HomeMy WebLinkAboutItem 08 - Certificates of ObligationMEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BRUNO RUMBELOW, CITY MANAGER
MEETING DATE: DECEMBER 6, 2022
SUBJECT: ORDINANCE PROVIDING ISSUANCE AND SALE OF CITY OF
GRAPEVINE, TEXAS COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2022
RECOMMENDATION: City Council to consider an ordinance providing for the issuance and sale
of City of Grapevine, Texas Combination Tax and Revenue Certificates of
Obligation, Series 2022 in a principal amount not to exceed $14,500,000;
awarding the sale thereof; levying a tax in payment thereof; authorizing
the execution and delivery of a paying agent/registrar agreement;
approving the official statement; approving a bond counsel engagement
letter; and enacting other provisions relating thereto.
FUNDING SOURCE: Upon approval of the ordinance and sale, bond funds will be available in
Capital Projects funds.
BACKGROUND: This action will authorize the issuance of not to exceed $14,500,000 total
principal amount of Certificates of Obligation for the purposes of:
(a) Designing, developing, constructing, improving, extending and
expanding streets, thoroughfares, sidewalks and bridges of the City,
including streetscaping, streetlighting, right-of-way protections, utility
relocation, and related storm drainage improvements; and acquiring
rights -of -way in connection therewith;
(b) Acquiring, improving and equipping land for parks and recreation
purpose in the City, including Settlers Park;
(c) Acquiring vehicles and equipment for police, fire, emergency services,
public works, utilities and park and recreation purposes;
(d) Professional services incurred with items `a' through `c' and paying the
costs incurred in connection with the issuance of the certificates
Staff recommends approval.
SJ/gj
T HTSContinuingDisdosureServicesJ�* PRELIMINARY OFFICIAL STATEMENT Ratings: Moody s. "Aal
"
„ „
-(See "Con nungl7solosu eoflnfomadon"herein) Dated November 22 2022 S&P: AA+
(See "OTHER INFORMATION -
a NEW ISSUE - Book -Entry -Only " Ratin herein
° o g )
In the opinion of Bond Counsel, under existing law, interest on the Certificates is (i) excludable from gross income for federal
21.1 income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended, and (ii) not an item of tax preference for
o ° purposes of the alternative minimum tax on individuals. See "TAX MATTERS" herein, including information regarding potential
o alternative minimum tax consequences for corporations.
a THE CERTIFICATES WILL NOT BE DESIGNATED AS "OUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS
T VIhE. $13,720,000*
4 , ' , s CITY OF GRAPEVINE, TEXAS
o (Tarrant, Denton and Dallas Counties)
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2022
o p
� o
Dated Date: December 1, 2022 Due: February 15, as shown on page 2
o o .y Interest accrues from the Delivery Date (defined herein)
o
o .r PAYMENT TERMS ... Interest on the $13,720,000* City of Grapevine, Texas, Combination Tax and Revenue Certificates of Obligation,
•2 Series 2022 (the "Certificates") will accrue from the date of initial delivery to the initial purchaser of the Certificates (the "Delivery
Date", anticipated to be on or about December 21, 2022), and will be payable February 15 and August 15 of each year commencing
T.� T
oAugust 15, 2023, until maturity or prior redemption, and will be calculated on the basis of a 360-day year consisting of twelve 30-day
w
y ° months. The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust
Uo Company New York, New York ("DTC") pursuant to the Book -Entry -Only System described herein. Beneficial ownership of the
Certificates may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the
8 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
r for subsequent payment to the beneficial owners of the Certificates (see "THE CERTIFICATES - Book -Entry -Only System" herein).
ti The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, NA, Dallas Texas (see "THE CERTIFICATES -
.N Paying Agent/Registrar").
o o
o 4 AUTHORITY FOR ISSUANCE ... The Certificates are issued pursuant to the Constitution and general laws of the State of Texas (the
o
E '� "State"), particularly Subchapter C of Chapter 271, Texas Local Government Code, 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
° L11tax levied, within the limits prescribed by law, on all taxable property within the City, and (ii) a pledge of the Surplus Revenues of the
City's Waterworks and Sewer System (the "System") in an amount not to exceed $1,000 as provided in the ordinance authorizing the
I Certificates (the " Ordinance") (see "THE CERTIFICATES - Authority for Issuance").
a
b
PURPOSE ... Proceeds from the sale of the Certificates will be used for paying all or a portion of the City's contractual obligations
incurred in connection with (i) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares,
asidewalks and bridges of the City, including streetscaping, streetlighting, right-of-way protection, utility relocation, and related storm
drainage improvements; and acquiring rights -of -way in connection therewith; (ii) acquiring, improving and equipping land for parks and
y recreation purpose in the City, including Settlers Park; (iii) acquiring vehicles and equipment for police, fire, emergency services, public
o v a works, utilities and park and recreation purposes, and (iv) professional services incurred in connection with items (i) through (iii), and to
pay the costs incurred in connection with the issuance of the Certificates.
E 3
o "o CUSIP PREFIX: 388625
y o MATURITY SCHEDULE & 9 DIGIT CUSIP
b �
.� See Schedule on Page 2
w°
v o LEGALITY ... The Certificates are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the
r u approving opinion of the Attorney General of Texas and the opinion of Bracewell LLP, Bond Counsel, Dallas, Texas, (see Appendix C,
w "Form of Bond Counsel's Opinion").
O
c DELIVERY ... It is expected that the Certificates will be available for delivery through the facilities of DTC on December 21, 2022.
o
a E b BIDS DUE TUESDAY, DECEMBER 6, 2022 AT 10:30 AM, CST
* Preliminary, subject to change.
MATURITY SCHEDULE*
(2-15) CUSIP
Amount
Maturity Rate Yield Suffix�l�
$ 825,000
2024
750,000
2025
790,000
2026
835,000
2027
880,000
2028
800,000
2029
840,000
2030
880,000
2031
925,000
2032
975,000
2033
(2-15)
Amount
Maturity
$ 875,000
2034
920,000
2035
425,000
2036
445,000
2037
465,000
2038
485,000
2039
510,000
2040
535,000
2041
560,000
2042
(Interest to accrue from the Delivery Date)
CUSIP Prefix: 388625 (1)
CUSIP
Rate Yield Suffix (1)
(1) CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services ("CGS") is managed on
behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright(c) 2022 CUSIP Global Services.
All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a
database and does not serve in any way as a substitute for the CGS database.
OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on or after
February 15, 2033, in whole or in part, in principal amounts of $5,000, or any integral multiple thereof, on August 15, 2032, or
any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE CERTIFICATES —
Optional Redemption").
2
* Preliminarv_ suhiect to change.
For purposes of compliance with Rule I5c2-12 of the United States Securities and Exchange Commission (the 'Rule'), this document, as the
same may be supplemented or corrected from time to time, constitutes an official statement of the City with respect to the Certificates described
herein that has been 'deemed final" by the City as of its date (or the date of any supplement or correction), except for the omission of no more
than the information permitted by the Rule.
This Official Statement, which includes the cover pages and the Appendices hereto, does not constitute an offer to sell or the solicitation of an
offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation, or sale.
No dealer, broker, salesperson, or other person has been authorized to give information or to make any representation other than those
contained in this Official Statement, and, ifgiven 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 representation, promise, or guarantee of the Financial Advisor.
This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is
made as to the correctness of such estimates and opinions, or that they will be realized. Any information and expressions of opinion herein
contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date
hereof. See "OTHER INFORMATION - Continuing Disclosure of Information" for a description of the City's undertaking to provide certain
information on a continuing basis.
Neither the City nor its Financial Advisor make any representation as to the accuracy, completeness, or adequacy of the information supplied by
The Depository Trust Company for use in this Official Statement.
The cover page contains certain information for general reference only and is not intended as a summary of the respective offering. Investors
should read the entire Official Statement, including all schedules and appendices hereto, to obtain information essential to making an informed
investment decision.
The agreements of the City and others related to the Certificates are contained solely in the contracts described herein. Neither this Official
Statement nor any other statement made in connection with the offer or sale of the Certificates is to be construed as constituting an agreement
with the purchaser of the Certificates. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL SCHEDULES
AND APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT
DECISION.
This Official Statement contains 'Forward -Looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements may involve known and unknown risks, uncertainties, and other factors which may cause the actual results,
performance, and achievements to be different from future results, performance, and achievements expressed or implied by such forward -looking
statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward -looking statements.
The Certificates are exempt from registration with the Securities and Exchange Commission and consequently have not been registered
therewith. The registration, qualification, or exemption of the Certificates in accordance with applicable securities law provisions of the
jurisdiction in which the Certificates have been registered, qualified or exempted should not be regarded as a recommendation thereof.
TABLE OF CONTENTS
PRELIMINARY OFFICIAL STATEMENT SUMMARY
..............4
FINANCIAL INFORMATION ........................................................ 31
TABLE 13 — CHANGES IN NET POSITION .................................... 31
CITY OFFICIALS, STAFF AND CONSULTANTS ........................6
TABLE 13A -GENERAL FUND REVENUES AND
ELECTED OFFICIALS...................................................................6
EXPENDITURE HISTORY ................................................ 32
SELECTED ADMINISTRATIVE STAFF ............................................
6
TABLE 14 - MUNICIPAL SALES TAX HISTORY ........................... 32
CONSULTANTS AND ADVISORS...................................................6
INTRODUCTION...............................................................................7
PLANOF FINANCING.....................................................................8
THE CERTIFICATES.......................................................................8
TAX INCREMENT REINVESTMENT ZONES ............................14
TAX INFORMATION......................................................................15
TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT........................................................20
TABLE 2 - TAXABLE ASSESSED VALUATIONS
BY
CATEGORY...................................................................21
TABLE 3 - VALUATION AND GENERAL OBLIGATION
DEBT HISTORY..............................................................22
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY ..........22
TABLE 5 - TEN LARGEST TAXPAYERS .......................................
22
TABLE 6 - TAX ADEQUACY.......................................................
23
TABLE 7 - ESTIMATED OVERLAPPING DEBT..............................23
DEBT INFORMATION...................................................................24
TABLE 8 — GENERAL OBLIGATION DEBT SERVICE
REQUIREMENTS............................................................24
TABLE 9 - INTEREST AND SINKING FUND BUDGET
PROJECTION..................................................................25
TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT............ 25
TABLE I I - AUTHORIZED BUT UNISSUED GENERAL
OBLIGATION BONDS......................................................25
TABLE 12 - OTHER OBLIGATIONS ............................................. 25
INVESTMENTS...............................................................................34
TABLE 15 - CURRENT INVESTMENTS ......................................... 35
TAX MATTERS...............................................................................36
TAX EXEMPTION...................................................................... 36
ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS............ 36
CONTINUING DISCLOSURE OF INFORMATION ...................38
OTHER INFORMATION................................................................39
RATING....................................................................................39
LITIGATION.............................................................................. 39
REGISTRATION AND QUALIFICATION OF CERTIFICATES
FORSALE...................................................................... 39
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS ............................................... 39
LEGALMATTERS......................................................................40
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION...............................................................40
FINANCIAL ADVISOR................................................................40
INITIAL PURCHASER FOR THE CERTIFICATES ............................40
FORWARD -LOOKING STATEMENTS DISCLAIMER ...................... 41
CERTIFICATION OF THE OFFICIAL STATEMENT .......................... 41
APPENDICES
GENERAL INFORMATION REGARDING THE CITY ....................... A
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED
SEPTEMBER 30, 2021........................................................ B
FORM OF BOND COUNSEL'S OPINION ....................................... C
The cover pages hereof, this page, the appendices included herein and
any addenda, supplement, or amendment hereto, are part of the Official
Statement.
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 (the "City") is a political subdivision and municipal corporation
of the State, located primarily in Tarrant County, Texas, and small portions of the City extend
into Dallas and Denton Counties. The City covers approximately 35.8 square miles (see
"INTRODUCTION - Description of City").
THE CERTIFICATES ..................... The Certificates are issued as $13,720,000* Combination Tax and Revenue Certificates of
Obligation, Series 2022 (the "Certificates"). The Certificates are issued as serial certificates
maturing February 15 in each of the years 2024 through 2042, inclusive, unless the Initial
Purchaser designates one or more consecutive serial maturities as Term Certificates (see "THE
CERTIFICATES - Description of the Certificates").
PAYMENT OF INTEREST ............... Interest on the Certificates accrues from the Delivery Date (anticipated to be December 21,
2022), and is payable August 15 and February 15 of each year, commencing August 15, 2023,
until maturity or prior redemption (see "THE CERTIFICATES - Description of the
Certificates").
AUTHORITY FOR ISSUANCE ......... The Certificates are issued pursuant to the Constitution and general laws of the State,
including particularly Subchapter C of Chapter 271, Texas Local Government Code, as
amended, and an ordinance (the "Ordinance") to be adopted by the City Council (see "THE
CERTIFICATES - Authority for Issuance of the Certificates").
SECURITY FOR THE
CERTIFICATES ............................. The Certificates constitute direct obligations of the City, payable from a combination of (i) the
levy and collection of an annual ad valorem tax levied, within the limits prescribed by law, on
all taxable property within the City, and (ii) a pledge of the Surplus Revenues of the City's
Waterworks and Sewer System (the "System") in an amount not to exceed $1,000 as provided
in the Ordinance (see "THE CERTIFICATES - Security and Source of Payment").
OPTIONAL REDEMPTION ............... The City reserves the right, at its option, to redeem Certificates having stated maturities on or
after February 15, 2033, in whole or in part, in principal amounts of $5,000, or any integral
multiple thereof, on August 15, 2032, or any date thereafter, at the par value thereof plus accrued
interest to the date of redemption (see "THE CERTIFICATES — Optional Redemption ").
TAX STATUS ................................... In the opinion of Bond Counsel, under existing law, interest on the Certificates is (i) excludable
from gross income for federal income tax purposes under section 103 of the Internal Revenue
Code of 1986, as amended, and (ii) not an item of tax preference for purposes of the alternative
minimum tax on individuals. See "TAX MATTERS" herein including information regarding
potential alternative minimum tax consequences for corporations.
QUALIFIED TAX-EXEMPT
CERTIFICATES .............................. The City will NOT designate the Certificates as "Qualified Tax -Exempt Obligations" for
financial institutions.
USE OF PROCEEDS ....................... Proceeds from the sale of the Certificates will be used for paying all or a portion of the City's
contractual obligations incurred in connection with (i) designing, developing, constructing,
improving, extending, and expanding streets, thoroughfares, sidewalks and bridges of the
City, including streetscaping, streetlighting, right-of-way protection, utility relocation, and
related storm drainage improvements; and acquiring rights -of -way in connection therewith;
(ii) acquiring, improving and equipping land for parks and recreation purpose in the City,
including Settlers Park; (iii) acquiring vehicles and equipment for police, fire, emergency
services, public works, utilities and park and recreation purposes, and (iv) professional
services incurred in connection with items (i) through (iii), and to pay the costs incurred in
connection with the issuance of the Certificates.
* Preliminarv, subject to change.
RATINGS ...................................... The Certificates and presently outstanding tax supported debt of the City are rated "Aal" by
Moody's Investors Service, Inc. ("Moody's") and "AA+" by Standard & Poor's Ratings
Services, a Standard & Poor's Financial Services LLC business ("S&P") (see "OTHER
INFORMATION - Ratings").
Boox-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 within a maturity. 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
Per
Ratio Funded
Fiscal
Per Capita
Capita
Tax Debt to
Year
Estimated
Taxable
Taxable
Funded
Funded
Taxable
% of
Ending
City
Assessed
Assessed
Tax
Tax
Assessed
Total Tax
9/30
Population
Valuation (2)
Valuation
Debt
Debt
Valuation
Collections
2019
55,2810)
$ 9,006,397,000
$ 162,920
$ 160,052,553
$ 2,895
1.78%
99.54%
2020
50,756(1)
9,778,084,000
192,649
147,520,000
2,906
1.51%
99.05%
2021
50,872(1)
10,226,552,000
201,025
149,285,000
2,935
1.46%
99.30%
2022
53,979(2)
10,900,233,906
201,935
137,870,000
2,554
1.26%
99.43% (4)
2023
53,985 (2)
11,241,146,174
208,227
140,945,000 (3)
2,611
1.25%
N/A
(1) Source: The City of Grapevine.
(2) Source: Tarrant, Dallas and Denton Appraisal Districts.
(3) Projected, includes the Certificates and Self -Supporting Debt. Preliminary, subject to change.
(4) Preliminary information provided by City staff.
For additional information regarding the City, please contact:
Greg Jordan
Chief Financial Officer
City of Grapevine
200 South Main
Grapevine, Texas 76051
(817) 410-3110
Nick Bulaich
Hilltop Securities Inc.
777 Main Street, Suite 1525
Fort Worth, Texas 76102
(817)332-9710
61
CITY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Length of
Term
City Council
Service
Expires
Occupation
William D. Tate
34 Years (1)
May, 2024
Attorney -at -Law
Mayor
Paul Slechta
7 Years
May, 2024
Business Owner
Councilmember, Place 1
Sharron Rogers
37 Years
May, 2024
Retired Sales Representative
Councilmember, Place 2
Leon Leal
3 Years
May, 2025
Commercial General Contracting Owner
Councilmember, Place 3
Darlene Freed
24 Years
May, 2025
Commercial Real Estate Agent
Mayor Pro Term, Place 4
Chris Coy
15 Years
May, 2023
District Sales Manager
Councilmember, Place 5
DuffO'Dell
8 Years
May, 2023
Independent Travel Consultant
Councilmember, Place 6
(1) Elected to City Council in 1972 and was elected Mayor in 1973, serving as Mayor until 1985. Re-elected Mayor in 1988 and
has served as Mayor continuously since.
SELECTED ADMINISTRATIVE STAFF
Length of
Name Position Service
Bruno Rumbelow City Manager 24 Years
Greg Jordan Chief Financial Officer 7 Years
Tara Brooks City Secretary 10 Years
CONSULTANTS AND ADVISORS
Auditors................................................................................................................................................... Patillo, Brown & Hill, LLP
Fort Worth, Texas
BondCounsel............................................................................................................................................................. Bracewell LLP
Dallas, Texas
FinancialAdvisor..............................................................................................................................................Hilltop Securities Inc.
Fort Worth, Texas
PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$13,720,000*
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2022
INTRODUCTION
This Preliminary Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance
of the $13,720,000* City of Grapevine, Texas Combination Tax and Revenue Certificates of Obligation, Series 2022 (the
"Certificates") being offered herein. Capitalized terms used in this Official Statement have the same meanings assigned to such
terms in the ordinance to be adopted on the date of sale of the Certificates (the "Ordinance") which will authorize the issuance of
the Certificates. except as otherwise indicated herein.
There follows in this Preliminary Official Statement descriptions of the Certificates and certain information regarding the City of
Grapevine, Texas (the "City") and its finances. All descriptions of documents contained herein are only summaries and are
qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's
Financial Advisor, Hilltop Securities, Inc. ("Hilltop Securities"), Fort Worth, Texas.
All financial and other information presented in this Preliminary Official Statement has been provided by the City from its
records, except for information expressly attributed to other sources. The presentation of information, including tables of receipts
from taxes and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing
trends in the financial position or other affairs of the City. No representation is made that past experience, as is shown by that
financial and other information, will necessarily continue or be repeated in the future (see "OTHER INFORMATION — Forward -
Looking Statements Disclaimer").
DESCRIPTION OF THE CITY ... The City is a political subdivision and municipal corporation of the State of Texas (the "State"),
duly organized and existing under the laws of the State, including the City's Home Rule Charter. The City 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 Council members, who are all elected at -large for staggered three-year terns. 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, water and sanitary sewer utilities, culture -recreation, public transportation, public improvements, planning
and zoning, and general administrative services. The 2020 Census population for the City was 50,756, and the 2023 estimated
population is 53,985. The City covers approximately 35.8 square miles.
INFECTIous DISEASE OUTBREAK — COVID-19 ... In March 2020, the World Health Organization and the President of the
United States separately declared the outbreak of a respiratory disease caused by a novel coronavirus ("COVID-19") to be a
public health emergency. On March 13, 2020, the Governor of Texas (the "Governor") declared a state of disaster for all counties
in the State because of the effects of COVID-19. Pursuant to Chapter 418 of the Texas Government Code, the Governor has
broad authority to respond to disasters, including taking action to suspend any regulatory statute prescribing the procedures for
conduct of state business or any order or rule of a state agency that would in any way prevent, hinder, or delay necessary action in
coping with this disaster, and issuing executive orders that have the force and effect of law. The Governor has since issued
several executive orders relating to COVID- 19 preparedness, mitigation and reopening Texas businesses. In response to a rise in
COVID-19 infections in the State and pursuant to Chapter 418 of the Texas Government Code, the Governor issued a number of
executive orders intended to help limit the spread of COVID-19 and mitigate injury and the loss of life, including limitations
imposed on business operations, social gatherings and other activities.
Under executive orders in effect as of the date of this Official Statement, there are no State -imposed COVID-19 related operating
limits for any business or other establishment in the State and no State -imposed requirement to wear a face covering. The
Governor retains the right to impose future restrictions on activities if needed in order to mitigate the effects of COVID-19.
Additional information regarding executive orders issued by the Governor is accessible on the website of the Governor at
https:Hgov.texas.gov/. Neither the information on, nor accessed through, such website of the Governor is incorporated by
reference, either expressly or by implication, into this Official Statement.
The Pandemic has negatively affected travel, commerce, and financial markets globally, and is widely expected to continue to
negatively affect economic output worldwide and within the City. These negative impacts may reduce or otherwise negatively
affect future property values and/or the collection of ad valorem tax revenues within the City. See "AD VALOREM
PROPERTY TAXATION". The Certificates are secured by an ad valorem tax (within the limits prescribed by law), and a
reduction in property values may require an increase in the ad valorem tax rate required to pay the Obligations as well as the
City's operations and maintenance expenses. See "AD VALOREM PROPERTY TAXATION — Public Hearing and
Maintenance and Operations Tax Rate Limitations" and "- Debt Tax Rate Limitations." Actions taken to slow the Pandemic are
expected to continue to reduce economic activity within the City on which the City collects taxes, charges, and fees. A reduction
in the collection of taxes and other fees and charges may negatively impact the City's operating budget and overall financial
condition.
The City continues to monitor the spread of COVID-19 and is working with local, State, and national agencies to address the
potential impact of the Pandemic upon the City. While the potential impact of the Pandemic on the City cannot be quantified at
this time, the continued outbreak of COVID-19 could have an adverse effect on the City's operations and financial condition, and
the effect could be material.
* Preliminary, subject to change
PLAN OF FINANCING
PURPOSE ... Proceeds from the sale of the Certificates will be used for paying all or a portion of the City's contractual
obligations incurred in connection with (i) designing, developing, constructing, improving, extending, and expanding streets,
thoroughfares, sidewalks and bridges of the City, including streetscaping, streetlighting, right-of-way protection, utility
relocation, and related storm drainage improvements; and acquiring rights -of -way in connection therewith; (ii) acquiring,
improving and equipping land for parks and recreation purpose in the City, including Settlers Park; (iii) acquiring vehicles and
equipment for police, fire, emergency services, public works, utilities and park and recreation purposes, and (iv) professional
services incurred in connection with items (i) through (iii), and to pay the costs incurred in connection with the issuance of the
Certificates.
SOURCES AND USES OF CERTIFICATE PROCEEDS ... The proceeds from the sale of the Certificates are expected to be expended as
follows:
Sources:
Principal Amount $ Net Premium -
Total Sources of Funds $ -
Uses:
Deposit to Construction Fund $ -
Costs of Issuance -
Total Uses of Funds $ -
THE CERTIFICATES
DESCRIPTION OF THE CERTIFICATES ... The Certificates are dated December 1, 2022 (the "Dated Date") and mature on
February 15 in each of the years and in the amounts shown on page 2 hereof Interest will accrue from the date of initial delivery
(the "Delivery Date", anticipated to be December 21, 2022), will be computed on the basis of a 360-day year of twelve 30-day
months, and will be payable on February 15 and August 15 of each year commencing August 15, 2023, until maturity or prior
redemption. 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 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").
AUTHORITY FOR ISSUANCE OF THE CERTIFICATES ... The Certificates are being issued pursuant to the Constitution and general
laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and the ordinance to be
adopted by the City Council of the City (the "Ordinance").
SECURITY AND SOURCE OF PAYMENT OF THE CERTIFICATES ... The principal of and interest on the Certificates is payable from
(i) a continuing direct annual ad valorem tax levied by the City against all taxable property in the City, within limits prescribed
by law, and (i) a pledge of the Surplus Revenues of the City's Waterworks and Sewer System (the "System") in an amount not to
exceed $1,000, as provided in the Ordinance.
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 OF THE CERTIFICATES ... The City reserves the right, at its option, to redeem Certificates having stated
maturities on or after February 15, 2033, in whole or in part, in principal amounts of $5,000, or any integral multiple thereof, on
August 15, 2032, 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 such 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 Certificate, 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.
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, WHETHER OR NOT THE
REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE CERTIFICATES
CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND
NOTWITHSTANDING THAT ANY OBLIGATION OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR
PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE.
The City reserves the right to give notice of its election or direction to redeem Certificates conditioned upon the occurrence of
subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized
securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other
entity as may be authorized by law, no later than the redemption date, or (ii) that the City retains the right to rescind such notice
at any time on or prior to the scheduled redemption date if the City delivers a certificate of the City to the Paying Agent/Registrar
instructing the Paying Agent/Registrar to rescind the redemption notice, and such notice and redemption shall be of no effect if
such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give
prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. Any Certificates subject to
conditional redemption and such redemption has been rescinded shall remain Outstanding, and the rescission of such redemption
shall not constitute an event of default. Further, in the case of a conditional redemption, the failure of the City to make moneys
and/or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default.
The Paying Agent/Registrar and the City, so long as a book -entry -only system is used for the Certificates, will send any notice of
redemption relating to the Certificates only to DTC. Any failure by DTC to advise any DTC participant, or of any DTC
participant or indirect participant to notify the Beneficial Owner, will not affect the validity of the redemption of the Certificates
called for redemption or any other action premised on any such notice. Redemptions of portions of the Certificates by the City
will reduce the outstanding principal amount of such Certificates held by DTC. In such event, DTC may implement, through its
book -entry -only system, a redemption of such Certificates held for the account of DTC participants in accordance with its rules
or other agreements with DTC participants and then DTC participants and indirect participants may implement a redemption of
such Certificates from the Beneficial Owners. Any such selection of Certificates within a maturity to be redeemed will not be
governed by the Ordinance and will not be conducted by the City or the Paying Agent/Registrar. Neither the City nor the Paying
Agent/Registrar will have any responsibility to DTC participants, indirect participants or the persons for whom DTC participants
act as nominees, with respect to the payments on the Certificates or the providing of notice to DTC participants, indirect
participants, or Beneficial Owners of the selection of portions of the Certificates for redemption (see "THE CERTIFICATES —
Book -Entry -Only System" herein).
DEFEASANCE ... The Ordinance provides that the City may discharge its obligations to the registered owners of any or all of the
Certificates, as applicable, to pay principal and interest thereon in any manner permitted by law. Under current Texas law, such
discharge may be accomplished either (i) by depositing with the Paying Agent/Registrar or other lawfully authorized entity a sum
of money equal to the principal of and all interest to accrue on such Certificates to maturity or redemption (if applicable) or (ii)
by depositing with the Paying Agent/Registrar or other lawfully authorized entity amounts sufficient, together with the
investments earnings thereon, to provide for the payment and/or redemption (if applicable) of such 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 obligations, 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 City Council 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 which 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. 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 (if applicable) of the Certificates, as the case may be.
There is no assurance that the current law will not be changed in a manner which would permit investments other than those
described above to be made with amounts deposited to defease the Certificates. Because the Ordinance does not contractually
limit such investments, registered owners will be deemed to have consented to defeasance with such other investments,
notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State
law. There is no assurance that the ratings for U.S. Treasury securities used as defeasance securities or that for any other
defeasance security will be maintained at any particular rating category.
Upon defeasance, 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 is 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 Preliminary Official Statement. The City believes the source of
such information to be reliable, but takes no responsibility for the accuracy or completeness thereof.
The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the 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 Preliminary Official Statement.
The current rules applicable to DTC are on file with the United States Securities and Exchange Commission (the "SEC"), and the
current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC.
DTC will act as securities depository for the Certificates. The Certificates will be issued as fully -registered securities registered
in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative
of DTC. One fully -registered certificate will be issued for each maturity of the Certificates in the aggregate principal amount of
each such maturity and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for
over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
(from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade
settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic
computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical
movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC, is the holding company of DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated
subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of. AA+. The DTC Rules applicable to
its Direct and Indirect Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of Certificates under the DTC system must be made by or through direct Participants, which will receive a credit for
such purchases on DTC's records. The ownership interest of each actual purchaser of each 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. Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interest in the Certificates are to be accomplished by entries made on
the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the 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. or such other name as may be requested by an authorized representative of DTC. The deposit
of Certificates with DTC and their registration in the name of Cede & Co. or such other nominee effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the 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. Beneficial Owners of Certificates may wish to
take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as
redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of
Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit
notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Paying
Agent/Registrar and request that copies of notices be provided directly to them.
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Redemption notices relating to the Certificates shall be sent to DTC. If less than all of the Certificates within a maturity are being
redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be
redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Certificates unless
authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to the City as soon as possible after the Record Date (hereinafter defined). The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the Record Date
(identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, principal and interest payments on the Certificates will be made to Cede & Co., or such other nominee as
may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's
receipt of funds and corresponding detail information from the City or the Paying Agent/Registrar on payable date in accordance
with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying
Agent/Registrar or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, principal and interest payments to Cede & Co. (or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of the City or the Paying Agent/Registrar, disbursement of such payments
to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the 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, security certificates will be printed and delivered.
So long as Cede & Co. is the registered owner of the Certificates, the City will have no obligation or responsibility to the Direct
Participants or Indirect Participants, or the persons for which they act as nominees, with respect to the payment to or providing of
notice to such Direct Participants, Indirect Participants or the persons for which they act as nominees.
Use of Certain Terms in Other Sections of this Preliminary Official Statement. In reading this Preliminary Official Statement it
should be understood that while the Certificates are in the Book -Entry -Only System, references in other sections of this
Preliminary Official Statement to registered owners should be read to include the person for which the Participant acquires an
interest in the 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 Ordinance will be given only to DTC.
Information concerning DTC and the Book -Entry System has been obtained from DTC and is not guaranteed as to accuracy or
completeness by, and is not to be construed as a representation by the City, the Financial Advisor or the Initial Purchaser.
PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar for the Certificates is The Bank of New York Mellon Trust
Company, NA, Dallas, Texas. In the Ordinance, the City retains the right to replace the Paying Agent/Registrar. The City
covenants to maintain and provide a Paying Agent/Registrar at all times until the Certificates are duly paid and any successor
Paying Agent/Registrar shall be a commercial bank, trust company, financial institution or other entity duly qualified and legally
authorized to serve as and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying
Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each registered owner
of such Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying
Agent/Registrar.
Principal of the Certificates will be payable to the registered owner at maturity or prior redemption upon presentation and
surrender at the principal office of the Paying Agent/Registrar. Interest on the Certificates shall be paid to the registered owners
appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date (see "THE
CERTIFICATES — Record Date for Interest Payment" herein), and such interest shall be paid (i) by check sent by United States
Mail, first class postage prepaid to the address of the registered owner recorded in the registration books of the Paying
Agent/Registrar, or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense
of, the registered owner. If the date for the payment of the principal of or interest on the Certificates shall be a Saturday, Sunday,
legal holiday or day when banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday,
legal holiday or day when banking institutions are authorized to close; and payment on such date shall have the same force and
effect as if made on the original date payment was due. So long as Cede & Co. is the registered owner of the Certificates,
payments of principal and interest on the Certificates will be made as described in "THE CERTIFICATES - Book -Entry -Only
System" herein.
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TRANSFER, EXCHANGE AND REGISTRATION ... In the event the Book -Entry -Only System should be discontinued, printed
certificates will be delivered to the registered owners of the Certificates and thereafter the Certificates may be transferred and
exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed
certificates to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the
registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange
and transfer. Certificates may be assigned by the execution of an assignment form on the 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 principal office of the Paying Agent/Registrar,
or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible,
new 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 of the
same series, in denominations of $5,000 or integral multiples thereof for any one maturity and for a like aggregate principal
amount as the Certificates surrendered for exchange or transfer. See "THE CERTIFICATES - Book -Entry -Only System" 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 on 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 (the "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 each interest payment
date for the Certificates.
In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (the "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the
payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date
of the past due interest (the "Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least
five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each
registered owner of 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.
MUTILATED, DESTROYED, LOST AND STOLEN CERTIFICATES ... If any Certificate is mutilated, destroyed, stolen or lost, a new
Certificate in the same principal amount as the Certificate so mutilated, destroyed, stolen or lost will be issued. In the case of a
mutilated Certificate, such new Certificate will be delivered only upon surrender and cancellation of such mutilated Certificate.
In the case of any Certificate issued in lieu of and substitution for any Certificate which has been destroyed, stolen or lost, such
new Certificate will be delivered only (a) upon filing with the Paying Agent/Registrar evidence satisfactory to the Paying
Agent/Registrar to the effect that such Certificate has been destroyed, stolen or lost and authenticity of ownership thereof, and (b)
upon furnishing the Paying Agent/Registrar with indemnity satisfactory to hold the City and the Paying Agent/Registrar
harmless. The person requesting the authentication and delivery of a new Certificate must pay such expenses as the Paying
Agent/Registrar may incur in connection therewith.
CERTIFICATEHOLDERs' REMEDIES ... The Ordinance establishes specific events of default with respect to the Certificates. If the
City defaults in the payment of the principal of or interest on the Certificates when due, or the City defaults in the observance or
performance of any of the covenants, conditions, or obligations of the City, the failure to perform which materially, 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 60 days after notice of such default is given by any owner to the City, the
Ordinance provides that any registered owner is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring
the City to make such payment or observe and perform such covenants, obligations, or conditions. The issuance of a writ of
mandamus is controlled by equitable principles, and rests with the discretion of the court, but may not be arbitrarily refused.
There is no acceleration of maturity of the Certificates in the event of default and, consequently, the remedy of mandamus may
have to be relied upon from year to year. The Ordinance does not provide for the appointment of a trustee to represent the
interest of the holders of the Certificates upon any failure of the City to perform in accordance with the terns of the Ordinance, or
upon any other condition and, accordingly, all legal actions to enforce such remedies would have to be undertaken at the initiative
of, and be financed by, the registered owners.
On June 30, 2006 Texas Supreme Court ruled in Tooke v. City ofMexia, 197 S.W. 3d 325 (Tex. 2006), that a waiver of sovereign
immunity in a contractual dispute must be provided for by statute in "clear and unambiguous language." Because it is unclear
whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, holders of
the Certificates may not be able to bring such a suit against the City for breach of the covenants in the Certificates or in the
Ordinance. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against
the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within
the City to enforce the tax lien on taxable property to pay the principal of and interest on the Certificates. In Tooke, the Court
noted the enactment in 2005 of sections 271.151 through .160, Texas Local Government Code (the "Local Government Immunity
Waiver Act"), which, according to the Court, waives "immunity from suit for contract claims against most local governmental
entities under certain circumstances." The Local Government Immunity Waiver Act covers cities and relates to contracts entered
into by cities for providing goods and services to cities.
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On April 1, 2016, the Texas Supreme Court ruled in Wasson Interests, Ltd. v. City of Jacksonville, 489 S.W.3d 427 (Tex. 2016)
("Wasson I ), that governmental immunity does not imbue a city with derivative immunity when it performs a proprietary, as
opposed to a governmental, function in respect to contracts executed by a city. On October 5, 2018, the Texas Supreme Court
issued a second opinion to clarify Wasson I, Wasson Interests LTD. v. City of Jacksonville, 559 S.W.3d 142 (Tex. 2018)
("Wasson IT', and together with Wasson I "Wasson"), ruling that to determine whether governmental immunity applies to a
breach of contract claim, the proper inquiry is whether the municipality was engaged in a governmental or proprietary function at
the time it entered into the contract, not at the time of the alleged breach. In Wasson, the Court recognized that the distinction
between governmental and proprietary functions is not clear. Therefore, in regard to municipal contract cases (as opposed to tort
claim cases), it is incumbent on the courts to determine whether a function was governmental or proprietary based upon the
statutory and common law guidance at the time of the contractual relationship. Texas jurisprudence has generally held that
proprietary functions are those conducted by a city in its private capacity, for the benefit only of those within its corporate limits,
and not as an arm of the government or under authority or for the benefit of the State; these are usually activities that can be, and
often are, provided by private persons, and therefore are not done as a branch of the State, and do not implicate the State's
immunity since they are not performed under the authority, or for the benefit, of the State as sovereign. Issues related to the
applicability of a governmental immunity as they relate to the issuance of municipal debt have not been adjudicated. Each
situation will be evaluated based on the facts and circumstances surrounding the contract in question.
As noted above, the Ordinance provides that holders of the Certificates may exercise the remedy of mandamus to enforce the
Certificates of the City under the Ordinance. Neither the remedy of mandamus nor any other type of injunctive relief was at issue
in Tooke, and it is unclear whether Tooke will be construed to have any effect with respect to the exercise of mandamus, as such
remedy has been interpreted by Texas courts. In general, Texas courts have held that a writ of mandamus may be issued to
require public officials to perform ministerial acts that clearly pertain to their duties. Texas courts have held that a ministerial act
is defined as a legal duty that is prescribed and defined with a precision and certainty that leaves nothing to the exercise of
discretion or judgment, though mandamus is not available to enforce purely contractual duties. However, mandamus may be
used to require a public officer to perform legally imposed ministerial duties necessary for the performance of a valid contract to
which the State or a political subdivision of the State is a party (including the payment of monies due under a contract).
Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the United States Bankruptcy Code ("Chapter
9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of
revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a
security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy
Court approval, the prosecution of any other legal action by creditors or holders of the Certificates 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
remedies 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, principles of governmental immunity, and general principles of equity that permit the exercise of judicial discretion.
AMENDMENTS ... The City may amend the Ordinance without the consent of or notice to any registered owner in any manner not
detrimental to the interest of the registered owners, including the curing of any ambiguity, inconsistency, formal defect, or
omission therein. In addition, the City may, with the written consent of the holders of a majority in aggregate principal amount
of the Certificates then outstanding and affected thereby, amend, add to, or rescind any of the provisions of Ordinance; except
that, without the consent of the registered owners of all of the Certificates then outstanding, no such amendment, addition, or
rescission may (i) extend the time or times of payment of the principal of and interest on the Certificates, reduce the principal
amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the
principal of or interest on the Certificates, (ii) give any preference to any Certificate over any other Certificate, or (iii) reduce the
aggregate principal amount of Certificates required to be held by Owners for consent to any such amendment, addition, or
rescission
13
TAX INCREMENT REINVESTMENT ZONES
Article VIII, Section 1-g of the Texas Constitution and the Tax Increment Financing Act, Chapter 311, Texas 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 and collected by the
taxing 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 all taxable real property for a year located
within the zone, less the tax increment base of the taxing 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 zone 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 any remainder. The TIF Act provides that each taxing unit that
participates in a zone is required to pay into the tax increment fund for the zone the collected Tax Increments that it has agreed to
pay under its agreement with the city and in accordance with the project plan. A taxing unit cannot reduce the amount of its
participation once the financing plan has been implemented. The City has created two tax increment reinvestment zones.
Reinvestment Zone Number One ... On February 20, 1996, the Grapevine City Council adopted an ordinance (as amended, the
"Zone One Ordinance") creating the City's Tax Increment Reinvestment Zone Number One ("Zone One") by designating a
contiguous geographic area in the jurisdiction of the City as a reinvestment zone to promote development within Zone One. The
Zone One Ordinance established the boundaries of Zone One, created a board of directors for Zone One, established a tax
increment fund for Zone One (the "Tax Increment Fund" for Zone One) and found that public works and improvements to be
undertaken in Zone One would significantly enhance the value of all taxable real property in Zone One and would be of general
benefit to the City. On December 15, 2015, the City Council approved an ordinance extending the boundaries of Zone One and
extending the termination date of Zone One until December 31, 2038, unless otherwise terminated early as a result of payment in
full of all project costs approved in the Project and Financing Plan for the Zone, or as authorized or permitted by law.
With the addition of approximately 419 acres to Zone One in December 2015, Zone One is now comprised of approximately 661
total acres in the northeast area of the City. The City is currently the only taxing unit participating in Zone One and contributes
100% of the City's tax collections in Zone One to the Tax Increment Fund for Zone One. The City's Tax Increment for Zone One
will be used to pay project costs within Zone One.
The tax increment base for the original property included in Zone One in 1996 was $7,647,325 and the tax increment base for the
property added to Zone One in 2015 was $57,644,619. The total incremental taxable value in Zone One is $672,595,598 for tax
year 2022. The Tax Increment revenues for Zone One are not pledged to the payment of any of the Certificates and the
holders of the Certificates shall have no claim on such Tax Increment revenues of Zone One.
Reinvestment Zone Number Two ... On December 28, 1998, the City Council adopted an ordinance (the "Zone Two Ordinance")
creating Tax Increment Reinvestment Zone Number Two ("Zone Two") by designating a contiguous geographic area in the
jurisdiction of the City as a reinvestment zone to promote development within Zone Two. The Zone Two Ordinance established
the boundaries of Zone Two, created a board of directors for Zone Two, established a tax increment fund for Zone Two (the "Tax
Increment Fund" for Zone Two) and found that public works and improvements to be undertaken in Zone Two would
significantly enhance the value of all taxable real property in Zone Two and would be of general benefit to the City. Zone Two is
comprised of approximately 122 acres in the northeast area of the City.
The City, Tarrant County, Tarrant County Junior College District, Tarrant County Hospital District and GCISD levy taxes on real
property within Zone Two. In addition to the City, only GCISD (together, the "Zone Two Taxing Units") has agreed to deposit
100% of its Tax Increments into the Tax Increment Fund for Zone Two; provided, however, that the amount deposited by GCISD
will be reduced by the amount necessary to offset any negative impact on GCISD, as a result of its participation in Zone Two,
under school finance laws. To date, no such reductions have been required. The Grapevine Middle School is located wholly
with Zone Two. Accordingly, as part of the Zone Two projects, the GCISD will be reimbursed from the Tax Increment Fund for
Zone Two for its debt service, including principal and interest, on bonds issued by GCISD for the Grapevine Middle School. The
Tax Increments of GCISD, and any other Zone Two Taxing Unit which elects to participate in the future, will be paid into the
Tax Increment Fund for Zone Two and used to pay project costs within Zone Two, and any other Obligations issued to finance
project costs in Zone Two. None of the Zone Two Taxing Units is required under State law to set a tax rate sufficient to assure
any certain dollar amount of Tax Increments; rather, State law only requires each Zone Two Taxing Unit to contribute the Tax
Increments actually collected by it and only to the extent provided in the applicable interlocal agreement.
The tax increment base for Zone Two established on January 1, 1998 was $744,886. The primary purpose for the creation of
Reinvestment Zone Number Two was to provide public improvements to complement development of The Gaylord Opryland
Hotel. The taxable value in Zone Two is $304,947,479 for tax year 2022. The project for which Zone Two was created has been
completed. The Zone Two Ordinance further provides that Zone Two shall take effect on January 1, 1999, and shall expire on
December 31, 2030, or such earlier date that the City determines that Zone Two 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, and the interest thereon, have been paid in full (see "Table 10 — Computation of Self -Supporting Debt"). The City's
Combination Tax and Tax Increment Reinvestment Zone #2 Revenue Refunding Bonds, Series 2015A (the "Series 2015 Zone
Two Bonds") are secured in part by the Tax Increment Revenues from Zone Two. There is currently $8,480,000,000 of
outstanding Series 2015 Zone Two Bonds. The Tax Increment revenues for Zone Two are not pledged to the payment of
any of the Certificates and the holders of the Certificates shall have no claim on such Tax Increment revenues of Zone
Two.
14
TAX INFORMATION
The following is a summary of certain provisions of State law as it relates to ad valorem taxation and is not intended to be
complete. Prospective investors are encouraged to review Title I of the Texas Tax Code, as amended (the "Property Tax Code'),
for identification of property subject to ad valorem taxation, property exempt or which may be exempted from ad valorem
taxation if claimed, the appraisal of propertyfor ad valorem tax purposes, and the procedures and limitations applicable to the
levy and collection of ad valorem taxes.
VALUATION OF TAXABLE PROPERTY ... The Property Tax Code provides for countywide appraisal and equalization of taxable
property values and establishes in each county of the State an appraisal district and an appraisal review board (the "Appraisal
Review Board") responsible for appraising property for all taxing units within the county. The appraisal of property within the
City is the responsibility of the Tarrant, Denton and Dallas Appraisal Districts (the "Appraisal Districts"). Except as generally
described below, the Appraisal Districts are required to appraise all property within the Appraisal Districts on the basis of 100%
of its market value and is prohibited from applying any assessment ratios. In determining market value of property, the Appraisal
Districts is required to consider the cost method of appraisal, the income method of appraisal and the market data comparison
method of appraisal, and use the method the chief appraiser of the Appraisal Districts considers most appropriate. The Property
Tax Code requires appraisal districts to reappraise all property in its jurisdiction at least once every three years. A taxing unit may
require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the
taxing unit by petition filed with the Appraisal Review Board.
State law requires the appraised value of an owner's principal residence ("homestead" or "homesteads") to be based solely on the
property's value as a homestead, regardless of whether residential use is considered to be the highest and best use of the property.
State law further limits the appraised value of a homestead to the lesser of (1) the market value of the property or (2) 110% of the
appraised value of the property for the preceding tax year plus the market value of all new improvements to the property (the
"10% Homestead Cap"). See "Table 1 — Assessed Valuation and Exemption" for the reduction in taxable valuation attributable to
the 10% Homestead Cap.
State law provides that eligible owners of both agricultural land and open -space land, 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 ("Productivity Value"). The same land may not be qualified as both agricultural
and open -space land. See "Table 1 — Assessed Valuation and Exemption" for the reduction in taxable valuation attributable to
valuation by Productivity Value.
The appraisal values set by the Appraisal Districts are subject to review and change by the Appraisal Review Board. The
appraisal rolls, as approved by the Appraisal Review Board, are used by taxing units, such as the City, in establishing their tax
rolls and tax rates. See "TAX INFORMATION — Issuer and Taxpayer Remedies."
STATE MANDATED HOMESTEAD EXEMPTIONS ... State law grants, with respect to each taxing unit in the State, various
exemptions for disabled veterans and their families, surviving spouses of members of the armed services killed in action, and
surviving spouses of first responders killed or fatally wounded in the line of duty. See "Table 1 — Assessed Valuation and
Exemption" for the reduction, if any, attributable to state mandated homestead exemptions.
LocAL OPTION HOMESTEAD EXEMPTIONS ... The governing body of a taxing unit, including a city, county, school district, or
special district, at its option may grant: (1) an exemption of up to 20% of the appraised value of all homesteads (but not less than
$5,000) and (2) an additional exemption of at least $3,000 of the appraised value of the homesteads of persons sixty-five (65)
years of age or older and the disabled. Each taxing unit decides if it will offer the local option homestead exemptions and at what
percentage or dollar amount, as applicable. The exemption described in (2), above, may be created, increased, decreased or
repealed at an election called by the governing body of a taxing unit upon presentment of a petition for such creation, increase,
decrease, or repeal of at least 20% of the number of qualified voters who voted in the preceding election of the taxing unit. See
"Table 1 — Assessed Valuation and Exemption" for the reduction, if any, attributable to local option homestead exemptions.
LocAL OPTION FREEZE FOR THE ELDERLY AND DISABLED ... The governing body of a county, municipality or junior college
district may, at its option, provide for a freeze on the total amount of ad valorem taxes levied on the homesteads of persons 65
years of age or older or of disabled persons above the amount of tax imposed in the year such residence qualified for such
exemption. Also, upon voter initiative, an election may be held to determine by majority vote whether to establish such a freeze
on ad valorem taxes. Once the freeze is established, the total amount of taxes imposed on such homesteads cannot be increased
except for certain improvements, and such freeze cannot be repealed or rescinded. See "Table 1 — Assessed Valuation and
Exemption" for the reduction, if any, attributable to the local option freeze for the elderly and disabled.
TEMPORARY EXEMPTION FOR QUALIFIED PROPERTY DAMAGED BY A DISASTER ... The Property Tax Code entitles the owner of
certain qualified (i) tangible personal property used for the production of income, (ii) improvements to real property, and (iii)
manufactured homes located in an area declared by the governor to be a disaster area following a disaster and is at least 15 percent
damaged by the disaster, as determined by the chief appraiser, to an exemption from taxation of a portion of the appraised value of
the property. The amount of the exemption ranges from 15 percent to 100 percent based upon the damage assessment rating assigned
by the chief appraiser. Except in situations where the territory is declared a disaster on or after the date the taxing unit adopts a tax
15
rate for the year in which the disaster declaration is issued, the governing body of the taxing unit is not required to take any action in
order for the taxpayer to be eligible for the exemption. If a taxpayer qualifies for the exemption after the beginning of the tax year,
the amount of the exemption is prorated based on the number of days left in the tax year following the day on which the governor
declares the area to be a disaster area. For more information on the exemption, reference is made to Section 11.35 of the Tax Code.
Section 11.35 of the Tax Code was enacted during the 2019 legislative session, and there is no historical judicial precedent for how
the statute will be applied. Texas Attorney General Opinion KP-0299, issued on April 13, 2020, concluded a court would likely find
the Texas Legislature intended to limit the temporary tax exemption to apply to property physically harmed as a result of a declared
disaster.
PERSONAL PROPERTY ... Tangible personal property (furniture, machinery, supplies, inventories, etc.) used in the "production of
income" is taxed based on the property's market value. Taxable personal property includes income -producing equipment and
inventory. Intangibles such as goodwill, accounts receivable, and proprietary processes are not taxable. Tangible personal
property not held or used for production of income, such as household goods, automobiles or light trucks, and boats, is exempt
from ad valorem taxation unless the governing body of a taxing unit elects to tax such property.
FREEPORT AND GOODS -IN -TRANSIT EXEMPTIONS ... Certain goods that are acquired in or imported into the State to be
forwarded outside the State, and are detained in the State for 175 days or less for the purpose of assembly, storage,
manufacturing, processing or fabrication ("Freeport Property") are exempt from ad valorem taxation unless a taxing unit took
official action to tax Freeport Property before April 1, 1990 and has not subsequently taken official action to exempt Freeport
Property. Decisions to continue taxing Freeport Property may be reversed in the future; decisions to exempt Freeport Property are
not subject to reversal.
Certain goods that are acquired in or imported into the State to be forwarded to another location within or without the State,
stored in a location that is not owned by the owner of the goods and are transported to another location within or without the State
within 175 days ("Goods -in -Transit"), are generally exempt from ad valorem taxation; however, the Property Tax Code permits a
taxing unit, on a local option basis, to tax Goods -in -Transit if the taxing unit takes official action after conducting a public
hearing, before January 1 of the first tax year in which the taxing unit proposes to tax Goods -in -Transit. Goods -in -Transit and
Freeport Property do not include oil, natural gas or petroleum products, and Goods -in -Transit does not include aircraft or special
inventories such as manufactured housing inventory, or a dealer's motor vehicle, boat, or heavy equipment inventory.
A taxpayer may receive only one of the Goods -in -Transit or Freeport Property exemptions for items of personal property.
See "Table 1 — Assessed Valuation and Exemption" for the reduction, if any, attributable to Freeport Property and/or Goods -in -
Transit exemptions.
OTIIER EXEMPT PROPERTY ... Other major categories of exempt property include property owned by the State or its political
subdivisions if used for public purposes, property exempt by federal law, property used for pollution control, farm products
owned by producers, property of nonprofit corporations used for scientific research or educational activities benefitting a college
or university, designated historic sites, solar and wind -powered energy devices, and certain classes of intangible personal
property.
TAx INCREMENT FINANCING ZONES ... A city or county, by petition of the landowners or by action of its governing body, may
create one or more tax increment financing zones ("TIRZ") within its boundaries, and other overlapping taxing units may agree to
contribute taxes levied against the "Incremental Value" in the TIRZ to finance or pay for project costs, as defined in Chapter 311,
Texas Government Code, general located within the TIRZ. At the time of the creation of the TIRZ, a "base value" for the real
property in the TIRZ is established and the difference between any increase in the assessed valuation of taxable real property in
the TIRZ in excess of the base value is known as the "Incremental Value", and during the existence of the TIRZ, all or a portion
of the taxes levied by each participating taxing unit against the Incremental Value in the TIRZ are restricted to paying project and
financing costs within the TIRZ and are not available for the payment of other obligations of such taxing units. See "TAX
INFORMATION — City Application of Property Tax Code" for descriptions of any TIRZ created in the City.
TAx ABATEMENT AGREEMENTS ... Taxing units may also enter into tax abatement agreements to encourage economic
development. Under the agreements, a property owner agrees to construct certain improvements on its property. The taxing unit,
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. See "TAX INFORMATION — City Application of
Property Tax Code for descriptions of any of the City's tax abatement agreements.
For a discussion of how the various exemptions described above are applied by the City, See "TAX INFORMATION — City
Application of Property Tax Code" herein.
PUBLIC HEARING AND MAINTENANCE AND OPERATION TAX RATE LIMITATIONS ... The Following terms as used in this section
have the meanings provided below:
"adjusted" means lost values are not included in the calculation of the prior year's taxes and new values are not included in the
current year's taxable values.
16
"de minimis rate" means the maintenance and operations tax rate that will produce the prior year's total maintenance and
operations tax levy (adjusted) from the current year's values (adjusted), plus the rate that produces an additional $500,000 in tax
revenue when applied to the current year's taxable value, plus the debt service tax rate.
"no -new -revenue tax rate" means the combined maintenance and operations tax rate and debt service tax rate that will produce
the prior year's total tax levy (adjusted) from the current year's total taxable values (adjusted).
"special taxing unit" means a city for which the maintenance and operations tax rate proposed for the current tax year is 2.5 cents
or less per $100 of taxable value.
"unused increment rate" means the cumulative difference between a city's voter -approval tax rate and its actual tax rate for each
of the tax years 2020 through 2022, which may be applied to a city's tax rate in tax years 2021 through 2023 without impacting
the voter -approval tax rate.
"voter -approval tax rate" means the maintenance and operations tax rate that will produce the prior year's total maintenance and
operations tax levy (adjusted) from the current year's values (adjusted) multiplied by 1.035, plus the debt service tax rate, plus
the "unused increment rate".
The City's tax rate consists of two components: (1) a rate for funding of maintenance and operations expenditures in the current
year (the "maintenance and operations tax rate"), and (2) a rate for funding debt service in the current year (the "debt service tax
rate"). Under State law, the assessor for the City must submit an appraisal roll showing the total appraised, assessed, and taxable
values of all property in the City to the City Council by August 1 or as soon as practicable thereafter.
A city must annually calculate its "voter -approval tax rate" and "no -new -revenue tax rate" (as such terms are defined above) in
accordance with forms prescribed by the State Comptroller and provide notice of such rates to each owner of taxable property
within the city and the county tax assessor -collector for each county in which all or part of the city is located. A city must adopt a
tax rate before the later of September 30 or the 60th day after receipt of the certified appraisal roll, except that a tax rate that
exceeds the voter -approval tax rate must be adopted not later than the 71st day before the next occurring November uniform
election date. If a city fails to timely adopt a tax rate, the tax rate is statutorily set as the lower of the no -new -revenue tax rate for
the current tax year or the tax rate adopted by the city for the preceding tax year.
As described below, the Property Tax Code provides that if a city adopts a tax rate that exceeds its voter -approval tax rate or, in
certain cases, its "de minimis rate", an election must be held to determine whether or not to reduce the adopted tax rate to the
voter -approval tax rate.
A city may not adopt a tax rate that exceeds the lower of the voter -approval tax rate or the no -new -revenue tax rate until each
appraisal district in which such city participates has delivered notice to each taxpayer of the estimated total amount of property
taxes owed and the city has held a public hearing on the proposed tax increase.
For cities with a population of 30,000 or more as of the most recent federal decennial census, if the adopted tax rate for any tax
year exceeds the voter -approval tax rate, that city must conduct an election on the next occurring November uniform election date
to determine whether or not to reduce the adopted tax rate to the voter -approval tax rate.
For cities with a population less than 30,000 as of the most recent federal decennial census, if the adopted tax rate for any tax
year exceeds the greater of (i) the voter -approval tax rate or (ii) the de minimis rate, the city must conduct an election on the next
occurring November uniform election date to determine whether or not to reduce the adopted tax rate to the voter -approval tax
rate. However, for any tax year during which a city has a population of less than 30,000 as of the most recent federal decennial
census and does not qualify as a special taxing unit, if a city's adopted tax rate is equal to or less than the de minimis rate but
greater than both (a) the no -new -revenue tax rate, multiplied by 1.08, plus the debt service tax rate or (b) the city's voter -approval
tax rate, then a valid petition signed by at least three percent of the registered voters in the city would require that an election be
held to determine whether or not to reduce the adopted tax rate to the voter -approval tax rate.
Any city located at least partly within an area declared a disaster area by the Governor of the State or the President of the United
States during the current year may calculate its "voter -approval tax rate" using a 1.08 multiplier, instead of 1.035, until the earlier
of (i) the second tax year in which such city's total taxable appraised value exceeds the taxable appraised value on January 1 of
the year the disaster occurred, or (ii) the third tax year after the tax year in which the disaster occurred.
State law provides cities and counties in the State the option of assessing a maximum one-half percent (1/2%) sales and use tax
on retail sales of taxable items for the purpose of reducing its ad valorem taxes, if approved by a majority of the voters in a local
option election. If the additional sales and use tax for ad valorem tax reduction is approved and levied, the no -new -revenue tan
rate and voter -approval tax rate must be reduced by the amount of the estimated sales tax revenues to be generated in the current
tax year.
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The calculations of the no -new -revenue tax rate and voter -approval tax rate do not limit or impact the City's ability to set a debt
service tax rate in each year sufficient to pay debt service on all of the City's tax -supported debt obligations, including the
Certificates.
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.
ISSUER AND TAx PAYER REMEDIES ... Under certain circumstances, the City and its taxpayers may appeal the determinations of
the Appraisal Districts by timely initiating a protest with the Appraisal Review Board. Additionally, taxing units such as the City
may bring suit against the Appraisal Districts to compel compliance with the Property Tax Code.
Owners of certain property with a taxable value of at least $50 million and situated in a county with a population of one million
or more as of the most recent federal decennial census may additionally protest the determinations of appraisal district directly to
a three -member special panel of the appraisal review board, selected by a State district judge, consisting of highly qualified
professionals in the field of property tax appraisal.
The Property Tax Code sets forth notice and hearing procedures for certain tax rate increases by the City and provides for
taxpayer referenda that could result in the repeal of certain tax increases (See "— Public Hearing and Maintenance and Operation
Tax Rate Limitations".) The Property Tax Code also establishes a procedure for notice to property owners of reappraisals
reflecting increased property value, appraisals which are higher than renditions, and appraisals of property not previously on an
appraisal roll.
The foregoing sections represents the City's current understanding of the recently adopted Senate Bill 2, however the City cannot
represent at this time what impact such legislation may have on the City. The City may revise and update this information as
more information about Senate Bill 2 and its specific impact on the City becomes available.
ISSUER'S RIGHTS IN THE EVENT of TAx DELINQUENCIES ... Taxes levied by the City are a personal obligation of the owner of
the property as of January 1 of the year for which the tax is imposed. On January 1 of each year, a tax lien attaches to property to
secure the payment of all State and local taxes, penalties, and interest ultimately imposed for the year on the property. The lien
exists in favor of the State and each local taxing unit, including the City, having power to tax the property. Personal property,
under certain circumstances, is subject to seizure and sale for the payment of delinquent taxes. At any time after taxes on property
become delinquent, the City may file suit to foreclose the lien securing payment of the tax, to enforce personal liability for the
tax, or both. In filing a suit to foreclose a tax lien on real property, the City must join other taxing units that have claims for
delinquent taxes against all or part of the same property. Collection of delinquent taxes may be adversely affected by the amount
of taxes owed to other taxing units, by the effects of market conditions on the foreclosure sale price, by taxpayer redemption
rights (a taxpayer may redeem property within two (2) years after the purchaser's deed issued at the foreclosure sale is filed in the
county records) or by bankruptcy proceedings which restrict the collection of taxpayer debts. Federal bankruptcy law provides
that an automatic stay of actions 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.
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 one -percent (1%) for each month or portion of a month
the tax remains unpaid. A delinquent tax continues to incur interest as long as the tax remains unpaid, regardless of whether a
judgment for the delinquent tax has been rendered. The purpose of imposing such interest is to compensate the taxing unit for
revenue lost because of the delinquency. In addition, if an account is delinquent in July, an attorney's collection fee of up to 20%
may be added to the total tax penalty and interest charge. Under certain circumstances, taxes which become delinquent on the
homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed.
In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts
due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law
provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the
18
filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents
liens for post -petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting
the stay is obtained from the bankruptcy court. In many cases post -petition taxes are paid as an administrative expense of the
estate in bankruptcy or by order of the bankruptcy court.
CITY APPLICATION OF TAx CODE ... The City grants an exemption to the market value of the residence homestead of persons
65 years of age or older of $75,000; the disabled are granted an exemption of $10,000.
The City has granted an additional exemption of 20% of the appraised value of residence homesteads with a minimum exemption
of $5,000.
The City has not adopted the tax freeze for citizens who are disabled or are 65 years of age or older, which became a local option
and subject to local referendum on January 1, 2004.
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; does not tax lease value on personal use vehicles; 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 tax goods -in -transit.
The City does not collect the additional one-half cent sales tax for reduction of ad valorem taxes.
See Table 1 for a listing of the amounts of the exemptions described above.
TAx ABATEMENT POLICY ... The City does not have a tax abatement policy nor has it granted any tax abatements.
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TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT
2022/23 Market Valuation Established by Tarrant, Denton and Dallas Appraisal Districts
Less Exemptions/Reductions at 100% Market Value:
Residence Homestead/Cap Loss Exemptions
Over 65 Years of Age
Disabled Exemptions
Veterans Exemptions
Solar/Wind Power Exemptions
Freeport Exemptions
Productivity Loss
Totally Exempt Property
Nominal Value Reductions
Pollution Control
Inventory
2022/23 Certified Net Taxable Assessed Valuation
Plus Minimum Value of Protests (1)
2022/23 Total Net Taxable Assessed Valuation (1)
2022/23 Incremental Taxable Assessed Value of Real Property within Reinvestment Zone Number One
2022/23 Incremental Taxable Assessed Value of Real Property within Reinvestment Zone Number Two
2022/23 Taxable Assessed Valuation available for General Fund Obligations and Debt of City
City Funded Debt Payable from Ad Valorem Taxes
General Obligation Bonds (as of 12-1-22)
Certificates of Obligation (as of 12-1-22)
Contractual Obligations (as of 12-1-22)
The Certificates
Funded Debt Payable from Ad Valorem Taxes
Less Self -Supporting Debt:
Combination Tax and Tax Increment Reinvestment Zone No. 2
Revenue Certificates of Obligation"'
Hotel Occupancy Tax System (4)
Waterworks and Sewer System (5)
Net Funded Debt Payable From Ad Valorem Taxes
$ 15,475,613,110
$ 791,235,405
238,865,765
3,277,642
19,742,178
69,726
104,989,283
41,991,375
2,706,159,293
413,400
20,556
1,130,754,381 (5,037,519,004)
$ 10,438,094,106
803,052,068
$ 11,241,146,174
672,595,598
304,947,479
$ 10,263,603,097
$ 74,180,000
62,930,000
760,000
13,720,000 c2)
$ 151,590,000
$ 8,480,000
3,825,000
6,970,000
Interest and Sinking Fund as of September 30, 2022
Ratio Total Funded Debt to Taxable Assessed Valuation............................................................... .
2023 Estimated Population - 53,985
Per Capita Taxable Assessed Valuation - $193,352
Per Capita Total Funded Debt - $2,808
$ 132,315,000
$ 7,141,619
1.45%
(1) Includes captured values for Incremental Taxable Assessed Value of Real Property within Reinvestment Zones Number One
and Two.
(2) Preliminary, subject to change.
(3) The self-supporting amount is a projection of debt by the City based on actual historical payments from Zone Two Funds.
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 with ad valorem taxes.
(4) Repayment of the debt shown is provided from revenues of the Hotel Occupancy Tax. The amount of self-supporting debt
is based on the percentages of revenue support as shown in Table 10. In the event the payments are not made from Fund
revenues, the City will be required to assess an ad valorem tax in an amount sufficient to make such payments.
(5) Repayment of the debt shown is provided from revenues of the Waterworks and Sewer System. The amount of self-
supporting debt is based on the percentages of revenue support as shown in Table 10. In the event the payments are not
made from Fund revenues, the City will be required to assess an ad valorem tax in an amount sufficient to make such
payments.
20
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY
Category
Real, Residential, Single -Family
Real, Residential, Multi -Family
Real, Vacant Lots Tracts
Real, Acreage (Land Only)
Real, Farm and Ranch Improvements
Real, Commercial
Real, Industrial
Real, Oil, Gas and Mineral Reserve
Real and Tangible Personal, Utilities
Real, Mobile Homes
Tangible Personal, Business
Tangible Personal, Commercial
Tangible Personal, Industrial
Tangible Personal, Mobile Homes
Tangible Personal, Other
Real Property, Inventory
Personal Property, Special Inventory
Total Appraised Value Before Exemptions
Adjustments
Less: Total Exemption/Reductions
Plus: Minimum Value of Protests
Taxable Assessed Value
Category
Real, Residential, Single -Family
Real, Residential, Multi -Family
Real, Vacant Lots Tracts
Real, Acreage (Land Only)
Real, Farm and Ranch Improvements
Real, Commercial
Real, Industrial
Real and Tangible Personal, Utilities
Tangible Personal, Commercial
Tangible Personal, Industrial
Tangible Personal, Other
Real Property, Inventory
Total Appraised Value Before Exemptions
Adjustments
Less: Total Exemption/Reductions
Plus: Minimum Value of Protests
Taxable Assessed Value
Taxable Appraised Value for Fiscal Year Ended September 30,
2023 2022 2021
% of
Amount
Total
Amount
$ 4,899,417,752
31.66%
$ 4,590,109,729
1,898,089,392
12.27%
1,606,960,904
847,681,903
5.48%
858,753,890
496,483
0.00%
41,158,205
3,353,758
0.02%
2,963,838
4,516,067,712
29.18%
4,404,835,821
70,713,571
0.46%
64,408,063
4,776,940
0.03%
1,326,510
132,370,775
0.86%
151,491,516
4,915,809
0.03%
-
-
0.00%
2,819,444,651
18.22%
2,777,950,420
65,889,432
0.43%
58,250,549
-
0.00%
4,687,312
-
0.00%
83,800
7,143,150
0.05%
156,032,423
205,251,782
1.33%
-
$ 15,475,613,110
100.00%
$ 14,719,012,980
(5,037,519,004)
(4,183,134,996)
803,052,068
364,355,922
$ 11,241,146,174
$ 10,900,233,906
Taxable Appraised Value for
Fiscal Year Ended September 30,
2020 2019
Amount
$ 4,183,370,567
1,324,646,898
113,472,550
889,270
3,041,597
2,762,198,923
37,372,913
143,983,795
2,420,322,834
79,407,984
147,765
138,032,289
$ 11,212,960,087
(311,839,343)
(1,927,403,569)
804,366,825
$ 9,778,084,000
% of
Total
37.31 %
11.81%
1.01 %
0.01%
0.03%
24.63%
0.33%
1.28%
21.59%
0.71%
0.00%
1.23%
100.00%
Amount
$ 3,838,301,674
1,181,804,413
104,862,039
889,756
3,294,293
2,435,306,275
35,563,770
156,360,525
2,368,546,265
57,626,211
141,345,918
2,301,400
$ 10,332,099,800
(266,653,412)
(1,601,787,897)
542,738,509
$ 9,006,397,000
% of
Total
31.18%
10.92%
5.83%
0.28%
0.02%
29.93%
0.44%
0.01%
1.03%
0.00%
0.00%
18.87%
0.40%
0.03%
0.00%
1.06%
0.00%
100.00%
% of
Total
37.15%
11.44%
1.01 %
0.01%
0.03%
23.57%
0.34%
1.51%
22.92%
0.56%
1.37%
0.02%
100.00%
Amount
$ 4,055,852,478
1,462,256,277
889,073,802
285,889
2,245,101
4,522,990,402
68,359,881
1,251,440
136,163,131
3,032,443,149
21,899,049
5,058,482
5,389,469
160,229,980
$ 14,363,498,530
(181,316,322)
(4,871,657,343)
916,027,135
$ 10,226,552,000
% of
Total
28.24%
10.18%
6.19%
0.00%
0.02%
31.49%
0.48%
0.01%
0.95%
0.00%
0.00%
21.11%
0.15%
0.04%
0.04%
1.12%
0.00%
100.00%
NOTE: Valuations shown are certified taxable assessed values reported by the Tarrant, Denton and Dallas Appraisal Districts to
the State Controller of Public Accounts. Certified values are subject to change throughout the year as contested values are
resolved and the Appraisal District updates records.
The Taxable Assessed Values include the tax incremental values within Reinvestment Zone Number One and Reinvestment Zone
Number Two. The property taxes levied on such tax incremental values are not available for the City's general use.
21
TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY
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 (3)
Per Capita
of Year
Valuation
Capita
2018
52,4900)
$ 9,778,084,000
$ 186,285
$ 149,818,143
1.53%
$2,854
2019
55,281
$ 9,006,397,000
$ 162,920
$ 160,052,553
1.78%
$ 2,895
2020
50,750)
9,778,084,000
192,649
147,520,000
1.51%
2,906
2021
50,87il'
10,226,552,000
201,025
149,285,000
1.46%
2,935
2022
53,979(2)
10,900,233,906
201,935
137,870,000
1.26%
2,554
2023
53,985(2)
11,241,146,174
208,227
140,945,000 (4)
1.25%
2,611
(1) Source: United States Census data.
(2) The City of Grapevine.
(3) Source: The Appraisal Districts. The Taxable Assessed Values include the tax incremental values within Reinvestment
Zone Number One and Reinvestment Zone Number Two, and the property taxes levied on such tax incremental values are
not available for the City's general use.
(4) Projected, includes the Certificates and self-supporting debt. Preliminary, subject to change.
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
2019 $ 0.289271 $ 0.130614
$ 0.158657 $ 26,058,000
99.54%
99.54%
2020 0.284271 0.141579
0.142692 27,796,000
99.05%
99.05%
2021 0.282601 0.143476
0.139125 28,136,000
99.22%
99.30%
2022 0.271800 0.140400
0.131400 29,114,949
99.43% ...
99.43%
2023 0.271775 0.143681
0.128094 29,897,846
In Process of Collection
(1) Preliminary information provided by City staff.
TABLE 5 - TEN LARGEST TAXPAYERS
2022/23
% of Total
Taxable
Taxable
Assessed
Assessed
Name of Taxpayer
Nature of Property
Valuation
Valuation
American Airlines Inc./Envoy Air Inc.
Commercial Airline
$ 557,205,459
4.96%
Opryland Hotel
Hotel
317,539,054
2.82%
Grapevine Mills Mall Ltd. Partnership
Regional Shopping Mall
236,257,000
2.10%
Fund Riverwalk LLC
Apartments
130,400,000
1.16%
Great Wolf Lodge Grapevine LLC
Hotel
128,244,310
1.14%
WMCI Dallas IC LLC
Commercial Building
101,700,000
0.90%
Silver Oaks LP
Apartments
97,800,000
0.87%
GGIF Grapevine LP
Apartments
94,208,071
0.84%
Oncor Electric Delivery Co.
Electric Service
93,009,180
0.83%
Jefferson Silverlake LLC
Apartments
90,500,000
0.81%
$ 1,846,863,074
16.43%
22
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. However, 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. Administratively,
the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all general
obligation debt, based on 90% tax collection factor (see "THE CERTIFICATES — Tax Rate Limitation").
TABLE 6 - TAX ADEQUACY (t)
2023 Principal and Interest Requirements $ 11,285,345
$0.1015 Tax Rate at 99.00% Collection Produces $ 11,295,666
Average Annual Principal and Interest Requirements, 2023 - 2042 $ 8,125,792
$0.0731 Tax Rate at 99.00% Collection Produces $ 8,135,105
Maximum Principal and Interest Requirements, 2026 $ 12,030,855
$0.1082 Tax Rate at 99.00% Collection Produces $ 12,041,291
(1) Includes the Certificates. Excludes self-supporting debt. See "Table 1 — Valuation, Exemptions and General Obligation Debt"
and "Table 10 — Computation of Self -Supporting Debt". Preliminary, subject to change.
TABLE 7 - ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities
on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures.
This statement of direct and estimated overlapping ad valorem tax debt ("Tax Debt") was developed from information contained
in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the
City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon
such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt
since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt,
the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City.
Taxing Jurisdiction
City of Grapevine
Carroll Independent School District
Coppell Independent School District
Dallas County
Dallas County Community College District
Dallas County Hospital District
Denton County
Grapevine-Colleyville Independent School District
Northwest Independent School District
Tarrant County
Tarrant County College District
Tarrant County Hospital District
Total Direct and Overlapping Funded Debt
2022/23
Net
City's
Taxable
2022/23
Total
Estimated
Overlapping
Assessed
Tax
Funded
%
Funded Debt
Value
Rate
Debt
Applicable
9/30/2022
$ 10,438,094,106
$ 0.271775
$ 132,315,000 ���
100.00%
$ 132,315,000
10,738,234,373
1.218800
311,395,000
5.63%
17,531,539
15,537,196,829
1.217300
335,954,846
2.25%
7,558,984
332,456,203,815
0.217946
236,605,000
0.10%
236,605
345,099,767,532
0.115899
110,835,000
0.10%
110,835
337,462,373,563
0,235800
559,905,000
0.10%
559,905
146,706,278,154
0,217543
611,835,000
0.01%
61,184
17,789,021,158
1.130800
311,711,018
55.51%
173,030,786
30,837,766,997
1.274600
1,353,929,040
0.17%
2,301,679
248,369,636,349
0.224000
404,360,000
5.19%
20,986,284
249,496,147,427
0.130170
610,315,000
5.19%
31,675,349
248,562,603,261
0.224429
12,825,000
5.19%
665,618
$ 387,033,766
Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation .............................................. 3.71 %
Per Capita Overlapping Funded Debt.............................................................................. $ 7,169.28
(1) Includes the Certificates. Excludes the self-supporting debt. Preliminary, subject to change.
23
N
A
TABLE 8 - GENERAL OBLIGATION DEBT .SERVICE REQUIREMENTS
Fiscal
Less W&S
Less TIF #2
Less Hotel
Total Debt
Year
Total
Self-
Self-
Occupancy Tax
Less Self-
% of
Ended
Outstanding Debt ���
The Certificates (2)
Debt
Supporting
Supporting
Self -Supporting
Supporting
Principal
9/30
Principal
Interest
Principal
Interest
Requirements
Requirements
Requirements
Requirements
Requirements
Retired
2023
$ 10,645,000
$ 3,816,874
$ -
$ 439,778
$ 14,901,652
$ 661,531
$ 2,295,350
$ 659,425
$ 11,285,345
2024
10,765,000
3,404,705
825,000
655,956
15,650,661
659,556
2,300,850
659,400
12,030,855
2025
11,160,000
3,064,042
750,000
616,581
15,590,624
666,056
2,308,000
658,625
11,957,942
2026
11,560,000
2,724,680
790,000
578,081
15,652,761
670,756
2,308,050
667,650
12,006,305
2027
9,250,000
2,385,236
835,000
537,456
13,007,693
667,456
-
665,725
11,674,511
37.32%
2028
9,160,000
2,128,557
880,000
494,581
12,663,139
667,256
-
509,600
11,486,282
2029
9,460,000
1,872,275
800,000
452,581
12,584,856
660,694
-
510,000
11,414,162
2030
9,235,000
1,627,786
840,000
411,581
12,114,368
671,719
-
11,442,649
2031
9,300,000
1,401,867
880,000
368,581
11,950,449
660,381
-
-
11,290,067
2032
9,555,000
1,182,927
925,000
323,456
11,986,384
662,831
-
-
11,323,552
70.99%
2033
9,770,000
959,786
975,000
275,956
11,980,742
659,375
-
-
11,321,367
2034
5,160,000
764,806
875,000
229,706
7,029,512
664,922
-
-
6,364,591
2035
5,305,000
603,178
920,000
184,831
7,013,009
650,000
-
-
6,363,009
2036
4,770,000
448,769
425,000
151,206
5,794,975
-
-
-
5,794,975
2037
4,910,000
298,809
445,000
130,847
5,784,656
-
-
-
5,784,656
93.13%
2038
4,455,000
153,013
465,000
110,941
5,183,953
-
-
-
5,183,953
2039
2,130,000
54,450
485,000
89,553
2,759,003
-
-
-
2,759,003
2040
635,000
19,250
510,000
66,544
1,230,794
-
-
-
1,230,794
2041
645,000
6,450
535,000
41,375
1,227,825
-
-
-
1,227,825
2042
-
-
560,000
14,000
574,000
574,000
100.00%
$ 137,870,000
$ 26,917,462
$ 13,720,000
$ 6,173,594
$ 184,681,055
$ 8,622,535
$ 9,212,250
$ 4,330,425
$ 162,515,845
(1) "Outstanding Debt" does not include lease/purchase obligations, includes self-supporting debt that is secured by a pledge of ad valorem taxes. Includes the $935,000 of principal that the
City has approved for early optional redemption on August 15, 2023.
(2) Average life of the issue - 9.212 years. Interest on the Certificates has been calculated at the average rate of 4.32% for purposes of illustration. Preliminary, subject to change.
TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION
Tax Supported Debt Service Requirements, Fiscal Year Ending 9/30/2023 ............................. $ 11,285,345
Interest and Sinking Fund Balance as of 9/30/2022.................................. $ 7,560,480
Interest and Sinking Fund Tax Levy ............................................. 13,101,524
Penalty and Interest.......................................................... 220,000 20,882,004
Estimated Balance,9/30/2023............................................................... $ 9,596,659
(1) Excludes self-supporting debt.
TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT
Tax Increment Reinvestment Zone (TIF #2)
Revenue Available for Debt Service fromTax Increment Reinvestment Zone #2, Fiscal Year Ended 9-30-21 ........ $ 6,263,301
Requirements for Tax Increment Reinvestment Zone Obligations, 2022 Fiscal Year ............................ 2,295,100
Projected Fund Balance,9-30-22...................................................................$ 3,968,201
Percentage of Tax Increment Reinvestment Zone Revenue Obligations Self -Supporting ......................... 100.00%
Hotel Occunancv Tax Fund
Revenue Available for Debt Service from Hotel Occupancy Tax Fund, Fiscal Year Ended 9-30-21................ $ 18,176,518
Less: Revenue Bond Requirements, 2022 Fiscal Year ................................................... -
Balance Available for Other Purposes............................................................... $ 18,176,518
Hotel Occupancy Tax Fund General Obligation Bond Requirements, 2022 Fiscal Year ......................... 658,675
Balance.......................................................................................$ 17,517,843
Percentage of Hotel Occupancy Tax Fund Obligations, Self -Supporting ..................................... 100.00%
Waterworks and Sewer Svstem Revenue Fund
Revenue Available for Debt Service from Waterworks and Sewer System Fund, Fiscal Year Ended 9-30-21 ........ $ 5,264,633
Less: Revenue Bond Requirements, 2022 Fiscal Year ................................................... -
Balance Available for Other Purposes............................................................... $ 5,264,633
System General Obligation Bond Requirements, 2022 Fiscal Year ......................................... 666,688
Balance.......................................................................................$ 4,597,945
Percentage of Waterworks and Sewer System Fund, Self -Supporting ....................................... 100.00%
TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
The City does not have any authorized but unissued general obligation debt.
ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ... The City does not anticipate the issuance of additional General
Obligation debt within the next 12 months.
TABLE 12 - OTHER OBLIGATIONS
The City has no unfunded debt outstanding as of September 30, 2021.
PENSION FUND
The City of Grapevine participates as one of 895 plans in the defined benefit cash- balance plan administered by the Texas
Municipal Retirement System (TMRS). TMRS is a statewide public retirement plan created by the State of Texas and
administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent
multiple -employer retirement system for employees of Texas participating cities. The TMRS Act places the general
administration and management of TMRS with a six -member, Governor -appointed Board of Trustees; however, TMRS is not
fiscally dependent on the State of Texas. TMRS issues a publicly available Annual Comprehensive Financial Report (Annual
Report) that can be obtained at www.tmrs.com.
All eligible employees of the city are required to participate in TMRS.
Benefits Provided ... TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing
body of the city, within the options available in the state statutes governing TMRS.
25
At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the city -financed
monetary credits with interest. Members may choose to receive their retirement benefit in one of seven payment options. Member
may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36
monthly payments, which cannot exceed 75% of the member's deposits and interest.
Starting in 2005, the City of Grapevine granted an annually repeating (automatic) basis monetary credit referred to as an updated
service credit (USC) which is a theoretical amount which considers salary increases or plan improvements. If at any time during
their career an employee earns a USC, this amount remains in their account earning interest until retirement. At retirement, the
benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer match plus
employer financed monetary credits such as USC, with interest were used to purchase an annuity. Additionally, initiated in 1998,
the City provided on an annually repeating (automatic) basis cost of living adjustments (COLA) for retirees equal to a percentage
of the change in the consumer price index (CPI).
The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing
TMRS. Plan provisions for the City were as follows:
Employee deposit rate
7.0%
Matching ratio (city to employee)
2 to 1
Years required for vesting
5
Service retirement eligibility
20 years to any age, or 5
(expressed as age/years of service)
years at age 60 and above
Updated Service Credit
100% repeating, transfers
Annutiy Increase (to retirees)
70% of CPI, repeating
Emplovees Covered by Benefit Terms ... At the December 31, 2020 valuation and measurement date, the following employees
were covered by the benefit terms:
Inactive Employees or Beneficiaries Currently Receving Benefits 454
Inactive Employees Entitled to But Not Yet Receving Benefits 285
Active Employees 592
1,331
Contributions ... The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and
the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the city. Under the
state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age
Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of
benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.
Employees for the City were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution
rates for the City was 18.53 and 18.58% in calendar years 2020 and 2019, respectively. The city's contributions to TMRS for the
year ended September 30, 2020, were $8,848,797, and were equal to the required contributions.
Net Pension Liabilitv ... The city's Net Pension Liability (NPL) was measured as of December 31, 2019, and the Total Pension
Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date.
Actuarial Assumptions ... The Total Pension Liability in the December 31, 2020 actuarial valuation was determined using the
following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 2.75% per year
Investment Rate of Return 6.75%
Salary increases were based on a service -related table. Mortality rates for active members, retirees, and beneficiaries were based
on the gender distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment with male rates multiplied by
109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for
future mortality improvements. For disabled annuitants, the gender -distinct RP2000 Combined Healthy Mortality Tables with
Blue Collar Adjustment are used with males' rates multiplied by 109% and female rates multiplied by 103% with a 3-year set -
forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger
members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality
improvements subject to the 3% floor.
26
The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-
year period from December 31, 2014 to December 31, 2018. They were adopted in 2019 and first used in the December 31, 2019
actuarial valuation. The post -retirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based
on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. In conjunction with
these changes first used in the December 31, 2013 valuation, the System adopted the Entry Age Normal actuarial cost method
and a one-time change to the amortization policy. Plan assets are managed on a total return basis with an emphasis on both
capital appreciation as well as the production of income, to satisfy the short-term and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best
estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation)
are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In
determining their best estimate of a recommended investment return assumption under the various alternative asset allocation
portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and
(2) the geometric mean (conservative) with an adjustment for time (aggressive). The target allocation and best estimates of
arithmetic real rates return for each major asset class in fiscal year 2020 are summarized in the following table:
Long -Term
Expected Real
Target
Rate of Return
Asset Class
Allocation
(Arithmetic)
Global Equity
30.0%
5.30%
Core Fixed Income
10.0%
1.25%
None -Core Fixed Income
20.0%
4.14%
Real Return
10.0%
3.85%
Real Estate
10.0%
4.00%
Absolute Return
10.0%
3.48%
Private Equity
10.0%
7.75%
Total
100.0%
Discount Rate
The discount rate used to measure the total pension liability was 6.75%. The projection of cash flows used to determine the
discount rate assumed that employee and employer contributions will be made at the rates specified in the statute. Based on that
assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments
of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was
applied to all periods of projected benefit payments to determine the total pension liability.
Balance at 12/31/2019
Changes for the year:
Service cost
Interest
Difference between expected and actual experience
Changes of assumptions
Contributions - employer
Contributions - employee
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense
Other changes
Net changes
Balance at 12/31/2019
Increase (Decrease)
Total Pension
Plan Fiduciary
Net Pension
Liability
Net Position
Liability
(a)
(b)
(a) - (b)
$ 303,673,126
$ 267,067,797
$ 36,605,329
8,865,558
-
$ 8,865,558
20,359,202
-
20,359,202
(1,320,295)
-
(1,320,295)
-
8,775,571
(8,775,571)
-
3,315,113
(3,315,113)
-
20,280,650
(20,280,650)
(12,976,187)
(12,976,187)
-
-
(131,176)
131,176
-
(5,118)
5,118
14,928,278
19,258,853
(4,330,575)
$ 318,601,404
$ 286,326,650
$ 32,274,754
27
The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as well as what the City's
net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point
higher than the current rate:
City's Net Pension Liability
Pension Plan Fiduciary Net Position
1%Decrease
Discount
1%Increase
in Discount
Rate
in Discount
Rate (5.75%)
(6.75%)
Rate (7.75%)
$ 76,451,912
$ 32,274,754
$ (4,109,876)
Detailed information about the pension plan's Fiduciary Net Position is available in a separately issued TMRS financial report.
The report may be obtained at www.tmrs.com.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
For the year ended September 30, 2020, the City recognized pension expense of $4,473,755, which is allocated to the
governmental and business -type activities in the amount of $4,081,549 and $392,206, respectively.
At September 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to pensions
from the following sources:
Changes for the year:
Difference between expected and actual economic experience
Changes in actuarial assumptions
Difference between projected and actual investment earnings
Contributions subsequent to the measurement date
Total
Deferred Outflows Deferred Inflows
of Resources
371,941
117,323
6,863,006
7,352,270
of Resources
$ 1,584,509
7,590,970
$ 9,175,479
$6,863,006 reported as deferred outflows of resources related to pension resulting from contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2021. Other
amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as
follows:
For the Year Ended
September 30,
2022
$ (3,287,695)
2023
(114,230)
2024
(4,653,924)
2025
(630,366)
Total
$ (8,686,215)
OTHER POSTEMPLOYMENT BENEFITS
The City provides certain health care and life insurance benefits through an agent, multiple -employer, defined benefit OPEB
plan, under City ordinance, for all full and part-time employees that meet eligibility requirements. Eligible individuals include
retired employees who have satisfied the requirement as defined by the Texas Municipal Retirement System and their dependents
that were covered prior to retirement. The requirement as defined by the Texas Municipal Retirement System is any age with 20
years of service or 5 years of service for age 60 and above. City Council members that serve three terms will be classified as
retired employees when they leave office.
Retirees pay premiums for coverage in the OPEB programs. There is not a maximum employer paid premium amount (capped
benefit). Active employees do not contribute to the retiree health care plan. Retirees are eligible for benefits immediately upon
retirement. If the employee returns to work for an employer that offers health coverage, they become ineligible for the City's plan
and cannot rejoin the City's health plan at a later date.
Benefits Provided
Retirees are eligible for medical, dental, vision, and prescription insurance until they become Medicare eligible. Retirees are also
eligible for a $20,000 life insurance policy. Once Medicare eligible, retirees are eligible for dental, vision, and life insurance
only. At that time, the City medical plan will no longer be available. The City supplements 70% of the premium to all retirees
who either (1) retire after the age of 65 or (2) are covered pre -Medicare in the retiree medical program. Spouses of retirees will
receive the City supplement if they have been on the plan for one year prior to retirement.
28
If an active employee passes away, the spouse and dependents will become eligible for retiree coverage if (1) the employee was
eligible for retirement as defined by the Texas Municipal Retirement System; and (2) the employee had dependent coverage at
the time of death. Coverage will continue under the plan if monthly retiree premiums are paid by the specified due date, until
dependents are no longer considered eligible dependents as defined by the plan, until the covered dependent becomes Medicare
eligible, or until a surviving spouse remarries.
For the fiscal year ended September 30, 2021, the City's contributions to the plan were $1,730,980 which was equal to benefit
payments.
The number of employees currently covered by the benefit terms is as follows:
Inactive Employees or Beneficiaries Currently Receving Benefits 238
Active Members 599
Total 837
Actuarial Methods and Assumptions
Significant methods and assumptions were as follows:
Actuarial Valuation Date 12/31/2020
Actuarial Cost Method Individual Entry Age Normal Cost Method
Discount Rate 2.04% as of December 31, 2020
Inflation Rate 2.50%
Salary Increases 3.50% to 11.50%, including inflation
Demographic Assumptions Based on the experience study covering the four-year period ending
December 31, 2018 as conducted for the Texas Municipal Retirement
System (TMRS)
Mortality For healthy retirees, the gender -distinct 2019 Municipal Retirees of Texas
mortality tables are used. The rates are projected on a fully generational
basis using the ultimate mortality improvement rates in the MP tables to
account for future mortality improvements
Participation Rates For health care coverage: 85% for retirees who are at least 50 years old at
retirement and 65% for retirees who are younger than 50 years old at
retirement; For life insurance: 85% regardless of age at retirement
Health Care Cost Trend Rates Pre-65 Medical: Initial rate of 7.00% declining to an ultimate rate of 4.25%
after 13 years;
Post-65 Medical Subsidy: Increases with inflation;
Dental 4.00%;
Vision 3.00%
Note: The Single Discount Rate changed from 2.95% as of December 31, 2019 to
2.04% as of December 31, 2020. The long -term investment return assumption
was changed from 6.75% to 6.25%.
Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the
valuation date and the pattern of sharing benefit costs between the City and its employees to that point. Actuarial calculations
reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial
accrued liabilities and the actuarial value of assets.
There is no separately issued audited benefit plan report available for the City's OPEB plan.
Discount Rate
A single discount rate of 2.04% was used to measure the total OPEB liability. This single discount rate was based on the
municipal bond rates as of the measurement date. The source of the municipal bond rate was fixed -income municipal bonds with
20 years to maturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index's "20-year Municipal
GO AA Index" based on the daily rate closest to but not later than the measurement date.
29
For the purpose of this valuation, the expected rate of return on OPEB plan investments is 6.25%.
Discount Rate Sensitivitv Analvsis
The following schedule shows the impact of the net OPEB liability if the discount rate used was 1% less than and 1% greater
than the discount rate that was used (2.95%) in measuring the net OPEB liability.
1%Decrease
Discount
1% Increase
in Discount
Rate
in Discount
Rate (1.04%)
(2.04%)
Rate (3.04%)
City's Net OPEB Liability $ 102,364,655
$ 88,107,329
$ 76,517,535
OPEB Liabilities, OPEB Expense, and Deferred Outflows ofResources Related to OPEBs
At September 30, 2021, the City reported a liability of $88,107,329 for its net OPEB liability. The net OPEB liability was
determined by an actuarial valuation as of December 31, 2020. For the year ended September 30, 2021, the City recognized
OPEB expense of $8,2087,067 which is allocated to governmental and business -type activities in the amounts of $7,381,757 and
$826,310, respectively. There were no changes of benefit terms that affected measurement of the net OPEB liability during the
measurement period.
Balance at 12/31/2019
Changes for the year:
Service cost
Interest
Difference between expected and actual experience
Changes of assumptions
Contributions - employer
Net investment income
Benefit payments
Administrative expense
Net changes
Balance at 12/31/2019
Increase (Decrease)
Total OPEB
Plan Fiduciary
Net OPEB
Liability
Net Position
Liability
(a)
(b)
(a) - (b)
$ 77,878,304
$ 2,271,736
$ 75,606,568
4,841,226
2,339,946
(3,113,851)
10,638,856
1,957,430
261,069
(1,957,430) (1,957,430)
- (13,083)
12,748,747 247,986
$ 90,627,051 $ 2,519,722
4,841,226
2,339,946
(3,113,851)
10,638,856
(1,957,430)
(261,069)
13,083
12,500,761
$ 88,107,329
Changes in assumptions and other inputs reflect a change in the discount rate from 2.95% to 2.04%. At September 30, 2021, the
City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Changes for the year:
Difference between expected and actual economic experience $ 94,471 $ 3,686,187
Changes in actuarial assumptions 15,863,118 4,975,339
Difference between projected and actual investment earnings - 138,242
Contributions subsequent to the measurement date 1,334,148 -
Total $ 17,291,737 $ 8,799,768
$1,334,148 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the
measurement date are due to benefit payments the City paid with own assets and will be recognized as a reduction of the net
OPEB liability for the year ending September 30, 2022.
Other amounts of the reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB
expense as follows:
For the Year Ended
September 30,
2022
$ 1,166,711
2023
1,172,606
2024
1,139,181
2025
695,405
2026
1,552,992
Thereafter
1,430,926
Total
$ 7,157,821
30
FINANCIAL INFORMATION
TABLE 13 — CHANGES IN NET POSITION (1)
Fiscal
Year Ended September 30,
Revenues:
2021
2020
2019
2018
2017
Proeram Revenues
Charges for Services
$
19,139,898
$
15,420,184
$
19,951,339
$
21,295,533
$
21,563,067
Operating Grants and Contributions
8,887,856
3,576,140
992,824
2,200,146
1,078,764
Capital Grants and Contributions
12,213,609
6,732,982
23,230,376
5,006,869
8,171,034
General Revenues
Property Taxes
34,037,464
33,160,755
30,848,837
28,561,385
26,027,260
Hotel Occupancy Taxes
12,625,773
11,721,385
20,767,302
19,875,456
18,800,663
Sales Taxes
56,914,190
51,111,959
59,297,844
56,029,012
53,853,888
Mixed Beverage Taxes
1,793,124
1,477,422
2,145,940
1,792,674
1,733,258
Franchise Fees
5,978,215
6,182,482
6,898,111
7,144,793
6,602,482
Investment Earnings
26,472
1,893,007
3,783,555
2,736,937
1,523,410
Miscellaneous
263,502
864,931
420,084
331,280
579,445
Gain (Loss) on Sale/Retirement
of Capital Assets
711,133
226,500
2,075,942
261,806
1,604,953
Total Revenues
$
152,591,236
$
132,367,747
$
170,412,154
$
145,235,891
$
141,538,224
Expenses:
General Government
$
20,933,648
$
21,449,315
$
18,382,135
$
19,230,968
$
20,417,359
Public Safety
38,778,212
41,527,731
38,471,701
35,954,134
35,650,701
Culture and Recreation
22,801,979
22,432,175
21,340,649
19,596,646
21,087,425
Public Works
15,786,659
18,875,598
17,929,564
16,825,724
16,585,032
Transportation
9,367,306
8,642,110
10,046,960
9,466,562
9,077,750
Economic Development
8,712,593
4,881,449
5,122,449
14,954,202
9,757,152
Tourism
17,559,893
16,982,374
23,886,464
21,561,351
20,506,911
Interest on Long -Term Debt
5,288,645
5,822,973
5,311,983
5,173,776
5,332,385
Total Expenses
$
139,228,935
$
140,613,725
$
140,491,905
$
142,763,363
$
138,414,715
Increase in Net Position
before Transfers
$
13,362,301
$
(8,245,978)
$
29,920,249
$
2,472,528
$
3,123,509
Transfers
406,616
5,888,820
6,950,707
3,019,894
3,199,377
Changes in Net Position
$
13,768,917
$
(2,357,158)
$
36,870,956
$
5,492,422
$
6,322,886
Net Position - October 1
272,492,323
275,545,490
237,943,782
262,262,744
240,766,155
Prior Period Adjustments
(3,358,000)
(696,009)
730,752
(29,811,384)
15,173,703
Net Position - September 30
$
282,903,240
$
272,492,323
$
275,545,490
$
237,943,782
$
262,262,744
(1) Includes Net Position for the City's governmental activities but excludes business -type activities.
31
TABLE 13A - GENERAL FUND REVENUES AND EXPENDITURE HISTORY
Fiscal Year Ended September 30,
Revenues
2021
2020
2019
2018
2017
Taxes (1)
$
49,764,146
$
46,193,029
$ 50,210,907
$ 48,305,242
$ 45,145,628
Licenses and Permits
1,459,940
1,344,611
1,969,000
1,603,621
1,883,200
Intergovernmental
3,988,244
326,563
380,269
313,451
246,229
Charges for Services
5,588,363
5,087,860
5,406,622
5,569,528
5,445,726
Fines and Forfeitures
933,618
1,012,037
1,509,299
1,564,586
1,775,990
Interest and Miscellaneous
480,070
691,993
732,074
737,941
814,901
Total Revenues
$
62,214,381
$
54,656,093
$ 60,208,171
$ 58,094,369
$ 55,311,674
Expenditures
General Government
$
17,575,948
$
17,399,113
$ 15,435,676
$ 16,181,883
$ 16,883,362
Public Safety
16,566,868
16,358,908
16,198,439
15,484,977
14,585,498
Culture and Recreation
14,218,244
14,080,930
13,299,784
12,283,748
12,555,064
Capital Outlay
85,576
734,516
264,387
109,711
148,957
Public Works
8,746,656
8,686,679
8,524,275
8,445,372
7,789,478
Debt Service
4,335
3,675
122,768
138,071
178,694
Total Expenditures
$
57,197,627
$
57,263,821
$ 53,845,329
$ 52,643,762
$ 52,141,053
Excess (Deficiency) of Revenues
Over Expenditures
$
5,016,754
$
(2,607,728)
$ 6,362,842
$
5,450,607
$
3,170,621
Other Financine Sources
Budgeted Transfers In
$
3,872,309
$
7,817,342
$ 3,907,798
$
3,973,143
$
3,925,937
Sale of Capital Assets
648,452
132,665
156,217
310,757
25,657
Insurance Recoveries
454,548
-
-
-
-
Issuance of Debt
-
42,374
Budgeted Transfers Out (2)
(9,983,504)
(7,515,828)
(12,276,630)
(8,454,200)
(7,461,000)
Total Transfers
$
(5,008,195)
$
476,553
$ (8,212,615)
$
(4,170,300)
$
(3,509,406)
Net Increase (Decrease)
$
8,559
$
(2,131,175)
$ (1,849,773)
$
1,280,307
$
(338,785)
Prior Period Adjustment
-
(589,801.00)
589,801.00
1,880,068
-
Beginning Fund Balance
11,574,295
14,295,271
15,555,243
12,394,868
12,733,653
Ending Fund Balance
$
11,582,854
$
11,574,295
$ 14,295,271
$
15,555,243
$
12,394,868
(1) Includes ad valorem property taxes, mixed beverage taxes, sales and use taxes, and franchise taxes.
(2) The interfund transfers are budgeted and planned to support expenditures of non -major governmental funds, primarily the City's
Quality of Life fund.
TABLE 14 - MUNICIPAL SALES TAX HISTORY
The City has adopted the Municipal Sales and Use Tax Act, Texas Tax Code, Chapter 321, which grants the City the power to
impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not
pledged to the payment of the 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
1%
% of
Equivalent of
Ended
Total
Ad Valorem
Ad Valorem
Per
9/30
Collected (1)
Tax Levy
Tax Rate
Capita
2018
$ 28,286,627
117.05%
$0.2893
$ 539
2019
29,863,646
114.60%
0.3316
540
2020
25,758,869
92.67%
0.2634
508
2021
28,590,889
101.62%
0.2796
562
2022
33,539,48312)
115.20%
0.3077
621
(1) Reflects general municipal sales tax rate only (1%), which does not include the cent levied for the City's Crime Control District
and cent for economic development. Pursuant to Chapter 505, Texas Local Government Code, as amended.
(2) Preliminary information provided by City staff.
32
FINANCIAL POLICIES
Basis of Accounting ... The accounting policies of the City conform to generally accepted accounting principles for governmental
entities as promulgated by the Government Accounting Standards Board. The accounting and financial reporting treatment applied
to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources
measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the combined
balance sheet. Operating statements of these funds present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
All proprietary and trust funds are accounted for on a flow of economic resources measurement focus. With this measurement focus,
all assets and all liabilities associated with the operation of these funds are included on the combined statement of net assets. Net
assets is segregated into net assets invested in capital assets, net of related debt, restricted net assets and uninvested net assets.
Proprietary fund -type operating statements present increases (revenues) and decreases (expenses) in net total net assets.
The modified accrual basis of accounting is used by all governmental funds types. Under the modified accrual basis of accounting
revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means
collectible within the current period of soon enough thereafter to be used to pay liabilities of the current period. Expenditures are
generally recorded when the related fund liability is incurred. However, principal of and interest on general long-term debt are
recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made
early in the following year. Major revenue sources which have been treated as susceptible to accrual under the modified basis of
accounting include property taxes, charges for services, intergovernmental revenues, and investment of idle funds.
The accrual basis of accounting is utilities by proprietary and trust funds. Under this method, revenue is recorded when earned and
expenses are recorded at the time liabilities are incurred.
Fund Balances ... Section B, Number 5.0 of the Grapevine Administrative Policy Manual establishes the fund balance reserve
policy to ensure fund availability for unforeseen emergencies that would severely impact the City's ability to pay for basic
operations and guarantee the payment of debt obligations. Any exceptions are to be noted at the time the budget is approved.
The emergency reserve is established at the following minimum levels:
• General Fund — 20% (72 days) of total current budgeted expenditures.
• Debt Service Fund — 20% (72 days) of total current budgeted net debt service expenditures.
• Convention & Visitors Fund — 16% (60 days) of total current budgeted expenditures.
• Utility Enterprise Fund — working capital reserves of 16% (60 days) of total budgeted expenses.
• Lake Enterprise Fund — working capital reserves of 25% (90 days) of total budgeted expenses.
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.
33
INVESTMENTS
The City invests its investable funds in investments authorized by State law in accordance with investment policies approved by the
City Council of the City. Both State law and the City's investment policies are subject to change.
LEGAL INVESTMENTS ... Under State law, the City is authorized to invest in: (1) obligations, including letters of credit, of the
United States or its agencies and instrumentalities, including the Federal Home Loan Banks; (2) direct obligations of the State or
its agencies and instrumentalities; (3) collateralized mortgage obligations issued by a federal agency or instrumentality of the
United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other
obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit
of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed
or insured by the Federal Deposit Insurance Corporation (the "FDIC") or by the explicit full faith and credit of the United States;
(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) interest -bearing banking deposits that are guaranteed or insured by the FDIC or the National Credit Union
Share Insurance Fund (the "NCUSIF") or their respective successors; (8) interest -bearing banking deposits, other than those
described in clause (7), that (i) are invested through a broker or institution with a main office or branch office in this state and
selected by the City in compliance with the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended
(the "PFIA"), (ii) the broker or institution arranges for the deposit of the funds in one or more federally insured depository
institutions, wherever located, for the City's account, (iii) the full amount of the principal and accrued interest of the banking
deposits is insured by the United States or an instrumentality of the United States, and (iv) the City appoints as its custodian of
the banking deposits, in compliance with the PFIA, the institution in clause (8)(i) above, a bank, or a broker -dealer; (9)
certificates of deposit and share certificates meeting the requirements of the PFIA (i) that are issued by an institution that has its
main office or a branch office in the State and are guaranteed or insured by the FDIC or the NCUSIF, or their respective
successors, or are secured as to principal by obligations described in clauses (1) through (8), above, or secured in accordance with
Chapter 2257, Texas Government Code, or in any other manner and amount provided by law for City deposits, or (ii) certificates
of deposit where (a) the funds are invested by the City through a broker or institution that has a main office or branch office in
the State and selected by the City in compliance with the PFIA, (b) the broker or institution arranges for the deposit of the funds
in one or more federally insured depository institutions, wherever located, for the account of the City, (c) the full amount of the
principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the
United States; and (d) the City appoints, in compliance with the PFIA, the institution in clause (9)(ii)(a) above, a bank, or broker -
dealer as custodian for the City with respect to the certificates of deposit; (10) fully collateralized repurchase agreements that
have a defined termination date, are secured by a combination of cash and obligations described by clause (1) above or clause
(12) below, which are pledged to the City, held in the City's name, and deposited at the time the investment is made with the City
or with a third party selected and approved by the City, and are placed through a primary government securities dealer, as defined
by the Federal Reserve, or a financial institution doing business in the State; (11) certain bankers' acceptances with a stated
maturity of 270 days or less, if the short-term obligations of the accepting bank, or of the holding company of which the bank is
the largest subsidiary, are rated not less than A-1 or P-1 or the equivalent by at least one nationally recognized credit rating
agency; (12) commercial paper with a stated maturity of 365 days or less that is rated at least A-1 or P-1 or an equivalent by
either (i) two nationally recognized credit rating agencies, or (ii) one nationally recognized credit rating agency if the commercial
paper is fully secured by an irrevocable letter of credit issued by a United States or state bank; (13) no-load money market mutual
funds registered with and regulated by the SEC that provide the City with a prospectus and other information required by the
Securities Exchange Act of 1934 or the Investment Company Act of 1940 and complies with SEC Rule 2a-7; (14) no-load mutual
funds that are registered and regulated by the SEC that have a weighted maturity of less than two years and either (i) have a
duration of one year or more and are invested exclusively in obligations approved in this paragraph, or (ii) have a duration of less
than one year and the investment portfolio is limited to investment grade securities, excluding asset backed securities; (15)
guaranteed investment contracts that have a defined termination date and are secured by obligations described in clause (1),
excluding obligations which the City is explicitly prohibited from investing in, and in an amount at least equal to the amount of
bond proceeds invested under such contract; and (16) securities lending programs if (i) the securities loaned under the program
are 100% collateralized, including accrued income, (ii) a loan made under the program allows for termination at any time, (iii) a
loan made under the program is either secured by (a) obligations described in clauses (1) through (8) above, (b) irrevocable
letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at
not less than A or its equivalent, or (c) cash invested in obligations described in clauses (1) through (8) above, clauses (12)
through (14) above, or an authorized investment pool, (iv) the terms of a loan made under the program require that the securities
being held as collateral be pledged to the City, held in the City's name, and deposited at the time the investment is made with the
City or with a third party designated by the City, (v) a loan made under the program is placed through either a primary
government securities dealer or a financial institution doing business in the State, and (vi) the agreement to lend securities has a
term of one year or less.
The City may invest in such obligations directly or through government investment pools that invest solely in such obligations
provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service.
The City may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C.
Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds or other
funds under its control for a term up to two years, but the City retains ultimate responsibility as fiduciary of its assets. In order to
renew or extend such a contract, the City must do so by order, ordinance, or resolution. The City is specifically prohibited from
investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying
34
mortgage -backed security collateral and pay no principal; (2) obligations whose payment represents the principal stream of cash flow
from the underlying mortgage -backed security and bear no interest; (3) collateralized mortgage obligations that have a stated final
maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that
adjusts opposite to the changes in a market index.
INVESTMENT POLICIES ... Under State law, the City is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of
investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any
individual investment, maximum average dollar -weighted maturity allowed for pooled fund groups, methods to monitor the market
price of investments acquired with public funds, a requirement for settlement of all transactions, except investment pool funds
and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with
public funds and the liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a
formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each hivestment 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.
The investment officer of a local government is allowed to invest bond proceeds or pledged revenue only to the extent permitted
by the PFIA and in accordance with (i) statutory provisions governing the debt issuance (or lease, installment sale, or other
agreement) and (ii) the local government's investment policy regarding the debt issuance or the agreement.
Under State law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence,
discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment,
considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the
City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers jointly
prepared and signed the report, (3) the beginning market value, ending market value and the fully accrued interest of each pooled
fund group for the reporting period, (4) the book value and market value of each separately listed asset at the end of the reporting
period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual
investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy
statements and (b) State law. No person may invest City funds without express written authority from the City Council.
ADDITIONAL PROVISIONS ... Under State law, the City is additionally required to: (1) annually review its adopted policies and
strategies; (2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment
strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order,
ordinance or resolution; (3) require any investment officers with personal business relationships or relatives with firms seeking to
sell securities to the City to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council;
(4) require the qualified representative of firms offering to engage in an investment transaction with the City to: (a) receive and
review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to
preclude investment transactions conducted between the City and the business organization that are not authorized by the City's
investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire
portfolio, requires an interpretation of subjective investment standards or relates to investment transactions of the entity that are
not made through accounts or other contractual arrangements over which the business organization has accepted discretionary
investment authority) and (c) deliver a written statement in a form acceptable to the City and the business organization attesting
to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the City's
investment policy; (6) provide specific investment training for the City's designated Investment Officer; (7) restrict reverse
repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater
than the term of the reverse purchase agreement; (8) restrict the investment in no-load mutual funds in the aggregate to no more
than 15% of the City's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt
service; (9) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation,
and advisory board requirements; and (10) at least annually review, revise, and adopt a list of qualified brokers that are
authorized to engage in investment transactions with the City.
TABLE )5- CURRENT INVESTMENTS
As of September 30, 2022 the City's investable funds were invested in the following categories:
Percent of
Book
Market
Description Book Value
Value
Value
TexPool/LOGIC 97.12%
$ 135,133,162
$ 135,133,162
Certificates of Deposit 2.88%
4,005,880
4,005,880
100.00%
$ 139,139,042
$ 139,139,042
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TAX MATTERS
The following discussion of certain federal income tax considerations is for general information only and is not tax advice.
Each prospective purchaser of the Certificates should consult its own tax advisor as to the tax consequences of the
acquisition, ownership, and disposition of the Certificates.
TAX EXEMPTION
In the opinion of Bracewell LLP, Bond Counsel, under existing law, interest on the Certificates is (i) excludable from gross
income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and
(ii) not an item of tax preference for purposes of the alternative minimum tax on individuals.
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 bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure,
a requirement that excess arbitrage earned on the investment of bond proceeds be paid periodically to the United States and a
requirement that the issuer file an information report with the Internal Revenue Service (the "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 that affect the excludability of interest on the Certificates from gross income for federal income tax purposes and, in
addition, will rely on representations by the City, and other parties involved in the issuance of the Certificates with respect to
matters solely within the knowledge of the City and such other parties, which Bond Counsel has not independently verified. If
the City fails to comply with the covenants in the Ordinance or if such representations are determined to be inaccurate or
incomplete, interest on the Certificates could become includable in gross income from the date of delivery of the Certificates,
regardless of the date on which the event causing such inclusion occurs.
Except as stated above, Bond Counsel will express no opinion as to the amount of interest on the Certificates or any federal, state
or local tax consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or disposition of, 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 thereof. 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. Moreover, Bond Counsel's opinions are not a guarantee of result and are not binding
on the Service; rather, such opinions represent Bond Counsel's legal judgment based upon its review of existing law and in
reliance upon the representations and covenants referenced above that it deems relevant to such opinions. The Service has an
ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is
includable in gross income for federal income tax purposes. No assurance can be given as to whether or not the Service will
commence an audit of the Certificates. If an audit is commenced, in accordance with its current published procedures the Service
is likely to treat the City as the taxpayer and the Owners may not have a right to participate in such audit. Public awareness of
any future audit of the Certificates could adversely affect the value and liquidity of the Certificates, regardless of the ultimate
outcome of the audit.
ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS
Collateral Tax Consequences
Prospective purchasers of the Certificates should be aware that the ownership of tax-exempt obligations may result in collateral
federal income tax consequences, including but not limited those noted below. Therefore, prospective purchasers of the
Certificates should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of the
Certificates.
For tax years beginning after December 31, 2022, an "applicable corporation" (as defined in section 59(k) of the Code) may be
subject to a 15% alternative minimum tax imposed under section 55 of the Code on its "adjusted financial statement income" (as
defined in section 56A of the Code) for such taxable year. Because interest on tax-exempt obligations, such as the Certificates, is
included in a corporation's "adjusted financial statement income," ownership of the Certificates could subject certain
corporations to alternative minimum tax consequences.
Ownership of tax-exempt obligations also 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, low and middle income taxpayers otherwise qualifying for
the health insurance premium assistance credit and individuals otherwise qualifying for the earned income tax credit. hi addition,
certain foreign corporations doing business in the United States 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.
Prospective purchasers of the Certificates should also be aware that, 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.
36
Tax Accounting Treatment of Original Issue Premium
The issue price of all or a portion of the Certificates may exceed the stated redemption price payable at maturity of such
Certificates. Such Certificates (the "Premium Certificates") are considered for federal income tax purposes to have "bond
premium" equal to the amount of such excess. The basis of a Premium Bond in the hands of an initial owner is reduced by the
amount of such excess that is amortized during the period such initial owner holds such Premium Bond in determining gain or
loss for federal income tax purposes. This reduction in basis will increase the amount of any gain or decrease the amount of any
loss recognized for federal income tax purposes on the sale or other taxable disposition of a Premium Bond by the initial owner.
No corresponding deduction is allowed for federal income tax purposes for the reduction in basis resulting from amortizable bond
premium. The amount of bond premium on a Premium Bond that is amortizable each year (or shorter period in the event of a
sale or disposition of a Premium Bond) is determined using the yield to maturity on the Premium Bond based on the initial
offering price of such Premium Bond.
The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of Premium
Certificates that are not purchased in the initial offering at the initial offering price may be determined according to rules that
differ from those described above. All owners of Premium Certificates should consult their own tax advisors with respect to the
determination for federal, state, and local income tax purposes of amortized bond premium upon the redemption, sale or other
disposition of a Premium Bond and with respect to the federal, state, local, and foreign tax consequences of the purchase,
ownership, and sale, redemption or other disposition of such Premium Certificates.
Tax Accounting Treatment of Original Issue Discount
The issue price of all or a portion of the Certificates may be less than the stated redemption price payable at maturity of such
Certificates (the "Original Issue Discount Certificates"). In such case, the difference between (i) the amount payable at the
maturity of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount
Bond constitutes original issue discount with respect to such Original Issue Discount Bond in the hands of any owner who has
purchased such Original Issue Discount Bond in the initial public offering of the Certificates. Generally, such initial owner is
entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original
Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the period that such Original
Issue Discount Bond continues to be owned by such owner. Because original issue discount is treated as interest for federal
income tax purposes, the discussions regarding interest on the Certificates under the captions "TAX MATTERS — Tax
Exemption" and "TAX MATTERS — Additional Federal Income Tax Considerations — Collateral Tax Consequences" and "—Tax
Legislative Changes" generally apply and should be considered in connection with the discussion in this portion of the Official
Statement.
In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity,
however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such
owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue
Discount Bond was held by such initial owner) is includable in gross income.
The foregoing discussion assumes that (i) the Initial Purchaser has purchased the Certificates for contemporaneous sale to the
public and (ii) 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 stated on the inside cover page of this Official Statement. Neither
the City nor Bond Counsel has made any investigation or offers any comfort that the Original Issue Discount Certificates will be
offered and sold in accordance with such assumptions.
Under existing law, the original issue discount on each Original Issue Discount Bond accrues daily to the stated maturity thereof
(in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates
of the date of the 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 Bond for purposes of determining the amount of gain or loss recognized by such
owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to
(i) 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 (ii) the amounts payable as current interest during such accrual period on such Bond.
The federal income tax consequences of the purchase, ownership, and redemption, sale or other disposition of Original Issue
Discount Certificates that are not purchased in the initial offering at the initial offering price may be determined according to
rules that 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.
Tax Legislative Changes
Current law may change so as to directly or indirectly reduce or eliminate the benefit of the excludability of interest on the
Certificates from gross income for federal income tax purposes. Any proposed legislation, whether or not enacted, could also
affect the value and liquidity of the Certificates. Prospective purchasers of the Certificates should consult with their own tax
advisors with respect to any recently -enacted, proposed, pending or future legislation.
37
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 the Municipal Securities Rulemaking Board (the "MSRB"). This
information will be available free of charge from the MSRB via the Electronic Municipal Market Access ("EMMA") system at
www.emma.msrb.org.
ANNUAL REPORTS ... The City will provide to the MSRB updated financial information and operating data annually. The
information to be updated includes quantitative financial information and operating data with respect to the City of the general
type included in this Official Statement under the Tables numbered 1 through 6 and 8 through 15. The City will update and
provide this information in the numbered tables within six months after the end of each fiscal year ending in or after 2022 and, if
then available, audited financial statements of the City. If audited financial statements are not available when the information is
provided, the City will provide audited financial statements when and if they become available, but in any event within 12
months after the end of each fiscal year. If the audit of such financial statements is not complete within 12 months after any such
fiscal year end, then the City shall file unaudited financial statements within such 12-month period and audited financial
statements for the applicable fiscal year, when and if the audit report on such statements becomes available. Any such financial
statements will be prepared in accordance with the accounting principles described in Appendix A or such other accounting
principles as the City may be required to employ from time to time pursuant to State law or regulation. The financial information
and operating data to be provided may be set forth in full in one or more documents or may be included by specific reference to
any document available to the public on the MSRB's Internet Web site or filed with the United States Securities and Exchange
Commission (the "SEC"), as permitted by SEC Rule 15c2-12 (the "Rule").
The City's current fiscal year end is September 30. Accordingly, updated unaudited information included in the above -referenced
tables must be provided by March 31 in each year, and audited financial statements must be provided by September 30 of each
year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify the MSRB of the change.
NOTICE OF CERTAIN EVENTS ... The City will also provide to the MSRB, in an electronic format as prescribed by the MSRB, in
a timely manner not in excess of ten (10) business days after the occurrence of the event, notice of any of the following events
with respect to the Certificates: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3)
unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements
reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax
opinions, the issuance by the Internal Revenue Service of proposed of final determinations of taxability, Notices of Proposed
Issue (IRS Form 5702-TEB) or other material notices or determinations with respect to the tax status of the Certificates, or other
material events affecting the tax status of the Certificates; (7) modifications to rights of holders of the Certificates, if material; (8)
bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the
Certificates, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the City; (13) the
consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of
the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14)
appointment of a successor or additional paying agent/registrar or the change of name of a paying agent/registrar, if material, (15)
incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights,
or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and (16) default,
event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of
the City, any of which reflect financial difficulties. In addition, the City will provide to the MSRB, in a timely manner, notice of
any failure by the City to provide the required annual financial information described above under "Annual Reports" and any
notices of events in accordance with this section.
For these purposes, (A) any event described in the immediately preceding clause (12) is considered to occur when any of the
following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States
Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed
jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the
existing governing body and officials or officers in possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets of business of the City, and (B) the
City intends the words used in clauses (15) and (16) in the immediately preceding paragraph and in the definition of Financial
Obligation to have the meanings ascribed to them in SEC Release No. 34-83885 dated August 20, 2018. The Ordinance defines
"Financial Obligation" as a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security
or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative
instrument; provided that "financial obligation" shall not include municipal securities (as defined in the Securities Exchange Act
of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent
with the Rule.
AVAILABILITY OF INFORMATION ... The City has agreed to provide the foregoing financial and operating information only as
described above. Investors may access continuing disclosure information filed with the MSRB free of charge at
www.emma.msrb.ore.
38
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 the Initial Purchaser, 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 Rule or a court of final jurisdiction enters judgment that such provisions of the
Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent the Initial Purchaser from
lawfully purchasing or selling Certificates in the primary offering of the Certificates. If the City so amends its continuing
disclosure agreement, it has agreed to include with the next financial information and operating data provided in accordance with
its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of
the impact of any change in the type of financial information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS . . . During the last five years, the City believes it has complied in all material
respects with all continuing disclosure agreements made by it in accordance with the Rule.
OTHER INFORMATION
RATING
The Certificates and the presently outstanding tax supported debt of the City are rated "Aal" by Moody's and "AA+" by S&P.
An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect
only the respective views of such organizations and the 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, or to their knowledge, threatened litigation or other
proceeding against the City that would have a material adverse financial impact upon the City or its operations.
At the time of the initial delivery of the Certificates, the City Attorney will notify the Initial Purchasers if there has been any
lawsuit or claim challenging the issuance of the Certificates or that affects the payment, delivery or security of the Obligations of
which the City Attorney has been notified.
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 and investment securities governed by Chapter 8, Texas Business and Commerce Code, and are legal
and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other
political subdivisions or public agencies of the State. With respect to investment in the Certificates by municipalities or other
political subdivisions or public agencies of the State, the PIFA, Chapter 2256, Texas Government Code, requires that the
Certificates be assigned a rating of not less than "A" or its equivalent as to investment quality by a national rating agency (see
"OTHER INFORMATION - Rating" 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 capital of
one million dollars or more, and savings and loan associations. The Certificates are eligible to secure deposits of any public funds
39
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.
No representation is made that the Certificates will be acceptable to public entities to secure their deposits or acceptable to such
institutions for investment purposes. The City has made no investigation of other laws, rules, regulations or investment criteria
which might apply to any such persons or entities or which might otherwise limit the suitability of the Certificates for any of the
foregoing purposes or limit the authority of such persons or entities to purchase or invest in the Certificates for such purposes.
LEGAL MATTERS
The City will furnish to the Initial Purchaser 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
Certificates 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 Section 103(a) of the
Code, subject to the matters described under "TAX MATTERS" herein. 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. Though it represents the Financial Advisor and purchasers of debt from governmental issuers
from time to time in matters unrelated to the issuance of the Certificates, Bond Counsel has been engaged by and only represents
the City in connection with the issuance of the Certificates. Bond Counsel was not requested to participate, and did not take part,
in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm
has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained
therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Certificates in the
Official Statement to verify that such description conforms to the provisions of the Ordinance. The legal fee to be paid Bond
Counsel for services rendered in connection with the issuance of the 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.
The legal opinions to be delivered concurrently with the delivery of the Certificates express the professional judgment of the
attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does
not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future
performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute
that may arise out of the transaction.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from City records, audited financial statements and
other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein
will be realized. All of the summaries of the statutes, documents and ordinances contained in this Official Statement are made
subject to all of the provisions of such statutes, documents and ordinances. These summaries do not purport to be complete
statements of such provisions and reference is made to such documents for further information. Reference is made to original
documents in all respects.
FINANCIAL ADVISOR
HilltopSecurities 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. HilltopSecurities, in its capacity as Financial Advisor, does not assume any responsibility for the information,
covenants and representations contained in any of the legal documents with respect to the federal income tax status of the
Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies.
The Financial Advisor to the City has provided the following sentence for inclusion in this Preliminary Official Statement. The
Financial Advisor has reviewed the information in this Preliminary Official Statement in accordance with, and as part of, its
responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information.
INITIAL PURCHASER FOR THE CERTIFICATES
After requesting competitive bids for the Certificates, the City accepted the bid of (the "Initial
Purchaser") to purchase the Certificates at the interest rates shown on page 2 of the Official Statement at a price of par plus a cash
premium of $ . The Initial Purchaser can give no assurance that any trading market will be developed for the
Certificates after their sale by the City to the Initial Purchaser. The City has no control over the price at which the Certificates are
subsequently sold and the initial yield at which the Certificates will be priced and reoffered will be established by and will be the sole
responsibility of the Initial Purchaser.
40
FORWARD -]_,OOHING STATEMENTS DISCLAIMER
The statements contained in this Preliminary Official Statement, and in any other information provided by the City, that are not
purely historical, are forward -looking statements, including statements regarding the City's expectations, hopes, intentions, or
strategies regarding the future. Readers should not place undue reliance on forward -looking statements. All forward -looking
statements included in this Preliminary Official Statement are based on information available to the City on the date hereof, and
the City assumes no obligation to update any such forward -looking statements. The City's actual results could differ materially
from those discussed in such forward -looking statements.
The forward -looking statements included herein are necessarily based on various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers,
business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related
to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and
future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control
of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward -looking
statements included in this Preliminary Official Statement will prove to be accurate.
CERTIFICATION OF THE OFFICIAL STATEMENT
At the time of payment for and delivery of the Certificates, the City will furnish a certificate, executed by a proper officer, acting
in such officer's official capacity, to the effect that: (a) the descriptions and statements of or pertaining to the City contained in
the 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.
ATTEST:
TARA BROOKS
City Secretary
WILLIAM D. TATE
Mayor
City of Grapevine, Texas
41
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APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
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TIE CITY ... The City is a political subdivision of the State incorporated in 1907 and operates as a home -rule City under the general
laws of the State 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 is 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 581 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
1980
11,801
U.S. Census
2006
47,500
City Estimate
1990
29,202
U.S. Census
2007
47,599
City Estimate
1991
30,300
City Estimate
2008
49,635
City Estimate
1992
31,400
City Estimate
2009
49,797
City Estimate
1993
31,902
City Estimate
2010
46,334
U.S. Census
1994
32,727
City Estimate
2011
46,300
City Estimate
1995
33,211
City Estimate
2012
46,420
City Estimate
1996
34,950
City Estimate
2013
47,070
City Estimate
1997
36,000
City Estimate
2014
49,424
City Estimate
1998
37,946
City Estimate
2015
51,240
City Estimate
1999
39,190
City Estimate
2016
52,490
City Estimate
2000
39,523
U.S. Census
2017
55,281
City Estimate
2001
44,390
City Estimate
2018
52,490
U.S. Census
2002
45,524
City Estimate
2019
55,281
U.S. Census
2003
46,188
City Estimate
2020
50,756
U.S. Census
2004
46,684
City Estimate
2021
50,872
City Estimate
2005
47,036
City Estimate
2022
53,979
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 38,500 parking spaces and is currently expanding parking facilities. Sales tax from parking fees generate
about $700,000 in annual income for the City and hotels providing service for travelers at DFW and seminar space for business
meetings generate approximately $2 million in annual hotel/motel tax revenue.
Grapevine Mills, located just two miles outside of DFW International Airport, operated by Simon Property Group, provides 180
stores and features LEGOLAND Discovery Center, SEA LIFE Aquarium as well as AMC Grapevine Mills 30 with dine -in theatres.
MAJoR EMPLOYERS
Estimated
Number of
Company
Employees
DFW International Airport
14,300
Gaylord Texan Resort & Convention Center
2,000
Grapevine-Colleyville ISD
2,000
GameStop Corporation
1,400
Baylor, Scott & White
800
City of Grapevine
700
Great Wolf Lodge
600
Kubota Tractor Corp
500
Pavestone Co
400
American Warranty Service
300
Source: City of Grapevine Economic Development Department, Neilsen/Claritas Business Facts, Info. USA.
A-1
BuiLDuvG PERMITS ... The number and value of building permits issued by the City are:
Fiscal
Commercial Permits
Residential Permits
Total
Year
Number
Number
Number
Total
Ended
of
Dollar
of
Dollar
of
Dollar
9/30
Permits
Value
Permits
Value
Permits
Value
2017
17
$ 94,380,941
105
$ 89,168,462
122
$ 183,549,403
2018
17
122,076,075
40
82,950,441
57
205,026,516
2019
20
61,073,137
48
70,154,147
68
131,227,284
2020
19
71,640,261
40
15,236,267
59
86,876,528
2021
6
10,507,216
42
20,054,127
48
30,561,343
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 shoreline 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 playgrounds, spray grounds, swimming pools, dog park, picnic areas, RV
Campground with cabins, tennis courts, baseball and softball diamonds, football and soccer fields as well as jogging and biking
trails. The REC center provides workout facilities, racquetball and basketball courts as well as an indoor aquatic center. The City also
owns and operates a 27 hole golf course with a new clubhouse, pro shop as well as a new restaurant.
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, with major highway systems both north/south and east/west.
The Trinity Metro TEXRAIL launched commuter service in Grapevine in 2019. It takes passengers along 27 miles to nine stations
between DFW International Airport and Downtown Fort Worth and runs continuously. The Grapevine Main Station includes the
new Harvest Hall food hall, Peace Plaza as well as the Hotel Vin which makes it the perfect place for commuters to stop at The
Grapevine Vintage Railroad provides a route between Grapevine and the Fort Worth Stockyards area.
HOTEL AND CoNvENTIoN FACILITIES ... Grapevine, Texas offers a diverse hotel portfolio throughout the City. In total, Grapevine
offers 21 (full service and select service) hotel options which represent over 6,000 guestrooms. As part of the 21 total hotels,
Grapevine offers eight full -service hotels within the City.
The Hyatt Regency DFW, adjacent to terminal C and Grand Hyatt, integrated into Terminal D, are both located inside DFW airport.
The hotels combined provide more than 126,000 square feet of meeting and convention facilities, heated swimming pools and fitness
centers.
The Hilton DFW Lakes Executive Conference Center is a 393-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 two 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 western themed events are available to hotel guests.
The Embassy Suites by Hilton, DFW Airport North is a 12-story, 329-room hotel located just north of DFW Airport. The Embassy
Suites offers over 19,000 square feet of meeting space with a 12,640 square foot ballroom, and a total of 15 meeting rooms. Also
provided is a state-of-the-art fitness center, a heated indoor swimming pool, complimentary, cooked -to -order breakfast.
The Gaylord Texan on Lake Grapevine is an 1,814 room resort and convention center located just 6 minutes north of DFW Airport.
The Gaylord Texan provides 490,000 square feet of convention, meeting, exhibit and pre -function space featuring 70 breakout
rooms, three ballrooms, 180,000 square -feet of dedicated exhibit space, an 80,000 square foot outdoor event lawn and a 2,500 square
foot amphitheater. Other amenities include seven restaurants, the Dallas Cowboys Golf Club, a contemporary Southwestern -style
outdoor pool, a 25,000 square foot European spa, salon and fitness center with 13 treatment rooms and a 20-meter indoor lap pool,
outdoor tennis courts and marina access for recreational water -craft.
The Great Wolf Lodge is located on Hwy. 26 in Grapevine and is an eight -story, Northwoods-themed resort with 605 all -suite guest
rooms. The Great Wolf Lodge provides a first-class, full -service family destination designed to capture the atmosphere and adventure
of the Northwoods. Serving as Texas' Year -Round Family ResortTM, Great Wolf Lodge provides a comprehensive package of
destination amenities. Great Wolf Lodge is also a premier indoor waterpark that includes 12 indoor waterslides, seven pools, an
interactive treehouse water fort featuring a nearly 1,000-gallon tipping water bucket, family cabanas and more than 100 lifeguards
nationally certified by Ellis & Associates oversee the waterparks safety.
A-2
Courtyard/TownePlace Suites/Hilton Garden Inn at SilverLake Crossings offers a three hotel, multi -branded complex with full
service amenities. The complex offers 453 guestrooms and over 20,000 square feet of flexible meeting and convention space, two
restaurant/bistros, a fitness center and a zero entry outdoor pool.
Hotel Vin, Autograph Collection is a 120 room boutique full service hotel in Historic Downtown Grapevine. The hotel offers over
21,000 square feet of meeting and convention space, Bacchus Kitchen+ Bar. The hotel also offers a state of the art fitness center and
is located along the Cotton Belt hike and bike trail system. Connected to the hotel is Grapevine Main Station and Harvest Hall, which
features a European -style food hall with seven curated kitchens and two bars.
EDUCATION ... Elementary and 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 schools
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:
1984
4,037
2003
13,834
1985
4,675
2004
13,777
1986
5,617
2005
13,838
1987
6,107
2006
13,868
1988
6,604
2007
13,903
1989
7,156
2008
13,943
1990
7,984
2009
13,822
1991
8,710
2010
13,671
1992
9,435
2011
13,670
1993
10,236
2012
13,510
1994
10,878
2013
13,388
1995
11,363
2014
13,523
1996
11,655
2015
13,748
1997
12,398
2016
13,773
1998
12,867
2017
13,750
1999
13,358
2018
13,750
2000
13,463
2019
13,957
2001
13,626
2020
13,970
2002
13,870
2021
14,040
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 of the City 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
A-3
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APPENDIX B
EXCERPTS FROM THE
CITY OF GRAPEVINE, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2021
The information contained in this Appendix consists of excerpts from the City of
Grapevine, Texas, Annual Financial Report for the Year Ended September 30, 2021, 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.
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Mkil
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and
Members of the City Council
City of Grapevine, Texas
Report on the Financial Statements
PATTILLO, BROWN & HILL, L.L.P.
401 West State Highway 6
Waco, Texas 76710
254.772.4901 1 pbhcpa.com
We have audited the accompanying financial statements of the governmental activities, the business -type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the City of Grapevine, Texas (the "City"), as of and for the year ended September 30, 2021, and the
related notes to the financial statements, which collectively comprise the City's basic financial statements as listed
in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business -type activities, the discretely presented
component unit, each major fund, and the aggregate remaining fund information of the City of Grapevine, Texas,
as of September 30, 2021, and the respective changes in financial position, and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
OFFICE LOCATIONS AN
TEXAS I Waco Temple I Hillsboro I Houston` AICPA
NEW MEXICO Albuquerque GAQC Member
Emphasis of Matter— Change in Accounting Principle
As described in the notes to the financial statements, in fiscal year 2021 the City adopted new accounting
guidance, Governmental Accounting Standards Board (GASB) Statement No. 84, Fiduciary Activities. Our opinion
is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and required supplementary information, as listed in the table of contents, be presented
to supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential
part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The introductory section, combining and individual nonmajor fund
financial statements and schedules, and statistical section are presented for purposes of additional analysis and
are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and schedules are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used to
prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the combining and
individual nonmajor fund financial statements and schedules are fairly stated, in all material respects, in relation to
the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance
on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 19, 2022,
on our consideration of the City's internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the City's internal control over financial reporting and compliance.
P0�4&0 /
Waco, Texas
April 19, 2022
2
MANAGEMENT'S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As management of the City of Grapevine (the "City"), we offer readers of the City's financial statements
this narrative overview and analysis of the financial activities of the City for the fiscal year ended
September 30, 2021. We encourage readers to consider the information presented here in conjunction
with additional information that we have furnished in our letter of transmittal, which can be found on pages
i-v of this report.
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of resources of the City exceeded its liabilities and
deferred inflows of resources at the close of the most recent fiscal year by $435,728,014
(net position).
• The City's total net position increased by $24,835,961 from operations. $13,768,917 of
this increase was attributable to governmental activities and an increase of $11,067,044
was due to business -type activities.
• At the close of the current fiscal year, the City's governmental funds reported combined
fund balances of $98,676,141, a decrease of $15,243,068 from the prior year.
• At the end of the current fiscal year, total fund balance for the General Fund was
$11,582,854 or 20.3% of total General Fund expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government -wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also contains supplementary information intended to furnish additional detail to support the basic financial
statements themselves.
Government -wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad overview of the
City's finances, in a manner similar to a private -sector business.
The Statement of Net Position presents information on all the City's assets, deferred outflows (inflows)
of resources, and liabilities, with the difference reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City is
improving or deteriorating.
The Statement of Activities presents information showing how the City's net position changed during the
fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the
change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported
in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected
taxes and earned but unused compensated absences).
3
Both government -wide financial statements distinguish functions of the City that are principally supported
by taxes and intergovernmental revenues (governmental activities) from other functions that are intended
to recover all or a significant portion of their costs through user fees and charges (business -type
activities). The governmental activities of the City include general government, public safety, culture and
recreation, public works, transportation, tourism and economic development. The business -type activities
of the City include water and sewer services and the lake enterprise activities (golf course).
The government -wide financial statements include not only the City itself (known as the primary
government), but also include the Heritage Foundation, which is a legally separate entity for which the
City is financially accountable. Financial information for this component unit is reported separately from
the financial information presented for the primary government itself. The Tax Increment Reinvestment
Zones Numbers One and Two, the Crime Control and Prevention District (Crime District), and the
Grapevine 4B Economic Development Corporation, although legally separate, function for all practical
purposes as departments of the City, and therefore have been included as an integral part of the primary
government.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses
fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All the
funds of the City can be divided into three categories: governmental funds, proprietary funds, and
fiduciary funds. The fund financial statements for governmental funds, proprietary funds, and fiduciary
funds can be found in the financial section of this report.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government -wide financial statements. However, unlike the government -wide financial
statements, governmental fund financial statements focus on near -term inflows and outflows of spendable
resources, as well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near -term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements. By doing
so, the reader may better understand the long-term impact of the City's near -term financing decisions.
Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City maintains 19 individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the General, Hotel Occupancy Tax Fund, Crime District Fund, 4B — Economic
Development Fund, 4B — Transit Fund, Debt Service Fund, TIF #1 Capital Projects Fund and General
Facilities and Equipment Fund, all of which are considered to be major funds.
Data from the other eleven governmental funds are combined into a single, aggregate presentation.
Individual fund data for each of these non -major governmental funds is provided in the form of combining
statements in the combining and individual fund statements and schedules section of this report.
4
Proprietary Funds
The City maintains two different types of proprietary funds. Enterprise funds are used to report the same
functions presented as business -type activities in the government -wide financial statements. The City
uses enterprise funds to account for its Water and Sewer Fund, and Lake Enterprise Fund (golf course).
Internal service funds are an accounting device used to accumulate and allocate costs internally among
the City's various functions. The City uses an internal service fund to account for its document
management services. Because these services predominantly benefit the governmental rather than
business -type functions, they have been included within the governmental activities in the government -
wide financial statements.
Proprietary funds provide the same type of information as the government -wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for the Water and
Sewer Fund and the Lake Enterprise Fund, which are both considered to be major funds.
Fiduciary Funds
Fiduciary fund level financial statements include assets that are held in a trustee or fiduciary capacity and
are therefore not available to support City programs; these funds are not included in the government -
wide statements. The City has two types of fiduciary funds.
The Custodial Fund is used to account for assets held by the City in a custodial capacity for individuals,
private organizations, and other governments. Custodial funds do not involve a formal trust agreement.
The Private -purpose Trust Fund is used to report resources held in trust for the W.D. Tate Scholarship
Fund. See Note I for additional information pertaining to fiduciary funds.
Notes to the financial statements
The notes provide additional information that is necessary to acquire a full understanding of the data
provided in the government -wide and fund financial statements.
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents required
supplementary information. The required supplementary information section of this report includes
budgetary comparison schedules for the General Fund and major special revenue funds with legally
adopted budgets, which include the Hotel Occupancy Tax Fund, Crime District Fund, 4B Economic
Development Fund, and 4B Transit Fund. This section of the report also includes schedules detailing the
City's progress in funding its liabilities related to providing pension and OPEB benefits to its employees.
The combining and individual fund statements and schedules referred to earlier in connection with
nonmajor governmental funds are presented immediately following the required supplementary
information on the City's pension and OPEB plans.
GOVERNMENT -WIDE OVERALL FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. As of September 30, 2021, the City's assets and deferred outflows of resources exceeded
liabilities and deferred inflows of resources by $435,728,014.
5
CITY OF GRAPEVINE'S NET POSITION
Governmental Activities
Business -type Activities
Totals
2021
2020
2021
2020
2021
2020
Current and other assets
$ 131,062,122
$ 137,636,759
$ 28,269,240
$ 26,612,507
$ 159,331,362
$ 164,249,266
Capital assets
441,497,971
425,901,522
146,880,384
137,872,997
588,378,355
563,774,519
Total assets
572,560,093
563,538,281
175,149,624
164,485,504
747,709,717
728,023,785
Deferred outflows of
resources
23,688,821
16,210,158
2,396,998
1,733,305
26,085,819
17,943,463
Long-term liabilities
277,065,025
269,230,027
19,686,795
20,040,171
296,751,820
289,270,198
Other liabilities
19,995,677
22,837,219
3,344,778
2,832,957
23,340,455
25,670,176
Total liabilities
297,060,702
292,067,246
23,031,573
22,873,128
320,092,275
314,940,374
Deferred inflows of
resources
16,284,972
15,188,870
1,690,275
1,587,951
17,975,247
16,776,821
Net position:
Net investment
in capital assets
292,356,763
279,795,020
141,818,801
133,348,566
434,175,564
413,143,586
Restricted
55,449,440
69,120,093
2,871,462
3,147,224
58,320,902
72,267,317
Unrestricted
( 64,902,963)
( 76,422,790)
8,134,511
5,261,940
( 56,768,452)
( 71,160,850)
Total net position
$ 282,903,240
$ 272,492,323
$ 152,824,774
$ 141,757,730
$ 435,728,014
$ 414,250,053
Current and other assets decreased in the governmental and business -type activities by $4,917,904 from
the prior year. Cash and investments decreased by $13,623,627, partially offset by an increase in
receivables primarily due to increases in sales tax and notes receivable. The decrease in cash and
investments can largely be attributed to ongoing capital projects and the spending down of available bond
proceeds for these projects.
Long-term liabilities for the City consist of bonds, contractual obligations, compensated absences, OPEB
and pension liabilities. Debt service payments of almost $11.5 million were made during the year to pay
down the balances of bonds and contractual obligations. The City's pension liability decreased by $4.3
million primarily as a result of net investment income and the City's OPEB liability increased by $12.5
million as a result of many factors including a change in the discount rate from 2.95% to 2.04%.
The largest portion of the City's net position is its investment in capital assets of $434,175,563 (e.g., land,
building, equipment, improvements, construction in progress, and infrastructure), less any debt used to
acquire capital assets still outstanding. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City's investment in capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
An additional portion of the City's net position represents resources that are subject to external restrictions
on how they may be used. Restricted net position includes (1) use of impact fees for construction
purposes ($2,871,462), (2) debt service ($22,149,669), (3) capital projects ($26,632,135), (4) court
security and technology ($494,849), (5) public safety ($790,844), (6) records preservation ($13,408), (7)
economic development ($5,080,146), (8) culture and recreation ($184,118), and (9) tourism ($104,272).
6
Net Position Comparison
UNR
NET INVESTMENT
ASSET;
$(100,000,000) $- $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000
E, 2020 m 2021
For fiscal year-end 2021, the City is able to report positive balances in two categories of net position for
the City as a whole. Unrestricted net position is a deficit for the governmental activities and in total for the
City. This is due in part to the recognition of the net pension liability under the requirements of GASB
Statement No. 68, the recognition of the net OPEB liability under GASB Statement No. 75, and also due
to the fact that the City has a substantial amount of debt related to TIF #2 which is not capital related.
7
Analysis of the City's Operations
The following table provides a summary of the City's operations for the year ended September 30, 2021,
and 2020:
CITY OF GRAPEVINE'S CHANGES IN NET POSITION
Governmental Activities
Business -type Activities
Totals
2021
2020
2021
2020
2021
2020
Revenues:
Program revenues:
Charges forservices $
19,139,898
$ 15,420,184 $
33,151,053 $
30,280,788
$ 52,290,951 $
45,700,972
Operating grants and
contributions
8,887,856
3,576,140
-
-
8,887,856
3,576,140
Capital grants and
contributions
12,213,609
6,732,982
8,128,733
3,714,288
20,342,342
10,447,270
General revenues:
Propertytaxes
34,037,464
33,160,755
-
-
34,037,464
33,160,755
Hotel occupancytaxes
12,625,773
11,721,385
12,625,773
11,721,385
Sales taxes
56,914,190
51,111,959
56,914,190
51,111,959
M ixed beverage taxes
1,793,124
1,477,422
1,793,124
1,477,422
Franchise taxes
5,978,215
6,182,482
-
-
5,978,215
6,182,482
Investment earnings
26,472
1,893,007
25,266
295,942
51,738
2,188,949
Gain on sale of capital assets
711,133
226,500
236,757
-
947,890
226,500
Miscellaneous
263,502
864,931
-
-
263,502
864,931
Total revenues
152,591,236
132,367,747
41,541,809
34,291,018
194,133,045
166,658,765
Expenses:
General government
20,933,648
21,449,315
-
-
20,933,648
21,449,315
Public safety
38,778,212
41,527,731
38,778,212
41,527,731
Culture and recreation
22,801,979
22,432,175
22,801,979
22,432,175
Public works
15,786,659
18,875,598
15,786,659
18,875,598
Transportation
9,367,306
8,642,110
9,367,306
8,642,110
Economic development
8,712,593
4,881,449
8,712,593
4,881,449
Tourism
T7,559,893
16,982,374
17,559,893
16,982,374
Interest on long-term debt
5,288,645
5,822,973
-
-
5,288,645
5,822,973
Water and sewer
-
-
27,653,812
25,227,582
27,653,812
25,227,582
Lake enterprise
-
-
2,414,337
2,789,819
2,414,337
2,789,819
Total expenses
139,228,935
140,613,725
30,068,149
28,017,401
169,297,084
168,631,126
Increases in net position
before extraordinary item
and transfers
13,362,301
( 8,245,978)
11,473,660
6,273,617
24,835,961 (
1,972,361)
Transfers
406,616
5,888,820 (
406,616) (
5,888,820)
-
Change in net position
13,768,917
( 2,357,158)
11,067,044
384,797
24,835,961 (
1,972,361)
Net position, beginning
272,492,323
275,545,490
141,757,730
141,157,827
414,250,053
416,703,37
Priorperiod adjustment (
3,358,000)
( 696,009)
-
215,106
( 3,358,000) (
480,903)
Net position, beginning (restated)
269,134,323
274,849,481
141,757,730
141,372,933
410,892,053
416,222,414
Net position, ending $
282,903,240
$ 272,492,323 $
152,824,774 $
141,757,730
$ 435,728,014 $
414,250,053
Governmental activities — Governmental activities increased the City's net position by $13,768,917 from
operations. This increase can broadly be attributed to increases in general revenues such as sales taxes,
hotel occupancy taxes, mixed beverage taxes as well as charges for services. These increases are
directly related to the recovery from the 2020 economic impacts of COVID-19.
In addition to the increase in revenues discussed above, operating grant funds totaling $3.4 million were
received from the COVID-19 Coronavirus State and Local Fiscal Recovery Fund during 2021. Capital
grants and contributions also increased by $6 million representing a reimbursement due from the
Grapevine Main project developer for capital contributions made by the City.
8
The City's operating expenses for 2021 decreased slightly by $1,384,790 or 1 %. Some functions such
as public safety and public works reflect decreases in operating expenses which are offset by an increase
in economic development. Public Safety expenses were down from FY20 resulting in lower salaries
related to COVID-19 activities. Public Works decreases resulted from roof replacements, lighting and
street improvements that were one-time projects completed in FY20. Economic development expenses
increased as a result of a community distribution for capital projects to GCISD.
All functions that include personnel reflect increases in expenses related to the City's OPEB plan. A net
of $6.3 million in expenses related to the City's OPEB plan were allocated across the governmental
activities. Additionally, insurance claims and premium cost increases for the fiscal year resulted in
increased expenses in the general government function of approximately $1.7 million.
S45.000.000
S40.000.000
S35.000.000
$30,000,000
S25.000.000
S20.000.000
$15,000.000
510.000,000
S5A00.000
S-
S60.000A00 Governmental Activities Revenues By Source
550,000.000 F
$40.000.000
S30.000.000 - -
S20.000.000
S10.000.000
SO
0WOMM
SALES TAXES PROPERTY TAXES CHARGES FOR HOTEL OCCUPANCY CAPITALGRANTS OPERATING FRANCHISE TAXES
SERVICES TAXES AND GRANTSANO
CONTRIBUTIONS CONTRIBUTIONS
02021 112020
Governmental Activities - Functional! Expenses
Cmmnnrisnn
GENERAL CULTURE AND
GOVERNMENT RECREATION
TOURISM PUBLIC WORKS ECONOMIC TRANSPORTATION INTEREST`ON
i 2021 a 2020 DEVELOPMENT LONG-TERM DEBT
Business -type activities — In total, the business -type activities increased the City's net position by
$11,067,044. Water and Sewer Utilities increased net position by $9,111,409 while Lake Enterprise (golf)
increased net position by $1,955,635.
9
The change in net position for the business -type activities was impacted by the Water and Sewer Fund
in the following ways: The City received donated assets valued at $4.4 million as well as a $1.7 million
refund from Trinity River Authority for unused project funds. In addition, Water and Sewer fund had a
decrease of $4.0 million in transfers to other funds. Charges for water and sewer increased, rainfall during
fiscal year 2021 was less compared to the prior year. This reduction in rainfall together with an increase
in rates led to an increase in charges for services. This led to higher charges for services and also an
increase in operating expenses related to the purchase, storage and treatment of water. Salary and
benefit expense increased by approximately $1.4 million as a result of increased OPEB expense
allocations to the fund.
The Lake Enterprise Fund (golf course) had increased revenues due to the new Grapevine golf course
facility which was completed in fiscal year 2021. As citizens and visitors continued to seek outdoor
activities, the golf course saw higher than normal traffic. The Lake Enterprise Fund also saw a decrease
in salary and benefits expenses of approximately $0.4 million as a result of decreased OPEB expense
allocations to the fund.
$34,000,000
$32,000,000
$30,000,000
$28,000,000
$26,000,000
$24,000,000
Business -type Activities Revenue and
Expense Comparison
2021
mOperating Revenues ■Expenses
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
2020
Governmental funds — The focus of the City's governmental funds is to provide information on near -term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's
financing requirements. In particular, unassigned fund balance may serve as a useful measure of a
government's net resources available for discretionary use as they represent the portion of fund balance
that has not yet been limited to use for a particular purpose by either an external party, the City itself, or
a group or individual that has been delegated authority to assign resources for use for particular purposes
by the City Council.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $98,676,141, a decrease of $15,243,068 compared with the prior year. Unassigned fund
balance is $9,804,934 (10.0%), which is available for spending at the City's discretion. The remainder of
fund balance is not available for new spending because it is (1) non -spendable ($1,324,729) (2) restricted
for debt service, capital projects, court security and technology, public safety, economic development,
transportation, tourism, records preservation and culture and recreation programs ($50,852,737) (3)
committed for stormwater drainage and public arts ($2,310,804) (4) or assigned for economic
development, capital projects, tourism, public safety, culture and recreation programs, and OPEB plan
contributions ($34,382,937).
10
Significant changes in fund balances of major funds are as follows:
General Fund — The General Fund is the chief operating fund of the City. At the end of FY 2021,
unassigned fund balance of the General Fund was $10,093,330, while total fund balance equaled
$11,582,854. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned
fund balance and total fund balance to total General Fund expenditures. Unassigned fund balance
represents approximately 17.6% of total General Fund expenditures, while the total fund balance
represents approximately 20.3% of that same amount.
The fund balance of the General Fund decreased by $8,559 for FY 2021. Revenues increased in the
General Fund from FY 2020 to FY 2021 by $7,558,288. Property taxes increased in the General Fund
by $781,464 for FY 2021. This increase is primarily due to increases in property values and a slight
increase in the M&O property tax rate. Sales taxes increased by $2,832,020 as the City began to see
recovery from the impacts of COVID-19. Intergovernmental revenue increased by $3,661,681 due to the
receipt of funds from the COVID-19 Coronavirus State and Local Fiscal Recovery Fund.
General Fund expenditures were relatively unchanged year over year. There were minor increases in
General Government, Public Safety, Culture and Recreation and Public Works as the City began to return
to pre COVID-19 operations. These increases were offset by a reduction of $648,940 in Capital Outlay
resulting from fewer land and machinery and equipment purchases.
Special Revenue — Hotel Occupancv Tax Fund — Fund balance in the Hotel Occupancy Tax Fund
decreased for FY 2021 by $763,367. This decrease can primarily be attributed to increased expenditures
related to a return to normal operations associated with tourism which includes the two main festivals
that were held in FY 2021 but not in FY 2020. Hotel occupancy taxes increased by $904,388. Charges
for services also increased by $2,019,144, or 59.3%, primarily as a result of the return of train excursions
and festivals.
Expenditures in the Hotel Occupancy Tax Fund increased from $15,850,705 in FY 2020 to $17,005,978
in FY 2021. As mentioned before, this increase was primarily attributed to a return to normal operations
associated with festival activity.
Special Revenue — Crime District Fund — Fund balance of the Crime District Fund increased by
$2,838,553. As the economy began to improve from the impacts of COVID-19, sales tax revenues, which
are the primary funding source of the Crime District Fund, increased by $1,538,089. Expenditures in the
Crime District Fund had a minimal increase of $404,559.
Special Revenue — 4B — Economic Development — The 413-Economic Development fund balance reflects
a minimal decrease of $4,999 over last fiscal year. Sales tax revenues increased by $826,359 during the
year due to improved economic conditions over FY 2020 caused by COVID- 19. Expenditures were down
by $302,977 primarily due a reduction in distributions during the year related to 380 agreements that the
City has entered into. These distributions were approximately $500,261 less than the previous fiscal year.
Special Revenue — 4B — Transit — The 4B-Transit ending fund balance was zero. Sales tax collected in
this fund has been pledged to the Fort Worth Transit Authority (the "T"). Any sales tax collections in this
fund, less half of the operating costs of the City's visitor shuttle service, are distributed to the "T" to help
fund commuter rail service in Grapevine. Sales taxes in this fund increased for the current period by
almost $605,763 because of improved economic conditions from FY 2020 due to the pandemic, and as
the revenues in this fund increase, so do the corresponding expenditures.
Debt Service Fund — The total fund balance of $6,681,805 in the Debt Service Fund is restricted for the
payment of debt obligations. This balance has declined by $607,791 and this is attributable to the City
paying more in debt service expenditures for the year than was collected in property taxes to repay the
debt.
11
Capital Proiects —TIF #1 —The net decrease in fund balance for the TIF #1 capital projects fund for fiscal
year 2021 was $3,069,033. The property taxes and investment earnings collected in this fund for the year
were $1,211,112. Expenditures for the fund for the current year include $4,280,145 in community
distributions to GCISD.
Capital Proiects — General Facilities and Equipment — The fund balance decreased $21,055,278 from
the prior year. The $25,136,893 decrease in capital outlay from fiscal year 2020 relates to the substantial
completion of the Grapevine Main, new fire stations, animal shelter, and golf clubhouse projects.
Additionally, general obligation bonds of $3,961,000 were issued in fiscal year 2021 to fund various
capital projects and equipment.
Provietary Funds — The City's proprietary funds provide the same type of information found in the
government -wide financial statements, but in more detail. Factors concerning the finances of the proprietary
funds have already been addressed in the discussion of the City's business -type activities.
General Fund Budgetary Highlights
Significant amendment changes:
There were no changes to budgeted revenues or expenditures for the fiscal year 2021.
Significant budget variances:
General Fund revenues came in roughly 9% higher than budgeted. This is primarily the result of
the City's economic recovery as the COVID-19 pandemic subsides.
Expenditures came in near budgeted levels with approximately $1 M of additional expenditures.
City costs for services accounted for the greatest increases due to a return of normal service
levels. Quality of Life, capital equipment, and capital maintenance transfers remained within the
General Fund to account for economic uncertainties related to COVID-19.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets —The City's investment in capital assets for its governmental and business -type activities
as of September 30, 2021, amounted to $588,378,355 (net of accumulated depreciation). This
investment in capital assets includes land, buildings, improvements, machinery and equipment,
infrastructure, intangible assets and construction in progress. The total net increase in the City's
investment in capital assets for the current fiscal year was $23,603,836 (4%).
Major capital asset events during the current fiscal year included the following:
• Grapevine Main and Harvest Hall construction of $8,421,219 was added to construction in
progress.
• Construction for the rebuild/remodel of four fire stations of $3,487,759 was added to construction
in progress, and all four completed stations were transferred to building assets totaling
$20,315,772.
• Construction in progress additions of $3,137,489 and $1,303,576 were added for the new golf
clubhouse and animal shelter, respectively.
12
• The acquisition of vehicles and equipment totaling $3,928,679, including $1,723,778 related to
public safety, $982,461 related to public works, $544,057 related to culture and recreation, and
$640,613 related to golf was added in fiscal year 2021. Of this total amount, $451,156 in vehicle
purchases were in construction in progress at the end of fiscal year 2020 due to delayed delivery
of vehicles and related equipment.
• Street construction of $3,691,750 was added to construction in progress related to Dallas Road,
and streets projects of $937,075 were completed and transferred out of construction in progress,
including improvements to Shady Brook Drive and Main Street lighting and intersection
improvements.
• The Water and Sewer Fund completed $3,781,982 in projects, which extended and improved the
City's water and sewer system. Donated water and sewer assets totaled $8,128,733.
CITY OF GRAPEVINE'S CAPITAL ASSETS AT YEAR-END
Governmental Activities
Business -type Activities
Totals
2021
2020
2021
2020
2021
2020
Land $
36,782,765
$ 34,496,800
$ 593,970
$ 593,970
$ 37,376,735 $
35,090,770
Right-of-way/easements
79,514,520
78,934,989
57,555,464
51,920,788
137,069,984
130,855,777
Construction in progress
112,602,574
112,876,261
1,927,349
2,501,786
114,529,923
115,378,047
Buildings
107,613,738
91,077,520
608,030
654,396
108,221,768
91,731,916
Improvements other
than buildings
36,068,213
38,538,976
1,184,738
986,992
37,252,951
39,525,968
Machinery and equipment
14,765,182
14,719,274
2,365,216
1,711,539
17,130,398
16,430,813
Software
167,797
93,875
60,060
70,075
227,857
163,950
Water storage rights
-
-
-
9,972
-
9,972
Infrastructure
53,983,182
55,163,827
82,585,557
79,423,479
136,568,739
134,587,306
Total $ 441,497,971 $ 425,901,522 $ 146,880,384 $ 137,872,997 $ 588,378,355 $ 563,774,519
Additional information on the City's capital assets can be found in Note V of the notes to the financial
statements.
Long-term debt —At the end of the current fiscal year, the City had total bonded debt outstanding of
$171,448,157.
CITY OF GRAPEVINE'S OUTSTANDING BONDS AND NOTES PAYABLE AT YEAR-END
Governmental Activities
Business -type Activities
Totals
2021
2020
2021 2020
2021
2020
General obligation bonds
$ 80,400,000
$ 84,490,000
$ - $ 455,000
$ 80,400,000 $
84,945,000
Certificates of obligation
49,770,000
40,680,000
7,395,000 7,800,000
57,165,000
48,480,000
Revenue bonds
24,760,000
27,445,000
- -
24,760,000
27,445,000
Contractual obligations
3,192,835
3,983,240
3,192,835
3,983,240
Tax notes
-
-
- -
-
-
Premium on bonds issued
5,631,912
7,018,360
298,410 352,468
5,930,322
7,370,828
$ 163,754,747 $ 163,616,600 $ 7,693,410 $ 8,607,468 $ 171,448,157 $ 172,224,068
Additional information on the City's long-term debt can be found in Note IX of the notes to the financial
statements.
13
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
In the fiscal year 2022 budget, total City revenues are budgeted at $175 million, an increase of $9 million
(5%) from the previous year. The City also lowered the property tax rate to $0.271811 per $100 of
valuation, which represents a 4% reduction from the fiscal year 2021 rate of $0.282601.
General Fund expenditures have been increased in the fiscal year 2022 budget by 5% or $3.4 million.
Sales tax budgets have been increased 18% and the hotel occupancy tax budget has been increased by
2%.
The economy of the City of Grapevine and the Dallas -Fort Worth Metroplex is expected to continue to
grow and rebuild as we recover from the COVID-19 pandemic. The City continues to focus on quality of
life, economic development, and cultural, educational and recreational amenities for the community.
The General Fund reserve requirement is expected to remain at approximately 20% of budgeted
expenditures for the fiscal year 2022. This meets the requirement of 20% of budgeted expenditures.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
The financial report is designed to provide our citizens, customers, investors and creditors with a general
overview of the City's finances. If you have questions about this report or need additional information,
contact the Finance Division, City of Grapevine, 200 S. Main Street, Grapevine, Texas 76051.
14
BASIC
FINANCIAL STATEMENTS
THIS PAGE LEFT BLANK INTENTIONALLY
ASSETS
Cash and investments
Receivables, net:
Taxes
Accounts
Notes
Internal balances
Due from primary government
Due from other governments
Inventory
Accrued interest
Prepaid expenses
Deposits
Restricted assets:
Cash and investments
Capital assets (net of accumulated depreciation):
Non -depreciable
Depreciable
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to pensions
Deferred outflows related to OPEB
Deferred loss on bond refunding
Total deferred outflows of resources
LIABILITIES
Accounts payable
Contracts and retainage payable
Accrued and other liabilities
Developer deposits
Customer deposits
Interest payable
Due to component unit
Due to other governments
Unearned revenue
Customer deposits
Noncurrent liabilities:
Due in one year
Due in more than one year
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to pensions
Deferred inflows related to OPEB
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted for:
Use of impact fees
Debt service
Capital projects
Court security and technology
Public safety
Records preservation
Economic development
Culture and recreation
Tourism
Unrestricted
Total net position
CITY OF GRAPEVINE, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2021
Primary Government
Governmental Business -type
Activities Activities
$ 97,073,487 $ 19,420,584 $
13,054,340
4,343,054
6,500,230
52,186
8,636,951
551,263
77,145
668,250
105,216
228,899,859
212,598,112
572,560,093
6,707,707
15,550,968
1,430,146
23,688,821
6,640,805
2,333,407
3,865,833
1,556,320
79,936
588,650
9,644
187,872
4,733,210
3,243,804
52,186)
75,440
10
35,029
5,546,559
60,076,783
86,803,601
175,149,624
644,563
1,740,769
11,666
2,396,998
1,921,020
54,936
305,953
31,526
-
1,031,343
13,281,178
498,526
263,783,847
19,188,269
297,060,702
23,031,573
8,371,081
804,398
7,913,891
885,877
16,284,972
1,690,275
292,356,762
141,818,801
-
2,871,462
22,149,669
-
26,632,135
494,849
790,844
13,408
5,080,146
184,118
104,272
-
( 64,902,963)
8,134,511
$ 282,903,240 $
152,824,774 $
Component
Unit
Heritage
Total
Foundation
116,494,071 $
330,091
13,054,340
-
7,586,858
6,500,230
-
9,644
8,636,951
-
626,703
77,155
703,279
105,216
5,546,559
-
288,976,642
450,067
299,401,713
662,981
747, 709, 717
1,452,783
7,352,270
-
17,291,737
1,441,812
26,085,819
-
8,561,825
4,840
2,388,343
-
4,171,786
1,556,320
79,936
620,176
9,644
187,872
-
4,733,210
7,768
1,031,343
-
13,779,704
282,972,116
-
320,092,275
12,608
9,175,479
-
8,799,768
17,975,247
-
434,175,563
1,113,048
2,871,462
-
22,149,669
26,632,135
494,849
790,844
13,408
5,080,146
184,118
104,272
-
56,768,452)
327,127
435,728,014 $
1,440,175
The accompanying notes are an integral
part of these financial statements.
15
CITY OF GRAPEVINE, TEXAS
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021
Functions/Programs
Primary government:
Governmental activities:
General government
Public safety
Culture and recreation
Public works
Transportation
Economic development
Tourism
Interest on long-term debt
Total governmental activities
Business -type activities:
Water and sewer
Lake Enterprise
Total business -type activities
Total primary government
Component unit:
Heritage Foundation
Program Revenue
Charges for
Operating Grants
Capital Grants
Expenses
Services
and Contributions
and Contributions
$ 20,933,648
$ 2,066,027
$ 6,998,854
$ 1,133,614
38,778,212
2,227,890
1,739,454
-
22,801,979
6,351,021
116,290
77,997
15,786,659
3,054,752
-
4,801,998
9,367,306
14,036
33,258
6,200,000
8,712,593
-
-
-
17,559,893
5,426,172
-
-
5,288,645
-
-
-
139,228,935
19,139,898
8,887,856
12,213,609
27,653,812
29,309,066
-
8,128,733
2,414,337
3,841,987
-
-
30,068,149
33,151,053
-
8,128,733
$ 169,297,084
$ 52,290,951
$ 8,887,856
$ 20,342,342
$ 103,622 $ 20,909 $
General revenues:
Taxes:
Property
Franchise
Hotel occupancy
Sales
Mixed beverage
Unrestricted investment income
Gain on sale of capital assets
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Prior period adjustment
Net position - beginning, as restated
Net position - ending
105,848 $ 2,893
The accompanying notes are an integral
part of these financial statements. 16
Net (Expense) Revenue and Changes in Net Position
Component
Primary Government
Unit
Governmental
Business -type
Heritage
Activities
Activities
Total
Foundation
$( 10,735,153)
$ - $(
10,735,153)
$ -
( 34,810,868)
- (
34,810,868)
-
( 16,256,671)
- (
16,256,671)
-
( 7,929,909)
- (
7,929,909)
-
( 3,120,012)
- (
3,120,012)
-
( 8,712,593)
- (
8,712,593)
-
( 12,133,721)
- (
12,133,721)
-
( 5,288,645)
- (
5,288,645)
-
( 98,987,572)
- (
98,987.572)
-
-
9,783,987
9,783,987
-
-
1,427,650
1,427,650
-
-
11,211,637
11,211,637
-
$( 98,987,572)
$ 11,211,637 $(
87,775,935)
$ -
26,028
$ 34,037,464 $
- $
34,037,464 $
-
5,978,215
-
5,978,215
-
12,625,773
-
12,625,773
-
56,914,190
-
56,914,190
-
1,793,124
-
1,793,124
-
26,472
25,266
51,738
242
711,133
236,757
947,890
-
263,502
-
263,502
7,610
406,616 (
406,616)
-
-
112,756,489 (
144,593)
112,611,896
7,852
13,768,917
11,067,044
24,835,961
33,880
272,492,323
141,757,730
414,250,053
1,406,295
( 3,358,000)
- (
3,358,000)
-
269,134,323
141,757,730
410,892,053
1,406,295
$ 282,903,240 $
152,824,774 $
435,728,014 $
1,440,175
17
CITY OF GRAPEVINE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2021
Special Revenue
Hotel
Crime
4B-Economic
General
Occupancv Tax
District
Development
ASSETS
Cash and investments
$ 7,422,972
$ 18,868,562
$
$ 11,880,088
Receivables (net of allowances
for uncollectibles):
Accounts
1,758,436
209,353
177,741
Taxes
6,046,745
1,339,810
2,718,885
890,185
Accrued interest
38
261
-
4
Notes
-
-
-
Inventory
548,608
2,655
Due from other funds
1,936,773
267,897
-
Due from other governments
3,878,435
-
19,180
-
Prepaid items
506,931
98,775
48,344
14,200
Deposits
5,216
100,000
-
-
Total assets
22,104,154
20,887,313
2,786,409
12,962,218
LIABILITIES
Accounts payable
1,354,516
1,720,983
126,371
683,335
Accrued liabilities
2,688,387
312,210
803,182
12,359
Due to other funds
-
-
1,824,047
-
Due to component unit
-
9,644
-
Due to other governments
187,781
-
-
Unearned revenue
2,083,286
1,887,031
19,180
Developer deposits
-
-
-
Customer deposits
79,936
-
-
-
Totalliabilities
6,393,906
3,929,868
2,772,780
695,694
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue
4,127,394
-
-
56,883
Total deferred inflows
of resources
4,127,394
-
56,883
FUND BALANCES (DEFICITS)
Nonspendable:
Inventory
548,608
2,655
-
-
Prepaid items
506,931
98,775
48,344
14,200
Deposits
5,216
100,000
-
-
Restricted for:
Debt service
-
-
1,402,400
Capital projects
-
Court security and technology
-
Economic development
1,269,491
Public safety
-
Records preservation
-
Tourism
104,272
Culture and recreation
-
Committed for:
Stormwater drainage operations
Public arts
-
Assigned for:
Economic development
9,523,550
Capital projects
-
-
-
Tourism
-
16,651,743
Culture and recreation
-
-
Public safety
-
OPEB
428,769
-
Unassigned
10,093,330
-
( 34,715)
-
Total fund balances
11,582,854
16,957,445
13,629
12,209,641
Total liabilities, deferred
inflows of resources and
fund balances
$ 22,104,154
$ 20,887,313
$ 2,786,409
$ 12,962,218
The accompanying notes are an integral
part of these financial statements. 18
Special
Revenue
46-Transit
Debt Service
$ 6,693,367 $
1,845,920
212,795
2
1,845,920
6,906,164
1,812,795
71,006
33,125
1,845,920
71,006
-
153,353
153,353
6,681,805
6,681,805
Capital Projects
General
Facilities and
TIF #1 Equipment
6,533,214 $ 14,328,214 $
4
6,533,218
2,689,312
3,843,906
6,533,218
$ 1,845,920 $ 6,906,164 $ 6,533,218 $
76,827
6,500,230
4,250,000
25,155, 271
337,272
8,333
400,000
745,605
10,311,691
10,311,691
Nonmajor
Governmental
Funds
31,200,876 $
2,197, 524
9
489,336
33,887,745
532,041
49,695
295,312
91
735,380
1,156,320
2,768,839
519,332
519,332
14,467,510
9,432,931
9,477,891
-
494,849
790,844
13,408
184,118
1,369,298
941,506
4,665,044
2,879,498
229,528
4,805
(
253,681)
14,097,975
30,599,574
25,155,271 $
33,887,745 $
Total
Governmental
Funds
96,927,293
4,343,054
13,054,340
77,145
6,500,230
551,263
2,204,670
8,636,951
668,250
105,216
133,068,412
6,638,319
3,865,833
2,152,484
9,644
187,872
4,733,210
1,556,320
79,936
19,223,618
15,168,653
15,168,653
551,263
668,250
105,216
22,551,715
21,600,134
494,849
5,113,397
790,844
13,408
104,272
184,118
1,369,298
941,506
9,523,550
7,544,542
16,651,743
229,528
4,805
428,769
9,804,934
98,676,141
133,068,412
19
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF GRAPEVINE, TEXAS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2021
Total fund balances - governmental funds balance sheet
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not reported in the funds.
Certain receivables will not be collected soon enough to pay for the current period's expenditures
and are, therefore, reported as deferred inflows of resources in the funds:
Property taxes
Property tax penalties and interest
Court fines and fees
Ambulance billing
Intergovernmental receivables
Other
An internal service fund is used to charge the cost of document management equipment
acquisition and maintenance to individual funds. The assets and liabilities of the internal service
fund are included in governmental activities.
Accrued bond interest is not due and payable in the current period and, therefore, is not reported
in the funds.
Retainage payable is not due and payable in the current period and, therefore, is not reported in
the funds.
Long-term liabilities and deferred losses on bond refundings,
resources, are not due and payable in the current period and,
funds. A summary of these items are as follows:
Long-term liabilities:
General obligation bonds
Certificates of obligations
Contractual obligation
Revenue bonds
Contractual obligations -private placement
Compensated absences
Deferred outflows of resources:
Deferred losses on bond refundings
reported as deferred outflows of
therefore, are not reported in the
98,676,141
441,497,971
100,566
208,667
151,959
106,466
14,206,710
394,285
143,708
588,650)
2,333,407)
82,543,081)
52,121,086)
1,432,489)
25,810,256)
1,847,835)
4,627,477)
1,430,146
Included in the items related to long-term liabilities is the recognition of the City's net pension
liability. The net position related to pensions included a deferred outflows of resources in the
amount of $6,707,707, a deferred inflows of resources in the amount of $8,371,081, and the net
pension liability of $29,445,281. ( 31,108,655)
Included in the items related to long-term liabilities is the recognition of the City's net OPEB
liability. The net position related to OPEB included a deferred outflows of resources in the amount
of $15,550,968, a deferred inflows of resources in the amount of $7,913,891, and the net OPEB
liability of $79,237,520. ( 71,600,443)
Net position of governmental activities
$ 282,903,240
The accompanying notes are an integral
part of these financial statements. 20
CITY OF GRAPEVINE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
REVENUES
Property taxes
Hotel occupancy taxes
Sales taxes
Mixed beverage taxes
Franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeitures
Investment income
Contributions
Miscellaneous
Total revenues
EXPENDITURES
Current:
General government
Public safety
Culture and recreation
Public works
Tourism
Economic development
Transportation
Capital outlay
Debt service:
Principal
Interest
Bond issuance costs
Fiscal agent charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Sale of capital assets
Refunding bonds issued
Bondsissued
Premium on issuance of bonds
Discount on issuance of refunding bonds
Payment to refunded bond escrow agent
Insurance recoveries
Total other financing sources
and uses
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING
PRIOR PERIOD ADJUSTMENT
FUND BALANCES, BEGINNING,
RESTATED
FUND BALANCES, ENDING
Special Revenue
Hotel
Crime
4B-Economic
General
Occupancy Tax
District
Development
$ 13,521,636
$ -
$
$
-
12,625,773
-
28,590,889
-
14,039,776
4,699,128
1,793,124
-
-
5,858,497
1,459,940
-
3,988,244
-
8,895
-
5,588,363
5,426,172
-
154,290
933,618
-
50,145
-
10,607
107,593
494
9,056
469,463
16,980
23,038
5,098
62,214,381
18,176,518
14,122,348
4,867,572
17,575,948
-
224,323
-
16, 505,107
17, 844,823
14,218,244
-
8,746,656
-
-
16,985,839
-
-
-
2,908,736
61,761
-
-
-
85,576
18,223
118,004
4,335
1,916
-
-
57,197,627
17,005,978
18,187,150
2,908,736
5,016,754
1,170,540
( 4,064,802)
1,958,836
3,872,309
278,852
6,903,355
22,981
( 9,983,504)
( 2,212,759)
-
( 2,015,565)
648,452
454,548
-
28,749
( 5,008,195) (
1,933,907)
6,903,355 (
1,963,835)
8,559 (
763,367)
2,838,553 (
4,999)
11,574,295
17,720,812 (
2,824,924)
12,214,640
11,574,295
17,720,812 (
2,824,924)
12,214,640
$ 11,582,854 $
16,957,445 $
13,629 $
12,209,641
The accompanying notes are an integral
part of these financial statements.
21
Special
Revenue
46-Transit Debt Service
$ 13,110,052 $
9,584,397
63 7,434
- 4,693
9,584,460 13,122,179
Capital Projects
General
Facilities and
TIF #1 Equipment
1,203,247 $ $
250,000
214,632
7,865 12,267
- 110,000
1,211,112 586,899
Nonmajor
Total
Governmental
Governmental
Funds
Funds
6,253,317 $
34,088,252
-
12,625,773
56,914,190
-
1,793,124
200,084
6,058,581
-
1,459,940
3,200,638
7,447,777
4,611,080
15,994,537
71,630
1,055,393
28,587
183,966
130,278
130,278
21,320
650,592
14, 516,934
138,402,403
-
-
557,186
131,789
18,489,246
-
163,689
1,173,207
35,686,826
-
-
3,842,018
18,060,262
-
161
2,159,455
10,906,272
-
-
191,448
17,177,287
-
-
4,280,145
1,510,250
8,699,131
9,305,545
-
-
-
9,367,306
-
-
19,792,401
7,230,123
27,244,327
9,505,000
-
2,035,405
11,540,405
5,368,866
-
-
572,493
5,941,359
217,505
-
30,248
53,753
301,506
-
116,467
-
1,092
1,039
124,849
9,305,545
15,207,838
4,280,145
20,544,777
18,900,980
163,538,776
278,915 (
2,085,659) (
3,069,033) (
19,957,878) (
4,384,046) (
25,136,373)
-
2,399,369
7,023,414
20,500,280
301,833) (
1,120,006)
- (
1,730,648) (
2,303,129) (
19,667,444)
-
-
-
648,452
44,945,000
-
-
-
44,945,000
-
-
3,680,129
6,539,871
10,220,000
-
-
311,119
552,882
864,001
(
31,856)
-
-
- (
31,856)
(
44,714,639)
-
- (
44,714,639)
-
-
-
-
4,214
487,511
301,833)
1,477,868
-
2,260,600
11,817,252
13,251,305
22,918) (
607,791) (
3,069,033) (
17,697,278)
7,433,206 (
11,885,068)
22,918
7,289,596
9,602,251
35,153,253
23,166,368
113,919,209
-
-
- (
3,358,000)
- (
3,358,000)
22,918
7,289,596
9,602,251
31,795,253
23,166,368
110,561,209
- $
6,681,805 $
6,533,218 $
14,097,975 $
30,599,574 $
98,676,141
22
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF GRAPEVINE, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Net change in fund balances - total governmental funds $( 11,885,068)
Amounts reported for governmental activities in the Statement of Activities are different because:
The net revenue/(expense) of certain activities of internal service funds are reported with
governmental activities. This is the change in net position of the internal service fund. ( 15,030)
Governmental funds report capital outlays as expenditures. However, in the Statement of
Activities the cost of those assets is allocated over their estimated useful lives and reported
as depreciation. This is the amount of capital outlay recorded in the current period. 30,882,660
Governmental funds do not recognize capital assets contributed by other entities. However,
in the Statement of Activities, the acquisition cost of those assets is recognized as revenue,
then depreciated over their estimated useful lives. 4,253,674
Depreciation on capital assets is reported in the Statement of Activities but does not require
the use of current financial resources. Therefore, depreciation is not reported as
expenditures in the governmental funds. ( 14,325,809)
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade•
ins, and donations) is to decrease net position. ( 851,050)
The issuance of long-term debt (e.g. bonds) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however, has any
effect on net position. Also, governmental funds report the effect of premiums, discounts, and
similar items when debt is first issued, whereas the amounts are deferred and amortized in
the Statement of Activities. This amount is the net effect of these differences in the treatment
of long-term debt and related items.
Issuance of debt ( 11,282,506)
Repayment of principal of long-term debt 11,540,405
Amortization of:
Premium on bond issuance 661,250
Loss on refunding ( 176,485)
Interest is accrued in the government -wide financial statements but not at the fund level. This
represents the change in the accrual during the period. 167,949
Current year changes in certain long-term liabilities do not require the use of current financial
resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences liability ( 72,921)
Net OPEB liability ( 6,264,253)
Net Pension liability 4,142,073
Retainage payable ( 2,208,629)
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds. 9,202,657
Change in net position of governmental activities $ 13,768,917
The accompanying notes are an integral
part of these financial statements. 23
CITY OF GRAPEVINE, TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
SEPTEMBER 30, 2021
Governmental
Business -type Activities - Enterprise
Funds
Activities
Water
Lake
Internal Service
and Sewer
Enterprise
Total
Fund
ASSETS
Current assets:
Cash and cash equivalents $
19,419,984 $
600 $
19,420,584
$ 146,194
Receivables, net
3,174,075
69,729
3,243,804
-
Accrued interest
10
-
10
-
Prepaid items
35,029
-
35,029
-
Inventory
-
75,440
75,440
-
Total current assets
22,629,098
145,769
22,774,867
146,194
Noncurrent assets:
Restricted cash and investments:
Bond construction
2,675,097
-
2,675,097
-
Impact fees
2,871,462
-
2,871,462
-
Total restricted cash
and investments
5,546,559
-
5,546,559
-
Capital assets:
Land
548,132
45,838
593,970
-
Easements
57,555,464
-
57,555,464
-
Construction in progress
1,904,497
22,852
1,927,349
-
Buildings
485,345
2,046,587
2,531,932
-
Improvements other than
buildings
-
9,084,270
9,084,270
-
Infrastructure
140,223,039
-
140,223,039
-
Vehicles, machinery and
equipment
4,547,275
1,750,894
6,298,169
115,612
Water storage rights
683,547
-
683,547
-
Computer software
70,102
-
70,102
60,608
Less accumulated depreciation (
61,734,083) (
10,353,375) (
72,087,458)
( 45,179)
Net capital assets
144,283,318
2,597,066
146,880,384
131,041
Total noncurrent assets
149,829,877
2,597,066
152,426,943
131,041
Total assets
172,458,975
2,742,835
175,201,810
277,235
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows related to
pensions
468,126
176,437
644,563
-
Deferred outflows related to OPEB
1,385,284
355,485
1,740,769
-
Deferred loss on bond refunding
11,666
-
11,666
-
Total deferred outflows
of resources
1,865,076
531,922
2,396,998
-
The accompanying notes are an integral
part of these financial statements. 24
CITY OF GRAPEVINE, TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
(Continued)
SEPTEMBER 30, 2021
LIABILITIES
Current liabilities:
Accounts payable $
Accrued liabilities
Due to other funds
Accrued bond interest payable
Retainage payable
Compensated absences
Bonds payable
Customer deposits
Total current liabilities
Noncurrent liabilities:
Bonds payable
Net OPEB liability
Net pension liability
Compensated absences
Total noncurrent liabilities
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Deferred inflows related to
to pensions
Deferred inflows related to OPEB
Total deferred inflows
of resources
NET POSITION
Net investment in capital assets
Restricted for:
Impact fees
Unrestricted
Total net position
Business -type Activities - Enterprise Funds
Water Lake
and Sewer Enterprise Total
Governmental
Activities
Internal Service
Fund
1,680,954 $
240,066 $
1,921,020 $ 2,486
219,618
86,335
305,953 -
-
52,186
52,186 -
31,526
-
31,526 -
54,936
-
54,936 -
42,119
31,407
73,526 -
425,000
-
425,000 -
1,031,343
-
1,031,343 -
3,485,496
409,994
3,895,490 2,486
7,268,410
-
7,268,410 -
7,058,497
1,811,312
8,869,809 -
2,054,962
774,511
2,829,473 -
126,358
94,219
220,577 -
16,508,227
2,680,042
19,188,269 -
19,993,723
3,090,036
23,083,759 2,486
584,210 220,188 804,398 -
704,971 180,906 885,877 -
1,289,181 401,094 1,690,275 -
139,221,735 2,597,066 141,818,801 131,041
2,871,462
10,947,950
$ 153,041,147 $(
2,871,462 -
2,813,439) 8,134,511 143,708
216,373) $ 152,824,774 $ 274,749
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF GRAPEVINE, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN NET POSITION - PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
OPERATING REVENUES
Charges for services
Miscellaneous
Total operating revenues
OPERATING EXPENSES
Salaries and benefits
Water purchases, storage,
and treatment
Refuse collections
Maintenance, repairs, and supplies
General and administrative
Depreciation
Total operating expenses
OPERATING INCOME (LOSS)
NONOPERATING REVENUES
(EXPENSES)
Gain on disposal of property
Loss on disposal of property
Investment income
Interest and fiscal agent charges
Total nonoperating revenues
(expenses)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS
Capital contributions
Transfers in
Transfers out
Total capital contributions
and transfers
CHANGE IN NET POSITION
TOTAL NET POSITION, BEGINNING
TOTAL NET POSITION, ENDING
Governmental
Business -type Activities - Enterprise Funds
Activities
Water
Lake
Internal Service
and Sewer
Enterprise
Total
Fund
$ 27,598,692
$ 3,814,981 $
31,413,673
$ 134,845
1,710,374
27,006
1,737,380
-
29,309,066
3,841,987
33,151,053
134,845
4,402,684
654,480
5,057,164
-
10,857,900
-
10,857,900
-
2,436,435
-
2,436,435
-
2,688,647
534,936
3,223,583
125,567
3,684,033
859,048
4,543,081
-
3,342,717
365,873
3,708,590
24,424
27,412,416
2,414,337
29,826,753
149,991
1,896,650
1,427,650
3,324,300
( 15,146)
-
236,757
236,757
-
( 5,089)
- (
5,089)
-
25,266
-
25,266
116
( 236,307)
- (
236,307)
-
( 216,130)
236,757
20,627
116
1,680,520
1,664,407
3,344,927 (
15,030)
8,128,733
426,220
8,554,953
-
1,120,006
-
1,120,006
-
( 1,817,850) (
134,992) (
1,952,842)
-
7,430,889
291,228
7,722,117
-
9,111,409
1,955,635
11,067,044 (
15,030)
143,929,738 (
2,172,008)
141,757,730
289,779
$ 153,041,147 $(
216,373) $
152,824,774 $
274,749
The accompanying notes are an integral
part of these financial statements.
26
CITY OF GRAPEVINE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Governmental
Business -type Activities - Enterprise Funds
Activities
Water
Lake
Internal Service
and Sewer
Enterprise
Total
Fund
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash received from customers
$ 29,790,717 $
3,803,778 $
33,594,495
$ -
Receipts from interfund charges for
document management services
-
-
-
134,845
Cash paid to employees
( 3,586,304) (
1,471,725) (
5,058,029)
-
Cash paid to suppliers
for goods and services
( 18,666,810) (
1,753,760) (
20,420,570)
( 124,664)
Net cash provided
by operating activities
7,537,603
578,293
8,115,896
10,181
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal paid on capital debt
( 860,000)
- (
860,000)
-
Interest paid on capital debt
( 260,006)
- (
260,006)
-
Acquisition and construction
of capital assets
( 3,542,243) (
683,101) (
4,225,344)
( 78,656)
Proceeds from the sale of assets
-
240,400
240,400
-
Net cash used by capital
and related financing activities
( 4,662,249) (
442,701) (
5,104,950)
( 78,656)
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest received on
investments and cash equivalents
25,290
-
25,290
116
Net cash provided
by investing activities
25,290
-
25,290
116
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfer in
1,120,006
-
1,120,006
-
Transfer out
( 1,817,850) (
134,992) (
1,952,842)
Net cash used by noncapital
financing activities
( 697.844) (
134,992) (
832,836)
-
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
2,202,800
600
2,203,400
( 68,359)
CASH AND CASH EQUIVALENTS,
BEGINNING
22,763,743
-
22,763,743
214,553
CASH AND CASH EQUIVALENTS,
ENDING
$ 24,966,543 $
600 $
24,967,143
$ 146,194
(Including $5,546,559 of restricted cash and cash equivalents
in the Water and Sewer Fund)
The accompanying notes are an integral
part of these financial statements. 27
CITY OF GRAPEVINE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
(Continued)
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH
PROVIDED (USED) BY OPERATING
ACTIVITIES
Operating income $
Adjustments to reconile operating
income to net cash provided (used)
by operating activities:
Depreciation
(Increase) decrease in assets:
Customer receivable
Prepaid items
Due from other funds
Inventories
Increase (decrease) in liabilities:
Accounts payable
Accrued liabilities
Other liabilities
Customer deposits
Net OPEB liability
Net pension liability
Compensated absences
Total adjustments
Net cash provided
by operating activities $
SCHEDULE OF NON -CASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Contributions of capital assets $
Governmental
Business -type Activities - Enterprise Funds Activities
Water Lake Internal Service
and Sewer Enterprise Total Fund
1,896,650 $ 1,427,650 $ 3,324,300 $( 15,146)
3,342,717
365,873
3,708,590 24,424
82,898 (
38,209)
44,689 -
546,283
-
546,283 -
396,400
-
396,400 -
- (
2,685) (
2,685) -
453,922
80,953
534,875 903
24,556
8,195
32,751 -
- (
438,044) (
438,044) -
2,353
-
2,353 -
1,071,769 (
812,622)
259,147 -
272,575) (
34,614) (
307,189) -
7,370)
21,796
14,426 -
5,640,953 (
849,357)
4,791,596 25,327
7,537,603 $
8,128,733 $
578,293 $ 8,115,896 $ 10,181
426,220 $ 8,554,953 $ -
28
CITY OF GRAPEVINE, TEXAS
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2021
ASSETS
Cash and cash equivalents
Total assets
LIABILITIES
Accounts payable
Total liabilities
NET POSITION
Restricted for scholarships
Restricted for individuals and organizations
Total net position
Private -Purpose Custodial
Trust Fund Fund
$ 14,492 $ 178,137
14,492 178,137
106
106
14,492 -
- 178,031
$ 14,492 $ 178,031
The accompanying notes are an integral
part of these financial statements. 29
CITY OF GRAPEVINE, TEXAS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2021
ADDITIONS
Investment earnings:
Interest, dividends, and other
Total investments earnings
Collections on behalf of employees
Total additions
DEDUCTIONS
Payments on -behalf of employees
Total deductions
NET INCREASE (DECREASE) IN
FIDUCIARY NET POSITION
NET POSITION, BEGINNING
PRIOR PERIOD ADJUSTMENT
NET POSITION, BEGINNING, RESTATED
NET POSITION, ENDING
The accompanying notes are an integral
part of these financial statements. 30
Private -Purpose Custodial
Trust Fund Fund
$ 11 $ 165
11 165
38,070
11 38,235
27,909
27,909
11 10,326
14,481 167,705
14,481 167,705
$ 14,492 $ 178,031
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF GRAPEVINE, TEXAS
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Grapevine ("City") is a municipal corporation incorporated under Article XI of the Texas
Constitution (Home Rule Amendment). The City operates under a Council -Manager form of government
and provides such services as are authorized by its charter to advance the welfare, health, safety, and
convenience of its citizens.
The accounting and reporting policies of the City relating to the funds included in the accompanying
financial statements conform to generally accepted accounting principles applicable to state and local
governments. The following represents the more significant accounting and reporting policies and
practices used by the City.
A. Reporting Entitv
The accompanying financial statements present the City and its component units, entities for which
the City is considered to be financially accountable. Blended component units, although legally
separate entities, are, in substance, part of the City's operations and are appropriately presented as
funds of the primary government. Discretely presented component units, on the other hand, are
reported in a separate column in the government -wide financial statements to emphasize they are
legally separate from the City.
Based on these criteria, the financial information of the following entities has been blended or
discretely presented within the financial statements.
Blended Component Units
Grapevine Tax Increment Financing District Reinvestment Zone Number One and Two (the "TIFs")
were formed to finance and make public improvements under the authority of the Tax Increment
Financing Act. The TIFs are governed by two separate boards of directors that are substantively the
same as the City Council. The chairman of the board is also designated by the City Council. The City
is obligated for the debts of both TIFs.
The Grapevine Crime Control and Prevention District (Crime District) was established to account for
the accumulation and use of sales tax proceeds designated for crime reduction programs. One-half
(1/2) cent of local sales and use tax within the district funds the Crime District. The Board of Directors
of the Crime Control and Prevention District is substantively the same as the City Council. The City is
entitled to and can otherwise access all the resources of the Crime District.
The Grapevine 4B Economic Development Corporation consists of two funds. The 4B Transit Fund
accounts for funds designated for Grapevine's participation in the commuter rail development project
with the Fort Worth Transit Authority (the "T"). The 4B Economic Development Fund accounts for
funds used to stimulate the local economy, development, and redevelopment opportunities. One-half
(1/2) cent local sales and use tax within the City funds these two blended component units. Three
eighths (3/81') of one cent of the local sales tax is used to fund the 4B Transit Fund. One eighth (1/8tn)
of one cent of the local sales tax is used to fund the 4B Economic Development Fund. The Board of
Directors of the Grapevine 4B Economic Development Corporation include citizens as members but
is substantively the same as the City Council. The City is entitled to and can otherwise access all the
resources of the Grapevine 4B Economic Development Corporation.
Separate financial statements for the TIF funds, Crime Control and Prevention District, the 4B Transit
Fund, and the 4B Economic Development Fund are not prepared.
31
Discretely Presented Component Unit
Grapevine Heritage Foundation (the "Foundation") is a Texas nonprofit corporation governed by a 9-
member board of directors appointed by the City Council, which includes a City Council member and
the Director of the City's Convention and Visitor's Bureau. The Foundation's operating budget is
subject to the approval of the City Council. The City is able to impose its will on the Foundation. The
board is not substantively the same as the City Council. The Foundation does not provide services to
the City.
Separate financial statements are not prepared for the Heritage Foundation.
B. Government -wide and Fund Financial Statements
The basic financial statements include both government -wide (based on the City as a whole) and
fund financial statements. The government -wide financial statements (i.e., the statement of net
position and the statement of activities) report information on all the nonfiduciary activities of the
primary government and its component units. For the most part, the effect of interfund activity has
been removed from these statements. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from business -type activities, which
rely to a significant extent on fees and charges for support. Likewise, the primary government is
reported separately from certain legally separate component units for which the primary government
is financially accountable.
The government -wide statement of activities demonstrates the degree to which the direct expenses of a
functional category (public safety, culture and recreation, tourism, etc.) or segment are offset by
program revenues. Direct expenses are those that are clearly identifiable with specific function or
segment. Program revenues include (1) charges to customers or applicants who purchase, use, or
directly benefit from goods, services, or privileges provided by a given function or segment, and
(2) grants and contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among program revenues
are reported instead as general revenues.
Separate fund based financial statements are provided for governmental funds, proprietary funds,
and fiduciary funds, even though the latter are excluded from the government -wide financial
statements. Major individual governmental funds and major individual enterprise funds are reported
as separate columns in the fund financial statements. The non -major funds are aggregated in a
separate column in the fund financial statements. The non -major funds are detailed in the
supplementary information section of this report.
The City's fiduciary funds are presented in the fund financial statements by type. Since these assets
are being held for the benefit of a third party and cannot be used to address activities or obligations of
the City, these funds are not incorporated into the government -wide statements.
The government -wide focus is more on the sustainability of the City as an entity and the change in
aggregate financial position resulting from the activities of the fiscal period. The focus of the fund
financial statements is on the major individual funds of the governmental and business -type
categories, as well as the fiduciary funds (by category). Each presentation provides valuable
information that can be analyzed and compared to enhance the usefulness of the information.
C. Measurement Focus. Basis of Accountinq and Financial Statement Presentation
The government -wide and fiduciary fund financial statements are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of related
cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants
and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
32
Governmental fund level financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon
as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current period.
For this purpose, the City considers revenues to be available if they are collected within 60 days of
the end of the current fiscal period. In applying the susceptible to accrual concept to
intergovernmental revenue, the legal and contractual requirements of the numerous individual
programs are used as guidance. Generally, monies must be expended on a specific purpose or
project before any amounts will be paid to the City; therefore, revenues are recognized based upon
the expenditures recorded. Ad valorem taxes are recognized as revenues in the year for which they
are levied. Sales taxes, franchise taxes, hotel occupancy taxes, charges for services and fines are
recognized as revenue as earned, when measurable and available. Licenses, permits, and
miscellaneous revenues (except earnings on investments) are recorded as revenues when received
in cash because they are generally not measurable until received. Investment earnings are recorded
as earned since they are measurable and available.
All proprietary funds are accounted for using the economic resources measurement focus and the
accrual basis of accounting. With this measurement focus, all assets, deferred outflows of resources,
liabilities and deferred inflows of resources associated with the operation of these funds are included
on the statement of net position. Proprietary fund -type operating statements present increases (e.g.,
revenues) and decreases (e.g., expenses) in net position. Proprietary funds distinguish operating
revenues and expenses from nonoperating items. Operating revenues and expenses generally result
from providing services and producing and delivering goods in connection with a proprietary fund's
principal ongoing operations. The principal operating revenues of the City's water and sewer and
municipal golf course are charges to customers for sales and services. Operating expenses for the
enterprise funds include the cost of sales and services, administrative expenses, and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as non -operating
revenues and expenses.
During operations, the City has activity between funds for various purposes. Any residual balances
outstanding at year-end are reported as due from/to other funds and advances to/from other funds.
While these balances are reported in fund financial statements, certain eliminations are made in the
preparation of the government -wide financial statements. Balances between the funds included in
governmental activities (i.e., the governmental funds) are eliminated so that only the net amount is
included as internal balances in the governmental activities column. Similarly, balances between the
funds included in business -type activities (i.e., the enterprise funds) are eliminated so that only the
net amount is included as internal balances in the business -type activities column.
Further, certain activity occurs during the year involving transfers of resources between funds. In fund
financial statements, these amounts are reported at gross amounts as transfers in/out. While reported
in fund financial statements, certain eliminations are made in the preparation of the government -wide
financial statements. Transfers between the funds included in governmental activities are eliminated
so that only the net amount is included as transfers in the governmental activities column. Similarly,
balances between the funds included in business -type activities are eliminated so that only the net
amount is included as transfers in the business -type activities column. However, interfund services
provided and used are not eliminated in the process of consolidation.
Governmental Funds
The focus of governmental fund measurement (in the fund financial statements) is upon
determination of financial position and changes in financial position (sources, uses, and balances of
financial resources) rather than upon net income. The following is a description of the major
governmental funds of the City:
The City reports the following major governmental funds:
The General Fund accounts for several of the City's primary services (general
administration, police administration, fire, public works, libraries, culture and recreation,
etc.) and is the primary operating fund of the City.
33
The Hotel Occupancv Tax Fund is a special revenue fund that accounts for all hotel
occupancy tax revenues that are restricted by state statute and can only be used on
expenditures related to tourism activities. Additional local revenues generated though
tourism activities are accumulated in this fund and are assigned for use on expenditures
related to tourism.
The Crime District Fund is a special revenue fund that accounts for the accumulation and
use of sales tax restricted for crime reduction programs.
The 4-B Economic Development Fund accounts for the accumulation of sales tax
restricted for economic development projects and local funds assigned by the City to
stimulate the local economy, development, and redevelopment.
The 4B Transit Fund is a special revenue fund that accounts for the accumulation of sales
tax restricted to fund the City's participation in the commuter rail development project with
the Fort Worth Transit Authority (the "T").
The Debt Service Fund is used to account for the accumulation of restricted property tax
resources levied for the payment of general long-term debt principal, interest, and related
costs of governmental funds.
The Tax Increment Financing (TIF) #1 Capital Proiects Fund is used to account for
capital acquisition and construction, economic incentives, and other expenditures
authorized by the TIF #1 Board of Directors.
The General Facilities and Equipment Fund is a capital projects fund used to account
for the general financing, acquisition, construction and improvements of the City's
buildings and capital equipment.
Proprietary Funds
The focus of proprietary fund measurement is upon determination of operating income, changes in
net position, financial position, and cash flows, which is similar to businesses. The following is a
description of the major proprietary funds of the City:
The Water and Sewer Fund accounts for the operation of the City's water and sewer
utility activities including administration, operation and maintenance of the water and
sewer system, and billing and collection activities. All costs are financed through charges
made to utility customers with rates reviewed regularly and adjusted, if necessary, to
ensure integrity of the fund.
The Lake Enterprise Fund includes the operations of the City's municipal golf course.
The Internal Service Fund accounts for revenues and expenses related to document
management services provided to parties inside the City on a cost -reimbursement basis.
Because the principal users of the internal services are accounted for in the City's
governmental activities, this fund is included in the "Governmental Activities" column of
the government -wide financial statements.
Fiduciary Funds
The Private -purpose Trust Fund is used to account for investments and interest for the
benefit of the W.D. Tate Scholarship fund. The benefits are dedicated to recipients in
according with the benefit terms. The donations and other contributions received by the
City do not belongs to the City and cannot be spent to further the City's own objectives.
The Custodial Fund is used to account for assets held, not in a trust, by the City in a
custodial capacity for individuals, private organizations, or other governments.
34
D. Assets, liabilities, deferred outflows/inflows of resources, and net position/fund balance
1. Cash and cash equivalents
The City's cash and cash equivalents are considered to be cash on hand, demand deposits
and short-term investments with original maturities of three months or less from the date of
acquisition.
2. Investments
Investments of the City are reported at fair value, except for the position in investment pools.
Investment pools are reported at the net asset value per share (which approximates fair value)
even though it is calculated using the amortized cost method.
3. Property Taxes and Other Receivables
The City's property tax is levied each October 1, on the assessed value listed as of the prior
January 1 for all real property located in the City. The appraisal of property within the City is the
responsibility of the Central Appraisal Districts of Dallas, Denton, and Tarrant Counties as
required by legislation passed by the Texas Legislature. The Appraisal Districts are required
under such legislation to assess all property within their Appraisal District on the basis of 100%
of its appraised value and is prohibited from applying any assessment ratios. The assessed
value upon which the completed tax year 2020 levy was based was approximately
$9,306,071,773. The value of property within the Appraisal District must be reviewed every five
years; however, the City may, at its own expense, require annual reviews of appraised values.
The City may challenge appraised values established by the Appraisal District through various
appeals and, if necessary, legal action.
General property taxes are limited by the Texas Constitution to $2.50 per $100 of assessed
valuation. The combined tax rate to finance maintenance and operations and debt service for
the year ended September 30, 2021, was $0.282601 per $100 of assessed valuation.
Property taxes attach as an enforceable lien on property as of January 1 following the levy
date. Taxes are due by January 31 following the levy date. Property taxes levied for 2021 are
recorded as receivables, net of estimated uncollectibles. The collections during 2021 and those
considered "available" at year-end are recognized as revenues in 2021. The City considers
property taxes available if they are collected within 60 days after year-end. Prior year levies were
recorded using these same principles. The remaining receivables are reflected as deferred
inflows of resources in the fund financial statements.
Property taxes are imposed nonexchange revenues. Assets from imposed nonexchange
transactions are recorded when the entity has enforceable legal claim to the asset, or when the
entity receives resources, whichever comes first. The enforceable legal claim date for property
taxes is the assessment date. The assessment date has been designated in the enabling
legislation as October 1.
4. Inventories and Prepaid Items
Inventories are valued at average cost on a first -in, first -out basis. Inventories in the General
Fund are recorded using the consumption method (i.e., recorded as an expenditure when used
rather than when purchased).
Prepaid items are payments made by the City in the current year to provide services occurring
in the subsequent fiscal year. A corresponding portion of fund balance is shown as
nonexpendable in governmental funds to indicate it is not available for other subsequent
expenditures. Prepaid items are defined as payments of greater than $5,000 that benefit future
periods. The cost of prepaid items is recorded as expenditures/expenses when consumed
rather than when purchased.
35
5. Restricted Assets
Certain proceeds of the City's general obligation bonds and certificates of obligation are
classified as restricted assets on the balance sheet because their use is limited by applicable
bond restrictions. Also included in restricted assets are impact fees, which are restricted for use
in infrastructure projects.
6. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, sidewalks, and similar items), are reported in the applicable governmental or business -
type activities column in the government -wide financial statements. Capital assets, other than
infrastructure, are defined by the City as assets with an initial, individual cost of more than
$5,000 and an estimated useful life in excess of two years. Infrastructure assets are defined by
the City as assets costing in excess of $50,000 that have an estimated useful life in excess of
two years. Such assets are recorded at historical cost if purchased or constructed. Donated
capital assets are recorded at acquisition cost at the date of donation. The costs of normal
maintenance and repairs that do not add to the value of the asset or materially extend assets
lives are not capitalized.
Depreciation has been provided on a straight-line basis over the estimated useful lives of the
assets.
The estimated useful lives are as follows:
Assets Years
Buildings
7-40
Water and sewer system
30-50
General infrastructure
20-30
Improvements other than buildings
10-20
Machinery and equipment
3-10
Water storage rights
40
Other intangibles
3-20
Motor vehicles
3-10
7. Deferred Inflows and Outflows of Resources
In addition to assets, the statement of net position and/or balance sheet will sometimes report a
separate section for deferred outflows of resources. This separate financial statement element,
deferred outflows of resources, represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until
then. The City has the following items that qualify for reporting in this category.
• Deferred loss on debt refundings — A deferred loss on refunding results from the difference in
the carrying value of refunded debt and its reacquisition price. This amount is deferred and
amortized over the shorter of the life of the refunded or refunding debt.
• Pension and OPEB contributions after measurement date — These contributions are deferred
and recognized in the following fiscal year.
• Changes in actuarial assumptions and other inputs included in determining the pension and
OPEB liability — This difference is deferred and recognized over the estimated average
remaining lives of all members determined as of the measurement date.
• Differences between expected and actual economic experience for the City's pension and
OPEB plan — These effects on the pension and OPEB liability are deferred and amortized
over a closed period equal to the average of the expected remaining service lives of all
employees that are provided with benefits through the pension plan (active employees and
inactive employees).
36
In addition to liabilities, the balance sheet will sometimes report a separate section for deferred
inflows of resources. This separate financial statement element represents an acquisition of
fund balance that applies to a future period(s) and, therefore, will not be recognized as an
inflow of resources (revenue) until that time. The City has one type of item that arises only
under the modified accrual basis of accounting that qualifies for reporting in this category.
Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance
sheet.
In addition, the City has deferred inflows of resources that are required to be reported on the
Statements of Net Position under the full accrual basis of accounting. Deferred inflows of
resources reported in the Statements of Net Position are as follows:
• Differences between expected and actual economic experience for the City's pension and
OPEB plans — These effects on the total pension liability are deferred and amortized over a
closed period equal to the average of the expected remaining service lives of all employees
that are provided with benefits through the pension plan (active employees and inactive
employees).
• Changes in actuarial assumptions and other inputs included in determining the OPEB liability
— This difference is deferred and recognized over the estimated average remaining lives of all
members determined as of the measurement date.
Difference in projected and actual earnings on pension and OPEB assets — This difference is
deferred and amortized over a closed five-year period.
8. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation,
compensatory time, and sick pay benefits. Employees are reimbursed upon termination for
accumulated vacation and only non-exempt employees are reimbursed for compensatory time.
The liabilities for these amounts are accrued as they are incurred in the government -wide and
proprietary fund financial statements. Employees are not reimbursed upon termination for
accumulated sick leave.
9. Long-term Debt
In the government -wide financial statements, and proprietary funds in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business -type activities, or proprietary fund type statement
of net position. Bond premiums and discounts are deferred and amortized over the life of the
bonds. Bonds payable are reported net of the applicable bond premium or discount.
In the fund financial statements, governmental funds recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is
reported as other financing sources. Premiums received on debt issuances are reported as
other financing sources while discounts on debt issuances are reported as other financing
uses. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as
debt service expenditures.
10. Pensions
For purposes of measuring the net pension liability, pension related deferred outflows and inflows
of resources, and pension expense, City specific information about its fiduciary net position in the
Texas Municipal Retirement System (TMRS) and additions to/deductions from TMRS's fiduciary
net position have been determined on the same basis as they are reported by TMRS. For this
purpose, plan contributions are recognized in the period that compensation is reported for the
employee, which is when contributions are legally due. Benefit payments and refunds are
recognized when due and payable in accordance with the benefit terms. Investments are reported
at fair value.
37
11. Other Postemployment Benefits (OPEB)
The City provides eligible employees with certain postemployment health and life insurance
benefits that meet the criteria of a defined benefit OPEB plan under Governmental Accounting
Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions. The City has placed assets in trust to pay the
obligations of the plan with the Public Agencies Retirement Services (PARS). Because plan
assets are pooled by PARS with those of other plans for investment, the City's plan meets the
criteria of an agent multiple -employer plan under GASB Statement No. 75.
The City has not established a formal funding policy and there is no actuarially determined
contribution. Therefore, for purposes of measuring the net OPEB liability, OPEB related
deferred outflows and inflows of resources, and OPEB expense, benefit payments and refunds
are recognized when due and payable in accordance with the benefit terms. Contributions are
not required but are measured as payments by the City for benefits due and payable that are
not reimbursed by plan assets. Information regarding the City's net OPEB liability is obtained
from a report prepared by a consulting actuary, Gabriel Roeder Smith & Company, in
compliance with GASB Statement No. 75.
12. Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications
that comprise a hierarchy that is based primarily on the extent to which the City is bound to
honor constraints on the specific purposes for which amounts in the respective governmental
funds can be spent. The classifications used in the governmental fund financial statements are
as follows:
Nonspendable: This classification includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) are legally or
contractually required to be maintained intact. Nonspendable items are not
expected to be converted to cash or are not expected to be converted to cash
within the next year.
Restricted: This classification includes amounts for which constraints have been
placed on the use of the resources either (a) externally imposed by creditors,
grantors, contributors, or laws or regulations of other governments, or (b)
imposed by law through constitutional provisions or enabling legislation.
Committed: This classification includes amounts that can be used only for
specific purposes pursuant to constraints imposed by ordinance of the City
Council. These amounts cannot be used for any other purpose unless the City
Council removes or changes the specified use by taking the same type of action
that was employed when the funds were initially committed. This classification
also includes contractual obligations to the extent that existing resources have
been specifically committed for use in satisfying those contractual requirements.
Assigned: Amounts in the assigned fund balance classification are intended to be
used by the City for specific purposes but do not meet the criteria to be classified
as committed. The City Council has, by resolution, authorized the City Manager
to assign fund balance. The City Council may also assign fund balance as it does
when appropriating fund balance to cover the gap between estimated revenue
and appropriations in the subsequent year's budget. Unlike commitments,
assignments generally only exist temporarily. In other words, an additional action
does not normally have to be taken for the removal of an assignment.
• Unassigned: This classification includes the residual fund balance for the
General Fund. The unassigned classification also includes negative residual fund
balance of any other governmental fund that cannot be eliminated by offsetting of
assigned fund balance amounts.
38
13. Fund balance flow assumptions
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balance is available, the City considers restricted funds to have been spent first. When an
expenditure is incurred for which committed, assigned, or unassigned fund balances are
available, the City considers amounts to have been spent first out of committed funds, then
assigned funds, and finally unassigned funds.
14. Net position flow assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g.,
restricted bond or grant proceeds) and unrestricted resources. To calculate the amounts to
report as restricted net position and unrestricted net position in the government -wide and
proprietary fund financial statements, a flow assumption must be made about the order in which
the resources are considered to be applied. It is the City's policy to consider restricted net
position to have been depleted before unrestricted net position is applied.
15. Future financial reporting requirements
The City has reviewed GASB pronouncements that become effective in future years and notes
the following statements are applicable to the City.
Statement No. 87, Leases — This statement changes the recognition requirements for certain
lease assets and liabilities for leases that are currently classified as operating leases. This
statement will become effective for the City in fiscal year 2022.
Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction
Period — The objectives of this statement are to (1) enhance the relevance and comparability of
information about capital assets and the cost of borrowing for a reporting period and (2) to
simplify accounting for interest cost incurred before the end of a construction period. This
statement will become effective for the City in fiscal year 2022.
Statement No. 91, Conduit Debt Obligations - The Statement provides a single method of
reporting conduit debt obligation by issuers and eliminate diversity in practice associated with
(1) commitments extended by issuers, (2) arrangements associated with conduit debt
obligations, and (3) related note disclosures. GASB 91 will be implemented by the City in fiscal
year 2023 and the impact has not yet been determined.
Statement No. 92, Omnibus 2020 — The objectives of this Statement are to enhance
comparability in accounting and financial reporting and to improve the consistency of
authoritative literature by addressing practice issues that have been identified during
implementation and application of certain GASB Statements. GASB 92 will be implemented by
the City in fiscal year 2022 and the impact has not yet been determined.
Statement No. 93, Replacement of Interbank Offered Rates — Some governments have entered
into agreements in which variable payments made or received depend on an interbank offered
rate (IBOR)-most notably, the London Interbank Offered Rate (LIBOR). As a result of global
reference rate reform, LIBOR is expected to cease to exist in its current form at the end of
2021, prompting governments to amend or replace financial instruments for the purpose of
replacing LIBOR with other reference rates, by either changing the reference rate or adding or
changing fallback provisions related to the reference rate. GASB 93 will be implemented by the
City in fiscal year 2022 and the impact has not yet been determined.
Statement No. 94, Public -Private and Public -Private Partnerships and Availability Payment
Arrangements — The primary objective of this Statement is to improve financial reporting by
addressing issues related to public -private and public -public partnership arrangements (PPPs).
GASB 94 will be implemented by the City in fiscal year 2023 and the impact has not yet been
determined.
39
Statement No. 96, Subscription -Based Technology Arrangements — this Statement provides
guidance on the accounting and financial reporting for subscription -based information
technology arrangements (SBITAs) for government end users (governments). To the extent
relevant, the standards for SBITAs are based on the standards established in Statement No.
87, Leases, as amended. GASB 96 will be implemented by the City in fiscal year 2023 and the
impact has not yet been determined.
Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting
for Internal Revenue Code Section 457 Deferred Compensation Plans — an amendment of
GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. — The
primary objectives of this Statement are to (1) increase consistency and comparability related to
the reporting of fiduciary component units in circumstances in which a potential component unit
does not have a governing board and the primary government performs the duties that a
governing board typically would perform; (2) mitigate costs associated with the reporting of
certain defined contribution pension plans, defined contribution other postemployment benefit
(OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other
employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and
(3) enhance the relevance, consistency, and comparability of the accounting and financial
reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section
457 plans) that meet the definition of a pension plan and for benefits provided through those
plans. GASB 97 will be implemented by the City in fiscal year 2022 and the impact has not yet
been determined.
CASH AND INVESTMENTS
As of September 30, 2021, the City had the following cash and investments:
Weighted
Primary government
Cash and cash equivalents:
Cash deposits - City
Certificates of deposit
Total cash and cash equivalents
Investment pools:
Tex Pool
Tex Pool Prime
LOGIC
Total investment pools
Total cash and investments of
the primary government
Portfolio weighted average maturity (days)
Discretely Presented Component Unit
Cash deposits
Total cash and investments
of the reporting entity
Percent
Average
of Total
Maturity
9/30/2021
Portfolio
(Days)
$ 4,139,771
3,995,329
3%
146
8,135,100
5,125,871
4%
37
23,520,925
20%
48
85,451,363
73%
59
114,098,159
$ 122,233,259
59
$ 330,091
$ 122,563,350
Reconciliation to the basic financial statements. The cash and investments as of September 30, 2021, are
reported in the financial statements as follows:
Government -wide Statement of Net Position:
Governmental activities
$ 97,073,487
Business -type activities
24,967,143
Discretely presented component unit
330,091
Fiduciary Funds Statement of Net Position:
Private Purpose Trust Fund
14,492
Custodial Fund
178,137
Total cash and investments
$ 122,563,350
40
Investment pools are not categorized as to investment risk since specific securities relating to the City
cannot be identified. Under the TexPool Participation Agreement, administrative and investment services
to TexPool and TexPool Prime are provided by Federated Investors, Inc. through an agreement with the
State of Texas Comptroller of Public Accountants. The State Comptroller is the sole officer, director, and
shareholder of the Texas Treasury Safekeeping Trust Company authorized to operate TexPool and
TexPool Prime.
Under the LOGIC Participation Agreement, administrative and investment services to LOGIC are provided
by Hilltop Securities, Inc. and JP Morgan Asset Management, Inc. as co -administrators. The
administrators settle all trades for LOGIC and secure and value its assets every day. The fair value of the
City's position in these pools is the same as the value of the pool shares. As of September 30, 2021, the
City's investments in LOGIC, TexPool and TexPool Prime were all rated AAAm by Standard & Poor's.
TexPool, TexPool Prime and LOGIC each have a redemption notice period of one day and may redeem
daily. The investment pools' authority may only impose restrictions on redemptions in the event of a
general suspension of trading on major securities markets, general banking moratorium or national state
of emergency that affects the pool's liquidity.
Interest Rate Risk. In accordance with its investment policy, the City minimizes the risk that the interest
earnings and the fair value of investments in the portfolio will fall due to changes in general interest rates,
by:
a. Structuring the investment portfolio so that investments mature to meet cash
requirements for ongoing operations, thereby avoiding the need to liquidate
investments prior to maturity.
Investing operating funds primarily in certificates of deposit, shorter -term securities,
money market mutual funds, or local government investment pools functioning as
money market mutual funds.
c. Diversifying maturities and staggering purchase dates to minimize the impact of
market movements over time.
Credit Risk. In accordance with its investment policy, the City minimizes credit risk, the risk of loss due to
the failure of the issuer or backer of the investment by:
a. Limiting investments to the safest types of investments.
b. Pre -qualifying the financial institutions and broker/dealers with which the City will do
business.
c. Diversifying the investment portfolio so that potential losses on individual issuers will
be minimized.
Concentration of Credit Risk. The City's investment policy allows up to 100% to be invested in U. S.
Treasury Bills/Notes/Bonds, and U. S. Agencies and Instrumentalities.
Custodial Credit Risk. State statutes require that all City deposits in financial institutions be fully
collateralized by U. S. Government obligations or obligations of the State of Texas or its agencies. The
City's deposits were fully collateralized by government securities or had a letter of credit issued by the
Federal Home Loan Bank as required by State statutes as of September 30, 2021.
41
III. RECEIVABLES
Receivables as of year-end for the City's individual major funds and nonmajor funds in the aggregate,
including the applicable allowances for uncollectible accounts, are as follows:
General
Hotel Occupancy
Crime District
413 - Economic Development
413 - Transit
Debt Service
TIF #1 Capital Projects
General Facilities and Equipment
Nonmajor governmental funds
Water and Sewer
Lake Enterprise
Total
IV. CAPITAL ASSETS
Less
Accrued
Gross
Allow ancefor
Interest
Taxes
Accounts
Notes Receivables
Uncollectibles
Total
$ 38
$ 7,278,611
$ 2,737,756
$ $ 10,016,405
$( 2,211,186) $
7,805,219
261
1,339,810
224,341
1,564,412
( 14,988)
1,549,424
2,718,885
-
2,718,885
-
2,718,885
4
890,185
177,741
1,067,930
1,067,930
-
1,845,920
-
1,845,920
1,845,920
2
1,427,865
1,427,867
( 1,215,070)
212,797
4
4
4
76,827
-
6,500,230 6,577,057
6,577,057
9
2,197,524
- 2,197,533
-
2,197,533
10
3,279,526
3,279,536
( 105,451)
3,174,085
-
69,729
69,729
-
69,729
$ 77,155 $ 15,501,276 $ 8,686,617 $ 6,500,230 $ 30,765,278 $( 3,546,695) $ 27,218,583
Capital asset activity for the year ended September 30, 2021, was as follows:
Primary Government
Governmental activities:
Capital assets, not being depreciated:
Land
Right of way
Construction in progress
Total assets not being depreciated
Capital assets, being depreciated:
Buildings
Improvement other than buildings
Machinery and equipment
Computer software
Infrastructure
Total capital assets being depreciated
Less accumulated depreciation:
Buildings
Improvement other than buildings
Machinery and equipment
Computer software
Infrastructure
Total accumulated depreciation
Total capital assets being
depreciated, net
Governmental activities capital
assets, net
Beginning
Transfers
Transfers and
Ending
Balance
and Additions
Retirements
Balance
$ 34,496,800
$ 2,285,965
$ -
$ 36,782,765
78,934,989
579,531
-
79,514,520
112,876,261
23,902,957
( 24,176,644)
112,602,574
226,308,050
26,768,453
( 24,176,644)
228,899,859
124,973,156
20,939,942
( 1,740,165)
144,172,933
60,638,977
543,825
-
61,182,802
43,620,037
3,478,676
( 1,486,974)
45,611,739
133,207
94,113
-
227,320
140,421,956
3,614,063
-
144,036,019
369,787,333
28,670,619
( 3,227,139)
395,230,813
( 33,895,636)
( 3,235,364)
571,805
( 36,559,195)
( 22,100,001)
( 3,014,588)
-
( 25,114,589)
( 28,900,763)
( 3,285,383)
1,339,589
( 30,846,557)
( 39,332)
( 20,191)
-
( 59,523)
( 85,258,129)
( 4,794,708)
-
( 90,052,837)
( 170,193,861)
( 14,350,234)
1,911,394
( 182,632,701)
199,593,472
14,320,385
( 1,315,745)
212,598,112
$ 425,901,522 $ 41,088,838 $( 25,492,389) $ 441,497,971
42
Business -type activities:
Capital assets, not being depreciated:
Land
Easements
Construction in progress
Total assets not being depreciated
Capital assets, being depreciated:
Buildings
Improvement other than buildings
Machinery and equipment
Water storage rights
Computer software
Infrastructure
Total capital assets being depreciated
Less accumulated depreciation:
Buildings
Improvement other than buildings
Machinery and equipment
Water storage rights
Computer software
Infrastructure
Total accumulated depreciation
Total capital assets being
depreciated, net
Business -type activities capital
assets, net
Beginning
Transfers
Transfers and
Ending
Balance
and Additions
Retirements
Balance
$ 593,970
$ -
$ -
$ 593,970
51,920,788
5,634,676
-
57,555,464
2,501,786
3,245,375
( 3,819,812)
1,927,349
55,016,544
8,880,051
( 3,819,812)
60,076,783
2,591,188
-
( 59,256)
2,531,932
8,622,265
468,709
( 6,704)
9,084,270
5,349,405
1,013,921
( 65,158)
6,298,168
683,547
-
-
683,547
70,102
-
-
70,102
134,041,200
6,181,839
-
140,223,039
151,357,707
7,664,469
( 131,118)
158,891,058
( 1,936,792)
( 42,723)
55,613
( 1,923,902)
( 7,635,273)
( 270,962)
6,704
( 7,899,531)
( 3,637,866)
( 355,157)
60,070
( 3,932,953)
( 673,574)
( 9,973)
( 683,547)
( 27)
( 10,015)
-
( 10,042)
( 54,617,722)
( 3,019,760)
-
( 57,637,482)
( 68,501,254)
( 3,708,590)
122,387
( 72,087,457)
82,856,453
3,955,879
( 8,731)
86,803,601
$ 137,872,997 $ 12,835,930 $( 3,828,543) $ 146,880,384
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities
General government
$
1,518,615
Public safety
2,233,279
Public works
5,398,958
Culture and recreation
4,448,144
Tourism
751,238
Total depreciation expense - governmental activities
$
14,350,234
Business -type activities:
Water and sewer
$
3,342,717
Lake Enterprise
365,873
Total depreciation expense - business -type activities
$
3,708,590
Water storage rights of $683,547 (net of accumulated amortization of $683,547) represent rights in the
Federal Reservoir at Lake Grapevine purchased through a long-term contract with the federal
government and are recorded at cost, with amortization being recorded using the straight-line method
over the initial term of the contract of 40 years.
43
V
Beginning Transfers
Transfers and Ending
Balance and Additions
Retirements Balance
Discretely Presented Component Unit:
Capital assets, not being depreciated:
Land $ 450,067 $
$ $ 450,067
Total assets not being depreciated 450,067
450,067
Capital assets, being depreciated:
Building 1,031,174
1,031,174
Improvements other than building 945,651 25,000
970,651
Vehicles and equipment 31,275 -
31,275
Total capital assets being depreciated 2,008,100 25,000
2,033,100
Less accumulated depreciation:
Building ( 370,898) ( 26,419)
( 397,317)
Improvements other than building ( 940,977) ( 550)
( 941,527)
Vehicles and equipment ( 31,275) -
( 31,275)
Total accumulated depreciation ( 1,343,150) ( 26,969)
( 1,370,119)
Total capital assets being
depreciated, net 664,950 ( 1,969)
662,981
Discretely presented component unit
capital assets, net $ 1,115,017 $( 1,969)
$ $ 1,113,048
Construction Commitments
The City has active construction commitments as of September 30,
2021, totaling $16,112,990. This
includes building projects, street construction and improvements of existing streets, and repair and
maintenance of existing water and sewer systems.
Project
Commitment
Streets and drainage projects $
4,223,732
Water and wastewater projects
5,215,839
Fiber optic cable project
1,242,968
Golf Clubhouse
83,649
Grapevine Main
5,253,925
Parks projects
92,877
Total $
16,112,990
The commitments for buildings, streets and drainage construction
will be funded from unexpended
general obligation and certificates of obligation bond proceeds. Water and wastewater projects will be
funded from unexpended certificates of obligation and revenue bond proceeds and operations.
INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The composition of interfund balances as of September 30, 2021, is as
follows:
Due to/from Other Funds
Receivable Fund Payable Fund
Amount
General Fund Grants Fund
$ 36,475
Crime District Fund
1,824,047
Lake Enterprise Fund
52,186
Nonmajor Governmental
24,065
Total General Fund
1,936,773
Hotel Occupancy Tax Nonmajor Governmental
234,772
4B-Transit
33,125
267,897
Total $ 2,204,670
44
Interfund balances for all the funds are created by short-term deficiencies in cash position in the individual
fund. It is anticipated that the balances will be repaid in one year or less. Similar transactions such as this
also exist between the primary government and the City's discretely presented component unit. The
balances due to and due from component unit and primary government as of September 30, 2021,
consisted of the following:
Receivable Payable Amount
Component unit - Heritage Foundation Primary Government -
Hotel Occupancy Tax Fund
Interfund Transfers
A summary of interfund transfers by fund type is as follows:
Transfers in Transfers out
General Fund Hotel Occupancy Tax Fund
4-13 Economic Development
Nonmajor Governmental
Water and Sewer Fund
Lake Enterprise Fund
Total General Fund
Hotel Occupancy Tax Fund
Crime District Fund
Debt Service Fund
Total Debt Service
413-Economc Development Fund
Nonmajor Governmental
4B-Transit Fund
General Facilities & Equipment
Nonmajor Governmental
Hotel Occupancy Tax Fund
4-13 Economic Development
4B-Transit Fund
General Fund
4B-Economic Development
Hotel Occupancy Tax Fund
General Facilities & Equipment
Nonmajor Governmental
Total nonmajor governmental
Water and Sewer Fund Debt Service Fund
Total
$ 9,644
Amount
Total
$ 1,213,537
353,046
352,884
1,817,850
134,992
$
3,872,309
278,852
1,390,053
5,513,302
6,903,355
998,850
1,400, 519
2,399,369
22,981
4,470,202
262,000
372
340,595
1,950,245
7,023,414
1,120,006
$
21,620,286
Interfund transfers are primarily made by the City for the following reasons:
• Budgeted transfers to the General Fund from other funds for operating and administrative
allocations.
• Operating transfer from the 413-Transit Fund to the Hotel Occupancy Tax Fund for visitor shuttle
services.
• Transfers to the Debt Service Fund to pay for self-supporting debt service expenditures.
• Transfers to the Crime District Fund from the General Fund is a budgeted transfer to cover
additional costs that are in excess of sales tax collections.
• Transfers from the Debt Service Fund to the Water and Sewer Fund were made to pay debt
recorded in the Water and Sewer Fund.
45
VI. DEFERRED INFLOWS OF RESOURCES
As of September 30, 2021, deferred inflows of resources reported in the governmental funds for
unavailable revenues are as follows:
Property taxes
Property tax penalties
and interest
Court fines and fees
Ambulance billing
Intergovernmental
Other
Total
VII. LEASES
Operatinq Leases
Lake Parks
General
4B-Economic Debt Facilities and Nonmajor
General Development Service Equipment Governmental Total
$ 49,042 $ $ 51,524 $ $
106,838 101,829
151,959 -
106,466
3,430,143 10,233, 368
282,946 56,883 - 78,323
$ 4,127,394 $ 56,883 $ 153,353 $ 10,311,691 $
- $ 100,566
208,667
151,959
- 106,466
426,075 14,089,586
93,257 511,409
519,332 $ 15,168,653
The City entered into a 25-year lease agreement with the United States Corps of Engineers to operate
and maintain approximately 770 acres of property at Lake Grapevine. The City is required to pay the cost
to maintain and operate the property with revenues generated from park operations. The term of the
operating lease is from October 2004 through September 2029. The agreement covers the park areas of
Meadowmere Park, Oak Grove Park and Silver Lake Park ("Vineyards").
The City entered into another 25-year lease agreement with the United State Corps of Engineers to
operate and maintain an additional 44.5 acres at Lake Grapevine referred to as Rockledge Park. The
term of this operating lease is from March 2009 through March 2034.
Gavlord Texan Resort and Convention Center
The City leased property from the United States Corps of Engineers and subsequently entered into a
sublease agreement with the Gaylord Texan Resort and Convention Center (Gaylord) on March 18, 1994,
for a portion of the leased property. The contract is for 49 years and rent payment is $1 per year. The
project opened on April 4, 2004, with 1,511 room convention hotel and over 400,000 square feet of
convention, meeting, exhibit and related amenities and support facilities. In subsequent years, The City
and Gaylord entered various addendums pertaining to the United States Corps of Engineers leased
property. Gaylord completed and opened its $120 million Vineyard Tower expansion in summer of 2018.
This project increased the number of rooms by 303 and provided 86,000 square feet of additional meeting
space. This ranks Gaylord as the nation's second-largest non -gaming convention hotel when measured
by total self-contained exhibit and meeting space.
Cowboys Golf Course
The City entered into a 50-year sublease agreement with the Cowboys Golf Course in 1999. The
Cowboys Golf course management company's lease fee is 3% of Cowboys' gross revenues from
operations.
Vill. LONG-TERM LIABILITIES
General Obliqation Bonds
The City issues general obligation bonds to provide funds for the acquisition and construction of major
capital facilities. General obligation bonds have been issued for both governmental and business -type
activities.
46
General obligation bonds are direct obligations and pledge the full faith and credit of the City. These
bonds generally are issued as 20-year serial bonds with principal maturing each year.
In 2021, taxable $44,945,000 Series 2021 General Obligation Refunding Bonds were issued with
maturities ranging from $625,000 to $4,780,000. The Series 2021 General Obligation Refunding Bonds
were publicly sold and are repaid from the Debt Service Fund. The purpose of the taxable bonds was to
refund certain outstanding ad valorem tax obligations of the City for debt service savings and for payment
of the costs of issuance of the taxable bonds.
A summary of the terms of general obligation bonds outstanding and their corresponding allocations to
the governmental and business -type activities as of September 30, 2021, follows:
General Obligation Bonds
Governmental activities:
2010 General Obligation Refunding Bonds
2012 General Obligation Refunding Bonds
2013 General Obligation Bonds
2015 General Obligation Refunding Bonds
2017 General Obligation Refunding Bonds
2019 General Obligation Refunding
and Improvement Bonds
2021 General Obligation Refunding Bonds
Original
Interest Rates
Sale Date
Borrow ing
to Maturity
Final Maturity
Outstanding
08/05/2010
$ 6,560,000
4.000%
02/15/2022
$ 480,000
12/01/2012
8,060,000
2.000% - 2.125%
02/15/2027
1,410,000
06/15/2013
65,805,000
0.000% - 5.000%
02/15/2023
6,185,000
02/26/2015
14,695,000
3.000%
02/15/2026
1,255,000
02/21/2017
1,365,000
2.000%-3.000%
02/15/2027
860,000
07/09/2019
28,860,000
3.000% - 4.000%
02/15/2039
25,265,000
09/02/2021
44,945,000
1.000% - 2.000%
02/15/2033
44,945,000
Total general obligation bonds outstanding
$ 80,400,000
Annual debt service requirements for general obligation bonds are as follows:
Governmental Activities
Year Ending Publicly Sold
September 30, Principal Interest
2022 $
6,220,000 $
1,814,132
2023
5,940,000
1,595,543
2024
5,840,000
1,399,143
2025
6,030,000
1,248,116
2026
6,220,000
1,108,186
2027-2031
29,725,000
3,800,835
2032-2036
16,015,000
1,309,373
2037-2041
4,410,000
200,850
Total $
80,400,000 $
12,476,178
Certificates of Obligation
The City also issued certificates of obligation to finance the acquisition and construction of capital assets
including certain capital improvement projects, municipal facilities, and machinery and equipment.
In 2021, tax-exempt $10,220,000 Series 2021 Combination Tax and Revenue Certificates of Obligation
were issued with maturities ranging from $375,000 to $645,000. The Series 2021 Combination Tax and
Revenue Certificates of Obligation were publicly sold and will be repaid from the Debt Service Fund.
Proceeds from the sale of the Certificates will be used for ongoing capital projects, purchase of vehicles
and other equipment, and paying the costs incurred in connection with the issuance of the Certificates.
47
The City had the following certificates of obligation outstanding as of September 30, 2021:
Original Interest Rates
Certificates of Obligation Sale Date Borrow ing to Maturity Final Maturity Outstanding
Governmental activities:
2015 Combination Tax and Revenue
Certificates of Obligation
2017 Combination Tax and Revenue
Certificates of Obligation
2018 Combination Tax and Revenue
Certificates of Obligation
2021 Combination Tax and Revenue
Certififcates of Obligation
Business -type activities:
2015 Combination Tax and Revenue
Certificates of Obligation
02/26/2015
2,000,000
2,000,000
02/15/2035
$ 1,065,000
02/21/2017
9,535,000
9,535,000
02/15/2037
7,630,000
05/15/2018
32,310,000
32,310,000
02/15/2038
30,855,000
09/02/2021
10,220,000
10,220,000
02/15/2041
10,220,000
49, 770, 000
02/26/2015
9,720,000 2.250% - 4.500%
02/15/2035
7,395,000
Total certificates
of obligation outstanding
$57,165,000
Annual debt service requirements to maturity for certificates of obligation of the primary government are
as follows:
Governmental Activities
Business -type Activities
Year Ending
Publicly Sold
Publicly Sold
September 30,
Principal
Interest
Principal
Interest
2022
$ 2,290,000 $
1,743,725
$ 425,000 $
242,075
2023
2,130,000
1,664,375
430,000
231,919
2024
2,225,000
1,564,863
440,000
219,944
2025
2,340,000
1,456,513
460,000
206,444
2026
2,475,000
1,342,075
460,000
191,493
2027-2031
13,865,000
4,957,756
2,715,000
656,006
2032-2036
16,080,000
2,495,553
2,465,000
154,541
2037-2041
8,365,000
331,121
-
-
Total
$ 49,770,000 $
15,555,981
$ 7,395,000 $
1,902,422
Contractual Obliclations
The City has issued contractual obligations to finance the acquisition of certain capital equipment. These
obligations are issued pursuant to the Constitution of the State of Texas, including particularly Subchapter
A of Chapter 271, Texas Local Government Code (the Public Property Finance Act), and constitute direct
obligations of the City of Grapevine, Texas, payable from a continuing ad valorem tax levied on all taxable
property within the City.
The City had the following Public Property Finance ("PPF") contractual obligations outstanding as of
September 30, 2021:
Contractual Obligations
Governmental activities:
2012 Public Property Finance Contractual
Obligations
2015 Public Property Finance Contractual
Obligations
2018 Public Property Finance Contractual
Obligations
Original Interest Rates
Sale Date Borrow ing to Maturity Final Maturity Outstanding
12/04/2012 $1,225,000 1.500% - 2.250% 02/15/2027 $ 570,000
01/01/2015 3,070,000 4.000% 02/15/2026 775,000
03/06/2018 2,500,000 3.950% 03/01/2028 1,847,835
Total contractual obligations outstanding $ 3,192,835
48
Contractual obligation debt service requirements to maturity are as follows:
Governmental Activities
Governmental Activities
Year Ending
Publicly Sold
Private Placement
September 30,
Principal Interest
Principal Interest
2022
$ 585,000 $
32,575
$ 234,309 $
72,989
2023
155,000
19,688
243,564
63,734
2024
165,000
14,906
253,185
54,113
2025
165,000
9,969
263,186
44,113
2026
175,000
4,875
273,582
33,717
2027-2031
100,000
1,125
580,009
34,588
Total
$ 1,345,000 $
83,138
$ 1,847,835 $
303,254
Revenue Bonds
On May 15, 2018, the City issued Sales Tax Revenue Refunding Bonds, Series 2018, to refund the
existing Sales Tax Revenue Bonds, Series 2014. The Sales Tax Revenue Refunding Bonds, Series
2018, were issued by the Grapevine 4B Economic Development Corporation, a blended component unit
of the City, pursuant to Chapters 501, 502, and 505, Texas Local Government Code. These bonds are
special obligations of the City, payable from a secured lien on and pledge of certain pledged revenues
which include the proceeds of of the'/2 cent sales and use tax levied within the City for the benefit of
the Grapevine 4B Economic Development Corporation.
As of September 30, 2021, the remaining balances for principal and interest on the debt are $14,385,000
and $3,795,591, respectively. Annual debt service requirements through February 15, 2034, do not
exceed $1,500,000 per year. Sales tax revenue collections in the 413-Economic Development Fund were
$4,699,128.
A reserve fund is required to be maintained as security for the payment of the sales tax revenue refunding
bonds. The reserve fund is required to be funded in an amount equal to the maximum annual principal
and interest required for the bonds. The reserve is currently funded at $1,402,400, which meets the
reserve requirements.
On June 6, 2000, the City issued Combination Tax and Tax Increment Revenue Certificates of Obligation,
Series 2000. These bonds were subsequently refunded with Combination Tax and Tax Increment
Reinvestment Zone Revenue Refunding Bonds, Series 2005A, and with Combination Tax and Tax
Increment Reinvestment Zone Revenue Refunding Bonds, Series 2015A. The Combination Tax and Tax
Increment Reinvestment Zone #2 Revenue Refunding Bonds, Series 2015A, were issued pursuant to the
Constitution and the general laws of the State of Texas, including particularly, Chapter 1207, Texas
Government Code and Section 9.26 of the City's Home Rule Charter, and are direct obligations of the
City, payable from a combination of the levy and collection of a continuing ad valorem tax levied on all
taxable property within the City and a subordinate lien on an pledge of the tax increments deposited in the
tax increment fund established for TIF #2.
As of September 30, 2021, the remaining principal and interest on the bonds was $10,375,000 and
$1,132,350, respectively. Principal and interest payments for the fiscal year were $1,810,000 and
$490,600. Tax increment revenues for TIF #2 for the current year were $6,263,301. The outstanding
revenue bonds have a final maturity of August 15, 2026.
A summary of the terms of the revenue bonds outstanding for the governmental activities as of
September 30, 2021, is as follows:
Original
Interest Rates
Revenue Bonds
Sale Date Borrow ing
to Maturity Final Maturity
Outstanding
Governmental activities:
2015 A Combination Tax and TIRZ #2
Revenue Refunding Bonds
01/23/2015 $ 20,565,000
3.000% - 5.000% 08/15/2026
$10,375,000
2018 Sales Tax Revenue Refunding
Bonds
04/17/2018 16,930,000
3.000% - 4.000% 02/15/2034
14,385,000
Total revenue bonds outstanding
$24,760,000
49
Annual debt service requirements for the revenue bonds are as follows:
Governmental Activities
Year Ending
Publicly Sold
September 30,
Principal
Interest
2022
$ 2,795,000 $
898,994
2023
2,920,000
776,794
2024
3,050,000
649,019
2025
3,150,000
556,453
2026
3,245,000
459,619
2027-2031
5,650,000
1,345,862
2032-2036
3,950,000
241,200
Total
$ 24,760,000 $
4,927,941
The following is a summary of long-term liability transactions of the City for the year ended September 30,
2021:
Governmental activities:
General obligation bonds
Certificates of obligation
Contractual obligations
Contractual obligations
- private placement
Revenue bonds
Premium on bond issues
Discount on bond issues
Total bonds and notes payable
Net OPEB liability
Net pension liability
Compensated absences
Total governmental activities
long-term liabilities
Balance
9/30/2020 Increases Reductions
$ 84,490,000 $ 44,945,000 $(49,035,000) $
40,680,000 10,220,000 ( 1,130,000)
1,910,000 - ( 565,000)
2,073,240 - ( 225,405)
27,445,000 - ( 2,685,000)
7,018,360 864,001 ( 2,221,043)
( 31,856) 2,450
163,616,600 55,997,145 (55,858,998)
67,583,973 11,653,547 -
33,474,898 - ( 4,029,617)
4,554,556 2,623,729 ( 2,550,808)
Balance
Due Within
9/30/2021
One Year
80,400,000
$ 6,220,000
49,770,000
2,290,000
1,345,000
585,000
1,847,835
234,309
24,760,000
2,795,000
5,661,318
-
29,406)
-
163,754,747
12,124, 309
79,237,520
-
29,445,281
-
4,627,477
1,156, 869
$ 269,230,027 $ 70,274,421 $(62,439,423) $ 277,065,025 $ 13,281,178
The liability for compensated absences and the pension and OPEB-related liabilities are paid from the
General Fund, Crime District Fund, and enterprise funds based on the assignment of an employee at
termination.
Business -type activities:
Water and sew er obligations:
General obligation bonds
Certificates of obligation
Prernium on bond issues
Total water and sewer bonds payable
Net OPEB liability
Net pension liability
Compensated absences
Total business -type activities
long-term liabilities
Balance
Balance
Due Within
9/30/2020
Increases Reductions
9/30/2021
One Year
$ 455,000
$ $( 455,000)
$ -
$ -
7,800,000
( 405,000)
7,395,000
425,000
352,468
( 54,058)
298,410
-
8,607,468
( 914,058)
7,693,410
425,000
8,022,595
847,214 -
8,869,809
-
3,130,431
- ( 300,958)
2,829,473
-
279,677
173,157 ( 158,731)
294,103
73,526
$ 20,040,171 $ 1,020,371 $( 1,373,747) $ 19,686,795 $ 498,526
50
IX. DEFINED BENEFIT PENSION PLAN
Plan Description. The City of Grapevine participates as one of 895 plans in the defined benefit cash -
balance plan administered by the Texas Municipal Retirement System (TMRS). TMRS is a statewide
public retirement plan created by the State of Texas and administered in accordance with the TMRS Act,
Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple -employer retirement
system for employees of Texas participating cities. The TMRS Act places the general administration and
management of TMRS with a six -member, Governor -appointed Board of Trustees; however, TMRS is not
fiscally dependent on the State of Texas. TMRS issues a publicly available Annual Comprehensive
Financial Report (Annual Report) that can be obtained at tmrs.com.
All eligible employees of the City are required to participate in TMRS.
Benefits Provided. TMRS provides retirement, disability and death benefits. Benefit provisions are adopted
by the governing body of the City, within the options available in the state statutes governing TMRS.
At retirement, the benefit is calculated based on the sum of the Member's contributions, with interest, and
the City -financed monetary credits with interest. The retiring Member may select one of seven monthly
benefit payment options. Members may also choose to receive a portion of their benefit as a lump sum
distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the total
Member contributions and interest.
Starting in 2005, the City of Grapevine granted an annually repeating (automatic) basis monetary credit
referred to as an updated service credit (USC) which is a theoretical amount which considers salary
increases or plan improvements. If at any time during their career an employee earns a USC, this amount
remains in their account earning interest until retirement. At retirement, the benefit is calculated as if the sum
of the employee's accumulated contributions with interest and the employer match plus employer -financed
monetary credits, such as USC, with interest were used to purchase an annuity. Additionally, initiated in
1998, the City of Grapevine provided on an annually repeating (automatic) basis cost of living adjustments
(COLA) for retirees equal to a percentage of the change in the consumer price index (CPI).
The plan provisions are adopted by the governing body of the City, within the options available in the state
statutes governing TMRS. Plan provisions for the City were as follows:
Employee deposit rate
7%
Matching ratio (City to employee)
2 to 1
Years required for vesting
5
Service retirement eligibility
20 years to any age, or
5 years at age 60 and above
Updated service credit
100% repeating, transfers
Annuity increase to retirees
70% of CPI, repeating
Employees covered by benefit terms
At the December 31, 2020, valuation and measurement date, the following employees were covered by
the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 454
Inactive employees entitled to but not yet receiving benefits 285
Active employees 592
Total 1,331
Contributions. Member contribution rates in TMRS are either 5%, 6%, or 7% of the Member's total
compensation, and the City matching percentages are either 100%, 150%, or 200%, both as adopted by
the governing body of the City. Under the state law governing TMRS, the contributions rate for each City
is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The
City's contribution rate is based on the liabilities created from the benefit plan options selected by the City
and any changes in benefits or actual experience over time.
51
Employees for the City of Grapevine were required to contribute 7% of their annual gross earnings during
the fiscal year. The contribution rate for the City of Grapevine were 18.82% and 18.53% in calendar years
2021 and 2020, respectively. The City's contributions to TMRS for the year ended September 30, 2021,
were $8,857,579 and were equal to the required contributions.
Net Pension Liability. The City's Net Pension Liability (NPL) was measured as of December 31, 2020,
and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an
actuarial valuation as of that date.
Actuarial assumptions:
The total pension liability in the December 31, 2020, actuarial valuation was determined using the
following actuarial assumptions:
Inflation 2.50% per year
Overall payroll growth 2.75% per year
Investment Rate of Return 6.75%
Salary increases were based on a service -related table. Mortality rates for active members are based on
the PUB(10) mortality tables with the Public Safety table used for males and the General Employee table
used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender -distinct
2019 Municipal Retirees of Texas mortality tables. The rates for actives, heathy retirees and beneficiaries
are projected on a fully generational basis by Scale UMP to account for future mortality improvements.
For disabled annuitants, the same mortality tables for healthy retirees are used with a 4-year set forward
for males and a 3- year set -forward for females. In addition, a 3.5% and 3.0% minimum mortality rate is
applied, for males and females respectively, to reflect the impairment for younger members who become
disabled. The rates are projected on a fully generational basis by Scale UMP to account for future
mortality improvements subject to the floor.
The actuarial assumptions were developed primarily from the actuarial investigation of the experience of
TMRS over the four-year period from December 31, 2014, to December 31, 2018. They were adopted in
2019 and first used in the December 31, 2019, actuarial valuation. The post -retirement mortality
assumption for Annuity Purchase Rate (APRs) is based on the Mortality Experience Investigation Study
covering 2009 through 2011 and dated December 31, 2013. In conjunction with these changes first used
in the December 31, 2013 valuation, the System adopted the Entry Age Normal actuarial cost method and
a one-time change to the amortization policy. Plan assets are managed on a total return basis with an
emphasis on both capital appreciation as well as the production of income to satisfy the short-term
and long-term funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a building-block
method in which best estimate ranges of expected future real rates of return (expected returns, net of
pension plan investment expenses and inflation) are developed for each major asset class. These ranges
are combined to produce the long-term expected rate of return by weighting the expected future real rates
of return by the target asset allocation percentage and by adding expected inflation. In determining their
best estimate of a recommended investment return assumption under the various alternative asset
allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an
adjustment for time (conservative) and (2) the geometric mean (conservative) with an adjustment for time
(aggressive). The target allocation and best estimates of real rates return for each major asset class in
fiscal year 2021 are summarized in the following table:
Long -Term Expected
Target Real Rate of Return
Asset Class Allocation (Arithmetic)
Global Equity
30%
5.30%
Core Fixed Income
10%
1.25%
Non -Core Fixed Income
20%
4.14%
Real Return
10%
3.85%
Real Estate
10%
4.00%
Absolute Return
10%
3.48%
Private Equity
10%
7.75%
Total 100%
52
Discount Rate
The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows
used to determine the discount rate assumed that Member and employer contributions will be made at
the rates specified in statute. Based on that assumption, the pension plan's Fiduciary Net Position was
projected to be available to make all projected future benefit payments of current active and inactive
Members. Therefore, the long-term expected rate of return on pension plan investments was applied to all
periods of projected benefit payments to determine the Total Pension Liability.
Changes in the Net Pension Liability
Increase (Decrease)
Total Pension
Plan Fiduciary
Net Pension
Liability
Net Position
Liability
(a)
(b)
(a) - (b)
Balance at 12/31/2019 $
303,673,126
$ 267,067,797 $
36,605,329
Changes for the year:
Service cost
8,865,558
-
8,865,558
Interest
20,359,202
-
20,359,202
Difference between expected and
actual experience (
1,320,295)
- (
1,320,295)
Changes of assumptions
-
-
Contributions - employer
-
8,775,571 (
8,775,571)
Contributions - employee
-
3,315,113 (
3,315,113)
Net investment income
20,280,650 (
20,280,650)
Benefit payments, including refunds
of employee contributions (
12,976,187)
( 12,976,187)
-
Administrative expense
( 131,176)
131,176
Other changes
-
( 5,118)
5,118
Net changes
14,928,278
19,258,853 (
4,330,575)
Balance at 12/31/2020 $
318,601,404
$ 286,326,650 $
32,274,754
The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as
well as what the City's net pension liability would be if it were calculated using a discount rate that is 1
percentage point lower (5.75%) or 1 percentage point higher (7.75%) than the current rate:
1% Decrease in
Current Single Discount
1% Increase in
Discount Rate
Rate Assumption
Discount Rate
(5.75%)
(6.75%)
(7.75%)
City's net pension
liability (asset) $ 76,451,912
$ 32,274,754 $(
4,109,876)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan's Fiduciary Net Position is available in the Schedule of
Changes in Fiduciary Net Position, by Participating City. That report may be obtained at tmrs.com.
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to Pensions
For the year ended September 30, 2021, the City recognized pension expense of $4,473,755, which is
allocated to the governmental and business -type activities in the amounts of $4,081,549 and $392,206,
respectively.
53
As of September 30, 2021, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Differences between expected
and actual economic experience
Changes in actuarial assumptions
Difference between projected and
actual investment earnings
Contributions subsequent to the
measurement date
Total
Deferred Outflows Deferred Inflows
of Resources of Resources
371,941 $ 1,584,509
117.323 -
7,590,970
6,863,006 -
7,352,270 $ 9,175,479
$6,863,006 reported as deferred outflows of resources related to pensions resulting from contributions
subsequent to the measurement date will be recognized as a reduction of the Net Pension Liability for the
year ending September 30, 2022. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
For the Year Ended
September 30,
2022 $( 3,287,695)
2023 ( 114,230)
2024 ( 4,653,924)
2025 ( 630,366)
Total $( 8,686,215)
X. OTHER POSTEMPLOYMENT BENEFITS
Post -retirement Health Care Benefits
Plan Description.
The City provides certain health care and life insurance benefits through an agent, multiple -employer,
defined benefit OPEB plan, under City ordinance, for all full and part-time employees that meet eligibility
requirements. Eligible individuals include retired employees who have satisfied the requirement as
defined by the Texas Municipal Retirement System and their dependents that were covered prior to
retirement. The requirement as defined by the Texas Municipal Retirement System is any age with 20
years of service or 5 years of service for age 60 and above. City Council members that serve three terms
will be classified as retired employees when they leave office.
Retirees pay premiums for coverage in the OPEB programs. There is not a maximum employer paid
premium amount (capped benefit). Active employees do not contribute to the retiree health care plan.
Retirees are eligible for benefits immediately upon retirement. If the employee returns to work for an
employer that offers health coverage, they become ineligible for the City's plan and cannot rejoin the
City's health plan at a later date.
Benefits Provided
Retirees are eligible for medical, dental, vision, and prescription insurance until they become Medicare
eligible. Retirees are also eligible for a $20,000 life insurance policy. Once Medicare eligible, retirees are
eligible for dental, vision, and life insurance only. At that time, the City medical plan will no longer be
available. The City supplements 70% of the premium to all retirees who either (1) retire after the age of 65
or (2) are covered pre -Medicare in the retiree medical program. Spouses of retirees will receive the City
supplement if they have been on the plan for one year prior to retirement.
54
If an active employee passes away, the spouse and dependents will become eligible for retiree coverage
if (1) the employee was eligible for retirement as defined by the Texas Municipal Retirement System; and
(2) the employee had dependent coverage at the time of death. Coverage will continue under the plan if
monthly retiree premiums are paid by the specified due date, until dependents are no longer considered
eligible dependents as defined by the plan, until the covered dependent becomes Medicare eligible, or
until a surviving spouse remarries.
For the fiscal year ended September 30, 2021, the City's contributions to the plan were $1,730,980, which
was equal to benefit payments.
The number of employees currently covered by the benefit terms is as follows:
Inactive employees or beneficiaries currently receiving benefits 238
Active members 599
Total 837
Actuarial Methods and Assumptions
Significant methods and assumptions were as follows:
Actuarial Valuation Date
12/31/2020
Actuarial Cost Method
Individual Entry Age Normal
Discount Rate
2.04% as of December 31, 2020
Inflation Rate
2.50%
Salary Increases
3.50% to 11.50%, including inflation
Demographic Assumptions
Based on the experience study covering the four-year period ending
December 31, 2018 as conducted for the Texas Municipal Retirement
System (TMRS)
Mortality
For healthy retirees, the gender -distinct 2019 Municipal Retirees of Texas
mortality tables are used. The rates are projected on a fully generational
basis using the ultimate mortality improvement rates in the MP tables to
account for future mortality improvements.
Participation Rates
For health care coverage: 85% for retirees w ho are at least 50 years old at
retirement and 65% for retirees who are younger than 50 years old at
retirement; For life insurance: 85% regardless of age at retirement
Health care cost trend rates
Pre-65 Medical: Initial rate of 7.00% declining to an ultimate rate of 4.25%
after 13 years;
Post-65 Medical Subsidy: Increases with inflation;
Dental: 4.00%;
Vision: 3.00%
Note:
The long-term investment return assumption was changed from 6.75% to
6.25%. The Single Discount Rate changed from2.95% as of December 31,
2019 to 2.04% as of December 31, 2020.
Projections of health benefits are based on the plan as understood by the City and include the types of
benefits in force at the valuation date and the pattern of sharing benefit costs between the City and its
employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and
assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the
actuarial value of assets.
There is no separately issued audited benefit plan report available for the City's OPEB plan.
55
Discount Rate
A single discount rate of 2.04% was used to measure the total OPEB liability. This single discount rate was
based on the municipal bond rates as of the measurement date. The source of the municipal bond rate
was fixed -income municipal bonds with 20 years to maturity that include only federally tax-exempt
municipal bonds as reported in Fidelity Index's "20-year Municipal GO AA Index" based on the daily rate
closest to but not later than the measurement date.
For the purpose of this valuation, the expected rate of return on OPEB plan investments is 6.25%.
Discount Rate Sensitivity Analysis
The following schedule shows the impact of the net OPEB liability if the discount rate used was 1 % less
than and 1 % greater than the discount rate that was used (2.04%) in measuring the net OPEB liability.
1 % Decrease in 1 % Increase in
Discount Rate (1.04%) Discount Rate (2.04%) Discount Rate (3.04%)
City's net OPEB liability $ 102,364,655 $ 88,107,329 $ 76,517,535
Healthcare Cost Trend Rate Sensitivity Analysis
The following schedule shows the impact of the net OPEB liability if the Healthcare Cost Trend Rate used
was 1 % less than and 1 % greater than what was used in measuring the Net OPEB liability.
City's net OPEB liability $
1% Decrease
74,842,275 $
Current Healthcare Cost
Trend Rate Assumption
88,107,329 $
1 % Increase
OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources Related to OPEBs
105,164, 557
As of September 30, 2021, the City reported a liability of $88,107,329 for its net OPEB liability. The net
OPEB liability was determined by an actuarial valuation as of December 31, 2020. For the year ended
September 30, 2021, the City recognized OPEB expense of $8,208,067, which is allocated to
governmental and business -type activities in the amounts of $7,381,757 and $826,310, respectively.
There were no changes of benefit terms that affected measurement of the net OPEB liability during the
measurement period.
Balance at 12/31/2019
Changes for the year:
Service cost
Interest
Difference between expected
and actual experience
Changes of assumptions
Contributions - employer
Net investment income
Benefit payments
Administrative expense
Net changes
Balance at 12/31/2020
Increase (Decrease)
Total OPEB Plan Fiduciary
Liability Net Position
(a) (b)
$ 77,878,304 $ 2,271,736
Net OPEB
Liability
(a) - (b)
75,606,568
4,841,226
4,841,226
2,339,946
2,339,946
( 3,113,851)
(
3,113,851)
10,638,856
-
10,638,856
-
1,957,430 (
1,957,430)
261,069 (
261,069)
( 1,957,430) (
1,957,430)
-
(
13,083)
13,083
12,748,747
247,986
12,500,761
$ 90,627,051 $
2,519,722 $
88,107,329
56
XI
XII
Changes in assumptions and other inputs reflect a change in the discount rate from 2.95% to 2.04%. As
of September 30, 2021, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Differences between expected
and actual economic experience
Changes in actuarial assumptions
Difference between projected and
actual investment earnings
Contributions subsequent to the
measurement date
Total
Deferred Outflows Deferred Inflows
of Resources of Resources
94,471 $ 3,686,187
15,863,118 4,975,339
138,242
1,334,148 -
17,291,737 $ 8,799,768
$1,334,148 reported as deferred outflows of resources related to OPEB resulting from contributions
subsequent to the measurement date are due to benefit payments the City paid with own assets and will
be recognized as a reduction of the net OPEB liability for the year ending September 30, 2022.
Other amounts of the reported as deferred outflows and inflows of resources related to OPEB will be
recognized in OPEB expense as follows:
For the Year Ended
September 30,
2022
$ 1,166,711
2023
1,172,606
2024
1,139,181
2025
695,405
2026
1,552,992
Thereafter
1,430,926
Total
$ 7,157,821
COMMITMENTS AND CONTINGENCIES
The City is a defendant in several pending lawsuits. City management estimates, based on the advice of
legal counsel, that the potential claims against the City, in excess of insurance coverage, would not
materially affect the basic financial statements of the City.
The City participates in several federal and state grant programs. These programs are subject to program
compliance audits by the grantors or their representatives. Any liability that may arise as the result of
these audits is not believed to be estimable or probable.
TAX ABATEMENTS
The City enters into economic development agreements designed to promote development and
redevelopment within the City, spur economic improvement, stimulate commercial activity, generate
additional sales tax, and enhance the property tax base and economic vitality of the City. The City's
economic development agreements are authorized under Chapter 380 of the Texas Local Government
Code, Chapter 311 (Tax Increment Financing Act) and Chapter 312 (Property Redevelopment and Tax
Abatement) of the Texas Tax Code. The economic development agreements are designed to support the
creation of new businesses, the expansion and retention of existing businesses within the City, and the
attraction of companies that offer high impact jobs and share the community's values. Recipients may be
eligible to receive economic assistance based on the employment, economic or community impact of the
project requesting assistance. Recipients generally commit to building or remodeling real property and
related infrastructure, redeveloping properties, expanding operations, or bringing targeted business to the
City. Agreements generally contain recapture provisions which may require repayment or termination if
recipients do not meet the required provisions of the economic incentives.
57
The City has the following categories of economic development agreements:
XIII
General Economic Development — The City enters into various agreements under Chapter 380 of the
Texas Local Government Code to stimulate economic development. Agreements may rebate a flat
amount or a percentage of hotel occupancy taxes or sales taxes received by the City, may result in fee
reductions such as utility charges or building inspection or permit fees, or make lump sum payments to
offset moving expenses, tenant finish -outs, demolition costs, infrastructure reimbursements,
redevelopment costs, or other expenses. For fiscal year 2021, the City rebated $4,061,689 in taxes,
made incentive payments of $96,540 under these agreements.
Tax Increment Financinq. — The City has adopted two Tax Increment Financing zones ("TIFs") under
Chapter 311 of the Texas Tax Code. The City enters into economic development and infrastructure
reimbursement agreements which earmark TIF revenues for payment to developers and represent
obligations over the life of the TIF or until the terms of the agreements have been met. Additionally, the
City enters into general economic development agreements under Chapter 380 of the Texas Local
Government Code, which are funded with TIF resources. The City made $5,790,396 in payments for
TIF obligations.
RISK MANAGEMENT
The City purchases a fully insured program for property and casualty insurance coverage through Travelers
Insurance and workers' compensation coverage through Texas Municipal League. The City is insured at the
following limits:
Policy Limits Deductible
General liability $1,000,000 per occurrence/$2,000,000 aggregate $10,000
Automobile liability $1,000,000 per occurrence $0
Automobile physical damage Actual cash value $1,000
Excess liability $10,000,000 per occurrence/$10,000,000 aggregate $0
Property $250,562,582 varies by peril
Workers' compensation Statutory/employers' liability $1,000,000
Risk Management oversees the City's self -insured employee health plan and retiree health plans. UMR is the
third -party administrator for the employee and pre-65 retiree health plans. Claims and other plan
administration services are performed by UMR. All participating funds make payments to the General Fund
for their portion of property and casualty and health plan cost.
Financial responsibility in a self -insured funding arrangement is on the City, the risk of losses exceeding an
affordable threshold is transferred to an insurance company through the purchase of stop -loss insurance with
Stealth Partner Group. Stop -loss insurance protects the City from plan claims costs exceeding a specified
deductible during the plan year.
Specific Excess Loss Insurance
The City has specific excess loss insurance to cover specific claims incurred by plan participants. The City
has a $250,000 specific deductible for each medical plan member. The specific benefit period
reimbursement maximum under this coverage is unlimited per covered person.
Aqqreqate Excess Loss Insurance
The City also has coverage for aggregate claims incurred under the self -insured health plan. Under this
coverage, aggregate claims in excess of an estimate annual aggregate attachment point of $9,505,503 would
be covered up to an aggregate benefit period reimbursement maximum of $1,000,000.
58
XIV
XV.
MATL
The City establishes the insurance claim liability based on estimates of the ultimate cost of claims reported
but unsettled and of claims incurred but not reported. Any claims incurred and not reported are not believed
to be significant to the City's financial statements. Activity for the last two years is as follows:
2021 2020
Claims payable, beginning of year $ 788,072 $ 694,451
Current year claims and changes in estimates 10,038,172 10,190,154
Payments on claims ( 10,125,981) ( 10,096,533)
Claims payable at end of year $ 700,263 $ 788,072
IMPACT FEES
The City records impact fees received in excess of the cost of physical connection to the water and sewer
system as revenues. Corresponding cash is recorded as a restricted asset for future expansion of the
water and sewer system.
WATER AND SEWER CONTRACTS
The City has separate contracts with the Trinity River Authority of Texas ("TRA") for the purchase of
treated water and for the transportation, treatment, and disposal of wastewater. The contracts require the
City to pay varying amounts based on the costs associated with water purchased and wastewater
transported and/or treated and disposed. The costs include the City's proportionate share of TRA's
operating and maintenance expenses, related debt service costs, plus certain other miscellaneous
charges. The City also purchases water from the City of Dallas -Water Utilities and Dallas County Park
Cities Municipal Utilities District.
Payments during 2021 for the purchase of treated water were $8,767,563 and payments made for the
transportation, treatment, and disposal of wastewater by TRA were $2,090,337. If the City were unable to
fulfill its obligations under the contracts, the only liability for future payment would be its proportionate
share of debt service requirements. In addition, the City does not retain an ongoing financial interest in
TRA and has no representation on the TRA Board; therefore, the TRA contracts are not considered to be
joint venture agreements.
PRIOR PERIOD ADJUSTMENT
In the General Facilities and Equipment Fund and the Governmental Activities column in the government -
wide financial statements, a prior period adjustment was recorded to decrease beginning equity by
$3,358,000. This adjustment was made to account for expenditures (expenses) that should have been
recorded in prior years.
59
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REQUIRED
SUPPLEMENTARY INFORMATION
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF GRAPEVINE, TEXAS
GENERALFUND
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2021
REVENUES
Property taxes
Sales taxes
Mixed beverage taxes
Franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Fines and forfeitures
Investment income
Miscellaneous
Total revenues
EXPENDITURES
Current:
General government
Public safety
Culture and recreation
Public works
Transportation
Capital outlay
Debt service:
Fiscal agent charges
Total expenditures
EXCESS (DEFICIENCY) OF REVENUE
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Sale of capital assets
Insurance recoveries
Total other
financing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING
FUND BALANCES, ENDING
The accompanying notes are an integral
part of this schedule.
Budgeted Amounts
Original Final
Variance with
Final Budget -
Positive
Actual (Negative)
$ 13,494,517 $ 13,494,517 $ 13,521,636 $ 27,119
24,581,761
24,581,761
28,590,889
4,009,128
1,899,934
1,899,934
1,793,124
( 106,810)
6,906,950
6,906,950
5,858,497
( 1,048,453)
1,587,296
1,587,296
1,459,940
( 127,356)
339,094
339,094
3,988,244
3,649,150
6,459,500
6,459,500
5,588,363
( 871,137)
1,362,500
1,362,500
933,618
( 428,882)
130,500
130,500
10,607
( 119,893)
411,434
411,434
469,463
58,029
57,173,486
57,173,486
62,214,381
5,040,895
16,427,881
16,600,171
13,809,752
9,154,845
115,000
16,528,073
16,600,171
13,809,752
9,154,845
139,000
56,107,649 56,231,841
1,065,837 941,645
17,575,948 ( 1,047,875)
16,505,107
95,064
14,218,244
( 408,492)
8,746,656
408,189
61,761
( 61,761)
85,576
53,424
4,335
( 4,335)
57,197,627
( 965,786)
5,016,754
4,075,109
4,229,234
4,229,234
3,872,309 (
356,925)
( 5,363,892) (
5,363,892) (
9,983,504) (
4,619,612)
25,700
25,700
648,452
622,752
130,000
130,000
454,548
324,548
( 978,958) (
978,958) (
5,008,195) (
4,029,237)
86,879 (
37,313)
8,559
45,872
11,574,295
11,574,295
11,574,295
-
$ 11,661,174 $
11,536,982 $
11,582,854 $
45,872
60
CITY OF GRAPEVINE, TEXAS
HOTEL OCCUPANCY TAX
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Budgeted Amounts
Variance with
Final Budget -
Positive
Original
Final
Actual
(Negative)
REVENUES
Taxes $
14,350,413 $
14,350,413 $
12,625,773
$( 1,724,640)
Charges for services
8,210,691
8,210,691
5,426,172
( 2,784,519)
Investment income
230,100
230,100
107,593
( 122,507)
Miscellaneous
20,000
20,000
16,980
( 3,020)
Total revenues
22,811,204
22,811,204
18,176,518
( 4,634,686)
EXPENDITURES
Current:
Tourism
22,849,293
22,863,561
16,985,839
5,877,722
Capital outlay
-
-
18,223
( 18,223)
Debt Service:
Fiscal agent charges
-
-
1,916
( 1,916)
Total expenditures
22,849,293
22,863,561
17,005,978
5,857,583
EXCESS (DEFICIENCY) OF REVENUE
OVER (UNDER) EXPENDITURES (
38,089) (
52,357)
1,170,540
1,222,897
OTHER FINANCING SOURCES (USES)
Transfers in
464,141
464,141
278,852
( 185,289)
Transfers out (
2,212,387) (
2,212,387) (
2,212,759)
( 372)
Total other financing sources (uses) (
1,748,246) (
1,748,246) (
1,933,907)
( 185,661)
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING
FUND BALANCES, ENDING
The accompanying notes are an integral
part of this schedule.
( 1,786,335) ( 1,800,603) ( 763,367) 1,037,236
17,720,812 17,720,812 17,720,812 -
$ 15,934,477 $ 15,920,209 $ 16,957,445 $ 1,037,236
61
CITY OF GRAPEVINE, TEXAS
CRIME DISTRICT
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2021
REVENUES
Taxes
Intergovernmental
Fines and forfeitures
Investment income
Miscellaneous
Total revenues
EXPENDITURES
Current:
General government
Public safety
Capital outlay
Total expenditures
EXCESS (DEFICIENCY) OF REVENUE
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in
Total other financing sources (uses)
NET CHANGE IN FUND BALANCES
FUND BALANCES, BEGINNING
FUND BALANCES, ENDING
The accompanying notes are an integral
part of this schedule.
Budgeted Amounts
Variance with
Final Budget -
Positive
Original
Final
Actual
(Negative)
$ 12,290,880 $
12,290,880 $
14,039,776
$ 1,748,896
-
-
8,895
8,895
111,900
111,900
50,145
( 61,755)
35,000
35,000
494
( 34,506)
6,500
6,500
23,038
16,538
12,444,280
12,444,280
14,122,348
1,678,068
189,513
189,513
224,323 (
34,810)
17,487,592
17,668,469
17,844,823 (
176,354)
-
-
118,004 (
118,004)
17,677,105
17,857,982
18,187,150 (
329,168)
( 5,232,825)
( 5,413,702)
( 4,064,802)
1,348,900
5,363,892
5,363,892
6,903,355
1,539,463
5,363,892
5,363,892
6,903,355
1,539,463
131,067
( 49,810)
2,838,553
2,888,363
( 2,824,924) ( 2,824,924) ( 2,824,924) -
$( 2,693,857) $( 2,874,734) $ 13,629 $ 2,888,363
62
CITY OF GRAPEVINE, TEXAS
4B - ECONOMIC DEVELOPMENT
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Budgeted Amounts
Variance with
Final Budget -
Positive
Original Final Actual (Negative)
REVENUES
Taxes $
3,653,721 $
3,653,721 $
4,699,128 $
1,045,407
Charges for services
-
-
154,290
154,290
Investment income
110,000
110,000
9,056 (
100,944)
Miscellaneous
-
-
5,098
5,098
Total revenues
3,763,721
3,763,721
4,867,572
1,103,851
EXPENDITURES
Current:
Economic development
2,071,998
2,073,623
2,908,736 (
835,113)
Total expenditures
2,071,998
2,073,623
2,908,736 (
835,113)
EXCESS (DEFICIENCY) OF REVENUE
OVER (UNDER) EXPENDITURES
1,691,723
1,690,098
1,958,836
268,738
OTHER FINANCING SOURCES (USES)
Transfers in
-
-
22,981
22,981
Transfers out (
1,691,723) (
1,691,723) (
2,015,565) (
323,842)
Insurance recoveries
-
-
28,749
28,749
Total other financing sources (uses) (
1,691,723) (
1,691,723) (
1,963,835) (
272,112)
NET CHANGE IN FUND BALANCES
- (
1,625) (
4,999) (
3,374)
FUND BALANCES, BEGINNING
12,214,640
12,214,640
12,214,640
-
FUND BALANCES, ENDING $
12,214,640 $
12,213,015 $
12,209,641 $(
3,374)
The accompanying notes are an integral
part of this schedule. 63
CITY OF GRAPEVINE, TEXAS
4B - TRANSIT
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Budgeted Amounts
Original Final
REVENUES
Variance with
Final Budget -
Positive
Actual (Negative)
Sales taxes
$ 9,218,161 $
9,218,161 $
9,584,397 $
366,236
Investment income
10,000
10,000
63 (
9,937)
Total revenues
9,228,161
9,228,161
9,584,460
356,299
EXPENDITURES
Current:
Transportation
8,754,020
8,754,020
9,305,545 (
551,525)
Total expenditures
8,754,020
8,754,020
9,305,545 (
551,525)
EXCESS (DEFICIENCY) OF REVENUE
OVER (UNDER) EXPENDITURES
474,141
474,141
278,915
OTHER FINANCING SOURCES (USES)
Transfers out (
464,141) (
464,141) (
301,833)
Total other financing sources (uses) (
464,141) (
464,141) (
301,833)
NET CHANGE IN FUND BALANCE
10,000
10,000 (
22,918)
FUND BALANCE, BEGINNING
22,918
22,918
22,918
FUND BALANCE, ENDING $
32,918 $
32,918 $
- $(
The accompanying notes are an integral
part of this schedule. 64
195,226)
162,308
162,308
32,918)
32,918)
CITY OF GRAPEVINE, TEXAS
SCHEDULE OF CHANGES IN NET PENSION LIABILITY
AND RELATED RATIOS - TEXAS MUNICIPAL RETIREMENT SYSTEM
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Plan Year
A. Total pension liability
Service Cost
Interest (on the total pension liability)
Difference between expected and actual experience
Changes of assumptions
Benefit payments, including refunds of employee contributions
Net change in total pension liability
Total pension liability - beginning
Total pension liability - ending (a)
B. Plan fiduciary net position
Contributions - employer
Contributions - employee
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense
Other
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
C. Net pension liability - ending (a) - (b)
D. Plan fiduciary net position as a percentage of total pension
liability
E. Covered payroll
F. Net pension liability as a percentage of covered payroll
2014 2015
$ 6,509,572 $
7,082,668
15,338,396
16,144,617
( 1,847,827) (
1,393,602)
- (
77,299)
( 8,121,165) (
9,417,307)
11,878,976 12,339,077
219,925,733
231,804,709
$ 231,804,709 $
244,143,786
$ 6,975,288 $
7,547,081
2,583,406
2,769,765
10,365,590
284,606
( 8,121,165) (
9,417,307)
( 108,213) (
173,344)
( 8,897) (
8,562)
11,686,009 1,002,239
181,182,907 192,868,916
192,868,916 193,871,155
$ 38,935,793 $ 50,272,631
83.20% 79.41 %
$ 36,690,944 $ 39,260,910
106.12% 128.05%
Note: GASB Statement No. 68 requires 10 years of data to be provided in this schedule. As of September 30,
2021, only 7 years are included and additional years will be added in the future as the information becomes
available.
65
2016
2017
2018
2019
2020
$ 7,293,298 $
7,724,236 $
8,129,774 $
8,579,543 $
8,865,558
16,410,412
17,301,746
18,265,311
19,238,959
20,359,202
( 1,109,085) (
772,200) (
1,201,653)
659,154 (
1,320,295)
-
-
-
207,921
-
( 9,346,450) (
9,863,833) (
10,499,198) (
11,488,595) (
12,976,187)
13,248,175
14,389,949
14,694,234
17,196,982
14,928,278
244,143,786
257,391,961
271,781,910
286,476,144
303,673,126
$ 257,391,961 $
271,781,910 $
286,476,144 $
303,673,126 $
318,601,404
$ 7,526,300 $
2,764,119
13,104,905
( 9,346,450) (
( 147,973) (
( 7,972)
13,892,929
193, 871,155
207,764,084
$ 49,627,877 $
80.72%
$ 39,444,551 $
125.82%
7,958,051 $
2,922,684
28,801,972
9,863,833) (
149,230) (
7,564) (
29,662,080
207,764,084
237,426,164
34,355,746 $
87.36%
41,752,627 $
82.28%
8,375,515 $
3,093,341
7,113,672)
10,499,198) (
137,452) (
7,184) (
6,288,650)
237,426,164
231,137,514
55,338,630 $
80.68%
44,087,711 $
125.52%
8,626,976 $
3,250,584
35,749,292
11,488,595) (
201,910) (
6,064) (
35,930,283
231,137,514
267,067,797
36,605,329 $
87.95%
46,426,097 $
78.85%
8,775,571
3,315,113
20,280,650
12,976,187)
131,176)
5,118)
19,258,853
267,067,797
286,326,650
32,274,754
89.87%
47,358,751
68.15%
66
CITY OF GRAPEVINE, TEXAS
SCHEDULE OF PENSION CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Fiscal Year
Actuarial determined contribution
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of
covered payroll
2014 2015 2016
$ 6,911,778 $ 7,193,830 $ 7,395,291
6,911,778 7,193,830 7,395,291
36,595,511 37,658,091 38,748,515
18.89% 19.10% 19.09%
Notes to Schedule of Contributions
Valuation Date:
Actuarially determined contribution rates are calculated as of December 31st and become effective in January,
13 months and a day later.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method
Entry Age Normal
Amortization Method
Level Percentage of Payroll, Closed
Remaining Amortization
Period
25 years
Asset Valuation Method
10 Year smoothed market; 12% soft corridor
Inflation
2.5%
Salary Increases
3.50% to 11.50% including inflation
Investment Rate of Return
6.75%
Retirement Age
Experience -based table of rates that are specific to the City's plan
of benefits. Last updated for the 2019 valuation pursuant to an
experience study of the period 2014 - 2018
Mortality
Post -retirement: 2019 Municipal Retirees of Texas Mortality Tables.
The rates are projected on a fully generational basis with scale
LIMP.
Pre -retirement: PUB(10) mortality tables, with the Public Safety
table used for males and the General Employee table used for
females. The rates are projected on a fully generational basis with
scale LIMP.
Other Information
There were no benefit changes during the year.
Note: GASB Statement No. 68 requires 10 years of data to be provided in this schedule. As of September 30,
2021, only 8 years are included and additional years will be added in the future as the information becomes
available.
67
2017
2018
2019
2020
2021
$ 7,815,149 $
8,334,727 $
8,735,515 $
8,848,797 $
8,857,579
7,815,149
8,334,727
8,735,515
8,848,797
8,857,579
41,002,879
43,861,106
45,272,727
47,716,819
47,270,943
19.06%
19.00%
19.30%
18.54%
18.74%
68
CITY OF GRAPEVINE, TEXAS
SCHEDULE OF CHANGES IN NET OPEB LIABILITY
AND RELATED RATIOS
POST -RETIREMENT HEALTH CARE BENEFIT PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Plan Year
2017
2018
2019
2020
A. Total OPEB liability
Service Cost
$
2,883,770
$ 3,547,117
$ 3,955,532
$ 4,841,226
Interest (on the total OPEB liability)
2,452,440
2,423,640
2,606,795
2,339,946
Difference between expected and actual experience
209,342
( 1,065,868)
( 528,026)
( 3,113,851)
Changes of assumptions
4,730,475
( 8,510,968)
6,316,707
10,638,856
Benefit payments
(
1,821,839)
( 1,687,035)
( 1,471,310)
( 1,957,430)
Net change in total OPEB liability
8,454,188
( 5,293,114)
10,879,698
12,748,747
Total OPEB liability - beginning
63,837,532
72,291,720
66,998,606
77,878,304
Total OPEB liability - ending (a)
$
72,291,720
$ 66,998,606
$ 77,878,304
$ 90,627,051
B. Plan fiduciary net position
Employer Contributions
$
2,821,839
$ 2,187,035
$ 1,971,310
$ 1,957,430
Net investment income
63,643
( 77,518)
304,042
261,069
Benefit payments
(
1,821,839)
( 1,687,035)
( 1,471,310)
( 1,957,430)
Administrative expense
(
2,315)
( 6,401)
( 9,715)
( 13,083)
Net change in plan fiduciary net position
1,061,328
416,081
794,327
247,986
Plan fiduciary net position - beginning
-
1,061,328
1,477,409
2,271,736
Plan fiduciary net position - ending (b)
1,061,328
1,477,409
2,271,736
2,519,722
C. Net OPEB liability - ending (a) - (b)
$
71,230,392
$ 65,521,197
$ 75,606,568
$ 88,107,329
D. Plan fiduciary net position as a percentage of total
OPEB liability 1.47% 2.21% 2.92% 2.78%
E. Covered -employee payroll $ 41,752,627 $ 44,087,895 $ 46,426,087 $ 47,352,845
F. Net OPEB liability as a percentage of Covered -
employee payroll 170.60% 148.61 % 162.85% 186.07%
Notes to Schedule:
GASB Statement No. 75 requires 10 years of data to be provided in this schedule. As of September 30, 2021, only 4 years are included.
Additional years will be added in the future as the information becomes available.
The long-term expected investment return assumption was changed from 6.75 to 6.25 in 2021
The demographic assumptions were updated to reflect the 2019 TMRS Experience Study and the health care trend rates were updated to
reflect the repeal of the excise tax on high -cost employer health plans.
Included in the changes of assumptions was a change in the discount rate from 2.95% to 2.04% in 2021.
69
CITY OF GRAPEVINE, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30, 2021
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Budgets
The City follows these procedures in establishing budgetary data reflected in the financial statements:
(1) Prior to August 1, the City Manager submits to the City Council a proposed operating budget for
the fiscal year commencing the following October 1. The operating budget includes proposed
expenditures and the means of financing them.
(2) Public hearings are conducted to obtain taxpayer comments.
(3) Prior to September 15, the budget is legally enacted through passage of an ordinance.
(4) The City Manager is authorized to transfer budgeted amounts between departments within any
fund; however, any revisions that alter the total expenditures of any fund must be approved by
the City Council, after public hearings. Total expenditures may not exceed appropriations at the
individual fund level.
(5) Budgets are legally adopted for the General Fund, Hotel Occupancy Tax Fund, the Crime
District Fund, the 4B — Economic Development Fund, the 4B — Transit Fund, the Debt Service
Fund and Enterprise Funds. Budgetary control is maintained at the fund level.
(6) Budgets for the General, Hotel Occupancy Tax, Crime District, 4-B Economic Development
Fund, 413—Transit Fund, and Debt Service Fund are adopted in accordance with generally
accepted accounting principles. Budget amounts are as amended by the City Council and
adjusted for transfers of budgeted amounts between departments within any fund, authorized by
the City Manager.
(7) Budgetary comparison schedules are presented as required supplementary information for the
General Fund and for each major special revenue fund. Capital Projects Funds have not been
presented as such funds are budgeted over the life of the respective project and not on an
annual basis. Accordingly, formal budgetary integration of these funds is not employed and
comparison of actual results of operations to budgetary data for such funds is not presented.
(8) The budgetary comparison schedules included in the required supplementary information
present a comparison of budgetary data to actual results of operations for the General Fund,
Hotel Occupancy Tax Fund, Crime District Fund, 4-B Economic Development Fund, and 413—
Transit Fund. A comparison of budgetary data to actual results of operations for the Debt
Service Fund is presented as supplementary information.
2. EXCESS OF EXPENDITURES OVER APPROPRIATIONS
For the year ended September 30, 2021, expenditures exceeded appropriations in the following funds by
the following amounts:
General Fund - $965,786
Crime District Fund - $329,168
4B — Economic Development Fund - $835,113
413—Transit Fund - $551,525.
The overages were covered by available fund balance.
70
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APPENDIX C
FORM OF BOND COUNSEL'S OPIMON
THIS PAGE LEFT BLANK INTENTIONALLY
I: _ alATLASaaI
[CLOSING DATE]
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION
SERIES 2022
WE HAVE represented the City of Grapevine, Texas (the "Issuer") as its bond counsel in
connection with an issue of certificates of obligation (the "Certificates") described as follows:
CITY OF GRAPEVINE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF
OBLIGATION, SERIES 2022, dated December 1, 2022, in the principal amount of
The Certificates mature, bear interest, are subject to redemption and may be
transferred and exchanged as set out in the Certificates and in the ordinance adopted by
the City Council of the Issuer authorizing their issuance (the "Ordinance").
WE HAVE represented the Issuer as its bond counsel for the sole purpose of rendering an
opinion with respect to the legality and validity of the Certificates under the Constitution and laws of the
State of Texas and with respect to the excludability of interest on the Certificates from gross income for
federal income tax purposes. We have not investigated or verified original proceedings, records, data or
other material, but have relied solely upon the transcript of proceedings described in the following
paragraph. We have not assumed any responsibility with respect to the financial condition or
capabilities of the Issuer or the disclosure thereof in connection with the sale of the Certificates. Our
role in connection with the Issuer's Official Statement prepared for use in connection with the sale of
the Certificates has been limited as described therein.
IN OUR CAPACITY as bond counsel, we have participated in the preparation of and have
examined a transcript of certified proceedings pertaining to the Certificates, on which we have relied in
giving our opinion. The transcript contains certified copies of certain proceedings of the Issuer;
customary certificates of officers, agents and representatives of the Issuer and other public officials; and
other certified showings relating to the authorization and issuance of the Certificates. We also have
analyzed such laws, regulations, guidance, documents and other materials as we have deemed
Bracewell LLP T: +1.214.468.3800 F: +1.800.404.3970
1445 Ross Avenue, Suite 3800, Dallas, Texas 75202-2724
bracewell.com
AUSTIN CONNECTICUT DALLAS DUBAI HOUSTON LONDON NEW YORK SAN ANTONIO SEATTLE WASHINGTON, DC
I: _ alATLAVaaI
necessary to render the opinions herein. Moreover, we have also examined executed Certificate No. T-1
of this issue.
In providing the opinions set forth herein, we have relied on representations and certifications
of the Issuer and other parties involved with the issuance of the Certificates with respect to matters
solely within the knowledge of the Issuer and such parties, which we have not independently verified.
In addition, we have assumed for purposes of this opinion continuing compliance with the covenants in
the Ordinance, including, but not limited to, covenants relating to the tax-exempt status of the
Certificates.
BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT:
(A) The transcript of certified proceedings evidences complete legal authority for
the issuance of the Certificates in full compliance with the Constitution and laws
of the State of Texas presently effective and, therefore, the Certificates
constitute valid and legally binding special obligations of the Issuer;
(B) A continuing ad valorem tax upon all taxable property within the City of
Grapevine, Texas, necessary to pay the principal of and interest on the
Certificates, has been levied and pledged irrevocably for such purposes, within
the limit prescribed by law; in addition, the payment of the principal of and
interest on the Certificates is further secured by a pledge of the Surplus
Revenues of the Issuer's Waterworks and Sewer System (as defined in the
Ordinance), such pledge being limited to an amount not in excess of $1,000; and
the total indebtedness of the Issuer, including the Certificates, does not exceed
any constitutional, statutory or other limitations; and
(C) Interest on the Certificates is excludable from gross income for federal income
tax purposes under section 103 of the Internal Revenue Code of 1986, as
amended. In addition, interest on the Certificates is not an item of tax
preference for purposes of the alternative minimum tax; however, such interest
is taken into account in determining the "annual adjusted financial statement
income" (as defined in section 56A of the Code) of "applicable corporations" (as
defined in section 59(k) of the Code) for the purpose of computing the
alternative minimum tax imposed on corporations for tax years beginning after
December 31, 2022.
The rights of the owners of the Certificates are subject to the applicable provisions of the federal
bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions
generally, and may be limited by general principles of equity which permit the exercise of judicial
discretion.
-2-
AUSTIN CONNECTICUT DALLAS DUBAI HOUSTON LONDON NEW YORK SAN ANTONIO SEATTLE WASHINGTON, DC
I: _ alATLAVaaI
Except as stated above, we express no opinion as to the amount of interest on the Certificates
or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or the
acquisition, ownership or disposition of, the Certificates. This opinion is specifically limited to the laws
of the State of Texas and, to the extent applicable, the laws of the United States of America. Further, in
the event that the representations of the Issuer and other parties upon which we have relied are
determined to be inaccurate or incomplete or the Issuer fails to comply with the covenants of the
Ordinance, interest on the Certificates could become includable in gross income for federal income tax
purposes from the date of the original delivery of the Certificates, regardless of the date on which the
event causing such inclusion occurs.
Our opinions are based on existing law and our knowledge of facts as of the date hereof and
may be affected by certain actions that may be taken or omitted on a later date. We assume no duty to
update or supplement our opinions, and this opinion letter may not be relied upon in connection with
any changes to the law or facts, or actions taken or omitted, after the date hereof.
-3-
AUSTIN CONNECTICUT DALLAS DUBAI HOUSTON LONDON NEW YORK SAN ANTONIO SEATTLE WASHINGTON, DC
Municipal Advisory Services
Provided By
HilltopSecurities J�w
A Hilltop Holdings Company.
ORDINANCE NO. 2022-090
AUTHORIZING THE ISSUANCE OF
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2022
Adopted: December 6, 2022
# DM-8317973.1
TABLE OF CONTENTS
Page
Parties.........................................................................................................................................1
ARTICLE I
DEFINITIONS AND OTHER PRELIMINARY MATTERS
Section1.01.
Definitions ...........................................................................................................2
Section 1.02.
Other Definitions .................................................................................................4
Section1.03.
Findings...............................................................................................................4
Section 1.04.
Table of Contents, Titles and Headings................................................................4
Section1.05.
Interpretation.......................................................................................................5
ARTICLE II
SECURITY FOR THE CERTIFICATES
Section 2.01. Payment of the Certificates..................................................................................5
ARTICLE III
AUTHORIZATION; GENERAL TERMS AND PROVISIONS
REGARDING THE CERTIFICATES
Section 3.01.
Authorization.......................................................................................................6
Section 3.02.
Date, Denomination, Maturities, Numbers and Interest........................................7
Section 3.03.
Medium, Method and Place of Payment...............................................................8
Section 3.04.
Execution and Initial Registration........................................................................8
Section3.05.
Ownership............................................................................................................9
Section 3.06.
Registration, Transfer and Exchange..................................................................10
Section 3.07.
Cancellation and Authentication.........................................................................10
Section 3.08.
Temporary Certificates .......................................................................................11
Section 3.09.
Replacement Certificates ....................................................................................11
Section 3.10.
Book -Entry Only System...................................................................................12
Section 3.11.
Successor Securities Depository; Transfer Outside Book -Entry Only System .....
13
Section 3.12.
Payments to Cede & Co.....................................................................................13
ARTICLE IV
REDEMPTION OF CERTIFICATES BEFORE MATURITY
Section 4.01. Limitation on Redemption..................................................................................14
Section 4.02. Optional Redemption.........................................................................................14
Section 4.03. Mandatory Sinking Fund Redemption................................................................14
Section 4.04. Partial Redemption.............................................................................................15
(i)
Ordinance No. 2022-090
Section 4.05. Notice of Redemption to Owners.......................................................................15
Section 4.06. Payment Upon Redemption................................................................................16
Section 4.07. Effect of Redemption.........................................................................................16
Section 4.08. Conditional Notice of Redemption.....................................................................16
Section4.09. Lapse of Payment...............................................................................................17
ARTICLE V
PAYING AGENT/REGISTRAR
Section 5.01.
Appointment of Initial Paying Agent/Registrar...................................................17
Section 5.02.
Qualifications.....................................................................................................17
Section 5.03.
Maintaining Paying Agent/Registrar..................................................................17
Section5.04.
Termination.......................................................................................................17
Section 5.05.
Notice of Change...............................................................................................17
Section 5.06.
Agreement to Perform Duties and Functions......................................................18
Section 5.07.
Delivery of Records to Successor.......................................................................18
ARTICLE VI
FORM OF THE CERTIFICATES
Section 6.01.
Form Generally..................................................................................................18
Section 6.02.
Form of Certificates...........................................................................................18
Section 6.03.
CUSIP Registration............................................................................................25
Section6.04.
Legal Opinion....................................................................................................25
Section 6.05.
Municipal Bond Insurance.................................................................................25
ARTICLE VII
SALE OF THE CERTIFICATES;
CONTROL AND DELIVERY OF THE CERTIFICATES
Section 7.01. Sale of Certificates; Official Statement; Engagement Letter...............................26
Section 7.02. Control and Delivery of Certificates...................................................................27
ARTICLE VIII
CREATION OF FUNDS AND ACCOUNTS;
DEPOSIT OF PROCEEDS; INVESTMENTS
Section 8.01.
Creation of Funds...............................................................................................27
Section 8.02.
Interest and Sinking Fund...................................................................................27
Section8.03.
Project Fund.......................................................................................................28
Section 8.04.
Security of Funds...............................................................................................28
Section 8.05.
Deposit of Proceeds...........................................................................................28
Section8.06.
Investments........................................................................................................28
Section 8.07.
Investment Income.............................................................................................29
Ordinance No. 2022-090
ARTICLE IX
PARTICULAR REPRESENTATIONS AND COVENANTS
Section 9.01.
Payment of the Certificates................................................................................29
Section 9.02.
Other Representations and Covenants................................................................29
Section 9.03.
Federal Income Tax Matters...............................................................................29
ARTICLE X
DEFAULT AND REMEDIES
Section 10.01. Events of Default...............................................................................................31
Section 10.02. Remedies for Default.........................................................................................31
Section 10.03. Remedies Not Exclusive....................................................................................31
ARTICLE XI
DISCHARGE
Section11.01. Discharge...........................................................................................................32
ARTICLE XII
CONTINUING DISCLOSURE UNDERTAKING
Section 12.01. Annual Reports..................................................................................................32
Section 12.02. Notice of Certain Events....................................................................................32
Section 12.03. Limitations, Disclaimers and Amendments........................................................34
ARTICLE XIII
AMENDMENTS
Section13.01. Amendments......................................................................................................35
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Changes to Ordinance........................................................................................36
Section 14.02. Partial Invalidity................................................................................................36
Section 14.03. No Personal Liability.........................................................................................36
Ordinance No. 2022-090
ARTICLE XV
EFFECTIVE IMMEDIATELY
Section 15.01. Effectiveness......................................................................................................36
(iv)
Ordinance No. 2022-090
AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE
OF $ CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND REVENUE CERTIFICATES OF
OBLIGATION, SERIES 2022; AWARDING THE SALE THEREOF;
LEVYING A TAX IN PAYMENT THEREOF; AUTHORIZING THE
EXECUTION AND DELIVERY OF A PAYING
AGENT/REGISTRAR AGREEMENT; APPROVING THE
OFFICIAL STATEMENT; APPROVING A BOND COUNSEL
ENGAGEMENT LETTER; AND ENACTING OTHER
PROVISIONS RELATING THERETO
WHEREAS, under the provisions of Chapter 271, Subchapter C, Texas Local
Government Code, as amended, the City of Grapevine, Texas (the "City"), is authorized to issue
certificates of obligation for the purposes specified in this Ordinance and for the payment of all
or a portion of the contractual obligations for professional services, including that of engineers,
attorneys, and financial advisors in connection therewith, and to sell the same for cash as herein
provided; and
WHEREAS, the City is authorized to provide that such obligations will be payable from
and secured by the levy of a direct and continuing ad valorem tax against all taxable property
within the City, in combination with a part of certain revenues of the City's waterworks and
sewer system (the "System") remaining after payment of any obligations of the City payable in
whole or in part from a lien or pledge of such revenues that would be superior to the obligations
to be authorized herein; and
WHEREAS, the City Council of the City (the "City Council") has found and determined
that it is necessary and in the best interests of the City and its citizens that it issue such
certificates of obligation authorized by this Ordinance; and
WHEREAS, pursuant to a resolution heretofore passed by this governing body, notice of
intention to issue Certificates of the City payable as provided in this Ordinance was published in
a newspaper of general circulation in the City in accordance with the requirements of law (the
"Notice of Intention"); and
WHEREAS, the Notice of Intention stated that the City Council intended to pass an
ordinance authorizing the issuance of the certificates of obligation at the regularly scheduled
December 6, 2022 City Council meeting; and
WHEREAS, the Notice of Intention was also published continuously on the City's
website for at least 45 days before December 6, 2022 in accordance the requirements of law; and
WHEREAS, no petition of any kind has been filed with the City Secretary, any member
of the City Council or any other official of the City, protesting the issuance of such certificates of
obligation; and
WHEREAS, this City Council is now authorized and empowered to proceed with the
issuance of said Certificates and to sell the same for cash; and
# DM-8317973.1
WHEREAS, it is officially found, determined, and declared that the meeting at which this
Ordinance has been adopted was open to the public and public notice of the time, place and
subject matter of the public business to be considered and acted upon at said meeting, including
this Ordinance, was given, all as required by the applicable provisions of Chapter 551, Texas
Government Code, as amended;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE:
ARTICLE I
DEFINITIONS AND OTHER PRELIMINARY MATTERS
Section 1.01. Definitions.
Unless otherwise expressly provided or unless the context clearly requires otherwise, in
this Ordinance the following terms shall have the meanings specified below:
"Applicable Law" means the duly adopted home rule charter of the City, and all other
laws or statutes, rules or regulations, and any amendments thereto, of the State or of the United
States by which the City and its powers, securities, credit agreement, operations and procedures
are, or may be, governed or from which its powers may be derived.
"Certificate" means any of the Certificates.
"Certificates" means any of the City's certificates of obligation entitled "City of
Grapevine, Texas Combination Tax and Revenue Certificates of Obligation, Series 2022"
authorized to be issued by Section 3.01.
"Closing Date" means the date of the initial delivery of and payment for the Certificates.
"Code" means the Internal Revenue Code of 1986, as amended, and, with respect to a
specific section thereof, such reference shall be deemed to include (a) the Regulations
promulgated under such section, (b) any successor provision of similar import hereafter enacted,
(c) any corresponding provision of any subsequent Internal Revenue Code and (d) the
regulations promulgated under the provisions described in (b) and (c).
"Designated Payment/Transfer Office" means (i) with respect to the initial Paying
Agent/Registrar named herein, its office in Dallas, Texas, or at such other location designated by
the Paying Agent/Registrar and (ii) with respect to any successor Paying Agent/Registrar, the
office of such successor designated and located as may be agreed upon by the City and such
successor.
"DTC" means The Depository Trust Company of New York, New York, or any
successor securities depository.
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"DTC Participant" means brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations on whose behalf DTC was created to hold securities
to facilitate the clearance and settlement of securities transactions among DTC Participants.
"EMMA" means Electronic Municipal Market Access System.
"Event of Default" means any Event of Default as defined in Section 10.01.
"Financial Obligation" means a (a) debt obligation; (b) derivative instrument entered into
in connection with, or pledged as security or a source of payment for, an existing or planned debt
obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that
"financial obligation" shall not include municipal securities (as defined in the Securities
Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule)
has been provided to the MSRB consistent with the Rule.
"Initial Certificate" means the Certificate described in Section 3.04(d) and 6.02(d).
"Interest and Sinking Fund" means the interest and sinking fund established by
Section 8.01(a).
"Interest Payment Date" means the date or dates upon which interest on the Certificates is
scheduled to be paid until the maturity of the Certificates, such dates being February 15 and
August 15 of each year commencing August 15, 2023.
"MSRB" means the Municipal Securities Rulemaking Board.
"Net Revenues" means the gross revenues of the System less the expenses of operation
and maintenance as said expenses are defined by Chapter 1502, Texas Government Code, as
amended.
"Ordinance" means this Ordinance.
"Owner" means the person who is the registered owner of a Certificate or Certificates, as
shown in the Register.
"Paying Agent/Registrar" means initially The Bank of New York Mellon Trust
Company, N.A., Dallas Texas, or any successor thereto as provided in this Ordinance.
"Paying Agent/Registrar Agreement" means the Paying Agent/Registrar Agreement
between the City and the Paying Agent/Registrar relating to the Certificates.
"Prior Lien Bonds" means any and all bonds or other obligations of the City presently
outstanding or that may be hereafter issued, payable from and secured by a first lien on and
pledge of the Net Revenues or by a lien on and pledge of the Net Revenues subordinate to a first
lien and pledge of such Net Revenues but superior to the lien and pledge of the Surplus
Revenues made for the Certificates.
"Project Fund" means the Project Fund established by Section 8.01(a).
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"Purchaser" means
"Record Date" means the last business day of the month next preceding an Interest
Payment Date.
"Register" means the Register specified in Section 3.06(a).
"Regulations" means the applicable proposed, temporary or final Treasury Regulations
promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue
Code of 1954, as such regulations may be amended or supplemented from time to time.
"Representation Letter" means the Blanket Letter of Representations between the City
and DTC.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"Special Payment Date" means the Special Payment Date prescribed by Section 3.03(b).
"Special Record Date" means the Special Record Date prescribed by Section 3.03(b).
"Surplus Revenues" means the revenues of the System remaining after payment of all
operation and maintenance expenses thereof, and all debt service, reserve, and other
requirements in connection with the City's Prior Lien Bonds; provided, however, that the amount
of such surplus revenues pledged to the payment of the Certificates shall be limited to $1,000.
"System" as used in this Ordinance means the City's waterworks and sewer system,
including all present and future additions, extensions, replacements, and improvements thereto.
"Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the
payment of the principal of or interest on Certificates as the same become due and payable and
remaining unclaimed by the Owners of such Certificates for 90 days after the applicable payment
or redemption date.
Section 1.02. Other Definitions.
The terms "City Council" and "City" shall have the meaning assigned in the preamble to
this Ordinance.
Section 1.03. Findiw4s.
The declarations, determinations and findings declared, made and found in the preamble
to this Ordinance are hereby adopted, restated and made a part of the operative provisions hereof.
Section 1.04. Table of Contents, Titles and Headings.
The table of contents, titles and headings of the Articles and Sections of this Ordinance
have been inserted for convenience of reference only and are not to be considered a part hereof
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and shall not in any way modify or restrict any of the terms or provisions hereof and shall never
be considered or given any effect in construing this Ordinance or any provision hereof or in
ascertaining intent, if any question of intent should arise.
Section 1.05. InterDretation.
(a) Unless the context requires otherwise, words of the masculine gender shall be
construed to include correlative words of the feminine and neuter genders and vice versa, and
words of the singular number shall be construed to include correlative words of the plural
number and vice versa.
(b) Article and Section references shall mean references to articles and sections of
this Ordinance unless designated otherwise.
(c) This Ordinance and all the terms and provisions hereof shall be liberally
construed to effectuate the purposes set forth herein to sustain the validity of this Ordinance.
ARTICLE II
SECURITY FOR THE CERTIFICATES
Section 2.01. Pavment of the Certificates.
(a) Pursuant to the authority granted by the Texas Constitution and the laws of the
State of Texas, there is hereby levied for the current year and for each succeeding year hereafter
while any of the Certificates or any interest thereon is outstanding and unpaid, an ad valorem tax
on each one hundred dollars' valuation of taxable property within the City, at a rate sufficient,
within the limit prescribed by law, to pay the debt service requirements of the Certificates, being
(i) the interest on the Certificates, and (ii) a sinking fund for their redemption at maturity or a
sinking fund of two percent per annum (whichever amount is the greater), when due and payable,
full allowance being made for delinquencies and costs of collection.
(b) The ad valorem tax thus levied shall be assessed and collected each year against
all property appearing on the tax rolls of the City most recently approved in accordance with law,
and the money thus collected shall be deposited as collected to the Interest and Sinking Fund.
(c) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or
required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and
committed irrevocably to the payment of the principal of and interest on the Certificates when
and as due and payable in accordance with their terms and this Ordinance.
(d) The amount of taxes to be provided annually for the payment of principal of and
interest on the Certificates shall be determined and accomplished in the following manner:
(i) The City's annual budget shall reflect (i) the amount of debt service
requirements to become due on the Certificates in the next succeeding Fiscal Year of the
City, (ii) the amount on deposit in the Interest and Sinking Fund, as of the date such
budget is prepared (after giving effect to any payments required to be made during the
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remainder of the then current Fiscal Year), and (iii) the amount of Surplus Revenues
estimated and budgeted to be available for the payment of such debt service requirements
on the Certificates during the next succeeding Fiscal Year of the City.
(ii) The amount required to be provided in the succeeding Fiscal Year of the
City from ad valorem taxes shall be the amount, if any, the debt service requirements to
be paid on the Certificates in the next succeeding Fiscal Year of the City exceeds the sum
of (i) the amount shown to be on deposit in the Interest and Sinking Fund (after giving
effect to any payments required to be made during the remainder of the then current
Fiscal Year) at the time the annual budget is prepared, and (ii) the Surplus Revenues
shown to be budgeted and available for payment of said debt service requirements.
(iii) Following the final approval of the annual budget of the City, the
governing body of the City shall, by ordinance, levy an ad valorem tax at a rate sufficient
to produce taxes in the amount determined in paragraph (b) above, to be utilized for
purposes of paying the principal of and interest on the Certificates in the next succeeding
Fiscal Year of the City.
(e) The City hereby covenants and agrees that the Surplus Revenues are hereby
irrevocably pledged equally and ratably to the payment of the principal of, redemption premium,
if any, and interest on the Certificates, as the same become due.
(f) If the liens and provisions of this Ordinance shall be released in a manner
permitted by Article XI hereof, then the collection of such ad valorem tax may be suspended or
appropriately reduced, as the facts may permit, and further deposits to the Interest and Sinking
Fund may be suspended or appropriately reduced, as the facts may permit. In determining the
aggregate principal amount of outstanding Certificates, there shall be subtracted the amount of
any Certificates that have been duly called for redemption and for which money has been
deposited with the Paying Agent/Registrar for such redemption.
ARTICLE III
AUTHORIZATION; GENERAL TERMS AND PROVISIONS
REGARDING THE CERTIFICATES
Section 3.01. Authorization.
The City's certificates of obligation to be designated "City of Grapevine, Texas
Combination Tax and Revenue Certificates of Obligation, Series 2022" (the "Certificates"), are
hereby authorized to be issued and delivered in accordance with the Constitution and laws of the
State of Texas, particularly Chapter 271, Subchapter C, Texas Local Government Code, as
amended and Section 9.26 of the City's Home -Rule Charter. The Certificates shall be issued in
the aggregate principal amount of $ for the purpose of paying contractual
obligations to be incurred for the following purposes, to wit: (i) designing, developing,
constructing, improving, extending, and expanding streets, thoroughfares, sidewalks and bridges
of the City, including streetscaping, streetlighting, right-of-way protection, utility relocation,
and related storm drainage improvements; and acquiring rights -of -way in connection therewith;
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(ii) acquiring, improving and equipping land for parks and recreation purpose in the City,
including Settlers Park; (iii) acquiring vehicles and equipment for police, fire, emergency
services, public works, utilities and park and recreation purposes, and (iv) professional services
incurred in connection with items (i) through (iii), and to pay the costs incurred in connection
with the issuance of the Certificates.
Section 3.02. Date, Denomination, Maturities, Numbers and Interest.
(a) The Certificates shall be dated December 1, 2022 shall be in fully registered form,
without coupons, in the denomination of $5,000 or any integral multiple thereof, and shall be
numbered separately from one upward or such other designation acceptable to the City and the
Paying Agent/Registrar, except the Initial Certificate, which shall be numbered T-1.
(b) The Certificates shall mature on February 15 in the years and in the principal
installments set forth in the following schedule:
$ Serial Certificates
Principal Interest
Year
Amount Rate Year
2024
2034
2025
2035
2026
2036
2027
2037
2028
2038
2029
2039
2030
2040
2031
2041
2032
2042
2033
Principal Interest
Amount Rate
$ Term Certificates
Principal
Year Amount Interest Rate
20
(c) Interest shall accrue and be paid on each Certificate, respectively, until the
payment of the principal amount thereof shall have been paid or provided for, from the later of
the Closing Date or the most recent Interest Payment Date to which interest has been paid or
provided for at the rates per annum for each respective maturity specified in the schedule
contained in subsection (b) above. Such interest shall be payable semiannually on each
February 15 and August 15 of each year, commencing on August 15, 2023, until maturity or
prior redemption. Interest on the Certificates shall be calculated on the basis of a 360-day year
composed of twelve 30-day months.
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Section 3.03. Medium, Method and Place of Pavment.
(a) The principal of, premium, if any, and interest on the Certificates shall be paid in
lawful money of the United States of America as provided in this Section.
(b) Interest on the Certificates shall be payable to the Owners whose names appear in
the Register at the close of business on the Record Date; provided, however, that in the event of
nonpayment of interest on a scheduled Interest 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 (the "Special Payment Date," which shall be at least 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 Owner of a Certificate appearing on the
books of the Paying Agent/Registrar at the close of business on the last business day next
preceding the date of mailing of such notice.
(c) Interest on the Certificates shall be paid by check (dated as of the Interest
Payment Date) and sent by the Paying Agent/Registrar to the person entitled to such payment,
United States mail, first class postage prepaid, to the address of such person as it appears in the
Register or by such other customary banking arrangements acceptable to the Paying
Agent/Registrar and the person to whom interest is to be paid; provided, however, that such
person shall bear all risk and expenses of such other customary banking arrangements.
(d) The principal of each Certificate shall be paid to the person in whose name such
Certificate is registered on the due date thereof (whether at the maturity date or the date of prior
redemption thereof) upon presentation and surrender of such Certificate at the Designated
Payment/Transfer Office.
(e) If a date for the payment of the principal of or interest on the Certificates is a
Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the
Designated Payment/Transfer Office 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 a Saturday, Sunday,
legal holiday, or day on which such 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.
(f) Subject to any applicable escheat, unclaimed property, or similar law, including
Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners
entitled thereto for three years after the applicable payment or redemption date shall be paid to
the City and thereafter neither the City, the Paying Agent/Registrar, nor any other person shall be
liable or responsible to any Owners of such Certificates for any further payment of such
unclaimed moneys or on account of any such Certificates.
Section 3.04. Execution and Initial Registration.
(a) The Certificates shall be executed on behalf of the City by the Mayor and City
Secretary of the City, by their manual or facsimile signatures, and the official seal of the City
shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Certificates
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shall have the same effect as if each of the Certificates had been signed manually and in person
by each of said officers, and such facsimile seal on the Certificates shall have the same effect as
if the official seal of the City had been manually impressed upon each of the Certificates.
(b) In the event that any officer of the City whose manual or facsimile signature
appears on the Certificates ceases to be such officer before the authentication of such Certificates
or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and
sufficient for all purposes as if such officer had remained in such office.
(c) Except as provided below, no Certificate shall be valid or obligatory for any
purpose or be entitled to any security or benefit of this Ordinance unless and until there appears
thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this
Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not
be required that the same authorized representative of the Paying Agent/Registrar sign the
Certificate of Paying Agent/Registrar on all of the Certificates. In lieu of the executed
Certificate of Paying Agent/Registrar described above, the Initial Certificate delivered on the
Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially
in the form provided in this Ordinance, manually executed by the Comptroller of Public
Accounts of the State of Texas or by his duly authorized agent, which certificate shall be
evidence that the Initial Certificate has been duly approved by the Attorney General of the State
of Texas and that it is a valid and binding obligation of the City, and has been registered by the
Comptroller.
(d) On the Closing Date, one Initial Certificate representing the entire principal
amount of the Certificates, payable in stated installments to the initial purchaser or its designee,
executed by manual or facsimile signature of the Mayor and City Secretary of the City, approved
by the Attorney General of Texas, and registered and manually signed by the Comptroller of
Public Accounts of the State of Texas, will be delivered to the Purchaser or its designee. Upon
payment for the Initial Certificate, the Paying Agent/Registrar shall cancel the Initial Certificate
and deliver to DTC on behalf of the Purchaser registered definitive Certificates as described in
Section 3.10(a).
Section 3.05. OwnershiD.
(a) The City, the Paying Agent/Registrar and any other person may treat the person in
whose name any Certificate is registered as the absolute owner of such Certificate for the
purpose of making and receiving payment of the principal thereof and premium, if any, thereon,
for the further purpose of making and receiving payment of the interest thereon (subject to the
provisions herein that interest is to be paid to the person in whose name the Certificate is
registered on the Record Date), and for all other purposes, whether or not such Certificate is
overdue, and neither the City nor the Paying Agent/Registrar shall be bound by any notice or
knowledge to the contrary.
(b) All payments made to the person deemed to be the Owner of any Certificate in
accordance with this Section shall be valid and effectual and shall discharge the liability of the
City and the Paying Agent/Registrar upon such Certificate to the extent of the sums paid.
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Section 3.06. Registration, Transfer and Exchange.
(a) So long as any Certificates remain outstanding, the City shall cause the Paying
Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar
shall provide for the registration and transfer of Certificates in accordance with this Ordinance.
(b) The ownership of a Certificate may be transferred only upon the presentation and
surrender of the Certificate at the Designated Payment/Transfer Office of the Paying
Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the
Paying Agent/Registrar. No transfer of any Certificate shall be effective until entered in the
Register.
(c) The Certificates shall be exchangeable upon the presentation and surrender
thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar for a
Certificate or Certificates of the same maturity and interest rate and in any denomination or
denominations of any integral multiple of $5,000 and in an aggregate principal amount equal to
the unpaid principal amount of the Certificates presented for exchange. The Paying
Agent/Registrar is hereby authorized to authenticate and deliver Certificates exchanged for other
Certificates in accordance with this Section.
(d) Each exchange Certificate delivered by the Paying Agent/ Registrar in accordance
with this Section shall constitute an original contractual obligation of the City and shall be
entitled to the benefits and security of this Ordinance to the same extent as the Certificate or
Certificates in lieu of which such exchange Certificate is delivered.
(e) No service charge shall be made to the Owner for the initial registration,
subsequent transfer, or exchange for any different denomination of any of the Certificates. The
Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any
tax or other governmental charge that is authorized to be imposed in connection with the
registration, transfer or exchange of a Certificate.
(f) Neither the City nor the Paying Agent/Registrar shall be required to issue,
transfer, or exchange any Certificate called for redemption, in whole or in part, where such
redemption is scheduled to occur within forty-five (45) calendar days after the transfer or
exchange date; provided, however, such limitation shall not be applicable to an exchange by the
Owner of the uncalled principal balance of a Certificate.
Section 3.07. Cancellation and Authentication.
All Certificates paid or redeemed before scheduled maturity in accordance with this
Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates
are authenticated and delivered in accordance with this Ordinance, shall be cancelled upon the
making of proper records regarding such payment, redemption, exchange or replacement. The
Paying Agent/Registrar shall dispose of the cancelled Certificates in accordance with the
Securities Exchange Act of 1934.
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Section 3.08. TemDorary Certificates.
(a) Following the delivery and registration of the Initial Certificate and pending the
preparation of definitive Certificates, the proper officers of the City may execute and, upon the
City's request, the Paying Agent/Registrar shall authenticate and deliver, one or more temporary
Certificates that are printed, lithographed, typewritten, mimeographed or otherwise produced, in
any denomination, substantially of the tenor of the definitive Certificates in lieu of which they
are delivered, without coupons, and with such appropriate insertions, omissions, substitutions
and other variations as the officers of the City executing such temporary Certificates may
determine, as evidenced by their signing of such temporary Certificates.
(b) Until exchanged for Certificates in definitive form, such Certificates in temporary
form shall be entitled to the benefit and security of this Ordinance.
(c) The City, without unreasonable delay, shall prepare, execute and deliver to the
Paying Agent/Registrar the Certificates in definitive form; thereupon, upon the presentation and
surrender of the Certificate or Certificates in temporary form to the Paying Agent/Registrar, the
Paying Agent/Registrar shall cancel the Certificates in temporary form and authenticate and
deliver in exchange therefor a Certificate or Certificates of the same maturity and series, in
definitive form, in the authorized denomination, and in the same aggregate principal amount, as
the Certificate or Certificates in temporary form surrendered. Such exchange shall be made
without the making of any charge therefor to any Owner.
Section 3.09. ReDlacement Certificates.
(a) Upon the presentation and surrender to the Paying Agent/Registrar, at the
Designated Payment/Transfer Office, of a mutilated Certificate, the Paying Agent/Registrar shall
authenticate and deliver in exchange therefor a replacement Certificate of like tenor and principal
amount, bearing a number not contemporaneously outstanding. The City or the Paying
Agent/Registrar may require the Owner of such Certificate to pay a sum sufficient to cover any
tax or other governmental charge that is authorized to be imposed in connection therewith and
any other expenses connected therewith.
(b) In the event that any Certificate is lost, apparently destroyed or wrongfully taken,
the Paying Agent/Registrar, pursuant to the applicable laws of the State of Texas and in the
absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser,
shall authenticate and deliver a replacement Certificate of like tenor and principal amount,
bearing a number not contemporaneously outstanding, provided that the Owner first:
(i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her
ownership of and the circumstances of the loss, destruction or theft of such Certificate;
(ii) furnishes such security or indemnity as may be required by the Paying
Agent/Registrar and the City to save them harmless;
(iii) pays all expenses and charges in connection therewith, including, but not
limited to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or
other governmental charge that is authorized to be imposed; and
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(iv) satisfies any other reasonable requirements imposed by the City and the
Paying Agent/Registrar.
(c) If, after the delivery of such replacement Certificate, a bona fide purchaser of the
original Certificate in lieu of which such replacement Certificate was issued presents for
payment such original Certificate, the City and the Paying Agent/Registrar shall be entitled to
recover such replacement Certificate from the person to whom it was delivered or any person
taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security
or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the
City or the Paying Agent/Registrar in connection therewith.
(d) In the event that any such mutilated, lost, apparently destroyed or wrongfully
taken Certificate has become or is about to become due and payable, the Paying Agent/Registrar,
in its discretion, instead of issuing a replacement Certificate, may pay such Certificate.
(e) Each replacement Certificate delivered in accordance with this Section shall
constitute an original contractual obligation of the City and shall be entitled to the benefits and
security of this Ordinance to the same extent as the Certificate or Certificates in lieu of which
such replacement Certificate is delivered.
Section 3.10. Book-Entry Only Svstem.
(a) The definitive Certificates shall be initially issued in the form of a separate single
fully registered Certificate for each of the maturities thereof. Upon initial issuance, the
ownership of each such Certificate shall be registered in the name of Cede & Co., as nominee of
DTC, and except as provided in Section 3.11 hereof, all of the outstanding Certificates shall be
registered in the name of Cede & Co., as nominee of DTC.
(b) With respect to Certificates registered in the name of Cede & Co., as nominee of
DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any
DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in
the Certificates, except as provided in this Ordinance. Without limiting the immediately
preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or
obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC
Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any DTC
Participant or any other person, other than an Owner, as shown on the Register, of any notice
with respect to the Certificates, including any notice of redemption, or (iii) the payment to any
DTC Participant or any other person, other than an Owner, as shown in the Register of any
amount with respect to principal of, premium, if any, or interest on the Certificates.
Notwithstanding any other provision of this Ordinance to the contrary, the City and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate
is registered in the Register as the absolute Owner of such Certificate for the purpose of payment
of principal of, premium, if any, and interest on the Certificates, for the purpose of giving notices
of redemption and other matters with respect to such Certificate, for the purpose of registering
transfer with respect to such Certificate, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of, premium, if any, and interest on the Certificates only
to or upon the order of the respective Owners, as shown in the Register as provided in this
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Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall
be valid and effective to fully satisfy and discharge the City's obligations with respect to
payment of, premium, if any, and interest on the Certificates to the extent of the sum or sums so
paid. No person other than an Owner, as shown in the register, shall receive a certificate
evidencing the obligation of the City to make payments of amounts due pursuant to this
Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect
that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the
provisions in this Ordinance with respect to interest checks or drafts being mailed to the
registered Owner at the close of business on the Record Date, the word "Cede & Co." in this
Ordinance shall refer to such new nominee of DTC.
(c) The Representation Letter previously executed and delivered by the City, and
applicable to the City's obligations delivered in book -entry -only form to DTC as securities
depository for said obligations, is hereby ratified and approved for the Certificates.
Section 3.11. Successor Securities DeDositorv_ : Transfer Outside Book-Entrv_ Onlv_
Svstem.
In the event that the City or the Paying Agent/Registrar determines that DTC is incapable
of discharging its responsibilities described herein and in the Representation Letter, and that it is
in the best interest of the beneficial owners of the Certificates that they be able to obtain
certificated Certificates, or in the event DTC discontinues the services described herein, the City
or the Paying Agent/Registrar shall (i) appoint a successor securities depository, qualified to act
as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify
DTC and DTC Participants, as identified by DTC, of the appointment of such successor
securities depository and transfer one or more separate Certificates to such successor securities
depository or (ii) notify DTC and DTC Participants, as identified by DTC, of the availability
through DTC of Certificates and transfer one or more separate Certificates to DTC Participants
having Certificates credited to their DTC accounts, as identified by DTC. In such event, the
Certificates shall no longer be restricted to being registered in the Register in the name of Cede
& Co., as nominee of DTC, but may be registered in the name of the successor securities
depository, or its nominee, or in whatever name or names Owners transferring or exchanging
Certificates shall designate, in accordance with the provisions of this Ordinance.
Section 3.12. Pavments to Cede & Co.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Certificates are registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to principal of, premium, if any, and interest on such Certificates, and all notices with
respect to such Certificates, shall be made and given, respectively, in the manner provided in the
Representation Letter.
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ARTICLE IV
REDEMPTION OF CERTIFICATES BEFORE MATURITY
Section 4.01. Limitation on Redemption.
The Certificates shall be subject to redemption before scheduled maturity only as
provided in this Article IV.
Section 4.02. Optional Redemption.
(a) The City reserves the option to redeem Certificates maturing on and after
February 15, 2033, in whole or any part, in principal amounts equal to $5,000 or any integral
multiple thereof, before their respective scheduled maturity dates, on August 15, 2032 or on any
date thereafter, such redemption date or dates to be fixed by the City, at a redemption price equal
to the principal amount of the Certificates called for redemption plus accrued interest to the date
fixed for redemption.
(b) The City, at least 45 days before the redemption date, unless a shorter period shall
be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such
redemption date and of the principal amount of Certificates to be redeemed.
Section 4.03. Mandatory Sinkin4 Fund Redemption
(a) The Certificates maturing on February 15, 20 (the "Term Certificates") are
subject to scheduled mandatory redemption and will be redeemed by the City, in part at a price
equal to the principal amount thereof, without premium, plus accrued interest to the redemption
date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and
in the respective principal amounts as set forth below.
Term Certificates Maturin4 February 15. 20
Redemption Date Redemption Amount
February 15, 20
February 15, 20
*Maturity
(b) At least forty-five (45) days prior to each scheduled mandatory redemption date,
the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method
that results in a random selection, a principal amount of Term Certificates equal to the aggregate
principal amount of such Term Certificates to be redeemed, shall call such Term Certificates for
redemption on such scheduled mandatory redemption date, and shall give notice of such
redemption, as provided in Section 4.05.
(c) The principal amount of the Term Certificates required to be redeemed on any
redemption date pursuant to subparagraph (a) of this Section 4.03 shall be reduced, at the option
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of the City, by the principal amount of any Term Certificates which, at least 45 days prior to the
mandatory sinking fund redemption date (i) 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 (ii) shall have
been redeemed pursuant to the optional redemption provisions hereof and not previously credited
to a mandatory sinking fund redemption.
Section 4.04. Partial Redemption.
(a) If less than all of the Certificates are to be optionally redeemed pursuant to
Section 4.02, the City shall determine the maturity or maturities and the amounts thereof to be
redeemed. If less than all of the Certificates of a maturity or maturities are to be redeemed, the
City will direct the Paying Agent/Registrar to call such Certificates within such maturity or
maturities by lot, or by such other method that results in a random selection.
(b) A portion of a single Certificate of a denomination greater than $5,000 may be
redeemed, but only in a principal amount equal to $5,000 or any integral multiple thereof. If
such a Certificate is to be partially redeemed, the Paying Agent/Registrar shall treat each $5,000
portion of the Certificate as though it were a single Certificate for purposes of selection for
redemption.
(c) Upon surrender of any Certificate for redemption in part, the Paying
Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and
deliver an exchange Certificate or Certificates in an aggregate principal amount equal to the
unredeemed portion of the Certificate so surrendered, such exchange being without charge.
(d) The Paying Agent/Registrar shall promptly notify the City in writing of the
principal amount to be redeemed of any Certificate as to which only a portion thereof is to be
redeemed.
Section 4.05. Notice of Redemption to Owners.
(a) The Paying Agent/Registrar shall give notice of any redemption of Certificates by
sending notice by first class United States mail, postage prepaid, not less than 30 days before the
date fixed for redemption, to the Owner of each Certificate (or part thereof) to be redeemed, at
the address shown on the Register at the close of business on the Business Day next preceding
the date of mailing of such notice.
(b) The notice shall state the redemption date, the redemption price, the place at
which the Certificates are to be surrendered for payment, and, if less than all the Certificates
outstanding are to be redeemed, an identification of the Certificates or portions thereof to be
redeemed.
(c) Any notice given as provided in this Section shall be conclusively presumed to
have been duly given, whether or not the Owner receives such notice.
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Section 4.06. Pavment UDon Redemption.
(a) Before or on each redemption date, the City shall deposit with the Paying
Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying
Agent/Registrar shall make provision for the payment of the Certificates to be redeemed on such
date by setting aside and holding in trust an amount from the Interest and Sinking Fund or
otherwise received by the Paying Agent/Registrar from the City and shall use such funds solely
for the purpose of paying the principal of, redemption premium, if any, and accrued interest on
the Certificates being redeemed.
(b) Upon presentation and surrender of any Certificate called for redemption at the
Designated Payment/Transfer Office on or after the date fixed for redemption, the Paying
Agent/Registrar shall pay the principal of, redemption premium, if any, and accrued interest on
such Certificate to the date of redemption from the money set aside for such purpose.
Section 4.07. Effect of RedemDtion.
(a) Notice of redemption having been given as provided in Section 4.05 of this
Ordinance, the Certificates or portions thereof called for redemption shall become due and
payable on the date fixed for redemption and, unless the City defaults in its obligation to make
provision for the payment of the principal thereof, redemption premium, if any, or accrued
interest thereon, such Certificates or portions thereof shall cease to bear interest from and after
the date fixed for redemption, whether or not such Certificates are presented and surrendered for
payment on such date.
(b) If the City shall fail to make provision for payment of all sums due on a
redemption date, then any Certificate or portion thereof called for redemption shall continue to
bear interest at the rate stated on the Certificate until due provision is made for the payment of
same by the City.
Section 4.08. Conditional Notice of RedemDtion.
The City reserves the right, in the case of an optional redemption pursuant to Section 4.02
herein, to give notice of its election or direction to redeem Certificates conditioned upon the
occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned
upon the deposit of moneys and/or authorized securities, in an amount equal to the amount
necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may
be authorized by law, no later than the redemption date, or (ii) that the City retains the right to
rescind such notice at any time on or prior to the scheduled redemption date if the City delivers a
certificate of the City to the Paying Agent/Registrar instructing the Paying Agent/Registrar to
rescind the redemption notice and such notice and redemption shall be of no effect if such
moneys and/or authorized securities are not so deposited or if the notice is rescinded. The
Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of
redemption to the affected Owners. Any Certificates subject to conditional redemption and such
redemption has been rescinded shall remain Outstanding and the rescission of such redemption
shall not constitute an Event of Default. Further, in the case of a conditional redemption, the
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failure of the City to make moneys and or authorized securities available in part or in whole on
or before the redemption date shall not constitute an Event of Default.
Section 4.09. LaDse of Pavment.
Money set aside for the redemption of the Certificates and remaining unclaimed by
Owners thereof shall be subject to the provisions of Section 3.03(f) hereof.
ARTICLE V
PAYING AGENT/REGISTRAR
Section 5.01. ADDointment of Initial Pavin4 Agent/Registrar.
The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, is hereby appointed
as the initial Paying Agent/Registrar for the Certificates.
Section 5.02. Qualifications.
Each Paying Agent/Registrar shall be a commercial bank, a trust company organized
under the laws of the State of Texas, or any other entity duly qualified and legally authorized to
serve as and perform the duties and services of paying agent and registrar for the Certificates.
Section 5.03. Maintainin4 Pavin4 Agent/Registrar.
(a) At all times while any Certificates are outstanding, the City will maintain a
Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor is
hereby authorized and directed to execute an agreement with the Paying Agent/Registrar
specifying the duties and responsibilities of the City and the Paying Agent/Registrar in
substantially the form presented to and hereby approved by the City Council. The signature of
the Mayor shall be attested to by the City Secretary.
(b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the
City will promptly appoint a replacement.
Section 5.04. Termination.
The City, upon not less than 60 days' notice, reserves the right to terminate the
appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to
be terminated written notice of such termination, provided, that such termination shall not be
effective until a successor Paying Agent/Registrar has been appointed and has accepted the
duties of Paying Agent/Registrar for the Certificates.
Section 5.05. Notice of Cham4e.
Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will
cause notice of the change to be sent to each Owner and any bond insurer by first class United
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States mail, postage prepaid, at the address in the Register, stating the effective date of the
change and the name and mailing address of the replacement Paying Agent/Registrar.
Section 5.06. Agreement to Perform Duties and Functions.
By accepting the appointment as Paying Agent/Registrar, and executing the Paying
Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the
provisions of this Ordinance and that it will perform the duties and functions of Paying
Agent/Registrar prescribed thereby.
Section 5.07. Delivery of Records to Successor.
If a Paying Agent/Registrar is replaced, such Paying Agent, promptly upon the
appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent
books and records relating to the Certificates to the successor Paying Agent/Registrar.
ARTICLE VI
FORM OF THE CERTIFICATES
Section 6.01. Form Generallv.
(a) The Certificates, including the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the
Assignment form to appear on each of the Certificates, (i) shall be substantially in the form set
forth in this Article, with such appropriate insertions, omissions, substitutions, and other
variations as are permitted or required by this Ordinance, and (ii) may have such letters,
numbers, or other marks of identification (including identifying numbers and letters of the
Committee on Uniform Securities Identification Procedures of the American Bankers
Association) and such legends and endorsements (including any reproduction of an opinion of
counsel) thereon as, consistently herewith, may be determined by the City or by the officers
executing such Certificates, as evidenced by their execution thereof.
(b) Any portion of the text of any Certificates may be set forth on the reverse side
thereof, with an appropriate reference thereto on the face of the Certificates.
(c) The Certificates, including the Initial Certificate submitted to the Attorney
General of Texas and any temporary Certificates, shall be typed, printed, lithographed,
photocopied or engraved, and may be produced by any combination of these methods or
produced in any other similar manner, all as determined by the officers executing such
Certificates, as evidenced by their execution thereof.
Section 6.02. Form of Certificates.
The form of Certificates, including the form of the Registration Certificate of the
Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying
Agent/Registrar and the form of Assignment appearing on the Certificates, shall be substantially
as follows:
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(a) TForm of Certificate]
REGISTERED
No.
United States of America
State of Texas
REGISTERED
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND REVENUE
CERTIFICATE OF OBLIGATION
SERIES 2022
INTEREST RATE MATURITY DATE CLOSING DATE CUSIP NO.
February 15, December 21, 2022
The City of Grapevine (the "City") in the Counties of Tarrant, Denton and Dallas, State
of Texas, for value received, hereby promises to pay to
or registered assigns, on the Maturity Date specified above, the sum of
DOLLARS
unless this Certificate shall have been sooner called for redemption and the payment of the
principal hereof shall have been paid or provision for such payment shall have been made, and to
pay interest on the unpaid principal amount hereof from the later of the Delivery Date specified
above or the most recent interest payment date to which interest has been paid or provided for
until such principal amount shall have been paid or provided for, at the per annum rate of interest
specified above, computed on the basis of a 360-day year of twelve 30-day months, such interest
to be paid semiannually on February 15 and August 15 of each year, commencing August 15,
2023.
The principal of this Certificate shall be payable without exchange or collection charges
in lawful money of the United States of America upon presentation and surrender of this
Certificate at the corporate trust office in Dallas, Texas (the "Designated Payment/Transfer
Office"), of The Bank of New York Mellon Trust Company, N.A. as initial Paying
Agent/Registrar, or, with respect to a successor Paying Agent/Registrar, at the Designated
Payment/Transfer Office of such successor. Interest on this Certificate is payable by check dated
as of the interest payment date, mailed by the Paying Agent/Registrar to the registered owner at
the address shown on the registration books kept by the Paying Agent/Registrar or by such other
customary banking arrangements acceptable to the Paying Agent/Registrar, requested by, and at
the risk and expense of, the person to whom interest is to be paid. For the purpose of the
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payment of interest on this Certificate, the registered owner shall be the person in whose name
this Certificate is registered at the close of business on the "Record Date," which shall be the last
business day of the month next preceding such interest payment date; provided, however, that in
the event of nonpayment of interest on a scheduled interest 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 (the "Special Payment Date," which shall be 15 days after
the Special Record Date) shall be sent at least five business days prior to the Special Record Date
by United States mail, first class postage prepaid, to the address of each Owner of a Certificate
appearing on the books of the Paying Agent/Registrar at the close of business on the last business
day preceding the date of mailing such notice.
If a date for the payment of the principal of or interest on the Certificates is a Saturday,
Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated
Payment/Transfer Office 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 a Saturday, Sunday, legal
holiday, or day on which such 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.
This Certificate is dated December 1, 2022 and is one of a series of fully registered bonds
specified in the title hereof issued in the aggregate principal amount of $ (herein
referred to as the "Certificates") pursuant to a certain ordinance of the City Council of the City
(the "Ordinance") for the public purpose of (i) designing, developing, constructing, improving,
extending, and expanding streets, thoroughfares, sidewalks and bridges of the City, including
streetscaping, streetlighting, right-of-way protection, utility relocation, and related storm
drainage improvements; and acquiring rights -of -way in connection therewith; (ii) acquiring,
improving and equipping land for parks and recreation purpose in the City, including Settlers
Park; (iii) acquiring vehicles and equipment for police, fire, emergency services, public works,
utilities and park and recreation purposes, and (iv) professional services incurred in connection
with items (i) through (iii), and to pay the costs incurred in connection with the issuance of the
Certificates.
The Certificates and the interest thereon are payable from the levy of a direct and
continuing ad valorem tax, within the limit prescribed by law, against all taxable property in the
City and from a pledge of certain surplus revenues (not to exceed $1,000) of the City's
Waterworks and Sewer System, all as described and provided in the Ordinance.
The City has reserved the option to redeem the Certificates maturing on or after
February 15, 2033, in whole or part, in principal amount equal to $5,000 or any integral multiple
thereof, before their respective scheduled maturity dates, on August 15, 2032, or on any date
thereafter, at a price equal to the principal amount of the Certificates so called for redemption
plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be
redeemed, the City shall determine the maturity or maturities and the amounts thereof to be
redeemed and shall direct the Paying Agent/Registrar to call by lot the Certificates, or portions
thereof, within such maturity or maturities and in such principal amounts, for redemption.
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Notice of such redemption or redemptions shall be given by first class mail, postage
prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of
each of the Certificates to be redeemed in whole or in part. Notice having been so given, the
Certificates or portions thereof designated for redemption shall become due and payable on the
redemption date specified in such notice; from and after such date, notwithstanding that any of
the Certificates or portions thereof so called for redemption shall not have been surrendered for
payment, interest on such Certificates or portions thereof shall cease to accrue.
The City reserves the right, in the case of an optional redemption, to give notice of its
election or direction to redeem Certificates conditioned upon the occurrence of subsequent
events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys
and/or authorized securities, in an amount equal to the amount necessary to effect the
redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law,
no later than the redemption date, or (ii) that the City retains the right to rescind such notice at
any time on or prior to the scheduled redemption date if the City delivers a certificate of the City
to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption
notice and such notice and redemption shall be of no effect if such moneys and/or authorized
securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall
give prompt notice of any such rescission of a conditional notice of redemption to the affected
Owners. Any Certificates subject to conditional redemption and such redemption has been
rescinded shall remain Outstanding and the rescission of such redemption shall not constitute an
Event of Default. Further, in the case of a conditional redemption, the failure of the City to make
moneys and or authorized securities available in part or in whole on or before the redemption
date shall not constitute an Event of Default.
The Certificates maturing February 15, 20 (the "Term Certificates") are subject to
scheduled mandatory redemption and will be redeemed by the City, in part at a price equal to the
principal amount thereof, without premium, plus accrued interest to the redemption date, out of
moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the
respective principal amounts as set forth below.
Term Certificates Maturin4 February 15. 20
Redemption Date Redemption Amount
February 15, 20
February 15, 20*
maturity
At least forty-five (45) days prior to each scheduled mandatory redemption date, the
Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that
results in a random selection, a principal amount of Term Certificates equal to the aggregate
principal amount of such Term Certificates to be redeemed and shall call such Term Certificates
for redemption on such scheduled mandatory redemption date.
The principal amount of the Term Certificates required to be redeemed on any mandatory
sinking fund redemption date shall be reduced, at the option of the District, by the principal
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amount of any Term Certificates which, at least 45 days prior to the mandatory sinking fund
redemption date (i) shall have been acquired by the District 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 (ii) shall have been redeemed
pursuant to an optional redemption and not previously credited to a mandatory sinking fund
redemption.
Notice of such redemption or redemptions shall be given by first class mail, postage
prepaid, not less than thirty (30) days before the date fixed for redemption, to the registered
owner of each of the Certificates to be redeemed in whole or in part. Notice having been so
given, the Certificates or portions thereof designated for redemption shall become due and
payable on the redemption date specified in such notice; from and after such date,
notwithstanding that any of the Certificates or portions thereof so called for redemption shall not
have been surrendered for payment, interest on such Certificates or portions thereof shall cease
to accrue.
As provided in the Ordinance, and subject to certain limitations therein set forth, this
Certificate is transferable upon surrender of this Certificate for transfer at the Designated
Payment/Transfer Office, with such endorsement or other evidence of transfer as is acceptable to
the Paying Agent/Registrar, and, thereupon, one or more new fully registered Certificates of the
same stated maturity, of authorized denominations, bearing the same rate of interest, and for the
same aggregate principal amount will be issued to the designated transferee or transferees.
Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or
exchange any Certificate called for redemption where such redemption is scheduled to occur
within 45 calendar days of the transfer or exchange date; provided, however, such limitation
shall not be applicable to an exchange by the registered owner of the uncalled principal balance
of a Certificate.
The City, the Paying Agent/Registrar, and any other person may treat the person in whose
name this Certificate is registered as the owner hereof for the purpose of receiving payment as
herein provided (except interest shall be paid to the person in whose name this Certificate is
registered on the Record Date or Special Record Date, as applicable) and for all other purposes,
whether or not this Certificate be overdue, and neither the City nor the Paying Agent/Registrar
shall be affected by notice to the contrary.
IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Certificate and the
series of which it is a part is duly authorized by law; that all acts, conditions, and things required
to be done precedent to and in the issuance of the Certificates have been properly done and
performed and have happened in regular and due time, form, and manner as required by law; that
ad valorem taxes upon all taxable property in the City have been levied for and pledged to the
payment of the debt service requirements of the Certificates within the limit prescribed by law;
that, in addition to said taxes, further provisions have been made for the payment of the debt
service requirements of the Certificates by pledging to such purpose, a limited amount of the
Surplus Revenues, as defined in the Ordinance, derived by the City from the operation of the
waterworks and sewer system; that when so collected, such taxes and Surplus Revenues shall be
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appropriated to such purposes; and that the total indebtedness of the City, including the
Certificates, does not exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, this Certificate has been duly executed on behalf of the City,
under its official seal, in accordance with law.
City Secretary, Mayor
City of Grapevine, Texas City of Grapevine, Texas
[SEAL]
(b) Form of ComDtroller's Registration Certificate.
The following Comptroller's Registration Certificate may be deleted from the definitive
Certificates if such Certificate on the Initial Certificate is fully executed.
OFFICE OF THE COMPTROLLER §
OF PUBLIC ACCOUNTS § REGISTER NO.
OF THE STATE OF TEXAS §
I hereby certify that there is on file and of record in my office a certificate of the Attorney
General of the State of Texas to the effect that this Certificate has been examined by him as
required by law, that he finds that it has been issued in conformity with the Constitution and laws
of the State of Texas, and that said Certificate has this day been registered by me.
Witness my hand and seal of office at Austin, Texas,
Comptroller of Public Accounts of
the State of Texas
[SEAL]
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(c) Form of Certificate of Pavin4 Agent/Registrar.
The following Certificate of Paying Agent/Registrar may be deleted from the Initial
Certificate if the Comptroller's Registration Certificate appears thereon.
CERTIFICATE OF PAYING AGENT/REGISTRAR
This is one of the Certificates referred to in the within mentioned Ordinance. The series
of Certificates of which this Certificate is a part was originally issued as one Initial Certificate
which was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
Dated:
(d) Form of Assignment.
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
as Paying Agent/Registrar
an
ASSIGNMENT
Authorized Signature
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or
typewrite name, address and Zip Code of transferee):
(Social Security or other identifying number: ) the within Certificate
and all rights hereunder and hereby irrevocably constitutes and appoints
attorney to transfer the within Certificate on the books kept for
registration hereof, with full power of substitution in the premises.
Date:
Signature Guaranteed By:
Authorized Signatory
NOTICE: The signature on this Assignment
must correspond with the name of the
registered owner as it appears on the face of
the within Certificate in every particular and
must be guaranteed in a manner acceptable to
the Paying Agent/Registrar.
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(e) Initial Certificate Insertions.
(i) The Initial Certificate shall be in the form set forth in paragraph (a) of this
Section, except that:
(ii) immediately under the name of the Certificate, the headings "INTEREST
RATE" and "MATURITY DATE" shall both be completed with the words "As Shown
Below" and "CUSIP NO. " deleted;
(iii) in the first paragraph:
the words "on the Maturity Date specified above" shall be deleted and the
following will be inserted: "on February 15 in the years, in the principal
installments and bearing interest at the per annum rates set forth in the
following schedule:
Years PrinciDal Installments Interest Rates
(Information to be inserted from Section 3.02(b) hereof).
(iv) the Initial Certificate shall be numbered T-1.
Section 6.03. CUSIP Registration.
The City may secure identification numbers through the CUSIP Services Bureau
managed by FactSet Research Systems on behalf of the American Bankers Association, and may
authorize the printing of such numbers on the face of the Certificates. It is expressly provided,
however, that the presence or absence of CUSIP numbers on the Certificates shall be of no
significance or effect as regards the legality thereof and neither the City nor the attorneys
approving said Certificates as to legality are to be held responsible for CUSIP numbers
incorrectly printed on the Certificates.
Section 6.04. Leal ODinion.
The approving legal opinion of Bracewell LLP, Bond Counsel, may be printed on each
Certificate over the certification of the City Secretary of the City, which may be executed in
facsimile.
Section 6.05. Municipal Bond Insurance.
If municipal bond guaranty insurance is obtained with respect to the Certificates, the
Certificates, including the Initial Certificate, may bear an appropriate legend, as provided by the
insurer. To the extent permitted by applicable law, the City will comply with all notice and other
applicable requirements of the insurer in connection with the issuance of the Certificates, as such
requirements may be in effect and transmitted to the City with the insurer's commitment to issue
such insurance.
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ARTICLE VII
SALE OF THE CERTIFICATES;
CONTROL AND DELIVERY OF THE CERTIFICATES
Section 7.01. Sale of Certificates; Official Statement; Em4nement Letter.
(a) The Certificates, having been duly advertised and offered for sale at competitive
bid, are hereby officially sold and awarded to (the "Purchaser") for a
purchase price equal to the principal amount thereof plus a cash premium of $ , being
the bid which produced the lowest true interest cost to the City. The Initial Certificate shall be
registered in the name of the Purchaser or its designee.
(b) The form and substance of the Preliminary Official Statement for the Certificates
and any addenda, supplement or amendment thereto (the "Preliminary Official Statement") and
the final Official Statement (the "Official Statement") presented to and considered at this
meeting, are hereby in all respects approved and adopted, and the Preliminary Official Statement
is hereby deemed final as of its date (except for the omission of pricing and related information)
within the meaning and for the purposes of paragraph (b)(1) of Rule 15c2-12 under the Securities
Exchange Act of 1934, as amended. The use and distribution of the Preliminary Official
Statement in the public offering of the Certificates by the Purchaser is hereby authorized. The
City Manager, Chief Financial Officer, Mayor and the City Secretary of the City are hereby
authorized and directed to use and distribute or authorize the use and distribution of the final
Official Statement and any addenda, supplement or amendment thereto (the "Official
Statement") and to execute the same and deliver appropriate numbers of executed copies thereof
to the Purchasers of the Certificates. The Official Statement as thus approved, executed and
delivered, with such appropriate variations as shall be approved by the City Manager, Chief
Financial Officer, Mayor of the City and the Purchaser, may be used by the Purchaser in the
public offering and sale thereof. The City Secretary is hereby authorized and directed to include
and maintain a copy of the Official Statement and any addenda, supplement or amendment
thereto thus approved among the permanent records of this meeting.
(c) All officers of the City are authorized to execute such documents, Certificates and
receipts as they may deem appropriate in order to consummate the delivery of the Certificates in
accordance with the terms of sale therefor. Further, in connection with the submission of the
record of proceedings for the Certificates to the Attorney General of the State of Texas for
examination and approval of such Certificates, the appropriate officer of the City is hereby
authorized and directed to issue a check of the City payable to the Attorney General of the State
of Texas as a nonrefundable examination fee in the amount required by Chapter 1202, Texas
Government Code (such amount to be the lesser of (i) 1/10th of 1% of the principal amount of
the Certificates or (ii) $9,500).
(d) The obligation of the Purchaser to accept delivery of the Certificates is subject to
the Purchaser being furnished with the final, approving opinion of Bracewell LLP, Bond Counsel
for the City, which opinion shall be dated as of and delivered on the Closing Date. The Mayor,
City Manager or the Chief Financial Officer are hereby authorized and directed to execute the
engagement letter with Bracewell LLP, setting forth such firm's duties as Bond Counsel for the
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City, and such engagement letter and the terms thereof in the form presented at this meeting is
hereby approved and accepted.
Section 7.02. Control and Delivery of Certificates.
(a) The Mayor is hereby authorized to have control of the Initial Certificate and all
necessary records and proceedings pertaining thereto pending investigation, examination and
approval of the Attorney General of the State of Texas, registration by the Comptroller of Public
Accounts of the State of Texas, and registration with, and initial exchange or transfer by, the
Paying Agent/Registrar.
(b) After registration by the Comptroller of Public Accounts, delivery of the
Certificates shall be made to the Underwriters under and subject to the general supervision and
direction of the Mayor, against receipt by the City of all amounts due to the City under the terms
of sale.
(c) In the event the Mayor or City Secretary is absent or otherwise unable to execute
any document or take any action authorized herein, the Mayor Pro Tem and the Assistant City
Secretary, respectively, shall be authorized to execute such documents and take such actions, and
the performance of such duties by the Mayor Pro Tem and the Assistant City Secretary shall for
the purposes of this Ordinance have the same force and effect as if such duties were performed
by the Mayor and City Secretary, respectively.
City.
ARTICLE VIII
CREATION OF FUNDS AND ACCOUNTS;
DEPOSIT OF PROCEEDS; INVESTMENTS
Section 8.01. Creation of Funds.
(a) The City hereby establishes the following special funds or accounts:
(i) The City of Grapevine, Texas Combination Tax and Revenue Certificates
of Obligation, Series 2022, Interest and Sinking Fund; and
(ii) The City of Grapevine, Texas Combination Tax and Revenue Certificates
of Obligation, Series 2022, Project Fund.
(b) Each of said funds or accounts shall be maintained at an official depository of the
Section 8.02. Interest and Sinkin4 Fund.
(a) The taxes levied under Section 2.01 shall be deposited to the credit of the Interest
and Sinking Fund at such times and in such amounts as necessary for the timely payment of the
principal of and interest on the Certificates.
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(b) If the amount of money in the Interest and Sinking Fund is at least equal to the
aggregate principal amount of the outstanding Certificates plus the aggregate amount of interest
due and that will become due and payable on such Certificates, no further deposits to that fund
need be made.
(c) Money on deposit in the Interest and Sinking Fund shall be used to pay the
principal of and interest on the Certificates as such become due and payable.
Section 8.03. Project Fund.
(a) Money on deposit in the Project Fund, including investment earnings thereof,
shall be used for the purposes specified in Section 3.01 of this Ordinance.
(b) All amounts remaining in the Project Fund after the accomplishment of the
purposes for which the Certificates are hereby issued, including investment earnings of the
Project Fund, shall be deposited into the Interest and Sinking Fund.
Section 8.04. Securitv of Funds.
All moneys on deposit in the funds referred to in this Ordinance shall be secured in the
manner and to the fullest extent required by the laws of the State of Texas for the security of
public funds, and moneys on deposit in such funds shall be used only for the purposes permitted
by this Ordinance.
Section 8.05. DeDOsit of Proceeds.
(a) $ of the proceeds of the Certificates received on the Closing Date,
representing $ of principal and $ of premium generated on the
Certificates, shall be deposited to the Project Fund, such moneys to be dedicated and used for the
purposes specified in Section 3.01(i) — (iii).
(b) $ of premium generated on the Certificates shall be used to pay the
cost of issuance of the Certificates. Any amounts remaining after payment of such costs shall be
deposited in the Interest and Sinking Fund.
Section 8.06. Investments.
(a) Money in the Interest and Sinking Fund and the Project Fund, at the option of the
City, may be invested in such securities or obligations as permitted under applicable law.
(b) Any securities or obligations in which money is so invested shall be kept and held
in trust for the benefit of the Owners and shall be sold and the proceeds of sale shall be timely
applied to the making of all payments required to be made from the fund from which the
investment was made.
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Section 8.07. Investment Income.
Interest and income derived from investment of any fund created by this Ordinance shall
be credited to such fund.
ARTICLE IX
PARTICULAR REPRESENTATIONS AND COVENANTS
Section 9.01. Pavment of the Certificates.
While any of the Certificates are outstanding and unpaid, there shall be made available to
the Paying Agent/Registrar, out of the Interest and Sinking Fund, money sufficient to pay the
interest on and the principal of the Certificates, as applicable, as will accrue or mature on each
applicable Interest Payment Date.
Section 9.02. Other ReDresentations and Covenants.
(a) The City will faithfully perform at all times any and all covenants, undertakings,
stipulations, and provisions contained in this Ordinance and in each Certificate; the City will
promptly pay or cause to be paid the principal of, interest on, and premium, if any, with respect
to, each Certificate on the dates and at the places and manner prescribed in such Certificate; and
the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be
deposited the amounts of money specified by this Ordinance.
(b) The City is duly authorized under the laws of the State of Texas to issue the
Certificates; all action on its part for the creation and issuance of the Certificates has been duly
and effectively taken; and the Certificates in the hands of the Owners thereof are and will be
valid and enforceable obligations of the City in accordance with their terms.
Section 9.03. Federal Income Tax Matters.
(a) General. The City covenants not to take any action or omit to take any action
that, if taken or omitted, would cause the interest on the Certificates to be includable in gross
income for federal income tax purposes. In furtherance thereof, the City covenants to comply
with sections 103 and 141 through 150 of the Code and the provisions set forth in the Federal
Tax Certificate executed by the City in connection with the Certificates.
(b) No Private Activitv Bonds. The City covenants that it will use the proceeds of the
Certificates (including investment income) and the property financed, directly or indirectly, with
such proceeds so that the Certificates will not be "private activity bonds" within the meaning of
section 141 of the Code. Furthermore, the City will not take a deliberate action (as defined in
section 1.141-2(d)(3) of the Regulations) that causes any Certificates to be a "private activity
bond" unless it takes a remedial action permitted by section 1.141-12 of the Regulations.
(c) No Federal Guarantee. The City covenants not to take any action or omit to take
any action that, if taken or omitted, would cause the Certificates to be "federally guaranteed"
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within the meaning of section 149(b) of the Code, except as permitted by section 149(b)(3) of the
Code.
(d) No Hedge Bonds. The City covenants not to take any action or omit to take action
that, if taken or omitted, would cause the Certificates to be "hedge bonds" within the meaning of
section 149(g) of the Code.
(e) No Arbitrage Bonds. The City covenants that it will make such use of the
proceeds of the Certificates (including investment income) and regulate the investment of such
proceeds of the Certificates so that the Certificates will not be "arbitrage bonds" within the
meaning of section 148(a) of the Code.
(f) Reauired Rebate. The City covenants that, if the City does not qualify for an
exception to the requirements of section 148(f) of the Code, the City will comply with the
requirement that certain amounts earned by the City on the investment of the gross proceeds of
the Certificates, be rebated to the United States.
(g) Information ReDortin4. The City covenants to file or cause to be filed with the
Secretary of the Treasury an information statement concerning the Certificates in accordance
with section 149(e) of the Code.
(h) Record Retention. The City covenants to retain all material records relating to the
expenditure of the proceeds (including investment income) of the Certificates and the use of the
property financed, directly or indirectly, thereby until three years after the last Certificate is
redeemed or paid at maturity (or such other period as provided by subsequent guidance issued by
the Department of the Treasury) in a manner that ensures their complete access throughout such
retention period.
(i) Registration. If the Certificates are "registration -required bonds" under section
149(a)(2) of the Code, the Certificates will be issued in registered form.
0) Favorable ODinion of Bond Counsel. Notwithstanding the foregoing, the City
will not be required to comply with any of the federal tax covenants set forth above if the City
has received an opinion of nationally recognized bond counsel that such noncompliance will not
adversely affect the excludability of interest on the Certificates from gross income for federal
income tax purposes.
(k) Continuin4 ComDliance. Notwithstanding any other provision of this Ordinance,
the City's obligations under the federal tax covenants set forth above will survive the defeasance
and discharge of the Certificates for as long as such matters are relevant to the excludability of
interest on the Certificates from gross income for federal income tax purposes.
(1) Official Intent. For purposes of section 1.150-2(d) of the Regulations, to the
extent that an official intent to reimburse has not previously been adopted by the City, this
Ordinance serves as the City's official declaration of intent to use proceeds of the Certificates
issued in the maximum amount authorized by this Ordinance to reimburse itself for certain
expenditures paid in connection with the projects set forth herein. Any such reimbursement will
only be made (i) for an original expenditure paid no earlier than 60 days prior to the date hereof
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and (ii) not later than 18 months after the later of (A) the date the original expenditure is paid or
(B) the date the project to which such expenditure relates is placed in service or abandoned, but
in to event more than three years after the original expenditure is paid.
ARTICLE X
DEFAULT AND REMEDIES
Section 10.01. Events of Default.
Each of the following occurrences or events for the purpose of this Ordinance is hereby
declared to be an "Event of Default," to -wit:
(a) the failure to make payment of the principal of or interest on any of the
Certificates when the same becomes due and payable; or
(b) default in the performance or observance of any other covenant, agreement or
obligation of the City, the failure to perform which materially, adversely affects the rights of the
Owners, including but not limited to, their prospect or ability to be repaid in accordance with this
Ordinance, and the continuation thereof for a period of 60 days after notice of such default is
given by any Owner to the City.
Section 10.02. Remedies for Default.
(a) Upon the happening of any Event of Default, then and in every case any Owner or
an authorized representative thereof, including but not limited to, a trustee or trustees therefor,
may proceed against the City for the purpose of protecting and enforcing the rights of the
Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity
or at law, in any court of competent jurisdiction, for any relief permitted by law, including the
specific performance of any covenant or agreement contained herein, or thereby to enjoin any act
or thing that may be unlawful or in violation of any right of the Owners hereunder or any
combination of such remedies.
(b) It is provided that all such proceedings shall be instituted and maintained for the
equal benefit of all Owners of Certificates then outstanding.
Section 10.03. Remedies Not Exclusive.
(a) No remedy herein conferred or reserved is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or under the Certificates or now or hereafter
existing at law or in equity; provided, however, that notwithstanding any other provision of this
Ordinance, the right to accelerate the debt evidenced by the Certificates shall not be available as
a remedy under this Ordinance.
(b) The exercise of any remedy herein conferred or reserved shall not be deemed a
waiver of any other available remedy.
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law.
ARTICLE XI
DISCHARGE
Section 11.01. Discharge.
The Certificates may be defeased, discharged or refunded by any manner permitted by
ARTICLE XII
CONTINUING DISCLOSURE UNDERTAKING
Section 12.01. Annual ReDorts.
(a) The City shall provide annually to the MSRB, (1) within six months after the end
of each fiscal year of the City, financial information and operating data with respect to the City
of the general type included in the final Official Statement, being information described in the
Tables numbered 1 through 6 and 8 through 15, including financial statements of the City if
audited financial statements of the City are then available, and (2) if not provided as part such
financial information and operating data, audited financial statements of the City, when and if
available. Any financial statements to be provided shall be (i) prepared in accordance with the
accounting principles appended to the Official Statement, or such other accounting principles as
the City may be required to employ from time to time pursuant to state law or regulation, and (ii)
audited, if the City commissions an audit of such financial statements and the audit is completed
within the period during which they must be provided. If the audit of such financial statements is
not complete within 12 months after any such fiscal year end, then the City shall file unaudited
financial statements within such 12-month period and audited financial statements for the
applicable fiscal year, when and if the audit report on such statements becomes available.
(b) If the City changes its Fiscal Year, it will notify the MSRB of the change (and of
the date of the new Fiscal Year end) prior to the next date by which the City otherwise would be
required to provide financial information and operating data pursuant to this Section.
(c) All financial information, operating data, financial statements, and notices
required by this Section to be provided to the MSRB shall be provided in an electronic format
and be accompanied by identifying information prescribed by the MSRB. Financial information
and operating data to be provided pursuant to Section may be set forth in full in one or more
documents or may be included by specific reference to any document (including an official
statement or other offering document) available to the public on the MSRB's Internet Web site
or filed with the SEC.
Section 12.02. Notice of Certain Events.
(a) The City shall provide the following to the MSRB, in an electronic format as
prescribed by the MSRB, in a timely manner not in excess of ten (10) business days after the
occurrence of the event, notice of any of the following events with respect to the Certificates:
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(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(iv) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(v) Substitution of credit or liquidity providers, or their failure to perform;
(vi) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form
5701-TEB) or other material notices or determinations with respect to the tax status of the
Certificates, or other material events affecting the tax status of the Certificates;
(vii) Modifications to rights of the holders of the Certificates, if material;
(viii) Certificate calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment of the
Certificates, if material;
(xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the City;
(xiii) The consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of the assets of the City, other than in the
ordinary course of business, the entry into a definitive agreement to undertake such an
action or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material;
(xiv) Appointment of successor or additional paying agent/registrar or the
change of name of a paying agent/registrar, if material;
(xv) Incurrence of a Financial Obligation of the City, if material, or agreement
to covenants, events of default, remedies, priority rights, or other similar terms of a
Financial Obligation of the City, any of which affect security holders, if material; and
(xvi) Default, event of acceleration, termination event, modification of terms, or
other similar events under the terms of a Financial Obligation of the City, any of which
reflect financial difficulties.
For these purposes, (A) any event described in the immediately preceding clause (xii) is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent,
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or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the City, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets of
business of the City, and (B) the City intends the words used in the immediately preceding
clauses (xv) and (xvi) in this Section and in the definition of Financial Obligation to have the
meanings ascribed to them in SEC Release No. 34-83885 dated August 20, 2018.
(b) The City shall provide to the MSRB, in an electronic format as prescribed by the
MSRB, in a timely manner, notice of a failure by the City to provide required annual financial
information and notices of material events in accordance with Section 12.01 and section (a)
above. All documents provided to the MSRB pursuant to this section shall be accompanied by
identifying information, as prescribed by the MSRB, and will be available via EMMA at
www.emma.msrb.org.
Section 12.03. Limitations, Disclaimers and Amendments.
(a) The City shall be obligated to observe and perform the covenants specified in this
Article for so long as, but only for so long as, the City remains an "obligated person" with
respect to the Certificates within the meaning of the Rule, except that the City in any event will
give notice of any deposit made in accordance with Article XI that causes Certificates no longer
to be Outstanding.
(b) The provisions of this Article are for the sole benefit of the Owners and beneficial
owners of the Certificates, and nothing in this Article, express or implied, shall give any benefit
or any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Article and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Article or otherwise, except as expressly
provided herein. The City does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Certificates at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER
OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN
CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM
ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS
PART, OF ANY COVENANT SPECIFIED IN THIS ARTICLE, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT
OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
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(c) No default by the City in observing or performing its obligations under this
Article shall comprise a breach of or default under the Ordinance for purposes of any other
provisions of this Ordinance.
(d) Nothing in this Article is intended or shall act to disclaim, waive, or otherwise
limit the duties of the City under federal and state securities laws.
(e) The provisions of this Article may be amended by the City 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, but only if (1) the
provisions of this Article, as so amended, would have permitted an underwriter to purchase or
sell Certificates in the primary offering of the Certificates 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 (2) either (A) the Owners of a majority in aggregate
principal amount (or any greater amount required by any other provisions of this Ordinance that
authorizes such an amendment) of the Outstanding Certificates consent to such amendment or
(B) a person that is unaffiliated with the City (such as nationally recognized bond counsel)
determines that such amendment will not materially impair the interests of the Owners and
beneficial owners of the Certificates. If the City so amends the provisions of this Article, it shall
include with any amended financial information or operating data next provided in accordance
with Section 12.01 an explanation, in narrative form, of the reasons for the amendment and of
the impact of any change in the type of financial information or operating data so provided.
ARTICLE XIII
AMENDMENTS
Section 13.01. Amendments. This Ordinance shall constitute a contract with the Owners,
be binding on the City, and shall not be amended or repealed by the City so long as any
Certificate remains outstanding except as permitted in this Section. The City may, without
consent of or notice to any Owners, from time to time and at any time, amend this Ordinance in
any manner not detrimental to the interests of the Owners, including the curing of any ambiguity,
inconsistency, or formal defect or omission herein. In addition, the City may, with the written
consent of the Owners of the Certificates holding a majority in aggregate principal amount of the
Certificates then outstanding, amend, add to, or rescind any of the provisions of this Ordinance;
provided that, without the consent of all Owners of outstanding Certificates, no such amendment,
addition, or rescission shall (i) extend the time or times of payment of the principal of and
interest on the Certificates, reduce the principal amount thereof, the redemption price, or the rate
of interest thereon, or in any other way modify the terms of payment of the principal of or
interest on the Certificates, (ii) give any preference to any Certificate over any other Certificate,
or (iii) reduce the aggregate principal amount of Certificates required to be held by Owners for
consent to any such amendment, addition, or rescission.
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ARTICLE XIV
MISCELLANEOUS
Section 14.01. Cham4es to Ordinance. The Mayor, City Manager or Chief Financial
Officer, in consultation with Bond Counsel, is hereby authorized to make changes to the terms of
this Ordinance if necessary or desirable to carry out the purposes hereof or in connection with the
approval of the issuance of the Certificates by the Attorney General of Texas.
Section 14.02. Partial Invalidity.
If any section, paragraph, clause or provision of this Ordinance shall for any reason be
held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph,
clause or provision shall not affect any of the remaining provisions of the Ordinance.
Section 14.03. No Personal Liabilitv.
No recourse shall be had for payment of the principal of or interest on any Certificates or
for any claim based thereon, or on this Ordinance, against any official or employee of the City or
any person executing any Certificates.
ARTICLE XV
EFFECTIVE IMMEDIATELY
Section 15.01. Effectiveness.
Notwithstanding any provisions of the City Charter, this Ordinance shall become
effective immediately upon its adoption at this meeting pursuant to Section 1201.028, Texas
Government Code.
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APPROVED this 6th day of December, 2022.
Mayor, City of Grapevine, Texas
ATTEST:
City Secretary, City of Grapevine, Texas
APPROVED AS TO FORM:
City Attorney, City of Grapevine, Texas
Signature Page for Ordinance
Series 2022 Combination Tax and Revenue Certificates of Obligation