R-99-02-25-13C1 - 2/25/1999THE STATE OF TEXAS §
COUNTIES OF WILLIAMSON AND TRAVIS §
CITY OF ROUND ROCK §
We, the undersigned officers and members of the City of Round Rock, Texas (the "City"),
hereby certify as follows:
1. The City Council of the City convened in REGULAR MEETING ON THE 25TH
DAY OF FEBRUARY, 1999, at the City Hall (the "Meeting "), and the roll was called of the duly
constituted officers and members of the City, to -wit:
AYES:
NOES:
pROCX/57.R.I: PUMA CAT 2/27/99
CERTIFICATE FOR RESOLUTION
Charles Culpepper, Mayor
Robert Stulka - Mayor Pro-Tem Place 1
Earl Palmer - Councilmember Place 4
Earl Hairston - Councilmember Place 2
Rick Stewart - Councilmember Place 3
Martha A. Chavez - Councilmember Place 5
Jimmy Joseph - Councilmember Place 6
and all of the persons were present, except the following absentees: , thus constituting
a quorum. Whereupon, among other business, the following was transacted at the Meeting: a written
A RESOLUTION APPROVING PRELIMINARY LIMITED OFFERING
MEMORANDUM RELATING TO CITY OF ROUND ROCK, TEXAS HOTEL
OCCUPANCY TAX REVENUE BONDS, SERIES 1999 (CONVENTION CENTER
COMPLEX PROJECT) AND AUTHORIZING DISTRIBUTION OF
PRELIMINARY LIMITED OFFERING MEMORANDUM
was duly introduced for the consideration of the City Council. It was then duly moved and seconded
that the Resolution be passed on first reading; and, after due discussion, said motion carrying with
it the passage of the Resolution, prevailed and carried by the following vote:
D
2. A true, full and correct copy of the Resolution passed at the Meetings described in
the above and foregoing paragraphs is attached to and follows this Certificate; that the Resolution
has been duly recorded in the City Council's minutes of the Meetings; that the above and foregoing
paragraphs are a true, full and correct excerpt from the City Council's minutes of the Meeting
pertaining to the passage of the Resolution; that the persons named in the above and foregoing
paragraphs are the duly chosen, qualified and acting officers and members of the City Council as
indicated therein; that each of the officers and members of the City Council was duly and sufficiently
notified officially and personally, in advance, of the time, place and purpose of the Meetings, and
that the Resolution would be introduced and considered for passage at the Meetings, and each of the
officers and members consented, in advance, to the holding of the Meetings for such purpose, and
that the Meetings were open to the public and public notice of the time, place and purpose of the
meeting was given, all as required by Chapter 551, Texas Government Code.
3. The Mayor of the City has approved and hereby approves the Resolution; that the
Mayor and the City Secretary of the City have duly signed the Resolution; and that the Mayor and
the City Secretary of the City hereby declare that their signing of this Certificate shall constitute the
signing of the attached and following copy of the Resolution for all purposes.
[CITY SEAL]
SIGNED AND SEALED the
RRUWSTMRIM: PLO. CRT 2/25M
Mayor
RROCK/STADN61: PLOMRES ]/1]199
Resolution No. /' 99' Da - S -/3C„
I
A RESOLUTION APPROVING PRELIMINARY LIMITED OFFERING
MEMORANDUM RELATING TO CITY OF ROUND ROCK, TEXAS HOTEL
OCCUPANCY TAX REVENUE BONDS, SERIES 1999 (CONVENTION CENTER
COMPLEX PROJECT) AND AUTHORIZING DISTRIBUTION OF
PRELIMINARY LIMITED OFFERING MEMORANDUM
WHEREAS, First Southwest Company, the City's Financial Advisor (the "Financial
Advisor"), has prepared a Preliminary Limited Offering Memorandum in connection with the
issuance of the City's Hotel Occupancy Tax Revenue Bonds, Series 1999 (Convention Center
Complex Project) (the "Bonds"); and
WHEREAS, the City has reviewed the Preliminary Limited Offering Memorandum; and
WHEREAS, the City deems it appropriate to approve the Preliminary Limited Offering
Memorandum and authorize the distribution of the Preliminary Limited Offering Memorandum;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF ROUND ROCK, TEXAS THAT:
Section 1. APPROVAL AND DISTRIBUTION OF PRELIMINARY LIMITED
OFFERING MEMORANDUM. The Council hereby approves the Preliminary Limited Offering
Memorandum substantially in the form attached hereto as Exhibit "A" with such changes, additions
or deletions as directed by the Council and City staff. The Financial Advisor to the City is hereby
authorized and directed to distribute the Preliminary Limited Offering Memorandum to the
Underwriter for further distribution to potential bond purchasers and to do all things necessary to
market such Bonds.
Section 2. OTHER MATTERS. The Mayor, City Manager or Director of Finance of
the City are authorized to do all things proper and necessary to carry out the intent hereof, including
the approval of appropriate changes to the Preliminary Limited Offering Memorandum.
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 the Open Meetings
Act, Chapter 551, Texas Government Code, as amended.
ATTEST:
RESOLVED this 25th day of February, 1999.
a
E LAND, City Secretary
of Round Rock, Texas
na«iuSTADIUM: PLOM v1
CHARLES CULP PER, Mayor
City of Round Rock, Texas
NEW ISSUE - Book - Entry-Only
In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax purposes under existing law and
the Bonds are not private activity bonds. See "TAX MATTERS" for a discussion of the opinion of Bond Counsel, including a description of
alternative minimum tax consequences for corporations.
*Preliminary, subject to change.
PRELIMINARY LIMITED OFFERING MEMORANDUM
Dated February 25, 1999
58,650,000*
CITY OF ROUND ROCK, TEXAS
(Williamson and Travis Counties)
HOTEL OCCUPANCY TAX REVENUE BONDS, SERIES 1999
(Convention Center Complex Project)
Dated: March 15, 1999 Due: December 1, as shown on inside cover page
PAYMENT TERMS ... The City of Round Rock, Texas Hotel Occupancy Tax Revenue Bonds, Series 1999 (Convention Center Complex
Project) (the "Bonds "), when issued, will be registered in the name of Cede & Co., as registered holder and nominee for The Depository Trust
Company ( "DTC "), New York, New York. DTC will act as securities depository for the Bonds. Purchases of beneficial ownership interest in
the Bonds will be made in book - entry form only. No physical delivery of the Bonds will be made to the owners thereof. See "BOND
INFORMATION — Book -Entry-Only System" herein. The Bonds will be issued only as fully registered bonds in the denomination of
$100,000 or any integral multiple of $5,000 in excess of $100,000 within a maturity. Interest on the Bonds is payable semiannually each
December I and June 1, commencing December 1, 1999. Principal of, premium, if any, and interest on the Bonds will be payable by the
Trustee/Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for
subsequent payment to the beneficial owners of the Bonds. The initial Trustee/Paying Agent/Registrar is Chase Bank of Texas, National
Association (see 'BOND INFORMATION — Trustee/Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE ... The Bonds are issued pursuant to the general laws of the State of Texas, particularly Chapter 351, Texas Tax
Code, as amended, Article 1269 - 4.1 Vemon's Annotated Texas Civil Statutes, as amended, an ordinance passed by the City Council of the
City (the "Ordinance ") and a Trust Indenture between the City and Chase Bank of Texas, National Association (the "Indenture "). The Bonds
and any Additional Parity Obligations (hereinafter defined) are special obligations of the City payable, as to principal, premium, if any, and
interest, solely from and secured by a first lien on and pledge of the Pledged Revenues. The Bonds are additionally secured by certain Pledged
Funds (see "BOND INFORMATION — Security for Bonds "). The Bondholders shall never have the right to demand payment of the Bonds
out of any funds raised or to be raised by taxation or any sources other than those specified in the Ordinance and the Indenture.
PURPOSE ... Proceeds from the sale of the Bonds will be used to provide a portion of the cost to develop a Convention Center Complex
Project (the "Project ") in Round Rock, Texas. Additionally, a portion of Bond proceeds will be used to (i) fund one -half of the required reserve
amount for the reserve fund, (ii) fund approximately 14 months capitalized interest and (iii) pay certain costs related to the issuance of the
Bonds, all as more fully described herein. See "CONVENTION CENTER COMPLEX PROJECT."
MATURITY SCHEDULE
See Inside Cover Page
LEGALITY ... The Bonds are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving opinion
of the Attomey General of the State of Texas and of McCall, Parkhurst & Horton L.L.P., Austin, Texas, Bond Counsel (see APPENDIX E -
"Form of Bond Counsel's Opinion "). Certain legal matters will be passed upon for the Underwriter by Ross & Hardies, Chicago, Illinois.
Delivery of the Bonds is anticipated through DTC on or about March 23, 1999. THE BONDS ARE SUBJECT TO SPECIAL RISK
FACTORS DESCRIBED HEREIN. BOND PURCHASERS ARE ENCOURAGED TO READ THIS PRELIMINARY LIMITED
OFFERING MEMORANDUM PRIOR TO MAKING AN INVESTMENT DECISION, PARTICULARLY THE SECTION
ENTITLED "BONDHOLDER RISKS."
MESIROW FINANCIAL, INC.
NOT RATED
(See "OTHER
INFORMATION" -
herein)
*Preliminary, subject to change.
MATURITY SCHEDULE*
THE BONDS
Maturity Principal Price or
December 1 Amount Rate Yield
2007 $ 295,000
2008 310,000
2009 320,000
2010 340,000
2011 355,000
5210,000 % Term Bond due December 1, 2006 - Yield _ %
$1,625,000 % Term Bond due December 1, 2015 - Yield %
$2,575,000 % Term Bond due December 1, 2020 • Yield %
52,620,000 % Term Bond due December 1, 2024 - Yield %
(Accrued interest from March 15, 1999 to be added)
REDEMPTION OPTION ... The Bonds are subject to optional and mandatory sinking fund redemption as described herein. (See
`BOND INFORMATION — Redemption of Bonds ")
(THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK)
2
No dealer, salesman or any person has been authorized by the City or the Underwriter to give any information or to make any representations,
other than the information and representations contained herein, in connection with the offering of the Bonds, and if given or made, such
information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Preliminary Limited
Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any of the Bonds
by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
Certain information set forth in this Preliminary Limited Offering Memorandum has been furnished by the City and other sources which are
believed to be reliable, but such information is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation
by, the Underwriter. Neither the City nor the Underwriter make any representation as to the accuracy, completeness or adequacy of the
information supplied by The Depository Trust Company for its use in this Preliminary Limited Offering Memorandum. The information and
expressions of opinion contained herein are subject to change without notice and neither the delivery of this Preliminary Limited Offering
Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs
of the City since the date hereof.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
TABLE OF CONTENTS
CITY ADMINISTRATION iii
Elected Officials tit
Selected Administrative Staff iv
Consultants and Advisors is
SELECTED DATA FROM THE PRELIMINARY LIMITED OFFERING MEMORANDUM v
The Issuer v
The Bonds v
Security for the Bonds
Optional Redemption v
Mandatory Redemption vi
Tax Exemption vi
Use of Bond Proceeds vi
Payment Record vi
INTRODUCTION 1
PLAN OF FINANCING
Purpose 1
Source and Application of Funds 2
BOND INFORMATION 2
General 2
Authority for Issuance 2
Security for Bonds 3
Pledged Revenues and Pledged Accounts 3
Funds and Accounts 4
Payment of Interest 7
Redemption of Bonds 7
Notice of Prior Redemption 9
Book -Entry-Only System 10
Refunding Obligations I I
Trustee/Paying Agent/Registrar 12
Transfer, Exchange and Registration 12
Limitation on Transfer of Bonds Called for Redemption 12
Available Information 15
Incorporation of Certain Documents by Reference 16
CONVENTION CENTER COMPLEX PROJECT 16
3
Hotel Tax
Lease Agreement
17
17
DEBT INFORMATION
Estimated Debt Service Coverage
INDEPENDENT CONSULTANT'S REPORT
BONDHOLDER RISKS
TAX MATTERS
ELIGIBILITY FOR INVESTMENT 29
18
19
20
20
22
OTHER INFORMATION 29
Ratings 29
Litigation 29
Registration and Qualification of Bonds for Sale 31
Legal Investments and Eligibility to Secure Public Funds in Texas 31
Legal Matters 31
Authenticity of Financial Data and Other Information 32
Continuing Disclosure of Information 32
Underwriting 33
Financial Advisors 34
Preliminary Limited Offering Memorandum 34
General Information Regarding the City of Round Rock, Texas
Excerpts from City of Round Rock, Texas Annual Financial Report
Projection of Hotel Tax Revenue to the City of Round Rock, Texas (The Report)
Excerpts of Certain Provisions of the Ordinance
Excerpts of Certain Provisions of the Indenture
Form of Bond Counsel's Opinion
4
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
APPENDIX F
ELECTED OFFICIALS
APPOINTED OFFICIALS
City Council
Charles C. Culpepper*
Mayor
Robert Stluka 9 Years May 1999 Self - Employed
Mayor Pro-Tem, Place 1
Earl M. Hairston
Councilman, Place 2
• 14 years length of service.
CONSULTANTS AND ADVISORS
Name
Robert L. Bennett, Jr.
Joanne Land
David Kautz
Stephan L. Sheets
For additional information regarding the City, please contact:
CITY ADMINISTRATION
Length of - Terrn
Service Expires Occupation
6 Years May 1999 Self - Employed
8 Months May 2001 Community Development Manager
Rick Stewart 8 Years May 2000 Retired Businessman
Councilman, Place 3
Earl Palmer , 9 Years May 1999 Retired Businessman
Councihnan, Place 4
Martha A. Chavez 6 Years May 2000 School Teacher, RRISD
Councilwoman, Place 5
Jimmy Joseph 10 Years May 2001 Self- Employed
Councilman, Place 6
Position
City Manager
Assistant City Manager /City Secretary
Director of Finance
City Attorney
Auditors Pena, Swayze & Company
Round Rock, Texas
Bond Counsel McCall, Parkhurst & Horton L.L.P.
Austin, Texas
Financial Advisor First Southwest Company
Austin, Texas
David Kautz Garry Kimball
Director of Finance First Southwest Company
City of Round Rock or 98 San Jacinto Blvd., Suite 370
221 East Main Street Austin, Texas 78701
Round Rock, Texas 78664 (512) 481 -2000
(512) 218 -5400 (512) 481 -2010 Fax
5
Length of
Service
21 Years
29 Years
22 Years
21 Years
SELECTED DATA FROM THE PRELIMINARY LIMITED OFFERING MEMORANDUM
The selected data on this page are subject in all respects to the more complete information and definitions contained or
incorporated in this Preliminary Limited Offering Memorandum. The offering of the Bonds to potential investors is made only
by means of the entire Preliminary Limited Offering Memorandum. No person is authorized to detach this data page from this
Preliminary Limited Offering Memorandum or to otherwise use it without the entire Preliminary Limited Offering
Memorandum.
This data page was prepared to present the purchasers of the Bonds information concerning the Bonds, the pledged revenues, the
description of the revenue base and other pertinent data, all as more fully described herein.
THE ISSUER ... The City of Round Rock, Texas (the "City"), is a political subdivision of the State of Texas (the "State ")
located in Williamson and Travis Counties, Texas, operating as a home -rule city under the laws of the State and a home -rule
charter approved by the voters in August, 1977, as amended (the "Home Rule Charter"). The City operates under a
Council/Manager form of government where the Mayor and six Councilmembers are elected for staggered three -year terms. The
Council formulates operating policy for the City while the City Manager is the chief administrative officer.
The City is located in Williamson and Travis Counties, Texas, 8 miles north of Austin and 85 miles south of Waco on Interstate
Highway 35. The City is also situated on U.S. Highway 79, which runs east and west. Both U.S. Highway 79 and Interstate
Highway 35 are main arteries of traffic in the State (see APPENDIX A - "General Information Regarding the City").
THE BONDS ... The Bonds are being issued in the original principal amount of $8,650,000* pursuant to the general laws of the
State of Texas, particularly Chapter 351, Texas Tax Code, as amended, Article 1269 - 4.1 Vemon's Annotated Texas Civil
Statutes, as amended, the Ordinance passed by the City Council of the City and the Trust Indenture between the City and Chase
Bank of Texas, National Association.
Pursuant to the initiative and referendum provisions of the City's Home Rule Charter, a group of citizens petitioned the City
Council regarding adoption of an "ordinance approving the expenditure of Hotel Occupancy Tax for a multi - purpose facility
baseball stadium ". An election was held within the City on November 3, 1998 regarding adoption of such ordinance and the
proposition was approved by 72% of the voters voting at the election (see "BOND INFORMATION – Authority for Issuance ").
SECURrrY FOR THE BONDS ... The Bonds and any Additional Parity Obligations constitute special obligations of the City
payable both as to principal and interest and secured by a first lien on and pledge of the Pledged Revenues. The Bonds are
additionally secured by certain Pledged Funds. The bondholders shall never have the right to demand payment of the Bonds out
of any funds raised or to be raised by taxation or any source other than those specified in the Ordinance and the Indenture (see
"BOND INFORMATION — Security for Bonds ").
The Pledged Revenues described in the Ordinance and Indenture include the Hotel Occupancy Tax. Economics Research
Associates, Inc. ( "ERA ") has prepared a report regarding the Projection of Hotel Tax Revenue to the City of Round Rock (the
"Report") which is included in its entirety as APPENDIX C. ERA is a national independent economic consulting firm
specializing in commercial recreational analysis, including all aspects of the travel and lodging industry.
Potential purchasers of the Bonds should read the Report in its entirety, including the assumptions and General Limiting
Conditions contained therein.
THE ESTIMATES, OPINIONS, PROJECTIONS AND CONCLUSIONS EXPRESSED IN THE REPORT ARE BASED
UPON CERTAIN ASSUMPTIONS, DATA, CALCULATIONS, QUALIFICATIONS AND CONDITIONS, AND THE
REPORT SHOULD BE READ IN ITS ENTIRETY IN ORDER TO EVALUATE AND UNDERSTAND BETTER SUCH
ESTIMATES, OPINIONS, PROJECTIONS AND CONCLUSIONS. THERE WILL USUALLY BE DIFFERENCES
BETWEEN PROJECTED AND ACTUAL RESULTS BECAUSE EVENTS AND CIRCUMSTANCES USUALLY DO NOT
OCCUR AS EXPECTED AND OTHERE FACTORS NOT CONSIDERED IN THE REPORT MAY ALSO ENFLUENCE
ACTUAL RESULTS. SUCH DIFFERENCES MAY BE MATERIAL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT ACTUAL RESULTS WILL APPROXIMATE PROJECTED RESULTS. NO WARRANTY OR
*Preliminary, subject to change.
6
REPRESENTATION IS MADE BY ERA THAT ANY OF THE PROJECTED VALUES OR RESULTS CONTAINED IN
THE REPORT WILL ACTUALLY BE ACHIEVED.
ADDITIONAL PARITY OBLIGATIONS ... The City may issue Additional Parity Obligations payable from the Pledged Revenues
which are equally and ratably secured by a parity first lien on and pledge of the Pledged Revenues, subject, however, to
complying with certain conditions in the Ordinance including the requirement that the City obtain from a Certified Public
Accountant a certificate to the effect the Pledged Revenues for the last complete fiscal year, or for any twelve consecutive
calendar month period ending not more than 90 days prior to the passage of the ordinance authorizing the issuance of such
Additional Parity Obligations were at least 1.25 times the average annual principal and interest requirements for all Outstanding
Parity Obligations after giving effect to the Additional Parity Obligations then being issued. In making such certification, the
accountant may take into account a rate increase that became effective at least 60 days prior to the last day of the period for
which Pledged Revenues are determined and give effect to such rate increase as if it had been effective for the entire period
covered by the certification (see `BOND INFORMATION — Additional Parity Obligations ").
OPTIONAL REDEMPTION ... The Bonds maturing on and after December 1, 2010 are subject to redemption prior to maturity, at
the option of the City, on December 1, 2009, or any date thereafter, at the par value thereof, plus accrued interest to the date
fixed for redemption (see "BOND INFORMATION - Redemption of Bonds ").
MANDATORY SINKING FUND REDEMPTION ... The Bonds maturing on December 1, 2006, December 1, 2015, December 1,
2020, and on December 1, 2024 (the "Term Bonds ") are also subject to mandatory redemption prior to scheduled maturity, and
will be redeemed by the City, in part at a redemption price equal to the principal amount thereof plus accrued interest to the date
of redemption, on the dates, in the principal amounts and under the circumstances shown herein under the heading "BOND
INFORMATION — Redemption of Bonds."
TAX EXEMPTION ... In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income
tax purposes under existing law and the Bonds are not private activity bonds. See "TAX MATTERS" for a discussion of the
opinion of Bond Counsel, including a description of alternative minimum tax consequences for corporations.
USE OF BOND PROCEEDS ... The Bonds will be used to provide a portion of the costs to develop a Convention Center Complex
Project (the "Project ") in Round Rock, Texas. Additionally, a portion of Bond proceeds will be used to (i) fund one -half of the
required reserve amount for the reserve fund, (0) fund approximately 14 months capitalized interest and (iii) pay certain costs
related to the issuance of the Bonds, all as more fully described herein. See "CONVENTION CENTER COMPLEX
PROJECT."
PAYMENT RECORD ... The City has never issued debt payable from the Pledged Revenues. The City has never defaulted on
any bonded indebtedness.
RATING ... The City has not applied for a rating on the Bonds, nor is it expected that an investment grade rating would have
been received had an application been made.
BONDHOLDER RISK ... The Bonds are subject to special risk factors described herein. Bond purchasers are encouraged to read
the entire Preliminary Limited Offering Memorandum prior to making an investment decision particularly the section entitled
"Bondholder Risks ".
BOOK ENTRY - ONLY SYSTEM ... The definitive Bonds will be initially registered and delivered only t6o Cede & Co., the
nominee of DTC pursuant to the Book -Entry-Only System described herein. Beneficial ownership of the Bonds may be
acquired in denominations of 100,000 or integral multiples of $5,000 in excess of $100,000 within a maturity thereof. No
physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the
Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the
participating members of DTC the subsequent payment to the beneficial owners of the Bonds (see "BOND INFORMATION —
Book-Entry-Only System ").
7
PRELIMINARY LIMITED OFFERING MEMORANDUM
Relating to
58,650,000*
CITY OF ROUND ROCK, TEXAS
HOTEL OCCUPANCY TAX REVENUE BONDS, SERIES 1999
(Convention Center Complex Project)
*Preliminary, subject to change.
INTRODUCTION
This Preliminary Limited Offering Memorandum, which includes the cover page and the Appendices hereto, provides certain
information regarding the issuance by the City of Round Rock, Texas (the "City") of its bonds, styled "City of Round Rock,
Texas Hotel Occupancy Tax Revenue Bonds, Series 1999 (Convention Center Complex Project) (the "Bonds "). Capitalized
terms used in this Preliminary Limited Offering Memorandum have the same meanings assigned to such terms in the Ordinance
and the Indenture authorizing the Project, except as otherwise indicated herein. See APPENDIX D — "Excerpts of Certain
Provisions of the Ordinance" and APPENDIX E — "Excerpts of Certain Provisions of the Indenture."
The City is a political subdivision of the State of Texas and a municipal corporation organized and existing under the laws of the
State of Texas, including the City's Home Rule Charter. The Bonds are issued pursuant to the general laws of the State of
Texas, particularly Chapter 351, Texas Tax Code, as amended, Article 1269 - 4.1, Vemon'ss Annotated Texas Civil Statutes, as
amended and pursuant to the Ordinance, to be approved by the Round Rock City Council (the "City Council ") on March 11,
1999.
There follows in this Preliminary Limited Offering Memorandum descriptions of the Plan of Financing, the Bonds, the
Convention Center Complex Project (the " Project "), the Ordinance, the Indenture, the Lease Agreement and certain information
about the City and the Pledged Revenues. All descriptions of documents contained herein are only summaries and are qualified
in their entirety by reference to each such document. Copies of such documents may be obtained by written request and payment
of reasonable costs of copying from the City's Financial Advisors, First Southwest Company, Dallas, Texas.
PLAN OF FINANCING
PURPOSE ... The Bonds will be used to provide a portion of the cost to develop a Convention Center Complex Project (the
"Project ") in Round Rock, Texas. Additionally, a portion of Bond proceeds will be used to (i) fund one -half of the required
reserve amount for the reserve fund, (ii) fund approximately 14 months capitalized interest and (iii) pay certain costs related to
the issuance of the Bonds. See "CONVENTION CENTER COMPLEX PROJECT."
(THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
8
SOURCE AND APPLICATION OF FUNDS ... The proceeds from the sale of the Bonds together with certain contributed funds, are
currently anticipated to be applied as follows:
Sources:
Principal Amount of the Bonds
Accrued Interest
Contribution
Total Sources of Funds
Uses:
Deposit to City Project Fund
Deposit to Debt Service Fund (Accrued interest
and 14 months capitalized interest)
Deposit to Reserve Fund
Underwriter Discount
Original Issue Discount
Costs of Issuance
Total Uses of Funds
BOND INFORMATION
9
$
(1) Ryan Sanders Ryan Sports, Inc. the operator of the Convention Center Complex has agreed to deposit with the Trustee,
concurrently with the delivery of the Bonds, at least $7,400,000 toward the cost of the Project.
(2) Represents Bond proceeds remaining after deposits to Debt Service Fund, and Reserve Fund and payment of costs of
issuance.
(3) Represents one -half of Required Reserve Amount. The remainder will be accumulated over a 60 month period from
available Pledged Revenues.
GENERAL ... The Bonds will be dated March 15, 1999 and will be issued in Authorized Denominations. The Bonds will
mature on the dates and in the principal amounts shown on the inside cover page hereto. Interest on the Bonds will accrue from
March 15, 1999 and is payable on December land June 1, commencing December 1, 1999, until maturity or earlier redemption.
The definitive Bonds will be issued only in fully registered form and will be initially registered and delivered to Cede & Co., the
nominee of The Depository Trust Company ( "DTC ") pursuant to the Book - Entry-Only System described herein. No physical
delivery of the Bonds will be made to the owners thereof. Principal of, premium, if any, and insurance on the Bonds will be
payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts paid to the participating
members of DTC for subsequent payment to the beneficial owners of the Bonds. See "Book- Entry-Only System" herein.
Certain provisions of the Ordinance and Indenture governing the issuance of the Bonds and the security for the Bonds are
included in this offering memorandum as APPENDIX D and APPENDIX E.
AUTHORITY FOR ISSUANCE .. .The Bonds are being issued pursuant to the general laws of the State, including particularly,
Chapter 351 of the Texas Tax Code, as amended, Article 1269 — 4.1, Vemon's Annotated Texas Civil Statutes and the
Ordinance approved by the City Council authorizing the Bonds.
Additionally, pursuant to Article 7, Section 7.01(a) of the City's Home Rule Charter, qualified Voters of the City have the
power of initiative to propose certain ordinances to the City Council and, if the City Council does not adopt an ordinance so
proposed, then to adapt or reject same at an election.
The City Council received two initiative ordinances in connections with the Project. The first proposed ordinance was
received from five qualified voters on June 29, 1998 and required that "[t]he City of Round Rock shall not expend any
hotel/motel, property, or any other form of tax money, any form of bond money, or any other city funds for any professional
sports facility, whether attached or unattached to a civic /convention center, without specific voter approval." The City
Council adopted this proposed ordinance on , 1998.
On August 4, 1998, the City Council received another proposed ordinance entitled "An Ordinance Approving the
Expenditure of Hotel Occupancy Tax for a Multi Purpose Facility/Baseball Stadium" from 35 qualified voters (the "Second
Initiative Ordinance "). On August 27, 1998, the City Council called for an election to be held within the City on November
3, 1998 regarding the adoption or rejection of the Second Initiative Ordinance. The Second Initiative Ordinance was
approved by 72% voting in favor of such ordinance. The Second Initiative Ordinance specifically authorized the use of the
hotel occupancy tax and the issuance of bonds or other obligations for the Project, however, unless approved by the voters,
the City Council is prohibited from using City ad valorem taxes or sales taxes for the financing or refinancing of the Project.
SECURITY FOR BONDS ... The Bonds, together with any Additional Parity Obligations, constitute special obligations of the
City and are payable solely from and equally and ratably secured by a first lien on and pledge of the Pledged Revenues. The
Bonds are additionally secured by the Pledged Funds. The Ordinance defines Pledged Revenues as (1) the Hotel Occupancy
Tax, (2) amounts and investments on deposit in the Debt Service Fund and the Reserve Fund, plus (3) any additional revenues,
income, receipts or other resources, including, without limitation, any grants, donations or income received or to be received
from the United States Government, or any other public or private source, whether pursuant to an agreement or otherwise, which
hereafter are pledged by the City to the payment of the Parity Obligations. The Pledged Funds for the Bonds, as defined in the
Ordinance, includes the Reserve Fund, the City Project Fund, the Capital Repair Fund and the Capital Improvement Fund.
Concurrently with delivery of the Bonds, approximately one -half of the Required Reserve Amount (Average Annual Debt
Service Requirements of the Bonds) will be deposited to the Reserve Fund from Bond proceeds. The remaining Required
Reserve Amount will be accumulated over a 60 month period beginning August 15, 2000. Additionally, approximately 14
months of capitalized interest is being funded from the proceeds of the Bonds and as a result, the City is not required to deposit
Pledged Revenues with the Trustee until August 15, 2000.
The Bonds are not a charge upon any other income or revenues of the City and will never constitute a legal or equitable pledge,
charge, lien, mortgage, or encumbrance upon any property of the City or the Convention Center Complex, except the Pledged
Revenues and Pledged Funds. See APPENDLX D — "Excerpts of Certain Provisions of the Ordinance" and APPENDIX E
"Excerpts of Certain Provisions of the Indenture"
ADDITIONAL PARITY OBLIGATIONS ... The City may issue Additional Parity Obligations payable from the Pledged Revenues
and, together with all Outstanding Parity Obligations, equally and ratably secured by a parity first lien on and pledge of the
Pledged Revenues, subject, however, to complying with certain conditions in the Ordinance including the requirement that the
City obtain from a Certified Public Accountant a certificate to the effect the Pledged Revenues for the last complete Fiscal Year,
or for any twelve consecutive calendar month period ending not more than 90 days prior to the passage of the ordinance
authorizing the issuance of such Additional Parity Obligations were at least 1.25 times the Average Annual Requirements
(computed on a Fiscal Year basis) including Amortization Installments, of the Obligations and the Additional Parity Obligations
to be Outstanding after issuance of the then proposed Additional Parity Obligations and 1.00 times the average annual debt
service requirement (computed in the same manner as the Parity Obligations) of the Subordinate Lien Obligations to be
outstanding after the issuance of the then proposed Additional Parity Obligations. In making such certification, the accountant
may take into account a rate increase that became effective at least 60 days prior to the last day of the period for which Pledged
Revenues are determined and give effect to such rate increase as if it had been effective for the entire period covered by the
certification.
See APPENDIX D — "Excerpts of Certain Provisions of the Ordinance" and APPENDIX E — "Excerpts of Certain Provisions of
the Indenture" for further inforrnation regarding the Bonds and any Additional Parity Obligations including the Flow of Funds,
Uses of the Pledged Funds, and Events of Default and Remedies.
DEFEASANCE ... The Ordinance provides that any Bond will deemed paid and shall no longer be considered to be outstanding
within the meaning of the Ordinance when payment of principal of and interest on such Bond to its stated maturity has been
made or provided for. Payment may be provided for by deposit of any combination of (1) money in an amount sufficient to
make such payment and (2) Government Obligations which mature as to principal and interest in such amount and at such time
to ensure payment. Any such deposit must be certified by an independent public accountant to be of such maturities and interest
payment dates and bear such interest as will, without reinvestment, be sufficient to make the payment to be provided for on the
Bonds. The Indenture also can be discharged to the extent all Parity Obligations are paid or provision provided is made for
payment as authorized pursuant to the Ordinance and any Supplemental Ordinance.
AMENDMENTS ... The City may amend the Ordinance in the manner described in Section 28 of the Ordinance and amend the
Indenture in the manner described in Section 9.01 of the Indenture excerpts from which are set forth in APPENDIX D and
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APPENDIX E, respectively, attached hereto.
ADDITIONAL COVENANTS ... In the Ordinance, the City has additionally covenanted that it will (1) maintain insurance
(including a program of self - insurance) on the Convention Center Complex of a kind in an amount which usually would be
carried by municipal corporations operating like properties, but with respect to public liability and property damage
insurance considering any governmental immunities to which the City may be entitled, (2) keep accurate records and
accounts and employ an independent certified public accountant to audit the Pledged Revenue at the close of each fiscal year,
such audit to be in accordance with applicable law, rules and regulations, and open to inspection in the office of the City
during normal office hours, (3) not additionally encumber the Pledged Revenues in any manner, except as permitted in the
Ordinance, (4) not sell, convey, mortgage, encumber, lease or in any manner transfer title to, or otherwise dispose of the
Convention Center Complex, or any significant part thereof, except as permitted in the Ordinance and the Lease Agreement,
(5) comply with all of the terms and conditions of any and all franchises, permits and authorizations applicable to or
necessary will respect to the Convention Center Complex which have been obtained from any governmental agency and keep
all of such in full force and effect, and (6) not level or repeal the Hotel Occupancy Tax and diligently pursue the collection of
any unpaid Hotel Occupancy Tax (see APPENDIX C — "Projection of Hotel Tax Revenue to the City of Round Rock, Texas
(The Report) ".
RECORD DATE ... The record date ( "Record Date ") for the interest payable on the Bonds on any interest payment date means
the close of business on the 15' day of the preceding month. In the event the City fails to pay interest on a scheduled payment
date on the Bonds and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date ") will
be established by the Trustee/Paying Agent/Registrar, if and when funds for the payment of such interest have been received
from the City. Notice of the Special Record Date and of the scheduled payment date of the interest due and payable (which shall
be 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. If the date for the payment of the principal of or interest on the Bonds is not a Business Day for such payment shall
be the next succeeding Business Day.
REDEMPTION OF BONDS:
Optional Redemption. The City reserves the right, at its option, to redeem Bonds having stated maturities on and after December
1, 2010, in whole or any part thereof in principal amounts of Authorized Denominations, on December 1, 2009, or any date
thereafter, at the par value thereof, plus accrued interest to the date fixed for redemption.
If less than all of the Bonds are to be redeemed the City reserves the right to determine the maturity or maturities and the
amounts thereof to be redeemed, and if Tess than all of a maturity is to be redeemed, the Trustee/Paying Agent/Registrar shall
determine by lot the Bonds, or portions thereof, within such maturity to be redeemed.
Mandatory Redemption. The Bonds maturing December 1, in the years 2006, 2015, 2020 and 2024 (the "Term Bonds ") are also
subject to scheduled mandatory redemption prior to scheduled maturities, and will be redeemed by the City, in part at redemption
prices equal to the principal amounts thereof plus accrued interest to the dates of redemption, on the dates and in principal
amounts, respectively, as shown in the following schedules:
TERM BONDS MATURING DECEMBER 1, 2006
Date Amount
December 1, 2002 5 25,000
December 1, 2003 35,000
December 1, 2004 45,000
December 1, 2005 50,000
December 1, 2006 (Maturity) 55,000
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TERM BONDS MATURING DECEMBER 1, 2015
Date Amount
December 1,2012 $ 375,000
December 1,2013 395,000
December 1, 2014 415,000
December 1, 2015 (Maturity) 440,000
TERM BONDS MATURING DECEMBER I, 2020
Date Amount
December 1, 2016 $ 460,000
December 1, 2017 485,000
December 1, 2018 515,000
December 1, 2019 545,000
December 1, 2020 (Maturity) 570,000
TERM BONDS MATURING DECEMBER 1, 2024
Date Amount
December 1, 2021 $ 605,000
December 1, 2022 635,000
December 1, 2023 670,000
December 1, 2024 (Maturity) 710,000
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 City, by the principal amount of any Term Bonds of the stated
maturity which, at least 50 days prior to a mandatory redemption date, (1) shall have been acquired by the City, at a price not
exceeding the principal amount of such Tenn Bonds plus accrued interest to the date of purchase thereof, and delivered to the
Paying Agent/Registrar for cancellation, (2) shall have been purchased and cancelled by the Paying Agent/Registrar at the
request of the City, with monies in the Debt Service Fund at a price not exceeding the principal amount of the Tenn 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.
BOOK-ENTRY-ONLY SYSTEM ... The Depository Trust Company ( "DTC "), New York, New York, will act as securities
depository for the Bonds. The Bonds will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully - registered certificate will be issued for each maturity of the Bonds in the aggregate principal
amount of each such maturity and will be deposited with DTC.
DTC is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning
of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 1 7A of
the Securities Exchange Act of 1934. DTC holds securities that its participants ( "Direct Participants ") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book -entry changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. 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.
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Purchases of Bonds under the DTC system must be made by or through DTC Participants, which will receive a credit for such
purchases on DTC's records. The ownership interest of each actual purchaser of each Bond ( "Beneficial Owner") is in turn to be
recorded on the Direct or Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of
their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of
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 described herein 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 an issue are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Direct Participant in such issue 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 City 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
each payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it
will not receive payment on such payable date. Payments by Participants to Beneficial Owners will be govemed 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 Trustee/Paying Agent/Registrar or the
City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest
to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC,
and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable
notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are
required to be printed and delivered.
The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository).
In that event, Bonds will be printed and delivered.
DTC management is aware that some computer applications, systems and the like for processing data ( "Systems ") that are
dependent on calendar dates, including dates before, on, and after January 1, 2000, may encounter "Year 2000 problems." DTC
has informed its Participants and other members of the financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the timely payment of distributions (including principal and
income payments) to securityholders, book -entry deliveries, and settlement of trades within DTC ( "DTC Services "), continue to
function appropriately. This program includes a technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent upon other parties, including but not limited to issuers
and their agents, as well as third party vendors from whom DTC licenses software and hardware, and third party vendors on
whom DTC relies for information or the provisions of services, including telecommunications and electrical utility service
providers among others. DTC has informed the Industry that it is contacting (and will continue to contact) third party vendors
from whom DTC acquires services to: (I) impress upon them the importance of such services being Year 2000 compliant; and
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(2) determine the extent of their efforts for Year 2000 remediation (and, as appropriate, testing) of their services. In addition,
DTC is in the process of developing such contingency plans as it deems appropriate.
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.
Use of Certain Terms in Other Sections of this Preliminary Limited Offering Memorandum. In reading this Preliminary Limited
Offering Memorandum it should be understood that while the Bonds are in the Book - Entry-Only System, references in other
sections of this Preliminary Limited Offering Memorandum 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
Ordinance will be given only to DTC.
Information concerning DTC and the Book - Entry-Only System has been obtained from DTC and is not guaranteed as to
accuracy or completeness by, and is not to be construed as a representation by, the City or the Underwriter.
DTC REDEMPTION PROVISIONS ... The Paying Agent/Registrar and the City, so long as a Book - Entry-Only System is used
for the Bonds, will send any notice of redemption, notice of proposed amendment to the Ordinance or other notices with respect
to the Bonds only to DTC. Any failure by DTC to advise any DTC Participant, or of any Direct Participant or Indirect
Participant to notify the beneficial owner, shall not affect the validity of the redemption of the Bonds called for redemption or
any other action premised on any such notice. Redemption of portions of the Bonds by the City will reduce the outstanding
principal amount of such Bonds held by DTC. In such event, DTC may implement, through its Book - Entry-Only System, a
redemption of such Bonds held for the account of DTC Participants in accordance with its rules or other agreements with DTC
Participants and then Direct Participants and Indirect Participants may implement a redemption of such Bonds and such
redemption will not be conducted by the City or the Paying Agent/Registrar. Neither the City nor the Paying Agent/Registrar
will have any responsibility to DTC Participants, Indirect Participants or the persons for whom DTC Participants act as nominees
with respect to the payments on the Bonds or the providing of notice to Direct Participants, Indirect Participants, or beneficial
owners of the selection of portions of the Bonds for redemption (see "BOND INFORMATION — Book - Entry -Only System"
herein.)
TRUSTEE/PAYING AGENT/REGISTRAR . .. The initial Trustee/Paying Agent/Registrar is Chase Bank of Texas, National
Association, Dallas, Texas. In the Ordinance the City retains the right to replace the Trustee/Paying Agent/Registrar.
Additionally the Trustee and Paying Agent/Registrar may be separate entities; however, the Paying Agent/Registrar will be on
entity. The City covenants to maintain and provide a Trustee/Paying Agent/Registrar at all times while the Bonds are
outstanding, and any successor Trustee/Paying Agent/Registrar shall be a commercial bank or trust company organized under
applicable law or other entity duly qualified and legally authorized to serve as and perform the duties and services of
Trustee/Paying Agent/Registrar for the Bonds. Upon any change in the Trustee/Paying Agent/Registrar for the Bonds, the City
agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first
class, postage prepaid, which notice shall also give the address of the new Trustee/Paying Agent/Registrar.
The Trustee/Paying Agent/Registrar has developed and is implementing a program to prepare its systems and applications for the
Year 2000, including those used to render Trustee/Paying Agent/Registrar Services. in that connection, the Trustee/Paying
Agent/Registrar intends to have such systems and applications capable of processing, on and after January 1, 2000, date, and
date - related data consistent with the functionality of such systems and applications, without a material adverse effect upon
performance of Trustee/Paying Agent/Registrar Services.
TRANSFER, EXCHANGE AND REGISTRATION ... In the event the Book - Entry-Only System should be discontinued, the Bonds
may be transferred and exchanged on the registration books of the Trustee/Paying Agent/Registrar only upon presentation and
surrender thereof to the Trustee/Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge
to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration,
exchange and transfer. A Bond may be assigned by the execution of an assignment form on the Bond or by other instrument of
transfer and assignment acceptable to the Trustee/Paying Agent/Registrar. A new Bond or Bonds will be delivered by the
Trustee/Paying Agent/Registrar, in lieu of the Bond being transferred or exchanged, at the principal corporate office of the
Trustee/Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his
14
designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner
or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the
written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in
form satisfactory to the Trustee/Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be
in Authorized Denominations and for a like aggregate principal amount (or Maturity Amount, as applicable) as the Bond or
Bonds surrendered for exchange or transfer. See "Book-Entry-Only System" herein for a description of the system to be utilized
initially in regard to ownership and transferability of the Bonds.
LIMITATION ON TRANSFER OF BONDS CALLED FOR REDEMPTION . . . Neither the City nor the Trustee/Paying
Agent/Registrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, where such
redemption is scheduled to occur within 45 calendar days of the transfer or exchange date, provided, however, such limitation
shall not be applicable to an exchange by the Holder of the uncalled principal balance of a Bond.
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CONVENTION CENTER COMPLEX PROJECT
The Project consists of the acquisition of sites for and the construction, improvement, enlarging, equipping, repairing, operation
and maintenance of a Convention Center Complex. The Convention Center Complex includes an indoor /outdoor facility
together with related facilities and infrastructure, including surface parking and necessary street, sewer and utility improvements.
Outdoor seating for 7,500 persons and indoor convention/meeting space of approximately 10,000 square feet will be constructed
initially. The Convention Center Complex including parking facilities and related improvements is located within the corporate
limits of the City.
The Convention Center Complex will be used for professional and amateur sports events including professional baseball games
of the Round Rock Express Double A Texas league baseball team, a member franchise of the National Baseball Association.
The Convention Center Complex will also be used for other sporting events such as baseball tournaments and for exhibitions,
trade shows, conventions, entertainment events such as music concerts and theatrical performances.
The City currently estimates that the cost of the Project will be approximately $14.6 million. Construction of the Project is
expected to commence in April 1999 and to be completed in April of 2000. Pursuant to a Master Agreement between the City
and Ryan Sanders Ryan Sports, Inc., approximately $7.350 million of eligible Project costs will be borne by the City and
approximately $7.40 million of eligible Project costs plus any cost overruns will be borne by Ryan Sanders Ryan Sports, Inc.
Ryan Sanders Ryan Sports, Inc. will be responsible for the planning, design, and engineering of the Project. The City will be
responsible for the construction of the Project.
The approximate 40 -acre site of the Convention Center Complex and related public improvements will be owned by the City;
however, the City has executed a 25 year lease with Ryan Sanders Ryan Sports, Inc. to operate and maintain the Convention
Center Complex. See "Lease Agreement." Project revenues are not pledged to the payment of the Bonds (see
"BONDHOLDER RISKS and "Lease Agreement ").
HOTEL TAX ... The City collects the Hotel Tax pursuant to the provision of Chapter 351 of the Texas Tax Code. The current
provisions of Chapter 351 authorizes the City to levy and collect a tax at any rate not to exceed 7% of the price paid for hotel
rooms located within the corporate limits of the City. The City currently levies the maximum rate of 7 %. Additionally, the State
also levies and collects a hotel occupancy tax currently at the rate of 6 %. Which is remitted by the hotel owners directly to the
State and is not available to pay debt service on the Bonds. The last day of each January, April, July and October, the hotel
owners remit the City Hotel Tax directly to the City.
Pursuant to Section 351.103 of the Tax Code and the Ordinance, the greater of (i) one percent of the cost of the room or (ii)
$260,000 (adjusted upward each year commencing March 23, 2000, by 3% on a compounded basis) must be used by the City for
advertising and promoting progress to attract tourist and convention delegates and does not constitute part of the Pledged
Revenues.
Section 351.006 of the Tax Code exempts or provides a refund from the Hotel Occupancy Tax for certain federal and state
officials when traveling on or otherwise engaged in the course of official duties.
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TABLE 1 - HISTORICAL HOTEL TAX COLLECTIONS
TABLE 2 - HOTEL TAXPAYERS
HOTEL TAX
Fiscal
Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Ended (October/ (January/ (April/ (July/
9 -30 December) March) June) September) Total
1994 $ 42,025 $ 39,596 $ 40,531 $ 48,247 $170,399
1995 50,325 45,553 51,511 57,165 204,554
1996 58,008 59,915 45,806 71,836 235,565
1997 60,820 76,515 89,230 113,026 339,591
1998 102,162 99,392 101,966 130,835 434,355
1999 121,857 N/A N/A N/A N/A
Total Number % of
1998 of Total
Taxpayer Collections Rooms Collections
La Quinta 5179,601.13 116 41.35%
Choice /Sleep Inn 92,503.25 107 21.30%
Best Western 80,837.34 67 18.61%
Rodeway Inn 39,259.08 49 9.04%
R.R. Hotel LTD/Ramada 39,264.18 62 9.04%
Pinnacle Suites 2,075.31 N/A 0.48%
St. Charles 815.20 3 0.18%
Total $434,355.49 404 100.00%
FINANCIAL INFORMATION
TABLE 3 - CONDENSED STATEMENT OF OPERATIONS OF HOTEL OCCUPANCY TAX FUND
Fiscal Year Ended September 30,
Revenues 1998 1997 1996 1995 1994
Hotel Taxes $ 434,355 $ 339,592 $ 235,565 . $ 204,555 $ 170,400
Interest Income and Other 38,089 33,417 25,767 23,067 15,146
Total Revenue $ 472,444 $ 373,009 $ 261,332 $ 227,622 $ 185,546
Expenditures
Advertising and Special Events 5 606,130 W $ 218,589 $ 170,856 $ 191,512 $ 195,908
Net Income /(Loss) -$ 133,686 " $ 154,420 $ 90,476 $ 36,110 -$ 10,362
Number of Rooms 404 404 182 182 178
(1) Expenditures for the period ended September 30, 1998 include a 5261,000 land site purchase. The purchase was a one -time
expenditure from accumulated cash.
17
Table 4 - Debt Information
Fiscal
Year LESS: Total
Ending Capitalized Debt Service
9/30 Principal Interest (1) Total Interest Requirements
1999 $ - $ - $ - $ - $ -
2000 - 546,193 546,193 546,193 (0)
2001 450,985 450,985 - 450,985
2002 - 450,985 450,985 450,985
2003 25,000 450,416 475,416 475,416
2004 35,000 449,051 484,051 484,051
2005 45,000 447,231 492,231 492,231
2006 50,000 445,070 495,070 495,070
2007 55,000 442,681 497,681 497,681
2008 295,000 434,571 729,571 729,571
2009 310,000 420,428 730,428 730,428
2010 320,000 405,543 725,543 725,543
2011 340,000 389,698 729,698 729,698
2012 355,000 372,755 727,755 727,755
2013 375,000 354,120 729,120 729,120
2014 395,000 333,715 728,715 728,715
2015 415,000 312,250 727,250 727,250
2016 440,000 289,593 729,593 729,593
2017 460,000 265,628 725,628 725,628
2018 485,000 240,349 725,349 725,349
2019 515,000 213,599 728,599 728,599
2020 545,000 185,244 730,244 - 730,244
2021 570,000 155,418 725,418 725,418
2022 605,000 123,986 728,986 728,986
2023 635,000 90,816 725,816 725,816
2024 670,000 55,908 725,908 725,908
2025 710,000 18,993 728,993 728,993
$ 8,650,000 $ 8,345,223 $ 16,995,223 $ 546,193 $ 16,449,030
(1) Interest on the Bonds calculated at 5.52% for purposes of illustration. Preliminary, subject to change.
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INDEPENDENT CONSULTANT'S REPORT
On April 8, 1998, the City retained Economics Research Associates, Inc. ( "ERA ") to research and analyze the hotel market in
and around the City and to deliver a report thereon. References made herein to the Report are made to the entire "Projection of
Hotel Tax Revenue to the City of Round Rock, Texas" prepared by Economics Research Associates, Inc. ( "ERA ") dated as of
February 2, 1999, which contains material concerning the hotel tax. ERA is a national independent economic consulting firm
specializing in commercial recreational analysis, including all aspects of the travel and lodging industry. A copy of the Report is
attached hereto as APPENDIX C.
Potential purchasers of the Bonds should read the Report in its entirety, including the assumptions and General Limiting
Conditions contained therein.
THE ESTIMATES, OPINIONS, PROJECTIONS AND CONCLUSIONS EXPRESSED IN THE REPORT ARE BASED
UPON CERTAIN ASSUMPTIONS, DATA, CALCULATIONS, QUALIFICATIONS AND CONDITIONS, AND THE
REPORT SHOULD BE READ IN ITS ENTIRETY IN ORDER TO EVALUATE AND UNDERSTAND BETTER SUCH
ESTIMATES, OPINIONS, PROJECTIONS AND CONCLUSIONS. THERE WILL USUALLY BE DIFFERENCES
BETWEEN PROJECTED AND ACTUAL RESULTS BECAUSE EVENTS AND CIRCUMSTANCES USUALLY DO NOT
INCUR AS EXPECTED AND OTHER FACTORS NOT CONSIDERED IN THE REPORT MAY ALSO INFLUENCE
ACTUAL RESULTS. SUCH DIFFERENCES MAY BE MATERIAL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT ACTUAL RESULTS WILL APPROXIMATE PROJECTED RESULTS. NO WARRANTY OR
REPRESENTATION IS MADE BY ERA THAT ANY OF THE PROJECTED VALUES OR RESULTS CONTAINED IN
THE REPORT WILL ACTUALLY BE ACHIEVED.
LEASE AGREEMENT ... The City, as the lessor, and Ryan Sanders Ryan Sports, Inc., as the lessee, are parties to the Lease
Agreement whereby the City has agreed to lease the Leased Premises (as defined therein, but consisting principally of the
Project) to Ryan Sanders Ryan Sports, Inc. Subject to the specific terms of the Lease Agreement, the initial term of the Lease
Agreement is 25 years and Ryan Sanders Ryan Sports, Inc. has agreed to pay to the City base rentals for the use and occupancy
of the Project in the amount of 81.00 per year At the expiration of the Lease Agreement and upon the receipt of a favorable
opinion of bond counsel, Ryan Sanders Ryan Sports, Inc. may extend the lease for up to 10 years at then market lease rates.
Under the Lease Agreement, Ryan Sanders Ryan Sports, Inc. is required to maintain, operate and upkeep the Project at their sole
expense. Additionally, Ryan Sanders Ryan Sports, Inc. has agreed to ensure that a professional baseball team will use the leased
premises for all of its home games during the term of the Lease
Ryan Sanders Ryan Sports, Inc. ( "RSR ") is a Sub Chapter S Corporation incorporated to own and operate a minor league
baseball team in Central Texas. RSR's owners include Hall of Fame Pitcher and bank owner Nolan Ryan, former Houston
Astros owner and Investment Banker Don Sanders, and Reid Ryan, Host of the television show Fishing and Hunting Texas.
RSR owners currently own and operate the Jackson Generals, a Double A baseball team, and plan to relocate that team to Round
Rock for the 2000 baseball season. The Generals, a Houston Astros affiliate, play in the Texas League. The eight team Texas
League is comprised of teams from: Arkansas, Mississippi, Louisiana, Oklahoma and Texas. RSR currently have a lease with
the City of Round Rock to provide a baseball team for the next 25 years to be housed in the City's new Convention Center
Complex.
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TABLE 5 - ESTIMATED DEBT SERVICE COVERAGE (000'S) ... The forecasted taxes presented below for the years 1999 through 2005 are taken from the Report contained in
APPENDIX C of this Preliminary Limited Offering Memorandum, should be read in conjunction with the entire Report, and are subject to the underlying assumptions and
general limiting conditions contained therein. Hotel Tax Revenues for the years 2006 through 2008 are assumed by the City of Round Rock to remain constant. The Annual
Debt Service Requirements, Estimated Debt Service Coverage Ratio and all other line items presented below are based on an estimated pricing of the Bonds at a total interest
cost of 5.52% (see "Table 4 - Debt Information "). The Annual Debt Service Requirements is preliminary and subject to change.
•
(I)
(2)
Forecasted Taxes'
Hotel Tax Receipts
LESS: 14.28% Local Tourism "'
Total Taxes Available for Debt Service
Annual Debt Service Requirements
Estimated Debt Service Coverage Ratio
1999 2000 2001
$ 616,261 $ 915,710 $ 1,039,635
260,000 260,000 267,800
$ 356,261 5 655,710 $ 771,835
$ 0 $ 0 $ 450,985 $ 450,985 $ 475,416 $ 484,051 $ 492,231 $ 495,070 $ 497,681 $ 729,571
N/A N/A 1.71
Surplus Tax Revenue After Debt Service"' $ 356,261 $ 655,710 $ 320,850 $
Fiscal Year Ended September 30,
2002 2003 2004 2005 2006 2007 2008
$ 1,1 17,362 $1,173,900 $ 1,233,300 $1,295,705 $ 1,295,705 $1,295,705 $ 1,295,705
275,834 284,109 292,632 301,411 310,454 319,767 329,360
$ 841,528 $ 889,791 $ 940,668 $ 994,294 $ 985,251 $ 975,938 $ 966,345
1.87 1.87 1.94 2.02 1.99 1.96 1.32
390,543 $ 414,375 $ 456,617 $ 502,063 $ 490,181 $ 478,257 $ 236,774
Source: Projection of Hotel Tax Revenue to the City of Round Rock, Texas prepared by Economics Research Associates, Inc. (see APPENDIX C).
Pursuant to Chapter 351 of the Tax Code and the Ordinance the greater of (a) one percent of the cost of the room or (b) $260,000 (adjusted upward each year
commencing March 23,2000, by 3% on a compared basis) must be used by the City for advertising and promoting programs to attract tourist and convention delegates
and does not constitute part of the Pledged Revenues.
Projections provided by the City for purposes of illustration only. After making the required deposits as provided in the Indenture any surplus revenues may be used by
the City for any lawful purpose prescribed by Chapter 351 of the Texas Tax Code.
BONDHOLDER RISKS
The timely payment of principal of and interest on the Bonds will be solely dependent upon the tax receipts generated by the
Hotel Occupancy Tax upon persons renting hotel accommodations in the City. For further discussion of the risk factors
affecting the City's hotel market, see the discussion below under "Disruptions in Hotel Market" and APPENDIX C — "Projection
of Hotel Tax Revenue to the City of Round Rock, Texas (The Report)." The collection by the City of Hotel Taxes and debt
service payments to Bondholders will also be subject to the following risk factors affecting hotels and real estate investments
generally:
NON - RECOURSE OBLIGATION ... THE BONDHOLDERS WILL HAVE NO RECOURSE AGAINST THE PHYSICAL
FACILITIES OF THE PROJECT OR ANY OTHER ASSETS OF THE CITY. NEITHER THE FULL FAITH AND
CREDIT NOR THE TAXING POWER OF THE STATE OF TEXAS, THE CITY OR ANY OTHER POLITICAL
SUBDIVISION THEREOF ARE AVILABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR
INTEREST ON THE BONDS.
The Bonds are special, limited obligations of the City payable solely from available Pledged Revenues and Pledged Funds.
The Legislature of the State of Texas may prospectively alter or amend the terms of the legislation authorizing the Hotel Tax,
which may adversely affect the ability of the City to collect Pledged Revenues in an amount sufficient to pay debt service on
the Bonds.
HOTEL MARKET RISK ... There is a lack of diversity of the assets and operations generating tax revenues available for
payment of debt service on the Bonds. Moreover, the City has no investment in the hotel market. The City has limited
ability to respond to changes in economic or other conditions with respect to the hotel market, thereby limiting its ability to
influence the generation of Hotel Tax for payment of debt service on the Bonds.
OPERATING RISKS ... The hotel market is subject to all operating risks common to the hotel and motel industry. These risks
include: changes in general economic conditions; the level of demand for rooms and related services; cyclical over - building
in the hotel industry; competition from other hotels, motels and recreational properties outside the City; the recurring need
for renovations and refurbishment; restrictive changes in zoning and similar land use laws and regulations or in health, safety
and environmental laws, rules and regulations; the inability to secure property and liability insurance to fully protect against
all losses or to obtain such insurance at reasonable rates; and changes in travel patterns.
COMPETITION ... The hotel market in the Austin area is highly competitive. The hotel market will compete with other
hotels in the broader market area. Some of the competitors may have substantially greater marketing and financial resources
than hotel operations found in the City. There is no assurance that additional hotel facilities outside the City will not be built.
REGULATION ... Under various federal, state and local environmental laws, ordinances and regulations, a current or
previous owner or operator areal property may become liable for the costs of removal or remediation of hazardous or toxic
substances on, under or in such property. Such laws often impose liability without regard to whether the owner or operator
knew of, or was responsible for, the presence of such hazardous or toxic substances. Other federal, state and local laws
exist, such as the Americans With Disabilities Act, which may require modification to buildings or restrict certain
renovations by requiring access to such buildings by disabled persons. The costs of compliance with such laws may be
substantial and may materially affect the hotel market.
BANKRUPTCY ... The obligations of the City, including its obligations to make debt service payments, and the rights of the
Bondholders, including remedies available to the Bondholders or to the Trustee acting on behalf of the Bondholders, are
subject to the effect of bankruptcy, insolvency, moratorium, reorganization and other laws affecting the enforcement of the
rights of creditors generally, as well as applicable equitable principles and judicial discretion.
Under Chapter 9 of the United States Bankruptcy Code (the "Bankruptcy Code "), which govems the bankruptcy proceedings
of public agencies such as the City, there are no involuntary proceedings in bankruptcy. If the City were to commence a
voluntary proceeding under Chapter 9, the City expects that all or some substantial portion of the Revenues would be treated
as "special revenues" within the meaning of the Bankruptcy Code, and thus the application of such Revenues to the payment
of the Bonds would not be stayed by the filing of a petition under Chapter 9. Nonetheless, any bankruptcy is a proceeding in
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equity which may involve the exercise of judicial discretion as to various matters (including, without limitation, the doctrine
of equitable subordination) which may affect the timing and priority of application of Pledged Revenues to the payment of
the Bonds. Such discretion could result in some delay pending a determination that all or some portion of the Pledged
Revenues constitute "special revenues" under the Bankruptcy Code. The extent of any delay would be influenced by many
factors, including the court calendar and the positions taken by interested parties and claimants.
The risk of a bankruptcy proceeding involving the City is not limited to events which may occur with respect to the Project,
inasmuch as the City owns other properties and conducts other activities as described herein under "THE CITY."
DISRUPTIONS IN HOTEL MARKET ... Changes in City economic conditions will directly affect demand for the hotel market
and thus the availability of Pledged Revenues to pay debt service on the Bonds. Such operations may be affected by casualty
losses at hotels in the City or trends in the hotel or tourism industries, which are further affected by political and economic
events beyond the control of the City, such as business conditions affecting the City's largest employers. For a more
complete description of the market conditions affecting the hotel market, see APPENDIX C — "Projection of Hotel Tax
Revenues to the City of Round Rock, Texas (The Report) ".
LIMITATIONS ON REMEDIES ... The occurrence of an Event of Default under the Indenture will generally not permit the
Trustee to accelerate the maturity of, or seek immediate payment for, the entire outstanding principal balance of the Bonds.
Due to the fact that payment of the Bonds is not secured by a mortgage lien or other security interests in the physical
facilities of the Project or any other assets of the City, the Trustee will be limited to seeking remedies against the Pledged
Revenues and Pledged Funds. (However, in the event of a default in payment of any installment of interest or principal due
on the Bonds and such default continues See "DEFAULT PROVISIONS AND REMEDIES — Remedies.")
INVESTMENT PRACTICES AND YEAR 2000 ISSUE
The Indenture authorizes the City of Round Rock invests its investible funds in Permitted Investments authorized by Texas law
in accordance with investment policies approved by the City Council of the City of Round Rock. Both State law and the City's
investment policies are subject to change.
Legal Investments ... Under State law, the City is authorized to invest in (1) obligations of the United States or its agencies and
instrumentalities, (2) direct obligations of the State or its agencies and instrumentalities, (3) collateralized mortgage obligations
directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an
agency or instrumentality of the United States, (4) other obligations, the principal of and interest on which are unconditionally
guaranteed or insured by, or backed by the full faith and credit of, the State or the United States or their respective agencies and
instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to
investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) certificates of deposit
issued by a state or national bank domiciled in Texas or a savings and loan association domiciled in Texas that are guaranteed or
insured by the Federal Deposit Insurance Corporation or are secured as to principal by obligations described in clauses (1)
through (5) or in any other manner and amount provided by law for City deposits, (7) certificates of deposit and share certificates
issued by a state or federal credit union domiciled in the State that are guaranteed or insured by the Federal Deposit Insurance
Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in the
clauses (1) through (5) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase
agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through
a primary government securities dealer or a financial institution doing business in the State, (9) bankers' acceptances with the
remaining term of 270 days or Tess, if the short-term obligations of the accepting bank or its parent are rated at least A -1 or P -1 or
the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper that is rated at least A -1 or P -1
or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating
agency if the paper is fully secured by an irrevocable letter of credit issued by a United States or state bank, (11) no -load money
market mutual funds regulated by the Securities and Exchange Commission that have a dollar weighted average portfolio
maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of 51 for each
share, and (12) no -load mutual funds registered with the Securities and Exchange Commission that have an average weighted
maturity of less than two years; invests exclusively in obligations described in the preceding clauses; and are continuously rated
as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent.
The City may invest in such obligations directly or through govemment investment pools that invest solely in such obligations
provided that the pools are rated no lower than AAA or AAA- or an equivalent by at least one nationally recognized rating
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service. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on
the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal; (2) obligations
whose payment represents the principal stream of cash flow from the underlying mortgage - backed security and bears no interest;
(3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage
obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.
Investment Policies ... Under State law, the City is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability
of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity
of any individual investment and the maximum average dollar- weighted maturity allowed for pooled fund groups. All City
funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds'
investment. Each Investment Strategy Statement must describe the investment objectives for the particular fund using the
following priorities: (1) suitability of investment type; (2) preservation and safety of principal; (3) liquidity; (4) marketability of
each investment; (5) diversification of the portfolio; and (6) yield.
Under State law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of
prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for
investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment
officers of the City shall submit an investment report detailing: (1) the investment position of the City; (2) that all investment
officers jointly prepared and signed the report; (3) the beginning market value, any additions and changes to market value and
the ending value of each pooled fund group; (4) the book value and market value of each separately listed asset at the beginning
and end of the reporting period; (5) the maturity date of each separately invested asset; (6) the account or fund or pooled fund
group for which each individual investment was acquired; and (7) the compliance of the investment portfolio as it relates to: (a)
adopted investment strategy statements and (b) State law. No person may invest City funds without express written authority
from the City Council.
Additional Provisions ... Under State law the City is additionally required to: (1) annually review its adopted policies and
strategies; (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities
to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require
the registered principal of firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b)
acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c)
deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments
and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer
and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse
repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict the investment in mutual
funds in the aggregate to no more than 80% of the City's monthly average fund balance, excluding bond proceeds and reserves
and other funds held for debt service and further restrict the investment in non -money market mutual funds of any portion of bond
proceeds, reserves and funds held for debt service and to no more than 15% of the entity's monthly average fund balance,
excluding bond proceeds and reserves and other funds held for debt service; and (8) require local government investment pools to
conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements.
Year 2000 Issue
Possible Impact of the Issue. The Year 2000 issue results from computer programs that do not differentiate between the Year
1900 and the Year 2000 because they were written using two digits rather than four to define the applicable year;
accordingly, computer systems and equipment with embedded computer hardware that have time - sensitive calculations or
functions may not properly recognize the Year 2000. As described below, while the City is taking steps to assess the full
scope of the Year 2000 issue on its operations, and it believes that it has identified the areas of its operations that it will need
to modify (to the extent that it has not already done so). The description herein of the Year 2000 issue and the City's efforts
to address the issue, is not intended to be a complete description of the issue or all aspects of the City's response to the issue.
The City's Year 2000 Efforts. The City has made an assessment of its computer system and, to the best of its knowledge, its
mechanical equipment that contain embedded computer processing chips, for purposes of addressing the Year 2000 issue.
The City's Year 2000 preparations include testing of its computer equipment and formulation of various contingency plans
for implementation in the event that the City is impacted by the Year 2000 issue. Initial steps in implementing the City's
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strategy have included working with its software manufacturer to upgrade its financial software. Such software pertains to
the City's accounts receivable records, its purchasing operations and other financial aspects of the City's operations. The
City has upgraded its accounting and billing software, which is Year 2000 compliant. In addition, a significant portion of the
City's computer equipment has been acquired within the last two years, and the City has received assurances from the
computer manufacturers that such equipment is also Year 2000 compliant. All systems have been checked by the City with
the exception of the water treatment supervisory control and data acquisition or "SCADA" System, autodialers and some
field sites, all of which have been checked as of December 31, 1998. The costs of the City's Year 2000 efforts have been
largely absorbed in normally budgeted hardware replacements and software upgrades. The City does not believe that the
cost of any further required replacements or upgrades related to the Year 2000 issue will have a material adverse impact on
the financial condition of the City. Should the City fail to identify and/or adequately address Year 2000 issues in its
computer systems and equipment, there could be material adverse effects on the operations and financial position of the City.
Interdependency with Other Entities. The City contracts with numerous third party vendors (the `vendors "), including Travis
and Williamson County Appraisal Districts for tax collection, and various public companies for electric and telephone
service. The City is seeking confirmation from its vendors that they are or will be Year 2000 compliant on a timely basis.
While the City has no expectation that utility service providers will experience service interruptions as a result of
malfunctions caused by the Year 2000 computer issue, the City's ability to deliver services to its residents could be adversely
impacted by any such service interruptions. In addition to utility service interdependency, the City, like other municipalities
and businesses, is interdependent with, among others, financial service sector entities, who collect tax payments and process
financial transactions for the City. While the City is implementing a Year 2000 strategy, it cannot control the operations of
such entities. Any particular manifestation of the Year 2000 issue by entities with whom the City does business or any
material and adverse manifestation of Year 2000 issues in the economy as a whole could materially and adversely affect the
ability of the City to deliver its governmental services and/or its financial condition.
TAX MATTERS
OPINION ... On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Austin, Texas, Bond Counsel,
will render their opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the
date thereof, (1) interest on the Bonds for federal income tax purposes will be excludable from the "gross income" of the
holders thereof and (2) the Bonds will not be treated as "private activity tax exempt bonds" the interest on which would be
included as an alternative minimum tax preference item under section 57(a)(5) of the Intemal Revenue Code of 1986 (the
"Code "). Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax
consequences of the purchase, ownership or disposition of the Bonds. See APPENDIX F - "Form of Bond Counsel's
Opinion ".
In rendering their opinion, Bond Counsel will rely upon (a) the City's federal tax certificate (b) covenants of the City with
respect to arbitrage, the application of the proceeds to be received from the issuance and sale of the Bonds and certain other
matters. Failure of the City to comply with these representations or covenants could cause the interest on the Bonds to
become includable in gross income retroactively to the date of issuance of the Bonds.
The law upon which Bond Counsel have based their opinion is subject to change by the Congress and to subsequent judicial
and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that such law
or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase,
ownership or disposition of the Bonds.
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT ... The initial public offering price to be
paid for one or more maturities of the Bonds (the "Original Issue Discount Bonds ") is less than the principal amount thereof or
one or more periods from the payment of interest on the Bonds may not be equal to the accrual period or be in excess of one
year. The difference between (i) "stated redemption price at maturity" of each Original Issue Discount Bond, and (ii) the initial
offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The "stated
redemption price at maturity" means the sum of all payments to be made on the Bonds less the amount of all periodic interest
payments. Periodic interest payments are payments which are made during equal accrual periods (or during any integral period
if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under existing law,
such initial owner is entitled to exclude from gross income (as defined in section 61 of the Code) 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 owner. For a discussion of certain collateral
federal tax consequences, see discussion set forth below.
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In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity,
however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such
owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue
Discount Bond was held by such initial owner) is includable in gross income.
Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity
thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual
anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an
initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by
such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is
equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield
to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Bond.
The federal income tax consequences of the purchase, 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 owners 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 purchase, ownership, redemption, sale or other disposition of such Original Issue Discount
Bonds.
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES ... The following discussion is a summary of certain collateral
federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is
based on existing statutes, regulation, published rulings and court decisions, all of which are subject to change or
modification, retroactively.
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, owners of an interest in FASIT, individuals allowed an earned income credit,
certain S corporations with Subchapter C earnings and profits and taxpayers who may be deemed to have incurred or
continued indebtedness to purchase obligations.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISION OF THE CODE, SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO
RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX EXEMPT BONDS BEFORE
DETERMINING WHETHER TO PURCHASE THE TAX EXEMPT BONDS.
Interest on the Bonds is includable in the "alternative minimum taxable income" of a corporation (other than a regulated
investment company or a real estate investment trust) for purposes of determining the environmental tax (if re- enacted)
imposed by section 59A of the Code. Section 59A of the Code imposes on a corporation an environmental tax, in addition to
any other income tax imposes by the Code, equal to 0.12 percent of the excess of the modified alternative minimum taxable
income of such corporation for the taxable year over $2,000,000.
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, holders of obligations, such as the Bonds, may be required to disclose interest received or
accrued during each taxable year on their returns of federal income taxation.
Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a 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 form the date of issue. Such treatment applies to "market discount tax exempt bonds" to the extent
such gain does not exceed the accrued market discount of such tax exempt 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 holder at a purchase price
which is Tess than the state redemption price at maturity or, in the case of an obligation issued at an original issue discount,
25
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 of
the purchase, 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.
ELIGIBILITY FOR INVESTMENT
The Bonds are legal and authorized investments for all banks, savings banks, trust companies, building and loan associations,
savings and loan associations, and insurance companies of all kinds and types, and for the interest and sinking funds and other
public funds of any issuer. The Bonds are also eligible and lawful security for all deposits of public funds of the State of Texas
and of any issuer, to the extent of the value of the Bonds, when accompanied by any unmatured interest coupons appurtenant to
them.
OTHER INFORMATION
RATINGS ... No application for ratings has been made for the Bonds nor is it anticipated that an investment grade rating would
have been obtained had an application been made.
LITIGATION ... The City is a party to various lawsuits in the normal course of business. It is the opinion of the City Attomey
and City Management that there is no pending litigation against the City that, if adversely decided, would have a material
adverse financial impact on the City or the security for the Bonds.
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE ... The sale of the Bonds has not been registered under the
Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the
Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have
the Bonds been qualified under the securities acts of any other jurisdiction. The City assumes no responsibility for qualification
of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, hypothecated or
otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be
construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS ... Section 9 of the Bond Procedures Act
provides that the Bonds "shall constitute negotiable instruments, and are investment securities govemed by Chapter 8, Texas
Uniform Commercial Code, notwithstanding any provisions of law or court decision to the contrary, and are legal and authorized
investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance
companies, fiduciaries, and trustees, and for the sinking fund of cities, towns, villages, school districts, and other political
subdivisions or public agencies of the State of Texas ". The Bonds are eligible to secure deposits of any public funds of the State,
its agencies and political subdivisions, and are legal security for those deposits to the extent of their market value. For political
subdivisions in Texas which have adopted investment policies and guidelines in accordance with the Public Funds Investment
Act (V.T.C.A., Govemment Code, Chapter 2256) the Bonds may have to be assigned a rating of "A" or its equivalent as to
investment quality by a national rating agency before such obligations are eligible for investments for sinking funds and other
public funds. No review by the City has been made of the laws in other states to determine whether the Bonds are legal
investments for various institutions in those states.
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LEGAL MATTERS ... The City will furnish a complete transcript of proceedings held incident to the authorization and issuance
of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving the Bonds and to
the effect that the Bonds are valid and legally binding special obligations of the City, and based upon examination of such
transcript of proceedings, the approving legal opinions of Bond Counsel, to like effect and to the effect that the interest on the
Bonds will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the
matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. The customary
closing papers, including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the
issuance and delivery of the Bonds, or which would affect the provision made for their payment or security, or in any manner
questioning the validity of the Bonds, will also be furnished. In their capacity as Bond Counsel, they have reviewed the
information relating to the Bonds and the Ordinance contained in this Preliminary Limited Offering Memorandum under the
captions "INTRODUCTION," "PLAN OF FINANCING," "BOND INFORMATION" (excluding the information under the
subheading "Book- Entry-Only System "), "TAX MATTERS ", "OTHER INFORMATION - Legal Investments and Eligibility to
Secure Public Funds in Texas ", "OTHER INFORMATION - Legal Matters," and "OTHER INFORMATION - Continuing
Disclosure of Information," APPENDIX D — "Excerpts of Certain Provisions of the Ordinance" and APPENDIX E — "Excerpts
of Certain Provisions of the Indenture" to determine that the information contained under such captions is a fair and accurate
summary of the information purported to be shown and correct as to matters of law. The legal fees to be paid Bond Counsel for
services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. The legal
opinions will be printed on or attached to the Bonds. Certain legal matters will be passed upon for the Underwriter by Ross &
Hardies, Chicago, Illinois.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION ... The financial data and other information contained
herein have been obtained from the City's records, audited financial statements and other sources which are believed to be
reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries
of the statutes, documents and resolutions contained in this Preliminary Limited Offering Memorandum are made subject to all
of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such
provisions and reference is made to such documents for further information. Reference is made to original documents in all
respects.
CONTINUING DISCLOSURE OF INFORMATION ... In the Ordinance, the City has made the following agreement for the benefit
of the holders and beneficial owners of the Bonds. The City is required to observe the agreement for so long as it remains
obligated to advance funds to pay the Bonds. Under the agreement, the City will be obligated to provide certain updated
financial information and operating data annually, and timely notice of specified material events, to certain information vendors.
This information will be available to securities brokers and others who subscribe to receive the information from the vendors.
Annual Reports. The City will provide certain updated financial information and operating data to certain information vendors
annually. The information to be updated includes the quantitative financial information and operating data with respect to the
City of the general type included in this Preliminary Limited Offering Memorandum, Tables 1 through 4, the collection of the
Hotel Tax and the excerpts of financial statements of the City as incorporated by reference in APPENDIX B. The City will
update and provide this information within six months after the end of each fiscal year ending in or after 1999. The City will
provide the updated information to each nationally recognized municipal securities information repository ( "NRMSIR ") and to
any state information depository ( "SID") that is designated and approved by the State and approved by the staff of the United
States Securities and Exchange Commission (the "SEC ").
The City may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by SEC Rule 15c2 -12 (the `Rule "). The updated information will include audited financial statements,
if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the
required time, the City will provide audited financial statements when and if the audit report becomes available. Any such
financial statements will be prepared in accordance with the accounting principles described or incorporated by reference in
APPENDIX B or such other accounting principles as the City may be required to employ from time to time pursuant to state law
or regulation.
The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31, in each year,
unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change.
Material Event Notices. The City will also provide timely notices of certain events to certain information vendors. The City will
27
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 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 holders of the Bonds; (8) Bond calls; (9) defeasances; (10) release,
substitution, or sale of property securing repayment of the Bonds; and (11) rating changes. Neither the Bonds nor the Ordinance
makes any provision for liquidity. In addition, the City will provide timely notice of any failure by the City to provide
information, data, or financial statements in accordance with its agreement described above under "Annual Reports" The City
will provide each notice described in this paragraph to any SID and to either each NRMSIR or the Municipal Securities
Rulemaking Board ( "MSRB ").
Availability of Information from NRMSIRS and SID. The City has agreed to provide the foregoing information only to
NRMSIRs and any SID. The information will be available to holders of Bonds only if the holders comply with the procedures
and pay the charges established by such information vendors or obtain the information through securities brokers who do so.
The Municipal Advisory Council of Texas has been designated by the State and approved by the SEC staff as a qualified SID.
The address of the Municipal Advisory Council is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768 -2177, and its
telephone is (512) 476 -6947.
Limitations and Amendments. The City has agreed to update information and to provide notices of material events only as
described above. The City has not agreed to provide other information that may be relevant or material to a complete
presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided,
except as described above. The City makes no representation or warranty concerning such information or concerning its
usefulness to a decision to invest in or sell Bonds at any future date. The City disclaims any contractual or tort liability for
damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made
pursuant to its agreement, although holders of Bonds may seek a writ of mandamus to compel the City to comply with its
agreement.
The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i)
the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in
compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as
well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding
Bonds consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel)
determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. If the
City so amends the agreement, it has agreed to include with the next financial information and operating data provided in
accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the
amendment and of the impact of any change in the type of financial information and operating data so provided.
Compliance with Prior Undertakings. The City has made and is in compliance with its continuing disclosure agreements.
UNDERWRITING ... The Underwriter has agreed, subject to certain conditions to delivery, to purchase the Bonds from the City
at an aggregate underwriting discount of $ The Underwriter will be obligated to purchase all of the Bonds if
any Bonds are purchased. The Bonds may be offered and sold to certain dealers and others at prices lower than such public
offering prices, and such public prices may be changed, from time to time, by the Underwriter. The Underwriter may from time
to time sell investment securities to the City for the investment of bond proceeds or other funds of the City upon the request of
the City.
28
CERTAIN RELATIONSHIPS ... The law firms rendering services in connection with the issuance of the Bonds represent many
political subdivisions, companies and individuals. The present or future clients of these law firms have or will have transactions
other than the issuance of the Bonds with the City. In addition, the underwriter for the Bonds, Mesirow Financial, Inc., serves as
financial advisor to Ryan Sanders Ryan Sports, Inc., the Lessee of the Facility, with respect to the acquisition of the Round Rock
Express Double A Texas league baseball team, certain aspects of the planning and design of the Leased Premises and the
negotiation of the Least Agreement with the City..
FINANCIAL ADVISOR ... First Southwest Company is employed as Financial Advisor to the City in connection with the
issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent
upon the issuance and delivery of the Bonds. First Southwest Company, in its capacity as Financial Advisor, has relied on
the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and
representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the
possible impact of any present, pending or future actions taken by any legislative or judicial bodies.
PRELIMINARY LIMITED OFFERING MEMORANDUM ... The Ordinance authorizing the issuance of the Bonds will also
approve the form and content of this Preliminary Limited Offering Memorandum, and any addendum, supplement or amendment
thereto, and authorize its further use in the reoffering of the Bonds by the Underwriter.
ATTEST:
City Secretary
Mayor
City of Round Rock, Texas
29
APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
THE CITY ... The City of Round Rock is located in Williamson and Travis Counties, Texas, 8 miles north of
Austin and 85 miles south of Waco on Interstate Highway 35. The City is also situated on U.S. Highway 79 which
runs east and west. Both U.S. Highway 79 and Interstate Highway 35 are main arteries of traffic in the State.
ECONOMIC DEVELOPMENT ... Round Rock has earned accolades both for its economic development efforts and its
pro- business stance. The City has attracted a number of high - technology companies, including Dell Computer,
DuPont Photomask and Cypress Semiconductor. DuPont Photomask broke ground earlier in the year on a
worldwide headquarters facility at its Round Rock campus while Dell Computer is completing work on its $120
million campus and is looking toward additional expansions.
Named by Texas Business Magazine in its June 1995 issue as the top choice in the State for business relocations
and expansions, Round Rock also is home to State Farm Insurance, Tellabs Texas, Westinghouse and Sysco Foods.
Other major employers include McNeil Consumer Products, TN Technologies, MagRabbit Inc. and Weed
Instruments.
Round Rock has become a magnet for business and industries, in large part because it has one of the most pro -
business attitude of any community in Central Texas. The City prides itself on a smooth development process and
on a pragmatic political leadership that extends a warm welcome to new employers.
The median household income of Round Rock residents, according to the 1990 U.S. Census, was 533,228. This
compares with $27,016 for Texas as a whole.
Round Rock has a young population: The median age is 30.9. Nearly 30 percent of Round Rock's residents aged
25 and over have completed high school, and a slightly higher percentage have a college, graduate or professional
degree. According to the 1990 U.S. Census, 26 percent of Round Rock residents hold professional positions, while
38 percent work in administrative or sales jobs.
Manufacturing and high - technology industries have fueled Round Rock's growth. Since 1991, 35 businesses have
located or expanded in Round Rock, creating 13,245 jobs and investing more than $300 million. The result has
been close to full employment. Round Rock's unemployment rate is below 2 percent.
In addition to its corporate base, the City, which lies within Williamson County, boasts extensive entrepreneurial
and innovative talent. In fact, Williamson County generates more patents than any other county in the Austin MSA.
MAJOR INDUSTRY ... Industries located within the City's corporate limits and in the City's immediate surrounding
area produce pharmaceuticals, office products, computer systems and communication equipment. Various other
industries and major employers such as the school district are located in the Round Rock area. The following is a
partial list of major employers and the number of people they employ as of February, 1999.
Company Employees
Dell Computer, Inc. 8,000+
Farmers Insurance Group, Inc. 850
AMP Packaging & Carroll Touch Systems 650
Westinghouse/TECO 550
Wayne Division- Dresser Industries, Inc. 485
Michael Angelo's Gourmet Food 450
Tellabs Texas, Inc. 439
Sysco Foods 387
Cypress Semiconductor, Inc. 300
DuPont Photomask 250
Source: Round Rock Chamber of Commerce.
A - I
LABOR MARKET PROFILE
City of Round Rock, Texas
December 1998 December 1997
Total Civilian Labor Force 29,322 28,514
Total Employment 28,872 28,023
Total Unemployment 450 491
Percent Unemployment 1.5% 1.7%
State of Texas
December 1998 December 1997
Total Civilian Labor Force 10,209,100 9,986,600
Total Employment 9,762,100 9,536,500
Total Unemployment 447,000 450,100
Percent Unemployment 4.4% 4.5%
CITY GOVERNMENT AND COMMUNITY SERVICES . . . The City is govemed by a Council/Manager forth of
government with a Mayor and six councilmembers. The City has 1,026 acres of parks, which include eleven tennis
courts, 22 baseball fields, 5 soccer fields, 2 swimming pools and other facilities that are available to the community.
A public, daily fee golf course is available for use. The Round Rock Leader, a weekly newspaper, an Austin daily
newspaper, and a public library with 83,000 volumes are just a few of the many community services offered to the
citizens of the City.
The Round Rock Hospital was completed in 1983 and is located on a 24 -acre site. The medical staff is currently
comprised of approximately 100 active staff physicians with 65 of these physicians having offices located in Round
Rock. The Hospital's total medical staff totals more than 450 active and consulting staff physicians. St. David's
Medicenter and Occupational Health Center, a minor emergency and occupational health clinic, is staffed by one
primary care physician and one occupational health physician. Other hospital services are easily accessible in
nearby Austin and Georgetown.
TRANSPORTATION ... The City is easily accessible from the Austin Municipal Airport and Executive Airpark, a
private airport located near the City. Austin - Bergstrom International Airport is scheduled to be operational in
1998 or 1999. Two major railroads, two motor freight lines and a bus line serve the City.
EDUCATIONAL FACILITIES ... The City is located entirely within one of the fastest growing school districts in the
State, the Round Rock Independent School District. The District is comprised of 110 square miles with a current
1998 Net Taxable Assessed Valuation of $7,120,641,747. The City is within 90 miles of six of the major
universities in the State, including The University of Texas at Austin, just 15 miles away. Southwestern University
is located eight miles north in the City of Georgetown.
RECREATION ... Lake Travis, together with a number of other major lakes and parks, is in the vicinity to add
recreational dimension to the area. The hunting of deer, quail and mouming doves can also be enjoyed throughout
this area. Each year Round Rock holds Frontier Days, a 21 year tradition which attracts many people. The streets
are lined with entertainment, arts, crafts, food booths; and many events are scheduled all over town. The event has
become an annual affair and draws crowds of several thousand. Also, since 1980 the Chamber of Commerce has
sponsored a Merchants Fair with over 60 booths, giving information about Round Rock businesses and services.
UTILITIES ... The City is served by Southwestern Bell Telephone Company, Texas Utilities Electric Company and
Lone Star Gas Company.
A -2
Selected Issuer Indices
Ratio Funded
Fiscal Per Capita Per Debt to
Year Estimated Taxable Taxable Funded Capita Taxable % of
Ended City Assessed Assessed Tax Tax Assessed Total Tax
9 -30 Population Valuation Valuation Debt Debt Valuation Collections
1992 33,769 $ 836,585,606 $ 24,774 $ 38,738,400 $ 1,147 4.63% 99.80%
1993 36,139 914,420,536 (0 25,303 40,961,100 1,133 4.48% 100.65%
1994 39,460 1,078,249,127 27,325 38,261,000 970 3.55% 101.59%
1995 41,650 1,404,239,617 33,715 43,069,000 1,034 3.07% 100.15%
1996 43,500 1,681,361,634 38,652 51,967,000 1,195 3.09% 99.86%
1997 46,485 1,976,785,606 42,525 53,435,000 1,150 2.70% 100.11%
1998 49,020 2,325,756,421 47,445 61,628,000 1,257 2.65% N/A
(1) Revaluation.
Ten Largest Taxpayers
Municipal Sales Tax History
Fiscal 1998 % of Total
Taxable Taxable
Assessed Assessed
Name of Taxpayer Valuation Valuation
Dell Computer Holdings LP $ 105,031,146 4.52 %
Cypress Semiconductor 71,670,599 3.08
McNeil Consumer Products Co. 24,756,072 1.06
Limestone Ridge LTD 24,353,831 1.05 %
Walmart 22,689,943 0.98 %
Dupont Photomasks Inc. 19,760,076 0.85 %
Steeplechase Downs 18,850,000 0.81
Westinghouse Motor Co. 18,432,137 0.79 %
Texas Utilities Electric 17,590,607 0.76 %
Sysco Food Services Inc. 16,904,720 0.73 %
$ 340,039,131 14.62 %
The City has adopted the Municipal Sales and Use Tax Act, Chapter 321, Texas Tax Code, V.T.C.A., which grants the City the
power to impose and levy a t' /,% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not
pledged to the payment of the Bonds or the Certificates. At an election held in August of 1997 the voters of Round Rock approved
the levy of an additional ''A cent for economical development transportation projects. Collections and enforcements are effected
through the offices of the Comptroller of Public Accounts of the State of Texas, who remits the proceeds of the tax, after deduction of
a 2% service fee, to the City monthly.
Fiscal Equivalent
Year % of of
Ended Total Ad Valorem Ad Valorem Per
9 -30 Collected Tax Levy Tax Rate Capita
1992 $ 3,231,220 59.85% $ 0.3534 $ 95.69
1993 4,159,852 72.86% 0.3858 115.11
1994 5,069,127 82.59% 0.3610 128.11
1995 7,144,297 103.48% 0.4249 164.24
1996 8,974,450 123.02% 0.4540 206.31
1997 1 1,689,671 133.30% 0.5026 251.67
1998 18,028,559 205.58% 0.7752 367.78
(1) Based on estimated or U. S. Census population for all years.
A -3
(1)
APPENDIX Be
UNAUDITED EXCERPTS FROM THE
CITY OF ROUND ROCK, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 1998
The information contained in this Appendix consists of excerpts from the City of
Round Rock, Texas Annual Financial Report for the Year Ended September 30,
1998, and is not intended to be a complete statement of the City's financial
condition.
The Bonds are limited obligations of the City payable solely from the Pledged Revenues
and Pledged Funds as provided in the Ordinance and the Indenture. The City provides
various governmental functions and collects taxes, revenues and fees for such services. As
a result, the City's audited financial statement includes revenues, fees and taxes which are
not pledged to the payment of the Bonds. The City's audited financial statements are
provided for purposes of compliance with Rule 15c2 -12 of the Federal Securities Exchange
Act of 1934. Therefore, the City cautions that financial information set forth herein
unrelated to the Pledge of Revenues and Pledged Funds should not be construed or
interpreted as available or pledged to the payment of the Bonds.
APPENDIX C
PROJECTION OF HOTEL TAX REVENUE
TO THE CITY OF ROUND ROCK, TEXAS
(The Report)
APPENDIX D
EXCERPTS OF CERTAIN PROVISIONS OF THE BOND ORDINANCE
EXCERPTS FROM THE BOND ORDINANCE
The following are excerpts of certain provisions of the Ordinance to be adopted by the City Council authorizing the
issuance of the Bonds. Such excerpts do not purport to be complete and reference should be made to the Ordinance
for the entirety thereof Copies of the Ordinance are available upon request to the City or the City's Bound Counsel.
As used in this Ordinance, the following terms and expressions shall have the meanings set forth below, unless the
text hereof specifically indicates otherwise. Any terms not otherwise defined herein have the meaning given in the
Indenture.
"Accountant" means an independent certified public accountant or accountants or a firm of an independent
certified public accountants, in either case, with demonstrated expertise and competence in public accountancy.
"Additional Parity Obligations" means Bonds, notes, warrants, certificates of obligation, contractual
obligations or other Debt which the City reserves the right to issue or enter into, as the case may be, in the future
under the terms and conditions provided in Sections 20 and 21 of this Ordinance and which obligations are equally
and ratably secured solely by a first lien on and pledge of the Pledged Revenues on a panty with the Bonds.
"Amortization Installment" means, with respect to any Tenn Bonds of any series of Parity Obligations, the
amount of money which is required to be deposited into a mandatory redemption account for retirement of such
Term Bonds (whether at maturity or by mandatory redemption and including redemption premium, if any) provided
that the total Amortization Installments for such Term Bonds shall be sufficient to provide for retirement of the
aggregate principal amount of such Tenn Bonds.
"Annual Debt Service Requirements" means, as of the date of calculation, the principal of and interest on
all Parity Obligations coming due at Maturity or Stated Maturity (or that could come due on demand of the owner
thereof other than by acceleration or other demand conditioned upon default by the City on such Debt, or be payable
in respect of any required purchase of such Debt by the City) in such Fiscal Year, and, for such purposes, any one or
more of the following rules shall apply at the election of the City:
(1) Balloon Debt. If the principal (including the accretion of interest resulting from original issue
discount or compounding of interest) of any series or issue of Funded Debt due (or payable in respect of any
required purchase of such Funded Debt by the City) in any Fiscal Year either is equal to at least 25% of the total
principal (including the accretion of interest resulting from original issue discount or compounding of interest) of
such Funded Debt or exceeds by more than 50% the greatest amount of principal of such series or issue of Funded
Debt due in any preceding or succeeding Fiscal Year (such principal due in such Fiscal Year for such series or issue
of Funded Debt being referred to herein and throughout this Ordinance as "Balloon Debt "), the amount of principal
of such Balloon Debt taken into account during any Fiscal Year shall be equal to the debt service calculated using
the original principal amount of such Balloon Debt amortized over the Term of Issue on a level debt service basis at
an assumed interest rate equal to the rate borne by such Balloon Debt on the date of calculation;
(2) Consent Sinking Fund. In the case of Balloon Debt, if a Designated Financial Officer shall
deliver to the City a certificate providing for the retirement of (and the instrument creating such Balloon Debt shall
permit the retirement of), or for the accumulation of a sinking fund for (and the instrument creating such Balloon
Debt shall permit the accumulation of a sinking fund for), such Balloon Debt according to a fixed schedule stated in
such certificate ending on or before the Fiscal Year in which such principal (and premium, if any) is due, then the
principal of (and, in the case of retirement, or to the extent provided for by the sinking fund accumulation, the
premium, if any, and interest and other debt service charges on) such Balloon Debt shall be computed as if the same
were due in accordance with such schedule, provided that this clause (2) shall apply only to Balloon Debt for which
the installments previously scheduled have been paid or deposited to the sinking fund established with respect to
such Debt on or before the times required by such schedule; and provided further that this clause (2) shall not apply
where the City has elected to apply the rule set forth in clause (1) above;
(3) Prepaid Debt. Principal of and interest on Bonds and Additional Parity Obligations, or portions
thereof, shall not be included in the computation of the Annual Debt Service Requirements for any Fiscal Year for
which such principal or interest are payable from funds on deposit or set aside in trust for the payment thereof at the
time of such calculations (including without limitation capitalized interest and accrued interest so deposited or set
aside in trust) with a financial institution acting as fiduciary with respect to the payment of such Debt; and
(4) Variable Rate. As to any Parity Obligations that bear interest at a variable interest rate which
cannot be ascertained at the time of calculation of the Annual Debt Service Requirement then, at the option of the
City, either (A) an interest rate equal to the average rate borne by such Parity Obligations (or by comparable debt in
the event that such Parity Obligations has not been outstanding during the preceding 24 months) for any 24 month
period ending within 30 days prior to the date of calculation, or (B) an interest rate equal to the 30 -year Revenue
Bond Index (as most recently published in The Bond Buyer), shall be presumed to apply for all future dates, unless
such index is no longer published in The Bond Buyer in which case an index of revenue Bonds with maturities of
at least 20 years which is published in a financial newspaper or journal with national circulation may be used for
this purpose (if two Series of Parity Obligations which bear interest at variable interest rate, or one or more
maturities within a Series, of equal par amounts, are issued simultaneously with inverse floating interest rates
providing a composite fixed interest rate for such Parity Obligations taken as a whole, such composite fixed rate
shall be used in determining the Annual Debt Service Requirement with respect to such Parity Obligations);
With respect to any calculation of historic data, only those payments actually made in the subject period shall be
taken into account in making such calculation and, with respect to prospective calculations, only those payments
reasonably expected to be made in the subject period shall be taken into account in making the calculation.
"Authorized Denominations" means with respect to the Bonds in the denomination of $100,000 and any
integral multiple of $5,000 in excess of $100,000 within a maturity.
"Average Annual Debt Service Requirements" means that average amount which, at the time of
computation, will be required to pay the Annual Debt Service Requirements when due (either at Stated Maturity or
mandatory redemption) and derived by dividing the total of such Annual Debt Service Requirements by the number
of Fiscal Years then remaining before Stated Maturity of such Parity Obligations. For the purposes of this
definition, a fractional period of a Fiscal Year shall be treated as an entire Fiscal Year. Capitalized interest
payments provided from bond proceeds, accrued interest on any Debt, and interest earnings thereon shall be
excluded in making such computation.
"Bonds" means the City of Round Rock, Texas Hotel Occupancy Tax Revenue Bonds, Series 1999
(Convention Center Complex Project).
"Book -Entry-Only System" means the book -entry system of bond registration provided in Section 6 of the
Ordinance, or any successor system of book -entry registration.
"Capital Improvement Fund" means the special fund created, established and maintained by the provision
of Section 4.06 of the Indenture and confirmed in Section 9 of the Ordinance.
"Capital Repair Fund" means the special fund created, established and maintained by the provisions of
Section 4.05 of the Indenture and confirmed in Section 9 of the Ordinance.
"Cede & Co." means the designated nominee and its successors and assigns of The Depository Trust
Company, New York.
"City" and "Issuer" mean the City of Round Rock, Texas, and where appropriate, the City Council.
"City Project Fund" means the special fund created, established and maintained by the provisions of
Section 4.07 of the Indenture and confirmed by Section 9 of this Ordinance.
"Convention Center Complex" means the civic center building, auditorium, exhibition halls and coliseum
including parking areas or facilities financed with the proceeds of the Bonds and any Additional Parity Obligations.
"Debt" and "Debt of the City payable from Pledged Revenues" mean:
(1) all indebtedness payable from Pledged Revenues incurred or assumed by the City for borrowed
money that, in accordance with generally accepted accounting principles, are shown on the liability side of a
balance sheet; and
(2) all other indebtedness payable from Pledged Revenues that is guaranteed, directly or indirectly, in
any manner by the City, or that is in effect guaranteed, directly or indirectly, by the City through an agreement,
contingent or otherwise, to purchase any such indebtedness or to advance or supply funds for the payment or
purchase of any such indebtedness or to purchase property or services primarily for the purpose of enabling the
debtor or seller to make payment of such indebtedness, or to assure the owner of the indebtedness against loss, or to
supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services
irrespective of whether or not such property is delivered or such services are rendered), or otherwise.
For the purpose of determining Debt, there shall be excluded any particular Debt if, upon or prior to the Maturity
thereof, there shall have been deposited with the proper depository (a) in trust the necessary funds (or investments
that will provide sufficient funds, if permitted by the instrument creating such Debt) for the payment, redemption, or
satisfaction of such Debt or (b) evidence of such Debt deposited for cancellation; and thereafter it shall not be
considered Debt. No item shall be considered Debt unless such item constitutes indebtedness under generally
accepted accounting principles applied on a basis consistent with the financial statements of the System in prior
Fiscal Years.
"Debt Service Fund" means the special fund created, established and maintained by the provisions of
Section 4.03 of the Indenture and confirmed in Section 9 of this Ordinance.
"Depository" means one or more official depository banks of the City.
"DTC" means The Depository Trust Company, New York, New York and its successors and assigns.
"DTC Participant" means securities 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.
"Designated Financial Officer" means the chief financial officer of the City, or such other financial or
accounting official of the City so designated by the City Council.
"Fiscal Year" means the twelve -month accounting period used by the City in connection with the
operation of the Project, currently ending on September 30 of each year, which may be any twelve consecutive
month period established by the City, but in no event may the Fiscal Year be changed more than one time in any
three calendar year period.
"Funded Debt" means all Parity Obligations created or assumed by the City that mature by their terms (in
the absence of the exercise of any earlier right of demand), or that are renewable at the option of the City to a date,
more than one year after the original creation or assumption of such Debt by the City.
"Funds" means collectively all funds authorized in Section 4.01 of the Indenture and confirmed in Section
9 of the Ordinance.
"Holder(s)" means the registered owner, whose name appears in the Registration Books, for any Parity
Obligation.
"Hotel Occtrpancy Tax" means that portion of the receipts of the municipal hotel occupancy tax authorized
pursuant to Chapter 351 of the Texas Tax Code, as amended, remaining after deducting the Local Tourism
Requirement.
"Indenture" means the Trust Indenture dated March 15, 1999 between the City and Chase Bank of Texas,
National Association or any successor thereto.
"Lease Agreement" means the Convention Center Complex Lease Agreement dated January 20, 1999
between the City and Ryan Sanders Ryan Sports, Inc. and may be amended from time to time.
"Lessee" means Ryan Sanders Ryan Sports, Inc., a Texas corporation or any successor thereto.
"Local Tourism Requirement" means that portion of the municipal hotel occupancy tax authorized
pursuant to Chapter 351 of the Texas Tax Code, as amended, which represents the greater of (i) the State Mandated
Set Aside and (ii) 5260,000 (adjusted upward each year commencing Fiscal Year 2000, by 3% on a compounded
basis).
"MSRB" means the Municipal Securities Rulemaking Board.
"Maturity" means, when used with respect to any Debt, the date on which the principal of such Debt or
any installment thereof becomes due and payable as therein provided, whether at the Stated Maturity thereof or by
declaration of acceleration, call for redemption, or otherwise.
"Maximum Annual Debt Service Requirements" means the greatest requirements of Annual Debt Service
Requirements (taking into account all mandatory principal redemption requirements) scheduled to occur in any
future Fiscal Year or in the then current Fiscal Year for the particular obligations for which such calculation is
made. Capitalized interest payments provided from Debt proceeds, accrued interest on any Debt, and interest
earnings thereon shall be excluded in making such computation.
"NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized
municipal securities information repository within the meaning of the Rule from time to time.
"Ordinance" means ordinance no. adopted by the City Council on March I1, 1999 in
connection with the issuance of the Bonds.
"Outstanding" when used with respect to Parity Obligations, means, as of the date of determination, all
Parity Obligations theretofore delivered under this Ordinance and any ordinance authorizing Additional Panty
Obligations, except:
(1) Parity Obligations theretofore canceled and delivered to the City or delivered to the Paying
Agent/Registrar for cancellation;
(2) Parity Obligations deemed paid pursuant to the provisions of Section 26 of the Ordinance or any
comparable section of any ordinance authorizing Additional Parity Obligations;
(3) Parity Obligations upon transfer of or in exchange for and in lieu of which other Parity
Obligations have been authenticated and delivered pursuant to this Ordinance and any ordinance authorizing
Additional Parity Obligations; and
(4) Parity Obligations under which the obligations of the City have been released, discharged or
extinguished in accordance with the terms thereof.
"Paying Agent /Registrar" shall have the meaning set forth in Section 6(a) of the Ordinance.
"Parity Obligations" means the Bonds and any Additional Parity Obligations hereafter issued by the City
or obligations issued to refund any of the foregoing (as determined within the sole discretion of the City Council in
accordance with applicable law) if issued in a manner that provides that the refunding obligations are payable from
and equally and ratably secured by a first lien on and pledge of the Pledged Revenues.
"Pledged Funds" means with respect to the Bonds, the Reserve Fund, the City Project Fund, the Capital
Repair Fund and the Capital Improvement Fund. Pledged Funds when referred to with respect to any Additional
Parity Obligations means those accounts pledged to the payment of such Additional Parity Obligations as specified
in the Supplemental Ordinance.
"Pledged Revenues" means (i) the Hotel Occupancy Tax, (ii) amounts and investments on deposit in the
Debt Service Fund and the Revenue Fund plus (iii) any additional revenues, income, receipts, or other resources,
including, without limitation, any grants, donations or income received or to be received from the United States
Government, or any other public or private source, whether pursuant to an agreement or otherwise, which hereafter
are pledged by the City to the payment of the Parity Obligations.
"Project" means any lawful purpose authorized by Chapter 351 of the Texas Tax Code, as amended,
including the Convention Center Complex.
"Purchaser" means Mesirow Financial, Inc.
"Rating Agency" means any nationally recognized securities rating agency which has assigned, at the
request of the City, a rating to the Parity Obligations.
"Record Date" means the Record Date as defined in the Form of Bond in EXHIBIT B to this Ordinance.
"Registration Books" means the records maintained by the Paying Agent/Registrar indicating the
registered owner of the Parity Obligations.
"Reserve Fund" means the special fund created, established and maintained by the provisions of Section
4.04 of the Indenture and confirmed by Section 9 of the Ordinance.
"Revenue Fund" means the special fund created, established and maintained by the provisions of Section
4.02 of the Indenture and confirmed by Section 9 of the Ordinance.
"RSR Contribution" means the amount contributed by Ryan Sanders Ryan Sports, Inc. toward the cost of
the Convention Center Complex which is initially at least 57,400,000.
"RSR Project Fund" means the special fund created, established and maintained pursuant to the provisions
of Section 4.08 of the Indenture and confirmed by Section 9 of the Ordinance.
"Rule" means SEC Rule 15c2 -12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person 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.
"State Mandated Set Aside" means one percent of the municipal hotel occupancy tax receipts required to
be allocated solely to advertising and conducting solicitation and promotional purposes to attract tourists and
convention delegates or registrants to the City or its vicinity as provided in Section 351.103 of the Texas Tax Code,
as amended.
"Stated Maturity" means the annual principal payments of the Parity Obligations payable on the respective
dates set forth in the Ordinance and any Supplemental Ordinance authorizing the issuance of such Parity
Obligations.
"Subordinate Lien Obligations" means (i) any bonds, notes, warrants, certificates of obligation,
contractual obligations or other Debt issued by the City that are payable, in whole or in part, from and equally and
ratably secured by a lien on and pledge of the Pledged Revenues, such pledge being subordinate and inferior to the
lien on and pledge of the Pledged Revenues that are or will be pledged to the payment of any Parity Obligations
issued by the City, and (ii) obligations hereafter issued to refund any of the foregoing if issued in a manner that
provides that the refunding Bonds are payable from and equally and ratably secured, in whole or in part, by a lien
on and pledge of the Pledged Revenues on a parity with the Subordinate Lien Obligations.
"Supplemental Ordinance" means the ordinances adopted by the City Council of the City from time to
time in connection with the issuance of Additional Parity Obligations.
"Term Bonds" means those Parity Obligations so designated in the ordinances authorizing such bonds
which shall be subject to retirement by operation of a mandatory redemption account.
"Term of means with respect to any Balloon Debt, a period of time equal to the greater of (i) the
period of time commencing on the date of issuance of such Balloon Debt and ending on the final maturity date of
such Balloon Debt or (ii) twenty-five years.
"Trustee" means Chase Bank of Texas, National Association or any successor thereto.
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The Bonds shall be entitled to the security and benefits of the Indenture. The City hereby covenants and agrees that
the Pledged Revenues are hereby irrevocably pledged to the payment and security of the Bonds and any Additional
Parity Obligations. The Bonds authorized pursuant to this Ordinance are additionally payable from and secured by
the Pledged Funds. Any Additional Parity Obligations may be further secured and payable from pledged funds as
provided in the Supplemental Ordinance authorizing any such Additional Parity Obligations. The Parity
Obligations, and the interest thereon, shall constitute a lien on and pledge of the Pledged Revenues and the City
shall cause the Pledged Revenues to be delivered to the Trustee, and the lien is hereby created on the Pledged
Revenues for the payment and security of the Parity Obligations which lien shall be superior to the lien on and
pledge of the Pledged Revenues securing payment of any Subordinate Lien Obligations hereafter issued by the City.
The creation of the Revenue Fund, Debt Service Fund, City Project Fund, Reserve Fund, Capital Repair Fund and
Capital Improvement Fund as set forth in the Indenture is hereby confirmed. The creation of a separate RSR Project
Fund to hold and administer the RSR Contribution as set forth in the Indenture is also hereby confirmed.
The City hereby covenants, agrees and establishes that the Pledged Revenues shall be transferred to the Trustee for
deposit and credit to the Revenue Fund as provided in the Indenture.
All Pledged Revenues deposited and credited to the Revenue Fund shall be pledged and appropriated to the extent
required and in the priority as set forth in the Indenture.
(a) Proceeds from the sale of the Bonds will be disbursed in accordance with this Section.
(b) Moneys received from the purchaser of the Bonds representing accrued interest on the Bonds
from their date to the date of their actual delivery shall be deposited into the Debt Service Fund. Additionally,
proceeds of the Bonds representing approximately 14 months capitalized interest on the Bonds shall be deposited
into the Debt Service Fund.
(c) The Bond proceeds representing approximately one -half of the Required Reserve Amount shall be
deposited into the Reserve Fund.
(d) The Bond proceeds remaining after making the other deposits as set forth in this section shall be
deposited into the City Project Fund.
Money in the Funds shall be invested, valued and secured as provided in the Indenture.
The City further covenants and agrees that in accordance with and to the extent required or permitted by law:
It will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in
any ordinance authorizing the issuance of Parity Obligations, including this Ordinance, and in each and every Parity
Obligation; it will promptly pay or cause to be paid the principal of and interest on every Parity Obligation on the
dates and in the places and manner prescribed in such ordinances, indentures and obligations; and it will, at the
times and in the manner prescribed, deposit and credit or cause to be deposited and credited the amounts required to
be deposited and credited to the Funds as provided in the Indenture.
It is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws of the
State of Texas to create and issue the Bonds; that all action on its part for the creation and issuance of the Bonds has
been duly and effectively taken, and that the Bonds in the hands of the Holders thereof are and will be valid and
enforceable special obligations of the City payable in accordance with their terms.
It has or will obtain lawful title to the lands, buildings, structures and facilities constituting the Convention Center
Complex, that it warrants that it will defend the title to all the aforesaid lands, buildings, structures and facilities,
and every part thereof, against the claims and demands of all persons whomsoever; that it is lawfully qualified to
pledge the Pledged Revenues to the payment of the Bonds and Additional Parity Obligations in the manner
prescribed herein, and has lawfully exercised such rights.
(d) While the Parity Obligations are outstanding and unpaid, it will not additionally encumber the
Pledged Revenues in any manner, except as permitted in this Ordinance and the Indenture in connection with
Additional Parity Obligations, unless said encumbrance is made junior and subordinate in all respects to the liens,
pledges, covenants and agreements of this Ordinance and the Indenture; but the right of the City to issue or incur
obligations payable from a subordinate lien on the Pledged Revenues is specifically recognized and retained.
While the Parity Obligations are outstanding and unpaid, it will not sell, convey, mortgage, encumber, lease or in
any manner transfer title to, or otherwise dispose of the Convention Center Complex except as set forth in the Lease
Agreement.
(1) General. It shall cause to be insured such parts of the Project as would usually be insured by
municipal corporations operating like properties, with a responsible insurance company or companies, against risks,
accidents or casualties against which and to the extent insurance is usually carried by municipal corporations
operating like properties, including, to the extent reasonably obtainable, fire and extended coverage insurance,
insurance against damage by floods, and use and occupancy insurance. Public liability and property damage
insurance shall also be carried unless the City Attorney of the City gives a written opinion to the effect that the City
is not liable for claims which would be protected by such insurance. At any time while any contractor engaged in
construction work shall be fully responsible therefor, the City shall not be required to carry insurance on the work
being constructed if the contractor is required to carry appropriate insurance. All such policies shall be open to the
inspection of the Holders and their representatives at all reasonable times. Upon the happening of any loss or
damage covered by insurance from one or more of said causes, the City shall make due proof of loss and shall do all
things necessary or desirable to cause the insuring companies to make payment in full directly to the City. The
proceeds of insurance covering such property are hereby pledged as security for the Parity Obligations and, together
with any other funds necessary and available for such purpose, shall be used forthwith by the City for repairing the
property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and other
funds are insufficient for such purpose, then said insurance proceeds pertaining to the Project shall be used promptly
as follows:
(i) for the redemption prior to maturity of the Parity Obligations, ratably in the proportion that the
Outstanding principal of each series of Parity Obligations bears to the total Outstanding principal of all Parity
Obligations, provided that if on any such occasion the principal of any such series is not subject to redemption, it
shall not be regarded as Outstanding in making the foregoing computation; or
(ii) if none of the Outstanding Parity Obligations is subject to redemption, then for the purchase on
the open market and retirement of said Parity Obligations in the same proportion as prescribed in the foregoing
clause (i), to the extent practicable; provided that the purchase price for any Parity Obligation shall not exceed the
redemption price of such Parity Obligation on the first date upon which it becomes subject to redemption; or
(iii) to the extent that the foregoing clauses (i) and (ii) cannot be complied with at the time, the
insurance proceeds, or the remainder thereof, shall be deposited in a special and separate trust fund, at a Depository
of the City, to be designated the Insurance Account. The Insurance Account shall be held until such time as the
foregoing clauses (i) and/or (ii) can be complied with, or until other funds become available which, together with
the Insurance Account, will be sufficient to make the repairs or replacements originally required, whichever of said
events occurs first.
(2) Coinsurance. The foregoing provisions of (1) above notwithstanding, the City shall have
authority to enter into coinsurance or similar plans where risk of loss is shared in whole or in part by the City.
(3) Audit. The annual audit hereinafter required shall contain a note commenting on whether or not
the City has complied with the requirements of this Section with respect to the maintenance of insurance, and listing
all policies carried, and whether or not all insurance premiums upon the insurance policies to which reference is
hereinbefore made have been paid.
(4) Source of Payment . Nothing in this Ordinance shall be construed as requiring the City to expend
any funds which are derived from sources other than the Hotel Occupancy Tax, but nothing herein shall be
construed as preventing the City from doing so.
It will comply with all of the terms and conditions of any and all franchises, permits and authorizations applicable to
or necessary with respect to the Project, and which have been obtained from any governmental agency; and the City
has or will obtain and keep in full force and effect all franchises, permits, authorization and other requirements
applicable to or necessary with respect to the acquisition, construction, equipment, operation and maintenance of the
Project.
(h) Collections and Rates. While the Parity Obligations are Outstanding and unpaid, the City shall
not lower or repeal the Hotel Occupancy Tax and shall diligently pursue the collection of any unpaid Hotel
Occupancy Tax.
The City covenants and agrees that so long as any of the Parity Obligations remain Outstanding, the City will keep
and maintain a separate and complete system of records and accounts pertaining to the Pledged Revenues in which
full, complete, true, proper, and correct entries shall be made of all dealings, transactions, business and affairs
relating thereto, as provided by generally accepted accounting principles, consistently applied, and by other
applicable law. The City further agrees that, following the close of each Fiscal Year, the City will cause an audit
report of such records and accounts to be made by an Accountant. Copies of each annual audit shall be made
available for public inspection during normal business hours at the City's principal office and the City Secretary's
office and may be furnished to, upon written request, any Holder upon payment of the reasonable copying and
mailing charges.
(a) The City shall have the right and power at any time and from time to time and in one or more
series or issues, to authorize, issue and deliver additional parity revenue bonds or other obligations (herein called
"Additional Parity Obligations "), in accordance with law, in any amounts, for purposes of (i) expanding, improving,
equipping or repairing the Convention Center Complex, (ii) any other projects or purposes that are a lawful use of
the Hotel Occupancy Tax or (iii) refunding of any Parity Obligations or Subordinate Lien Obligations. Such
Additional Parity Obligations, if and when authorized, issued and delivered in accordance with this Ordinance, shall
be secured by and made payable equally and ratably on a parity with all other Outstanding Parity Obligations, from
the lien on and pledge of the Pledged Revenues herein granted.
(b) The Debt Service Fund established by the Indenture shall secure and be used to pay all Parity
Obligations. However, each ordinance under which Additional Parity Obligations are issued shall provide and
require that, in addition to the amounts required by the provisions of this Ordinance and the Indenture and the
provisions of any other Supplemental Ordinance authorizing Additional Parity Obligations to be deposited to the
credit of the Debt Service Fund, the City shall deposit to the credit of the Debt Service Fund at least such amounts
as are required for the payment of all principal of and interest on said Additional Parity Obligations then being
issued, as the same come due.
(c) The City may create and establish a reserve fund pursuant to the provisions of any Supplemental
Ordinance authorizing the issuance of Additional Parity Obligations for the purpose of securing that particular issue
or series of Parity Obligations or any specific group of issues or series of Parity Obligations and the amounts once
deposited or credited to said reserve funds shall no longer constitute Pledged Revenues and shall be held solely for
the benefit of the Holders of the particular Parity Obligations for which such reserve fund was established. The City
hereby confirms the establishment of the Reserve Fund to secure the Bonds. Each reserve fund shall be designated
in such manner as is necessary to identify the Parity Obligations it secures and to distinguish such reserve fund from
the Reserve Fund securing the Bonds and the reserve funds created for the benefit of other Parity Obligations.
(d) The City may create and establish other pledged funds pursuant to the provisions of any
Supplemental Ordinance authorizing the issuance of Additional Parity Obligations for the purpose of securing that
particular issue or series of Parity Obligations or any specific group, issue or series of Parity Obligations and the
amounts once deposited or credited to said pledged funds shall no longer constitute Pledged Revenues and shall be
held solely for the benefit of the Holders of the particular Parity Obligations for which such pledged funds were
established. The City hereby confirms the establishment of the Pledged Funds to secure the Bonds. Pledged funds
shall be designated in such manner as is necessary to identify the Parity Obligations secured and to distinguish such
pledged funds from the Pledged Funds securing the Bonds and the pledged funds created for the benefit of other
Parity Obligations.
Additional Parity Obligations shall be issued only in accordance with this Ordinance, but notwithstanding any
provisions of this Ordinance to the contrary, no installment, series or issue of Additional Parity Obligations shall be
issued or delivered unless:
(a) The City Manager and the City Secretary of the City sign a written certificate to the effect that the
City is not in default as to any covenant, condition or obligation in connection with all Outstanding Parity
Obligations, and the ordinances authorizing same, and that the (i) Debt Service Fund, the Reserve Fund and any
reserve fund securing any other series or issue of Parity Obligations each contains the amount then required to be
therein and (ii) the Pledged Funds and any pledged funds securing any other series or issue of Parity Obligations
each contains the amount then required to be therein; provided, however, the City shall not be required to satisfy the
requirements of this Section 21(a)(ii) as a requirement for the issuance of Additional Parity Obligations for the
Convention Center Complex.
(b) An Accountant signs and delivers to the City a written certificate to the effect that, during either
the next preceding Fiscal Year, or any twelve consecutive calendar month period ending not more than ninety days
prior to the date of the then proposed Additional Parity Obligations, the Pledged Revenues were, in the opinion
thereof, at least equal to the sum of 1.25 times the Average Annual Debt Service Requirements (computed on a
Fiscal Year basis), including Amortization Installments, of the Parity Obligations and the Additional Parity
Obligations to be Outstanding after the issuance of the then proposed Additional Parity Obligations and 1.00 times
the average annual debt service requirement (computed in the same manner as for Parity Obligations) of the
Subordinate Lien Obligations to be outstanding after the issuance of the then proposed Additional Parity
Obligations.
(c) In making a determination of Pledged Revenues for any of the purposes described in this Section,
the Accountant may take into consideration a change in the rates and charges in connection with the Pledged
Revenues that became effective at least 60 days prior to the last day of the period for which Pledged Revenues are
determined and, for purposes of satisfying the Pledged Revenues tests described above, make a pro forma
determination of the Pledged Revenues for the period of time covered by said Accountant's certification or opinion
based on such change in rates and charges being in effect for the entire period covered by said Accountant's
certificate or opinion.
The City reserves the right to issue Additional Parity Obligations to refund all or any part of the outstanding Parity
Obligations or any other obligations of the City payable, in whole or in part, from the Pledged Revenues, pursuant
to any law then available, upon such terms and conditions as the City Council may deem to be in the best interest of
the City and its inhabitants, and, unless all of the then outstanding Parity Obligations are refunded, the conditions
precedent prescribed for the issuance of Additional Parity Obligations and the representations and certifications
required in Sections 20 and 21 shall be satisfied and shall give effect to the Average Annual Debt Service
Requirements of the proposed refunding Additional Parity Obligations (but shall not give effect to the Average
Annual Debt Service Requirements of the obligations being refunded following their cancellation or provision being
made for their payment); provided, however, if as a result of such refunding the Annual Debt Service Requirements
are not increased in any Fiscal Year, the City shall not be required to satisfy the requirements of Section 21(b) as a
requirement for the issuance of such refunding Additional Parity Obligations.
The City hereby reserves the right to issue, at any time, obligations including, but not limited to, Subordinate Lien
Obligations, payable from and equally and ratably secured, in whole or in part, by a lien on and pledge of the
Pledged Revenues, subordinate and inferior in rank and dignity to the lien on and pledge of such Pledged Revenues
securing the payment of the Parity Obligations, as may be authorized by the laws of the State of Texas.
The Parity Obligations are limited, special obligations of the City payable from and equally and ratably secured
solely by a first lien on and pledge of the Pledged Revenues, and the Holders thereof shall never have the right to
demand payment of the principal or interest on the Parity Obligations from any funds raised or to be raised through
taxation or any other resources of the City.
The Events of Default and remedies thereof shall be as defined and provided in the Indenture.
(a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a
"Defeased Bond ") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this
Section, when payment of the principal of such Defeased Bond, plus interest thereon to the due date (whether such
due date be by reason of maturity, upon redemption or otherwise) either (i) shall have been made or caused to be
made in accordance with the terms thereof (including the giving of any required notice of redemption or irrevocable
provisions for the giving of the notice of redemption having been made), or (ii) shall have been provided for on or
before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such
payment (1) lawful money of the United States of America sufficient to make such payment (2) Government
Obligations which mature as to principal and interest in such amounts and at such times as will insure the
availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements
have been made by the City with the Paying Agent/Registrar for the payment of its services until all Defeased
Bonds shall have become due and payable or (3) any combination of (1) and (2). At such time as a Bond shall be
deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be
secured by, payable from or entitled to the benefits of, the Pledged Revenues as provided in this Ordinance, and
such principal and interest shall be payable solely from such money or Government Obligations.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the City
also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all
income from such Government Obligations received by the Paying Agent/Registrar which is not required for the
payment of Parity Obligations and interest thereon, with respect to which such money has been so deposited, shall
be turned over to the City, or deposited as directed in writing by the City.
(c) The term " Government Obligations" as used in this Section, shall mean direct obligations of the
United States of America, including obligations which are unconditionally guaranteed by the United States of
America, which may be United States Treasury obligations such as its State and Local Government Series, which
may be in book -entry form.
(d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall
perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased,
and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance.
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(a) The holders of the Parity Obligations aggregating a majority in principal amount of the aggregate
principal amount of then Outstanding Parity Obligations shall have the right from time to time to approve any
amendment to this Ordinance which may be deemed necessary or desirable by the City, provided, however, that
without the consent of the holders of all of the effected Parity Obligations at the time outstanding, nothing herein
contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in
the Parity Obligations so as to:
(1) Make any change in the maturity of the Outstanding Parity Obligations;
(2) Reduce the rate of interest borne by any of the Outstanding Parity Obligations;
(3) Reduce the amount of the principal payable on the Outstanding Parity Obligations;
(4) Modify the terms of payment of principal of or interest on the Outstanding Parity Obligations or
impose any conditions with respect to such payment;
(5) Affect the rights of the holders of less than all of the Parity Obligations then outstanding;
(6) Change the minimum percentage of the principal amount of Parity Obligations necessary for
consent to such amendment.
(b) If at any time the City shall desire to amend this Ordinance under this Section, the City shall cause
notice of the proposed amendment to be published in a financial newspaper or journal of general circulation in The
City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such
notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file for
inspection by all registered owners of Parity Obligations at the designated trust office of the registrar for the Parity
Obligations. Such publication is not required, however, if notice in writing is given to each registered owner of the
Parity Obligations.
(c) Whenever at any time not less than thirty days, and within one year, from the date of the first
publication of said notice or other service of written notice the City shall receive an instrument or instruments
executed by the holders of at least a majority in aggregate principal amount of all Parity Obligations then
Outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and
which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with
the Trustee, the City Council may pass the amendatory ordinance in substantially the same form.
(d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this
Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and the respective rights,
duties and obligations under this Ordinance of the City and all the holders of then Outstanding Parity Obligations
shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such amendments.
(e) Any consent given by the registered owner of a Parity Obligation pursuant to the provisions of
this Section shall be irrevocable for a period of six months from the date of the first publication of the notice
provided for in this Section, and shall be conclusive and binding upon all future holders of the same Parity
Obligation during such period. Such consent may be revoked at any time after six months from the date of the first
publication of such notice by the holder who gave such consent, or by a successor in title, by filing notice thereof
with the Paying Agent and the City, but such revocation shall not be effective if the registered owners of at least a
majority in aggregate principal amount of the then outstanding Parity Obligations as in this Section defined have,
prior to the attempted revocation, consented to and approve the amendment.
(f) For the purpose of this Section, the fact of the holding of Parity Obligations issued in registered
form without coupons and the amounts and numbers of such Parity Obligations and the date of their holding same
shall be proved by the Registration Books of the Paying Agent/Registrar. For purposes of this Section, the holder of
a Parity Obligation in such registered form shall be the owner thereof as shown on such Registration Books. The
City may conclusively assume that such ownership continues until written notice to the contrary is served upon the
City.
(g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council
may amend this Ordinance and the Indenture for any one or more of the following purposes:
(1) To add to the covenants and agreements of the City in this Ordinance contained, other covenants
and agreements thereafter to be observed, grant additional rights or remedies to bondholders or to surrender, restrict
or limit any right or power herein reserved to or conferred upon the City;
(2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting or
supplementing any defective provision contained in this Ordinance, or in regard to clarifying matters or questions
arising under this Ordinance, as are necessary or desirable and not contrary to or inconsistent with this Ordinance
and which shall not adversely affect the interests of the holders of the Parity Obligations;
(3) To make any changes or amendments requested by any Rating Agency, as a condition to the
issuance or maintenance of a rating, which changes or amendments do not, in the judgment of the City, materially
adversely affect the interests of the owners of the outstanding Parity Obligations;
(4) To make such changes, modifications or amendments as may be necessary or desirable, which
shall not adversely affect the interests of the owners of the outstanding Parity Obligations, in order, to the extent
permitted by law, to facilitate the economic and practical utilization of credit agreements with respect to the Parity
Obligations including, without limitation, supplementing the definition of "Annual Debt Service Requirements" to
address the amortization of payments due and owing under a credit agreement;
(5) To modify any of the provisions of this Ordinance in any other respect whatever, provided that (i)
such modification shall be, and be expressed to be, effective only after all Parity Obligations outstanding at the date
of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically
referred to in the text of all Additional Parity Obligations issued after the date of the adoption of such modification.
Notice of any such amendment may be published or given by the City in the manner described in subsection (b) of
this Section; provided, however, that the publication of such notice shall not constitute a condition precedent to the
adoption of such amendatory ordinance and the failure to publish such notice shall not adversely affect the
implementation of such amendment as adopted pursuant to such amendatory ordinance.
APPENDIX E
EXCERPTS OF CERTAIN PROVISIONS OF THE INDENTURE
EXCERPTS FROM THE INDENTURE
The following are excerpts of certain provisions of the Indenture to be adopted by the City Council authorizing the
issuance of the Bonds. Such excerpts do not purport to be complete and reference should be made to the Indenture
for the entirety thereof. Copies of the Indenture are available upon request to the City or the City's Bound Counsel.
DEFINITIONS
"Bond Insurer" means the provider of a Reserve Fund Obligation, if any, with respect to the Bonds and
any entity that insure or guarantees the payment of principal and interest on any Additional Parity Obligations.
"Business Day" means any day which is not a Saturday, Sunday, a legal holiday or a day on which
banking institutions in the city where the Trustee or Paying Agent/Registrar is located are authorized by law or
executive order to close.
"Capital Improvements" means all property or interests in property, real, personal and mixed (a) which
constitutes additions, improvements or extraordinary repairs to or replacements of all or any part of the Convention
Center Complex and (b) the costs of which is properly capitalized under generally accepted accounting principles.
"Capital Repairs" means work necessary to repair, restore, replace or refurbish any equipment, facility,
structure or other component of the Convention Center Complex that does not constitute a Capital Improvement.
"Commencement Date" means the thirtieth day following the substantial completion date of the
Convention Center Complex or the date on which Lessee opens the Convention Center Complex to the public,
whichever first occurs.
"Costs of Issuance" means the fees and expenses of the City Attorney, Bond Counsel, the City's Financial
Advisor, the costs of printing and distributing any offering documents and other related costs approved by the City
Council.
"Event of Default" shall mean any Event of Default described in Section 6.01 of this Indenture.
"Paying Agent/Registrar" shall mean the bank or trust company so designated in the Ordinance.
"Permitted Investment" means any security or obligation or combination thereof permitted under the
Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended or other applicable law and the
City's investment policy.
"Required Reserve Amount" means the amount required to be maintained in the Reserve Fund pursuant
to the provisions Section 4.09 of the Indenture.
"Required Reserve Fund Deposits" means the deposits and credits, if any, required to be made to the
Reserve Fund pursuant to the provisions of Section 4.04 of the Indenture.
"Reserve Fund Obligation" means, to the extent permitted by law, as evidenced by an opinion of
nationally recognized bond counsel, a surety bond or insurance policy (which, under applicable law, shall not entitle
the provider thereof to any right of reimbursement or repayment other than a right to subrogation upon payments
being made to Holders) deposited in the Reserve Fund to satisfy the Required Reserve Amount whereby the issuer
is obligated to provide funds up to and including the maximum amount and under the conditions specified in such
agreement or instrument.
"Reserve Fund Obligation Payment" means any subrogation payment the City is obligated to make from
Pledged Revenues deposited in the Reserve Fund with respect to a Reserve Fund Obligation.
"Trustee" means Chase Bank of Texas, National Association or any successor thereto.
SECTION 3.01. Authorization of Parity Obligations.
(a) The Parity Obligations may be authorized from time to time by the City pursuant to a separate
Supplemental Ordinance duly adopted by the City Council of the City, which Supplemental Ordinance shall specify
the dates, denominations, principal amounts, interest rates, maturities, redemption provisions, whether a reserve
fund or other pledged funds are being utilized for that series of Parity Obligations, forms of bonds, manner of
payment, provision for execution and authentication, application of proceeds and all other terms and provisions of
the Parity Obligations not otherwise provided herein.
(b) At or prior to the issuance of each series of Parity Obligations pursuant to any Supplemental
Ordinance, the City shall provide to the Trustee the following:
(i) a certified copy of the Supplemental Ordinance;
(ii) the opinion of the City's bond counsel, with respect to such series of Parity Obligations;
(iii) if such series of Parity Obligations are being issued to refund any previously issued
Parity Obligations, the identity, redemption date and redemption price of the Parity Obligations to be
refunded;
(iv) copies of the requirements specified in the Ordinance and any Supplemental Ordinance
relating to the issuance of Additional Parity Obligations; and
(v) the amount of the Required Reserve Amount and other funding requirements, if any, as
such may have been modified based upon the issuance of such Additional Parity Obligations.
ARTICLE IV
FUNDS AND INVESTMENTS
SECTION 4.01. Creation of Funds.
(a) There are hereby created the following funds with respect to any Parity Obligations:
(i) Revenue Fund; and
(ii) Debt Service Fund.
(b) With respect to the Bonds authorized pursuant to the Ordinance, there are hereby created the
following additional funds:
(i) Reserve Fund;
(ii) City Project Fund;
(iii) RSR Project Fund;
(iv) Capital Repair Fund; and
(v) Capital Improvement Fund.
Each fund shall be maintained by the Trustee separate and apart from all other funds of the City. The Pledged
Funds shall constitute trust funds which shall be held in trust by the Trustee solely for the benefit of the Owners of
the Parity Obligations.
Section 4.02. Revenue Fund. On February 15th, May 15th, August 15th and November 15th of each
year while the Parity Obligations are outstanding, commencing August 15, 2000, the City shall deposit or cause to
be deposited into the Revenue Fund the Pledged Revenues which shall be applied and appropriated in accordance
with Section 4.09 hereof.
SECTION 4.03. Debt Service Fund. Money in the Debt Service Fund shall be used to pay the principal of
a redemption premium, if any, and interest on the Parity Obligations as the same become due and payable. Money
in this fund is pledged to secure the equal and ratable payment of all Parity Obligations. Accrued interest and
capitalized interest, if any, received from the purchaser of any Parity Obligation shall be taken into consideration
and reduce the amount of the quarterly deposits and credits required into the Debt Service Fund so provided in
Section 4.09 of this Indenture.
SECTION 4.04. Reserve Fund.
(a) To accumulate and maintain a reserve for the payment of the Bonds equal to the Average Annual
Debt Service Requirements of the Bonds (calculated by the City at the beginning of each Fiscal Year) (the
"Required Reserve Amount "), the Reserve Fund has been established and shall be maintained by the City. Upon
delivery of the Bonds, the City shall deposit one -half of the Required Reserve Amount from the proceeds of the
Bonds. Thereafter, the City shall make the Required Reserve Deposits to the Reserve Fund from Pledged Revenues
in accordance with Section 4.09 by making quarterly deposits and credits on or before each February 15th, May
15th, August 15th and November 15th in amounts equal to not less than 3 /60th of the Required Reserve Amount
until the Required Reserve Amount is accumulated. Earnings and income derived from the investment of amounts
held for the credit of the Reserve Funds shall be retained in the Reserve Fund until the Reserve Fund contains the
Required Reserve Amount; thereafter, such earnings and income shall be deposited to the credit of the Revenue
Fund. As provided in Section 4.09, the City shall deposit and credit to the Reserve Fund amounts required to
accumulate and maintain the balance in the Reserve Fund in an amount equal to the Required Reserve Amount.
There shall be deposited into the Reserve Fund any Reserve Fund Obligations so designated by the City. All funds,
investments and Reserve Fund Obligations on deposit and credited to the Reserve Funds shall be used solely for (i)
the payment of the principal of and interest on the Bonds, when and to the extent other funds available for such
purposes are insufficient, (ii) to make Reserve Fund Obligation Payments and (iii) to retire the last Stated Maturity
or Stated Maturities of principal or interest on the Bonds.
(b) When and for so long as the cash, investments and Reserve Fund Obligations in the Reserve Fund
equal the Required Reserve Amount, no deposits need be made to the credit of the Reserve Fund; but, if and when
the Reserve Fund at any time contains less than the Required Reserve Amount, the City covenants and agrees that
the City shall cure the deficiency in the Reserve Fund by resuming the Required Reserve Fund Deposits to such
fund from the available Pledged Revenues; provided, however, that no such deposits shall be made into the Reserve
Fund until there has been deposited into the Debt Service Fund the full amount required to be deposited therein by
the next following December 1 and June I, as the case may be. In addition, in the event that a portion of the
Required Reserve Amount is represented by a Reserve Fund Obligation, the Required Reserve Amount shall be
restored as soon as possible from deposits of the available Pledged Revenues on deposit in the Revenue Fund in
accordance with Section 4.09, but subject to making the full deposits and credits to the Debt Service Fund required
to be made by the next following December 1 and June 1, as the case may be. The City further covenants and
agrees that, subject only to the prior deposits and credits to be made to the Debt Service Fund, the Pledged
Revenues shall be applied and appropriated and used to establish and maintain the Required Reserve Amount,
including by paying Reserve Fund Obligation Payments when due, and any reserve established for the benefit of
any issue or series of Additional Parity Obligations and to cure any deficiency in such amounts as required by the
terms of the Bond Ordinance and any other Supplemental Ordinances pertaining to the issuance of Additional Parity
Obligations.
During such time as the Reserve Fund contains the Required Reserve Amount or any cash is replaced with a
Reserve Fund Obligation pursuant to subsection (c) below, the City may, at its option, withdraw all surplus funds in
the Reserve Fund and deposit such surplus in the Debt Service Fund or otherwise use such amount in any manner
permitted by law.
(c) A Reserve Fund Obligation issued in an amount equal to all or part of the Required Reserve
Amount for the Bonds may be used in lieu of depositing cash into the Reserve Fund. In addition, a Reserve Fund
Obligation may be substituted for monies and investments in the Reserve Fund if the substitution of the Reserve
Fund Obligation will not, in and of itself, cause any ratings then assigned to the Bonds by any Rating Agency to be
lowered and the ordinance authorizing the substitution of the Reserve Fund Obligation for all or part of the
Required Reserve Amount contains a finding that such substitution is cost effective.
(d) A Reserve Fund Obligation permitted under (a) above, must be in the form of a surety bond or
insurance policy meeting the requirements described below.
(1) (i) A surety bond or insurance policy issued to the Trustee, as agent of the Holders, by a
company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Parity
Obligations (a "municipal bond insurer ") if the claims paying ability of the issuer thereof shall be rated "AAA" or
"Aaa ", respectively, by S &P and Moody's, or (ii) a surety bond or insurance policy issued to the Trustee, as agent
of the Holders, by an entity other than a municipal bond insurer, if the form and substance of such instrument and
the issuer thereof shall be approved in writing by each Bond Insurer of record.
(2) The obligation to reimburse the issuer of a Reserve Fund Obligation for any claims or
draws upon such Reserve Fund Obligation in accordance with its terms, including expenses incurred in connection
with such claims or draws, to the extent permitted by law, (a Reserve Fund Obligation Payment) shall be made from
the deposits made to the Reserve Fund as provided in this Section and in Section 4.09. The Reserve Fund
Obligation shall provide for a revolving feature under which the amount available thereunder will be reinstated to
the extent of any reimbursement of draws or claims paid. If the revolving feature is suspended or terminated for any
reason, the right of the issuer of the Reserve Fund Obligation to reimbursement will be subordinated to the cash
replenishment of the Reserve Fund to an amount equal to the difference between the full original amount available
under the Reserve Fund Obligation and the amount then available for further draws or claims. In the event (a) the
issuer of a Reserve Fund Obligation becomes insolvent, or (b) the issuer of a Reserve Fund Obligation defaults in its
payment obligations thereunder, or (c) the claims paying ability of the issuer of the insurance policy or surety bond
falls below "AAA" or "Aaa ", by S &P and Moody's, respectively, the obligation to reimburse the issuer of the
Reserve Fund Obligation shall be subordinated to the cash replenishment of the Reserve Fund.
(3) In the event (a) the revolving reinstatement feature described in the preceding paragraph
is suspended or terminated, or (b) the rating of the claims paying ability of the issuer of the surety bond or insurance
policy falls below "AAA" or "Aaa ", by S &P and Moody's, respectively, the City shall either (i) deposit into the
Reserve Fund, in accordance with this Section and Section 4.09, an amount sufficient to cause the cash or
investments credited to the Reserve Fund to accumulate to the Required Reserve Amount, or (ii) replace such
instrument with a surety bond or insurance policy meeting the requirements of I and 2 above, within six months of
such occurrence. In the event (a) the rating of the claims - paying ability of the issuer of the surety bond or insurance
policy falls below "A" by S &P and Moody's, or (b) the issuer of the Reserve Fund Obligation defaults in its
payment obligations hereunder, or (c) the issuer of the Reserve Fund Obligation becomes insolvent, the City shall
either (i) deposit into the Reserve Fund, in accordance with this Section, amounts sufficient to cause the cash or
investments on deposit in the Reserve Fund to accumulate to the Required Reserve Amount, or (ii) replace such
instrument with a surety bond or insurance policy meeting the requirements of 1 and 2 above within six months of
such occurrence.
(4) The Trustee shall ascertain the necessity for a claim or draw upon any Reserve Fund
Obligation and provide notice to the issuer of the Reserve Fund Obligation in accordance with its terms not later
than three days (or such appropriate time period as will, when combined with the timing of required payment under
the Reserve Fund Obligation, ensure payment under the Reserve Fund Obligation on or before the interest payment
date) prior to each date upon which the principal of or interest on the Parity Obligations will be due.
SECTION 4.05. Capital Repair Fund. Money in the Capital Repair Fund may be used for one or more of
the following purposes:
(a) Paying Capital Repairs; and
(b) Paying the principal of, premium, if any, and interest on the Bonds upon Stated Maturity,
redemption or interest payment date when moneys in the special funds created solely for the payment and security
thereof are insufficient to make a required payment on the Bonds.
For purposes of providing an amount in the Capital Repair Fund sufficient to meet the Capital Repair needs, the
City agrees to cause to be deposited to the Capital Repair Fund, from available Pledged Revenues commencing on
the Commencement Date, quarterly deposits until a total sum of $250,000 has accumulated. No further deposits
need be made into the Capital Repair Fund after there has accumulated in such fund $250,000. Whenever any
money is disbursed from the fund, quarterly deposits shall be resumed and continued so that the fund may be
restored to $250,000.
Disbursements from the Capital Repair Fund shall be made pursuant to a requisition presented to the Trustee in
substantially the form of EXHIBIT B.
SECTION 4.06. Capital Improvement Fund. Money in the Capital Improvement Fund may be used for
one or more of the following purposes:
(a) Paying Capital Improvements; and
(b) Paying the principal of, premium, in any, and interest on the Bonds upon Stated Maturity,
redemption or interest payment date when money in the special funds created solely for the payment and security
thereof are insufficient to make a required payment on the Bonds.
For purposes of providing an amount in the Capital Fund sufficient to meet the Capital Improvement needs, the City
agrees to cause to be deposited to the Capital Fund, from available Pledged Revenues commencing on the Business
Day nearest to the sixth year following the Commencement Date, $100,000 annually until a total sum of $500,000
has accumulated. No further deposits need be made into the Capital Fund after there has accumulated in such fund
$500,000. Whenever any money is disbursed from the fund, deposits of $100,000 annually shall be resumed and
continued so that the fund may be restored to $500,000.
Disbursements from the Capital Improvement Fund shall be made pursuant to a requisition presented to the Trustee
in substantially the form of EXHIBIT B.
SECTION 4.07. City Project Fund. The Bond proceeds remaining after deposits to the Debt Service Fund
and Reserve Fund shall be deposited to the City Project Fund. Bond proceeds and investment earnings on deposit in
the City Project Fund shall be used for the following purposes:
(a) Paying the costs of issuance of the Bonds;
(b) Paying the costs in connection with the Convention Center Complex including any reimbursement
to the City in connection with such costs; and
(c) Paying principal of, premium, if any, and interest on the Bonds upon Stated Maturity, redemption
or interest payment date when money in the special funds created solely for the payment and security thereof are
insufficient to make a required payment on the Bonds.
Disbursements from the City Project Fund shall be made pursuant to a requisition presented to the Trustee in
substantially the form of EXHIBIT C.
SECTION 4.08. RSR Project Fund. The RSR Contribution shall be deposited to the RSR Project Fund
and shall be used to pay costs of issuance of the Bonds and the costs in connection with the Convention Center
Complex. Disbursements from the RSR Project Fund shall be made pursuant to a requisition presented to the
Trustee in substantially the form of EXHIBIT C. Amounts on deposit in the RSR Project Fund shall be disbursed
by the City prior to the disbursement amounts on deposit in the City Project Fund except the payment of Costs of
Issuance which shall be disbursed from the City Project Fund.
SECTION 4.09. Flow of Funds. All Pledged Revenues deposited to the Revenue Fund shall be applied
and appropriated to the extent required for the following uses and in the order of precedence shown below. Each
fund shall contain the amount required to be on deposit therein prior to making any additional deposits to the funds
set forth below:
FIRST: to the payment of the amounts required to be deposited in the Debt Service Fund for the payment
of principal of, premium, if any, and interest on the Parity Obligations as the same become due and payable
(whether at Stated Maturity or upon redemption). The Trustee shall deposit into the Debt Service Fund an amount
equal to 100% of the amount required to pay fully the next scheduled interest and principal and redemption
payments for the Parity Obligation, such payments to be made in substantially equal quarterly installments on or
before the 15th day of each February, May, August and November.
SECOND: pro rata to the payment of the amounts required to be deposited to (a) the Reserve Fund created
by the Ordinance to accumulate and maintain the Required Reserve Amount and (b) each other reserve fund created
and established to maintain a reserve in accordance with the provisions of the Supplemental Ordinance relating to
the issuance of any Additional Parity Obligations hereafter issued by the City.
THIRD: pro rata to the payment of the amounts required to be deposited to (a) the Capital Repair Fund
created by the Ordinance to accumulate and maintain $250,000 in accordance with Section 4.05 hereof and (b) each
other capital repair fund, if any, created and maintained as a repair fund in accordance with the provisions of the
Supplemental Ordinance relating to the issuance of any Additional Parity Obligations hereafter issued by the City.
FOURTH: pro rata to the payment of the amount required to be deposited to (a) the Capital Improvement
Fund created by the Ordinance to accumulate and maintain $500,000 in accordance with Section 4.06 hereof and (b)
each other capital improvement fund, if any, created and maintained as an improvement fund in accordance with the
provisions of the Supplemental Ordinance relating to the issuance of any Additional Parity Obligations hereafter
issued by the City.
FIFTH: to the payment of Subordinate Lien Obligations.
SIXTH: all remaining Pledged Revenues shall be transferred to the Revenue Fund to be used for any
lawful purpose and transferred or disbursed in accordance with written instructions from the City.
SECTION 4.10. Deficiencies - Excess Pledged Revenues.
(a) If on any occasion there shall not be sufficient Pledged Revenues (after making all payment
pertaining to all Parity Obligations) to make the required deposits and credits to the Debt Service Fund, the Reserve
Fund, the Capital Repair Fund and the Capital Improvement Fund, then such deficiency shall be cured as soon as
possible from the next available unallocated Pledged Revenues and such deposits and credits shall be in addition to
the amounts otherwise required to be deposited and credited to these Funds.
(b) Subject to making the deposits and credits required by the Ordinance, or any Supplemental
Ordinance authorizing the issuance of Additional Parity Obligations, or the payments and credits required by the
provisions of the ordinances authorizing the issuance of Subordinate Lien Obligations hereafter issued by the City,
the excess Pledged Revenues may be used for any lawful purpose.
Funds.
SECTION 4.11. Investment of Funds — Valuation — Transfer of Investment Income, Security for
(a) Money in the Funds may, at the written direction of the City, be invested in Permitted
Investments; provided that all such deposits and investments shall be made in such manner that the money required
to be expended from any fund will be available at the proper time or times. All such investments shall be valued in
terms of current market value no less frequently than the last Business Day of the City's Fiscal Year, except that any
direct obligations of the United States of America - State and Local Government Series shall be continuously valued
at their par value or principal face amount. For purposes of maximizing investment returns, money in such funds
may be invested together in common investments of the kind described above, or in a common pool of such
investments held by the Trustee or its designated agent on behalf of the City, which shall not be deemed to be or
constitute a commingling of such money or funds provided that safekeeping receipts or certificates of participation
clearly evidencing the investment or investment pool in which such money is invested and the share thereof
purchased with such money or owned by such fund are held by or on behalf of each such fund. If necessary, such
investments shall be promptly sold to prevent any default.
(b) All interest and income derived from such investments (other than interest and income derived
from amounts credited to the Reserve Fund if the Reserve Fund does not contain the Required Reserve Amount)
shall be credited to the Revenue Fund quarterly and shalt constitute Pledged Revenues,
(c) All money on deposit in the Funds (except any portion thereof as may be at any time properly
invested) shall be secured in the manner and to the fullest extent required by the laws of Texas for the security of
public funds and moneys on deposit in such Funds shall be used only for the purposes permitted by this Indenture.
(d) The Trustee shall not be responsible for determining whether or not any Permitted Investments are
legal investments under the laws of the State. The Trustee shall not be liable for any loss arising from investments
made in accordance with this Section, for the Parity Obligations becoming "arbitrage bonds" by reason of any
investments so made, or for any loss resulting from the redemption or sale of any such investments as authorized by
this Section. The Trustee is specifically authorized to implement its automated cash investment system to assure
that cash on hand is invested and to charge its usual cash management fees, which may be deducted from income
earned on investments. The Trustee may make any investments through its own bond or securities department, may
act as principal or agent in the making or disposing of any investments, and may act as sponsor, advisor or manager
in connection with any such investments. The provisions of this subsection shall apply to affiliates of the Trustee.
ARTICLE V
COVENANTS OF THE CITY CONCERNING THE PARITY OBLIGATIONS
SECTION 5.01. Payment of Parity Obligations and Performance of Obligations. The City covenants to
promptly pay or cause to be paid the principal of, redemption premium, if any, and interest on the Parity Obligations
as the same become due and payable, whether at maturity or by prior redemption, in accordance with the terms of
the Parity Obligations and the Ordinance and any Supplemental Ordinance; to pay when due all fees, charges and
other amounts due to the Trustee and the Paying Agent/Registrar for the discharge of its duties hereunder; and to
faithfully keep and perform all of its covenants, undertakings and agreements contained in this Indenture, the
Ordinance, the Supplemental Ordinance and the Parity Obligations.
SECTION 5.02. Recordation and Execution of Security Instruments. The City covenants to cause this
Indenture, any supplemental indentures and all other security instruments, financing statements and supplements
thereto that may be necessary, to be filed, recorded, refiled and rerecorded, in such manner, at such times and in
such places as may be required by law in order to fully preserve and protect the rights and security of the Owners of
the Parity Obligations and to perfect and preserve the lien of this Indenture. Without limiting the generality of the
foregoing, the City shall execute and deliver such additional instruments and perform such additional acts as may be
necessary and proper after the execution of this Indenture and to transfer to any successor Trustee or Trustees the
assets, powers, instruments and funds held in trust hereunder and to confirm the lien of this Indenture with respect
to any Bond or Additional Parity Obligations, and shall take all action that may at any time be necessary, in the
opinion of the Trustee, to secure the interests of the Owners of the Parity Obligations.
SECTION 5.03. Title; Encumbrances of Pledged Revenues. The City covenants that it has good and
indefeasible title to the Pledged Revenues, subject to the assignments and pledges contained herein. So long as any
Parity Obligations remain outstanding, except as permitted by Section 5.04 of this Indenture, the City covenants not
to sell, transfer, assign, pledge, encumber, mortgage or otherwise dispose of, directly or indirectly, by merger or
otherwise, or cause or suffer same, or create or allow to accrue or exist any lien upon, all or any part of its interest in
the Pledged Revenues or any portion thereof, except for the lien of this Indenture and except as further provided in
the Bond Ordinance and any Supplemental Ordinances.
SECTION 5.04. Pledged Revenues Not Encumbered. The Pledged Revenues are not in any manner
pledged to the payment of any debt or obligation of the City other than the Parity Obligations. The City covenants
that it will not in any manner pledge or further encumber the Pledged Revenues unless such pledge or encumbrance
is junior and subordinate to the lien and pledge hereunder securing the Parity Obligations.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An Event of Default hereunder shall consist of any of the following
acts or occurrences:
(a) failure to pay when due the principal, redemption price, or interest on any Panty Obligation; or
(b) failure to deposit to the Debt Service Fund money sufficient for the payment of any principal of or
interest payable on the Parity Obligations by no later than.the date when it becomes due and payable.
SECTION 6.02. Notices. In order to provide the City with information with respect to its obligations under
this Indenture, the Trustee shall provide the City the following notices:
(a) Notice of any draws upon the Reserve Fund which are required to be transferred to the Debt
Service Fund for the payment of, principal of or interest on any Parity Obligations, together with the description of
the amount drawn; and
(b) On or before the last Business Day after the end of each month, furnish to the City an accounting
statement on the status of each of the Funds created under Section 4.01.
SECTION 6.03. Notice of Default. The Trustee shall also be required to give immediate notice to the City
of any Event of Default thereunder.
SECTION 6.04. Remedies in General. If an Event of Default hereunder shall occur and be continuing,
then, in addition to all of the other rights and remedies granted to the Trustee hereunder, the Trustee in its discretion,
subject to the provisions of this Indenture may proceed to protect and enforce its rights and the rights of the Owners
of Parity Obligations by suit, action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Indenture, the Ordinance, any Supplemental Ordinance
or Parity Obligations or in aid of the execution of any power granted in this Indenture or for the enforcement of any
other legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect
and enforce any of the rights of the Trustee or such Owners of the Parity Obligations, including, without limitation,
the right to seek a writ of mandamus issued by a court of competent jurisdiction compelling the City Council of the
City to make any Pledged Revenues available (but only from and to the extent of the sources provided in this
Indenture, the Ordinance and any Supplemental Ordinance) or to observe and perform such covenant, obligations or
conditions of this Indenture, the Ordinance and any Supplemental Ordinance.
SECTION 6.05. Appointment of Receivers. If an Event of Default hereunder shall occur and be
continuing, and upon filing of a bill in equity or commencement of other judicial proceedings to enforce the rights
of the Trustee and the Owners hereunder, the Trustee shall be entitled as a matter of right, and to the extent
permitted by law, to the appointment of a receiver or receivers of the Pledged Revenues and the income, rents,
profits and use thereof pending such proceedings, with such powers as the court making such appointment shall
confer.
SECTION 6.06. Trustee May Act Without Possession of Parity Obligations. All rights of action under
this Indenture or under any Parity Obligations may be enforced by the Trustee without possession of any of the
Parity Obligations or the production thereof on any trial or other proceedings relative thereto, and any such suit or
proceedings instituted by the Trustee shall be brought in its name, as Trustee for the ratable benefit of the Owners of
the Parity Obligations, subject to the provisions of this Indenture.
SECTION 6.07. Trustee as Attorney in Fact. The Trustee is hereby appointed (and the Owners of the
Parity Obligations, by taking and owning same from time to time, shall be deemed to have so appointed the Trustee)
the true and lawful attorney in fact of the Owners of the Parity Obligations, to make or file, in the names of the
Owners of the Parity Obligations, or on behalf of all Owners of the Parity Obligations as a class, any proof of debt,
amendment to proof of debt, petition or other document, and to do and perform any and all acts and things for and
in the name of the Owners of the Parity Obligations as a class as may be necessary or advisable, in the judgment of
the Trustee, in order to have the claims of the Owners of the Parity Obligations against the City approved in any
equity receivership, insolvency, liquidation, bankruptcy, reorganization or other proceedings to which the City shall
be a party and to receive payment of or on account of such claims. Any such receiver, assignee, liquidator or trustee
is hereby authorized by each of the Owners to make such payments to the Trustee, and, in the event that the Trustee
shall consent to the making of such payments directly to the Owners, to pay to the Trustee any amount due for
compensation and expenses of the Trustee, including counsel fees, incurred up to the date of such distribution, and
the Trustee shall have full power of substitution and delegation in respect of any such powers.
SECTION 6.08. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee 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 Parity Obligations, or now
or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or
acquiescence therein, and every such right and power may be exercised from time to time and as often as may be
deemed expedient.
SECTION 6.09. Limitation on Suits. All rights of action in respect of this Indenture shall be exercised
only by the Trustee, and no Owner of any Parity Obligation secured hereunder shall have any right to institute any
suit, action or proceeding at law or in equity for the appointment of a receiver or for any other remedy hereunder or
by reason hereto, unless and until the Trustee shall have received written request of the Owners of not less than
twenty-five percent (25 %) in aggregate principal amount of the Parity Obligations then Outstanding and shall have
been furnished reasonable indemnity satisfactory to it and shall have refused or neglected for ten (10) days
thereafter to institute such suit, action or proceedings. The making of such request and the fumishing of such
indemnity shall in each and every case be conditions precedent to the execution and enforcement by any Owner of
any Bond of the powers and remedies given to the Trustee hereunder and to the institution and maintenance by any
such Owner of any action or cause of action for the appointment of a receiver or for any other remedy hereunder,
but the Trustee may, in its discretion, and when thereunto duly requested in writing by the Owner of not less than
twenty-five percent (25 %) in aggregate principal amount of the Parity Obligations then Outstanding and when
furnished indemnity satisfactory to it to protect it against expenses, charges and liability shall, forthwith, take such
appropriate action by judicial proceedings or otherwise in respect of any existing default on the part of the City as
the Trustee may deem expedient in the interest of the Owners of the Parity Obligations.
Nothing contained in this Article, however, shall affect or impair the right of any Owner, which shall be absolute
and unconditional, to enforce the payment of the principal of, premium, if any, and interest on the Parity Obligations
of such Owner, but only out of the moneys for such payment as herein provided, or the obligation of the City, which
shall also be absolute and unconditional, to make payment of the principal of, premium, if any, and interest on the
Parity Obligations issued hereunder, but only out of the funds provided herein for such payment, to the respective
Owners thereof at the time and place stated in said Parity Obligations.
SECTION 6.10. Right of Owners of the Parity Obligations to Direct Proceedings. Notwithstanding any
provision of this Indenture to the contrary, the Owners of more than fifty percent (50 %) in aggregate principal
amount of the Parity Obligations then Outstanding shall have the right, at any time, by an instrument or instruments
in writing executed and delivered to the Trustee, to direct the time, method and place of conducting all proceedings
to be taken in connection with the enforcement of the terms and conditions of this Indenture or for any remedy
available to the Trustee or exercising any trust or power conferred on the Trustee or any other proceedings
hereunder; provided, however, that such direction shall not be contrary to law or the provisions of this Indenture,
and the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall
determine that the proceeding so directed would involve it in personal liability or would be unjustly prejudicial to
the Owners of the Parity Obligations not consenting.
SECTION 6.11. Restoration of Rights and Remedies. If the Trustee or any Owner of a Parity Obligation
has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Owner of a
Bond, then and in every such case the City, the Trustee and the Owners of the Parity Obligations shall, subject to
any determination in such proceeding, be restored severally and respectively to their former positions hereunder,
and thereafter all rights and remedies of the Trustee and the Owners of the Parity Obligations shall continue as
though no such proceeding had been instituted.
SECTION 6.12. Waiver of Stay or Extension Laws. To the extent that it may lawfully do so, the City
covenants that it will not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or
advantage of any stay or extension law whenever or wherever enacted, which may affect the covenants or the
performance of this Indenture. The City also covenants that it will not otherwise hinder, delay or impede the
execution of any power herein granted to the Trustee.
SECTION 6.13. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Owner of
any Parity Obligation to exercise any right or remedy accruing upon any Event of Default hereunder shall impair
any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every
right and remedy given by this Article or by law to the Trustee or to the Owners may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Owners of the Parity Obligations, as the
case may be.
ARTICLE VII
DISCHARGE
SECTION 7.01. Discharge by Payment. When all Parity Obligations have been paid in full as to principal
and as to interest and premium, if any, or when all Parity Obligations have become due and payable, whether at
maturity or by prior redemption or otherwise, and the City shall have provided for the payment of the whole amount
due or to become due on all Parity Obligations then Outstanding, including all interest which has accrued thereon or
which may accrue to the date of maturity or redemption by depositing with the Trustee or the Paying Agent/
Registrar, for payment of such outstanding Parity Obligations and the interest thereon and any premium which may
be due thereon, the entire amount due or to become due thereon, or amounts and investments sufficient to provide
for such payment as provided in the Ordinance and any Supplemental Ordinances, and the City shall also have paid
or caused to be paid all sums payable hereunder by the City, including the compensation due or to become due the
Trustee, then the Trustee shall, upon receipt of a letter of instructions from the City requesting the same, discharge
and release the lien of this Indenture and execute and deliver to the City such releases or other instruments as shall
be requisite to release the lien hereof.
ARTICLE IX
MODIFICATION OF INDENTURE
SECTION 9.01. Supplemental Indentures Not Requiring Consent of Owners of the Parity
Obligations. The City and the Trustee may, without the consent of the Owners of any of the Parity Obligations,
enter into one or more supplemental indentures, which shall form a part hereof, for any one or more of the following
purposes:
(a) to cure any ambiguity, inconsistency or formal defect or omission in this Indenture;
(b) to grant to or confer upon the Trustee for the benefit of the Owners of the Parity Obligations any
additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Owners of the
Parity Obligations or the Trustee or either of them;
(c) to subject to the lien of this Indenture additional revenues, properties or collateral;
(d) to modify, amend or supplement this Indenture or any supplemental indenture in such manner as
to provide further assurances that interest on the Parity Obligations will, to the greatest extent legally possible, be
excludable from gross income for federal income tax purposes;
(e) to obtain or maintain bond insurance or a rating for any Parity Obligations; and
(f) to modify, amend or supplement this Indenture or any supplemental indenture in such a manner to
make conforming changes necessary in connection with an amendment of the Ordinance or any Supplemental
Ordinance; provided, however, that no provision in such supplemental indenture shall be inconsistent with this
Indenture or shall impair in any manner the rights of the Owners of the Parity Obligations.
SECTION 9.02. Supplemental Indentures Requiring Consent of Owners of the Parity Obligations.
Except as otherwise provided in the preceding Section, any modification, change or amendment of this Indenture
may be made only by a supplemental indenture adopted by the City and executed by the City and the Trustee with
the consent of the Owners of not less than a majority of the aggregate principal amount of the Parity Obligations
then Outstanding,
Notwithstanding the preceding paragraph of this Section, no modification, change or amendment to this Indenture
shall, without the consent of the Owner of each Parity Obligation so affected, extend the time of payment of the
principal thereof or interest thereon, or reduce the principal amount thereof or premium, if any, or interest thereon
payable in any coin or currency other than that hereinbefore provided, or deprive such Owner of the lien hereof on
the revenues pledged hereunder. Moreover, without the consent of the Owner of each Parity Obligation then
Outstanding, no modification, change or amendment to this Indenture shall permit the creation of any lien on the
revenues pledged hereunder equal or prior to the lien hereof, or reduce the aggregate principal amount of Parity
Obligations, the Owners of which are required to approve any such modification, change or amendment of this
Indenture.
SECTION 9.03. Consents. Consents required pursuant to this Article shall be valid only if given following
the giving of notice by or on behalf of the City requesting such consent, setting forth the substance of the
supplemental indenture in respect of which such consent is sought and stating that copies thereof are available at the
office of the Trustee for inspection, to the Owners of Parity Obligations whose consent is required in accordance
with the provisions of this Article. Such notice shall be given by sending such notice by first -class mail, postage
prepaid, to the registered Owners of such Parity Obligations. Any consent or other action by an Owner of any Parity
Obligation in accordance with this Article shall bind every future owner of the same Parity Obligation and the
Owner of any Parity Obligation issued in exchange therefor or in lieu thereof.
APPENDIX F
FORM OF BOND COUNSEL'S OPINION
APPENDIX C
PROJECTION OF HOTEL TAX REVENUE
TO THE CITY OF ROUND ROCK, TEXAS
(The Report)
ERA
Economics Research Associates
Final Report
PROJECTION OF HOTEL TAX REVENUE TO
THE CITY OF ROUND ROCK, TEXAS
Prepared for
THE CITY OF ROUND ROCK, TEXAS
Submitted by
Economics Research Associates
February 16, 1999
ERA Project No. 12981
333 Market Srr =e[ Svire 1580
5s5 Fran.-,sco, CA 94111 EPA is arriiiared ..isn Drivers Jonas
4:5 958 3152 FAX 115.950.5221 .v.v .v 2 70r44r35f
Los Angeles 5311 Francisco San Diego
Chicago Dallas Washington DC London
Section
I INTRODUCTION
TABLE OF CONTENTS
GENERAL LIMITING CONDITIONS
II EXECUTIVE SUMMARY
Regional Demographic, Economic, and Hotel Trends
Planned Economic Development Projects, City of Round Rock
City of Round Rock Hotel Market
Projections of Hotel Tax Revenue to the City of Round Rock
III ANALYSIS OF REGIONAL SOCIO- ECONOMIC TRENDS
Socio- Economic Trends in the Austin -San Marcos MSA
Williamson County
IV SOCIO - ECONOMIC TRENDS IN ROUND ROCK AND
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY
Analysis of Socio- Economic Trends in the City of Round Rock
Projections of Hotel Tax Revenue to the City of Round Rock
I- 1
III- 1
III- 1
III- 4
IV- 1
IV- 1
IV- 7
POPULATION PROJECTIONS, AUSTIN-SAN MARCOS MSA
EMPLOYMENT TRENDS, AUSTIN-SAN MARCOS MSA
TREND IN UNEMPLOYMEN RATES, AUSTIN-SAN MARCOS MSA
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, AUSTIN-SAN
MARCOS MSA
III- 5 BUILDING PERMIT TRENDS, AUSTIN MSA
III- 6 TOURISM TRENDS FOR THE CITY OF AUSTIN
III- 7 AIRPORT ARRIVALS/DEPARTURES, AUSTIN
III- 8 HOTEL MARKET TRENDS, AUSTIN MSA
III- 9 TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
III -10 OVERVIEW OF AUSTIN HOTEL MARKET, 1 996/1 997
III -11 POPULATION PROJECTIONS, WILLIAMSON COUNTY
III -12 EMPLOYMENT TRENDS, WILLIAMSON COUNTY
III -13 TREND IN UNEMPLOYMENT RATES, WILLIAMSON COUNTY
LIST OF TABLES
III -14 TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, WILLIAMSON
COUNTY
III -15 BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
III -16 HOTEL MARKET TRENDS, WILLIAMSON COUNTY
IV- 1 TREND IN GROSS SALES, ALL MAJOR INDUSTRIES, CITY OF ROUND
ROCK
IV- 2 CORPORATE LOCATIONS/EXPANSIONS, CITY OF ROUND ROCK
ii
Table
IV- 3
IV- 4
LIST OF TABLES
MAJOR EMPLOYERS WITHIN A 15- MINUTE DRIVE OF DOWNTOWN
ROUND ROCK
SELECTED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND
ROCK
IV- 5 TRAFFIC COUNTS ON I -35 IN ROUND ROCK
N- 6 HOTEL MARKET TRENDS, ROUND ROCK
IV- 7 CITY OF ROUND ROCK, HOTEL/MOTEL BED TAX RECEIPTS
N- 8 CHARACTERISTICS OF HOTELS IN ROUND ROCK
N- 9 OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
IV-10 ANALYSIS OF POPULATION, EMPLOYMENT AND ROOMNIGHT
TRENDS
IV -11 PROJECTIONS OF HOTEL BED TAX REVENUE TO THE CITY OF ROUND
ROCK
iii
LIST OF FIGURES
Figure
I - 1 LOCATION OF THE CITY OF ROUND ROCK
III- 1 TOTAL JOBS IN THE AUSTIN — SAN MARCOS MSA
III- 2 HOTEL ROOMNIGHTS AND REVENUES, AUSTIN — SAN MARCOS MSA
III- 3 TOTAL JOBS IN WILLIAMSON COUNTY
IV- 1 HOTEL ROOMNIGHTS AND REVENUES, ROUND ROCK
IV- 2 PROJECTIONS OF POPULATION AND EMPLOYMENT: AUSTIN -SAN
MARCOS MSA
IV- 3 HISTORICL AND PROJECTED HOTEL ROOMNIGHT DEMAND
IV- 4 ROUND ROCK HOTEL MARKET: HISTORICAL AND PROJECTED
PERFORMANCE
iv
GENERAL LIMITING CONDITIONS
Every reasonable effort has been made in order that the data contained in this study reflect the most
accurate and timely information possible and it has been derived from sources believed to be reliable. •
This study is based on estimates, assumptions, and other information developed by Economics Research
Associates from its independent research effort, general knowledge of the hotel industry, and consultation
with representatives of the City of Round Rock. No responsibility is assumed for inaccuracies in
reporting by the client or representatives, or any other sources used in preparing or presenting this study.
This report is based on regional economic and demographic information that was current as of June 1998.
In addition, for data pertaining to the characteristics of hotels in Round Rock, and other information
pertaining to economic development projects in the City of Round Rock, this information was current as
of January 1999. Economics Research Associates has no responsibility to update or revise this report
subsequent to this date.
This study evaluates the effect of various factors, both present and anticipated in the future, which may
have an effect on future hotel tax revenues to the City of Round Rock, Texas. The projected lodging tax
revenues are influenced by many factors which cannot be foreseen. Many other significant influencing
factors may be unpredictable and unquantifiable, which would include weather, the general state of the
economy, continued strength of the area's key employers, a recession, technological changes, changing
competitive situations, changing visitation patterns, or possibly an over -built hotel market at some future
time, unforeseen construction problems or delays with respect to planned hotels, management strength in
developing and operating hotels, and the ability to attract new hotel business to the area. Unless expressly
identified, such other significant influencing factors have not been considered by ERA in the preparation
of this study and calculation of future hotel tax revenues to the City of Round Rock. Under differing
scenarios, these other significant influencing factors can have either positive or negative effects on
projected hotel tax revenues.
The scope of this study consisted primarily of evaluating secondary data sources supplemented by
interviews with representatives of management of existing hotels, the proponents of planned and proposed
hotels, and representatives of major employers in Round Rock. Although such information is deemed
reliable, no independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information.
No warranty or representation is made by Economics Research Associates that any of tax revenue
projections contained in this study will actually be achieved. Projections are based on estimating the
likelihood of future events and will probably differ from actual results; and these differences can be
material.
Possession of this study does not carry with it the right of publication thereof or to use the name
Economics Research Associates in any manner without first obtaining the prior written consent of
Economics Research Associates. No abstracting, excerpting or summarization of this study may be made
without first obtaining the prior written consent of Economics Research Associates. This report is not to
be used in conjunction with any public or private offering of securities or any other purpose where it may
be relied upon to any degree by any person other than the client without first obtaining the prior written
consent of Economics Research Associates. This study may not be used for purposes other than that for
which it is prepared or for which prior written consent has first been obtained from Economics Research
Associates.
This study is qualified in its entirety, and should be considered in light of these limitations, conditions,
and considerations.
Section I
INTRODUCTION
The City of Round Rock, Texas retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
annual hotel bed tax revenue stream which could flow to the City. If this revenue stream appears
sufficiently large, the City intends on issuing a revenue bond in order to capitalize on the future
value. As shown on Figure I -1, the City of Round Rock is located in Central Texas in
Williamson County in the Austin — San Marcos Metropolitan Statistical Area (MSA).
In April 1998, the City of Round Rock retained ERA to study the local hotel market and a
key component of this research effort was the collection and analysis of economic and
demographic statistics. In most cases, the most current annual data pertained to year -end 1997
and the following demographic and economic factors were analyzed:
• Population
• Employment
• Major Company Openings
• Building Permits
• Gross Sales In All Major Industries
• Tourism Statistics
• Airport Arrivals
• Traffic Counts on I -35
• Hotel Revenues and Roomnights
The above information was evaluated at three geographic levels:
L Austin — San Marcos MSA
2. Williamson County
3. Round Rock
Economics Research Associates I- I
Figure I -1
LOCATION OF THE CITY OF ROUND ROCK
Source: Map produced by the City of Round Rock Chamber of Commerce
In addition, ERA also conducted interviews with several different economic interest groups
in the area, including:
• Operators of existing hotel properties in the Round Rock and North Austin areas,
• Proponents of new hotels currently being planned or under construction in the City of
Round Rock, and,
• Major employers in Round Rock.
In December 1998, the City of Round Rock retained ERA to conduct a market update of
the first study. Since the year 1998 was not complete, and regional economic and demographic
data pertaining to year -end 1998 was not yet available, ERA's market update concentrated on the
following:
• The latest status of various economic development projects in the City of Round
Rock.
• The updated operating characteristics of existing hotels in Round Rock.
• An assessment of the three new hotels that opened in Round Rock the later part of
1998.
• The latest status of various planned and proposed hotels in Round Rock.
ERA's findings and conclusions regarding the basis of the hotel bed tax revenue
projections are summarized in the following Section II, and are presented in further detail in
subsequent sections of this report.
Economics Research Associates 1 -2
Section II
EXECUTIVE SUMMARY
The City of Round Rock, Texas retained Economics Research Associates (ERA) to
conduct an independent analysis of the hotel market in Round Rock, and to project the future
annual hotel bed tax revenue stream which could flow to the City. If this revenue stream appears
sufficiently large, the City intends on issuing a revenue bond in order to capitalize on the future
value. The City of Round Rock is situated within Williamson County which is part of the Austin
— San Marcos MSA (metropolitan statistical area).
REGIONAL DEMOGRAPHIC, ECONOMIC, AND HOTEL TRENDS
An important part of ERA's research effort was the analysis of demographic, economic,
and hotel growth trends for: 1) the Austin — San Marcos MSA, 2) Williamson County, and 3) the
City of Round Rock. As shown below, a key observation is that while historical growth in the
Austin — San Marcos MSA has been significant in recent years, in Williamson County, and in
Round Rock in particular, the rates of growth have been, and are expected to be, even higher:
• Projected average annual compound growth, population, 1998 - 2008:
— Austin — San Marcos MSA': 2.1 percent
— Williamson County: 4.4 percent
• Average annual compound growth, gross sales in all major industries, 1987 - 1997:
— Austin — San Marcos MSA: 10.1 percent
— Williamson County: 13.5 percent
• Average annual compound employment growth, 1990 to 1997:
— Austin — San Marcos MSA: 5.6 percent
— Williamson County: 8.1 percent
— Round Rock: over 16 percent (addition of over 13,000 jobs since 1991 associated
with new capital investment of over S400 million).
Economics Research Associates II -1
• Average annual compound growth, annual hotel rooms revenue, 1987 — 1997:
— Austin — San Marcos MSA: 13.5 percent
— Williamson County: 14.8 percent
— City of Round Rock: 17.6 percent
It is important to note that a key assumption incorporated into this analysis is that
Williamson County, and the City of Round Rock in particular, will continue to be a major and
growing node of future economic growth in the Austin — San Marcos MSA.
PLANNED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND ROCK
According to the Round Rock Chamber of Commerce, there are numerous planned
economic development projects in the City of Round Rock. It is impossible to predict which of
these projects will actually be built (if any), or the ultimate size, scale and timing of the facilities
that are built; however, it is useful to note that the following projects are proposed:
— Dell Computer: possible 550,000 square foot expansion to be completed in 1999
with estimated job creation of about 2,000.
— La Frontera: planned development of a 328 -acre mixed -use development on a site
located on the west side of I -35 just north of FM 1325 (just west and across the
interstate from Dell Computer). According to a representative of 35/45 Investors,
L.P., general partner for the project, principal components of the proposed
development would possibly include a "power center" consisting of major anchor
stores, a 16- screen movie theater, numerous restaurants, and a 300 -room full -
service hotel.
— City of Round Rock Convention Center Complex: there is currently a proposal to
build a convention center complex on a site located adjacent to Old Settlers Park
on Highway 79 in Round Rock. Two key components of the proposed project are
a convention center with approximately 10,000 square feet of meeting / exhibition
space and a 7,500 -seat minor - league professional baseball stadium. If built, the
stadium would accommodate the Round Rock Express, a AA affiliate of the
Major League Baseball Houston Astros organization. The scheduled opening
date for the complex is April 2000 and the Express would be scheduled to play 70
home games between April and September of each year. Nolan Ryan, a native
Economics Research Associates II -
Factor
Period Covered
Average Annual
Compound Growth
Rate
Hotel Roomnights
1987 through 1997
12.9 percent
Hotel Rooms Revenue
1987 through 1997
17.6 percent
Hotel Taxes, City of Round Rock
1988 through 1998
17.5 percent
Texan and recent inductee into the Major League Baseball Hall of Fame, would
have an ownership interest in the team. It should be noted that ERA cannot
predict whether or not this facility will actually be built. Also, ERA's hotel tax
projections did not consider any new hotel business this project might potentially
attract to Round Rock in the future.
— Cypress Semiconductor: construction of a $350 million project is proposed to
begin in the fourth quarter of 1999.
— Trend Technologies: A 62,000 square foot expansion is underway and, if
completed, is planned to open in March 1999.
- Security Capital: planned development of a 240,000 square foot facility with a
scheduled completion in the summer of 1999.
CITY OF ROUND ROCK HOTEL MARKET
Indicators of Growth
As shown below, the hotel market in the City of Round Rock has experienced significant
growth over the last ten years (a roomnight is defined as the rental of one hotel room for one
night):
Source: Tourism Division, Texas Department of Economic Development, City o __ oun . Roc
Economics Research Associates
II -3
Hotel Name
1997
1998
% Increase
Number of Rooms
404
404
0
Average Occupancy
65.9%
67.9%
3.0%
Average Daily Room Rate
$59.33
$60.70
2.3%
Hotel Name
ft of Rooms
Opening Date
Baymont
93
7/16/98
Marriott Courtyard
113
8/21/98
Crossland
124
12/21/98
Approximate Aggregate Operating Performance of Hotels in Round Rock as of June 30, 1998
The following is a two -year comparison of the approximate aggregate operating
performance for hotels located in the City of Round Rock as of June 30, 1998 (for cash reporting
purposes, the end of the City's fiscal year):
Source: Economics Research Associates
It should be noted that not included in the above are the following new hotels that opened
in Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
Interviews with Major Employers in Round Rock Regarding Hotel Utilization
Based on personal interviews conducted with representatives of major employers in the
City of Round Rock, it was reported to ERA that several major employers in Round Rock are
significant generators of hotel demand, and they expect this demand to increase along with
expected economic growth. However, there is currently significant "leakage" of hotel
roomnights outside of Round Rock to, primarily, hotels located in the North Austin / Airport
area. It was further reported that the major employers would prefer to house their people in
Round Rock, if possible, because convenience is important, and if new, more upscale hotels with
more meeting space were opened in Round Rock, they would likely utilize them with less
"leakage" of hotel roomnights out of Round Rock as a result.
Economics Research Associates Q-4
Assumed Changes to Hotel Supply, City of Round Rock, 1999 to 2005
ERA investigated the status of proposed hotels in Round Rock through a variety of
sources including the City of Round Rock Planning Department and individual proponents for
the projects. For a variety of reasons, it is impossible to predict which hotels, if any, will be
built, or the size, scale, and timing of the property. In addition, it is possible that, even for hotels
currently under construction, they may not open as planned.
ERA is aware of at least seven hotels which are proposed in Round Rock. Collectively,
they account for 981 rooms. It is important to note that, for purposes of this analysis, ERA has
incorporated the assumption that only those hotels currently under construction -- the 100 - room
Wingate Inn, the 96 -room Marriott Residence Inn, and the 122 -room Hilton Garden Inn -- will
actually enter the market over the 1999 to 2005 projection period. This represents 318 rooms out
of the 918 rooms proposed (35 percent). In addition, ERA incorporated the assumption that in
fiscal year 2000, approximately 100 rooms in older, less competitive properties will be taken out
of service.
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY OF ROUND ROCK
Overview of Methodology
ERA's approach to projecting hotel tax revenues to the City of Round Rock included the
analysis of two major elements: 1) historical and projected hotel demand, and 2) historical and
projected hotel supply. On the demand side, ERA developed a methodology which considered
the historical and projected relationship in the Austin — San Marcos MSA between population
and employment growth, and hotel roomnights. A key assumption incorporated into the analysis
was that, over the 1999 to 2005 time period, a significant portion of the net new regional
roomnights will be captured in Round Rock.
Other assumptions are as follows:
• Hotel rooms in Round Rock are subject to a 13 percent hotel occupancy tax with
seven percent accruing to the City of Round Rock and six percent accruing to the
State.
• Round Rock will continue to capture, at least, its fair share of the market for limited
service hotels.
Economics Research Associates
II -5
• The new hotel developments already under construction will open as planned;
however, for purposes of this analysis and the projections contained herein, other
proposed hotels, such as a full- service hotel at La Frontera, have not been included.
The following is an overview of the hotels assumed to enter the Round Rock hotel
market:
Hotel Name
Wingate
Marriott Residence Inn
Hilton Garden Inn
# Rooms
1
96
122
Assumed Opening Date
March 1, 1999
June 1, 1999
November 1, 1999
• In fiscal year 2000, the supply of hotel rooms in Round Rock will decrease by about
100 rooms.
• For the most part, the new hotels expected to open in Round Rock will be more
upscale than the existing hotels, therefore, average daily room rates will tend to rise
accordingly.
Projection of Hotel Taxes to the City of Round Rock
The following is a summary of ERA's projections of hotel tax revenue to the City of
Round Rock over the 1999 to 2005 time period:
Fiscal
Year
1998 2/
1999
2000
2001
2002
2003
2004
2005
# Hotel
Rooms 1/
404
930
942
942
942
942
942
942
Average
Occupancy
67.9%
60.6%
64.8%
66.4%
68.0%
69.4%
70.8%
72.2%
Average
Room Rate
$60.70
$57.09
$61.39
$65.07
$68.24
$70.28
$72.39
$74.56
Hotel Tax
Revenues
$434,355
$616,261
$915,710
$1,039,635
$1,117,362
$1,173,900
$1,233,300
$1,295,705
1/ End of the year room counts
2/ Approximate occupancy and rate data for 1998 is shown for comparative purposes only
Economics Research Associates
11 -6
A graph of historical and projected hotel roomnights in the City of Round Rock is as
follows:
300.000
250.000
a 200.000
+s3000
100.000
50.000
1990 1991 1992 1993 1994 1995 193E 1997 1996 1999 2000 2001 2002 2003 2004 2009
Sourer Texas Depammen1 of Economic De+eloprteor, Tavern Drvmon fa hmoncal data and Ecanomtes Research Associate for mamas
Economics Research Associates 11-7
Section III
ANALYSIS OF REGIONAL SOCIO - ECONOMIC TRENDS
In this section, ERA presents an examination of demographic and economic trends in the
greater Austin area. An analysis of the Austin — San Marcos MSA is presented first and this is
followed by an analysis of Williamson County. (An analysis of the Round Rock area is
presented in the following section). The primary objective of this analysis is to assess trends in
population and economic growth in the greater Austin region as background information for
assessing the potential for economic and hotel growth in Round Rock.
SOCIO- ECONOMIC TRENDS IN THE AUSTIN — SAN MARCOS MSA
Population Trends (Table III -1)
According to the Texas State Comptroller of Public Accounts:
• The population for the Austin — San Marcos MSA in 1998 was about one million
people (1,020,133).
• Over the 1990 to 1998 time period, the MSA population grew by 173,906 people.
This equates to an average annual compound growth rate of about 2.4 percent.
• Over the 1998 to 2008 time period, the MSA population is projected to grow by
231,437 people. This equates to an average annual compound growth rate of about
2.1 percent.
• Over the 2008 to 2030 time period, the MSA population is projected to grow by a rate
of 1.8 percent to 2 percent.
Employment Trends (Table 111-2, Table 111-3, and Figure III -1)
• According to the Texas Workforce Commission and the State Comptroller of Public
Accounts, total non - agricultural employment in the Austin — San Marcos MSA
increased from 386,588 jobs in 1990 to 530,175 jobs in 1996. This represented an
average annual compound growth rate of about 5.4 percent.
• For 1999, total non - agricultural employment in the MSA was estimated by Angelou
Economic Advisors, Inc. at 607,500 jobs. As compared to the 1996 job counts, this
Economics Research Associates III -1
Table 111 -1
POPULATION PROJECTIONS, AUSTIN - SAN MARCOS MSA
Projected Percent
Year Population Chanee
1990 846,227
1991 870,046 2.8%
1992 889,685 2.3%
1993 910,539 2.3%
1994 933,073 2.5%
1995 956,003 2.5%
1996 976,603 2.2%
1997 998,633 2.3%
1998 1,020,133 2.2%
1999 1,041,455 2.1%
2000 1,064,677 2.2%
2001 1,088,209 2.2%
2002 1,111,661 2.2%
2003 1,134,838 2.1%
2004 1,158,025 2.0%
2005 1,181,131 2.0%
2006 1,204,441 2.0%
2007 1,227,612 1.9%
2008 1,251,570 2.0%
2009 1,276,212 2.0%
2010 1,301,430 2.0%
2011 1,326,853 2.0%
2012 1 ,352,520 1.9%
2013 1,378,512 1.9%
2014 1,405,539 2.0"/
2015 1,433,472 2.0%
2016 1,462,369 2.0%
2017 1,491,498 2.0%
2018 1,521,831 2.0%
2019 1,552,976 2.0"/
2020 1,584,215 2.0%
2021 1,615,261 2.0%
2022 1,645,897 1.9%
2023 1,677,373 1.9%
2024 1,709,469 1.9%
2025 1,742,065 1.9%
2026 1,774,765 1.9%
2027 1,807,039 1.8%
2028 1,839,910 1.8%
2029 1,873,414 1.8%
2030 1,907,642 1.8%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
Table 11I -2
EMPLOYMENT TRENDS, AUSTIN - SAN MARCOS MSA
Avg. Annual
Economic Forecast 3/ Compound
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Growt Rate
Construction 12,259 13,384 15,286 18,400 22,660 25,105 28,297 29,600 30,900 31,800 11.17%
Manufacturing 49,863 53,939 55,514 59,595 62,609 66,659 72,884 75,700 78,400 80,800 5.51%
TCPU I/ 12,504 13,402 13,742 14,895 15,244 15,603 17,319 18,600 19,700 20,500 5.65%
Trade 83,804 83,703 88,636 94,845 103,080 110,860 116,518 121,300 126,600 131,700 5.14%
FIRE 2/ 23,382 23,386 24,099 25,864 27,576 27,280 28,122 29,000 30,700 31,400 3.33%
Services 93,511 99,209 105,515 115,600 122,801 134,172 141,502 161,500 170,400 179,000 748%
Government 111,185 114,433 116,790 121,216 125,158 128,481 125,533 127,700 130,000 132,300 1.95%
SUBTOTAL 386,588 401,456 419,582 450,415 479,128 508,160 530,175 564,200 586,700 607500 5.15%
Agriculture 2,328 2,577 2,868 3,151 3,456 3,866 4,262 NA NA NA 8.82%
Mining 1,109 1,200 1,118 968 936 1,029 1,129 NA NA NA -1.24%
Other 10 23 16 20 NA NA NA
I/ Transportation, communications, public utilities
2/ Finance, Insurance, Real Estate
3/ Angelou Economic Advisors, Inc.
Source Texas Workforce Commission and State Comptroller of Public Accounts
650,000
600,000
550,000
500,000
450,000
400,000
350,000
F igur e 1 11 - 1
Total Jobs in Austin MSA
1990 1991 1992 1993 1994 1995
Source: Texas Workforce Commission and State Comptroller of Public Accounts
T
1996 1997 1998 1999
Table III -3
TREND IN UNEMPLOYMENT RATES
AUSTIN - SAN MARCOS MSA
Unemployment Rate
1988 6.1%
1989 5.5%
1990 4.9%
1991 4.5%
1992 4.6%
1993 4.0%
1994 3.6%
1995 3.3%
1996 3.0%
1997 3.1%
Source: Texas Workforce Commission and State
Comptroller of Public Accounts
Employment
Category
Average Annual
Compound Growth
Rate
Construction
11.2%
Services
7.5%
TCPU 1/
5.7%
Manufacturing
5.5%
Trade
5.1%
represents an estimated increase of 77,325 jobs and equates to an average annual
compound growth rate of about 4.6 percent. (Angelou Economic Advisors, Inc. is a
economic consulting firm based in Austin).
• When combining the above mentioned data sources, it is apparent that over the 1990
to 1999 time period, the sectors of the MSA economy with the highest projected
growth rates are as follows:
1/ Transportation, communications, public utilities
• According to the Texas Workforce Commission and the State Comptroller of Public
Accounts, the unemployment rate in the Austin — San Marcos MSA has generally
declined from 6.1 percent in 1988 to 3.1 percent in 1997.
Gross Sales, All Major Industries (Table 111-4)
According to the Texas State Comptroller of Public Accounts:
• Gross sales in all major industries in the Austin — San Marcos MSA increased from
about $11.7 billion in 1986 to $30.1 billion in 1997 — an increase of $18.4 billion.
• This represents an average annual compound growth rate of about 9.3 percent.
Economics Research Associates 111'2
Table III-4
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
AUSTIN - SAN MARCOS MSA
Avg. Annual
Compound
Growth Rate
Gross Sales,
All Major
Industries
1986 $11,650,230,707
1987 $11,832,414,005
1988 $12,020,711,855
1989 512,996,810,422
1990 $14,081,077,819
1991 $15,448,669,100
1992 $17,318,167,981
1993 $19,217,871,110
1994 $21,758,381,397
1995 $25,009,787,750
1996 $27,269,792,682
1997 $30,960,016,584
9.29%
Source; Comptroller of Public Accounts, Research Division
Residential Building Permit Trends (Table 111 -5)
According to the Real Estate Center at Texas A &M University and the U.S. Bureau of
Census:
• The number of residential building permits in the greater Austin area increased from
1,962 in 1990 to 13,617 in 1997.
• The value of residential building permits increased from about $228.4 million in 1990
to $1.1 billion in 1997.
Tourism Trends (Table 111 -6)
According to the Austin Convention and Visitors Bureau:
• Annual visitation to the City of Austin has increased from about 6.1 million people in
1991 to 16 million in 1998.
• This equates to an average annual compound growth rate of about 14.8 percent.
Airport Arrivals /Departures (Table 111 -7)
According to the Department of Aviation for the City of Austin:
• Total arrivals and departures at the Robert Mueller International Airport increased
from about 4.3 million in 1990 to about 5.9 million in 1997. This equates to an
average annual compound growth rate of about 4.7 percent.
• The new Austin Bergstrom International Airport is scheduled to open in the southem
part of Austin in May 1999. With 25 gates, as compared to 16 gates at the current
airport, annual arrivals and departures are projected to increase at an annual
compound growth rate of 4.5 percent to 5 percent.
Hotel Market Trends (Tables 111 -8 through 111 -10 and Figure 111 -2)
• According to the Tourism Division of the Texas Department of Economic
Development, the number of hotel roomnights in the MSA increased from about 2.4
million in 1987 to about 3.8 million in 1997. This represents an average annual
compound growth rate of about 4.6 percent.
Economics Research Associates III -3
Table 111 -5
BUILDING PERMIT TRENDS, AUSTIN MSA
Single Family Bldg. Permits Multi - Family Bldg. Permits Single Family + Multi - Family Non - Residential
Number Value Number Value Number Value Number Value ($0001
1990 1,916 $226,662,800 46 $1,697,400 1,962 $228,360,200 583 $85,468,966
1991 2,994 $317,064,600 228 $7,022,400 3,222 $324,087,000 573 $68,899,812
1992 4,641 $457,602,600 1,030 $20,394,000 5,671 $477,996,600 553 $57,031,996
1993 6,369 $689,125,800 2,174 $60,002,400 8,543 $749,128,200 895 $372,069,400
1994 6,250 $663,750,000 4,518 $155,871,000 10,768 $819,621,000 965 $233,512,630
1995 7,435 $769,522,500 6,330 $236,109,000 13,765 $1,005,631,500 859 $260,190,241
1996 10,095 $1,049,880,000 6,982 $259,032,200 17,077 $1,308,912,200 NA NA
1997 8,456 $882,806,400 5,161 $217,278,100 13,617 $1,100,084,500 NA NA
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table III-6
TOURISM TRENDS FOR THE CITY OF AUSTIN
Annual Visitation to Austin
by Leisure Travelers 1/
Year # Visitors 2/
1991 6,100,000
1992 NA
1993 6,300,000
1994 7,100,000
1995 8,700,000
1996 10,300,000
1997 14,000,000
1998 16,000,000
Avg. Annual
Compound
Growth Rate
1991 - 1998
14.77%
1/ According to the Austin Convention and Visitors Bureau, leisure travelers constitute about two- thirds of visitation
2/ Based on national survey of 25,000 people conducted monthly regarding travel behavior
Source: DK Shiflett and Associates Limited and the Austin Convention and Visitors Bureau
Table I11 -7
AIRPORT ARRIVALS / DEPARTURES, AUSTIN
Robert Mueller International Airport
Number of gates 16
Arrivals Departures Total
1990 2,137,073 2,140,860 4,277,933
1991 2,052,097 2,054,310 4,106,407
1992 2,181,962 2,187,790 4,369,752
1993 2,323,769 2,324,696 4,648,465
1994 2,550,132 2,550,011 5,100,143
1995 2,676,240 2,668,447 5,344,687
1996 2,838,008 2,853,225 5,691,233
1997 2,946,752 2,957,553 5,904,305
Average Annual
Compound Growth, 1990 - 1997 4.71%
Austin Bergstrom International Airport
Planned Opening
Number of gates
May -99
Projected Annual Compound Growth
in Arrivals / Departures 4.5% - 5%
25
Source: Department of Aviation, City of Austin
Table 111 -8
HOTEL MARKET TRENDS, AUSTIN MSA
Annual Room -
Revenue Nights 1/
Year ($000) (000)
1987 $114,551 2,409.4
1988 $115,966 2,327.4
1989 $132,591 2,526.1
1990 $145,550 2,688.6
1991 $160,131 2,812.6
1992 $137,250 2,303.9
1993 $204,011 3,210.6
1994 $227,610 3,393.7
1995 $254,987 3,514.3
1996 $272,072 3,501.1
1997 $301,729 3,786.9
Average
Annual
Compound
Growth 10.17% 4.63%
1/ A roomnight is defined as the rental of one hotel room for one night
Source: Texas Department of Economic Development, Tourism Division
4,000.0
3,800.0 —
3,600.0 —
3,400.0 —
3,200.0 -
3,000 0
2,800.0
2,60a0
2,400.0 -
2,200.0
2,000.0
Figure 111 -2
Austin MSA
•
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Room- Nights (000)
--•— Annual Revenue ($000)
i
Source: Tourism Division, Texas Department of Economic Development
$350,000
$300,000
$250,000
$200,000
$150,000
$1
$50,000
$0
Table III -9
TOP NATIONAL HOTEL MARKETS, SUPPLY AND DEMAND, 1997
Top Demand Growth Markets. 1997 Too Suonly Growth Markets, 1997
Omaha, Neb. 9.2% Omaha, Neb. 12.1%
Chattanooga, Tenn. 9.1% Atlanta, Ga. 9.7%
Southern Texas 9.1% Mississippi 9.0%
Houston, Texas 8.9% Western Kentucky 9.0%
North Dakota 8.6% Austin, Texas 8.7%
Rhode Island 8.2% Ft. Worth / Arlington, Tx 8.5%
Austin, Texas 7.6% Salt Lake City, Ut 8.1%
Santa Barbara, Ca. 7.4% Tucson, Az 8.l%
Denver, Co. 7.1% Kansas City, Mo. - Kan. 8.0%
Maine 6.9% Dallas, Texas 8.0%
Source: Smith Travel Research, Hotel & Motel Management, 4/6/98
Table III-10
OVERVIEW OF AUSTIN HOTEL MARKET, 1996 / 1997 1/
Austin, Total
Central Bus. District
North / Airport Area
Northwest Austin
South Austin
Occupancy
1996 1997 Change
73.4% 74.6% 1.2%
70.7% 74.5% 3.7%
72.7% 72.7% -0.1%
81.6% 79.8% -1.8%
73.4% 75.2% 1.9%
Average Daily Rate
1996 1997 Change
573.65
$92.53
$64.16
$89.81
$61.40
$78.01 5.9%
$98.38 6.3%
565.93 2.8%
590.22 0.5%
$66.32 8.0%
RevPAR (Rev. Per Avail. Rooms
1996 1997 Change
$54.05
566.45
$46.66
$73.28
$45.04
$58.16 7.6%
573.25 11.9%
$47.90 2.7%
$72.00 -1.7%
549.90 10.8%
1/ Data includes information from 155 participating properties with 21,988 rooms
Source: PKF Consulting / Hospitality Advisory Services
• The Tourism Division also reports that over the 1987 to 1997 time period, annual
rooms revenue in the MSA grew at an average annual compound growth rate of 10.2
percent (as compared to 4.6 percent for roomnights).
• According to Smith Travel Research, a national compiler of hotel operating statistics,
for the year ending 1997, the City of Austin was ranked among the top 10 markets in
the U.S. in terms of hotel demand growth (7 and hotel supply growth (5
• According to PKF Consulting, a leading travel industry consulting firm, the following
is a comparison of key hotel operating indicators for hotels in the City of Austin,
1996 versus 1997:
WILLIAMSON COUNTY
1/ Revenue per available room (reflects both occupancy and average room rate)
As mentioned, the City of Round Rock is located in Williamson County (which is part of
the Austin — San Marcos MSA). In the following paragraphs, ERA presents an overview of
demographic and economic trends for Williamson County.
Population Trends (Table III -11)
According to the State Comptroller of Public Accounts:
• The population in Williamson County in 1998 was nearly 207,000 (206,868).
• Over the 1990 to 1998 time period, population growth in Williamson County was
67,317 people.
• Over the 1990 to 1998 time period, the population in Williamson County grew at an
annual compound growth rate of about 5 percent.
Economics Research Associates 111-4
1996
1997
% Increase
Occupancy
73.4%
74.6%
1.6%
Average Rate
$73.65
$78.01
5.9%
RevPar 1/
$54.05
$58.16
7.6%
• The Tourism Division also reports that over the 1987 to 1997 time period, annual
rooms revenue in the MSA grew at an average annual compound growth rate of 10.2
percent (as compared to 4.6 percent for roomnights).
• According to Smith Travel Research, a national compiler of hotel operating statistics,
for the year ending 1997, the City of Austin was ranked among the top 10 markets in
the U.S. in terms of hotel demand growth (7 and hotel supply growth (5
• According to PKF Consulting, a leading travel industry consulting firm, the following
is a comparison of key hotel operating indicators for hotels in the City of Austin,
1996 versus 1997:
WILLIAMSON COUNTY
1/ Revenue per available room (reflects both occupancy and average room rate)
As mentioned, the City of Round Rock is located in Williamson County (which is part of
the Austin — San Marcos MSA). In the following paragraphs, ERA presents an overview of
demographic and economic trends for Williamson County.
Population Trends (Table III -11)
According to the State Comptroller of Public Accounts:
• The population in Williamson County in 1998 was nearly 207,000 (206,868).
• Over the 1990 to 1998 time period, population growth in Williamson County was
67,317 people.
• Over the 1990 to 1998 time period, the population in Williamson County grew at an
annual compound growth rate of about 5 percent.
Economics Research Associates 111-4
Table III -11
POPULATION PROJECTIONS, WILLIAMSON COUNTY
Projected Percent
Year Population Change
1990 139,551
1991 147,262 5.5%
1992 154,822 5.1%
1993 162,923 5.2%
1994 171,387 5.2%
1995 180,008 5.0%
1996 188,525 4.7%
1997 197,605 4.8%
1998 206,868 4.7%
1999 216,358 4.6%
2000 226,318 4.6%
2001 236,795 4.6%
2002 247,554 4.5%
2003 258,512 4.4%
2004 269,683 4.3%
2005 281,125 4.2%
2006 292,886 4.2%
2007 304,910 4.1%
2008 317,398 4.1%
2009 330,346 4.1%
2010 343,755 4.1%
2011 357,650 4.0%
2012 371,874 4.0%
2013 386,542 3.9%
2014 401,769 3.9%
2015 417,602 3.9%
2016 433,912 3.9%
2017 450,650 3.9%
2018 468,061 3.9%
2019 486,076 3.8%
2020 504,508 3.8%
2021 523,156 3.7%
2022 542,032 3.6%
2023 561,493 3.6%
2024 581,586 3.6%
2025 602,122 3.5%
2026 623,052 3.5%
2027 644,254 3.4%
2028 665,972 3.4%
2029 688,396 3.4%
2030 711,493 3.4%
Source: John Sharp, Comptroller of Public Accounts
(Winter 1997 -1998 County Population Forecast)
Construction
10.6%
Services
8.8%
Trade
8.6%
Government
5.5%
FIRE 1/
3.8%
• Over the 1998 to 2008 time period, the population in Williamson County is projected
to increase to 317,398. This represents a projected increase of 110,530 people and
equates to an average annual compound growth rate of about 4.4 percent.
• Over the 2008 to 2030 time period, the population of Williamson County is projected
to increase at an average annual compound growth rate of about 3.7 percent.
Employment Trends (Table 111 -12, Table 111 -13, and Figure 111 -3)
According to the Texas Workforce Commission and the State Comptroller of Public
Accounts:
• By the end of the third quarter in 1997, non - agricultural employment in Williamson
County was 51,547.
• From year -end 1987 through the third quarter of 1997, the number of non - agricultural
jobs in Williamson County more than doubled — from 25,243 in 1987 to 51,547 by
the end of the third quarter 1997. This represented an average annual compound
growth rate of about 7.6 percent.
• Over the 1987 to third quarter 1997 time period, the following were the non-
agricultural employment sectors in Williamson County exhibiting the highest average
annual compound growth rates:
Economics Research Associates
1/ Finance, Insurance, Real Estate
• The unemployment rate in Williamson County declined from 6.0 percent in 1988 to
2.0 percent in 1996. In 1997, the unemployment rate was 2.2 percent.
Ill -5
Table 111 -12
EMPLOYMENT TRENDS, WILLIAMSON COUNTY
Avg. Annual
3rd Qtr Compound
1987 1988 1989 1990 1221 1992 1993 1994 1995 1996 1997 Growth Rate
Agriculture 274 281 289 274 348 406 397 • 490 539 526 786 11.40%
Mining 349 257 226 192 218 212 221 217 331 420 427 2.09%
Construction 1,762 1,466 1,647 1,624 1,791 2,133 2,319 2,736 3,350 4,083 4,708 10.60%
Manufacturing 4,167 4,757 5,100 5,412 5,549 6,061 6,534 6,951 7,903 8,554 8,913 8.10%
TCPU 1/ 787 732 720 643 619 631 596 965 669 706 755 -0.42%
Trade 6,309 6,714 6,683 6,998 7,819 8,376 9,039 10,259 11,368 12,859 14,099 8.59%
FIRE 2/ 1,270 1,148 1,055 1,019 766 802 928 1,716 1,719 1,723 1,824 3.78%
Services 4,865 4,613 5,246 5,801 6,041 6,469 7,444 8,173 8,734 9,850 11,083 8.80%
Government 5,734 5,910 6,323 6,602 6,910 7,285 7,837 8,498 9,097 9,660 9,704 5.54%
Other
34
Total 25,517 25,878 27,289 28,565 30,061 32,375 35,315 40,005 43,710 48,381 52,333 7.64%
I/ Transportation, communications, public utilities
2/ Finance, Insurance, Real Estate
Source: Texas Workforce Commission and State Comptroller of Public Accounts
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
Figure 111 -3
Total Jobs in Williamson County
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
Source: Texas Workforce Commission and State Comptroller of Public Accounts
Table II1 -13
TREND IN UNEMPLOYMENT RATES
WILLIAMSON COUNTY
Unemployment Rate
1988 6.0%
1989 4.9%
1990 4.3%
1991 3.5%
1992 3.4%
1993 2.9%
1994 2.3%
1995 2.3%
1996 2.0%
1997 2.2%
Source: Texas Workforce Commission and State
Comptroller of Public Accounts
Gross Sales, All Major Industries (Table III -14)
According to the State Comptroller of Public Accounts:
• Gross sales in all major industries in Williamson County increased from about $1.1
billion ($1,099,508,376) in 1986 to nearly 54.3 billion ($4,277,705,396) by 1997.
• This represented an increase of nearly $3.2 billion ($3,178,197,020) over the last 11
years and equates to an average annual compound growth rate of about 13.2 percent.
Building Permit Trends (Table III -15)
According to the Real Estate Center at Texas A &M University and the U.S. Bureau of
Census:
• The number of residential building permits in Williamson County increased from 174
in 1990 to 3,532 in 1997.
• The value of residential building permits in Williamson County increased from about
$13.7 million in 1990 to about $327.4 million in 1997.
Hotel Market Trends (Table III -16)
According to the Tourism Division of the Texas Department of Economic Development:
• The number of hotel roomnights in Williamson County increased from 74,300 in
1987 to 180,700 in 1997. This represented an increase of 106,400 roomnights over
the ten -year period and equates to an average annual compound growth rate of about
9.3 percent.
• Annual hotel rooms revenue in Williamson County increased from $2,571,000 in
1987 to $10,228,000 in 1997. This represented an increase of $7,657,000 over the
ten -year period and equates to an average annual compound growth rate of about 14.8
percent.
Economics Research Associates III -6
Table 1II -14
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES,
WILLIAMSON COUNTY
Gross Sales,
All Major
Industries
1986 $1,099,508,376
1987 $1,210,084,368
1988 81,075,109,737
1989 81,235,119,557
1990 $1,397,066,502
1991 81,471,980,979
1992 81,732,015,285
1993 81,979,554,645
1994 $2,222,424,489
1995 82,860,356,963
1996 $3,465,151,286
1997 84,277,705,396
Avg. Annual
Compound
Growth Rate 13.15%
Source: Comptroller of Public Accounts, Research Division
Table 11I -15
BUILDING PERMIT TRENDS, WILLIAMSON COUNTY
Single Family Bldg. Permits Multi - Family Bldg. Permits Single Family +Multi - Family Non- Residential
Number Value Number Value Number Value Number Value ($000)
1990 174 $13,711,200 0 50 174 $13,711,200 80 $573,360
1991 380 $29,488,000 4 $120,000 384 $29,608,000 80 $126,880
1992 767 $58,522,100 0 $0 767 $58,522,100 86 $334,884
1993 1,397 $116,649,500 64 $1,696,000 1,461 $118,345,500 157 $4,757,728
1994 1,537 $153,853,700 340 $11,118,000 1,877 $164,971,700 196 $5,114,816
1995 2,816 $271,462,400 570 $31,293,000 3,386 $302,755,400 149 $13,344,291
1996 3,685 $376,238,500 925 $38,387,500 4,610 $414,626,000 NA NA
1997 3,063 $308,444,100 469 $18,947,600 3,532 5327,391,700 NA NA
Source: Real Estate Center at Texas A &M University and U.S. Bureau of Census
Table III -16
HOTEL MARKET TRENDS, WILLIAMSON COUNTY
Annual Room -
Revenue Nights
Year 00001 (0001
1987 $2,571 74.3
1988 $2,494 66.8
1989 $2,961 75
1990 83,440 84.1
1991 $3,670 87.4
1992 $4,210 100.5
1993 $4,767 105.7
1994 $4,188 88
1995 $6,785 123.6
1996 $7,586 129.7
1997 $10,228 180.7
Average
Annual
Compound
Growth 14.81%
9.29%
Source: Texas Department of Economic Development, Tourism Division
Section IV
SOCIO - ECONOMIC TRENDS IN ROUND ROCK AND
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY
In this section, ERA first presents an overview of socio - economic trends in the City of
Round Rock. The section concludes with an analysis of the Local hotel market and ERA's
projections for hotel bed tax revenue to the City of Round Rock over the 1999 to 2005 time
period.
ANALYSIS OF SOCIO - ECONOMIC TRENDS IN THE CITY OF ROUND ROCK
Trend in Gross Sales, All Major Industries (Table IV -1)
According to the Texas State Comptroller of Public Accounts:
• Over the 1986 to 1997 time period, gross sales in all major industries in the City of
Round Rock grew from about $389 million in 1986 ($338,946,394) to about $2.4
billion in 1997 ($2,379,282,692).
• This represents an increase of nearly $2 billion ($1,990,336,298) over the last 11
years and equates to an average annual compound growth rate of about 17.9 percent.
Employment Trends in the City of Round Rock (Table IV -2 through IV -4)
According to the Round Rock Chamber of Commerce:
• Over the 1991 to 1998 time period, 60 companies have either located to, or expanded
their operations, in the City of Round Rock. The total new capital investment in the
City over the 1991 to 1998 time period is estimated by the Chamber of Commerce at
over $400 million.
• Of the approximate 20,000 jobs in Round Rock through 1998, about 13,235 jobs
(two - thirds) have been created over the 1991 through 1998 time period.
• The top ten employers within an approximate 15 minute drive time of downtown
Round Rock are as follows:
Economics Research Associates
IV -1
Table IV -1
TREND IN GROSS SALES, ALL MAJOR INDUSTRIES
CITY OF ROUND ROCK
Avg. Annual
Compound
Growth Rate
Gross Sales,
All Major
Industries
1986 $388,946,394
1987 $494,692,532
1988 $365,630,786
1989 $484,024,851
1990 $576,647,921
1991 8639,653,938
1992 8786,188,732
1993 $814,047,661
1994 $1,016,384,702
1995 $1,514,203,095
1996 $1,870,601,970
1997 $2,379,282,692
17.90%
Source: Comptroller of Public Accounts, Research Division
Table IV -2
CORPORATE LOCATIONS / EXPANSIONS
CITY OF ROUND ROCK
1992 7 380 $9 Million
1993 1/ 7 2,650 525 Million
1993 / 1994 2/ 3 1,800 $30 Million
1994 / 1995 2/ 12 2,485 $150 Million
1995 / 1996 2/ 10 1,065 575 Million
1996 / 1997 2/ 7 2,335 577 Million
1997 / 1998 3/ 6 1.900 $30 Million
60 13,235 $406 Million
Approx.
Locations / # Jobs Capital
Expansions Created Investment
1991 8 620 $10 Million
1/ 9 -month period January through September
2/ October through September
3/ October through May 20
Source: Round Rock Chamber of Commerce
Table IV -3
MAJOR EMPLOYERS WITHIN A 15- MINUTE DRIVE OF DOWNTOWN ROUND ROCK
Company Name
Dell Computers
Abbott Laboratories
State Farm Insurance
Famers Insurance
Sears TeleSery
IBM
Intermedics Orthopedics
AMP Packaging
Wayne - Dresser
Tellalabs
Westinghouse / TECO
Michael Angelo's Gourmet Foods
Cypress Semiconductor
Sysco Foods
Columbia Medical Center
City of Round Rock
Trend Technologies
DuPont Photomask
Rolm
McNeil Consumer Products 1/
TN Technologies
Moll Industries
Austin White Lime
Texas Crushed Stone
Weed Instrument
Cintas Corporation
Paradigm Metals
Prudential Overall Supply
Preferred Stamping
MagRabbit
TECO Technology
Centex Machining
Infolab
Mission Industries
Photronics
Featherlife Building Products
Micro -Bac International
Insync
1st Tech Molding
Enviroquip
Precision Laser Cuts
Texas Heat Treating
Textek Plastics
Company Type
Computers
Intravaneous Solutions
Insurance
Regional Headquarters
Technical Cell Center
Computers
Prosthesis Manufacturer
Computer Equipment
Electronic Pump Controls
Communications
Motors
Italian Food
Semiconductors
Food Distributor
Health Care
Government
Medical Fabrication
Photomasks
Telecommunications
Tylenol
Electronic Measurement
Injection Molding
Limestone Quarry
Crushed Limestone
Sensors
Uniform Laundry
Metal Fabrication
Garment Laundry
Metal Fabrication
Software
Monitors
Medical Equipment
Medical Equipment
Garment Laundry
Photomasks
Building Materials
Bio- Remediation Products
Gas Flow Devices
Plastic Injection Molding
Wastewater Treamient
Metal Fabrication
Metal Heat Treating
Injection Molding
Emoloyees
8,000
1,600
1,000
893
750
700
700
600
476
470
440
425
395
387
350
310
250
250
200
171
165
160
145
140
125
100
100
100
90
75
65
50
45
45
45
40
40
35
30
30
30
30
30
20,082
I/ Announcement in 12/98 that this facility will be phased out by 2002
Source: Round Rock Chamber of Commerce
Table IV-4
SELECTED ECONOMIC DEVELOPMENT PROJECTS, CITY OF ROUND ROCK
Company Name
Dell Computers
Trend Technologies
Estimated
Comments (sf = square feet) Job Creation
Early '98: 240,000 sf expansion to Bldg. # 2 1,600
Mid '98: construction 350,000 sf building 1,000
Early '99: construction 200,000 sf building 1 000
3,600
Approximate # Employees, Mid 1998 8,000
Approximate # Employees, End 1999 10,000
120,000 sf facility recently 200 - 300,
completed in August 1998 800 in 3 -5 years
62,000 sf expansion underway,
completion expected in March 1999 Unknown
Sears TeleSery 120,000 square foot facility 750
Cypress Semiconductor Fab 5 Project construction to begin in the 350
4th quarter 1999, 5350 million project
a Frontera
Planned 328 -acre mixed -use development
including Power Center with major regional
anchor stores, 16 screen cinema, numerous
restaurants, and 300 -room full- service hotel
1st Tech Molding Expansion in Corridor Park 75
Armstrong Moving & Storage Completed new facility / relocated operations 75
JemPac International leased 12,000 sf facility 25
OPUS South broken ground on 60,000 sf Class A
office project, 15,000 sf pre- leased Unknown
Office / Warehouse project
Security Capital
Leased 50,000 sf of total 100,000 sf to two 50
companies: TD Industries and Texas
Quality Machining and Fabrication
office / warehouse facilities, 240,000 sf,
scheduled completion summer 1999,
may attract a Dell supplier that would
occupy 133,000 sf of space
IDCO leased 57,000 sf; however, corp. mgt.
has decided to close distribution facility
and sub -lease this space
Unknown
50
Unknown
Source: Round Rock Chamber of Commerce
Company Name
Approximate # of
Employees
Dell Computers
8,000
Abbott Laboratories
1,600
State Farm Insurance
1,000
Farmers Insurance
893
Sears TeleSery
750
IBM
700
Intermedics Orthopedics
700
AMP Packaging
600
Wayne- Dresser
476
Tellalabs
470
• There are numerous planned economic development projects in the City of Round
Rock (Table IV -4). It is impossible to predict which of these projects will actually be
built (if any), or the ultimate size, scale and timing of the facilities that are built;
however, it is useful to note that the following projects are proposed:
— Dell Computers: possible 550,000 square foot expansion to be completed in 1999
with estimated job creation of about 2,000.
— La Frontera: Developer's Diversified REIT (DDR) of Cleveland, Ohio in
partnership with Bemdt Interests of Dallas have announced the planned
development of a 328 -acre mixed -use development on a site located on the west
side of I -35 just north of FM 1325 (just west and across the interstate from Dell
Computer). According to a representative of 35/45 Investors, L.P., general
partner for the project, the developer has proposed to have the land annexed by
the City of Round Rock. In addition, principal components of the proposed
development would possibly include a "power center" consisting of major anchor
stores, a 16- screen movie theater, numerous restaurants, and a 300 -room full-
Economics Research Associates lV -2
service hotel. It was further stated that accessibility to the project would be
improved if the planned Mopac / Loop 1 road extension out of north Austin
towards Round Rock, and the planned SR 45 east / west connector (connecting
the Mopac extension and I -35) proceed as planned. These possible road
improvements are discussed in more detail below.
— City of Round Rock Convention Center Complex: there is currently a proposal to
build a convention center complex on a site located adjacent to Old Settlers Park
on Highway 79 in Round Rock. Two key components of the proposed project are
a convention center with approximately 10,000 square feet of meeting / exhibition
space and a 7,500 -seat minor - league professional baseball stadium. If built, the
stadium would accommodate the Round Rock Express, a AA affiliate of the
Major League Baseball Houston Astros organization. The scheduled opening
date for the complex is April 2000 and the Express would be scheduled to play 70
home games between April and September of each year. Nolan Ryan, a native
Texan and recent inductee into the Major League Baseball Hall of Fame, would
have an ownership interest in the team. It should be noted that ERA cannot
predict whether or not this facility will actually be built. Also, ERA's hotel tax
projections did not consider any new hotel business this project might potentially
attract to Round Rock in the future.
— Cypress Semiconductor: construction of a $350 million project is proposed to
begin in the fourth quarter of 1999.
— Trend Technologies: A 62,000 square foot expansion is underway and, if
completed, is planned to open in March 1999.
— Security Capital: planned development of a 240,000 square foot facility with a
scheduled completion in the summer of 1999.
Traffic Counts on 1-35 and Planned Road Improvements in Round Rock (Table IV -5)
• According to the Austin Transportation Study and the Texas Department of
Transportation, the increase in traffic counts on I -35 in Round Rock was as follows:
— I -35 at FM 1325: increase of 81,860 in 1988 to 121,000 in 1996 (increase of 48
percent).
Economics Research Associates
IV -3
Table IV -5
TRAFFIC COUNTS ON 1 -35 IN ROUND ROCK
1 -35 at F.M. 1325
Average
Annual
Compound
1980 1984 1988 1992 1996 Growth
36,000 65,050 81,860 100,400 121,000 7.87%
Average
Annual
Compound
1990 1993 1994 1995 1996 Growth
1 -35 at RM 620 - McNeil Road 84,000 92,000 114,000 116,000 125,000 6.85%
Source: Austin Transportation Study and Texas Department of Transportation
— I -35 at RM 620 / McNeil Road: increase of 84,000 in 1990 to 125,000 in 1996
(increase of 49 percent)
As mentioned, there is a proposal to build what is generally called the Mopac / Loop 1
extension which would connect north Austin and Round Rock. The Mopac / Loop 1 extension is
proposed to terminate near the La Frontera site and also proposed is a short east -west connector
(SR 45) which would connect the Mopac extension to I -35. As mentioned, ERA can not predict
whether or not this project will actually move forward.
It should also be noted that there is a proposal to build a 90 -mile bypass road (State
Highway 130) which would link Georgetown in the north to the new Austin Bergstrom
International Airport in the south. If built, this road would pass through the eastern edge of
Round Rock. According to a representative of the Department of Transportation, the State
Highway 130 bypass is a medium to long -range project and it is possible that work on this
project could begin by the year 2005. It should be noted that, for purposes of this report, ERA
has incorporated the assumption that State Highway 130 does not open during the 1995 to 2005
projection period.
Hotel Market Trends, City of Round Rock (Table IV -6, Table IV -7, and Figure IV -I)
According to the Tourism Division of the Texas Department of Economic Development:
• Annual hotel roomnights in the City of Round Rock increased from 30,300 in 1987 to
102,000 in 1997. This represents an increase of 71,700 roomnights over the ten -year
period and equates to an average annual compound growth rate of about 12.9 percent.
• Annual hotel rooms revenue in the City of Round Rock increased from $1,181,000 in
1987 to $5,953,000 in 1997. This represents an increase of about $4,772,000 over the
ten -year period and equates to an average annual compound growth rate of about 17.6
percent.
According to the City of Round Rock:
• Annual hotel tax revenues to the City increased from $85,061 in fiscal year 1988 to
$434,355 in fiscal year 1998. This increase of $349,294 over the ten -year period
equates to an average annual compound growth rate of about 17.7 percent.
Economics Research Associates
IV-4
Table 1V -6
HOTEL MARKET TRENDS, ROUND ROCK
Annual Room -
Revenue Nights
Year ($0001 (0001
1987 $1,181 30.3
1988 $1,274 30.6
1989 51,480 32.8
1990 51,617 33.7
1991 $1,628 33.1
1992 $1,753 37.7
1993 52,306 46.6
1994 $2,031 37.6
1995 $3,064 50.6
1996 53,447 52.5
1997 $5,953 102.0
Average
Annual
Compound
Growth 17.56%
12.91%
Source: Texas Department of Economic Development, Tourism Division
Table N -7
CITY OF ROUND ROCK, HOTEL / MOTEL BED TAX RECEIPTS
(Bed Tax Rate of 7% to City of Round Rock)
Bed Tax Annual
Receipts 1/ Growth
1988 $85,061
1989 $101,030 19%
1990 $100,349 -1%
1991 $110,854 10%
1992 $122,537 11%
1993 $143,709 17%
1994 $170,400 19%
1995 $204,555 20%
1996 $235,565 15%
1997 $339,592 44%
1998 $434,355 28%
Average Annual
Compound Growth 17.71%
1/ Reflects hotel operations for fiscal years ending September 30 (reflects cash receipts through June 30 of each year)
Source: City of Round Rock
110
100 —
90
80 —
70 —
60 —
50
40 -
Figure IV -1
Round Rock
MI Room- Nights (000)
—�— Annual Revenue ($000)
Source: Tourism Division, Texas Department of Economic Development
1993 1994 1995 1996 1997
• It should be noted that the fiscal year for the City of Round Rock ends September 30;
however, hotel tax revenues pertain to the period ending June 30 (there is a three
month lag time to allow for revenue collection and reporting).
Interviews with Major Employers in Round Rock Regarding the Regional Hotel Market
In May 1998, ERA conducted personal interviews with representatives of the major
employers in Round Rock. Key areas of inquiry were current use of hotels in the region, current
satisfaction level with hotels used, anticipated hotel demand in the future, and anticipated use of
new hotels that might open in Round Rock in the near future (for example, the Marriott
Courtyard, the Marriott Residence Inn, the Hilton Garden Inn, and a possible full- service hotel).
ERA conducted interviews with representatives of the following companies:
• Dell Computer;
• Cypress Semiconductor;
• Wayne- Dresser;
• Sysco Foods;
• DuPont Photomask; and
• McNeil Consumer Products.
It was reported to ERA that major employers in Round Rock such as Dell and Wayne-
Dresser are significant generators of hotel demand, and this demand is expected to increase along
with expected economic growth. However, there is currently significant "leakage" of hotel
roomnights outside of Round Rock to, primarily, hotels located in the North Austin / Airport
area. This "leakage" is due, in part, to the general perception that, for the most part, the limited
service mid - market hotels in Round Rock are generally not the type of hotels preferred by many
of the employees of the companies. Limited service hotels generally do not offer full food and
beverage facilities and meeting space is typically quite limited. Employers report that they
would prefer to house their people in Round Rock, if possible, because convenience is important,
and if new, more upscale hotels with more meeting space were opened in Round Rock, they
would likely utilize them with less "leakage" of hotel roomnights out of Round Rock as a result.
Economics Research Associates IV -5
Characteristics of Hotels in Round Rock (Table IV -8)
Table IV -8 presents a summary of the characteristics of hotels in Round Rock. Not
shown is the three -room St. Charles Bed & Breakfast or the Pinnacle Suites, which is an
apartment complex where units are sometimes rented out as hotel rooms on an extended stay
basis (and hotel tax revenue is generated). As shown, information presented includes property
name, date opened, location, operator, number of rooms, and range of rack room rates.
In May 1998, ERA conducted physical property inspections at all the hotels in Round
Rock. In addition, at the same time, ERA conducted interviews with managers of the individual
hotel properties. Among other things, key areas of inquiry were trends in occupancy, average
daily room rate, and market mix for each property. (Market mix refers to a hotel's market
segmentation, for example, the mix of corporate, leisure, and other business on an average
annual, seasonal, and daily basis). In addition, in January 1999, as part of a market update, ERA
re- contacted the hotel managers in order to obtain the year-end 1998 figures for average annual
occupancy and average daily room rate. (Although this information is deemed reliable, no
independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information).
The estimated individual hotel operating information for 1997 and 1998 was incorporated
into a computer spreadsheet model and was used as a starting point for projecting hotel bed tax
revenue in the future. (As part of its analysis, ERA compared the individual property
information to total hotel bed tax receipt information as reported by the City of Round Rock).
The following is a summary of the approximate aggregate hotel operating information for 1997
and 1998:
Source: Economics Research Associates
Economics Research Associates IV -6
1997
1998
% Increase
Number of Rooms
404
404
0
Average Occupancy
65.9%
67.9%
3.0%
Average Daily Room Rate
$59.33
$60.70
2.3%
Characteristics of Hotels in Round Rock (Table IV -8)
Table IV -8 presents a summary of the characteristics of hotels in Round Rock. Not
shown is the three -room St. Charles Bed & Breakfast or the Pinnacle Suites, which is an
apartment complex where units are sometimes rented out as hotel rooms on an extended stay
basis (and hotel tax revenue is generated). As shown, information presented includes property
name, date opened, location, operator, number of rooms, and range of rack room rates.
In May 1998, ERA conducted physical property inspections at all the hotels in Round
Rock. In addition, at the same time, ERA conducted interviews with managers of the individual
hotel properties. Among other things, key areas of inquiry were trends in occupancy, average
daily room rate, and market mix for each property. (Market mix refers to a hotel's market
segmentation, for example, the mix of corporate, leisure, and other business on an average
annual, seasonal, and daily basis). In addition, in January 1999, as part of a market update, ERA
re- contacted the hotel managers in order to obtain the year-end 1998 figures for average annual
occupancy and average daily room rate. (Although this information is deemed reliable, no
independent attempt has been made by ERA to verify the factual basis of the information
provided and ERA makes no assurance as to the accuracy of such information).
The estimated individual hotel operating information for 1997 and 1998 was incorporated
into a computer spreadsheet model and was used as a starting point for projecting hotel bed tax
revenue in the future. (As part of its analysis, ERA compared the individual property
information to total hotel bed tax receipt information as reported by the City of Round Rock).
The following is a summary of the approximate aggregate hotel operating information for 1997
and 1998:
Source: Economics Research Associates
Economics Research Associates IV -6
Table IV -8
CHARACTERISTICS OF HOTELS IN ROUND ROCK
NA = Not Available
Date Number Approx. Market Segmentation Range of Posted
Property Name ened Location Operator Rooms Corporate Highway SMERF 1/ Rack Room Rates
Ramada Limited 1973 1400 North IH -35 Ramada Limited 62 29% 21% 50% $58 - $74
La Quinta 1984 2004 North IH -35 Trinity Ventures 116 80% 10% 10% $69 - $82
Sleep Inn 9/20/96 1990 North 111-35 Boulevard Hotel 107 35% 55% 10% 869 - $79
Best Western 11/4/96 1851 North 1H -35 Sudar Majmudar 67 40% 30% 30% $59 - $79
Rodeway Inn 11/15/96 1802 North IH -35 Suren Suthar 49 20% 40% 40% $65 - $125
Baymont 7/16/98 150 Parker Levtex Hotel 93 NA NA NA $52 - $69
Marriott Courtyard 8/21/98 2700 Hoppe Trail Wilrock Inc. 113 NA NA NA $89
Crossland 12/21/98 555 South IH -35 Extended Stay 124 NA NA NA $39 - $54
1/ Social, military, education, religious, and fraternal (miscellaneous category)
2/ According to general managers at individual properties
Source: General Managers of Individual Properties and the City of Round Rock
Hotel Name
# of Rooms
Opening Date
Baymont
93
7/16/98
Marriott Courtyard
113
8/21/98
Crossland
124
12/21/98
It should be noted that not included in the above are the following new hotels that opened in
Round Rock after June 30, 1998, and were therefore not accounted for during the City's fiscal
year 1998:
In terms of average daily room rate for the three new hotels to open in fiscal year 1999,
ERA has incorporated the assumption that the Marriott Courtyard would achieve an average rate
above the market average, the rate at the Baymont would be similar to the market average, and
the average rate at the Crossland would be below the market average.
In terms of annual occupancy for fiscal year 1999, reflecting both an increase in hotel
supply and the fact that it is the first year of operation for the new hotels, ERA incorporated the
assumption that all of the new hotels would achieve an average annual occupancy below the
1998 market average.
New and Proposed Hotels in the City of Round Rock (Table IV -9)
ERA investigated the status of proposed hotels in Round Rock through a variety of
sources including the City of Round Rock Planning Department and individual proponents for
the projects. As mentioned, for a variety of reasons, it is impossible to predict which hotels, if
any, will be built, or the size, scale, and timing of the property. In addition, it is possible that,
even for hotels currently under construction, they may not open as planned.
As shown on Table IV -9, ERA is aware of at least seven hotels which are proposed in
Round Rock. Collectively, they account for 981 rooms. It is important to note that, for purposes
of this analysis, ERA has incorporated the assumption that only those hotels currently under
construction — the 100 -room Wingate Inn, the 96 -room Marriott Residence Inn, and the 122 -
room Hilton Garden Inn, will actually enter the market over the 1999 to 2005 projection period.
It is possible, of course, that other hotels may open during this time frame as well, for example,
Economics Research Associates IV -7
Table IV -9
OVERVIEW OF PROPOSED HOTELS IN ROUND ROCK
Developers
Targeted
Hotel Name Hotel Type Location # Rooms Project Status Opening Dale
Wingate Inn Limited Service, Mid - Market 1209 N. I.H. 35 100 Under Constriction 1 -Mar-99
Marriott Residence Inn Limited Service, Suite Product 2505 S I.H. 35 96 Under Construction 1 -Jun-99
Hilton Garden Inn Limited Service, Upscale FM 3406 & I.H. 35 122 Under Construction 1- Nov -99
omfort Suites Limited Service, Mid - Market I.H. 35 & 620 62 Pending Review I- Nov -99
Marriott Spring Hills Suites Suite Product 2960 Hoppe Trail 106 Proposed Unknown
Unknown Full- Service, Upscale IH 35 & FM 1325 (La Frontera) 300 Proposed I- Jan -01
Unknown Limited Service Hesters Crossing / IH 35 195 Proposed Unknown
Source: City of Round Rock, Planning Department, Individual Developers
the 300 -room full- service hotel proposed at the La Frontera mixed -use project; however, as
mentioned, for purposes of this analysis, it is assumed that, other than the three hotels currently
under construction, no other hotel will enter the Round Rock market over the 1999 to 2005 time
period.
PROJECTIONS OF HOTEL TAX REVENUE TO THE CITY OF ROUND ROCK
ERA's approach to projecting hotel tax revenues to the City of Round Rock included the
analysis of two major elements: 1) historical and projected hotel demand, and 2) historical and
projected hotel supply. On the demand side, a key observation is that while historical growth in
the Austin — San Marcos MSA has been significant in recent years, in Williamson County, and in
Round Rock in particular, the rates of growth have been, and are expected to be, even higher.
The following are key observations in support of that conclusion:
• Projected average annual compound growth, population, 1998 - 2008:
— Austin — San Marcos MSA: 2.1 percent
— Williamson County: 4.4 percent
• Average annual compound growth, gross sales in all major industries, 1987 - 1997:
— Austin — San Marcos MSA: 10.1 percent
— Williamson County: 13.5 percent
• Average annual compound emplovment growth, 1990 to 1997:
— Austin — San Marcos MSA: 5.6 percent
— Williamson County: 8.1 percent
— Round Rock: over 16 percent (addition of over 13,000 jobs since 1991 associated
with new capital investment of over $400 million).
• Average annual compound growth, annual hotel rooms revenue, 1987 — 1997:
— Austin — San Marcos MSA: 13.5 percent
— Williamson County: 14.8 percent
— City of Round Rock: 17.6 percent
Economics Research Associates IV -8
A key assumption incorporated into this analysis is that Williamson County, and the City
of Round Rock in particular, will continue to be a major and growing node of future economic
growth in the Austin — San Marcos MSA. It is further assumed that this growth will translate
into growth in hotel demand. This assumption is supported by the following:
• Dell Computer serves as an "anchor" for the community.
• If the Mopac / Loop 1 and SR 45 road extensions (connecting North Austin and
Round Rock) proceed as planned, there will be additional road capacity between
Round Rock and Austin.
• There are several major economic development projects proposed in the City of
Round Rock, such as La Frontera, and if some of these projects move forward, there
will likely be significant additional economic growth in the community.
• There is a general perception in the region that the political climate in Round Rock is
"pro- growth."
In the following paragraphs, ERA presents its projections for hotel tax revenue to the
City of Round Rock. It should be noted that the actual performance of hotel operations and
estimates of the resulting tax may differ substantially and materially from the projections for
many reasons as the result of both foreseen and unforeseen events. A partial list includes:
changes in the national or local economy, changes in the local political climate regarding growth,
significant changes in the hotel market, significant changes to hotel supply, inability of
management to complete high quality hotel developments in a timely manner, technological
changes that reduce the need for corporate and other meetings, ineffective hotel marketing or
operation, and changes in hotel management. It is important to note that all projections are
inherently imprecise. This is especially true as projections are made further into the future.
Accordingly, there can be no assurance that any of the projected results shown in this report will
actually be achieved.
Overview of Methodology
As shown on Table IV -10, ERA projected hotel taxes to the City of Round Rock over the
1999 to 2005 time period utilizing a demand -based methodology that considered the following:
1. Historical and projected population trends for the Austin — San Marcos MSA (Figure
IV -2)
Economics Research Associates IV -9
Tabk IV -10
ANALYSIS OF POPULATION, EMPLOYMENT, AND ROOMNIGHT TRENDS
Austin • San Marcos MSA and the City of Round Rock
Austin MSA Population
Austin MSA Non -Ag. Employment 386,588 401,456 419,582 450,415 479,128 508,160 510,175 565,500 587,900 608,700
Labor Force Participation Rate 46% 46% 47% 49% 51% 53% 54% 57% 58% 58%
Austin MSA Hotel Room-Nights (000) 2,6 2,813 2,304 3,211 3,394 3,514 3,501 3,787
Ratio of Roomnights per lob 6.95 7.01 5.49 7,13 7.08 6.92 6.60 6.70
Estimated Austin MSA Roomnights (000)
)_ 1221 1222 1551 L 1?2f 9 L L1 229 1255 2001 - 2003 .0.1 L
846,227 870,046 889,685 910,539 933.073 956,003 976,603 998,633 1,020,133 1,041,455 1,064,677 1,088,209 1,111.661 1,134,838 1.156,029 1,181,131
Projected by Economics Research Associates
617,513 631,161 655,880 669,554 694,815 708,679
58% 58% 59% 59% 60% 60%
New MSA Roomnights after 1997 (000)
Round Rock Hotel Roomnights (000) 34 33 38 47 38 51 53
Round Rock Hotel Roomnights (000, FYE9 /30)
New Round Rock Roomnigh1s after 1997 (000)
New Round Rock Roomnights as a Percent
of new Austin - San Marcos MSA Roomnights
82
Projected by Economics Research Associates
6.89 689 6.89 6.89 6.89 6.89 6.89 6.89
Factor of 6.89 is the calculated average for the previous five years
4,051 4,194 4,255 4,349 4,519 4,613 4.787 4,883
264 407 468 562 732 826 1,000 1,096
Projected by Economics Research Associates
100 154 213 228 234 239 243 248
18 72 131 147 152 157 162 167
7% 18% 28% 26% 21% 19% 16% 15%
Source: various except for material espressely sourced to Economics Research Associates
1,400,000
1,200,000
1,000,000
800
600,000
400,000
200,000
Projections of Population and Employment: Austin -San Marcos MSA
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
So cc: Texas Comptroller or Publ Accounts;'I'cxas Workforce ('onuuissiou
Figure IV -2
—e-- Austin MSA Population
— Austin MSA Non -Ag. Employment
2. Historical and projected employment trends in the Austin — San Marcos MSA (also
Figure IV -2)
3. The historical and projected relationship between employment levels and hotel
roomnights in the Austin — San Marcos MSA (Table IV -10 with the resulting
roomnight trend in Figure IV -3).
4. Projected roomnights in Round Rock as a percentage of projected roomnights for the
MSA, as a test of reasonableness for the Round Rock projections (Table IV -10)
5. A projected roomnight capture by hotels in Round Rock that is consistent with both
the anticipated supply of new rooms and the regional demand for lodging (Figure IV-
3).
An overview of the methodology presented on Table IV -10 is as follows:
• The analysis begins with projections for population in the Austin — San Marcos MSA
(as reported by the Comptroller of Public Accounts)
• When examining the historical relationship between non - agriculture employment and
population, it is apparent that there is a fairly stable relationship. For example, over
the 1995 to 1997 time period, total non - agricultural employment in the MSA,
expressed as a percentage of the MSA population, ranged from 53 to 57 percent (this
means that over half of the population had jobs). For the 1999 to 2005 projection
period, ERA incorporated the assumption that the jobs to population percentage will
continue to increase, but at a decreasing rate, from 58 to 60 percent in the Austin —
San Marcos MSA.
• It is also apparent that there is a fairly stable relationship between hotel roomnights
and total non - agricultural employment. For example, over the last five years, the
number of hotel roomnights per job in the MSA ranged from 6.6 to 7.1. For the 1995
to 2005 period, ERA projected a roomnights to job ratio of 6.89.
• Hotel roomnights in the Austin — San Marcos MSA were then projected to the year
2005 based on the assumed relationship between population, non - agricultural
employment, and hotel roomnights. As can be seen, total MSA roomnights are
projected to range from about 4.2 million in 1999 to nearly 4.9 million in 2005. This
compares to the reported figure of nearly 3.8 million roomnights in 1997.
Economics Research Associates IV-10
6,000
5,000
0
g 4,000
c 2,000
1,000
Figure IV -3
Historical and Projected Hotel Room - Night Demand
—4---Austin MSA Hotel Room - Nights (000)
Historical
Projected
• • ■ • •
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
+Round Rock Hotel Roomnights (000)
Source: Texas Department of Economic Development, Tourism Division for historical data and Economics Research Associates for projections
Hotel Name
# Rooms
Assumed Opening Date
Wingate
100
March 1, 1999
Marriott Residence Inn
96
June 1, 1999
Hilton Garden Inn
122
November 1, 1999
• New incremental, or marginal, roomnights for the MSA to the year 2005 are also
shown on the table. As shown, incremental roomnights in the MSA are projected to
range from 407,000 in 1999 to nearly 1.1 million in 2005. As mentioned, this
projection is based on the assumed relationship between population, employment, and
roomnights (as discussed above).
• ERA concludes that Williamson County, and the City of Round Rock in particular,
will continue to be a major and growing node of future economic growth in the
Austin — San Marcos MSA, and that the City of Round Rock will capture a significant
portion of the MSA's hotel growth.
Assumptions Pertaining to the Hotel Tax Projection:
• Hotel rooms in Round Rock are subject to a 13 percent hotel occupancy tax with
seven percent accruing to the City of Round Rock and six percent accruing to the
State. According to the City, subject to a majority vote of the residents of Round
Rock, an additional two percent could be added to the City's share; however, it
should be noted that, under current state law, this possible revenue source could not
be used for the proposed City of Round Rock Convention Center Complex project.
Therefore, this analysis and all projections contained herein are based on the present
allocation of the hotel occupancy tax.
• Round Rock will continue to capture, at least, its fair share of the market for limited
service hotels.
• The new hotel developments already under construction will open as planned;
however, for purposes of this analysis and the projections contained herein, other
proposed hotels, such as a full- service hotel at La Frontera, have not been included.
The following is an overview of the hotels assumed to enter the Round Rock hotel
market:
Economics Research Associates IV-11
• As mentioned, it is impossible to predict which hotels, if any, will actually enter the
market, or their timing or number of rooms. In addition, it is impossible to predict
which hotels, if any, might exit the market, or their exit timing and number of rooms.
It should be noted; however, that ERA has incorporated the assumption that, starting
in fiscal year 2000, the supply of hotel rooms in Round Rock will decrease by about
100 rooms. This scenario could pertain to either 100 less rooms being developed than
originally assumed, or the exit of about 100 rooms from the market.
• The following hotel tax projections include modest increases in hotels' average room
rates due to inflation and real growth in average room rates.
Projection of Hotel Taxes to the City of Round Rock (Table IV -11)
Table IV - presents the hotel tax projection to the City of Round Rock over the 1999 to
2005 time period. The following are key observations:
• ERA's model for fiscal years 1997 and 1998 is presented for comparative purposes.
As mentioned, this model was created based on interviews with managers of the
existing hotels in Round Rock and actual hotel tax revenues as reported by the City of
Round Rock.
• In fiscal year 1999, the end -of- the -year room count in the city is projected to increase
from 404 to 930. Corresponding to the projected increase in hotel room supply, it is
projected that the overall average occupancy and average room rate for the market
will decline. Average annual occupancy is assumed to decline from 67.9 percent to
60.6 percent, a decrease of about 11 percent (or a decline of 7.3 points of occupancy),
and the average daily room rate is assumed to decline from $60.70 to $57.09, a
decline of $3.61, or about six percent. This calculation was based on a projected
decrease in average occupancy and average daily rates at existing hotels, and assumed
first -year average occupancy and average daily rates at the new hotels. For fiscal year
1999, hotel tax revenues to the City of Round Rock are projected at $616,261.
• In fiscal year 2000, it is assumed that the Hilton Garden Inn hotel opens; however,
with about 100 hotel rooms assumed to exit the market, the net change in hotel supply
is 12 rooms. For fiscal year 2000, hotel tax revenues to the City of Round Rock are
projected at $915,710.
Economics Research Associates IV -12
Table IV -11
PROJECTIONS OF HOTEL BED TAX REVENUE TO THE CITY OF ROUND ROCK
Anticpated End -of -Year Room Count
Roomnights Available
Change
Projected Roomnights
Change
Average Occupancy
Change
Overall Average Room Rate
Change
Rooms Revenue
Change
Hotel Taxes to City of Round Rock 3/
Change
Actual Hotel Tax Revenue to City 4/
Historical 2/
L
404 404
123,986 147,460
19%
81,707 100,178
23%
65.9% 67.9%
3.1%
$59.33 560.70
2.3%
54,847,339 56,080,697
25.4%
8339,314 5425,649
25.4%
5339,592 $434,355
Fiscal Years Ending Septermber 30 1/
1999 2000 2001 2002 2003 2004 2005
930 942 942 942 942 942 942
254,380 328,701 343,830 343,830 343,830 343,830 343,830
73% 29% 5% 0% 0% 0% 0
154,198 213,093 228,231 233,929 238,607 243,379 248,247
54% 38% 7% 2% 2% 2% 2%
60.6% 64.8% 66.4% 68.0% 69.4% 70.8% 72.2%
-10.8% 6.9% 2.4% 2.5% 2.0% 2.0% 2.0%
557.09 $61.39 865.07 $68.24 870.28 572.39 574.56
-5.9% 7.5% 6.0% 4.9% 3% 3% 3%
88,803,726 513,081,578 $14,851,927 $15,962,311 $16,770,004 $17,618,567 518,510,066
44.8% 48.6% 13.5% 7.5% 5.1% 5.1% 5.1%
$616,261 5915,710 81,039,635 51,117,362 51,173,900 51,233,300 51,295,705
44.8% 48.6% 13.5% 7.5% 5.1% 5.1% 5.1%
1/ Reflects cash receipts to the City of Round Rock for the year -end time period ending June 30
2/ Presented for comparative purposes, hotel occupancy and average daily room rate information is approximate
3/ Based on 7 percent lax rate to the City of Round Rock
4/ City of Round Rock (account number 71 -00- 000 -4123)
Source: Economics Research Associates
• For the remaining 2001 to 2005 period, the number of hotel rooms is projected to
remain constant and, reflecting gradual increases in occupancy and average daily
room rate, hotel tax revenues to the City of Round Rock are projected to range from
$1,039,635 to $1,295,705.
• The projected increase in hotel roomnights in the City of Round Rock is shown
graphically on Figure IV-4.
Economics Research Associates
1V -13
0
O
O
K
c 200,000
0
O
K
w
d
• 150,000
0
0
0
0
0
300,000
250,000
50,000
0
Figure IV-4
Round Rock Hotel Market: Historical and Projected Performance
Historical
•
Projected
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Texas Department of Economic Development, Tourism Division for historical data and Economics Research Associates for projections
DATE: February 19, 1999
SUBJECT: City Council Meeting — February 25, 1999
ITEM: 13.C.1. Consider a resolution approving Preliminary Limited Offering
Memorandum Relating to City of Round Rock, Texas Hotel
Occupancy Tax Revenue Bonds, Series 1999 (Convention Center
Complex Project) and authorizing distribution of Preliminary
Limited Offering Memorandum. The revenue bonds are to be offered
in the approximate par amount of $8,650,000 for the purpose of
providing a portion of the funds to develop a Convention Center
Complex Project. The bonds are an obligation of the City payable
solely from the hotel occupancy tax. Staff Resource Person: David
Kautz, Finance Director.