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Item 6D & 6E
City of Southlake, Texas Southlake Parks Development Corporation FirstSouthwest4 A PlainsCapital Company CONTACT: Jim Sabonis, Managing Director jim.sabonis @firstsw.com Phone: 214- 953 -4195 Fax: 214- 953 -4050 Member FINRA & SIPC 1Subsidiary of PlainsCapital C 2014 FirstSouthwest SOUTHLAKE, TEXAS GENERAL OBLIGATION REFUNDING, SERIES 2014 TAX AND WATERWORKS AND SEWER SYSTEM LIMITED PLEDGE) REVENUE COS, SERIES 2014 SOUTHLAKE PARKS DEVELOPMENT CORPORATION SALES TAX REVENUE REFUNDING BONDS, SERIES 2014 TABLE OF CONTENTS TAB PRELIMINARY OFFICIAL STATEMENT AND NOTICE OF SALE 1 RATING REPORTS 2 S &P Fitch MARKET REVIEW AND COMMENTARY 3 SUMMARY OF BIDS AND DEBT SERVICE SCHEDULE 4 SOUTHLAKE CITY OF SOUTHLAKE, TEXAS Ei $21,040,000* General Obligation Refunding Bonds, Series 2014 $8,480,000* Tax & Waterworks & Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2014 As of February 28, 2014 Feb -14 Mar -14 Apr -14 May -14 Jun -14 S M T W Th F S S M T W Th F S S M T W Th F S S M T W Th F S S M T W Th F S 1 1 1 2 3 4 5 1 2 3 1 2 3 4 5 6 7 2 3 4 5 6 7 8 2 3 4 5 6 7 8 _6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14 9 10 11 12 13 14 15 9 10 11 12 13 14 15 13 14 15 16 17 18 19 11 12 13 14 15 16 17 16 17 18 19 20 21 16 17 18 19 20 21 22 16 17 18 19 20 21 22 20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28 23 24 25 26 27 28 23 24 W 25 26 27 28 29 27 28 29 30 25 26 27 28 29 30 31 29 30 30 31 Holiday Holiday Holiday Responsible Date Event Party Completed First Southwest sends information request for preparation of offering document FA Completed First Southwest distributes 1st draft of Preliminary Official Statement ( "POS ") and Notice of Sale ( "NOS ") for comments FA Wednesday, 03/12/14 Deadline to provide comments on 1st draft of POS and NOS City Staff, BC Monday, 03/17/14 First Southwest distributes POS to Rating Agencies and for 2nd round of comments FA Tuesday, 03/18/14 Presentation of Senes 2014 CIP Bond Funding and Refunding Status to City Council City Staff City Council Approves Resolution to Authorize Notice of Intent to issue Certificates of Obligation City Council Sunday. 03/23/14 First Publicabon of Notice of Intent to issue Certificates of Obligation City Staff Sunday. 03/30/14 Second Publication of Notice of Intent to issue Certificates of Obligation City Staff 4/7- 4/11 Credit rating conference calls /meetings City Staff, FA Thursday, 04/24/14 Deadline to provide comments on 2nd draft of POS and NOS All parties Friday, 04/25/14 Deadline to provide ratings and rating reports S &P, Fitch Monday, 04/28/14 POS and NOS posted on i -deal FA Tuesday, 0516/14 Pricing of General Obligation Refunding Bonds, Series 2014 & Certificates of Obligation, Series 2014 at Time TBD UWs, FA City Council approves Ordinances authorizing the issuance of General Obligation Refunding Bonds, Series 2014 and the City Council Certificates of Obligation, Series 2014 Thursday, 05/15/14 Distribution of Final Official Statement FA 30 days Attorney General Approves Sale BC Thursday, 06/5/14 Closing of Debt Issues and delivery of funds to Escrow Agent and the City UW, BC, PA, EA Monday, 06/9/14 Redemption of General Obligation Refunding Bonds, Series 2005 EA *Preliminary, subject to change. Key Actions to be Taken by City Council Key Actions to be Taken by City Staff Public Finance Department FirstScuthwest CITY OF SOUTHLAKE, TEXAS GO REFUNDING BONDS, S2014 TAX AND WATERWORKS AND SEWER SYSTEM LIMITED PLEDGE) REVENUE COS, S2014 ISSUER City of Southlake Telephone: (817) 748 -8042 Sharen Jackson Fax: (817) 748 -8048 1400 Main Street. Suite 440 Email: sjackson c ci.southlake.tx.us Southlake, TX 76092 FINANCIAL ADVISOR FirstSouthwest Telephone: (214) 953 -4195 (Jim) Jim Sabonis, Andre Ayala (214) 953 -4184 (Andre) & Penny Brooker (214) 953-4189 (Penny) 325 North St. Paul, Suite 800 Fax: (214) 953 -4050 Dallas, TX 75201 Email: jim.sabonis(rr firstsw.com andre.ayala@firstsw.com penny .brooker c firstsw.com BOND COUNSEL Fulbright & Jaworski LLP Telephone: (214) 855 -8068 (Bob) Bob Dransfield, Corey Admire & Jenny Hackler (214) 855 -7495 (Corey) 2200 Ross Avenue, Suite 2800 (214) 855 -8025 (Jenny) Dallas, TX 75201 Fax: (214) 855 -8200 Email: rdransfield c fulbright.com cadm ire c fulbright.com j hacklerWulbri ght.com INITIAL PURCHASER OF COs TBD Telephone: Email: INITIAL PURCHASER OF BONDS TBD Telephone: Email: PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Telephone: (214) 468 -6018 Rosalyn Davis Fax: (214) 468 -6322 2001 Bryan Street 11 Floor Email: Dallas. TX 75201 rosalyn.davis cr bnvmellon.com RATING AGENCIES Standard and Poor's Telephone: (214) 871 -1419 Brian Marshall, Kate Choban 500 North Akard Street, Suite 3200 Email: Dallas, TX 75201 brian .marshall@standardandpoors.com kate.choban@standardandpoors.com Fitch Ratings Rebecca Meyer 1 I 1 Congress Avenue. Suite 2010 Telephone (512) 215 -3733 Austin, TX 78701 Email : rebecca.meverr ;fitchratings.com SOUTHLAKE SOUTH LAKE PARKS DEVELOPMENT CORPORATION 0 $15,080,000* Sales Tax Revenue Refunding Bonds, Series 2014 Schedule of Events* As of February 28, 2014 Feb -14 Mar -14 Apr -14 May -14 Jun -14 S M T W Th F S S M T W Th F S S M T W Th F S S M T W Th F S S M T W Th F S 1 1 1 2 3 4 5 1 2 3 1 2 3 4 5 6 7 2 3 4 5 6 7 8 2 3 4 5 6 7 8 6 7 8 9 10 11 12 4 5 6 7 8 9 10 8 9 10 11 12 13 14 9 10 11 12 13 14 15 9 10 11 12 13 14 15 13 14 15 16 17 18 19 11 12 13 14 15 16 17 15 16 17 18 19 20 21 16 17 18 19 20 21 22 16 17 18 19 20 21 22 20 21 22 23 24 25 26 18 19 20 21 22 23 24 22 23 24 25 26 27 28 23 24 25 26 27 28 23 24 25 26 27 28 29 27 28 29 30 25 26 27 28 29 30 31 29 30 30 31 Holiday Holiday Holiday Responsible Date Event Party Completed First Southwest sends information request for preparation of offering document FA Completed First Southwest distributes 1st draft of Preliminary Official Statement ( "POS ") and Notice of Sale ( "NOS ") for comments FA Wednesday, 03/12/14 Deadline to provide comments on 1st draft of POS and NOS City Staff. BC Monday, 03/17/14 First Southwest distributes POS to Rating Agencies and for 2nd round of comments FA Tuesday, 04 /1/14 Presentation of Sales Tax Revenue Refunding to the Southlake Parks Development Corporation Board City Staff SPDC Board of Directors directs Staff to move forward with refunding of SPDC bonds SPDC Board City Council reviews refunding status and authorizes to move forward with the PDC bonds refunding City Council 4/7 - 4/11 Credit rating conference calls /meetings City Staff. FA Thursday, 04/24/14 Deadline to provide comments on 2nd draft of POS and NOS All parties Friday, 04/25/14 Deadline to provide ratings and rating reports S &P, Fitch Monday, 04/28/14 POS and NOS posted on i -deal FA Tuesday, 05/6/14 Pricing of Sales Tax Revenue Refunding Bonds, Series 2014 at Time TBD UWs, FA SPDC Board approves Ordinance authorizing the issuance of the Sales Tax Revenue Refunding Bonds, Series 2014, SPDC Board and conducts a public hearing. City Council approves Ordinance authorizing the issuance of the Sales Tax Revenue Refunding Bonds, Series 2014 City Council Thursday, 05/15/14 Distribution of Final Official Statement FA 30 days Attorney General Approves Sale BC Thursday, 06/5/14 Closing of Debt Issue and delivery of funds to Escrow Agent. UW, BC, PA, EA Monday, 06/9/14 Redemption of Series 1997 Bonds EA Friday, 08/15/14 Redemption of Series 2005 and Series 2006 Bonds EA `Preliminary, subject to change. Key Actions to be Taken by City Council Key Actions to be Taken by Southlake Parks Development Corporation Board Key Actions to be Taken by City Staff Public Finance Department FustSouthwest SOUTHLAKE PDC SALES TAX REFUNDING BONDS, S2014 ISSUER City of Southlake Telephone: (817) 748 -8042 Sharen Jackson Fax: (817) 748 -8048 1400 Main Street, Suite 440 Email: sjackson ci.southlake.tx.us Southlake, TX 76092 FINANCIAL ADVISOR FirstSouthwest Telephone: (214) 953 -4195 (Jim) Jim Sabonis, Andre Ayala (214) 953 -4184 (Andre) & Penny Brooker (214) 953-4189 (Penny) 325 North St. Paul, Suite 800 Fax: (214) 953 -4050 Dallas, TX 75201 Email: jim.sabonis ,firstsw.com andre. aval an firstsw. co m pennv.brookerfirstsw.com c BOND COUNSEL Fulbright & Jaworski LLP Telephone: (214) 855 -8068 (Bob) Bob Dransfield, Corey Admire & Jenny Hackler (214) 855 -7495 (Corey) 2200 Ross Avenue, Suite 2800 (214) 855 -8025 (Jenny) Dallas, TX 75201 Fax: (214) 855 -8200 Email: rdransfield(a)fulbright.com cadmired fulbright.com ihackler cr?fulbright.com INITIAL PURCHASER OF BONDS TBD Telephone: Email: PAYING AGENT The Bank of New York Mellon Trust Company, N.A. Telephone: (214) 468 -6018 Rosalyn Davis Fax: (214) 468 -6322 2001 Bryan Street 11` Floor Email: Dallas, TX 75201 rosalvn.davisrc bnvmellon.com RATING AGENCIES Standard and Poor's Telephone: (214) 871 -1419 Brian Marshall, Kate Choban 500 North Akard Street, Suite 3200 Email: Dallas, TX 75201 brian. marshall@standardandpoors.com kate .choban @standardandpoors.com Fitch Ratings Telephone : (512) 215 -3733 Rebecca Meyer 111 Congress Avenue, Suite 2010 Email : Austin, TX 78701 rebecca.mever cfitchratings.com ° FirstSouthwest4S PRELIMINARY OFFICIAL STATEMENT Ratings: A Plains Capital Company g S &P: "AAA" To LI' Dated April 29, 2014 Fitch: "AAA" (see "OTHER INFORMATION - Ratings" herein) NEW ISSUE - Book - Entry -Only In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on ° corporations. r. THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX- EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS R � +n $21,540,000* CITY OF SOUTHLAKE, TEXAS (Tarrant and Denton Counties) GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014 c° Dated Date: May 1, 2014 Y Due: February 15, as shown on page 2 Interest Accrues from date of delivery PAYMENT TERMS ... Interest on the $21,540,000* City of Southlake, Texas. General Obligation Refunding Bonds, Series 2014 (the "Bonds "), will accrue from the date of delivery (anticipated to be June 5, 2014). and will be payable February 15 and August 15 of each year commencing August 15, 2014, until maturity or prior redemption, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of an The Depository Trust Company ( "DTC ") pursuant to the Book -Entry-Only System described herein. Beneficial ownership of the = ° Bonds may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any. and interest on the Bonds will be payable by the Paying — = Agent/Registrar to Cede & Co.. which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see "THE OBLIGATIONS - Book - Entry-Only System" herein). The initial Paying Agent /Registrar is The Bank of New York Mellon Trust Company. N.A., Dallas, Texas (see "THE OBLIGATIONS - V Paying Agent /Registrar "). s - o AUTHORITY FOR ISSUANCE ... The Bonds are issued pursuant to the City's Home Rule Charter, the Constitution and general laws of q the State of Texas (the "State "), including particularly Texas Government Code, Chapter 1207, as amended. and are direct obligations of the City payable from a continuing annual ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds (the "Bond Ordinance ") (see THE OBLIGATIONS - Authority for C V Issuance of the Bonds "). PURPOSE... Proceeds from the sale of the Bonds will be used to (i) refund the portion of the City's outstanding debt shown in F Schedule I (the "Refunded Obligations ") to achieve a present value debt service savings. and (ii) pay costs of professional services including the costs of issuance of the Bonds. See "PLAN OF FINANCING — Purpose for the Bonds" and Schedule I herein. CUSIP PREFIX: 844424 MATURITY SCHEDULE & 9 DIGIT CUSIP .,p c Shown on Page 2 T SEPARATE ISSUES .. .The Bonds are being offered by the City concurrently with the "City of Southlake, Texas, Tax and Waterworks g and Sewer System (Limited Pledge) Revenue Certificates of Obligation. Series 2014" (the "Certificates"). under a common Official ' Statement and such Bonds and Certificates hereinafter sometimes referred to collectively as the "Obligations." The Bonds and 2 Certificates are separate and distinct securities offerings being issued and sold independently except for the common Official V' ° Statement, and, while the Bonds and Certificates share certain common attributes. each issue is separate from the other and should be = reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its T payment, the rights of the holders, and other features. c LEGALITY ... The Bonds are offered for delivery when, as and if issued and received by the Initial Purchaser (defined herein) and .c subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski LLP, Bond Counsel. c - Dallas, Texas, a member of Norton Rose Fulbright (see Appendix C, "Form of Bond Counsel's Opinion (THE BONDS)"). o DELIVERY... It is expected that the Bonds will be available for delivery through DTC on June 5, 2014. 2 BIDS DUE TUESDAY, MAY 6, 2014 AT 11:00 AM, CDT f 3 *Preliminary, subject to change. 2 _ 5 MATURITY SCHEDULE* CUSIP Prefix: 844424 (1) Price Principal 15 -Feb Interest or CUSIP Amount Maturity Rate Yield Suffix $ 3,955,000 2015 4,135.000 2016 4.140.000 2017 3,535,000 2018 2,635,000 2019 1,480,000 2020 780,000 2021 170,000 2022 170,000 2023 175.000 2024 175.000 2025 190,000 2026 (Interest accrues from the date of delivery) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data set forth herein is provided by CUSIP Global Services managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP services. Neither the City, the Financial Advisor nor the Initial Purchaser shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Bonds having stated maturities on or after February 15, 2025, in whole or in part, in principal amounts of $5,000, or any integral multiple thereof, on February 15, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — Optional Redemption of the Obligations'). *Preliminary, subject to change. 2 FjrstSouthwest PRELIMINARY OFFICIAL STATEMENT Ratings: A PiatnsCapitai Company S &P: "AAA" Dated April 29, 2014 Fitch: "AAA" (see "OTHER INFORMATION - NEW ISSUE - Book - Entry -Only Ratings" herein) In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes g T under existing law, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on - ° corporations. THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS ct J .4 ct „ J $8,875,000* CITY OF SOUTHLAKE, TEXAS 2 (Tarrant and Denton Counties) o TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2014 >, • Dated Date: May 1, 2014 Due: February 15, as shown on page 4 Interest accrues from date of delivery - o PAYMENT TERMS... Interest on the $8,875,000* City of Southlake, Texas. Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2014 (the "Certificates ") will accrue from the date of delivery (anticipated to be June 5, 2014). and will be payable February 15 and August 15 of each year commencing February 15, 2015, until maturity or prior redemption. and will o .L be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book - Entry-Only System ° - described herein. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof ° within a maturity. No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, ` o g and interest on the Certificates will be payable by the Paying Agent /Registrar to Cede & Co.. which will make distribution of the N N amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates (see THE 2 OBLIGATIONS - Book- Entry-Only System" herein). The initial Paying Agent /Registrar is The Bank of New York Mellon Trust A7 Company, N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent /Registrar "). AUTHORITY FOR ISSUANCE ... The Certificates are issued pursuant to the City's Home Rule Charter, the Constitution and general laws • of the State of Texas (the "State "), particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and constitute g direct obligations of the City of Southlake, Texas, (the "City "), payable from a combination of (i) the levy and collection of an annual ad c valorem tax, within the limits prescribed by law, on all taxable property within the City, and (ii) a limited pledge (not to exceed $1,000) of the Net Revenues from the operation of the City's combined Waterworks and Sewer System. as provided in the ordinance authorizing v the Certificates (the "Certificate Ordinance ") (see "THE OBLIGATIONS — Authority for Issuance of the Certificates"). ▪ PURPOSE... Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for (i) the construction of public works, to wit: (a) constructing and improving streets and sidewalks, including the acquisition of land and rights -of -way therefor, and (b) improvements and extensions to the City's combined Waterworks and Sewer System, including the V purchase of land. rights -of -way, and equipment therefor and (ii) professional services rendered in relation to such projects and the financing thereof. _ • .o CUSIP PREFIX: 844424 G Q. y n _ MATURITY SCHEDULE & 9 DIGIT CUSIP See Schedule on Page 4 A • S SEPARATE IssUES ... The Certificates are being offered by the City concurrently with the "City of Southlake, Texas. General Obligation Refunding Bonds. Series 2014" (the "Bonds "), under a common Official Statement, and such Bonds and Certificates are hereinafter n sometimes referred to collectively as the "Obligations." The Bonds and Certificates are separate and distinct securities offerings being g = issued and sold independently except for the common Official Statement, and, while the Bonds and Certificates share certain common n attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation o ` being offered, its terms for payment, the security for payment, the rights of the holders and other features. c • ° LEGALITY ... The Certificates are offered for delivery when, as and if issued and received by the Initial Purchaser (defined herein) and subject to the approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski LLP. Bond Counsel. Dallas, y o Texas, a member of Norton Rose Fulbright (see Appendix D, "Form of Bond Counsel's Opinion (THE CERTIFICATES) "). E ,o DELIVERY... It is expected that the Certificates will be available for delivery through DTC on June 5. 2014. U 7 BIDS DUE TUESDAY, MAY 6, 2014 AT 11:00 AM, CDT V .V ! L , L ' * Preliminary, subject to change. , MATURITY SCHEDULE* CUSIP Prefix: 844424 (1) Price Price Principal 15 -Feb Interest or CUSIP Principal 15 -Feb Interest or CUSIP Amount Maturity Rate Yield Suffix" Amount Maturity Rate Yield Suffix"" $ 935,000 2015 $ 225,000 2025 L005,000 2016 235,000 2026 1,045,000 2017 240,000 2027 1,085.000 2018 245,000 2028 1,130,000 2019 255,000 2029 210,000 2020 265,000 2030 210.000 2021 270.000 2031 215,000 2022 280,000 2032 220,000 2023 285,000 2033 225.000 2024 295,000 2034 (Interest to accrue from the date of delivery.) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data set forth herein is provided by CUSIP Global Services managed by Standard & Poor's Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for CUSIP services. Neither the City. the Financial Advisor nor the Initial Purchaser shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. OPTIONAL, REDEMPTION ... The City reserves the right. at its option. to redeem Certificates having stated maturities on or after February 15. 2025, in whole or in part, in principal amounts of $5.000, or any integral multiple thereof, on February 15. 2024, or any date thereafter. at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — Optional Redemption of the Obligations "). * Preliminary, subject to change. 4 For purposes of compliance with Rude 15c2 -12 of the Securities and Exchange Commission, as amended (the "Rude') and in effect on the dale of this Preliminary Official Statement, this document constitutes a Preliminary Official Statement of the Crtt• that has been deemed 'final " by the C, 4. as of no date except for the onnssron of no more than the information permitted by the Rule. No dealer, broker, salesman or other person has been authorized by the City or the Initial Purchaser to give any information, or to make any representations other than those contained in this Preliminary Official Statement, and, if given or made, such other information or representations must not he relied upon as having been authorized by the City or the Initial Purchaser This Preliminary Official Statement does not constitute an offer to sell Obligation in arty Jurisdiction to any person to whom it is unlaufl to make such offer in such jurisdiction Certain information set forth herein has been obtained from the City and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Financial Advisor. An information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof. See "CONTINUING DISCLOSURE OF INFORMATION" for a description of the City's undertaking to provide certain information on a continuing basis IN CONNECTION WITH THE OFFERING OF THE OBLIGATIONS. THE INITIAL PURCHASER MAY 0I ER -ALLOT OR EFFECT TRANSACTIONS 117-1ICH STABILIZE OR AL41NTAJN THE MARKET PRICES OF THE OBLIGATIONS AT A LEl 'EL ABOI E THAT W RICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET SUCH STABILIZING, IF COAL MENCED, MAY BE DLSCONTINI 1 ED AT ANY TIME. THE OBLIGATIONS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HA171 NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION OR E1EA1PTION OF THE OBLIGATIONS IN ACCORDANCE WITH APPLICABLE SECURITIES LA W' PRO I7SIONS 01 THE JURISDICTION IN WHICH THE OBLIG477ONS HAVE E BEEN REGISTERED, QUALIFIED OR E.IEA IPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF NONE THE CITY; THE INITIAL PURCHASER, OR THE FINANCIAL ADVISOR MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS PRELIMINARY OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY, AS SUCH INFORMATION H.4S BEEN PROVIDED BY THE DEPOSITORY TRUST COMPANY THIS PRELIMINARY OFFICIAL STATEMENT CONTAINS "FORWARD- LOOKING" STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INI OL t E KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROM FUTURE RESULTS, PERFORMANCE, AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD - LOOKING STA TEMENTS. The agreements of the City and others related to the Obligations are contained solely in the contracts described herein. Neither this Preliminary Official Statement nor any other statement made in connection with the offer or sale of the Obligations is to he construed as constituting an agreement with the purchasers of the Obligations. INVESTORS SHOULD READ THE ENTIRE PRELIMINARY OFFICIAL STATEMENT, INCLUDING THE SCHEDULE AND ALL APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. TABLE OF CONTENTS PRELIMINARY OFFICIAL STATEMENT SUMMARY 6 TAX MATTERS 34 CITY OFFICIALS, STAFF AND CONSULTANTS 9 CONTINUING DISCLOSURE OF INFORMATION 36 ELECTED OFFICIALS _... 9 SELECTED ADMINISTRATIVE STAFF 9 OTHER INFORMATION 37 CONSULTANTS AND ADVISORS 9 RATINGS..... 37 LITIGATION . .37 INTRODUCTION 10 REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE 37 PLAN OF FINANCING 10 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC THE OBLIGATIONS 12 FUNDS IN TEXAS 37 LEGAL OPINION AND NO LITIGATION CERTIFICATE . 38 TAX INFORMATION 17 FINANCIAL ADVISOR 38 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL INITIAL PURCHASER FOR THE BONDS 38 OBLIGATION DEBT 21 INITIAL PURCHASER FOR THE CERTIFICATES. 38 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY FORWARD - LOOKING STATEMETNS DISCLAIMER. . 39 CATEGORY 22 CERTIFICATE OF THE OFFICIAL STATEMENT .39 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY 23 SCHEDULE OF REFUNDED OBLIGATIONS SCHEDULE I TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY . . 23 APPENDICES TABLE 5 - TEN LARGEST TAXPAYERS. 24 GENERAL INFORMATION REGARDING THE CITY A TABLE 6 -TAT: ADEQUACY. 24 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT .. B TABLE 7 - ESTIMATED OVERLAPPING DEBT 25 FORM OF BOND COUNSELS OPINION (THE BONDS) . C DEBT INFORMATION 26 FORM OF BOND COUNSELS OPINION (THE CERTIFICATES) D TABLE 8 - PRO -FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS 26 The cover pages hereof, this page, the schedule and the appendices TABLE 9 - INTEREST AND SINKING FUND Included herein and any addenda, supplement or amendment hereto, are BUDGET PROJECTION. 27 part of the Preliminary Official Statement TABLE 10 - COMPUTATION OF SELF SUPPORTING DEBT 27 TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS 27 TABLE 12 - OTHER OBLIGATIONS.... 28 FINANCIAL INFORMATION 29 TABLE 13 - CHANGE IN NET ASSETS 29 TABLE 1 3A - GENERAL FUND REVENUES AND EXPENDITURES 30 TABLE 14 - MUNICIPAL SALES TAX HISTORY 31 TABLE 15 - CURRENT INVESTMENTS 33 5 PRELIMINARY OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Preliminary Official Statement. The offering of the Obligations to potential investors is made only by means of this entire Preliminary Official Statement. No person is authorized to detach this summary from this Preliminary Official Statement or to otherwise use it without the entire Preliminary Official Statement. THE CITY The City of Southlake, Texas (the "City ") is a political subdivision and municipal corporation of the State of Texas (the "State "), located in Tarrant and Denton Counties, Texas. The City covers approximately 23 square miles (see "INTRODUCTION - Description of the City"). THE BONDS The Bonds are issued as $21,540,000* General Obligation Refunding Bonds. Series 2014. The Bonds are issued as serial bonds maturing February 15 in the each of the years 2015 through 2026, inclusive (see "THE OBLIGATIONS " — Description of the Obligations "). THE CERTIFICATES The Certificates are issued as $8.875,000* Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2014 (the "Certificates "). The Certificates are issued as serial certificates maturing February 15 in each of the years 2015 through 2034, inclusive (see "THE OBLIGATIONS - Description of the Obligations "). PAYMENT OF INTEREST ON THE BONDS Interest on the Bonds accrues from the date of delivery (anticipated to be June 5. 2014), and is payable August 15. 2014, and each August 15 and February 15 thereafter until maturity or prior redemption (see "THE OBLIGATIONS - Description of the Obligations "). PAYMENT OF INTEREST ON THE CERTIFICATES Interest on the Certificates accrues from the date of delivery (anticipated to be June 5, 2014). and is payable February 15 and August 15 of each year. commencing February 15, 2015, until maturity or prior redemption (see "THE OBLIGATIONS - Description of the Obligations "). AUTHORITY FOR ISSUANCE OF THE BONDS The Bonds are issued pursuant to the City's Home Rule Charter, the Constitution and general laws of the State of Texas (the "State "), including particularly Chapter 1207. Texas Government Code, as amended, and an ordinance passed by City Council (the "Bond Ordinance") (see THE OBLIGATIONS — Authority for Issuance of the Bonds "). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES The Certificates are issued pursuant to the City's Home Rule Charter, the Constitution and general laws of the State, including particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and an ordinance passed by the City Council (the "Certificate Ordinance") (see "THE OBLIGATIONS - Authority for Issuance of the Certificates "). SECURITY FOR THE BONDS The Bonds constitute direct obligations of the City, payable from the levy and collection of a direct and continuing annual ad valorem tax, within the limits prescribed by law, on all taxable property located within the City (see "THE OBLIGATIONS - Security and Source of Payment of the Bonds "). SECURITY FOR THE CERTIFICATES The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of an annual ad valorem tax, within the limits prescribed by law, on all taxable property located within the City. and (ii) a limited pledge (not to exceed $1,000) of the Net Revenues from the operation of the City's combined Waterworks and Sewer System, as provided in the Certificate Ordinance (see THE OBLIGATIONS — Security and Source of Payment of the Certificates"'). * Preliminary. subject to change. 6 OPTIONAL REDEMPTION FOR THE OBLIGATIONS The City reserves the right, at its option, to redeem Obligations having stated maturities on or after February 15, 2025, in whole or in part, in principal amounts of $5,000, or any integral multiple thereof, on February 15, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — Optional Redemption of the Obligations'). TAX EXEMPTION In the opinion of Bond Counsel, the interest on the Obligations will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "TAX MATTERS ", including the alternative minimum tax on corporations. USE OF PROCEEDS FOR THE BONDS Proceeds from the sale of the Bonds will be used to (i) refund the portion of the City's outstanding debt shown in Schedule I (the "Refunded Obligations ") to achieve a present value debt service savings, and (ii) pay costs of professional services including the costs of issuance of the Bonds. See "PLAN OF FINANCING — Purpose for the Bonds" and Schedule I herein. USE OF PROCEEDS FOR THE CERTIFICATES Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for (i) the construction of public works, to wit: (a) constructing and improving streets and sidewalks, including the acquisition of land and rights -of -way therefor, and (b) improvements and extensions to the City's combined Waterworks and Sewer System, including the purchase of land, rights -of -way, and equipment therefor and (ii) professional services rendered in relation to such projects and the financing thereof. RATINGS FOR THE OBLIGATIONS The Obligations have been rated "AAA" by Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ("S &P "), and "AAA" by Fitch Ratings ( "Fitch "), without regard to credit enhancement (see "OTHER INFORMATION - Ratings "). BOOR - ENTRY -ONLY' SYSTEM The definitive Obligations will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book- Entry-Only System described herein. Beneficial ownership of the Obligations may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Obligations will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying Agent /Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Obligations (see "THE OBLIGATIONS - Book- Entry-Only System "). PAYMENT RECORD The City has never defaulted in payment of its general obligation tax debt. 7 SELECTED FINANCIAL INFORMATION G.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 ofYear Valuation Capita 2010 26,917 $ 5,362,878,794 (3) $ 199,238 $ 160,670,000 3.00% $ 5,969 2011 27,184 5.533,423,835 (4) 203,554 158.245,000 2.86% 5,821 2012 27,045 5.582,797.777 (5) 206.426 156,395.000 2.80% 5,783 2013 27,045 5,656,185,377 (6) 209.140 153.820.000 2.72% 5.688 2014 27,500 5.800,769,814 (7) 210,937 145.300,000 (9) 2.50% (9) 5,284 (9) (1) Source: City officials. (2) As reported by the Denton and Tarrant County Appraisal Districts on City's annual State Property Tax Board Reports; subject to change during the ensuing year. (3) Includes taxable incremental value of approximately $298,861,976 that is not available for payment of the City's general obligation debt. (4) Includes taxable incremental value of approximately $280,986,280 that is not available for payment of the City's general obligation debt. (5) Includes taxable incremental value of approximately $280,411,181 that is not available for payment of the City's general obligation debt. (6) Includes taxable incremental value of approximately $290,288,909 that is not available for payment of the City's general obligation debt. (7) Includes taxable incremental value of approximately $331,409,142 that is not available for payment of the City's general obligation debt. (8) Includes self - supporting debt. See "Table 10 — Computation of Self - Supporting Debt ". (9) Projected, subject to change. Excludes the Refunded Obligations, includes the Obligations. GENERAL FUND CONSOLIDATED STATEMENT SUMMARY Fiscal Years Ended September 30, 2013 2012 2011 2010 2009 Beginning Balance $ 19,959,607 $ 17.048,465 $ 18.146,566 $ 15.355,085 $ 16,924.804 Total Revenue 37,649,893 35,277,026 33,664.841 33,289.293 31.070,949 Total Expenditures 34.894,648 30.829,622 31,200,189 29.383,174 30.142.354 Net Transfers /Other Uses (1,932,330) (1,536.262) (3.562,753) (1,114,638) (2,498.314) Net Funds Available 822.915 2,911,142 17.048.465 18,146,566 15,355.085 Equity Transfer/Prior Period Adjustment - - - - - Ending Balance $ 20,782,522 $ 19,959,607 $ 17,048,465 $ 18,146.566 $ 15.355.085 For additional information regarding the City. please contact: Sharen Jackson, CPA James S. Sabonis Chief Financial Officer Managing Director slackson(aci.southlake.tx.us or jim.sabonis c ..firstsw.com City of Southlake First Southwest Company Administrative Offices 325 North Saint Paul. Suite 800 1400 Main Street, Suite 440 Dallas, Texas 75201 Southlake, Texas 76092 (214) 953-4195 (817) 481-1713 8 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Length of Term City Council Service Expires Occupation John Terrell 4 Years May -15 Executive Mayor Martin Schelling 2 Years May -14 Real Estate Councilmember Carolyn Morris 11 Years May -15 Educator Councilmember Brandon Bledsoe 4 Years May -16 Executive Mayor Pro Tem Randy Williamson 1 Year May -16 Executive Councilmember Laura Hill 1 Year May -16 Business Owner Councilmember Pamela A. Muller 5 years May -14 Community Volunteer Deputy Mayor Pro Tem SELECTED ADMINISTRATIVE STAFF Length of Name Position Service Shana Yelverton City Manager 20 Years Sharen Jackson Chief Financial Officer 14 Years Robert H. Price Director of Public Works 8 Years CONSULTANTS AND ADVISORS Auditors Weaver and Tidwell, L.L.P. Dallas, Texas Bond Counsel Fulbright & Jaworski LLP A member of Norton Rose Fulbright Dallas, Texas Financial Advisor First Southwest Company Dallas, Texas 9 PRELIMINARY OFFICIAL STATEMENT RELATING TO $21,540,000* CITY OF SOUTHLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014 $8,875,000* CITY OF SOUTHLAKE, TEXAS TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2014 INTRODUCTION This Preliminary Official Statement, which includes the Schedule and Appendices hereto, provides certain information regarding the issuance of the $21.540,000* City of Southlake, Texas, General Obligation Refunding Bonds, Series 2014 (the "Bonds ") and the $8,875,000* City of Southlake, Texas. Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation. Series 2014 (the "Certificates ", and together with the Bonds sometimes referred to collectively as the "Obligations"). Capitalized terms used in this Preliminary Official Statement have the same meanings assigned to such terms in the applicable ordinances to be adopted on the date of sale of the Obligations which will authorize the issuance of the respective Obligations (the "Certificate Ordinance" and the "Bond Ordinance'. and sometimes referred to collectively as the "Ordinances "), except as otherwise indicated herein. There follows in this Preliminary Official Statement descriptions of the Obligations and certain information regarding the City of Southlake, Texas (the "City ") and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor. First Southwest Company, Dallas, Texas. SEPARATE ISSUES... The Bonds and the Certificates are being offered concurrently by the City under a common Preliminary Official Statement and are sometimes referred to collectively herein as the "Obligations ". The Bonds and the Certificates are separate and distinct securities offerings being issued and sold independently except for the common Preliminary Official Statement, and, while the Bonds and Certificates share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its payment, the rights of holders, and other features. DESCRIPTION OF THE CITY... The City is a political subdivision and municipal corporation of the State of Texas (the "State "), duly organized and existing under the laws of the State, including the City's Home Rule Charter. The City Charter was adopted at an election held in the City for that purpose on April 4. 1987, and said Charter has not been amended since the date of its adoption except for elections held January 19, 1991, January 21, 1995, May 2, 1998, May 5, 2001 and November 6, 2007. The City operates under a Council /Manager form of government with a City Council comprised of the Mayor and six Councilmembers who are elected for staggered three -year terms. The City Council formulates operating policy for the City while the City Manager is the chief administration officer. Some of the services that the City provides are: public safety (police and fire protection), highways and streets, water and sanitary sewer utilities, culture - recreation, public improvements, planning and zoning, and general administrative services. The 2010 Census population for the City was 26,575. while the estimated 2013 population is 27,045. The City covers approximately 23 square miles. PLAN OF FINANCING PURPOSE FOR THE BONDS... Proceeds from the sale of the Bonds will be used to refund a portion of the City's outstanding debt (the "Refunded Obligations ") to achieve a present value debt service savings and to pay costs of issuance of the Bonds. See Schedule I for a detailed listing of the Refunded Obligations and their redemption date. PURPOSE FOR THE CERTIFICATES... Proceeds from the sale of the Certificates will be used for the purpose of paying contractual obligations to be incurred for (i) the construction of public works, to wit: (a) constructing and improving streets and sidewalks, including the acquisition of land and rights -of -way therefor. and (b) improvements and extensions to the City's combined Waterworks and Sewer System, including the purchase of land, rights -of -way, and equipment therefor and (ii) professional services rendered in relation to such projects and the financing thereof. * Preliminary, subject to change. 10 REFUNDED OBLIGATIONS ... A description, identification and redemption date (the "Redemption Date ") of the Refunded Obligations appears in Schedule I attached hereto. The principal and interest due on the Refunded Obligations are to be paid on the Redemption Date from funds to be deposited with Bank of America, N.A., Dallas. Texas, the paying agent /registrar for the Refunded Obligations (the "Refunded Obligations Paying Agent "). The Bond Ordinance provides that a portion of the proceeds from the sale of the Bonds, together with funds contributed by the City, if any are necessary, will be irrevocably deposited with the Refunded Obligations Paying Agent in an amount sufficient to accomplish the discharge and final payment of the Refunded Obligations on the Redemption Date. Such funds will be held by the Refunded Obligations Paying Agent pending their disbursement to redeem the Refunded Obligations on the Redemption Date and will not be available to pay the Bonds. By the deposit of such funds with the Refunded Obligations Paying Agent, the City will have effected the defeasance of the Refunded Obligations in accordance with law and, as a result of such defeasance, the Refunded Obligations will not be deemed as being outstanding obligations of the City payable from ad valorem taxes or other revenues nor for the purpose of applying any limitation on the issuance of debt. The Refunded Obligations Paying Agent, in its capacity as paying agent/registrar for the Refunded Obligations, will certify as to the sufficiency of the amount initially deposited therewith to pay the principal of and interest on the Refunded Obligations on the Redemption Date. SOURCES AND USES OF BOND PROCEEDS ... The proceeds from the sale of the Bonds, together with certain available funds from the City, are expected to be expended as follows: SOURCES OF FUNDS: Par Amount of Bonds $ Net Premium - City Contribution - TOTAL ISSUES: $ - USES OF FUNDS: Deposit to Escrow Fund $ - Costs of Issuance - TOTAL USES: $ - SOURCES AND USES OF CERTIFICATE PROCEEDS ... The proceeds from the sale of the Certificates are expected to be expended as follows: SOURCES OF FUNDS: Par Amount of Certificates $ Net Premium - TOTAL ISSUES: $ - USES OF FUNDS: Deposit to Project Fund $ - Costs of Issuance - TOTAL USES: $ - 11 THE OBLIGATIONS DESCRIPTION OF THE OBLIGATIONS... The Obligations are dated May 1, 2014 (the "Dated Date "), and mature on February 15 in each of the years and in the amounts shown on pages 2 and 4 hereof. Interest will accrue from the date of delivery of the Obligations (anticipated to be June 5. 2014), will be computed on the basis of a 360 -day year of twelve 30 -day months, and will be payable on February 15 and August 15 of each year commencing August 15, 2014 with respect to the Bonds or February 15, 2015 for the Certificates, until maturity or prior redemption. The definitive Obligations will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book - Entry-Only System described herein. No physical delivery of the Obligations will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Obligations (see "THE OBLIGATIONS - Book -Entry -Only System "). AUTHORITY FOR ISSUANCE OF THE BONDS ... The Bonds are issued pursuant to the City's Home Rule Charter, the Constitution and general laws of the State of Texas (the "State "), including particularly Chapter 1207, Texas Government Code. as amended, and an ordinance passed by City Council (the " Bond Ordinance "). AUTHORITY FOR ISSUANCE OF THE CERTIFICATES ... The Certificates are being issued pursuant to the City's Home Rule Charter, the Constitution and general laws of the State. particularly Subchapter C of Chapter 271, Texas Local Government, as amended, and an ordinance passed by City Council (the "Certificate Ordinance"). SECURITY AND SOURCE OF PAYMENT OF THE BONDS... All taxable property located within the City is subject to a continuing direct annual ad valorem tax levied by the City, within the limits prescribed by law, sufficient to provide for the payment of principal of and interest on the Bonds. SECURITY AND SOURCE OF PAYMENT OF THE CERTIFICATES... The Certificates are payable from the proceeds of an annual ad valorem tax levied, within the limits prescribed by law. on all taxable property located within the City and from a limited pledge of the Net Revenues (as defined in the Certificate Ordinance) of the City's combined Waterworks and Sewer System (the "System "), such pledge is limited to an amount of $1,000 and is subject to the prior lien on and pledge of the Net Revenues of the System to the payment and security of Prior Lien Obligations (as defined and identified in the Certificate Ordinance) and is on a parity in all respects with any existing liens on and pledges of the Net Revenues of the System to the payment and security of Previously Issued Certificates (as defined in the Certificate Ordinance). In the Certificate Ordinance, the City reserves and retains the right to issue Prior Lien Obligations without limitation as to principal amount but subject to any applicable terms, conditions or restrictions under law or otherwise as well as the right to issue additional obligations payable from the same sources as are the Certificates and, together with the Certificates and Previously issued Certificates, equally and ratably secured by a parity lien on and pledge of the surplus Net Revenues of the System. TAX RATE LIMITATION... All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and provides for a maximum ad valorem tax rate of $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City allows the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. Administratively, the Attorney General of the State of Texas will permit allocation of the $1.50 of the $2.50 maximum tax rate for all general obligation debt service, as calculated at the time of issuance. OPTIONAL REDEMPTION OF THE OBLIGATIONS ... The City reserves the right, at its option. to redeem Obligations having stated maturities on or after February 15, 2025, in whole or in part, in principal amounts of $5.000, or any integral multiple thereof, on February 15, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Obligations are to be redeemed, the City may select the maturities of such Obligations to be redeemed. If less than all the Obligation of any maturity is to be redeemed, the Paying Agent /Registrar (or DTC while the Obligations are in Book -Entry-Only form) shall determine by lot the Obligation. or portions thereof, within such maturity to be redeemed. If a Obligation (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Obligation (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent /Registrar on the redemption date. NOTICE OF REDEMPTION... Not less than 30 days prior to a redemption date for the Obligations, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Obligations to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE OBLIGATIONS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND 12 NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Obligations, unless moneys sufficient to pay the principal of and premium, if any. and interest on the Obligations to be redeemed shall have been received by the Paying Agent /Registrar prior to the giving of such notice of redemption, such notice may, at the option of the City. state that said redemption is conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and. if sufficient moneys are not received, such notice shall be of no force and effect. the City shall not redeem such Obligations and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Obligations have not been redeemed. DEFEASANCE ... The Ordinances provide for the defeasance of the Obligations when the payment of the principal of and premium, if any, on the Obligations. plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise). is provided by irrevocably depositing with a paying agent or other authorized escrow agent, in trust (1) money sufficient to make such payment or (2) Government Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of sufficient money, together with monies deposited therewith, if any, to make such payment. The Ordinances provide that "Government Obligations" means (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated. on the date of their acquisition or purchase by the City, as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that are rated, on the date of their acquisition or purchase by the City, as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (d) any other then authorized securities or obligations that may be used to defease obligations such as the Obligations under the then applicable laws of the State of Texas. The City has the right, subject to satisfying the requirements of (1) and (2) above. to substitute other Government Securities for the Government Securities originally deposited. to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the City moneys in excess of the amount required for such defeasance. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Obligations. Because the Ordinances do not contractually limit such investments, registered owners may be deemed to have consented to defeasance with such other investments. notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Government Securities or for any other Government Security will be maintained at any particular rating category. Upon making such deposit in the manner described, such defeased obligations shall no longer be deemed outstanding obligations secured by the Ordinances, but will be payable only from the funds and Government Securities deposited into escrow and will not be considered debt of the City for purposes of taxation or applying any limitation on the City's ability to issue debt for any other purpose. If any of such Obligations are to be redeemed prior to their dates of maturity, provision must have been made for giving notice of redemption as provided in the Ordinances. Upon such deposit as described above, such Obligations shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment or redemption of the Obligations have been made as described above, all rights of the City to initiate proceedings to call the Obligations for redemption, or take any other action amending the terms of the Obligations, are extinguished; provided. however, that the right to call the Obligations for redemption is not extinguished if the City: (i) in the proceedings providing for firm banking and financial arrangements, expressly reserves the right to call the Obligations for redemption; (ii) gives notice of the reservation of that right to the owners of the Obligations immediately following the making of the firm banking and financial arrangements, and (iii) directs that notice of the reservation be included in any redemption notices that it authorizes. BOOK- ENTRY -ONLY SYSTEM... This section describes how ownership of the Obligations is to be transferred and how the principal of, premium, if any, and interest on the Obligations are to be paid to and credited by DTC while the Obligations are registered in its nominee name. The information in this section concerning DTC and the Book- Entry-Only System has been provided by DTC for use in disclosure documents such as this Preliminary Official Statement. The City believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Obligations, or redemption or other notices, to DTC Participants. (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Obligations), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis. or (3) DTC will serve and act in the manner described in this Preliminary Official Statement. The current rules applicable to DTC are on file with the United States Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. 13 DTC will act as securities depository for the Obligations. The Obligations will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered certificate will be issued for each maturity of the Obligations in the aggregate principal amount of each such maturity and will be deposited with DTC. DTC, the world's largest depository, is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, is the holding company of DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks. trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant. either directly or indirectly( "Indirect Participants "). DTC has a Standard & Poor's rating of: AA +. The DTC Rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Obligations under the DTC system must be made by or through direct Participants, which will receive a credit for such purchases on DTC's records. The ownership interest of each actual purchaser of each Obligations ( "Beneficial Owner ") is in turn to be recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however. expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Obligations, except in the event that use of the book -entry system described herein is discontinued. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee. Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. or such other nominee effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations. such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent /Registrar and request that copies of notices be provided directly to them. Redemption notices relating to the Obligations shall be sent to DTC. If less than all of the Obligations within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Obligations unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined). The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Obligations are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, principal and interest payments on the Obligations will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City or the Paying Agent /Registrar on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by 14 standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent/Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent /Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Obligations are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Obligation certificates will be printed and delivered. So long as Cede & Co. is the registered owner of the Obligations, the City will have no obligation or responsibility to the Direct Participants or Indirect Participants. or the persons for which they act as nominees, with respect to the payment to or providing of notice to such Direct Participants, Indirect Participants or the persons for which they act as nominees. Use of Certain Terms in Other Sections of this Preliminmy Official Statement. In reading this Preliminary Official Statement it should be understood that while the Obligations are in the Book - Entry-Only System, references in other sections of this Preliminary Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Obligations, but (i) all rights of ownership must be exercised through DTC and the Book -Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the applicable Ordinance will be given only to DTC. Information concerning DTC and the Book -Entry System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City, the Financial Advisor or the Initial Purchaser. PAYING AGENT /REGISTRAR... The initial Paying Agent/Registrar for the Obligations is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas. In the Ordinances, the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Obligations are duly paid and any successor Paying Agent/Registrar shall be a commercial bank, trust company, financial institution or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent /Registrar. Upon any change in the Paying Agent/Registrar for the Obligations, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of such Obligations by United States mail, first class. postage prepaid, which notice shall also give the address of the new Paying Agent /Registrar. Principal of the Obligations will be payable to the registered owner at maturity or prior redemption upon presentation at the principal office of the Paying Agent /Registrar. Interest on the Obligations shall be paid to the registered owners appearing on the registration books of the Paying Agent /Registrar at the close of business on the Record Date (see THE OBLIGATIONS — Record Date for Interest Payment" herein), and such interest shall be paid (i) by check sent by United States Mail, first class postage prepaid to the address of the registered owner recorded in the registration books of the Paying Agent/Registrar, or (ii) by such other method, acceptable to the Paying Agent/Registrar. requested by, and at the risk and expense of, the registered owner. If the date for the payment of the principal of or interest on the Obligations shall be a Saturday, Sunday, legal holiday or day when banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday or day when banking institutions are authorized to close: and payment on such date shall have the same force and effect as if made on the original date payment was due. So long as Cede & Co. is the registered owner of the Obligations, payments of principal and interest on the Obligations will be made as described in "THE OBLIGATIONS - Book -Entry -Only System" herein. TRANSFER, EXCHANGE AND REGISTRATION... In the event the Book- Entry -Only System should be discontinued. printed Obligation certificates will be delivered to the registered owners of the Obligations and thereafter the Obligations may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner. except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Obligations may be assigned by the execution of an assignment form on the respective Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent /Registrar. New Obligations will be delivered by the Paying Agent/Registrar, in lieu of the Obligations being transferred or exchanged, at the principal office of the Paying Agent /Registrar, or sent by United States mail. first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Obligations to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent /Registrar. New Obligations registered and delivered in an exchange or transfer shall be in 15 denominations of $5,000 or integral multiples thereof for any one maturity and for a like aggregate principal amount as the Obligations surrendered for exchange or transfer. See "THE OBLIGATIONS - Book- Entry-Only System" for a description of the system to be utilized initially in regard to ownership and transferability of the Obligations. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Obligation called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Obligation. RECORD DATE FOR INTEREST PAYMENT... The record date (the "Record Date ") for the interest payable on the Obligations on any interest payment date means the close of business on the last business day of the month next proceeding each interest payment date for the Obligations. In the event of a non - payment of interest on a scheduled payment date. and for 30 days thereafter, a new record date for such interest payment (the "Special Record Date ") will be established by the Paying Agent /Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date ". which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail. first class postage prepaid, to the address of each registered owner of an Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. MUTILATED, DESTROYED, LOST AND STOLEN OBLIGATIONS... If any Obligation is mutilated, destroyed, stolen or lost. a new Obligation in the same principal amount as the Obligation so mutilated, destroyed, stolen or lost will be issued. In the case of a mutilated Obligation, such new Obligation will be delivered only upon surrender and cancellation of such mutilated Obligation. In the case of any Obligation issued in lieu of and substitution for any Obligation which has been destroyed. stolen or lost. such new Obligation will be delivered only (a) upon filing with the Paying Agent /Registrar evidence satisfactory to the Paying Agent /Registrar to the effect that such Obligation has been destroyed. stolen or lost and authenticity of ownership thereof, and (b) upon furnishing the Paying Agent /Registrar with indemnity satisfactory to hold the City and the Paying Agent /Registrar harmless. The person requesting the authentication and delivery of a new Obligation must pay such expenses as the Paying Agent /Registrar may incur in connection therewith. OBLIGATIONHOLDERS' REMEDIES... The Ordinances do not specify events of default with respect to the Obligations. If the City defaults in the payment of principal or interest on the Obligations or redemption price when due, or if it fails to make payments into any fund or funds created in the Ordinances, or defaults in the observation or performance of any other covenants, conditions or obligations set forth in the Ordinances, the registered owners may seek a writ of mandamus to compel City officials to carry out their legally imposed duties with respect to the Obligations if there is no other available remedy at law to compel performance of the Obligations or the Ordinances and the City's obligations are not uncertain or disputed. The issuance of a writ of mandamus is controlled by equitable principles and rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Ordinances do not provide for the appointment of a trustee to represent the interest of the holders of the Obligations upon any failure of the City to perform in accordance with the terms of the Ordinances, or upon any other condition and, accordingly, all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners. The Texas Supreme Court has ruled in Tooke v. City ofMexia, 197 S.W. 3d 325 (Tex. 2006) that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, holders of the Obligations may not be able to bring such a suit against the City for breach of the Obligations or the Ordinances covenants. Even if a judgment against the City could be obtained. it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Obligations. Furthermore. the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ( "Chapter 9 "). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval. the prosecution of any other legal action by creditors or holders of the Obligations of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinions of Bond Counsel will note that all opinions relative to the enforceability of the Ordinances and the Obligations are qualified with respect to the customary rights of debtors relative to their creditors. AMENDMENTS ... The City may amend the Ordinances without the consent of or notice to any registered owner in any manner not detrimental to the interest of the registered owners, including the curing of any ambiguity, inconsistency, formal defect, or omission therein. In addition, the City may, with the written consent of the holders of a majority in aggregate principal amount of the respective Obligations then outstanding and affected thereby, amend, add to. or rescind any of the provisions of the respective Ordinances; except that, without the consent of the registered owners of all of the respective Obligations then outstanding. no such amendment. addition. or rescission may (1) extend the time or times of payment of the principal of. 16 premium, if any, and interest on the Obligations, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of the payment of the principal of, premium, if any. or interest on the Obligations; (2) give any preference to any Obligation over any other Obligation, or (3) reduce the aggregate principal amount of the Obligations required to be held by the registered owners for consent to any such amendment. addition. or rescission. TAX INFORMATION AD VALOREM TAX LAW. .. The appraisal of property within the City is the responsibility of the Tarrant Appraisal District and the Denton Central Appraisal District (the "Appraisal Districts "). Excluding agricultural and open -space land, which may be taxed on the basis of productive capacity, the Appraisal Districts are required under Title I of the Texas Tax Code (the "Property Tax Code ") to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used including the cost method of appraisal. the income method of appraisal and the market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law requires the appraised value of a residence homestead to be based solely on the property's value as a residence homestead regardless of whether residential use is considered to be the highest and best use of the property. State law further limits the appraised value of a residence homestead for a tax year to an amount that would not exceed the lesser of (1) the property's market value in the most recent tax year in which the market value was determined by the appraisal district or (2) the sum of (a) 10°%o of the property's appraised value in the preceding tax year. plus (b) the property's appraised value the preceding tax year, plus (c) the market value of all new improvements to the property. The value placed upon property by the Appraisal Districts is subject to review by the Appraisal Review Board, consisting of members appointed by the Board of Directors of each Appraisal District. The Appraisal Districts are required to review the value of property within each Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the Property Tax Code for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ( "Article VIII ") and State law provide for certain exemptions from property taxes. the valuation of agricultural and open -space lands at productivity value and the exemption of certain personal property from ad valorem taxation. Under Section 1 -b, Article VIII. and State law, the governing body of a political subdivision, at its option, may grant either or both of the following exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision. Once authorized, such exemption may be repealed or decreased or increased in amount (i) by the governing body of the political subdivision or (ii) by a favorable vote of a majority of the qualified voters at an election called by the governing body of the political subdivision. which election must be called upon receipt of a petition signed by at least 20% of the number of qualified voters who voted in the preceding election of the political subdivision. In the case of a decrease, the amount of the exemption may not be reduced to less than $3,000 of the market value. The surviving spouse of an individual who qualifies for the foregoing exemption for the residence homestead of a person 65 or older (but not the disabled) is entitled to an exemption for the same property in an amount equal to that of the exemption for which the deceased spouse qualified if (i) the deceased spouse died in a year in which the deceased spouse qualified for the exemption. (ii) the surviving spouse was at least 55 years of age at the time of the death of the individual's spouse and (iii) the property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse. In addition to any other exemptions provided by the Property Tax Code. the governing body of a political subdivision. at its option, may grant an exemption of up to 20% of the market value of residence homesteads. with a minimum exemption of $5,000. In the case of residence homestead exemptions granted under Section 1 -b. Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have been previously pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. Under Article VIII and State law, the governing body of a county, municipality or junior college district, may freeze the total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years of age or older to the amount of taxes imposed in the year such residence qualified for such exemption. Also, upon receipt of a petition signed by five percent of the registered voters of the county, municipality or junior college district, an election must be held to determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are disabled. Upon providing for such exemption, such freeze on ad valorem taxes is transferable to a different residence homestead. Also. a surviving spouse of a taxpayer who qualifies for the freeze on ad valorem taxes is entitled to the same exemption so long as the property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse and the spouse was at least 55 years of age at the time of the death of the individual's spouse. 17 If improvements (other than maintenance, repairs or improvements required to comply with governmental requirements) are made to the property, the value of the improvements is taxed at the then current tax rate, and the total amount of taxes imposed is increased to reflect the new improvements with the new amount of taxes then serving as the ceiling on taxes for the following years. Once established, the tax rate limitation may not be repealed or rescinded. State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12.000; provided, however, a disabled veteran who receives from the United States Department of Veterans Affairs or its successor 100 percent disability compensation due to a service - connected disability and a rating of 100 percent disabled or of individual unemployability is entitled to an exemption from taxation of the total appraised value of the veteran's residence homestead. Additionally, effective January 1, 2012. subject to certain conditions, the surviving spouse of a disabled veteran who is entitled to an exemption for the full value of the veteran's residence homestead is also entitled to an exemption from taxation of the total appraised value of the same property to which the disabled veteran's exemption applied. 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, is 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. Notwithstanding such exemption, counties, school districts. junior college districts and cities may tax such tangible personal property provided official action to tax the same was taken before April 1, 1990. Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal. Article VIII. Section 1 -n of the Texas Constitution provides for the exemption from taxation of "goods -in- transit." Section 11.253 of the Tax Code defines "goods -in- transit" as personal property acquired or imported into Texas and transported to another location in the State or outside of the State within 175 days of the date the property was acquired or imported into Texas. The exemption excludes oil. natural gas, petroleum products, aircraft and special inventory, including motor vehicle, vessel and out board motor. heavy equipment and manufactured housing inventory. Section 11.253 of the Tax Code permits local governmental entities, on a local option basis. to take official action by January 1 of the year preceding a tax year, after holding a public hearing, to tax goods -in- transit during the following year. A taxpayer may receive only one of the freeport exemptions or one of the goods -in- transit exemptions, but not both. for items of personal property. 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. To date, the City has created one tax increment financing district ( "TIFD ") within the boundaries of the City (see "Tax Increment Financing Zones" below). The difference between any increase in the assessed valuation of taxable real property in the TIFD in excess of the base value of taxable real property in the TIFD is known as the "Incremental Value ", and during the existence of the TIFD, taxes levied by the City against the Incremental Value in the TIFD are restricted to paying project and financing costs within the TIFD and are not available for the payment of other obligations of the City, including the Certificates. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. The City is also authorized. pursuant to Chapter 380. Texas Local Government Code, as amended ( "Chapter 380"). to establish programs to promote state or local economic development and to stimulate business and commercial activity in the City. In accordance with a program established pursuant to Chapter 380, the City may make loans or grants of public funds for economic development purposes; provided, however, that no obligations secured by ad valorem taxes may be issued for such purposes unless approved by the voters of the City. The City may contract with the federal government, the State, another political subdivision. a nonprofit organization, or any other entity, including private entities, for the administration of such program. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE ... By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditure, and (2) a rate for debt service. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate ". A tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or the effective tax rate until two public hearings are held on the proposed tax rate following a notice of such public hearings (including the requirement that notice 18 be posted on the City's website if the City owns, operates or controls an internet website and public notice be given by television if the City has free access to a television channel) and the City Council has otherwise complied with the legal requirements for the adoption of such tax rate. If the adopted tax rate exceeds the rollback tax rate. the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one -half cent sales tax on retail sales of taxable items. If the additional tax is levied. the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAX PAYMENT... Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September 1. Effective January 1, 2012, oil and gas reserves are assessed on the basis of a valuation process which uses pricing information contained in the most recently published Early Release Overview of the Annual Energy Outlook published by the United States Energy Information Administration, as well as appraisal formulas developed by the State Comptroller of Public Accounts. 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. The Property Tax Code also makes provision for the split payment of taxes, discounts for early payment and the postponement of the delinquency date of taxes under certain circumstances. 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 (1) Interest continues to accrue after July 1 at the rate of 1% per month until paid. After July, penalty remains at 12 %, and interest increases at the rate of one - percent (1%) for each month or portion of a month the tax remains unpaid. A delinquent tax continues to incur interest as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered. The purpose of imposing such interest is to compensate the taxing unit for revenue lost because of the delinquency. In addition, if an account is delinquent in July. an attorney's collection fee of up to 20% may be added to the total tax penalty and interest charge. Under certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% 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. 19 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 an additional exemption of 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 has adopted the tax freeze for citizens who are disabled or are 65 years of age or older, which became a local option and subject to local referendum on January 1, 2004. The City does not tax nonbusiness personal property; and Tarrant County collects taxes for the City. The City does not permit split payments of taxes, and discounts for early payment of taxes are not allowed. The City does tax Freeport property. The City does not tax Goods -in- Transit. The City does not collect the additional one -half cent sales tax for reduction of ad valorem taxes. The City has adopted a tax abatement policy, and reviews applications for abatements on a case by case basis. TAX INCREMENT FINANCE ZONES... The City has established the Tax Increment Financing Reinvestment Zone Number One, comprised of approximately 408 acres in an area of the City bounded by East Highland Street, North Kimball Avenue, East Southlake Boulevard (F.M. 1709) and North Carroll Avenue. The tax increment base for the Reinvestment Zone Number One established on January 1, 1997 is $23,267,804. Taxes assessed and collected against the base value in the Reinvestment Zone may be used for general fund purposes. However, taxes assessed and collected against the assessed valuation of real property in the Reinvestment Zone in excess of the tax increment base ( "Tax Increment Revenues") are restricted to pay or finance projects within the Reinvestment Zone. The Incremental 2013/14 Taxable Assessed Value for the Reinvestment Zone Number One is $331,409,142. The Tax Increment Revenues are not available to pay the Obligations. [The remainder of this page left blank intentionally] 20 TABLE 1 - ASSESSED VALUATION AND EXEMPTION 2013/14 Market Valuation Established by Tarrant and Denton County Appraisal Districts (excluding totally exempt property) $ 5,994,366,121 Less Exemptions/Reductions at 100% Market Value: Over 65 75.275,900 Disabled Persons 3,187.500 Disabled Veterans 7.027,386 10% Cap 258,394 Pollution Control 1,166 Prorated Absolute 328,321 Agricultural Use Reductions 98,980.033 Nominal Value 622 Freeport Inventory 5,459,968 Homestead 2.630,496 Other 446.521 Abatements - 191596,307 2013/14 Taxable Assessed Valuation $ 5,800,769,814 General Obligation Debt Payable from Ad Valorem Taxes (as of 4/1/2013) General Obligation Bonds and Certificates of Obligation (2) $ 114,885.000 The Bonds (3) 21.540.000 The Certificates (3) 8,875,000 Total General Obligation Debt Payable from Ad Valorem Taxes $ 145,300,000 Less: Self Supporting Debt Water and Sewer Sy stem Debt (2) $ 28.598.457 Tax Increment Financing Debt 11,324,587 Crime Control Prevention District Debt 8.260,000 Southlake Parks Development Corporation Debt 16.055,000 The Bonds (W &S)' 14,070,000 The Certificates (W &S) (3) 4.600,000 82,908,044 Net General Obligation Debt Payable from Ad Valorem Taxes $ 62,391.956 General Obligation Interest and Sinking Fund (as of 2/15/2014) $ 9,620,687 Ratio General Obligation Tax Debt to Taxable Assessed Valuation 1.08% 2014 Estimated Population - 27,500 Per Capita Taxable Assessed Valuation - $210,937 Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes - $2.269 (1) Includes the 2013/14 taxable incremental value of approximately $331,409,142 that is not available for debt service on the Obligations. (2) Excludes the Refunded Obligations and excludes the Trinity River Authority Contract Revenue Bonds. See Table 12 — Other Obligations for more detail. (3) Preliminary, subject to change. 21 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY' Taxable Appraised Value for Fiscal Year Ended September 30, 2014 2013 2012 % of % of % of Category Amount Total Amount Total Amount Total Real, Residential, Single- Family $ 4,358,695,950 72.71% $4,163,902,331 71.18% $4,111,842,519 70 67% Real. Residential, Multi - Family 2,482,100 0.04% 2,382,000 0.04% 2,229,300 0.04% Real, Vacant Lots/Tracts 129,835.125 2.17% 113,718,340 1.94% 120,473,667 2.07% Real, Acreage (Land Only) 93,915,024 1 57% 120,395,212 2.06% 127.106,917 2.18% Real, Farm and Ranch Improvements 10,817,510 0.18% 15.292,236 0.26% 14,697,528 0 25% Real, Commercial 1,018,718,559 16.99% 971,182,117 16 60% 945,126,317 16.24% Real, Industrial 2,446,545 0 04% 4,010,725 0.07% 5,554,282 0.10% Real and Tangible Personal, Utilities 46,504,595 0.78% 175,814,381 3.01% 180,608,841 3.10% Tangible Personal, Commercial 268,377,323 4.48% 214,214,328 3 66% 233,190,394 4.01% Tangible Personal, Industrial 8,640,798 0 14% 10,501,266 0.18% 11,281,402 0.19% Tangible Personal, Mobile Homes 458,583 0.01% 456.230 0 01% 480,925 0 01% Real Property, Inventory 53,474,009 0 89% 57,912,518 0 99% 65.452,258 1.12% Total Appraised Value Before Exemptions $ 5,994,366,121 100.00% $ 5.849,781.684 100.00% $ 5,818,044,350 100 00% Adjustments - - Less: Total Exemptions/Reductions 193,596,307 193,596,307 235,246,573 Taxable Assessed Value $ 5,800,769.814 ` $ 5.656.185.377 (2) $ 5,582,797,777 (" Taxable Appraised Value for Fiscal Year Ended September 30, 2011 2010 2009 % of % of % of Category Amount Total Amount Total Amount Total Real, Residential, Single - Family $ 4.041,884,577 70.00% $ 3,796,919,716 67.59% $ 3,691,156,295 67 90% Real, Residential, M ulti- Family 2,725,400 0 05% 4,301,802 0 08% 2,907,770 0.05% Real, Vacant Lots/Tracts 116,941,275 2 03% 125.532.640 2.23% 118,324,987 2 18% Real. Acreage (Land Only) 141,033,979 2.44% 163,885,713 2.92% 167,932,522 3 09% Real, Farm and Ranch Improvements 14,353,827 0 25% 15,770,400 0 28% 15,755,514 0.29% Real, Commercial 948,832,777 16.43% 974,756,220 17.35% 955,377,967 17 57% Real, Industrial 5,438.678 0.09% 5,695,756 0.10% 6,039,393 0.11% Real and Tangible Personal, Utilities 152.592,936 2 64% 153,209,530 2.73% 121,841,546 2.24% Tangible Personal, Commercial 245,849,455 4 26% 258,063.120 4 59% 256.087,044 4.71% Tangible Personal, Industrial 10,260,247 0.18% 10 492,452 0.19% 5,588,988 0.10% Tangible Personal, Mobile Homes 244,293 0 00% 409,447 0.01% 803.135 0 01% Real Property, Inventory 93,649,485 1 62% 108,702,397 1.93% 94.275,774 1.73% Total Appraised Value Before Exemptions $ 5,773,806,929 100.00% $ 5,617,739,193 100.00% $ 5,436,090,935 100 00% Adjustments - - - Less: Total Exemptions/Reductions 240,383.094 254,860,399 210,053,507 Taxable Assessed Value $ 5,533,423,835 (4) $ 5.362,878,794 ' $ 5,226,037,428 (6) (1) Includes taxable incremental value of approximately $331,409,142 that is not available for payment of the City's general obligation debt. (2) Includes taxable incremental value of approximately $290,288,909 that is not available for payment of the City's general obligation debt. (3) Includes taxable incremental value of approximately $280,411,181 that is not available for payment of the City's general obligation debt. (4) Includes taxable incremental value of approximately $280,986,280 that is not available for payment of the City's general obligation debt. (5) Includes taxable incremental value of approximately $298,861,976 that is not available for payment of the City's general obligation debt. (6) Includes taxable incremental value of approximately $304,146,791 that is not available for payment of the City's general obligation debt. Note: Valuations shown are certified taxable assessed values reported by the Appraisal Districts to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal Districts update records. 22 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 2010 26,917 $ 5,362,878,794 (3) $ 199,238 $ 160,670,000 3.00% $ 5,969 2011 27, 184 5,533,423.835 (4) 203,554 158,245,000 2.86% 5,821 2012 27,045 5,582,797.777 (5) 206,426 156,395,000 2.80% 5,783 2013 27,045 5,656,185377 (6) 209,140 153,820,000 2.72% 5.688 2014 27,500 5,800,769.814 (7) 210,937 145,300,000 (9) 2.50% (9) 5,284 (9) (1) Source: City officials. (2) As reported by the Appraisal Districts on City's annual State Property Tax Board Reports; subject to change during the ensuing year. (3) Includes taxable incremental value of approximately $298,861,976 that is not available for payment of the City's general obligation debt. (4) Includes taxable incremental value of approximately $280,986,280 that is not available for payment of the City's general obligation debt. (5) Includes taxable incremental value of approximately $280,411,181 that is not available for payment of the City's general obligation debt. (6) Includes taxable incremental value of approximately $290,288,909 that is not available for payment of the City's general obligation debt. (7) Includes taxable incremental value of approximately $331,409,142 that is not available for payment of the City's general obligation debt. (8) Includes self - supporting debt. See "Table 10 — Computation of Self - Supporting Debt ". (9) Projected. Preliminary, subject to change. Excludes Refunded Obligations, includes the Obligations. TABLE 4 — TAX RATE, LEVY AND COLLECTION HISTORY Interest Year and Ended Tax General Sinking % Current % Total 9/30 Rate Fund Fund Tax Levy (I) Collections Collections 2010 $ 0.4620 $ 0.3320 $ 0.1300 $ 25,833,584 99.14% 99.62% 2011 0.4620 0.3320 0.1300 24,173,302 99.22% 99.88% 2012 0.4620 0.3200 0.1300 25,792,526 99.25% 99.99% 2013 0.4620 0.3200 0.1300 26,131,576 99.48% 101.08% 2014 0.4620 0.3420 0.1200 26,799,557 93.70% (2) 95.00% (2) (1) Includes levy on taxable incremental values, such tax levy is not available for the City "s general use. (2) Collections as of February. 2014. [The remainder of this page left blank intentionally] 23 TABLE 5 - TEN LARGEST TAXPAYERS 2013/2014 % of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuat ion Verizon Wireless Texas, LLC Telecommunications $ 177,921,915 3.07% Town Square Ventures LP Real Estate 116.505,690 2.01% Slts Grand Avenue LP Real Estate 73.544.854 1.27% Wyndham Properties Ltd. Real Estate 52,366,496 0.90% Sabre Headquarters LLC Technology 45.538,556 0.79% Carroll/1709 Ltd. Land /Improvements 44,199.577 0.76% H & C Southlake Hilton LLC Hotel 30.000.000 0.52% Inland W Southlake Corners Ltd. Land/Improvements 27.700,000 0.48% Cambridge 114 Inc. Real Estate 20.924,941 0.36% Costco Wholesale Corporation Distributor 20,309.231 0.35% $ 609,011,260 10.50% GENERAL OBLIGATION DEBT LIMITATION... No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "THE OBLIGATIONS - Tax Rate Limitation "). TABLE 6 - TAX ADEQUACY Net Principal and Interest Requirements, 2014 $ 7,289.542 $0.1360 Tax Rate at 98% Collections Produces $ 7.289.564 (1) Average Net Principal and Interest Requirements, 2014 -2030 $ 4,890.515 $0.0912 Tax Rate at 98% Collections Produces $ 4.890.976 (1) Maximum Net Principal and Interest Requirements. 2015 $ 8,227,830 $0.1535 Tax Rate at 98% Collections Produces $ 8,228.095 c»i (1) Calculated based on the Net Taxable Assessed Valuation after adjustment for Tax Increment Reinvestment Zone #1. (2) Preliminary. subject to change. [The remainder of this page left blank intentionally] 24 TABLE 7 - ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax debt ( "Tax Debt ") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. City's Overlapping Taxable Total Estimated G.O. Assessed Tax G.O. Tax Debt % Tax Debt Taxing Jurisdiction Value Rate As of 2/1/2014 Applicable as of 2/1/2014 City of Southlake $ 5,800.769,814 $ 0.4620 $ 145,300,000 (2) 100.00% $ 145.300,000 Carroll ISD 5,741,066,974 1.4000 235,203,792 86.88% 204,345,054 Denton County 57,196,387,009 0.2849 596.245,000 0.20% 1,192,490 Grapevine - ColleyvilleISD 11,032,086.960 1.3201 345,235,467 1.57% 5,420,197 Keller ISD 1 1,925,3 86,754 1.5400 681,493,167 2.42% 16,492,135 Northwest 1SD 10,225,521,620 1.4525 674,308,840 0.67% 4,517,869 Tarrant County 136,858,702,396 0.2640 336,635,000 4.24% 14,273,324 Tarrant County Hospital District 127,015,707,711 0.2279 25,375,000 4.24% 1,075,900 Tarrant County Junior College District 127,454.200,572 0.1495 15,485,000 4.24% 656,564 Total Direct and Overlapping G. 0. TaxDebt $ 393,273,533 Ratio of Direct and Overlapping G. 0. Tax Debt to Taxable Assessed Valuation 6.78% Per Capita Overlapping G. 0. TaxDebt $ 14,541 (1) As reported by the Municipal Advisory Council of Texas. (2) Excludes the Refunded Obligations, includes the Bonds and Certificates. Preliminary, subject to change. [The remainder of this page left blank intentionally] 25 DEBT INFORMATION TABLE 8- PRO -FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS Fiscal • Total Less: Net Year General Self- General % a Ending Outstanding Debt Service The Bonds"' The Certificates' Obligation Supporting Obligation Principal 9/30 Principal Interest Total D/S Principal Interest Total D/S Principal Interest Total D/S Debt Service Debt Service" Debt Service Retired 2014 $ 16,490,000 $ 5,423,115 $ 21,913,115 $ - $ 149,224 $ 149,224 $ - $ - $ - $ 22,062,339 $ 14,772,797 $ 7,289,542 2015 13,295,000 4,090,708 17,385,708 3,955,000 688,338 4,643,338 935,000 314,845 1,249,845 23,278,890 15,051,059 8,227,830 2016 11,980,000 3,641,958 15,621,958 4,135,000 526,538 4,661,538 1,005,000 237,644 1,242,644 21,526,139 13,455,350 8,070,789 2017 11,835,000 3,236,758 15,071,758 4,140,000 361,038 4,501,038 1,045,000 201,669 1,246,669 20,819,464 12,816,733 8,002,730 2018 9,840,000 2,831,758 12,671,758 3,535,000 207,538 3,742,538 1,085,000 159,069 1,244,069 17,658,364 10,340,598 7,317,766 51.47% 2019 5,560,000 2,534,795 8,094,795 2,635,000 97,313 2,732,313 1,130,000 114,769 1,244,769 12,071,876 5,628,387 6,443,489 2020 6,100,000 2,308,095 8,408,095 1,480,000 42,988 1,522,988 210,000 91,119 301,119 10,232,201 4,834,063 5,398,138 2021 6,505,000 2,050,467 8,555,467 780,000 23,313 803,313 210,000 88,756 298,756 9,657,536 4,364,592 5,292,943 2022 6,775,000 1,777,058 8,552,058 170,000 17,056 187,056 215,000 85,697 300,697 9,039,811 3,969,404 5,070,407 2023 7,040,000 1,506,501 8,546,501 170,000 14,188 184,188 220,000 82,025 302,025 9,032,714 3,966,615 5,066,099 75.70% 2024 7,150,000 1,243,967 8,393,967 175,000 11,059 186,059 225,000 77,991 302,991 8,883,017 3,923,017 4,960,000 2025 6,555,000 986,836 7,541,836 175,000 7,559 182,559 225,000 73,491 298,491 8,022,886 3,726,461 4,296,425 2026 6,800,000 736,320 7,536,320 190,000 2,850 192,850 235,000 67,575 302,575 8,031,745 3,735,439 4,296,306 2027 3,980,000 528,654 4,508,654 - - - 240,000 60,450 300,450 4,809,104 3,608,736 1,200,369 2028 4,140,000 361,683 4,501,683 - - - 245,000 53,175 298,175 4,799,858 3,598,095 1,201,762 94.45% 2029 3,225,000 211,223 3,436,223 - - - 255,000 45,675 300,675 3,736,898 3,049,323 687,575 2030 2,045,000 107,072 2,152,072 - - - 265,000 37,875 302,875 2,454,947 2,138,359 316,588 2031 1,170,000 47,978 1,217,978 - - - 270,000 29,850 299,850 1,517,828 1,517,828 - 2032 725,000 16,484 741,484 - - - 280,000 21,600 301,600 1,043,084 1,043,084 - 2033 165,000 2,578 167,578 - - - 285,000 13,125 298,125 465,703 465,703 - 99.82% 2034 - - 295,000 4,425 299,425 299,425 299,425 100.00% - $ 131,375 000 $ 33,644,006 $ 165,019,006 $ 21,540,000 $ 2,148 999 $ 23,688,999 $ 8,875,000 $ 1,860,823 $ 10,735,823 $ 199,443,828 $ 116,305,069 $ 83,138,759 (1) Excludes the Refunded Obligations. (2) Preliminary , subject to change. (3) Includes a portion of the Bonds and the Certificates. 26 TABLE 9 — INTEREST AND SINKING FUND BUDGET PROJECTION Debt Service Requirements, Fiscal Year Ending 9/30/14 (1) $ 7289,542 Interest and Sinking Fund, Fiscal Year Ending 9/30/13 10,830,404 Budgeted Interest and Sinking Fund Tax Levy 6,655,483 Administrative Expenses 18,000 Estimated Investment Income 20.000 $ 17.523.887 Estimated Balance, Fiscal Year Ending 9/30/14 $ 10,234,345 (1) Preliminary, subject to change. TABLE 10 — COMPUTATION OF SELF - SUPPORTING DEBT (t) Water and Sewer TIRZiTIF SPDC CCPD Net System Revenue Available Fiscal Year 2013" $ 4,621,581 $ 3,254,404 $ 5,490,048 $ 4,331,319 Less: Requirements for Revenue Bonds - - 1,790,059 - Balance Available for Other Proposes $ 4,621,581 $ 3,254,404 $ 3,699,989 $ 4,331,319 Self - supporting Tax Debt Requirements for fiscal y ear 2014 $ 6,169.659 ij $ 3,288,465 $ 1,295,538 $ 4,019,135 Percentage of Self - supporting Tax Debt Requirements to be paid from sources shown 75% 99% 100% 100 ° %b (1) The City considers the general obligation debt listed below to be self - supporting and payable from Net Revenues of the System, available revenues from the TIF Fund, the available revenues of the Southlake Parks Development Corporation ("SPDC"). or available revenues of the Crime Control & Prevention District ("CCPD") as indicated above. However, with the exception of certain limited pledges of System revenues in connection with prior certificates of obligation issues (which may or may not have been fully satisfied), the revenues described above are not pledged to the payment of such general obligation debt. The transfers of System revenues to make debt service payments on the City's general obligation debt is discretionary and may be discontinued by the City, in whole or in part, at any time. The transfers of other revenues may be provided for by contract with the TIF, SPDC, and CCPD. In the event the City chooses to discontinue such transfer of System revenues, or should any of the revenues described above be insufficient or otherwise unavailable to pay debt service on such general obligation debt, the City will be required to levy ad valorem taxes or to appropriate other lawfully available funds of the City in amounts sufficient to pay the debt service on such general obligation debt. (2) As of September 30. 2013 the Tax Increment Financing District had a Fund Balance of $4,298,510 of which $3,805,621 were cash and cash equivalents. (3) Net Revenue after operating expenditures; and capital outlay in the case of the TIF Fund. (4) Adjusted due to 2014 refunding. TABLE 11 — AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Date Amount Previously Unissued Purpose Authorized Authorized Issued Balance Street Improvements (intersections) 5/1/1999 $ 17,300,000 $ 10,508,179 $ 6,791,821 Street Improvements (design enhancements) 5/1/1999 2,150,000 1,560,000 590,000 Park Improvements (hike and bike trails) 5/1/1999 4,730,000 2,230,000 2,500,000 $ 24,180,000 $ 14,298.179 $ 9,881,821 ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT... The City does not anticipate the issuance of additional general obligation debt within the next six months. 27 TABLE 12 — OTHER OBLIGATIONS Trinity River Authority Contract Revenue Bonds" Fiscal Year Ending 9/30 Principal Interest Total D/S 2014 $ 335,000 $ 62.956 $ 397.956 2015 350.000 46,250 396.250 2016 365.000 28,375 393,375 2017 385,000 9,625 394,625 $ 1.435,000 $ 147,206 $ 1.582,206 (1) Includes the Denton Creek Wastewater Pressure Interceptor System Revenue Refunding Bonds, Series 2001. PENSION FUND... The City provides pension benefits for all of its full -time employees through the Texas Municipal Retirement System ( "TMRS "), a State -wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. In addition to providing pension benefits through the Texas Municipal Retirement System, the City has opted to provide eligible retired employees with the following post - employment benefits: The City contributes $125 /month toward retiree medical insurance or $225 /month for retiree and dependent. Retirees are eligible for city medical insurance until they reach Medicare age or have other insurance available. The City recognizes its share of the costs of providing these benefits when paid, on a "pay -as- you -go" basis. These payments are budgeted annually. The amount budgeted for the fiscal year ending September 30. 2014 is $19,600. The appropriation for the fiscal year ending September 30, 2013 was $10.175. As of September 30. 2013, there were approximately 4 participants eligible to receive such benefits. Commencing in fiscal 2009. the City implemented the GASB Statement No. 45 "Accounting and Financial Reporting by Employers for Post - employment Benefits Other Than Pensions." The City has performed an actuarial valuation of its post - retirement benefit liability. The City established an irrevocable trust for future post retirement benefits. For fiscal year ending September 30. 2013, the City invested $125.000 in the trust. (For more detailed information concerning the retirement plan, see Appendix B. "Excerpts from the City's Annual Financial Report" - Note #7.) [The remainder of this page left blank intentionally] 28 FINANCIAL INFORMATION TABLE 13 — CHANGE IN NET ASSETS Fiscal Years Ended September 30, 2013 2012 2011 2010 2009 Revenues: Progam Revenues: Charges for Services $ 30,926,027 $ 30,352,107 $ 29,462,242 $ 6,811,321 $ 6,021,524 Operating Grants and Contributions 639,230 200,434 532,100 688,803 239,364 Capital Grants and Contributions 4,226,319 1.733,012 3,742,891 5,994.206 1,833,160 General Revenues: Taxes 57,151,241 53,841, 399 53,321,732 52,515,389 50,983,544 Interest on Investments 55,337 278,934 382,428 414,852 1,703,418 Gain (Loss) on Sales of Fixed Assets 89,923 91,134 26,741 21,465 167,127 Miscellaneous 873,595 474,492 701,365 428,804 341,957 Transfers - - - 596,093 339,510 Total Revenues $ 93,961,672 $ 86,971,512 $ 88,169,499 $ 67,470,933 $ 61,629,604 Expenses: General Government $ 12,892,140 $ 13,277,006 $ 13,754,530 $ 11,814,836 $ 11,068,965 Public Safety 18,425,878 15,891,911 15,144,172 14,885,499 12,920,263 Public Works 8,528,331 6,399,819 6,279,687 5,767,688 5,840,432 Culture and Recreation 8,829,394 8,158,291 7,897,173 7,287,434 6,439,100 Intergovernmental - - - - - Interest on Long -Term Debt 6,747,628 5,865,798 5,638,272 6,515,269 854,931 Water and Sewer 22.119,518 22,530,688 20,724,651 - - Total Expenses $ 77,542,889 $ 72,123,513 $ 69,438,485 $ 46,270,726 $ 37,123,691 Increase in Net Assets 16.418,783 14,847,999 18,731,014 21,200.207 19,505,913 Net Assets - Beginning of Year 462,688,538 447,840,539 429,109,525 324,038,419 304,532,506 Net Assets -End of Year $ 479,107,321 $ 462,688,538 $ 447,840,539 $ 345,238,626 $ 324.038,419 [The remainder- of this page left blank intentionally] 29 TABLE 13A — GENERAL FUND REVENUES AND EXPENDITURE HISTORY Fiscal Years Ended September 30, 2013 2012 2011 2010 2009 Revenues: Taxes $ 31,705,886 $29,731.625 $ 29,052,838 $ 28,395,556 $ 26.671,791 Licenses and Permits 2,070,146 2.111,754 1,265,609 1,453,823 1.292,409 Charges for Services 1,876,302 1.805.022 1,660,154 1.535.363 1,498,823 Fines and Forfeitures 1.397,101 1,119.050 1.170,708 1,032.817 1,012,023 Other Revenues 600.458 509,575 515,532 871,734 595,903 Total Revenues $ 37,649.893 $ 35.277,026 $ 33,664,841 $ 33,289,293 $ 31.070,949 Expenditures: City Administration $ 8,034,790 $ 7,188,993 $ 7,369,100 $ 7.062.597 $ 6,815,752 Police Department 5,808,421 5.621,650 5,520.833 5,430,771 5,171,702 Fire Department 6,849,567 5,597.946 5,215,401 5,062,613 4,741,459 Building Department 854.804 816,771 862,832 793.608 890.156 Streets and Drainage 1,685.890 1,776,764 1.608,693 1,439.925 1,610,338 MunicipalCourt 582.436 559.154 729.549 656,109 617.824 Parks 4,579,615 4.297.051 5,566,561 4.051,304 3,914,015 Public Works Department 3,543.818 2,176,991 1,944,128 2.097.798 3.249.375 Public Safety Support 1,513,616 1.516,999 1,498,584 1.607.951 2,084.614 Community Development 1,441,691 1,277,303 884.508 1,180,498 1,047,119 Total Expenditures $ 34.894,648 $30.829.622 $ 31,200.189 $ 29,383,174 $ 30,142,354 Excess (deficiency) of Revenues Over Expenditures $ 2,755,245 $ 4.447,404 $ 2.464.652 $ 3,906,119 $ 928.595 Sale of Vehicles $ - $ - $ - $ - $ - Bond Proceeds - - - - - Budgeted Transfers In 1,982.670 1,463,738 1,570,247 920,362 1,001.686 Budgeted Transfers Out (3,915,000) (3.000,000) (5,133,000) (2,035,000) (3,500,000) Total Other Sources (Uses) $ (1,932,330) $ (1,536,262) $ (3,562,753) $ (1,114,638) $ (2,498,314) Net Increase (Decrease) $ 822.915 $ 2,911.142 $ (1.098.101) $ 2,791.481 $ (1.569.719) Beginning Fund Balance 19,959.607 17,048,465 18,146.566 15,355,085 16,924,804 Equity Transfer/Prior Period Adjustment - - - - Ending Fund Balance $ 20,782,522 $ 19,959,607 $ 17,048,465 $ 18.146,566 $ 15,355.085 [The remainder of this page left blank intentionally] 30 TABLE 14 - MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, Texas Tax Code, Chapter 321, which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged to the payment of the Obligations. Collections and enforcements are effected through the offices of the State Comptroller of Public Accounts, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. Fiscal Equivalent Year % of of Ended 1% City Ad Valorem Ad Valorem Per 9/30 Collections Tax Levy Tax Rate Capita 2010 $ 8.881,243 34.38% (1) $ 0.1656 $329.95 2011 9,417,344 38.96% (2) 0.1702 346.43 2012 10,115.518 39.22% (3) 0.1812 374.03 2013 11,303,173 43.35% (4) 0.2003 417.94 2014 7,175 248 (6) 26.77% (5) 0.1237 260.92 (1) Includes taxable incremental value of approximately $298,861,976 that is not available for the City's general use. (2) Includes taxable incremental value of approximately $280.986,280 that is not available for the City's general use. (3) Includes taxable incremental value of approximately $280.411,181 that is not available for the City's general use. (4) Includes taxable incremental value of approximately $290,288,909 that is not available for the City's general use. (5) Includes taxable incremental value of approximately $331,409,142 that is not available for the City's general use. (6) Partial collections through April, 2014. As reported by the Texas Comptroller of Public Accounts. FINANCIAL POLICIES BASIS OF ACCOUNTING. . . All governmental funds and agency funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund Liability is incurred. The exception to this general rule is that principal and interest on general long -term debt is recognized when due. The more significant revenues which are treated as susceptible to accrual under the modified accrual basis are property taxes, intergovernmental revenues, charges for services, and interest. Other revenue sources are not considered measurable and available. and are not treated as susceptible to accrual. All proprietary funds are accounted for using the accrual basis of accounting. Their revenues are recognized when they are earned and their expenses are recognized when they are incurred. GENERAL FUND BALANCE ... The City's goal is to maintain surplus and unencumbered funds equal to 15%-25% of expenditures in the General Fund. This allows the City to avoid interim borrowing pending tax receipts. USE OF CERTIFICATE PROCEEDS ... The City's policy is to use Certificate proceeds for capital expenditures related to the purposes specified in the Certificate Ordinance and for no other purpose. Such revenues are never to be used to fund City operations. BUDGETARY PROCEDURES... The City Charter establishes the fiscal year as the twelve -month period beginning October 1. The departments submit to the City Manager a budget of estimated expenditures for the ensuing fiscal year by the first of July. The City Manager subsequently submits a budget of estimated expenditures and revenues to the City Council by August I. The City Council then holds a public hearing on the budget. The Council shall then make any changes in the budget as it deems advisable and shall adopt a budget prior to September 30. FUND INVESTMENTS. . . The City investment policy parallels State law which governs investment of public funds. The City generally restricts investments to direct obligations of the United States Government and to insured or collateralized bank certificates of deposits. Both state law and the City's investment policies are subject to change. 31 INVESTMENTS The City invests its investable funds in investments authorized by State law in accordance with investment policies approved by the City Council of the City. Both State law and the City's investment policies are subject to change. LEGAL INVESTMENTS... Under State law, the City is authorized to invest in investments meeting the requirements of the Texas Public Funds Investment Act (Chapter 2256, Texas Government Code, as amended, the "PFIA" ), which may include: (1) obligations of the United States or its agencies and instrumentalities, including letters of credit. (2) direct obligations of the State or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States. the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations. the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities; (5) obligations of states, agencies. counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit or share certificates (i) that are issued by an institution that has its main office of a branch office in the State of Texas and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or their respective successors, and are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and provided for by law for City deposits, or (ii) where (a) the funds are invested by the City through (A) a broker that has its main office or a branch office in the State of Texas and is selected from a list adopted by the City as required by law, or (B) a depository institution that has its main office or branch office in the State of Texas that is selected by the City, (b) the broker or the depository institution selected by the City arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions. wherever located. for the account of the City, (c) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States. and (d) the City appoints the depository institution selected under (a) above, a custodian as described by Section 2257.041(d) of the Texas Government Code, or a clearing broker- dealer registered with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule 15c3 -3 (17 C.F.R. Section 240.15c3 -3) as custodian for the City with respect to the certificates of deposit; (8) fully collateralized repurchase agreements that (i) have a defined termination date. (ii) are fully secured by a combination of cash and obligations described in clause (1) above, (iii) require the securities being purchased by the City or cash held by the City to be pledged to the City. held in the City's name, and deposited at the time the investment is made with the City or with a third party selected and approved by the City, and (iv) are placed through a primary government securities dealer. as defined by the Federal Reserve, or a financial institution doing business in the State of Texas; (9) certain bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A -1 or P -1 or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper with a stated maturity of 270 days or less that is rated at least A -1 or P -1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no -load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no -load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in the this paragraph. and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. If specifically authorized in the authorizing document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract. other than the prohibited obligations described in the next succeeding paragraph. The City may also be eligible to invest its funds in additional investments authorized by the Public Funds Investment Act as the same may be amended from time to time. The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA -m or an equivalent by at least one nationally recognized rating service. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage - backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Governmental bodies in the State are also authorized to implement securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (6) and (10) through (12) of the first paragraph under this subcaption, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body. held in the name of the governmental body and deposited at the time the investment is made with the City or a third party designated by the City; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend securities has a term of one year or less. 32 INVESTMENT POLICIES... Under State law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum average dollar- weighted maturity allowed for pooled fund groups, methods to monitor the market price of investments acquired with public funds, a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each fund's investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under State law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs. not for speculation. but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing: (1) the investment position of the City on the date of the report, (2) that all investment officers jointly prepared and signed the report. (3) the beginning market value, the ending market value, and the fully accrued interest of of each pooled fund group. (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS ... Under State law the City is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution; (3) require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (4) require the qualified representative of firms offering to engage in an investment transaction with the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the City and the business organization that are not authorized by the City's investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio and requires an interpretation of subjective investment standards) and (c) deliver a written statement in a form acceptable to the City and the business organization attesting to these requirements; (5) perforrn an annual audit of the management controls on investments and adherence to the City's investment policy; (6) provide specific investment training for the City's designated Investment Officer; (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse purchase agreement; (9) require local government investment pools to conform to the new disclosure, rating, net asset value. yield calculation, and advisory board requirements, and (10) at least annually review. revise. and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. TABLE 15 - CURRENT INVESTMENTS As of December 31, 2013 the City's investable funds were invested in the following categories: Book Market Type of Investment Value Percent Value Percent U.S. Government Agency Securities $ 55,258,288 47.80% $ 54,817,294 47.60% TexPool & TexStar 47,225,482 40.85% 47.225,482 41.01% Commercial Paper 4,998.817 4.32% 4.999,671 4.34% Cert ificates of Deposit 8,121,081 7.02% 8,121,081 7.05% Totals $ 115,603,668 100.00% $ 115,163.528 100.00% 33 TAX MATTERS TAX EXEMPTION .. .The delivery of the Obligations is subject to the opinions of Bond Counsel to the effect that interest on the Obligations for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinions (the "Code "), pursuant to section 103 of the Code and existing regulations. published rulings, and court decisions. and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described. corporations. Forms of Bond Counsel's opinions are reproduced as Appendix C and Appendix D. The statutes, regulations. rulings, and court decisions on which such opinions are based are subject to change. Interest on the Obligations owned by a corporation will be included in such corporation's adjusted current earnings for purposes of calculating the alternative minimum taxable income of such corporation. other than an S corporation, a qualified mutual fund. a real estate investment trust, a real estate mortgage investment conduit, or a financial asset securitization investment trust ("FASIT "). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by Section 55 of the Code will be computed. In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the City made in a certificate dated the date of delivery of the Obligations pertaining to the use, expenditure, and investment of the proceeds of the Obligations and will assume continuing compliance by the City with the provisions of the Ordinances subsequent to the issuance of the Obligations. The Ordinances contain covenants by the City with respect to. among other matters, the use of the proceeds of the Obligations and the facilities financed therewith by persons other than state or local governmental units. the manner in which the proceeds of the Obligations are to be invested. the periodic calculation and payment to the United States Treasury of arbitrage "profits" from the investment of proceeds. and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest on the Obligations to be includable in the gross income of the owners thereof from the date of the issuance of the Obligations. Bond Counsel's opinions are not a guarantee of a result, but represent its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the City described above. No ruling has been sought from the Internal Revenue Service (the "IRS ") with respect to the matters addressed in the opinions of Bond Counsel, and Bond Counsel's opinions are not binding on the IRS. The IRS has an ongoing program of auditing the tax - exempt status of the interest on tax- exempt obligations. If an audit of the Obligations is commenced, under current procedures the IRS is likely to treat the City as the "taxpayer," and the owners of the Obligations would have no right to participate in the audit process. In responding to or defending an audit of the tax- exempt status of the interest on the Obligations, the City may have different or conflicting interests from the owners of the Obligations. Public awareness of any future audit of the Obligations could adversely affect the value and liquidity of the Obligations during the pendency of the audit, regardless of its ultimate outcome. Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Obligations. Prospective purchasers of the Obligations should be aware that the ownership of tax - exempt obligations such as the Obligations may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits. individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax - exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. Existing law may change to reduce or eliminate the benefit to owners of the Obligations of the exclusion of interest on the Obligations from gross income for federal income tax purposes. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the Obligations. Prospective purchasers of the Obligations should consult with their own tax advisors with respect to any proposed or future changes in tax law. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN OBLIGATIONS ... The initial public offering price of certain Bonds or Certificates (the "Discount Obligations ") may be less than the amount payable on such Bonds or Certificates at maturity. An amount equal to the difference between the initial public offering price of a Discount Obligation (assuming that a substantial amount of the Bonds or Certificates 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 Obligation. A portion of such original issue discount allocable to the holding period of such Discount Obligation by the initial purchaser will, upon the disposition of such Discount Obligation (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Obligations described above under "Tax Exemption." Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Obligation. taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Obligation and generally will be allocated to an initial purchaser in a different amount from the amount of the payment denominated as interest actually received by the initial purchaser during the tax year. 34 However, such interest may be required to be taken into account in determining the alternative minimum taxable income of a corporation, for purposes of calculating a corporation's alternative minimum tax imposed by Section 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits. individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry. or who have paid or incurred certain expenses allocable to. tax- exempt obligations. Moreover. in the event of the redemption, sale or other taxable disposition of a Discount Obligation by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Obligation in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Obligation was held) is includable in gross income. Owners of Discount Obligations should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Obligations. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Obligations may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds or Certificates (the "Premium Obligations ") may be greater than the amount payable on such Bonds or Certificates at maturity. An amount equal to the difference between the initial public offering price of a Premium Obligation (assuming that a substantial amount of the Bonds or Certificates 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 Prernium Obligations. The basis for federal income tax purposes of a Premium Obligation in the hands of such initial purchaser must be reduced each year by the amortizable bond premium. although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Obligation. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Obligations should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Obligations. CONTINUING DISCLOSURE OF INFORMATION In the respective Ordinances, the City has made the following agreement for the benefit of the holders and beneficial owners of the Obligations. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Obligations. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to the Municipal Securities Rulemaking Board (the `MSRB "), which pursuant to SEC - approved amendments to SEC Rule 15c2 -12 (the "Rule ") that became effective beginning July 1, 2009, is now the sole nationally recognized municipal securities information repository ( "NRMSIR "). The MSRB has established the Electronic Municipal Market Access ( "EMMA ") system to make such continuing disclosure available to investors free of charge. Investors may access continuing disclosure information filed with the MSRB at www.emma.msrb.org. ANNUAL REPORTS ... The City will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 15 and in Appendix B. The City will update and provide this information within six months after the end of each fiscal year ending in or after 2014. The financial information and operating data to be provided may be set forth in full in one or more documents or may be included by specific reference to any document available to the public on the MSRB's internet web site or filed with the SEC as permitted by the Rule. The updated information will include audited financial statements. if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial statements by the required time, and audited financial statements when and if such audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify the MSRB of the change. 35 NOTICE OF CERTAIN EV'ENTS...The City will also provide the following to the MSRB. in an electronic format as prescribed by the MSRB, in a timely manner not in excess of ten (10) business days after the occurrence of the event, notice of any of the following events with respect to the Obligations: (1) principal and interest payment delinquencies; (2) non - payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed of final determinations of taxability, Notices of Proposed Issue (IRS Form 5702 -TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other material events affecting the tax status of the Obligations; (7) modifications to rights of holders of the Obligations, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Obligations, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City; (13) the consummation of a merger. consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City. other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional paying agent/registrar or the change of name of a paying agent/registrar, if material. In addition, the City will provide to the MSRB, in a timely manner, notice of any failure by the City to provide the required annual financial information described above under "Annual Reports" and any notices of events in accordance with this section. For these purposes. any event described in (12) in the immediately preceding paragraph is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City. or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. AVAILABILITY OF INFORMATION... The City has agreed to provide the foregoing financial and operating information only as described above. Investors may access continuing disclosure information filed with the MSRB free of charge at www. emma.msrb.org. LIMITATIONS AND AMENDMENTS ... The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Obligations at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Obligations may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity. nature, status. or type of operations of the City, if (i) the agreement, as amended, would have permitted an Initial Purchaser to purchase or sell Obligations in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the respective outstanding Obligations consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Obligations. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an Initial Purchaser from lawfully purchasing or selling Obligations in the primary offering of the Obligations. If the City so amends its continuing disclosure agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports' an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS... During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. 36 OTHER INFORMATION RATINGS The Obligations have been rated "AAA" by Standard & Poor's Ratings Services. a Standard & Poor's Financial Services LLC business ("S&P"). and "AAA" by Fitch Ratings ( "Fitch ") without regard to credit enhancement. The ratings reflect only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by any or more of such rating companies, if in the judgment of any or more companies. circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Obligations. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE The sale of the Obligations has not been registered under the Federal Securities Act of 1933, as amended. in reliance upon the exemption provided thereunder by Section 3(a)(2): and the Obligations have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Obligations been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Obligations under the securities laws of any jurisdiction in which the Obligations may be sold. assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Obligations shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Obligations are negotiable instruments and investment securities governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State. With respect to investment in the Obligations by municipalities or other political subdivisions or public agencies of the State, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Certificates be assigned a rating of not less than "A" or its equivalent as to investment quality by a national rating agency (see "OTHER INFORMATION - Ratings" herein). In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Obligations are legal investments for state banks, savings banks, trust companies with capital of one million dollars or more, and savings and loan associations. The Obligations are eligible to secure deposits of any public funds of the State. its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Obligations are legal investments for various institutions in those states. No representation is made that the Obligations will be acceptable to public entities to secure their deposits or acceptable to such institutions for investment purposes. The City has made no investigation of other laws. rules, regulations or investment criteria which might apply to any such persons or entities or which might otherwise limit the suitability of the Obligations for any of the foregoing purposes or limit the authority of such persons or entities to purchase or invest in the Obligations for such purposes. LEGAL OPINIONS AND No LITIGATION CERTIFICATE The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Obligations including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Obligations and to the effect that the Obligations are valid and legally binding obligations of the City payable from the proceeds of an annual ad valorem tax levied, within the limitations prescribed by law. upon all taxable property in the City, and the limited pledge of the Net Revenues of the System (with respect to the Certificates) provided in the respective Ordinances, and the approving legal opinions of Fulbright & Jaworski, LLP, Bond Counsel, to like effect and to the effect that the interest on the Obligations will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "TAX MATTERS" herein. including the alternative minimum tax on corporations. The customary closing papers. including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Obligations will also be furnished. The forms of Bond Counsel's opinions are attached hereto as Appendix C and Appendix D. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Obligations is contingent upon the sale and delivery of the Obligations. The legal opinions of Bond Counsel will accompany the Obligations deposited with DTC or will be printed on the definitive Obligations in the event of the discontinuance of the Book -Entry -Only System. Bond Counsel was engaged by, and only represents, the City. Except as noted below. Bond Counsel did not take part in the preparation of the Official Notice of Sale and Bidding Instructions. the Official Bid Form and the Preliminary Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information 37 contained herein except that in its capacity as Bond Counsel, such firm has reviewed the information appearing under captions "PLAN OF FINANCING" (except under the subcaptions "Sources and Uses of Bond Proceeds" and "Sources and Uses of Certificate Proceeds"). "THE OBLIGATIONS" (except under the subcaptions "Book- Entry-Only System," and "Obligationholders' Remedies "), "TAX MATTERS," "CONTINUING DISCLOSURE OF INFORMATION" (except under the subcaption "Compliance With Prior Undertakings ") and the subcaptions "Legal Opinions and No Litigation Certificate" (except for the last two sentences of the first paragraph thereof), "Registration and Qualification of Obligations for Sale" and "Legal Investments And Eligibility To Secure Public Funds In Texas," under the caption "OTHER INFORMATION" and such firm is of the opinion that the information relating to the Obligations and legal matters contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Obligations, such information conforms to the Ordinances. The various legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion. the attorney does not become an insurer or guarantor of the expression of professional judgment. of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records. audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Obligations. The Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and delivery of the Obligations. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor to the City has provided the following sentence for inclusion in this Preliminary Official Statement. The Financial Advisor has reviewed the information in this Preliminary Official Statement in accordance with. and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction. but the Financial Advisor does not guarantee the accuracy or completeness of such information. INITIAL PURCHASER FOR THE BONDS After requesting competitive bids for the Bonds, the City accepted the bid of (the "Initial Purchaser ") to purchase the Bonds at the interest rates shown on page 2 of the Official Statement at a price of ( %) of par plus a cash premium (if any) of $ . The Initial Purchaser can give no assurance that any trading market will be developed for the Bonds after their sale by the City to the Initial Purchaser. The City has no control over the price at which the Bonds are subsequently sold and the initial yield at which the Bonds will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser. INITIAL PURCHASER FOR THE CERTIFICATES After requesting competitive bids for the Certificates, the City accepted the bid of (the "Initial Purchaser ") to purchase the Certificates at the interest rates shown on page 4 of the Official Statement at a price of ( %) of par plus a cash premium (if any) of $ . The Initial Purchaser can give no assurance that any trading market will be developed for the Certificates after their sale by the City to the Initial Purchaser. The City has no control over the price at which the Certificates are subsequently sold and the initial yield at which the Certificates will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser. 38 FORWARD - LOOKING STATEMENTS DISCLAIMER The statements contained in this Preliminary Official Statement, and in any other information provided by the City, that are not purely historical, are forward- looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward- looking statements. All forward- looking statements included in this Preliminary Official Statement are based on information available to the City on the date hereof, and the City assumes no obligation to update any such forward - looking statements. The City's actual results could differ materially from those discussed in such forward - looking statements. The forward - looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business. industry, market, legal. and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors. and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things. future economic, competitive. and market conditions and future business decisions. all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and. therefore, there can be no assurance that the forward- looking statements included in this Preliminary Official Statement will prove to be accurate. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Obligations. the City will furnish a certificate, executed by a proper officer, acting in their official capacity, to the effect that to the best of his or her knowledge and belief: (a) the descriptions and statements of or pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of said Obligations and the acceptance of the best bid therefor, and on the date of the delivery. were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any material respect; and (d) there has been no material adverse change in the financial condition of the City since the date of the last audited financial statements of the City. The respective Ordinances authorizing the issuance of the Obligations will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the Initial Purchaser(s). Mayor City of Southlake, Texas ATTEST: City Secretary City of Southlake, Texas 39 SCHEDULE OF REFUNDED OBLIGATIONS SCHEDULE I GENERAL OBLIGATION REFUNDING BONDS, SERIES 2005 Original Original Principal Dated Maturity Interest Amount Call Date (Feb. 15) Rate Outstanding Date 3/15/2005 2015 4.200% $ 4,130,000 5/19/2014 2016 4.200% 4.320,000 5/19/2014 2017 4.200% 4.330.000 5/19/2014 2018 4.200% 3,690.000 5/19/2014 2019 4.200 2.740,000 5/19/2014 2020 4.200% 1,530,000 5/19/2014 2021 4.200% 805,000 5/19/2014 2022 4.200% 165,000 5/19/2014 2023 4.200% 170,000 5/19/2014 2024 4.200% 180,000 5/19/2014 2025 4.200% 185.000 5/19/2014 2026 4.200% 200.000 5/19/2014 $ 22,445.000 The Certificates will be redeemed on May 19, 2014 at a price of par plus accrued interest to the redemption date. APPENDIX A GENERAL INFORMATION REGARDING THE CITY THE CITY LOCATION The City is located in northeast Tarrant and Denton Counties. The City is approximately 15 miles northwest of the City of Dallas on State Highway 114 and approximately 10 miles northeast of the City of Fort Worth. POPULATION The City's 2012 estimated population is 27.045, a steady increase over the 2010 census population of 26.575. ECONOMY The City is primarily residential with some commercial and light manufacturing companies. The City's growth is due to its proximity to the Dallas -Fort Worth Metroplex and to the Dallas -Fort Worth Intemational Airport. Major employers in the City are: Employer Nature of Business Number of Employees Sabre Holdings Travel Industry 2,700 Carroll Independent School District School District 1,072 Verizon Wireless Telecommunications 619 Central M arket Grocery Store 350 City of Southlake Government 310 Hilton Dallas/Town Square Hotel 218 Century 21 Mike Bowman, Inc. Insurance 200 Tri -Dal. Ltd. Construction 194 Cheesecake Factory Restaurant 161 Lowes Home Improvement Retail 145 Allied Oil & Gas Services Oil Industry 140 Texas Health Harris Methodist Medical Industry 135 Ameristar Information Network Telecommunications 125 Costco Wholesale Retail 107 TRANSPORTATION The City is located on State Highways 114 and 26 providing direct access to the Cities of Dallas and Fort Worth and to Dallas -Fort Worth International Airport. The City is approximately 5 miles northwest of Dallas -Fort Worth International Airport. 19 miles from Dallas Love Field and 10 miles from Alliance Airport. EDUCATION The City is served primarily by Carroll Independent School District, and additionally by Keller, Grapevine - Colleyville and Northwest Independent School Districts. There are four elementary schools, one junior high, two intermediate schools, one high school and one senior high school located within the City. Higher education is provided by many institutions located within a 25 -mile radius from the City, such as: Texas Christian University. University of North Texas, Southern Methodist University, Texas Woman's University, University of Texas at Arlington, University of Texas at Dallas, University of Dallas and Tarrant County Junior College. RECREATION The City has over 700 total park acres (and growing), 47 practice and game fields, 21 lighted tennis courts. lighted in -line hockey facility. 3 lighted basketball courts, 6 miles of park trials, 12 concession and /or restroom facilities, 10 ponds with aeration features, 13 pavilions, a senior activity center, a nature center, and a full service library. The City lies on the southern border of Lake Grapevine which offers additional swimming, camping, boating, and fishing opportunities. The City also provides an assortment of recreational programs with over 50,000 participants taking part annually in classes, programs, athletic leagues, concerts, and special events offered through the Recreation Division. A- 1 HISTORICAL EMPLOYMENT (AVERAGE ANNUAL) (1) 2013 2012 2011 2010 2009 Labor Force 13,170 12,730 12,466 12,287 12,404 Employed 12,573 12,119 11,640 11,414 11,645 Unemployed 597 611 826 873 759 Unemployment Rate 4.5% 4.8% 6.6% 7.1% 6.1% (1) Source: Texas Employment Commission. BUILDING PERMITS BY CATEGORI' Fiscal Year Ended Commercial Residential 9/30 Number Amount Number Amount Grand Total 2009 17 $ 39,463,638 55 $ 77,089,249 $ 116.552.887 2010 14 67,764,510 52 31,871,888 99,636,398 2011 10 18,384,157 90 59,040,985 77.425,142 2012 14 83,728,043 105 58,736,866 142,464.909 2013 20 17,976,714 188 84,028,745 102,005,459 Source: City Staff. TARRANT COUNTY Tarrant County (the "County ") is located in North Central Texas with a 2010 population of 1,809,034. The County, together with Dallas County, is an integral part of the Dallas -Fort Worth Metroplex, one of the largest and fastest growing metropolitan areas in the nation. The combined Metroplex area has an estimated population in excess of 4.0 million. A -2 APPENDIX B EXCERPTS FROM THE CITY OF SOUTHLAKE, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2013 The information contained in this Appendix consists of excerpts from the City of Southlake, Texas, Annual Financial Report for the Year Ended September 30, 2013, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. APPENDIX C FORM OF BOND COUNSEL'S OPINION (THE BONDS) APPENDIX D FORM OF BOND COUNSEL'S OPINION (THE CERTIFICATES) OFFICIAL NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $21,540,000* CITY OF SOUTHLAKE, TEXAS (Tarrant and Denton Counties) GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014 Sealed Bids Due Tuesday, May 6, 2014 at 11:00 AM CDT THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING ... The City Council (the "Council ") of the City of Southlake, Texas (the "City") is offering for sale its $21,540,000* General Obligation Refunding Bonds, Series 2014 (the "Bonds "). Bidders may submit bids for the Bonds by any of the following methods: (1) Deliver bids directly to the City as described below in "BIDS DELIVERED TO THE CITY;" (2) Submit bids electronically as described below in "ELECTRONIC BIDDING PROCEDURES;" or (3) Submit bids by telephone or facsimile as described below in "BIDS BY TELEPHONE OR FACSIMILE." BIDS DELIVERED TO THE CITY ... Sealed bids, plainly marked "Bid for Bonds ", should be addressed to "Sharen Jackson. Chief Financial Officer. City of Southlake, Texas ", and delivered to the City at 1400 Main Street, Suite 440. Southlake, Texas 76092 (the "City's Meeting Place "), prior to 11:00 AM, Central Time, on the date of the bid opening. All bids must be submitted on the Official Bid Form. without alteration or interlineation. ELECTRONIC BIDDING PROCEDURE ... Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to the i -Deal LLC's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit the Official Bid Form prior to bidding. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms provided in this Official Notice of Sale and Bidding Instructions, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY. the use of such facilities being the sole risk of the prospective bidder. If any provisions of this Official Notice of Sale and Bidding Instructions shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Official Notice of Sale and bidding instructions shall control. Further information about PARITY, including any fee charged, may be obtained from Parity Customer Support, 40 West 23' Street, 5th Floor, New York, New York 10010, (212) 404 -8102. For purposes of the bidding process, regardless of the bidding method, the time as maintained by i -Deal shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate the provisions of this Official Notice of Sale and the Official Bid Form. The winning bidder shall submit a signed bid form if not previously submitted. BIDS BY TELEPHONE OR FACSIMILE ... Bidders must submit a SIGNED Official Bid Form to Jim Sabonis, First Southwest Company. 325 N. St. Paul Street, Suite 800. Dallas, TX 75201, and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (214) 953 -4189, between 10:00 AM, Central Time and 11:00 AM, Central Time on Tuesday. May 6. 2014. Fax bids must be received between 10:00 AM, Central Time and 11:00 AM Central Time, on Tuesday, May 6, 2014 at (214) 953 -4050, Attention: Penny Brooker. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. The City and First Southwest Company, as the City's Financial Advisor, are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted on a timely basis. * Preliminary, subject to change. See `Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. 1 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 Bonds will be publicly opened and read at the City Hall, 1400 Main Street, Southlake, TX 76092. at 11:30 AM, Central Time. on Tuesday. May 6, 2014. AWARD OF THE BONDS ... The Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to convene at 5:30 PM, Central Time, on the date of the bid opening, and adopt an ordinance authorizing the Bonds and approving the Official Statement (the "Bond Ordinance "). ADVANCE MODIFICATION OF PRINCIPAL AMOUNTS ... The City reserves the right to change the principal amounts provided below in the "MATURITY SCHEDULE" in each stated maturity by giving notice of such change, via bond buyer wire service, and PARITY at least 18 hours in advance of the time set for receipt of bids. Such notice shall be considered an amendment to this Official Notice of Sale and Bidding Instructions. POST BID MODIFICATION OF PRINCIPAL AMOUNTS ... After the receipt of bids, but prior to the award of the Bonds, the City reserves the right to amend the total par amount by up to 15% in order to generate the City's target amortization. Such modifications of principal amounts will be disclosed to the winning bidder within two hours after receipt of the bids. The purchase price of the Bonds will be adjusted proportionately to the adjustment in principal amount of the Bonds and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. THE BONDS DESCRIPTION ... The Bonds will be dated May 1, 2014 (the "Dated Date "). Interest will accrue from June 5, 2014 (the "Delivery Date ") and will be due on August 15, 2014, and each August 15 and February 15 thereafter until the earlier of stated maturity, or prior redemption. The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Bonds will mature on February 15 in each year as follows: MATURITY SCHEDULE* Principal 15 -Feb Amount M aturit_v $ 3,955,000 2015 4,135,000 2016 4.140,000 2017 3,535,000 2018 2,635,000 2019 1,480,000 2020 780,000 2021 170,000 2022 170,000 2023 175,000 2024 175,000 2025 190,000 2026 OPTIONAL REDEMPTION ... The City reserves the right. at its option, to redeem Bonds having stated maturities on and after February 15, 2025, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. Any Bonds designated as Term Bonds (defined herein) by the Initial Purchaser will also be subject to mandatory sinking fund redemption. SERIAL BONDS AND /OR TERM BONDS ... Bidders may provide that all of the Bonds be issued as serial bonds or may provide that any two or more consecutive annual principal amounts be combined into one or more term bonds (the "Term Bonds "). MANDATORY SINKING FUND REDEMPTION ... If the successful bidder elects to alter the MATURITY SCHEDULE reflected above and convert the principal amounts of the serial bonds into Term Bonds, such Term Bonds shall be subject to mandatory redemption the first February 15 next following the last maturity for serial bonds, and annually thereafter on each February 15 until the stated maturity for the Term Bonds at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the "MATURITY SCHEDULE" shown above had no designation of such maturities as Term Bonds occurred. At least forty-five (45) days prior to each mandatory date, the Paying Agent/Registrar shall select by lot the Term Bonds to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. ii The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of the Term Bonds of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final Official Statement will incorporate the mandatory redemption provisions for the Bonds in the event the successful bidder elects to convert serial maturities into one or more Term Bonds. BOOK- ENTRY -ONLY SYSTEM ... The City intends to utilize the Book -Entry-Only System of The Depository Trust Company, New York, New York ( "DTC "). See "THE OBLIGATIONS - Book -Entry-Only System" in the Official Statement. PAYING AGENT /REGISTRAR ... The initial Paying Agent/Registrar shall be The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent /Registrar" in the Official Statement). SOURCE OF PAYMENT ... The Bonds constitute direct obligations of the City, payable from the levy and collection of a direct and continuing annual ad valorem tax, within the limits prescribed by law, on all taxable property located within the City. Further details regarding the Bonds are set forth in the Official Statement. SEPARATE ISSUES ...The Bonds are being offered by the City concurrently with the "City of Southlake, Texas. Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2014" (the "Certificates "), under a common Official Statement and such Bonds and Certificates hereinafter sometimes referred to collectively as the "Obligations." The Bonds and Certificates are separate and distinct securities offerings being issued and sold independently except for the common Official Statement, and, while the Bonds and Certificates share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its payment, the rights of the holders, and other features. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ... The Bonds will be sold in one block, on an "All or None" basis, and at a price of not less than 102% and not more than 106% of their par value. Bidders are invited to name the rate(s) of interest to be borne by the Bonds, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% 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. Beginning with the Bonds maturing in the year 2025, no reoffering yield producing a dollar price less than $97.50 for any individual maturity will be accepted. The high bidder will be required to submit reoffering yields and dollar prices prior to award. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in the bid the total interest cost in dollars and the True Interest Cost as defined below. BASIS FOR AWARD ... Subject to the City's right to reject any or all bids and to waive any irregularities except time of filing, the sale of the Bonds will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form (the "initial Purchaser ") making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost (defined herein) rate to the City based on the maturity schedule in the Official Bid Form. The "True Interest Cost" rate is that rate which, when used to compute the total present value as of the Delivery Date of all debt service payments on the Bonds on the basis of semi - annual compounding, produces an amount equal to the sum of the par value of the Bonds plus any premium bid, if any. In the event of a bidder's error in interest cost rate calculations, the interest rates. and premium, if any, set forth in the Official Bid Form will be considered as the intended bid. In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Bonds from the gross income of their owners, the Initial Purchaser will be required to complete, execute, and deliver to the City (on or before the Delivery Date) a certification as to their "issue price" (the "Issue Price Certificate ") in the form and to the effect attached hereto or accompanying this Official Notice of Sale and Bidding Instructions. In the event the Initial Purchaser is unable to sell a substantial amount of the Bonds of any stated maturity, such certificate may be modified in a manner approved by the City or by Fulbright & Jaworski LLP, Dallas, Texas, a member of Norton Rose Fulbright, bond counsel to the City ( "Bond Counsel "). In no event will the City fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate at least six (6) days prior to the date of delivery of the Bonds. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements, to make such investigation. or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of Southlake, Texas ", in the amount of $430,800.00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Initial Purchaser's compliance with the terms of the bid and the Official Notice of Sale and Bidding Instructions. iii The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the bid. then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be retumed immediately after the bids are opened, and an award of the Bonds has been made. DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Bonds, but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this Official Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERY OF BONDS ... Delivery will be accomplished by the issuance of one Initial Bond (also called the "Bond" or "Bonds"). either in typed or printed form. in the aggregate principal amount of $21,540,000 *, payable in stated installments to the Initial Purchaser. signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Bond. it shall be immediately cancelled and one definitive Bond for each maturity will be registered and delivered only to Cede & Co.. and deposited with DTC in connection with DTC's Book -Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Bonds must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Initial Purchaser will be given six business days' notice of the time fixed for delivery of the Bonds. It is anticipated that delivery of the Bonds can be made on or about June 5, 2014, and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Bonds by 10:00 AM, Central Time, on June 5, 2014. If for any reason the City is unable to make delivery on or before June 5, 2014, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned. and both the City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Bonds, provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS TO DELIVERY ... The obligation of the Initial Purchaser to take up and pay for the Bonds is subject to the Initial Purchaser's receipt of (a) the legal opinion of Bond Counsel. (b) the no- litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. LEGAL OPINION ... The Bonds are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Initial Purchaser of opinions of Bond Counsel, to the effect that the Bonds are valid and binding obligations of the City and that the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" in the Official Statement, including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATEMENT ... At the time of payment for and Initial Delivery of the Bonds, the City will execute and deliver to the Initial Purchaser a certificate in the form set forth in the Official Statement. CHANGE IN TAX EXEMPT STATUS ... At any time before the Bonds are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders on bonds of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change iv GENERAL FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present. pending or future actions taken by any legislative or judicial bodies. BLUE SKY LAws ... By submission of its bid, the Initial Purchaser represents that the sale of the Bonds in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees to cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL ... This Official Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds, but is merely notice of the sale of the Bonds. The offer to sell the Bonds is being made by means of the Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective Initial Purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Bonds. ISSUANCE OF ADDITIONAL DEBT ... The City does not anticipate the issuance of additional general obligation debt within the next twelve months. RATINGS ... The Bonds have been rated "AAA" by Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P "), and "AAA" by Fitch Ratings ("Fitch"). without regard to credit enhancement. THE PRELIMINARY OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2 -12 ... The City has prepared the accompanying Preliminary Official Statement and. for the limited purpose of complying with United States Securities and Exchange Commission Rule 15c2 -12 (the "Rule"). deems such Preliminary Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Preliminary Official Statement contains information. including financial information or operating data concerning every entity, enterprise, fund, account. or person that is material to an evaluation of the offering of the Bonds. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Preliminary Official Statement are addressed elsewhere in this Official Notice of Sale and Bidding Instructions and in the Preliminary Official Statement. The City will furnish to the Initial Purchaser, acting through a designated senior representative. in accordance with instructions received from the Initial Purchaser, within seven (7) business days from the sale date an aggregate of 30 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. In addition, the City agrees to provide, or cause to be provided, to the Initial Purchaser, the Preliminary Official Statement and the Official Statement and any amendments or supplements thereto in a "designated electronic format" (or printed format with respect to the final Official Statement) as may be required for the Initial Purchaser to comply with the Rule or the rules of the Municipal Securities Rulemaking Board ( "MSRB "). The City consents to the distribution of such documents in a "designated electronic format." Upon receipt, the Initial Purchaser shall promptly file the Official Statement with the MSRB in accordance with the applicable MSRB rules. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the City assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT ... The City will agree in the Bond Ordinance to provide certain periodic information and notices of certain events in accordance with the Rule, as described in the Preliminary Official Statement under "CONTINUING DISCLOSURE OF INFORMATION ". The Initial Purchaser's obligation to accept and pay for the Bonds is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Bond Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS ... During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT ... A limited number of additional copies of this Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Preliminary Official Statement. as available over and above the normal mailing, may be obtained upon request at the offices of First Southwest Company, 325 North St. Paul, Suite 800, Dallas, Texas 75201. Financial Advisor to the City. v On the date of the sale, the City Council will, in the Bond Ordinance authorizing the issuance of the Bonds, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Bonds by the Initial Purchaser. JOHN TERRELL Mayor City of Southlake, Texas ATTEST: ALICIA RICHARDSON City Secretary City of Southlake, Texas April 29, 2014 vi OFFICIAL BID FORM Honorable Mayor and City Council May 6, 2014 City of Southlake, Texas Honorable Mayor and Members of the City Council: Reference is made to your Preliminary Official Statement and Official Notice of Sale and Bidding Instructions, dated April 29, 2014 of $21.540,000* CITY OF SOUTHLAKE, TEXAS, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014 (the "Bonds "), both of which constitute a part hereof. For your legally issued Bonds, as described in said Official Notice of Sale and Preliminary Official Statement. we will pay you par, plus a cash premium of $ for Bonds maturing and bearing interest as follows: Principal Interest Princip al Interest Maturity Amount Rate Maturity Amount Rate 2/15/2015 $ 3,955,000 2/15/2021 780,000 2/15/2016 4,135,000 2/15/2022 170,000 2/15/2017 4,140,000 2/15/2023 170,000 2/15/2018 3,535,000 2/15/2024 175,000 2/15/2019 2,635.000 2/15/2025 175.000 2/15/2020 1,480.000 2/15/2026 190,000 Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which may include multiple term bonds, one term bond or no term bond if none is indicated). For those years which have been combined into a "Term Bond ", the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The Term Bonds created are as follows: Year of Principal Term Bond First Mandatory Amount of Interest Maturity Date Redemption Term Bond Rate $ $ $ $ PREMIUM (DISCOUNT) $ TRUE INTEREST COST The Initial Bonds shall be registered in the name of , which will, upon payment for the Bonds, be cancelled by the Paying Agent/Registrar. The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry-Only System. A bank cashier's check or certified check of the Bank, , in the amount of $430,800.00. which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Official Notice of Sale and Bidding Instructions. * Preliminary. subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. We agree to accept delivery of the Bonds utilizing the Book- Entry-Only System through DTC and make payment for the Initial Bond in immediately available funds, not later than 10:00 AM, Central Time, on June 5, 2014, or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Bonds to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect accompanying the Official Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to Fulbright & Jaworski LLP, Dallas, Texas, a member of Norton Rose Fulbright, Bond Counsel 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. Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Southlake, Texas, subject to and in accordance with the Official Notice of Sale and Bidding Instructions, this the 6th day of May, 2014. Mayor City of Southlake, Texas ATTEST: City Secretary City of Southlake, Texas ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of CITY OF SOUTHLAKE, TEXAS, GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014 (the "Bonds "), issued in aggregate principal amount of $ , as follows: 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Bonds from the City of Southlake, Texas (the "Issuer ") at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to the public of all of the Bonds of each maturity at the respective prices set forth below. 3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the Bonds of each maturity_ at which a substantial amount (at least 10 %) of the Bonds of such maturity was sold to the public is as set forth below. Principal Principal Amount Year of Offering Price Amount Year of Offering Price Maturinu Maturity (% /Yield) Maturing Maturity ( %/Yield) 2015 2021 2016 2022 2017 2023 2018 2024 2019 2025 2020 2026 4. The term "public," as used herein, means persons other than bondhouses, brokers. dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased bond insurance for the Bonds. The bond insurance, if any, has been purchased from (the "Insurer ") for a premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the Bonds which results after recovery of the insurance premium, exceeds the present value of the bond insurance premium. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended. on the excludability of interest on the Bonds from the gross income of their owners. EXECUTED and DELIVERED this day of . 2014. (Name of Underwriter or Manager) By (Title) OFFICIAL NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $8,875,000* CITY OF SOUTHLAKE, TEXAS (Tarrant and Denton Counties) TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2014 Sealed Bids Due Tuesday, May 6, 2014 at 11:00 AM CDT THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE CERTIFICATES OFFERED FOR SALE AT COMPETITIVE BIDDING ... The City Council (the "Council ") of the City of Southlake, Texas (the "City") is offering for sale its $8,875,000* Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2014 (the "Certificates "). Bidders may submit bids for the Certificates by any of the following methods: (1) Deliver bids directly to the City as described below in "BIDS DELIVERED TO THE CITY :" (2) Submit bids electronically as described below in "ELECTRONIC BIDDING PROCEDURES :" or (3) Submit bids by telephone or facsimile as described below in "BIDS BY TELEPHONE OR FACSIMILE." BIDS DELIVERED TO THE CITY ... Sealed bids. plainly marked "Bid for Certificates ", should be addressed to "Sharen Jackson, Chief Financial Officer, City of Southlake, Texas ", and delivered to the City at 1400 Main Street. Suite 440, Southlake, Texas 76092 (the "City's Meeting Place "), prior to 11:00 AM, Central Time, on the date of the bid opening. All bids must be submitted on the Official Bid Form. without alteration or interlineation. ELECTRONIC BIDDING PROCEDURE ... Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to the i -Deal LLC's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit the Official Bid Form prior to bidding. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Certificates on the terms provided in this Official Notice of Sale and Bidding Instructions, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the City. The City shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the use of such facilities being the sole risk of the prospective bidder. If any provisions of this Official Notice of Sale and Bidding Instructions shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Official Notice of Sale and Bidding Instructions shall control. Further information about PARITY, including any fee charged, may be obtained from Parity Customer Support, 40 West 23" Street, 5th Floor, New York, New York 10010, (212) 404 -8102. For purposes of the bidding process, regardless of the bidding method, the time as maintained by i -Deal shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate the provisions of this Official Notice of Sale and the Official Bid Form. The winning bidder shall submit a signed bid form if not previously submitted. BIDS BY TELEPHONE OR FACSIMILE . .. Bidders must submit a SIGNED Official Bid Form to Jim Sabonis, First Southwest Company, 325 North St. Paul Street, Suite 800, Dallas, TX 75201. and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (214) 953 -4189, between 10:00 AM, Central Time and 11:00 AM, Central Time on Tuesday, May 6, 2014. Fax bids must be received between 10:00 AM, Central Time and 11:00 AM Central Time, on Tuesday. May 6, 2014 at (214) 953 -4050, Attention: Penny Brooker. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. The City and First Southwest Company, as the City's Financial Advisor, are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted on a timely basis. 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 Certificates will be publicly opened and read at the City Hall, 1400 Main Street, Southlake, TX 76092, at 11:30 AM, Central Time, on Tuesday, May 6, 2014. AWARD OF THE CERTIFICATES ... The Council will take action to award the Certificates (or reject all bids) at a meeting scheduled to convene at 5:30 PM, Central Time, on the date of the bid opening, and adopt an ordinance authorizing the Certificates and approving the Official Statement (the "Certificate Ordinance "). ADVANCE MODIFICATION OF PRINCIPAL AMOUNTS ... The City reserves the right to change the principal amounts provided below in the "MATURITY SCHEDULE" in each stated maturity by giving notice of such change, via bond buyer wire service, and PARITY at least 18 hours in advance of the time set for receipt of bids. Such notice shall be considered an amendment to this Official Notice of Sale and Bidding Instructions. POST BID MODIFICATION OF PRINCIPAL AMOUNTS ... After the receipt of bids, but prior to the award of the Certificates, the City reserves the right to amend the total par amount by up to 15% in order to generate the City's target amortization. Such modifications of principal amounts will be disclosed to the winning bidder within two hours after receipt of the bids. The purchase price of the Certificates will be adjusted proportionately to the adjustment in principal amount of the Certificates and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. THE CERTIFICATES DESCRIPTION ... The Certificates will be dated May 1, 2014 (the "Dated Date "). Interest will accrue from June 5, 2014 (the "Delivery Date ") and will be due on February 15, 2015, and each August 15 and February 15 thereafter until the earlier of stated maturity, or prior redemption. The Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Certificates will mature on February 15 in each year as follows: MATURITY SCHEDULE* Principal 15 -Feb Principal 15 -Feb Amount Maturity Amount Maturity $ 935,000 2015 $ 225,000 2025 1,005,000 2016 235,000 2026 1,045,000 2017 240,000 2027 1,085,000 2018 245,000 2028 1,130,000 2019 255,000 2029 210,000 2020 265,000 2030 210,000 2021 270,000 2031 215,000 2022 280,000 2032 220,000 2023 285,000 2033 225,000 2024 295,000 2034 OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2025, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. Any Certificates designated as Term Certificates (defined herein) by the Initial Purchaser will also be subject to mandatory sinking fund redemption. SERIAL CERTIFICATES AND /OR TERM CERTIFICATES ... Bidders may provide that all of the Certificates be issued as serial Certificates or may provide that any two or more consecutive annual principal amounts be combined into one or more term Certificates (the "Term Certificates "). MANDATORY SINKING FUND REDEMPTION ... If the successful bidder elects to alter the MATURITY SCHEDULE reflected above and convert the principal amounts of the serial Certificates into Term Certificates, such Term Certificates shall be subject to mandatory redemption the first February 15 next following the Last maturity for serial certificates, and annually thereafter on each February 15 until the stated maturity for the Term Certificates at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of the Term Certificates to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the "MATURITY SCHEDULE" shown above had no designation of such maturities as Term Certificates occurred. At least forty-five (45) days prior to each mandatory date, the Paying Agent/Registrar shall select by lot the Term Certificates to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. ii The principal amount of the Term Certificates required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the City, by the principal amount of the Term Certificates of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the City and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final Official Statement will incorporate the mandatory redemption provisions for the Certificates in the event the successful bidder elects to convert serial maturities into one or more Term Certificates. BOOK- ENTRY -ONLY SYSTEM ... The City intends to utilize the Book -Entry -Only System of The Depository Trust Company, New York, New York ( "DTC "). See "THE OBLIGATIONS - Book -Entry-Only System" in the Official Statement. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar shall be The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent /Registrar" in the Official Statement). SOURCE OF PAYMENT ... The Certificates constitute direct obligations of the City, payable from a combination of (i) the levy and collection of an annual ad valorem tax, within the limits prescribed by law, on all taxable property located within the City, and (ii) a limited pledge (not to exceed $1,000) of the Net Revenues from the operation of the City's Waterworks and Sewer System. as provided in the Certificate Ordinance. Further details regarding the Certificates are set forth in the Official Statement. SEPARATE ISSUES ... The Certificates are being offered by the City concurrently with the "City of Southlake. Texas. General Obligation Refunding Bonds, Series 2014" (the "Bonds "), under a common Official Statement, and such Bonds and Certificates are hereinafter sometimes referred to collectively as the "Obligations." The Bonds and Certificates are separate and distinct securities offerings being issued and sold independently except for the common Official Statement, and, while the Bonds and Certificates share certain common attributes. each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered. its terms for payment, the security for payment. the rights of the holders and other features. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ... The Certificates will be sold in one block, on an "All or None" basis, and at a price of not less than 100% and not more than 104% of their par value. Bidders are invited to name the rate(s) of interest to be borne by the Certificates, provided that each rate bid must be in a multiple of 1/8 of 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. Beginning with the Bonds maturing in the year 2025, no reoffering yield producing a dollar price less than $97.50 for any individual maturity will be accepted. The high bidder will be required to submit reoffering yields and dollar prices prior to award. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Certificates of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in the bid the total interest cost in dollars and the True Interest Cost as defined below. BASIS FOR AWARD ... Subject to the City's right to reject any or all bids and to waive any irregularities except time of filing, the sale of the Certificates will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form (the "Initial Purchaser ") making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost (defined herein) rate to the City based on the maturity schedule in the Official Bid Form. The "True Interest Cost" rate is that rate which, when used to compute the total present value as of the Delivery Date of all debt service payments on the Certificates on the basis of semi - annual compounding, produces an amount equal to the sum of the par value of the Certificates plus any premium bid, if any. In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any. set forth in the Official Bid Form will be considered as the intended bid. In order to provide the City with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Certificates from the gross income of their owners. the Initial Purchaser will be required to complete, execute, and deliver to the City (on or before the Delivery Date) a certification as to their "issue price" (the "Issue Price Certificate ") in the form and to the effect attached hereto or accompanying this Official Notice of Sale and Bidding Instructions. In the event the Initial Purchaser is unable to sell a substantial amount of the Bonds of any stated maturity, such certificate may be modified in a manner approved by the City or by Fulbright & Jaworski LLP, Dallas, Texas, a member of Norton Rose Fulbright, bond counsel to the City ( "Bond Counsel "). In no event will the City fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid. agrees to complete, execute. and deliver such a certificate at least six (6) days prior to the date of delivery of the Bonds. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements. to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. i ii GOOD FAITH DEPOSIT ... A Good Faith Deposit, payable to the "City of Southlake, Texas ", in the amount of $177,500.00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the City pending the Initial Purchaser's compliance with the terms of the bid and the Official Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Certificates. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Certificates in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Certificates has been made. DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Certificates, but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Certificates in accordance with the terms of this Official Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Certificates shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERY OF CERTIFICATES ... Delivery will be accomplished by the issuance of one Initial Certificate (also called the "Certificate" or "Certificates "), either in typed or printed form, in the aggregate principal amount of $8,875,000 *, payable in stated installments to the Initial Purchaser, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Certificate, it shall be immediately cancelled and one definitive Certificate for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book -Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Certificates must be made in immediately available funds for unconditional credit to the City, or as otherwise directed by the City. The Initial Purchaser will be given six business days' notice of the time fixed for delivery of the Certificates. It is anticipated that delivery of the Certificate(s) can be made on or about June 5, 2014, and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Certificates by 10:00 AM, Central Time, on June 5, 2014. If for any reason the City is unable to make delivery on or before June 5, 2014, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Certificates, provided such failure is due to circumstances beyond the City's reasonable control. CONDITIONS TO DELIVERY ... The obligation of the Initial Purchaser to take up and pay for the Certificates is subject to the Initial Purchaser's receipt of (a) the legal opinion of Bond Counsel, (b) the no- litigation certificate, and (c) the certification as to the Official Statement, all as further described in the Official Statement. LEGAL OPINION ... The Certificates are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Certificates is subject to the receipt by the Initial Purchaser of opinions of Bond Counsel, to the effect that the Certificates are valid and binding obligations of the City and that the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" in the Official Statement, including the alterative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATEMENT ... At the time of payment for, and Initial Delivery of the Certificates, the City will execute and deliver to the Initial Purchaser a certificate in the form set forth in the Official Statement. CHANGE IN TAY EXEMPT STATUS ... At any time before the Certificates are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders on Certificates of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change iv GENERAL FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information. covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. BLUE SKY LAWS ... By submission of its bid, the Initial Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Certificates in accordance with the securities law of the states in which the Certificates are offered or sold. The City agrees to cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary. provided, however, that the City shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL ... This Official Notice of Sale and Bidding instructions does not alone constitute an offer to sell the Certificates. but is merely notice of the sale of the Certificates. The offer to sell the Certificates is being made by means of the Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Certificates. ISSUANCE OF ADDITIONAL DEBT ... The City does not anticipate the issuance of additional general obligation debt within the next twelve months. RATINGS ... The Obligations have been rated "AAA" by Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P "), and "AAA" by Fitch Ratings ( "Fitch "), without regard to credit enhancement. THE PRELIMINARY OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2 -12 ... The City has prepared the accompanying Preliminary Official Statement and, for the limited purpose of complying with United States Securities and Exchange Commission Rule 15c2 -12 (the "Rule "), deems such Preliminary Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City. the Preliminary Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund. account, or person that is material to an evaluation of the offering of the Certificates. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Preliminary Official Statement are addressed elsewhere in this Official Notice of Sale and Bidding Instructions and in the Preliminary Official Statement. The City will furnish to the Initial Purchaser, acting through a designated senior representative, in accordance with instructions received from the Initial Purchaser, within seven (7) business days from the sale date an aggregate of 30 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Certificates. In addition, the City agrees to provide, or cause to be provided, to the Initial Purchaser, the Preliminary Official Statement and the Official Statement and any amendments or supplements thereto in a "designated electronic format" (or printed format with respect to the final Official Statement) as may be required for the Initial Purchaser to comply with the Rule or the rules of the Municipal Securities Rulemaking Board ( "MSRB "). The City consents to the distribution of such documents in a "designated electronic format." Upon receipt, the Initial Purchaser shall promptly file the Official Statement with the MSRB in accordance with the applicable MSRB rules. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any. to the Financial Advisor by the close of the next business day after the award. Except as noted above, the 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 Certificate Ordinance to provide certain periodic information and notices of certain events in accordance with the Rule, as described in the Preliminary Official Statement under "CONTINUING DISCLOSURE OF INFORMATION ". The Initial Purchaser's obligation to accept and pay for the Certificates is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Certificate Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS ... During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT ... A limited number of additional copies of this Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Preliminary Official Statement. as available over and above the normal mailing. may be obtained upon request at the offices of First Southwest Company, 325 North St. Paul, Suite 800. Dallas. Texas 75201, Financial Advisor to the City. v On the date of the sale, the City Council will, in the Certificate Ordinance authorizing the issuance of the Certificates, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Certificates by the Initial Purchaser. JOHN TERRELL Mayor City of Southlake, Texas ATTEST: ALICIA RICHARDSON City Secretary City of Southlake, Texas April 29, 2014 vi OFFICIAL BID FORM Honorable Mayor and City Council May 6, 2014 City of Southlake, Texas Honorable Mayor and Members of the City Council: Reference is made to your Preliminary Official Statement and Official Notice of Sale and Bidding Instructions, dated April 29, 2014 of $8,875,000 CITY OF SOUTHLAKE, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATION, SERIES 2014 (the "Certificates "), both of which constitute a part hereof. For your legally issued Certificates, as described in said Official Notice of Sale and Preliminary Official Statement, we will pay you par, plus a cash premium of $ for Certificates maturing and bearing interest as follows: Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate 2/15/2015 $ 935,000 2/15/2025 $ 225.000 2/15/2016 1,005,000 2/15/2026 235.000 2/15/2017 1.045,000 2/15/2027 240,000 2/15/2018 1,085,000 2/15/2028 245.000 2/15/2019 1,130,000 2/15/2029 255,000 2/15/2020 210,000 2/15/2030 265,000 2/15/2021 210,000 2/15/2031 270,000 2/15/2022 215,000 2/15/2032 280.000 2/15/2023 220.000 2/15/2033 285,000 2/15/2024 225,000 2/15/2034 295,000 Of the principal maturities set forth in the table above, term Certificates have been created as indicated in the following table (which may include multiple term Certificates, one term bond or no term bond if none is indicated). For those years which have been combined into a "Term Certificate ". the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term certificate maturity date shall mature in such year. The Term Certificates created are as follows: Year of Principal Term Certificate First Mandatory Amount of Interest Maturity Date Redemption Term Certificate Rate $ $ PREMIUM (DISCOUNT) $ TRUE INTEREST COST The Initial Certificates shall be registered in the name of , which will, upon payment for the Certificates, be cancelled by the Paying Agent/Registrar. The Certificates will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry-Only System. A bank cashier's check or certified check of the Bank, , in the amount of $177,500.00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. We agree to accept delivery of the Certificates utilizing the Book -Entry-Only System through DTC and make payment for the Initial Bond in immediately available funds, not later than 10:00 AM, Central Time, on May 15, 2014, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Certificates to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Certificates, a certificate relating to the "issue price" of the Certificates in the form and to the effect accompanying the Official Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to Fulbright & Jaworski LLP, Dallas, Texas, a member of Norton Rose Fulbright, Bond Counsel 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. Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Southlake, Texas, subject to and in accordance with the Official Notice of Sale and Bidding Instructions, this the 6th day of May, 2014. Mayor City of Southlake, Texas ATTEST: City Secretary City of Southlake, Texas ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of CITY OF SOUTHLAKE, TEXAS, TAX AND WATERWORKS AND SEWER SYSTEM (LIMITED PLEDGE) REVENUE CERTIFICATES OF OBLIGATIONS, SERIES 2014 (the "Certificates "), issued in aggregate principal amount of $ , as follows: 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Certificates from the City of Southlake, Texas (the "Issuer ") at competitive sale. 2. The undersigned and /or one or more other members of the underwriting syndicate, if any, have made a bona fide offering to the public of all of the Certificates of each maturity at the respective prices set forth below. 3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the Certificates of each maturity at which a substantial amount (at least 10 %) of the Certificates of such maturity was sold to the public is as set forth below. Principal Principal Amount Year of Offering Price Amount Year of Offering Price Maturing Maturity (% /Yield) Maturing Maturity ( %/Yield) 2015 2025 2016 2026 2017 2027 2018 2028 2019 2029 2020 2030 2021 2031 2022 2032 2023 2033 2024 2034 4. The term "public," as used herein, means persons other than bondhouses, brokers. dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased bond insurance for the Certificates. The bond insurance, if any, has been purchased from (the "Insurer ") for a premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the Certificates which results after recovery of the insurance premium, exceeds the present value of the bond insurance premium. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Certificates from the gross income of their owners. EXECUTED and DELIVERED this day of , 2014. (Name of Underwriter or Manager) By (Title) OP .5 3 FirstSouthwest c ^. continuing Disclosure Servires c y PRELIMINARY OFFICIAL STATEMENT Ratings: S &P: "AA-" Dated: April 29, 2014 Fitch: "AA -" (see "OTHER INFORMATION .. NEW ISSUE - Book - Entry -Only Ratings" herein) .c c In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under c 7 existing law, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. '°' c THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL >.,� INSTITUTIONS ° c $15,660,000* _ = o SOUTHLAKE PARKS DEVELOPMENT CORPORATION y ^ (Dallas and Tarrant Counties) c c SALES TAX REVENUE REFUNDING BONDS, SERIES 2014 c Dated Date: May 15, 2014 Due: February 15, as shown on page 2 • ' ` e Interest to accrue from Delivery Date c PAYMENT TERMS... Interest on the $15,660,000* Southlake Parks Development Corporation, Sales Tax Revenue Refunding Bonds, • as — — Series 2014 (the "Bonds ") will accrue from the "Delivery Date ", will be payable February 15 and August 15 of each year commencing ? August 15, 2014, until maturity or prior redemption, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day L v months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust L _ Company ( "DTC ") pursuant to the Book -Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in .L ti L. d of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Bonds will be made to the C = beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to :L c Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the ° = beneficial owners of the Bonds. See "THE BONDS - Book -Entry -Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (see "THE BONDS - Paying Agent/Registrar "). E c AUTHORITY FOR ISSUANCE... The Bonds are being issued by Southlake Parks Development Corporation (the "Corporation ") pursuant to v c Texas Local Government Code, Chapters 501, 502 and 505, as amended (collectively, the "Act "). The Bonds and their terms are governed •r. 'c by the provisions of a resolution (the "Resolution ") adopted by the Board of Directors of the Corporation (see "The Bonds - Authority for ° = .4 . Issuance "). c. e, c The Bonds are special obligations of the Corporation, payable from and secured by a first lien on and pledge of certain Pledged Revenues • c a which include the proceeds of a 1/2 of 1% sales and use tax levied within the Corporation of Southlake, Texas (the "City") for the benefit of . L the Corporation (see "Selected Provisions of the Bond Resolution "). i L ± The Bonds do not constitute a legal or equitable, pledge, charge, lien, or encumbrance upon any property of the Corporation or the c s Corporation except with respect to the "Pledged Revenues': Neither the State, the Corporation, the Counties of Tarrant and Denton, or any political corporation, subdivision, or agency of the State shall be obligated to pay the Bonds or the interest thereon and neither the t= faith and credit nor the taxing power of the State, the Corporation, the Counties of Tarrant and Denton, or any political corporation, LE - subdivision, or agency thereof, except as authorized by the Act, as herein defined, is pledged to the payment of the principal of or interest on the Bonds. e3 = c 7, g PURPOSE... Proceeds from the sale of the Bonds will be used to (i) refund the Corporation's outstanding sales tax revenue bonds (the r, - "Refunded Bonds ") (see "SCHEDULE I — Schedule of Refunded Bonds" herein) in order to lower the debt service requirements on such c obligations and (ii) to pay the costs associated with the issuance of the Bonds. c c C. C T. 1 CUSIP PREFIX: 844426 o MATURITY SCHEDULE & 9 DIGIT CUSIP A., Shown on Page 2 . - i = LEGALITY ... The Bonds are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the y c G approving opinion of the Attorney General of Texas and the opinion of Fulbright & Jaworski LLP, Bond Counsel, Dallas, Texas, a c member of Norton Rose Fulbright (see Appendix C, "Form of Bond Counsel's Opinion "). cc c > . c DELIVERY... It is expected that the Bonds will be available for delivery through The Depository Trust Company on June 5, 2014. d u ,9 c .= 4 * Preliminary, subject to change s :U 5 54 C f_ . BIDS DUE TUESDAY, MAY 6, 2014 AT 11:00 AM, CDT c i - u v v E u MATURITY SCHEDULE* CUSIP Prefix: 844426 Price Principal 15 -Feb Interest or CUSIP Amount Maturity Rate Yield Suffix" $ 1,105,000 2015 1,115,000 2016 1,150,000 2017 1,175,000 2018 1,210,000 2019 1,250.000 2020 1,300,000 2021 1,355,000 2022 1.405,000 2023 1.460,000 2024 1,315,000 2025 1,015.000 2026 805.000 2027 (Interest to accrue from Delivery Date) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor's Financial Services LLC on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The Corporation, the Financial Advisor and the Initial Purchaser take no responsibility for the accuracy of such numbers. OPTIONAL REDEMPTION... The Corporation reserves the right, at its option. to redeem Bonds having stated maturities on and after February 15. 2025, in whole or in part in principal amounts of $5.000 or any integral multiple thereof, on Februaryl5, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE BONDS - Optional Redemption of the Bonds "). * Preliminary, subject to change kz, 2 For purposes of compliance with Rule 15c2 -12 of the Securities and Exchange Commission, as amended (the "Rule") and in effect on the dale of this Prelnnmar Official Statement, this document constitutes a Preliminary Official Statement of the Corporation that has been deemed 'final" by the Corporation as of its date except for the onhsston of no more than the information permitted by the Rule. No dealer, broker, salesman or other person has been authorized b the Corporation or the Initial Purchaser to gn'e any information, or to make any representations other than those contained in this Preliminary Official Statement, and if given or made, such other information or representations mist not be relied upon as having been authorized by the Corporation or the Inital Purchaser. This Prehmnary Official Statement does not constitute an offer to sell Bonds in any Jurisdiction to any person to whom it is unlan fd to make such offer in such jurisdiction. Certain information set forth herein has been obtained from the Corporation and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to he construed as a representation by the Financial Advisor Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Preliminary Official Statement nor arty sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Corporation or other matters described herein since the date hereof. See "CONTINUING DISCLOSURE OF INFORMATION for a description of the Corporation's undertaking to provide certain information on a continuing basis. IN CONNECTION 117TH THE OFFERING OF THE BONDS, THE INITIAL PURCHASER AMY OI ER -ALLOT OR EFFECT TRANSACTIONS 4 RICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT A LEI EL ABOI E THAT 14 HIGH A LIGHT OTHER 1I LSE PREI AIL IN THE OPEN MARKET SUCH ST,4BILIZING, IF COMMENCED. M4 Y BE DISCONTINUED AT ANY 7IALE. THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND CONSEQ( /ENTLY HA 3 E NOT BEEN REGIS %FRED THEREWITH. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH APPLICABLE SECURITIES L.4 H' PROVISIONS OF THE JURISDICTION IN WHICH THE BONDS HA E BEEN REGISTERED, QUALIFIED OR EXEMPTED .SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF NONE THE CORPORATION, THE INITIAL PURCHASER, OR THE FINANCIAL ADVISOR MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS PRELIMIN4RY OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY, AS SUCH INFORbL4TION HAS BEEN PRODDED BY THE DEPOSITORY T R(7ST COMPANY THIS PRELIMINARY OFFICIAL STATEMENT CONTAINS "FORWARD- LOOKING" .STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED SUCH STATEMENTS MAY INI'OL I E KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEI EMENT.S TO BE DIFFERENT FROM FUTURE RESULTS, PERFORMANCE, .AND ACHIEI EMENT.S EXPRESSED OR IMPLIED BYSUCHFORWARD-LOOKING STATEMENTS IN1ESTORS ARE CA(ITIONED TI THE ACTUAL RESULTS COULD DIFFER MATERL4LLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. The agreements of the Corporation and others related to the Bonds are contained solely in the contracts described herein. Neither this Preliminary Official Statement nor any other .statement made m connection with the offer or sale of the Bonds is to he construed as constituting an agreement with the purchasers of the Bonds. IN1 ESTORS SHOULD RE4D THE ENTIRE PRELIMINARY OFFICIAL STATEMENT INCLUDING THE SCHEDULE AND ALL APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED IM E.STMENT DECISION. THE INITIAL PURCHASER HAS PRODDED THE FOLLOWING SENTENCE FOR INCLUSION IN THIS PRELIMINARY OFFICIAL STATEMENT THE INITIAL PURCHASER H.4S REVIEWED THE INFORMATION IN THIS PRELIMINARY OFFICIAL STATEMENT IN ACCORDANCE 147TH, AND .4S PART OF, THEIR RE.SPECTII "F, RESPONSIBILITIES TO INVESTORS CINDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE INITIAL PURCHASER DOES NOT GUARANTEE THE ACCURACY OF COMPLETENESS OF SI TCH INFORMATION. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARY 4 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE 26 CITY OFFICIALS, STAFF AND CONSULTANTS 6 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE ELECTED OFFICIALS 6 PUBLIC FUNDS IN TEXAS 26 SELECTED ADMINISTRATIVE STAFF 6 LEGAL MATTERS 26 CONSULTANTS AND ADVISORS 6 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION 26 INTRODUCTION 7 FINANCIAL ADVISOR 26 PLAN OF FINANCING 7 FORWARK - LOOKING STATEMENTS DISCLAIMER 27 INITIAL PURCHASER 27 THE BONDS 8 MISCELLANEOUS 27 DEBT INFORMATION 15 SCHEDULE OF REFUNDED TABLE 1 - DEBT SERVICE REQUIREMENTS 14 BONDS SCHEDULE I TABLE 2 - HISTORICAL CITY RECEIPTS OF 1/2% EQUIVALENT SALES TAX 18 APPENDICES TABLE 3 - CALCULATION OF COVERAGE FOR THE GENERAL INFORMATION REGARDING THE ISSUANCE OF ADDITIONAL OBLIGATIONS 18 CORPORATION A SELECTED PROVISIONS OF THE RESOLUTION 19 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT B FORM OF BOND COUNSEL'S OPINION C INVESTMENTS 25 CURRENT INVESTMENTS 22 The cover page hereof, this page, the schedules, and the TAX MATTERS 27 appendices included herein and any addenda, supplement or amendment hereto. are part of the Official Statement. CONTINUING DISCLOSURE OF INFORMATION 24 OTHER INFORMATION 25 RATINGS 25 LITIGATION 15 3 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CORPORATION The Corporation is a non - profit Type B development corporation of the State, created, organized and existing under the laws of the State of Texas, particularly the Act and is a constituted authority and instrumentality acting on behalf of the City of Southlake, Texas (the "City") (see "Introduction - Description of the Corporation "). THE BONDS The Bonds are issued as $15,660.000* Sales Tax Revenue Refunding Bonds. Series 2014. The Bonds are issued as serial bonds to mature on February 15 in each of the years 2015 through 2027, inclusive (see THE BONDS - Description of the Bonds "). PAYMENT OF INTEREST Interest on the Bonds accrues from the date of the initial delivery of the Bonds. anticipated to be June 5, 2014. and is payable August 15, 2014 and each February 15 and August 15 thereafter until maturity or prior redemption (see "The Bonds - Description of the Bonds" and "THE BONDS — Optional Redemption of the Bonds"). AUTHORITY FOR ISSUANCE The Bonds are being issued by the Corporation pursuant to Texas Local Government Code, Chapters 501. 502 and 505, as amended (collectively. the "Act'), and a resolution adopted by the Board of Directors of the Corporation (the "Resolution "). SECURITY FOR THE BONDS The Bonds are special obligations of the Corporation payable solely from a lien on and pledge of the "Pledged Revenues" (as defined in the Resolution) of the Corporation, including the receipts from a sales tax levied for the benefit of the Corporation pursuant to the Act; See "THE BONDS - Security and Source of Payment" herein for a more complete description of the revenues pledged and the security for the payment of the Bonds (see "THE BONDS — Authority for Issuance "). REDEMPTION OF THE BONDS The Corporation reserves the right, at its option. to redeem Bonds having stated maturities on and after February 15, 2025, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2024 or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE BONDS - Optional Redemption of the Bonds "). TAX EXEMPTION In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law. subject to the matters described under the caption "TAX MATTERS" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS Proceeds from the sale of the Bonds will be used to (i) refund the Corporation's outstanding sales tax revenue bonds (the "Refunded Bonds ") (see "SCHEDULE I — Schedule of Refunded Bonds" herein) in order to lower the debt service requirements on such obligations and (ii) to pay the costs associated with the issuance of the Bonds. RATINGS The Bonds have been rated "AA -" by Fitch Ratings. Inc. ( "Fitch ") and "AA -" by Standard and Poor's Ratings Services, a Standard and Poor's Financial Services LLC business ( "S &P ") (see "OTHER INFORMATION - Ratings "). * Preliminary. subject to change. 4 BOOK-ENTRY-ONLY SYSTEM... The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book- Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of. premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see THE BONDS - Book -Entry- Only System "). PAYMENT RECORD The Corporation has never defaulted in payment of its bonds. For additional information regarding the Corporation, please contact: Sharen Jackson, CPA Jim S. Sabonis Chief Financial Officer Managing Director sjacksonnci. south] ake.tx.us Or jim.sabonisnfirstsw.com City of Southlake First Southwest Company Administrative Offices 325 N. St. Paul Street, Suite 800 1400 Main Street, Suite 440 Dallas, Texas 75201 Southlake, Texas 76092 (214) 953 -4195 (817) 481-1713 (THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.) 5 CORPORATION ADMINISTRATION THE CORPORATE BOARD OF DIRECTORS Length of Term Board Member Service Expires Occupation Tina Wasserman 2 Years May -14 Community Volunteer Parks and Recreation Board Representative Sherry Berman 11 Years May -15 Community Volunteer Citizen Representative Tamara McMillan 3 Years May -15 Community Volunteer Citizen Representative Carolyn Morris 11 Years May -15 Educator President City Council Representative Randy Williamson 1 Year May -16 Executive Councilmember Laura Hill 1 Year May -16 Business Owner City Council Representative Pamela A. Muller 6 Years May -14 Community Volunteer Vice President City Council Representative SELECTED ADMINISTRATIVE STAFF Length of Name Position Service Sharen Jackson Chief Financial Officer 14 Years Chris Tribble Director of Community Services 8 Years CONSULTANTS AND ADVISORS Auditors Weaver and Tidwell, LLP Dallas, Texas Bond Counsel Fulbright & Jaworski LLP a member of Norton Rose Fulbright Dallas, Texas Financial Advisor First Southwest Company Dallas, Texas 6 PRELIMINARY OFFICIAL STATEMENT RELATING TO $15,660,000* SOUTHLAKE PARKS DEVELOPMENT CORPORATION SALES TAX REVENUE REFUNDING BONDS, SERIES 2014 INTRODUCTION This Official Statement, which includes the Schedule and Appendices hereto, provides certain information regarding the issuance of $15,660,000* Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Resolution to be adopted on the date of sale of the Bonds (the "Resolution ") which will authorize the issuance of the Bonds. except as othenvise indicated herein (see "SELECTED PROVISIONS OF THE RESOLUTION "). There follows in this Official Statement descriptions of the Bonds and certain information regarding the Corporation and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the Corporation's Financial Advisor. First Southwest Company, Dallas, Texas. DESCRIPTION OF THE CORPORATION ... The Corporation is a non -profit corporation duly organized and operating under the laws of the State of Texas, particularly Chapter 505 of the Act (formerly Section 4B of the Development Corporation Act of 1979, Art. 5190 Tex. Rev. Civ. Stat, as amended). The Corporation was created following an election held by the City of Southlake, Texas (the "City") on November 2. 1993, on the question of the levy of a 1/2 of 1% local sales and use tax in the City for the benefit of the Corporation. The Corporation as currently organized is to promote and provide for the economic development within the City and the State of Texas in order to eliminate unemployment and underemployment, and to promote and encourage employment and the public welfare of, for, and on behalf of the City by developing, implementing, providing, and financing park and recreation projects under the Act, which are municipally - owned. The City Council of the City of Southlake appoints the members of the Board of Directors of the Corporation. Under the provisions of the Act and the Corporation's by -laws, the City is required to approve certain actions of the Corporation, including the issuance of the Bonds by the Corporation and the undertaking of projects. PLAN OF FINANCING PURPOSE ... The Bonds are being issued for the purpose of refunding the Corporation's outstanding sales tax revenue bonds (the "Refunded Bonds ") in order to lower the debt service requirements on such obligations and (ii) to pay the costs associated with the issuance of the Bonds (see "SCHEDULE I — Schedule of Refunded Bonds"). REFUNDED BONDS ... The Refunded Bonds are being redeemed on the dates set forth in Schedule 1 hereto (the "Redemption Dates"). The principal and interest due on the Refunded Bonds are to be paid on the Redemption Dates from funds to be deposited pursuant to a certain escrow agreement (the "Escrow Agreement') with The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the "Escrow Agent "). The Resolution provides that from the proceeds of the sale of the Bonds received from the Initial Purchaser and other available funds of the Corporation, if any, the Corporation will deposit with the Escrow Agent the amount that will be sufficient to accomplish the discharge and final payment of the Refunded Bonds on their respective Redemption Dates. Prior to the Redemption Dates, such funds will be held by the Escrow Agent in a special escrow account (the "Escrow Fund ") and such funds may be either (i) held uninvested in the Escrow Fund. or (ii) used to purchase some or all of the following types of obligations: (a) direct noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States, (b) noncallable obligations of an agency or instrumentality of the Unites States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent and /or (c) noncallable obligations of a state or an agency or a county, municipality or other political subdivision of a state that have been refunded that, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent (the "Escrowed Securities"). Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of principal of and interest on the Refunded Bonds. By the deposit of the funds with the Escrow Agent pursuant to the Escrow Agreement as described above, the Corporation will have effected the defeasance of the Refunded Bonds in accordance with law; and. as a result of such defeasance, the Refunded Bonds will be outstanding only for the purpose of receiving payments from the Escrowed Fund and such Refunded Bonds will not be deemed as being outstanding obligations of the Corporation payable from Pledged Revenues nor for the purpose of applying any limitation on the issuance of debt. The paying agent /registrar of the Refunded Bonds will certify as to the sufficiency of the amount initially deposited therewith to pay the principal of and interest on the Refunded Bonds on their respective Redemption Dates. * Preliminary, subject to change. 7 USE OF PROCEEDS ... The proceeds from the sale of the Bonds will be applied approximately as follows: SOURCES OF FUNDS: Par Amount of Bonds $ - Net Premium - Transfer from prior DS Fund - TOTAL ISSUES: $ - USES OF FUNDS: Deposit to Escrow Fund $ - Costs of Issuance - TOTAL USES: $ - THE BONDS DESCRIPTION OF THE BONDS ... The Bonds are dated May 15. 2014 and mature on February 15 in each of the years and in the amounts shown on page 2 hereof. Interest will be computed on the basis of a 360 -day year consisting of twelve 30 -day months, and will be payable on February 15 and August 15 in each year. commencing August 15. 2014 until maturity or prior redemption. The definitive Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ( "DTC ") pursuant to the Book - Entry-Only System described herein. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium. if any, and interest on the Bonds will be payable by the Paying Agent /Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "THE BONDS - Book - Entry -Only System" herein. AUTHORITY FOR ISSUANCE ... The Bonds are being issued by the Corporation pursuant to Texas Local Government Code, Chapters 501, 502 and 505, as amended (collectively, the "Acf'). The Bonds and their terms are governed by the provisions of the Resolution. SECURITY AND SOURCE OF PAYMENT ... The Bonds are special obligations of the Corporation payable solely from a lien on and pledge of the "Pledged Revenues' (as defined in the Resolution) of the Corporation. The Pledged Revenues include the revenues or receipts from a sales and use tax levied within the City at the rate of 'A of 1% pursuant to Chapter 505 of the Act and an election held November 2, 1993, less any amounts due and owed to the Comptroller of Public Accounts of the State of Texas as charges for the collection of the Sales Tax or retention by said Comptroller for refunds and to redeem dishonored checks and drafts, to the extent such charges and retention are authorized or required by law. The Bonds do not constitute a debt of the City, the State or any agency, political corporation or subdivision thereof nor do the Bonds constitute a legal or equitable, pledge, charge, lien or encumbrance upon any property of the Corporation or the City of Southlake, Texas (the "City ") except with respect to the "Pledged Revenues ". In the Resolution, the Corporation has reserved the right to issue additional revenue obligations payable, in whole or in part, from the "Pledged Revenues" and, subject to satisfying the terms and conditions prescribed therefor, such additional revenue obligations may be equally and ratably secured by a parity first lien on and pledge of such "Pledged Revenues ". NEITHER THE FAITH AND CREDIT OF THE CITY, THE STATE, TARRANT AND DENTON COUNTIES, OR ANY AGENCY, POLITICAL CORPORATION OR SUBDIVISION THEREOF, HAS BEEN PLEDGED FOR THE PAYMENT OF THE BONDS, EXCEPT AS DESCRIBED HEREIN. Chapter 505 of the Act contains no provisions which would allow the voters of the City to either reduce or repeal the Sales Tax. Should the Legislature ever enact such an amendment to Chapter 505 to allow for the reduction or repeal of the Sales Tax, the Attorney General of Texas has rendered an Opinion (Opinion No. DM -137) to the effect that a "reduction in the sales tax rate, or a limitation on the amount of time the tax may be collected. may not be applied to any bonds issued prior to the date of the rollback election." In so opining, the Attorney General noted any "subsequent legislation which purports to permit the reduction or other limitation of that tax is ineffective to do so. because such alteration would impair the obligation of the contract between the city and such bondholders." and in effect be a violation of Article 1. Section 10 of the United States Constitution and Article I, Section 16 of the Texas Constitution. PLEDGE UNDER RESOLUTION ... The Corporation covenants and agrees that the Pledged Revenues, with the exception of those in excess of the amounts required for the payment and security of the Parity Obligations, are irrevocably pledged to the payment and security of the Bonds, including the establishment and maintenance of the special funds created and established in the Resolution or in any resolution authorizing the issuance of Additional Bonds. The Resolution further provides that the Bonds shall constitute a first lien on the Pledged Revenues in accordance with the terms of the Resolution and any resolution authorizing the issuance of Additional Bonds, which lien shall be valid and binding and fully perfected from and after the date of adoption of 8 the Resolution without physical delivery or transfer or transfer of control of the Pledged Revenues, the filing of the Resolution or any other act. PLEDGED REVENUE FUND ... The Corporation has previously established the "Pledged Revenue Fund" and the City has previously agreed to promptly collect and remit to the Corporation the Gross Sales Tax Revenues for the deposit in the Pledged Revenue Fund. Under the Resolution, the Corporation covenants and agrees maintain such Pledged Revenue Fund for so long as any Parity Obligations, including the Bonds, remain Outstanding. All Pledged Revenues deposited to the credit of such Fund shall be accounted for separate and apart from all other revenues, receipts and income of the Corporation and, with respect to the Gross Sales Tax Revenues, the Corporation shall further account for such funds separate and apart from the other Pledged Revenues deposited to the credit of the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of the Pledged Revenue Fund shall be appropriated and expended to the extent required by the Resolution or any resolution authorizing the issuance of any Parity Obligations for the following uses and in the order of priority shown below. FLOW OF FUNDS ... The Resolution establishes the following funds and accounts for the payment and security of the Parity Obligations (defined as the Bonds and Additional Obligations if issued) and for the Pledged Revenues with all revenues flowing first to the Corporation's Pledged Revenue Fund: PRIORITY FUND First Priority To the Bond Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable; Second Priority To the payment of the amounts required to be deposited in the Reserve Fund, if any, to establish and maintain the Required Reserve in accordance with the provisions of the Resolution and any resolution authorizing the issuance of Parity Obligations: Third Priority To the payment of the amounts required to be deposited in any other fund or account required by the Resolution or any other resolution authorizing the issuance of Parity Obligations, including any reserve fund if established; Fourth Priority To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of obligations or the creation of debt of the Corporation having a lien on the Pledged Revenues subordinate to the lien created herein on behalf of any Parity Obligations; and Fifth Priority Any Pledged Revenues remaining in the Pledged Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other lawful purpose now or hereafter permitted by law. BOND FUND ... Under the Resolution, the Corporation agrees and covenants to maintain a separate and special account or fund on the books and records of the for the purpose of providing funds to pay the principal of and interest on Parity Obligations, (the "Bond Fund "), and all monies deposited to the credit of such fund shall be held in a special banking fund or account maintained at a depository of the Corporation. The Corporation further covenants to into the Bond Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per centum (100 %) of the interest on and the principal of the Bonds then falling due and payable, and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 10th day of each month, beginning on or before the 10th day of the month next following the delivery of the Bonds to the initial purchasers until (i) the total amount on deposit in the Bond Fund is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or (ii) the Bonds are no longer Outstanding. RESERVE FUND ... Under the Resolution, the Corporation is not required to establish or maintain a Reserve Fund for the payment of the Bonds or any Parity Obligations so long as the Pledged Revenues for a Fiscal Year (calculated annually on or before the date that is 6 months after the end of the Fiscal Year and for which audited financial statements of the Corporation have been prepared and accepted) equal or exceed one hundred fifty per cent (150 %) of the maximum debt service requirements of the outstanding Parity Obligations. If any such calculation reflects that the Pledged Revenues do not exceed 150% of the maximum debt service requirements of the then outstanding Parity Obligations, the Corporation shall be obligated to establish and maintain on the books of the Corporation a separate fund or account designated as the Reserve Fund. Upon being established and except as provided in below, the amount on deposit to the credit of the Reserve Fund shall be maintained for the benefit of the owners of the Parity Obligations. Monies or investments held in the Reserve Fund shall be used for the purpose of retiring the last of the Parity Obligations as they become due or paying principal of and interest on the Parity Obligations when and to the extent the amounts in the Bond Fund are insufficient for such purpose. 9 If a Reserve Fund is required to be established as described above and while the same is required to be maintained, the Required Reserve to be accumulated and maintained in such Reserve Fund shall be equal to the maximum annual Debt Service (calculated on a Fiscal Year basis) for all Parity Obligations then Outstanding, as determined on the date of calculation of the Pledged Revenues. The Required Reserve shall be established and maintained with Pledged Revenues, the proceeds of sale of Parity Obligations, by depositing to the credit of the Reserve Fund one or more surety bonds issued by a company or institution having a rating in one of the two highest rating categories by two nationally recognized rating agencies or services, or by making monthly deposits from lawfully available funds on or before the 15` day of each month following the determination of the need to fund a Reserve Fund. of not less than 1 /60th of the Required Reserve. If a Reserve Fund has been established and if on the date of the calculation of the Pledged Revenues for two (2) consecutive calculation periods the calculation of the Pledged Revenues reflects that the Pledged Revenues were at least equal to 150% of the maximum annual debt service on the then outstanding Parity Obligations, the money in the Reserve Fund can be released and used by the Corporation for any lawful purpose that is consistent with the provisions of the Act and any applicable federal income tax requirements related to the tax - exempt status of the Parity Obligations and the Reserve Fund will no longer need to be maintained unless and until future calculations reflect that the Pledged Revenues were not at least equal to 150% of the maximum annual debt service on the then outstanding Parity Obligations in which event the Reserve Fund shall be reinstated and funded as set forth above. This process is intended to be followed during the time any of the Bonds are outstanding. ADDITIONAL OBLIGATIONS ... Under the Resolution. and subject to the provisions contained therein, the Corporation has reserved the right to issue, from time to time as needed, Additional Obligations for any lawful purpose. Such Additional Obligations may be issued in such form and manner as the Corporation determines, provided, however, prior to issuing or incurring such Additional Obligations, the following conditions precedent for the authorization and issuance of such Additional Obligations are satisfied: (1) the Treasurer of the Corporation (or other officer of the Corporation then having the primary responsibility for the financial affairs of the Corporation) shall have executed a certificate stating that. to the best of his or her knowledge and belief, the Corporation is not in default as to any covenant, obligation or agreement contained in any resolution authorizing the issuance of Parity Obligations: and (2) the Corporation has secured from a certified public accountant a certificate or opinion to the effect that, according to the books and records of the Corporation, the Gross Sales Tax Revenues received by the Corporation for either (i) the last completed Fiscal Year next preceding the adoption of the resolution authorizing the issuance of the proposed Additional Obligations or (ii) any twelve (12) consecutive months out of the previous eighteen (18) months next preceding the adoption of the resolution authorizing the Additional Obligations were equal to not less than 1.25 times the maximum annual Debt Service for all Parity Obligations then Outstanding and after giving effect to the issuance of the Additional Obligations then being issued. GENERAL COVENANT REGARDING THE SALES TAX ... The Municipal Sales and Use Tax Act provides that the Sales Tax does not apply to the sale of a taxable item unless the item is also taxable under the Texas Limited Sales, Excise and Use Tax Act. The Sales Tax is therefore subject to broadening and reduction in the base against which it is levied by action of the State Legislature without the consent of the City or the Corporation. In the Resolution, the Corporation covenants and agrees that. while any Bonds are outstanding, it will take all legal means and actions permissible to cause the Sales Tax, at its current rate (1/2 of 1 %) or at a higher rate if legally permitted, to be levied and collected continuously throughout the boundaries of the City, as such boundaries may be changed from time to time, in the manner and to the maximum extent legally permitted: and to cause no reduction, abatement or exemption in the Sales Tax until all of the Bonds have been paid in full or until they are lawfully defeased in accordance with the Resolution. The Corporation also covenants and agrees that, if. subsequent to the issuance of the Bonds. the City is authorized by applicable law to impose and levy the Sales Tax on any items or transactions that are not subject to the Sales Tax on the date the Resolution was adopted, then the Corporation will use its best efforts to cause the City to take such action as may be required by applicable law to subject such items or transactions to the Sales Tax. OPTIONAL REDEMPTION . . The Corporation reserves the right. at its option, to redeem Bonds having stated maturities on and after February 15, 2025, in whole or in part in principal amounts of $5,000 or any integral multiple thereof. on February 15, 2024, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bonds are to be redeemed, the Corporation may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be redeemed, the Paying Agent /Registrar (or DTC while the Bonds are in Book- Entry-Only form) shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. If a Bond (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION... Not less than 30 days prior to a redemption date for the Bonds, the Corporation shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds to be redeemed, in whole or in part, at the address of each registered owner appearing on the registration books of the Paying Agent /Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL 10 BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY OBLIGATION OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Bonds, unless moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be redeemed shall have been received by the Paying Agent /Registrar prior to the giving of such notice of redemption, such notice may state that said redemption is conditional upon the receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and, if sufficient moneys are not received, such notice shall be of no force and effect, the Corporation shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Bonds have not been redeemed. BOOK - ENTRY -ONLY SYSTEM... This section describes how ownership of the Bonds are to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and credited by DTC while the Bonds are registered in its nominee name. The information in this section concerning DTC and the Book- Entry-Only System has been provided by DTC for use in disclosure documents such as this Preliminary Official Statement. The Corporation believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The Corporation cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or any notices. to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds), or any notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Preliminary Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount of such issue. and will be deposited with DTC. DTC, the world's largest securities depository, is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies. and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants'). DTC has a Standard & Poor's rating of: AA +. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ( "Beneficial Owner ") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. To facilitate subsequent transfers. all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 11 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners, in the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of the notices be provided directly to them. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to the Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). All payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Corporation or Paying Agent /Registrar on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent/Registrar, or the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) are, the responsibility of the Corporation or Paying Agent /Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Corporation or Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Corporation may decide to discontinue use of the system of book -entry only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered (see "THE BONDS - Transfer, Exchange and Registration" herein). Use of Certain Terms in Other Sections of this Preliminary Official Statement... In reading this Preliminary Official Statement it should be understood that while the Bonds are in the Book- Entry-Only System, references in other sections of this Preliminary Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and the Book -Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the Resolution will be given only to DTC. Information concerning DTC and the Book- Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Corporation or the Initial Purchaser. Effect of Termination of Book -Enty -Only System... In the event that the Book -Entry-Only System is discontinued, printed Bonds will be issued to the Participants or the Beneficial Owners, as the case may be, and the Bonds will be subject to transfer. exchange and registration provisions as set forth in the Resolution and summarized under THE BONDS - Transfer, Exchange and Registration" below. PAVING AGENT /REGISTRAR... The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas. In the Resolution, the Corporation retains the right to replace the Paying Agent /Registrar. The Corporation covenants to maintain and provide a Paying Agent /Registrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent /Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the Corporation agrees to promptly cause a written notice thereof to be sent to each registered owner of such Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent /Registrar. Interest on the Bonds shall be paid to the registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date (hereinafter defined), and such interest shall be paid (i) by check sent United States mail, first class, postage prepaid, to the address of the registered owner recorded in the registration books of the Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. Principal of the Bonds will be paid to the registered owner at the stated maturity upon presentation to the designated payment /transfer office of the Paying Agent /Registrar; provided, however, that so long as Cede & Co. (or other DTC nominee) is the registered owner of the Bonds, all payments will be made as described under "THE BONDS - Book -Entry-Only System" herein. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday. a legal holiday or a day when banking institutions in the Corporation where the designated payment /transfer office of the Paying 12 Agent/Registrar is located are authorized to close, then the date for such payment shall be the next succeeding day which is not such a day, and payment on such date shall have the same force and effect as if made on the date payment was due. TRANSFER, EXCHANGE AND REGISTRATION... In the event the Book -Entry-Only System should be discontinued, printed certificates will be delivered to the registered owners of the Bonds and thereafter the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bonds being transferred or exchanged, at the principal office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent /Registrar. New Bonds registered and delivered in an exchange or transfer shall be in denominations of $5,000 or integral multiples thereof for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "THE BONDS - Book -Entry -Only System" for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. RECORD DATE FOR INTEREST PAYMENT... The record date (the "Record Date ") for the interest payable on the Bonds on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non - payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (the "Special Record Date ") will be established by the Paying Agent /Registrar, if and when funds for the payment of such interest have been received from the Corporation. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date ", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each registered owner of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. REGISTERED OWNERS' REMEDIES... The Resolution provides that in the event the Corporation (a) defaults in payments to be made to the Interest and Sinking Fund or the Reserve Fund as required by the Resolution or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in the Resolution, the Holder or Holders of any Bond shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the governing body of the Corporation and other officers of the Corporation to observe and perform any covenant, condition or obligation prescribed in the Resolution. The issuance of a writ of mandamus is controlled by equitable principles and rests with the discretion of the court, but may not be arbitrarily refused. The enforcement of such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Resolution does not provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the Corporation to perform in accordance with the terms of the Resolution. or upon any other condition and, accordingly. all legal actions to enforce such remedies would have to be undertaken at the initiative of, and financed by, the registered owners. On June 30. 2006, the Texas Supreme Court ruled in Tooke v. City of Alexia, 197 S.W. 3d 325 (Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the Corporation's sovereign immunity from a suit for money damages, holders of the Bonds may not be able to bring such a suit against the Corporation for breach of the Bonds or Resolution covenants. Even if a judgment against the Corporation could be obtained, it could not be enforced by direct levy and execution against the Corporation's property. Furthermore, the Corporation is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ( "Chapter 9 "). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, such as the Pledged Revenues, such provisions are subject to construction. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval. the prosecution of any other legal action by creditors or holders of the Bonds of an entity which has sought protection under Chapter 9. Therefore, should the Corporation avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Resolution and Bonds are qualified with respect to the customary rights of debtors relative to their creditors. DEFEASANCE ... The Resolution provides for the defeasance of the Bonds when the payment of the principal of and premium, if any, plus interest thereon to the due date thereof (whether such due date be by reason of maturity or otherwise), is provided by irrevocably depositing with the Paying Agent/Registrar, or other authorized escrow agent, in trust (1) money sufficient to make such payment or (2) Government Obligations to mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees. compensation and expenses of the paying agent for the Bonds. The Resolution provides that "Government Obligations" means 13 (a) direct. noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, and (d) any other then authorized securities or obligations that may be used to defease obligations such as the Bonds under applicable laws of the State of Texas. The Corporation has the right, subject to satisfying the requirements of (1) and (2) above, to substitute other Government Obligations for the Government Obligations originally deposited, to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the Corporation moneys in excess of the amount required for such defeasance. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Bonds. Because the Resolution does not contractually limit such investments, registered owners may be deemed to have consented to defeasance with such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Government Obligations or that for any other Government Obligation will be maintained at any particular rating category. Upon such deposit as described above, the Bonds shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment of the Bonds have been made as described above, all rights of the Corporation to take any action amending the terms of the Bonds are extinguished. AMENDMENTS ... The Corporation may amend the Resolution without the consent of or notice to any registered owner in any manner not detrimental to the interests of the registered owners, including the curing of any ambiguity, inconsistency. or formal defect or omission therein. In addition. the Corporation may with the written consent of the Holders of a majority of aggregate principal amount of the Bonds then outstanding affected thereby. amend, add to, or rescind any of the provisions of the Resolution; except that. without the consent of the registered owners of all of the affected Bonds. no such amendment, addition or rescission may (i) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof. the redemption price, or the rate of interest thereon. or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment, addition, or rescission. 14 DEBT INFORMATION TABLE 1 - DEBT SERVICE REQUIREMENTS Fiscal Year Less: Plus: % of Ending Existing Debt Service Refunded The Bonds Net New Principal 9/30 Principal Interest Total D/S Debt Service Principal Interest Total D/S Debt Service Retired 2014 $ 1,035,000 $ 755,059 $ 1,790,059 $ 1,412,529 $ - $ 100,294 $ 100,294 $ 477,824 2015 1,085,000 709,733 1,794,733 1,794,733 1,105,000 510,275 1,615,275 1,615,275 2016 1,125,000 662,233 1,787,233 1,787,233 1,115,000 493,600 1,608,600 1,608.600 2017 1,180,000 612,920 1,792,920 1,792,920 1,150,000 465,200 1,615,200 1,615,200 2018 1,230,000 561,165 1,791,165 1,791,165 1,175,000 436,200 1,611,200 1,611,200 29.02% 2019 1,285,000 507,236 1,792,236 1,792,236 1,210,000 406,300 1,616,300 1,616,300 2020 1,340,000 450,355 1,790,355 1,790,355 1,250,000 363,150 1,613,150 1,613,150 2021 1,400,000 390,879 1,790,879 1,790,879 1,300,000 312,150 1,612,150 1,612,150 2022 1,465,000 328,720 1,793,720 1,793,720 1,355,000 259,050 1,614,050 1,614,050 2023 1,520,000 265,725 1,785,725 1,785,725 1,405,000 203,850 1,608,850 1,608,850 70.66% 2024 1,585,000 200,065 1,785,065 1,785,065 1,460,000 146,550 1,606,550 1,606,550 2025 1,275,000 131,595 1,406,595 1,406,595 1,315,000 91,050 1,406,050 1,406,050 2026 985,000 76,110 1,061,110 1,061,110 1,015,000 44,450 1,059,450 1,059,450 2027 785,000 33,755 818,755 818,755 805,000 12,075 817,075 817,075 100.00% $ 17,295,000 $ 5,685,549 $ 22,980,549 $ 22,603,019 $ 15,660,000 $ 3,844,194 $ 19,504,194 $ 19,881,724 (1) Includes the Corporation's senior, subordinate and third lien Obligations. (2) Preliminary, subject to change. 15 THE SALES TAX SOURCE AND AUTHORIZATION ... The Sales Tax is a 1/2 of 1% limited sales and use tax imposed on all taxable transactions within the City as approved at the Election. The Sales Tax is authorized to be levied and collected against the receipts from the sale at retail of taxable items within the City. The Sales Tax also is an excise tax on the use, storage or other consumption of taxable tangible personal property purchased, leased or rented from a retailer within the City. The City currently levies another sales and use tax for City purposes totaling 1% in accordance with State law and is restricted by current law. The imposition, computation, administration, governance, abolition and use of the Sales Tax is governed by the Texas Limited Sales, Excise, and Use Tax Act except to the extent that there is conflict with the Act, in which case the provisions of the Act control as to the Bonds, and by the Texas Municipal Sales and Use Tax Act. and reference is made thereto for a more complete description of the Sales Tax. In general, as applied to the Sales Tax, a taxable item includes any tangible personal property and certain taxable services. "Taxable services" include certain amusement services, cable television services, motor vehicle parking and storage services, the repair, maintenance and restoration of most tangible personal property. certain telecommunication services, credit reporting services. debt collection services, insurance services, information services, real property services, data processing services, real property repair and remodeling and security services. Certain items are exempted by State law from sales and use taxes, including items purchased for resale, food products (except food products which are sold for immediate consumption, e.g. by restaurants, lunch counters, etc.), health care supplies (including medicines, corrective lens and various therapeutic appliances and devices), agricultural items (if the item is to be used exclusively on a farm or ranch or in the production of agricultural products), gas and electricity purchased for residential use (unless a city has taken steps to repeal the exemption), certain telecommunications services, newspapers and magazines. In addition, items which are taxed under other State laws are generally exempted from sales taxes. These items include certain natural resources. cement, motor vehicles and insurance premiums. Alcohol and tobacco products are taxed under both State alcohol and tobacco taxes as well as through the sales taxes. In addition, purchases made by various exempt organizations are not subject to the sales and use taxes. Such organizations include the federal and state governments, political subdivisions, Indian tribes, religious institutions and certain charitable organizations and non -profit corporations. Also. State law provides an exemption from sales taxes on items purchased under a contract in effect when the legislation authorizing such tax (or the increase in the rate thereof) is enacted, up to a maximum of three years. In general, a sale of a taxable item is deemed to occur within the municipality, county or special district in which the sale is consummated. The tax levied on the use, storage or consumption of tangible personal property is considered to be consummated at the location where the item is first stored, used or consumed. Thus, the use is considered to be consummated in a municipality, and the tax is levied there if the item is shipped from outside the state to a point within the municipality. In addition to the local sales and use taxes levied, as described above, the State levies and collects a 6.25% sales and use tax against essentially the same taxable items and transactions as the Sales Tax is levied. Under current State law, the maximum aggregate sales and use tax which may be levied within a given area by an authorized political subdivision within such area including the State, is 8.25 %. The current aggregate sales and use tax levied in the City is 8.25% of which 6.25% is levied by the State, 1% is levied by the City, 1/2 of 1% is levied as the Sales Tax and 1/2 of 1% is levied for the Southlake Crime Control & Prevention District. The Comptroller administers and enforces all sales tax laws and collects all sales and use taxes levied by the State, and levying counties, municipalities and other special districts having sales tax powers. Certain limited items are taxed for the benefit of the State under nonsales tax statutes, such as certain natural resources and other items described above, and are not subject to the sales tax base available to municipalities and counties, including the tax base against which the Sales Tax is levied. Municipalities may by local option determine to tax certain telecommunication services on the same basis as the State taxes such services (some aspects of telecommunication services, such as interstate telephone calls and broadcasts regulated by the FCC are not subject to either State or local taxation). The City has opted to repeal the local telecommunication services exemption. With respect to the taxation of the residential use of gas and electricity, the State is not authorized to collect a sales tax, while municipalities, on a local option basis, may tax such use. The City has opted to tax the residential use of gas and electricity. In recent years, several changes in the State sales tax laws have contributed to the growth of local sales tax revenues. These changes have added additional goods and services to the list of taxable items. Other items have been subjected to sales tax on an interim basis or have been taxed pursuant to legislation which includes planned phase -outs of the tax. With certain exceptions, sales and use taxes in the State are collected at the point of sale and are remitted to the Comptroller by the "taxpayee who is, generally speaking, the business that collects the tax resulting from a taxable transaction. Taxpayers owing $500 or more sales and use tax dollars in a calendar month submit their tax collections to the Comptroller on a monthly basis; taxpayers owing less than $500 sales and use tax dollars in a calendar month but $1,500 or more in a calendar quarter submit their tax collections quarterly; and taxpayers owing less than $1.500 in a calendar quarter submit their tax collections annually. Taxpayers are required to report and remit to the Comptroller by the 20th day of the month following the end of the reporting period. The reporting period for yearly filers ends each December 31; for quarterly filers. the reporting period ends at the end of each calendar quarter: and monthly filers report and remit by the 20th of each month for the previous month. The Comptroller is required by law to distribute funds to the receiving political subdivisions periodically and as promptly as feasible but not less frequently than twice during each fiscal year of the State. Historically. and at the present time. the Comptroller distributes the funds monthly with the largest payments being made quarterly in February, May, August and November. In 1989. the Comptroller initiated a direct deposit program using 16 electronic funds transfers to expedite the distribution of monthly allocation checks. If a political subdivision desires to participate in the electronic funds transfers, it may make application to the Comptroller. The City participates in this program. Otherwise, the Comptroller mails the monthly allocation check, which is typically received by the middle of the month following the month in which the taxpayer reports and remits payment on the tax. The Comptroller is responsible for enforcing the collection of sales and use taxes in the State. Under State law, the Comptroller utilizes sales tax permits, sales tax bonds and audits to encourage timely payment of sales and use taxes. Each entity selling, renting, leasing or otherwise providing taxable goods or services is required to have a sales tax permit. Permits are required for each individual location of a taxpayer and are valid for only one year, requiring an annual renewal. As a general rule, every person who applies for a sales tax permit for the first time, or who becomes delinquent in paying the sales or use tax, is required to post a bond in an amount sufficient to protect against the failure to pay taxes. The Comptroller's audit procedures include auditing the largest 2% of the sales and use tax taxpayers (who report about 65% of all sales and use tax in the State annually), each every three or four years. Other taxpayers are selected at random or upon some other basis for audits. The Comptroller also engages in taxpayer education programs and mails a report to each taxpayer before the last day of the month, quarter or year that it covers. Once a taxpayer becomes delinquent in the payment of a sales or use tax, the Comptroller may collect the delinquent tax by using one or more of the following methods; (i) collection by an automated collection center or local field office, (ii) estimating the taxpayers' liability based on the highest amount due in the previous 12 months and billing them for it, (iii) filing liens and requiring a new or increased payment bond, (iv) utilizing forced collection procedures such as seizing assets of the taxpayer (e.g., a checking account) or freezing assets of the taxpayer that are in the custody of third parties, (v) removing a taxpayer's sales and use tax permit, and (vi) certifying the account to the Attorney General's Office to file suit for collection. A municipality may not sue for delinquent taxes unless it joins the Attorney General as a plaintiff or unless it first receives the permission of the Attorney General and the Comptroller. The Comptroller retains 2% of the tax receipts for collection of the tax; additionally, under State law, a taxpayer may deduct and withhold 1/2% of the amount of taxes due on a timely return as reimbursement for the cost of collecting the sales and use taxes. In addition, a taxpayer who prepays its tax liability on the basis of a reasonable estimate of the tax liability for a month or quarter in which a prepayment is made, may deduct and withhold 1 1/4% of the amount of the prepayment in addition of the 1/2% allowed for the cost of collecting the sales and use tax. INVESTOR CONSIDERATIONS ... The primary source of security for the Bonds will be certain receipts of the Sales Tax received by the Corporation for the benefit of the Corporation. The amount of revenues from the Sales Tax is closely related to the amount of economic activity in the Corporation. Sales and use tax receipts, unlike other taxes levied by municipalities, immediately reflect changes in the economic conditions of a municipality. Historically, the Comptroller has remitted sales and use tax allocation checks to municipalities on a monthly basis, but State law currently requires that such allocation be made at least twice annually and such procedures could change in the future. Additionally. the taxable items and services subject to State and local sales and use taxes are subject to legislative action, and have been changed in recent years by the State Legislature. State law provides that the Sales Tax cannot be levied against any taxable item or service unless such item or service is also subject to the State sales and use tax. In recent years the State Legislature has enacted laws permitting the State, together with its political subdivisions, to levy sales and use taxes of up to 8.25 %, which is among the highest sales tax rates in the nation (although the State has no personal or corporate income tax), and the current total sales and use tax rate within the Corporation's boundaries is 8.25% (including State and City taxes as well as the Sales Tax). The rate of the sales and use taxes authorized in the State could be further increased by the State Legislature and the Corporation has no way of predicting any such increase or the effect that would have on the Sales Tax the pledge of which secures the Bonds. State leaders have appointed committees to study methods of achieving greater tax equity within the State's tax system. Any changes which may be enacted by the State Legislature could effect the tax base against which the Sales Tax is levied; and the Corporation, except in certain limited instances described below, has no control over the components of the tax base. Tax receipts received by the Corporation are expected to be subject to seasonal variations and to variations caused by the State laws and administrative practices governing the remittance of sales and use tax receipts which authorize different taxpayers to remit the tax receipts at different times throughout the year. The Sales Tax is collected by the Comptroller and remitted to the City along with other City sales and use tax receipts. The City allocates a portion of the receipts to the Corporation which represents the 1/2 of 1% tax rate of the Sales Tax. Generally, sales and use taxes in the State are collected at the point of a taxable transaction and remitted by the taxpayer to the Comptroller. The Comptroller has the primary responsibility for enforcing sales and use tax laws and collecting delinquent taxes (see "The Sales Tax — Source and Authorization "). The collection efforts of the Comptroller are subject to applicable federal bankruptcy code provisions with respect to the protection of debtors. Changes in the tax base against which a sales and use tax is assessed, as well as changes in the rate of such taxes, make projections of future tax revenue collections very difficult. No independent projections have been made with respect to the revenues available to pay debt service on the Bonds. 17 TABLE 2 - HISTORICAL CITY RECEIPTS OF 1/2% EQUIVALENT SALES TAX (1) Month Year Year Year Year Year Year Year of Ending Ending Ending Ending Ending Ending Ending Receipt 9/30/2014 9/30/2013 9/30/2012 9/30/2011 9/30/2010 9/30/2009 9/30/2008 October $ 456,442 $ 392,868 $ 370,680 $ 342,305 $ 326,090 $ 327,058 $ 334,634 November 493,103 487,885 455,702 426,367 394,742 429,708 403,113 December 489,346 422,078 318,277 350,134 338,065 392,680 341,542 January 495,210 416,830 393,301 376,613 342,776 383,961 399,212 February 756,056 643,701 620,332 553,714 572,646 527,372 584,209 March 463,605 416,503 343,929 342,512 296,889 294,285 378,247 April 433,862 406,434 346,434 284,377 300,061 317,456 308,372 May - 485,636 476,500 468,822 417,149 397,769 425,876 June - 460,311 409,618 370,254 354,646 378,567 372,890 July - 493,563 407,414 359.996 325,483 306,597 391,709 August - 561,067 471,524 470,959 433.105 374,673 456,268 September - 464,712 444,047 362,619 338,970 310,792 373,654 Annual Totals $ 3,587,624 $ 5,651,587 $ 5,057,759 $ 4,708.672 $ 4,440,622 $ 4,440,918 $ 4,769,727 (1) As reported by the Texas Comptroller of Public Accounts. TABLE 3 - CALCULATION OF COVERAGE FOR THE ISSUANCE OF ADDITIONAL OBLIGATIONS Sales Tax Collection for the Fiscal Year End 9/30/2013 $ 5,651.587 Maximum Annual Debt Service, 2015 $ 1.616.300 Coverage of Maximum Requirements by last fiscal year revenue 3.50x Average Annual Debt Service (2015 - 2027) $ 1,492,608 Coverage of Average Requirements by last fiscal year revenue 3.79x TABLE 4 - HISTORICAL CORPORATION REVENUES AND EXPENDITURES Fiscal Years Ended September 30, 2013 2012 2011 2010 2009 Revenues: Sales Tax $ 5,663,174 $ 5,061,008 $ 4,718,718 $ 4,443,577 $ 4,360,934 Interest 7.677 21,544 - 29,038 215,823 Miscellaneous 153,824 153,824 153,824 153,824 153,824 Total Revenues $ 5,824,675 $ 5,236,376 $ 4,872,542 $ 4,626,439 $ 4,730,581 Operating Expenditures $ 334.627 $ 382,442 $ 380.251 $ 265,479 $ 203,009 Excess (Deficiency) of Revenue Over Expenditures $ 5,490,048 $ 4,853,934 $ 4,492,291 $ 4,360,960 $ 4,527.572 Transfers - Net (4,296,433) (4.899,788) (6.084,224) (5.810,356) (3.965.612) Beginning Fund Balance 6,223,207 6.269,061 7,860.994 9.310,390 8,748,430 Ending Fund Balance $ 7,416,822 $ 6,223,207 $ 6,269,061 $ 7.860,994 $ 9.310,390 18 SELECTED PROVISIONS OF THE RESOLUTION The following are selected provisions of the Resolution. These excerpts should be qualified by reference to the exact terms of the Resolution. Unless otherwise indicated, any references to sections listed below are to sections contained in the Resolution and section headings contained in the following excerpts are to sections contained in the Resolution. SECTION 10. Definitions. For all purposes of this Resolution and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues to the payment of the Bonds, the following definitions are provided: "Act" - Chapters 501, 502 and 505 of the Texas Development Corporation Act, Texas Local Government Code, Title 12, Subtitle C1, as the same may be amended from time to time (formerly Vernon's Ann.Civ.St., Section 4B of Article 5190.6, as amended). "Additional Obligations" - The additional parity revenue obligations authorized to be issued in accordance with the terms and conditions prescribed in Section 18 hereof. "Board" - The Board of Directors of the Corporation. "Bonds" - The "Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 ", dated May 15, 2014. authorized by this Resolution. "City" - The City of Southlake, Texas. "Corporation" - The Southlake Parks Development Corporation. a non -profit industrial development corporation organized and existing under and pursuant to the laws of the State of Texas. including the Act, with its principal place of business in Tarrant County, Texas. "Debt Service" - As of any particular date of computation, with respect to any obligations and with respect to any period, the aggregate of the amounts to be paid or set aside by the Corporation as of such date or in such period for the payment of the principal of, premium. if any, and interest (to the extent not capitalized) on such obligations; assuming, in the case of obligations without a fixed numerical rate, that such obligations bear, or would have borne, interest at the maximum legal per annum rate applicable to such obligations, and further assuming in the case of obligations required to be redeemed or prepaid as to principal prior to maturity, the principal amounts thereof will be redeemed prior to maturity in accordance with the mandatory redemption provisions applicable thereto. "Depository" - A commercial bank or other qualified financial institution eligible and qualified to serve as the custodian of the Corporation's monetary accounts and funds. "Fiscal Year" - The twelve month financial accounting period used by the Corporation ending September 30 in each year, or such other twelve consecutive month period established by the Corporation. "Government Obligations" - (i) direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent and (iv) any other then authorized securities or obligations that may be used to defease obligations such as the Bonds under the then applicable laws of the State of Texas. "Gross Sales Tax Revenues" - All of the Sales Tax revenues or receipts due or owing to, or collected or received by or on behalf of the Corporation by the City or otherwise pursuant to Chapter 505 of the Act and the election held November 2, 1993, less any amounts due and owed to the Comptroller of Public Accounts of the State of Texas as charges for the collection of the Sales Tax or retention by said Comptroller for refunds and to redeem dishonored checks and drafts, to the extent such charges and retention are authorized or required by law. 19 "Outstanding" - When used in this Resolution with respect to Bonds or Parity Obligations, as the case may be, means, as of the date of determination, all Bonds and Parity Obligations theretofore sold, issued and delivered by the Corporation, except: (1) those Bonds or Parity Obligations canceled or delivered to the transfer agent or registrar for cancellation in connection with the exchange or transfer of such obligations; (2) those Bonds or Parity Obligations paid or deemed to be paid in accordance with the provisions of Section 24 by the irrevocable deposit with the Paying Agent /Registrar of money or Government Obligations, or both, in the amount necessary to fully pay the principal of, premium, if any, and interest thereon to maturity or redemption, as the case may be. provided that, if such Bonds or Parity Obligations are to be redeemed, notice of redemption thereof shall have been duly given pursuant to the resolution authorizing the issuance of such Bonds or Parity Obligations or irrevocably provided to be given to the satisfaction of the Paying Agent /Registrar, or waived; and. (3) those Bonds or Parity Obligations that have been mutilated, destroyed, lost, or stolen and replacement obligations have been registered and delivered in lieu thereof. "Parity Obligations" - Collectively, the Bonds and any Additional Obligations. "Pledged Revenues" - Collectively means (i) Gross Sales Tax Revenues from time to time deposited or owing to the Pledged Revenue Fund, and (ii) such other money, income, revenue, receipts or other property as may be specifically dedicated, pledged or otherwise encumbered for the payment and security of Parity Obligations. "Required Reserve" - The amount required to be accumulated and maintained in a Reserve Fund under the provisions of Section 14 hereof. "Sales Tax" - The local sales and use tax authorized under Chapter 505 of the Act, approved at an election held on November 2, 1993, and the effective date for the imposition and application of such Sales Tax within the corporate limits of the City by the Comptroller of Public Accounts of the State of Texas being April 1, 1994, together with any increases in the rate of such Sales Tax authorized and provided by law. SECTION 11. Pledge. The Corporation hereby covenants and agrees that the Pledged Revenues, with the exception of those in excess of the amounts required for the payment and security of the Parity Obligations, are hereby irrevocably pledged to the payment and security of the Bonds and Additional Obligations, if issued, including the establishment and maintenance of the special funds created and established in this Resolution all as hereinafter provided. The Corporation hereby resolves that the Parity Obligations shall constitute a first lien on the Pledged Revenues in accordance with the terms of this Resolution and any resolution authorizing the issuance of Additional Bonds, which lien shall be valid and binding and fully perfected from and after the date of adoption of this Resolution without physical delivery or transfer or transfer of control of the Pledged Revenues, the filing of this Resolution or any other act; all as provided in Texas Government Code, Chapter 1208, as amended. Texas Government Code, Chapter 1208, as amended, applies to the issuance of the Bonds and the pledge of the Pledged Revenues granted by the Corporation under this Section 10, and such pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the pledge of the Pledged Revenues granted by the Corporation under this Section 11 is to be subject to the filing requirements of Texas Business and Commerce Code, Chapter 9, as amended, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the Corporation agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Texas Business and Commerce Code, Chapter 9, as amended, and enable a filing to perfect the security interest in said pledge to occur. SECTION 12. Pledged Revenue Fund. The Corporation has previously established the "Pledged Revenue Fund" at a Depository for the deposit of the Pledged Revenues as received by the Corporation and hereby covenants and agrees maintain such Pledged Revenue Fund for so long as the Bonds and any Additional Bonds, if issued, remain Outstanding. All Pledged Revenues deposited to the credit of such Fund shall be accounted for separate and apart from all other revenues, receipts and income of the Corporation and, with respect to the Gross Sales Tax Revenues, the Corporation shall further account for such funds separate and apart from the other Pledged Revenues deposited to the credit of the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of the Pledged Revenue Fund shall be appropriated and expended to the extent required by this 20 Resolution or any resolution authorizing the issuance of any Parity Obligations for the following uses and in the order of priority shown: First: To the payment of the amounts required to be deposited in the Bond Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable: Second: To the payment of the amounts required to be deposited in the Reserve Fund, if any, to establish and maintain the Required Reserve in accordance with the provisions of this Resolution and any resolution authorizing the issuance of Parity Obligations; Third: To the payment of the amounts required to be deposited in any other fund or account required by any resolution authorizing the issuance of Parity Obligations; and Fourth: To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of obligations or the creation of debt of the Corporation having a lien on the Pledged Revenues subordinate to the lien created herein on behalf of any Parity Obligations. Any Pledged Revenues remaining in the Pledged Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other lawful purpose now or hereafter permitted by law. SECTION 13. Bond Fund. For the purpose of providing funds to pay the principal of and interest on Parity Obligations, the Corporation agrees and covenants to maintain a separate and special account or fund on the books and records of the Corporation known as the "Southlake Parks Development Corporation Debt Service Account" (the "Bond Fund "), and all monies deposited to the credit of such Fund shall be held in a special banking fund or account maintained at a depository of the Corporation. The Corporation covenants that there shall be deposited into the Bond Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per centum (100 %) of the interest on and the principal of the Bonds then falling due and payable, and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 10th day of each month, beginning on or before the 10th day of the month next following the delivery of the Bonds to the initial purchasers. The required deposits to the Bond Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until (i) the total amount on deposit in the Bond Fund is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or (ii) the Bonds are no longer Outstanding. SECTION 14. Reserve Fund. (a) Establishment. A Reserve Fund shall not be required to be established or maintained by the Corporation for the payment of the Bonds or any other Parity Obligations so long as the Pledged Revenues for a Fiscal Year (calculated annually on or before the date that is 6 months after the end of the Fiscal Year and for which audited financial statements of the Corporation have been prepared and accepted) equal or exceed one hundred fifty per cent (150 %) of the maximum debt service requirements of the outstanding Parity Obligations. If any such calculation reflects that the Pledged Revenues do not exceed 150% of the maximum debt service requirements of the then outstanding Parity Obligations. the Corporation shall be obligated to establish and maintain on the books of the Corporation a separate fund or account designated as the Reserve Fund. Upon being established and except as provided in below. the amount on deposit to the credit of the Reserve Fund shall be maintained for the benefit of the owners of the Parity Obligations. Monies or investments held in the Reserve Fund shall be used for the purpose of retiring the last of the Parity Obligations as they become due or paying principal of and interest on the Parity Obligations when and to the extent the amounts in the Bond Fund are insufficient for such purpose. When a Reserve Fund is required to be established as noted above and while the same is required to be maintained, the Required Reserve to be accumulated and maintained in such Reserve Fund shall be equal to the maximum annual Debt Service (calculated on a Fiscal Year basis) for all Parity Obligations then Outstanding, as determined on the date of calculation of the Pledged Revenues. The Required Reserve shall be established and maintained with Pledged Revenues. the proceeds of sale of Parity Obligations, by depositing to the credit of the Reserve Fund one or more surety bonds issued by a company or institution having a rating in one of the two highest rating categories by two nationally recognized rating agencies or services, or by making monthly deposits from lawfully available funds on or before the 15 day of each month following the determination of the need to fund a Reserve Fund, of not less than 1 /60th of the Required Reserve. If a Reserve Fund has been established and if on the date of the calculation of the Pledged Revenues for two (2) consecutive calculation periods the calculation of the Pledged Revenues reflects that the Pledged Revenues were at least equal to 150% of the maximum annual debt service on the then outstanding Parity Obligations, the money in the Reserve Fund can be released and used by the Corporation for any lawful purpose that is consistent with the provisions of the Act and any applicable federal income tax requirements related to the tax - exempt status of the Parity Obligations and the Reserve Fund will no longer need to be maintained unless and until future calculations reflect that the Pledged Revenues were not at least equal to 150% of the 21 maximum annual debt service on the then outstanding Parity Obligations in which event the Reserve Fund shall be reinstated and funded as set forth above. This process is intended to be followed during the time any of the Bonds are outstanding. SECTION 15. Deficiencies. if on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Bond Fund or Reserve Fund, if any, such deficiency shall be cured as soon as possible from the next available Pledged Revenues. or from any other sources available for such purpose. SECTION 16. Payment of Bonds. While any of the Bonds are Outstanding, the Treasurer of the Corporation (or other designated financial officer of the Corporation) shall cause to be transferred to the Paying Agent/Registrar. from funds on deposit in the Bond Fund, and. if necessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly as each installment of interest and principal of the Bonds accrues or matures; such transfer of funds to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent /Registrar for the Bonds at the close of the business day next preceding the date of payment for the Bonds. SECTION 17. Investments - Security of Funds. (a) Money in any Fund required to be maintained pursuant to this Resolution may. at the option of the Corporation, be invested in obligations and in the manner prescribed by the Public Funds Investment Act (Texas Government Code, Chapter 2256, as amended), including investments held in book -entry form; provided that all such deposits and investments shall be made in such a manner that the money required to be expended from any Fund will be available at the proper time or times and provided further the maximum stated maturity for any investment acquired with money deposited to the credit of the Reserve Fund shall be limited to five (5) years from the date of the investment of such money. Such investments shall be valued in terms of current market value within forty -five (45) days of the close of each Fiscal Year and. with respect to investments held for the account of the Reserve Fund, within forty -five (45) days of the date of passage of each authorizing document of the Corporation pertaining to the issuance of Additional Obligations.. All interest and income derived from deposits and investments in the Bond Fund immediately shall be credited to. and any losses debited to, the appropriate account of the Bond Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Obligations. (b) Money deposited to the credit of the Pledged Revenue Fund, Bond Fund and Reserve Fund, if any, to the extent not invested and not otherwise insured by the Federal Deposit Insurance Corporation or similar agency, shall be secured by in a manner permitted by the Public Funds Collateral Act (Texas Government Code, Chapter 2257. as amended). SECTION 18. Issuance of Additional Parity Obligations. Subject to the provisions hereinafter appearing as to conditions precedent which must be satisfied, the Corporation reserves the right to issue. from time to time as needed, Additional Obligations for any lawful purpose. Such Additional Obligations may be issued in such form and manner as the Corporation shall determine. provided, however, prior to issuing or incurring such Additional Obligations, the following conditions precedent for the authorization and issuance of the same are satisfied, to wit: (a) The Treasurer of the Corporation (or other officer of the Corporation then having the primary responsibility for the financial affairs of the Corporation) shall have executed a certificate stating that, to the best of his or her knowledge and belief, the Corporation is not then in default as to any covenant, obligation or agreement contained in any resolution authorizing the issuance of Parity Obligations. (b) The Corporation has secured from a certified public accountant a certificate or opinion to the effect that. according to the books and records of the Corporation, the Gross Sales Tax Revenues received by the Corporation for either (i) the last completed Fiscal Year next preceding the adoption of the resolution authorizing the issuance of the proposed Additional Obligations or (ii) any twelve (12) consecutive months out of the previous eighteen (18) months next preceding the adoption of the resolution authorizing the Additional Obligations were equal to not less than 1.25 times the maximum annual Debt Service for all Parity Obligations then Outstanding and after giving effect to the issuance of the Additional Obligations then being issued. (c) The Required Reserve to be accumulated and maintained in the Reserve Fund is increased to the extent required by Section 14. SECTION 19. Refunding Bonds. The Corporation reserves the right to issue refunding bonds to refund all or any part of the Parity Obligations (pursuant to any law then available) upon such terms and conditions as the Board may deem to be in the best interest of the Corporation, and if less than all such Parity Obligations then Outstanding are refunded, the conditions precedent prescribed (for the issuance of Additional Obligations) set forth in Section 18 hereof shall be satisfied, and shall give effect to the refunding. SECTION 20. Right to Create Subordinate Debt. Except as may be limited by a resolution authorizing the issuance of Additional Bonds. the Corporation hereby expressly retains the right to issue or create any debt payable from and 22 secured by a lien on all or any part of the Pledged Revenues for any lawful purpose without complying with the provisions of Section 18 or 19 hereof, provided the pledge and the lien securing the payment of such obligations is junior and subordinate to the lien and pledge established, made and created in Sections 11 of this Resolution with respect to the Pledged Revenues to the payment and security of the Parity Obligations. SECTION 21. Confirmation and Levy of Sales Tax. (a) The Board hereby represents the City has duly complied with the provisions of the Act for the levy of the Sales Tax at the rate voted at the election held by and within the City on November 2, 1993, and such Sales Tax is being imposed within the corporate limits of the City and the receipts of such Sales Tax are being remitted to the City by the Comptroller of Public Accounts on a monthly basis. (b) While any Bonds are Outstanding, the Corporation covenants, agrees and warrants to take and pursue all action permissible to cause the Sales Tax, at said rate or at a higher rate if legally permitted, to be levied and collected continuously, in the manner and to the maximum extent permitted by law, and to cause no reduction, abatement or exemption in the Sales Tax or rate of tax below the rate stated, confirmed and ordered in subsection (a) of this Section to be ordered or permitted while any Bonds shall remain Outstanding. (c) If hereafter authorized by law to apply, impose and levy the Sales Tax on any taxable items or transactions that are not subject to the Sales Tax on the date of the adoption hereof, to the extent it legally may do so, the Corporation agrees to use its best efforts to cause the City to take such action as may be required to subject such taxable items or transactions to the Sales Tax. (d) The Corporation agrees to take and pursue all action legally permissible to cause the Sales Tax to be collected and remitted and deposited as herein required and as required by Section 4B of the Act, at the earliest and most frequent times permitted by law. (e) The Corporation agrees to use its best efforts to cause the City to comply with the provisions of the Act and shall cause the Gross Sales Tax Revenues to be deposited to the credit of the Pledged Revenue Fund in their entirety immediately upon receipt by the City. In the alternative and if legally authorized, the Corporation shall, by appropriate notice, direction, request or other legal method, use its good -faith efforts to cause the Comptroller of Public Accounts of the State of Texas (the "Comptroller ") to pay all Gross Sales Tax Revenues directly to the Corporation for deposit to the Pledged Revenue Fund. SECTION 22. Records and Accounts. The Corporation hereby covenants and agrees that while any of the Bonds are Outstanding, it will keep and maintain complete records and accounts in accordance with generally accepted accounting principles, and following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of certified public accountants. Each such audit, in addition to whatever other matters may be thought proper by the accountant, shall particularly include the following: 1. A statement in reasonable detail regarding the receipt and disbursement of the Pledged Revenues for such Fiscal Year; and 2. A balance sheet for the Corporation as of the end of such Fiscal Year. Such annual audit of the records and accounts of the Corporation shall be in the form of a report and be accompanied by an opinion of the accountant to the effect that such examination was made in accordance with generally accepted auditing standards and contain a statement to the effect that in the course of making the examination necessary for the report and opinion, the accountant obtained no knowledge of any default of the Corporation on the Bonds or in the fulfillment of any of the terms, covenants or provisions of this Resolution, or under any other evidence of indebtedness, or of any event which, with notice or lapse of time, or both, would constitute a failure of the Corporation to comply with the provisions of this Resolution or if, in the opinion of the accountants, any such failure to comply with a covenant or agreement hereof, a statement as to the nature and status thereof shall be included. Copies of each annual audit report shall be furnished upon written request, to any Holders of any of said Bonds. The audits herein required shall be made within 120 days following the close of each Fiscal Year insofar as is possible. The Holders of any Bonds or any duly authorized agent or agents of such Holders shall have the right to inspect such records, accounts and data of the Corporation during regular business hours. SECTION 23. Representations as to Security for the Bonds. 23 (a) The Corporation represents and warrants that, except for the the Parity Obligations, the Pledged Revenues are and will be and remain free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto prior to. or of equal rank with, the pledge and lien created in or authorized by this Resolution except as expressly provided herein. (b) The Bonds and the provisions of this Resolution are and will be the valid and legally enforceable obligations of the Corporation in accordance with their terms and the terms of this Resolution. subject only to any applicable bankruptcy or insolvency laws or to any laws affecting creditors' rights generally. (c) The Corporation shall at all times, to the extent permitted by law, defend, preserve and protect the pledge of the Pledged Revenues and all the rights of the Holders against all claims and demands of all persons whomsoever. (d) The Corporation will take, and use its best efforts to cause the City to take, all steps reasonably necessary and appropriate to collect all delinquencies in the collection of the Sales Tax to the fullest extent permitted by the Act. (e) The provisions, covenants, pledge and lien on and against the Pledged Revenues, as herein set forth, are established and shall be for the equal benefit. protection and security of the owners and holders of Parity Obligations without distinction as to priority and rights under this Resolution. (f) The Parity Obligations shall constitute special obligations of the Corporation, payable solely from, and equally and ratably secured by a parity pledge of and lien on, the Pledged Revenues, and not from any other revenues. properties or income of the Corporation; such pledge of and lien on the Pledged Revenues being junior and subordinate to the pledge of and lien on the Pledged Revenues securing the payment of the Priority Bonds. The Bonds may not be paid in whole or in part from any property taxes raised or to be raised by the City and shall not constitute debts or obligations of the State or of the City. and the Holders, shall never have the right to demand payment out of any funds raised or to be raised by any system of ad valorem taxation. SECTION 24. Satisfaction of Obligation of Corporation. If the Corporation shall pay or cause to be paid, or there shall otherwise be paid to the Holders. the principal of, premium, if any. and interest on the Bonds, at the times and in the manner stipulated in this Resolution, then the pledge of the Pledged Revenues under this Resolution and all other obligations of the Corporation to the Holders shall thereupon cease, terminate. and be discharged and satisfied. Bonds or any principal amount(s) shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Bonds at maturity or to the redemption date therefor. together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Obligations shall have been irrevocably deposited in trust with the Paying Agent /Registrar, or an authorized escrow agent. which Government Obligations have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together with any moneys deposited therewith, if any. to pay when due the Bonds on the Stated Maturities thereof. The Corporation covenants that no deposit of moneys or Government Obligations will be made under this Section and no use made of any such deposit which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent, and all income from Government Obligations held in trust by the Paying Agent /Registrar, or an authorized escrow agent. pursuant to this Section in excess of the amount required for the payment of the Bonds shall be remitted to the Corporation or deposited as directed by the Corporation. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity of the Bonds such moneys were deposited and are held in trust to pay shall, upon the request of the Corporation, be remitted to the Corporation against a written receipt therefor. Notwithstanding the above and foregoing, any remittance of funds from the Paying Agent /Registrar to the Corporation shall be subject to any applicable unclaimed property laws of the State of Texas. SECTION 25. Resolution a Contract - Amendments. This Resolution shall constitute a contract with the Holders from time to time, be binding on the Corporation, and shall not be amended or repealed by the Corporation while any Bond remains Outstanding except as permitted in this Section. The Corporation, may. Nvith out the consent of or notice to any Holders, from time to time and at any time, amend this Resolution in any manner not detrimental to the interests of the Holders. including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the Corporation may, with the written consent from the owners holding a majority in aggregate principal amount of the Parity Obligations then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Resolution; provided that. without the written consent of all Holders of Outstanding Bonds effected, no such amendment. addition. or rescission shall (1) extend the time or times of payment of the principal of. premium, if any, and interest on the Bonds, reduce the principal amount thereof. the redemption price therefor. or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds or Parity Obligations, as the case may be, required to be held for consent to any such amendment. addition, or rescission. 24 SECTION 26. Mutilated - Destroyed - Lost and Stolen Bonds. In case any Bond shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the Corporation and after (i) the filing by the Holder thereof with the Paying Agent/Registrar of evidence satisfactory to the Paying Agent /Registrar of the destruction, loss or theft of such Bond, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the Corporation and the Paying Agent/Registrar harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Bond shall be borne by the Holder of the Bond mutilated, or destroyed, lost or stolen. Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Bond shall constitute a replacement of the prior obligation of the Corporation, whether or not the mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Resolution equally and ratably with all other Outstanding Bonds. INVESTMENTS The Southlake Parks Development Corporation is a nonprofit corporation acting on behalf of the City and is subject to the provisions of the Public Funds Investment Act (Texas Government Code, Ch. 2256) with respect to the investment of its funds. The Corporation invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the Board of Directors of the Corporation. Both state law and the Corporation's investment policies are subject to change. LEGAL INVESTMENTS ... Under State law, the Corporation is authorized to invest in obligations meeting the requirements of the Texas Public Funds Investments Act, Texas Government Code, Chapter 2256, as amended, (the "PEA") which may include (1) obligations of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying 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 or the United States or their respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities. and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) certificates of deposit that are guaranteed or insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in the preceding clauses or in any other manner and amount provided by law for Corporation deposits, (7) certificates of deposit and share certificates issued by a state or federal credit union domiciled in the State of Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the clauses (1) through (5) or in any other manner and amount provided by law for Corporation deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State, (9) bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A -1 or P -1 or the equivalent by at least one nationally recognized credit rating agency. (10) commercial paper that is rated at least A -1 or P -1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no -load money market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, (12) no -load mutual funds registered with the Securities and Exchange Commission that: have an average weighted maturity of less than two years: invests exclusively in obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent, (13) bonds issued, assumed, or guaranteed by the State of Israel, and (14) guaranteed investment contracts secured by obligations of the United States of America or its agencies and instrumentalities, other than the prohibited obligations described in the next succeeding paragraph. The Corporation may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service. The Corporation is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage - backed security and bears no interest (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Effective September 1, 2003 Governmental bodies in the State are authorized to implement securities lending programs if (i) the securities loaned under the program are collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (5) and (13) of the first 25 paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (5) and (10) through (13) of the first paragraph under this subcaption, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body, held in the name of the governmental body and deposited at the time the investment is made with the Agency or a third party designated by the Agency; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less. INVESTMENT POLICIES ... Under State law, the Corporation is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for Corporation funds, maximum allowable stated maturity of any individual investment and the maximum average dollar- weighted maturity allowed for pooled fund groups. All Corporation funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each 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 State law. Corporation investments must be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment. considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the Corporation shall submit an investment report detailing: (1) the investment position of the Corporation, (2) that all investment officers jointly prepared and signed the report. (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period. (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) State law. No person may invest Corporation funds without express written authority from the Board of Directors. ADDITIONAL PROVISIONS ... Under State law the City is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule. order, ordinance or resolution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution; (3) require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (4) require the qualified representative of firms offering to engage in an investment transaction with the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the City and the business organization that are not authorized by the City's investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio and requires an interpretation of subjective investment standards) and (c) deliver a written statement in a form acceptable to the City and the business organization attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the City's investment policy; (6) provide specific investment training for the City's designated Investment Officer: (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse purchase agreement; (9) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements, and (10) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. CURRENT INVESTMENTS ... As of December 31, 2013 the following percentages of the City's invertible funds were invested in the following categories of investments: Book Market Type of Investment Value Percent Value Percent U.S. Government Agency Securities $ 55.258,288 47.80% $ 54,817,294 47.60% TexPool & TexStar 47,225,482 40.85% 47,225,482 41.01% Commercial Paper 4,998,817 4.32% 4,999.671 4.34% Certificates of Deposit 8,121,081 7.02% 8,121.081 7.05% Totals $ 115,603,668 100.00% $ 115.163,528 100.00% 26 TAX MATTERS TAX EXEMPTION ... The delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that interest on the Bonds for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinion (the "Code "), pursuant to section 103 of the Code and existing regulations. published rulings, and court decisions, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described, corporations. A form of Bond Counsel's opinion is reproduced as Appendix C. The statutes. regulations, rulings. and court decisions on which such opinion is based are subject to change. Interest on the Bonds owned by a corporation will be included in such corporation's adjusted current earnings for purposes of calculating the alternative minimum taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate investment trust, a real estate mortgage investment conduit. or a financial asset securitization investment trust (`FASIT "). A corporation's alternative minimum taxable income is the basis on which the alternative minimum tax imposed by Section 55 of the Code will be computed. In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the Corporation made in a certificate dated the date of delivery of the Bonds pertaining to the use, expenditure. and investment of the proceeds of the Bonds and will assume continuing compliance by the Corporation with the provisions of the Resolution subsequent to the issuance of the Bonds. The Resolution contains covenants by the Corporation with respect to, among other matters, the use of the proceeds of the Bonds and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Bonds are to be invested, the periodic calculation and payment to the United States Treasury of arbitrage "profits" from the investment of proceeds. and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest on the Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the Bonds. Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations. published rulings and court decisions and the representations and covenants of the Corporation described above. No ruling has been sought from the Internal Revenue Service (the "IRS') with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel's opinion is not binding on the IRS. The IRS has an ongoing program of auditing the tax - exempt status of the interest on tax- exempt obligations. If an audit of the Bonds is commenced, under current procedures the IRS is likely to treat the Corporation as the "taxpayer." and the owners of the Bonds would have no right to participate in the audit process. In responding to or defending an audit of the tax- exempt status of the interest on the Bonds, the Corporation may have different or conflicting interests from the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the audit, regardless of its ultimate outcome. Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation. resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax- exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits. individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT. and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax - exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. Existing law may change to reduce or eliminate the benefit to bondholders of the exclusion of interest on the Bonds from gross income for federal income tax purposes. Any proposed legislation or administrative action. whether or not taken, could also affect the value and marketability of the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN BONDS ... The initial public offering price of certain Bonds (the "Discount Bonds ") may be less than the amount payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a Discount Bond (assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Bond. A portion of such original issue discount allocable to the holding period of such Discount Bond by the initial purchaser will, upon the disposition of such Discount Bond (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Bonds described above under "Tax Exemption." Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Bond, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Bond and generally will be allocated to an initial purchaser in a different amount from the amount of the payment denominated as interest actually received by the initial purchaser during the tax year. 27 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 altemative minimum tax imposed by Section 55 of the Code, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition. the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies. S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits. individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry. or who have paid or incurred certain expenses allocable to, tax - exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Bond by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Bond was held) is includable in gross income. Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds (the "Premium Bonds ") may be greater than the amount payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a Premium Bond (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Bonds. The basis for federal income tax purposes of a Premium Bond in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser's yield to maturity. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. CONTINUING DISCLOSURE OF INFORMATION In the Resolution, the Corporation has made the following agreement for the benefit of the registered and beneficial owners of the Bonds. The Corporation is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the Corporation will be obligated to provide certain updated financial information and operating data annually, and timely notice of certain events. to the Municipal Securities Rulemaking Board (the "MSRB "). ANNUAL REPORTS... The Corporation will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the Corporation of the general type included in this Preliminary Official Statement under Tables numbered 1 through 3 and in Appendix B. The Corporation will update and provide this information within six months after the end of each fiscal year ending in or after 2014. The financial information and operating data to be provided may be set forth in full in one or more documents or may be included by specific reference to any document available to the public on the MSRB's Internet Web site or filed with the Securities and Exchange Commission (the "SEC "), as permitted by SEC Rule 15c2 -12 (the "Rule "). The updated information will include audited financial statements, if the Corporation commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time. the Corporation will provide unaudited financial information of the type described in the preceding paragraph by the required time. and audited financial statements when and if such audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the Corporation may be required to employ from time to time pursuant to State law or regulation. The Corporation's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year. unless the Corporation changes its fiscal year. If the Corporation changes its fiscal year, it will notify the MSRB of the change. NOTICE OF CERTAIN EVENTS...The Corporation will also provide timely notices of certain events to the MSRB. The Corporation will provide notice of any of the following events with respect to the Bonds to the MSRB in a timely manner (but not in excess of 28 ten business days after the occurrence of the event): (1) principal and interest payment delinquencies; (2) non - payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB), or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) Bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the Corporation, which shall occur as described below; (13) the consummation of a merger, consolidation, or acquisition involving the Corporation or the sale of all or substantially all of its assets, other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. In addition, the Corporation will provide timely notice of any failure by the Corporation to provide annual financial information in accordance with their agreement described above under "Annual Reports ". For these purposes, any event described in clause (12) in the immediately preceding paragraph is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Corporation in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Corporation, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Corporation. AVAILABILITY OF INFORMATION... In connection with its continuing disclosure agreement entered into with respect to the Bonds, the Corporation will file all required information and documentation with the MSRB in electronic format in accordance with MSRB's guidelines. Access to such filings will be provided, without charge to the general public, by the MSRB at www. emma.msrb.org. LIMITATIONS AND AMENDMENTS... The Corporation has agreed to update information and to provide notices of certain specified events only as described above. The Corporation has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The Corporation makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. The Corporation disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although registered and beneficial owners of Bonds may seek a writ of mandamus to compel the Corporation to comply with its agreement. The Corporation may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Corporation, if (i) the agreement, as amended, would have permitted an Initial Purchaser to purchase or sell Bonds in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the registered and beneficial owners of a majority in aggregate principal amount of the outstanding Bonds consent to the amendment or (b) any person unaffiliated with the Corporation (such as nationally' recognized bond counsel) determines that the amendment will not materially impair the interests of the registered and beneficial owners of the Bonds. The Corporation may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an Initial Purchaser from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the Corporation so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS... During the last five years, the Corporation has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. 29 OTHER INFORMATION RATINGS The Bonds have been rated "AA-" by Fitch Ratings, Inc. ("Fitch ") and "AA-" by Standard and Poor's Ratings Services, a Standard and Poor's Financial Services LLC business ( "S &P "). An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the Corporation 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 such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, may have an adverse effect on the market price of the Bonds. LITIGATION It is the opinion of the Corporation Attorney and City Staff that there is no pending litigation against the Corporation that would have a material adverse financial impact upon the Corporation or its operations. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of the Bonds has not been registered under the federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any jurisdiction. The Corporation assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned. pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Texas Government Code, Chapter 1201. as amended) provides the Bonds are (i) negotiable instruments, (ii) investment securities to which Texas Business and Commerce Code, as amended, applies and (iii) legal and authorized investments for insurance companies, fiduciaries or trustees and sinking funds of municipalities or other political subdivisions or public agencies of the State. The Texas Finance Code also contains provisions that, subject to a prudent investor standard. provide for the Bonds to be legal investments for state banks. savings banks. trust companies with capital of one million dollars or more, and savings and loan associations. For the Bonds to be an eligible investments for municipalities, political subdivisions or public agencies of the State, the Public Funds Investment Act, Texas, Government Code, Chapter 2256. as amended, provides that a rating of not less than "A" or its equivalent as to investment quality must be assigned by a nationally recognized investment rating agency. Furthermore, the Bonds are eligible to secure the deposits of any public funds of the State, its agencies and its political subdivisions and are legal security for those deposits to the extent of their market value. The Corporation made no investigation of other laws. rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Bonds for such purposes. LEGAL OPINIONS AND NO LITIGATION CERTIFICATE The Corporation will furnish the Purchaser a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and to the effect that the Bonds are valid and legally binding obligations of the Corporation and, based upon examination of such transcript of proceedings, the approving legal opinion of Bond Counsel, to like effect and to the effect that the interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. The customary closing papers, including a certificate of the Corporation as described under "OTHER INFORMATION - Certification of the Official Statement" will also be furnished to the Purchasers. Though it represents the Financial Advisor and investment banking firms such as the Purchaser from time to time in matters unrelated to the issuance of the Bonds. Bond Counsel has been engaged by and only represents the Corporation in connection with the issuance of the Bonds. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that. in its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds in the Official Statement to verify that such description conforms to the provisions of the Resolution. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the 30 attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of the expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources that are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes. documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the Corporation in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company, in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. In the normal course of business, the Financial Advisor may from time to time sell investment securities to the Corporation for the investment of bond proceeds or other funds of the Corporation upon the request of the Corporation. The Financial Advisor to the Corporation has provided the following sentence for inclusion in this Preliminary Official Statement. The Financial Advisor has reviewed the information in this Preliminary Official Statement in accordance with, and as part of. its responsibilities to the Corporation and, as applicable. to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. FORWARD - LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the Corporation, that are not purely historical, are forward- looking statements. including statements regarding the Corporation's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward - looking statements. All forward- looking statements included in this Official Statement are based on information available to the Corporation on the date hereof, and the Corporation assumes no obligation to update any such forward- looking statements. The Corporation's actual results could differ materially from those discussed in such forward- looking statements. The forward- looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry. market, legal. and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors. and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic. competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Corporation. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward - looking statements included in this Official Statement will prove to be accurate. INITIAL PURCHASER After requesting competitive bids for the Bonds, the Corporation accepted the bid of (the "Purchaser" or "Initial Purchaser') to purchase the Bonds at the interest rates shown on the (inside) cover page of the Official Statement at a price of ( %) of par plus a cash premium (if any) of $ . The Initial Purchaser can give no assurance that any trading market will be developed for the Bonds after their sale by the Corporation to the Initial Purchaser. The Corporation has no control over the price at which the Bonds are subsequently sold and the initial yields at which the Bonds will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds, the Corporation will furnish the Purchaser a certificate, executed by an authorized representative of the Corporation, acting in such person's representative capacity, to the effect that to the best of such person's knowledge and belief: (a) the descriptions and statements of or pertaining to the Corporation contained in the Official Statement. and any addenda, supplement or amendment thereto, on the date of the Official Statement, on the date of sale of the Bonds and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material 31 respects; (b) insofar as the Corporation and its affairs, including its financial affairs, are concerned, the Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect; (c) insofar as the descriptions and statements. including financial data, of or pertaining to entities, other than the Corporation, and their activities contained in the Official Statement are concerned, such statements and data have been obtained from sources which the Corporation believes to be reliable and the Corporation has no reason to believe that they are untrue in any material respect; and (d) there has been no material adverse change in the financial condition of the Corporation since the date of the last audited financial statements of the Corporation. The Resolution authorizing the issuance of the Bonds will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds by the Purchaser. President Southlake Parks Development Corporation ATTEST: Secretary Southlake Parks Development Corporation 32 Schedule I SCHEDULE OF REFUNDED BONDS* Refunding and Improvement Sales Tax Revenue Bonds, Series 1997 Original Original Principal Dated Maturity Interest Amount Call Date (Aug 15) Rate Outstanding Date 2/15/1997 2014 5.375% $ 135,000 6/9/2014 2015 5.375% 140,000 6/9/2014 2016 5.375% 150,000 6/9/2014 2017 5.375% 160,000 6/9/2014 2018 5.375% 165,000 6/9/2014 2019 5.375% 175,000 6/9/2014 2020 5.375% 185,000 6/9/2014 2021 5.375% 195,000 6/9/2014 $ 1,305,000 Sales Tax Third Lien Revenue Refunding Bonds, Series 2005 Original Original Principal Dated Maturity Interest Amount Call Date (Aug. 15) Rate Outstanding Date 3/15/2005 2014 4.300% $ 690,000 8/15/2014 2015 4.300% 725,000 8/15/2014 2016 4.300% 750,000 8/15/2014 2017 4.300% 785,000 8/15/2014 2018 4.300% 820,000 8/15/2014 2019 4.300% 855,000 8/15/2014 2020 4.300% 890,000 8/15/2014 2021 4.300% 930,000 8/15/2014 2022 4.300% 1,175,000 8/15/2014 2023 4.300% 1,220,000 8/15/2014 2024 4.300% 1,270,000 8/15/2014 2025 4.300% 945,000 8/15/2014 2026 4.300% 985,000 8/15/2014 2027 4.300% 785,000 8/15/2014 $12,825,000 Schedule I Cont. SCHEDULE OF REFUNDED BONDS* Sales Tax Subordinate Lien Revenue Bonds, Series 2006 Original Original Principal Dated Maturity Interest Amount Call Date (Aug. 15) Rate Outstanding Date 1/15/2006 2014 4.000% $ 210,000 8/15/2014 2015 4.000% 220,000 8/15/2014 2016 4.000% 225.000 8/15/2014 2017 4.000% 235.000 8/15/2014 2018 4.000% 245.000 8/15/2014 2019 4.200% 255,000 8/15/2014 2020 4.250% 265,000 8/15/2014 2021 4.250% 275.000 8/15/2014 2022 4.300% 290.000 8/15/2014 2023 4.400% 300,000 8/15/2014 2024 4.400% 315,000 8/15/2014 2025 4.500% 330.000 8/15/2014 $ 3,165.000 * Preliminary. subject to change APPENDIX A GENERAL INFORMATION REGARDING THE CORPORATION LOCATION The City is located in northeast Tarrant and Denton Counties. The City is approximately 15 miles northwest of the City of Dallas on State Highway 1 14 and approximately 10 miles northeast of the City of Fort Worth. POPULATION The City's 2012 estimated population is 27.045, a steady increase over the 2010 census population of 26,575. ECONOMY The City is primarily residential with some commercial and light manufacturing companies. The City's growth is due to its proximity to the Dallas-Fort Worth Metroplex and to the Dallas -Fort Worth International Airport. Major employers in the City are: Employer Nature of Business Number of Employees Sabre Holdings Travel Industry 2,700 Carroll Independent School District School District 1.072 Verizon Wireless Telecommunications 619 Central Market Grocery Store 350 City of Southlake Government 310 Hilton Dallas/Town Square Hotel 218 Century 21 M ike Bowman, Inc. Insurance 200 Tri -Dal, Ltd. Construction 194 Cheesecake Factory Restaurant 161 Lowes Home Improvement Retail 145 Allied Oil & Gas Services Oil Industry 140 Texas Health Harris Methodist Medical Industry 135 Ameristar Information Network Telecommunications 125 Costco Wholesale Retail 107 TRANSPORTATION The City is located on State Highways 114 and 26 providing direct access to the Cities of Dallas and Fort Worth and to Dallas -Fort Worth International Airport. The City is approximately 5 miles northwest of Dallas -Fort Worth International Airport, 19 miles from Dallas Love Field and 10 miles from Alliance Airport. EDUCATION The City is served primarily by Carroll Independent School District, and additionally by Keller, Grapevine- Colleyville and Northwest Independent School Districts. There are four elementary schools, one junior high, two intermediate schools, one high school and one senior high school located within the City. Higher education is provided by many institutions located within a 25 -mile radius from the City. such as: Texas Christian University, University of North Texas. Southern Methodist University, Texas Woman's University, University of Texas at Arlington, University of Texas at Dallas, University of Dallas and Tarrant County Junior College. RECREATION The City has over 700 total park acres (and growing), 47 practice and game fields. 21 lighted tennis courts, lighted in -line hockey facility. 3 lighted basketball courts, 6 miles of park trials, 12 concession and /or restroom facilities, 10 ponds with aeration features, 13 pavilions, a senior activity center, a nature center, and a full service library. The City lies on the southern border of Lake Grapevine which offers additional swimming, camping, boating, and fishing opportunities. The City also provides an assortment of recreational programs with over 50,000 participants taking part annually in classes, programs. athletic leagues, concerts, and special events offered through the Recreation Division. A- 1 HISTORICAL EMPLOYMENT (AVERAGE ANNUAL) (1) 2013 2012 2011 2010 2009 Labor Force 13,170 12,730 12,466 12,287 12,404 Employed 12,573 12,119 11,640 11,414 11,645 Unemployed 597 611 826 873 759 Unemployment Rate 4.5% 4.8% 6.6% 7.1% 6.1% (1) Source: Texas Employment Commission. BUILDING PERMITS BY CATEGORY Fiscal Year Ended Commercial Residential 9/30 Number Amount Number Amount Grand Total 2009 17 $ 39,463,638 55 $ 77,089,249 $ 116,552,887 2010 14 67,764,510 52 31,871,888 99,636.398 2011 10 18,384,157 90 59,040,985 77,425.142 2012 14 83,728,043 105 58,736.866 142.464,909 2013 20 17,976,714 188 84,028.745 102.005.459 Source: City Staff. TARRANT COUNTY Tarrant County (the "County") is located in North Central Texas with a 2010 population of 1,809,034. The County, together with Dallas County, is an integral part of the Dallas -Fort Worth Metroplex, one of the largest and fastest growing metropolitan areas in the nation. The combined Metroplex area has an estimated population in excess of 4.0 million. APPENDIX B EXCERPTS FROM THE SOUTHLAKE PARKS DEVELOPMENT CORPORATION ANNUAL FINANCIAL REPORT For the Year Ended September 30. 2013 The information contained in this Appendix consists of excerpts from the Southlake Parks Development Corporation Annual Financial Report for the Year Ended September 30, 2013, and is not intended to be a complete statement of the Corporation's financial condition. Reference is made to the complete Report for further information. APPENDIX C FORM OF BOND COUNSEL'S OPINION OFFICIAL NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $15,660,000* SOUTHLAKE PARKS DEVELOPMENT CORPORATION, TEXAS (Tarrant and Denton Counties) SALES TAX REVENUE REFUNDING BONDS, SERIES 2014 Sealed Bids Due Tuesday, May 6, 2014 at 11:00 AM CDT THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING ... The Board (the "Board ") of the Southlake Parks Development Corporation (the "Corporation ") is offering for sale its $15,660.000* Sales Tax Revenue Refunding Bonds, Series 2014 (the "Bonds "). Bidders may submit bids for the Bonds by any of the following methods: (1) Deliver bids directly to the Corporation as described below in "BIDS DELIVERED TO THE CORPORATION:" (2) Submit bids electronically as described below in "ELECTRONIC BIDDING PROCEDURES;" or (3) Submit bids by telephone or facsimile as described below in "BIDS BY TELEPHONE OR FACSIMILE." BIDS DELIVERED TO THE CORPORATION ... Sealed bids, plainly marked "Bid for Bonds ". should be addressed to "Sharen Jackson, Chief Financial Officer, City of Southlake, Texas ", and delivered to the Corporation at 1400 Main Street, Suite 440, Southlake, Texas 76092 (the "City's Meeting Place "), prior to 11:00 AM, Central Time, on the date of the bid opening. All bids must be submitted on the Official Bid Form, without alteration or interlineation. ELECTRONIC BIDDING PROCEDURE ... Any prospective bidder that intends to submit an electronic bid must submit its electronic bid through the facilities of PARITY. Subscription to the i -Deal LLC's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid. The Corporation will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit the Official Bid Form prior to bidding. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms provided in this Official Notice of Sale and Bidding Instructions, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the Corporation. The Corporation shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY. the use of such facilities being the sole risk of the prospective bidder. If any provisions of this Official Notice of Sale and Bidding Instructions shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Official Notice of Sale and bidding instructions shall control. Further information about PARITY, including any fee charged, may be obtained from Parity Customer Support, 40 West 23` Street, 5th Floor, New York, New York 10010, (212) 404 -8102. For purposes of the bidding process. regardless of the bidding method, the time as maintained by i -Deal shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the Corporation, as described under "Basis of Award" below. All electronic bids shall be deemed to incorporate the provisions of this Official Notice of Sale and the Official Bid Form. The winning bidder shall submit a signed bid form if not previously submitted. BIDS BY TELEPHONE OR FACSIMILE ... Bidders must submit a SIGNED Official Bid Form to Jim Sabonis, First Southwest Company. 325 N. St. Paul Street, Suite 800, Dallas, TX 75201. and submit their bid by telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (214) 953 -4189, between 10:00 AM, Central Time and 11:00 AM, Central Time on Tuesday, May 6, 2014. Fax bids must be received between 10:00 AM. Central Time and 11:00 AM Central Time, on the date of the sale at (214) 953- 4050. Attention: Penny Brooker. First Southwest Company will not be responsible for submitting any bids received after the above deadlines. The Corporation and First Southwest Company, as the Corporation's Financial Advisor, are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted on a timely basis. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. 1 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 Bonds will be publicly opened and read at the Corporation Hall, 1400 Main Street, Southlake, TX 76092, at 11:30 AM, Central Time, on Tuesday, May 6, 2014. AWARD OF THE BONDS ... The Council will take action to award the Bonds (or reject all bids) at a meeting scheduled to convene at 5:30 PM. Central Time, on the date of the bid opening, and adopt a resolution authorizing the Bonds and approving the Official Statement (the "Resolution "). ADVANCE MODIFICATION OF PRINCIPAL AMOUNTS . .. The Corporation reserves the right to change the principal amounts provided below in the `MATURITY SCHEDULE" in each stated maturity by giving notice of such change, via bond buyer wire service, and PARITY at least 18 hours in advance of the time set for receipt of bids. Such notice shall be considered an amendment to this Official Notice of Sale and Bidding Instructions. POST BID MODIFICATION OF PRINCIPAL AMOUNTS ... After the receipt of bids, but prior to the award of the Bonds, the Corporation reserves the right to amend the total par amount by up to 15% in order to generate the Corporation's target amortization. Such modifications of principal amounts will be disclosed to the winning bidder within two hours after receipt of the bids. The purchase price of the Bonds will be adjusted proportionately to the adjustment in principal amount of the Bonds and in such manner as to maintain as comparable an underwriter spread as possible to the winning bid. THE BONDS DESCRIPTION ... The Bonds will be dated May 15, 2014 (the "Dated Date "). Interest will accrue from June 5, 2014 (the "Delivery Date ") and will be due on August 15, 2014, and each August 15 and February 15 thereafter until the earlier of stated maturity, or prior redemption. The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Bonds will mature on February 15 in each year as follows: MATURITY SCHEDULE* Principal 15 -Feb Amount Maturity $ 1,105.000 2015 1,115,000 2016 1,150,000 2017 1,175,000 2018 1,210,000 2019 1,250.000 2020 1,300,000 2021 1,355,000 2022 1.405,000 2023 1,460.000 2024 1,315,000 2025 1,015,000 2026 805.000 2027 OPTIONAL REDEMPTION ... The Corporation reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15, 2025, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15. 2024, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. Any Bonds designated as Term Bonds (defined herein) by the Initial Purchaser will also be subject to mandatory sinking fund redemption. SERIAL BONDS AND /OR TERM BONDS ... Bidders may provide that all of the Bonds be issued as serial bonds or may provide that any two or more consecutive annual principal amounts be combined into one or more term bonds (the "Term Bonds "). MANDATORY SINKING FUND REDEMPTION ... If the successful bidder elects to alter the MATURITY SCHEDULE reflected above and convert the principal amounts of the serial bonds into Term Bonds, such Term Bonds shall be subject to mandatory redemption the first February 15 next following the last maturity for serial bonds, and annually thereafter on each February 15 until the stated maturity for the Term Bonds at the redemption price of par plus accrued interest to the date of redemption. The principal amounts of the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the "MATURITY SCHEDULE" shown above had no designation of such maturities as Term Bonds occurred. At least forty-five (45) days prior to each mandatory date. the Paying Agent/Registrar shall select by lot the Term Bonds to be redeemed and cause a notice of redemption to be given in the manner provided in the Official Statement. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions may be reduced, at the option of the Corporation, by the principal amount of the Term Bonds of the same maturity which at least fifty (50) days prior to a mandatory redemption date (i) shall have been acquired by the Corporation and delivered to the Paying Agent/Registrar for cancellation or (ii) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final Official Statement will incorporate the mandatory redemption provisions for the Bonds in the event the successful bidder elects to convert serial maturities into one or more Term Bonds. BOOK -ENTRY -ONLY SYSTEM ... The Corporation intends to utilize the Book- Entry-Only System of The Depository Trust Company, New York, New York ( "DTC "). See "THE OBLIGATIONS - Book -Entry-Only System" in the Official Statement. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar shall be The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent/Registrar" in the Official Statement). SOURCE OF PAYMENT ... The Bonds constitute special obligations of the Corporation, payable from and secured solely by Pledged Revenues (as defined in the Resolution) consisting primarily of revenues collected from a '/2 of 1% sales and use tax levied within the City of Southlake, Texas for the benefit of the Corporation. Further details regarding the Bonds are set forth in the Official Statement. CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ... The Bonds will be sold in one block, on an "All or None" basis, and at a price of not less than 102% and not more than 106% of their par value. Bidders are invited to name the rate(s) of interest to be borne by the Bonds, provided that each rate bid must be in a multiple of 1/8 of 1% or 1/20 of 1% 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. Beginning with the Bonds maturing in the year 2025, no reoffering yield producing a dollar price less than $97.50 for any individual maturity will be accepted. The high bidder will be required to submit reoffering yields and dollar prices prior to award. No limitation is imposed upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. Each bidder shall state in the bid the total interest cost in dollars and the True Interest Cost as defined below. BASIS FOR AWARD ... Subject to the Corporation's right to reject any or all bids and to waive any irregularities except time of filing, the sale of the Bonds will be awarded to the bidder or syndicate account manager whose name first appears on the Official Bid Form (the "Initial Purchaser ") making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost (defined herein) rate to the Corporation based on the maturity schedule in the Official Bid Form. The `True Interest Cost" rate is that rate which, when used to compute the total present value as of the Delivery Date of all debt service payments on the Bonds on the basis of semi - annual compounding, produces an amount equal to the sum of the par value of the Bonds plus any premium bid, if any. In the event of a bidder's error in interest cost rate calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the intended bid. In order to provide the Corporation with information required to enable it to comply with certain conditions of the Internal Revenue Code of 1986 relating to the exclusion of interest on the Bonds from the gross income of their owners, the Initial Purchaser will be required to complete, execute, and deliver to the Corporation (on or before the Delivery Date) a certification as to their "issue price" (the Issue Price Certificate ") in the form and to the effect attached hereto or accompanying this Official Notice of Sale and Bidding Instructions. In the event the Initial Purchaser is unable to sell a substantial amount of the Bonds of any stated maturity, such certificate may be modified in a manner approved by the Corporation or by Fulbright & Jaworski LLP, Dallas, Texas, a member of Norton Rose Fulbright, bond counsel to the Corporation ( "Bond Counsel "). In no event will the Corporation fail to deliver the Bonds as a result of the Initial Purchaser's inability to sell a substantial amount of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certificate at least six (6) days prior to the date of delivery of the Bonds. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements, to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. GooD FAITH DEPOSIT .. . A Good Faith Deposit, payable to the "City of Southlake, Texas ", in the amount of S313,200.00, is required. Such Good Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the Corporation pending the Initial Purchaser's compliance with the terms of the bid and the Official Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the Corporation prior to the opening of the bids, and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser who shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the bid, then said check shall be cashed and accepted by the Corporation as full iii and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Bonds has been made. DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS ... It is anticipated that CUSIP identification numbers will appear on the Bonds. but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this Official Notice of Sale and Bidding Instructions and the terms of the Official Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by the Corporation; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERY OF BONDS ... Delivery will be accomplished by the issuance of one Initial Bond (also called the "Bond" or "Bonds"). either in typed or printed form, in the aggregate principal amount of $15,660,000 *, payable in stated installments to the Initial Purchaser, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Bond. it shall be immediately cancelled and one definitive Bond for each maturity will be registered and delivered only to Cede & Co., and deposited with DTC in connection with DTC's Book -Entry-Only System. Delivery will be at the principal office of the Paying Agent/Registrar. Payment for the Bonds must be made in immediately available funds for unconditional credit to the Corporation, or as otherwise directed by the Corporation. The Initial Purchaser will be given six business days' notice of the time fixed for delivery of the Bonds. It is anticipated that delivery of the Bonds can be made on or about June 5, 2014. and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Bonds by 10:00 AM, Central Time, on June 5. 2014. If for any reason the Corporation is unable to make delivery on or before June 5, 2014, the Corporation shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Good Faith Deposit will be returned, and both the Corporation and the Initial Purchaser shall be relieved of any further obligation. In no event shall the Corporation be liable for any damages by reason of its failure to deliver the Bonds, provided such failure is due to circumstances beyond the Corporation's reasonable control. CONDITIONS TO DELIVERY ... The obligation of the Initial Purchaser to take up and pay for the Bonds is subject to the Initial Purchaser's receipt of (a) the legal opinion of Bond Counsel. (b) the no- litigation certificate. and (c) the certification as to the Official Statement, all as further described in the Official Statement. LEGAL OPINION ... The Bonds are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Bonds is subject to the receipt by the Initial Purchaser of opinions of Bond Counsel. to the effect that the Bonds are valid and binding obligations of the Corporation and that the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" in the Official Statement, including the alternative minimum tax on corporations. CERTIFICATION OF OFFICIAL STATEMENT ... At the time of payment for and Initial Delivery of the Bonds. the Corporation will execute and deliver to the Initial Purchaser a certificate relating to the Official Statement as more fully described in the Official Statement. CHANGE IN TAX EXEMPT STATUS ... At any time before the Bonds are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders on bonds of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any Federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change iv GENERAL FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the Corporation in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. BLUE SKY LAWS ... By submission of its bid, the Initial Purchaser represents that the sale of the Bonds in states other than Texas will be made only pursuant to exemptions from registration or, where necessary, the Initial Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The Corporation agrees to cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary, provided. however, that the Corporation shall not be obligated to execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL ... This Official Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds, but is merely notice of the sale of the Bonds. The offer to sell the Bonds is being made by means of the Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement. Prospective Initial Purchasers are urged to carefully examine the Official Statement to determine the investment quality of the Bonds. ISSUANCE OF ADDITIONAL DEBT ... The Corporation does not anticipate the issuance of additional general obligation debt within the next twelve months. RATINGS ... The Bonds have been rated "AA -" by Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business ( "S &P "), and "AA -" by Fitch Ratings ( "Fitch "), without regard to credit enhancement. THE PRELIMINARY OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2-12 ... The Corporation has prepared the accompanying Preliminary Official Statement and, for the limited purpose of complying with United States Securities and Exchange Commission Rule 15c2 -12 (the "Rule "), deems such Preliminary Official Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the Corporation, the Preliminary Official Statement contains information, including financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Bonds. Representations made and to be made by the Corporation concerning the absence of material misstatements and omissions in the Preliminary Official Statement are addressed elsewhere in this Official Notice of Sale and Bidding Instructions and in the Preliminary Official Statement. The Corporation will furnish to the Initial Purchaser, acting through a designated senior representative. in accordance with instructions received from the Initial Purchaser, within seven (7) business days from the sale date an aggregate of thirty (30) copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. In addition, the Corporation agrees to provide, or cause to be provided, to the Initial Purchaser, the Preliminary Official Statement and the Official Statement and any amendments or supplements thereto in a "designated electronic format" (or printed format with respect to the final Official Statement) as may be required for the Initial Purchaser to comply with the Rule or the rules of the Municipal Securities Rulemaking Board ( "MSRB "). The Corporation consents to the distribution of such documents in a "designated electronic format." Upon receipt, the Initial Purchaser shall promptly file the Official Statement with the MSRB in accordance with the applicable MSRB rules. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above, the Corporation assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT ... The Corporation will agree in the Resolution to provide certain periodic information and notices of certain events in accordance with the Rule, as described in the Preliminary Official Statement under "CONTINUING DISCLOSURE OF INFORMATION ". The Initial Purchaser's obligation to accept and pay for the Bonds is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Resolution containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS ... During the last five years, the Corporation has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT ... A limited number of additional copies of this Official Notice of Sale and Bidding Instructions, the Official Bid Form and the Preliminary Official Statement, as available over and above the normal mailing, may be obtained upon request at the offices of First Southwest Company, 325 North St. Paul, Suite 800, Dallas, Texas 75201, Financial Advisor to the Corporation. v On the date of the sale, the Board of the Corporation will, in the Resolution authorizing the issuance of the Bonds, confirm its approval of the form and content of the Official Statement, and any addenda, supplement or amendment thereto, and authorize its use in the reoffering of the Bonds by the Initial Purchaser. CAROLYN MORRIS President Southlake Parks Development Corporation ATTEST: ALICIA RICHARDSON Secretary Southlake Parks Development Corporation April 29, 2014 vi OFFICIAL BID FORM Honorable Mayor and City Council May 6, 2014 City of Southlake, Texas President and Members of the Board of Directors, Southlake Parks Development Corporation: Reference is made to your Preliminary Official Statement and Official Notice of Sale and Bidding Instructions, dated April 29, 2014 of $15,660,000* SOUTHLAKE PARKS DEVELOPMENT CORPORATION, SALES TAX REVENUE REFUNDING BONDS, SERIES 2014 (the "Bonds "), both of which constitute a part hereof. For your legally issued Bonds, as described in said Official Notice of Sale and Preliminary Official Statement, we will pay you par. plus a cash premium of $ for Bonds maturing and bearing interest as follows: Principal Interest Princip al Interest Maturity Amount Rate Maturity Amount Rate 2/15/2015 $ 1,105.000 2/15/2022 $ 1,355,000 2/15/2016 1,115,000 2/15/2023 1.405.000 2/15/2017 1,150,000 2/15/2024 1,460,000 2/15/2018 1,175,000 2/15/2025 1,315,000 2/15/2019 1,210,000 2/15/2026 1.015,000 2/15/2020 1,250,000 2/15/2027 805,000 2/15/2021 1,300,000 Of the principal maturities set forth in the table above, term bonds have been created as indicated in the following table (which may include multiple term bonds, one term bond or no term bond if none is indicated). For those years which have been combined into a "Term Bond ", the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The Term Bonds created are as follows: Year of Principal Term Bond First Mandatory Amount of Interest Maturity Date Redemption Term Bond Rate $ $ ov $ PREMIUM (DISCOUNT) $ TRUE INTEREST COST The Initial Bonds shall be registered in the name of , which will, upon payment for the Bonds. be cancelled by the Paying Agent/Registrar. The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book -Entry-Only System. A bank cashier's check or certified check of the Bank, , in the amount of $313,200.00, which represents our Good Faith Deposit (is attached hereto) or (has been made available to you prior to the opening of this bid), and is submitted in accordance with the terms as set forth in the Official Statement and Official Notice of Sale and Bidding Instructions. * Preliminary, subject to change. See "Advance Modification of Principal Amounts" and "Post Bid Modification of Principal Amounts" herein. We agree to accept delivery of the Bonds utilizing the Book- Entry-Only System through DTC and make payment for the Initial Bond in immediately available funds, not later than 10:00 AM, Central Time, on June 5, 2014, or thereafter on the date the Bonds are tendered for delivery, pursuant to the terms set forth in the Official Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Bonds to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the Corporation, at least six business days prior to delivery of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect accompanying the Official Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to Fulbright & Jaworski LLP, Dallas, Texas, a member of Norton Rose Fulbright, Bond Counsel to the Corporation. 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, Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the Southlake Parks Development Corporation of the City of Southlake, Texas, subject to and in accordance with the Official Notice of Sale and Bidding Instructions, this the 6th day of May, 2014. President Southlake Parks Development Corporation ATTEST: Secretary Southlake Parks Development Corporation ISSUE PRICE CERTIFICATE The undersigned hereby certifies with respect to the sale of SOUTHLAKE PARKS DEVELOPMENT CORPORATION, SALES TAX REVENUE REFUNDING BONDS, SERIES 2014 (the "Bonds "), issued in aggregate principal amount of $ as follows: 1. The undersigned is the underwriter or the manager of the syndicate of underwriters which has purchased the Bonds from the Southlake Parks Development Corporation (the "Issuer ") at competitive sale. 2. The undersigned and/or one or more other members of the underwriting syndicate, if any. have made a bona fide offering to the public of all of the Bonds of each maturity at the respective prices set forth below. 3. The initial offering price (expressed as a percentage of principal amount or yield and exclusive of accrued interest) for the Bonds of each maturity at which a substantial amount (at least 10 %) of the Bonds of such maturity was sold to the public is as set forth below. Principal Principal Amount Year of Offering Price Amount Year of Offering Price Maturing Maturity 0/0/Yield) Maturing Maturity (% /Yield) 2015 2022 2016 2023 2017 2024 2018 2025 2019 2026 2020 2027 2021 4. The term "public," as used herein, means persons other than bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers. 5. The offering prices described above reflect current market prices at the time of such sales. 6. The undersigned and/or one or more other members of the underwriting syndicate, as the case may be, (have)(have not) purchased bond insurance for the Bonds. The bond insurance, if any, has been purchased from (the "Insurer ") for a premium cost of $ (net of any nonguarantee cost, e.g., rating agency fees). The amount of such cost is set forth in the Insurer's commitment and is separately stated from all other fees or charges payable to the Insurer. The premium does not exceed a reasonable charge for the transfer of credit risk taking into account payments charged by guarantors in comparable transactions (including transactions in which a guarantor has no involvement other than as a guarantor). The present value of the debt service savings expected to be realized as a result of such insurance, discounted at a rate equal to the yield on the Bonds which results after recovery of the insurance premium. exceeds the present value of the bond insurance premium. 7. The undersigned understands that the statements made herein will be relied upon by the Issuer in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended, on the excludability of interest on the Bonds from the gross income of their owners. EXECUTED and DELIVERED this day of , 2014. (Name of Underwriter or Manager) By (Title) STANDARD &POOR'S RATINGS SERVICES McGRAW HILL FINANCIAL Ratin i e O Summary: Southlake, Texas; General Obligation Primary Credit Analyst: Brian J Marshall, Dallas (1) 214 - 871 -1414; brian .marshall @standardandpoors.com Secondary Contact: Kate Choban, Dallas (1) 214 - 871 -1420; kate .choban @standardandpoors.com Table Of Contents Rationale Outlook Related Criteria And Research WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 29, 2014 1 1306607 1 3001252 '_8 Summary: Southlake, Texas; General Obligation Credit Profile US$21.0 mil go rfdg bnds ser 2014 dtd 05/01/2014 due 02/15/2026 Long Term Rating AAA /Stable New US$8.5 mil certs of oblig ser 2014 dtd 05/01/2014 due 02/15/2034 Long Term Rating AAA /Stable New Southlake GO Long Term Rating AAA /Stable Affirmed Southlake GO Unenhanced Rating AAA(SPUR) /Stable Affirmed Rationale Standard & Poor's Ratings Services assigned its 'AAA' long -term rating to Southlake, Texas' series 2014 general obligation (GO) refunding bonds and series 2014 tax and waterworks and sewer system revenue certificates of obligation based on the application of our local GO criteria released Sept. 12, 2013. At the same time, we affirmed our 'AAA' long -term rating and underlying rating (SPUR) on the city's previously issued GO debt. The outlook is stable. The rating reflects our view of the city's: • Very strong economy, • Very strong management, • Very strong budget flexibility, • Very strong liquidity, • Strong budgetary performance, and • Weak debt and contingent liabilities. Officials will use bond proceeds to refund a portion of the city's debt and use certificate proceeds to fund utility system improvements. The bonds and the certificates are secured by the city's full faith and credit. Very strong economy We view Southlake's local economy as very strong, with projected per capita effective buying income (EBI) at 288% of the national average and per capita market value at roughly $214,700. In our view, the projected EBI is a big credit strength, as it represents 288% of the U.S. average. The city's assessed value has increased 8% to $5.8 billion in fiscal 2014 from $5.4 billion in fiscal 2010. Officials attribute the growth to continued commercial and residential building activity. Tarrant County's unemployment rate (2013) was 6.1 %, according to the Bureau of Labor Statistics. Residents benefit, in our view, from participation in the broad and diverse Dallas -Fort Worth - Arlington metropolitan statistical area. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 29, 2014 2 306607 1 300125218 Summary: Southlake, Texas; General Obligation Very strong management In our view, Southlake's management conditions are very strong, with "strong" financial practices under our financial management assessment (FMA) methodology, indicating our view that practices are well embedded and likely sustainable. Management uses historical trends, departmental needs, and statistical information to forecast revenue and expenditures. Management has developed an informal long -term financial plan and a formal five -year capital improvement plan with identified funding sources. Officials monitor the budget monthly and make adjustments midyear. The city has a written, in- depth, and conservative investment policy, and makes quarterly updates to the governing body. Debt management guidelines outline when city officials can issue debt. A formal reserve policy targets reserves of at least 25% of operating expenditures for emergencies. Very strong budgetary flexibility In our view, Southlake's budgetary flexibility is very strong, with available reserves at 58.7% of operating expenditures in fiscal 2013. Officials are conservatively projecting to maintain similar reserve levels in fiscal 2014. In our view, reserves are a credit strength: The available fund balance was above 30% for the most recent audited year and we anticipate that it will remain so for the next few years. Very strong liquidity Southlake's finances benefit from what we consider very strong liquidity, with total government available cash at 78% of total government fund expenditures and 3.8x debt service. Based on the frequency and type of past debt issuances, we believe that the issuer has exceptional access to capital markets to provide for liquidity needs if necessary. Strong budgetary performance We view Southlake's budgetary performance as strong overall, with a surplus of 2.4% for the general fund and a surplus of 6.0% for the total governmental funds in fiscal 2013 after accounting for certain one -time capital expenditure adjustments. Officials are projecting modest surpluses of less than 1% for both the general fund and across all governmental funds. Weak debt and contingent liabilities In our view, Southlake's debt and contingent liability profile is weak. Net direct debt is 144.2% of total governmental funds revenue, and total governmental funds debt service is 20.8% of total governmental funds expenditures. Approximately 76% of the debt is repaid over 10 years. We consider this a credit strength. Last year Southlake fulfilled 100% of its annual required pension contribution. The annual pension and other postemployment benefit costs accounted for 3% of the total government expenditures in fiscal 2013. Officials report that the city has no immediate debt plans. Strong institutional framework We consider the Institutional Framework score for Texas strong. Outlook The stable outlook reflects our anticipation that the city will maintain its very strong financial profile, as indicated by WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 29, 2014 3 1306e.07 3031 25218 Summary: Southlake, Texas; General Obligation its very strong liquidity and budgetary flexibility. Given the above, we do not anticipate changing the rating during our two -year outlook horizon. Related Criteria And Research Related Criteria USPF Criteria: Local Government GO Ratings Methodology And Assumptions, Sept. 12, 2013 Related Research • S &P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013 • Institutional Framework Overview: Texas Local Governments Ratings Detail (As Of April 29, 2014) Southlake GO Long Term Rating AAA /Stable Affirmed Many issues are enhanced by bond insurance. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 29, 2014 4 130660' 1 3001252/8 Copyright © 2014 Standard & Poor's Financial Services LLC, a part of McGraw Hill Financial. All rights reserved. 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STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 29, 2014 5 306607 1 300125218 Fitch Ratings FITCH RATES SOUTHLAKE, TX GOS AND COS 'AAA'; SPDC SALES TAX REVS 'AA -'; OUTLOOK STABLE Fitch Ratings- Austin -24 April 2014: Fitch Ratings assigns a rating of 'AAA'to the following obligations (general obligations [GOs], certificates of obligation [COs]) of the city of Southlake, Texas (the city or Southlake) and assigns a rating of 'AA-' to the following sales tax revenue refunding bonds of Southlake Parks Development Corp (SPDC): - -$20.9 million GO refunding bonds, series 2014; - -$8.4 million tax and waterworks and sewer system (limited pledge) revenue COs, series 2014; - -$14.9 million sales tax revenue refunding bonds, series 2014. The bonds are expected to price via competition the week of May 5, pending market conditions. Proceeds from the GOs and sales tax revenue bonds will be used to refund a portion of the city's outstanding obligations for debt service savings. The COs will fund a variety of public works projects. In addition, Fitch affirms the following ratings: -- $137.3 million in outstanding GOs and COs (pre- refunding) at 'AAA'; - -$3.2 million in outstanding Southlake Parks Development Corp. sales tax bonds at 'AA -'. The Rating Outlook is Stable. SECURITY The GOs and COs are secured by an ad valorem tax levied on all taxable property within the city, limited to $2.50 per $100 taxable assessed valuation (TAV). The COs are additionally secured by a nominal pledge of subordinate net revenues (limited in amount typically to $1,000) from the city's waterworks and sewer system. The sales tax bonds are secured by a priority lien on proceeds of a 0.5% sales and use tax levied within the city for the benefit of the Southlake Parks Development Corporation (the corporation). KEY RATING DRIVERS STRONG FINANCES: The city's deliberate financial management has allowed it to maintain strong reserves, while cash funding capital and street improvements despite moderate exposure to economically sensitive sales tax revenues. Dedicated funding sources, including citizen- approved sales taxes, mitigate pressure on the budget and contribute to a moderately low ad valorem tax rate. AFFLUENT DALLAS AREA COMMUNITY: The largely residential area is characterized by exceptionally high wealth. The city lies on the southern shore of Grapevine Lake and is strategically located within close proximity to Dallas, Fort Worth and the Dallas -Fort Worth (DFW) airport; unemployment is low. RESUMED TAX BASE GROWTH: New development and a rise in home prices contributed to a pick -up in current TAV, following two years of uncharacteristically slow growth. Fitch anticipates new development and regional mobility improvements to spur additional near -term TAV growth. HIGH DEBT; RAPID PAYOUT: High overall debt results largely from overlapping debt of local school districts. The city's rapid amortization rate is reflected in a high debt burden on the budget. Pensions and other post - employment benefit (OPEB) obligations are well - funded. STRONG COVERAGE: Debt service coverage on the sales tax bonds is strong and responds well to stress. Although the additional bonds test (ABT) is weak, Fitch anticipates coverage levels to remain solid based on the lack of new issuance plans. RATING SENSITIVITIES SOLID CREDIT PROFILE: Sound reserves, rapid principal amortization, commitment to pay -go capital and superior wealth levels are key offsets to the city's high overall debt. A change in these mitigating factors would place downward pressure on the rating. CREDIT PROFILE Southlake is an affluent community with a population of about 27,500, located 15 miles northwest of Dallas and 10 miles northeast of Fort Worth. WEALTHY DFW COMMUNITY; GROWTH PROSPECTS Southlake's per capita money income represents 243% of the U.S. average and its fiscal 2014 market value per capita remains very high at $217,977. The city's tax base has a moderate 10.5% concentration among technology, real estate, telecommunications, leisure /hotel and distribution interests with the top two taxpayers accounting for 5% of fiscal 2014 TAV - Verizon Wireless at 3% and Town Square Ventures at 2 %. New development is underway, consistent with the city's long -term plan for significant commercial and retail build -out within Southlake's Town Square, an upscale regional retail center, and its three primary multi -use zoned corridors. Fitch considers the city's expectation for further tax base growth reasonable based on a large number of residential and commercial projects nearing completion and others announced for near -term start-up. STRONG FINANCIAL FLEXIBILITY The city's diverse general fund revenue stream is driven by property taxes (47% of total revenues) and sales taxes (27 %). Additionally, numerous dedicated funding sources have mitigated operating and capital pressure on the general and debt service funds. Robust planning and prudent cost management support maintenance of a strong financial position, evidenced by healthy reserves in excess of policy targets. The city's fund balance policy targets a minimum 15% of general fund budgeted operating expenditures, with the stated optimum goal of 25% applicable to unassigned general fund reserves. Funds in excess of25% are typically committed for strategic capital initiatives, helping to reduce growth in the city's indebtedness. A sizable fiscal 2013 unrestricted general fund balance of $20.5 million (52.8% of spending) was driven by the strength of sales tax revenues, up 11.6% from the year prior. A fiscal 2014 balanced budget includes conservative revenue growth and funding for a new public safety station and moderate pay increases. Management projects moderate improvement in fiscal 2014 reserves which appears reasonable based on strong sales tax and permit revenue performance and a history of prudent expenditure controls. HIGH DEBT BURDEN; WELL- FUNDED PENSIONS Southlake's overall debt levels are high at approximately 6.0% of market value. At 17% of governmental spending, the debt service burden on the budget is also high, reflecting rapid amortization of 76% within 10 years. The city's fiscal 2014 five -year capital plan is affordable at about $79 million. Southlake typically funds a portion of its annual capital plan with general fund monies. In fiscal 2013 the city transferred 12.5% oftotal general fund revenues to the city's strategic initiative fund in the amount of $4.7 million (representing balances in excess of 25% of budgeted expenditures), which served to reduce the city's debt issuance, consistent with historical trends. The city's pension plan, as well as disability and death benefits, is through the Texas Municipal Retirement System and the city's funded position remains strong at 86.6% as of Dec. 31, 2012. The city has made 100% of its annual required contribution for fiscal years 2008 -2013. Carrying costs including debt service, pension and OPEB contributions represent a manageable 20.1 % of governmental spending. HEALTHY SALES TAX BOND COVERAGE; NO FORESEABLE ISSUANCE PLANS The series 2014 sales revenue bonds refund the city's senior (1997), subordinate (2006) and third lien bonds (2005) with a single parity issue. Pledged revenues show a strong compound annual growth rate of 9.8% since 1999, with very strong 11.7% growth in fiscal 2013. Fiscal 2013 pledged revenues of $5.6 million cover maximum annual debt service (MADS) a strong 3.4x. A stress test reflected by a 10% decline in fiscal 2013 pledged revenues would still cover MADs by a solid 3.0x. Management reasonably anticipates fiscal 2014 sales tax revenues to reflect additional moderate gains based on strong fiscal year -to -date performance. The ABT is below average at 1.25x, but the city does not plan to further leverage the pledged sales tax revenues within its five - year planning horizon. Contact: Primary Analyst Rebecca Meyer Director +1-512-215-3733 Fitch Ratings, Inc. 111 Congress Ste. 2010 Austin, TX 78701 Secondary Analyst Rebecca Moses Director +1 -512- 215 -3739 Committee Chairperson Jessalynn Moro Managing Director 212 - 908 -1608 Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email: ayssa.castelli@fitchratings.com; Sandro Scenga, New York, Tel: +1 212- 908 -0278, Email: sandro.scenga @fitchratings.com. Additional information is available at 'www.fitchratings.com'. In addition to the sources of information identified in Fitch's Tax- Supported Rating Criteria, this action was additionally informed by information from Creditscope, University Financial Associates, S &P /Case- Shiller Home Price Index, IHS Global Insight, National Association of Realtors. Applicable Criteria and Related Research: - -'Tax- Supported Rating Criteria' (Aug. 14, 2012); - -'U.S. Local Government Tax - Supported Rating Criteria' (Aug. 14, 2012). Applicable Criteria and Related Research: Tax - Supported Rating Criteria http: / /www. fitchratings.com /cre d itd e sk/ reports /report_fram e. cfm ?rpt_i d =6 86015 U.S. Local Government Tax - Supported Rating Criteria http: / /www. fitchratings. com /cred itdesk /reports /report_frame.cfm ?rpt_id = 685314 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP: / /FITCHRATINGS.COM/ UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU- REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. STANDARD & POOR'S RATINGS SERVICES McGRAW HILL FINANCIAL RatingsDirect® Summary: Southlake Park Development Corp., Texas; Sales Tax Primary Credit Analyst: Brian J Marshall, Dallas (1) 214 - 871 -1414; bran .marshal] @standardandpoors.com Secondary Contact: Kate Choban, Dallas (1) 214 - 871 -1420; kate .choban @standardandpoors.com Table Of Contents Rationale Outlook Related Criteria And Research WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 30, 2014 1 1307468 300125218 Summary: Southlake Park Development Corp., Texas; Sales Tax Credit Profile US$14.97 mil sales tax rev rfdg bnds ser 2014 dtd 05/15/2014 due 02/15/2027 Long Term Rating AA- /Stable New Southlake Pk Dev Corp sales tax Unenhanced Rating AA- (SPUR) /Stable Affirmed Many issues are enhanced by bond insurance. Rationale Standard & Poor's Ratings Services assigned its 'AA-' long -term rating to Southlake Park Development Corp., Texas' series 2014 sales tax refunding bonds. At the same time, we affirmed our 'AA-' long -term rating and underlying rating (SPUR) on the development corporation's existing debt. The outlook is stable. The rating reflect our view of: • The corporation's coverage levels, which are significantly above its additional bonds test (ABT) with no plans for additional debt; • Southlake, Texas' participation in the diverse Dallas -Fort Worth metropolitan statistical area (MSA) employment base; • High income levels; • Consistent growth in pledged sales tax revenues and • Adequate bond provisions. Officials recently passed a resolution that placed all of the corporation's revenue bonds on parity. Revenue from a half -cent sales- and -use tax secures the bonds. Officials will use bond proceeds to refund existing sales tax debt for savings without extending maturities. Southlake, which has a population of about 27,400, is in Tarrant County, six miles west of Dallas -Fort Worth International Airport. It exhibited rapid growth during the past decade as a result of its favorable location in the Dallas -Fort Worth MSA, coupled with its access to the airport. Residential and commercial development in the city have been consistent in the past two fiscal years. Southlake's median household effective buying income is very strong, in our view, at 287% of the national average. Per capita retail sales are also above the national average, at 127 %. Pledged sales tax revenue increased by an annual average of 8% for three fiscal years to reach $5.6 million in fiscal 2013. The pledged revenue provides 3.4x coverage on the maximum annual debt service (MADS) on all parity debt. Sales tax revenue has covered MADS 1.89x through the first six months of fiscal 2014, and is projected to provide 3.7x MADS coverage by year end. Continued retail expansion is the primary reason behind the city's positive sales tax WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 30, 2014 2 30 7468 { 300125218 Summary: Southlake Park Development Corp., Texas; Sales Tax collection trends. The major retail sales taxpayers are very diverse, in our opinion. The ABT for this issue is what we view as adequate, at 1.25x MADS, and we understand that officials have no plans to issue additional parity debt in the near term, which should allow coverage to remain significantly above the ABT. In addition, the bond indenture calls for a springing reserve to be established in the event that existing and proposed debt do not exceed 1.5x MADS. The springing reserve will ultimately be equal to MADS. Outlook The stable outlook reflects our view of the city's participation in the Dallas -Fort Worth MSA, demonstrated by its high per capita retail sales and very strong income levels, coupled with our anticipation that the development corporation will maintain very strong coverage. We do not anticipate raising the rating in the two -year outlook horizon. However, if pledged revenue declines significantly, resulting in lower coverage, we could lower the rating. Related Criteria And Research Related Criteria USPF Criteria: Special Tax Bonds, June 13, 2007 Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 30, 2014 3 :3074681 300125218 Copyright © 2014 Standard & Poor's Financial Services LLC, a part of McGraw Hill Financial. All rights reserved. No content (including ratings, credit - related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S &P). 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S &P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription) and www.spcapitaliq.com (subscription) and may be distributed through other means, including via S &P publications and third -party redistributors. Additional information about our ratings fees is available at www. standardandpoors .com /usratingsfees. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT APRIL 30, 2014 4 13074 I 300125218 Texas City and County Market Commentary First Southwest APRIL 28 - MAY 2, 2014 A week of waiting as participants were focused on a slate of economic numbers being released and the Federal Reserve's rate decision. Well, we got both. The Fed kept rates unchanged and continued the tapering program to the tune of an additional $10 billion a month reducing the purchasing program to $55 billion a month. In the past, the numbers that this market experienced during the week would have pulled the Treasury market down dramatically but the new norm says otherwise. A Treasury market with a ton of shorts had to cover, so the Nonfarm Payroll number coming in at 288k when the forecast was 218k and the Unemployment Rate coming in at 6.3% when it was forecast at 6.60% made no difference. The Treasury market was off briefly after the number well over 1 point and now has come roaring back to post better on the day by 1 point. Tax - exempts took the news in stride and held their own and kept the bid side up and active. Everyone wants rates to go up in here but with a calendar of just over $4 billion on top of the $6 billion that came the week prior and copious amounts of cash, tax - exempts continue to roll. No one likes the market but transactions continue to price and clear. The large redemption months of June and July are upcoming so more cash to add on to the pile, coming to an account near you! The market will face $4.2 billion in new issuance this coming week. Nothing to be concerned about as the market will accept the calendar with very little pause. Still looking for a catalyst to move the needle. Selected Recent Texas Cit and County Sales Ratings Yields Pricing Amount Issuer Ins. (M's /S &P/ Date ($000s) Tax (some bonds may have calls; not all maturities shown) Fitch) 1 Yr 3 Yr 5 Yr 10 Yr 20 Yr 25 Yr 30 Yr Plano GO LT -- Aaa/AAA/NR 4/28 $29,325 T/E 0.21% 0.73% 1.35% 2.44% 3.605% -- -- Kingsville GO LT -- NR/A + /NR 4/28 $9,040 BQ 0.30% 0.70% 1.25% 2.30% -- -- -- Kautman GO LT - A1/NR/NR 4/28 $1,045 T/E 0.35% 0.90% 1.55% 2.90% 4.10% - - Carrollton GO LT -- NR/AAA/AAA 4/29 $20,485 T/E 0.21% 0.75% 1.35% 2.48% 3.71% -- -- 4 - Year History of Weekly Floating Rate Index (SIFMA) vs. Tax Exempt Yield Curve 20 -Year Fixed Rate (BBI) and Bond Buyer 25 -Bond Bank Qualified vs. Not Bank Qualified Pricing Revenue Bond Index (RBI) Insured "A" Underlying as of May 2, 2014 Source: Thomson Reuters and The Bond Buyer 6.00 700 • • 5.00 600 . 500 4.00 4.00 3.00 300 • 2.00 .:.........__............_. 2.40 w...�._.. ... • 1.00 — — — 1.40 - .. 9 O.00 . ... ryO ryA ryo '47 ry o _....._...... -000 0 .. , .. . .__. , ..__._.. , ......._.... 000......0. 4.00. . y 1 a tit ti ° rye � �^ � �� � `>' � �� X0 ^ b� v ^° a ^� �^ V V ^ ^ t ? ^^ n) ^ry {i1�� 1� ^ry {^ 1). � y� .:,‘a ^ L � kb, 19' ^¢ *These graphs depict historical interest rates and their respective relationships. Future interest rates are dependent upon many factors such as, but not limited to, interest rate trends, tax rates, supply, changes in laws, rules and regulations, as well as changes in credit quality and rating agency considerations. The effect of such changes in such assumptions may be material and could affect the projected results. These results should be viewed with these potential changes in mind as well as the understanding that there may be interruptions in the short term market or no market may exist at all. Texas City and County Market Commentary FirstSouthwest' APRIL 28 - MAY 2, 2014 Commercial Paper Pool Comparison Government Investment Pool Average Rate Summary as of May 2 2014 o as of May 2, 2014 0.50% 0.50% .... .............................. ......_ ......._.. .........__............._....._ .......__...... _..........._................. _ . 0.40% ° -- 0.40 k i 0.30 °!° 0.30% ; - - 0.20% 0.20% 0.10 % 0.10% 0.00% M. 7 -Days 1 Month 3 Months 6 Months 1 Year 3 Year 0'00% - 7 -Days 1 Month 3 Months 6 Months 1 Year 3 Year Yields on Collateralized Investment Agreements* Market Movers as of May 2, 2014, Source: Internal Source. Bloomberg 1.05% Date Event Estimate Actual 4/30 FOMC Rate Decision 0.25% 0.25% 090° 0,891 5/1 Personal lncome 0.50% 0.50% 5/1 Personal Spending 0.60% 0.90% o75m 5/1 ISM Manufacturing 54.2 54.9 5/1 ISM Prices Paid 59.3 56.5 0653r> 5/1 Total Vehicle Sales 16.20M 15.98 060% 5/2 Change in Nonfarm Payrolls 210K 288K 5/2 Change in Private Payrolls 210K 273K 0.45:6 5/2 Change in Manufact. Payrolls 5K 12K 5/2 Unemployment Rate 6.60% 6.30% 0400% 5/5 ISM Non -Manf. Composite 54 -- 0.30% 5/6 Trade Balance - $40.38 -- 0 247% 5/7 MBA Mortgage Applications -- -- 0.15% o 185% 5/7 Nonfarm Productivity -0.80% 5/7 Unit Labor Costs 2.40% -- 0 123% 5/7 Consumer Credit $15.9508 -- 000% 0 023 , 5/8 Initial Jobless Claims 325K -- 3 6 9 12 t8 24 m Weighted Average Life {Months) 5/8 Continuing Claims 2745K -- 5/9 Wholesale Inventories MoM 0.50% -- *Collateralized guaranteed investment contracts consists of United States Treasury 5/9 Wholesale Trade Sales MoM 1.20% securities and AAA -rated agency securities. Fed Outlook Date of FOMC Meeting 4/30/14 6/18/14 7/30/14 9/17/14 10/29/14 12/17/14 1/28/15 3/18/15 FED Funds Forecast (Bloomberg) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% ( 0.25% 0.25% Interest Rates for Short Tern Debt Issues Contact as of May 2, 2014 Jack Addams Days 7 30 60 90 120 150 I 180 210 240 I 360 Direct: 214/953 -4102 Taxable(LIBOR) (Bloomberg) 0.11% 0.15% 0.18% 0.22% -- -- 0.32% -- -- 0.54% Toll Free: 800.678.3792 Tax - Exempt MIG1 0.10% 0.10% 0.10% 0.10% 0.10% 11.00% 0.11% 0.12% 0.13% 0.15% Jack.addams @firstsw.com (Thomson /Reuters) FirstSW.com Disclosure: This paper is intended for issuers for educational and informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute FirstSouthwest views as of the date of the report and are subject to change without notice This paper represents historical information only and is not an indication of future performance. 2 Texas City and County Market Commentary FirstSouthwest APRIL 28 - MAY 2, 2014 There was a staggering amount of economic news and data during the week. The Bloomberg Eco page listed 52 separate data releases. On Wednesday morning, the Commerce Department reported the initial Q1 annualized GDP at a surprisingly weak +0.1 %. This was well below the median forecast of +1.2% and suggested that cold winter weather hammered economic growth in the first three months of the year. The detail was interesting in that the personal spending component (at least on the surface) appeared solid at +3.0 %. This would normally be seen as being quite positive except that the spending gains were concentrated in services rather than goods, with the majority in utilities and healthcare. Higher spending on utilities can be attributed to higher heating bills. Healthcare purchases, due largely to the initiation of the Affordable Care Act, jumped $43.3 billion last quarter to an annual pace of $1.85 trillion, the most since record keeping began in 1947. Goods purchases rose at just a 0.4% pace, the smallest gain in nearly two years. Business investment has now been negative for four straight quarters, and residential investment (housing) has been sluggish since last summer. The Fed, which met last Tuesday and Wednesday, announced another $10 billion taper in its QE3 asset purchases, but the economy is clearly not in acceleration mode. Economic growth was +2.8% in 2012, +1.9% in 2013 and +0.1% so far in 2014. Granted, the Q1 data is already stale, subject to revision, and likely sets the table for a significant rebound in the current quarter, but any time growth is so close to negative it should raise some eyebrows at the Fed. In theory, when the Fed allows interest rates to rise, it does so to slow the economy and prevent it from overheating. Right now, this doesn't appear to be a concern. On Thursday, the April ISM manufacturing index rose to 54.9, bettering the Bloomberg median forecast of 54.3. Any number above 50 signals expansion in the factory sector, and by proxy the economy as a whole. A key component in the ISM data was the prices paid index, which fell from 59.0 to 56.5, hinting that price pressures are easing. In theory, the Fed can remain accommodative longer if prices are well behaved. Speaking of inflation, the Fed's favorite price measure, the Personal Consumption Expenditures (PCE) Index gained 0.2% in both the headline and the core in March. These increases boosted the overall and core year- over -year PCE up to 1.1% and 1.2% respectively. Idealistically, the Fed would prefer closer to 2.0% price pressure, so there's still plenty of breathing room. On Friday, April nonfarm payrolls grew by an unexpectedly robust 288k, handily beating the median forecast of 218k. The biggest monthly gain in over two years brought the three -month average up to an impressive 238k. By contrast, December and January averaged just 114k. In theory, the economy needs to produce somewhere around 200k jobs just to absorb new workers entering the labor force. It's been a while since we've seen that degree of sustained growth; in fact, payrolls increased by an average of 186k in 2012 and 194k in 2013. The majority of April job gains were concentrated in business and professional services ( +75k ...24k of these were temporary positions), retail ( +35k), food services ( +33k), construction ( +32k), healthcare ( +19k), local government ( +17k) and manufacturing ( +12k). The household survey also produced a strong headline number as the unemployment rate fell from 6.7% to a 5 %- year low of 6.3% (6.275 %), although much of this decline was due to a drop in the number of persons looking for work. The number of Americans in the labor force plunged by 806k, the largest monthly decline in history, bringing the participation rate back down to 62.8 %, equaling the lowest since 1978. There's plenty of speculation about why this is occurring. Demographics certainly play a role, as 10,000 Americans will supposedly reach retirement age every day for the next 15 years, but survey after survey indicate that only a small percentage have enough savings to quit working. Hourly earnings were flat, and are now up just 1.9% year- over -year. So, despite increased job creation, there remains considerable labor market slack. There are now officially 9.7 million unemployed workers, but these are only Americans who have actively sought work in the past 4 weeks. There are currently 7.5 million working part-time for economic reasons and another 2.2 million who are available for work, and have looked for work at some point in the past 12 months, just not in the past four weeks. The labor market is healing, but not healed. The bottom line on the April labor report is good. It won't change the Fed's set course, simply because the Fed was counting on renewed hiring all along. Interestingly, the bond market rallied throughout the week and the DOW reached a new record high on Wednesday. The notion that long bond yields would decline at the same time the Fed reels in its planned bond purchases is surprising, but traders who have shorted the bond market this year have been crushed, and seem to be throwing in the towel. 3 RrstSOUthwest TABLE OF CONTENTS City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd Pledge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Report Page GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Sources and Uses of Funds 1 Form 8038 Statistics 2 Proof of Arbitrage Yield 5 General Obligation Refunding Bonds, Series 2014 Summary of Refunding Results 7 Summary of Bonds Refunded 8 Savings 9 Prior Bond Debt Service 10 Bond Summary Statistics 11 Bond Pricing 12 Bond Debt Service 13 General Obligation Refunding Bonds, Series 2014 (I &S Tax Portion) Detailed Bond Debt Service 14 General Obligation Refunding Bonds, Series 2014 (Utility Portion) Detailed Bond Debt Service 15 General Obligation Refunding Bonds, Series 2014 Escrow Requirements 16 Escrow Cost 17 Escrow Sufficiency 18 Escrow Statistics 19 Tax and Waterworks and Sewer System (Ltd Pledge) Revenue Certificates of Obligation, Series 2014 Bond Summary Statistics 20 Bond Pricing 21 Bond Debt Service 23 Tax & Waterworks & Sewer System (Ltd Pledge) Rev Certificates of Obligation, Series 2014 (I &S Tax) Detailed Bond Debt Service 25 Tax & Waterworks & Sewer System (Ltd Pledge) Rev Certificates of Obligation, Series 2014 (W &S) Detailed Bond Debt Service 26 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) FirstSouthvvest4 SOURCES AND USES OF FUNDS City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 Tax and Waterworks and Sewer System General (Ltd Pledge) Obligation Revenue Refunding Certificates Bonds, Series of Obligation, Sources: 2014 Series 2014 Total Bond Proceeds: Par Amount 21,330,000.00 8,780,000.00 30,110,000.00 Net Premium /OID 1,346,065.60 252,387.75 1,598,453.35 22,676,065.60 9,032,387.75 31,708,453.35 Other Sources of Funds: Transfer from prior issue D/S Fund 312,085.28 312,085.28 22,988,150.88 9,032,387.75 32,020,538.63 Tax and Waterworks and Sewer System General (Ltd Pledge) Obligation Revenue Refunding Certificates Bonds, Series of Obligation, Uses: 2014 Series 2014 Total Project Fund Deposits: Project Fund 8,896,000.00 8,896,000.00 Refunding Escrow Deposits: Cash Deposit 22,743,518.50 22,743,518.50 Delivery Date Expenses: Cost of Issuance 181,238.13 91,409.48 272,647.61 Underwriter's Discount 63,394.25 44,978.27 108,372.52 244,632.38 136,387.75 381,020.13 22,988,150.88 9,032,387.75 32,020,538.63 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 1 FRrstSouthwest4* FORM 8038 STATISTICS City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Serial Bonds: 02/15/2015 3,895,000.00 5.000% 103.350 4,025,482.50 3,895,000.00 02/15/2016 4,105,000.00 5.000% 107.830 4,426,421.50 4,105,000.00 02/15/2017 4,135,000.00 4.000% 108.988 4,506,653.80 4,135,000.00 02/15/2018 3,520,000.00 3.000% 107.273 3,776,009.60 3,520,000.00 02/15/2019 2,605,000.00 3.000% 107.669 2,804,777.45 2,605,000.00 02/15/2020 1,455,000.00 2.000% 102.003 1,484,143.65 1,455,000.00 02/15/2021 765,000.00 2.000% 100.499 768,817.35 765,000.00 02/15/2022 160,000.00 3.000% 105.923 169,476.80 160,000.00 02/15/2023 160,000.00 3.000% 105.243 168,388.80 160,000.00 02/15/2024 170,000.00 3.000% 104.542 177,721.40 170,000.00 02/15/2025 175,000.00 3.000% 102.799 179,898.25 175,000.00 02/15/2026 185,000.00 3.000% 101.770 188,274.50 185,000.00 Serial Certificates: 02/15/2015 950,000.00 3.000% 102.012 969,114.00 950,000.00 02/15/2016 1,030,000.00 3.000% 104.472 1,076,061.60 1,030,000.00 02/15/2017 1,060,000.00 3.000% 106.266 1,126,419.60 1,060,000.00 02/15/2018 1,095,000.00 3.000% 107.424 1,176,292.80 1,095,000.00 02/15/2019 1,120,000.00 2.000% 103.408 1,158,169.60 1,120,000.00 02/15/2020 195,000.00 2.000% 102.167 199,225.65 195,000.00 02/15/2021 195,000.00 2.000% 100.624 196,216.80 195,000.00 02/15/2022 200,000.00 2.000% 99.291 198,582.00 200,000.00 02/15/2023 205,000.00 3.000% 105.485 216,244.25 205,000.00 02/15/2024 210,000.00 3.000% 104.718 219,907.80 210,000.00 02/15/2025 220,000.00 3.000% 103.405 227,491.00 220,000.00 02/15/2026 225,000.00 3.000% 101.685 228,791.25 225,000.00 02/15/2027 230,000.00 3.000% 100.000 230,000.00 230,000.00 02/15/2028 240,000.00 3.000% 97.793 234,703.20 240,000.00 02/15/2029 245,000.00 3.125% 97.972 240,031.40 245,000.00 02/15/2030 255,000.00 3.250% 98.184 250,369.20 255,000.00 02/15/2031 265,000.00 3.375% 98.426 260,828.90 265,000.00 02/15/2032 270,000.00 3.375% 97.711 263,819.70 270,000.00 02/15/2033 280,000.00 3.500% 98.644 276,203.20 280,000.00 02/15/2034 290,000.00 3.500% 97.902 283,915.80 290,000.00 30,110,000.00 31,708,453.35 30,110,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 02/15/2034 3.500% 283,915.80 290,000.00 Entire Issue 31,708,453.35 30,110,000.00 4.2118 1.8058% May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 2 FirstSoutttwest4* FORM 8038 STATISTICS City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Proceeds used for accrued interest 0.00 Proceeds used for bond issuance costs (including underwriters' discount) 381,020.13 Proceeds used for credit enhancement 0.00 Proceeds allocated to reasonably required reserve or replacement fund 0.00 Proceeds used to currently refund prior issues 22,431,433.22 Proceeds used to advance refund prior issues 0.00 Remaining weighted average maturity of the bonds to be currently refunded 3.1750 Remaining weighted average maturity of the bonds to be advance refunded 0.0000 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 3 FrstSoutlwvest FORM 8038 STATISTICS City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Refunded Bonds Bond Component Date Principal Coupon Price Issue Price General Obligation Refunding Bonds, Series 2005 (I &S Tax Portion): TERM 02/15/2015 1,432,284.00 4.200% 100.000 1,432,284.00 TERM 02/15/2016 1,498,176.00 4.200% 100.000 1,498,176.00 TERM 02/15/2017 1,501,644.00 4.200% 100.000 1,501,644.00 TERM 02/15/2018 1,279,692.00 4.200% 100.000 1,279,692.00 TERM 02/15/2019 950,232.00 4.200% 100.000 950,232.00 TERM 02/15/2020 530,604.00 4.200% 100.000 530,604.00 TERM 02/15/2021 279,174.00 4.200% 100.000 279,174.00 TERM 02/15/2022 57,222.00 4.200% 100.000 57,222.00 TERM 02/15/2023 58,956.00 4.200% 100.000 58,956.00 TERM 02/15/2024 62,424.00 4.200% 100.000 62,424.00 TERM 02/15/2025 64,158.00 4.200% 100.000 64,158.00 TERM 02/15/2026 69,360.00 4.200% 100.000 69,360.00 7,783,926.00 7,783,926.00 General Obligation Refunding Bonds, Series 2005 (Utility Portion): TERM 02/15/2015 2,697,716.00 4.200% 100.000 2,697,716.00 TERM 02/15/2016 2,821,824.00 4.200% 100.000 2,821,824.00 TERM 02/15/2017 2,828,356.00 4.200% 100.000 2,828,356.00 TERM 02/15/2018 2,410,308.00 4.200% 100.000 2,410,308.00 TERM 02/15/2019 1,789,768.00 4.200% 100.000 1,789,768.00 TERM 02/15/2020 999,396.00 4.200% 100.000 999,396.00 TERM 02/15/2021 525,826.00 4.200% 100.000 525,826.00 TERM 02/15/2022 107,778.00 4.200% 100.000 107,778.00 TERM 02/15/2023 111,044.00 4.200% 100.000 111,044.00 TERM 02/15/2024 117,576.00 4.200% 100.000 117,576.00 TERM 02/15/2025 120,842.00 4.200% 100.000 120,842.00 TERM 02/15/2026 130,640.00 4.200% 100.000 130,640.00 14,661,074.00 14,661,074.00 22,445,000.00 22,445,000.00 Remaining Last Weighted Call Issue Average Date Date Maturity General Obligation Refunding Bonds, Series 2005 (I &S Tax Portion) 06/09/2014 04/20/2005 3.1750 General Obligation Refunding Bonds, Series 2005 (Utility Portion) 06/09/2014 04/20/2005 3.1750 All Refunded Issues 06/09/2014 3.1750 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 4 RrstSouthwest4 PROOF OF ARBITRAGE YIELD City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Present Value to 06/05/2014 Date Debt Service Total @ 1.8058303415% 08/15/2014 159,259.72 159,259.72 158, 703.99 02/15/2015 5,429,594.45 5,429,594.45 5,362,231.60 08/15/2015 423,950.00 423,950.00 414,943.63 02/15/2016 5,558,950.00 5,558,950.00 5,392,169.26 08/15/2016 305,875.00 305,875.00 294,043.12 02/15/2017 5,500,875.00 5,500,875.00 5,240,769.97 08/15/2017 207,275.00 207,275.00 195,707.08 02/15/2018 4,822,275.00 4,822,275.00 4,512,402.88 08/15/2018 138,050.00 138,050.00 128, 023.17 02/15/2019 3,863,050.00 3,863,050.00 3,550,412.36 08/15/2019 87,775.00 87,775.00 79,949.47 02/15/2020 1, 737, 775.00 1, 737, 775.00 1, 568, 680.82 08/15/2020 71,275.00 71,275.00 63,763.85 02/15/2021 1,031,275.00 1,031,275.00 914,340.81 08/15/2021 61,675.00 61,675.00 54,192.48 02/15/2022 421,675.00 421,675.00 367,201.16 08/15/2022 57,275.00 57,275.00 49,429.65 02/15/2023 422,275.00 422,275.00 361,172.05 08/15/2023 51,800.00 51,800.00 43,908.12 02/15/2024 826,800.00 826,800.00 694,563.25 08/15/2024 40,175.00 40,175.00 33,447.49 02/15/2025 40,175.00 40,175.00 33,148.19 08/15/2025 40,175.00 40,175.00 32,851.57 02/15/2026 450,175.00 450,175.00 364,819.34 08/15/2026 34,025.00 34,025.00 27,326.93 02/15/2027 264,025.00 264,025.00 210,152.28 08/15/2027 30,575.00 30,575.00 24,118.58 02/15/2028 270,575.00 270,575.00 211,528.70 08/15/2028 26,975.00 26,975.00 20,899.67 02/15/2029 271,975.00 271,975.00 208,834.95 08/15/2029 23,146.88 23,146.88 17,614.20 02/15/2030 278,146.88 278,146.88 209,768.83 08/15/2030 19,003.13 19,003.13 14,203.27 02/15/2031 284,003.13 284,003.13 210,369.35 08/15/2031 14, 531.25 14,531.25 10,667.40 02/15/2032 284,531.25 284,531.25 207,005.50 08/15/2032 9,975.00 9,975.00 7,192.19 02/15/2033 289,975.00 289,975.00 207,207.30 08/15/2033 5,075.00 5,075.00 3,593.99 02/15/2034 295,075.00 295,075.00 207,094.93 34,151,066.69 34,151,066.69 31,708,453.35 Proceeds Summary Delivery date 06/05/2014 Par Value 30,110,000.00 Premium (Discount) 1,598,453.35 Target for yield calculation 31,708,453.35 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 5 First Southwest** PROOF OF ARBITRAGE YIELD City of Southlake, Texas GO Refunding Bonds, Series 2014 and Tax & WW &SS (Ltd PLedge) Rev C /O, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Assumed Call /Computation Dates for Premium Bonds Present Value Bond Maturity Call Call to 06/05/2014 Component Date Rate Yield Date Price @ 1.8058303415% SERIAL_B 02/15/2025 3.000% 2.670% 02/15/2024 100.000 13,613.37 SER_COS 02/15/2025 3.000% 2.600% 02/15/2024 100.000 15,769.30 Rejected Call /Computation Dates for Premium Bonds Present Value Bond Maturity Call Call to 06/05/2014 Increase Component Date Rate Yield Date Price @ 1.8058303415% to NPV SERIAL_B 02/15/2025 3.000% 2.670% 15,345.43 1,732.06 SER_COS 02/15/2025 3.000% 2.600% 17,946.76 2,177.46 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 6 First Southwest 40 SUMMARY OF REFUNDING RESULTS City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 Arbitrage yield 1.805830% Escrow yield Value of Negative Arbitrage Bond Par Amount 21,330,000.00 True Interest Cost 1.305199% Net Interest Cost 1.358446% All -In TIC 1.572569% Average Coupon 3.251758% Average Life 3.176 Par amount of refunded bonds 22,445,000.00 Average coupon of refunded bonds 4.200000% Average life of refunded bonds 3.175 PV of prior debt to 06/05/2014 @ 1.572569% 24,532,007.79 Net PV Savings 1,788,489 29 Percentage savings of refunded bonds 7.968319% May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 7 Hirstsauthwest4► SUMMARY OF BONDS REFUNDED City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL - - - -- CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Maturity Interest Par Call Call Bond Date Rate Amount Date Price General Obligation Refunding Bonds, Series 2005 (I &S Tax Portion), S05_TAX: TERM 02/15/2015 4.200% 1,432,284.00 06/09/2014 100.000 02/15/2016 4.200% 1,498,176.00 06/09/2014 100.000 02/15/2017 4.200% 1,501,644.00 06/09/2014 100.000 02/15/2018 4.200% 1,279,692.00 06/09/2014 100.000 02/15/2019 4.200% 950,232.00 06/09/2014 100.000 02/15/2020 4.200% 530,604.00 06/09/2014 100.000 02/15/2021 4.200% 279,174.00 06/09/2014 100.000 02/15/2022 4.200% 57,222.00 06/09/2014 100.000 02/15/2023 4.200% 58,956.00 06/09/2014 100.000 02/15/2024 4.200% 62,424.00 06/09/2014 100.000 02/15/2025 4.200% 64,158.00 06/09/2014 100.000 02/15/2026 4.200% 69,360.00 06/09/2014 100.000 7,783,926.00 General Obligation Refunding Bonds, Series 2005 (Utility Portion), 505_UTIL: TERM 02/15/2015 4.200% 2,697,716.00 06/09/2014 100.000 02/15/2016 4.200% 2,821,824.00 06/09/2014 100.000 02/15/2017 4.200% 2,828,356.00 06/09/2014 100.000 02/15/2018 4.200% 2,410,308.00 06/09/2014 100.000 02/15/2019 4.200% 1,789,768.00 06/09/2014 100.000 02/15/2020 4.200% 999,396.00 06/09/2014 100.000 02/15/2021 4.200% 525,826.00 06/09/2014 100.000 02/15/2022 4.200% 107,778.00 06/09/2014 100.000 02/15/2023 4.200% 111,044.00 06/09/2014 100.000 • 02/15/2024 4.200% 117,576.00 06/09/2014 100.000 02/15/2025 4.200% 120,842.00 06/09/2014 100.000 02/15/2026 4.200% 130,640.00 06/09/2014 100.000 14,661,074.00 22,445,000.00 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:S14) Page 8 R stSouthlwest4 SAVINGS City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Prior Prior Prior Refunding Date Debt Service Receipts Net Cash Flow Debt Service Savings 09/30/2014 471,345.00 312,085.28 159,259.72 159,259.72 09/30/2015 4,985,960.00 4,985,960.00 4,616,675.00 369,285.00 09/30/2016 4,998,510.00 4,998,510.00 4,626,675.00 371,835.00 09/30/2017 4,826,860.00 4,826,860.00 4,471,350.00 355,510.00 09/30/2018 4,018,440.00 4,018,440.00 3,720,850.00 297,590.00 09/30/2019 2,933,410.00 2,933,410.00 2,713,975.00 219,435.00 09/30/2020 1,633,740.00 1,633,740.00 1,510,350.00 123,390.00 09/30/2021 859,705.00 859,705.00 798,150.00 61,555.00 09/30/2022 199,335.00 199,335.00 183,100.00 16,235.00 09/30/2023 197,300.00 197,300.00 178,300.00 19,000.00 09/30/2024 199,950.00 199,950.00 183,350.00 16,600.00 09/30/2025 197,285.00 197,285.00 183,175.00 14,110.00 09/30/2026 204,200.00 204,200.00 187,775.00 16,425.00 25,726,040.00 312,085.28 25,413,954.72 23,532,984.72 1,880,970.00 Savings Summary Savings PV date 06/05/2014 Savings PV rate 1.572569% PV of savings from cash flow 1,788,489.29 Net PV Savings 1,788,489.29 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 9 FirstSouthwest4 PRIOR BOND DEBT SERVICE City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Period Debt Ending Principal Coupon Interest Service 09/30/2014 471,345 471,345 09/30/2015 4,130,000 4.200% 855,960 4,985,960 09/30/2016 4,320,000 4.200% 678,510 4,998,510 09/30/2017 4,330,000 4.200% 496,860 4,826,860 09/30/2018 3,690,000 4.200% 328,440 4,018,440 09/30/2019 2,740,000 4.200% 193,410 2,933,410 09/30/2020 1,530,000 4.200% 103,740 1,633,740 09/30/2021 805,000 4.200% 54,705 859,705 09/30/2022 165,000 4.200% 34,335 199,335 09/30/2023 170,000 4.200% 27,300 197,300 09/30/2024 180,000 4.200% 19,950 199,950 09/30/2025 185,000 4.200% 12,285 197,285 09/30/2026 200,000 4.200% 4,200 204,200 22,445,000 3,281,040 25,726,040 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 10 FirstSouthwest BOND SUMMARY STATISTICS City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 First Coupon 08/15/2014 Last Maturity 02/15/2026 Arbitrage Yield 1.805830% True Interest Cost (TIC) 1.305199% Net Interest Cost (NIC) 1.358446% All -In TIC 1.572569% Average Coupon 3.251758% Average Life (years) 3.176 Duration of Issue (years) 3.037 Par Amount 21,330,000.00 Bond Proceeds 22,676,065.60 Total Interest 2,202,984.72 Net Interest 920,313.37 Bond Years from Dated Date 67,747,500.00 Bond Years from Delivery Date 67,747,500.00 Total Debt Service 23,532,984.72 Maximum Annual Debt Service 4,626,675.00 Average Annual Debt Service 2,012,321.73 Underwriter's Fees (per $1000) Average Takedown Other Fee 2.972070 Total Underwriter's Discount 2.972070 Bid Price 106.013462 Par Average Average Bond Component Value Price Coupon Life Serial Bonds 21,330,000.00 106.311 3.252% 3.176 21,330,000.00 3.176 All -In Arbitrage TIC TIC Yield Par Value 21,330,000.00 21,330,000.00 21,330,000.00 + Accrued Interest + Premium (Discount) 1,346,065.60 1,346,065.60 1,346,065.60 - Underwriter's Discount - 63,394.25 - 63,394.25 - Cost of Issuance Expense - 181,238.13 - Other Amounts Target Value 22,612,671.35 22,431,433.22 22,676,065.60 Target Date 06/05/2014 06/05/2014 06/05/2014 Yield 1.305199% 1.572569% 1.805830% May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 11 FirstSouthwest 44. BOND PRICING City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Maturity Yield to CaII Call Premium Bond Component Date Amount Rate Yield Price Maturity Date Price (- Discount) Serial Bonds: 02/15/2015 3,895,000 5.000% 0.170% 103.350 130,482.50 02/15/2016 4,105,000 5.000% 0.360% 107.830 321,421.50 02/15/2017 4,135,000 4.000% 0.630% 108.988 371,653.80 02/15/2018 3,520,000 3.000% 0.990% 107.273 256,009.60 02/15/2019 2,605,000 3.000% 1.310% 107.669 199,777.45 02/15/2020 1,455,000 2.000% 1.630% 102.003 29,143.65 02/15/2021 765,000 2.000% 1.920% 100.499 3,817.35 02/15/2022 160,000 3.000% 2.160% 105.923 9,476.80 02/15/2023 160,000 3.000% 2.330% 105.243 8,388.80 02/15/2024 170,000 3.000% 2.470% 104.542 7,721.40 02/15/2025 175,000 3.000% 2.670% 102.799 C 2.697% 02/15/2024 100.000 4,898.25 02/15/2026 185,000 3.000% 2.790% 101.770 C 2.821% 02/15/2024 100.000 3,274.50 21,330,000 1,346,065.60 Dated Date 06/05/2014 Delivery Date 06/05/2014 First Coupon 08/15/2014 Par Amount 21,330,000.00 Premium 1,346,065.60 Production 22,676,065.60 106.310669% Underwriter's Discount - 63,394.25 - 0.297207% Purchase Price 22,612,671.35 106.013462% Accrued Interest Net Proceeds 22,612,671.35 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 12 Rrstsouthwest BOND DEBT SERVICE City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Period Annual Ending Principal Coupon Interest Debt Service Debt Service 08/15/2014 159,259.72 159,259.72 09/30/2014 159,259.72 02/15/2015 3,895,000 5.000% 409,525.00 4,304,525.00 08/15/2015 312,150.00 312,150.00 09/30/2015 4,616,675.00 02/15/2016 4,105,000 5.000% 312,150.00 4,417,150.00 08/15/2016 209,525.00 209,525.00 09/30/2016 4,626,675.00 02/15/2017 4,135,000 4.000% 209,525.00 4,344,525.00 08/15/2017 126,825.00 126,825.00 09/30/2017 4,471,350.00 02/15/2018 3,520,000 3.000% 126,825.00 3,646,825.00 08/15/2018 74,025.00 74,025.00 09/30/2018 3,720,850.00 02/15/2019 2,605,000 3.000% 74,025.00 2,679,025.00 08/15/2019 34,950.00 34,950.00 09/30/2019 2,713,975.00 02/15/2020 1,455,000 2.000% 34,950.00 1,489,950.00 08/15/2020 20,400.00 20,400.00 09/30/2020 1,510,350.00 02/15/2021 765,000 2.000% 20,400.00 785,400.00 08/15/2021 12,750.00 12,750.00 09/30/2021 798,150.00 02/15/2022 160,000 3.000% 12,750.00 172,750.00 08/15/2022 10,350.00 10,350.00 09/30/2022 183,100.00 02/15/2023 160,000 3.000% 10,350.00 170,350.00 08/15/2023 7,950.00 7,950.00 09/30/2023 178,300.00 02/15/2024 170,000 3.000% 7,950.00 177,950.00 08/15/2024 5,400.00 5,400.00 09/30/2024 183,350.00 02/15/2025 175,000 3.000% 5,400.00 180,400.00 08/15/2025 2,775.00 2,775.00 09/30/2025 183,175.00 02/15/2026 185,000 3.000% 2,775.00 187,775.00 09/30/2026 187,775.00 21,330,000 2,202,984.72 23,532,984.72 23,532,984.72 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 13 First.Suuthvvest4* DETAILED BOND DEBT SERVICE City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 (I &S Tax Portion) Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Serial Bonds (SERIAL B) Period Ending Principal Coupon Interest Debt Service 09/30/2014 55,251.39 55,251.39 09/30/2015 1,350,000 5.000% 250,400.00 1,600,400.00 09/30/2016 1,425,000 5.000% 181,025.00 1,606,025.00 09/30/2017 1,435,000 4.000% 116,700.00 1,551,700.00 09/30/2018 1,220,000 3.000% 69,700.00 1,289,700.00 09/30/2019 905,000 3.000% 37,825.00 942,825.00 09/30/2020 505,000 2.000% 19,200.00 524,200.00 09/30/2021 265,000 2.000% 11,500.00 276,500.00 09/30/2022 55,000 3.000% 8,025.00 63,025.00 09/30/2023 55,000 3.000% 6,375.00 61,375.00 09/30/2024 60,000 3.000% 4,650.00 64,650.00 09/30/2025 60,000 3.000% 2,850.00 62,850.00 09/30/2026 65,000 3.000% 975.00 65,975.00 7,400,000 764,476.39 8,164,476.39 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 14 HrSISOUthilifeSt4P DETAILED BOND DEBT SERVICE City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 (Utility Portion) Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Serial Bonds (SERIAL B) Period Ending Principal Coupon Interest Debt Service 09/30/2014 104,008.33 104,008.33 09/30/2015 2,545,000 5.000% 471,275.00 3,016,275.00 09/30/2016 2,680,000 5.000% 340,650.00 3,020,650.00 09/30/2017 2,700,000 4.000% 219,650.00 2,919,650.00 09/30/2018 2,300,000 3.000% 131,150.00 2,431,150.00 09/30/2019 1,700,000 3.000% 71,150.00 1,771,150.00 09/30/2020 950,000 2.000% 36,150.00 986,150.00 09/30/2021 500,000 2.000% 21,650.00 521,650.00 09/30/2022 105,000 3.000% 15,075.00 120,075.00 09/30/2023 105,000 3.000% 11,925.00 116,925.00 09/30/2024 110,000 3.000% 8,700.00 118,700.00 09/30/2025 115,000 3.000% 5,325.00 120,325.00 09/30/2026 120,000 3.000% 1,800.00 121,800.00 13,930,000 1,438,508.33 15,368,508.33 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 15 llrstSouthwest4* ESCROW REQUIREMENTS City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Period Principal Ending Interest Redeemed Total 06/09/2014 298,518.50 22,445,000.00 22,743,518.50 298,518.50 22,445,000.00 22,743,518.50 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 16 FirstSouthwest't, ESCROW COST City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Purchase Cost of Cash Total Date Securities Deposit Escrow Cost 06/05/2014 22,743,518.50 22,743,518.50 0 22,743,518.50 22,743,518.50 May 6, 2014 12 :11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 17 FrstSouthwest4 0 ESCROW SUFFICIENCY City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance 06/05/2014 22,743,518.50 22,743,518.50 22,743,518.50 06/09/2014 22,743,518.50 - 22,743,518.50 22,743,518.50 22,743,518.50 0.00 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 18 Hrst5outhwest4 ESCROW STATISTICS City of Southlake, Texas General Obligation Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Modified Yield to Yield to Perfect Value of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Escrow Cost (years) Date Date Cost Arbitrage Dead Time Series 2005 (TAX Portion) (505TAX): CASH 108,211.06 0.000000% 0.000000% 108,189.45 21.61 BP 7,779,241.16 0.000000% 0.000000% 7,777,687.43 1,553.73 Series 2005 (UTILITY Portion) (S05W5): CASH 203,874.22 0.000000% 0.000000% 203,833.50 40.72 BP 14,652,192.06 0.000000% 0.000000% 14,649,265.62 2,926.44 22,743,518.50 22,738,976.00 0.00 4,542.50 Delivery date 06/05/2014 Arbitrage yield 1.805830% May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 19 Filr^stSouthwest4 BOND SUMMARY STATISTICS City of Southlake, Texas Tax and Waterworks and Sewer System (Ltd Pledge) Revenue Certificates of Obligation, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 First Coupon 02/15/2015 Last Maturity 02/15/2034 Arbitrage Yield 1.805830% True Interest Cost (TIC) 2.599111% Net Interest Cost (NIC) 2.680478% All -In TIC 2.769425% Average Coupon 3.018955% Average Life (years) 6.979 Duration of Issue (years) 6.107 Par Amount 8,780,000.00 Bond Proceeds 9,032,387.75 Total Interest 1,849,931.97 Net Interest 1,642,522.49 Bond Years from Dated Date 61,277,222.22 Bond Years from Delivery Date 61,277,222.22 Total Debt Service 10,629,931.97 Maximum Annual Debt Service 1,239,475.00 Average Annual Debt Service 539,742.67 Underwriter's Fees (per $1000) Average Takedown Other Fee 5.122810 Total Underwriter's Discount 5.122810 Bid Price 102.362295 Par Average Average Bond Component Value Price Coupon Life Serial Certificates 8,780,000.00 102.875 3.019% 6.979 8,780,000.00 6.979 All -In Arbitrage TIC TIC Yield Par Value 8,780,000.00 8,780,000.00 8,780,000.00 + Accrued lnterest + Premium (Discount) 252,387.75 252,387.75 252,387.75 - Underwriter's Discount - 44,978.27 - 44,978.27 - Cost of Issuance Expense - 91,409.48 - Other Amounts Target Value 8,987,409.48 8,896,000.00 9,032,387.75 Target Date 06/05/2014 06/05/2014 06/05/2014 Yield 2.599111% 2.769425% 1.805830% May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 20 First Southwest BOND PRICING City of Southlake, Texas Tax and Waterworks and Sewer System (Ltd Pledge) Revenue Certificates of Obligation, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, Ni FINAL NUMBERS Maturity Yield to Call Call Premium Bond Component Date Amount Rate Yield Price Maturity Date Price (- Discount) Serial Certificates: 02/15/2015 950,000 3.000% 0.100% 102.012 19,114.00 02/15/2016 1,030,000 3.000% 0.350% 104.472 46,061.60 02/15/2017 1,060,000 3.000% 0.650% 106.266 66,419.60 02/15/2018 1,095,000 3.000% 0.950% 107.424 81,292.80 02/15/2019 1,120,000 2.000% 1.250% 103.408 38,169.60 02/15/2020 195,000 2.000% 1.600% 102.167 4,225.65 02/15/2021 195,000 2.000% 1.900% 100.624 1,216.80 02/15/2022 200,000 2.000% 2.100% 99.291 - 1,418.00 02/15/2023 205,000 3.000% 2.300% 105.485 11,244.25 02/15/2024 210,000 3.000% 2.450% 104.718 9,907.80 02/15/2025 220,000 3.000% 2.600% 103.405 C 2.632% 02/15/2024 100.000 7,491.00 02/15/2026 225,000 3.000% 2.800% 101.685 C 2.830% 02/15/2024 100.000 3,791.25 02/15/2027 230,000 3.000% 3.000% 100.000 02/15/2028 240,000 3.000% 3.200% 97.793 - 5,296.80 02/15/2029 245,000 3.125% 3.300% 97.972 - 4,968.60 02/15/2030 255,000 3.250% 3.400% 98.184 - 4,630.80 02/15/2031 265,000 3.375% 3.500% 98.426 - 4,171.10 02/15/2032 270,000 3.375% 3.550% 97.711 - 6,180.30 02/15/2033 280,000 3.500% 3.600% 98.644 - 3,796.80 02/15/2034 290,000 3.500% 3.650% 97.902 - 6,084.20 8,780,000 252,387.75 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 21 FirstSouthw►est BOND PRICING City of Southlake, Texas Tax and Waterworks and Sewer System (Ltd Pledge) Revenue Certificates of Obligation, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 First Coupon 02/15/2015 Par Amount 8,780,000.00 Premium 252,387.75 Production 9,032,387.75 102.874576% Underwriter's Discount - 44,978.27 - 0.512281% Purchase Price 8,987,409.48 102.362295% Accrued Interest Net Proceeds 8,987,409.48 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:S14) Page 22 HrstSouethwest BOND DEBT SERVICE City of Southlake, Texas Tax and Waterworks and Sewer System (Ltd Pledge) Revenue Certificates of Obligation, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Period Annual Ending Principal Coupon Interest Debt Service Debt Service 02/15/2015 950,000 3.000% 175,069.45 1,125,069.45 08/15/2015 111,800.00 111,800.00 09/30/2015 1,236,869.45 02/15/2016 1,030,000 3.000% 111,800.00 1,141,800.00 08/15/2016 96,350.00 96,350.00 09/30/2016 1,238,150.00 02/15/2017 1,060,000 3.000% 96,350.00 1,156,350.00 08/15/2017 80,450.00 80,450.00 09/30/2017 1,236,800.00 02/15/2018 1,095,000 3.000% 80,450.00 1,175,450.00 08/15/2018 64,025.00 64,025.00 09/30/2018 1,239,475.00 02/15/2019 1,120,000 2.000% 64,025.00 1,184,025.00 08/15/2019 52,825.00 52,825.00 09/30/2019 1,236,850.00 02/15/2020 195,000 2.000% 52,825.00 247,825.00 08/15/2020 50,875.00 50,875.00 09/30/2020 298,700.00 02/15/2021 195,000 2.000% 50,875.00 245,875.00 08/15/2021 48,925.00 48,925.00 09/30/2021 294,800.00 02/15/2022 200,000 2.000% 48,925.00 248,925.00 08/15/2022 46,925.00 46,925.00 09/30/2022 295,850.00 02/15/2023 205,000 3.000% 46,925.00 251,925.00 08/15/2023 43,850.00 43,850.00 09/30/2023 295,775.00 02/15/2024 210,000 3.000% 43,850.00 253,850.00 08/15/2024 40,700.00 40,700.00 09/30/2024 294,550.00 02/15/2025 220,000 3.000% 40,700.00 260,700.00 08/15/2025 37,400.00 37,400.00 09/30/2025 298,100.00 02/15/2026 225,000 3.000% 37,400.00 262,400.00 08/15/2026 34,025.00 34,025.00 09/30/2026 296,425.00 02/15/2027 230,000 3.000% 34,025.00 264,025.00 08/15/2027 30,575.00 30,575.00 09/30/2027 294,600.00 02/15/2028 240,000 3.000% 30,575.00 270,575.00 08/15/2028 26,975.00 26,975.00 09/30/2028 297,550.00 02/15/2029 245,000 3.125% 26,975.00 271,975.00 08/15/2029 23,146.88 23,146.88 09/30/2029 295,121.88 02/15/2030 255,000 3.250% 23,146.88 278,146.88 08/15/2030 19,003.13 19,003.13 09/30/2030 297,150.01 02/15/2031 265,000 3.375% 19,003.13 284,003.13 08/15/2031 14,531.25 14,531.25 09/30/2031 298,534.38 02/15/2032 270,000 3.375% 14,531.25 284,531.25 08/15/2032 9,975.00 9,975.00 09/30/2032 294,506.25 02/15/2033 280,000 3.500% 9,975.00 289,975.00 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 23 FirstSouthwest BOND DEBT SERVICE City of Southlake, Texas Tax and Waterworks and Sewer System (Ltd Pledge) Revenue Certificates of Obligation, Series 2014 Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Period Annual Ending Principal Coupon Interest Debt Service Debt Service 08/15/2033 5,075.00 5,075.00 09/30/2033 295,050.00 02/15/2034 290,000 3.500% 5,075.00 295,075.00 09/30/2034 295,075.00 8,780,000 1,849,931.97 10,629,931.97 10,629,931.97 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 24 FiirstSou thwest ' DETAILED BOND DEBT SERVICE City of Southlake, Texas Tax & Waterworks & Sewer System (Ltd Pledge) Rev Certificates of Obligation, Series 2014 (I &S Tax) Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Serial Certificates (SER COS) Period Ending Principal Coupon Interest Debt Service 09/30/2015 805,000 3.000% 133,766.67 938,766.67 09/30/2016 855,000 3.000% 85,125.00 940,125.00 09/30/2017 880,000 3.000% 59,100.00 939,100.00 09/30/2018 910,000 3.000% 32,250.00 942,250.00 09/30/2019 930,000 2.000% 9,300.00 939,300.00 4,380,000 319,541.67 4,699,541.67 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 25 HrStSOUthWeStAIP DETAILED BOND DEBT SERVICE City of Southlake, Texas Tax & Waterworks & Sewer System (Ltd Pledge) Rev Certificates of Obligation, Series 2014 (W &S) Callable on 2/15/2024 @ par GO REFUNDING BONDS HIGH BID: BMO Capital Markets, Chicago, IL CERTIFICATES HIGH BID: Robert W. Baird & Co., Inc., Red Bank, NJ FINAL NUMBERS Serial Certificates (SER COS) Period Ending Principal Coupon Interest Debt Service 09/30/2015 145,000 3.000% 153,102.78 298,102.78 09/30/2016 175,000 3.000% 123,025.00 298,025.00 09/30/2017 180,000 3.000% 117,700.00 297,700.00 09/30/2018 185,000 3.000% 112,225.00 297,225.00 09/30/2019 190,000 2.000% 107,550.00 297,550.00 09/30/2020 195,000 2.000% 103,700.00 298,700.00 09/30/2021 195,000 2.000% 99,800.00 294,800.00 09/30/2022 200,000 2.000% 95,850.00 295,850.00 09/30/2023 205,000 3.000% 90,775.00 295,775.00 09/30/2024 210,000 3.000% 84,550.00 294,550.00 09/30/2025 220,000 3.000% 78,100.00 298,100.00 09/30/2026 225,000 3.000% 71,425.00 296,425.00 09/30/2027 230,000 3.000% 64,600.00 294,600.00 09/30/2028 240,000 3.000% 57,550.00 297,550.00 09/30/2029 245,000 3.125% 50,121.88 295,121.88 09/30/2030 255,000 3.250% 42,150.01 297,150.01 09/30/2031 265,000 3.375% 33,534.38 298,534.38 09/30/2032 270,000 3.375% 24,506.25 294,506.25 09/30/2033 280,000 3.500% 15,050.00 295,050.00 09/30/2034 290,000 3.500% 5,075.00 295,075.00 4,400,000 1,530,390.30 5,930,390.30 May 6, 2014 12:11 pm Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:514) Page 26 PARITY Result Screen Page 1 of 1 11:01:06 a.m. CDST r Upcoming Calendar ll Overview 'IT Compare II Summary E Bid Results Southlake $21,540,000 General Obligation Refunding Bonds, Series 2014 The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC BMO Capital Markets 1.309984 El Robert W. Baird & Co.. Inc. 1.319204 Li William Blair & Company, LLC 1.332809 UBS Financial Services Inc. 1.345645 Li Hutchinson. Shockey. Erley & Co. 1.361727 El Fidelity Capital Markets 1.397919 El Bank of America Merrill Lynch 1.407001 ED Piper Jaffray 1.415142 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. 1981-2002 i -Deal LLC. AU rights reserved. Trademarks httnc / /www newissuehome.i- deal.com/Parity/ asp/ main. asp? frame = content &page= parityRes... 5/6/2014 05/06/2014 11:21:14 AM CDST Page 1 of Bond Report $21,540,000.00 Southlake, TX General Obligation Refunding Bonds, Series 2014 S&P: AAA 1 Moody: 1 Fitch: AAA Description: SOUTHLAKE TX $21M Sale Date: 05/06/2014 11:00:00 AM CDST BMO Capital Markets Delivery Date: 06/05/2014 Dated Date: 05/01/2014 First Int Date: 08/15/2014 Int Accrue Date: 06/05/2014 Submitted via Parity: 05/06/2014 10:58 :50 AM CDST No. Maturity Coupon Price Computed Conc. Takedown Price of Date or Price Bonds Basis Yield Date 3,955 02/15/2015 5.0000 0.1700 103.3500 0.1250 4,135 02/15/2016 5.0000 0.3600 107.8300 0.1500 4,140 02/15/2017 4.0000 0.6300 108.9880 0.2000 3,535 02/15/2018 3.0000 0.9900 107.2730 0.2500 2,635 02/15/2019 3.0000 1.3100 107.6690 0.2500 1,480 02/15/2020 2.0000 1.6300 102.0030 0.2500 780 02/15/2021 2.0000 1.9200 100.4990 0.3750 170 02/15/2022 3.0000 2.1600 105.9230 0.6250 170 02/15/2023 3.0000 2.3300 105.2430 0.6250 175 02/15/2024 3.0000 2.4700 104.5420 0.6250 175 02/15/2025 3.0000 2.6700 102.7990 0.7500 02/15/2024 190 02/15/2026 3.0000 2.7900 101.7700 0.7500 02/15/2024 Summary Total Per $100 Par Amount: 21,540,000.00 100.000000 Gross Prod: 22,896,273.45 106.296534 Spread: 64,018.30 0.297207 Bid: 22,832,255.15 105.999328 Accrued Int: 0.00 0.000000 Bond Yrs: 68,563.33 Avg Life: 3.1831 3 Years 2 Months 6 Days Gross int Cost: 2,227,016.67 - Net Premium: 1,292,255.15 ( +Prod: 1,356,273.45 - Spread:64,018.30) Net Int Cost: 934,761.52 NIC: 1.363355 TIC -- Del Date *: 1.309984 Avg Takedown: 2.202066 CaII Schedule Bonds due 02/15/2025 to 02/15/2026 callable 02/15/2024 at par. PARITY Result Screen Page 1 of 1 11:01:29 a.m. CDST r Upcoming Calendar If Overview I1 Compare I I Summary , Bid Results Southlake $8,875,000 Tax And Waterworks and Sewer System (Limited Pledged) Revenue Certificates of Obligation, Series 2014 The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC L Robert W. Baird & Co., Inc. 2.610451 Li Bank of America Merrill Lynch 2.652387 l Fidelity Capital Markets 2.668198 .I Hutchinson, Shockey, Erley & Co. 2.713581 UBS Financial Services Inc. 2.734434 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. 1981 -2002 i -Deal LLC, AU rights reserved. Trademarks httns: / /www.newissuehome. i -deal. com /Parity /asp /main. asp? frame = content &page= parityRes... 5/6/2014 , 05/06/2014 12:00:42 PM EST Page 1 of 2 Bond Report $8,875,000.00 Southlake, TX Tax And Waterworks and Sewer System (Limited Pledged) Revenue Certificates of Obligation, Series 2014 S &P: AAA / Moody: / Fitch: AAA Description: SOUTH Sale Date: 05/06/2014 11:00:00 AM CDST Robert W. Baird Delivery Date: 06/05/2014 Dated Date: 05/01/2014 First Int Date: 02/15/2015 Int Accrue Date: 06/05/2014 Submitted via Parity: 05/06/2014 11:55:52 AM EST No. Maturity Coupon Price Computed Conc. Takedown Price of Date or Price To Bonds Basis Yield Date 935 02/15/2015 3.0000 0.1000 102.0120 0.1540 1,005 02/15/2016 3.0000 0.3500 104.4720 0.2500 1,045 02/15/2017 3.0000 0.6500 106.2660 0.2500 1,085 02/15/2018 3.0000 0.9500 107.4240 0.2500 1,130 02/15/2019 2.0000 1.2500 103.4080 0.3750 210 02/15/2020 2.0000 1.6000 102.1670 0.3750 210 02/15/2021 2.0000 1.9000 100.6240 0.5000 215 02/15/2022 2.0000 2.1000 99.2910 0.5000 220 02/15/2023 3.0000 2.3000 105.4850 0.6250 225 02/15/2024 3.0000 2.4500 104.7180 0.7500 225 02/15/2025 3.0000 2.6000 103.4050 0.7500 02/15/2024 235 02/15/2026 3.0000 2.8000 101.6850 0.7500 02/15/2024 240 02/15/2027 3.0000 3.0000 100.0000 1.0000 02/15/2027 245 02/15/2028 3.0000 3.2000 97.7930 0.5000 02/15/2028 255 02/15/2029 3.1250 3.3000 97.9720 0.5000 02/15/2029 265 02/15/2030 3.2500 3.4000 98.1840 0.5000 02/15/2030 270 02/15/2031 3.3750 3.5000 98.4260 0.5000 02/15/2031 280 02/15/2032 3.3750 3.5500 97.7110 0.5000 02/15/2032 285 02/15/2033 3.5000 3.6000 98.6440 0.5000 02/15/2033 295 02/15/2034 3.5000 3.6500 97.9020 0.5000 02/15/2034 05/06/2014 12:00:42 PM EST Page 2 of 2 Bond Report $8,875,000.00 Southlake, TX Tax And Waterworks and Sewer System (Limited Pledged) Revenue Certificates of Obligation, Series 2014 S&P: AAA / Moody: / Fitch: AAA Description: SOUTH Sale Date: 05/06/2014 11:00:00 AM CDST Robert W. Baird Delivery Date: 06/05/2014 Dated Date: 05/01/2014 First Int Date: 02/15/2015 Int Accrue Date: 06/05/2014 Submitted via Parity: 05/06/2014 11.55.52 AM EST Summary Total Per $100 Par Amount: 8,875,000.00 100.000000 Gross Prod: 9,125,832.90 102.826286 Spread: 45,464.90 0.512281 Bid: 9, 080, 368.00 102.314006 Accrued Int: 0.00 0.000000 Bond Yrs: 62,893.19 Avg Life: 7.0866 7 Years 1 Months 1 Days Gross Int Cost: 1,897,441.49 - Net Premium: 205,368.00 ( +Prod:250,832.90 - Spread:45,464.90) Net Int Cost: 1,692,073.49 NIC: 2.690392 TIC -- Del Date *: 2.610451 Avg Takedown: 3.922806 Call Schedule Bonds due 02/15/2025 to 02/15/2034 callable 02/15/2024 at par. PARITY Result Screen Page 1 of 1 11:00:30 a.m. CDST I Upcoming Calendar li Overview Il Compare [r Summary Bid Results Southlake Pk Dev Corp $15,660,000 Sales Tax Revenue Refunding Bonds, Series 2014 The following bids were submitted using PARITY® and displayed ranked by lowest TIC. Click on the name of each bidder to see the respective bids. Bid Award* Bidder Name TIC 0 Bank of America Merrill Lynch 2.465833 Gl Fidelity Capital Markets 2.552973 C Hutchinson, Shockey, Erley & Co. 2.565690 Robert W. Baird & Co., Inc. 2.599349 UBS Financial Services Inc. 2.617479 *Awarding the Bonds to a specific bidder will provide you with the Reoffering Prices and Yields. 1981 -2002 1 -Deal LLC. Al' rights reserved. Trademarks https: / /www.newissuehome. i -deal. com /Parity /asp /main. asp? frame = content &page= parityRes... 5/6/2014 05/06/2014 12:10:07 PM EDST Page 1 of 1 Bond Report $15,660,000.00 Southlake Pk Dev Corp, TX Sales Tax Revenue Refunding Bonds, Series 2014 S&P: AA- / Moody: / Fitch: AA- Description: SOUTHLAKE Sale Date: 05106/2014 11 :00:00 AM CDST Bank of America Merr Delivery Date: 06/05/2014 Dated Date: 05/15/2014 First Int Date: 08/15/2014 Int Accrue Date: 06/05/2014 Submitted via Parity: 05/06/2014 11:57:19 AM EAST No. Maturity Coupon Price Computed Conc. Takedown Price of Date or Price To Bonds Basis Yield Date 1.105 02/15/2015 3.0000 0.2500 101.9060 0.2500 1,115 02/15/2016 3.0000 0 5100 104.1950 0.2500 1,150 02/15/2017 3.0000 0.8500 105.7140 0.3750 1,175 02/15/2018 3.0000 1.2200 106.4090 0.3750 1.210 02/15/2019 3.0000 1.5100 106 7260 0.3750 1,250 02/15/2020 3.0000 1.7800 106.5770 0.5000 1.300 02/15/2021 3.0000 2.0900 105.6550 0.5000 1,355 02/15/2022 3.0000 2.2900 104.9800 0.5000 1,405 02/15/2023 3.0000 2.5100 103.8030 0.5000 1,460 02/15/2024 3.0000 2.6900 102.6270 0.5000 1,315 02/15/2025 3.0000 2.8600 101.1750 0.7500 02/15/2024 1,015 02/15/2026 3.0000 2.9800 100.1640 0.7500 02115/2024 805 02/15/2027 3.0000 3.1800 98.1290 0.7500 02/15/2027 Summary Total Per $100 Par Amount: 15, 660, 000.00 100.000000 Gross Prod: 16,267,284.05 103,877931 Spread: 105,922.75 0.676391 Bid: 16,161,361.30 103.201541 Accrued Int: 0.00 0.000000 Bond Yrs: 104,545.00 Avg Life: 6.6759 6 Years 8 Months 3 Days Gross Int Cost: 3,136,350.00 - Net Premium: 501,361.30 ( +Prod:607,284.05 - Spread: 105,922.75) Net Int Cost: 2,634,988.70 NIC: 2.520435 TIC -- Del Date *: 2.465833 Avg Takedown: 4.863905 Call Schedule Bonds due 02/15/2025 to 02/15/2027 callable 02/15/2024 at par. FrstSouthwest TABLE OF CONTENTS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Report Page Sources and Uses of Funds 1 Summary of Refunding Results 2 Summary of Bonds Refunded 3 Savings 4 Prior Bond Debt Service 5 Bond Summary Statistics 9 Bond Pricing 10 Bond Debt Service 11 Escrow Requirements 12 Escrow Cost 13 Escrow Sufficiency 14 Escrow Statistics 15 Form 8038 Statistics 16 Proof of Arbitrage Yield 19 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Flrstsouthwest'* SOURCES AND USES OF FUNDS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 Sources: Bond Proceeds: Par Amount 16,000,000.00 Net Premium 625,500.55 16,625,500.55 Other Sources of Funds: Transfers from prior issue D/S Fund 1,319,196.05 17,944,696.60 Uses: Refunding Escrow Deposits: Cash Deposit 17,659,669.69 Delivery Date Expenses: Cost of Issuance 176,804.51 Underwriter's Discount 108,222.40 285,026.91 17,944,696.60 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- 514REF,S14REF) Page 1 FirstSouthwest4 SUMMARY OF REFUNDING RESULTS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 Arbitrage yield 2.347631% • Escrow yield Value of Negative Arbitrage Bond Par Amount 16,000,000.00 True Interest Cost 2.458036% Net Interest Cost 2.513063% All -In TIC 2.640656% Average Coupon 3.000000% Average Life 6.639 Par amount of refunded bonds 17,295,000.00 Average coupon of refunded bonds 4.349880% Average life of refunded bonds 6.749 PV of prior debt to 06/05/2014 @ 2.640656% 19,296,860.49 Net PV Savings 1,637,190.80 Percentage savings of refunded bonds 9.466267% May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 2 HrstSouthwest' SUMMARY OF BONDS REFUNDED Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Maturity Interest Par Call Call Bond Date Rate Amount Date Price Sales Tax Third Lien Revenue Refunding Bonds, Series 2005, S05_3RD: TERM 08/15/2014 4.300% 690,000.00 08/15/2015 4.300% 725,000.00 08/15/2014 100.000 08/15/2016 4.300% 750,000.00 08/15/2014 100.000 08/15/2017 4.300% 785,000.00 08/15/2014 100.000 08/15/2018 4.300% 820,000.00 08/15/2014 100.000 08/15/2019 4.300% 855,000.00 08/15/2014 100.000 08/15/2020 4.300% 890,000.00 08/15/2014 100.000 08/15/2021 4.300% 930,000.00 08/15/2014 100.000 • 08/15/2022 4.300% 1,175,000.00 08/15/2014 100.000 08/15/2023 4.300% 1,220,000.00 08/15/2014 100.000 08/15/2024 4.300% 1,270,000.00 08/15/2014 100.000 08/15/2025 4.300% 945,000.00 08/15/2014 100.000 08/15/2026 4.300% 985,000.00 08/15/2014 100.000 08/15/2027 4.300% 785,000.00 08/15/2014 100.000 12,825,000.00 Sales Tax Subordinate Lien Revenue Bonds, Series 2006, S06_JR: SERIAL 08/15/2014 4.000% 210,000.00 08/15/2015 4.000% 220,000.00 08/15/2014 100.000 08/15/2016 4.000% 225,000.00 08/15/2014 100.000 08/15/2017 4.000% 235,000.00 08/15/2014 100.000 08/15/2018 4.000% 245,000.00 08/15/2014 100.000 08/15/2019 4.200% 255,000.00 08/15/2014 100.000 08/15/2020 4.250% 265,000.00 08/15/2014 100.000 08/15/2021 4.250% 275,000.00 08/15/2014 100.000 08/15/2022 4.300% 290,000.00 08/15/2014 100.000 08/15/2023 4.400% 300,000.00 08/15/2014 100.000 08/15/2024 4.400% 315,000.00 08/15/2014 100.000 08/15/2025 4.500% 330,000.00 08/15/2014 100.000 3,165,000.00 Refunding & Improvement Sales Tax Revenue Bonds, Series 1997, 597_SR: SERIAL 08/15/2014 5.375% 135,000.00 06/09/2014 100.000 TERM_1 08/15/2015 5.375% 140,000.00 06/09/2014 100.000 08/15/2016 5.375% 150,000.00 06/09/2014 100.000 08/15/2017 5.375% 160,000.00 06/09/2014 100.000 TERM_2 08/15/2018 5.375% 165,000.00 06/09/2014 100.000 08/15/2019 5.375% 175,000.00 06/09/2014 100.000 08/15/2020 5.375% 185,000.00 06/09/2014 100.000 08/15/2021 5.375% 195,000.00 06/09/2014 100.000 1,305,000.00 17,295,000.00 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 3 FirstSouthwest4 SAVINGS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Prior Prior Prior Refunding Date Debt Service Receipts Net Cash Flow Debt Service Savings 09/30/2014 1,412,529.38 1,319,196.05 93,333.33 93,333.33 09/30/2015 1,794,732.50 1,794,732.50 1,583,200.00 211,532.50 09/30/2016 1,787,232.50 1,787,232.50 1,579,150.00 208,082.50 09/30/2017 1,792,920.00 1,792,920.00 1,584,050.00 208,870.00 09/30/2018 1,791,165.00 1,791,165.00 1,582,825.00 208,340.00 09/30/2019 1,792,236.26 1,792,236.26 1,580,550.00 211,686.26 09/30/2020 1,790,355.00 1,790,355.00 1,582,150.00 208,205.00 09/30/2021 1,790,878.76 1,790,878.76 1,582,550.00 208,328.76 09/30/2022 1,793,720.00 1,793,720.00 1,586,675.00 207,045.00 09/30/2023 1,785,725.00 1,785,725.00 1,574,675.00 211,050.00 09/30/2024 1,785,065.00 1,785,065.00 1,576,550.00 208,515.00 09/30/2025 1,406,595.00 1,406,595.00 1,404,700.00 1,895.00 09/30/2026 1,061,110.00 1,061,110.00 1,059,450.00 1,660.00 09/30/2027 818,755.00 818,755.00 817,075.00 1,680.00 22,603,019.40 1,319,196.05 21,283,823.35 19,186,933.33 2,096,890.02 Savings Summary Savings PV date 06/05/2014 Savings PV rate 2.640656% PV of savings from cash flow 1,637,190.80 Net PV Savings 1,637,190.80 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 4 FirstSouthvvest'* PRIOR BOND DEBT SERVICE Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Period Ending Principal Coupon Interest Debt Service 09/30/2014 1,035,000 ** % 377,529.38 1,412,529.38 09/30/2015 1,085,000 ** % 709,732.50 1,794,732.50 09/30/2016 1,125,000 ** % 662,232.50 1,787,232.50 09/30/2017 1,180,000 ** % 612,920.00 1,792,920.00 09/30/2018 1,230,000 ** % 561,165.00 1,791,165.00 09/30/2019 1,285,000 ** % 507,236.26 1,792,236.26 09/30/2020 1,340,000 ** % 450,355.00 1,790,355.00 09/30/2021 1,400,000 ** % 390,878.76 1,790,878.76 09/30/2022 1,465,000 4.300% 328,720.00 1,793,720.00 09/30/2023 1,520,000 ** % 265,725.00 1,785,725.00 09/30/2024 1,585,000 ** % 200,065.00 1,785,065.00 09/30/2025 1,275,000 ** % 131,595.00 1,406,595.00 09/30/2026 985,000 4.300% 76,110.00 1,061,110.00 09/30/2027 785,000 4.300% 33,755.00 818,755.00 17,295,000 5,308,019.40 22,603,019.40 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,514REF) Page 5 IF rstSouthwest ► PRIOR BOND DEBT SERVICE Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Sales Tax Third Lien Revenue Refunding Bonds, Series 2005 (S05 3RD) Period Annual Ending Principal Coupon Interest Debt Service Debt Service 08/15/2014 690,000 4.300% 275,737.50 965,737.50 09/30/2014 965,737.50 02/15/2015 260,902.50 260,902.50 08/15/2015 725,000 4.300% 260,902.50 985,902.50 09/30/2015 1,246,805.00 02/15/2016 245,315.00 245,315.00 08/15/2016 750,000 4.300% 245,315.00 995,315.00 09/30/2016 1,240,630.00 02/15/2017 229,190.00 229,190.00 08/15/2017 785,000 4.300% 229,190.00 1,014,190.00 09/30/2017 1,243,380.00 02/15/2018 212,312.50 212,312.50 08/15/2018 820,000 4.300% 212,312.50 1,032,312.50 09/30/2018 1,244,625.00 02/15/2019 194,682.50 194,682.50 08/15/2019 855,000 4.300% 194,682.50 1,049,682.50 09/30/2019 1,244,365.00 02/15/2020 176,300.00 176,300.00 08/15/2020 890,000 4.300% 176,300.00 1,066,300.00 09/30/2020 1,242,600.00 02/15/2021 157,165.00 157,165.00 08/15/2021 930,000 4.300% 157,165.00 1,087,165.00 09/30/2021 1,244,330.00 02/15/2022 137,170.00 137,170.00 08/15/2022 1,175,000 4.300% 137,170.00 1,312,170.00 09/30/2022 1,449,340.00 02/15/2023 111,907.50 111,907.50 08/15/2023 1,220,000 4.300% 111,907.50 1,331,907.50 09/30/2023 1,443,815.00 02/15/2024 85,677.50 85,677.50 08/15/2024 1,270,000 4.300% 85,677.50 1,355,677.50 09/30/2024 1,441,355.00 02/15/2025 58,372.50 58,372.50 08/15/2025 945,000 4.300% 58,372.50 1,003,372.50 09/30/2025 1,061,745.00 02/15/2026 38,055.00 38,055.00 08/15/2026 985,000 4.300% 38,055.00 1,023,055.00 09/30/2026 1,061,110.00 02/15/2027 16,877.50 16,877.50 08/15/2027 785,000 4.300% 16,877.50 801,877.50 09/30/2027 818,755.00 12,825,000 4,123,592.50 16,948,592.50 16,948,592.50 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 6 RrstSouthwest PRIOR BOND DEBT SERVICE Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Sales Tax Subordinate Lien Revenue Bonds, Series 2006 (S06 JR) Period Annual Ending Principal Coupon Interest Debt Service Debt Service 08/15/2014 210,000 4.000% 66,720.00 276,720.00 09/30/2014 276,720.00 02/15/2015 62,520.00 62,520.00 08/15/2015 220,000 4.000% 62,520.00 282,520.00 09/30/2015 345,040.00 02/15/2016 58,120.00 58,120.00 08/15/2016 225,000 4.000% 58,120.00 283,120.00 09/30/2016 341,240.00 02/15/2017 53,620.00 53,620.00 08/15/2017 235,000 4.000% 53,620.00 288,620.00 09/30/2017 342,240.00 02/15/2018 48,920.00 48,920.00 08/15/2018 245,000 4.000% 48,920.00 293,920.00 09/30/2018 342,840.00 02/15/2019 44,020.00 44,020.00 08/15/2019 255,000 4.200% 44,020.00 299,020.00 09/30/2019 343,040.00 02/15/2020 38,665.00 38,665.00 08/15/2020 265,000 4.250% 38,665.00 303,665.00 09/30/2020 342,330.00 02/15/2021 33,033.75 33,033.75 08/15/2021 275,000 4.250% 33,033.75 308,033.75 09/30/2021 341,067.50 02/15/2022 27,190.00 27,190.00 08/15/2022 290,000 4.300% 27,190.00 317,190.00 09/30/2022 344,380.00 02/15/2023 20,955.00 20,955.00 08/15/2023 300,000 4.400% 20,955.00 320,955.00 09/30/2023 341,910.00 02/15/2024 14,355.00 14,355.00 08/15/2024 315,000 4.400% 14,355.00 329,355.00 09/30/2024 343,710.00 02/15/2025 7,425.00 7,425.00 08/15/2025 330,000 4.500% 7,425.00 337,425.00 09/30/2025 344,850.00 3,165,000 884,367.50 4,049,367.50 4,049,367.50 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 7 First, Southwestfa PRIOR BOND DEBT SERVICE Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Refunding & Improvement Sales Tax Revenue Bonds, Series 1997 (597 SR) Period Annual Ending Principal Coupon Interest Debt Service Debt Service 08/15/2014 135,000 5.375% 35,071.88 170,071.88 09/30/2014 170,071.88 02/15/2015 31,443.75 31,443.75 08/15/2015 140,000 5.375% 31,443.75 171,443.75 09/30/2015 202,887.50 02/15/2016 27,681.25 27,681.25 08/15/2016 150,000 5.375% 27,681.25 177,681.25 09/30/2016 205,362.50 02/15/2017 23,650.00 23,650.00 08/15/2017 160,000 5.375% 23,650.00 183,650.00 09/30/2017 207,300.00 02/15/2018 19,350.00 19,350.00 08/15/2018 165,000 5.375% 19,350.00 184,350.00 09/30/2018 203,700.00 02/15/2019 14,915.63 14,915.63 08/15/2019 175,000 5.375% 14,915.63 189,915.63 09/30/2019 204,831.26 02/15/2020 10,212.50 10,212.50 08/15/2020 185,000 5.375% 10,212.50 195,212.50 09/30/2020 205,425.00 02/15/2021 5,240.63 5,240.63 08/15/2021 195,000 5.375% 5,240.63 200,240.63 09/30/2021 205,481.26 1,305,000 300,059.40 1,605,059.40 1,605,059.40 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPOC- S14REF,S14REF) Page 8 RrstSoouthvvest4 BOND SUMMARY STATISTICS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 First Coupon 08/15/2014 Last Maturity 02/15/2027 Arbitrage Yield 2.347631% True Interest Cost (TIC) 2.458036% Net lnterest Cost (NIC) 2.513063% All -In TIC 2.640656% Average Coupon 3.000000% Average Life (years) 6.639 Duration of Issue (years) 5.979 Par Amount 16,000,000.00 Bond Proceeds 16,625,500.55 Total Interest 3,186,933.33 Net Interest 2,669,655.18 Bond Years from Dated Date 106,231,111.11 Bond Years from Delivery Date 106,231,111.11 Total Debt Service 19,186,933.33 Maximum Annual Debt Service 1,586,675.00 Average Annual Debt Service 1,511,443.33 Underwriter's Fees (per $1000) Average Takedown Other Fee 6.763900 Total Underwriter's Discount 6.763900 Bid Price 103.232988 Par Average Average Bond Component Value Price Coupon Life Serial Bonds 16,000,000.00 103.909 3.000% 6.639 16,000,000.00 6.639 All -In Arbitrage TIC TIC Yield Par Value 16,000,000.00 16,000,000.00 16,000,000.00 + Accrued Interest + Premium (Discount) 625,500.55 625,500.55 625,500.55 - Underwriter's Discount - 108,222.40 - 108,222.40 - Cost of Issuance Expense - 176,804.51 - Other Amounts Target Value 16,517,278.15 16,340,473.64 16,625,500.55 Target Date 06/05/2014 06/05/2014 06/05/2014 Yield 2.458036% 2.640656% 2.347631% May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 9 FirstSouthwest BOND PRICING Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Maturity Yield to Call Call Premium Bond Component Date Amount Rate Yield Price Maturity Date Price (- Discount) Serial Bonds: 02/15/2015 1,120,000 3.000% 0.250% 101.906 21,347.20 02/15/2016 1,150,000 3.000% 0.510% 104.195 48,242.50 02/15/2017 1,190,000 3.000% 0.850% 105.714 67,996.60 02/15/2018 1,225,000 3.000% 1.220% 106.409 78,510.25 02/15/2019 1,260,000 3.000% 1.510% 106.726 84,747.60 02/15/2020 1,300,000 3.000% 1.780% 106.577 85,501.00 02/15/2021 1,340,000 3.000% 2.090% 105.655 75,777.00 02/15/2022 1,385,000 3.000% 2.290% 104.980 68,973.00 02/15/2023 1,415,000 3.000% 2.510% 103.803 53,812.45 02/15/2024 1,460,000 3.000% 2.690% 102.627 38,354.20 02/15/2025 1,330,000 3.000% 2.860% 101.175 C 2.871% 02/15/2024 100.000 15,627.50 02/15/2026 1,020,000 3.000% 2.980% 100.164 C 2.983% 02/15/2024 100.000 1,672.80 02/15/2027 805,000 3.000% 3.180% 98.129 - 15,061.55 16,000,000 625,500.55 Dated Date 06/05/2014 Delivery Date 06/05/2014 First Coupon 08/15/2014 Par Amount 16,000,000.00 Premium 625,500.55 Production 16,625,500.55 103.909378% Underwriter's Discount - 108,222.40 - 0.676390% Purchase Price 16,517,278.15 103.232988% Accrued Interest Net Proceeds 16,517,278.15 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 10 First Southwest 44110 BOND DEBT SERVICE Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Period Annual Ending Principal Coupon Interest Debt Service Debt Service 08/15/2014 93,333.33 93,333.33 09/30/2014 93,333.33 02/15/2015 1,120,000 3.000% 240,000.00 1,360,000.00 08/15/2015 223,200.00 223,200.00 09/30/2015 1,583,200.00 02/15/2016 1,150,000 3.000% 223,200.00 1,373,200.00 08/15/2016 205,950.00 205,950.00 09/30/2016 1,579,150.00 02/15/2017 1,190,000 3.000% 205,950.00 1,395,950.00 08/15/2017 188,100.00 188,100.00 09/30/2017 1,584,050.00 02/15/2018 1,225,000 3.000% 188,100.00 1,413,100.00 08/15/2018 169,725.00 169,725.00 09/30/2018 1,582,825.00 02/15/2019 1,260,000 3.000% 169,725.00 1,429,725.00 08/15/2019 150,825.00 150,825.00 09/30/2019 1,580,550.00 02/15/2020 1,300,000 3.000% 150,825.00 1,450,825.00 08/15/2020 131,325.00 131,325.00 09/30/2020 1,582,150.00 02/15/2021 1,340,000 3.000% 131,325.00 1,471,325.00 08/15/2021 111,225.00 111,225.00 09/30/2021 1,582,550.00 02/15/2022 1,385,000 3.000% 111,225.00 1,496,225.00 08/15/2022 90,450.00 90,450.00 09/30/2022 1,586,675.00 02/15/2023 1,415,000 3.000% 90,450.00 1,505,450.00 08/15/2023 69,225.00 69,225.00 09/30/2023 1,574,675.00 02/15/2024 1,460,000 3.000% 69,225.00 1,529,225.00 08/15/2024 47,325.00 47,325.00 09/30/2024 1,576,550.00 02/15/2025 1,330,000 3.000% 47,325.00 1,377,325.00 08/15/2025 27,375.00 27,375.00 09/30/2025 1,404,700.00 02/15/2026 1,020,000 3.000% 27,375.00 1,047,375.00 08/15/2026 12,075.00 12,075.00 09/30/2026 1,059,450.00 02/15/2027 805,000 3.000% 12,075.00 817,075.00 09/30/2027 817,075.00 16,000,000 3,186,933.33 19,186,933.33 19,186,933.33 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 11 fjrstSouthwest4* ESCROW REQUIREMENTS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Period Principal Ending Principal Interest Redeemed Total 06/09/2014 22,212.19 1,305,000.00 1,327,212.19 08/15/2014 900,000.00 342,457.50 15,090,000.00 16,332,457.50 900,000.00 364,669.69 16,395,000.00 17,659,669.69 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 12 RrstSouthwestiat ESCROW COST Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Purchase Cost of Cash Total Date Securities Deposit Escrow Cost 06/05/2014 17,659,669.69 17,659,669.69 0 17,659,669.69 17,659,669.69 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 13 FirstSouthvvest4 ESCROW SUFFICIENCY Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance 06/05/2014 17,659,669.69 17,659,669.69 17,659,669.69 06/09/2014 1,327,212.19 - 1,327,212.19 16,332,457.50 08/15/2014 16,332,457.50 - 16,332,457.50 17,659,669.69 17,659,669.69 0.00 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 14 FrstSouthwest4 ESCROW STATISTICS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Modified Yield to Yield to Perfect Value of Total Duration Receipt Disbursement Escrow Negative Cost of Escrow Escrow Cost (years) Date Date Cost Arbitrage Dead Time CASH 1,319,196.05 0.000000% 0.000000% 1,318,853.99 342.06 BP 16,340,473.64 0.000000% 0.000000% 16,266,518.66 73,954.98 17,659,669.69 17,585,372.65 0.00 74,297.04 Delivery date 06/05/2014 Arbitrage yield 2.347631% May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 15 Firstsouthwest4* FORM 8038 STATISTICS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Dated Date 06/05/2014 Delivery Date 06/05/2014 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Serial Bonds: 02/15/2015 1,120,000.00 3.000% 101.906 1,141,347.20 1,120,000.00 02/15/2016 1,150,000.00 3.000% 104.195 1,198,242.50 1,150,000.00 02/15/2017 1,190,000.00 3.000% 105.714 1,257,996.60 1,190,000.00 02/15/2018 1,225,000.00 3.000% 106.409 1,303,510.25 1,225,000.00 02/15/2019 1,260,000.00 3.000% 106.726 1,344,747.60 1,260,000.00 02/15/2020 1,300,000.00 3.000% 106.577 1,385,501.00 1,300,000.00 02/15/2021 1,340,000.00 3.000% 105.655 1,415,777.00 1,340,000.00 02/15/2022 1,385,000.00 3.000% 104.980 1,453,973.00 1,385,000.00 02/15/2023 1,415,000.00 3.000% 103.803 1,468,812.45 1,415,000.00 02/15/2024 1,460,000.00 3.000% 102.627 1,498,354.20 1,460,000.00 02/15/2025 1,330,000.00 3.000% 101.175 1,345,627.50 1,330,000.00 02/15/2026 1,020,000.00 3.000% 100.164 1,021,672.80 1,020,000.00 02/15/2027 805,000.00 3.000% 98.129 789,938.45 805,000.00 16,000,000.00 16,625,500.55 16,000,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 02/15/2027 3.000% 789,938.45 805,000.00 Entire Issue 16,625,500.55 16,000,000.00 6.5898 2.3476% Proceeds used for accrued interest 0.00 Proceeds used for bond issuance costs (including underwriters' discount) 285,026.91 Proceeds used for credit enhancement 0.00 Proceeds allocated to reasonably required reserve or replacement fund 0.00 Proceeds used to currently refund prior issues 16,340,473.64 Proceeds used to advance refund prior issues 0.00 Remaining weighted average maturity of the bonds to be currently refunded 6.7519 Remaining weighted average maturity of the bonds to be advance refunded 0.0000 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 16 Rrstsoulthwestagt FORM 8038 STATISTICS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Refunded Bonds Bond Component Date Principal Coupon Price Issue Price Sales Tax Third Lien Revenue Refunding Bonds, Series 2005: TERM 08/15/2014 690,000.00 4.300% 100.000 690,000.00 TERM 08/15/2015 725,000.00 4.300% 100.000 725,000.00 TERM 08/15/2016 750,000.00 4.300% 100.000 750,000.00 TERM 08/15/2017 785,000.00 4.300% 100.000 785,000.00 TERM 08/15/2018 820,000.00 4.300% 100.000 820,000.00 TERM 08/15/2019 855,000.00 4.300% 100.000 855,000.00 TERM 08/15/2020 890,000.00 4.300% 100.000 890,000.00 TERM 08/15/2021 930,000.00 4.300% 100.000 930,000.00 TERM 08/15/2022 1,175,000.00 4.300% 100.000 1,175,000.00 TERM 08/15/2023 1,220,000.00 4.300% 100.000 1,220,000.00 TERM 08/15/2024 1,270,000.00 4.300% 100.000 1,270,000.00 TERM 08/15/2025 945,000.00 4.300% 100.000 945,000.00 TERM 08/15/2026 985,000.00 4.300% 100.000 985,000.00 TERM 08/15/2027 785,000.00 4.300% 100.000 785,000.00 12,825,000.00 12,825,000.00 Sales Tax Subordinate Lien Revenue Bonds, Series 2006: SERIAL 08/15/2014 210,000.00 4.000% 101.513 213,177.30 SERIAL 08/15/2015 220,000.00 4.000% 101.006 222,213.20 SERIAL 08/15/2016 225,000.00 4.000% 100.214 225,481.50 SERIAL 08/15/2017 235,000.00 4.000% 99.271 233,286.85 SERIAL 08/15/2018 245,000.00 4.000% 98.165 240,504.25 SERIAL 08/15/2019 255,000.00 4.200% 99.287 253,181.85 SERIAL 08/15/2020 265,000.00 4.250% 99.038 262,450.70 SERIAL 08/15/2021 275,000.00 4.250% 98.548 271,007.00 SERIAL 08/15/2022 290,000.00 4.300% 98.720 286,288.00 SERIAL 08/15/2023 300,000.00 4.400% 99.396 298,188.00 SERIAL 08/15/2024 315,000.00 4.400% 98.877 311,462.55 SERIAL 08/15/2025 330,000.00 4.500% 99.614 328,726.20 3,165,000.00 3,145,967.40 Refunding & Improvement Sales Tax Revenue Bonds, Series 1997: SERIAL 08/15/2014 135,000.00 5.375% 98.605 133,116.75 TERM_1 08/15/2015 140,000.00 5.375% 97.278 136,189.20 TERM_1 08/15/2016 150,000.00 5.375% 97.278 145,917.00 TERM_1 08/15/2017 160,000.00 5.375% 97.278 155,644.80 TERM_2 08/15/2018 165,000.00 5.375% 96.376 159,020.40 TERM_2 08/15/2019 175,000.00 5.375% 96.376 168,658.00 TERM_2 08/15/2020 185,000.00 5.375% 96.376 178,295.60 TERM_2 08/15/2021 195,000.00 5.375% 96.376 187,933.20 1,305,000.00 1,264,774.95 17,295,000.00 17,235,742.35 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 17 FrstSouthlwest4 FORM 8038 STATISTICS Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Remaining Last Weighted CaII Issue Average Date Date Maturity Sales Tax Third Lien Revenue Refunding Bonds, Series 2005 08/15/2014 04/20/2005 7.1718 Sales Tax Subordinate Lien Revenue Bonds, Series 2006 08/15/2014 02/15/2006 6.1631 Refunding & Improvement Sales Tax Revenue Bonds, Series 1997 06/09/2014 03/18/1997 3.9577 All Refunded Issues 08/15/2014 6.7519 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 18 firstSouthwest PROOF OF ARBITRAGE YIELD Southlake Parks Development Corporation Sales Tax Revenue Refunding Bonds, Series 2014 Callable on 2/15/2024 @ par HIGH BID: Bank of America Merrill Lynch, New York, NY FINAL NUMBERS Present Value to 06/05/2014 Date Debt Service @ 2.3476307559% 08/15/2014 93,333.33 92,910.72 02/15/2015 1,360,000.00 1,338,134.73 08/15/2015 223,200.00 217,063.60 02/15/2016 1,373,200.00 1,319,953.01 08/15/2016 205,950.00 195,667.34 02/15/2017 1,395,950.00 1,310,865.95 08/15/2017 188,100.00 174,585.87 02/15/2018 1,413,100.00 1,296,358.33 08/15/2018 169,725.00 153,896.89 02/15/2019 1,429, 725.00 1,281,351.91 08/15/2019 150,825.00 133,604.51 02/15/2020 1,450,825.00 1,270,266.03 08/15/2020 131,325.00 113,647.25 02/15/2021 1,471,325.00 1,258,496.50 08/15/2021 111,225.00 94,032.44 02/15/2022 1,496, 225.00 1, 250, 270.68 08/15/2022 90,450.00 74,704.64 02/15/2023 1,505,450.00 1,228,958.51 08/15/2023 69,225.00 55,855.47 02/15/2024 1,529,225.00 1,219,567.99 08/15/2024 47,325.00 37,304.15 02/15/2025 1,377,325.00 1,073,086.68 08/15/2025 27,375.00 21,080.67 02/15/2026 1,047,375.00 797,194.55 08/15/2026 12,075.00 9,084.08 02/15/2027 817,075.00 607,558.05 19,186,933.33 16, 625,500.55 Proceeds Summary Delivery date 06/05/2014 Par Value 16,000,000.00 Premium (Discount) 625,500.55 Target for yield calculation 16,625,500.55 May 6, 2014 11:41 am Prepared by FirstSouthwest (eaa) (Finance 7.008 Southlake 2014:SPDC- S14REF,S14REF) Page 19