HomeMy WebLinkAboutItem 05 - Certificates of Obligation ITEM • .c.
MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: ROGER NELSON, CITY MANAGER
MEETING DATE: JUNE 6, 2000
SUBJECT: COMBINATION TAX AND TAX INCREMENT REINVESTMENT
ZONE REVENUE CERTIFICATES OF OBLIGATION SALE
RECOMMENDATION:
City Council to consider approving an ordinance accepting bids as recommended for the
sale of$31,580,000 of Combination Tax and Tax Increment Reinvestment Zone Revenue
Certificates of Obligation, Series 2000, for financing certain public improvements
associated with Tax Increment Reinvestment Zone Number 2, the Opryland Project.
BACKGROUND:
At the June 6, 2000, City Council meeting, a representative of the First Southwest
Company, the City's financial advisor, will present bids for the sale of $31,580,000 of
Combination Tax and Tax Increment Reinvestment Zone Revenue Certificates of
Obligation (CO's). Sale of the CO's was authorized by City Council when approving a
Notice of Intent at the May 16, 2000, City Council Meeting. The Notice of Intent has been
published twice as required by law in a newspaper of general circulation in the community.
Funds from the sale of the CO's will be used to fund the following projects.
• Bridge serving the main drive
• Roadways A-B-C-D
• Utility Facilities consisting of water and wastewater lines and associated facilities
or appurtenances
• Parking facilities consisting of two public parking garages, one located beneath
the convention center and the second located adjacent to the hotel
• Land and easement purchases
• Management Fees
Total cost to the Tax Increment Financing District (TIF) for the public improvements will not
exceed $27,500,000.
May 17, 2000(3:24PM)
•
PRELIMINARY OFFICIAL STATEMENT Ratings:
Moody's: Applied For
Dated May 25,2000 S&P: Applied For
See("Other Information-
NEW ISSUE-Book-Entry-Only Ratings"herein)
In the opinion of Bond Counsel,interest on the Certificates is excludable from gross income for federal income tax purposes under existing law
and the Certificates are not private activity bonds. See"Tax Exemption"herein for a discussion of the opinion of Bond Counsel,including a
description of alternative minimum tax consequences for corporations.
THE CERTIFICATES WILL NOT BE DESIGNATED AS"QUALIFIED TAX-EXEMPT OBLIGATIONS"FOR FINANCIAL INSTITUTIONS
$31,580,000
CITY OF GRAPEVINE,TEXAS
(Tarrant County)
COMBINATION TAX AND TAX INCREMENT REINVESTMENT
ZONE REVENUE CERTIFICATES OF OBLIGATION,SERIES 2000
Dated Date: June 1,2000 Due: August 15,as shown below
PAYMENT TERMS...Interest on the$31,580,000 City of Grapevine,Texas Combination Tax and Tax Increment Reinvestment Zone("TIRZ")
Revenue Certificates of Obligation, Series 2000 (the "Certificates") will accrue from June 1, 2000, (the "Dated Date") and will be payable
February 15 and August 15 of each year commencing February 15, 2001, and will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. The definitive Certificates will be initially registered and delivered only to Cede&Co.,the nominee of The Depository
Trust Company("DTC")pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in
denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the owners thereof. Principal of,
premium,if any,and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede&Co.,which will make distribution of
the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. See "The
Certificates - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is Bank One, Texas, N.A., Dallas, Texas (see "The
Certificates-Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE...The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, (the"State")
particularly Subchapter C of Chapter 271,Texas Local Government Code(the Certificate of Obligation Act of 1971),as amended,and constitute
direct obligations of the City of Grapevine, Texas (the "City"), payable from a combination of (i) the levy and collection of a direct and
continuing ad valorem tax,within the limits prescribed by law,on all taxable property within the City,and(ii)a subordinate lien on and pledge
of the Tax Increments deposited into the Tax Increment Fund established for the City's Reinvestment Zone Number Two (the "Zone"), as
provided in the ordinance authorizing the Certificates(the"Ordinance") (see"The Certificates-Security and Source of Payment").
PURPOSE ...The proceeds of the Certificates will be used for public improvements in the Zone that will include the construction and
improvement of public streets and thoroughfares, including related signage and signalization, landscaping, lighting and utility relocation;
construction of a bridge across Silverlake Inlet, including related signage and signalization, landscaping and utility relocations; additions,
improvements and extensions to Grapevine's waterworks and sanitary sewer system;storm drainage improvements;construction and equipment
of subterranean and above-ground public parking lots and facilities,including lighting,signage,landscaping and irrigation; and acquisition of
land and interests in land,including easements and right-of-way,necessary or convenient for the foregoing,to provide funds to pay interest on the
Certificates during construction of such works and for a period not to exceed one year thereafter,and to pay costs of issuance associated with the sale
of the Certificates.
MATURITY SCHEDULE
Amount Maturity Rate Yield Amount Maturity Rate Yield
$ 730,000 2005 $ 1,380,000 2016
770,000 2006 1,465,000 2017
820,000 2007 1,550,000 2018
865,000 2008 1,645,000 2019
920,000 2009 1,745,000 2020
975,000 2010 1,850,000 2021
1,030,000 2011 1,960,000 2022
1,095,000 2012 2,075,000 2023
1,160,000 2013 2,200,000 2024
1,230,000 2014 2,335,000 2025
1,305,000 2015 2,475,000 2026
(Accrued Interest from June 1,2000 to be added)
REDEMPTION...The City reserves the right, at its option, to redeem Certificates having stated maturities on and after August 15, 2011, in
whole or in part in principal amounts of$5,000 or any integral multiple thereof, on August 15, 2010, or any date thereafter,at the par value
thereof plus accrued interest to the date of redemption. Additionally,the Certificates may be subject to mandatory redemption in the event the
Initial Purchaser(s) of the Certificates elects to aggregate one or more maturities as a Term Certificate (see "The Certificates - Optional
Redemption"and"The Certificates-Mandatory Sinking Fund Redemption").
LEGALITY ...The Certificates are offered for delivery when, as and if issued and received by the Initial Purchaser(s) and subject to the
approving opinion of the Attorney General of Texas and the opinion of Vinson&Elkins L.L.P.,Bond Counsel,Dallas,Texas(see Appendix C,
"Form of Bond Counsel's Opinions").
DELIVERY...It is expected that the Certificates will be available for delivery through The Depository Trust Company on July 12,2000.
BIDS DUE TUESDAY,JUNE 6, 2000, AT 11:30 AM, CDT
This Preliminary Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to
sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer,solicitation
or sale.
No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other
than those contained in this Preliminary Official Statement, and, if given or made, such other information or representations
must not be relied upon.
The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information
is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial
Advisor. This Preliminary Official Statement contains, in part, estimates and matters of opinion which are not intended as
statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be
realized.
The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of
this Preliminary Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the City or other matters described.
TABLE OF CONTENTS
PRELIMINARY OFFICIAL STATEMENT FINANCIAL INFORMATION 22
SUMMARY 3 TABLE 13 - GENERAL FUND REVENUES AND
EXPENDITURE HISTORY 22
CITY OFFICIALS,STAFF AND CONSULTANTS....5 TABLE 14 - MUNICIPAL SALES TAX HISTORY 23
ELECTED OFFICIALS 5 TABLE 15-CURRENT INVESTMENTS 25
SELECTED ADMINISTRATIVE STAFF 5
CONSULTANTS AND ADVISORS 5 TAX MATTERS 26
INTRODUCTION 7 OTHER INFORMATION 28
RATINGS 28
THE CERTIFICATES 7 LITIGATION 28
REGISTRATION AND QUALIFICATION OF CERTIFICATES
TAX INCREMENT REINVESTMENT ZONE 12 FOR SALE 28
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
TAX INFORMATION 13 PUBLIC FUNDS IN TEXAS 28
TABLE 1 - VALUATION,EXEMPTIONS AND GENERAL LEGAL MATTERS 28
OBLIGATION DEBT 16 AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION 29
TABLE 2 TAXABLE ASSESSED VALUATIONS BY CONTINUING DISCLOSURE OF INFORMATION 29
CATEGORY 17 INITIAL PURCHASER OF THE CERTIFICATES 30
TABLE 3 - VALUATION AND GENERAL OBLIGATION FINANCIAL ADVISOR 30
DEBT HISTORY 18 CERTIFICATION OF THE OFFICIAL STATEMENT 31
TABLE 4 - TAX RATE,LEVY AND COLLECTION
HISTORY 18 APPENDICES
TABLE 5 TEN LARGEST TAXPAYERS 18 GENERAL INFORMATION REGARDING THE CITY A
TABLE 6 TAX ADEQUACY 19 EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B
TABLE 7 - ESTIMATED OVERLAPPING DEBT 19 FORM OF BOND COUNSEL'S OPINION C
DEBT INFORMATION 20 The cover page hereof, this page, the appendices included
TABLE 8 - PRO-FORMA GENERAL OBLIGATION DEBT herein and any addenda,supplement or amendment hereto,
SERVICE REQUIREMENTS 20 are part of the Preliminary Official Statement.
TABLE 9 - INTEREST AND SINKING FUND BUDGET
PROJECTION 20
TABLE 10 - COMPUTATION OF SELF-SUPPORTING
DEBT 21
TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL
OBLIGATION BONDS 21
TABLE 12 - OTHER OBLIGATIONS 21
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PRELIMINARY OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Preliminary Official Statement. The offering of the Certificates to potential investors is made only by means of this entire
Preliminary Official Statement. No person is authorized to detach this summary from this Preliminary Official Statement or to
otherwise use it without the entire Preliminary Official Statement.
THE CITY The City of Grapevine,Texas is a political subdivision and municipal corporation of the State,
located in Tarrant County, Texas. The City covers approximately 33 square miles (see
"Introduction-Description of City").
THE CERTIFICATES The Certificates are issued as$31,580,000 Combination Tax and Tax Increment Reinvestment
Zone Revenue Certificates of Obligation, Series 2000. The Certificates are issued as serial
certificates maturing August 15,2005 through August 15,2026,unless the Initial Purchaser(s)
designate(s) one or more maturities as a Term Certificate (see "The Certificates -Description
of the Certificates").
PAYMENT OF INTEREST Interest on the Certificates accrues from June 1, 2000,and is payable February 15, 2001,and
each August 15 and February 15 thereafter until maturity or prior redemption (see "The
Certificates-Description of the Certificates,""The Certificates-Optional Redemption").
AUTHORITY FOR ISSUANCE The Certificates are issued pursuant to the general laws of the State,particularly Subchapter C
of Chapter 271,Texas Local Government Code (the Certificate of Obligation Act of 1971),-as
amended and an Ordinance passed by the City Council of the City (see "The Certificates -
Authority for Issuance").
SECURITY FOR THE
CERTIFICATES The Certificates constitute direct obligations of the City, payable from a combination of(i) the
levy and collection of a direct and continuing ad valorem tax,within the limits prescribed by law,
on all taxable property within the City, and (ii) a subordinate lien on and pledge of the Tax
Increments of the City's Reinvestment Zone Number Two (see "The Certificates - Security and
Source of Payment").
REDEMPTION The City reserves the right, at its option, to redeem Certificates having stated maturities on
and after August 15, 2011,in whole or in part in principal amounts of$5,000 or any integral
multiple thereof, on August 15, 2010, or any date thereafter, at the par value thereof plus
accrued interest to the date of redemption (see"The Certificates-Optional Redemption").
TAX EXEMPTION In the opinion of Bond Counsel, the interest on the Certificates will be excludable from gross
income for federal income tax purposes under existing law and the Certificates are not private
activity bonds. See "Tax Matters - Tax Exemption" for a discussion of the opinion of Bond
Counsel,including a description of the alternative minimum tax consequences for corporations.
USE OF PROCEEDS The proceeds of the Certificates will be used for public improvements in the Zone that will
include the construction and improvement of public streets and thoroughfares, including
related signage and signalization,landscaping,lighting and utility relocation;construction of a
bridge across Silverlake Inlet, including related signage and signalization, landscaping and
utility relocations; additions, improvements and extensions to Grapevine's waterworks and
sanitary sewer system; storm drainage improvements; construction and equipment of
subterranean and above-ground public parking lots and facilities, including lighting,signage,
landscaping and irrigation; and acquisition of land and interests in land, including easements
and right-of-way,necessary or convenient for the foregoing,to provide funds to pay interest on
the Certificates during construction of such works and for a period not to exceed one year
thereafter,and to pay costs of issuance associated with the sale of the Certificates.
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RATINGS The presently outstanding general obligation debt of the City is rated "Al" by Moody's
Investors Service, Inc. ("Moody's") and "A+" by Standard & Poor's Ratings Services, A
Division of The McGraw-Hill Companies,Inc. ("S&P"). The City also has issues outstanding
which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various
commercial insurance companies. Applications for contract ratings on the Certificates have
been made to Moody's and S&P (see"Other Information-Ratings").
BOOK-ENTRY-ONLY
SYSTEM The definitive Certificates will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Certificates may be acquired in denominations of $5,000 or integral
multiples thereof. No physical delivery of the Certificates will be made to the beneficial
owners thereof. Principal of,premium,if any,and interest on the Certificates will be payable
by the Paying Agent/Registrar to Cede&Co.,which will make distribution of the amounts so
paid to the participating members of DTC for subsequent payment to the beneficial owners of
the Certificates(see"The Certificates-Book-Entry-Only System").
PAYMENT RECORD The City has not defaulted on its tax-supported debt since 1932 when all defaults were
corrected without refunding.
SELECTED FINANCIAL INFORMATION
Ratio Funded
Fiscal Per Capita Per Capita Tax Debt to
Year Estimated Taxable Taxable Funded Funded Taxable %of
Ended City Assessed Assessed Tax Tax Assessed Total Tax
9/30 Population Valuation Valuation Debt Debt Valuation Collections
1996 34,950 $ 2,915,106,982 $ 83,408 $ 54,565,256 $ 1,561 1.87% 100.85%
1997 36,000 3,124,673,648 86,796 90,993,462 2,528 2.91% 99.68%
1998 37,946 3,253,338,457 85,736 95,546,968 2,518 2.94% 99.40%
1999 39,190 3,994,671,130 101,931 103,132,152 2,632 2.58% 100.30%
2000 39,190 4,089,979,800 104,363 143,995,000 (I) 3,674 3.52% 98.91% (2)
(1) Projected,includes the Certificates.
(2) Collections for part year only,through May 1,2000
For additional information regarding the City,please contact:
Fred Werner David K.Medanich
Director of Finance or Steven Adams
City of Grapevine First Southwest Company
200 South Main 201 Main Street,Suite 1320
Grapevine,Texas 76051 Fort Worth,Texas 76102
(817) 251-4819 (817)332-9710
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CITY OFFICIALS,STAFF AND CONSULTANTS
ELECTED OFFICIALS
Length of Term
City Council Service Expires Occupation
William D.Tate 12 Years 0) May,2003 Attorney-at-Law
Mayor
Ted R.Ware 21 Years May,2002 Commercial Contractor
Mayor Pro Tern
C.Shane Wilbanks 15 Years May,2003 Personnel Director
Councilmember,Place 1
SJlarron Spencer 15 Years May,2003 Retired Sales Representative
Councilmember,Place 2
Clydene Johnson 5 Years May,2001 Independent Insurance Agent •
Councilmember,Place 3
Darlene Freed 2 Years May,2001 Commercial Real Estate Agent
Councilmember,Place 4
Roy Stewart 4 Years May,2002 Construction Company Owner
Councilmember,Place 6
(1) Previously served 14 years as Mayor and Councilmember.
SELECTED ADMINISTRATIVE STAFF
Name Position Length of Service
Roger Nelson City Manager 5 Years
Bill Gaither Administrative Services Director 4 Years
Fred Werner Director of Finance 3 1/2 Years
Linda Huff City Secretary 19 Years«)
(1) 18 years with City; 13 years in present position.
CONSULTANTS AND ADVISORS
Auditors Deloitte&Touche LLP
Fort Worth,Texas
Bond Counsel Vinson&Elkins L.L.P.
Dallas,Texas
Financial Advisor First Southwest Company
Dallas and Fort Worth,Texas
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PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$31,580,000
CITY OF GRAPEVINE,TEXAS
COMBINATION TAX AND TAX INCREMENT REINVESTMENT
ZONE REVENUE CERTIFICATES OF OBLIGATION,SERIES 2000
INTRODUCTION
This Preliminary Official Statement,which includes the Appendices hereto, provides certain information regarding the issuance
of$31,580,000 City of Grapevine, Texas Combination Tax and Tax Increment Reinvestment Zone Revenue Certificates of
Obligation, Series 2000 (the "Certificates"). Capitalized terms used in this Preliminary Official Statement have the same
meanings assigned to such terms in the Ordinance each to be adopted on the date of sale of the Certificates which will authorize
the issuance of the Certificates,respectively,except as otherwise indicated herein.
There follows in this Preliminary Official Statement descriptions of the Certificates and certain information regarding the City
and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by
reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor,First Southwest
Company,Dallas,Texas.
DESCRIPTION OF THE CITY ...The City is a political subdivision and municipal corporation of the State, duly organized and
existing under the laws of the State,including the City's Home Rule Charter. The City first adopted its Home Rule Charter in 1965.
The City operates under the Council/Manager form of government with a City Council comprised of the Mayor and six
Councilmembers. The City Manager is the chief administrative officer for the City. Some of the services that the City provides are:
public safety(police and fire protection),highways and streets,electric,water and sanitary sewer utilities,health and social services,
culture-recreation,public transportation,public improvements,planning and zoning,and general administrative services. The 1990
Census population for the City was 29,202,while the 2000 estimated population is 39,190. The City covers approximately 33 square
miles.
THE CERTIFICATES
DESCRIPTION OF THE CERTIFICATES ...The Certificates are dated June 1, 2000,and mature on August 15 in each of the years
and in the amounts shown on the cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day
months,and will be payable on August 15 and February 15,commencing February 15, 2001. The definitive Certificates will be
issued only in fully registered form in any integral multiple of$5,000 for any one maturity and will be initially registered and
delivered only to Cede&Co.,the nominee of The Depository Trust Company("DTC") pursuant to the Book-Entry-Only System
described herein. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium,if any,
and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede&Co.,which will make distribution of the
amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. See
"Book-Entry-Only System"herein.
AUTHORITY FOR ISSUANCE. ..The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas,
particularly Subchapter C of Chapter 271,Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended,
and an Ordinance passed by the City Council.
SECURITY AND SOURCE OF PAYMENT...The Certificates are payable from and secured by: (a) a continuing direct annual ad
valorem tax levied,within the limits prescribed by law, upon all taxable property within the City; and (b) a pledge of the Tax
Increments on deposit in the Tax Increment Fund,such pledge being subordinate to: (i) any future bonds or obligations issued
by the City that by the express terms thereof have a prior lien on and pledge of the Tax Increment Fund; and (ii) any bonds or
other obligations heretofore or hereafter issued by the Taxing Units and secured by a levy of ad valorem taxes upon all taxable
property in the Taxing Units for which the levy and collection of ad valorem taxes has been insufficient for the payment thereof.
See"REINVESTMENT ZONE."
PURPOSE. . .The proceeds of the Certificates will be used for public improvements in the Zone that will include the construction
and improvement of public streets and thoroughfares, including related signage and signalization, landscaping, lighting and
utility relocation; construction of a bridge across Silverlake Inlet, including related signage and signalization, landscaping and
utility relocations;additions,improvements and extensions to Grapevine's waterworks and sanitary sewer system; storm drainage
improvements; construction and equipment of subterranean and above-ground public parking lots and facilities, including
lighting,signage,landscaping and irrigation;and acquisition of land and interests in land,including easements and right-of-way,
necessary or convenient for the foregoing.
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TAX RATE LIMITATION...All taxable property within the City is subject to the assessment,levy and collection by the City of a
continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax
debt within the limits prescribed by law. Article XI,Section 5,of the Texas Constitution is applicable to the City,and limits its
maximum ad valorem tax rate to$2.50 per$100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of
the City adopts the constitutionally authorized maximum tax rate of$2.50 per$100 Taxable Assessed Valuation.
OPTIONAL REDEMPTION...The City reserves the right, at its option, to redeem Certificates having stated maturities on and
after August 15,2011,in whole or in part in principal amounts of$5,000 or any integral multiple thereof,on August 15,2010,or
any date thereafter,at the par value thereof plus accrued interest to the date of redemption. If less than all of the Certificates are
to be redeemed,the City may select the maturities of Certificates to be redeemed. If less than all the Certificates of any maturity
are to be redeemed,the Paying Agent/Registrar (or DTC while the Certificates are in Book-Entry-Only form)shall determine by
lot the Certificates,or portions thereof,within such maturity to be redeemed.If a Certificate (or any portion of the principal sum
thereof) shall have been called for redemption and notice of such redemption shall have been given, such Certificate (or the
principal amount thereof to be redeemed)shall become due and payable on such redemption date and interest thereon shall cease
to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest
thereon are held by the Paying Agent/Registrar on the redemption date.
MANDATORY SINKING FUND REDEMPTION . . . . In addition to being subject to optional redemption as provided above, should
the Initial Purchaser(s) of the Certificates select a combination of serial bonds and term bonds in accordance with the Notice of
Sale for the Certificates,the term certificates are subject to mandatory redemption on the first August 15th next following the last
maturity of the serial bonds,and annually thereafter on each August 15th until the stated maturity for the term certificates at the
redemption price of par plus accrued interest to the date of redemption.
In each of the years the term certificates are to be mandatorily redeemed, the Paying Agent/Registrar shall select by lot the
numbers of the term certificates within the applicable Stated Maturity to be redeemed on the next following August 15th from
moneys set aside for that purpose in the Interest and Sinking Fund.Any term certificate not selected for prior redemption shall be
paid on the date of its Stated Maturity.
The principal amount of the term certificates for a Stated Maturity required to be redeemed pursuant to the operation of such
mandatory redemption provisions shall be reduced, at the option of the City, by the principal amount of the term certificates of
like Stated Maturity which (1) shall have been acquired by the City at a price not exceeding the principal amount of such term
certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation or
(2) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory
redemption requirement.
NOTICE OF REDEMPTION.. .Not less than 30 days prior to a redemption date for the Certificates,the City shall cause a notice of
redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Certificates to be
redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying
Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO
MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN,NOTWITHSTANDING THAT ONE
OR MORE REGISTERED OWNERS MAY HAVE FAILED TO RECEIVE SUCH NOTICE. If a Certificate (or any portion of
its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon the
redemption date such Certificate (or the portion of its principal sum to be redeemed) shall become due and payable, and, if
moneys for the payment of the redemption price and the interest accrued on the principal amount to be redeemed to the date of
redemption are held for the purpose of such payment by the Paying Agent/Registrar,interest shall cease to accrue and be payable
from and after the redemption date on the principal amount redeemed.
DEFEASANCE...The Ordinance provides that the City may discharge its obligations to the registered owners of any or all of the
Certificates to pay principal, interest and redemption price thereon in any manner permitted by law. Under current Texas law,
such discharge may be accomplished either(i)by depositing with the Comptroller of Public Accounts of the State of Texas a sum
of money equal to the principal of,premium,if any,and all interest to accrue on the Certificates to maturity or redemption or(ii)
by depositing with any place of payment (paying agent) for obligations of the City payable from revenues or from ad valorem
taxes or both, amounts sufficient to provide for the payment and/or redemption of the Certificates; provided that such deposits
may be invested and reinvested only in (a) direct non-callable obligations of the United States of America, including obligations
that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality
of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and
that,on the date the governing body of the City adopts or approves the proceedings authorizing the issuance of refunding bonds,
are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent;and (c)
noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been
refunded and that, on the date the governing body of the City adopts or approves the proceedings authorizing the issuance of
refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its
equivalent.The foregoing obligations may be in book entry form,and shall mature and/or bear interest payable at such times and
in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of the Certificates. If any of such
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Certificates are to be redeemed prior to their respective dates of maturity, provision must have been made for giving notice of
redemption as provided in the Ordinance.
Under current state law, after such deposit as described above, such Certificates shall no longer be regarded as outstanding or
unpaid.After firm banking and financial arrangements for the discharge and final payment or redemption of the Certificates have
been made as described above, all rights of the City to initiate proceedings to call the Certificates for redemption or take any
other action amending the terms of the Certificates are extinguished;provided, however,that the right to call the Certificates for
redemption is not extinguished if the City: (i) in the proceedings providing for the firm banking and financial arrangements,
expressly reserves the right to call the Certificates for redemption; (ii)gives notice of the reservation of that right to the owners of
the Certificates immediately following the making of the firm banking and financial arrangements;and (iii) directs that notice of
the reservation be included in any redemption notices that it authorizes.
BOOK-ENTRY-ONLY SYSTEM...This section describes how ownership of the Certificates are to be transferred and how the
principal of, premium, if any, and interest on the Certificates are to be paid to and credited by DTC while the Certificates are
registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been
provided by DTC for use in disclosure documents such as this Official Statement. The City believes the source of such
information to be reliable,but takes no responsibility for the accuracy or completeness thereof.
The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Certificates, or
redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to
DTC or its nominee(as the registered owner of the Certificates),or redemption or other notices,to the Beneficial Owners,or that
they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current
rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to-be
followed in dealing with DTC Participants are on file with DTC.
The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Certificates. The
Certificates 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 Certificates 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 City"within the meaning of the
New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants ("Direct Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing
Citys, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange,Inc.,the American Stock Exchange,Inc.,and the National Association of Securities Dealers,Inc. Access to the DTC
system is also available to others such as securities brokers and dealers,banks,and trust companies that clear through or maintain
a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The Rules applicable to
DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Certificates 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 Certificate ("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 Certificates 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 Certificates, except in the event that use of the book-entry system described herein is
discontinued.
To facilitate subsequent transfers,all Certificates deposited by Direct Participants with DTC are registered in the name of DTC's
partnership nominee, Cede &Co. The deposit of Certificates 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 Certificates; DTC's records
reflect only the identity of the Direct Participants to whose accounts such Certificates 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 Certificates 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.
9
Neither DTC nor Cede & Co. will consent or vote with respect to the Certificates. Under its usual procedures, DTC mails an
Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined). The Omnibus Proxy assigns Cede&
Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the Record Date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Certificates will be made to DTC. DTC's practice is to credit Direct Participants'accounts
on each payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payment on such payable date. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices,as is the case with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar or the City,
subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to
DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC,
and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Certificates at any time by giving
reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained,
Certificates 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,Certificates will be printed and delivered.
Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood
that while the Certificates are in the Book-Entry Only System,references in other sections of this Official Statement to registered
owners should be read to include the person for which the Participant acquires an interest in the Certificates,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 Trust Agreement 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 Purchasers.
Effect of Termination of Book-Entry Only System. In the event that the Book-Entry Only System is discontinued by DTC or
the use of the Book-Entry Only System is discontinued by the City, the following provisions will be applicable to the
Certificates. The Certificates may be exchanged for an equal aggregate principal amount of the Certificates in authorized
denominations and of the same maturity upon surrender thereof at the principal office for payment of the Trustee. The transfer of
any Certificate may be registered on the books maintained by the Trustee for such purpose only upon the surrender of such
Certificate to the Trustee with a duly executed assignment in form satisfactory to the Trustee. For every exchange or transfer of
registration of Certificates, the Trustee and the City may make a charge sufficient to reimburse them for any tax or other
governmental charge required to be paid with respect to such exchange or registration of transfer. The City shall pay the fee,if
any,charged by the Trustee for the transfer or exchange. The Trustee will not be required to transfer or exchange any Certificate
after its selection for redemption. The City and the Trustee may treat the person in whose name a Certificate is registered as the
absolute owner thereof for all purposes, whether such Certificate is overdue or not, including for the purpose of receiving
payment of,or on account of,the principal of,premium,if any,and interest on,such Certificate.
PAYING AGENT/REGISTRAR . . .The initial Paying Agent/Registrar is Bank One, Texas, N.A., Fort Worth, Texas. In the
Ordinance,the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying
Agent/Registrar at all times until the Certificates are duly paid and any successor Paying Agent/Registrar shall be a commercial
bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to
serve as and perform the duties and services of Paying Agent/Registrar for the Certificates. Upon any change in the Paying
Agent/Registrar for the Certificates,the City agrees to promptly cause a written notice thereof to be sent to each registered owner
of the Certificates by United States mail, first class,postage prepaid,which notice shall also give the address of the new Paying
Agent/Registrar.
In the event the Book-Entry-Only System should be discontinued, principal of the Certificates will be payable to the registered
owner at maturity or prior redemption upon presentation at the designated corporate trust office of the Paying Agent/Registrar
(the"Designated Trust Office"). Interest on the Certificates will be payable by check,dated as of the interest payment date,and
mailed by the Paying Agent/Registrar to registered owners as shown on the records of the Paying Agent/Registrar on the Record
Date (see "The Certificates—Record Date for Interest Payment" herein), or by such other method, acceptable to the Paying
Agent/Registrar,requested by,and at the risk and expense of,the registered owner.If the date for the payment of the principal of
or interest on the Certificates shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where
the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be
the next succeeding day which is not such a Saturday,Sunday,legal holiday,or day on which banking institutions are authorized
to close;and payment on such date shall have the same force and effect as if made on the original date payment was due.
10
TRANSFER, EXCHANGE AND REGISTRATION ...In the event the Book-Entry-Only System should be discontinued, the
Certificates may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation
and surrender to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the
registered owner,except for any tax or other governmental charges required to be paid with respect to such registration,exchange
and transfer. Certificates may be assigned by the execution of an assignment form on the respective Certificates or by other
instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Certificates will be delivered by the Paying
Agent/Registrar,in lieu of the Certificates being transferred or exchanged,at the designated office of the Paying Agent/Registrar,
or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible,
new Certificates issued in an exchange or transfer of Certificates 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 Certificates to be canceled, and the written
instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form
satisfactory to the Paying Agent/Registrar. New Certificates registered and delivered in an exchange or transfer shall be in any
integral multiple of$5,000 for any one maturity and for a like aggregate principal amount as the Certificates 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 Certificates. Neither the City nor the Paying Agent/Registrar shall be required to transfer or
exchange any Certificate called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided,
however,such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a
Certificate.
RECORD DATE FOR INTEREST PAYMENT...The record date ("Record Date") for the interest payable on the Certificates on any
interest payment date means the close of business on the last business day of the month next preceding.
In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (a"Special Record Date")will be established by the Paying Agent/Registrar,if and when funds for the payment
of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the
past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail,first class postage prepaid,to the address of each Holder of
a Certificate appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day
next preceding the date of mailing of such notice.
CERTIFICATEHOLDERS' REMEDIES ...The Ordinance establishes as "events of default" (i) the failure to make payment of
principal of, redemption premium, if any, or interest on any of the Certificates when due and payable; or (ii) default in the
performance or observance of any other covenant, agreement or obligation of the City, which default materially and adversely
affects the rights of the Owners, including but not limited to their prospect or ability to be repaid in accordance with the
Ordinance,and the continuation thereof for a period of sixty days after notice of such default is given by any owner to the City.
Under State law there is no right to the acceleration of maturity of the Certificates upon the failure of the City to observe any
covenant under the Ordinance. Although a registered owner of Certificates could presumably obtain a judgment against the City
if a default occurred in the payment of principal of or interest on any such Certificates, such judgment could not be satisfied by
execution against any property of the City. Such registered owner's only practical remedy, if a default occurs, is a mandamus or
mandatory injunction proceeding to compel the City to assess and collect rates and charges for water and sewer services
sufficient to pay principal of and interest on the Certificates as it becomes due. The enforcement of any such remedy may be
difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. Neither the
Certificate Ordinance nor the Ordinance provides for the appointment of a trustee to represent the interests of the bondholders
upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition.
Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code. Chapter 9
provides for the recognition of a security interest represented by a specifically pledged source of revenues,and also includes an
automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by
creditors or bondholders of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of
Chapter 9 protection from creditors,the ability to enforce would be subject to the approval of the Bankruptcy Court (which could
require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides
for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond
Counsel will note that all opinions relative to the enforceability of the Ordinance and the Certificates are qualified with respect to
the customary rights of debtors relative to their creditors.
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TAX INCREMENT REINVESTMENT ZONE
Article VIII,Section 1-g of the Texas Constitution and the Tax Increment Financing Act, Chapter 311,V.T.C.A.Tax Code (the
"TIF Act") authorize municipalities in the State to establish one or more tax increment financing reinvestment zones for
development or redevelopment of the territory within the zones.
The TIF Act provides that the municipality may appoint a board of directors for a reinvestment zone to develop a project plan
and financing plan for the zone and may delegate to the board certain management duties relating to the zone. Project costs,
including financing costs,within the zone may be paid from tax increments collected by each of the taxing units in the zone. The
amount of a taxing unit's tax increment ("Tax Increment") for a year is the amount of property taxes levied by the unit for that
year on the captured appraised value of real property taxable by the unit (the "Captured Appraised Value") and located in the
zone. The Captured Appraised Value is the total appraised value of the property for a year, less the tax increment base of the
unit. The tax increment base of a taxing unit is the total appraised value of all real property taxable by the unit and located in the
zone in the year in which the City created the zone. Participation by a taxing unit in a reinvestment is discretionary with such
taxing unit, and it may decide to deposit all or none, or a portion, of its tax increments into the fund and retain for its own
purposes the remainder. A taxing unit cannot reduce the amount of its participation once the financing plan has been
implemented.
On December 8, 1998, the Grapevine City Council adopted an ordinance (the "Zone Ordinance") creating Tax Increment
Financing Reinvestment Zone Number Two, City of Grapevine,Texas(the"Zone") by designating a contiguous geographic area
in the jurisdiction of the City as a reinvestment zone to promote development or redevelopment in the Zone. The Zone
Ordinance described the boundaries of the Zone,created a board of directors for the Zone,established a tax increment fund (the
"Tax Increment Fund") for the Zone and found that public works and improvements to be undertaken in the Zone would
significantly enhance the value of all taxable real property in the Zone and would be of general benefit to the City.
The Board of Directors of the Zone (the "Board") is comprised of nine members,who serve two year terms. The City appoints
five members and the chairman of the Board. Each of the other Taxing Units may appoint one member of the Board, or may
waive its right to make such appointment. The Board serves to present non-binding recommendations to the City Council for its
review. The recommendations pertain to development and redevelopment in the Zone pursuant to a project plan and
reinvestment zone financing plan (the "Plans") prepared for the Zone. The project plan shows existing uses and conditions of
real property in the Zone and provides a map of proposed improvements to and uses of such property. The reinvestment zone
financing plan describes the estimated project costs of the Zone and lists the type, number and location of all proposed public
works and improvements in the Zone. The Board has prepared the Plans and submitted them to the City Council for its review.
The City Council has approved the Plans. The public improvements to be constructed with the proceeds of the Certificates are
part of the public improvements described in the Plans(the"TIF Two Project").
The Zone is comprised of approximately 122 acres of undeveloped land in the northeast area of the City and is located on what is
referred to as the "Peninsula Tract" on Grapevine Lake, north of State Highway 26 between Ruth Wall Road and Fairway. As
part of the TIF Two Project,the City has entered into an agreement with Opryland Hotel-Texas Limited Partnership whereby the
City will provide certain public improvements within the Zone (as described in the project plan for the zone) and Opryland
Hotel-Texas Limited Partnership will develop and construct a destination convention center hotel complex (the "Opryland USA
Development"). In addition to the proposed convention center development, land and infrastructure will be available for other
retail development within the Zone.
The Opryland USA Development is expected to be a 1,500 room destination convention center with approximately 400,000
square feet of convention, meeting rooms and banquet facilities, parking facilities and related amenities. A 30,000 square foot
country and western entertainment facility is also planned which will feature a large dance floor, restaurant and entertainment
venues.
Additionally, the Grapevine Middle School is located wholly within the Zone. As part of the TIF Two Project, the Grapevine-
Colleyville Independent School District will be reimbursed from the Tax Increment Fund in amount equal to approximately
$27,000,000 for its debt service, including principal and interest, on bonds issued by the School District for the Grapevine
Middle School.
Tarrant County,Tarrant County Junior College District,Tarrant County Hospital District and Grapevine-Colleyville Independent
School District levy taxes on real property within the Zone. Only the School District has agreed to deposit 100% of its Tax
Increments into the Tax Increment Fund;provided,however,that the amount deposited by the School District will be reduced by
the amount necessary to offset any negative impact on the School District, as a result of its participation in the Zone, under
school finance laws.
The Tax Increments of the School District, and any other Taxing Unit which elects to participate in the future, will be paid into
the Tax Increment Fund and used to pay project costs within the Zone, including debt service on the Certificates and any other
obligations issued to finance project costs. The Zone Ordinance provides that the tax increment base for each Taxing Unit in the
Zone shall be the total appraised value of all taxable real property in the Zone as of January 1, 1999.
The Zone Ordinance further provides that the Zone shall take effect on January 1, 1999,and shall expire on December 31,2030,
or such earlier date that Grapevine determines that the Zone should be terminated due to insufficient private investment,
accelerated private investment or other good cause, or such time as all project costs and obligations secured by Tax Increments,
such as the Certificates,and the interest thereon,have been paid in full.
12
TAX INFORMATION
AD VALOREM TAX LAW...The appraisal of property within the City is the responsibility of the Tarrant Appraisal.District (the
"Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the
Appraisal District is required under the Property Tax Code to appraise all property within the Appraisal District on the basis of 100%
of its market value and is prohibited from applying any assessment ratios. In determining market value of property,different methods
of appraisal may be used,including the cost method of appraisal,the income method of appraisal and market data comparison method of
appraisal,and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a
residence homestead for a tax year to an amount not to exceed the lesser of(1)the market value of the property,or(2)the sum of(a) 10%
of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the
property was last appraised,plus(b)the appraised value of the property for the last year in which the property was appraised plus(c)the
market value of all new improvements to the property. The value placed upon property within the Appraisal District is subject to
review by an Appraisal Review Board,consisting of three members appointed by the Board of Directors of the Appraisal District.
The Appraisal District is required to review the value of property within the Appraisal District at least every three years. The City
may require annual review at its own expense,and is entitled to challenge the determination of appraised value of property within the
City by petition filed with the Appraisal Review Board.
Reference is made to the V.T.C.A.,Property Tax Code,for identification of property subject to taxation; property exempt or which
may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and
limitations applicable to the levy and collection of ad valorem taxes.
Article VIII of the State Constitution("Article VIII")and State law provide for certain exemptions from property taxes,the valuation
of agricultural and open-space lands at productivity value,and the exemption of certain personal property from ad valorem taxation'.
Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An
exemption of not less than$3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled
from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of
residence homesteads. The minimum exemption under this provision is$5,000.
In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be
levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if
cessation of the levy would impair the obligation of the contract by which the debt was created. •
State law and Section 2,Article VIII,mandate an additional property tax exemption for disabled veterans or the surviving spouse or
children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal
property with the amount of assessed valuation exempted ranging from$5,000 to a maximum of$12,000.
Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-1), including
open-space land devoted to farm or ranch purposes or open-space land devoted to timber production,may elect to have such property
appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d
and 1-d-1.
Nonbusiness personal property,such as automobiles or light trucks,are exempt from ad valorem taxation unless the governing body
of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation.
Article VIII,Section 1-j, provides for"freeport property" to be exempted from ad valorem taxation. Freeport property is defined as
goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication.
Decisions to continue to tax may be reversed in the future;decisions to exempt freeport property are not subject to reversal.
The City and the other taxing bodies within its territory may agree to jointly create tax increment financing zones,under which the tax
values on property in the zone are"frozen"at the value of the property at the time of creation of the zone. The City also may enter
into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct
certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the
improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years.
13
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE ... By each September 1 or as soon thereafter as practicable, the City
Council adopts a tax rate per$100 taxable value for the current year. The City Council will be required to adopt the annual tax
rate for the City before the later of September 30 or the 606 day after the date the certified appraisal roll is received by the City.
If the City Council does not adopt a tax rate by such required date the tax rate for that tax year is the lower of the effective tax
rate calculated for the tax year or the tax rate adopted by the City for the preceding tax year. The tax rate consists of two
components: (1)a rate for funding of maintenance and operation expenditures,and(2)a rate for debt service.
Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate".
Effective January 1,2000,a tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or 103
per cent of the effective tax rate until a public hearing is held on the proposed tax rate following a notice of such public hearing
(including the requirements that notice be posted on the City's website if the City owns, operates or controls an internet website
and public notice be given by television if the City has free access to a television channel) and the City Council has otherwise
complied with the legal requirements for the adoption of such tax rate. If the adopted tax rate exceeds the rollback tax rate the
qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate
adopted for the current year to the rollback tax rate.
"Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values
(adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included
in this year's taxable values.
"Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's
values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted)
divided by the anticipated tax collection rate.
The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize
an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied,the effective tax rate and the
rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the
calculation of the various defined tax rates.
PROPERTY ASSESSMENT AND TAx PAYMENT...Property within the City is generally assessed as of January 1 of each year.
Business inventory may, at the option of the taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the
basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October
1 of the same year,and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by
State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment
due on August 1.
PENALTIES AND INTEREST... Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative Cumulative
Month Penalty Interest Total
February 6% 1% 7%
March 7 2 9
April 8 3 11
May 9 4 13
June 10 5 15
July 12 6 18
After July,penalty remains at 12%,and interest increases at the rate of 1%each month. In addition, if an account is delinquent
in July, a 15%attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, taxes
which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no
additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels,
pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against
an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities,
including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents
governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and
obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many
cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court.
14
CITY APPLICATION OF TAX CODE ...The City grants an exemption to the market value of the residence homestead of persons
65 years of age or older of$60,000.
The City has granted an additional exemption of 20% of the market value of residence homesteads; minimum exemption of
$5,000.
See Table 1 for a listing of the amounts of the exemptions described above.
Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt.
The City does not tax nonbusiness personal property;and the City contracts with the Grapevine-Colleyville Independent School
District for the collection of its taxes.
The City does not permit split payments,and discounts are not allowed.
The City does not tax freeport property.
The City does not collect the additional one-half cent sales tax for reduction of ad valorem taxes.
TAx ABATEMENT POLICY...The City does not have a tax abatement policy.
TAx INCREMENT FINANCE ZONES. . The City has established the Tax Increment Financing Reinvestment Zone Number One,
comprised of approximately 175 acres in the northeast area of the City. The taxable assessed value as of January 1, 1999 in the
zone was$156,728,938.
The City has additionally established the Tax Increment Financing Reinvestment Zone Number Two, comprised of
approximately 121.817 acres in the northeast area of the City. The taxable assessed value as of January 1, 1999 in the Zone was
$1,010,348. See"Tax Increment Reinvestment Zone".
15
TABLE 1 - VALUATION,EXEMPTIONS AND GENERAL OBLIGATION DEBT
1999/00 Market Valuation Established by Tarrant Appraisal District $ .60,642,926
Less Exemptions/Reductions at 100%Market Value:
Residence Homestead Exemptions $ 243,822,075
Over 65 Years of Age/Disabled 38,238,523
Disabled Veterans Exemptions 955,719
Pollution Control Exemptions 6,164
Solar/Wind Power Exemptions 9,774
Freeport Exemptions 350,227,167
Open-Space Land Use Reductions 37,162,049
Prorated Absolute Exemptions 241,655 (670,663,126)
1999/00 Taxable Assessed Valuation $ 4,089,979,800
1999/00 Incremental Taxable Assessed Value of Real Prperty within Reinvestment Zone Number One(I) (156,728,938)
1999/00 Incremental Taxable Assessed Value of Real Prperty within Reinvestment Zone Number Two(2) (1,010,348)
1999/00 Taxable Assessed Valuation available for General Fund Obligations and Debt of City $ 3,932,240,514
City Funded Debt Payable from Ad Valorem Taxes(as of 5/1/00)(3) '
General Obligation Bonds $ 72,680,000
Certificates of Obligation 38,360,000
Equipment Acquisition Notes 2,270,000
The Certificates 31,580.000
Funded Debt Payable from Ad Valorem Taxes $ 144,890,000
Less Self-Supporting Debt:(4)
Combination Tax and Tax Increment Reinvestment Zone
Revenue Certificates of Obligation 27,020,000
Net Funded Debt Payable From Ad Valorem Taxes $ 171,910,000
Interest and Sinking Fund as of May 1,2000 $ 4,108,758
Ratio Total Funded Debt to Taxable Assessed Valuation 3.54%
2000 Estimated Population - 39,190
Per Capita Taxable Assessed Valuation - $104,363
Per Capita Total Funded Debt $3,697
(1) The tax increment base for the Reinvestment Zone Number One established on January 1, 1996 was $7,647,325. As of
January 1, 1999 approximately$164,376,263 in permanent improvements have been made to the property within the Zone.
The project was completed on October 31, 1997.
(2) The tax increment base for the Reinvestment Zone Number Two established on January 1, 1999 approximately$1,010,348 in
permanent improvements have been made to the property within the Zone.
(3) The above statement of indebtedness does not include currently outstanding $28,087,560 system revenue bonds, as these
bonds are payable solely from the net revenues of the Waterworks and Sewer System (the "System"), as defined in the
ordinances authorizing the system revenue bonds.
(4) The self-supporting amount is a projection of debt by the City based on actual historical payments from the Tax Increment
Reinvestment Zone Fund. The amount of self-supporting debt is based on the percentage of revenue support as shown in
Table 10. There is no guarantee that these payments will continue in the future.If the payments are not made from the
revenues in the future,the difference will have to be paid for with ad valorem taxes.
16
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY
Taxable Appraised Value for Fiscal Year Ended September 30,
2000 1999 1998
%of %of %of
Category Amount Total Amount Total Amount Total
Real,Residential,Single-Family $ 1.429,819.700 30.03% S 1,324,311,480 33.12% S 1,269,695,241 35.14%
Real,Residential,Multi-Family 129,208.574 2.71% 117,908,272 2.95% 98,709,403 2.73%
Real,Vacant Lots Tracts 78.468.029 1.65% 72,832,010 1.82% 47,489,789 1.31%
Real,Acreage(Land Only) 144,983,152 3.05% 144,782,450 3.62% 112,224,673 3.11%
Real,Farm and Ranch Improvements 3,191,100 0.07% 3.879,434 0.10% 4,381,298 0.12%
Real,Commercial 756,002,113 15.88% 572,358,423 14.32% 387,770,795 10.73%
Real,Industrial 9,795,363 0.21% 8.731.223 0.22% 5,083,972 0.14%
Real and Tangible Personal,Utilities 76,908.376 1.62% 66,444,170 1.66% 64.098,691 1.77%
Real,Mobile Homes 141,400 0.00% 152,200 0.00% 143,000 0.00%
Tangible Personal,Business - 0.00% - 0.00% - 0.00%
Tangible Personal.Commercial 2,089.790.810 43.90% 1,646,479,365 41.18% 1.582,354,352 43.79%
Tangible Personal,Industrial 27.055,281 0.57% 26,974.631 0.67% 25,564,473 0.71%
Tangible Personal.Mobile Homes 3,120,287 0.07% 3,187.135 0.08% 3,162,915 0.09%
Tangible Personal,Other 3,768,771 0.08% 3,723,954 0.09% 3,741,821 0.10%
Real Property,Inventory 8,389.970 0.18% 6.450,400 0.16% 8,812,490 0.24%
Total Appraised Value Before Exemptions $4,760,642,926 100.00% S 3,998,215,147 100.00% S 3,613,232,913 100.00%
Adjustments - 348,874,464 (3,468,230)
Less: Total Exemption/Reductions (670,663,126) (352.418,481) (356.426.226)_
Taxable Assessed Value S 4,089,979,800 S 3,994,671,130 S 3,253,338.457
Taxable Appraised Value for
Fiscal Year Ended September 30,
1997 1996
%of %of
Category Amount Total - Amount Total
Real.Residential,Single-Family S 1,183,119,622 34.70% S 1,126,253,665 35.19%
Real,Residential,Multi-Family 92,886,182 2.72% 85,227,949 2.66%
Real.Vacant Lots Tracts 46,096,677 1.35% 42,586,867 1.33%
Real,Acreage(Land Only) 94,678.310 2.78% 83,473,678 2.61%
I Real,Farm and Ranch Improvements
4,158.598 0.12% 4,322,319 0.14%
Real,Commercial 298,782,743 8.76% 237,996,484 7.44%
Real,Industrial 5,384,539 0.16% 5,233,136 0.16%
Real and Tangible Personal,Utilities 60.144,766 1.76% 60,744,526 1.90%
Real,Mobile Homes 123,300 0.00% 123,300 0.00%
Tangible Personal,Business - 0.00% - 0.00%
Tangible Personal,Commercial 1.563,927,567 45.87% 1,505,073,652 47.03%
Tangible Personal,Industrial 40,058,697 1.18% 33,175,919 1.04%
Tangible Personal,Mobile Homes 2,884,175 0.08% 2,741,052 0.09%
Tangible Personal,Other 3,748,031 0.11% 3,743,161 0.12%
Real Property,Inventory 13,247,140 0.39% 9,452,170 0.30%
Total Appraised Value Before Exemptions S 3,409,240,347 100.00% $ 3,200,147,878 100.00%
Adjustments (10,343,105) (18,869,730)
Less: Total Exemption/Reductions (274,223,594) (266,171,166)
Taxable Assessed Value S 3,124,673,648 $ 2,915,106,982
NOTE: Valuations shown are certified taxable assessed values reported by the Tarrant Appraisal District to the State
Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and
Ithe Appraisal District updates records.
17
TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY
Net Ratio
Fiscal Taxable Tax Debt Tax Debt Funded
Year Taxable Assessed Outstanding to Taxable Debt
Ended Estimated Assessed Valuation at End Assessed Per
9/30 Population Valuation Per Capita of Year Valuation Capita
1996 34,950 $ 2,915,106,982 $ 83,408 $ 54,565,256 1.87% $ 1,561
1997 36,000 3,124,673,648 86,796 90,993,462 2.91% 2,528
1998 37,946 3,253,338,457 85,736 95,546,968 2.94% 2,518
1999 39,190 3,994,671,130 101,931 103,132,152 2.58% 2,632
2000 39,190 4,089,979,800 104,363 143,995,000 (I) 3.52% 3,674
(1) Projected,includes the Certificates.
TABLE 4 - TAX RATE,LEVY AND COLLECTION HISTORY
Fiscal
Year Distribution
Ended Tax General Interest and %Current %Total
9/30 Rate Fund Sinking Fund Tax Levy Collections Collections
1996 $ 0.41500 $0.280800 $ 0.134200 $ 12,118,312 98.80% 101.00%
1997 0.41500 0.280800 0.134200 12,967,402 98.79% 99.68%
1998 0.40500 0.276996 0.128004 13,176,597 98.70% 99.40%
1999 0.38500 0.218736 0.166264 13,935,727 99.10% 100.30%
2000 0.38000 0.201983 0.178017 15,511,437 98.53% (l) 98.91% (1)
(1) Collections for part year only,through May 1,2000
TABLE 5 - TEN LARGEST TAXPAYERS
1999/00 %of Total
Taxable Taxable
Assessed Assessed
Name of Taxpayer Nature of Property Valuation Valuation
American Airlines Inc. Commercial Airline $ 735,998,070 18.00%
Delta Airlines Inc. Commercial Airline 195,775,372 4.79%
Grapevine Mills Ltd.Partnership Regional Shopping Mall 178,150,131 4.36%
UPS Inc./United Parcel Service Parcel Service 67,413,014 1.65%
GTE Directories Real Estate 54,077,697 1.32%
Industrial Development International Inc. Trade Center 49,739,759 1.22%
GE Capital Services Simuflite Training School 48,946,286 1.20%
National Car Rental System,Inc. Car Rental 45,641,743 1.12%
Hertz Corp Rent-A-Car Division Car Rental 42,926,018 1.05%
D/FW Hilton Hotel Hotel 32,934,392 0.81%
$ 1,451,602.482 35.49%
GENERAL OBLIGATION DEBT LIMITATION. ..No general obligation debt limitation is imposed on the City under current State
law or the City's Home Rule Charter(see"The Certificates—Tax Rate Limitation").
18
TABLE 6 - TAX ADEQUACY(1)
2000 Principal and Interest Requirements $ 8,681,532
$0.2230 Tax Rate at 99.00%Collection Produces $ 8,683,438
Average Annual Principal and Interest Requirements,2000-2026 $ 8,833,276
$0.2269 Tax Rate at 99.00%Collection Produces $ 8,835,301
Maximum Principal and Interest Requirements,2001 $ 12,259,994
$0.3149 Tax Rate at 99.00%Collection Produces $ 12,261,949
(1) Includes the Certificates,excludes self-supporting debt.
TABLE 7 - ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities
on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures.
This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from information
contained in"Texas Municipal Reports"published by the Municipal Advisory Council of Texas. Except for the amounts relating
to the City,the City has not independently verified the accuracy or completeness of such information,and no person should rely
upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional
bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional
bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of
the City.
1999/00 Net City's
Taxable 1999/00 Total Estimated Overlapping
Assessed Tax Funded % Funded Debt
Taxine Jurisdiction Value Rate Debt Applicable As of 5-1-00
City of Grapevine $ 4,089,979,800 $0.380000 $ 171,910,000(I) 100.00% $ 171,910,000
Carroll Independent School District 2,287,210,782 1.790000 98,415,651 5.38% 5,294,762
Coppell Independent School District 3,937,459,872 1.600000 130,049,432 0.48% 624,237
Dallas County 106,173,662,020 0.196000 256,325,138 0.01% 25,633
Dallas County Community College District 109,167,519,669 0.050000 0 0.01% 0
Dallas County Hospital District 106,723,025,652 0.193000 0 0.01% 0
Grapevine-Colleyville Independent School District 5,992,685,547 1.552290 263,105,813 67.47% 177,517,492
Tarrant County 59,456,863,323 0.264836 141,075,000 5.24% 7,392,330
Tarrant County Hospital District 59,456,863,323 0.234070 18,419,977 5.24% 965,207
Tarrant County Junior College District 60,197,417,870 0.106410 88,990,000 5.24% 4.663.076
Total Direct and Overlapping Funded Debt $ 368,392,737
Ratio of Direct and Overlaying Funded Debt to Taxable Assessed Valuation - 9.01%
Per Capita Overlapping Funded Debt 9,400.17
(1) Includes the Certificates,less self-supporting debt.
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DEBT INFORMATION
TABLE 8 - PRO-FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS
Fiscal
Year Total Debt %of
Ended Outstanding Debt") The Certificates(2) Less TIF(3) Less TIF Principal
9/30 Principal Interest Total Principal Interest Total Requirements Requirements Retired
2000 $ 4,422,152 $ 6,781,697 $ 11,203,849 $ 2,522,316 $ 8,681,532
2001 6,445,000 6,042,673 12,487,673 $ 2,284,287 $ 2,284,287 2,511,966 12,259,994
2002 6,800,000 5,325,860 12,125,860 1,894,800 1,894,800 2,502,241 11,518,419
2003 6,565,000 4,930,023 11,495,023 1,894,800 1,894,800 2,492,791 10,897,031
2004 6,860,000 4,532,931 11,392,931 1,894,800 1,894,800 2,478,441 10,809,290 20.95%
2005 6,545,000 4,141,603 10,686,603 $ 730,000 1,894,800 2,624,800 2,470,161 10,841,241
2006 6,770,000 3,782,910 10,552,910 770,000 1,851,000 2,621,000 2,470,281 10,703,629
2007 6,795,000 3,435,584 10,230,584 820,000 1,804,800 2,624,800 2,482,228 10,373,156
2008 6,980,000 3,096,898 10,076,898 865,000 1,755,600 2,620,600 2,497,700 10,199,798
2009 7,460,000 2,754,238 10,214,238 920,000 1,703,700 2,623,700 2,507,256 10,330,681 46.99%
2010 7,145,000 2,406,948 9,551,948 975,000 1,648,500 2,623,500 2,521,563 9,653,885
2011 6,815,000 2,055,231 8,870,231 1,030,000 1,590,000 2,620,000 2,535,225 8,955,006
2012 5,935,000 1,746,620 7,681,620 1,095,000 1,528,200 2,623,200 2,547,981 7,756,839
2013 5,925,000 1,456,641 7,381,641 1,160,000 1,462,500 2,622,500 2,564,438 7,439,704
2014 6,240,000 1,151,436 7,391,436 1,230,000 1,392,900 2,622,900 2,579,200 7,435,136 72.29%
2015 6,445,000 825,531 7,270,531 1,305,000 1,319,100 2,624,100 2,596,875 7,297,756
2016 6,345,000 494,730 6,839,730 1,380,000 1,240,800 2,620,800 2,616,938 6,843,593
2017 2,595,000 261,924 2,856,924 1,465,000 1,158,000 2,623,000 5,479,924
2018 1,825,000 146,808 1,971,808 1,550,000 1,070,100 2,620,100 4,591,908
2019 1,925,000 49,898 1,974,898 1,645,000 977,100 2,622,100 4,596,998 90.14%
2020 1,745,000 878,400 2,623,400 2,623,400
2021 1,850,000 773,700 2,623,700 2,623,700
2022 1,960,000 662,700 2,622,700 2,622,700
2023 2,075,000 545,100 2,620,100 2,620,100
2024 2,200,000 420,600 2,620,600 2,620,600 96.76%
2025 2,335,000 288,600 2,623,600 2,623,600
2026 2,475.000 148,500 2.623.50Q 2.623.50Q 100.00%
$ 116,837,152 $ 55.420.182 $ 172.257.334 $ 31,580,000 $ 34,083,387 $ 65,663,387 $42,897,602 S 195,023,119
(1) "Outstanding Debt"does not include lease/purchase obligations,includes self-supporting debt.
(2) Average life of the issue - 17.988 years. Interest on the Certificates has been calculated at the rate of 6.00%for purposes
of illustration.
(3) Self-supporting debt payable from Tax Increment Financing Reinvestment Zone Number One.
TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION
Tax Supported Debt Service Requirements,Fiscal Year Ending 9/30/2000 $ 9,785,103
Interest and Sinking Fund Balance as of 9/30/99 $ 1,460,118 (1)
Interest and Sinking Fund Tax Levy 6,669,293
Budgeted Transfers 591,783
Tax Levies from Other Entities 3,686,370
Estimated Investment Income 130.000 12,537.564
Estimated Balance,9/30/2000 $ 2,752,461
(1) Excludes TIF One and TIF Two debt service.
20
TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT
Beginning Fund Balance,9-30-99 $ 883,415
Net Tax Increment Reinvestment Zone Revenue Available for Debt Service 3,716,617
Requirements for Tax Increment Reinvestment Zone Certificates (2.522,316)
Projected Fund Balance,9-30-00 $ 2,077,716
Percentage of Tax Increment Reinvestment Zone Number One Revenue Certificates Self-Supporting 100.00%
TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
Amount
Date Amount Heretofore Unissued
Purpose Authorized Authorized Issued Balance
Street Improvements 12/5/98 $ 30,245,000 $ 10,480,000 $ 19,765,000
Library 12/5/98 6,750,000 3,900,000 2,850,000
Park and Trail Improvements 12/5/98 1,270,000 250.000 1,020.000
$ 38,265,000 $ 14,630,000 $ 23,635,000
TABLE 12 - OTHER OBLIGATIONS
As of September 30, 1999,the City's outstanding installment purchase for land are as follows:
Amount Outstanding
Land Agreement $72,500
PENSION FUND...The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement
System ("TMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the
amounts accrued for pension expense. (For more detailed information concerning the retirement plan, see Appendix B,
"Excerpts from the City's Annual Financial Report")
I
I
4
21
FINANCIAL INFORMATION
TABLE 13 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY
Fiscal Year Ended September 30,
RPvrmHes 1999 1998 1997 1996 1995
Taxes $ 25,160,401 $ 23,365,424 $ 19,061,690 $ 17,125,907 $ 15,309,968
Licenses and Permits 1,163,306 1,246,991 1,491,997 937,000 680,675
Intergovernmental 190,189 216,171 221,844 169,335 158,400
Charges for Services 2,693,057 2,522,115 1,984,238 1,427,067 1,195,855
Fines and Forfeitures 1,850,076 1,599,870 1,482,489 1,470,865 1,201,749
Interest and Miscellaneous 687.619 ' 865.135 477.206 399.464 479,243
Total Revenues $ 31,744,648 $ 29,815,706 $ 24,719,464 $ 21,529,638 $ 19,025,890
Fvrend iti errs
General Government $ 5,625,351 $ 4,792,874 $ 5,452,213 $ 3,626,510 $ 3,463,213
Public Safety 13,245,400 12,098,657 9,965,868 8,546,355 7,924,507
Culture and Recreation 4,519,957 4,021,478 3,222,997 2,524,332 2,414,913
Public Works 5.062.397 4.188.152 3,546.854 2.993,710 2.800.784
Total Expenditures $ 28,453,105 $ 25,101,161 $ 22,187,932 $ 17,690,907 $ 16,603,417
Excess(deficiency)of Revenues
Over Expenditures $ 3,291,543 $ 4,714,545 $ 2,531,532 $ 3,838,731 $ 2,422,473
Budgeted Transfers In $ 13,090 $ 14,170 $ 104,208 $ - $
-
Budgeted Transfers Out (1.900,345) (5,610,764) (2.406.216) (3,807,018) (2.606.806)
Total Transfers $ (1,887,255) $ (5,596,594) $ (2,302,008) $ (3,807,018) $ (2,606,806)
Net Increase(Decrease) $ 1,404,288 $ (882,049) $ 229,524 $ 31,713 $ (184,333)
Other Miscellaneous Adjustments - 898,214 -
-
-
Residual Equity Transfer 79,788 - (86,261) - -
Beginning Fund Balance 5,407.260 6.289.309 5.247.832 5.216.119 5.400.452
Ending Fund Balance $ 6,891,336 $ 5,407,260 $ 6,289,309 $ 5,247,832 $ 5,216,119
22
TABLE 14 - MUNICIPAL SALES TAX HISTORY
The City has adopted the Municipal Sales and Use Tax Act,V.A.T.C.S.,Tax Code,Chapter 321,which grants the City the power to
impose and levy a 1%Local Sales and Use Tax within the City;the proceeds are credited to the General Fund and are not pledged to
the payment of the Certificates. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts,
State of Texas,who remits the proceeds of the tax,after deduction of a 2%service fee,to the City monthly.
Fiscal
Year %of Equivalent of
Ended Total Ad Valorem Ad Valorem Per
9/30 Collected Tax Levy Tax Rate Capita
1995 $ 4,792,980 43.05% $ 0.1869 $ 144
1996 5,603,184 46.24% 0.1922 160
1997 6,665,625 51.40% 0.2133 185
1998 10,556,089 80.11% 0.3245 278
1999 13,058,268 93.70% 0.3269 333
FINANCIAL POLICIES
Basis of Accounting. . .The City's accounting records of the governmental fund revenues and expenditures are recognized on the
modified accrual basis.Revenues are recognized in the accounting period in which they are available and measurable. Expenditures
are recognized in the accounting period in which the fund liability occurred,if measurable,except for unmatured interest on general
long-term debt.
Proprietary Fund revenues and expenses are recognized on the full accrual basis.Revenues are recognized in the accounting period in
which they are earned and become measurable.Expenses are recognized in the accounting period in which they are incurred.
Fund Balances.. .It is the City's policy regarding the General Fund and Enterprise Funds that working capital resources should be
maintained at a minimum of 10%of the Fund's operating expenditure budget.The City maintains its various debt service funds in
accordance with the covenants of the bond ordinances.
Use of Bond Proceeds...The City's policy is to use bond proceeds for capital expenditures only.Such revenues are never to be used
to fund normal City operations.
Budgetary Procedures. . .The City Charter establishes the fiscal year as the twelve-month period beginning each October 1. Each
year between May and July, the City Manager, analyzes and then after review, submits a budget of estimated revenues and
expenditures to the City Council.Subsequently,the City Council will hold work sessions to discuss and amend the budget to coincide
with their direction of the City.Various public hearings may be held to comply with state and local statutes.The City Council will
adopt a budget prior to September 30. If the Council fails to adopt a budget then the budget presented to the Council by the City
Manager becomes the adopted budget.
During the fiscal year, budgetary control is maintained by the monthly review of departmental appropriation balances. Actual
operations are compared to the amounts set forth in the budget.Departmental appropriations that have not been expended lapse at the
end of the fiscal year.Therefore,funds that were budgeted and not used by the departments during the fiscal year are not available for
their use unless appropriated in the ensuing fiscal year's budget.
23
INVESTMENTS
The City of Grapevine invests its investable funds in investments authorized by Texas law in accordance with investment policies
approved by the City Council of the City of Grapevine. Both state law and the City's investment policies are subject to change.
LEGAL INVESTMENTS...Under Texas law,the City is authorized to invest in(1)obligations of the United States or its agencies and
instrumentalities, (2)direct obligations of the State of Texas or its agencies and instrumentalities, (3)collateralized mortgage
obligations directly issued by a federal agency or instrumentality of the United States,the underlying security for which is guaranteed
by an agency or instrumentality of the United States, (4)other obligations,the principal of and interest on which are unconditionally
guaranteed or insured by,or backed by the full faith and credit of,the State of Texas or the United States or their respective agencies
and instrumentalities, (5)obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to
investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6)bonds issued,assumed,or
guaranteed by the State of Israel, (7)certificates of deposit issued by a state or national bank domiciled in Texas, a savings bank
domiciled in Texas, or a state or federal credit union domiciled in Texas that are (i)guaranteed or insured by the Federal Deposit
Insurance Company or its successor or the National Credit Union Share Insurance Fund or its successor or(ii)secured by obligations
that are described in clauses (1)through (6)above, including mortgage backed securities directly issued by a federal agency or
instrumentality that have a market value of not less than the principal amount of the certificates or (iii)in any other manner and
amount provided by law for deposits of the City, (8)fully collateralized repurchase agreements that have a defined termination date,
are fully secured by obligations described in clause (1)above and are placed through a primary government securities dealer or a
financial institution doing business in the State of Texas,(9)bankers' acceptances with the remaining term of 270 days or less,if the
short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally
recognized credit rating 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, (10) commercial paper that is rated at least A-1 or P-1 or the equivalent by
either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully
secured by an irrevocable letter of credit issued by a U.S. or state bank, (11)no-load money market mutual funds regulated by the
Securities and Exchange Commission that have a dollar weighted average portfolio maturity of 90 days or less and include in their
investment objectives the maintenance of a stable net asset value of$1 for each share, (12)no-load mutual funds registered with the
Securities and Exchange Commission that: have an average weighted maturity of less than two years; invests exclusively in
obligations described in the preceding clauses; and are continuously rated as to investment quality by at least one nationally
recognized investment rating firm of not less than AAA or its equivalent;provided,however,that the City is not authorized to invest
in the aggregate more than 15%of its monthly average fund balance,excluding bond proceeds and reserves and other funds held for
debt service, in such no-load mutual funds, and (13)for bond proceeds, guaranteed investment contracts that have a defined
termination date,are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the
amount invested under the contract, and are pledged to the City and deposited with the City or with a third party selected and
approved by the City.
The City may invest in such obligations directly or through government investment pools that invest solely in such obligations
provided that the pools are rated no lower than AAA or AAA-or an equivalent by at least one nationally recognized rating service.
The City may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C.
Section 806-1 et. seq.)or with the State Security Board to provide for the investment and management of its public funds or other
funds under its control for a term of up to two years but the City retains ultimate responsibility as fiduciary of its assets. 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.
INvEsrMENT POLICIES...Under Texas law,the City is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity;that address investment diversification,yield,maturity, and the quality and capability of
investment management;and that includes a list of authorized investments for City funds,maximum allowable stated maturity of any
individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be
invested consistent with a formally adopted"Investment Strategy Statement"that specifically addresses each funds'investment. Each
Investment Strategy Statement will describe its objectives concerning: (1)suitability of investment type, (2)preservation and safety of
principal,(3)liquidity,(4)marketability of each investment, (5)diversification of the portfolio,and(6)yield.
Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of
prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for
investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment
officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers
jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending
value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the
reporting period, (5)the maturity date of each separately invested asset, (6)the account or fund or pooled fund group for which each
individual investment was acquired,and(7)the compliance of the investment portfolio as it relates to: (a)adopted investment strategy
statements and(b)state law. No person may invest City funds without express written authority from the City Council.
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ADDITIONAL PROVISIONS ...Under Texas law the City is additionally required to: (1) annually review its adopted policies and
strategies; (2)require any investment officers'with personal business relationships or relatives with firms seeking to sell securities to
the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the
registered principal of firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b)
acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities,and (c)
deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments
and adherence to the City's investment policy; (5)provide specific investment training for the Treasurer,Chief Financial Officer and
investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse
repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) 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.
TABLE 15-CURRENT INVESTMENTS
As of May 1,2000,the City's investable funds were invested in the following categories:
Book Market
Description Percent Value Value
Treasury Notes/Bonds/CD 15.91% $ 11,881,413 $ 11,842,396
Investment Pools 84.09% 62,805,938 62,801.908 -
100.00% $ 74,687,351 $ 74,644,304
TexPool is a local government investment pool under the control of the Texas Comptroller of Public Accounts. The
Comptroller has engaged Chase Bank of Texas, and its affiliates, to provide investment management and fund accounting
services for TexPool. First Southwest Asset Management, Inc., an affiliate of First Southwest Company, provides customer
service and marketing for the pool. TexPool currently maintains a AAAm rating from Standard&Poor's. The pool's investment
objectives include achieving a stable net asset value of$1.00 per share. Daily investment or redemption of funds is allowed by
the participants.
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TAX MATTERS
TAX EXEMPTION...In the opinion of Vinson &Elkins L.L.P.,Bond Counsel, (i) interest on the Certificates is excludable from
gross income for federal income tax purposes under existing law and (ii) the Certificates are not "private activity bonds" under
the Internal Revenue Code of 1986,as amended(the"Code"),and interest on the Certificates will not be subject to the alternative
minimum tax on individuals and corporations, except as described below in the discussion regarding the adjusted current
earnings adjustment for corporations.
The Code imposes a number of requirements that must be satisfied for interest on state or local obligations, such as the
Certificates,to be excludable from gross income for federal income tax purposes. These requirements include limitations on the
use of proceeds and the source of repayment, limitations on the investment of proceeds prior to expenditure, a requirement that
excess arbitrage earned on the investment of proceeds be paid periodically to the United States,and requirement that the issuer
file an information report with the Internal Revenue Service. The City has covenanted in the Ordinance that it will comply with
these requirements.
Bond Counsel's opinion will assume continuing compliance with the covenants of the Ordinance pertaining to those sections of
the Code which affect the exclusion from gross income of interest on the Certificates for federal income tax purposes and, in
addition,will rely on representations by the City,the City's Financial Advisor and the initial purchasers of the Certificates with
respect to matters solely within the knowledge of the City, the City's Financial Advisor and the initial purchasers of the
Certificates, respectively, which Bond Counsel has not independently verified. If the City should fail to comply with the
covenants in the Ordinance or if the foregoing representations should be determined to be inaccurate or incomplete, interest on
the Certificates could become taxable from the date of delivery of the Certificates, regardless of the date on which the event
causing such taxability occurs.
The Code also imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a corporation, if the
amount of such alternative minimum tax is greater than the amount of the corporation's regular income tax. Generally, the
alternative minimum taxable income of a corporation (other than any S corporation, regulated investment company, REIT,
REMIC or FASIT),includes 75%of the amount by which its"adjusted current earnings"exceeds its other"alternative minimum
taxable income." Because interest on tax-exempt obligations, such as the Certificates, is included in a corporation's "adjusted
current earnings,"ownership of the Certificates could subject a corporation to alternative minimum tax consequences.
Under the Code, taxpayers are required to report on their returns the amount of tax-exempt interest, such as interest on the
Certificates,received or accrued during the year.
Except as stated above,and as stated below in"Tax Accounting Treatment of Original Issue Discount Certificates"and"Purchase
of Certificates by Financial Institutions,"Bond Counsel will express no opinion as to any federal,state or local tax consequences
resulting from the ownership of,receipt of interest on,or disposition of,the Certificates.
Prospective purchasers of the Certificates should be aware that the ownership of tax-exempt obligations may result in collateral
federal income tax consequences to financial institutions,life insurance and property and casualty insurance companies,certain S
corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, and
individuals otherwise qualifying for the earned income credit. In addition, certain foreign corporations doing business in the
U.S. may be subject to the"branch profits tax" on their effectively-connected earnings and profits including tax-exempt interest
such as interest on the Certificates. These categories of prospective purchasers should consult their own tax advisors as to the
applicability of these consequences.
Prospective purchasers of the Certificates should also be aware that proposed legislation is from time to time considered by the
United States Congress that, if enacted, may adversely affect the federal tax consequences of ownership or disposition of, and,
whether or not enacted,may adversely affect the value of,tax-exempt obligations,such as the Certificates.
Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions are further based on Bond
Counsel's knowledge of facts as of the date hereof. Bond Counsel assumes no duty to update or supplement its opinions to
reflect any facts or circumstances that may thereafter come to Bond Counsel's attention or to reflect any changes in any law that
may thereafter occur or become effective.
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TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT CERTIFICATES...The initial public offering price for certain of
the Certificates may be less than the principal amount thereof(the "Original Issue Discount Certificates"). In such case, Bond
Counsel,under existing law and based upon the assumptions hereinafter stated,will render an opinion to the effect that:
(a)The difference between (i) the amount payable at the maturity of each Original Issue Discount Certificate,and (ii) the initial
offering price to the public of such Original Issue Discount Certificate constitutes original issue discount with respect to such
Original Issue Discount Certificate in the hands of any owner who has purchased such Original Issue Discount Certificate in the
initial public offering of the Certificates;and
(b) 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 Certificate equal to that portion of the amount of such original issue discount allocable to
the period that such Original Issue Discount Certificate continues to be owned by such owner.
In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Certificate prior to stated
maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Certificate 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 Certificate was held by such initial owner) is includable in gross income. (Because original issue
discount is treated as interest for federal income tax purposes, the discussion regarding interest on the Certificates under the
caption "Tax Exemption"generally applies,except as otherwise provided below, to original issue discount on an Original Issue
Discount Certificate held by an owner who purchased such Certificate at the initial offering price in the initial public offering of
the Certificates, and should be considered in connection with the discussion in this portion of the Preliminary Official
Statement.)
In rendering the foregoing opinion, Bond Counsel will assume, in reliance upon certain representations of the initial purchaser,
that(a) the initial purchaser has purchased the Certificates for contemporaneous sale to the public and(b)all of the Original Issue
Discount Certificates have been initially offered,and a substantial amount of each maturity thereof has been sold, to the general
public in arm's-length transactions for a price (and with no other consideration being included) not more than the initial offering
prices thereof. Neither the City nor Bond Counsel warrants that the Original Issue Discount Certificates will be offered and sold
in accordance with such assumptions. Certain of the representations of the initial purchaser,upon which Bond Counsel will rely
in rendering the foregoing opinion, will be based on records or facts the initial purchaser had no reason to believe were not
correct.
Under existing law,the original issue discount on each Original Issue Discount Certificate 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 semi-annual
anniversary dates of the date of the Certificates 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 Certificate 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 Certificate.
The federal income tax consequences of the purchase, ownership, and redemption, sale or other disposition of Original Issue
Discount Certificates 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 Certificates should consult their own tax
advisors with respect to the determination for federal,state,and local income tax purposes of interest accrued upon redemption,
sale or other disposition of such Original Issue Discount Certificates 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 Certificates.
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OTHER INFORMATION
RATINGS
The presently outstanding tax supported debt of the City is rated "Al" by Moody's and "A+" by S&P. The City also has issues
outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance
companies. Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the
significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective
views of such organization and the City makes no representation as to the appropriateness of the ratings. There is no assurance
that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by
either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such
downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the
Certificates.
LITIGATION
It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material
adverse financial impact upon the City or its operations.
REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE
The sale of the Certificates 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 Certificates have not been qualified under the Securities Act of Texas
in reliance upon various exemptions contained therein; nor have the Certificates been qualified under the securities acts of any
jurisdiction. The City assumes no responsibility for qualification of the Certificates under the securities laws of any jurisdiction
in which the Certificates may be sold,assigned,pledged,hypothecated or otherwise transferred. This disclaimer of responsibility
for qualification for sale or other disposition of the Certificates shall not be construed as an interpretation of any kind with regard
to the availability of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 of the Public Security Procedures Act (Chapter 1201,Texas Government Code) provides that the Certificates
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political
subdivisions or public agencies of the State of Texas. With respect to investment in the Certificates by municipalities or other
political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas
Government Code, requires that the Certificates be assigned a rating of "A" or its equivalent as to investment quality by a
national rating agency. See "Other Information - Ratings" herein. In addition, various provisions of the Texas Finance Code
provide that, subject to a prudent investor standard, the Certificates are legal investments for state banks, savings banks, trust
companies with at capital of one million dollars or more, and savings and loan associations. The Certificates are eligible to
secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those
deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine
whether the Certificates are legal investments for various institutions in those states.
LEGAL MATTERS
The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Certificates,
including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Certificate and to the
effect that the Certificates are valid and legally binding obligations of the City,and based upon examination of such transcript of
proceedings,the approving legal opinion of Bond Counsel,to like effect and to the effect that the interest on the Certificates will
be excludable from gross income for federal income tax purposes under existing law and the Certificates are not private activity
bonds, subject to the matters described under " Tax Matters" herein, including alternative minimum tax consequences for
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 Certificates, or which would affect the provision made for their
payment or security,or in any manner questioning the validity of said Certificates will also be furnished. Bond Counsel was not
requested to participate,and did not take part, in the preparation of the Notice of Sale and Bidding Instructions,the Official Bid
Form and the Preliminary Official Statement, and such firm has not assumed any responsibility with respect thereto or
undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such
firm has reviewed the information describing the Certificates in the Preliminary Official Statement to verify that such description
conforms to the provisions of the Ordinance. The legal fee to be paid Bond Counsel for services rendered in connection with the
issuance of the Certificates is contingent on the sale and delivery of the Certificates. The legal opinion will accompany the
Certificates deposited with DTC or will be printed on the Certificates in the event of the discontinuance of the Book-Entry-Only
System.
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AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from City records,audited financial statements and
other sources which are believed to be reliable.There is no guarantee that any of the assumptions or estimates contained herein
will be realized.All of the summaries of the statutes,documents and resolutions contained in this Preliminary Official Statement
are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be
complete statements of such provisions and reference is made to such documents for further information. Reference is made to
original documents in all respects.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the
Certificates. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the
Certificates. Under the agreement,the City will be obligated to provide certain updated financial information and operating data
annually, and timely notice of specified material events, to certain information vendors. This information will be available to
securities brokers and others who subscribe to receive the information from the vendors.
ANNUAL REPORTS ...The City will provide certain updated financial information and operating data to certain information
vendors annually. The information to be updated includes all quantitative financial information and operating data with respect
to the City of the general type included in this Preliminary Official Statement under Tables numbered 1 through 6 and 8 through
15 and in Appendix B. The City will update and provide this information within six months after the end of each fiscal year
ending in or after 2000. The City will provide the updated information to each nationally recognized municipal securities
information repository("NRMSIR") and to any state information depository("SID") that is designated by the State of Texas and
approved by the State of Texas and approved by the staff of the United States Securities and Exchange Commission(the"SEC").
The City may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the City
commissions an audit and it is completed by the required time. If audited financial statements are not available by the required
time,the City will provide unaudited financial statements by the required time and audited financial statements when and if such
audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting
principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time
pursuant to state law or regulation.
The City's current fiscal year end is September 30. Accordingly,it must provide updated information by March 31 in each year,
unless the City changes its fiscal year. If the City changes its fiscal year,it will notify each NRMSIR and the SID of the change.
The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a
qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P.O. Box 2177, Austin, Texas 78768-
2177,and its telephone number is 512/476-6947.
MATERIAL EVENT NOTICES...The City will also provide timely notices of certain events to certain information vendors. The
City will provide notice of any of the following events with respect to the Certificates, if such event is material to a decision to
purchase or sell Certificates: (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 Certificates; (7) modifications to rights of holders of the Certificates; (8) Bond calls; (9)
defeasances; (10) release, substitution, or sale of property securing repayment of the Certificates; and (11) rating changes.
(Neither the Certificates nor the Ordinance make any provision for debt service reserves, liquidity enhancement, or early
redemption for the Certificates.) 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 the 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 the SID. The information will be available to holders of Certificates 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.
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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 Certificates 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 Certificates 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 Certificates 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 Certificates 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
Certificates. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or
repeals the applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of
the SEC Rule 15c2-12 are invalid, but only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Certificates in the primary offering of the Certificates. 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 complied in all material respects with all continuing disclosure
agreements made by it in accordance with SEC Rule 15c2-12.
INITIAL PURCHASER OF THE CERTIFICATES
After requesting competitive bids for the Certificates, the City accepted the bid of (the "Initial
Purchaser(s) of the Certificates") to purchase the Certificates at the interest rates shown on the cover page of the Official
Statement at a price of the principal amount thereof plus a cash premium (if any) of$ . The Initial Purchaser(s) of
the Certificates can give no assurance that any trading market will be developed for the Certificates after their sale by the City to
the Initial Purchaser(s) of the Certificates.The City has no control over the price at which the Certificates are subsequently sold
and the initial yield at which the Certificates will be priced and reoffered will be established by and will be the responsibility of
the Initial Purchaser(s) of the Certificates.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The
Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and
delivery of the Certificates. First Southwest Company may submit a bid for the Certificates,either independently or as a member
of a syndicate organized to submit a bid for the Certificates. 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 Certificates, or
the possible impact of any present,pending or future actions taken by any legislative or judicial bodies.
The Financial Advisor to the City has provided the following sentence for inclusion in this Preliminary Official Statement. The
Financial Advisor has reviewed the information in this Preliminary Official Statement in accordance with, and as part of, its
responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and
circumstances of this transaction,but the Financial Advisor does not guarantee the accuracy or completeness of such information.
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CERTIFICATION OF THE OFFICIAL STATEMENT
At the time of payment for and delivery of the Certificates,the City will furnish a certificate,executed by proper officers,acting
in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or
pertaining to the City contained in its Official Statement,and any addenda,supplement or amendment thereto,on the date of such
Official Statement, on the date of sale of said Certificates and the acceptance of the best bid therefor, and on the date of the
delivery,were and are true and correct in all material respects; (b)insofar as the City and its affairs,including its financial affairs,
are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made,not misleading; (c)insofar as the descriptions and statements,including financial data,of or pertaining to
entities, other than the City, and their activities contained in such Official Statement are concerned, such statements and data
have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue
in any material respect;and (d) there has been no material adverse change in the financial condition of the City since the date of
the last audited financial statements of the City.
The Ordinance authorizing the issuance of the Certificates will also approve the form and content of this Official Statement,and
any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Certificates by the Initial
Purchaser(s).
WILLIAM D.TATE
Mayor
City of Grapevine,Texas
ATTEST:
LINDA HUFF
City Secretary
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APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
(Insert Map)
THE CrrY...The City is a political subdivision of the State of Texas incorporated in 1907 and operates as a home-rule City under the
general laws of the State of Texas and a charter approved by the voters in 1965. The City has a Council/Manager form of government
in which the mayor and six council members are elected for staggered three-year terms with elections held annually in May. Policy
making is the responsibility of,and vested in, the City Council. The Council delegates the operational authority of the City to the
City Manager who is the chief administrative officer of the City.
The City provides all the functions normally associated with a municipality including,but not limited to,public safety(i.e.,police and
fire personnel and equipment),health inspection and enforcement,water and sewer facilities,streets and drainage facilities and parks
and recreational facilities. The City presently employs approximately 434 full-time staff members.
POPULATION. . .The City has had significant population growth during the past several years. These population estimates are as
follows:
Year Population Source Year Population Source
1970 7,023 U.S.Census 1990 29,202 U.S.Census
1980 11,801 U.S.Census 1991 30,300 City Estimate
1981 15,245 Grapevine Community Profile 1992 31,400 City Estimate
1982 16,183 Grapevine Community Profile 1993 31,902 City Estimate
1983 18,121 Grapevine Community Profile 1994 32,727 City Estimate
1984 19,405 Grapevine Community Profile 1995 33,211 City Estimate _
1985 22,002 Grapevine Community Profile 1996 34,950 City Estimate
1986 24,493 Grapevine Community Profile 1997 36,000 City Estimate
1987 25,853 Grapevine Community Profile 1998 37,946 City Estimate
1988 27,132 City Estimate 1999 39,190 City Estimate
1989 27,257 City Estimate 2000 39,190 City Estimate
ECONOMICS. . . The proximity of the Dallas/Fort Worth International Airport ("DFW") greatly influences both industrial and
residential growth of the City. DFW has been and is expected to continue to be an economic generator of employment, spin-off
businesses and tax base,all of which benefit the City and the surrounding area. Approximately 65%of the airport is within the city
limits of Grapevine.
Several large business operations owe their genesis to DFW including air cargo services,flight kitchens,rent/lease car operations and
SimuFlite Training International,a company which provides jet pilot flight training in advanced flight simulators. Seven of the ten
largest taxpayers of the City are directly related to DFW either by location or primary business sources.
DFW contains approximately 18,000 acres and directly employs some 33,000 personnel. These employees have skills ranging from
custodial level to highly trained jet aircraft pilots. A number of these people have purchased homes in the City and conduct their
daily business here.
DFW has approximately 19,400 parking spaces and is currently expanding parking facilities. Sales tax from parking fees generate
about $330,000 in annual income for the City and hotels providing service for travelers at DFW and seminar space for business
meetings generate approximately$2.0 million in annual hotel/motel tax revenue.
EMPLOYMENT. . . The labor market in the City continues to be strong. Employment figures furnished by Texas Employment
Commission are:
March Annual Annual Annual Annual Annual
2000 1999 1998 1997 1996 1995
Labor Force 21,731 21,343 20,955 20,188 20,019 19,420
Employed 21,375 20,990 20,589 19,796 19,602 18,911
Unemployed 356 353 366 392 417 509
Percent of Unemployed 1.60% 1.70% 1.70% 1.90% 2.10% 2.60%
A- 1
MAJOR EMPLOYERS
Estimated
Number of
Company Product Employees
Dallas/Fort Worth International Airport Airport 33,000
Grapevine/Colleyville Independent School District School District 1,656
United Parcel Service Parcel Service 1,218
GTE Directory Corporation Yellow Pages Directory 1,200
Baylor Medical Center Health Services 874
Hyatt Regency Hotel Hotel 815
City of Grapevine City Government 434
D/FW Hilton Hotel Hotel 380
Super Shuttle Airport Shuttle Service 320
SimuFlite Training International Pilot Training 260
Embassy Suites Hotel 250
Trencor Heavy Equipment Manufacturing 180
Source:City of Grapevine,Department of Development Services.
BANKING AND FINANCIAL...Banking facilities for the City are provided by four banks,the Texas Bank of Grapevine,the First State
Bank of Grapevine,Frost Bank and a branch of NationsBank of Texas,Independent National Bank and of Bank of America. Also
located in the City is a branch of the Omni Federal Credit Union.
Source:City of Grapevine,Finance Department.
BUILDING PERMITS...The number and value of building permits issued by the City are:
Fiscal Commercial Permits Residential Permits Total
Year Number Number Number
Ended of Dollar of Dollar of Dollar
9/30 Permits Value Permits Value Permits Value
1995 41 $ 21,778,985 267 $ 32,722,332 308 $ 54,501,317
1996 23 25,295,000 315 39,236,215 338 64,531,215
1997 39 105,827,449 182 40,113,663 221 145,941,112
1998 35 85,231,406 228 37,995,929 263 123,227,335
1999 32 59,920,763 185 21,026,688 217 80,947,451
Source:City of Grapevine records.
RECREATION. . .Located approximately two miles north of the downtown area of the City lies Grapevine Lake. The lake serves as
the City reservoir and supplies approximately 50%of the water supply of the City. The lake covers a surface area of approximately
12,740 acres and has a shore line of 146 miles. The lake is 19 miles long and 2.5 miles wide at its widest point. The lake is owned
and operated by the U.S.Corps of Engineers and is a major recreation area for swimming,fishing,picnicking and camping and draws
some five million visitors each year to the area.
The City also has an extensive park system which includes tennis courts,racquetball courts,baseball and softball diamonds,football
and soccer fields, a jogging and biking trail, swimming pool and picnic areas. The City also owns and operates an 18-hole golf
course and has plans for a 9-hole expansion.
TRANSPORTATION...The City is in the center of a highway network that includes seven spokes of an extensive highway system:six
U.S.highways,seven major state highways and one interstate highway. This network connects the City to all major entrances to both
Dallas and Fort Worth and with major highway systems both north/south and east/west.
There are 43 motor freight lines providing service to the City and the City is within the Dallas and Fort Worth Commercial Zone for
deliveries. Railroad service is offered by the Cotton Belt Railroad and the Southern Pacific Railroad, both with daily switching
service. Greyhound/Trailways Bus Lines provides the City with surface bus transportation.
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HOTEL arra CONVENTION FACILITIES...There are three major hotels in the City and several other hotels and motels adjacent to the
City near DFW.
The Hyatt Regency DFW is located on the airport and provides 1,450 rooms,one of the largest hotels in Texas. The Hyatt provides
more than 130,000 square feet of meeting and convention facilities,five dining facilities,availability to two 18-hole championship
golf courses,tennis courts,heated swimming pool and health spa and jogging trails.
The D/FW Airport Hilton and Executive Conference Center is a 400-room hotel located 2.5 miles north of DFW offering a 14,400
square foot exhibit hall and ballroom that can accommodate 900 banquet guests. Also provided are three restaurants,tennis courts,
racquetball courts,indoor and outdoor swimming pools,steam room,health club and lighted jogging trails.Adjacent to the hotel is
the Austin Ranch where horseback riding and other western events are available to hotel guests.
The Embassy Suites Conference Center is a 12-story,329-room hotel located just north of DFW Airport. The Embassy Suites offers
a 12,640 square foot conference center and ballroom, a 3,432 square foot junior ballroom and 14 other meeting rooms. Also
provided is a state-of-the-art fitness center,a heated indoor swimming pool, complimentary, cooked-to-order breakfast and 24-hour
in-room dining.
EDUCATION. . . Secondary education is provided to the City by the Grapevine-Colleyville Independent School District (the
"District"). The District provides seventeen campuses,all air conditioned,as follows:
2 High school
4 Middle schools
11 Elementary schools
In addition to the campuses,the District also owns an administration/service center,an auditorium and a complete athletic complex.
Historical school enrollment figures are:
1982 3,646 1991 8,706
1983 3,732 1992 9,459
1984 4,037 1993 10,878
1985 4,675 1994 10,957
1986 5,617 1995 11,316
1987 6,107 1996 12,373
1988 6,604 1997 12,893
1989 7,156 1998 13,319
1990 7,984 1999 13,159
Source:Grapevine-Colleyville Independent School District.
Educational opportunities beyond the secondary level are numerous and within easy driving distance of the City. Some of the
colleges and universities within a 50 mile radius are as follows:
College/University Location
Texas Christian University Fort Worth,Texas
Texas Wesleyan University Fort Worth,Texas
Tarrant County College Fort Worth,Texas
University of Texas at Arlington Arlington,Texas
University of North Texas Denton,Texas
Texas Women's University Denton,Texas
Southern Methodist University Dallas,Texas
Dallas Baptist University Dallas,Texas
Dallas Community College Dallas,Texas
University of Dallas Irving,Texas
University of Texas at Dallas Richardson,Texas
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APPENDIX B
EXCERPTS FROM THE
CITY OF GRAPEVINE,TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 1999
The information contained in this Appendix consists of excerpts from the City of
Grapevine,Texas Annual Financial Report for the Year Ended September 30, 1999,and
is not intended to be a complete statement of the City's financial condition. Reference is
made to the complete Report for further information.
APPENDIX C
FORM OF BOND COUNSEL'S OPINION
Total uses for the funds from the CO sale are as follows:
Public Improvement Costs $27,500,000
Capitalized Debt Payments 3,980,000
Issuance Costs 100,000
Total $31,580,000
Note that the total $31,580,000 sizing for the sale is approximate. Fluctuating interest
rates may affect the exact amount required for sale of CO's on the day of the sale. In no
event will costs for public improvements exceed $27,500,000. A copy of the official
statement prepared for the sale is included in your packet. The draft CO sale ordinance
is available in the City Secretary's Office.
Staff recommends acceptance of the First Southwest Company 's recommendation and
approval of the ordinance.
WAG/cjc
H:agmcosale6/6/2000
f
May 17, 2000 (3:24PM)