R-03-03-27-9B1 - 3/27/2003RESOLUTION NO. R-03-03-27-9B1
WHEREAS, the Council of the City of Round Rock, Texas, has
previously consented to the creation of The Meadows at Chandler
Creek Municipal Utility District, and
WHEREAS, The Meadows at Chandler Creek Municipal Utility
District (the "District ") is a conservation and reclamation
district, a body corporate and politic and governmental agency of
the State of Texas, created under Article XVI, Sec. 59 of the
Texas Constitution by order of the Texas Water Commission, now
the Texas Natural Resource Conservation Commission ( "the TNRCC "),
and the District operates under Chapters 49 and 54 of the Texas
Water Code, as amended, and
WHEREAS, the City of Round Rock previously granted its
consent to the creation of the District, and the City, the
District and Nash Phillips /Copus, Inc. entered into an "Agreement
Concerning Creation and Operation of The Meadows at Chandler
Creek Municipal Utility District" (the "Consent Agreement "),
which sets forth the terms and conditions for creation and
operation of the District, and
WHEREAS, the District and the City also entered into that
certain "Utility Construction Contract" dated May 10, 1984
setting forth the terms and conditions pursuant to which the City
agreed to provide water and sanitary sewer service within the
boundaries of the District and pursuant to which the District
0 : \Wdsx \RESOLUTI \R30327B1.WP0 /sc
agreed to purchase, construct and acquire facilities for such
purposes, and
WHEREAS, by an election held on June 13, 1985, the District
was authorized to issue bonds in the maximum amount of
$13,000,000, pursuant to which the District has issued $5,810,000
in bonds, leaving an authorized but unissued amount of
$7,190,000, and
WHEREAS, the District is authorized by law to purchase,
construct, acquire, own, operate, maintain, repair, improve, or
extend, inside or outside its boundaries, any and all works,
improvements, facilities, plants, equipment, and appliances
necessary to accomplish the purposes of its creation, and
WHEREAS, the District made application to the TNRCC for
approval of the issuance by the District of its unlimited tax and
revenue bonds to finance or reimburse the developer for the cost
of water, sewer and drainage improvements (the "Improvements ")
serving lands within the District, and
WHEREAS, under the Consent Agreement, the Utility
Construction Contract, and that certain "Order Authorizing the
Issuance of $5,700,000 The Meadows at Chandler Creek Municipal
Utility District Combination Unlimited Tax and Revenue Bonds,
Series 2003" proposed to be adopted by the Board of Directors of
the District (the "2003 Bond Order "), the District proposes to
authorize the issuance of its combination unlimited tax and
2
revenue bonds designated as its "$5,700,000 The Meadows at
Chandler Creek Municipal Utility District Combination Unlimited
Tax and Revenue Bonds, Series 2003" (the "Series 2003 Bonds ") to
finance or reimburse the developer for the cost of the
Improvements, and
WHEREAS, the District has submitted to the City for review
and approval a substantial draft of the 2003 Bond Order and
Preliminary Official Statement and requested approval of the
District's Series 2003 Bond, Now Therefore
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,
TEXAS THAT,
1. The issuance by the District of the Series 2003 Bonds in
an amount not to exceed $5,700,000 is hereby approved.
2. The City Council approves the substantial draft of the
2003 Bond Order and Preliminary Official Statement for the Series
2003 Bonds, the form and substance of which are attached as
Exhibits "A" and "B ", respectively, incorporated by reference,
and are approved.
The City Council hereby finds and declares that written
notice of the date, hour, place and subject of the meeting at
which this Resolution was adopted was posted and that such
meeting was open to the public as required by law at all times
during which this Resolution and the subject matter hereof were
discussed, considered and formally acted upon, all as required by
3
the Open Meetings Act, Chapter 551, Texas Government Code, as
amended.
RESOLVED this 27th day of March, 2003.
A TEST:
CHRISTINE R. MARTINEZ, City Secret
4
City of Round Rock, Texas
y
ELL, Mayor
THE MEADOWS AT CHANDLER CREEK
MUNICIPAL UTILITY DISTRICT
$5,700,000
Combination Unlimited Tax and Revenue Bonds, Series 2003
BOND ISSUE SUMMARY
2002 Certified Assessed Valuation $146,501,624
2003 Estimated Assessed Valuation (provided by WCAD) $180,000,000
Gross Debt Outstanding (after issuance of bonds) $ 10,160,000
Ratio of Gross Debt to 2002 Assessed Valuation 6.94%
Ratio of Gross Debt to 2003 Assessed Valuation 5.64%
Estimated Direct & Overlapping Net Debt $ 17,380,790
Ratio of Direct & Overlapping Net Debt to 2002 A.V. 11.86%
Ratio of Direct & Overlapping Net Debt to 2003 A.V. 9.66%
Average Annual Debt Service Requirement (2003/2008) of the
Bonds and the Outstanding Bonds (Projected Average Req.)
Debt Service Fund Balance as of February 18, 2003
Authorized but Un- issued Bonds
At this time, the District does not anticipate issuing any additional debt.
2002 Tax Rate D/S $0.5272
O &M $0.1566
Projected Tax Rate TCEQ Directed D/S Rate (not less than)
Estimated O &M Rate
Estimated Total
$0.6838
$0.4680
$0.1566
$0.6246
Number of active single family connection as of February 2003 1,389
Estimated population as of February 2003 4,862
$ 1,021,286
$ 905,969
$ 1,490,000
THE STATE OF TEXAS §
COUNTY OF WILLIAMSON §
CERTIFICATE FOR BOND ORDER
I, the undersigned officer of the Board of Directors of The Meadows at Chandler
Creek Municipal Utility District, hereby certify as follows:
1. The Board of Directors of The Meadows at Chandler Creek Municipal
Utility District convened in a regular meeting on , 2003 at a designated
meeting place outside the boundaries of the District at Winstead Sechrest & Minick
P.C., 100 Congress Avenue, Suite 900, Austin, Texas (the "Meeting ") and the roll was
called of the duly constituted officers and members of the Board, to -wit:
Douglas D. Eastwood President
Nancy Beleckis Vice President
Ann Mifflin Secretary
Howard Hemberger Treasurer
Walter Berry Director
and all of said persons were present for the Meeting, except , thus
constituting a quorum. Whereupon, among other business, the following was
transacted at the Meeting: a written
ORDER NO.
ORDER AUTHORIZING THE ISSUANCE OF $5,700,000 THE
MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
COMBINATION UNLIMITED TAX AND REVENUE BONDS, SERIES
2003; AWARDING THE SALE OF THE BONDS; AUTHORIZING THE
LEVY OF AN AD VALOREM TAX IN SUPPORT OF THE BONDS;
APPROVING AN OFFICIAL STATEMENT, PAYING AGENT /REGISTRAR
AGREEMENT, AND ESCROW AGREEMENT; AND AUTHORIZING
OTHER MATTERS RELATED TO THE ISSUANCE OF THE BONDS
(the "Order") was introduced for the consideration of the Board. It was then duly moved
and seconded that the Order be adopted; and, after due discussion, the motion,
carrying with it the adoption of the Order, prevailed and carried unanimously.
2. That a true, full, and correct copy of the Order adopted at the Meeting is
attached to and follows this certificate; that the Order has been duly recorded in the
Board's minutes of the Meeting; that the persons named in the above and foregoing
paragraph are the duly chosen, qualified, and acting officers and members of the Board
as indicated therein; that each of the officers and members of the Board was duly and
sufficiently notified officially and personally, in advance, of the time, place, and purpose
EXHIBIT
"An
of the Meeting, and that the Order would be introduced and considered for adoption at
the Meeting, and each of the officers and members consented, in advance, to the
holding of the Meeting for such purpose; that the Meeting was open to the public as
required by law; and that public notice of the time, place, and subject of the Meeting
was given as required by Chapter 551, Texas Govemment Code, and Section 49.063,
Texas Water Code, as amended.
(Remainder of page intentionally left blank)
2
(SEAL)
SIGNED AND SEALED on this
Secretary, Board of Directors
Signature page to the Certificate of the Order Authorizing Issuance of the $5,700,000
The Meadows at Chandler Creek Municipal Utility District Combination Unlimited Tax
and Revenue Bonds, Series 2003
ORDER AUTHORIZING THE ISSUANCE OF $5,700,000 THE MEADOWS AT
CHANDLER CREEK MUNICIPAL UTILITY DISTRICT COMBINATION UNLIMITED
TAX AND REVENUE BONDS, SERIES 2003; AWARDING THE SALE OF THE
BONDS; AUTHORIZING THE LEVY OF AN AD VALOREM TAX IN SUPPORT OF THE
BONDS; APPROVING AN OFFICIAL STATEMENT, PAYING AGENT /REGISTRAR
AGREEMENT, AND ESCROW AGREEMENT; AND AUTHORIZING OTHER
MATTERS RELATED TO THE ISSUANCE OF THE BONDS
Adopted: , 2003
Table of Contents
Page
ARTICLE I - DEFINITIONS, FINDINGS, AND INTERPRETATION 2
Section 1.1 Definitions 2
Section 1.2 Findings 5
Section 1.3 Table of Contents, Titles and Headings 5
Section 1.4 Interpretation. 5
ARTICLE II - AUTHORIZATION; GENERAL TERMS AND PROVISIONS
REGARDING THE BONDS
Section 2.1 Authorization 6
Section 2.2 Date, Denomination, Maturities, Numbers, and Interest 6
Section 2.3 Medium, Method, and Place of Payment 7
Section 2.4 Execution and Initial Registration. 8
Section 2.5 Ownership. 9
Section 2.6 Registration, Transfer, and Exchange. 10
Section 2.7 Cancellation and Authentication. 11
Section 2.8 Temporary Bonds. 12
Section 2.9 Replacement Bonds. 12
Section 2.10 Book -Entry Only System. 14
Section 2.11 Successor Securities Depository; Transfer Outside Book -Entry
Only System 15
Section 2.12 Payments to Cede & Co 15
ARTICLE III - REDEMPTION OF BONDS BEFORE MATURITY 16
Section 3.1 Limitation on Redemption 16
Section 3.2 Optional Redemption 16
Section 3.3. Mandatory Redemption of Term Bonds 16
Section 3.4 Partial Redemption. 17
Section 3.5 Notice of Redemption to Registered Owners. 18
Section 3.6 Payment Upon Redemption. 18
Section 3.7 Effect of Redemption. 18
Section 3.8 Lapse of Payment. 19
ARTICLE IV - PAYING AGENT /REGISTRAR 19
Section 4.1 Appointment of Paying Agent/Registrar 19
Section 4.2 Qualifications of Paying Agent/Registrar 19
Section 4.3 Maintaining Paying Agent/Registrar. 19
Section 4.4 Termination of Paying Agent/Registrar 19
Table of Contents
(continued)
Section 4.5 Notice of Change of Paying Agent/Registrar to Registered
Owners 20
Section 4.6 Agreement of Paying Agent/Registrar to Perform Duties and
Functions 20
Section 4.7 Delivery of Records to Successor 20
ARTICLE V - FORM OF BONDS 20
Section 5.1 Form 20
Section 5.2 CUSIP Registration 27
Section 5.3 Legal Opinion 27
ARTICLE VI - SECURITY OF THE BONDS 27
Section 6.1 Security of Bonds 27
Section 6.2 Levy of Tax 27
Section 6.3 Net Revenue Pledge as Additional Security. 28
Section 6.4 Perfection of Pledge 29
ARTICLE VII - FUNDS; FLOW OF FUNDS; AND INVESTMENTS 30
Section 7.1 Creation of Funds 30
Section 7.2 Security of Funds 30
Section 7.3 Debt Service Fund 30
Section 7.4 Operating Fund 31
Section 7.5 Deposit of Proceeds 31
Section 7.6 Investments 31
Section 7.7 Escrow Agreement 32
ARTICLE VIII - SPECIFIC OBLIGATIONS OF BOARD 32
Section 8.1 Covenants 32
ARTICLE IX - TAX EXEMPTION 33
Section 9.1 Provisions Concerning Federal Income Tax Exclusion 33
Section 9.2 Covenants Regarding Sale, Lease, or Disposition of Financed
Property 35
Section 9.3 Designation as Qualified Tax - Exempt Obligations 35
ARTICLE X - CONTINUING DISCLOSURE OF FINANCIAL INFORMATION 35
Section 10.1 Annual Reports 35
Section 10.2 Material Event Notices 36
Section 10.3 Limitations, Disclaimers, and Amendments 37
Table of Contents
(continued)
Page
ARTICLE XI - ADDITIONAL BONDS AND REFUNDING BONDS 38
Section 11.1 Additional Bonds 38
Section 11.2 Revenue Bonds 38
Section 11.3 Inferior Lien Bonds 38
Section 11.4 Special Project Bonds 38
Section 11.5 Refunding Bonds 38
ARTICLE XII - SALE AND DELIVERY OF BONDS 39
Section 12.1 Sale and Delivery of Bonds. 39
ARTICLE XIII - DEFAULT AND REMEDIES 40
Section 13.1 Events of Default 40
Section 13.2 Remedies for Default. 40
Section 13.3 Remedies Not Exclusive 40
ARTICLE XIV - DISCHARGE 40
Section 14.1 Discharge by Payment 41
Section 14.2 Discharge by Deposit. 41
ARTICLE XV - MISCELLANEOUS 43
Section 15.1 Persons Deemed Registered Owners 43
Section 15.2 District's Successors and Assigns 43
Section 15.3 Benefits of Order Provisions 43
Section 15.4 Severability Clause 43
Section 15.5 Open Meeting 43
Section 15.6 Amendments 43
Section 15.7 No Personal Liability 44
Section 15.8 Notice to Registered Owners 44
Section 15.9 District's Officers' Duties 44
ARTICLE XVI - EFFECTIVENESS 44
Section 16.1 Effectiveness 44
AUSTIN 1 \197238\
19239-4 03/11/2003
II!
THE STATE OF TEXAS
COUNTY OF WILLIAMSON
ORDER NO.
ORDER AUTHORIZING THE ISSUANCE OF $5,700,000 THE
MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
COMBINATION UNLIMITED TAX AND REVENUE BONDS, SERIES
2003; AWARDING THE SALE OF THE BONDS; AUTHORIZING THE
LEVY OF AN AD VALOREM TAX IN SUPPORT OF THE BONDS;
APPROVING AN OFFICIAL STATEMENT, PAYING AGENT /REGISTRAR
AGREEMENT, AND ESCROW AGREEMENT; AND AUTHORIZING
OTHER MATTERS RELATED TO THE ISSUANCE OF THE BONDS
Recitals
WHEREAS, The Meadows at Chandler Creek Municipal Utility District (the
"District ") was organized, created, and established pursuant to Article XVI, Section 59 of
the Constitution of the State of Texas by an order of the Texas Water Commission,
dated May 14, 1985, as a body politic and corporate and a political subdivision of the
State of Texas. The District operates pursuant to Chapters 49 and 54 of the Texas
Water Code, as amended;
WHEREAS, at an election held in the District on July 13, 1985 (the "election "),
the District was authorized to issue bonds in the maximum amount of $13,000,000 for
the purpose or purposes of purchasing, constructing, acquiring, owning, operating,
repairing, improving, or extending a waterworks system, sanitary sewer system, and
drainage and storm sewer system, including, but not limited to, all additions to such
systems and all works, improvements, facilities, plants, equipment, appliances, interests
in property, and contract rights needed therefor and administrative facilities needed in
connection therewith, and all expenses incidental thereto, including expenses incidental
to the organization, administration, and financing of the District, and to provide for the
payment of principal of and interest on such bonds by the levy and collection of a
sufficient tax upon all taxable property within the District and by a pledge of all or any
designated part or parts of the net revenues resulting from the ownership or operation of
the District's works, improvements, facilities, plants, equipment, and appliances, or
under specific contracts;
WHEREAS, the election was called and held under and in strict conformity with
the Constitution and laws of the State of Texas, and of the United States of America,
and the Board of Directors has heretofore officially declared the results of the election
and declared that the District was legally created and authorized to issue the bonds
described above;
WHEREAS, to construct the various phases of a waterworks, sanitary sewer, and
drainage and storm sewer systems within the District, the District previously issued its
$2,450,000 Waterworks and Sewer System Combination Unlimited Tax and Revenue
Bonds, Series 1987 (the "Series 1987 Bonds "), and in reliance upon the authority of
Art. 717 -k, V.T.C.S. (now codified as Chapter 1207 of the Texas Government Code),
and its $2,124,995.80 Combination Unlimited Tax and Revenue Refunding Bonds,
Series 1994 (the "Series 1994 Refunding Bonds "). In addition, for the purpose of
acquiring water, sewage, and drainage facilities, the District previously issued its
$1,410,000 Combination Unlimited Tax and Revenue Bonds, Series 1999, (the "Series
1999 Bonds") and its $1,950,000 Combination Unlimited Tax and Revenue Bonds,
Series 2001 (the "Series 2001 Bonds "). No portion of the Series 1987 Bonds remains
outstanding, and $1,225,000 of the Series 1994 Bonds, $1,380,000 of the Series 1999
Bonds, and $1,855,000 of the Series 2001 Bonds remain outstanding;
WHEREAS, the District previously reserved the right to issue the now remaining
$5,700,000 unissued balance of the bonds authorized at the election and intends to
issue $5,700,000 in bonds to pay for the costs of acquiring water, wastewater, and
drainage facilities to serve the Meadows at Chandler Creek Development (the
"Development "), including intemal water, wastewater, and drainage facilities in Sections
5, 6C, 10, 11, 12, 13, 14, 15, 16, 17, 19, 21, and 22 of the Development and to finance
certain engineering costs. In addition, proceeds of the Bonds will be used to pay certain
administrative and issuance costs of the Bonds. As a result of the issuance of the
Bonds, the District's remaining authorized but unissued bonds for the purposes of
financing improvements to the District's water, sewer and drainage systems or any other
lawful purpose will be $1,490,000;
WHEREAS, the District has been authorized to levy taxes, and the taxes to be
collected, together with the net revenues from the operation of the District's waterworks
and sanitary sewer system to be constructed or acquired, will be sufficient to make the
principal and interest payments on the outstanding bonds and the Bonds authorized by
this Order;
WHEREAS, the Board of Directors reserves the right to issue any other bonds as
may hereinafter be authorized by the District voters, in one or more series at a future
date or dates when, in the Boards judgment, such amounts are required for the
District's authorized purposes; Now, Therefore
BE IT ORDERED BY THE BOARD OF DIRECTORS OF THE MEADOWS AT
CHANDLER CREEK MUNICIPAL UTILITY DISTRICT THAT:
ARTICLE I
DEFINITIONS, FINDINGS, AND INTERPRETATION
Section 1.1 Definitions. Throughout this Order, the following terms and
expressions as used herein shall have the meanings set forth below:
2
"Act" means Chapters 49 and 54, Texas Water Code, as amended.
"Additional Bonds" means the additional bonds which the District expressly
reserves the right to issue in Section 11.1 of this Order.
"Board" means the Board of Directors of the District.
"Bond" or "Bonds" means one or more bonds of the issue of The Meadows at
Chandler Creek Municipal Utility District Combination Unlimited Tax and Revenue
Bonds, Series 2003 authorized in this Order unless the context clearly indicates
otherwise.
"Business Day" means any day which is not a Saturday, Sunday, or a day on
which the Paying Agent/Registrar is authorized by law or executive order to remain
closed.
"Closing Date" means the date of initial delivery of and payment for the Bonds.
"Code" means the Internal Revenue Code of 1986, as amended.
"Construction Account" means the Construction Account created and established
in this Order.
"Debt Service Fund" means the Debt Service Fund affirmed in this Order.
"District" means The Meadows at Chandler Creek Municipal Utility District,
situated in Williamson County, Texas.
"DTC" means the Depository Trust Company of New York, New York.
"DTC Participant" means brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations on whose behalf DTC was created to hold
securities to facilitate the clearance and settlement of securities transactions among
DTC Participants.
"Escrow Agreement" means that TexPool Escrow Agreement for Texas
Commission on Environmental Quality Transactions, dated , 2003, by and
between the District and the Escrow Agent and incorporated herein.
"Initial Bond" means the Initial Bond authorized by Section 2.4 of this Order.
"Initial Date" means the date designated as the Initial Date by Section 2.2(a) of
this Order.
3
"Interest Payment Date ", when used in connection with any Bond, means August
1, 2003, and each February 1 and August 1 thereafter until maturity or prior redemption
of such Bond.
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each entity whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of
the Rule.
"Operating Fund" means the Operating Fund affirmed in this Order.
"Order" means as used herein and in the Bonds means this Order authorizing the
Bonds.
"Paying Agent/Registrar" means JPMorgan Chase Bank, Dallas, Texas or any
successor thereto or replacement thereof as provided in this Order.
"Paying Agent/Registrar Agreement" means that Paying Agent/Registrar
Agreement dated May 1, 2003, by and between the District and the Paying
Agent/Registrar and incorporated herein.
"Person" means any individual, corporation, partnership, joint venture,
association, joint -stock company, trust, unincorporated organization, or government or
any agency or political subdivision thereof.
"Purchaser" shall have the meaning stated in Section 12.1 of this Order.
"Record Date" means, for any Interest Payment Date, the fifteenth calendar day
of the month next preceding each Interest Payment Date.
"Register" means the books of registration kept by the Paying Agent/Registrar, in
which are maintained the names and addresses of, and the principal amounts of the
Bonds registered to, each Registered Owner.
"Registered Owner" means any person who shall be the registered owner of any
outstanding Bond.
"Representation Letter" means the Letter of Representations between the District
and the DTC.
"Revenue Bonds" means the revenue bonds that the District expressly reserves
the right to issue in Section 11.2 of this Order.
"Rule" means SEC Rule 15c2 -12, as amended from time to time.
4
"SEC" means the United States Securities and Exchange Commission.
"Serial Bonds" means the $ of the Bonds that mature on February 1, in
the years 20_ through 20 inclusive, and the year 20 being issued as serial bonds
as set forth in Section 2.2 hereof.
"SID" means any entity designated by the State of Texas or an authorized
department, officer, or agency thereof as, and determined by the SEC or its staff to be,
a state information depository within the meaning of the Rule from time to time.
"System" means the waterworks system, sanitary sewer system, and drainage
and storm sewer system of the District, including, but not limited to, all works,
improvements, facilities, plants, equipment, appliances, interests in property, and
contract rights needed therefor, now owned or to be hereafter purchased, constructed,
or otherwise acquired, whether by deed, contract, or otherwise, together with any
additions or extensions thereto or improvements and replacements thereof, except the
water, sewer, and /or drainage or storm sewer facilities that the District may purchase or
acquire with the proceeds of the sale of special project bonds, so long as such special
project bonds are outstanding, notwithstanding that such facilities may be physically
connected with the System.
"Term Bonds" means the $ of the Bonds that mature February 1, 20,
the $ of the Bonds that mature February 1, 20 the $ of the Bonds
that mature February 1, 20_, the $ of the Bonds that mature February 1, 20
and the $ of the Bonds that mature February 1, 20_ that are being issued as
term bonds subject to mandatory sinking fund redemption on February 1 in the years as
set forth in Section 2.2.
Section 1.2 Findings. The declarations, determinations, and findings declared,
made, and found in the preamble to this Order are hereby adopted, restated, and made
a part of the operative provisions hereof.
Section 1.3 Table of Contents, Titles and Headings. The table of contents,
titles, and headings of the Articles and Sections of this Order have been inserted for
convenience of reference only and are not to be considered a part hereof and shall not
in any way modify or restrict any of the terms or provisions hereof and shall never be
considered or given any effect in construing this Order or any provision hereof or in
ascertaining intent, if any question of intent should arise.
Section 1.4 Interpretation.
(a) Unless the context requires otherwise, words of the masculine gender
shall be construed to include correlative words of the feminine and neuter genders and
vice versa, and words of the singular number shall be construed to include correlative
words of the plural number and vice versa.
5
(b) This Order and all the terms and provisions hereof shall be liberally
construed to effectuate the purposes set forth herein to sustain the validity of the Bonds
and the validity of the taxes levied in payment thereof.
ARTICLE II
AUTHORIZATION; GENERAL TERMS AND
PROVISIONS REGARDING THE BONDS
Section 2.1 Authorization. The District's unlimited tax and revenue bonds to be
designated the "THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY
DISTRICT COMBINATION UNLIMITED TAX AND REVENUE BONDS, SERIES 2003"
are hereby authorized to be issued and delivered in accordance with the Constitution
and the laws of the State of Texas, particularly Section 59 of Article XVI of the
Constitution of the State of Texas and the Act. The Bonds shall be issued in the total
aggregate amount of Seven Million One Hundred and Ninety Thousand and No /100
Dollars ($5,700,000.00) for the purposes of providing funds to pay the costs of acquiring
water, wastewater, and drainage facilities to serve the Meadows at Chandler Creek
Development (the "Development "), including certain engineering costs, and water,
wastewater, and drainage facilities in Sections 5, 6C, 10, 11, 12, 13, 14, 15, 16, 17, 19,
21, and 22 of the Development. In addition, proceeds of the Bonds will be used to pay
certain administrative and issuance costs of the Bonds.
Section 2.2 Date, Denomination, Maturities. Numbers. and Interest.
(a) The Bonds shall have an Initial Date of May 1, 2003. The Bonds shall be
in fully registered form, without coupons, and shall be numbered consecutively from R -1
upward, except the Initial Bond, which shall be numbered as specified in Section 5.1.
(b) The Bonds shall be issued as fully registered obligations in denominations
of $5,000 or any integral multiple thereof, shall mature on February 1 in the years and in
the principal amounts and shall bear interest at the per annum rates set forth in the
following table:
$ Serial Bonds
Principal Year of Interest
Amount Maturity Rate
6
$ Term Bonds
Principal Interest Year of Maturity
Amount Rate (February 1)
(c) Interest shall accrue and be paid on each Bond respectively until its
maturity or earlier redemption from the later of the Initial Date or the most recent Interest
Payment Date to which interest has been paid or provided for at the per annum rates
specified in the schedule contained in subsection (b) above. Such interest shall be
payable semiannually on February 1 and August 1 of each year, commencing August 1,
2003, computed on the basis of a 360 -day year of twelve 30 -day months.
Section 2.3 Medium, Method, and Place of Payment.
(a) The District will duly and punctually pay the principal of and interest on the
Bonds in accordance with their terms in lawful money of the United States of America
and shall deposit with the Paying Agent/Registrar on or before each Interest Payment
Date funds sufficient to pay the principal of and interest on the Bonds then due, as
provided in this Section.
(b) Interest on the Bonds shall be paid to the Registered Owners thereof as
shown in the Register at the close of business on the Record Date by check (dated as
of the Interest Payment Date) and sent by the Paying Agent/Registrar to the person
entitled to such payment, first class United States mail, postage prepaid, to the address
of such person as it appears in the Register, or by such other customary banking
arrangements acceptable to the Paying Agent/Registrar and the person to whom
interest is paid; provided, however, that such person shall bear all risk and expense of
such other customary banking arrangement.
7
(c) The principal of each Bond shall be paid to the Registered Owner of such
Bond on the due date thereof (whether at the maturity date or the date of prior
redemption thereof) upon presentation and surrender of such Bond at the designated
office of the Paying Agent/Registrar.
(d) If the specified date for any payment of principal of or interest on the
Bonds shall be a day which is not a Business Day, such payment may be made on the
next Business Day without additional interest and with the same force and effect as if
made on the specified date for such payment.
(e) In the event of nonpayment of interest on a Bond on an Interest Payment
Date, and for thirty (30) days thereafter, a new record date for such interest payment (a
"Special Record Date ") will be established by the Paying Agent/Registrar, if and when
funds for the payment of such interest have been received from the District. Notice of
the Special Record Date and of the scheduled payment date of the past due interest
(the "Special Payment Date" that shall be fifteen (15) days after the Special Record
Date) shall be sent at least five (5) 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 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.
(f) Unclaimed payments shall be segregated in a special escrow account and
held in trust, uninvested by the Paying Agent/Registrar, for the account of the
Registered Owners of the Bonds to which the unclaimed payments pertain. Subject to
Title 6 of the Texas Property Code, payments remaining unclaimed by the Registered
Owners entitled thereto for three years after the applicable payment or redemption date
shall be applied to the next payment or payments on the Bonds thereafter coming due
and, to the extent any such money remains after the retirement of all outstanding
Bonds, shall be paid to the District to be used for any lawful purpose. Thereafter,
neither the District, the Paying Agent/Registrar nor any other person shall be liable or
responsible to any Registered Owners of such Bonds for any further payment of such
unclaimed moneys or on account of any such Bonds, subject to Title 6 of the Texas
Property Code.
Section 2.4 Execution and Initial Registration.
(a) The Bonds shall be executed on behalf of the District by the President and
Secretary of the Board, by their manual or facsimile signatures, and the official seal of
the District shall be impressed or placed in facsimile thereon. Such facsimile signatures
on the Bonds shall have the same effect as if each of the Bonds had been signed
manually and in person by each of said officers, and such facsimile seal on the Bonds
shall have the same effect as if the official seal of the District had been manually
impressed upon each of the Bonds.
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(b) In the event that any officer of the District whose manual or facsimile
signature appears on the Bonds ceases to be such officer before the authentication of
such Bonds or before the delivery thereof, such manual or facsimile signature
nevertheless shall be valid and sufficient for all purposes as if such officer had remained
in such office.
(c) Except as provided below, no Bond shall be valid or obligatory for any
purpose or be entitled to any security or benefit of this Order unless and until there
appears thereon the Certificate of Paying Agent/Registrar substantially in the form
provided herein, duly authenticated by manual execution by an officer or duly authorized
signatory of the Paying Agent/Registrar. It shall not be required that the same officer or
authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying
Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying
Agent/Registrar described above, the Initial Bond delivered at the Closing Date shall
have attached thereto the Comptroller's Registration Certificate substantially in the form
provided herein, manually executed by the Comptroller of Public Accounts of the State
of Texas, or by his duly authorized agent, which Certificate shall be evidence that the
Bond has been duly approved by the Attorney General of the State of Texas, that it is a
valid and binding obligation of the District and that it has been registered by the
Comptroller of Public Accounts of the State of Texas.
(d) On the Closing Date, one Initial Bond representing the entire principal
amount of the Bonds, payable in stated installments to the Purchaser or its designee,
executed by manual or facsimile signature of the President and Secretary of the Board,
approved by the Attorney General, and registered and manually signed by the
Comptroller of Public Accounts, will be delivered to the Purchaser or its designee. Upon
payment for the Initial Bond, the Paying Agent/Registrar, pursuant to written instructions
from the Purchaser or its designee, shall cancel the Initial Bond and deliver to DTC on
behalf of the Purchaser one registered Definitive Bond for each year of maturity of the
Bonds in the aggregate principal amount of all Bonds for such maturity, registered in the
name of Cede & Co., as nominee of DTC.
Section 2.5 Ownership.
(a) The District, the Paying Agent/Registrar, and any other person may treat
the person in whose name any Bond is registered as the absolute Registered Owner of
such Bond for the purpose of making and receiving payment of the principal, for the
further purpose of making and receiving payment of the interest thereon (subject to the
terms of this Order requiring the Paying Agent/Registrar to make payments of interest to
the person who is the Registered Owner on the Record Date or the Special Record
Date), and for all other purposes, whether or not such Bond is overdue, and neither the
District nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the
contrary.
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(b) All payments made to the person deemed to be the Registered Owner of
any Bond in accordance with this Section shall be valid and effectual and shall
discharge the liability of the District and the Paying Agent/Registrar upon such Bond to
the extent of the sums paid.
Section 2.6 Registration, Transfer, and Exchange.
(a) So long as any Bonds remain outstanding, the District shall cause the
Paying Agent/Registrar to keep at its designated office the Register in which, subject to
such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall
provide for the registration and transfer of Bonds in accordance with this Order.
(b) Registration of any Bond may be transferred in the Register only upon the
presentation and surrender thereof at the designated office of the Paying
Agent/Registrar for transfer of registration and cancellation, together with proper written
instruments of assignment, in form and with guarantee of signatures satisfactory to the
Paying Agent/Registrar, evidencing assignment of the Bonds, or any portion thereof in
any integral multiple of $5,000, to the assignee or assignees thereof, and the right of
such assignee or assignees thereof to have the Bond or any portion thereof registered
in the name of such assignee or assignees. No transfer of any Bond shall be effective
until entered in the Register. Upon assignment and transfer of any Bond or portion
thereof, a new Bond or Bonds will be issued by the Paying Agent/Registrar in exchange
for such transferred and assigned Bond. To the extent possible, the Paying
Agent/Registrar will issue such new Bond or Bonds in not more than three (3) Business
Days after receipt of the Bond to be transferred in proper form and with proper
instructions directing such transfer.
(c) Any Bond may be exchanged only upon the presentation and surrender
thereof at the designated office of the Paying Agent/Registrar, together with a written
request therefor duly executed by the Registered Owner or assignee or assignees
thereof, or its or their duly authorized attorney or representatives, with guarantees of
signatures satisfactory to the Paying Agent/Registrar, for a Bond or Bonds of the same
maturity and interest rate and in any authorized denomination and in an aggregate
principal amount equal to the unpaid principal amount of the Bond presented for
exchange. If a portion of any Bond is redeemed prior to its scheduled maturity as
provided herein, a substitute Bond or Bonds having the same maturity date, bearing
interest at the same rate, in the denomination or denominations of any integral multiple
of $5,000 at the request of the Registered Owner, and in an aggregate principal amount
equal to the unredeemed portion thereof, will be issued to the Registered Owner upon
surrender thereof for cancellation. To the extent possible, a new Bond or Bonds will be
required to be delivered by the Paying Agent/Registrar to the Registered Owner of the
Bond or Bonds in not more than three (3) Business Days after receipt of the Bond to be
exchanged in proper form and with proper instructions directing such exchange.
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(d) Each Bond issued in exchange for any Bond or portion thereof assigned
or transferred shall be of the same tenor and shall have the same maturity date and
bear interest at the same rate and in the same manner as the Bond for which it is being
exchanged. The Paying Agent/Registrar shall exchange the Bonds as provided herein,
and each substitute Bond delivered in accordance with this Section shall constitute an
original additional contractual obligation of the District and shall be entitled to the
benefits and security of this Order to the same extent as the Bond or Bonds in lieu of
which such substitute Bond is delivered.
(e) The District will pay the Paying Agent/Registrar's reasonable and
customary charge for the initial registration of the Bonds and the subsequent exchange
of the Bonds pursuant to the provisions hereof; however, the Paying Agent/Registrar will
require the Registered Owner to pay a sum sufficient to cover any tax or other
governmental charge that is authorized to be imposed in connection with the
registration, transfer, or exchange of a Bond. In addition, the District hereby covenants
with the Registered Owners of the Bonds that it will (i) pay the reasonable and standard
or customary fees and charges of the Paying Agent/Registrar for its services with
respect to the payment of the principal of and interest on the Bonds, when due, and (ii)
pay the fees and charges of the Paying Agent/Registrar for services with respect to the
transfer, registration, and exchange of Bonds as provided herein to the extent such fees
and charges are payable hereunder by the District.
(f) Neither the District nor the Paying Agent/Registrar shall be required to
issue, transfer, or exchange any Bond called for redemption, in whole or in part, where
such redemption is scheduled to occur within forty -five (45) calendar days of the
transfer or exchange date; provided, however, such limitation shall not be applicable to
an exchange by the Registered Owner of the uncalled principal balance of a Bond.
Section 2.7 Cancellation and Authentication.
(a) All Bonds paid or redeemed before scheduled maturity in accordance with
this Order, and all Bonds in lieu of which exchange Bonds or replacement Bonds are
authenticated and delivered in accordance with this Order, shall be canceled and proper
records shall be made regarding such payment, redemption, exchange, or replacement.
The Paying Agent/Registrar shall then return such canceled Bonds to the District or may
in accordance with law destroy such canceled Bonds arid periodically furnish the District
with certificates of destruction of such Bonds.
(b) Each substitute Bond issued in exchange for or replacement of (pursuant
to the provisions of Section 2.9 hereof) any Bond or Bonds issued under this Order shall
have printed thereon a Paying Agent/Registrar's Authentication Certificate (the
"Certificate "), in the form hereinafter set forth. An authorized representative of the
Paying Agent/Registrar shall, before the delivery of any such bond, manually sign and
date such Certificate, and no such bond shall be deemed to be issued or outstanding
unless such Certificate is so executed. No additional resolutions or orders need be
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passed or adopted by the District or any other body or person so as to accomplish the
foregoing exchange, or replacement of any Bond or portion thereof, and the Paying
Agent/Registrar shall provide for the printing, execution, and delivery of the substitute
Bonds in the manner prescribed herein. Pursuant to Chapter 1206 of the Texas
Government Code, as amended, and particularly Section 1206.023 thereof, the duty of
exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying
Agent/Registrar, and, upon the execution of the Certificate, the exchanged or replaced
Bonds shall be valid, incontestable, and enforceable in the same manner and with the
same effect as the Bonds which originally were delivered pursuant to this Order,
approved by the Attorney General, and registered by the Comptroller of Public
Accounts.
Section 2.8 Temporary Bonds.
(a) Pending the preparation of definitive Bonds, the proper officers of the
District may execute and, upon the District's request, the Paying Agent/Registrar shall
authenticate and deliver, one or more temporary Bonds that are printed, lithographed,
typewritten, mimeographed, or otherwise produced, in any denomination, substantially
of the tenor of the definitive Bonds in lieu of which they are delivered, without coupons
and with such appropriate insertions, omissions, substitutions, and other variations as
the officers of the District executing such temporary Bonds may determine, as
evidenced by their signing of such temporary Bonds.
(b) Until exchanged for Bonds in definitive form, such Bonds in temporary
form shall be entitled to the benefit and security of this Order.
(c) The District, without unreasonable delay, shall prepare, execute, and
deliver to the Paying Agent/Registrar the Bonds in definitive form and thereupon, upon
the presentation and surrender of the Bond or Bonds in temporary form to the Paying
Agent/Registrar, the Paying Agent/Registrar shall authenticate and deliver in exchange
therefor a Bond or Bonds of the same maturity and series, in definitive form, in the
authorized denomination, and in the same aggregate principal amount as the Bond or
Bonds in temporary form surrendered. Such exchange shall be made without the
making of any charge therefor to any Registered Owner.
Section 2.9 Replacement Bonds.
(a) Upon the presentation and surrender to the Paying Agent/Registrar of a
mutilated Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange
therefor a replacement Bond of like tenor and principal amount, bearing a number not
contemporaneously outstanding. The District or the Paying Agent/Registrar may
require the Registered Owner of such Bond to pay a sum sufficient to cover any tax or
other governmental charge that is authorized to be imposed in connection therewith and
any other expenses connected therewith.
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(b) In the event that any Bond is lost, apparently destroyed, or wrongfully
taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State of Texas
and in the absence of notice or knowledge that such Bond has been acquired by a bona
fide purchaser, shall authenticate and deliver a replacement Bond of like tenor and
principal amount, bearing a number not contemporaneously outstanding, provided that
the Registered Owner first:
(i) furnishes to the Paying Agent/Registrar satisfactory
evidence of his or her ownership of and the circumstances of the loss,
destruction, qr theft of such Bond;
(ii) furnishes such security or indemnity as may be required by
the Paying Agent/Registrar to save it and the District harmless;
(iii) pays all expenses and charges in connection
therewith, including, but not limited to, printing costs, legal fees, fees of the
Paying Agent/Registrar, and any tax or other governmental charge that is
authorized to be imposed; and
(iv) satisfies any other reasonable requirements imposed
by the District and the Paying Agent/Registrar.
(c) If, after the delivery of such replacement Bond, a bona fide purchaser of
the original Bond in lieu of which such replacement Bond was issued presents for
payment such original Bond, the District and the Paying Agent/Registrar shall be
entitled to recover such replacement Bond from the person to whom it was delivered or
any person taking therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any loss,
damage, cost, or expense incurred by the District or the Paying Agent/Registrar in
connection therewith.
(d) In the event that any such mutilated, lost, apparently destroyed, or
wrongfully taken Bond has become or is about to become due and payable, the Paying
Agent/Registrar, in its discretion, instead of issuing a replacement Bond, may pay such
Bond if it has become due and payable.
(e) Each replacement Bond delivered in accordance with this Section shall
constitute an original additional contractual obligation of the District and shall be entitled
to the benefits and security of this Order to the same extent as the Bond or Bonds in
lieu of which such replacement Bond is delivered.
(f) Replacement Bonds may be issued directly to beneficial owners of bonds
other than DTC or its nominee, but only in the event that (i) DTC determines not to
continue to act as securities depository for the Bonds (which determination shall
become effective no less than 90 days after written notice to such effect to the District
and the Paying Agent/Registrar); or (ii) the District has advised DTC of its determination
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(which determination is conclusive as to DTC and the beneficial owners of the Bonds)
that the interests of the beneficial owners of the Bonds might be adversely affected if
such book -entry only system of transfer is continued. Upon occurrence of any of the
foregoing events, the District shall use its best efforts to attempt to locate another
qualified securities depository. If the District fails to locate another qualified securities
depository to replace DTC, the District shall cause to be authenticated and delivered
replacement Bonds, in certificate form, to the beneficial owners of the Bonds. In the
event that the District makes the determination noted in (i) or (ii) above (provided that
the District undertakes no obligation to make any investigation to determine the
occurrence of any events that would permit the District to make any such
determination), and has made provisions to notify the beneficial owners of Bonds of
such determination by mailing an appropriate notice to DTC, it shall cause to be issued
replacement Bonds in certificate form to beneficial owners of the Bonds as shown on
the records of DTC provided to the District.
Section 2.10 Book -Entry Only System.
(a) One Initial Bond representing the entire principal amount of the Bonds
shall be issued in the name of the Purchaser, or its designee, executed and submitted
to the Attorney General of Texas for approval, and thereupon certified by the
Comptroller of Public Accounts of the State of Texas by manual signature of an
appropriate official in such office. The Initial Bond shall be delivered against payment
to the Purchaser. The Purchaser shall be required to promptly surrender the Initial
Bond to the Paying Agent/Registrar for exchange. Definitive Bonds issued in exchange
shall be registered in the name of Cede & Co., as nominee of DTC, as registered owner
of the Bonds, and held in the custody of DTC. Unless otherwise requested by DTC, a
single Bond will be issued and delivered to DTC for each maturity of the Bonds.
Beneficial owners of Bonds will not receive physical delivery of Bond certificates except
as provided hereinafter. For so long as DTC shall continue to serve as securities
depository for the Bonds as provided herein, all transfers of beneficial ownership
interests will be made by book -entry only, and no investor or other party purchasing,
selling, or otherwise transferring beneficial ownership of Bonds is to receive, hold, or
deliver any Bond certificate.
(b) With respect to Bonds registered in the name of Cede & Co., as nominee
of DTC, the District and the Paying Agent/Registrar shall have no responsibility or
obligation to any DTC Participant to hold securities to facilitate the clearance and
settlement of securities' transactions among DTC Participants or to any Person on
whose behalf a DTC Participant holds an interest in the Bonds. Without limiting the
immediately preceding sentence, the District and the Paying Agent/Registrar shall have
no responsibility or obligation with respect to (i) the accuracy of the records of DTC,
Cede & Co., or any DTC Participant with respect to any ownership interest in the Bonds,
(ii) the delivery to any DTC Participant or any other Person, other than a Registered
Owner of the Bonds, as shown on the Register, of any notice with respect to the Bonds,
and (iii) the payment to any DTC Participant or any other Person, other than a
14
Registered Owner of the Bonds, as shown in the Register, of any amount with respect
to principal of or interest on the Bonds. Notwithstanding any other provision of this
Order to the contrary, the District and the Paying Agent/Registrar shall be entitled to
treat and consider the person in whose name each Bond is registered in the Register as
the absolute owner of such Bond for the purpose of payment of principal and interest
with respect to such Bond, for the purpose of registering transfers with respect to such
Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all
principal of and interest on the Bonds only to or upon the order of the Registered
Owners, as shown in the Register as provided in this Order, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective
to fully satisfy and discharge the District's obligations with respect to payment of
principal of and interest on the Bonds to the extent of the sum or sums so paid. No
person other than a Registered Owner, as shown in the Register, shall receive a Bond
certificate evidencing the obligation of the District to make payments of principal and
interest pursuant to this Order. Upon delivery by DTC to the Paying Agent/Registrar of
written notice to the effect that DTC has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions in this Order with respect to interest
checks being mailed to the Registered Owner at the close of business on the Record
Date, the words "Cede & Co." in this Order shall refer to such new nominee of DTC.
Section 2.11 Successor Securities Depository; Transfer Outside Book -Entry Only
System. In the event that the District or the Paying Agent/Registrar determines that
DTC is incapable of discharging its responsibilities described herein and in the
Representation Letter, and that it is in the best interest of the beneficial owners of the
Bonds that they be able to obtain certificated Bonds, or in the event DTC discontinues
the services described herein, the District or the Paying Agent/Registrar shall (1) appoint
a successor securities depository, qualified to act as such under Section 17(a) of the
Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants,
as identified by DTC, of the appointment of such successor securities depository and
transfer one or more separate Bonds to such successor securities depository or
(ii) notify DTC and DTC Participants, as identified by DTC, of the availability through
DTC of Bonds and transfer one or more separate Bonds to DTC Participants having
Bonds credited to their DTC accounts, as identified by DTC. In such event, the Bonds
shall no longer be restricted to being registered in the Register in the name of Cede &
Co., as nominee of DTC, but may be registered in the name of the successor securities
depository, or its nominee, or in whatever name or names Registered Owners
transferring or exchanging Bonds shall designate, in accordance with the provisions of
this Order.
Section 2.12 Payments to Cede & Co. Notwithstanding any other provision of
this Order to the contrary, so long as any Bonds are registered in the name of Cede &
Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and
interest on such Bonds and all notices with respect to such Bonds, shall be made and
given, respectively, in the manner provided in the Representation Letter.
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ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 3.1 Limitation on Redemption. The Bonds shall be subject to
redemption before their scheduled maturity only as provided in this Article.
Section 3.2 Optional Redemption.
(a) The District reserves the option to redeem the Serial Bonds and the Term
Bonds maturing on and after February 1, 2012, in whole or in part, and by lot or by any
other customary method that results in a random selection within a maturity, before their
respective scheduled maturity dates, on February 1, 2011, or any date thereafter, at a
redemption price equal to the principal amount thereof plus accrued interest from the
most recent Interest Payment Date to the date fixed for redemption.
(b) The District, at least 45 days before the redemption date unless a shorter
period shall be satisfactory to the Paying Agent/Registrar, shall notify the paying
Agent/Registrar of such redemption date and of the principal amount of Bonds to be
redeemed.
(c) The exercise by the District of its option to redeem Bonds shall be
evidenced by an order or resolution of the Board entered into its minutes.
Section 3.3 Mandatory Redemption of Term Bonds.
(a) In addition to being subject to optional redemption as provided above, the
Term Bonds, referenced below are subject to mandatory sinking fund redemption prior
to maturity in the following amounts, on the following dates and at a price of par plus
accrued interest to the redemption date from amounts required to be deposited in the
Debt Service Fund:
$ Term Bonds $ Term Bonds
Maturing February 1, 20 Maturing February 1, 20
Mandatory Principal Mandatory Principal
Redemption Date Amount Redemption Amount
$ Term Bonds $ Term Bonds
Maturing February 1, 20 Maturing February 1, 20
Mandatory Principal Mandatory Principal
Redemption Date Amount Redemption Amount
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$ Term Bonds
Maturing February 1, 20
Mandatory Principal
Redemption Date Amount
(b) The principal amount of the Term Bonds required to be redeemed
pursuant to the operation of the mandatory sinking fund redemption provisions shall be
reduced, at the option of the District, by the principal amount of any Bonds of the stated
maturity which, at least 50 days prior to a mandatory redemption date, (1) shall have
been acquired by the District, at a price not exceeding the principal amount of such
Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying
Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the District, with monies in the Debt Service
Fund at a price not exceeding the principal amount of the Bonds plus accrued interest to
the date of purchase thereof, or (3) shall have been redeemed pursuant to the optional
redemption provisions and not theretofore credited against a mandatory sinking fund
redemption requirement.
Section 3.4 Partial Redemption.
(a) A portion of a single Bond of a denomination greater than $5,000 may be
redeemed, but only in a principal amount equal to $5,000 or any integral multiple
thereof. If such a Bond is to be partially redeemed, the Paying Agent/Registrar shall
assign a separate number for each $5,000 portion of the Bonds and select the portion
or portions of the Bond to be redeemed by lot or by any other customary method that
results in a random selection.
(b) Upon surrender of any Bond for redemption in part, the Paying
Agent/Registrar, in accordance with the provisions of this Order, shall authenticate and
deliver an exchange Bond or Bonds in an aggregate principal amount equal to the
unredeemed portion of the Bond so surrendered, such exchange being without charge.
(c) The Paying Agent/Registrar shall promptly notify the District in writing of
the Bonds selected for redemption and, in the case of any Bond selected for partial
redemption, the principal amount thereof to be redeemed.
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Section 3.5 Notice of Redemption to Registered Owners.
(a) The Paying Agent/Registrar shall give notice of any redemption of Bonds
by sending notice by first class United States mail, postage prepaid, not less than 30
days before the date fixed for redemption, to DTC and to the Registered Owner of each
Bond or portion thereof to be redeemed, at the address shown in the Register at the
close of business on the Business Day next preceding the date of mailing of such
notice.
(b) The notice shall state, among other things, the redemption date, the
redemption price, the place at which the Bonds are to be surrendered for payment, that
the Bonds so called for redemption shall cease to bear interest at the redemption date,
and, if less than all the Bonds outstanding are to be redeemed, an identification of the
Bonds or portions thereof to be redeemed.
(c) Any notice given as provided in this Section shall be conclusively
presumed to have been duly given, whether or not the Registered Owner receives such
notice.
(d) The Paying Agent/Registrar shall give written notice of redemption, by
registered mail, overnight delivery, or other comparably secure means, not less than
thirty (30) days prior to the Redemption Date, to each registered securities depository
(and to each national information service that disseminates redemption notices) known
to the Paying Agent/Registrar, but neither the failure to give such notice nor any defect
therein shall affect the sufficiency of notice given to the Registered Owner as
hereinabove stated. The Paying Agent/Registrar may provide written notice of
redemption to DTC by facsimile.
Section 3.6 Payment Upon Redemption.
(a) Before or on each redemption date, the Paying Agent/Registrar shall
make provision for the payment of the Bonds to be redeemed on such date by setting
aside and holding in trust an amount received by the Paying Agent/Registrar sufficient
to pay the principal of and accrued interest on such Bonds.
(b) Upon presentation and surrender of any Bond called for redemption at the
designated office of the Paying Agent/Registrar, on or after the date fixed for
redemption, the Paying Agent/Registrar shall pay the principal of, and accrued interest
on such Bond from the money set aside for such purpose.
Section 3.7 Effect of Redemption.
(a) Notice of redemption having been given as provided in Section 3.5 of this
Order, the Bonds or portions thereof called for redemption shall become due and
payable on the date fixed for redemption and unless the District defaults in the payment
of the principal thereof or accrued interest thereon, such Bonds or portions of such
18
Bonds shall cease to bear interest from and after the date fixed for redemption, whether
or not such Bonds are presented and surrendered for payment on such date.
(b) If any Bond or portion thereof called for redemption is not so paid upon
presentation and surrender thereof for redemption, such Bond or portion thereof shall
continue to bear interest at the rate stated on the Bond until paid or until due provision is
made for the payment of same.
Section 3.8 Lapse of Payment. Money set aside for the redemption of Bonds
and remaining unclaimed by the Registered Owners thereof shall be subject to the
provisions of Section 2.3(f).
ARTICLE IV
PAYING AGENT /REGISTRAR
Section 4.1 Appointment of Paving Agent/Registrar.
(a) JPMorgan Chase Bank is hereby appointed as the initial Paying
Agent/Registrar for the Bonds.
(b) The Paying Agent/Registrar Agreement is hereby approved and the
President and the Vice President of the Board or either of them, and the Secretary and
any Assistant or Acting Secretary of the Board, or any of them, are hereby authorized
and directed to execute the Paying Agent/Registrar Agreement for the Bonds.
Section 4.2 Qualifications of Paving Agent/Registrar. Every Paying Agent/
Registrar appointed hereunder shall be a commercial bank, 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 and registrar for the
Bonds. Every Paying Agent/Registrar shall maintain the Register at a location in the
State of Texas.
Section 4.3 Maintaining Paving Agent/Registrar.
(a) At all times while any Bonds are outstanding, the District will maintain a
Paying Agent/Registrar that is qualified under Section 4.2 of this Order.
(b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as
such, the District will promptly appoint a replacement.
Section 4.4 Termination of Paying Agent/Registrar.
(a) The District reserves the right to appoint a successor Paying
Agent/Registrar by (i) filing with the entity then performing such functions a certified
copy of a resolution or order giving 30 days notice of the termination of the appointment,
19
stating the effective date of such termination and (ii) appointing a successor Paying
Agent/Registrar.
(b) If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar,
promptly upon the appointment of the successor, will deliver the Register (or a copy
thereof) and all other pertinent books and records relating to the Bonds to the successor
Paying Agent/Registrar.
Section 4.5 Notice of Change of Paving Agent/Registrar to Registered
Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar,
the District will cause notice of the change to be sent to each Registered Owner by first
class United States mail, postage prepaid, at the address in the Register, stating the
effective date of the change and the name and mailing address of the replacement
Paying Agent/Registrar.
Section 4.6 Agreement of Paying Agent/Registrar to Perform Duties and
Functions. By accepting the appointment as Paying Agent/Registrar, the Paying
Agent/Registrar is deemed to have agreed to the provisions of this Order and that it will
perform the duties and functions of Paying Agent/Registrar prescribed hereby.
Section 4.7 Delivery of Records to Successor. If a Paying Agent/Registrar is
replaced, such Paying Agent/Registrar, promptly upon the appointment of the
successor, will deliver the Register (or a copy thereof) and all other pertinent books and
records relating to the Bonds to the successor Paying Agent/Registrar.
ARTICLE V
FORM OF BONDS
Section 5.1 Form. The form of the Bonds, including the form of the Registrar's
Authentication Certificate, the form of Assignment, and the form of Registration
Certificate of the Comptroller of Public Accounts of the State of Texas, which shall be
attached or affixed to the Bonds initially issued, shall be, respectively, substantially in
the form set forth in this Article, with such additions, deletions and variations as may be
necessary or desirable and not prohibited by this Order:
20
(a) Form of Bonds.
(Face of Bond)
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF WILLIAMSON
REGISTERED REGISTERED
NUMBER AMOUNT
R - $
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
COMBINATION UNLIMITED TAX AND REVENUE BONDS,
SERIES 2003
Interest Rate Maturity Date Initial Date CUSIP
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT (the
"District "), in the County of Williamson, State of Texas, for value received, hereby
promises to pay to or registered assigns,
but solely from the sources and in the manner hereinafter provided, on the Maturity
Date specified above, the sum of
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DOLLARS
unless this Bond shall have been sooner called for prior redemption and the payment of
the principal hereof shall have been paid or provided for, and to pay interest on such
principal amount from the later of the Initial Date set forth above or the most recent
interest payment date to which interest has been paid or provided for until payment of
such principal amount has been paid or provided for, at the per annum rate of interest
specified above, computed on the basis of a 360 -day year of twelve 30 -day months,
such interest to be paid semiannually on February 1 and August 1 of each year,
commencing August 1, 2003. The principal of this Bond shall be payable without
exchange or collection charges in lawful money of the United States of America upon
presentation and surrender of this Bond at the designated office of the Paying
Agent/Registrar or any successor thereto executing the registration certificate appearing
hereon. Interest on this Bond is payable by check, dated as Of the interest payment
date, mailed by the Paying Agent/Registrar to the registered owner at the address
shown on the registration books kept by the Paying Agent/Registrar or by such other
customary banking arrangements acceptable to the Paying Agent/Registrar and the
person to whom interest is paid; provided, however, that such person shall bear all risk
and expense of such other customary banking arrangements. For the purpose of the
payment of interest on this Bond, the registered owner shall be the person in whose
name this Bond is registered at the close of business on the "Record Date," which shall
be the fifteenth day of the month next preceding such interest payment date. In the
event of a nonpayment of interest on a scheduled payment date, and for thirty days
thereafter, a new record date for such interest payment (a "Special Record Date ") will
be established by the Paying Agent/Registrar, if and when funds for the payment of
such interest have been received from the District. Notice of the Special Record Date
and of the scheduled payment date of the past due interest (the "Special Payment
Date,' which date shall be fifteen days after the Special Record Date) shall be sent at
least five business days prior to the Special Record Date by United States mail, first
class, postage prepaid, to the address of each owner of a Bond appearing on the books
of the Paying Agent/Registrar at the close of business on the last business day next
preceding the date of mailing of such notice.
If the date for the payment of the principal of or interest on this Bond shall be a
Saturday, Sunday, legal holiday, or day on which banking institutions in the city where
the Paying Agent/Registrar is located are required or authorized by law or executive
order to close, the date for such payment shall be the next succeeding day which is not
a Saturday, Sunday, legal holiday, or day on which banking institutions are required or
authorized to close, and payment on such date shall for all purposes be deemed to
have been made on the original date payment was due.
This Bond is one of a series of fully registered bonds specified in the title hereof,
dated as of May 1, 2003 issued in the aggregate principal amount of $5,700,000 (herein
referred to as the "Bonds "), and issued pursuant to the authority provided by the
Constitution and laws of the State of Texas, particularly Chapters 49 and 54 of the
Texas Water Code, as amended, by authority of an election held for and within the
District on July 13, 1985, and a certain order of the District (the "Order ") for the purpose
of providing funds to pay the costs of acquiring water, wastewater, and drainage
facilities to serve the Meadows at Chandler Creek Development, including internal
water, wastewater, and drainage facilities in Sections 5, 6C, 10, 11, 12, 13, 14, 15, 16,
17, 19, 21, and 22 of the development, and to finance certain engineering costs. In
addition, proceeds of the Bonds will be used to pay certain administrative and issuance
costs of the Bonds, as described in the Order. Capitalized terms used herein and not
otherwise defined shall have the meaning assigned thereto in the Order.
The District reserves the option to redeem Bonds maturing on or after February
1, 2012, in whole or in part, in principal amounts of $5,000 or any integral multiple
thereof, before their respective scheduled maturity dates, on February 1, 2011, or on
any date thereafter, at a price equal to the principal amount of the Bonds so called for
redemption plus accrued interest to the redemption date. If less than all of the Bonds
are to be optionally redeemed, the Bonds shall be redeemed by lot or other customary
random method within such maturity to be redeemed.
The Bonds referenced below (the "Term Bonds ") are subject to mandatory
sinking fund redemption prior to maturity in the following amounts, on the following
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dates and at a price of par plus accrued interest to the redemption date, subject to
reduction by prior cancellation or optional redemption:
$ Term Bonds $ Term Bonds
Maturing February 1. 20 Maturing February 1, 20
Mandatory Principal Mandatory Principal
Redemption Date Amount Redemption Amount
$ Term Bonds $ Term Bonds
Maturing February 1, 20 Maturing February 1, 20
Mandatory Principal Mandatory Principal
Redemption Date Amount Redemption Amount
$ Term Bonds
Maturing February 1 20
Mandatory Principal
Redemption Date Amount
The Term Bonds to be redeemed shall be selected by lot or other customary
random method. The Term Bonds shall be redeemed at a price equal to the principal
amount of the Bonds or portions thereof so called for redemption, plus accrued interest
to the date of redemption. Reference is made to the Order for complete details
concerning the manner of mandatorily redeeming Term Bonds.
As provided in the Order and subject to certain limitations therein set forth, this
Bond is transferable upon surrender of this Bond for transfer at the designated
corporate trust office of the Paying Agent/Registrar with such endorsement or other
evidence of transfer as is acceptable to the Paying Agent/Registrar, and, thereupon,
one or more new fully registered Bonds of the same stated maturity, of authorized
denominations, bearing the same rate of interest, and for the same aggregate principal
amount will be issued to the designated transferee or transferees.
Neither the District nor the Paying Agent/Registrar shall be required to issue,
transfer, or exchange any Bond called for redemption when such redemption is to occur
within 45 calendar days after the transfer or exchange date. However, such limitations
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of transfer shall not be applicable to an exchange by the Registered Owner of the
unredeemed balance of a Bond called for redemption in part.
The District, the Paying Agent/Registrar, and any other person may treat the
person in whose name this Bond is registered as the owner hereof for the purpose of
receiving payment as herein provided (except interest shall be paid to the person in
whose name this Bond is registered on the Record Date) and for all other purposes,
whether or not this Bond be overdue, and neither the District, the Paying
Agent/Registrar, nor any such agent shall be affected by notice to the contrary.
STATEMENT OF INSURANCE
[to follow]
IT IS HEREBY CERTIFIED, RECITED, AND COVENANTED that this Bond has
been duly and validly issued and delivered; that all acts, conditions, and things required
or proper to be performed, to exist, and to be done precedent to or in the issuance and
delivery of this Bond have been performed, exist, and have been done in accordance
with law; and that an ad valorem tax, without legal limit as to rate or amount, sufficient to
provide for the payment of the interest on and principal of this Bond, as such interest
comes due and such principal matures, has been levied and ordered to be levied
against all taxable property in the District and has been pledged irrevocably for such
payment.
IT IS FURTHER CERTIFIED, RECITED, AND COVENANTED that certain net
revenues to be derived from the ownership and operation of the District's waterworks
and sanitary sewer system also have been pledged to the payment of the interest on
and principal of the Bonds to the extent that ad valorem taxes levied and collected for
the payment thereof, together with other amounts on deposit in the District's Debt
Service Fund, are insufficient for such purpose, all as set forth in the Order, to which
reference is made for all particulars, and that such Order also permits the District and its
successors to issue obligations secured in whole or in part by lien on and pledge of
such net revenues on a parity with or subordinate to the lien securing the Bonds.
IN WITNESS WHEREOF, this Bond has been signed with the manual or
facsimile signature of the President of the Board of Directors and countersigned with the
manual or facsimile signature of the Secretary of the Board of Directors, and the official
seal of the District has been duly impressed, or placed in facsimile, on this Bond.
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Secretary, Board of Directors
(SEAL)
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
STATE OF TEXAS
THE MEADOWS AT CHANDLER CREEK
MUNICIPAL UTILITY DISTRICT
President, Board of Directors
(b) Form of Comptroller's Registration Certificate.
[to be printed on Initial Bond only]
COMPTROLLER'S REGISTRATION CERTIFICATE
REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and
approved by the Attorney General of the State of Texas, and that this Bond has been
registered by the Comptroller of Public Accounts of the State of Texas.
WITNESS MY SIGNATURE AND SEAL this
XXXXX
Comptroller of Public Accounts
of the State of Texas
(SEAL)
(c) Form of Registrar's Authentication Certificate
AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been delivered pursuant to the Order
described in the text of this Bond, in exchange for or in replacement of a bond, bonds or
a portion of a bond or bonds of a series which was originally approved by the Attorney
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Signature Guaranteed:
Registered Owner(s)
NOTICE: Signature must be
NOTICE: The signature above must
guaranteed by a member firm of the
correspond to the name of the
New York Stock Exchange or a
Registered Owner(s) as shown on the
commercial bank or trust company.
face of this Bond in every particular,
without any alteration, enlargement or
change whatsoever.
General of the State of Texas and registered by the Comptroller of Public Accounts of
the State of Texas.
(d) Form of Assignment
For value received, the undersigned hereby sells, assigns, and transfers unto
JPMORGAN CHASE BANK
By:
Authorized Signature
Date of Authentication:
ASSIGNMENT
(Please print or type name, address, and zip code of Transferee)
Please insert Social Security or Taxpayer Identification Number of Transferee)
the within Bond and all rights thereunder, and hereby irrevocably constitutes and
appoints attorney to transfer said Bond on the books kept for registration thereof, with
full power of substitution in the premises.
DATED:
(e) The Initial Bond shall be in the form set forth in subsection (a) of this
Section, except for the following alterations:
(1) immediately under the name of the Bond, the headings "Interest
Rate," "Maturity Date" shall be completed with the words "As Shown Below" and
the heading "CUSIP" deleted.
(2) in the first paragraph of the Bond:
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(A) the words on the Maturity Date specified above the sum of
DOLLARS" shall be deleted and the
following will be inserted: on February 1 in each of the years, in
the principal amounts and bearing interest at the per annum rates
set forth in the following schedule:"
(Information to be inserted from schedule in
Section 2.2 of this Order)
(B) the words "executing the registration certificate appearing
hereon" shall be deleted and an additional sentence shall be added
to the paragraph as follows: "The initial Paying Agent/Registrar is
JPMorgan Chase Bank."
(3) the Initial Bond shall be numbered T -1.
Section 5.2 CUSIP Registration. The President of the Board may secure the
printing of identification numbers on the Bonds through the CUSIP Service Bureau
Division of Standard and Poor's Corporation, New York, New York.
Section 5.3 Legal Opinion. The approving opinion of Bond Counsel, Winstead
Sechrest & Minick P.C., may be printed on the back of the Bonds with the certification of
the Secretary of the Board which may be executed in facsimile.
ARTICLE VI
SECURITY OF THE BONDS
Section 6.1 Security of Bonds. The Bonds are secured by and payable from
the levy of a continuing, direct, annual ad valorem tax, without limit as to rate or amount,
upon all taxable property within the District, and are further secured by and payable
from a lien on and pledge of certain Net Revenues (as defined below) of the Districts
System.
Section 6.2 Levy of Tax. To pay the interest on the Bonds, and to create a
sinking fund for the payment of the principal thereof when due, and to pay the expenses
of assessing and collecting such taxes, there is hereby levied, and shall be assessed
and collected in due time, a continuing, direct annual ad valorem tax, without limit as to
rate or amount, on all taxable property in the District for each year while any of the
Bonds are outstanding. All of the proceeds of such collections, except expenses
incurred in that connection, shall be paid into the Debt Service Fund, and the
aforementioned tax and such payments into such fund shall continue until the Bonds
and the interest thereon have been fully paid and discharged, and such proceeds shall
be used for such purposes and no other. While the Bonds, or any of them, are
outstanding and unpaid, an ad valorem tax each year at a rate from year to year as will
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be ample and sufficient to provide funds to pay the interest on the Bonds and to provide
the necessary sinking fund to pay the principal when due, full allowance being made for
delinquencies and costs of collection, shall be levied, assessed, and collected and
applied to the payment of principal and interest on the Bonds. In determining the
amount of taxes which should be levied each year, the Board of Directors may consider
whether proceeds from the sale of Bonds have been placed in escrow to pay interest
during construction and whether the Board of Directors reasonably expects to have
revenue or receipts available from other sources which are legally available to pay
principal of or interest or redemption price on the Bonds.
Section 6.3 Net Revenue Pledge as Additional Security.
(a) For purposes of this Section the following terms shall have the following
definitions:
(i) The term "Maintenance and Operation Expenses" shall
mean the expenses necessary to provide for the administration, efficient
operation, and adequate maintenance, of the System together with such other
costs and expenses as may now or hereafter be defined by law as proper
Maintenance and Operation Expenses of the System; and
(ii) The term "Net Revenues" shall mean all income derived
from the ownership and operation of the System after deducting the Maintenance
and Operation Expenses and providing for the funding of any operating reserve
from time to time established by the Board.
(b) In order to further secure the Bonds, the District hereby grants a lien on
and pledge of the Districts Net Revenues. Such Net Revenues, as herein provided, are
hereby pledged to the payment of the principal, interest, redemption price, and bank
charges of the Bonds. If at any time ad valorem taxes levied and collected for the
payment thereof, together with other amounts in the Debt Service Fund, are insufficient
for such purpose, the District shall transfer to the Debt Service Fund such available Net
Revenues as shall be necessary to provide (together with other amounts on deposit in
the Debt Service Fund) for the payment of principal, interest, redemption price, and
bank charges of the Bonds; provided, however, that no transfers of revenues shall be
made to the Debt Service Fund by the District until all Maintenance and Operation
Expenses, including the cost of maintaining an operating reserve, shall have been paid
by the District. The District reserves the right to apply Net Revenues not required for
current payments of principal, interest, redemption price, and bank charges of the
Bonds for any lawful purpose of the District. Notwithstanding the foregoing, no
revenues generated from maintenance taxes shall be included in Net Revenues or used
to make payments on the Bonds.
(c) The pledge of the Net Revenues hereunder is on a parity with the pledge
of the Net Revenues made to secure the obligations relating to the Series 1994
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Refunding Bonds, the Series 1999 Bonds, and the Series 2001 Bonds. The District
reserves the right to issue Additional Bonds and incur obligations secured in whole or in
part by a lien on and pledge of Net Revenues on a parity with or subordinate to the lien
on and pledge of Net Revenues securing the Bonds, and to apply such Net Revenues
to the payment of such Additional Bonds and obligations on a parity with or subordinate
to the Bonds.
(d) The District is located within the extraterritorial jurisdiction of the City of
Round Rock, Texas (the "City "). The City has the right to annex and dissolve the
District. At such time, the obligations of the District payable in whole or in part from ad
valorem taxes shall become obligations of the City, and the governing body of the City
is thereafter required to levy and cause to be collected taxes on all taxable property
within the City sufficient to pay the principal of and interest on the obligations of the
District so assumed by the City. In order to allow the City to integrate the District's
System into the City's water and sewer system, the City may terminate the pledge of
and lien on the Net Revenues of the District's System to the payment of the Bonds. The
City may under certain circumstances annex but not dissolve the District, in which case
the District may continue to provide retail water and wastewater service and the
maintenance of parks and recreation areas.
(e) State law permits the District to be consolidated with one or more
conservation and reclamation districts. In the event the District is consolidated with
another district or districts, the District reserves the right to:
(i) consolidate the System with a similar system of one or more
districts with which the District is consolidating and operate and maintain the
systems as one consolidated system (the "Consolidated System");
(ii) apply the net revenues from the operation of the
Consolidated System to the payment of principal, interest, redemption price, and
bank charges on the Bonds and any other combination tax and revenue bonds or
bonds or other obligations secured solely or primarily by such net revenues (the
"Revenue Bonds ") of the District and of the district or districts with which the
District is consolidating (herein collectively, the "Consolidating Districts ") without
preference to any series of bonds (except subordinate lien revenue bonds which
shall be subordinate to the Revenue Bonds of the Consolidating Districts); or
(iii) pledge the net revenues of the Consolidated System to the
payment of principal, interest, redemption price, and bank charges on any
Revenue Bonds which may be issued by the Consolidating Districts on a parity
with the outstanding Revenue Bonds of the Consolidating Districts.
Section 6.4 Perfection of Pledge. Chapter 1208, Texas Government Code, as
amended, applies to the issuance of the Bonds and the pledge of the taxes and
revenues granted by the District in this Article, and such pledge is therefore valid,
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effective, and perfected. If Texas law is amended at any time while the Bonds are
outstanding and unpaid such that the pledge of the taxes and revenues granted by the
District hereunder is to be subject to the filing requirements of Chapter 9, Texas
Business and Commerce Code, as amended, then in order to preserve to the
Registered Owners of the Bonds the perfection of the security interest in the pledge, the
District hereby agrees to take such measures as it determines are reasonable and
necessary under Texas law to comply with the applicable provisions of Chapter 9,
Texas Business and Commerce Code, as amended, and to enable a filing to perfect the
security interest in the pledge to occur.
ARTICLE VII
FUNDS; FLOW OF FUNDS; AND INVESTMENTS
Section 7.1 Creation of Funds.
(a) There is hereby created and established the "Meadows at Chandler Creek
Municipal Utility District 2003 Construction Account."
(b) There is hereby affirmed the "Operating Fund," created and maintained as
set forth in the District's order authorizing the Series 1987 Bonds and affirmed in the
District's order authorizing the Series 1999 Bonds and again in the District's order
authorizing the Series 2001 Bonds.
(c) There is hereby created and established a separate and special account
or fund on the books and records of the District known as the "Series 2003 Debt Service
Fund" (the "Debt Service Fund ") for the purpose of providing funds to pay the principal
of, redemption price, if any, and interest on the Bonds as the same becomes due and
payable, and all money deposited to the credit of the Debt Service Fund shall be held in
a special banking fund or account maintained at an official depository of the District.
The Debt Service Fund shall constitute a trust fund which shall be held in trust by the
District for the benefit of the Registered Owners of the Bonds. There may be created
within the Debt Service Fund such accounts and subaccounts as the District deems
necessary or desirable.
(d) The Debt Service Fund and Construction Account shall be held at an
official depository of the District, and shall be kept separate and apart from all other
funds of the District. The Debt Service Fund shall constitute a trust fund which shall be
held in trust by the District for the benefit of the Registered Owners of the Bonds. There
may be created within the Construction Account and Debt Service Fund such accounts
and subaccounts as the District deems necessary or desirable.
Section 7.2 Security of Funds. Any cash balance in any fund shall be invested
subject to the Public Funds Investment Act, Chapter 2256, Texas Government Code, as
amended.
Section 7.3 Debt Service Fund.
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(a) The District shall deposit or cause to be deposited into the Debt Service
Fund the aggregate of the following at the time specified:
Bonds; and
(1)
upon receipt by the District, the accrued interest on the
(ii) taxes levied and collected pursuant to Section 6.2 hereof,
less costs of collection, as collected.
(b) Not later than five (5) days prior to any principal and /or Interest Payment
Date on the Bonds, the Board of Directors shall cause the transfer of money out of the
Debt Service Fund to the Paying Agent/Registrar in an amount not less than that which
is sufficient to pay the principal which matures on such date, the interest which accrues
on such date, and the Paying Agent/Registrar's fees for handling such payments on that
date.
Section 7.4 Operating Fund. The Operating Fund is the maintenance fund of
the District into which shall be placed the revenues from operations of the System. The
Operating Fund shall be used first to pay all reasonable expenses of administration,
efficient operation, and adequate maintenance of the System and the District, including
payments to political subdivisions or municipalities for regional waste disposal and
water supply services and facilities, if necessary, after which Net Revenues, if any, shall
either (i) periodically be transferred into the Debt Service Fund for so long as any part of
the principal of or interest on the Bonds is outstanding, or (ii), to the extent that the
balance in the Debt Service Fund and tax collections available for deposit thereto are
sufficient to pay when due the obligations of the District payable from the Debt Service
Fund, to pay other proper expenses of the District.
Section 7.5 Deposit of Proceeds. Accrued interest on the Bonds shall be
deposited into the Debt Service Fund upon receipt. Proceeds of the Bonds in the
amount of $474,318.00 shall be deposited into an escrow account pursuant to the
Escrow Agreement, to be disbursed pursuant to the terms of the Escrow Agreement
and this Order, and the remaining proceeds of sale of the Bonds, including interest
earnings thereon, shall be deposited into the Construction Account and shall be used
for the purposes set forth in this Order and for payment of the costs of issuing the
Bonds, with any remainder after completion of the entire System described in this Order
being transferred to the Debt Service Fund, all in accordance with the applicable laws
and regulations, including those of the Texas Commission on Environmental Quality or
its successor, in effect at such time.
Section 7.6 Investments. Money deposited into the Debt Service Fund or
Construction Account and any other fund or funds that the District may lawfully create
may be invested or reinvested in any legally authorized investments. All investments
and any profits realized from or interest accruing on such investments shall belong to
the fund from which the money for such investments was taken; provided, however, that
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in the discretion of the Board the profits realized from and interest accruing on
investments made from any fund may be transferred to the Debt Service Fund.
Section 7.7 Escrow Agreement. The Escrow Agreement is hereby approved
and the President and the Vice President of the Board or either of them, and the
Secretary and any Assistant or Acting Secretary of the Board, or any of them, are
hereby authorized and directed to execute the Escrow Agreement for the Bonds.
ARTICLE VIII
SPECIFIC OBLIGATIONS OF BOARD
Section 8.1 Covenants. The Board of Directors, on behalf of the District,
expressly stipulates and covenants that, for the benefit of the Purchaser and any and all
subsequent Registered Owners of the Bonds (and enforceable by any one or all of said
Registered Owners), in addition to all other provisions hereof, it will:
(a) Fix and maintain rates and collect charges for the facilities and services
rendered by the District which, together with any taxes levied for maintenance
purposes, will provide revenues sufficient at all times to pay all reasonable
administration expenses of the District and all efficient operation and adequate
maintenance expenses of the System. The Board has enacted and will maintain in
effect an order fixing rates and charges for services which contains, among other
provisions, a requirement for periodic billing of all customers of the District and a
prohibition against the fumishing of water or sewer service without charge to any
person, firm, organization, or corporation.
(b) Subject to the provisions of Article VI of this Order, levy an ad valorem tax
that will be ample and sufficient to provide funds to pay the interest on the Bonds and to
provide the necessary sinking fund.
(c) Not mortgage or otherwise encumber the physical properties of the
System, nor sell, lease, or otherwise dispose of any substantial portion of such physical
properties, unless said properties of the System are deemed by the Board of Directors
of the District to be unnecessary to the operation of the System.
(d) Maintain the System in good condition and operate it in an efficient
manner and at a reasonable cost.
(e) Maintain insurance on the System of a kind and in an amount which
usually would be carried by municipal corporations and political subdivisions in Texas
operating similar facilities.
(f) Keep accurate records and accounts and employ an independent certified
public accountant of recognized integrity and ability to direct the installation of the
required accounting procedures and to audit its affairs at the close of each fiscal year.
The fiscal year of the District is from October 1 to September 30 of the following year, or
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such other fiscal year as the Board of Directors may hereafter designate. Said audits
shall include a statement in detail of the income and expenditures of the System for
each year; a balance sheet as of the end of the year; the auditor's comments regarding
the manner in which the District has carried out the requirements of all bond resolutions
and orders; his recommendations, if any, for changes or improvements in the operation
of the District's plants, facilities, and improvements; a list of insurance policies in force
as of the date of the audit including the amount, expiration date, risk covered, and name
of the insurer for each such policy; and the number of properties connected to the
System as of the end of the fiscal year. The audit report shall be delivered to each
member of the Board not later than 120 days after the close of each fiscal year, and
shall be retained and filed in the office of the auditor. Copies of said audit shall be filed
as required by law and maintained in the office of the District, available for inspection by
any interested person or persons during normal office hours.
ARTICLE IX
TAX EXEMPTION
Section 9.1 Provisions Concerning Federal Income Tax Exclusion. The District
covenants to take any action to maintain, or refrain from any action which would
adversely affect, the treatment of the Bonds as obligations described in section 103 of
the Intemal Revenue Code of 1986, as amended (the "Code "), the interest on which is
not includable in "gross income" for federal income tax purposes. In furtherance
thereof, the District specifically covenants as follows:
(i) To refrain from taking any action which would result in the
Bonds being treated as "private activity bonds" within the meaning of section
141(a) of the Code;
(ii) To take any action to assure that no more than 10% of the
proceeds of the Bonds or the projects financed therewith are used for any
"private business use," as defined in section 141(b)(6) of the Code or, if more
than 10% of the proceeds or the projects financed therewith are so used, that
amounts, whether or not received by the District with respect to such private
business use, do not under the terms of this Order or any underlying
arrangement, directly or indirectly, secure or provide for the payment of more
than 10% of the debt service on the Bonds, in contravention of section 141(b)(2)
of the Code;
(iii) To take any action to assure that in the event that the "private
business use" described in paragraph (ii) hereof exceeds 5% of the proceeds of
the Bonds or the projects financed therewith, then the amount in excess of 5% is
used for a "private business use" which is "related" and not "disproportionate,"
within the meaning of section 141(b)(3) of the Code, to the governmental use;
33
(iv) To take any action to assure that no amount which is greater
than the lesser of $5,000,000 or 5% of the proceeds of the Bonds is directly or
indirectly used to finance loans to persons, other than state or local governmental
units, in contravention of section 141(c) of the Code;
(v) To refrain from taking any action which would result in the
Bonds being "federally guaranteed" within the meaning of section 149(b) of the
Code;
(vi) Except to the extent permitted by section 148 of the Code
and the regulations and rulings thereunder, to refrain from using any portion of
the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds
which were used, directly or indirectly, to acquire investment property (as defined
in section 148(b)(2) of the Code) which produces a materially higher yield over
the term of the Bonds;
(vii) To otherwise restrict the use of the proceeds of the Bonds or
amounts treated as proceeds of the Bonds, as may be necessary, so that the
Bonds do not otherwise contravene the requirements of section 148 of the Code
(relating to arbitrage) and, to the extent applicable, section 149(d) of the Code
(relating to advance refunding);
(viii) Except to the extent otherwise provided in section 148(f) of
the Code and the regulations and rulings thereunder, to pay to the United States
of America at least once during each five year period (beginning on the date of
delivery of the Bonds) an amount that is at least equal to 90% of the "Excess
Earnings," within the meaning of section 148(f) of the Code, and to pay to the.
United States of America, not later than 60 days after the Bonds have been paid
in full, 100% of the amount then required to be paid as a result of Excess
Earnings under section 148(f) of the Code; and
(ix) To maintain such records as will enable the District to fulfill
its responsibilities under this subsection and section 148 of the Code and to
retain such records for at least six years following the final payment of principal
and interest on the Bonds.
For the purposes of the foregoing, in the case of a refunding bond, the term proceeds
includes transferred proceeds and, for purposes of paragraphs (ii) and (iii), proceeds of
the refunded bonds.
The covenants contained herein are intended to assure compliance with the
Code and any regulations or rulings promulgated by the U.S. Department of Treasury
pursuant thereto. In the event that regulations or rulings are hereafter promulgated
which modify or expand provisions of the Code, as applicable to the Bonds, the District
will not be required to comply with any covenant contained herein to the extent that
34
such noncompliance, in the opinion of nationally- recognized bond counsel, will not
adversely affect the exclusion from gross income of interest on the Bonds under section
103 of the Code. In the event that regulations or rulings are hereafter promulgated
which impose additional requirements which are applicable to the Bonds, the District
agrees to comply with the additional requirements to the extent necessary, in the
opinion of nationally- recognized bond counsel, to preserve the exclusion from gross
income of interest on the Bonds under section 103 of the Code.
Proper officers of the District charged with the responsibility of issuing the Bonds
are hereby authorized and directed to execute any documents, certificates, or reports
required by the Code and to make such elections, on behalf of the District, which may
be permitted by the Code as are consistent with the purpose for the issuance of the
Bonds.
Notwithstanding any other provision in this Order, to the extent necessary to
preserve the exclusion from gross income of interest on the Bonds under section 103 of
the Code the covenants contained in this subsection shall survive the later of the
defeasance or discharge of the Bonds.
Section 9.2 Covenants Regarding Sale, Lease, or Disposition of Financed
Property. The District covenants that the District will regulate the use of the property
financed, directly or indirectly, with the proceeds of the Bonds and will not sell, lease, or
otherwise dispose of such property unless (i) the District takes the remedial measures
as may be required by the Code and the regulations and rulings thereunder in order to
preserve the exclusion from gross income of interest on the Bonds under section 103 of
the Code or (ii) the District seeks the advice of nationally- recognized bond counsel with
respect to such sale, lease, or other disposition.
Section 9.3 Designation as Qualified Tax - Exempt Obligations. The District
hereby designates the Bonds as "qualified tax - exempt obligations" as defined in section
265(b)(3) of the Code. In furtherance of such designation, the District represents,
covenants, and warrants the following: (a) during the calendar year in which the Bonds
are issued, the District (including any subordinate entities) has not designated nor will
designate obligations, which when aggregated with the Bonds, will result in more than
$10,000,000 of "qualified tax - exempt obligations" being issued; (b) the District reason-
ably anticipates that the amount of tax - exempt obligations issued during 2003 by the
District (including any subordinate entities) will not exceed $10,000,000; and (c) the
District will take such action which would assure, or to refrain from such action which
would adversely affect, the treatment of the Bonds as "qualified tax - exempt obligations."
ARTICLE X
CONTINUING DISCLOSURE OF FINANCIAL INFORMATION
Section 10.1 Annual Reports.
35
(a) The District shall provide annually to each NRMSIR and any SID, within
six months after the end of each fiscal year ending in or after 2003, financial information
and operating data with respect to the District, including the District's annual financial
statements, current tax data, water and sewer operations data, and debt service
information. Any financial statements so to be provided shall be (i) prepared in
accordance with generally accepted auditing standards or such other accounting
principles as the District may be required to employ from time to time pursuant to State
law or regulation and (ii) audited, if the audit is completed within the period during which
they must be provided. If the audit of such financial statements is not complete within
such period, then the District shall provide unaudited financial statements for the
applicable fiscal year to each NRMSIR and any SID within such six month period and
audited financial statements when the audit report on such statements becomes
available.
(b) If the District changes its fiscal year, it will notify each NRMSIR and any
SID of the change (and of the date of the new fiscal year end) prior to the next date by
which the District otherwise would be required to provide financial information and
operating data pursuant to this Section.
(c) The financial information and operating data to be provided pursuant to
this Section may be set forth in full in one or more documents or may be included by
specific reference to any document (including an official statement or other offering
document, if it is available from the MSRB) that theretofore has been provided to each
NRMSIR and any SID or filed with the SEC.
Section 10.2 Material Event Notices.
(a) The District shall notify any SID and either each NRMSIR or the MSRB, in
a timely manner, of any of the following events with respect to the Bonds, if such event
is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non - payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial
difficulties;
4. Unscheduled draws on credit enhancements reflecting financial
difficulties;
5. Substitution of credit or liquidity providers, or their failure to
perform;
6. Adverse tax opinions or events affecting the tax - exempt status of
the Bonds;
7. Modifications to rights of the Registered Owners;
8. Bond calls;
9. Defeasances;
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10. Release, substitution, or sale of property securing repayment of the
Bonds; and
11. Rating changes affecting the Bonds.
(b) The District shall notify any SID and either each NRMSIR or the MSRB, in
a timely manner, of any failure by the District to provide financial information or
operating data in accordance with Section 10.1 of this Order by the time required by
such Section.
Section 10.3 Limitations, Disclaimers, and Amendments.
(a) The District shall be obligated to observe and perform the covenants
specified in this Article for so long as, but only for so long as, the District remains an
"obligated person" with respect to the Bonds within the meaning of the Rule, except that
the District in any event will give notice of any deposit made in accordance with Texas
law that causes the Bonds no longer to be outstanding.
(b) The provisions of this Section are for the sole benefit of the Registered
Owners and nothing in this Article, express or implied, shall give any benefit or any legal
or equitable right, remedy, or claim hereunder to any other person. The District
undertakes to provide only the financial information, operating data, financial
statements, and notices which it has expressly agreed to provide pursuant to this Article
and does not hereby undertake to provide any other information that may be relevant or
material to a complete presentation of the District's financial results, condition, or
prospects or hereby undertake to update any information provided in accordance with
this Article or otherwise, except as expressly provided herein. The District does not
make any representation or warranty concerning such information or its usefulness to a
decision to invest in or sell Bonds at any future date.
(c) UNDER NO CIRCUMSTANCES SHALL THE DISTRICT BE LIABLE TO A
REGISTERED OWNER OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR
DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE
DISTRICT, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY
COVENANT SPECIFIED IN THIS SECTION. EVERY RIGHT AND REMEDY OF ANY
SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH
BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
(d) No default by the District in observing or performing its obligations under
this Article shall comprise a breach of or default under this Order for purposes of any
other provision of this Order. Nothing in this Article is intended or shall act to disclaim,
waive, or otherwise limit the duties of the District under federal and state securities laws.
37
(e) Notwithstanding any other provision within this Order, the provisions of
this Article may be amended by the District 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, or status or type of operations of the District, if (1) the
agreement, as so amended, would have permitted an underwriter to purchase or sell
Bonds in the original primary offering in compliance with the Rule, taking into account
such amendment as well as such changed circumstances, and (2) a person unaffiliated
with the District (such as nationally recognized bond counsel) determines that the
amendment will not materially impair the interests of the Registered Owners. If any
such amendment is made, the District will include in its next annual update an
explanation in narrative form of the reasons for the change and its impact on the type of
operating data or financial information being provided.
ARTICLE XI
ADDITIONAL BONDS AND REFUNDING BONDS
Section 11.1 Additional Bonds. The District expressly reserves the right to issue,
in one or more installments, for the purpose of completing, repairing, improving,
extending, enlarging, or replacing the System or any other lawful purpose (a) the
unissued unlimited tax and revenue bonds which were authorized at the bond election
described in the recitals of this Order; and (2) such other unlimited tax and revenue
bonds as may hereafter be authorized at subsequent elections.
Section 11.2 Revenue Bonds. The District expressly reserves the right to issue
revenue bonds in one or more installments for the purpose of completing, repairing,
improving, extending, enlarging, or replacing the System, which will be payable solely
from the Net Revenues and such bonds may be payable from and equally secured by a
lien on and pledge of the Net Revenues.
Section 11.3 Inferior Lien Bonds. The District also reserves the right to issue
inferior lien bonds and pledge the Net Revenues to the payment thereof, such pledge to
be subordinate in all respects to the lien of previously issued Additional Bonds and
revenue bonds.
Section 11.4 Special Project Bonds. The District further reserves the right to
issue bonds in one or more installments for the purchase, construction, improvement,
extension, replacement, enlargement, or repair of water, sewer, and /or drainage
facilities necessary under a contract or contracts with persons, corporations, municipal
corporations, political subdivisions, or other entities, such bonds to be payable from and
secured by the proceeds of such contract or contracts. The District further reserves the
right to refund such bonds.
Section 11.5 Refunding Bonds. The District further reserves the right to issue
Refunding Bonds in any manner permitted by law to refund any Bonds and Additional
Bonds at or prior to their respective dates of maturity or redemption.
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ARTICLE XII
SALE AND DELIVERY OF BONDS
Section 12.1 Sale and Delivery of Bonds.
(a) The sale and delivery of the Bonds to (herein collectively
referred to as the "Purchaser") at a price of $ plus accrued interest thereon
to date of delivery, is hereby authorized, approved, ratified, and confirmed, subject to
the approving opinion as to the legality of the Bonds of the Attorney General of the State
of Texas, and of Winstead Sechrest & Minick P.C., bond counsel.
(b) It is hereby found and declared that the Purchaser's bid is the best bid for
the Bonds after advertisement and public sale, and that the net effective interest rate
resulting from such bid is _ %, which rate is less than the maximum rate permitted by
law.
(c) The President, Vice President, and Secretary of the Board of Directors are
authorized to execute such documents, certificates, and receipts and to take such
actions as they may deem appropriate in order to consummate the delivery of the
Bonds in accordance with this Order.
(d) Approval of Official Statement. The District ratifies and confirms its prior
approval of the form and content of the Preliminary Official Statement prepared in the
initial offering of the Bonds and hereby authorizes and approves the amendment of the
Preliminary Official Statement to add the terms of the Purchaser's bid and to make any
other changes necessary to comply with the provisions of this Order and existing law.
The use of such final Official Statement in the referring of the Bonds by the Purchaser is
hereby approved and authorized. The proper officials of the District are hereby
authorized to execute and deliver a certificate pertaining to such Official Statement as
prescribed therein, dated as of the date of payment for and delivery of the Bonds. The
District will furnish to the Purchaser of the Bonds from the District (and to each other
"Participating Underwriter" of the Bonds, within meaning of SEC Rule 15c2- 12(a),
designated by the Purchaser), within seven (7) business days after the sale date, copies
of the final Official Statement in such amount required by the Purchaser not to exceed
100 copies. The District will also furnish to the Purchaser a like number of any
supplement or amendment prepared by the District for dissemination to potential
purchasers of the Bonds as described above as well as such additional copies of the
Official Statement or any supplement or amendment as the Purchaser may request
prior to the 90th day after the end of the underwriting period referred to in SEC Rule
15c2- 12(e)(2). The District will pay the expense of preparing up to 100 copies of the
Official Statement and all copies of any supplement or amendment issued on or before
the delivery date, but the Purchaser must pay for all other copies of the Official
Statement or any supplement or amendment thereto.
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Section 13.1 Events of Default. Each of the following occurrences or events for
the purpose of this Order is hereby declared to be an Event of Default:
(a) the failure to make payment of the principal of or interest on any of the
Bonds when the same becomes due and payable;
(b) default in the performance or observance of any other covenant,
agreement, or obligation of the District and the continuation thereof for a period of 60
days after notice of such default is given by any Registered Owner to the District; or
(c) the District files for protection under the federal Bankruptcy Code or other
similar state or federal statute.
Section 13.2 Remedies for Default.
ARTICLE XIII
DEFAULT AND REMEDIES
(a) Upon the occurrence of any Event of Default, then any Registered Owner
or an authorized representative thereof, including but not limited to, a trustee or trustees
therefor, may proceed against the District for the purpose of protecting and enforcing
the rights of the Registered Owners under this Order, by mandamus or other suit,
action, or special proceeding in equity or at law, in any court of competent jurisdiction,
for any relief permitted by law, including the specific performance of any covenant or
agreement contained herein, or thereby to enjoin any act or thing that may be unlawful
or in violation of any right of the Registered Owners hereunder or any combination of
such remedies.
(b) All such proceedings shall be instituted and maintained for the equal
benefit of all Registered Owners.
Section 13.3 Remedies Not Exclusive.
(a) No remedy herein conferred or reserved is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or under the
Bonds or now or hereafter existing at law or in equity; provided, however, that
notwithstanding any other provision of this Order, the right to accelerate the debt
evidenced by the Bonds shall not be available as a remedy under this Order.
(b) The exercise of any remedy herein conferred or reserved shall not be
deemed a waiver of any other available remedy.
ARTICLE XIV
DISCHARGE
40
Section 14.1 Discharge by Payment. When all or any portion of the Bonds have
been paid in full or when all or any portion of the Bonds have become due and payable,
whether at maturity or otherwise, and the District shall have provided for the payment of
the whole amount due or to become due on such Bonds then outstanding by depositing
with the Paying Agent/Registrar for payment of such Bonds the entire amount due or to
become due thereon, and the District shall also have paid or caused to be paid all sums
payable under this Order by the District with respect to all Bonds, including the
compensation due or to become due the Paying Agent/Registrar, then the Paying
Agent/Registrar, upon receipt of a letter of instructions from the District requesting the
same, shall discharge and release the lien of this Order with respect to such Bonds and
execute and deliver to the District such releases or other instruments as shall be
requisite to release the lien hereof.
Section 14.2 Discharge by Degosit.
(a) The District may discharge its obligation to pay the principal of and interest
on all or any portion of the Bonds and its obligation to pay other sums payable or to
become payable under this Order by complying with the following procedures:
(i) the District shall deposit or cause to be deposited with the
Paying Agent/Registrar an amount of money that, together with the interest
earned on or capital gains or profits to be realized from the investment of such
money, will be sufficient to pay the principal of and accrued interest on such
Bonds to maturity or to the date fixed for prior redemption of such Bonds and to
pay such other amounts as may be reasonably estimated by the Paying
Agent/Registrar to become payable under this Order with respect to the Bonds
being provided for, including the compensation due or to become due the Paying
Agent/Registrar;
(ii) the District shall establish or cause to be established a
separate escrow account fund with the Paying Agent/Registrar for the deposit
pursuant to subdivision (i) of this subsection (a);
(iii) Only cash, direct non - callable obligations of the United
States of America and securities fully and unconditionally guaranteed as to the
timely payment of principal and interest by the United States of America, to which
direct obligation or guarantee the full faith and credit of the United States of
America has been pledged shall be used to effect defeasance of the Bonds. In
the event of an advance refunding, the District shall cause to be delivered a
verification report of an independent nationally recognized certified public
accountant. If a forward supply contract is employed in connection with the
refunding, (i) such report shall expressly identify the types of securities to be
purchased pursuant to the forward supply contract and shall state that the
adequacy of the escrow to accomplish the refunding relies solely on the initial
escrowed investments and the maturing principal thereof and interest income
41
thereon and does not assume performance under or compliance with the forward
supply contract, and (ii) the applicable escrow agreement shall provide that in the
event of any discrepancy or difference between the terms of the forward supply
contract and the escrow agreement (or the authorizing document, if no separate
escrow agreement is utilized), the terms of the escrow agreement or authorizing
document, if applicable, shall be controlling;
(iv) the District shall make provision for the payment to the
Registered Owners at the date of maturity or redemption of the full amount to
which the Registered Owners of the appropriate Bonds would be entitled by way
of principal and interest to the date of such maturity;
(v) the District shall make provision for the sending of written
notice by first class postage prepaid United States mail to the Registered Owner
of each appropriate Bond then outstanding within 30 days following the date of
such deposit that such moneys are so available for such payment; and
(vi) the District shall provide the Paying Agent/Registrar with an
opinion of Winstead Sechrest & Minick P.C. or other nationally recognized bond
counsel selected by the District and acceptable to the Paying Agent/Registrar to
the effect that the deposit specified in subdivision (i) of this subsection (a) will not
cause the interest on any of the Bonds to become includable in the gross income
of the Registered Owners thereof and that such Bonds are legally defeased.
(b) Upon compliance with subsection (a) of this Section, the Bonds for the
payment of which provision is thus made shall no longer be regarded as outstanding
and unpaid, and the Paying Agent/Registrar, upon receipt of a letter of instructions from
the District requesting the same, shall discharge and release the lien of this Order as to
such Bonds and shall execute and deliver to the District such releases or other
instruments as shall be requisite to release the lien hereof.
(c) Following final payment of the principal of and interest on the appropriate
Bonds, any money, interest eamings, profits, or capital gains over and above the
amounts necessary for such purposes shall be paid to the District.
(d) The District hereby reserves the right, to be exercised at the time of
defeasance of the Bonds, to call for earlier redemption those Bonds which have been
defeased to their maturity dates, if the District:
(i) in the proceeding providing for the firm banking and financial
arrangements expressly reserves the right to call the Bonds being defeased for
earlier redemption;
(ii) gives notice of the reservation of that right to the Owners of
the Bonds being defeased immediately following the making of firm banking and
financial arrangements; and
42
(iii) directs that notice of the reservation be included in any
redemption notices that the District authorizes.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Persons Deemed Registered Owners. The District, the Paying
Agent/Registrar, and any agent of either of them may treat the Person in whose name
any Bond is registered as the owner of such Bond for the purpose of receiving payment
of the principal (and redemption price) of and interest on such Bond and for all other
purposes whatsoever, and to the extent permitted by law, neither the District, the Paying
Agent/Registrar, nor any agent of either of them shall be affected by notice to the
contrary.
Section 15.2 District's Successors and Assigns. Whenever in this Order the
District is named and referred to, it shall be deemed to include its successors and
assigns, and all covenants and agreements in this Order by or on behalf of the District,
except as otherwise provided herein, shall bind and inure to the benefit of its successors
and assigns whether or not so expressed.
Section 15.3 Benefits of Order Provisions. Nothing in this Order or in the Bonds,
expressed or implied, shall give or be construed to give any Person, other than the
District, the Paying Agent/Registrar, and the Registered Owners any legal or equitable
right or claim under or in respect of this Order, or under any covenant, condition, or
provision herein contained, all the covenants, conditions, and provisions contained in
this Order or in the Bonds being for the sole benefit of the District, the Paying
Agent/Registrar and the Registered Owners.
Section 15.4 Severability Clause. If any word, phrase, clause, sentence,
paragraph, section, or other part of this Order, or the application thereof to any person
or circumstance, shall ever be held to be invalid or unconstitutional by any court of
competent jurisdiction, the remainder of this Order and the application of such word,
phrase, clause, sentence, paragraph, section or other part of this Order to any other
persons or circumstances shall not be affected thereby.
Section 15.5 Open Meeting. It is hereby officially found and determined that the
meeting at which this Order was adopted was open to the public, and public notice of
the time, place, and purpose of said meeting was properly given, all as required by
Chapter 551, Texas Government Code, and Section 49.063, Texas Water Code, as
amended.
Section 15.6 Amendments. The District may, without the consent of or notice to
any Registered Owners of the Bonds, amend, change, or modify this Order as may be
required (a) for the purpose of curing any ambiguity, inconsistency, or formal defect or
43
omission herein, or (b) in connection with any other change which is not to the prejudice
of the Registered Owners of the Bonds. Except for such amendments, changes, or
modifications, the District shall not amend, change, or modify this Order in any manner
without the consent of the Registered Owners of the Bonds.
Section 15.7 No Personal Liability. No recourse shall be had for payment of the
principal of or interest on any Bonds or for any claim based thereon, or on this Order,
against any official or employee of the District or any person executing any Bonds.
Section 15.8 Notice to Registered Owners. Except as may be otherwise
provided in this Order, where this Order provides for notice to Registered Owners of
any event, such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first -class postage prepaid, to each Registered
Owner, at the address of such Registered Owner as it appears in the Register. Neither
the failure to mail such notice, nor any defect in any notice so mailed, to any particular
Registered Owner of Bonds shall affect the sufficiency of such notice with respect to all
other Registered Owners. Wherever this Order provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice, either
before or after the event with respect to which such notice is given, and such waiver
shall be the equivalent of such notice. Waivers of notice by Registered Owners shall be
filed with the District, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section 15.9 District's Officers' Duties. The President, Vice President, and
Secretary of the Board of Directors are hereby authorized to take any and all actions
proper and necessary to comply with the terms of in this Order to facilitate the
transactions contemplated by this Order, including the execution of certificates,
opinions, and other documents necessary in connection therewith.
ARTICLE XVI
EFFECTIVENESS
Section 16.1 Effectiveness. This Order shall take effect and be in force from and
after its passage and approval.
(Remainder of page intentionally left blank)
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ATTEST:
PASSED AND APPROVED on this
Secretary, Board of Directors
(SEAL)
President, Board of Directors
Signature Page to the Order Authorizing Issuance of the $5,700,000 The Meadows at
Chandler Creek Municipal Utility District Combination Unlimited Tax and Revenue
Bonds, Series 2003
OFFICIAL NOTICE OF SALE
$5,700,000
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
(A Political Subdivision of the State of Texas Located in Williamson County, Texas)
COMBINATION UNLIMITED TAX AND REVENUE BONDS, SERIES 2003
Selling: , 2003 at 12:00, Noon, local time
BIDS DUE BY 11:30 A.M., LOCAL TIME
The Bonds are obligations solely of The Meadows at Chandler Creek Municipal Utility District and are not obligations of the
City of Round Rock, Texas; Williamson County, Texas; the State of Texas or any entity other than the District.
THE DISTRICT WILL DESIGNATE THE BONDS AS "QUALIFIED TAX - EXEMPT OBLIGATIONS" FOR FINANCIAL
INSTITUTIONS,
THE SALE
Bonds Offered for Sale at Competitive Bidding ... The Meadows at Chandler Creek Municipal Utility District (the
"District") is offering for sale $5,700,000 Combination Unlimited Tax and Revenue Bonds, Series 2003 (the "Bonds ").
Place and Time of Bid Opening ... The Board will open and publicly read sealed bids for purchase of the Bonds at the
designated meeting place outside the boundaries of the District at the offices of Winstead Sechrest & Minick P.C., 100
Congress, Suite 900, Austin, Texas 78701 8112:00 Noon, Local time.
Award of Bonds ... The District will take action to award the Bonds or reject all bids promptly upon the opening of bids.
Upon awarding the Bonds, the District will also adopt the order authorizing issuance of the Bonds (the "Bond Order ") and will
approve the Official Statement, which will be an amended form of the Preliminary Official Statement. Sale of the Bonds will
be made subject to the terms, conditions and provisions of the Bond Order to which Bond Order reference is hereby made for
all purposes.
Address of Bids/Bids Delivered in Person ... Sealed bids, plainly marked "Bid for Bonds," should be addressed to the
Board of Directors of The Meadows at Chandler Creek Municipal Utility District, and if delivered in person, delivered at the
designated meeting place outside the boundaries of the District, at the offices of Winstead Sechrest & Minick P.C., 100
Congress, Suite 900, Austin, Texas, 78701, by 11:30 a.m., local time, on the date of the bid opening. All bids must be
submitted on the "Official Bid Form" without alteration or interlineation. Copies of ttie Official Bid Form accompany the
Preliminary Official Statement.
Electronic Bidding Procedure ... Notice is hereby given electronic bids will be received via PARITY, in the manner
described below, until 11:30 a.m., local time on 2003.
Bids must be submitted: (a) Electronically via PARITY in accordance with this Notice of Sale, until 11:30 am. local time, but
no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth
in PARITY conflict with the Notice of Sale, the terms of this Notice of Sale shall control. For further information about
PARITY, potential bidders may contact the financial advisor to the District or Dalcomp at 40 West 23' 5 Floor, New York,
NY 10010, telephone (212) 404 -8102
For purposes of both the written sealed bid process and the electronic bidding process, the time as maintained
by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their
electronic bids the true interest cost to the District. All electronic bids shall be deemed to incorporate the provisions
of this Official Notice of Sale and the Official Bid Form.
EXHIBIT
5 „B„
Bids by Telephone or Facsimile ...Bidders that choose to exercise the telephone or facsimile bidding options MUST
SUBMIT SIGNED Official Bid Forms to Chris Lane, SAMCO Capital Markets, 6907 Capital of Texas Highway, Suite 230
Austin, Texas 78731 and submit their bid by telephone or facsimile on the date of the sale. Any bids received by facsimile
will be attached to the signed Official Bid Form previously submitted.
Telephone bids will be accepted by Chris Lane at (512) 457 -4205, between 10:30 a.m. and 11:30 a.m., Local time on the date
of sale.
Facsimile bids will be accepted at (512) 457 -4250 between 10:30 a.m. and 11.30 a.m., Local time on the date of sale to the
attention of Phil Haag.
The District and SAMCO Capital Markets are not responsible if such facsimile or telephone numbers are busy or
malfunctioning which prevents a bid or bids from being submitted on a timely basis. Bidders who fax bids do so at their
own risk All such bids shall be binding on the bidder. The District and SAMCO Capital Markets will not be
responsible for submitting any bids received after the above deadlines. The District and SAMCO Capital Markets assume
no responsibility or liability with respect to any irregularities associated with the submission of bids if the telephone or
facsimile bid option is exercised.
THE BONDS
Description of Bonds . .. The Bonds will be dated 1, 2003, and interest on the Bonds will be payable,
August 1, 2003, and semiannually thereafter on each August 1 and February 1 (each an `Interest Payment Date ") until
maturity or earlier redemption. The Bonds will be delivered to the Initial Purchaser as one Bond for each maturity, in fully
registered form, and may be exchanged for Bonds in the denomination of $5,000 or any integral multiple thereof The initial
paying agent/registrar (the "Paying Agent ") is JPMorgan Chase Bank, Dallas, Texas. Payment of the principal and semiannual
interest, and transfer and exchange of Bonds shall be handled at the offices of the Paying Agent in Dallas, Texas. Principal
and redemption price of the Bonds will be payable to the registered owner at maturity or earlier redemption upon presentation
and surrender of the Bonds to the Paying Agent. Interest on the Bonds will be payable by check or draft, dated as of the
Interest Payment Date, and mailed on or before each Interest Payment Date by the Paying Agent to each registered owner of
record as of the Record Date (as defined herein). The Bonds mature serially on February 1 in the years and amounts shown
below.
Principal Principal
Amount Year of Amount Year of
Ma M Maturi Ma[uri
$ 150,000 2004 $275,000 2014(i)(ii)
160,000 2005 300,000 2015(i)(ii)
170,000 2006 310,000 2016(i)(ii)
180,000 2007 330,000 2017(ixii)
200,000 2008 350,000 2018(i)(ii)
200,000 2009 370,000 2019(i)(ii)
220,000 2010 400,000 2020(i)(ii)
230,000 2011 420,000 20210(ii)
250,000 2012(00) 450,000 2022(i)(ii)
260,000 2013(ixii) 475,000 2023(i)(ii)
(i) The District reserves the right to redeem prior to maturity those Bonds maturing on February 1 in each of the
years 2012 through 2023, both inclusive, in whole or from time to time in part on February I, 2011, or any date
thereafter, in integral multiples of $5,000 at a price of par plus accrued interest from the most recent Interest
Payment Date to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the particular
Bonds thereof shall be selected and designated by the District, and if less than all of the Bonds within a maturity
are redeemed, the particular Bonds or portions thereof to be redeemed shall be selected by the Paying Agent by
lot.
(ii) Of such principal maturities set forth above, the bidder has the option to create term bonds as reflected on the bid
form.
Source of Payment ... The Bonds, when issued, will constitute valid and binding obligations of the District payable as to
principal and interest from the proceeds of a continuing, direct, annual ad valorem tax levied against taxable property located
within the District, without legal limitation as to rate or amount, and are further secured by a pledge of the Net Revenues of
the System, as described in the Official Statement.
Other Terms and Covenants ... Other teems of the Bonds and various covenants of the District contained in the Bond Order
under which the Bonds are to be issued are described in the Preliminary Official Statement, to which reference is made for all
purposes.
CONDITIONS OF SALE
Types of Bids and Interest Rates ... The Bonds will be sold in one block, on an all or none basis, and no bid of Tess than
97% of par value plus accrued interest to the date of delivery will be considered. Bidders must specify the rate or rates of
interest the Bonds will bear, but no bid which results in a net effective interest rate as calculated pursuant to Chapter 1204,
Texas Govemment Code, as amended (the IBA method), of more than % will be considered. The difference between
the highest interest rate bid and the lowest interest rate bid shall not exceed 2 %. Interest rates must be in multiples of 1 /8th or
1 /2Oth of 1 %. Any number of interest rates and rate changes may be named, but graduating or declining interest rates within a
maturity, split interest rates within a maturity, or supplemental or zero interest rates will not be acceptable.
Basis of Award ... For the purpose of awarding the sale of the Bonds, the total interest cost of each bid will be computed by
determining, at the rate or rates specified, the total dollar value of all interest on the Bonds from the date thereof to their
respective maturities and adding thereto the dollar amount of the discount bid, if any, or deducting therefrom the premium bid,
if any. Subject to the right of the District to reject any or all bids, the Bonds will be awarded to the bidder whose bid, based on
the above computation, produces the lowest interest cost to the District. In the event of mathematical discrepancies between
the interest rates and the interest costs determined therefrom, as both appear on the "Official Bid Form," the bid will be
determined solely from the interest rates shown on the "Official Bid Form"
Good Faith Deposit ... Each bid must be accompanied by a bank cashier's check payable to the order of "The Meadows at
Chandler Creek Municipal Utility District" in the amount of $114,000, which is 2% of the par value of the Bonds. The check
will be considered as a Good Faith Deposit, and the check of the successful bidder (the "Initial Purchaser") will be retained
un- cashed by the District until the Bonds are delivered. Upon payment for and delivery of the Bonds, the Good Faith Deposit
will be returned to the Initial Purchaser un- cashed. If the Initial Purchaser should fail or refuse to make payment for or accept
delivery of the Bonds in accordance with its bid, then the check will be cashed and accepted by the District as full and
complete liquidated damages. Such check may accompany the Official Bid Form or it may be submitted separately. If
submitted separately, it shall be made available to the District prior to the opening of the bids and shall be accompanied by
instructions from the bank on which it is drawn, which authorize its use as a Good Faith Deposit. The checks of the
unsuccessful bidders will be returned immediately after bids are opened and sale of the Bonds has been awarded.
Financial Advisor's Reservation of Rights ... The District's Financial Advisor, SAMCO Capital Markets, has requested the
right to bid on the Bonds, and the District has given its consent.
OFFICIAL STATEMENT
By accepting the winning bid, the District agrees to the following representations and covenants to assist the Initial Purchaser
in complying with Rule 15c2 -12 of the Securities and Exchange Commission ( "SEC ").
Final Official Statement... The District has prepared the accompanying Preliminary Official Statement for dissemination to
potential purchasers of the Bonds, but will not prepare any other document or version for such purpose, except as described
below. The District will be responsible for completing the Official Statement by inserting the interest rates bid, the purchase
price bid, the ratings assigned to the Bonds (if not currently included) if applicable, the purchase of municipal bond insurance,
if any, the initial public offering yields as set forth in the Official Bid Form, or otherwise supplied by the Initial Purchaser, and
for preparing and inserting the final debt service schedule. The District does not intend to amend or supplement the Official
Statement otherwise, except to take into account certain subsequent events, if any, as described below. Accordingly, the
District deems the accompanying Preliminary Official Statement to be final as of its date, within the meaning of SEC Rule
15c2- 12(6)(1), except for the omission of the foregoing items. By delivering the final Official Statement or any amendment or
supplement thereto in the requested quantity to the Initial Purchaser on or after the sale date, the District represents the same to
be complete as of such date, within the meaning of SEC Rule 15c2- 12(ex3). Notwithstanding the foregoing, the only
representations concerning the absence of material misstatements or omissions from the Official Statement which are or will
be made by the District are those described in the Official Statement under "OFFICIAL STATEMENT - Certification as to
Official Statement."
Changes to Official Statement During Underwriting Period ... If, subsequent to the date of the Official Statement to and
including the date the Initial Purchaser is no longer required to provide an Official Statement to potential customers who
request the same pursuant to SEC Rule 15c2 -12 (the earlier of (i) 90 days from the "end of the underwriting period" (as
defined in the Rule 15c2 -12) and (ii) the time when the Official Statement is available to any person from a nationally
recognized repository but in no case less than 25 days after the "end of the underwriting period "), the District learns or is
notified by the Initial Purchaser of any adverse event which causes any of the key representations in the Official Statement to
be materially misleading, the District will promptly prepare and supply to the Initial Purchaser a supplement to the Official
Statement which corrects such representation to the reasonable satisfaction of the Initial Purchaser, unless the Initial Purchaser
elects to terminate its obligation to purchase the Bonds as described below. See "DELIVERY OF THE BONDS AND
ACCOMPANYING DOCUMENTS — Delivery." The obligation of the District to update or change the Official Statement
will terminate when the District delivers the Bonds to the Initial Purchaser (the "end of the underwriting period" within the
meaning of the Rule 15c2 -12), unless the Initial Purchaser provides written notice to the District that less than all of the Bonds
have been sold to ultimate customers on or before such date, in which case the obligation to update or change the Official
Statement will extend for an additional 25 days after all the Bonds have been sold to ultimate customers. In the event the
Initial Purchaser provides written notice to the District that less than all of the Bonds have been sold to ultimate customers, the
Initial Purchaser agrees to notify the District in writing following the occurrence of the "end of the underwriting period" as
defined in the Rule 15c2 -12.
Delivery of Official Statements ... The District will furnish to the Initial Purchaser (and to each other participating
underwriter of the Bonds, within the meaning of SEC Rule 15c2- 12(a), designated by the Initial Purchaser), within seven (7)
business days after the sale date, the aggregate number of Official Statements requested but not in excess of 150 copies. The
District will also furnish to the Initial Purchaser a like number of any supplement or amendment prepared by the District for
dissemination to potential purchasers of the Bonds as described above as well as such additional copies of the Official
Statement or any supplement or amendment as the Initial Purchaser may request prior to the 90th day after the end of the
underwriting period referred to in SEC Rule 15c2- 12(e)(2). The District will pay the expense of preparing up to 150 copies of
the Official Statement and all copies of any supplement or amendment issued on or before the delivery date, but the Initial
Purchaser must pay for all other copies of the Official Statement or any supplement or amendment thereto.
Rule G-36 Requirements ... It is the responsibility of the Initial Purchaser to comply with the Municipal Securities Rule
Making Board's Rule G -36 within the required time frame. The Initial Purchaser must send two copies of the "Official
Statement" along with two complete Form G -36's to the appropriate address.
DELIVERY OF THE BONDS AND ACCOMPANYING DOCUMENTS
Delivery ... The Bonds will be tendered to the Initial Purchaser as a single typewritten, photocopied or otherwise reproduced
bond for each maturity in fully registered form in the aggregate principal amount of S5,700,000 payable to the Initial
Purchaser or its representative as designated in the Official Bid Form, manually signed by the President and Secretary of the
Board of Directors, or executed by the facsimile signatures of the President and Secretary of the Board of Directors, and
approved by the Attorney General of the State of Texas and registered and manually signed by the Comptroller of Public
Accounts of the State of Texas. Initial delivery will be at the designated office for payment of the Paying Agent in Houston,
Texas. Payment for the Bonds must be made in immediately available funds for unconditional credit to the District, or as
otherwise directed by the District. The Initial Purchaser will be given six (6) business days' notice of the time fixed for
delivery of the Bonds. It is anticipated that initial delivery can be made on or about , 2003, and it is understood
and agreed that the Initial Purchaser will accept delivery and make payment for the Bonds no later than 10:00 a.m., Local time
on 2003 or thereafter on the date the Bonds are tendered for delivery up to and including
2003. If for any reason the District is unable to make delivery on or before , 2003, then the District shall
immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend his offer for an additional thirty (30)
days. If the Initial Purchaser does not elect to extend its offer within five (5) business days thereafter, then the Good Faith
Deposit will be returned, and both the District and the Initial Purchaser shall be relieved of any further obligation.
Exchange for Definitive Bonds ... The District shall provide definitive Bonds, which shall be printed, lithographed,
engraved or produced by any combination of these methods. At any time following the initial delivery, the Paying Agent
shall, in the time and manner provided in the Bond Order, exchange the Initial Bond and deliver registered definitive Bonds in
denominations of $5,000 or any integral multiple thereof for any one maturity, in accordance with instructions received from
the Initial Purchaser as to the persons to whom such definitive Bonds are to be registered and transferred, the addresses of
such persons, and the principal amounts and maturities of such definitive Bonds; provided, however, should the Initial
Purchaser famish to the Paying Agent such written instructions at least five (5) business days prior to the initial delivery on
forms to be provided by the Paying Agent, the Paying Agent shall exchange such definitive Bonds for the Initial Bond
immediately upon payment for and surrender for exchange of such Initial Bond by the Initial Purchaser. The Paying Agent
will not be required to accept registration instructions after the commencement of the five (5) period.
CUSIP Numbers ... It is anticipated that CUSIP identification numbers will be printed or otherwise reproduced on the
Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto shall constitute cause of a
failure or refusal by the Initial Purchaser to accept delivery of and pay for the Bonds in accordance with the terms of this
Notice of Sale and the terns of the Official Bid Form. All expenses in relation to the printing of CUSIP numbers on the
Bonds shall be paid by the District. However, 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.
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 the legal opinion of the Attorney General of Texas and the legal opinion of Winstead Sechrest & Minick
P.C., Austin, Texas, Bond Counsel for the District ( "Bond Counsel "), the no- litigation certificate, as described below, and the
non - occurrence of the events described below under "No Material Adverse Change." In addition, if the District fails to
comply with its obligations under "OFFICIAL STATEMENT" above, the Initial Purchaser may terminate its contract to
purchase the Bonds by delivering written notice to the District within five (5) days thereafter.
Legal Opinions ... The District will fumish the Initial Purchaser a transcript of certain proceedings held incident to the
authorization and issuance of the Bonds, including a certified copy or original of the approving opinion of the Attorney
General of Texas, as recorded in the Bond Register of the Comptroller of Public Accounts of the State of Texas, to the effect
that the Bonds are valid and binding obligations of the District, payable from the proceeds of an annual ad valorem tax levied,
without limit as to rate or amount, upon all taxable property within the District and from a pledge of and lien on certain net
revenues if any, of the District's water, sanitary sewer and drainage system (the "System "). The District also will furnish the
legal opinion of Winstead Sechrest & Minick P.C., Bond Counsel, to the effect that, based upon an examination of such
transcript, (1) the Bonds are valid and legally binding obligations of the District payable from the sources and enforceable in
accordance with the terms and conditions described therein, except to the extent that the enforceability thereof may be affected
by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights or the exercise of
judicial discretion in accordance with general principles of equity, (2) the Bonds are payable, both as to principal and interest,
from the levy of ad valorem taxes, without limitation as to rate or amount, against taxable property within the District and Net
Revenues, if any, the District receives in connection with the System, and (3) pursuant to the Internal Revenue Code of 1986,
(the "Code ") then in effect and existing law and assuming continuing compliance by the District with the provisions of the
Bond Order, the interest on the Bonds will be excludable from gross income, and will not be subject to the alternative
minimum tax on individuals for federal income tax purposes. The statutes, regulations, rulings, and court decisions on which
such opinion is based are subject to change. Neither the opinion of the Attorney General nor the opinion of Bond Counsel
will express any opinion or make any comment with respect to the sufficiency of the security for or the marketability of the
Bonds.
The opinion of Bond Counsel is expected to be reproduced on the back panel of the definitive Bonds over a certification by
the facsimile signature of the Secretary of the Board attesting that such reproduction is a true and correct copy of the original
opinion. The failure to print such legal opinion on any Bond shall not constitute cause for a failure or refusal by the Initial
Purchaser to accept delivery of and pay for the Bonds.
Certification of Issue Price ... In order to provide the District with information required to enable it to comply with certain
conditions of the Internal Revenue Code of 1986, as amended, relating to the exemption 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 District (on or
before the date of delivery of the Bonds) a certification as to the "issue price" of the Bonds substantially in the form
accompanying this "Notice of Sale" of the Bonds. In the event the successful bidder will not re -offer the Bonds for sale or is
unable to sell a substantial amount of the Bonds of any maturity by the date of delivery, such certificate may be modified in a
manner approved by the District and Bond Counsel. Each bidder, by submitting its bid, agrees to complete, execute, and
deliver such a certificate by the date of delivery of the Bonds, if its bid is accepted by the District. 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. In no event will the District 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.
Qualified Tax - Exempt Obligations for Financial Institutions ... Section 265(a) of the Code provides, in pertinent part,
that interest paid or incurred by a taxpayer, including a "financial institution," on indebtedness incurred or continued to
purchase or carry tax- exempt obligations is not deductible by such taxpayer in determining taxable income. Section 265(b) of
the Code provides an exception to the disallowance of such deduction for any interest expense paid or incurred an
indebtedness of a taxpayer which is a "financial institution" allocable to tax- exempt obligations, other than "private activity
bonds," which are designated by an "qualified small issuer" as "qualified tax- exempt obligations." A "qualified small issuer"
is any governmental issuer (together with any subordinate issuers) who issues no more than 810,000,000 of tax-exempt
obligations during the calendar year. Section 265(b)(5) of the Code defines the tens "financial institution" as referring to any
corporation described in section 585(a)(2) of the Code, or any person accepting deposits from the public in the ordinary course
of such person's trade or business which is subject to federal or state supervision as a financial institution.
The Disbict expects to designate the Bonds as "qualified tax - exempt obligations" within the meaning of section 265(b) of the
Code. In furtherance of that designation, the District will covenant to take such action, which would assure or to refrain from
such action which would adversely affect the treatment of the Bonds as "qualified tax- exempt obligations." Potential
purchasers should be aware that if the issue price to the public (or, in the case of discount bonds, the amount payable at
maturity) exceeds $10,000,000, then such obligations might fail to satisfy the 810,000,000 limitation and the obligations
would not be "qualified tax- exempt obligations."
No Material Adverse Change ... The obligations of the District to deliver the Bonds and of the Initial Purchaser to accept
delivery of and pay for the Bonds are subject to the condition that at the time of delivery of and receipt of payment for the
Bonds, there shall have been no material adverse change in the condition of the District from those set forth in or
contemplated by the "Preliminary Official Statement" as it may have been supplemented or amended through the date of sale.
No-Litigation Certificate ... On the date of delivery of the Bonds to the Initial Purchaser, the District will deliver to the
Initial Purchaser a certificate, as of the same date, to the effect that to the best of the District's knowledge no litigation of any
nature is pending or, to the best of the certifying officers' knowledge or belief, threatened against the District, contesting or
affecting the Bonds; restraining or enjoining the authorization, execution, or delivery of the Bonds; affecting the provision
made for the payment of or security for the Bonds; in any manner questioning the authority or proceedings for the issuance,
execution or delivery of the Bonds; or affecting the validity of the Bonds or the title of the present officers and directors of the
District.
CONTINUING DISCLOSURE AGREEMENT
The District will agree in the Bond Order to provide certain periodic information and notices of material events in accordance
with SEC Rule 15c2 -12, as described in the Preliminary Official Statement under "CONTINUING DISCLOSURE OF
INFORMATION." The Initial Purchaser's (s) or its (their) agent's obligation to accept and pay for the Bonds is conditioned
upon delivery to the Initial Purchaser of a certified copy of the Bond Order containing the agreement described under such
heading.
GENERAL CONSIDERATIONS
Future Registration ... The Bonds are transferred, registered and exchanged only on the registration books of the Paying
Agent, and such registration shall be at the expense of the District though the District or Paying Agent may require payment by
an owner of the Bonds requesting a transfer or exchange of Bonds of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of any Bond. A Bond may be transferred or
exchanged upon surrender to the Paying Agent accompanied by a written instrument of transfer acceptable to the Paying
Agent duly executed by the registered owner thereof or his attorney duly authorized in writing. Upon surrender for transfer of
any Bond to the Paying Agent, the District shall execute and the Paying Agent shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Bonds of the same stated maturity and of any authorized
denomination, and of a like aggregate principal amount.
Record Date ... The record date ( "Record Date ") for the interest payable on any Interest Payment Date means the 15th
calendar day of the month next preceding such Interest Payment Date.
Record Date for Bonds to be Redeemed ... Neither the District nor the Paying Agent shall be required (1) to issue, transfer,
or exchange any Bond during the period commencing with the close of business on any Record Date and ending with the
opening of business on the next following principal on interest payment date, or (2) to transfer or exchange, in whole or in
part, any Bond or any portion thereof selected for redemption prior to maturity, within forty-five (45) calendar days prior to its
redemption date.
Investment Considerations ... The Bonds involve certain investment considerations and all prospective bidders are urged to
examine carefully the Preliminary Official Statement with respect to the investment considerations associated with the Bonds.
Particular attention should be given to the information set forth therein under the caption "INVESTMENT
CONSIDERATIONS."
Rating ... The District has a BBB underlying rating from Standard & Poor's Ratings Service ( "S & P ") on its outstanding
debt and has submitted a request for an underlying rating on the 2003 Bond Issue. The District's 2001 bond issue has a
AAA as a result of an insurance policy insuring the timely payment of the principal and interest on the Bonds issued by FSA.
Insurance ... The District has also made application for a guaranty insurance policy insuring the timely payment of the
principal of and interest on the Bonds. The premium for such insurance and any associated rating fees, if used, will be paid by
the Initial Purchaser. The insurance will be at the option of the purchaser.
Reservation of Rights ... The District reserves the right to reject any and all bids and to waive any and all irregularities,
except time of filing.
Not an Offer to Sell ... This Official Notice of Sale does not alone constitute an offer to sell the Bonds but is merely notice
of sale of the Bonds. The invitation for bids on the Bonds is being made by means of this Official Notice of Sale, the
Preliminary Official Statement and the Official Bid Form
Registration and Qualification Under Securities Laws ... The offer and sale of the Bonds have not been registered or
qualified under the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder; the Bonds have
not been registered or qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor
have the Bonds been registered or qualified under the securities laws of any other jurisdiction. The District assumes 110
responsibility for registration or 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 registration or
vii
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 or qualification provisions.
By submission of a bid, the Initial Purchaser represents that its sale of the Bonds in states other than Texas will be made only
pursuant to exemptions from registration or qualification or, where necessary, the Initial Purchaser will register and qualify the
Bonds in accordance with the securities laws of any jurisdiction which an requires. The District agrees to cooperate, at the
Initial Purchaser's written request and expense, in registering or qualifying the Bonds, or in obtaining exemption from
registration or qualification, in any state where such action is necessary, provided that the District shall not be required to file a
general or special consent to service of process in any jurisdiction.
Copies of Documents ... Copies of the Official Notice of Sale, the Preliminary Official Statement, the Official Bid Form,
Audits, and the pro forma Bond Order may be obtained at the offices of SAMCO Capital Markets, 6907 Capital of Texas
Highway, Suite 230, Austin, Texas 78731, Financial Advisor to the District.
, 2003
viii
Douglas D. Eastwood, President
Board of Directors
The Meadows at Chandler Creek Municipal
Utility District
President and Board of Directors
The Meadows at Chandler Creek
Municipal Utility District
c/o Winstead Sechrest & Minick P.C.
100 Congress, Suite 900
Austin, Texas 78701
Directors:
OFFICIAL BID FORM
We have read in detail the Official Notice of Sale and Preliminary Official Statement of The Meadows at Chandler Creek
Municipal Utility District (the "District ") relating to its $5,700,000 Combination Unlimited Tax and Revenue Bonds, Series
2003 (the "Bonds "), which by reference are made a part hereof. We recognize the special investment considerations involved
in these securities, and have made such inspections and investigations as we deem necessary in order to evaluate the
investment quality of the Bonds. Accordingly, we offer to purchase the District's legally issued Bonds, upon the terms and
conditions set forth in the Bond Order, the Official Notice of Sale and the Preliminary Official Statement, for a cash price of
$ (which represents % of par value) plus accrued interest to the date of delivery
of the Bonds to us, provided such Bonds mature February 1 and bear interest in each year at the following rates:
Mandatory Mandatory
Maturity Interest Sinking Fund Maturity Interest Sinking Fund
(February 1) Amount Rate Installment (February 1) Amount Rate Installment
2004 $ 150,000 2014 (i)(ii) $275,000
2005 160,000 2015 (i)(ii) 300,000
2006 170,000 2016 (i)(ii). 310,000
2007 180,000 2017 (i)(ii) 330,000
2008 200,000 2018 (i)(ii) 350,000
2009 200,000 2019 (i)(ii) 370,000
2010 . 220,000 2020 (i)(ii) 400,000
2011 230,000 2021 (i)(ii) 420,000
2012 (i)(ii) 250,000 2022 (i)(ii) 450,000
2013 (iXii) 260,000 2023 (i)(ii) 475,000
(i) The District reserves the right to redeem, prior to maturity,- those Bonds maturing February 1, 2012 through
2023, both inclusive, in whole or from time to time in part on February 1, 2011 and on any date thereafter at a
price of par plus accrued interest from the most recent interest payment date to the date fixed for redemption.
(ii) Of such principal maturities set forth above, we have created term bonds as indicated in the following table
(which may include multiple term bonds, one term bond, or no term bonds 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. The term bonds created are as follows.
Term Bonds Year of
Maturity Date First Maturity Principal Amount Interest
(February 1) Redem of Term Bonds Rate
Our calculation (which is not a part of this bid) of the interest cost from the above bid is:
Total Interest Cost $
Plus: Cash Discount $
Net Interest Cost $
Net Effective interest Rate
The initial bond shall be registered in the name of (syndicate manager). We will
advise the office for payment of in the Paying Agent, on forms to be provided by
the Paying Agent, of our registration instructions at least five (5) business days prior to the date set for initial delivery of
Bonds on the closing date. We will not ask the Paying Agent to accept any registration instructions after the five (5) day
period for delivery of Bonds on the closing date.
We are having maturities of the Bonds insured by at a premium of $
said premium to be paid by the Initial Purchaser. Any fees to be paid to the rating agencies as a result of such insurance will
be paid by the Initial Purchaser.
Cashier's Check No. , issued by Bank, , Texas
and payable to your order in the amount of $114,000 (is attached hereto) (has been made available to you prior to the opening
of this bid) as the Good Faith Deposit for disposition in accordance with the terms and conditions set forth in the Official
Notice of Sale. Should we fail or refuse to make payment for the Bonds in accordance with the terns and conditions of such
Official Notice of Sale, such check shall be cashed and the proceeds retained as complete liquidated damages against us. We
• hereby represent that sale of the Bonds in states other than Texas will be made only pursuant to exemptions from registration
or qualification and that, where necessary, we will register or qualify the Bonds in accordance with the securities laws of the
states in which the Bonds are offered or sold.
The undersigned agrees to complete, execute, and deliver to the District, at least six (6) business days prior to the date of
delivery of the Bonds, a certificate relating to the "issue price" of the Bonds in the form and to the effect attached to or
accompanying the Official Notice of Sale, with such changes thereto as may be acceptable to the District. The undersigned
further agrees to provide in writing the initial reoffering prices and other terms, if any, to SAMCO Capital Markets by the
close of the next business day after the award.
(Syndicate members, if any)
ATTEST:
ACCEPTANCE CLAUSE
Respectfully submitted,
By:
Authorized Representative
Phone Number:
The above and foregoing bid is hereby accepted by The Meadows at Chandler Creek Municipal Utility District this day of
, 2003.
Secretary, Board of Directors President, Board of Directors
BOND YEARS
Interest Accrues From: May 1, 2003 Due: February 1
Cumulative
Year Amount Bond Years Bond Years Year
2004 $150,000 112.50 112.50 2004
2005 160,000 280.00 392.50 2005
2006 170,000 467.50 860.00 2006
2007 180,000 675.00 1,535.00 2007
2008 200,000 950.00 2,485.00 2008
2009 200,000 1,150.00 3,635.00 2009
2010 220,000 1,485.00 5,120.00 2010
2011 230,000 1,782.50 6,902.50 2001
2012 250,000 2,187.50 9,090.00 2012
2013 260,000 2,535.00 11,625.00 2013
2014 275,000 2,956.25 14,581.25 2014
2015 300,000 3,525.00 18,106.25 2015
2016 310,000 3,952.50 22,058.75 2016
2017 330,000 4,537.50 26,596.25 2017
2018 350,000 5,162.50 31,758.75 2018
2019 370,000 5,827.50 37,586.25 2019
2020 400,000 6,700.00 44,286.25 2020
2021 420,000 7,455.00 51,741.25 2021
2022 450,000 8,437.50 60,178.75 2022
2023 475.000 9,381.25 69,560.00 2023
5 700
Total Bond Years: 69,560
Average Life: 12.2035 years
ISSUE PRICE CERTIFICATE
The undersigned hereby certifies with respect to the sale of The Meadows at Chandler Creek Municipal Utility District
Combination Unlimited Tax and Revenue Bonds, Series 2003 (the "Bonds "), issued in the aggregate principal amount of
$5,700,000, as follows:
1. The undersigned is the underwriter ( "Underwriter ") or the manager ( "Manager ") of the syndicate of underwriters
which has purchased the Bonds from The Meadows at Chandler Creek Municipal Utility District (the "Issuer ") at
competitive sale.
2. The undersigned and/or one or more other members of the underwriting syndicate, if any, have made a bona fide
offering to the public of the Bonds of each maturity at the respective prices set forth below.
3. The first price during the initial offering (expressed as a "yield ") of each maturity of the Bonds which a substantial
amount thereof (at least 10 percent of principal amount of each maturity of the Bonds) has been sold to the public is
as set forth below:
Offering Offering
Year of Principal Price Year of Principal Price
Maturity Amount ( %/Yield) Maturity Amount ( %fYield)
2004 $ 150,000 2014 $ 275,000
2005 160,000 2015 300,000
2006 170,000 2016 310,000
2007 180,000 2017 330,000
2008 200,000 2018 350,000
2009 200,000 2019 370,000
2010 220,000 2020 400,000
2011 230,000 2021 420,000
2012 250,000 2022 450,000
2013 260,000 2023 475,000
4. For purposes of this certificate, the term "public" does not include (a) the undersigned, (b) members of the syndicate, if
any, managed by the undersigned, or (c) any 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. If any or all of the obligations constituting the Bonds are to be guaranteed then the premium paid for such guarantee in
an amount equal to $ is a reasonable amount payable solely for the transfer of credit risk for the payment of
debt service on the Bonds and does not include any amount payable for a cost other than such guarantee, e.g., a credit
rating fee. The Underwriter has represented that the present value of the premium paid for the guarantee for each
obligation constituting the Bonds to which such premium is properly allocated and which are insured thereby is less
than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation
constituting the Bonds. The premium has been paid to a person which is not exempt from federal income taxation and
which is not a user or related to the user of any proceeds of the Bonds. In determining present value for this purpose,
the yield of the Bonds (determined with regard to the payment of the guarantee fee) has been used as the discount rate.
7. The CUSIP number of the Bond with the latest stated maturity is
8. The undersigned understands that the statements made herein will be relied upon by the Issuer in its efforts to comply
with the conditions imposed by the Internal Revenue Code of 1986, as amended, and by Bond Counsel in rendering
their opinion that the interest on the Bonds is excludable from the gross income of the owners thereof.
EXECUTED AND DELIVERED this day of
,2003.
(Name of Underwriter or Manager)
By:
Title:
Rating: Standard & Poor's "
NEW ISSUE BOOK - ENTRY -ONLY See "MUNICIPAL BOND RATINGS AND INSURANCE"
PRELIMINARY OFFICIAL STATEMENT DATED , 2003
Delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that 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 - Tax Exemption" including the alternative minimum tax on corporations. The District will
designate the Bonds as Qualified Tax - Exempt Obligations. See "TAX MATTERS - Qualified Tax - Exempt Obligations ".
Dated:
$5,700,000
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
(A Political Subdivision of the State of Texas Located in Williamson County, Texas)
COMBINATION UNLIMITED TAX AND REVENUE BONDS, SERIES 2003
1, 2003 Due: February 1, as shown below
Interest on the herein described bonds (the "Bonds ") will accrue from 1, 2003 and is payable August 1, 2003 and each February I and
August 1 (each an 'Interest Payment Date "), thereafter until the earlier of maturity or redemption, and will be calculated on the basis of a 360 -day year
composed of twelve 30-day months. The Bonds will be issued in fully registered form only, without coupons, in the denomination of 55,000 or any
integral multiple thereof, and when issued, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust
Company ( "DTC "), New York, New York, acting as securities depository for the Bonds until DTC resigns or is discharged. The Bonds initially will be
available to purchasers in book-entry form only. So long as Cede & Co., as the nominee of DTC, is the registered owner of the Bonds, principal of and
interest on the Bonds will be payable by the paying agent to DTC, which will be solely responsible for making such payment to the beneficial owners of
the Bonds. The initial Paying Agent/Registrar for the Bonds is JPMorgan Chase Bank, Dallas, Texas (the "Paying Agent "). The Bonds are obligations
solely of the District and are not obligations of the City of Round Rock, Texas; Williamson County, Texas; the State of Texas; or any entity other than the
District.
MATURITIES
(Due February 1)
Initial Initial
Principal Interest Reoffering Principal Interest Reoffering
Amount Rate (A )k Due Yield (b) Amount - Rate a Due Yield (b)
$ 150,000 2004 $ 275,000 2014
160,000 2005 300,000 2015
170,000 2006 310,000 2016 •
180,000 2007 330,000 2017 •
200,000 2008 350,000 2018 •
200,000 2009 370,000 2019 •
220,000 2010 400,000 2020 •
230,000 2011 420,000 2021 •
250,000 2012 • 450,000 2022 •
260,000 2013 • 475,000 2023 *
Optional Redemption Precisions: The District reserves the right to redeem, prior to maturity, in integral multiples 0055,000, those Bonds maturing February 1, 2012 though
2023, both inclusive, in whole or from time to time in part, on February 1, 2011, and ou any date thereafter at a price of par plus accrued interest from the most recent interest
payment date to the dare fixed for redemption. The Bonds maturing February 1, 2012 through February I, 2023 may be subject to mandatory sinking find redemption. See
'THE BONDS - Redemption Provisions ".
After requesting competitive bids for purchase of the Bonds, the District has accepted the lowest bid to purchase the Bonds, bearing interest as shown, at a pd. of
% of par plus accrued interest to the date of delivery, resulting in a net effective interest rare to the District of %.
The initial reoffering yields indicated represent the lower of the yields resulting when priced to maturity or the first call date. The initial yields at which the Bonds will be
priced will be established by and will be the sole responsibility of the Initial Purchaser (as herein defined). The yields may be changed at any time at the discretion of the
Initial Purchaser. Accrued interest from 1 2003 to the date of delivery of the Bonds to the Initial Purchaser is to be added to the price.
The Bonds, when issued, will constitute valid and legally binding obligations of the District and will be payable from the proceeds of an annual ad
valorem tax, without legal limitation to rate or amount, levied against taxable property within the District and from a pledge of and lien on limited Net
Revenues (as defined in the Bond Order), if any, of the District's System (as defined in the Bond Order). See "THE BONDS - Source of Payment." THE
BONDS ARE SUBJECT TO SPECIAL INVESTMENT CONSIDERATIONS DESCRIBED HEREIN. Bond purchasers are encouraged to read this
entire Official Statement prior to making an investment decision, including particularly the section titled "INVESTMENT CONSIDERATIONS."
The Bonds are offered by the Initial Purchaser subject to prior sale, when, as and if issued by the District and accepted by the Initial Purchaser, subject,
among other things to the approval of the Initial Bond by the Attorney General of Texas and the approval of certain legal matters by Winstead Sechrest
Minick P.C., Austin, Texas, Bond Counsel. Delivery of the Bond is expected on or about , 2003, in Austin, Texas.
Selling: , 2003 at Noon, Local time
at 100 Congress, Suite 900, Austin Texas 78701
BIDS DUE BY 11:30 AM, LOCAL TIME
TABLE OF CONTENTS
USE OF INFORMATION IN OFFICIAL STATEMENT ....... ........
SALE AND DISTRIBUTION OF THE BONDS 3
Award of the Bonds 3
Securities . ..... ...... ......................_........ .......,_........,
Municipal Bond Rating and Insurance 4
OFFICIAL STATEMENT SUMMARY 5
THE DISTRICT 5
SELECTED FINANCIAL INFORMATION 8
INTRODUCTION 9
Redemption Provisions 9
Termination of Book- Entry-Only Syst em.. ,._ ........................ 10
Payment Record 11
Funds 12
Authority for Issuance ............................... ._ 12
Registration and Transfer 12
Replacement of Paying Agent 13
Lost, Stolen or Destroyed Bonds 13
Issuance of Additional Debt 13
Consolidation 13
Remedies in Event of Default ... 14
Legal Investment and Eligibility to Secure
Defeasance 14
Amendments to the Bond Order 16
Alteration of Boundaries 16
Approval of Bonds ...,. , 16
BOOK - ENTRY -ONLY SYSTEM.. 16
EXTRATERRITORIAL JURISDICTION AND 'ANNEXATION 18
USE AND DISTRIBUTION OF BOND PROCEEDS .............. 19
INVESTMENT CONSIDERATIONS.. 20
Factors Affecting Taxable Values and Tax Payments.... ......... 20
Tax Collections and Foreclosure Remedies 21
Bankruptcy Limitation to Registered Owners' Rights 22
The Effect of Financial Institutions Act of 1989
on Tax Collections of the District 22
Marketability 23
Continuing Compliance with Certain Covenants......,... 23
Approval of Bonds 23
DISTRICT MAP - 24
THE DISTRICT 25
General .................. ............................... _... ......, 25
Location ...... ..... 25
Management of the District 25
Historical and Current Status of Development 26
Future Development ........ 28
DEVELOPERS/LANDOWNERS 28
Role of a Developers/Landowners 28
Description of the Developers/ Landowners. ....... .......... 29
Agricultural Waiver._.__ 29
Utility Construction Agreements ................ .........._...........,., 29
THE SYSTEM 30
General 30
Water System 30
Drainage System ............. ................ _......... ..,........................_ 30
100 -year Flood Plain 30
Future Debt .... 30
PROTECTED DEBT SERVICE REQUIREMENTS ..............._........ 33
Assessed Value.. 34
Combination Unlimited Tax and Revenue Bonds
Authorized but Unissued 34
Outstanding Bonds 34
Cash and Nvestment Balances ................. ..............._.....,....., , 34
Investment Authority and Investment Practices
of the District 35
Current Investments 35
Estimated Overlapping Debt Statement.................. 35
TAX DATA 36
Classification of Assessed Valuation 36
Tax Collections....._ ................................... ... ..__....... .., 36
Dismct Tax Rates 37
Tax Rate Limitation 37
Maintenance Tax 37
Principal Taxpayers ............... ...... _ 37
Tax Adequacy for Debt Service 38
Debt Service Fund Management Index 38
TAXING PROCEDURES 38
Authority to Levy Taxes 38
Property Tax Code and County-Wide Appraisal District 39
Property Subject to Taxation by the District 39
Valuation of Property for Taxation..._ 39
District and Taxpayer Remedies 40
Levy and Collection of Taxes 40
Districts' Rights in the Event of Tax Delinquencies 40
LEGAL MATTERS 41
Legal Proceedings 41
No Material Adverse Change .. 41
No Litigation Certificate 41
TAX MATTERS 42
Tax Exemption 42
Federal Income Tax Accounting Treatment
of Discount and Premium Bonds ........ 43
Collateral Federal Income Tax Consequences 43
State, Local, and Foreign Taxes - 44
Qualified Tax - Exempt Obligations 44
CONTINUING DISCLOSURE OF INFORMATION........... ... . 45
Material Event Notices 45
Availability of Information from NRMSIRS and SID... ........... 45
Compliance with Prior Undertakings ........ ........... ........................ 46
OFFICIAL STATEMENT 46
.................................... ....................._
Experts........ .... .............. ................. ........_......_............, 47
Updating the Official Statement During
Underwriting Period 47
Certification as to Official Statement .............. 47
Official Statement "Deemed Final" 48
PHOTOGRAPHS -
APPENDIX A - Audited Financial Statements
No dealer, broker, salesman or other person has been authorized to give any information or to make any
representations other than those contained in this Official Statement, and if given or made, such other information or
representations must not be relied upon as having been authorized by the District.
This Official Statement does not alone constitute, and is not authorized by the District for use in connection with, an
offer to sell or the solicitation of any offer to buy in any state in which such offer or solicitation is not authorized or
m which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation.
All of the summaries of the statutes, orders, contracts, records, and engineering and other related reports set forth in
the Official Statement are made subject to all of the provisions of such documents. These summaries do not purport
to be complete statements of such provisions, and reference is made to such documents, copies of which are
available from SAMCO Capital Markets for further information.
This Official Statement contains, in part, estimates, assumptions and matters of opinion which are not intended as
statements of fact, and no representation is made as to the correctness of such estimates, assumptions, or matters of
opinion, or as to the likelihood that they will be realized. Any information and expressions of opinion herein
contained are subject to change without notice, and neither the delivery of this "Official Statement" nor any sale
made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of
the District or the other matters described herein since the date hereof. However, the District has agreed to keep this
"Official Statement" current by amendment or sticker to reflect material changes in the affairs of the District, and to
the extent that information actually comes to its attention, other matters described in the "Official Statement" until
delivery of the Bonds to the Initial Purchaser and thereafter only as specified in "OFFICIAL STATEMENT -
Updating the Official Statement During Underwriting Period" and "CONTINUING DISCLOSURE OF
INFORMATION."
Award of the Bonds
After requesting competitive bids for the Bonds, the District has accepted the bid of (the
"Initial Purchaser ") to purchase the Bonds at the interest rates shown on page I of this Official Statement at a price of
of par plus accrued interest to date of delivery. No assurance can be given that any trading market will be
developed for the Bonds after their sale by the District to the Initial Purchaser. The District has no control over the price
at which the Bonds are subsequently sold, and the initial yields at which the Bonds are priced and reoffered are
established by and are the sole responsibility of the Initial Purchaser.
Prices and Marketability
USE OF INFORMATION IN OFFICIAL STATEMENT
SALE AND DISTRIBUTION OF THE BONDS
The delivery of the Bonds is conditioned upon the receipt by the District of a certificate executed and delivered by
the Initial Purchaser on or before the date of delivery of the Bonds stating the prices at which a substantial amount of
the Bonds of each maturity has been sold to the public. For this purpose, the term "public" shall not include any
person who is a bond house, broker or similar person acting in the capacity of underwriter or wholesaler. Otherwise,
the District has no understanding with the Initial Purchaser regarding the reoffering yields or prices of the Bonds.
Information concerning reoffering yields or prices is the responsibility of the Initial Purchaser.
The prices and other terms with respect to the offering and sale of the Bonds may be changed from time-to time by
the Initial Purchaser after the Bonds are released for sale, and the Bonds may be offered and sold at prices other than
the initial offering prices, including sales to dealers who may sell the Bonds into investment accounts. In connection
with the offering of the Bonds, the Initial Purchaser may over - allot or effect transactions which stabilize or maintain
the market prices or the Bonds at levels above those which might otherwise prevail in the open market. Such
stabilizing, if commenced, may be discontinued at any time.
The District has no control over trading of the Bonds in the secondary market. Moreover, there is no guarantee that
a secondary market will be made in the Bonds. In such a secondary market, the difference between the bid and asked
price of utility district bonds may be greater than the difference between the bid and asked price of bonds of
comparable maturity and quality issued by more traditional municipal entities, as bonds of such entities are more
3
generally bought, sold or traded in the secondary market.
Securities Laws
No registration statement relating to the offer and sale of the Bonds has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder.
The Bonds have not been registered or qualified under the Securities Act of Texas in reliance upon various
exemptions contained therein; nor have the Bonds been registered or qualified under the securities laws of any other
jurisdiction. The District assumes no responsibility for registration of the Bonds under the securities laws of any
other jurisdiction in which the Bonds may be offered, sold or otherwise transferred. This disclaimer of responsibility
for registration or 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 or qualification provisions in
such other jurisdiction.
MUNICIPAL BOND RATINGS AND INSURANCE
The District currently has a `BBB" underlying rating from Standard & Poor's Rating Service ( "S & P ") on its
outstanding debt and has made application for a rating on their Series 2003 Bond Issue. The District's 2001 bond issue
has a AAA rating as a result of an insurance policy insuring the timely payment of the principal and interest on the Bonds
issued by FSA.
The District has, also, made application for a guaranty insurance policy insuring the timely payment of the principal
of and interest on the Bonds. The premium for such insurance and any associated rating fees will be paid by the
Initial Purchaser. "S &P" has assigned a rating of "" to the Bonds as a result of a guaranty insurance policy
insuring the timely payment of principal of and interest on the Bonds to be issued by
simultaneously with the delivery of the Bonds.
An explanation of the significance of a rating may be obtained from the company furnishing the rating. The rating
reflects only the respective view of such organization, and the District makes no representation as to the
appropriateness of the rating. There is no assurance that such rating will continue for any given period of time or
that it will not be revised downward or withdrawn entirely by such rating company, if, in the judgment of such
company circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse
effect on the market price of the Bonds.
4
OFFICIAL STATEMENT SUMMARY
The following material is qualified in its entirety by the more detailed information and financial statements appearing
elsewhere 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 DISTRICT
The Issuer The Meadows at Chandler Creek Municipal Utility District (the "District'), is a
political subdivision of the State of Texas, as authorized by Article XVI, Section
59 of the Texas Constitution. The District was created in 1985 by the Texas Water
Commission, predecessor to the Texas Commission on Environmental Quality
( "TCEQ "), and operates pursuant to Chapters 49 and 54 of the Texas Water Code,
as amended. The District was created to provide water, wastewater and storm
drainage services to the approximately 531 acres within its boundaries, all of which
lies within Williamson County, Texas. See "THE DISTRICT — General."
Location The District, which encompasses approximately 531 acres of land, is located in
south central Williamson County and lies approximately 25 miles north of the City
of Austin's central business district and approximately 3 miles northeast of the City
of Round Rock's central business district. The District lies entirely within the
extraterritorial jurisdiction of the City of Round Rock, Texas and wholly within the
boundaries of the Round Rock Independent School District. See "THE
DISTRICT."
Developers/Landowners The active developers within the District are Lennar Homes, KB Homes, and
Kimball Hill Homes, which companies are also building homes in the District. In
addition, approximately IA acres are owned by Chandler Creek Cottages Ltd. as
an existing retirement center and approximately 2.3 acres is owed by Quail Creek
Cottages, which are ultimately expected to be developed as additional phases of an
existing retirement center. Chandler Creek Investment Limited Partnership also
owns approximately 14 acres. See "DEVELOPERS/LANDOWNERS" and "THE
DISTRICT — Historical and Current Status of Development ".
Development within
The District Of the approximately 531 acres within the District, approximately 472 acres are
developable under current land development regulations. As of February, 2003,
utility facilities have been constructed, or are currently under construction, to serve
approximately 87% of the District Development includes 1,330 completed single -
family homes, 57 homes under construction, and approximately 101 vacant
developed single- family lots. In addition to the single - family development, the
development includes a 28 -bed retirement center, a five acre park and approximate
12 acre elementary school site. The District currently includes approximately 53
remaining undeveloped by developable acres. See "THE DISTRICT — Historical
and Current Status of Development"
Homebuilders Homebuilders active within the District include Lennar Homes, KB Homes and
Kimball Hill Homes. Homes currently under construction within the District range
in price from $110,000 to 5200,000. See "THE DISTRICT — Historical and
Current Status of Development."
5
THE BONDS
Description The Bonds in the aggregate principal amount of $5,700,000 maturing annually in
varying amounts on February 1 of each year from 2004 through 2023. Interest
accrues from 1, 2003 at the rates per annum set forth on the cover
page hereof and is payable August 1, 2003 and each February 1 and August 1
thereafter until maturity or earlier redemption. The Bonds are offered in fully
registered form in integral multiples of $5,000 for any one maturity. See "THE
BONDS — General Description."
Redemption Bonds maturing in the years 2012 through 2023, inclusive, are subject to
redemption, in whole or from time to time in part, at the option of the District on
February 1, 2011, and on any interest payment date thereafter at par plus accrued
interest from the most recent interest payment date to the date of redemption. See
"THE BONDS — Redemption Provisions ".
Source of Payment Principal and interest on the Bonds are payable from the proceeds of a continuing
direct annual ad valorem tax levied upon all taxable property within the District,
which under Texas law is not limited as to rate or amount and a lien on the Net
Revenues (hereinafter defined), if any, of the District's System (hereinafter
defined). The Bonds are obligations solely of the The Meadows at Chandler
Creek Municipal Utility District and are not obligations of the State of Texas;
Williamson County, Texas; the City of Round Rock, Texas or any other
political subdivision or entity other than the District. See "THE BONDS -
Source of Payment."
Payment Record The District has never defaulted in the timely payment of principal or interest on its
previously issued bonds. See "FINANCIAL STATEMENT - Outstanding Bonds."
Authority for
Issuance The. Bonds are issued pursuant to Article XVI, Section 59 of the Texas
Constitution and the general laws of the State of Texas, including particularly
Chapters 49 and 54 of the Texas Water Code, as amended, an order of the Texas
Commission on Environmental Quality ( "TCEQ "), and pursuant to an order (the
"Bond Order ") adopted by the Board of Directors of the District. See "THE
BONDS - Authority for Issuance."
Use of Proceeds The proceeds of the Bonds will be used to acquire (i) water, wastewater and
drainage lines to serve The Meadows at Chandler Creek Sections, 5, 6C, 10, 11,
12, 13, 14, 15, 16, 17, 19, 21, 22 and water service line replacements; and (ii) to
finance certain engineering costs. In addition, proceeds of the Bonds will be used
to pay certain costs associated with the issuance of the Bonds. See "USE AND
DISTRIBUTION OF BOND PROCEEDS."
Bonds Authorized But
Unissued The Bonds are the fourth installment of $13,000,000 bonds authorized at an
election held within the District on July 13, 1985. After the sale of the Bonds,
$1,490,000 bonds will remain authorized but unissued. See `FINANCIAL
STATEMENT — Combination Unlimited Tax and Revenue Bonds Authorized but
Unissued."
Municipal Bond Ratings
and Insurance
The District has a BBB underlying rating from Standard & Poor's Rating Service
on its outstanding debt and has requested a rating on the Series 2003 Bond Issue.
The District's 2001 bond issue has a AAA rating as a result of an insurance policy
insuring the timely payment of the principal and interest on the Bonds issued by FSA. An
application has also been made for a commitment for municipal bond guaranty
insurance on the Bonds. See "MUNICIPAL BOND RATINGS AND
INSURANCE."
6
Qualified Tax - Exempt
Obligations The District is expected to designate the Bonds as "qualified tax- exempt
obligations" pursuant to section 265(b) of the Internal Revenue Code of 1986, as
amended, and will represent that the total amount of tax- exempt bonds (including
the Bonds) issued by it during calendar year 2003 is not reasonably expected to
exceed $10,000,000. See "LEGAL MATTERS - Qualified Tax - Exempt
Obligations ".
Bond & General Counsel Winstead Sechrest & Minick P.C., Austin, Texas.
Disclosure Counsel Coats, Rose, Yale, Ryman & Lee, P.C., Houston, Texas.
Financial Advisor SAMCO Capital Markets, Austin, Texas.
District Engineer Gray Jansing & Associates, Inc., Austin, Texas.
INVESTMENT CONSIDERATIONS
The purchase and ownership of the Bonds involve certain investment considerations, and all prospective purchasers
are urged to examine carefully the Official Statement, including particularly the section captioned "INVESTMENT
CONSIDERATIONS, " with respect to the investment security of the Bonds and other factors described therein.
7
SELECTED FINANCIAL INFORMATION
(Unaudited as of February 2003)
2002 Assessed Valuation (100% of estimated market value) $146,501,624 (a)
2003 Preliminary Assessed Valuation (100% of estimated market value) $180,000,000 (b)
Gross Debt Outstanding (after issuance of the Bonds) $ 10,160,000 (c)
Ratio of Gross Debt to 2002 Assessed Valuation 6.94%
Ratio of Gross Debt to Preliminary 2003 Assessed Valuation 5.64%
2002 Tax Rate
Debt Service $0.5272
Maintenance & Operation $0.1566
Total $0.6838 (d)
Debt Service Fund Balance as of February 18, 2003 $905,969 (e)
Average percentage of current tax collections - Tax Years 1993/2002 98.59%
Average percentage of total tax collections - Tax Years 1993/2002 99.12%
Projected Average Annual Debt Service Requirement (2004/2008) of the
Bonds and the Outstanding Bonds ( "Projected Average Requirement ") $1,021,286
Tax rate required to pay Projected Average Requirement based upon
2002 Assessed Valuation at 95% collections $0.74/$100 A.V.
Tax rate required to pay Projected Average Requirement based upon
2003 Preliminary Assessed Valuation at 95% collections $0.60 /$100 A.V.
Projected Maximum Annual Debt Service Requirement (2008) of the
Bonds and the Outstanding Bonds ( "Projected Maximum Requirement ") $1,029,416
Tax rate required to pay Projected Maximum Requirement based upon
2002 Assessed Valuation at 95% collections $0.74/$100 A.V.
Tax rate required to pay Projected Maximum Requirement based upon
2003 Preliminary Assessed Valuation at 95% collections $0.61/$100 A.V.
Number of active single - family connections as of February, 2003 1,389 (1)
Estimated population as of February, 2003 4,862 (g)
(a)
(
(e)
(d)
(e)
(t)
(5)
Certified Taxable Assessed Value within the District on January 1, 2002 as provided by the Williamson County Appraisal District
( "WCAD "). See "TAXING PROCEDURES"
Preliminary Taxable Assessed Value within the District on January 1, 2003 as estimated by WCAD.
Includes the Bonds. See "FINANCIAL STATEMENT — Outstanding Bonds."
In its order authorizing issuance of the Bonds, the TCEQ directed that the District levy a tax rate for debt service purposes of no less than
$0.468 per $100 valuation for2003.
Neither Texas Law nor the Bond Order requires that the District maintain any particular sum in the Debt Service Fund.
Includes 79 builder connections.
Based on 3.5 residents per completed single - family connection.
8
OFFICIAL STATEMENT
relating to
85,700,000
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
(A Political Subdivision of the State of Texas Located in Williamson County, Texas)
Combination Unlimited Tax and Revenue Bonds, Series 2003
INTRODUCTION
This Official Statement provides certain information in connection with the issuance by The Meadows at Chandler
Creek Municipal Utility District (the "District ") of its $5,700,000 Combination Unlimited Tax and Revenue Bonds,
Series 2001 (the `Bonds ").
The Bonds are issued pursuant to Article XVI, Section 59 of the Texas Constitution and the general laws of the State
of Texas, including Chapters 49 and 54 of the Texas Water Code, as amended, pursuant to an order (the "Order ")
adopted by the Board of Directors of the District on the date of the sale of the Bonds, and pursuant an approving
order of the Texas Commission on Environmental Quality (the "TCEQ ").
Unless otherwise indicated, capitalized terms used in this Official Statement have the same meaning assigned to such
terms in the Bond Order.
Included in this Official Statement are descriptions of the Bonds and certain information about the District and its
finances. ALL DESCRIPTIONS OF DOCUMENTS CONTAINED HEREIN ARE SUMMARIES ONLY AND
ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO EACH SUCH DOCUMENT. Copies of such
documents may be obtained from the District at Winstead Sechrest & Minick P.C., 100 Congress Avenue, Suite 900,
Austin, Texas 78701 or during the offering period from the District's Financial Advisor, SAMCO Capital Markets,
Attn: Christina M. Lane, 6907 Capital of Texas Highway, Suite 230, Austin, Texas 78731 upon payment of
reasonable copying, mailing and handling charges.
General Description
Redemption Provisions
THE BONDS
The $5,700,000 The Meadows at Chandler Creek Municipal Utility District Combination Unlimited Tax and
Revenue Bonds, Series 2003 will bear interest from 1 and will mature on February 1 of the years and
in the principal amounts, and will bear interest at the rates per annum, set forth on the cover page hereof. Interest on
the Bonds will be paid on August 1, 2003 and February 1 and August 1(each an "Interest Payment Date ") thereafter
until maturity or earlier redemption and will be calculated on the basis of a 360 -day year composed of twelve 30 -day
months. The Bonds will be issued in fully registered form only, without coupons, in the denomination of $5,000 or
any integral multiple thereof, and when issued, will be registered in the name of Cede & Co., as registered owner and
nominee for The Depository Trust Company ( "DTC "), New York, New York, acting as securities depository for the
Bonds until DTC resigns or is discharged. The Bonds initially will be available to purchasers in book -entry form
only. So long as Cede & Co., as the nominee of DTC, is the registered owner of the Bonds, principal of and interest
on the Bonds will be payable by the paying agent to DTC, which will be solely responsible for making such payment
to the beneficial owners of the Bonds. The initial paying agent/registrar for the Bonds is JPMorgan Chase Bank,
Dallas, Texas ( "Paying Agent ").
Optional Redemption...The Bonds maturing on and after February 1, 2012, are subject to redemption prior to
maturity at the option of the District, in whole or from time to time in part, on February 1, 2011, or on any date
thereafter, at a redemption price equal to the principal amount thereof plus accrued interest from the most recent
payment date to the date fixed for redemption.
9
Mandatory Sinking Fund Redemption...In addition to being subject to optional redemption, as provided above, the
Bonds maturing February 1, and February 1, are subject to mandatory sinking fund redemption prior
to maturity in the following amounts, on the following dates and at a price of par plus accrued interest to the
redemption date from amounts required to be deposited in the Debt Service Fund:
Bonds Maturing February 1,
Mandatory Principal
Redemption Date Amount
Bonds Maturing February 1,
Mandatory Principal
Redemption Date Amount
The principal amount of the Bonds required to be redeemed pursuant to the operation of the mandatory sinking fund
redemption provisions shall be reduced, at the option of the District, by the principal amount of any Bonds of the
stated maturity which, at least 50 days prior to a mandatory redemption date, (1) shall have been acquired by the
District, at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase
thereof, and delivered to the Paying Agent for cancellation, (2) shall have been purchased and cancelled by the
Paying Agent at the request of the District, with monies in the Debt Service Fund at a price not exceeding the •
principal amount of the Bonds plus accrued interest to the date of purchase thereof, or (3) shall have been redeemed
pursuant to the optional redemption provisions and not theretofore credited against a mandatory sinking fund
redemption requirement.
Notice of Redemption—At least 30 calendar days prior to the date fixed for any redemption of Bonds or portions
thereof prior to maturity a written notice of such redemption shall be published once in a financial journal or
publication of general circulation in the City of New York, New York or in the City of Austin, Texas. The Paying
Agent/Registrar shall give written notice of redemption, by registered mail, overnight delivery, or other comparably
secure means, not less than thirty (30) days prior to the Redemption date, to each registered securities depository
(and to each national information service that disseminates redemption notices) known to the Paying
Agent/Registrar, but neither the failure to give such notice nor any defect therein shall affect the sufficiency of notice
given to the Registered Owner as hereinabove stated. The Paying Agent/Registrar may provide written notice of
redemption to DTC by facsimile.
The Bonds of a denomination larger than $5,000 may be redeemed in part ($5,000 or any multiple thereof). Any
Bond to be partially redeemed must be surrendered in exchange for one or more new Bonds of the same maturity for
the unredeemed portion of the principal of the Bonds so surrendered. In the event of redemption of less than all of
the Bonds, the particular Bonds to be redeemed shall be selected by the District, if less than all of the Bonds of a
particular maturity are to be redeemed, the Paying Agent is required to select the Bonds of such maturity to be
redeemed by lot.
Termination of Book - Entry -Only System
The Bonds are subject to the book -entry-only system administered by DTC. See "BOOK- ENTRY -ONLY
SYSTEM." In the event that the book -entry-only system is discontinued by DTC or the District, the following
provisions will be applicable to the Bonds. - -
Payment ...Principal of the Bonds will be payable at maturity to the registered owners as shown by the registration
books maintained by the Paying Agent upon presentation and surrender of the Bonds to the Paying Agent at the
designated office for payment of the Paying Agent in Dallas, Texas (the "Designated Payment/Transfer Office ").
Interest on the Bonds will be payable by check or draft, dated as of the applicable interest payment date, sent by the
Paying Agent by United States mail, first class, postage prepaid, to the registered owners at their respective addresses
shown on such records, or by such other method acceptable to the Paying Agent requested by a registered owner at the
risk and expense of such registered owner. If the date for the payment of the principal of or interest on the Bonds shall
be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated
Payment/Fransfer Office of the Paying Agent is located are required or authorized by law or executive order to close,
then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or day
on which banking institutions are required or authorized to close, and payment on such date shall for all purposes be
deemed to have been made on the original date payment was due.
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Registration... If the book - entry-only system is discontinued, the Bonds may be transferred and re- registered on the
registration books of the Paying Agent only upon presentation and surrender thereof to the Paying Agent at the
Designated Payment/Transfer Office. A Bond also may be exchanged for a Bond or Bonds of like maturity and
interest and having a like aggregate principal amount or maturity amount, as the case may be, upon presentation and
surrender at the Designated Payment/Transfer Office. All Bonds surrendered for transfer or exchange must be
endorsed for assignment by the execution by the registered owner or his duly authorized agent of an assignment form
on the Bonds or other instruction of transfer acceptable to the Paying Agent. Transfer and exchange for Bonds will
be without expense or service charged to the registered owner, except for any tax or other governmental charges
required to be paid with respect to such transfer or exchange. A new Bond or Bonds, in lieu of the Bond being
transferred or exchanged, will be delivered by the Paying Agent to the registered owner, at the Designated
Payment/Transfer Office of the Paying Agent or by United States mail, first-class, postage prepaid. To the extend
possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner not more
than three (3) business days after the receipt of the Bonds to be canceled in the exchange or transfer in the
denominations of $5,000 or any integral multiple thereof.
Limitation on Transfer of Bonds...Neither the District nor the Paying Agent shall be required to make any transfer,
conversion or exchange to an assignee of the registered owner of the Bonds (i) during the period commencing on the
close of business on the 15 calendar day of the month preceding each Interest Payment Date (the "Record Date ")
and ending with the opening of business on the next following principal or Interest Payment Date, or (ii) with respect
to any Bond called for redemption, in whole or in part, within forty -five (45) days of the date fixed for redeniption;
provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the
uncalled balance of a Bond.
Replacement Bonds...If a Bond is mutilated, the Paying Agent will provide a replacement Bond in exchange for the
mutilated Bond. If a Bond is destroyed, lost or stolen, the Paying Agent will provide a replacement Bond upon (i)
the filing by the registered owner with the Paying Agent of evidence satisfactory to the Paying Agent of the
destruction, loss or theft of the Bond and the authenticity of the registered owner's ownership, and (ii) the furnishing
to the Paying Agent of indenmification in an amount satisfactory to hold the District and the Paying Agent harmless.
All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a
replacement Bond must be borne by the registered owner. The provisions of the Bond Order relating to the
replacement Bonds are exclusive and to the extent lawful, preclude all other rights and remedies with respect to the
replacement and payment of mutilated, destroyed, lost or stolen Bonds.
Source of Payment
While the Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, the District
covenants to levy and annually assess and collect in due time, form and manner, and at the same time as other
District taxes are assessed, levied and collected, in each year, beginning with the current year, a continuing direct
annual ad valorem tax, without legal limit as to rate or amount, upon all taxable property in the District sufficient to
pay the interest on the Bonds as the same becomes due and to pay each installment of the principal of the Bonds as
the same matures, with full allowance being made for delinquencies and cost of collection. In the Bond Order, the
District covenants that said taxes are irrevocably pledged to the payment of the interest and principal of the Bonds,
together with the_bonds previously issued and outstanding and to no other purpose. The Bonds are further payable
from and secured by a pledge of and a lien on certain net revenues ( "Net Revenues "), if any, of the District's
waterworks, sanitary sewer and drainage system (the "System "). The Bonds are obligations of the District and are
not the obligations of the State of Texas; Williamson County, Texas; the City of Round Rock, Texas; or any other
political subdivision or any entity other than the District.
Payment Record
The District has previously issued $2,450,000 Combination Unlimited Tax and Revenue Bonds, Series 1987;
$2,124,995.80 Combination Unlimited Tax and Revenue Refunding Bonds, Series 1994; $1,410,000 Combination
Unlimited Tax and Revenue Bonds, Series 1999; and $1,950,000 Combination Unlimited Tax and Revenue Bonds,
Series 2001. There has been no default by the District in payment of principal of or interest on such bonds.
$4,460,000 (Series 1994, 1999, & 2001) in principal amount of such bonds remains outstanding (collectively, the
"Outstanding Bonds ").
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Funds
In the Bond Order, the Debt Service Fund is created and established, and the proceeds from all taxes levied, assessed
and collected for and on account of the Bonds authorized by the Bond Order shall be deposited, as collected, in such
fund.
Upon the receipt by the District of the purchase price for the Bonds, the accrued interest on the Bonds shall be
deposited in to the Debt Service Fund upon receipt. The remaining proceeds of sale of the Bonds, including interest
earnings thereon, shall be deposited into the Capital Projects Fund, to be used for the purposes described in the Bond
Order. Any monies remaining in the Capital Projects Fund after completion of construction of the entire System will
be transferred to the Debt Service Fund. See "USE AND DISTRIBUTION OF BOND PROCEEDS" for a more
complete description of the use of Bond proceeds and the projects related thereto.
Authority for Issuance
At a bond election held within the District on July 13, 1985, the voters of the District authorized the issuance of
$13,000,000 principal amount of unlimited tax and revenue bonds. See "Issuance of Additional Debt" below.
By adoption of an order dated March , 2003, the TCEQ authorized the District to sell the Bonds subject to
certain restrictions, including restrictions on the use of Bond proceeds as summarized in "USE AND
DISTRIBUTION OF BOND PROCEEDS" and recommended, among other things, the levy of a debt service tax of
at least $0.468 per $100 of assessed valuation in the initial year of the Bonds, which is 2003.
The Bonds are issued by the District pursuant to an order of the TCEQ, an ordinance of the City of Round Rock, the
terms and conditions of the Bond Order; Article XVI, Section 59 of the Constitution of the State of Texas, Chapters
49 and 54 of the Texas Water Code, as amended, and general laws of the State of Texas relating to the issuance of
bonds by political subdivisions of the State of Texas.
Before the Bonds can be issued, the Attomey General of Texas must initially pass upon the legality of certain related
matters, The Attomey General of Texas does not guarantee or pass upon the safety of the Bonds as an investment or
upon the adequacy of the information contained in this Official Statement.
Registration and Transfer
So long as the Bonds remain outstanding, the Paying Agent shall keep the register at its principal corporate trust
office and, subject to such reasonable regulations as it may prescribe, the Paying Agent shall provide for the
registration and transfer of Bonds in accordance with the terms of the Bond Order.
Each Bond shall be transferable only upon the presentation and surrender of such Bond at the principal corporate
trust office of the Paying Agent, duly endorsed for transfer, or accompanied by an assigimient duly executed by the
registered owner or his authorized representative in form satisfactory to the Paying Agent. Upon due presentation of
any Bond in proper form for transfer, the Paying Agent has been directed by the District to authenticate and deliver
in exchange therefor, within three (3) business days after such presentation, a new Bond or Bonds, registered in the
name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal
amount and paying interest at the same rate as the Bond or Bonds so presented.
All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the
Paying Agent for a Bond of the same maturity and interest rate and in any authorized denomination in an aggregate
amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Paying Agent is
authorized to authenticate and deliver exchange Bonds. Each exchange Bond delivered shall be entitled to the
benefits and security of the Bond Order to the same extent as the Bond or Bonds in lieu of which such exchange
Bond is delivered.
Neither the District not the Paying Agent shall be required to transfer or to exchange any Bond during the period
beginning on a Record Date and ending the next succeeding Interest Payment Date or to transfer or exchange any
Bonds for a period of forty-five (45) days next preceding the selection of Bonds for redemption or to transfer or
exchange any Bonds called for redemption.
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The District or the Paying Agent may require the registered owner of any Bond to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connections with the transfer or exchange of such Bond(s).
Any fee or charge of the Paying Agent for such transfer or exchange shall be paid by the District.
Replacement of Paying Agent
Provision is made in the Bond Order for replacement of the Paying Agent by the District. If the Paying Agent is
replaced by the District the new Paying Agent shall act in the same capacity as the previous Paying Agent. Any
Paying Agent selected by the District shall be a national or state banking institution, a corporation organized and
doing business under the laws of the United States of America or of any State, authorized under such laws to exercise
trust powers, and subject to supervision or examination by federal or state authority, to act as Paying Agent for the
Bonds.
Lost, Stolen or Destroyed Bonds
Upon presentation and surrender to the Paying Agent of a mutilated Bond, the Paying Agent shall authenticate and
deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a
number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the
District, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such
Bond has been acquired by a bona fide purchaser, shall, upon receipt of certain documentation from the registered
owner requested by the District or the Paying Agent and an indemnity bond, and such other security or indemnity as
is satisfactory to the District and the Paying Agent to hold them harmless, and satisfaction by the registered owner of
any other reasonable requirements of the District and the Paying Agent, execute and the Paying Agent shall
authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount bearing a number not
contemporaneously outstanding.
Registered owners of lost, stolen or destroyed Bonds will be required to pay the District's cost to replace such Bonds
(including, but not limited to the fees and expenses of the Paying Agent). In addition, the District or the Paying
Agent may require the registered owner to pay a sum sufficient to cover any tax or other governmental charge that
may be imposed.
Issuance of Additional Debt
The District may issue additional bonds, with the approval of the TCEQ, necessary to provide and maintain
improvements and facilities consistent with the purposes for which the District was created. See "THE DISTRICT -
General." The District's voters have authorized the issuance of $13,000,000 of unlimited tax and revenue bonds and
could authorize additional amounts. Any additional bonds sold would be on a parity with or subordinate, to the
Bonds and the Outstanding Bonds. Following the issuance of the Bonds, the' 'District will have $1,490,000 of
unlimited tax and revenue bonds authorized but unissued.
The Bond Order imposes no limitation on the amount of additional parity bonds which may be authorized for
issuance by the District's voters or the amount ultimately issued by the District. See "INVESTMENT
CONSIDERATIONS - Future Debt"
The District is also authorized by statute to engage in fire fighting activities, including the issuance of bonds payable
from taxes for such purpose. Before the District could issue fire fighting bonds payable from taxes, the following
actions would be required: (a) amendment to the existing City of Round Rock ordinance specifying the purposes for
which the District may issue bonds; (b) authorization of a detailed master plan and bonds for such purpose by the
qualified voters in the District; (c) approval of the master plan and issuance of bonds by the TCEQ; and (d) approval
of such bonds by the Attorney General of Texas. The Board has not considered calling an election for purposes of
authorization of a detailed master plan and issuance of bonds for fire fighting activities at this time. Issuance of
bonds for fire- fighting activities could dilute the investment security for the Bonds.
Consolidation
A district (such as the District) has the legal authority to consolidate with other districts and, in connection therewith,
to provide for the consolidation of its assets, such as cash and the utility system, with the water and wastewater
systems of the district(s) with which it is consolidating as well as its liabilities (which would include the Bonds). No
representation is made concerning the likelihood of consolidation.
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Remedies in Event of Default
Other than a writ of mandamus and other relief authorized by law, the Bond Order does not expressly provide a
specific remedy for a default. Although a registered owner could presumably obtain a judgment against the District
for a default in the payment of principal or interest, such judgement could not be satisfied by execution against any
property of the District. If the District defaults, a registered owner could petition for a writ of mandamus issued by a
court of competent jurisdiction requiring the District and the District's officials to observe and perform the
covenants, obligations or conditions prescribed in the Bond Order. Such remedy might need to be enforced on a
periodic basis. The enforcement of a clans for payment on the Bonds would be subject to the applicable provisions
of the federal bankruptcy laws, any other similar laws affecting the rights of creditors of political subdivisions, and
general principals of equity. See "INVESTMENT CONSIDERATIONS - Registered Owners' Remedies, and -
Bankruptcy Limitation to Registered Owners' Rights."
Legal Investment and Eligibility to Secure Public Funds in Texas
The Texas Legislature has enacted four partially conflicting statutes which pertain to the eligibility of bonds issued by a
municipal utility district as investments for certain entities and as security for deposits of public funds in Texas; Section
49.186 of the Water Code; Chapter 2256, Texas Government Code ( "Public Funds Investment Act "); and Chapter 2257,
Texas Government Code ( "Public Funds Collateral Act "). After reconciling their conflicting provisions, these four
statutes provide the following authorization:
1. Whether rated or unrated, bonds of the District (including the Bonds) are authorized investments in the State of
Texas for banks, savings and loan associations, insurance companies, fiduciaries, trustees and the State of
Texas;
2. Bonds of the District are authorized investments for political subdivisions of the State of Texas; and
3. Bonds of the District (including the Bonds) may be used to secure the deposit of public funds in the State of
Texas only if they have been rated by a nationally recognized investment rating firm and have received a rating
of not less than "A" or its equivalent.
The District makes no representation that the Bonds will be acceptable to banks, savings and loan associations or
public entities for investment purposes or to secure deposits of public funds. The District has made no investigation
of other laws, regulations or investment criteria which might apply to or otherwise limit the availability of the Bonds
for investment or collateral purposes. Prospective purchasers are urged to carefully evaluate the investment quality
of the Bonds and as to the acceptability of the Bonds for investment or collateral purposes.
Defeasance
When all or any portion of the Bonds have been paid in full or when all or any portion of the Bonds have become
due and payable, whether at maturity or otherwise, and the District shall have provided for the payment of the whole
amount due or to become due on such Bonds then outstanding by depositing with the Paying Agent/Registrar for
payment of such Bonds the entire amount due or to become due thereon, and the District shall also have paid or
caused to be paid all sums payable under the Order by the District with respect to all Bonds, including the
compensation due or to become due the Paying Agent/Registrar, then the Paying Agent/Registrar, upon receipt of a
letter of instructions from the District requesting the same, shall discharge and release the lien of the Order with
respect to the Bonds and execute and deliver to the District the releases or other instruments as needed to release the
lien of the Order.
The District may also discharge its obligation to pay the principal of and interest on all or any portion of the Bonds
and its obligation to pay other sums payable or to become payable under the Order by complying with the following
procedures:
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(a) The District shall deposit or cause to be deposited with the Paying Agent/Registrar an amount of money that,
together with the interest eamed on or capital gains or profits to be realized from the investment of such money, will be
sufficient to pay the principal of and accrued interest on such Bonds to maturity or to the date fixed for prior redemption
of such Bonds and to pay such other amounts as may be reasonably estimated by the Paying Agent/Registrar to become
payable under the Order with respect to the Bonds being provided for, including the compensation due or to become due
the Paying Agent/Registrar;
(b) The District shall establish or cause to be established a separate escrow account fund with the Paying
Agent/Registrar for the deposit pursuant to subdivision (a) above;
(c) Only cash, direct non - callable obligations of the United States of America and securities fully and
unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, to which
direct obligation or guarantee the full faith and credit of the United States of America has been pledged shall be used to
effect defeasance of the Bonds. In the event of an advance refunding, the District shall cause to be delivered a
verification report of an,independent nationally recognized certified public accountant. If a forward supply contract is
employed in connection with the refunding, (i) such report shall expressly identify the types of securities to be purchased
pursuant to the forward supply contract and shall state that the adequacy of the escrow to accomplish the refunding relies
solely on the initial escrowed investments and the maturing principal thereof and interest income thereon and does not
assume performance under or compliance with the forward supply contract, and (ii) the applicable escrow agreement
shall provide that in the event of any discrepancy or difference between the terms of the forward supply contract and the
escrow agreement (or the authorizing document, if no separate escrow agreement is utilized), the terns of the escrow
agreement or authorizing document, if applicable, shall be controlling;
(d) The District shall make provision for the payment to the Registered Owners at the date of maturity or redemption
of the full amount to which the Registered Owners of the appropriate Bonds would be entitled by way of principal and
interest to the date of such maturity;
(e) The District shall make provision for the sending of written notice by first class postage prepaid United States
mail to the Registered Owner of each appropriate Bond then outstanding within 30 days following the date of such
deposit that such moneys are so available for such payment; and
(f) The District shall provide the Paying Agent/Registrar with an opinion of Winstead Sechrest & Minick P.C. or
other nationally recognized bond counsel selected by the District and acceptable to the Paying Agent/Registrar to the
effect that the deposit specified in subsection (a) will not cause the interest on any of the Bonds to become includable in
the gross income of the Registered Owners thereof and that such Bonds are legally defeased.
Upon compliance with subsection (a) of this Section, the Bonds for the payment of which provision is thus made
shall no longer be regarded as outstanding and unpaid, and the Paying Agent/Registrar, upon receipt of a letter of
instructions from the District requesting the same, shall discharge and release the lien of this Order as to such Bonds
and shall execute and deliver to the District such releases or other instruments needed to release the lien of of the
Order.
Following final payment of the principal of and interest on the appropriate Bonds, any money, interest earnings,
profits, or capital gains over and above the amounts necessary for such purposes shall be paid to the District.
In the Order, the District reserves the right, to be exercised at the time of defeasance of the Bonds, to call for earlier
redemption those Bonds which have been defeased to their maturity dates, if the District:
(a) in the proceeding providing for the firm banking and financial arrangements expressly reserves the right to call
the Bonds being defeased for earlier redemption;
(b) gives notice of the reservation of that right to the Owners of the Bonds being defeased immediately following the
making of firm banking and financial arrangements; and
(c) directs that notice of the reservation be included in any redemption notices that the District authorizes
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Specific Tax Covenants
In the Bond Order the District has covenanted with respect to among other matters, the use of the proceeds of the
Bonds and the use of facilities financed therewith by persons other than state or local governmental units, and the
manner in which the proceeds of the Bonds are to be invested. The District may cease to comply with any such
covenant if it has received a written opinion of a nationally recognized bond counsel to the effect that regulations or
rulings hereafter promulgated modify or expand provisions of the Internal Revenue Code of 1986, as amended (the
"Code "), so that such covenant is ineffective or inapplicable or compliance with such covenant adversely affects the
exclusion from gross income of interest on the Bonds under Section 103 of the Code.
Additional Covenants
The District has additionally covenanted in the Bond Order that to the extent it has the authority to do so, it will (i)
maintain the System in good condition and repair, ordinary wear and tear and obsolescence excepted, and operate the
System in an efficient manner and at a reasonable cost, (ii) maintain insurance on the System of a kind and in an
amount which usually would be carried by municipal corporations and political subdivisions in Texas engaged in a
similar type of business, but considering any governmental immunities to which the District may be entitled, and (iii)
keep accurate records and accounts and employ an independent certified public accountant to audit and report on its
financial affairs at the close of each fiscal year, such audits to be in accordance with applicable law, rules and
regulations and open to inspection in the office of the District.
Amendment to Bond Order
The Bond Order contains provisions to the effect that the District may, without the consent of or notice to any
registered owners of the Bonds amend, change or modify the Bond Order as may be required (a) by the provisions of
the Bond Order, (b) for the purpose of curing any ambiguity, inconsistency, or formal defect or omission in the Bond
Order, or (c) in connection with any other change which is not to the prejudice of the registered owners of the Bonds.
Except for such amendments, changes or modifications, the District shall not amend, change or modify the Bond
Order in any manner without the consent of the registered owners.
Alteration of Boundaries
In certain circumstances, under Texas law the District may alter its boundaries to: (1) upon satisfying certain
condition, annex additional territory; and (2) exclude land subject to taxation within the District that is not served by
District facilities if the District simultaneously annexes land of equal acreage and value that may be practicably
served by District facilities. No representation is made conceming the likelihood that the District would effect any
change in its boundaries.
Approval of the Bonds
The Attorney General of Texas must approve the legality of the Bonds prior to their delivery. The Attorney General
of Texas does not pass upon or guarantee the quality of the Bonds as an investment, nor does he pass upon the
adequacy or accuracy of the information contained in this Official Statement.
BOOK -ENTRY -ONLY SYSTEM
The Depository Trust Company ( "DTC "), New York, New York, will act initially 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). One fully registered certificate will be issued for each maturity of the Bonds in the aggregate
principal amount of such maturity, and will be deposited with DTC.
DTC is a limited - purpose trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve System, a `blearing
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 securities that its
participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book -
entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities
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certiftcates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that
clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect
Participants "). The rules applicable to DTC and its participants are on file with the Securities and Exchange
Commission.
Purchases of 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, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or
Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interest
in the Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the
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. The deposit of Bonds with DTC and their registration in the name of Cede
& Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the
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 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.
Redemption notices shall be sent to Cede & Co. If less than all of the Bonds 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. will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails
an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on payment dates in accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on payment dates. Payments by participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name ", and will be the responsibility of such participant and not
of DTC, the Paying Agent, the Initial Purchaser or the District, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the District,
disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving
reasonable notice to the District. Under such circumstances, in the event that a successor securities depository is not
obtained, Bonds are required to be printed and delivered.
The District may decide to discontinue use of the system of book -entry transfers through DTC (or a successor
securities depository). In that event, Bonds will be printed and delivered in accordance with the Bond Order.
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In reading this Official Statement it should be understood that while the Bonds are in the book - entry-only system,
references in other sections of this Official Statement to registered owners should be read to include the person for
which the participant acquires an interest in the 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 Bond Order will be given only to DTC.
According to DTC, the foregoing information with respect to DTC has been provided to the Industry for
informational purposes only and is not intended to serve as a representation, warranty, or contract modification of
any kind.
Information concerning DTC and the book - entry-only system has been obtained from DTC and is not guaranteed as
to accuracy or completeness, and is not be construed as a representation by the District, the Financial Advisor or the
Initial Purchaser.
EXTRATERRITORIAL JURISDICTION AND ANNEXATION
The District lies wholly within the extraterritorial jurisdiction of the City of Round Rock, Texas ( the "City" or
"Round Rock "). "Under Texas law, a city may annex a special district located within its extraterritorial jurisdiction
pursuant to certain statutory provisions that allow for negotiations between the city and the special district as to the
timing, terms and conditions of the annexation. When such special district is dissolved, the City, must assume the
assets, functions and liabilities of the special district, including its bonded indebtedness. The City and the District
have entered into several agreements concerning the creation, operation and services to be provided to the District
(collectively, the "Agreements "). The Agreements, as supplemented, set forth, among other things, plans for
operation and maintenance of a water and wastewater system to service customers within the District and the
provision of water and wastewater services by the City to the District. Such Agreements contain various provisions
regarding bond issuance, land development as well as provisions for annexation and dissolution of the District. In
particular, such Agreements provide that the District will install at least 90% of the facilities and amenities for which
District bonds have been authorized by December 10, 1997. In the event the District violates such provision, the City
is entitled to injunctive relief or a writ of mandamus or may revoke its approval of the installation of any further
facilities or amenities and the issuance of the balance of the District's unissued bonds; provided however, the City's
right to revoke such authorization may be exercised only if the City concurrently annexes the entire District. The
District has not installed 90% of the facilities and amenities for which District bonds have been authorized, and the
City has not taken any relief to which it is entitled under the Agreements. Upon annexation of the District into the
City, the Agreements provide that the City may collect from District customers a surcharge not to exceed $50 per
month in addition to the water and sewer rate. No representation is made concerning the likelihood of annexation of
the District by Round Rock or the ability of Round Rock to make debt service payments on the Bonds should
annexation occur.
[The rest of this page intentionally left blank.]
18
TOTAL NON - CONSTRUCTION COSTS
TOTAL BOND ISSUE REQUIREMENT
USE AND DISTRIBUTION OF BOND PROCEEDS
The proceeds of the Bonds will be used to purchase certain water, wastewater, trunk lines and drainage facilities to
serve Sections 5, 6C, 10, 11, 12, 13, 14, 15, 16, 17, 19, 21, 22, water service line replacement and associated
engineering fees. In addition, proceeds of the Bonds will be used to pay certain costs associated with the issuance of
the Bonds.
The presently estimated use and distribution of Bond proceeds is set forth below. Of the proceeds to be received
from the sale of the Bonds, $4 „860,533 is estimated to be required for construction costs, and $839,467 is estimated
to be required for non - construction costs.
Construction Costs: Amount
1. The Meadows at Chandler Creek, Section 5 $ 492,618
2. The Meadows at Chandler Creek, Section 6C 81,489
3. The Meadows at Chandler Creek, Section 10 664,237
4. The Meadows at Chandler Creek, Section 11 555,207
5. The Meadows at Chandler Creek, Section 12 206,695
6. The Meadows at Chandler Creek, Section 13 203,867
7. The Meadows at Chandler Creek, Section 14 154,218
8. The Meadows at Chandler Creek, Section 15 429,181
9. The Meadows at Chandler Creek, Section 16 119,743
10. The Meadows at Chandler Creek, Section 17 335,791
11. The Meadows at Chandler Creek, Section 19 303,738
12. The Meadows at Chandler Creek, Section 21 346,917
13. The Meadows at Chandler Creek, Section 22 199,318
14. Engineering Costs 492,514
15. The Meadows at Chandler Creek, Water Service Line Replacement 275.000
TOTAL CONSTRUCTION COSTS 84,860,533
Non - Construction Costs: Amount
1. Legal Fees (1.5 %) $ 85,500
2. Financial Advisor Fees (1.5 %) 85,500
3. Bond Discount (3 %) - 171,000
4. Bond Issuance Costs 40,000
5. TCEQ Bond Issuance Fee (0.25 %) 14,250
6. Bond Application Report 45,000
7. Developer Interest 398,217
8. Contingency* 0 *
* Preliminary, subject to change. In its approval of issuance of the Bonds, the TCEQ directed any surplus bond
proceeds resulting from the sale of the Bonds at a lower interest rate (than anticipated in the Bond Application) to
be shown as a contingency line item and be subject to the TCEQ rules on use of surplus bond funds.
19
S 819,467
55,700,000
General
The Bonds, which are obligations of the District and are not obligations of the State of Texas; Williamson County,
Texas; Round Rock, Texas; or any other political subdivision, will be secured by a continuing direct annual ad valorem
tax, without legal limitation as to rate or amount, on all taxable property located within the District, and by a pledge of
and lien on certain Net Revenues, if any, of the System It is not expected that any Net Revenues will be available to
contribute to the payment of the Bonds. (See "THE BONDS - Source of Payment. ") The ultimate security for payment
of principal of and interest on the Bonds depends on the ability of the District to collect from the property owners within
the District all taxes levied against the property, or in the event of foreclosure, on the value of the taxable property with
respect to taxes levied by the District and by other taxing authorities. The collection by the District of delinquent taxes
owed to it and the enforcement by the registered owners of the Districts obligation to collect sufficient taxes may be a
costly and lengthy process. Furthermore, the District cannot and does not make any representations that continued
development of property within the District will accumulate or maintain taxable values sufficient to justify continued
payment by property owners or that there will be a market for the property. See "Registered Owners' Remedies" below.
Factors Affecting Taxable Values and Tax Payments
INVESTMENT CONSIDERATIONS
Economic Factors and Interest Rates: A substantial percentage of the taxable value of the District results from the
current market value of single -family residences and developed lots. The market value of such homes and lots is related
to general economic conditions affecting the demand for and taxable value of residences. Demand for lots of this type
and the construction of residential dwellings thereon can be significantly affected by factors such as interest rates, credit
availability, construction costs, energy availability and the prosperity and demographic characteristics of the urban
center toward which the marketing of lots is directed. Decreased levels of construction activity would tend to restrict the
growth of property values in the District or could adversely impact existing values.
Interest rates and the availability of mortgage and development funding have a direct impact on the construction activity,
particularly short-term interest rates at which developers are able to obtain financing for development costs. Lenders
have been selective in recent years in making real estate loans in the Austin area because of the negative impact to their
real estate portfolios. Interest rate levels may affect the ability of a Landowner with undeveloped property to undertake
and complete construction activities within the District. Because of the numerous and changing factors affecting the
availability of funds, the District is unable to assess the future availability of such funds for continued development and
construction within the District. In addition, although located approximately 25 miles from the central downtown
business district of the City of Austin, the success of development within the District and growth of District taxable
property values are, to a great extent, a function of the Austin metropolitan and regional economics.
The September 11, 2001 terrorist activities in New York and Washington, D.C., and their resultant effect upon
employment in certain industries and upon the economic well -being of the marketplace, may have an adverse effect
upon development in general. Recently announced layoffs in the high -tech industry based in the Austin area may have
similar adverse effects.
Competition: The demand for and construction of single - family homes in the District could be affected by competition
from other residential developments including other residential developments located in other utility districts located
near the District. In addition to competition for new home sales from other developments, there are numerous
previously -owned homes in more established neighborhoods closer to downtown Round Rock that are for sale. Such
homes could represent additional competition for new homes proposed to be sold within the District.
The competitive position of the developers in the sale of developed lots and of prospective builders in the construction
of single - family residential houses within the District is affected by most of the factors discussed in this section. Such a
competitive position is directly related to the growth and maintenance of taxable values in the District and tax revenues
to be received by the District. The District can give no assurance that building and marketing programs in the District
by the developers will be implemented or, if implemented, will be successful.
20
Developers Under No Obligation to the District: The developers have informed the Board of their current plans to
continue to develop land in the District for single family home purposes. None of the developers has current plans to
sell their land within the District. However, none of the developers are obligated to implement such plan on any
particular schedule or at all. Thus, the furnishing of information related to the proposed development by the
developers should not be interpreted as such a commitment. The District makes no representation about the
probability of development continuing in a timely manner or about the ability of the developers, or any other
subsequent landowners to whom a party may sell all or a portion of its holdings within the District, to implement any
plan of development. Furthermore, there is no restriction on the developers right to sell their land. The District can
make no prediction as to the effects that current or future economic or governmental circumstances may have on any
plans of the developers. Failure to construct taxable improvements on developed lots and tracts and failure of the
developers to develop their land would restrict the rate of growth of taxable value in the District. The District is also
dependent upon the developers (see "TAX DATA - Top Ten Taxpayers ") for the timely payment of ad valorem
taxes, and the District cannot predict what the future financial condition of the developers will be or what effect, if
any, such conditions may have on its ability to pay taxes. See "THE DEVELOPERS/LANDOWNERS."
Impact on District Tax Rates: Assuming no further development or construction of taxable improvements, the value of
the land and improvements currently within the District will be the major determinant of the ability or willingness of
property owners within the District to pay their taxes. The 2002 assessed valuation of the District is $146,501,624 and
the preliminary assessed value for 2003 is estimated at $180,000,000 (see "FINANCIAL STATEMENT "). After
issuance of the Bonds, the Projected Maximum Annual Debt Service Requirement is estimated to be $1,029,416 (2008)
and the Projected Average Annual Debt Service Requirement is estimated to be $1,021,286 (2004 through 2008,
inclusive). Based on the 2002 assessed valuation and no use of funds on hand, a tax rate of $0.74 per $100 assessed
valuation, at a 95% collection rate would be necessary to pay the Projected Maximum Annual Debt Service
Requirement of $1,029,416 and a tax rate of $0.74 per $100 assessed valuation at a 95% collection rate would be.
necessary to pay the Projected Average Annual Debt Service Requirement of $1,021,286. Assuming (1) no increase or
decrease in the preliminary estimated 2003 assessed valuation, and (2) no use of funds on hand, a tax rate of $0.61 per
$100 assessed valuation, at a 95% collection rate would be necessary to pay the Projected Maximum Annual Debt
Service Requirement of $1,029,416 and a tax rate of $0.60 per $100 assessed valuation at a 95% collection rate would
be necessary to pay the Projected Average Annual Debt Service Requirement of $1,021,286. See "PROJECTED
DEBT SERVICE REQUIREMENTS" and "TAX DATA - Tax Adequacy for Debt Service."
Tax Collections and Foreclosure Remedies
The District has a right to seek judicial foreclosure on a tax lien, but such remedy may prove to be costly and time
consuming and, since the future market or resale market, if any, of the taxable real property within the District is
uncertain, there can be no assurance that such property could be sold and delinquent taxes paid. Registered owners of
the Bonds are entitled under Texas law to a writ of mandamus to compel the District to perform its obligations. Such
remedy would have to be exercised upon each separate default and may prove costly, time consuming and difficult to
enforce. Furthermore, there is no trust indenture or trustee, and all legal actions would have to be taken on the initiative
of, and be financed by, registered owners to enforce such remedies. The rights and remedies of the registered owners
and the enforceability of the Bonds may also be limited by banlmsptcy, reorganization and other similar laws affecting
the enforcement of creditors' rights generally.
Registered Owners' Remedies
In the event of default in the payment of principal of or interest on the Bonds, the registered owners have the right to
seek a writ of mandamus, requiring the District to levy adequate taxes each year to make such payments. Except for
mandamus, the Bond Order does not specifically provide for remedies to protect and enforce the interest of the
registered owners. 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. Although the registered owners could obtain a
judgment against the District, such a judgment could not be enforced by direct levy and execution against the District's
property. Further, the registered owners cannot themselves foreclose on property within the District or sell property
within the District in order to pay the principal of and interest on the Bonds. The enforceability of the rights and
remedies of the registered owners may further be limited by laws relating to bankmmptcy, reorganization or other similar
laws of general application affecting the rights of creditors of political subdivisions such as the District.
21
Bankruptcy Limitation to Registered Owners' Rights
The enforceability of the rights and remedies of registered owners of the Bonds may be limited by laws relating to
banlmtptcy, reorganization or other similar laws of general application affecting the rights of creditors of political
subdivisions such as the District. Subject to the requirements of Texas law discussed below, a political subdivision such
as the District may voluntarily file a petition for relief from creditors under Chapter 9 of the U.S. Bankruptcy Code, 11
USC sections 901 -946. The filing of such petition would automatically stay the enforcement of Registered Owners'
remedies, including mandamus and the foreclosure of tax liens upon property within the District discussed above. The
automatic stay would remain in effect until the federal bankruptcy judge hearing the case dismisses the petition, enters an
order granting relief from the stay or otherwise allows creditors to proceed against the petitioning political subdivision.
A political subdivision, such as the District, may qualify as a debtor eligible to proceed in a Chapter 9 case only if it (1)
is generally authorized to file for federal banlnuptcy protection by applicable state law, (2) is insolvent or unable to meet
its debts as they mature, (3) desires to effect a plan to adjust such debts, and (4) has either obtained the agreement of or
negotiated in good faith with its creditors or is unable to negotiate with its creditors because negotiations are
impracticable. Under Texas law, a municipal utility district, such as the District, must obtain the approval of the TCEQ
as a condition to seeking relief under the U.S. Bankruptcy Code. The TCEQ is required to investigate the financial
condition of a financially troubled district and authorize such district to proceed under federal bankruptcy law only if
such district has fully exercised its rights and powers under Texas law and remains unable to meet its debts and other
obligations as they mature.
Notwithstanding noncompliance by a district with Texas law requirements, a district could file a voluntary bankruptcy
petition under Chapter 9, thereby involving the protection of the automatic stay until the bankruptcy court, after a
hearing, dismisses the petition. A federal bankruptcy court is a court of equity and federal bankruptcy judges have
considerable discretion in the conduct of bankruptcy proceedings and in determining the decision of whether to grant the
petitioning district relief from its creditors. While such a decision might be applicable, the concomitant delay and loss of
remedies to the registered owners could potentially and adversely impair the value of the registered owner's claim
If a petitioning district were allowed to proceed voluntarily under Chapter 9 of the Federal Bankruptcy Code, it could
file a plan for an adjustment of its debts. If such a plan were confirmed by the bankruptcy court, it could, among other
things, affect a registered owner by reducing or eliminating the amount of indebtedness, deferring or rearranging the
debt service schedule, reducing or eliminating the interest rate, modifying or abrogating collateral or security
arrangements, substituting (in whole or in part) other securities, and otherwise compromising and modifying the rights
and remedies of the registered owner's claim against a district.
The Effect of the Financial Institutions Act of 1989 on Tax Collections of the District
The "Financial Institutions Reform, Recovery and Enforcement Act of 1989" ( "FIRREA "), enacted on August 9, 1989,
contains certain provisions which affect the time for protesting property valuations, the fixing of tax liens, and the
collection of penalties and interest on delinquent taxes on real property owned by the Federal Deposit Insurance
Corporation ( "FDIC ") and the Resolution Trust Corporation ( "RTC ") when the FDIC/RTC is acting as the conservator •
or receiver of an insolvent financial institution.
Under FIRREA real property held by the FDIC/RTC is still subject to ad valorem taxation, but such act states (i) that no
real property of the FDIC/RTC shall be subject to foreclosure or sale without the consent of the FDIC/RTC and no
involuntary liens shall attach to such property, (ii) the FDIC or RTC shall not be liable for any penalties or fines,
including those arising from the failure to pay any real or personal property tax when due, and (iii) notwithstanding
failure of a person to challenge an appraisal in accordance with state law, such value shall be determined as of the period
for which such tax is imposed.
There has been little judicial determination of the validity of the provisions of FIRREA or how they are to be construed
and reconciled with respect to conflicting state laws. However, certain recent federal court decisions have held that the
FDIC/RTC is not liable for statutory penalties and interest authorized by State property tax law, and that although a lien
for taxes may exist against real property, such lien may not be foreclosed without the consent of the FDIC/RTC, and no
liens for penalties, fines, interest, attorneys fees, costs of abstract and research fees exist against the real property for the
failure of the FDIC/RTC or a prior property owner to pay ad valorem taxes when due. It is also not known whether the
FDIC/RTC will attempt to claim the FIRREA exemptions as to the time for contesting valuations and tax assessments
made prior to and after the enactment of FIRREA. Accordingly, to the extent that the FIRREA provisions are valid and
applicable to any property in the District, and to the extent that the FDIC/RTC attempts to enforce the same, these
provisions may affect the timeliness of collection of taxes on property, if any, owned by the FDIC/RTC in the District,
22
and may prevent the collection of penalties and interest on such taxes.
Marketability
The District has no understanding with the Initial Purchaser regarding the reoffering yields or prices of the Bonds and
has no control over trading of the Bonds in the secondary market. Moreover, there is no assurance that a secondary
market will be made in the Bonds. If there is a secondary market, the difference between the bid and asked price for the
Bonds may be greater than the difference between the bid and asked price of bonds of comparable maturity and quality
issued by more traditional issuers as such bonds are more generally bought, sold or traded in the secondary market.
Continuing Compliance with Certain Covenants
Failure of the District to comply with certain covenants contained in the Bond Order on a continuing basis prior to the
maturity of the Bonds could result in interest on the Bonds becoming taxable retroactively to the date of original
issuance. See "LEGAL MATTERS - Tax Exemption."
Future Debt
The District reserves in the Bond Order the right to issue the remaining $1,490,000 authorized but unissued bonds (see
"COMBINATION TAX AND REVENUE BONDS AUTHORIZED BUT UNISSUED "), and such additional bonds as
may hereafter be approved by both the Board of Directors and voters of the District. The District has also reserved the
right to issue certain other additional bonds, special project bonds, refunding bonds, inferior lien bonds, and other
obligations described in the Bond Order. All the remaining $1,490,000 bonds, which have heretofore been authorized
by the voters of the District may be issued by the District, with the approval of the TCEQ, from time to time as
improvement needs arise. If the District does issue future bonds or other debt obligations, such issuance could increase
gross debt/property valuation ratios and might adversely affect the investment security of the Bonds.
To date, the developers (or their predecessors) have advanced certain funds, for construction of utilities for which the
developers have not been reimbursed. After reimbursements made with Bond proceeds, there ,will be no additional
monies reimbursable to the developers. According to the Districts Engineer, the remaining undeveloped but
developable acres within the District (approximately 37 net acres) is currently planned for multi family or commercial •
development and the District does not currently have plans to issue the unissued bonds remaining after the issuance of
the Bonds ($1,490,000). The District does not employ any formula with respect to assessed valuations, tax collections
or otherwise to limit the amount of parity bonds which it may issue. The issuance of additional bonds is subject to
approval by the TCEQ pursuant to its rules regarding issuance and feasibility of bonds. In addition, future changes in
health, environmental or other governmental regulations could require the construction and financing of additional
improvements without any corresponding increases in taxable value in the District. See "THE BONDS - Issuance of
Additional Debt ".
Approval of the Bonds
As required by law, engineering plans, specifications and estimates of construction costs for the facilities and
services to be purchased or constructed by the District with the proceeds of the Bonds have been approved, subject
to certain conditions, by the TCEQ. See "USE AND DISTRIBUTION OF BOND PROCEEDS ". In addition, the
Attorney General of Texas must approve the legality of the Bonds prior to their delivery.
Neither the TCEQ nor the Attorney General of Texas passes upon or guarantees the security of the Bonds as an
investment, nor have the foregoing authorities passed upon the adequacy or accuracy of the information contained in
this Official Statement.
23
gent By: SAMCO;
ICTION 6 -A
SECTION 4
,tt �._
PTE( DTVELOPMENT CO., LLC
SECTION 10
CHANDLER CREEK 16" WATERLINE
SECTION 7'rB
SECTION`7 - A
SECTION 6 -B
SECTION 24
PREVIOUS PROJECTS
5123430514; Mar -12 -03 10:48; Page 2
Page 3 of 4
SECTION 5
ICINITY MAP
CHANDLER CREEK
MAY '3 7 100(3
ATTACHMENT VI
General
The District was created by order of the Texas Water Commission ( "TWC "), now known as the Texas Commission
on Environmental Quality ( "TCEQ" or "Commission "), adopted on May 14, 1985, and a confirmation election held
within the District on July 13, 1985, and operates as a municipal utility district pursuant to the provisions of Chapters
49 and 54 of the Texas Water Code, as amended, and other general statutes of the State of Texas applicable to
municipal utility districts. The District is subject to the continuing supervision of the TCEQ and is located within the
extraterritorial jurisdiction of the City of Round Rock, Texas and within the boundaries of Round Rock Independent
School District
The District has the statutory authority, among other things, to purchase, construct, operate and maintain all works,
improvements, facilities and plants necessary for the supply and distribution of water; the collection, transportation,
and treatment of wastewater; and the control and diversion of storm water. The District may issue bonds and other
forms of indebtedness to purchase or construct such facilities. The District may also provide solid waste collection
and disposal service and is empowered to establish, operate and maintain a fire department, independently or with
one or more other conservation and reclamation districts, if approved by the voters of the District and the TCEQ.
The District contracts for waste collection and disposal services and for fire protection and emergency services and
has no present plans to provide a fire department. The District is also empowered to operate and maintain
recreational facilities.
Location
The District is located approximately one mile north of the intersection of U.S. Highway 79 and Texas State
Highway 1460 approximately three miles northeast of the central business district of the City of Round Rock, Texas
(the "City" or "Round Rock "). The District is situated on both sides of State Highway 1460 and lies adjacent to the
city limits of Round Rock. The District is located approximately 25 miles northeast of the central business district of
Austin, Texas.
Management of the District
Board of Directors
The District is governed by a board, consisting of five directors, which has control over and management
supervision of all affairs of the District. Directors' terms are four years with elections held within the District on
the first Saturday in May in each even numbered year. All of the directors own property in the District.
Length of Term
Name Position Service Expires May
Douglas D. Eastwood President 4 years 2006
Nancy Beleckis Vice President 4 years 2004
Ann Mifflin Secretary Newly Elected 2006
Howard Hemberger Treasurer 1 year 2004
Walter Berry Director Newly Appointed 2006
Consultants
Tax Assessor /Collector
Land and improvements in the District are being appraised by the Williamson County Appraisal District The
Tax Assessor /Collector is appointed by the Board of Directors of the District. The Williamson County Tax
Assessor /Collector, Ms. Deborah M. Hunt, currently serves the District in this capacity under contract. The
Williamson County Tax Assessor /Collector serves approximately 39 other districts as Tax Assessor /Collector.
Operator/Bookkeeper
THE DISTRICT
The District contracts with Severn Trent Environmental Services ( "Severn Trent ") to operate as Operator and
Bookkeeper for the District. Severn Trent serves in this capacity for 6 other special districts in the Austin
metropolitan area.
25
Engineer
The District's consulting engineer is Gray Jansing & Associates, Inc. (the "Engineer "). Such firm serves as
consulting engineer to 10 other special districts.
Auditor
Maxwell Locke & Ritter L.L.P., certified public accountants, ( "MLR "), audited the District's fmancial
statements for the fiscal year ended September 30, 2001. MLR serves as auditor to one other special district.
Financial Advisor
SAMCO Capital Markets serves as the District's financial advisor (the "Financial Advisor "). The fee for
services rendered in connection with the issuance of the Bonds is based on the percentage of the Bonds actually .
issued, sold and delivered and, therefore, such fee is contingent upon the sale and delivery of the Bonds. The
Financial Advisor has been authorized through a resolution of the Board to submit a bid for the purchase of the
Bonds.
Bond & General Counsel
The District has engaged Winstead Sechrest & Minick P.C. ( "Winstead ") Austin, Texas, as Bond Counsel in
connection with the issuance of the District's Bonds. The fees of Bond Counsel are contingent upon the sale of
and delivery of the Bonds. Winstead also serves as the District's general counsel.
Disclosure Counsel
The District has employed Coats, Rose, Yale, Ryman & Lee, P.C., Houston, Texas, as disclosure counsel.
Historical and Current Status of Development
Development within the District began in 1985 with the development of the initial sections of The Meadows at
Chandler Creek Subdivisions. From 1985 through 1987 development and the construction of single family homes
continued intermittently. In 1987 the then developer conveyed all of its vacant lots and all of the remaining
undeveloped land within the District to its development lender, a subsidiary of American General Corporation
(hereinafter "American General").
From 1987 through March, 1994, American General maintained the development and sold lots to homebuilders. In
June, 1993, American General entered into contracts for the sale of a total of 99 lots in Chandler Creek, Section 3 to
Pioneer Homes and Clark Wilson Homes, and such homebuilders began constructing homes in the $95,000 to
$120,000 price range,
In March, 1994, Camco Land Ltd., a Texas limited partnership ( "Camco ") purchased all of American General's 458
undeveloped acres and 152 vacant lots in the District and assumed the lot sales contracts with Pioneer Homes and
Clark Wilson Homes. In August, 1998, Camco sold 335 acres within the District (while retaining 36 acres) to
Chandler Creek Investment Limited Partnership ( "Development "), a Texas limited partnership (305.6 acres) and to
Chandler Creek Investment Limited Partnership ( "Limited "), a Texas limited partnership (29.5 acres). The general
partners of both Development and Limited are E. W. Development Company, a Texas corporation, JDB Real
Properties, Inc., a Texas Corporation and Butler Broadcasting Management Company, Inc. Ed Wendler, Jr. is
managing the property. See "DEVELOPERS/LANDOWNERS ".
In April, 1999, Investments and Development sold approximately 106 acres to Kaufman & Broad of Texas, Ltd.
( "KB Home "). Since such time, KB Home has developed all 106 acres of property now known as The Meadows at
Chandler Creek, Sections 6A, 6B, 6C, 10 and 11. In addition, KB Home has purchased 102 single family lots in The
Meadows of Chandler Creek, Sections 2 and 5. Homes being constructed in the District by KB Home range in price
from $110,000 to $160,000. KB Home sold approximately 33 homes in 1999, 120 homes in 2000, 169 in 2001, and
131 homes in 2002. To date, KB Home has 12 remaining unsold homes and 42 total remaining unclosed in' all
sections.
26
In December, 1999, Investments and Development sold approximately 211 acres to Lennar Homes. Since that time,
Lennar Homes has developed The Meadows at Chandler Creek, Sections 5, 7B, 12, 13, 14, 15, 16 and 17. See chart
below. Homes being constructed in the District by Lennar Homes range in price from $130,000 to $170,000.
Lennar Homes began constructing homes in the District in June, 2000 and sold approximately 50 homes during
2000, 108 homes in 2001, and 145 homes in 2002. Lennar Homes owns no undeveloped but developable land in the
District.
In 2000, Kimball Hill Homes purchased approximately 43 acres within the District and is in the process of
developing such land as The Meadows of Chandler Creek, Sections 19, 21, and 22. Section 19 and 21 has been
completed; and the land plan for Section 22 has been prepared but no engineering work has been performed on such
subdivision. According to representatives of Kimball Hill Homes, they intend to construct homes ranging in price
from $130,000 to $200,000.
In addition to single family residential development that is occurring within the District, a 15.089 acre site has been
acquired by Agape Round Rock Housing, Inc., a Texas Corporation ( "Agape "). According to representatives of
Agape, they developed the site with approximately 216 unit apartment complex which consist of "affordable
housing" for the residents. According to agreements negotiated between the District and Agape, the apartment
project will pay an amount equal to taxes on 100 percent of its appraised value.
In 1998, Centex Senior Services Corporation ( "Centex ") constructed a 28 -bed assisted living center ( "Center ") on a
1.4 acre site. The assisted living center was recently sold to Chandler Creek Cottages Ltd. Quail Creek Cottages
owns approximately 2.3 acres of adjacent land and in conjunction with Chandler Creek Cottages ultimately expect to
develop the property as additional phases of an existing retirement center.
A. Developed with Utility Facilities
Section
Platted Completed Homes Under Vacant
Acreage Lots Homes Construction Lots
1 33.865 164 164 0 0
2 9.159 48 - 48 0 0
3 21.103 99 99 0 0
4 29.285 130 130 0 0
5 25.417 102 90 11 1
6A 16.173 51 51 0 0
6B 21.580 54 54 0 0
6C 7.860 23 15 8 0
7A 23.030 89 89 0 0
7B 12.800 52 - 50 0 2
8A (a) 3.643 0 0 0 0
10 43.089 119 111 3 5
11 25.331 116 99 14 3
12 14.000 60 60 0 0
13 11.040 47 47 0 0
14 9.680 40 34 6 0
15 12.220 49 49 0 0
16 10.500 45 45 0 0
17 &18 21.040 73 63 6 4
19 13.981 47 31 4 12
21 22.650 68 0 5 63
23 (b) 15.089 1 1 0 0
24 3,831 11 0 0 11
School Site (c) 12.800 0 0 0 0
419.166 1,488 1,330 57 101
(a) land owned by Chandler Creek Cottages; assisted living center is located on approximately 1.4 acres.
(b) Apartment Complex
(c) Round Rock Independent School District elementary school site.
27
B. Remaining Developable Acreage
Multi- Family 12.097
Church 5.000
Retail 14.200
Section 22 16.101
Other 5.400
52.798
C. Other
Park (existing)
Parldand (donated land)
Flood Plain
Total Acreage: 511.608
Future Development
Annexation of the District
5.000
51.144
2.500
58.644
Additional development within the District consists of an approximately five acre park with junior olympic
swimming pool, bathhouse, tennis courts and playground. Such park is owned and operated by the Meadows at
Chandler Creek Home Owners Association and is available to all residents of the District. An elementary school
(740 pupils) is also located within the District on approximately 12 acres.
The District contains approximately 53 remaining undeveloped but developable acres under current land
development regulations all of which is currently owned by Cameo and Chandler Creek Investment. All have stated
that their current intention is to develop the remaining approximate 53 acres as Tots for the construction of homes;
Multi - Family purposes; a Church; however, they are under no obligation to continue development.
The District lies wholly within the extraterritorial jurisdiction of the City of Round Rock, Texas. See
"EXTRATERRITORIAL JURISDICTION AND ANNEXATION" for a discussion of the ability of the City of
Round Rock to annex the District.
Role of the Developers/Landowners
DEVELOPERS/LANDOWNERS
In general, the activities of a landowner or developer in a utility district, such as the District, include, among other
activities, purchasing land within the future district, petitioning for creation of the district, designing the
development, defining a marketing program, planning and scheduling building schedules, securing necessary
governmental approvals and permits for development, arranging for the construction of roads and the installation of
utilities (including, in some cases water, sewer, and drainage facilities in the utility district) pursuant to the rules of
the TCEQ, and selling improved lots or commercial reserves to builders, other developers or third parties.
Ordinarily, the developer pays one hundred percent (100 %) of the costs of paying and amenity design and
construction and up to 30% of the costs of construction of the water supply and distribution, wastewater collection,
and drainage facilities. While a Landowner or developer is required by the, TCEQ to pave streets and pay for its
allocable portion of the costs of utilities to be financed by the district through a specific bond issue, if any, a
developer is under no obligation to a district to undertake development activities with respect to other property it
owns within the district. Furthermore, there is no restriction on a developer's right to sell any or all of the land
which the developer owns within a district. In addition, the developer is ordinarily the major taxpayer within the
district during the early stages of development. The relative success or failure of the developer to perform such
activities in development of the property within the utility district may have a profound effect on the security for the
bonds issued by a district.
28
Description of the Developers/Landowners
In August, 1998, Camco sold 335 acres within the District (while retaining 36 acres) to Chandler Creek Development
Limited Partnership ( "Development"), a Texas limited partnership (29.5 acres) and to Chandler Creek Investment
Limited Partnership ( "Investment"), a Texas limited partnership (305.6 acres). The general partners of both
Development and Limited are E. W. Development Company, a Texas corporation, JDB Real Properties, Inc., a Texas
corporation and Butler Broadcasting Management Company, Inc., a Texas corporation. E.W. Development Company,
whose President is Ed Wendler, Jr. is managing the property.
Kaufman & Broad of Texas, Ltd. ( "KB Home ") has purchased approximately 106 acres in the District and has
developed such property for single family residential purposes. KB Home is a Texas limited partnership which is owned
by KBSA Inc., a Texas Corporation. KB Home obtains its funds for development purposes from internal sources. In
October 2002, KB Home donated approximately 10.6 acres to the District for parkland.
Lennar Homes of Texas Land & Construction, Ltd. ( "Lennar Homes ") has purchased approximately 211 acres within
the District and has developed all such property for single family residential purposes. Lennar Homes is owned by
Lennar Corporation. Lemur Homes obtain its funds for development purposes from internal sources. In October 2000,
Lennar Homes sold Kimball Hill Homes 43 acres for development. They also donated approximately 40.52 acres to the
District for parkland in October 2002.
Kimball Hill Homes Texas, Inc. ( "Kimball Hill Homes ") is a Texas corporation whose stock is owned by Kimball Hill
Homes Inc.. Kimball Hill Homes has'purcbased approximately 43 acres within the District and is developing such
property for single family residential purposes. Financing of its land acquisition and development is provided by
internally generated funds and a development loan from First American Bank in the amount of approximately
$1,466,500. According to representatives of Kimball Hill Homes, it is in compliance with all material terns of its
development loan.
Agricultural Waiver
Camco previously executed an agreement affecting approximately 403 acres, which is recorded in the real property of
Williamson County and is a covenant running with the land, waiving the right to have undeveloped land located within
the District classified as agricultural, open -space or timberland. In addition, such agreement waives the right of a
developer to have its lots and houses (if any) classified as business inventory. Such agreement may not be modified
without the approval of the TCEQ and is binding on purchasers of such land. See "TAXING PROCEDURES —
Property Subject to Taxation by the District."
Utility Construction Agreements
The District is a party to Utility Construction Agreements with Development, Investment, KB Home, Lennar Homes and
Kimball Hill Homes, which define the conditions under which the District will issue additional bonds to reimburse such
entities for the water, wastewater and drainage facilities within and outside the District. Under the terms of the
agreements, the District has agreed to repay the cost of facilities through a series of bond sales over time. The District's
obligation to issue bonds and reimburse the entities for funds advanced for facilities is subject to various conditions
including approval of such facilities and bonds by the TCEQ and the Texas Attomey General, the recommendation of
the District's financial advisor that the sale of the bonds is feasible and prudent, and approval of the City of Round Rock,
Texas. Generally, bonds will be issued to pay 70% of reimbursable costs unless the District, in its sole discretion,
increases reimbursement to 100% if such expenditures qualify pursuant to the TCEQ's roles. The District bonds issued
will be at a net effective interest rate not to exceed 2% above the highest average interest rate reported by the Daily
Bond Buyer in its weekly "20 Bond Index ".
29
General
The water, wastewater and storm drainage facilities, the purchase, acquisition and construction of which have been
financed by the District with the proceeds of the Outstanding Bonds, have been designed in accordance with accepted
engineering practices and the recommendation of certain governmental agencies having regulatory or supervisory
jurisdiction over construction and operation of such facilities, including, among others, the TCEQ. According to Gray
Jansing & Associates, Inc. (the "Engineer"), the design of all such facilities has been approved by all governmental
agencies, which have jurisdiction over the District.
Operation of the District's waterworks and wastewater facilities is subject to regulation by, among others, the
Environmental Protection Agency, and the TCEQ. In many cases, regulations promulgated by these agencies have
become effective only recently and are subject to further development and revision. By agreement between the City of
Round Rock and the District, the City operates and maintains the District's water and wastewater facilities at its expense.
The District pays the City of Round Rock's in -city water and wastewater rates.
Water System
Wastewater System
THE SYSTEM
Water is currently supplied to the District under a contract with the City of Round Rock through an existing 16 inch
waterline at the westem boundary of the District. Billings to individual residences are handled directly by the City of
Round Rock. Elevated storage requirements for the District are met through capacity in an existing 750,000 gallon
elevated water storage tank. Pursuant to an agreement with the City of Round Rock, sufficient capacity of water is
provided to serve 2,043 living unit equivalents.
Wastewater treatment is provided to the District by agreement with the City of Round Rock. The City of Round
Rock recently operated a 2,100 gpm lift station located on the eastern boundary of the District which pumped
wastewater through a 20 inch force main to the Chandler Creek interceptor. The City of Round Rock with the Lower
Colorado River Authority has recently constructed a 48" gravity interceptor along Chandler Creek, leading to the
Round Rock Wastewater Treatment Plant. The construction of this line has allowed for the removal of the existing
2,100 gpm sewage lift station. All of the District's wastewater flows are transported through this facility. Pursuant
to an agreement with the City of Round Rock, sufficient capacity of sewage treatment service is provided for 2,043
living unit equivalents.
Drainage System
The storm drainage system that serves the District consists of curb and gutter streets and storm sewers that collect
storm water runoff for outfall into Chandler Creek. The facilities are designed in accordance with Williamson
County, City of Austin, and City of Round Rock criteria.
100 -year Flood Plain
According to U.S.G.S. topographic maps and Federal Insurance Administration ( "FIA ") maps, the District is relatively
flat with elevations ranging from 670 to 730 feet above mean sea level. The land within the District slopes generally
from 0.5% to 3.5%. Approximately 54 acres of the District lie within the 100 -year flood plain. This acreage has been
planned as green space and will not be used for development.
Future Debt
After the issuance of the Bonds, $1,490,000 combination unlimited tax and revenue bonds will remain authorized but
unissued. To date, following issuance of the Bonds, there will be nothing owed to the Developers on current
development. In the opinion of the District's Engineer, the $1,490,000 authorized but unissued bonds should be
sufficient to fully reimburse and provide utility service to the remaining undeveloped but potentially developable
acreage.
30
Water and Wastewater Operations
Rate and Fee Schedule — Table I
The Board of Directors establishes rates and fees for water and sewer service, subject to change from time to time. The
following schedule sets forth the rates and fees for the District's water and sewer service, which have been in effect since
January I, 2001. The City of Round Rock charges the District for water and sewer service at the same rates it charges to
its retail customers, and the City bills the District's customers for such services directly.
Water (Monthly Billing)
Base Rate 5/8" Meter
Per 1,000 gallons (for 2,001 gallons and over)
Wastewater (Monthly Billing)
Single Family:
Base Rate $8.15
Per 1,000 gallons of winter average water usage (for 2,001 gallons & over) $1.81 per 1,000 gallons
[The rest of this page intentionally left blank.]
31
$10.95
$1.84 per 1,000 gallons
Waterworks and Sewer System Operating Statement - Table 2
The following statement sets forth in condensed form the historical operations of the District's water and sewer system.
Accounting principles customarily employed in the determination of net revenues for coverage of debt service have been
observed and in all instances exclude depreciation. Such summary has been prepared upon information obtained from
the District's audited financial statements and records. Reference is made to such statements for further and more
complete information. See "APPENDIX A - Audited Financial Statements."
(a)
0')
(c)
(d)
Fiscal Year Ended (all
1/31/03 (6) 09/30/02 09/30/01 09/30/00 09/30/99
REVENUE
Property Taxes $218,552 $172,758 $ 97,244 $ 85,929 $ 76,644
Water and Wastewater Service 174,032 663,785 430,379 301,976 250,867
Interest on Temporary Invest. 1,553 4,993 9,131 8,970 6,605
Tap Connection Fees 1,700 18,600 13,800 6,780 1,725
Penalties & Interest 163 960 492 877 0
Contributions in Lieu of Taxes (c) 20,946
Miscellaneous 15 004 (d) 25 125 85 0
TOTAL REVENUE $2 D $861,121 $551171 $404617 $335,841
EXPENDITURES
Professional Fees $ 18,944 $ 48,080 $ 28,854 $ 28,005 $ 33,560
Water and Wastewater Service 174,032 663,785 430,379 301,976 250,867
Contracted Services 5,228 28,200 26,700 19,756 27,318
Utilities 2,000 9,065 9,283 8,061 6,808
Repairs and Maintenance 587 17,816 15,326 7,198 2,806
Administrative 3,874 10,659 6,860 10,101 2,400
Other Expenditures 3 184 17,715 6.217 7,184 1,904 •
TOTAL EXPENDITURES 20 $49 $5,75,619 $382,281 $325 663
TOTAL REVENUE OVER
(UNDER EXPENDITURES) 2$ 24.101 9 65 801 $_27,52 22,336 178
Fund Balance, End of Year $266,967 $201,166 $173,614 $151,278
Active Single Family Conn. 1,389 1,310 922 662 499
Audited. -
Unaudited
Agape Round Rock Housing Inc. is a tax-exempt; however, through an agreement with the District Agape agreed to pay an amount equal to
taxes on 100 percent of its appraised value. Agape's market value is $13,373,837. Based on the 2002 tax rate the District collected 191460
from Agape. The amount collected from Agape is not included in any of the calculations with regard to the tax rate. This year the District agreed
to separate the contribution between debt service and the operating account in accordance with the current 2002 tax rate. See "Historical and
Current Status of Development ".
This is a contribution made by the builders to clear brush on land they donated to the District.
32
DEBT SERVICE REQUIREMENTS - TABLE 3
Issue Dated: 1,2003
First Interest Payment Due: August 1, 2003
"Interest estimated at 6%
THE MEADOWS AT CHANDLER CREEK MUNICIPAL UTILITY DISTRICT
$5,700,000.00
Combination Unlimited Tax and Revenue Bonds, Series 2003
Projected
Year Outstanding Bonds Series 2003 Total
Ending Principal Interest* Principal Debt Service
12/31 Principal Interest Total (Due02 /01) (Due 02/01) (Due. 08/01) Total & Interest Requirement
2003 121,224 121,224 114,000 114,000 114,000 235,224
2004 300,000 232,979 532,979 150,000 171,000 166,500 337,500 487,500 1,020,479
2005 320,000 213,365 533,365 160,000 166,500 161,700 328,200 488,200 1,021,565
2006 340,000 192,730 532,730 170,000 161,700 156,600 318,300 488,300 1,021,030
2007 355,000 171,140 526,140 180,000 156,600 151,200 307,800 487,800 1,013,940
2008 385,000 148,016 533,016 200,000 151,200 145,200 296,400 496,400 1,029,416
2009 115,000 132,728 247,728 200,000 145,200 139,200 284,400 484,400 732,128
2010 120,000 126,552 246,552 220,000 139,200 132,600 271,800 491,800 738,352
2011 125,000 120,777 245,777 230,000 132,600 125,700 258,300 488,300 734,077
2012 140,000 114,625 254,625 250,000 125,700 118,200 243,900 493,900 748,525
2013 145,000 107,928 252,928 260,000 118,200 110,400 228,600 488,600 741,528
2014 160,000 100,580 260,580 275,000 110,400 102,150 212,550 487,550 748,130
2015 165,000 92,590 257,590 300,000 102,150 93,150 195,300 495,300 752,890
2016 180,000 84,030 264,030 310,000 93,150 83,850 177,000 487,000 751,030
2017 190,000 74,805 264,805 330,000 83,850 73,950 157,800 487,800 752,605
2018 205,000 64,983 269,983 350,000 73,950 63,450 137,400 487,400 757,383
2019 225,000 54,263 279,263 370,000 63,450 52,350 115,800 485,800 765,063
2020 230,000 42,975 272,975 400,000 52,350 40,350 92,700 492,700 765,675
2021 240,000 31,400 271,400 420,000 40,350 27,750 68,100 488,100 759,500
2022 250,000 19,375 269,375 450,000 27,750 14,250 42,000 492,000 761,375
2023 270,000 6,625 276,625 475,000 14,250 14,250 489,250 765,875
$4,460,000 $2,253,688 $6,713,688 $5,700,000 $2,129,550 $2,072,550 $4,202,100 $9,902,100 $16,615,788
1994 1999 2001 TOTAL
1 -Feb 1 -Feb 1 -Feb
2003
2004 215,000 40,000 45,000 300,000
2005 230,000 40,000 50,000 320,000
2006 245,000 40,000 55,000 340,000
2007 260,000 40,000 55,000 355,000
2008 275,000 50,000 60,000 385,000
2009 50,000 65,000 115,000
2010 50,000 70,000 120,000
2011 50,000 75,000 125,000
2012 60,000 80,000 140,000
2013 60,000 85,000 145,000
2014 70,000 90,000 160,000
2015 70,000 95,000 165,000
2016 80,000 100,000 180,000
2017 80,000 110,000 190,000
2018 90,000 115,000 205,000
2019 100,000 125,000 225,000
2020 100,000 130,000 230,000
2021 100,000 140,000 240,000
2022 100,000 150,000 250,000
2023 110,000 160,000 270,000
2024 0
2025 0
2026 0
2027 0
2028 0
2029 0
2030 0
2031 0
2032 0
2033 0
1,225,000 1,380,000 1,855,000 4,460,000
4,460,000
+ 5,700,000
10,160,000
1994 1999 2001 TOTAL
1 -Feb 1 -Feb 1 -Feb
2003
2004 215,000 40,000 45,000 300,000
2005 230,000 40,000 50,000 320,000
2006 245,000 40,000 55,000 340,000
2007 260,000 40,000 55,000 355,000
2008 275,000 50,000 60,000 385,000
2009 50,000 65,000 115,000
2010 50,000 70,000 1 20, 000
2011 50,000 75,000 125,000
2012 60,000 80,000 140,000
2013 60,000 85,000 145,000
2014 70,000 90,000 160,000
2015 70,000 95,000 165,000
2016 80,000 100,000 180,000
2017 80,000 110,000 190,000
2018 90,000 115,000 205,000
2019 100,000 125,000 225,000
2020 100,000 130,000 230,000
2021 100,000 140,000 240,000
2022 100,000 150,000 250,000
2023 110,000 160,000 270,000
2024 0
2025 0
2026 0
2027 0
2028 0
2029 0
2030 0
2031 0
2032 0
2033 0
1,225,000 1,380,000 1,855,000 4,460,000
Assessed Value - Table 4
FINANCIAL STATEMENT
(Unaudited as of February 18, 2003)
2002 Assessed Valuation (100% of estimated market value) $146,501,624 (a)
2003 Preliminary Assessed Valuation (100% of estimated market value) $180,000,000 (b)
Gross Debt Outstanding $10,160,000 (c)
Debt Service Fund Balance (Cash and investments as of February 18, 2003) $905,969 (d)
Ratio of Gross Debt to 2002 Assessed Valuation 6.94%
Ratio of Gross Debt to 2003 Preliminary Assessed Valuation 5.64
(a)
(b)
(c)
(d)
(e)
(a) Includes the Bonds.
Outstanding Bonds - Table 6
(a) The Bonds.
Estimated 2002 Population: 4,862 (e)
Certified Taxable Assessed Value within the District on January 1, 2002 as provided by the Williamson County Appraisal District
( "WCAD "). See "TAXING PROCEDURES ".
Preliminary Taxable Assessed Value within the District on January 1, 2003, as estimated by WCAD.
After issuance of the Bonds. See "DEBT SERVICE REQUIREMENTS ".
Neither Texas law nor the Bond Order requires that the District maintain any particular sum in the Debt Service Fund.
As of February, 2003. Based on 3.5 residents per active single - family connection.
Combination Unlimited Tax and Revenue Bonds Authorized but Unissued - Table 5
Date Issued
Authorization Purpose Authorized to Date Unissued
07/13/85 Water, Sanitary $13,000,000 $11,510,000(a) $1,490,000
Sewer and Drainage
Principal
Original Amount
A. Dated Principal Outstanding
Date Series Purpose Amount (a, 03/01/03
01/01/87 1987 Water, Sewer & Drainage $2,450,000 $ 0
07/01/99 1999 Water, Sewer & Drainage 1,410,000 1,380,000
11 /01 /01 2001 Water, Sewer & Drainage 1,950,000 1,855,000
_ /01/03 2003 Water, Sewer & Drainage 5,700,000 (a) 5,700,000 (a)
$11,510,000 $8,935,000
B. 09/01/94 1994 Refunding $2,124,996 $1,225,000
Total 813.,634,996 $10.160.000
Cash and Investment Balances (Unaudited as of February 18, 2003) - Table 7
Operating Fund $455,399
Debt Service Fund $905,969 (a)
Construction Fund $94,943
(a) Neither Texas law nor the Bond Order requires the District to maintain any particular sum in the Debt Service Fund.
34
Investment Authority and Investment Practices of the District
The District has adopted an Investment Policy (the "Policy ") as required by the Public Funds Investment Act,
Chapter 2256, Texas Government Code (the "Act "). The District's goal is to preserve principal and maintain
liquidity in a diversified portfolio while securing a competitive yield on its portfolio. Funds of the District are to be
invested only in accordance with the Policy. The Policy states that the funds of the District may be invested in short
term obligations of the U.S. or its agencies or instrumentalities, in certificates of deposits insured by the Federal
Deposit Insurance Corporation ( "FDIC ") and secured by collateral authorized by the Act, and in TexPool and Texas
Class, which are public funds investment pools rated in the highest rating category by a nationally recognized rating
service. The District does not currently own, nor does it anticipate, the inclusion of long term securities or derivative
products in the portfolio.
Current Investments - Table 8
The District's funds are currently invested in TexPool ($1,387,368) and money market funds. This investment
portfolio is generally representative of the District's investment practices although the District has in the past or may
in the future also invest in authorized Government Securities. State law requires the District to mark its investments
to market price each calendar quarter and upon the conclusion of each fiscal year, for the purpose of compliance with
applicable accounting policies concerning the contents of the District's audited financial statements. The District
currently marks its investments to market price monthly.
Estimated Overlapping Debt Statement
Other governmental entities whose boundaries overlap the District have outstanding bonds payable from ad valorem
taxes. The following statement of direct and estimated overlapping ad valorem tax debt was developed, from several
sources, including information contained in the "Texas Municipal Report," published by the Municipal Advisory
Council of Texas. Except for the amount relating to the District, the District has not independently verified the accuracy
or completeness of such information, and no person is entitled to rely upon such information as being accurate or
complete. Furthermore, certain of the entities listed below may have issued additional bonds since the dates stated in
this table, and such entities may have programs requiting the issuance of substantial amounts of additional bonds, the
amount of which cannot be determined. Political subdivisions overlapping the District are authorized by Texas law to
levy and collect ad valorem taxes for operation, maintenance and/or general revenue purposes in addition to taxes of
debt service and the tax burden for operation, maintenance and/or general purposes is not included in these figures.
% of Amount of
Net Debt Overlpg. Overlpg.
Taxing Body Amount As of Net Debt Net Debt
Williamson County $374,779,896 04/03/02 0.77% $2,885,805
Round Rock Independent School Dist. $401,387,543 06/30/02 1.08% $4.334.985
TOTAL ESTIMATED OVERLAPPING NET DEBT $7,220,790
The District (a) $10,160,000 03/01/03 100.00% $10,160,000
TOTAL ESTIMATED DIRECT AND
OVERLAPPING NET DEBT - $11,M0_7_9_0
Ratio of Direct & Overlapping Net Debt
to 2002 Assessed Valuation 11.86%
Ratio of Direct & Overlapping Net Debt
to 2003 Preliminary Assessed Valuation 9.66%
(a) After issuance of the Bonds.
35
Overlapping Taxes for 2002
2002 Tax Average
Rate Per $100 Tax
Overlapping Entity Assessed Valuation Bill (a)
Williamson County $0.458300 $ 593
Round Rock Independent School District 1.792361 2,319
Brushy Creek Water Control & Improvement Dist 1 -A 0.020000 26
The District 0.683800 885
Total $2.954461 $ S2
(a) Based upon the 2002 average single - family home value of $129,375.
Classification of Assessed Valuation (a) - Table 9
(a)
Type Property
Tax Collections - Table 10
(a) Collections through January 31, 2003.
TAX DATA
2002 2001 2000
Amount % Amount % Amount
Single - Family $130,604,877 88.14 $80,330,654 84.72 $52,333,198 85.23
Vacant Lots 8,216,601 5.55 5,081,089 5.36 2,348,040 3.83
Ac?eage 1,787,596 1.21 5,266,356 5.55 3,272,606 5.33
Commercial 1,256,970 0.85 1,295,210 1.37 1,223,057 1.99
Utilities 3,190,630 2.15 2,191,570 2.31 1,797,480 2.93
Personal Property 651,305 0.44 482,933 0.51 278,333 0.45
Inventory 2,467,500 1.66 167,000 0.18 148,200 0.24
Total $1481. 75.479 100.00% $4,814.812 100.00% $!1.400914 100.00%
Reflects classification of .assessed valuation as supplied by the Williamson Appraisal District ( "WCAD ") prior to adjustments or
exemptions. Such value may differ from the original certified assessed valuation, and any supplements or adjustments thereto, as supplied
by WCAD.
The following statement of tax collections reflects the historical tax collection experience of the District. Such
summary has been prepared for inclusion herein based upon information from District audits and records of the
District Tax Assessor /Collector. Reference is made to such audits and records for further and more complete
information. See "Classification of Assessed Valuation" above.
Assessed Tax Current Total Year
Valuation Rate Tax Lew Amount % Amount % Endina
1993 $ 15,284,850 $1.0726 $163,945 $163,377 99.65 $165,513 100.35 09/30/94
1994 23,134,675 0.8750 203,723 203,114 99.70 203,603 99.94 09/30/95
1995 31,472,476 6.8250 256,259 254,445 99.29 255,547 99.72 09/30/96
1996 38,862,774 0.8500 330,142 325,359 98.55 325,359 98.55 09/30/97
1997 44,439,386 0.8111 360,448 356,966 99.03 360,448 100.00 09/30/98
1998 46,369,612 0.7960 371,291 364,982 98.30 371,291 100.00 09/30/99
1999 53,542,225 0.7910 423,519 421,391 99.50 423,519 99.90 09/30/00
2000 61,449,399 0.7432 456,692 464,689 99.15 469,094 98.70 09/30/01
2001 95,155,440 0.7432 707,277 693,491 98.05 699,178 98.85 09/30/02
2002 146,501,624 0.6838 1,001,364 769,971 76.89 773,816 77.66 09/30/03 (a)
36
District Tax Rates — Table 11
Tax Rate Per $100 A.V. 2002 2001 2000 1999 1998
Debt Service
Maintenance
Total
$0.5272
0.1566
$0.6838
$0.5600
0.1832
$0.7432
$0.5877
0.1555
$0.7432
Tax Rate Limitation
The District's tax rate for debt service on the Bonds is legally unlimited as to rate or amount.
Maintenance Tax
$0.6330 $0.6333
0.1580 0.1627
$0.7910 $0.7960
The Board of Directors of the District has the statutory authority to levy and collect an annual ad valorem tax for
planning, maintaining, repairing and operating of the District's improvements, if such maintenance tax is authorized by a
vote of the District's electors. Such tax is in addition to taxes, which the District is authorized to levy for paying
principal of and interest on the Outstanding Bonds, the Bonds, and any tax bonds which may be issued in the future. At
an election held within the District on July 13, 1985, voters of the District authorized the levy of a maintenance tax not
to exceed $1.00/$100 assessed valuation. As shown above under "District Tax Rates," the District levied a 2002
maintenance and operations tax of $0.1566 per $100 assessed valuation for tax year 2002.
Principal Taxpayers- Table 12
The following list of principal taxpayers was provided by Williamson County Appraisal District based on the 2002 and
2001 ax rolls of the District, which reflect ownership as of January 1, of each year shown.
Taxpayer
KB Homes Lone Star LP (b)
Lennar Home of Texas (b)
Oncor Elec. Delivery Co. (Tx. Util.)
Kimball Hill Homes Texas Inc. (b)
Cameo Land Ltd.
Agape Round Rock Housing Inc. (c)
Centex Senior Services Corp.
Chandler Creek Investments (b)
KBone Inc.
Whitehall Homes Inc.
Wells Fargo Home Mortgage
Highland Lakes Bank
(a)
(b)
(c)
Type of Property
Vacant Lots, Homes
Vacant Lots, Homes
Utilities
Vacant Lots, Homes
Land
Apartments
Assisted Living Center
Acreage
KB Model Homes
Vacant Lots, Homes
Home
Land
Total $15,715,640 SU,352,190 '
Percent of Assessed Valuation 10.73% 16.13%
Not a principal taxpayer for respective year.
See "Developers/Landowners."
Agape Round Rock Housing Inc. is tax-exempt; however, through an agreement with the District Agape agreed to pay an amount equal
to the taxes on 100 percent of its appraised value. Agape's market value is $13,373,837. Based on the 2002 tax rare , the District
collected $91,450 from Agape. The amount collected from Agape is not included in any of the calculations with regard to the tax rate.
This year the Disbicl agreed to separate the contribution between debt service and the operating account in accordance with the current
2002 tax rate. See "Historical and Current Status of Development "_
37
2002 2001
$4,831,305 $3,834,710
$2,940;942 3,192,091
2,936,930 2,026,970
2,595,705 1,722,025
1,029,889 (a)
(c) 1,567,725
(a) 1,440,465
(a) 966,621
658,243 249,747
395,391 351,836
327,235 (a)
(a) (a)
Tax Adequacy for Debt Service
The calculations shown below are solely for purposes of illustration only and are based on the certified assessed
value for 2002 and the preliminary estimated assessed value for 2003 and utilize tax rates adequate to service the
District's total projected debt service requirements, including the Bonds. No available debt service funds are
reflected in these computations. See "INVESTMENT CONSIDERATIONS — Factors Affecting Taxable Values and
Tax Payments - Impact on District Tax Rates."
Projected Average Annual Debt Service Requirements on
the Bonds and the Outstanding Bonds (2004 through 2008)
$0.74 Tax Rate on 2002 Assessed Valuation of
$146,501,624 @ 95% collections produces
0.60 Tax Rate on 2003 Preliminary Assessed Valuation of
$180,000,000 @ 95% collections produces
Projected Maximum Annual Debt Service Requirements on
the Bonds and the Outstanding Bonds (2008)
$0.74 Tax Rate on 2002 Assessed Valuation of
$146,501,624 @ 95% collections produces
$0.61 Tax Rate on 2003 Preliminary Assessed Valuation of
$180,000,000 @ 95% collections produces
Debt Service Fund Management Index
Projected Debt. Service Requirements for year ending 12/31/03
Projected Debt Service Fund Balance as of 09/30/02 (Audited) $484,597 (b)
Projected 2002 Tax Levy @ 95% collections produces $733,739 (c)
Projected Total Available for Debt Service
(a) The Fist interest payment on the Bonds is on August 1, 2003.
(b) Neither Texas law nor the Bond Order requires that the District maintain any particular sum in the District's Debt Service Funds.
(c) In its order approving the issuance of the Bonds, the TCEQ recommended that a minimum 2003 debt service tan rate of 10.468 be levied
by the District.
Authority to Levy Taxes
TAXING PROCEDURES
The Board is authorized to levy an annual ad valorem tax on all taxable property within the District in an amount
sufficient to pay the principal of and interest on the Bonds and Outstanding Bonds, and any additional bonds payable
from taxes which the District may hereafter issue (see "INVESTMENT CONSIDERATIONS - Future Debt") and to
pay the expenses of assessing and collecting such taxes. The District agrees in the Bond Order to levy such a tax from
year -to -year as described more fully herein under "THE BONDS - Source of and Security for Payment." Under Texas
law, the Board is also authorized to levy and collect an annual ad valorem tax for the operation and maintenance of the
District and its water and wastewater system and for the payment of certain contractual obligations if authorized by its
voters. See "TAX DATA - Tax Rate Limitation ".
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$1,021,286
$1,029,906
$1,026,000
$1,029,416
$1,029,906
$1,043,100
$702,203 (a)
$1,218,336
Property Tax Code and County -Wide Appraisal District
The Texas Property Tax Code (the "Property Tax Code ") specifies the taxing procedures of all political subdivisions
of the State of Texas, including the District. Provisions of the Property Tax Code are complex and are not fully
summarized herein.
The Property Tax Code requires, among other matters, county-wide appraisal and equalization of taxable property
values and establishes in each county of the State of Texas an appraisal district with the responsibility for recording and
appraising property for all taxing units within a county and an appraisal review board with the responsibility for
reviewing and equalizing the values established by the appraisal district. The Williamson County Appraisal District (the
"Appraisal District" or "WCAD ") has the responsibility for appraising property for all taxing units within Williamson
County, including the District Such appraisal values are subject to review and change by the Williamson County
Appraisal Review Board (the "Appraisal Review Board "). The appraisal roll as approved by the Appraisal Review
Board must be used by the District in establishing its tax roll and tax rate.
Property Subject to Taxation by the District
General: Except for certain exemptions provided by Texas law, all real property, tangible personal property held or
used for the production of income, mobile homes and certain categories of intangible personal property with a tax situs
in the District are subject to taxation by the District however, no effort is expected to be made by the Appraisal District
to include on a tax roll tangible or intangible personal property not devoted to commercial or industrial use. Principal
categories of exempt property include, but are not limited to: property owned by the State of Texas or its political
subdivisions if the property is used for public purposes; property exempt from ad valorem taxation by federal law;
income producing tangible personal property or mineral interest with a taxable value of less than $1,500; certain
property used for the control of air, water or land pollution; solar and wind powered energy devices; certain household
goods, wares and merchandise in transit; certain farm products owned by the producer; certain property of charitable
organizations, youth development organizations, religious organizations, and qualified schools; designated historical
sites; and most individually owned automobiles. Property owned by a disabled veteran or a veteran who died while on
active duty has been granted an exemption up to $3,000 of assessed value. Partially exempt to between $5,000 and
$12,000 of assessed value, depending upon the disability rating of the veteran, is property owned by a disabled veteran
or spouse or certain children. Also exempt, if approved by the Board or through a process of petition and referendum by
the District's voters, are residential homesteads of person sixty-five (65) years or older and of certain disabled persons to
the extent of $3,000 of appraised value or more. The District's tax assessor /collector is authorized by statute to
disregard such exemptions for the elderly and disabled if granting the exemptions would impair the District's obligation
to pay tax supported debt incurred prior to adoption of the exemptions by the District.
Residential Homestead Exemptions: The Property Tax Code authorizes the governing body of each political
subdivision in the State of Texas to exempt up to twenty (20 %) percent of the appraised value of residential homesteads
from ad valorem taxation. Where ad valorem taxes have previously been pledged for the payment of debt, the governing
body of a political subdivision may continue to levy and collect taxes against the exempt value of the homesteads until
the debt is discharged, if the cessation of the levy would impair the obligations of the contract by which the debt was
created. The District has never adopted a general homestead exemption.
Tax Abatement: Williamson County and the District may enter into tax abatement agreements with owners of real
property within such zone. The tax abatement agreements may exempt from ad valorem taxation by the applicable
taxing jurisdiction for a period of up to ten years, all or any part of the increase in the assessed valuation of property
covered by the agreement over its assessed valuation in the year in which the agreement is executed, on the condition
that the property owner make specified improvement or repairs to the property in conformity with a comprehensive plan.
To date, the District has not executed any abatement agreements.
Valuation of Property for Taxation
Generally, property in the District must be appraised by the WCAD at market value as of January I of each year. Once
an appraisal roll is prepared and formally approved by the Appraisal Review Board, it is used by the District in
establishing its tax rolls and tax rate. Assessments under the Property Tax Code are to be based on one hundred percent
(100 %) of market value, as such is defined in the Property Tax Code.
39
The Property Tax Code permits land designated for agricultural use, open space or timberland to be appraised at its
value based on the land's capacity to produce agricultural or timber products rather than at its market value. The
Property Tax Code permits, under certain circumstances, that residential real property inventory held by a person in the
trade or business be valued at the price that such property would bring if sold as a unit to a purchaser who would
continue the business. Landowners wishing to avail themselves of the agricultural use, open space or timberland
designation or residential real property inventory designation must apply for the designation, and the appraiser is
required by the Property Tax Code to act on each claimant's right to the designation individually. A claimant may waive
the special valuation as to taxation by some political subdivisions while claiming it as to another. If a claimant receives
the agricultural use designation and later loses it by changing the use of the property or selling it to an unqualified owner,
the District can collect taxes based on the new use, including taxes for the previous three years for agricultural use and
taxes for the previous five years for open space land and timberland.
The Property Tax Code requires the WCAD to implement a plan for periodic reappraisal of property. The plan must
provide for appraisal of all real property in the WCAD at least once every three years. It is not known what frequency of
reappraisal will be utilized by the WCAD or whether reappraisals will be conducted on a zone or county-wide basis.
The District, however, at its expense has the right to obtain from the WCAD a current estimate of appraised values
within the District or an estimate of any new property or improvements within the District. While such current estimate
of appraised values may serve to indicate the rate and extent of growth of taxable values within the District, it cannot be
used for establishing a tax rate within the District until such time as the WCAD chooses formally to include such values
on its appraisal roll.
District and Taxpayer Remedies
Under certain circumstances, taxpayers and taxing units (such as the District) may appeal the orders of the Appraisal
Review Board by filing a timely petition of review in State district court. In such event, the value of the property in
question will be determined by the court or by a jury if requested by any party. Additionally, taxing units may bring suit
against the WCAD to compel compliance with the Property Tax Code.
The Property Tax Code sets forth notice and hearing procedures for certain tax rate increases by the District and
provides for taxpayer referenda, which could result in the repeal of certain tax increases. The Property Tax Code also
establishes a procedure for notice to property owners of reappraisals reflecting increased property value, appraisals
which are higher than renditions, and appraisals of property not previously on an appraisal roll.
Levy and Collection of Taxes
The District is responsible for the levy and collection of its taxes unless it elects to transfer the collection functions to
another governmental entity. Each year the rate of taxation is set by the Board based upon the valuation of property
within the District as of the preceding January 1. Taxes are due or when billed, and become delinquent after January 31
of the following year. A delinquent tax incurs a penalty of six percent (6 %) of the amount of the tax for the first
calendar month it is delinquent, plus one percent (1 %) for each additional month or portion of a month the tax remains
unpaid prior to July 1 of the year in which it becomes delinquent. If the tax is not paid by July 1 of the year in which it
becomes delinquent, the tax incurs a total penalty of twelve percent (12 %) regardless of the number of months the tax
has been delinquent and incurs an additional penalty of up to fifteen percent (15 %) if imposed by the District. The
delinquent tax also accrues interest at a rate of one percent (1 %) for each month or portion of a month it remains unpaid.
The Property Tax Code also stakes provision for the split payment of taxes, discounts for early payment and the
postponement of the delinquency date of taxes under certain circumstances.
District's Rights In The Event Of Tax Delinquencies
Taxes levied by the District are a personal obligation of the owner of the property as of January 1 of the year for which
the tax is imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all state and local
taxes, penalties, and interest ultimately imposed for the year on the property. The lien exists in favor of the State of
Texas and each local taxing unit, including the District, having power to tax the property. The District's tax lien is on a
parity with tax liens of such other taxing units (see "FINANCIAL STATEMENT — Overlapping Taxes for 2002 "). A
tax lien on real property takes priority over the claim of most creditors and other holders of liens on the property
encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien; however,
whether a lien of the United States is on a parity with or takes priority over a tax lien of the District is determined by
applicable federal law. Personal property under certain circumstances is subject to seizure and sale for the payment of
delinquent taxes, penalty, and interest.
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At any lime after taxes on property become delinquent, the District may file suit to foreclose the lien securing payment
of the tax, to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax lien on real property, the
District must join other taxing units that have claims for delinquent taxes against all or part of the same property.
Collection of delinquent taxes may be adversely affected by the amount of taxes owed to other taxing units, by the
effects of market conditions on the foreclosure sale price, by taxpayer redemption rights (a taxpayer may redeem
property within two (2) years after the purchaser's deed issued at the foreclosure sale is filed in the county records) or
by banlmtptcyproceeding which restrict the collection of taxpayer debts. See "INVESTMENT CONSIDERATIONS -
General - Tax Collection and Foreclosure Remedies."
Legal Proceedings
Delivery of the Bonds will be accompanied by the unqualified approving legal opinion of the Attomey General of Texas
to the effect that the Bonds are valid and legally binding obligations of the District under the Constitution and laws of the
State of Texas payable from the proceeds of an annual ad valorem tax levied, without legal limit as to rate or amount,
upon all taxable property within the District and from certain Net Revenues generated from the District's water, sanitary
sewer and drainage system and based upon their examination of a transcript of certified proceedings relating to the
issuance and sale of the Bonds; the approving legal opinion of Bond Counsel, to a like effect, and to the effect that
interest on the Bonds is excludable from gross income of the holders for federal tax purposes under existing law, and the
' Bonds are not "private activity bonds" under the Internal Revenue Code of 1986, as amended (the "Code ") and interest
on the Bonds will not be subject to the alternative mininnnn tax on individuals and corporations, except as described
below in the discussion regarding the adjusted current eamings adjustments for corporations. See "APPENDIX B —
Bond Counsel Opinion."
Bond Counsel has reviewed the information appearing in this Official Statement under the caption "THE DISTRICT -
General," "THE BONDS," "TAXING PROCEDURES,' "EXTRATERRITORIAL JURISDICTION AND
ANNEXATION," "LEGAL MATTERS," and "CONTINUING DISCLOSURE OF INFORMATION," solely to
determine whether such information fairly summarizes matters of law and the provisions of the documents referred to
therein. Bond Counsel has not, however, independently verified any of the factual information contained in this Official
Statement nor has it conducted an investigation of the affairs of the District or the developers for the purpose of passing
upon the accuracy or completeness of this Official Statement. No person is entitled to rely upon Bond Counsel's limited
participation as an assumption of responsibility for or an expression of opinion of any kind with regard to the accuracy
or completeness of any information contained herein
The legal fees paid to Bond Counsel for services rendered in connection with the issuance of the Bonds are based on a
percentage of the bonds actually issued, sold and delivered and, therefore, such fees are contingent upon the sale and
delivery of the Bonds.
No Material Adverse Change
The obligations of the Initial Purchaser to take and pay for the Bonds, and of the District to deliver the Bonds, are
subject to the condition that, up to the time of delivery of and receipt of payment for the Bonds, there shall have been no
material adverse change in the condition (financial or otherwise) of the District subsequent to the date of sale from that
set forth or contemplated in the Preliminary Official Statement, as it may have been supplemented or amended through
the date of sale.
No-Litigation Certificate
LEGAL MATTERS
The District will furnish the Initial Purchaser a certificate, dated of the date of delivery of the Bonds, executed by both
the President or Vice President and Secretary or Assistant Secretary of the Board, to the effect that no litigation of any
nature has been filed or is to heir knowledge then pending or threatened, either in state or federal courts, contesting or
attaching the Bonds; restraining or enjoining the issuance, execution or delivery of the Bonds; affecting the provisions
made for the payment of or security for the Bonds; in any manner questioning the authority or proceedings for the
issuance, execution or delivery of the Bonds; or affecting the validity of the Bonds.
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Tax Exemption
TAX MATTERS
The delivery of the Bonds is subject to the opinion of Winstead Sechrest & Minick P.C., Bond Counsel, that, (1)
interest on the Bonds will be excludable from gross income of the owners thereof for federal income tax purposes
under section 103 of the Internal Revenue Code of 1986, as amended (the "Code ") and (2) the Bonds will not be
treated as "private activity bonds" within the meaning of section 141 of the Code and that, accordingly, interest on
the Bonds will not be included as an alternative minimum tax preference item under section 57(a)(5) of the Code.
Except as stated above, Bond Counsel will express no opinion as 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, ownership, or disposition of the Bonds. See APPENDIX B FORM OF OPINION OF BOND
COUNSEL.
The Code imposes a number of requirements that must be satisfied for interest on state and local obligations, such as
the Bonds, to be excludable from gross income of the owners thereof for federal income tax purposes. The District
has covenanted that it will comply with these requirements which include limitations on the use of proceeds of the
Bonds and the source of repayment, limitations on the investment of proceeds of the Bonds prior to expenditure, the
calculation and payment to the United States Treasury of certain "arbitrage profits ", the filing of an information
return with the Internal Revenue Service, and certain other matters.
In rendering their opinions, Bond Counsel will rely upon representations and certifications of the District with
respect to matters solely within the knowledge of the District, which Bond Counsel have not independently verified,
and will assume continuing compliance by the District with the District's covenants pertaining to those sections of the
Code which affect the exclusion from gross income of interest on the Bonds for federal income tax purposes. If such
representations and certifications are determined to be inaccurate or incomplete, or the District fails to comply with
the foregoing covenants, interest on the Bonds could become includable in gross income retroactively to the date of
issuance of the Bonds, regardless of the date on which the event causing such inclusion occurs.
The statutes, - regulations, published rulings, and court decisions upon which Bond Counsel have based their opinions
are subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and
the Internal Revenue Service (the "Service"). There can be no assurance that such law or the interpretation thereof
will not be changed in a manner which would adversely affect the fax treatment of the receipt or accrual of interest
on or the acquisition, ownership, or disposition of the Bonds. No ruling has been sought from the Service and the
opinions of Bond Counsel are not binding on the Service. The Service has an ongoing program of auditing tax -
exempt obligations to determine whether, in the view of the Service, interest on such tax - exempt obligations is
includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be given as
to whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current
procedures the Service will treat the District 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 with respect to the Bonds, the District may
have different or conflicting interest from the owners of the Bonds.
The opinions set forth above are based upon existing law and Bond Counsel's knowledge of the facts on the date of
issuance of the Bonds. Such opinions are an expression of professional judgment and not a guarantee of result
Bond Counsel assumes no obligation to update or supplement their opinions to reflect any facts or circumstances that
may come to their attention or any changes in law that may occur after the date of issuance of the Bonds.
42
Federal Income Tax Accounting Treatment of Discount and Premium Bonds
The initial public offering price of certain stated maturities of the Bonds may be less than the stated redemption price
at maturity (as defined in section 1272 of the Code and Income Tax Regulations thereunder) on the Bonds (the
"Original Issue Discount Bonds "). Assuming that all of the Original Issue Discount Bonds have been initially
offered and a substantial amount of each maturity thereof has been sold, to the general public in arm's length
transactions for a price (with no other consideration being included) for not more than the initial offering prices
stated in the Official Statement, an amount equal to the difference between the initial public offering price of an
Original Issue Discount Bond and the stated redemption price at maturity constitutes "original issue discount" to the
initial purchaser of such Original Issue Discount Bond. Such original issue discount may result from the payment of
accrued interest by the initial purchaser, bonds having an interest payment period longer than six months, or the
purchase by the initial purchaser at a discount from the face amount of the Bonds. Under existing law, such initial
purchaser is entitled to exclude from gross income an amount of income with respect to such Original Issue Discount
Bond equal to that portion of the amount of such original issue discount allocable to the period that such Original
Issue Discount Bond continues to be owned by such purchaser. For a discussion of certain collateral federal tax
consequences, see discussion set forth below.
In the event of the redemption, sale, or other taxable disposition of such Original Issue Discount Bond prior to stated
maturity, the amount realized by such purchaser in excess of the basis of such Original Issue Discount Bond in the
hands of such purchaser (adjusted upward by the portion of the original issue discount allocable to the period for
which such Original Issue Discount Bond was held by such initial purchaser) is includable in gross income.
Original issue discount is considered to be accrued actuarially in accordance with the constant interest method over
the life of the Original Issue Discount Bond, taking into account the semiannual compounding of accrued interest, at
the yield to maturity on such Original Issue Discount Bond. The allocation of such original issue discount will
generally result in an amount treated as interest that is different than the amount of the payment denominated as
interest actually received by the owner thereof during the taxable year.
The federal income tax consequences of the acquisition, ownership, redemption, sale, or other disposition of Original
Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined
according to rules which differ from those described above. All purchasers of Original Issue Discount Bonds should
consult their own tax advisors with respect to the determination for federal, state, and local income tax purposes of
the treatment of interest accrued upon redemption, sale, or other disposition of, such Original Issue Discount Bonds
and with respect to the federal, state, local, and foreign tax consequences of the acquisition, ownership, redemption,
sale, or other disposition of, such Original Issue Discount Bonds.
The initial public offering price of certain stated Maturities of the Bonds (the "Premium Bonds ") maybe 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 Bond. The basis for federal income tax purposes of a Premium Bond in the hands of such purchaser must
be reduced each year by the 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. All purchasers of the Premium Bonds should
consult with their own tax advisors with respect to the determination of amortizable bond premium with respect to
the Premium Bonds for federal income tax purposes and with respect to the federal, state, local, and foreign tax
consequences of acquisition, ownership, redemption, sale, or other disposition of, such Premium Bonds.
Collateral Federal Income Tax Consequences
The following discussion is a summary of certain collateral federal income tax consequences resulting from the
receipt or accrual of interest on or the acquisition, ownership, or disposition of the Bonds. This discussion is
based on existing statutes, regulations, published rulings, and court decisions, all of which are subject to
change or modification retroactively.
43
The following discussion is applicable to investors, other than those who are subject to special provisions of the
Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual
recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income
tax credit, owners of an interest in a financial asset securitization investment trust, certain S corporations with
Subchapter C earnings and profits, and taxpayers who may be deemed to have incurred or continued indebtedness to
purchase or carry, or who have paid or incurred expenses allocable to, tax- exempt obligations.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE,
SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX TREATMENT WHICH
MAY BE ANTICIPATED TO RESULT FROM THE RECEIPT OR ACCRUAL OF INTEREST ON OR THE
ACQUISITION, OWNERSHIP, AND DISPOSITION OF TAX - EXEMPT OBLIGATIONS BEFORE
DETERMINING WHETHER TO PURCHASE THE BONDS.
Interest on the Bonds will be included in the "adjusted current earnings" of certain corporations for purposes of
computing their alternative minimum tax imposed by section 55 of the Code.
Interest on the Bonds may be subject to the "branch profits tax" imposed by section 884 of the Code on the
effectively- connected earnings and profits of a foreign corporation doing business in the United States.
Under section 6012 of the Code, owners of tax- exempt obligations, such as the Bonds, may be required to disclose
interest received or accrued during each taxable year on their returns with respect to federal income taxes.
Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a
tax- exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed
maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to
"market discount bonds" to the extent such gain does not exceed the accrued market discount (defined below) of
such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount
bond" is one which is acquired by the owner at a purchase price which is less than the stated redemption price at
maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price
plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the
market discount as the number of days during which the holder holds the obligation bears to the number of days
between the acquisition date and the final maturity date. -
State, Local, and Foreign Taxes
Investors should consult their own tax advisors concerning the tax implications resulting from the receipt or accrual
of interest on or the acquisition, ownership, or disposition of the Bonds under applicable state or local laws. Foreign
investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not
United States persons.
Qualified Tax - Exempt Obligations
Section 265(a) of the Code provides, in pertinent part, that interest paid or incurred by a taxpayer, including a
"financial institution," on indebtedness incurred or continued to purchase or carry tax - exempt obligations is not
deductible by such taxpayer in determining taxable income. Section 265(b) of the Code provides an exception to the
disallowance of such deduction for any interest expense paid or incurred on indebtedness of a taxpayer which is a
"financial institution' allocable to tax - exempt obligations, other than certain "private activity bonds," which are
designated by a "qualified small issuer" as "qualified tax - exempt obligations." A "qualified small issuer" is any
governmental issuer (together with any subordinate issuers) who issues no more than $10,000,000 of tax- exempt
obligations during the calendar year. Section 265(b)(5) of the Code defines the term "financial institution" as
referring to any corporation described in section 585(a)(2) of the Code or any person accepting deposits from the
public in the ordinary course of such person's trade or business which is subject to federal or state supervision as a
financial institution.
44
The District will designate the Bonds as "qualified tax- exempt obligations" within the meaning of section 265(b) of
the Code. In furtherance of that designation, the District will take such action, which would assure, or to refrain from
such action which would adversely affect, the treatment of the Bonds as "qualified tax- exempt obligations."
Potential purchasers should be aware that if the issue price to the public exceeds $10,000,000, then such obligations
might fail to satisfy the $10,000,000 limitation and the obligations would not be "qualified tax- exempt obligations.
CONTINUING DISCLOSURE OF INFORMATION
In the Bond Order, the District is obligated to provide certain updated financial information and operating data
annually and timely notice of specified material events, to certain information vendors for the benefit of the
registered and beneficial owners of the Bonds. This information will be available to securities brokers and others
who subscribe to receive the information from the vendors.
Annual Reports
The District will provide certain updated financial information and operating data to certain information vendors
annually. The information to be updated includes all quantitative financial information and operating data with
respect to the District of the general type included in this Official Statement as Tables 1 through 12 and in Appendix
A. The District will update and provide this information within nine months after the end of each fiscal year ending
in or after 2003. The District will provide the updated information to each nationally recognized municipal
securities information repository ( "NRMSIR ") and to any state information depository ( "SID ") that is designated by
the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC ").
The District may provide updated information in full text or may incorporate by reference certain other publicly
available documents, as permitted by SEC Rule 15c2 -12 (the "Rule "). The updated information will include audited
financial statements, if it is completed by the required time. If audited financial statements are not available by the
required time, the District will provide audited financial statements when the audit report becomes available. Any
such financial statements will be prepared in accordance with the accounting principles described in Appendix A or
such other accounting principles as the District may be required to employ from time to time pursuant to state law or
regulation.
The District's current fiscal year end is September 30, 2003. Accordingly, it must provide updated information by
March 31, in each year, commencing after 2003 unless the District changes its fiscal year. If the District changes its
fiscal year, it will notify each NRMSIR and any SID of the change.
Material Event Notices
The District will also provide timely notices of certain events to certain information vendors. The District will
provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to
purchase or sell Bonds: (1) principal and interest payment delinquencies; (2) non - payment related defaults;
(3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit
enhancements reflecting fmancial difficulties; (5) substitution of credit or liquidity providers, or their failure to
perform; (6) adverse tax opinions or events affecting the tax- exempt status of the Bonds; (7) modifications to rights
of registered owners; (8) Bond calls; (9) defeasances; (10) release, substitution, or sale of property securing
repayment of the Bonds; and (11) rating changes. In addition, the District will provide timely notice of any failure
by the District to provide information, data, or financial statements in accordance with its agreement described above
under ".Annual Reports ". The District will provide each notice described in this paragraph to any SID and to either
each NRMSIR or the Municipal Securities Rulemaking Board ( "MSRB ").
Availability of Information from NRMSIRs and SID
The District has agreed to provide the foregoing information only to NRMSIRs and any SID. The information will
be available to registered owners only if the registered owners comply with the procedures and pay the charges
established by such information vendors or obtain the information through securities brokers who do so.
The Municipal Advisory Council of Texas has been designated by the State of Texas as a SID and has received a no
action letter from the SEC that recognized the Municipal Advisory Council as a SID. The address of the Municipal
Advisory Council is 600 West 8th Street, P.O. Box 2177, Austin, Texas 78768 -2177, and its telephone number is
512/476 -6947.
45
Limitations and Amendments
The District has agreed to update information and to provide notices of material events only as described above. The
District 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 District 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 District 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 owners may seek a writ of mandamus to compel the
District to comply with its agreement.
This continuing disclosure agreement may be amended by the District 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 District, but only if (1) the provisions, as so amended, would have permitted an
underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into
account any amendments or interpretations of the Rule since such offering as well as such changed circumstances
and (2) either (a) the holders of a majority in aggregate principal amount (or any greater amount required by any
other provision of the Bond Order that authorizes such an amendment) of the outstanding Bonds consent to such
amendment or (b) a person that is unaffiliated with the District (such as nationally recognized bond counsel)
determined that such amendment will not materially impair the interest of the registered owners and beneficial
owners of the Bonds. The District may also amend or repeal the provisions of this continuing disclosure agreement
if the SEC amends or repeals the applicable provision 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 underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds.
Compliance with Prior Undertakings
The District has complied in all material respects with its previous continuing disclosure agreements made pursuant
to SEC Rule 15c2 -12.
FINANCIAL ADVISOR
The Official Statement was compiled and edited under the supervision of SAMCO Capital Markets (the "Financial
Advisor"), which firm was employed in 2000 as Financial Advisor to the District. The fees paid the Financial Advisor
for services rendered in connection with the issuance and sale of the Bonds are based on a percentage of the Bonds
actually issued, sold and delivered, and therefore such fees are contingent on the sale and delivery of the Bonds. The
Financial Advisor has requested the right to bid on the Bonds, and the District has given its consent.
Preparation
OFFICIAL STATEMENT
The information in this Official Statement was compiled and edited by the Financial Advisor. In addition to compiling
and editing such information, the Financial Advisor has obtained the information set forth herein under the captions
indicated from the following sources:
"THE DISTRICT"; Gray Jansing & Associates, Inc. ( "Engineer "), Round Rock Independent School District,
and Chandler Creek Investment Limited Partnership Development, K & B, Lennar, and Kimball Hill Homes
( "Developers "); "LANDOWNERS AND DEVELOPERS" — the Developers; "THE SYSTEM" — Engineer;
"COMBINATION UNLIMITED TAX AND REVENUE BONDS AUTHORIZED BUT UNISSUED" —
Records of the District ( "Records "), `FINANCIAL STATEMENT' — Williamson County Appraisal District;
`ESTIMATED OVERLAPPING DEBT STATEMENT' — Municipal Advisory Council of Texas; "TAX
DATA" — and "WATER AND SEWER OPERATIONS" — Audits, Records and Tax Assessor /Collector;
"MANAGEMENT' — District Directors; "THE BONDS," "CONTINUING DISCLOSURE OF
INFORMATION"; "TAXING PROCEDURES," "EXTRATERRITORIAL JURISDICTION AND
ANNEXATION," and "LEGAL MATTERS" — Winstead, Sechrest & Minick P.C.
46
Experts
In approving this Official Statement, the District has relied upon the following experts in addition to the Financial
Advisor.
The Engineer: The information contained in the Official Statement relating to engineering matters and to the
description of the System and, in particular, that information included in the sections entitled "THE
DISTRICT" and "THE SYSTEM," has been provided by Gray Jansing & Associates, Inc., and has been
included in reliance upon the authority of said firm as experts in the field of civil engineering.
Appraisal District: The information contained in the Official Statement relating to the certified assessed
valuation of property in the District and, in particular such information contained in the sections captioned
'FINANCIAL STATEMENT' and "TAX DATA" has been provided by the Williamson County Appraisal
District, in reliance upon the authority as experts in appraising and tax assessing.
Tax Assessor /Collector. The information contained in this Official Statement relating to principal tax payers
and tax collection rates has been provided by Ms Deborah Hunt in reliance upon her authority as an expert
in the field of tax assessing and collecting.
Updating the Official Statement During Underwriting Period
If, subsequent to the date of the Official Statement to and including the date the Initial Purchaser is no longer required to
provide an Official Statement to potential customers who request the same pursuant to Rule 15c2 -12 of the federal
Securities Exchange Act of 1934 (the "Rule ") (the earlier of (i) 90 days from the "end of the underwriting period" (as
defined in the Rule) and (ii) the time when the Official Statement is available to any person from a nationally recognized
repository but in no case less than 25 days after the "end of the underwriting period "), the District Teams or is notified by
the Initial Purchaser of any adverse event which causes any of the key representations in the Official Statement to be
materially misleading, the District will promptly prepare and supply to the Initial Purchaser a supplement to the Official
Statement which corrects such representation to the reasonable satisfaction of the Initial Purchaser, unless the Initial
Purchaser elects to terminate its obligation to purchase the Bonds as described below. The obligation of the District to
update or change the Official Statement will terminate when the District delivers the Bonds to the Initial Purchaser (the
"end of the underwriting period" within the meaning of the Rule), unless the Initial Purchaser provides written notice the
District that less than all the Bonds have been sold to ultimate customers on or before such date, in which case the
obligation to update or change the Official Statement will extend for an additional period of time of 25 days after all of
the Bonds have been sold to ultimate customers. In the event the Initial Purchaser provides written notice to the District
that less than all of the Bonds have been sold to Ultimate customers, the Initial Purchaser agrees to notify the District in
writing following the occurrence of the "end of the underwriting period" as defined in the Rule.
Certification as to Official Statement
The District, acting by and through its Board of Directors in its official capacity, in reliance upon the experts listed
above, hereby certifies, as of the date hereof, that to the best of its knowledge and belief, the information, statements and
descriptions pertaining to the District and its affairs herein contain no untrue statements of a material fact and do not
omit to state any material fact necessary to make the statements herein, in light of the circumstances under which they
were made, not misleading. The information, description and statements concerning entities other than the District,
including particularly other governmental entities, have been obtained from sources believed to be reliable, but the
District has made no independent investigation or verification of such matters and makes no representation as to the
accuracy or completeness thereof.
47
Official Statement "Deemed Final"
For purposes of compliance with Rule 15c(2) -12 promulgated by the Securities and Exchange Commission, this
document, as the same may be supplemented or corrected by the District from time -to -time, maybe treated as an Official
Statement with respect to the Bonds described herein "deemed final" by the District as of the date hereof (or of any such
supplement or correction) except for the omission of certain information referred to in the succeeding paragraph
The Official Statement, when further supplemented by adding information specifying the interest rates and certain other
information relating to the Bonds, shall constitute a "FINAL OFFICIAL STATEMENT" of the District with respect to
the Bonds, as that term is defined in Rule 15c(2) -12.
This Official Statement was approved by the Board of Directors of The Meadows at Chandler Creek Municipal Utility
District, as of the date shown on the first page hereof.
/s/
Ann Mifflin
Secretary, Board of Directors
The Meadows at Chandler Creek
Municipal Utility District
48
/s/
Douglas D. Eastwood
President, Board of Directors
The Meadows at Chandler Creek
Municipal Utility District
DATE: March 21, 2003
SUBJECT: City Council Meeting — March 27, 2003
ITEM: 9.B.1. Consider a resolution approving the issuance of an amount not to
exceed $5,700,000 Combination Unlimited Tax and Revenue Bonds,
Series 2003 by the Meadows at Chandler Creek Municipal Utility
District.
Resource: David Kautz, Assistant City Manager
Bill White, Finance Director
History: The District is in the extraterritorial jurisdiction of the City of Round Rock and,
therefore, the City's approval is required prior to the sale of the bonds. The
District is nearing full development with 87% build out (1,330 single family
homes are completed, 57 are under construction and 101 vacant, developed lots
remain). The District population is 4,862. Including these bonds, the District will
have issued $11,510,000 in tax and revenue supported debt. $1,490,000 remains
authorized but unissued. It is anticipated that the current issuance will be the last
and it is for the purpose of reimbursing the developer for water, wastewater and
drainage improvements. These bonds are an obligation of the District and no
other entity. No adverse impact is anticipated on the District's tax or utility rates.
Approval for this transaction has been received by the Texas Commission on
Environmental Quality.
Funding:
Cost: N/A
Source of funds: N/A
Outside Resources: Samco Capital Markets (Chris Lane), Financial Advisor
Winstead Sechrest & Minick P.C., Bond Counsel
Impact/Benefit: Proceeds from the bonds will be used to reimburse the developer for utility
construction costs.
Public Comment: N/A
Sponsor: N/A
R
WNSTEAD
March 12, 2003
VIA HAND DELIVERY
Ms. Christine Martinez
Round Rock City Secretary
221 E. Main Street
Round Rock, TX 78664
Mr. Stephen Sheets
Round Rock City Attorney
Sheets & Crossfield
309 E. Main Street
Round Rock, Texas 78664
David Kautz
City of Round Rock Finance Dept.
221 E.Main Street
Round Rock, Texas 78664
Re: The Meadows at Chandler Creek Municipal Utility District Combination
Unlimited Tax and Revenue Bonds, Series 2003
Dear Ms. Martinez, Mr. Sheets and Mr. Kautz:
The Meadows at Chandler Creek Municipal Utility District (the "District ") intends to
issue $5,700,000 of its Combination Unlimited Tax and Revenue Bonds, Series 2003 (the
"Bonds ") to finance water, wastewater, and drainage facilities within the District's boundaries.
The District has received approval to issue the Bonds from the Texas Commission on
Environmental Quality, and we ask that the City of Round Rock, Texas (the "City ") consider
approval of the Bonds at the City Council meeting scheduled for March 27, 2003.
Enclosed for your review and that of the City Attorney are the following documents
relating to the Bonds:
(1) A substantially final preliminary official statement;
(2) A substantially final order of the District authorizing the sale of the Bonds;
SUITE 800
100 CONGRESS AVENUE
AUSTIN, TEXAS 78701
PH 512.474.4330
FAX 512.370.2850
WINSTEAD.COM
WINSTEAD SECUREST E MINICK
Attorneys and Counselors
A Professional Corporation
direct dial: 512.370.2862
phaag @winstead.cvm
Austin, Dallas, Fort Worth,
Houston, Mexico City,
The Woodlands, Washington DC
Mr. David Kautz
March 12, 2003
Page 2
(3) A summary of the District's finances (highlighting the impact the sale of the Bonds
will have on the District's finances); and
If you need additional information or have any questions regarding the enclosed, please
call me. I plan on attending the City Council meeting on March 27, 2003, so will be available
for any questions you or the City Council members may have. Thank you for your assistance
with this matter.
Enclosures
AUSTIN_1\209315\l
19239-4 03/12/2003
(4) A draft order prepared for the City regarding approval of the Bonds.
Sincerely,
Phil Haag
Mayor
Nyle Maxwell
Mayor Pro-tem
Tom Nielson
Council Members
Alan McGraw
Carrie Pitt
Scot Knight
Isabel Gallahan
Gary Coe
City Manager
Jim Nuse
City Attorney
Stephan L. Sheets
ROUND ROCK, TEXAS
PURPOSE. PASSION. PROSPERITY.
April 1, 2003
Ms. Georgia Canfield
Winstead Sechrest & Minick
100 Congress Avenue, Suite 800
Austin, TX 78701
Dear Ms. Canfield:
The Round Rock City Council approved Resolution No. R- 03- 03 -27-
9B1 at their regularly scheduled meeting on March 27, 2003. This
resolution approves the Meadows at Chandler Creek Municipal Utility
District Combination Unlimited Tax and Revenue Bonds, Series 2003.
Enclosed is a certified copy of the resolution. If you have any
questions, please do not hesitate to contact David Kautz at 218 -5401.
Sincerely,
Christine R. Martinez
City Secretary
Enclosure
CITY OF ROUND ROCK Administrative Dept, 221 East Main Street • Round Rock, Texas 78664
Phone: 512.218.540o • Fax: 5[2.218.7097 - www.ct_round- rock.tx.us
STATE OF TEXAS
COUNTY OF WILLIAMSON
CITY OF ROUND ROCK
2003.
[SEAL]
I, Christine Martinez, City Secretary of the City of Round Rock, Texas do hereby
certify that the attached Resolution is a true and correct copy of a resolution passed and
adopted by the City Council of the City of Round Rock, Texas, at a meeting held on March
27, 2003.
WITNESSED by my hand and seal of the City of Round Rock, Texas on March 27,
City Secretary
City of Round Rock, Texas
RESOLUTION NO.
WHEREAS, the Council of the City of Round Rock, Texas has previously consented
to the creation of The Meadows at Chandler Creek Municipal Utility District;
WHEREAS, The Meadows at Chandler Creek Municipal Utility District (the "District ")
is a conservation and reclamation district, a body corporate and politic and governmental
agency of the State of Texas, created under Article XVI, Sec. 59 of the Texas Constitution
by order of the Texas Water Commission, now the Texas Commission on Environmental
Quality ( "the TCEQ "), and the District operates under Chapters 49 and 54 of the Texas
Water Code, as amended;
WHEREAS, the City of Round Rock (the "City") previously granted its consent to the
creation of the District, and the City, the District, and Nash Phillips /Copus, Inc. entered into
an "Agreement Concerning Creation and Operation of The Meadows at Chandler Creek
Municipal Utility District" (the "Consent Agreement "), which sets forth, the terms and
conditions for creation and operation of the District;
WHEREAS, the District and the City also entered into that certain "Utility
Construction Contract" dated May 10, 1984 setting forth the terms and conditions pursuant
to which the City agreed to provide water and sanitary sewer service within the boundaries
of the District and pursuant to which the District agreed to purchase, construct, and acquire
facilities for such purposes;
WHEREAS, by an election held on June 13, 1985, the District was authorized to
issue bonds in the maximum amount of $13,000,000, pursuant to which the District has
issued $5,810,000 in bonds, leaving an authorized but unissued amount of $7,190,000;
WHEREAS, the District is authorized by law to purchase, construct, acquire, own,
operate, maintain, repair, improve, or extend, inside or outside its boundaries, any and all
works, improvements, facilities, plants, equipment, and appliances necessary to
accomplish the purposes of its creation;
WHEREAS, the District has made application to the TCEQ for approval of the
issuance by the District of its unlimited tax and revenue bonds to finance or reimburse the
developer for the cost of water, sewer, and drainage improvements (the "Improvements ")
serving lands within the District;
WHEREAS, under the Consent Agreement, the Utility Construction Contract, and
that certain "Order Authorizing the Issuance of $5,700,000 The Meadows at Chandler
Creek Municipal Utility District Combination Unlimited Tax and Revenue Bonds, Series
2003" proposed to be adopted by the Board of Directors of the District (the "2003 Bond
Order"), the District proposes to authorize the issuance of its combination unlimited tax and
revenue bonds designated as its "$5,700,000 The Meadows at Chandler Creek Municipal
Utility District Combination Unlimited Tax and Revenue Bonds, Series 2003" (the "Series
2003 Bonds ") to finance or reimburse the developer for the cost of the Improvements;
WHEREAS, the District has submitted to the City for review and approval a
substantial draft of the 2003 Bond Order and Preliminary Official Statement and requested
approval of the District's Series 2003 Bonds.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
ROUND ROCK, TEXAS THAT:
1. The issuance by the District of the Series 2003 Bonds in an amount not to
exceed $5,700,000 is hereby approved.
2. The City Council approves the substantial draft of the 2003 Bond Order and
Preliminary Official Statement for the Series 2003 Bonds, the form and substance of which
are attached as Exhibits A and B, respectively, incorporated herein by reference.
(Remainder of this page intentionally left blank)
EXECUTED THIS
ATTEST:
Secretary, City of Round Rock
SIGNATURE PAGE FOR RESOLUTION CONSENTING TO BOND ISSUE
AUSTIN_151 97 2 8 011
19239 -4 03/1112003
Mayor, City of Round Rock
AUSTIN_1119728011
19239-0 03/11/2003
EXHIBIT A
BOND ORDER
AUSTIN_1 \197280 \1
19239 -4 03/11/2003
EXHIBIT B
PRELIMINARY OFFICIAL STATEMENT