 740,000 2001 830,000 2002 865,000 2003 900,000 2004 940,000 BOOK -ENTRY -ONLY SYSTEM . . . The City intends to utilize the Book -Entry-Only System of The Depository Trust Company ( "DTC "). See "The Notes - Book -Entry-Only System" in the Official Statement. REDEMPTION ... The Notes are not optional for prior payment. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar shall be Chase Bank of Texas, N.A., Dallas, Texas (see "The Notes - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT ... The Notes are special obligations of the City payable, both as to principal and interest, from the proceeds of an ad valorem tax levied, within the limits prescribed by law, on all taxable property within the City. The City's Home Rule Charter currently limits the total tax rate to $2.50 per $100 of Assessed Valuation for all purposes of the City, including the payment of debt. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ... The Notes will be sold in one block on an "All or None" basis, and at a price of not less than 99% of their par value plus accrued interest from date of the Notes to the date of delivery of the Notes. Bidders are invited to name the rate(s) of interest to be borne by the Notes, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 3% in rate. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Notes of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. BASIS FOR AWARD ... The sale of the Notes will be awarded to the bidder making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Note Date of all debt service payments on the Notes on the basis of semi - annual compounding, produces an amount equal to the sum of the par value of the Notes plus any premium bid (but not interest accrued from the Note Date to the date of their delivery). In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the intended bid. GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of Southlake, Texas", in the amount of $92,000, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Purchaser who shall be named in such instructions. The Good Faith Deposit of the Purchaser will be returned to the Purchaser upon payment for the Notes. No interest will be allowed on the Good Faith Deposit. In the event the Purchaser should fail or refuse to take up and pay for the Notes in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Notes has been made. DELIVERY OF THE NOTES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Notes, but neither the failure to print or type such number on any Note nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Notes in accordance with the terms of this Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Notes shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Purchaser. DELIVERY OF NOTES ... Initial Delivery will be accomplished by the issuance of one Initial Note (also called the "Certificate" or "Notes "), either in typed or printed form, in the aggregate principal amount of $4,275,000 payable in stated installments to the Purchaser, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Note, it shall be immediately cancelled and one definitive Note for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book -Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Notes must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Purchaser will be given six business days' notice of the time fixed for delivery of the Notes. It is anticipated that delivery of the Notes can be made on or about November 17, 1998, and it is understood and agreed that the Purchaser will accept delivery and make payment for the Notes by 10:00 A.M., CST, on November 17, 1998, or thereafter on the date the Note is tendered for delivery, up to and including December 18, 1998. If for any reason the City is unable to make delivery on or before December 18, 1998, the City shall immediately contact the Purchaser and offer to allow the Purchaser to extend its offer for an additional thirty days. If the Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Notes, provided such failure is due to circumstances beyond the City's reasonable control. CONDrrIONS TO DELIVERY ... The obligation of the Purchaser to take up and pay for the Notes is subject to the Purchaser's receipt of (a) the legal opinion of Fulbright & Jaworski L.L.P., Dallas, Texas, Bond Counsel for the City ( "Bond Counsel "), (b) the no- litigation note, and (c) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exemption of interest on the Notes from the gross income of their owners, the Purchaser will be required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Notes) a certification as to ii their "issue price" substantially in the form and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Notes for sale, such notes may be modified in a manner approved by the City. In no event will the City fail to deliver the Notes as a result of the Initial Purchaser's inability to sell a substantial amount of the Notes at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a note by the date of delivery of the Notes, if its bid is accepted by the City. It will be the responsibility of the Purchaser to institute such syndicate reporting requirements to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. LEGAL OPINIONS ... The Notes are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Notes is subject to the receipt by the Purchaser of opinions of Bond Counsel, to the effect that the Notes are valid and binding obligations of the City and that the interest on the Notes will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATEMENT ... At the time of payment for and Initial Delivery of the Notes, the City will execute and deliver to the Purchaser a note in the form set forth in the Official Statement. CHANGE IN TAX EXEMPT STATUS .. .At any time before the Notes are tendered for delivery, the Purchaser may withdraw its bid if the interest received by private holders on obligations of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Notes. The Financial Advisor's fee for services rendered with respect to the sale of the Notes is contingent upon the issuance and delivery of the Notes. First Southwest Company has agreed, in its Financial Advisory contract, not to bid for the Notes, either independently or as a member of a syndicate organized to submit a bid for the Notes. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Notes, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. BLUE SKY LAWS ... By submission of its bid, the Purchaser represents that the sale of the Notes in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Purchaser will register the Notes in accordance with the securities law of the states in which the Notes are offered or sold. The City agrees to cooperate with the Purchaser, at the Purchaser's written request and expense, in registering the Notes or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL ... This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Notes, but is merely notice of the sale of the Notes. The offer to sell the Notes is being made by means of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Notes. ISSUANCE OF ADDITIONAL DEBT ... The City anticipates the issuance of approximately $18 million of general obligation debt within the next twelve months. RATINGS ... The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors Service, Inc. ( "Moody's ") and "A +" by Standard & Poor's Ratings Services, a Division of The McGraw -Hill Companies, Inc. ( "S &P "). The City also has various issues outstanding which are rated "Aaa" by Moody's and "AAA" by S &P through insurance by various commercial insurance companies. Application for contract ratings on this issue has been made to both Moody's and S &P. The results of their determinations will be provided as soon as possible. MUNICIPAL BOND INSURANCE ... In the event the Notes are qualified for municipal bond insurance, and the Purchaser desires to purchase such insurance, the cost therefor will be paid by the Purchaser. Any fees to be paid to the rating agencies as a result of said insurance will be paid by the City. It will be the responsibility of the Purchaser to disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the Notes. THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2 . The City has prepared the accompanying Official Statement and, for the limited purpose of complying with SEC Rule 15c2 -12, deems such Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Notes. The City has entered into a previous continuing disclosure undertakings as specified in SEC Rule 15c2- 12(b)(5)(i) and, accordingly, has not failed to comply with any such undertaking. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Official Statement. iii The City will furnish to the Purchaser, or Purchasers, acting through a designated senior representative, in accordance with instructions received from the Purchaser(s), within seven (7) business days from the sale date an aggregate of 100 copies of the Official Statement including a like number of copies of any Supplement(s) reflecting interest rates and other terms relating to the initial reoffering of the Notes. The cost of a reprinted Official Statement, if the Purchaser(s) shall so elect, and the cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Purchaser(s). The Purchaser(s) shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT ... The City will agree in the Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule 15c2 -12, as described in the Official Statement under "Continuing Disclosure of Information ". The Purchaser(s') obligation to accept and pay for the Notes is conditioned upon delivery to the Purchaser(s) or (their) agent of a certified copy of the Ordinance containing the agreement described under such heading. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT ... A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, as available over and above the normal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 1700 Pacific Avenue, Suite 500, Dallas, Texas 75201, Financial Advisor to the City. The City Council has approved the form and content of the Notice of Sale and Bidding Instructions, the Official Bid Form and Official Statement, and authorized the use thereof in its initial offering of the Notes. On the date of the sale, the City Council will, in the Ordinance authorizing the issuance of the Notes, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Notes by the Purchaser. RICK STACY Mayor ATTEST: City of Southlake, Texas SANDRA L. LeGRAND City Secretary October 7, 1998 iv OFFICIAL BID FORM Honorable Mayor and City Council City of Southlake, Texas October 20, 1998 Members of the City Council: Reference is made to your Official Statement and Notice of Sale and Bidding Instructions, dated October 7. 1998 of $4,275,000 CITY OF SOUTHLAKE, TAX NOTES, SERIES 1998, both of which constitute a part hereof. For your legally issued Bonds, as described in said Notice of Sale and Bidding Instructions and Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ bearing interest as follows: for bonds maturing and Principal Interest Maturity Amount Rate 2000 $ 740,000 2001 830,000 2002 865,000 2003 900,000 2004 940,000 Our calculation (which is not a part of this bid) of the interest cost from the above is: Total Interest Cost We are having the Notes of the following maturities insure at a premium of $ said premium to be paid by the Purcha er a Any tees to be paid to the rating agencies as a result of said insurance will be paid by the C ity. The Initial Notes shall be registered in the name of , which Notes be cancelled by the Paying Agent/Registrar. The Notes will then be registered in the name of Cede & (DTC s y partnership nominee), under the Book - Entry-Only System. A bank cashier's check or certified check of the which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to in the amount of $ the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Notice of Sale and Bidding Instructions. We agree to accept delivery of the Notes utilizing the Book -Entry-Only System through DTC and make payment for the Initial Notes in immediately available funds in the Corporate Trust Division, Chase Bank of Texas, N.A., Dallas, Texas, not later than 10:00 A.M., CST, on November 17, 1998, or thereafter on the date the Notes are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Notes to complete the DTC Eligibility Questionnaire. relating t the agrees to "issue price' of the Notes in the execute, and deliver rm andto the effect City, ompanying the Not Notice Sale and Bidding nI structions, such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Respectfully submitted, By Authorized Representative ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Southlake, Texas, subject to and in accordance with the Notice of Sale and Bidding Instructions, this the 20th day of October, 1998. ATTEST: Mayor City of Southlake, Texas City Secretary ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of CITY OF SOUTHLAKE, TEXAS, TAX NOTES, SERIES 1998 (the "Notes "), issued in aggregate principal amount of $4,275,000, as follows: 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Notes from the City of Southlake, Texas (the "Issuer ") at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to the public of the Notes of each maturity at the respective prices set forth below. 3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the Notes of each maturity at which a substantial amount of the Notes of such maturity was sold to the public is as set forth below: Principal Offering Amount Year of Price Maturing Maturity ( %/Yield) $ 740,000 2000 830,000 2001 865,000 2002 900,000 2003 940,000 2004 4. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased bond insurance for the Notes. The bond insurance, if any, has been purchased from (the "Insurer ") for a premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the Notes which results after recovery of the insurance premium, exceeds the present value of the bond insurance premium. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Notes from the gross income of their owners. EXECUTED and DELIVERED this day of , 19 (Name of Und or Manager) By (Title) OFFICIAL STATEMENT Dated October 7, 1998 Ratings: Moody's: Applied For S &P: Applied For See ( "Other Information NEW ISSUE - Book -Entry -Only Ratings" herein) In the opinion of Bond Counsel, interest on the Notes 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 NOTES WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $4,275,000 CITY OF SOUTHLAKE, TEXAS (Tarrant and Denton Counties) TAX NOTES, SERIES 1998 Dated Date: October 15, 1998 Due: February 15, as shown below PAYMENT TERMS .. . Interest on the $4,275,000 City of Southlake, Texas, Tax Notes, Series 1998 (the "Notes ") will accrue from October 15, 1998, (the "Dated Date ") and will be payable August 15 and February 15 of each year commencing August 15, 1999, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Notes will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book - Entry-Only System described herein. Beneficial ownership of the Notes may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Notes will be made to the owners thereof. Principal of, premium, if any, and interest on the Notes will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Notes. See "The Notes - Book - Entry-Only System" herein. The initial Paying Agent/Registrar is Chase Bank of Texas, N.A., Dallas, Texas (see "The Notes - Paying Agent/Registrar "). AUTHORITY FOR ISSUANCE ... These Notes constitute direct obligations of the City, payable from an ad valorem tax levied within the limits prescribed by law, on all taxable property located within the City, as provided in the ordinance (the "Ordinance ") authorizing the Notes (see "Note Information - Authority for Issuance "). PURPOSE ... Proceeds from the sale of the Notes will be used for (i) the purchase of land for public safety facilities, and (ii) professional services rendered in relation to such projects and purposes and the financing thereof; now, therefore. MATURITY SCHEDULE Offering Principal Interest Price Maturity Amount Rate or Yield 2000 $ 740,000 2001 830,000 2002 865,000 2003 900,000 2004 940,000 (Accrued Interest from October 15, 1998 to be added.) REDEMPTION PROVISIONS ... The Notes are not optional for prior payment. LEGALITY ... The Notes are offered for delivery when, as and if issued and received by the Purchasers and subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion "). DELIVERY . . . It is expected that the Notes will be available for delivery through The Depository Trust Company on November 17, 1998. This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial Advisor. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. The information and expressions of opinion contained herein 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. TABLE OF CONTENTS LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE OFFICIAL STATEMENT SUMMARY 3 PUBLIC FUNDS IN TEXAS 25 CITY OFFICIALS, STAFF AND CONSULTANTS 5 LEGAL OPINIONS AND NO- LITIGATION CERTIFICATE 25 ELECTED OFFICIALS 5 AUTHENTICITY OF FINANCIAL DATA AND OTHER SELECTED ADMINISTRATIVE STAFF 5 INFORMATION 26 CONSULTANTS AND ADVISORS 5 CONTINUING DISCLOSURE OF INFORMATION 26 YEAR 2000 IssuE 27 INTRODUCTION 7 FINANCIAL ADVISOR 27 THE NOTES 7 CERTIFICATION OF THE OFFICIAL STATEMENT 27 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 12 APPENDICES TABLE 2 - TAXABLE ASSESSED VALUATIONS BY GENERAL INFORMATION REGARDING THE CITY A CATEGORY 13 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT . B TABLE 3 - VALUATION AND GENERAL OBLIGATION FORM OF BOND COUNSEL'S OPINION C DEBT HISTORY 14 TABLE 4 - TAX RATE, LEVY AND COLLECTION The cover page hereof, this page, the appendices included HISTORY 14 herein and any addenda, supplement or amendment hereto, TABLE 5 - TEN LARGEST TAXPAYERS 15 are part of the Official Statement. TABLE 6 - TAX ADEQUACY 1) 15 TABLE 7 - ESTIMATED OVERLAPPING DEBT 16 DEBT INFORMATION 17 TABLE 8 - PRO -FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS 17 TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION 18 TABLE 10 - COMPUTATION OF SELF - SUPPORTING DEBT 18 TABLE 1 1 - OTHER OBLIGATIONS 18 FINANCIAL INFORMATION 19 TABLE 12 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY 19 TABLE 13 - MUNICIPAL SALES TAX HISTORY 20 TABLE 14 - CURRENT INVESTMENTS 22 TAX MATTERS 23 OTHER INFORMATION 25 RATINGS 25 LMGATION 25 REGISTRATION AND QUALIFICATION OF NOTES FOR SALE 25 2 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Notes to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CITY The City of Southlake is a political subdivision and municipal corporation of the State, located in Tarrant and Denton Counties, Texas. The City covers approximately 23 square miles (see "Introduction - Description of City"). THE NOTES The Notes are issued as $4,275,000 Tax Notes, Series 1998. The Notes are issued as serial Notes maturing February 15, 2000 through February 15, 2004 unless the purchaser designates one or more maturities as a Term Certificate (see "The Notes - Description of the Notes "). PAYMENT OF INTEREST Interest on the Notes accrues from October 15, 1998, and is payable August 15, 1999, and each February 15 and August 15, thereafter until maturity (see "The Notes - Description of the Notes "). AUTHORITY FOR ISSUANCE The Notes are being issued pursuant to the general laws of the State of Texas, particularly Vernon's Annotated Civil Statutes, Article 717w (Chapter 137, Acts 73rd Legislature Regular Session 1993), and an Ordinance passed by the City Council of the City (see "Note Information - Authority for Issuance "). SECURITY FOR THE NOTES The Notes constitute direct 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 debt, within the limits prescribed by law (see "Note Information - Security for Notes "). REDEMPTION FOR THE NOTES The Notes are not subject to redemption for prior maturity. TAX EXEMPTION In the opinion of Bond Counsel, the interest on the Notes will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "Other Information - Tax Exemption" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS Proceeds from the sale of the Notes will be used for (i) the purchase of land for public safety facilities, and (ii) professional services rendered in relation to such projects and purposes and the financing thereof; now, therefore. RATINGS The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors Service, Inc. ( "Moody's "), and "A +" by Standard & Poor's Ratings Services, A Division of The McGraw -Hill Companies, Inc. ( "S &P "). The City also has issues outstanding which are rated "Aaa" by Moody's, and "AAA" by S &P through insurance by various commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and S &P. The results of their determinations will be provided as soon as possible. The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S &P through insurance by various commercial insurance companies (see "Other Information - Ratings"). BOOK - ENTRY -ONLY SYSTEM The definitive Notes will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book - Entry-Only System described herein. Beneficial ownership of the Notes may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Notes will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Notes will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Notes (see "The Notes - Book - Entry-Only System ") . PAYMENT RECORD The City has never defaulted in payment of its general obligation tax debt. 3 SELECTED FINANCIAL INFORMATION G.O. Ratio of Fiscal Taxable Tax Debt G.O. Tax Debt G.O. Tax Year Taxable Assessed Outstanding to Taxable Debt % of Ended Estimated Assessed Valuation at End Assessed Per Total Tax 9/30 Population Valuation � Per Capita of Year Valuation Capita Collections 1994 10,400 $ 682,557,761 $ 65,631 $ 18,076,137 2.65% $ 1,738 103.88% 1995 12,750 822,337,271 64,497 24,196,137 2.94% 1,898 102.49% 1996 14,195 1,066,548,969 75,136 25,946,137 2.43% 1,828 101.87% 1997 16,850 1,309,488,163 77,714 34,561,137 2.64% 2,051 102.66% 1998 19,250 1,548,468,585 80,440 47,116,137 3.04% 2,448 102.25 % (3) 1999 21,602 1,927,672,157 (3) 89,236 49,541,605 (4) 2.57% 2,293 N/A (1) Source: North Central Texas Council of Governments and the City Staff. (2) As reported by the Tarrant County Appraisal District on the City's Annual State Property Tax Board Reports; subject to change during ensuing year. (3) Excludes $133,636,448 annexation value for Westlake properties in dispute. (4) Projected. Includes the Notes. (5) Unaudited figure provided by City. GENERAL FUND CONSOLIDATED STATEMENT SUMMARY Fiscal Year Ended September 30 1997 1996 1995 1994 1993 Beginning Balance $ 2,353,654 $ 1,712,923 $ 2,059,031 $ 1,521,101 $ 1,136,448 Total Revenue 10,039,389 8,501,860 6,375,681 5,587,324 4,678,980 Total Expenditures 11,418,822 8,166,557 7,040,649 5,774,667 4,453,773 Net Transfers 1,623,382 305,428 318,860 725,273 159,446 Net Funds Available 243,949 640,731 (346,108) 537,930 384,653 Ending Balance $ 2,597,603 $ 2,353,654 $ 1,712,923 $ 2,059,031 $ 1,521,101 For additional information regarding the City, please contact: Mr. Curtis E. Hawk Mr. James S. Sabonis Ms. Lou Ann Heath Mr. Daniel C. Roseveare City of Southlake or First Southwest Company 667 N. Carroll Avenue 1700 Pacific Avenue Southlake, Texas 76092 Suite 500 (817) 481 -5581 Dallas, Texas 75201 (214) 953-4000 4 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Length of Term City Council Service Expires Occupation Rick Stacy 3 Years May -00 Owner & President of Furniture Store Mayor W. Ralph Evans 3 Years May -99 Mortgage Banker Mayor Pro Tem Scott Martin 3 Years May -99 Architect Deputy Mayor Pro -Tem Gary Fawks 3 Years May -00 International Councilmember Import/Export Trading Wayne Moffat 3 Years May -00 Firefighter Councilmember Debra Edmondson 1 Year May -01 Community Volunteer Councilmember Veronica "Ronnie" Kendall 1 Year May -01 Homemaker Councilmember SELECTED ADMINISTRATIVE STAFF Length of Name Position Service Curtis E. Hawk City Manager 10 Years Lou Aim Heath Director of Finance 8 Years Sandra L. LeGrand City Secretary 21 Years CONSULTANTS AND ADVISORS Auditors Weaver and Tidwell L.L.P. Dallas, Texas Bond Counsel Fulbright & Jaworski L.L.P. Dallas, Texas Financial Advisor First Southwest Company Dallas, Texas 5 THIS PAGE LEFT BLANK INTENTIONALLY 6 OFFICIAL STATEMENT RELATING TO $4,275,000 CITY OF SOUTHLAKE, TEXAS TAX NOTES, SERIES 1998 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $4,275,000 City of Southlake, Texas, Tax Notes, Series 1998. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Ordinance to be adopted on the date of sale of the Notes which will authorize the issuance of the Notes, except as otherwise indicated herein. There follows in this Official Statement descriptions of the Notes and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. DESCRIPTION OF THE CITY ... The City is a political subdivision and municipal corporation of the State, duly organized and existing under the laws of the State, including the City's Home Rule Charter. The City first adopted its Home Rule Charter in 1987. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and six Councilmembers who are elected for staggered three -year terms. The City Council formulates operating policy for the City while the City Manager is the chief administrative officer. Some of the services that the City provides are: public safety (police and fire protection), highways and streets, water and sanitary sewer utilities, culture- recreation, public improvements, planning and zoning, and general administrative services. The 1990 Census population for the City was 7,082, while the estimated 1998 population is 19,250. The City covers approximately 23 square miles. THE NOTES DESCRIPTION OF THE NOTES ... The Notes are dated October 15, 1998, and mature on February 15 in each of the years and in the amounts shown on the cover page hereof. Interest will be computed on the basis of a 360 -day year of twelve 30 -day months, and will be payable on February 15 and August 15, commencing August 15, 1999. The definitive Notes will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book - Entry-Only System described herein. No physical delivery of the Notes will be made to the owners thereof. Principal of, premium, if any, and interest on the Notes will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Notes. See "Book- Entry-Only System" herein. AUTHORITY FOR ISSUANCE ... The Notes are being issued pursuant to the general laws of the State of Texas, particularly Vernon's Annotated Civil Statutes, Article 717w (Chapter 137, Acts 73rd Legislature Regular Session 1993), and an Ordinance passed by the City Council of the City (see "Note Information - Authority for Issuance "). SECURITY AND SOURCE OF PAYMENT ... The Notes constitute direct 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 debt, within the limits prescribed by law (see "Note Information - Security for Notes "). 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 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. REDEMPTION ... The Notes are not subject to redemption for prior maturity. BOOK- ENTRY -ONLY SYSTEM ... The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository for the Notes. The Notes will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully- registered Note will be issued for each maturity of the Notes in the aggregate principal amount of each such maturity and will be deposited with DTC. DTC is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning 7 of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section I 7A of the Securities Exchange Act of 1934. DTC holds securities that its participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities Notes. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Notes under the DTC system must be made by or through DTC Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Note ("Beneficial Owner ") is in turn to be recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Notes representing their ownership interests in the Notes, except in the event that use of the book -entry system described herein is discontinued. To facilitate subsequent transfers, all Notes deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither DTC nor Cede & Co. will consent or vote with respect to the Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined). The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Notes will be made to DTC. DTC's practice is to credit Direct Participants' accounts on each payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Notes at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Notes are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Notes will be printed and delivered. DTC's Year 2000 Efforts. DTC has established a Year 2000 Project Office and will provide information concerning DTC's Year 2000 compliance to persons requesting such information. The address is as follows: The Depository Trust Company, Year 2000 Project Office, 55 Water Street, New York, New York 10041. Telephone numbers for the DTC Year 2000 Project Office are (212) 855 -8068 and (212) 855 -8881. In addition, information concerning DTC's Year 2000 compliance can be obtained from its website at the following address: www.dtc.org http: / /www.dtc.org. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Notes are in the Book - Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Notes, but (i) all rights of ownership must be exercised through DTC and the Book - Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinance will be given only to DTC. 8 Information concerning DTC and the Book - Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City or the Purchasers. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar is Chase Bank of Texas, N.A., Dallas, 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 until the Notes are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Notes. Upon any change in the Paying Agent/Registrar for the Notes, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Notes 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 ... In the event the Book -Entry-Only System should be discontinued, the Notes 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. Notes may be assigned by the execution of an assignment form on the respective Notes or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Notes will be delivered by the Paying Agent/Registrar, in lieu of the Notes 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 Notes issued in an exchange or transfer of Notes 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 Notes to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Notes 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 Notes surrendered for exchange or transfer. See "Book- Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Notes. RECORD DATE FOR INTEREST PAYMENT ... The record date ( "Record Date ") for the interest payable on the Notes on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non - payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (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 ( "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 Holder of a Note appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. NOTEHOLDERS' REMEDIES ... Although a Holder of a Note, could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Note, such judgment could not be satisfied by execution against any property of the City. The Holder's only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the City Council to levy, assess and collect an annual ad valorem tax within the tax rate limitation sufficient to pay such principal and interest as it becomes due. The Holder could be required to enforce such remedy on a periodic basis. The enforcement or claim for payment of principal of or interest on the Notes, 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. USE OF NOTES PROCEEDS ... Proceeds from the sale of the Notes are expected to be expended as follows: Notes Deposit to Project Fund $ Underwriter's Discount Costs of Issuance Deposit to Interest & Sinking Fund Total $ 9 TAX INFORMATION AD VALOREM TAx LAW ... The appraisal of property within the City is the responsibility of the Tarrant County Appraisal District (the "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. In determining the market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the less of (1) the market value of the property or (2) the sum of (a) 10% of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the property was last appraised, plus (b) the appraised value of the property for the last year in which the property was appraised plus (c) the market value of all new improvements to the property. 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 V.T.C.A., 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. The minimum exemption under this provision is $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 $5,000 to a maximum of $12,000. 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 personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation. Article VIII, Section 1-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal. The City and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the tax values on property in the zone are "frozen" at the value of the property at the time of creation of the zone. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. TAx INCREMENT FINANCING (TIF) .. The City has created a TIF and has adopted a comprehensive project and financing plan. The City has committed to fund capital needs for the TIF zone of approximately $28,500,000 issued from fiscal year 1999 to 2008. These capital needs will be funded by issuing TIF bonds or notes. The debt service from these bonds on notes will be payable only from taxes levied against the incremental values of the TIF zone by all or some of the overlapping taxing jurisdictions. EFFECTIVE TAx RATE AND ROLLBACK TAx RATE ... By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate ". The City Council may not adopt a tax rate that exceeds the prior year's levy until a public hearing has been held on the proposed 10 increase following notice to the taxpayers and otherwise complied with the Property 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 Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one -half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAx PAYMENT ... Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September. Taxes become due October 1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on August 1. PENALTIES AND INTEREST ... Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative 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. Under certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post - petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post - petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. CITY APPLICATION OF TAx CODE ... The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $75,000, the disabled are also granted an exemption of $75,000. The City has not granted any part of the additional exemption of up to 20% of the market value of residence homesteads; minimum exemption of $5,000. See Table 1 for a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City does not tax nonbusiness personal property; and Tarrant County collects taxes for the City. The City does allow permit split payments of taxes, and discounts for early payment of taxes are not allowed. The City does not tax freeport property. The City does not collect the additional one -half cent sales tax for reduction of ad valorem taxes. The City has adopted a tax abatement policy, and reviews applications for abatements on a case by case basis. 11 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 1998/99 Market Valuation Established by Tarrant County Appraisal District (excluding totally exempt property) $ 2,019,895,222 Less Exemptions/Reductions at 100% Market Value: Over 65 and Disable Persons Exemptions $ 17,943,320 Disabled Veterans 1,616,230 Freeport 488,762 Agricultural Use Reductions 72,174,753 92,223,065 1998/99 Taxable Assessed Valuation $ 1,927,672,157 General Obligation Debt Payable from Ad Valorem Taxes (as of 9/30/98) The General Obligation Debt Outstanding $ 45,266,605 The Notes 4,275,000 General Obligation Debt Payable from Ad Valorem Taxes $ 49,541,605 Less: Self Supporting Debt (3) Water and Sewer System General Obligation Debt $ 10,313,750 Park Dedication Fee Supported General Obligation Debt 434,700 Sales Tax Supported General Obligation Debt 4,275,000 Less: Total Self Supporting Debt $ 15,023,450 Net General Obligation Debt Payable from Ad Valorem Taxes $ 34,518,155 General Obligation Interest and Sinking Fund as of 9/30/98 $ 779,453 Ratio General Obligation Tax Debt to Taxable Assessed Valuation 1.79% 1998 Estimated Population - 19,250 Per Capita Taxable Assessed Valuation - $100,139 Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes - $1,793 (1) Excludes $133,636,448 annexation value for Westlake properties in dispute. (2) The above statement of indebtedness does not include currently outstanding $259,000 revenue bonds, as these bonds are payable solely from the net revenues of the Waterworks and Sewer System (the "System "), as defined in the ordinances authorizing the bonds. (3) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 10. It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the future. 12 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY Taxable Appraised Value for Fiscal Year Ended September 30, 1999 a 1998 1997 %of %of %of Category Amount Total Amount Total Amount Total Real, Residential, Single- Family $ 1,415,303,293 70.07% $ 1,170,089,009 71.93% $ 927,115,146 66.91% Real, Residential, Multi - Family 913,500 0.05% 658,700 0.04% 658,700 0.05% Real, Vacant Lots/Tracts 75,704,832 3.75% 75,436,440 4.64% 85,420,513 6.16% Real, Acreage (Land Only) 105,474,369 5.22% 91,213,633 5.61% 104,823,268 7.56% Real, Farm and Ranch Improvements 40,304,022 2.00% 37,713,390 2.32% 35,600,458 2.57% Real, Commercial 243,241,064 12.04% 116,406,151 7.16% 85,587,491 6.18% Real, Industrial 3,408,516 0.17% 3,408,516 0.21% 3,028,765 0.22% Real and Tangible Personal, Utilities 1,015,851 0.05% 26,780,627 1.65% 24,694,474 1.78% Tangible Personal, Commercial 100,841,817 4.99% 70,665,995 4.34% 75,433,951 5.44% Tangible Personal, Industrial 648,811 0.03% 2,200,558 0.14% 2,293,240 0.17% Tangible Personal, Mobile Homes 172,732 0.01% 287,410 0.02% 284,206 0.02% Intangible Personal & Uncertified 6,165 0.00% 6,165 0.00% 0 0.00% Real Property, Inventory 32,860,250 1.63% 31,752,988 1.95% 40,755,167 2.94% Total Appraised Value Before Exemptions $ 2,019,895,222 100.00% $ 1,626,619,582 100.00% $ 1,385,695,379 100.00% Less: Total Exemptions /Reductions 92,223,065 78,150,997 76,207,216 Taxable Assessed Value $ 1,927,672,157 $ 1,548,468,585 $ 1,309,488,163 Taxable Appraised Value for Fiscal Year Ended September 30, 1996 1995 %of %of Category Amount Total Amount Total Real, Residential, Single- Family $ 761,024,177 37.68% $ 577,696,109 64.37% Real, Residential, Multi- Family 561,500 0.03% 614,200 0.07% Real, Vacant Lots/Tracts 55,009,903 2.72% 57,685,194 6.43% Real, Acreage (Land Only) 100,812,646 4.99% 91,554,754 10.20% Real, Farm and Ranch Improvements 34,673,059 1.72% 33,596,522 3.74% Real, Commercial 66,209,220 3.28% 54,294,403 6.05% Real, Industrial 2,940,720 0.15% 2,917,596 0.33% Real and Tangible Personal, Utilities 21,306,442 1.05% 19,493,995 2.17% Tangible Personal, Commercial 69,590,281 3.45% 46,391,044 5.17% Tangible Personal, Industrial 2,173,982 0.11% 2,890,595 0.32% Tangible Personal, Mobile Homes 338,465 0.02% 368,436 0.04% Intangible Personal & Uncertified 622,250 0.03% 0 0.00% Real Property, Inventory 27,416,400 1.36% 9,999,760 1.11% Total Appraised Value Before Exemptions $ 1,142,679,045 56.57% $ 897,502,608 100.00% Less: Total Exemptions/Reductions 76,130,076 75,165,337 Taxable Assessed Value $ 1,066,548,969 $ 822,337,271 NOTE: Valuations shown are certified taxable assessed values reported by the Tarrant County Appraisal District to the State Controller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. (1) Excludes $133,636,448 annexation value for Westlake properties in dispute. 13 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY G.O. Ratio of Fiscal Taxable Tax Debt G.O. Tax Debt G.O. Tax Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9/30 Population Valuation Per Capita of Year Valuation Capita 1995 $ 12,750 $ 822,337,271 $ 64,497 $ 24,196,137 2.94% $ 1,898 1996 14,195 1,066,548,969 75,136 25,946,137 2.43% 1,828 1997 16,850 1,309,488,163 77,714 34,561,137 2.64% 2,051 1998 19,250 1,548,468,585 80,440 47,116,137 3.04% 2,448 1999 21,602 1,927,672,157 (3) 89,236 49,541,605 (4) 2.57% 2,293 (1) Source: North Central Texas Council of Governments and City Staff. (2) As reported by the Tarrant County Appraisal District on the City's Annual State Property Tax Board Reports; subject to change during ensuing year. (3) Excludes $133,636,448 annexation value for Westlake properties in dispute. (4) Projected. Includes the Notes. TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Interest Year and Ended Tax General Sinking % Current % Total 9/30 Rate Fund Fund Tax Levy Collections Collections 1995 $ 0.4490 $ 0.27285 $ 0.17615 $ 3,688,030 98.64% 102.49% 1996 0.4220 0.26285 0.15915 4,526,038 98.06% 101.87% 1997 0.4220 0.24962 0.17238 5,522,117 98.76% 102.66% 1998 0.4220 0.24739 0.17461 6,539,020 98.94% (I) 102.25% (I) 1999 0.4220 0.30763 0.11437 8,864,749 N/A N/A (1) Unaudited figures from City. 14 TABLE 5 - TEN LARGEST TAXPAYERS TOP TEN TAXPAYERS 1998/99 % of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation Maguire Thomas Partners, ETAL (I) Class "A" Commercial Real Estate $ 175,825,392 9.12 % IBM Corporation Class "A" Commercial Real Estate 37,802,009 1.96 Levi Strauss Class "A" Commercial Real Estate 15,324,803 0.79 Texas Utilities Electric Company Electric Utility 14,628,741 0.76 Wal -Mart Retail 13,698,222 0.71 Home Depot USA Inc. Retail 12,378,803 0.64 Westerra Timarron, LP Real Estate 9,225,378 0.48 OTR/Regency TX Realty Holdings Telephone Utility 9,195,223 0.48 Sabre Group, Inc. Retail 5,488,099 0.28 Albertsons Grocery Store 5,248,961 0.27 $ 298,815,631 15.50 % (1) Includes $133,636,448 of disputed annexed Westlake property GENERAL OBLIGATION DEBT LIMITATION ... No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "Tax Rate Limitation "). TABLE 6 - TAX ADEQUACY ( 1999 Principal and Interest Requirements $ 3,468,008 $0.18358 Tax Rate at 98% Collection Produces" $ 3,468,008 Average Annual Principal and Interest Requirements, 1999 -2018 $ 2,456,894 $0.13006 Tax Rate at 98% Collection Produces" $ 2,456,894 Maximum Principal and Interest Requirements, 2001 $ 3,486,542 $0.18456 Tax Rate at 98% Collection Produces" $ 3,486,542 (1) Includes the Notes. 15 TABLE 7 - ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ( "Tax Debt ") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional bonds since the date hereof, 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 Tax Debt of the City. City's 1998 /99 Overlapping Authorized Taxable 1998/99 Total Estimated G.O. But Unissued Assessed Tax G.O. Tax Debt % Tax Debt Debt As Of Taxing Jurisdiction Value Rate As of 9/30/98 Applicable As of 9/30/98 12/31/96 City ofSouthlake $ 1,927,672,157 (2) $0.4220 $ 49,541,605 tI1 100.00% $ 49,541,605 0 Denton County 14,825,007,858 0.2559 61,685,000 0.04% 24,674 13,145,000 Tarrant County 50,409,864,045 0.2649 144,960,000 1.21% 1,754,016 500,000 CanoIl Independent School District 1,602,251,815 1.7400 91,974,701 65.58% 60,317,009 6,000,000 Grapevine - Colleyville Independent School District 4,885,513,828 1.5378 130,347,480 0.80% 1,042,780 0 Keller Independent School District 2,069,427,606 1.5000 201,024,318 3.75% 7,538,412 27,200,000 Northwest Independent School District 1,154,838,915 1.6758 44,815,371 0.68% 304,745 0 Tarrant County Hospital District 47,282,165,682 0.2341 41,049,987 1.21% 496,705 0 Tarrant County Junior College District 50,836,861,394 0.0577 96,350,000 1.21% 1,165,835 0 Total Direct and Overlapping G. O. Tax Debt $ 122,185,780 Ratio of Direct and Overlapping G. O. Tax Debt to Taxable Assessed Valuation 6.34% Per Capita Overlapping G. O. Tax Debt $ 6,347.31 (1) Total General Obligation Tax Debt as of 9/30/99. Includes the Notes. (2) As reported by the Tarrant County Appraisal District on the City's Annual State Property Tax Board Reports; subject to change during ensuing year. (3) Excludes $133,636,448 annexation value for Westlake properties in dispute. 16 0 0 0 0 �„� a o t� -1- O O o N M t- o U • e •= . N WI O a` 00 N N v) -. M O■ O -• 00 so .1- t` N oo 00 O M O en C O O .n 7 10 4.N. 0 O\ .et. V r M a, et' . N • of \D 00 a) N o0 --� en .--. t` N t` eF ON v, t` N O vi 0o O t� oo et 4. ca L .2 E so .-. 00 00 00 et• eF h v1 t— t-- eF eF O, t� M m t� O as O1 • y 2 t M t .--. -• T 01 0\ O\ O O N . ON T t vt en [- 14 a) '= M M M M M Os N O1 N N N N N N N N •4 N .-. -. -• -• C en a) C4 69 69 ,eO h N N N .M. 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C d\ -• N N N N N N N N N N N N N N N N N N N Y b 40 00 A W W p v F.4 O = Q E" 17 .. � � TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION Tax Supported Debt Service Requirements, Fiscal Year Ending 9/30/99 $ 3,468,008 Interest and Sinking Fund, 9/30/98 $ 779,453 Budgeted Transfers 676,687 Budgeted Interest and Sinking Fund Tax Levy 2,401,209 Estimated Investment Income 35,750 3,893,099 Estimated Balance, 9/30/99 $ 425,091 TABLE 10 - COMPUTATION OF SELF - SUPPORTING DEBT Net System Revenue Available Fiscal Year 1997/98 $ 2,631,960 Less: Requirements for Revenue Bonds 82,420 Balance Available for Other Purposes $ 2,549,540 Requirements for System Tax Bonds 719,234 Percentage of System General Obligation Bonds Self - Supporting 100% AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS . . . The City has no authorized but unissued general obligation debt. ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ... The City anticipates the issuance of additional $18 million general obligation debt within the current fiscal year. TABLE 11 - OTHER OBLIGATIONS The following table illustrates the City's two outstanding lease obligations: Lease #1 Lease #2 Original date of the loan or lease: June, 1996 Original date of the loan or lease: August, 1997 Purpose of loan or lease: Computer Equipment Purpose of loan or lease: Copy Machines Repayment Schedule: 60 Months Repayment Schedule: 60 Months Date of Final Payment: May, 2001 Date of Final Payment: July, 2002 Payments made from what source: General Fund Payments made from what source: General Fund Amount currently outstanding: $75,300 as of 9/30/97 Amount currently outstanding: $145,984 as of 9/30/97 PENSION FUND ... The City provides pension benefits for all of its full -time employees through the Texas Municipal Retirement System ( "TMRS "), a State -wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. (For more detailed information concerning the retirement plan, see Appendix B, "Excerpts from the City's Annual Financial Report" - Note #7.) 18 FINANCIAL INFORMATION TABLE 12 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY Fiscal Years Ended September 30, 1997 1996 1995 1994 1993 Revenues: Taxes $ 6,297,394 $ 4,926,208 $ 3,890,459 $ 3,467,579 $ 3,087,297 Licenses and Permits 2,525,797 2,642,353 1,901,245 1,680,918 1,251,287 Charges for Services 354,555 222,052 109,093 56,225 60,328 Fine and Forfeitures 509,328 435,537 274,154 235,591 181,029 Other Revenues 352,315 275,710 200,730 147,011 99,039 Total Revenues $ 10,039,389 $ 8,501,860 $ 6,375,681 $ 5,587,324 $ 4,678,980 Expenditures: City Administration $ 2,893,743 $ 2,170,968 $ 1,610,196 $ 1,292,402 $ 1,003,587 Police Department 2,242,915 1,389,060 1,304,845 1,055,234 895,343 Fire Department 1,460,111 901,925 783,873 728,480 566,832 Building Department 474,511 351,228 329,647 261,663 154,005 Streets and Drainage 903,988 871,038 1,058,438 1,225,241 857,494 Municipal Court 301,380 244,814 201,965 158,793 144,786 Parks 1,013,013 623,974 389,861 199,681 138,224 Public Works Department 690,191 360,338 359,623 137,192 102,064 Other - - Public Safety Support 975,419 835,717 608,880 434,779 357,268 Community Development 463,551 417,495 393,321 281,202 234,170 Total Expenditures $ 11,418,822 $ 8,166,557 $ 7,040,649 $ 5,774,667 $ 4,453,773 Excess (deficiency) of Revenues Over Expenditures $ (1,379,433) $ 335,303 $ (664,968) $ (187,343) $ 225,207 Capital Leases and Bonds Payable $ 990,382 $ 88,109 $ - $ 720,827 $ - Budgeted Transfers In 640,904 594,606 $ 941,860 159,446 159,446 Budgeted Transfers Out (7,904) (377,287) (623,000) (155,000) 0 Total Other Sources (Uses) $ 1,623,382 $ 305,428 $ 318,860 $ 725,273 $ 159,446 Net Increase (Decrease) $ 243,949 $ 640,731 $ (346,108) $ 537,930 $ 384,653 0 0 0 Beginning Fund Balance 2,353,653 1,712,922 2,059,031 1,521,101 1,136,448 Ending Fund Balance $ 2,597,602 $ 2,353,653 $ 1,712,923 $ 2,059,031 $ 1,521,101 19 TABLE 13 - 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 Notes. 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. On November 2, 1993, the voters of the City approved the imposition of an additional sales and use tax of one -half of one percent ('h% of 1%) for economic and park development. Collection for the additional tax went into effect in April, 1994. The sales tax for economic development is collected solely for the benefit of Southlake Parks Development Corporation (the "Corporation "), and may be pledged to secure payment of sales tax revenue bonds issued by the Corporation, and is not included in the table below. Fiscal Equivalent Year % of of Ended Total Ad Valorem Ad Valorem Per 9/30 Collected (I) Tax Levy Tax Rate Capita 1994 $ 877,615 0.1281% $ 28.52 $ 84.39 1995 1,033,502 0.1258% 28.02 81.06 1996 1,476,708 0.1387% 32.63 104.03 1997 1,931,017 0.1475% 34.97 114.60 1998 2,521,857 (3) 0.1629% (3) 38.57 131.01 (1) Unaudited figures provided by City Staff. (2) Population Sources: North Central Texas Council of Governments and City Staff. (3) Unaudited figures provided by City Staff. 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 -teen 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 funds 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 Notes of deposits. 20 INVESTMENTS The City of South lake invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City of Southlake. Both state law and the City's investment policies are subject to change. LEGAL INVESTMENTS ... Under Texas law, the City is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) Notes of deposit that are guaranteed or insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and amount provided by law for City deposits, (7) Notes of deposit and share Notes issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the clauses (1) through (5) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A -1 or P -1 or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper that is rated at least A -1 or P -1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no -load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or Less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no -load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage - backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. INVESTMENT POLICIES ... Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum average dollar- weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS ... Under Texas law the City is additionally required to: (1) annually review its adopted policies and strategies, (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the registered principal of firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse 21 repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict the investment in mutual funds in the aggregate to no more than 80% of the City's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service and further restrict the investment in non -money market mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (8) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. The City of Southlake shall manage and invest its cash with four objectives, listed in order of priority: Safety, Liquidity, Yield, and Public Trust. The safety of the principal invested always remains the primary objective. All investments shall be designed and managed in a manner responsive to the public trust and consistent with State and Local law. TABLE 14 - CURRENT INVESTMENTS As of June 30, 1998, the City's investable funds were invested in the following categories: Purchase Market Book Type of Investment Cost Value Value Federal Home Loan Banks $ 1,004,450 $ 1,003,744 $ 1,004,567 Texas National Bank CD 3,000,000 3,000,000 3,000,000 Flex Repo -AMBAC 3,477,011 3,477,011 3,477,011 TexPool 21,176,744 21,176,744 21,176,744 $ 28,658,205 $ 28,657,499 $ 28,658,321 22 TAX MATTERS TAx EXEMPTION ... The delivery of the Notes is subject to the opinion of Bond Counsel to the effect that interest on the Notes for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinion (the "Code "), pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described, corporations. A form of Bond Counsel's opinion is reproduced as Appendix C. The statute, regulations, rulings, and court decisions on which such opinion is based are subject to change. Interest on all tax- exempt obligations, including the Notes, owned by a corporation will be included in such corporation's 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 or a real estate mortgage investment conduit or a financial asset securitization investment trust (FASIT). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by Section 55 of the Code will be computed. In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the City made in a Note dated the date of delivery of the Notes pertaining to the use, expenditure, and investment of the proceeds of the Notes and will assume continuing compliance by the City with the provisions of the Ordinance subsequent to the issuance of the Notes. The Ordinance contains covenants by the City with respect to, among other matters, the use of the proceeds of the Notes and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Notes are to be invested, the periodic calculation and payment to the United States Treasury of arbitrage "profits" from the investment of the proceeds, and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants would cause interest on the Notes to be includable in the gross income of the owners thereof from date of the issuance of the Notes. 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 Notes. Prospective purchasers of the Notes should be aware that the ownership of tax- exempt obligations such as the Notes may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax- exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN NOTES ... The initial public offering price of certain Notes (the "Discount Notes") may be less than the amount payable on such Notes at maturity. An amount equal to the difference between the initial public offering price of a Discount Note (assuming that a substantial amount of the Discount Notes of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Note. A portion of such original issue discount allocable to the holding period of such Discount Note by the initial purchaser will, upon the disposition of such Discount Note (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Notes described above under "Tax Exemption." Such interest is considered to be accrued actuarially in accordance with the constant interest method over the Life of a Discount Note, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Note and generally will be allocated to an original purchaser in a different amount from the amount of the payment denominated as interest actually received by the original purchaser during the tax year. 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 Sections 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, Life insurance companies, property and casualty insurance companies, S corporations with "subchapter C" earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for earned income tax credit, owners of an interest in a FASIT and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax- exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Note by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Note in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Note was held) is includable in gross income. 23 Owners of Discount Notes should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Notes for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Notes. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Notes may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Notes (the "Premium Notes ") may be greater than the amount payable on such Notes at maturity. An amount equal to the difference between the initial public offering price of a Premium Note (assuming that a substantial amount of the Premium Notes of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Notes. The basis for federal income tax purposes of a Premium Note in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Note. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Notes should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Notes for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Notes. 24 OTHER INFORMATION RATINGS Applications for contract ratings on this issue have been made to Moody's and S &P. The results of their determinations will be provided as soon as possible. The uninsured tax supported debt of the City are rated "Al" by Moody's and "A +" by S &P. The City has outstanding issues rated "Aaa" by Moody's and "AAA" by S &P through insurance by various commercial insurance companies. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The rating reflects only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Notes. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF NOTES FOR SALE The sale of the Notes has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Notes have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Notes been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Notes under the securities laws of any jurisdiction in which the Notes may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Notes shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 9 of the Bond Procedures Act provides that the Notes "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". The Notes 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. For political subdivisions in Texas which have adopted investment policies and guidelines in accordance with the Public Funds Investment Act (V.T.C.A., Government Code, Chapter 2256), the Notes may have to be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency before such obligations are eligible investments for sinking funds and other public funds. No review by the City has been made of the laws in other states to determine whether the Notes are legal investments for various institutions in those states. LEGAL OPINIONS AND NO- LITIGATION CERTIFICATE The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Notes, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Note and to the effect that the Notes 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 effect that the interest on the Notes will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. The customary closing papers, including a Note to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Notes, or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Notes will also be furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Notes in the Official Statement to verify that such description conforms to the provisions of the Ordinance. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Notes is contingent on the sale and delivery of the Notes. The legal opinion will accompany the Notes deposited with DTC or will be printed on the Notes in the event of the discontinuance of the Book -Entry-Only System. 25 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. CONTINUING DISCLOSURE OF INFORMATION In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Notes. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Notes. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors. This information will be available to securities brokers and others who subscribe to receive the information from the vendors. ANNUAL REPORTS ... The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 14. The City will update and provide this information within six months after the end of each fiscal year ending in or after 1998. The City will provide the updated information to each nationally recognized municipal securities information repository ( "NRMSIR ") and to any state information depository ( "SID ") that is designated by the State of Texas and approved by the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC "). The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2 -12. The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial statements at the time of filing and later furnish the audit report when it becomes available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year ends September 30. Accordingly, it must provide updated information by March 30, in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change. MATERIAL EVENT NOTICES ... The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Notes, if such event is material to a decision to purchase or sell Notes: (1) principal and interest payment delinquencies; (2) non - payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax- exempt status of the Notes; (7) modifications to rights of holders of the Notes; (8) Note calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Notes; and (11) rating changes. Neither the Notes nor the Ordinance make any provision for debt service reserves, liquidity enhancement on credit enhancement. In addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this paragraph to any SID and to either each NRMSIR or the Municipal Securities Rulemaking Board ( "MSRB "). AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID ... The City has agreed to provide the foregoing information only to NRMSIRs and any SID. The information will be available to holders of Notes only if the holders comply with the procedures and pay the charges established by such information vendors or obtain the information through securities brokers who do so. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768- 2177, and its telephone number is 512/476 -6947. LIMITATIONS AND AMENDMENTS ... The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Notes at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Notes may seek a writ of mandamus to compel the City to comply with its agreement. 26 The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Notes in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Notes consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Notes. The City may also amend or repeal its agreement if the SEC amends or repeals the applicable provisions of SEC Rule 15c2 -12 or a court of final jurisdiction determines that such provisions are invalid, but only if and to the extent that reserving the right to do so does not make unlawful the Purchasers' purchase and sale of the Notes in the offering described herein. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS . . . The City has made continuing disclosure agreements with regard to various securities for which the City is obligated to make payment. The City is in compliance with prior undertakings. YEAR 2000 ISSUE The year 2000 presents potential problems for computerized data files and computer programs. When developed, many computer applications were not expected to be in operation at the end of the century; however, many of these applications continue to be used by governments and businesses. The City recognizes the year 2000 problem and has taken certain steps to resolve these issues, including (i) the identification and replacement of non -year 2000 compliant hardware; (ii) with respect to software purchased since 1997, purchasing year 2000 compliant software; and (iii) the director of data processing is in the process of reviewing and resolving issues that may arise related to the City's software. It is anticipated that all systems relating to the City will be year 2000 compliant by the turn of the century, so it is not expected that year 2000 issues will pose significant problems for the City. No assurance can be given, however, that problems or delays will not occur in the ongoing modification and replacement efforts. In the event any such problems were to occur, there could be delays beyond such projected target dates. The City further recognizes that the year 2000 problem may affect certain other third parties with whom the City has contracted and/or upon which it relies to provide certain services, including but not limited to, the Tarrant County Appraisal District, the Paying Agent/Registrar and Depository Trust Company. The City cannot guarantee that computer systems of such third parties upon which the City relies will be timely modified or converted to address the year 2000 problem. Moreover, the City cannot give any assurances that it will be able to identify all potential year 2000 problems in computer systems of third parties upon which the City relies or that the computer systems of such entities will be timely modified or converted to address the year 2000 problem. To the extent that the year 2000 problem is not adequately addressed by such third parties, there could be interruptions in the operations of the City. See The Bonds — Book - Entry-Only System" for a discussion of the Year 2000 compliance efforts of The Depository Trust Company. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Notes. The Financial Advisor's fee for services rendered with respect to the sale of the Notes is contingent upon the issuance and delivery of the Notes. First Southwest Company has agreed, in its Financial Advisory contract, not to bid for the Notes, either independently or as a member of a syndicate organized to submit a bid for the Notes. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Notes, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Notes, the City will furnish a Note, executed by proper officers, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of said Notes and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any 27 material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of the last audited financial statements of the City. The Ordinance authorizing the issuance of the Notes will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Notes by the Purchasers. RICK STACY Mayor City of Southlake, Texas ATTEST: SANDRA L. LeGRAND City Secretary 28 APPENDIX A GENERAL INFORMATION REGARDING THE CITY • Amarillo SOUTHLAKE Fort Worth ■ 'Dallas I Paso Austin • Houston • San Antonio THIS PAGE LEFT BLANK INTENTIONALLY 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 1998 population was 19,250 an increase of 271.8% over the 1990 census population of 7,082. ECONOMY The City 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: Company Nature of Business Number of Employees AMR / Sabre Group Transportation 1,600 Carroll Independent School District School District 680 Walmart Retailer 250 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 Alliance Airport. EDUCATION The City of Southlake is served primarily by Carroll Independent School District, and additionally by Keller, Grapevine - Colleyville and Northwest Independent School Districts. There are four elementary schools, one middle school, two intermediate schools and one high school located within the City. The combined enrollment for 1997 -98 was 5,256 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, Southern Methodist University, Texas Woman's University, University of Texas at Arlington, University of Texas at Dallas, University of Dallas and Tarrant County Junior College. RECREATION The City has four municipal parks. The Bicentennial Park is 48 acres that includes nine baseball fields, eight soccer fields, two tennis courts, two community buildings and one playground. The Koalaty Park is 5 acres that includes four practice ball fields. The Lonesome Dove Park is 8 acres that includes a pavilion, a playground and two sand volleyball courts. The Bob Jones Park is approximately 100 acres and is currently being developed. Smith Park is 13 acres and not developed. Noble Park is 5 acres and is undeveloped. Southlake lies on the southern boundary of Lake Grapevine which offers swimming, camping, boating and fishing. HISTORICAL EMPLOYMENT (AVERAGE ANNUAL) Area 1997 1996 1995 1994 1993 Fort Worth - Arlington PMSA Employed 815,915 802,365 776,586 760,352 685,200 Unemployed 30,966 32,892 39,760 44,724 48,700 % of Unemployed 3.7% 3.7% 4.9% 5.6% 6.4% Tarrant County Employed 709,798 698,011 678,060 664,713 645,708 Unemployed 26,754 28,337 34,723 38,866 43,915 % of Unemployed 3.6% 3.2% 4.9% 5.5% 4.2% Source: Texas Employment Commission. A -1 EFFECTIVE BUYING INCOME Tarrant Count» Effective Buying Income $ 23,070,588 Median Per Household 37,929 Household Earnings: $20,000 - $34,999 22.6 $35,000 - $49,999 18.7 $50,000 and over 35.3 Source: Sales and Marketing Management, 1997 Survey of Buying Power BUILDING PERMITS BY CATEGORY Fiscal Year Ended Commercial Residential 9/30 Number Amount Number Amount Grand Total 1992 11 $ 3,273,000 326 $ 68,746,220 $ 72,019,220 1993 21 1,450,900 477 100,406,032 101,856,932 1994 12 9,309,800 629 140,035,538 149,345,338 1995 21 5,033,100 460 107,208,023 112,241,123 1996 77 14,229,000 691 169,959,810 184,188,810 1997 146 15,340,460 633 162,484,632 177,825,092 1998 (1) 122 17,348,107 529 141,061,522 158,409,629 ( For ten (10) months only, through July 31, 1998. TARRANT COUNTY Tarrant County (the "County") is located in North Central Texas with an estimated 1998 population of 1,306,800. 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 4.0 million. A -2 APPENDIX B CITY OF SOUTHLAKE, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 1997 The information contained in this Appendix consists of excerpts from the City of Southlake, Texas Annual Financial Report for the Year Ended September 30, 1997, 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. THIS PAGE LEFT BLANK INTENTIONALLY INDEPENDENT AUDITOR'S REPORT To Members of the City Council WEAVER and City Manager TIDWELL City of Southlake, Texas L.L.P CERTIFIED PUBLIC We have audited the accompanying general purpose financial statements of the City of ACCOUNTANTS Southlake, Texas as of and for the year ended September 30, 1997, as listed in the table AND CONSULTANTS of contents. These general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general 12221 Meru Druz purpose financial statements based on our audit. sun, 1 -Uu Dallas. Texas - 5251 y" 490 /9 We conducted our audit in accordance with generally accepted auditing standards and F 9- -02.8321 Govemment Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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 general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Southlake, Texas at September 30, 1997, 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 general purpose 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 general purpose financial statements of the City of Southlake, Texas. The individual fund and account group financial statements and schedules have been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, are fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. The statistical section has not been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, accordingly, we express no opinion on such data. In accordance with Govemment Auditing Standards, we also issued reports dated February 6, 1998 on our consideration of the City's intemal control structure and on its compliance with laws and regulations. ‘4.,~"e" 4."--"Ze-e-ter WEAVER AND TIDWELL, L.L.P. FORT WORTH OFFICE ;,,- „ e, S j, r<<r Dallas, Texas sun, r ,,,II February 6 , 1998 F -,rr 11,0,. T,xa, - 6192 717 WORLDWIDE AFFILIATIONS THROUGH SUMMIT INTERNATIONAL ASSOCIATES. INC 1 Se. uthla 2 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. Govemmental Funds Those through which most Govemmental functions are typically ' financed. The measurement focus is upon determination of financial position and changes in financial position. The Govemmental 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 Govemmental facilities and services that are supported by user charges. The measurement focus is upon determination of net income, financial position and cash flows. The Proprietary Fund within the City is the Enterprise Fund. Fiduciary Funds Used to account for assets held by the City as an agent for individuals, private organizations, other govemments, and/or other funds. Agency funds are custodial in nature and do not involve measurement of results of operations. The Agency Funds within the City are used to account for the Municipal Cash Escrow Fund and Deferred Compensation Plan. Account Groups Used to establish accounting control and accountability for the City's general fixed assets and unmatured principal of the City's general long- term debt. 3 CITY OF SOUTHLAKE, TEXAS COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30, 1997 Govemmental Fund Types Special Debt Capital ASSETS General Revenue Service Projects Cash and investments $ 3,220,963 $ 505,871 $ 716,701 $ 10,451,130 Investment in deferred compensation plan Receivables (net of allowances for estimated uncollectibles) Taxes 336,719 86,958 72,293 Accounts 8,353 5,725 Unbilled services Special assessments Inventories 24,414 Prepaid expenditures Restricted cash and investments Revenue bond debt service Water and sewer capital improvements Customer deposits Bond issue costs, net of amortization Capacity rights Construction -in- progress Fixed assets, net of accumulated depreciation General fixed assets Amount available in debt service fund Amount to be provided for retirement of general Tong -term debt TOTAL ASSETS $ 3,590,449 $ 598,554 $ 788,994 $ 10,451,130 The Notes to Combined Financial Statements are an integral part of this statement. 4 Page 1 of 2 Proprietary Fiduciary Totals Fund Type Fund Type Account Groups (Memorandum Only) General General Fixed Long -Term Enterprise Agency Assets Debt 1997 1996 $ 1,012,259 $ 47,867 $ $ $ 15,954,791 $ 9,975,171 508,847 508,847 316,160 495,970 489,857 1,196,459 1,210,537 961,426 426,626 426,626 194,419 50,262 50,262 41,844 24,414 11,085 397 397 7,731 335,168 335,168 562,356 6,668,641 6,668,641 3,594,168 82,100 82,100 170,565 250,860 250,860 266,576 9,137,821 9,137,821 9,324,307 1,028,300 1,028,300 2,402.062 29,301,472 29,301,472 23,340,967 11,885,400 11,885,400 8,905.585 671,970 671,970 745,346 30,972,734 30,972,734 16,922,501 $ 49,490,365 $ 556,714 $ 11,885,400 $ 31,644,704 $ 109,006,310 $ 78.232,126 5 CITY OF SOUTHLAKE, TEXAS COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30, 1997 Govemmental Fund Types LIABILITIES AND FUND EQUITY Special Debt Capital AND OTHER CREDITS General Revenue Service Projects Liabilities Accounts payable $ 407,725 $ $ $ 431,432 Other accrued liabilities 412,039 727 44.731 Deferred Revenue 173,083 72.293 Current portion of contract obligations Payable from restricted assets Current portion of revenue bonds Accrued interest payable Customer deposits General obligation and govemmental revenue bonds Note payable Lease obligation Revenue bonds - noncurrent Contract revenue obligations - noncurrent Deferred compensation plan payable Total liabilities 992.847 727 117.024 431,432 Fund Equity and Other Credits: Contributed capital Investment in general fixed assets Retained earnings: Reserved for revenue bond retirement Unreserved Fund balance Reserved for debt service 671,970 Reserved for recycling 11,982 Reserved for police expenditures 19,583 Reserved for parks 578,244 Reserved for capital projects 10,019,698 Reserved for inventories and prepaid expenditures 24,414 Reserved for encumbrances 98,179 Unreserved Undesignated 2,463.027 Total fund equity and other credits 2,597.602 597,827 671,970 10,019,698 TOTAL LIABILITIESAND FUND EQUITY AND OTHER CREDITS $ 3.590,449 $ 598,554 $ 788.994 $ 10,451,130 The Notes to Combined Financial Statements are an integral part of this statement. 6 Page 2 of 2 Proprietary Fiduciary Totals Fund Type Fund Type Account Groups (Memorandum Only) General General Fixed Long -Term Enterprise Agency Assets Debt 1997 1996 $ 1,409,486 $ 47,867 $ $ $ 2,296,510 $ 2,003,455 145,256 160,233 762,986 579,930 790,159 1,035,535 1,043,750 416,702 416,702 259,928 306,000 306,000 291,000 54,954 54,954 51,100 82,100 82,100 170.565 30,611,137 30,611,137 16,596,137 652,050 652,050 869,400 221,284 221,284 82,378 5,279,000 5,279,000 5,585,000 10,539,631 10,539,631 10,914,318 508,847 508,847 316,160 19,023,288 556,714 31,644,704 52,766,736 38,763,121 26,271,356 26,271,356 18,774,436 11,885,400 11,885,400 8,905,585 220,256 4,195,721 4,195,721 3.468,158 671,970 745,346 11,982 13,122 19.583 23,242 578,244 784,786 10,019,698 4,193,543 24,414 13,996 98,179 2.463,027 2,326,535 30,467,077 11,885,400 56,239,574 39,469.005 $ 49.490.365 $ 556,714 $ 11,885,400 $ 31,644,704 $ 1� $ 78,232.126 , 7 CITY OF SOUTHLAKE, TEXAS COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES YEAR ENDED SEPTEMBER 30, 1997 Totals Governmental Fund Types (Memorandum Only) Special Debt Capital General Revenue Service Projects 1997 1996 Revenues Taxes $ 6,297,394 $ 965,508 $ 2,304,859 $ $ 9,567,761 $ 7,403,105 Licenses, permits and fees 2,525,797 143,877 2,669,674 2,861,764 Charges for services 354,555 354,555 222,052 Fines and forfeits 509,328 509,328 435,537 Interest and miscellaneous 352,315 48,115 94.273 722.169 1,216.872 741,406 Total revenues 10,039.389 1,157,500 2,399,132 722,169 14,318,190 11,663.864 Expenditures Current City secretary/mayor 242,575 242,575 255,958 City manager's office 499,939 499,939 432,524 Human Resources 144,948 144,948 Economic development 90,319 90,319 110,511 Support services 1,497,945 1,497,945 981,311 Finance 418,017 418,017 390,664 Municipal court 301,380 301,380 244,814 Police services 2,242,915 10,433 2,253,348 1,389,060 Fire services 1,460,111 1,460,111 901,925 Public safety support 975,419 975,419 835,717 Building inspection 474,511 474,511 351,228 Public works administration 690,191 690,191 360,338 Parks and recreation 1,013,013 70,623 1,083,636 885,560 Streets and drainage 903,988 903,988 871,038 Community development 463,551 463,551 417,495 Capital projects 2,774,828 2,774,828 2,823,P" Debt service Principal retirement 1,292,350 1,292,350 1,00; Interest and fiscal charges 1,032,796 1,032,796 865,tr» Payment to bond escrow agent 259,234 259,234 Total expenditures 11,418,822 81,056 2,584,380 2,774,828 16,859,086 13,120,751 Excess (deficiency) of revenues over expenditures (1,379,433) 1,076,444 (185,248) (2,052,659) (2,540,896) (1,456,887) Other financing sources (uses) Operating transfers in 640,904 696,645 590,000 1,927,549 1,626,932 Operating transfers out (7,904) (1,286,645) (584,773) (1,879,322) (1,822,579) Proceeds of bonds 828,485 7,288,814 8,117,299 2,845,000 Proceeds of refunding bonds 3,469,867 3,469,867 Payment to refunding bond escrow agent (3,469,867) (3,469,867) Lease proceeds 161,897 161,897 88,109 Total other financing sources (uses) 1,623,382 (1,286,645) 111,872 7,878,814 8,327,423 2,737,462 Excess (deficiency) of revenues and other sources over expenditures and other uses 243,949 (210,201) (73,376) 5,826,155 5,786,527 1,280,575 Fund balance, beginning of year 2,353,653 808,028 745,346 4,193,543 8,100,570 6,819,995 Fund balance, end of year $ 2.597,602 $ 597,827 $ 671,970 $ 10,019,698 $ 13,887,097 $ 8,100,570 The Notes to Combined Financial Statements are an integral part of this statement. 8 `..� UthI 9 CITY OF SOUTHLAKE, TEXAS COMBINED STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUND YEAR ENDED SEPTEMBER 30, 1997 General Fund Variance - Favorab e Budget Actual (Unfavorable) Revenues Taxes $ 6,416,249 $ 6,297,394 $ (118,855) Licenses, permits and fees 2,215,010 2.525,797 310,787 Charges for services 363,850 354,555 (9,295) Fines and forfeits 513,700 509,328 (4,372) Interest and miscellaneous 313,751 352.315 38,564 Total revenues 9,822,560 10.039.389 216,829 Expenditures Current City secretary/mayor 224,577 242,575 (17.998) City manager's office 505,358 499,939 5,419 Human Resources 135,999 144,948 (8,949) Economic development 96,427 90,319 6,108 Support services 1,261,277 1,497,945 (236,668) Finance 423,576 418,017 5,559 Municipal court 311,298 301,380 9,918 Police services 2,210,622 2,242,915 (32,293) Fire services 1,379,162 1,460,111 (80,949) Public safety support 972,363 975,419 (3,056) Building inspection 509,950 474,511 35,439 Public works administration 586,050 690,191 (104,141) Parks and recreation 1,022,917 1,013,013 9,904 Streets and drainage 900,793 903,988 (3,195) Community development 488,664 463,551 25,113 Capital projects Debt service Principal retirement Interest and fiscal charges Payment to bond escrow agent Total expenditures 11,029,033 11,418.822 (389.789) Excess (deficiency) of revenues over expenditures (1,206,473) (1,379,433) (172,960) Other financing sources (uses) Operating transfers in 633 ,000 640,904 7,904 Operating transfers out (7904) (7,904) Proceeds of bonds 842,184 828,485 (13,699) Proceeds of refunding bonds Payment to refunding bond escrow agent Lease proceeds 161 ,897 161,897 Total other financing sources (uses) 1,475,184 1,623,382 148.198 Excess (deficiency) of revenues and other sources over expenditures and other uses 268,711 243,949 (24,762) Fund balance, beginning of year 2,353,653 2,353,653 Fund balance, end of year $ 2.622.364 $ 2.597,602 $ (24,762) The Notes to Combined Financial Statements are an integral part of this statement. 10 Special Revenue Fund Debt Service Fund Variance- Variance - Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) $ 1,050,000 $ 965,508 $ (84.492) $ 2,287,344 $ 2,304,859 $ 17,515 53,000 143,877 90,877 48,400 48,115 (285) 70,000 94,273 24,273 1,151,400 1,157,500 6,100 2,357,344 2.399,132 41.788 10,433 (10,433) 121,162 70,623 50,539 1,292,350 1,292,350 1,047,425 1,032,796 14,629 259,234 (259,234) 121,162 81,056 40,106 2,339,775 2,584,380 (244,605) 1,030.238 1,076,444 46.206 17,569 (185,248) (202,817) 436,645 696,645 260,000 (1,026,645) (1,286,645) (260,000) (584,773) (584,773) 3,469,867 3,469,867 (3,469,867) (3,469,867) (1,026,645) (1,286.645) (260,000) (148,128) 111,872 260,000 3,593 (210,201) (213,794) (130,559) (73,376) 57,183 808,028 808,028 745,346 745.346 $ 811,621 $ 597,827 $ (213.794) $ 614,787 $ 671,970 $ 11 CITY OF SOUTHLAKE, TEXAS PROPRIETARY FUND TYPE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS FOR THE YEAR ENDED SEPTEMBER 30, 1997 Total Enterprise (Memorandum Fund Only) 1997 1996 Operating revenues Water, sewer and garbage $ 6,446,646 $ 6,115,383 Service fees 334,386 364,404 Other miscellaneous revenues 201.629 280,100 Total operating revenues 6,982,661 6,759,887 Operating expenses Personal service 653,635 582,751 Contractual services 544,810 615,642 Lease payments 1,256 2,259 Supplies 22,339 5,790 Utilities 2,695,717 2,675,136 Administrative 34,128 29,452 Maintenance 833,218 989,337 Professional benefits 19,523 13,969 Depreciation 1,037,311 764,869 Total operating expenses 5,841,937 5,679,205 Operating income 1,140,724 1,080,682 Non - operating revenue (expense) Interest income 453,925 348,064 Interest expense (1,325,483) (1,401,566) Gain (loss) on sale of assets (36,779) Total non - operating revenue (expense) (908,337) (1,053.502) Net income before operating transfers 232,387 27,180 Operating transfers Operating transfers in 584,773 251,203 Operating transfers out (633,000) (55,556) Total operating transfers (48,227) 195,647 Net income (loss) 184,160 222,827 Add back depreciation on contributed assets 323,147 320,469 Retained earnings at beginning of year 3,688,414 3,145,118 Retained eamings at end of year $ 4,195,721 $ 3,688,414 The Notes to Combined Financial Statements are an integral part of this statement. 12 (1 of 2) CITY OF SOUTHLAKE, TEXAS PROPRIETARY FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 1997 Total Enterprise (Memorandum Fund Only) 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers and users $ 6,416,397 $ 6,734,787 Cash payments to suppliers (4,117,691) (3,616,029) Cash payments to employees (542,981) (596,720) Net cash provided by operating activities 1,755,725 2,522,038 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital expenditures (4,166,790) (5,309,540) Principal payments on bonds, notes and capital lease obligations (508,913) (234,000) Proceeds from sale of asset 31,211 Interest paid (1,308,797) (1,125,906) Capital contribution 6,481,299 1,278,179 Net cash provided by (used for) capital and related financing activities 528,010 (5,391,267) CASH FLOWS FROM NON - CAPITAL FINANCING ACTIVITIES: Cash received from other funds 584,773 251,203 Cash paid to other funds (633,000) (55,556) Net cash provided by (used for) non - capital financing activities (48,227) 195,647 CASH FLOWS FROM INVESTING ACTIVITIES: Interest received 453,925 348.064 Net increase in cash and cash equivalents 2,689,433 (2,325,518) Cash and cash equivalents at the beginning of year 5,408,735 7,734,253 Cash and cash equivalents at the end of year $ 8,098,168 $ 5,408,735 The Notes to Combined Financial Statements are an integral part of this statement. 13 (2 of 2) CITY OF SOUTHLAKE, TEXAS PROPRIETARY FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 1997 Total Enterprise (Memorandum Fund Only) 1997 1996 RECONCILIATION OF CASH AND CASH EQUIVALENTS OF STATEMENT OF CASH FLOWS TO THE BALANCE SHEET: Current assets $ 1,012,259 $ 1,081,646 Restricted assets 7,085.909 4,327,089 Cash and cash equivalents at the end of the year $ 8,098,168 $ 5,408,735 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income $ 1,140,724 $ 1,080,682 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,037,311 764,869 Decrease (increase) in assets Receivables (528,062) (39,485) Prepaid 4,423 (1,953) Increase (decrease) in liabilities Payables and accruals 189,794 703,540 Customer deposits (88,465) 14,385 Net cash provided by operating activities $ 1,755,725 $ 2,522,038 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: During the fiscal year ended September 30, 1997 the estimated value of water and sewer infrastructure contributed by developers was $1,338,768. The Notes to Combined Financial Statements are an integral part of this statement. 14 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies The combined financial statements of the City of Southlake are presented in accordance with generally accepted accounting principles applicable to state and local govemmental units as set forth by the Govemmental Accounting Standards Board. The following is a summary of the more significant accounting policies: A. Reporting Entity The City of Southlake operates under a Home Rule Council - Manager form of govemment. 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 govemment of the City. The City of Southlake's general purpose financial statements include the separate govemmental entities that are controlled by or are dependent on the City. The determination to include separate govemmental entities is based on the criteria of Govemmental Accounting Standards (GASB) Statement 14. GASB Statement 14 defines the reporting entity as the primary govemment and those component units for which the primary govemment is financially accountable. To be financially accountable, a voting majority of the component unit's board must be appointed by the primary govemment, and either (A) the primary govemment must be able to impose its will, or (B) the primary govemment may potentially benefit financially or be financially responsible for the component unit. Based on these criteria the financial information of the Southlake Parks Development Corporation is included within the reporting entity. The Southlake Parks Development Corporation (the "Corporation") is a nonprofit industrial development corporation formed in January, 1994 under the Development Corporation Act of 1979. The Corporation is organized exclusively to act on behalf of the City for the financing, development and operation of parks and recreation facilities. The affairs of the Corporation are managed by a board of directors which is composed of seven persons appointed by the City Council. However, the annual corporate budget and issuance of debt must be approved by the City Council. Although it is a legally separate entity, the Corporation is reported as if it were part of the primary govemment because its sole purpose is to finance and develop parks and recreational facilities on behalf of the City. 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 six generic fund types, three broad fund categories and two account groups as follows: 15 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies - continued B. Fund Accounting - continued Govemmental 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 Proiects 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 improvements and interest eamed on such monies. Proprietary Fund Type 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. Fiduciary Fund Types Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, other govemments, 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 Lona -Term Debt Account Group is utilized to account for the long -term liabilities of govemmental fund types. 16 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies - continued 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 govemmental 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 ". Govemmental fund operating statements present increases (revenues and other financing resources) 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 govemmental fund type operations and long -term liabilities expected to be financed from govemmental 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 concemed 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 determination of net income, financial position and cash flows. 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 govemmental 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, intergovemmental 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 eamed and their expenses are recognized when they are incurred. The City has elected not to apply Financial Accounting Standards Board pronouncements issued after November 30, 1989 for its proprietary funds. 17 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies - continued 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 the majority of the members of the City Council. Upon adoption the budget is filed with the City Secretary. During the fiscal year, the City Council may transfer funds allocated to a department to another department or re- estimate revenues or expenditures. The City Manager may transfer budgeted funds within a department. Expenditures should not exceed appropriations at the department level, the classification level as reported in the combined financial statements. Supplemental appropriations to amend the budget during the year were not material to total appropriations. The final amended version of the budget was utilized in this report. Unused appropriations lapse at the end of each fiscal year. The budgets for the general fund, special revenue funds, and debt service funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). The final amended version of these budgets are used in this report. Control over the expenditures for the capital projects funds are maintained through general obligation bond indenture agreements, and authorized construction contracts. Accordingly, formal budgetary integration is not employed for the capital projects funds. F. Cash and Investments Cash and investments are comprised of demand accounts, imprest funds and certificates of deposit. The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the combined financial statements as cash and investments or restricted cash and investments. 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 govemment. 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 thirty 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. 18 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies - continued G. Property Taxes - continued The City's taxable assessed valuation of $1,308,239,821 and tax rate of .422 per $100 of taxable assessed valuation resulted in a tax levy of $5,520,772. 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. A lien is created and attaches to property on January 1 each year until taxes are paid. Tax collection of the 1996 tax levy and total collections, including collections of prior year taxes, during the fiscal year ended September 30, 1997 were 98.78% and 104.5% of the current year tax levy, respectively. 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 uncollectible taxes and water and sewer billings at September 30, 1997 and 1996 were $65,762 and $23,099, respectively. 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 and supplies 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 cortributed). 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 are as follows: 19 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies - continued K. Property, Plant and Equipment - continued Category Life Buildings 20 -30 years Distribution system 30 years Storage tanks 30 years Equipment 5-10 years Maintenance, repairs, renewals and betterments which do not enhance the value or increase the basic productive capacity of assets are charged to expense as incurred. L. General Fixed Assets General fixed assets have been acquired for general govemmental purposes from govemmental fund types. Assets purchased in govemmental funds are recorded as expenditures in govemmental 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 eamed 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 govemmental fund types for the amount expected to be liquidated with expendable financial resources. The remainder of the liability from compensated absences of govemmental 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 retumed 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: 20 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies - continued N. Contributed Capital - continued Assets contributed by City. Assets contributed by developers. Receipts of federal grants specifically designated for acquisition of assets. System development and impact fees charged to fund the costs of capital improvements to the utilities system. Special assessments levied to fund costs of capital improvements. Proceeds of general obligation debt utilized to acquire proprietary assets for which debt will be retired with debt service tax. O. Reserves Reserves indicate portions of fund equity legally segregated for a specific future use. P. Tax Revenues The City's tax revenues consist of property tax, franchise tax, and City sales tax. The ordinance levying property taxes specifies the percentage applicable to the General Fund and Debt Service Fund. Tax revenues by fund for the year ended September 30, 1997 were as follows: General Special Revenue Debt Service Fund Funds Funds Total Property taxes $ 3,464,261 $ S 2,304,859 S 5,769,120 Franchise taxes 899,599 899'599 Sales taxes 1,931,016 965,508 2,896,524 Mixed beverage taxes 2.518 2.518 Tax revenue S 6 7q7 1Q4 a i5 508 a.2-3011.1152 S 9 !S67 761 Q. Cash Flow Presentation For the purposes of presenting the Statement of Cash Flows, the City considers all highly liquid investments with an original maturity or initial maturity of Tess than three months to be cash equivalents. The enterprise funds equity in the City's pooled cash and investments is considered as a cash equivalent. R. 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 c consolidation. Interfund eliminations have not been made in the aggregation of this data. S. Comparative Data Comparative totals for the prior year have been presented in the accompanying combined financial statements in order to provide an understanding of changes in the City's financial position and operations. 21 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 2. Deposits and Investments with Financial Institutions The City's investment policies are govemed 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; Direct obligations of the State of Texas or its agencies; Other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States; 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 having received a rating of not less than A or its equivalent; Certificates of deposit 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; Local Govemment Investment Pools as authorized by State Statute. Maturities on all investments are consistent with the City's cash flow requirements. The City's deposits and investments are pooled accounts consisting of the following: Cost Market Deposits with financial institutions $ 2,870,511 $ 2,870,511 U.S. Govemment Agency obligation (at cost) 16,022,220 16,085,578 Govemment investment pools (at cost) 4.147,969 4.147.969 23,040,700 23,104,058 Deferred compensation plans (at market) 508.847 508.847 s23 549 547 $ 73 612905 Deposits with financial institutions are fully insured or collateralized with securities held by the City or its agent in the City's name. All investments were insured or registered, or securities held by the City or its agent in the City's name. Govemment pool investments are not categorized because they are not evidenced by securities that exist in physical or book entry form. 22 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 3. Fixed Assets General Fixed Assets All fixed assets acquired for govemmental 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 $ 8,905,585 $ 3,522,790 $ 1,368,763 $ 4,014,032 Additions 2,979,815 1,478,317 245,198 1,256,300 Deletions Balance, ending $11 885 40Q $ 5 001 107 $ 1 613 961 $ 5 270 332 Proprietary Fixed Assets A summary of proprietary fund fixed assets by type of property is as follows: Land and improvements $ 2,117,742 Buildings and improvements 349,962 Distribution system 31,386,169 Equipment 865.844 34,719,717 Less accumulated depreciation 5.418.245 $7q301 477 Note 4. General Long -Term Debt General long -term debt of the City consists of general obligation bonds, certificates of obligation, govemment revenue bonds, notes payable, capital financing lease and obligations under compensated absence agreements. General obligation bond, certificates of obligation, govemment revenue bonds, notes payable and lease obligation retirements are provided from the debt service tax within the Debt Service Fund. The retirement of accrued vacation is provided by financial resources of the General Fund. 23 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 4. General Long -Term Debt - continued General obligation bonds and govemmental revenue bonds, certificates of obligation, notes payable, and lease obligations outstanding at September 30, 1997 consist of the following: Date Amount of Amount Interest Date Series Original Outstanding Rates Issued Matures Issue 9 -30-97 General Obligation Bonds General Obligation, Refunding, Series 1990 6.1 - 7.1 % 1990 2009 $ 3.076.137 $ 476.137 Tax and Water Works and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1990 7.25 - 9.75 1990 2012 1,100,000 175.000 Tax and Water Works and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1992 6.0 -8.0 1992 2012 1,300,000 1,130,000 General Obligation Bonds, Series 1992 5.2 -8.2 1992 2013 1,500,00 1,370,000 General Obligation Refunding Bonds, Series 1993 2.8 - 4.7 1994 2013 6,490,000 5,925,000 Public Property Contractual Obligation, Series 1993 2.6 - 3.65 1994 1999 745,000 295,000 Certificates of Obligation, Series 1994 3.0 - 4.4 1994 1998 320,000 70,000 Revenue Certificates of Obligation, Series 1995 5.5 1996 2001 290,000 290,000 Revenue Certificates of Obligation, Series 1996 5.05 - 5.15 1996 2015 2,380.000 2.335,000 Revenue Certificates of Obligation, Series 1997 3.75 - 5.60 1997 2017 9,670,000 9.670.000 Governmental Revenue Bonds 21.736.137 Sales Tax Revenue Bonds, Refunding and Improvements, Series 1997 3.5 - 5.38 1997 2021 9,220,000 1.11.10.220 Notes Payable Notes payable - Land 5.25 1994 2000 868,000 $ 520,800 Notes payable - Land 7.5 1995 2000 115,000 86,250 Notes payable - Land 7.5 1995 2000 60,000 45.000 Lease Obligations s 652 050 Lease Obligation 5.55 1996 2001 98,127 $ 75,300 Lease Obligation 10.25 1997 2002 151,879 145.984 5_22L254 A summary of changes in general long -term debt follows: Sales Tax General Revenue Compensated Note Lease Total Obligation Bonds Absences Payable -Land Obligation Balance, beginning 517,667,847 $12,796,137 $ 3,800,000 $ 119,932 $ 869,400 $ 82,378 Additions 19,092,198 9,670,000 9,220,000 40,301 181,897 Deletions 5.115.341 730.000 4.145.000 217.350 22.991 Balance, ending 631.944 704 X21 736 137 s 8 8_ 75 000 5 1 s0 233 1_152.050 11.221.2F 24 • CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 4. General Long -Term Debt - continued The debt service requirements of general obligation bonds and sales tax revenue bonds are as follows: General Obliaation Bonds Due Fiscal Year Ending Principal Interest Total 1998 S 875,000 S 1,314,447 S 2,189,447 1999 1,019,532 1,110,666 2,130,198 2000 906.754 1,074,778 1,981.532 2001 1,234,851 1,029,244 2,264,095 2002 1,090.000 883,836 1,973,836 2003 -2017 16.610.000 6.216.770 22.826.77Q $71 736117 $11 67g 741 $31'165 876 Sales Tax Revenue Bonds Due Fiscal Total Year Ending Principal Interest 1998 S 205,000 $ 446,813 S 651,813 1999 215.000 439,125 654,125 2000 225,000 430,525 655,525 2001 230,000 421.300 651,300 2002 240,000 411.640 651.640 2003 -2021 7.760.000 4 734 677 12.494.677 S 8.875000 S B� 080 ¶15 754 080 N otes Payable Due Fiscal Total Year Ending Principal Interest 1998 S 217,350 S 37,186 S 254,536 1999 217,350 24,791 242,141 2000 217.350 12.395 229.745 S 652 050 $ 74 372 $ 726 422 Lease Obligation Due Fiscal Interest Total Year Ending Principal 1998 S 44,334 S 17,133 S 61,467 1999 48,018 13,449 2000 52,042 9,425 61,467 2001 48.888 12,580 61.468 2002 28.002 10.947 —MR b 771 784 $ 6'1514 L.224.2111 Note 5. Proprietary Long -Term Debt Proprietary long -term debt consists of revenue bonds and revenue contract obligations. Resources to retire these obligations are provided from the net revenues of the water and sewer fund and transfers from the debt service fund. Revenue Bonds and Combination Tax and Revenue Certificates of Obligations Revenue bonds were issued to make improvements to the water and sewer system. Revenue bonds are payable solely from the net revenues of the water and sewer system. Combination tax and revenue certificate of obligations are payable from the net revenues of the water and sewer system and general debt service tax. 25 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 5. Proprietary Long -Term Debt - continued Revenue Bonds and Combination Tax and Revenue Certificates of Obligations - continued Revenue bonds and combination tax and certificate of obligations outstanding at September 30, 1997 consist of the following: Date Amount of Balance Interest Date Series Original Outstanding Rates Issued Matures Issue 9 -30-97 Waterworks and Sewer System Revenue Bonds, Series 1984 9.80 - 11.75% 1984 2001 $ 500,000 $ 210,000 Waterworks and Sewer System Revenue Bonds, Series 1987 3.75 1987 2005 217,000 105,000 Tax and Waterworks and Sewer System Surplus Revenue Certificate of Obligation, Series1992A 5.20 -8.20 1992 2013 1,300,000 1,185,000 Tax and Waterworks and Sewer System Revenue Certificates of Obligation, Series 1994 5.95 - 8.75 1994 2015 4,350,000 4.085.000 5.5.51110:10 Contract Revenue Obligations The City has entered into various contractual agreements to unconditionally finance the principal and interest or a fixed percentage of principal and interest of Trinity River Authority (TRA) Contract Revenue Bonds. Under the agreements, the Trinity River Authority utilized the bond proceeds to administer and construct various sewer and wastewater treatment projects on the City's behalf. Such agreements provide the City title to the assets upon retirement of the debt or capacity rights in the use of constructed assets. The City has included in its financial statements its proportionate share of these obligations and its investment in these assets as capacity rights. Contract revenue obligations at September 30, 1997 consist of the following: Amount Date Date Outstanding Issued Matures 9-30-97 TRA - City of Southlake Sewer System Project - Contract Revenue Obligations - Series 1990 1990 2011 $ 1,055.000 TRA - Big Bear Creek Interceptor - Contract Revenue Obligation - Series 1990 1990 2000 484,416 TRA - Denton Creek Wastewater Pressure Interceptor - Contract Revenue Obligation - Series 1990 1990 2012 1,270,000 TRA - Denton Creek Wastewater Pressure Interceptor - Contract Revenue Obligation - Series 1994 1994 2017 5,230,000 TRA - Big Bear Creek Refunding - Series 1996 1996 2011 3.090.964 511 070 380 Total principal and interest requirements outstanding for all revenue bonds and contract revenue obligations for the respective years ending September 30 are as follows: Princioal Interest Tatal 1998 $ 722,702 $ 1,032,288 $ 1,754,990 1999 767,158 976,983 1,744,141 2000 825,614 917,829 1,743,443 2001 780,752 856,809 1,637,561 2002 756,162 803,693 1,559,855 2003 -2019 12.802.992 5.446.841 18.249.833 S16 655 380 stn 0'M 44.1 26 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 6. Advance Refunding Resulting in In- Substance Defeasance of Debt During 1997, the City issued $9,220,000 in Refunding and Improvement Sales Tax Revenue Bonds, of which $4,112,000 was issued to advance refund $3,800,000 of outstanding 1994 Series bonds. The remaining proceeds of $5,108,000 will be used for park and related improvements. The City advance refunding resulted in a reduction of the City's debt service payments over the next 16 years by $504,016 which resulted in an economic loss (difference between the present value of the debt service payments of the old and new debt of $130,567). In previous years the City has legally defeased certain outstanding general obligation and revenue debt by placing funds into irrevocable trusts pledged to pay all future debt service payments of the refunded debt. Accordingly, the trust pledged to pay all future debt service payments of the refunded debt and the liability for the defeased issues are not included in the City's financial statements. As of September 30, 1997 the following outstanding bonds were legally defeased: Series Type Amounts 1988 Combination Tax and Revenue Certificates of Obligation $ 1,390,000 1990 Certificates of Obligation 745,000 1990 General Obligation 2,070,000 1990 Big Bear Creek Wastewater Interceptor System Contract Revenue Bonds 2,787,074 1994 Sales Tax Revenue Bonds 2,800,000 1994 Sales Tax Subordinate Lien Revenue Bonds 1.000.000 $10 792 074 The difference between the reacquisition price of refunded proprietary debt and its net carry value has been reported as a reduction of the refunding debt on the balance sheet and is being amortized as a component of interest expense over four years (the remaining life of the refunded debt). The unamortized balance at September 30, 1997 was $114,047. Current year amortization of the deferred amount is $39,015. 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 688 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 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 27 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 7. Retirement Plan - continued Plan Description - continued 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 that are one year before the effective date. 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 goveming body of the City, within the options available in the state statutes goveming TMRS and within the actuarial constraints also in the statutes. Contributions The contribution rate for the employees is 6 %, and the City matching percent is currently 200 %, both as adopted by the governing body of the City. Under the state law goveming TMRS, the City contribution rate is annually determined by the actuary. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his retirement becomes effective. The prior service contribution rate amortizes 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, 1996. 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. The City's total payroll in fiscal year 1997 was $5,868,459 and the City's contributions were based on a payroll of $5,714,331. Both the City and the covered employees made the required contributions, amounting to $419,416 (7.07% of covered payroll for the months in calendar year 1996, 5.84% normal cost plus 1.23% to amortize the unfunded actuarial liability, and 7.48% for the months in calendar year 1997, 6.13% normal cost plus 1.35% to amortize the unfunded actuarial liability) for the City and $342,824 (6 %) for the employees. The City adopted changes in the plan since the previous actuarial valuation, which had the effect of increasing the City's contribution rate for 1997 by 0.06% of payroll. There were no related -party transactions. 28 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 7. Retirement Plan - continued 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 Govemmental 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 eamed 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, 1996. Because of the money - purchase nature of the plan, the interest rate assumption, currently 8.0% per year, does not have as 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 102.7% of book value as of December 31, 1996. Pension Benefit Obligation Annuitants currently receiving benefits $ 27,401 Terminated employees 323,689 Current employees Accumulated employee contributions including allocated invested earnings 1,320,374 Employee- financed vested 1,607,641 Employer - financed nonvested 513.228 Total $ 3 7q7 333 Net assets available for benefits, at book value $ 2,912,059 Unfunded pension benefit obligation 880.274 3 7q7 333 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 the adoption of changes in the plan since the previous actuarial valuation, which had the effect of increasing the pension benefit obligation by $40,661. 29 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 7. Retirement Plan - continued Trend Information 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 may be found in the supplementary information of the City's Comprehensive Annual Financial Report. Three year trend information as of December 31 is as follows: 1996 1995 1994 Net assets available for benefits as a percentage of the pension benefit obligation 76.79% 72.90% 70.35% Unfunded benefit obligation as a percentage of annual covered payroll 20.10% 18.30% 18.30% City's contribution as a percentage of annual covered payroll 9.58% 8.42% 8.19% Note 8. Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. The Plan is administered by PEBSCO and ICMA and assets and liabilities are reported at approximate market value. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property and rights purchased with those available to the employee or other beneficiary) solely the property and rights of the City (without being restricted to the provisions of benefits under the plan), subject only to the claims of the City's general creditors. Participant's rights under the plan are equal to those of general creditors of the City in an amount equal to the fair market value of the deferred account for each participant. It is the opinion of management of the City that there is no liability for losses under the plan but that they do have the duty of due care that would be required of an ordinary prudent investor. The City believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. 30 CITY OF SOUTHLAKE, TEXAS NOTES TO COMBINED FINANCIAL STATEMENTS Note 9. Cc+nmitments and Contingencies The City has entered various contracts with the Trinity River Authority (TRA) and other cities. Terms of the agreements provide the City will pay an amount equal to its proportional share of maintenance and operations and debt service based upon volumes of wastewater transported, treated or disposed of. The City's proportional share of future costs under these contracts is indeterminable and has not been recorded. Payments to the TRA under these contracts for the year ended September 30, 1997 was $413,986. The City has authorized various contracts obligating future funds of the City as the contracted services are performed. Significant amounts unexpended under such contracts at year end are reflected as reserves for authorized contracts in the applicable funds. Note 10. Risk Financing and Insurance The City is exposed to various risks of Toss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During the fiscal year 1990, the City joined the Texas Municipal League Workers Compensation Joint Insurance Fund for risks related to employees. Premiums are paid to the Pool, which retain a limit of loss. Reinsurance companies insure the risks beyond those limits. The City retains, as a risk, only the deductible amount of each policy. The City continues to carry commercial insurance with Texas Municipal League provided through Mutual of Omaha for other risks including general liability, property and errors and omissions. Employee group benefits are provided through Mutual of Omaha. There were no significant reductions in coverage in the past year and there were no settlements exceeding insurance coverage in each of the past three fiscal years. Note 11. Contributed Capital During 1997, contributed capital changed by the following amounts: Balance, beginning $18,774,436 Contribution from govemmental funds 6,477,747 Impact fees 1,338,768 Development contributions 3,552 Depreciation on contributed assets ( 323.147) Balance, ending $26 271 356 Note 12. Excess Expenditures Over Appropriations The following is a list of funds with expenditures exceeding appropriations: Southlake Parks Development Corporation Debt Service $ 257,935 General Fund 389,789 31 Fr L SO uth 32 APPENDIX C FORM OF BOND COUNSEL'S OPINION THIS PAGE LEFT BLANK INTENTIONALLY FULBRIGHT & JAWORSKI L.L.P. A REGISTERED LIMITED LIABILITY PARTNERSHIP TELEPHONE: 214/855 -8000 FACSIMILE: 214/855 -8200 2200 ROSS AVENUE HOUSTON WASHINGTON, D.C. WRITER'S INTERNET ADDRESS: SUITE 2800 AUSTIN @fulbright.com DALLAS, TEXAS 75201 SAN ANONIO DALLAS WRITERS DIRECT DIAL NUMBER: NEW YORK 214/855-8 LOS ANGELES LONDON HONG KONG IN REGARD to the authorization and issuance of the "City of Southlake, Texas, Tax Notes, Series 1998" (the "Notes "), dated October 15, 1998 (the "Note Date "), in the principal amount of $4,275,000, we have examined into the legality and validity of the issuance thereof by the City of Southlake, Texas (the "City "), which Notes are issuable in fully registered form only, in denominations of $5,000 or any integral multiple thereof (within a maturity), have stated maturities of February 15, 2000 through February 15, 2004, without right of prior redemption, and bear interest on the unpaid principal amount from the Note Date at the rates per annum stated in the ordinance authorizing the issuance of the Notes (the "Ordinance "), such interest being payable on February 15 and August 15 in each year, commencing August 15, 1999, to the registered owners thereof shown on the registration books of the Paying Agent/Registrar on the Record Date (stated on the face of the Notes). WE HAVE SERVED AS BOND COUNSEL for the City solely to pass upon the legality and validity of the issuance of the Notes under the Constitution and laws of the State of Texas, and with respect to the exclusion of the interest on the Notes 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. Our examinations into the legality and validity of the Notes included a review of the applicable and pertinent provisions of the Constitution and laws of the State of Texas, a transcript of certified proceedings of the City relating to the authorization and issuance of the Notes, including the Ordinance, customary certifications and opinions of officials of the City and other pertinent showings, and an examination of the Note 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, under applicable law of the United States of America and the State of Texas now in force and effect that: 1. The Notes have been duly authorized by the City, and the Notes 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; and 2. 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 Notes, interest on the 732528.1 THIS PAGE LEFT BLANK INTENTIONALLY Page 2 of Legal Opinion of Fulbright & Jaworski L.L.P. Re: $4,275,000 "City of Southlake, Texas, Tax Notes, Series 1998 ", dated October 15, 1998 Notes 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 altemative minimum taxable income of individuals or, except as hereinafter described, corporations. Interest on all tax - exempt obligations, such as the Notes, owned by a corporation will be included in such corporation's adjusted current earnings for tax years beginning after 1989 for purposes of calculating the altemative minimum taxable income of such corporations, other than an S corporation, a qualified mutual fund, a real estate mortgage investment conduit, a real estate investment trust or a financial asset securitization investment trust (FASIT). A corporation's alternative minimum taxable income is the basis on which the altemative minimum tax imposed by section 55 of the Code 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 Notes. Ownership of tax - exempt obligations such as the Notes 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 eamings and profits, owners of an interest in a FASIT, individual recipients of Social Security or Railroad Retirement Benefits, individuals otherwise qualifying for the eamed income tax credit, 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:dfc 732528.1 fi� Th Financial Advisory Services Provided By FIRST SOUTHWEST COMPANY INVESTMENT BANKERS 1 Timarron Bent Creek Subdivision Proposed Phases of Street Repairs 1. _Ai...014 Ilt SSW __ at legend 1 1 Phase I Creekway Bend I Phase II , _____\ Bent Creek Drive 1 1 Phase III Bent Creek Drive (West) Bent Trail Drive Bent Trail Circle * 41 . 2 v 1 Ini 1.1" 1111 'N.4.../vvollw41 I i ■ W 41a + No Scale l thl - /o8 I 53/4/-3 Public Works - GIS