HomeMy WebLinkAboutItem 06 - Certificates of ObligationMEMO TO:
FROM:
MEETING DATE
SUBJECT
RECOMMENDATION:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
BRUNO RUMBELOW, ACTING CITY MANAGER �IZ
OCTOBER 18, 2005
ORDINANCE AUTHORIZING THE SALE OF CERTIFICATES OF
OBLIGATION
City Council to consider approving an ordinance authorizing the sale of $2,380,000 of
Combination Tax and Lake Parks Revenue Certificates of Obligation, Series 2005A.
BACKGROUND:
At the October 18, 2005 City Council meeting, a representative of First Southwest
Company, the City's financial advisor, will present bids for the sale of $2,380,000 of
Combination Tax Revenue Certificates of Obligation. Sale of the certificates were
previously authorized by the City Council on September 20, 2005.
Funds received from this CO sale will be used as follows:
Lake Parks Improvements Construction $1,638,472
Engineering and Design $207,028
Capitalized Interest $184,500
Property Purchased (Toon Property) $310,000
Issuance Costs $40,000
$2,380,000
The appropriate amount of Lake Parks revenue will be used to pay the Lake Parks portion
of the outstanding debt. Hotel/Motel tax revenues will be used to pay the Dooley Street
property portion of the debt.
A summary of the official statement prepared for this sale is in your packet. The complete
official statement along with the draft sale ordinance is available in the City Secretary's
office.
Staff recommends acceptance of the First Southwest Company's recommendation and
approval of the ordinance authorizing the sale of the certificates of obligation.
WAG/sit
October 13, 2005 (11:13AM)
PRELIMINARY OFFICIAL STATEMENT Ratings:
Moody's: "Applied For"
Dated October 10, 2005 S&P: "Applied For"
("Other Information —
NEW ISSUE - Book -Entry -Only Ratings" herein)
In the opinion of Bond Counsel, interest on the Certificates is excludable from gross income for federal income tax purposes under existing law and
the Certificates are not private activity bonds. See "TAX MATTERS - Tax Exemption" herein for a discussion of the opinion of Bond Counsel,
including a description of alternative minimum tax consequences for corporations.
THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS
$2,380,000
CITY OF GRAPEVINE, TEXAS
(Tarrant County)
COMBINATION TAX AND LAKE PARKS REVENUE CERTIFICATES OF OBLIGATIONS, SERIES 2005A
Dated Date: October 15, 2005 Due: February 15, as shown below
PAYMENT TERMS... Interest on the $2,380,000 City of Grapevine, Texas, Combination Tax and Lake Parks Revenue Certificates of Obligations,
Series 2005A (the "Certificates") will accrue from October 15, 2005 (the "Dated Date"), will be payable August 15 and February 15 of each year
commencing February 15, 2006, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Certificates
will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -
Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No
physical delivery of the Certificates will be made to the owners thereof. Principal of and interest on the Certificates will be payable by the Paying
Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to
the beneficial owners of the Certificates. See "The Certificates - Book -Entry -Only System" herein. The initial Paying Agent/Registrar is JPMorgan
Chase Bank, National Association, Dallas, Texas (see "The Certificates - Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE ... The Certificates are issued pursuant to the Constitution and general laws of the State of Texas (the "State")
particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and an ordinance adopted by the City Council and constitute
direct obligations of the City of Grapevine, Texas (the "City"), payable from the Net Revenues of the City's Lakes Park, as authorized by Chapter
I502, Texas Government Code, and to the extent such amounts are insufficient for such purposes, from the levy and collection of a direct and
continuing ad valorem tax, levied within the limits prescribed by law, on all taxable property within the City, all as provided in the Ordinance. (the
"Ordinance") (see "The Certificates - Authority for Issuance").
PURPOSE ... Proceeds from the sale of the Certificates will be used for the purpose of (i) acquiring and constructing of facilities and improvements
for the City's Lake Parks (the "Lake Parks Improvements"); (ii) paying interest on the Certificates issued for the Lake Parks Improvements for a
period not to exceed the period of construction of such Lake Parks Improvements and for one year thereafter; (iii) acquiring land and improvements
on Dooley Street near the Cotton Belt Railroad District for use in connection with City festivals and events and other City purposes (together with the
Lake Parks Improvements, the "Project"); and (iv) paying for professional services of attorneys, financial advisors and other professionals in
connection with the Project and the issuance of the Certificates.
Amount
Maturity
$ 75,000
2007
150,000
2008
150,000
2009
160,000
2010
75,000
2011
80,000
2012
85,000
2013
85,000
2014
90,000
2015
95,000
20I6
95,000
2017
MATURITY SCHEDULE
CUSIP
Rate Yield Suffix (1)
Amount Maturity
$ 100,000 2018
105,000 2019
110,000 2020
115,000 2021
120,000 2022
125,000 2023
130,000 2024
140,000 2025
145,000 2026
150,000 2027
(Accrued Interest from October 15, 2005 to be added)
CUSIP") Prefix: 388622
CUSIP
Rate Yield Suffix,,,
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service
Bureau, a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute
for the CUSIP Services.
OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2016,
in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2015, or any date thereafter, at the par value
thereof plus accrued interest to the date of redemption (see "The Certificates - Redemption").
LEGALITY... The Certificates are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the approving
opinion of the Attorney General of Texas and the opinion of Vinson & Elkins L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond
Counsel's Opinion").
DELIVERY... It is expected that the Certificates will be available for delivery through The Depository Trust Company on November 22, 2005
SEALED BIDS DUE TUESDAY, OCTOBER 18, AT 11:00 AM, CDT
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation
ofan offer to buy in arty 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, if given or made, such other information or representations must not be relied upon.
For purposes of compliance with Rule 15c 2-12 of the Securities and Exchange Commission (the 'Rule'), this document constitutes an
Official Statement of the Issuer with respect to the Certilicates that has been 'deemed final" by the City as of its date except for the
omission of no more than the information permitted by the Rule.
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. 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 stall, 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 oflnformation"for a description of the City's undertaking to provide certain information on a continuing basis.
Neither the City nor its Financial Advisors 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.
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 an d unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements to be d fferent 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 these securities have been registered or exempted should not be regarded as a recommendation thereof.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY ..............................3
CITY OFFICIALS, STAFF AND CONSULTANTS .......... 5
ELECTED OFFICIALS....................................................... 5
SELECTED ADMINISTRATIVE STAFF...............................5
CONSULTANTS AND ADVISORS......................................5
INTRODUCTION.................................................................. 6
THE CERTIFICATES.......................................................... 6
TAX INFORMATION.,.... ............................ ........ ..... ___
10
TABLE I - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT .............................................
13
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY
FORSALE............................................................27
CATEGORY.......................................................
- 14
TABLE 3 - VALUATION AND GENERAL OBLIGATION
PUBLIC FUNDS IN TEXAS....................................27
DEBT HISTORY ...................................................
15
TABLE 4 - TAX RATE, LEVY AND COLLECTION
AUTHENTICITY OF FINANCIAL DATA AND OTHER
HISTORY............................................................
15
TABLE 5 - TEN LARGEST TAXPAYERS.. . .......................
15
TABLE 6 - TAX ADEQUACY ..........................................
16
TABLE 7 - ESTIMATED OVERLAPPING DEBT ................
16
DEBT INFORMATION......................................................17
TABLE 8 - GENERAL OBLIGATION DEBT SERVICE
REQUIREMENTS..................................................
17
TABLE 9 - INTEREST AND SINKING FUND BUDGET
FORSALE............................................................27
PROJECTION.......................................................
18
TABLE 10 - COMPUTATION OF SELF-SUPPORTING
PUBLIC FUNDS IN TEXAS....................................27
DEBT..................................................................18
LEGAL MATTERS..........................................................27
TABLE I I - AUTHORIZED BUT UNISSUED GENERAL
AUTHENTICITY OF FINANCIAL DATA AND OTHER
OBLIGATION BONDS ..........................................
19
TABLE 12 - OTHER OBLIGATIONS ................................
19
FINANCIAL INFORMATION-.... - . . . .... .......... ................. 20
TABLE 13 — CHANGES IN NET ASSETS ..........................20
TABLE 13A - GENERAL FUND REVENUES AND
EXPENDITURE HISTORY.....................................21
TABLE 14 - MUNICIPAL SALES TAX HISTORY..............22
TABLE 15 - CURRENT INVESTMENTS ............................24
TAX MATTERS...................................................................25
TAXEXEMPTION..........................................................25
ADDITIONAL FEDERAL INCOME TAX
CONSIDERATIONS. ................... __ ........... 25
OTHER INFORMATION...................................................27
RATINGS.......................................................................27
LITIGATION... ... __ .............................................. ..........
27
REGISTRATION AND QUALIFICATION OF CERTIFICATES
FORSALE............................................................27
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS....................................27
LEGAL MATTERS..........................................................27
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION.. ..... - ..................... ........ ............
. 27
CONTINUING DISCLOSURE OF INFORMATION., ............
.28
INITIAL PURCHASER OF THE CERTIFICATES .................29
FINANCIAL ADVISOR....................................................29
FORWARD-LOOKING STATEMENTS DISCLAIMER ........
.29
CERTIFICATION OF THE OFFICIAL STATEMENT ............30
APPENDICES
GENERAL INFORMATION REGARDING THE CITY.......... A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT... B
FORM OF BOND COUNSEL'S OPINION .......................... C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto, are
part of the Official Statement.
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Certificates to potential investors is made only by means of this entire Official Statement.
No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official
Statement.
THE CITY ..................................... The City of Grapevine, Texas (the "City') is a political subdivision and municipal corporation
of the State, located in Tarrant County, Texas. The City covers approximately 35.8 square
miles (see "Introduction - Description of City").
THE CERTIFICATES .....................
The Certificates are issued as $2,380,000 Combination Tax and Lake Parks Revenue
Certificates of Obligations, Series 2005A. The Certificates are issued as serial securities
maturing February 15, 2007 through February 15, 2027, unless the Initial Purchaser
designates one or more maturities as a Term Certificate (see "The Certificates — Description
of the Certificates").
PAYMENT OF INTEREST ..............
Interest on the Certificates accrues from October 15, 2005, and is payable February 15, 2006,
and each February 15 and August 15 thereafter until maturity (see "The Certificates -
Description of the Certificates").
AUTHORITY FOR ISSUANCE..........
The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C
of Chapter 271, Texas Local Government Code, as amended, and an Ordinance passed by the
City Council of the City (see "The Certificates - Authority for Issuance").
SECURITY FOR THE
CERTIFICATES .........................
The Certificates constitute direct obligations of the City payable from the Net Revenues of the
City's Lakes Park, as authorized by Chapter 1502, Texas Government Code, and to the extent
such amounts are insufficient for such purposes, from the levy and collection of a direct and
continuing ad valorem tax, levied within the limits prescribed by law, on all taxable property
within the City, all as provided in the Ordinance.
OPTIONAL REDEMPTION .............
The City reserves the right, at its option, to redeem Certificates, as the case may be, having
stated maturities on and after February 15, 2016, in whole or in part in principal amounts of
$5,000 or any integral multiple thereof, on February 15, 2015, or any date thereafter, at the
par value thereof plus accrued interest to the date of redemption.
TAx EXEMPTION ............................
In the opinion of Bond Counsel, the interest on the Certificates will be excludable from gross
income for federal income tax purposes under existing law and the Certificates are not private
activity bonds. See "Tax Matters - Tax Exemption" for a discussion of the opinion of Bond
Counsel, including a description of the alternative minimum tax consequences for corporations.
USE OF PROCEEDS. . ................
Proceeds from the sale of the Certificates will be used for the purpose of (i) acquiring and
constructing of facilities and improvements for the City's Lake Parks (the "Lake Parks
Improvements"); (ii) paying interest on the Certificates issued for the Lake Parks
Improvements for a period not to exceed the period of construction of such Lake Parks
Improvements and for one year thereafter; (iii) acquiring land and improvements on Dooley
Street near the Cotton Belt Railroad District for use in connection with City festivals and
events and other City purposes (together with the Lake Parks Improvements, the "Project");
and (iv) paying for professional services of attorneys, financial advisors and other
professionals in connection with the Project and the issuance of the Certificates.
RATINGS ......................................
The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors
Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Group, a division of
McGraw-Hill ("S&P"). The City also has issues outstanding which are rated "Aaa" by Moody's
and "AAA" by S&P through insurance by various commercial insurance companies.
Applications for contract ratings on the Certificates have been made to both Moody's and S&P.
The results of their determinations will be provided as soon as possible.
Book -ENTRY -ONLY SYSTEM...... The definitive Certificates will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book -Entry -Only System described herein. Beneficial
ownership of the Certificates may be acquired in denominations of $5,000 or integral
multiples thereof. No physical delivery of the Certificates will be made to the beneficial
owners thereof. Principal of 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
(1) Source: The City of Grapevine. Preliminary, subject to change.
(2) Source: Tarrant Appraisal District.
(3) Projected, includes the Certificates.
(4) Collections for part year only, through September 1, 2005.
For additional information regarding the City, please contact:
Fred Werner
Director of Finance
City of Grapevine
200 South Main
Grapevine, Texas 76051
(817)410-3111
4
David K. Medanich
Laura Alexander
First Southwest Company
777 Main Street, Suite 1200
Fort Worth, Texas 76102
(817)332-9710
Ratio Funded
Fiscal
Per Capita
Per Capita
Tax Debt to
Year
Estimated
Taxable
Taxable
Funded
Funded
Taxable
% of
Ended
City
Assessed
Assessed
Tax
Tax
Assessed
Total Tax
9/30
Population (1)
Valuation (2)
Valuation
Debt
Debt
Valuation
Collections
2002
45,500
$ 4,773,863,018
$ 104,920
$ 157,940,000
$ 3,471
3.31%
99.20%
2003
46,400
4,766,361,580
102,723
157,645,000
3,398
3.31%
99.40%
2004
46,684
4,880,107,595
104,535
148,300,000
3,177
3.04%
99.70%
2005
47,036
5,352,933,433
113,805
144,685,000
3,076
2.70%
97.98% 141
2006
47,500
5,427,160,086
114,256
138,610,000 t31
2,918
2.55%
N.A.
(1) Source: The City of Grapevine. Preliminary, subject to change.
(2) Source: Tarrant Appraisal District.
(3) Projected, includes the Certificates.
(4) Collections for part year only, through September 1, 2005.
For additional information regarding the City, please contact:
Fred Werner
Director of Finance
City of Grapevine
200 South Main
Grapevine, Texas 76051
(817)410-3111
4
David K. Medanich
Laura Alexander
First Southwest Company
777 Main Street, Suite 1200
Fort Worth, Texas 76102
(817)332-9710
CITY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Fort Worth, Texas
5
Length of Term
City Council
Service Expires
Occupation
William D. Tate
17 Years May, 2006
Attorney -at -Law
Mayor
Ted R. Ware
26 Years May, 2008
Commercial Contractor
Mayor Pro Tem
C. Shane Wilbanks
20 Years May, 2006
Personnel Director
Councilmember, Place 1
Sharron Spencer
20 Years May, 2006
Retired Sales Representative
Councilmember, Place 2
Clydene Johnson
10 Years May, 2007
Independent Insurance Agent
Councilmember, Place 3
Darlene Freed
7 Years May, 2007
Commercial Real Estate Agent
Councilmember, Place 4
Roy Stewart
9 Years May, 2008
Construction Company Owner
Councilmember, Place 6
(1) Previously served 13 years as Mayor and Councilmember.
SELECTED ADMINISTRATIVE STAFF
Name
Position
Length of Service
Bruno Rumbelow
Acting City Manager
7 Years
Bill Gaither
Administrative Services Director 9 Years
Fred Werner
Director of Finance
8 Years
Linda Huff
City Secretary
18 Years (2)
(1) Mr. Bruno Rumbelow will be the City's
acting City Manager until City Council
appoints a City Manager. Mr. Rumbelow has
been acting City Manager for 6 months; 6 '/2
years as Acting City Manager.
(2) 23 years with City; 18 years in present position.
CONSULTANTS AND ADVISORS
Auditors........................................................................................................................................................Deloitte
& Touche LLP
Fort Worth, Texas
BondCounsel................................................................................................................................................
Vinson & Elkins L.L.P.
Dallas, Texas
Financial Advisor......................................................................................................................................
First Southwest Company
Fort Worth, Texas
5
$2,380,000
COMBINATION TAX AND LAKE PARKS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2005A
Bid Due Tuesday, October 18, 2005, at 11:00 AM, CDT
The following ratings have been assigned:
Underlying
FSA Credit
Insured Rating
Moody's Investors Service, Inc. "Aaa" "A1"
Standard & Poor's Rating Group "AAA" "AA-"
A Division of McGraw-Hill, Inc.
V
PREPARED BY:
First Southwest Company
Investment Bankers Since 1946
Global Credit Research
Cin, New Issue
In 17 OCT 2005
~*M sorviae
21
New Issue: Grapevine (City of) TX
MOODY'S ASSIGNS Al RATING TO CITY OF GRAPEVINE'S (TX) COMBINATION TAX AND LAKE PARKS
REVENUE CERTIFICATES OF OBLIGATION, SERIES 2005A
Al AFFIRMATION AFFECTS $147.1 MILLION IN PARITY DEBT, INCLUDING CURRENT SALE
Municipality
TX
Moody's Rating
ISSUE RATING
Combination Tax and Lake Parks Revenue Certificates of Obligation, Series 2005A Al
Sale Amount $2,380,000
Expected Sale Date 10/18/05
Rating Description General Obligation Limited Tax
Opinion
NEW YORK, Oct 17, 2005 — Moody's Investors Service has assigned an Al rating to the City of Grapevine's
(TX) $2.4 million Combination Tax and Lake Parks Revenue Certificates of Obligations, Series 2005A.
Concurrently, Moody's has affirmed the Al rating on the city's outstanding parity general obligation debt,
affecting $147.1 million including the current issue. Factors contributing to the assignment and affirmation
include a sizable tax base that continues to expand despite financial hardship experienced by major
taxpayers, and above average, but manageable debt levels. The rating also reflects Moody's expectation that
the city will rebalance its financial operations as planned in 2006, after a period of consecutive operating
deficits which have diminished general fund reserves, and take steps to rebuild reserves to the city's stated
targets. Failure to do so would likely result in reconsideration of the rating level. Proceeds from the sale of
bonds will be used to fund acquisition of land and construction of public facilities for recreational purposes.
The current issue is secured by a direct and continuing ad valorem tax pledge, levied against all taxable
property within the city, and further secured by a limited pledge of net revenues of the city's Lake Park
System.
INCREASED DIVERSIFICATION OF TAXBASE; HIGH WEALTH LEVELS
Situated in northeast Tarrant County (general obligation rating Aaa), the city of Grapevine is a suburban
community located within the Dalbs/Ft. Worth (DFW) metropolitan area. Two thirds of the DFW International
Airport, including all the terminals, is located within the city. DFW airport is the largest employer in the city
with a workforce of over 16,000; and it is also an economic generator of employment and spin-off businesses
in the area. Resident wealth levels are above those of the state and have improved on a relative basis over
the ten-year intercensal period. The 2000 Census per capita income (PCI) was $31,549 or 161 % of the
statewide figure, while in 1990 the PCI represented 151 % of the statewide figure.
Assessed values (AV) in the city experienced some softness following the events of September 11th as
growth was tempered by losses at major airlines, including America Airlines and Delta. The tax base
rebounded significantly in fiscal 2005, expanding 9.7% over prior year to a sizable $5.35 billion. Despite
subsequent losses in the airline industry, the fiscal 2006 AV of $5.4 billion represents a small increase of
1.4% over prioryear, which is mostly attributed to new commercial and residential construction. New
commercial development has spurred in the proximity of the $300 million Gaylord Texan Resort and
Convention Center that opened in April 2004. The resort and convention center reports 60% occupancy rates
since opening, indicating the viability of the hotel despite competition from downtown Ft. Worth and Dallas.
Other commercial properties recently added to the tax base include a Walmart Super Center and Sam's
Wholesale Club. City officials report new residential construction has slowed down, but reappraisal of existing
single-family homes is expected to remain healthy. Moody's believes diversification of the tax base through
new commercial construction and market value reassessments offsets uncertainty in AV growth provided by
fluctuations in airline operations.
ABOVE AVERAGE DEBT POSITION WITH RAPID PAYOUT
The city's direct and overall debt ratios are relatively high though affordable at 2.7% and 5.9% respectively,
both expressed as a percent of assessed valuation. Upon completion of this sale, the city will have
authorized debt issuance capacity of $5.2 million for street improvements from the 1998 election that plans
on issuing within the next three months. Officials indicate they are currently assessing future capital
requirements as well as the need for a new bond election in the summer of 2006. Despite the city's existing
leveraged position and future plans for issuance, Moody's believes the above average amortization (66% in
ten years) coupled with modest taxbase expansion will mitigate further upward pressure on the debt burden.
DECLINING RESERVES WITH RELIANCE ON ECONOMICALLY SENSITIVE REVENUES
As a result of consecutive operational deficits, the city has reduced its general fund balance from $7.7 million
or 20.8% of revenues in fiscal 2001, to $4.5 million or 11.5% of revenues in fiscal 2004. While the city did
plan on reducing general fund reserves between fiscal years 2001 and 2003, the subsequent 25% reduction
in fund balance at the end of fiscal 2004 was unanticipated and due to higher than expected operating
expenditures. Additionally, the undesignated reserve decreased from $5.4 million in fiscal 2003 or 13.7% of
revenues to a narrow $3 million or 7.6% of revenues in fiscal 2004. This level of reserve was well below the
city's goal of maintaining 60 days of operations in undesignated general fund reserve. Unaudited results for
fiscal 2005 suggest a subsequent deficit in the general fund of $1.9 million. The excess of expenditures over
revenues is mainly attributed to overspending in health insurance claims and overtime expenses in the Fire
Department. In order to prevent further declines in general fund reserves, officials transferred cash resources
from the lease and capital projects funds into the general fund at fiscal year-end 2005. Therefore, they
anticipate an ending general fund balance of $4.7 million, which Moody's expects will coincide with the final
audited result for fiscal 2005.
The city heavily relies on sales tax collections, an economically cyclical revenue source, to finance
operations. In fiscal 2004, sales tax receipts provided 35% of the city's operating funds, while propertytax
revenues contributed 33%. In that same year, sales tax collections experienced a healthy increase of 12.1 %
over prior year, to almost $18 million, due to the expansion of the city's base of retail offerings and favorable
activity at the Gaylord Texan Resort. For fiscal 2005 officials report sales tax collections of $18.4 million
(unaudited) and they are budgeting an increase of $300,000 for fiscal 2006.
Although officials plan to align expenditures to revenue in fiscal 2006, the city's trend of deficit spending and
the use of capital projects funds in fiscal 2005 to replenish general fund reserves constitute issues of
concern, particularly given the city's heavy reliance on sales tax as the primary operating revenue. Failure to
rebalance operations as planned in 2006 and to begin to rebuild reserves to levels consistent with the city's
goals, would likely result in a reconsideration of the Al rating.
KEY STATISTICS:
2006 Estimated Population: 47,500
2006 Full Valuation: $5.42 billion
Average annual taxbase growth (last five years): 4.4%
PCI as % of the state: 160.8%
Direct Debt Ratio: 2.7%
Debt Ratio: 5.9%
Payout of Principal (10 years): 66.1 %
FY 2004 General Fund balance: $4.6 million (11.5% of General Fund revenues)
FY 2005 Unaudited General Fund balance: $4.7 million
Post -sale Parity Debt Outstanding: $147.1 million
Analysts
Maria Erickson
Analyst
Public Finance Group
Moody's Investors Service
Publication date: 13 -Oct -2005
Reprinted from RatingsDirect
Grapevine, Texas
Primary Credit Analyst: Wendy Wlpperman, Dallas (1) 214-871-1421; wendy_wipperman@standardandpoors.com
Secondary Credit Analyst: Theodore Chapman, Dallas (1) 214-871-1401; theodore_chapman@standardandpoors.com
Rationale
Standard & Poor's Ratings Services assigned its'AA-' rating, and stable
outlook, to Grapevine, Texas' series 2005A combination tax and lake parks
revenue certificates of obligation.
The rating reflects the city's:
• Expanding, diversifying substantial property tax base, coupled with a
competitive property tax rate;
• Moderating overall debt burden, coupled with limited future capital
needs;
• Historically strong financial performance and adequate financial
position; and
• High wealth and income levels, which are boosted by its participation in
the Dallas -Fort Worth MSA.
Net revenues of the city's lakes park and the city's limited -tax pledge secure
the certificates. City officials will use debt proceeds to fund the acquisition of,
and improvements to, the Grapevine Lake parks.
The city's moderately concentrated economic base, which, while deep, is
heavily dependent on Dallas -Fort Worth International Airport and related
industries, is an offsetting factor.
Grapevine, with an estimated population of 47,500, is centrally located
between Dallas, Texas and Fort Worth, Texas. City residents have direct
transportation access throughout the entire MSA. Dallas -Fort Worth
International Airport -- two-thirds of which is within Grapevine's corporate city
limits -- has greatly influenced the city's development. The airport's presence
contributes substantial direct and indirect employment, sales and hotel tax
revenues, and industrial and commercial real estate taxes. While the
nationwide economic downturn and the events of Sept. 11, 2001, affected
most of these revenue sources, airport volume has stabilized. Assessed value
(AV) declined by a nominal 0.2% in fiscal 2003 but has since rebounded; AV
increased by 2.4% and 9.7% in fiscais 2004 and 2005, respectively. The
construction of the Gaylord Texan resort -- a 1,500 -room destination hotel and
convention center on Lake Grapevine with an AV of $113 million -- contributed
to an increase in commercial real estate values in fiscal 2005. Additional
significant commercial development includes Grapevine Mills Mall, a regional
outlet mall; and Bass Pro Shop, a sporting goods store. AV growth is
essentially flat in fiscal 2006, increasing by just 1.4% over fiscal 2005 AV to a
substantial $5.43 billion. Tax base concentration is moderate with the 10
leading taxpayers accounting for 21.8% of total AV. American Airlines Inc., the
leading taxpayer, accounts for 5.8% of total AV. Grapevine Mills L.P., a
regional shopping mall, Is the second leading taxpayer, accounting for 3.4% of
taxable AV. Delta Airlines, the city's third leading taxpayer with 2.8% of
taxable AV, recently announced plans to make significant reductions to its
flight operations from Dallas -Fort Worth International Airport. Airport officials
modest 1.7% over fiscal 2005 projected collections. The city council reduced
the property tax rate by 0.10 cents to 36.25 cents per $100 of AV for fiscal
2006, which is low for cities in Tarrant County.
Debt
Overall net debt is a high $5,560 per capita; but it has moderated to 4.9% of
market value. The debt burden is almost entirely attributable to Grapevine-
Colleyville Independent School District ('AA -'Standard & Poor's underlying
rating (SPUR), GO debt); net direct debt, however, accounted for a low 1.6%
of market value. Grapevine-Colleyville Independent School District's
electorate passed a bond election on Sept. 10, 2005, that authorized the
issuance of $107.9 million of GO bonds. Debt levels should moderate in the
future as both the city and school district are approaching buildout. Debt
service costs are a high 25.3% of fiscal 2004 total expenditures, which is in-
line with historical levels; self-supporting revenue streams, however,
somewhat offset the high carrying charges. The city's manageable five-year
capital plan consists almost entirely of street and quality -of -life projects, The
city has $5.25 million of authorized, but unissued, GO bonds remaining for
street improvements, which it plans to issue in early fiscal 2006.
Published by Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. Executive offices: 1221
Avenue of the Americas, New York, NY 10020. Editorial offices: 55 Water Street, New York, NY 10041.
Subscriber services: (1) 212-438-7280. Copyright 2005 by The McGraw-Hill Companies, Inc.
Reproduction in whole or in part prohibited except by permission. All rights reserved. information has
been obtained by Standard & Poor's from sources believed to be reliable. However, because of the
possibility of human or mechanical error by our sources, Standard & Poor's or others, Standard &
Poor's does not guarantee the accuracy, adequacy, or completeness of any information and is not
responsible for any errors or omissions or the result obtained from the use of such information. Ratings
are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any
securities.
Prepared by:
P
First Southwest any
Investment Bankers Since 1946
777 Main Street
Suite 1200
Fort Worth, Texas 76102
(817) 332-9710
§XA'l &'JAI •
$2,380,000
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND LAKE PARKS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2005A
SELLING TUESDAY, OCTOBER 18,2005, AT 11:00 AM, CDT
ACCOUNT MANAGER
TRUE
INTEREST COST
Wachovia Securities, LLC
4.489689%
A.G. Edwards & Sons, Inc.
4.510236%
UBS Financial Services Inc.
4.554801%
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PRELIMINARY OFFICIAL STATEMENT
Dated October 10, 2005
NEW ISSUE - Book -Entry -Only
Ratings:
Moody's: "Applied For"
S&P: "Applied For"
("Other Information —
Ratings" herein)
In the opinion of Bond Counsel, interest on the Certificates is excludable from gross income for federal income tax purposes under existing law and
the Certificates are not private activity bonds. See "TAX MATTERS - Tax Exemption" herein for a discussion of the opinion of Bond Counsel,
including a description of alternative minimum tax consequences for corporations.
THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS
$2,380,000
CITY OF GRAPEVINE, TEXAS
(Tarrant County)
COMBINATION TAX AND LAKE PARKS REVENUE CERTIFICATES OF OBLIGATIONS, SERIES 2005A
Dated Date: October 15, 2005
Due: February 15, as shown below
PAYMENT TERMS... Interest on the $2,380,000 City of Grapevine, Texas, Combination Tax and Lake Parks Revenue Certificates of Obligations,
Series 2005A (the "Certificates") will accrue from October 15, 2005 (the "Dated Date"), will be payable August 15 and February 15 of each year
commencing February 15, 2006, and will be calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Certificates
will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -
Only System described herein. Beneficial ownership of the Certificates maybe acquired in denominations of $5,000 or integral multiples thereof. No
physical delivery of the Certificates will be made to the owners thereof. Principal of and interest on the Certificates will be payable by the Paying
Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to
the beneficial owners of the Certificates. See "The Certificates - Book -Entry -Only System" herein. The initial Paying Agent(Registrar is JPMorgan
Chase Bank, National Association, Dallas, Texas (see "The Certificates - Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE ... The Certificates are issued pursuant to the Constitution and general laws of the State of Texas (the "State")
particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and an ordinance adopted by the City Council and constitute
direct obligations of the City of Grapevine, Texas (the "City"), payable from the Net Revenues of the City's Lakes Park, as authorized by Chapter
1502, Texas Government Code, and to the extent such amounts are insufficient for such purposes, from the levy and collection of a direct and
continuing ad valorem tax, levied within the limits prescribed by law, on all taxable property within the City, all as provided in the Ordinance. (the
"Ordinance") (see "The Certificates - Authority for Issuance").
PURPOSE ... Proceeds from the sale of the Certificates will be used for the purpose of (i) acquiring and constructing of facilities and improvements
for the City's Lake Parks (the "Lake Parks Improvements"); (ii) paying interest on the Certificates issued for the Lake Parks Improvements for a
period not to exceed the period of construction of such Lake Parks Improvements and for one year thereafter; (iii) acquiring land and improvements
on Dooley Street near the Cotton Belt Railroad District for use in connection with City festivals and events and other City purposes (together with the
Lake Parks Improvements, the "Project"); and (iv) paying for professional services of attorneys, financial advisors and other professionals in
connection with the Project and the issuance of the Certificates.
Amount
Maturity Rate
$ 75,000
2007
150,000
2008
150,000
2009
160,000
2010
75,000
2011
80,000
2012
85,000
2013
85,000
2014
90,000
2015
95,000
2016
95,000
2017
MATURITY SCHEDULE
CUSIP
Yield Suffix",
Amount
$ 100,000
105,000
110,000
115,000
120,000
125,000
130,000
140,000
145,000
150,000
CUSIPt'i Prefix: 388622
CUSIP
Maturity Rate Yield Suffix("
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
(Accrued Interest from October 15, 2005 to be added)
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service
Bureau, a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute
for the CUSIP Services.
OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2016,
in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2015, or any date thereafter, at the par value
thereof plus accrued interest to the date of redemption (see "The Certificates - Redemption").
LEGALITY... The Certificates are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the approving
opinion of the Attorney General of Texas and the opinion of Vinson & Elkins L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond
Counsel's Opinion").
DELIVERY... It is expected that the Certificates will be available for delivery through The Depository Trust Company on November 22, 2005.
1 1 1 1 i i I I• 1
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation
of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale.
No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those
contained in this Official Statement, and, ifgiven or made, such other information or representations must not be relied upon.
For purposes of compliance with Rule 15c 2-12 of the Securities and Exchange Commission (the 'Rule'), this document constitutes an
Official Statement of the Issuer with respect to the Certificates that has been "deemed final" by the City as of its date except for the
omission of no more than the information permitted by the Rule.
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. 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 stall, 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 oflnformation"for a description of the City's undertaking to provide certain information on a continuing basis.
Neither the City nor its Financial Advisors 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.
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 an d 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
orwardlooking 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 these securities have been registered or exempted should not be regarded as a recommendation thereof.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY ......... ........... .......... 3
CITY OFFICIALS, STAFF AND CONSULTANTS .......... 5
ELECTED OFFICIALS.. ................... .... - ........................ _ 5
SELECTED ADMINISTRATIVE STAFF ............................... 5
CONSULTANTS AND ADVISORS......................................5
INTRODUCTION.. .... ................................... ............ ....... _ 6
THE CERTIFICATES..........................................................6
TAX INFORMATION........................................................10
TABLE I - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT.............................................13
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY
CATEGORY.........................................................14
TABLE 3 - VALUATION AND GENERAL OBLIGATION
DEBT HISTORY ................................................... 15
TABLE 4 - TAX RATE, LEVY AND COLLECTION
HISTORY............................................................ 15
TABLE 5 - TEN LARGEST TAXPAYERS .......................... 15
TABLE 6 - TAX ADEQUACY .......................................... 16
TABLE 7 - ESTIMATED OVERLAPPING DEBT ................16
DEBT INFORMATION......................................................17
TABLE 8 - GENERAL OBLIGATION DEBT SERVICE
REQUIREMENTS..................................................17
TABLE 9 - INTEREST AND SINKING FUND BUDGET
PROJECTION....................................................... 18
TABLE 10 - COMPUTATION OF SELF-SUPPORTING
DEBT..................................................................18
TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL
OBLIGATION BONDS..........................................19
TABLE 12 - OTHER OBLIGATIONS ................................ 19
2
FINANCIAL INFORMATION...........................................20
TABLE 13 — CHANGES IN NET ASSETS..... .................. _20
TABLE 13A - GENERAL FUND REVENUES AND
EXPENDITURE HISTORY.....................................21
TABLE 14 - MUNICIPAL SALES TAX HISTORY ..............22
TABLE 15 - CURRENT INVESTMENTS ............................24
TAX MATTERS...................................................................25
TAX EXEMPTION..........................................................25
ADDITIONAL FEDERAL INCOME TAX
CONSIDERATIONS..............................................25
OTHER INFORMATION...................................................27
RATINGS.......................................................................27
LITIGATION...................................................................27
REGISTRATION AND QUALIFICATION OF CERTIFICATES
FORSALE............................................................27
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS....................................27
LEGAL MATTERS..........................................................27
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION.....................................................27
CONTINUING DISCLOSURE OF INFORMATION...............28
INITIAL PURCHASER OF THE CERTIFICATES .................29
FINANCIAL ADVISOR....................................................29
FORWARD-LOOKING STATEMENTS DISCLAIMER .... .....
29
CERTIFICATION OF THE OFFICIAL STATEMENT ............30
APPENDICES
GENERAL INFORMATION REGARDING THE CITY.......... A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT... B
FORM OF BOND COUNSEL'S OPINION .......................... C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto, are
part of the Official Statement.
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Certificates to potential investors is made only by means of this entire Official Statement.
No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official
Statement.
THE CITY ..................................... The City of Grapevine, Texas (the "City') is a political subdivision and municipal corporation
of the State, located in Tarrant County, Texas. The City covers approximately 35.8 square
miles (see "Introduction - Description of City").
THE CERTIFICATES ..................... The Certificates are issued as $2,380,000 Combination Tax and Lake Parks Revenue
Certificates of Obligations, Series 2005A. The Certificates are issued as serial securities
maturing February 15, 2007 through February 15, 2027, unless the Initial Purchaser
designates one or more maturities as a Term Certificate (see "The Certificates — Description
of the Certificates").
PAYMENT OF INTEREST .............. Interest on the Certificates accrues from October 15, 2005, and is payable February 15, 2006,
and each February 15 and August 15 thereafter until maturity (see "The Certificates -
Description of the Certificates").
AUTHORITY FOR ISSUANCE.......... The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C
of Chapter 271, Texas Local Government Code, as amended, and an Ordinance passed by the
City Council of the City (see "The Certificates - Authority for Issuance").
SECURITY FOR THE
CERTIFICATES .........................
The Certificates constitute direct obligations of the City payable from the Net Revenues of the
City's Lakes Park, as authorized by Chapter 1502, Texas Government Code, and to the extent
such amounts are insufficient for such purposes, from the levy and collection of a direct and
continuing ad valorem tax, levied within the limits prescribed by law, on all taxable property
within the City, all as provided in the Ordinance.
OPTIONAL REDEMPTION .............
The City reserves the right, at its option, to redeem Certificates, as the case may be, having
stated maturities on and after February 15, 2016, in whole or in part in principal amounts of
$5,000 or any integral multiple thereof, on February 15, 2015, or any date thereafter, at the
par value thereof plus accrued interest to the date of redemption.
TAX EXEMPTION ............................
In the opinion of Bond Counsel, the interest on the Certificates will be excludable from gross
income for federal income tax purposes under existing law and the Certificates are not private
activity bonds. See "Tax Matters - Tax Exemption" for a discussion of the opinion of Bond
Counsel, including a description of the alternative minimum tax consequences for corporations.
USE OF PROCEEDS.. . ............
Proceeds from the sale of the Certificates will be used for the purpose of (i) acquiring and
constructing of facilities and improvements for the City's Lake Parks (the "Lake Parks
Improvements"); (ii) paying interest on the Certificates issued for the Lake Parks
Improvements for a period not to exceed the period of construction of such Lake Parks
Improvements and for one year thereafter; (iii) acquiring land and improvements on Dooley
Street near the Cotton Belt Railroad District for use in connection with City festivals and
events and other City purposes (together with the Lake Parks Improvements, the "Project");
and (iv) paying for professional services of attorneys, financial advisors and other
professionals in connection with the Project and the issuance of the Certificates.
RATINGS ......................................
The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors
Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Group, a division of
McGraw-Hill ("S&P"). The City also has issues outstanding which are rated "Aaa" by Moody's
and "AAA" by S&P through insurance by various commercial insurance companies.
Applications for contract ratings on the Certificates have been made to both Moody's and S&P.
The results of their determinations will be provided as soon as possible.
BOOK -ENTRY -ONLY SYSTEM...... The definitive Certificates will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book -Entry -Only System described herein. Beneficial
ownership of the Certificates may be acquired in denominations of $5,000 or integral
multiples thereof No physical delivery of the Certificates will be made to the beneficial
owners thereof. Principal of 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
4
Ratio Funded
Fiscal Per Capita
Per Capita
Tax Debt to
Year Estimated Taxable Taxable
Funded Funded
Taxable
% of
Ended City Assessed Assessed
Tax Tax
Assessed
Total Tax
9130 Population (1) Valuation (2) Valuation
Debt Debt
Valuation
Collections
2002 45,500 $ 4,773,863,018 $ 104,920
$ 157,940,000 $ 3,471
3.31%
99.20%
2003 46,400 4,766,361,580 102,723
157,645,000 3,398
3.31%
99.40%
2004 46,684 4,880,107,595 104,535
148,300,000 3,177
3.04%
99.70%
2005 47,036 5,352,933,433 113,805
144,685,000 3,076
2.70%
97.98% (41
2006 47,500 5,427,160,086 114,256
138,610,000 (3) 2,918
2.55%
N.A.
(1) Source: The City of Grapevine. Preliminary, subject to change.
(2) Source: Tarrant Appraisal District.
(3) Projected, includes the Certificates.
(4) Collections for part year only, through September 1, 2005.
For additional information regarding the City, please contact:
Fred Werner
David K. M edanich
Director of Finance
Laura Alexander
City of Grapevine
First Southwest Company
200 South Main
777 Main Street, Suite 1200
Grapevine, Texas 76051
Fort Worth, Texas 76102
(817)410-3111
(817)332-9710
4
CITY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Councilmember, Place 4
Roy Stewart 9 Years May, 2008 Construction Company Owner
Councilmember, Place 6
(1) Previously served 13 years as Mayor and Councilmember.
SELECTED ADMINISTRATIVE STAFF
Name Position Length of Service
Bruno Rumbelow(l)
Bill Gaither
Fred Werner
Linda Huff
Acting City Manager 7 Years
Administrative Services Director 9 Years
Director of Finance 8 Years
City Secretary 18 Years (2)
(1) Mr. Bruno Rumbelow will be the City's acting City Manager until City Council appoints a City Manager. Mr. Rumbelow has
been acting City Manager for 6 months; 6 '/2 years as Acting City Manager.
(2) 23 years with City; 18 years in present position.
CONSULTANTS AND ADVISORS
Auditors........................................................................................................................................................Deloitte & Touche LLP
Fort Worth, Texas
BondCounsel................................................................................................................................................ Vinson & Elkins L.L.P.
Dallas, Texas
FinancialAdvisor...................................................................................................................................... First Southwest Company
Fort Worth, Texas
5
Length of
Term
City Council
Service
Expires
Occupation
William D. Tate
17 Years ���
May, 2006
Attorney -at -Law
Mayor
Ted R. Ware
26 Years
May, 2008
Commercial Contractor
Mayor Pro Tem
C. Shane Wilbanks
20 Years
May, 2006
Personnel Director
Councilmember, Place 1
Sharron Spencer
20 Years
May, 2006
Retired Sales Representative
Councilmember, Place 2
Clydene Johnson
10 Years
May, 2007
Independent Insurance Agent
Councilmember, Place 3
Darlene Freed
7 Years
May, 2007
Commercial Real Estate Agent
Councilmember, Place 4
Roy Stewart 9 Years May, 2008 Construction Company Owner
Councilmember, Place 6
(1) Previously served 13 years as Mayor and Councilmember.
SELECTED ADMINISTRATIVE STAFF
Name Position Length of Service
Bruno Rumbelow(l)
Bill Gaither
Fred Werner
Linda Huff
Acting City Manager 7 Years
Administrative Services Director 9 Years
Director of Finance 8 Years
City Secretary 18 Years (2)
(1) Mr. Bruno Rumbelow will be the City's acting City Manager until City Council appoints a City Manager. Mr. Rumbelow has
been acting City Manager for 6 months; 6 '/2 years as Acting City Manager.
(2) 23 years with City; 18 years in present position.
CONSULTANTS AND ADVISORS
Auditors........................................................................................................................................................Deloitte & Touche LLP
Fort Worth, Texas
BondCounsel................................................................................................................................................ Vinson & Elkins L.L.P.
Dallas, Texas
FinancialAdvisor...................................................................................................................................... First Southwest Company
Fort Worth, Texas
5
OFFICIAL STATEMENT
RELATING TO
$2,380,000
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND LAKE PARKS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2005A
INTRODUCTION
This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of
$2,380,000 City of Grapevine, Texas, Combination Tax and Lake Parks Revenue Certificates of Obligations, Series 2005A (the
"Certificates"). 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 except as otherwise indicated herein.
There follows in this Official Statement a description 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,
First Southwest Company, Fort Worth, Texas.
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 Councilmembers. The City Manager is the chief administrative officer for the City. Some of the services that the City provides
are: public safety (police and fire protection), highways and streets, electric, water and sanitary sewer utilities, health and social
services, culture -recreation, public transportation, public improvements, planning and zoning, and general administrative services.
The 2000 Census population for the City was 42,059, and the 2006 estimated population is 47,500. The City covers approximately
35.8 square miles.
THE CERTIFICATES
DESCRIPTION OF THE CERTIFICATES ... The Certificates are dated October 15, 2005, and mature on February 15 in each of the
years and in the amounts and bear interest at per annum rates as shown on the cover page hereof. Interest will be computed on
the basis of a 360 -day year of twelve 30 -day months, and will be payable on August 15 and February 15, commencing February
15, 2006. The definitive Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one
maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company
("DTC") pursuant to the Book -Entry -Only System described herein. No physical delivery of the Certificates will be made to
the owners thereof. Principal of and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co.,
which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the
beneficial owners of the Certificates. See "The Certificates - Book -Entry -Only System" herein.
AUTHORITY FOR ISSUANCE ... 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 an Ordinance passed by the City
Council.
SECURITY AND SOURCE OF PAYMENT ... The Certificates are direct obligations of the City and are secured and payable from the
Net Revenues of the City's Lake Parks, as authorized by Chapter 1502, Texas Government Code, and to the extent such amounts
are insufficient for such purposes, from the levy and collection of a direct and continuing ad valorem tax, levied within the limits
prescribed by law, on all taxable property within the City, all as provided in the Ordinance authorizing the Certificates.
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. 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.
Administratively, the Attorney General of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all tax
supported debt service, as calculated at the time of issuance.
REDEMPTION ... The City reserves the right, at its option, to redeem Certificates of each series having stated maturities on and
after February 15, 2016, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15,
2015, 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 of a
maturity of a Series of Certificates is to be redeemed, the Paying Agent/Registrar (or DTC (hereinafter defined) while the
Certificates are in Book -Entry -Only form) shall determine by lot the Certificates, or portions thereof, within such maturity to be
redeemed. If an 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
Agentaegistrar 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 CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR
PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE.
DEFEASANCE ... The Ordinance provides that the City may discharge its obligations to the registered owners of any or all of the
Certificates to pay principal, interest and redemption price thereon in any manner permitted by law. Under current Texas law,
such discharge may be accomplished either (i) by depositing with the Comptroller of Public Accounts of the State of Texas a
sum of money equal to the principal of, premium, if any, and all interest to accrue on the Certificates to maturity or date of
redemption or (ii) by depositing with an eligible place of payment (paying agent) for obligations of the City amounts sufficient to
provide for the payment and/or redemption of the Certificates; provided that such deposits may be invested and reinvested only
in (a) direct noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by
the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States, including
obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing
body of the City adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment
quality by a nationally recognized investment rating firm not less than AAA or its equivalent; and (c) noncallable obligations of
a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the
date the governing body of the City adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as
to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. The foregoing
obligations may be in book entry form, and shall mature and/or bear interest payable at such times and in such amounts as will
be sufficient to provide for the scheduled payment and/or redemption of the Certificates. If any of such Certificates are to be
redeemed prior to their date of maturity, provision must have been made for giving notice of redemption as provided in the
Ordinance.
Boox-ENTRY-ONLY SYSTEM ... This section describes how ownership of the Certificates are to be transferred and how the
principal of and interest on the Certificates are to be paid to and credited by DTC while the Certificates are registered in its
nominee name. The information in this section concerning DTC and the Book -Entry -Only System has been provided by DTC
for use in disclosure documents such as this Official Statement. The City believes the source of such information to be reliable,
but takes no responsibility for the accuracy or completeness thereof.
The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Certificates, or
redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or
its nominee (as the registered owner of the Certificates), or redemption or other notices, to the Beneficial Owners, or that they will do
so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to
DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with
DTC Participants are on file with DTC.
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
such maturity, and will be deposited with DTC.
DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million
issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85
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, in turn, is owned by a number of Direct Participants of DTC and Members of the National
Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging
Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York
Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 Standard & Poor's highest rating: AAA. The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at
www,dtcc.com.
Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for
the Certificates 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 and Indirect Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the 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 Certificates, except in the event that use of the book -entry system for the
Certificates 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 DTC nominee do not effect any 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 Direct and Indirect 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 bond 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
registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Certificates within an issue are being redeemed, DTC's practice
is to determine by lot the amount of interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by
a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City
as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Certificates will be made to 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 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. 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 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.
USE OF CERTAIN TERMS IN OTHER SECTIONS OF THIS OFFICIAL STATEMENT. In reading this Official Statement it should be
understood that while the Certificates are in the Book -Entry -Only System, references in other sections of this Official Statement
to registered owners should be read to include the person for which the Participant acquires an interest in the Certificates, but (i)
all rights of ownership must be exercised through DTC and the Book -Entry -Only System, and (ii) except as described above,
notices that are to be given to registered owners under the Ordinance will be given only to DTC.
Information concerning DTC and the Book -Entry -Only System has been obtained from DTC and is not guaranteed as to
accuracy or completeness by, and is not to be construed as a representation by the City or the Financial Advisor.
EFFECT OF TERMINATION OF BOOK -ENTRY -ONLY SYSTEM. In the event that the Book -Entry -Only System is discontinued by
DTC or the use of the Book -Entry -Only System is discontinued by the City, printed Certificates will be issued to the respective
holders and the Certificates will be subject to transfer, exchange and registration provisions as set forth in the Ordinance and
summarized under "The Certificates - Transfer, Exchange and Registration" below.
PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar is JPMorgan Chase Bank, National Association, 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 or trust company organized under the laws of the State of Texas or other entity duly qualified and legally
authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Certificates. Upon any change in
the Paying Agent/Registrar for the Certificates, the City agrees to promptly cause a written notice thereof to be sent to each
registered owner of the Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of
the new Paying Agent/Registrar.
PAYMENT ... 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 (defined below), and such interest shall be paid (i) by check sent
United States Mail, first class postage prepaid to the address of the registered owner recorded in the registration books of the
Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying Agent/Registrar requested by, and at the risk and
expense of, the registered owner. Principal of the Certificates will be paid to the registered owner at their stated maturity upon
presentation to the designated payment/transfer office of the Paying Agent/Registrar. If the date for the payment of the principal
of or interest on the Certificates shall be a Saturday, Sunday, a legal holiday or a day when banking institutions in the city where
the designated payment/transfer office of the Paying Agent/ Registrar is located are authorized to close, then the date for such
payment shall be the next succeeding day which is not such a day, and payment on such date shall have the same force and effect
as if made on the date payment was due.
TRANSFER, EXCHANGE AND REGISTRATION ... In the event the Book -Entry -Only System should be discontinued, printed
Certificates will be delivered to the registered owners and thereafter the Certificates may be transferred and exchanged on the
registration books of the Paying Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such
transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental
charges required to be paid with respect to such registration, exchange and transfer. Certificates may be assigned by the
execution of an assignment form on the respective Certificates or by other instrument of transfer and assignment acceptable to
the Paying Agent/Registrar. New Certificates will be delivered by the Paying AgentfRegistrar, in lieu of the Certificates being
transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class,
postage prepaid, to the new registered owner or his designee. To the extent possible, new Certificates issued in an exchange or
transfer of Certificates will be delivered to the registered owner or assignee of the registered owner in not more than three
business days after the receipt of the Certificates to be canceled, and the written instrument of transfer or request for exchange
duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New
Certificates registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity
and for a like aggregate designated amount as the Certificates surrendered for exchange or transfer. See "The Certificates -
Book -Entry -Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability
of the Certificates. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Certificate
called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of
transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Certificate.
RECORD DATE FOR INTEREST PAYMENT ... The record date ("Record Date") for the interest payable on the Certificates on any
interest payment date means the close of business on the last business day of the month preceding such interest payment date.
In the event of a non payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (a "Special Record Date") will be established by the Paying Agent'Registrar, if and when funds for the payment
of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the
past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of
a Certificate appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day
next preceding the date of mailing of such notice.
CERTIFICATEHOLDERS' REMEDIES ... The Ordinance establishes as 'Event of Default" (i) the failure to make payment of
principal of or interest on the Certificates when due, and (ii) default in the performance or observance of any other covenant,
agreement, or obligation of the City, the failure of which materially, adversely affects the rights of the Owner, including but
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. Under State law there is no right to the acceleration of
maturity of the Certificates. Although a registered owner of Certificates could presumably obtain a judgment against the City if
a default occurred in the payment of principal of or interest on any such Certificates, such judgment could not be satisfied by
execution against any property of the City. Such registered owner's only practical remedy, if a default occurs, is a mandamus or
mandatory injunction proceeding to compel the City to levy, assess and collect an annual ad valorem tax sufficient to pay
principal of and interest on the Certificates as it becomes due. The enforcement of any such remedy may be difficult and time
consuming and a registered owner could be required to enforce such remedy on a periodic basis. The Ordinance does not
provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the City to perform in
accordance with the terms of the Ordinance, or upon any other condition. Furthermore, the City is eligible to seek relief from its
creditors under Chapter 9 of the U.S. Bankruptcy Code. Although Chapter 9 provides for the recognition of a security interest
represented by a specifically pledged source of revenues, the pledge of 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 bondholders of
an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from
creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be
heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary
powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all
opinions relative to the enforceability of the Ordinance and the Certificates are qualified with respect to the customary rights of
debtors relative to their creditors.
TAX INFORMATION
AD VALOREM Tax LAW ... The appraisal of property within the City is the responsibility of the Tarrant Appraisal District (the
"Appraisal District"). Excluding agricultural and open -space land, which may be taxed on the basis of productive capacity, the
Appraisal District is required under the Property Tax Code to appraise all property within the Appraisal District on the basis of 100%
of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods
of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data comparison method of
appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law fiirther limits the appraised value of
a residence homestead for a tax year to an amount not to exceed the lesser of (1) the market value of the property, or (2) the sum of (a)
10% of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years
since the property was last appraised, plus (b) the appraised value of the property for the last year in which the property was appraised
plus (c) the market value of all new improvements to the property. The value placed upon property within the Appraisal District is
subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal
District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years.
The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property
within the City by petition filed with the Appraisal Review Board.
Reference is made to the Texas Property Tax Code (the "Property Tax Code"), for identification of property subject to taxation;
property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes;
and the procedures and limitations applicable to the levy and collection of ad valorem taxes.
Article VIII of the State Constitution ("Article VIIP") and State law provide for certain exemptions from property taxes, the valuation
of agricultural and open -space lands at productivity value, and the exemption of certain personal property from ad valorem taxation.
Under Article VIII, Section 1-b, and State law, the governing body of a political subdivision, at its option, may grant: (1) An
exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled
from all ad valorem taxes thereafter levied by the political subdivision; and (2) An exemption of up to 20% of the market value of
residence homesteads; the minimum exemption under this provision is $5,000.
In the case of residence homestead exemptions granted under, Article VIII, Section 1-b, ad valorem taxes may continue to be levied
against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation
of the levy would impair the obligation of the contract by which the debt was created.
State law and Article VIII, Section 2, mandate an additional property tax exemption for disabled veterans or the surviving spouse or
children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal
property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000.
Under Article VIII and State law, the governing body of a county, municipality or junior college district, may freeze the total amount
of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years of age or older to the amount of taxes
imposed in the year such residence qualified for such exemption. Also, upon receipt of a petition signed by five percent of the
registered voters of the county, municipality or junior college district, an election must be held to determine by majority vote whether
to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are disabled. Upon providing
for such exemption, such freeze on ad valorem taxes is transferable to a different residence homestead and to a surviving spouse
living in such homestead who is disabled or is at least 55 years of age. If improvements (other than maintenance or repairs) are made
to the property, the value of the improvements is taxed at the then current tax rate, and the total amount of taxes imposed is increased
to reflect the new improvements with the new amount of taxes then serving as the ceiling on taxes for the following years, Once
established, the tax rate limitation may not be repealed or rescinded.
Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open -space land (Section 1-d-1), including
open -space land devoted to farm or ranch purposes or open -space land devoted to timber production, may elect to have such property
appraised for property taxation on the basis of its productive capacity. The same Iand may not be qualified under both Sections I -d
and 1-d-1.
Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body
of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation.
Article VIII, Section 1-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as
goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication.
Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal.
10
The City and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the
tax values on property in the zone are "frozen" at the value of the property at the time of creation of the zone. The difference
between any increase in the assessed valuation of taxable real property in the TIF in excess of the base value of taxable real
property in the TIF is known as the "Incremental Value," and during the existence of the TIFs, taxes levied by the City against
the Incremental Value in the TIFs are restricted to paying project and financing costs within the TIFs and are not available for
the payment of other obligations of the City, including the Certificates.
The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property
owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the
increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a
period of up to 10 years.
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE ... Section 26.05 of the Property Tax Code provides that the governing body of a
taxing unit is required to adopt the annual tax rate for the unit before the later of September 30 or the 6& day after the date the
certified appraisal roll is received by the taxing unit, and a failure to adopt a tax rate by such required date will result in the tax rate
for the taxing unit for the tax year to be the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the
taxing unit for the preceding tax year. Furthermore, Section 26.05 provides that the City Council may not adopt a tax rate that
exceeds the lower of the rollback tax rate or the effective tax rate until two public hearings are held on the proposed tax rate
following a notice of such public hearing (including the requirement that notice be posted on the City's website if the City owns,
operates or controls an internet website and public notice be given by television if the City has free access to a television channel)
and the City Council has otherwise complied with the legal requirements for the adoption of such tax rate. The tax rate consists of
two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service.
Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate." If
the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held
to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate.
"Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values
(adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included
in this year's taxable values.
"Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's
values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted)
divided by the anticipated tax collection rate.
The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize
an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the
rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the
calculation of the various defined tax rates.
PROPERTY ASSESSMENT AND TAX PAYMENT ... Property within the City is generally assessed as of January I of each year.
Business inventory may, at the option of the taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the
basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October
1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted
by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final
installment due on August 1.
PENALTIES AND INTEREST ... Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative
Cumulative
Month
Penalty
Interest
Total
February
6%
1 %
7%
March
7
2
9
April
8
3
11
May
9
4
13
June
10
5
15
July
12
6
18
After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent
in July, up to a 20% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances,
taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no
additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels,
pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against
an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities,
including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents
governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and
obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many
cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court.
CITY APPLICATION OF TAx CODE ... The City grants an exemption to the market value of the residence homestead of persons
65 years of age or older of $60,000.
The City has granted an additional exemption of 20% of the market value of residence homesteads with a minimum exemption
of $5,000.
See Table 1 for a listing of the amounts of the exemptions described above.
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 not collect the additional one-half cent sales tax for reduction of ad valorem taxes.
TAx ABATEMENT POLICY ... The City does not have a tax abatement policy.
TAx INCREMENT FINANCE ZONES.. The City has established the Tax Increment Financing Reinvestment Zone Number One,
comprised of approximately 175 acres in the northeast area of the City. The tax increment base for the Reinvestment Zone
Number One established on January 1, 1996 was $7,647,325. As of September 30, 2005, the Reinvestment Zone Number One
Taxable Assessed Value is $207,460,497. The project for which the Zone was created was completed on October 31, 1997.
The City has additionally established the Tax Increment Financing Reinvestment Zone Number Two, comprised of approximately
121.817 acres in the northeast area of the City. The tax increment base for the Reinvestment Zone Number Two established on
January 1, 1998 was $744,866. As of September 30, 2005, the Reinvestment Zone Number Two Taxable Assessed Value is
$289,483,130. As of September 30, 2004, approximately $100% of permanent improvements have been made to Reinvestment Zone
Number Two,
The Gaylord Opryland Hotel ("Gaylord") has entered into litigation with the Tarrant Appraisal District concerning the appraised
value of their property located in Tax Increment Reinvestment Zone No. 2. For tax year 2004, the appraisal district has assessed the
value of the Gaylord property at $266,892,918. Gaylord disputes this valuation and asserts that $130,892,918 should be the correct
valuation number. Gaylord has made a partial payment of their 2004 tax liability based on a $168,550,996 appraised market value.
At this time, there is no resolution to the lawsuit and the case is scheduled for trial in March, 2006. The 2005 Taxable value under
protest is $289,483,130. The final resolution of the pending litigations will determine the taxable value of the property and the
amount of the available TIF Increment in that reinvestment zone.
12
TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT
2005,'06 Market Valuation Established by Tarrant Appraisal District (as of August 23, 2005)
Less Exemptions/Reductions at 100% Market Value:
Residence Homestead Exemptions
Over 65 Years of Age
Disabled Exemptions
Veterans Exemptions
Pollution Control Exemptions
Solar/Wind Power Exemptions
Freeport Exemptions
Open -Space Land Use Reductions
Prorated Absolutes
Nominal Value Reductions
2005/06 Taxable Assessed Valuation
2005/06 Incremental Taxable Assessed Value of Real Property within Reinvestment Zone Number One
$ 374,927,600
62,593,082
1,036,500
1,153,600
94,952
9.774
2005/06 Incremental Taxable Assessed Value of Real Property within Reinvestment Zone Number Two
2005/06 Taxable Assessed Valuation available for General Fund Obligations and Debt of City
City Funded Debt Payable from Ad Valorem Taxes (2)
General Obligation Bonds (as of 9-30-05)
Certificates of Obligation (as of 9-30-05)
Equipment Acquisition Notes (as of 9-30-05)
The Certificates
Funded Debt Payable from Ad Valorem Taxes
Less Self -Supporting Debt:
Combination Tax and Tax Increment Reinvestment Zone
Revenue Certificates of Obligation (as of 9-30-05) (a)
Lake Enterprise Notes and Certificates of Obligation, and Refunding Bonds (as of 9-30-05) to
Hotel Occupancy Tax System
Lake Park Certificates of Obligation
Net Funded Debt Payable From Ad Valorem Taxes
$ 6,414,552,194
495,069,833
52,453,731
38,183
14,853 987,392,108
$ 71,775,000
71,770,000
1,140,000
2,380,000
Interest and Sinking Fund as of September 30, 2005
Ratio Total Funded Debt to Taxable Assessed Valuation ................................................. .
$ 5,427,160,086
(199,923,510)
(288,738,244) ...
$ 4,938,498,332
$ 147,065,000
53,490,000
5,129,504
320,000 �s>
21060,000 (b)
$ 88,445,496
$ 2,162,544
2.71%
2006 Estimated Population - 47,500
Per Capita Taxable Assessed Valuation - $114,256
Per Capita Total Funded Debt - $3,096
(1) The Gaylord Opryland Hotel ("Gaylord") has entered into litigation with the Tarrant Appraisal District concerning the appraised value of
their property located in Tax Increment Reinvestment Zone No, 2. For tax year 2004, the appraisal district has assessed the value of the
Gaylord property at $266,892,918. Gaylord disputes this valuation and asserts that $130,892,918 should be the correct valuation number.
Gaylord has made a partial payment of their 2004 tax liability based on a $168,550,996 appraised market value. At this time, there is no
resolution to the lawsuit and the case is scheduled for trial in March, 2006. The 2005 Taxable value under protest is $289,483,130. The
final resolution of the pending litigations will determine the taxable value of the property and the amount of the available TIF Increment in
that reinvestment zone.
(2) This statement of indebtedness does not include currently outstanding $24,447,824 Waterworks and Sewer System (the "System") revenue bonds,
as these bonds are payable solely from the net revenues of the System, as defined in the ordinances authorizing such bonds.
(3) The self-supporting amount is a projection of debt by the City based on actual historical payments from the Tax Increment Reinvestment Zone
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 fixture, the difference will have to be paid
with ad valorem taxes.
(4) Certificate and Note debt in the amounts shown for which repayment is provided from revenues of the Lake Enterprise Fund. The amount of self-
supporting debt is based on the percentages of revenue support as shown in Table 10. It is the City's current policy to provide these payments
from Fund revenues; this policy is subject to change in the future. In the event the payments are not made from Fund revenues, the City will be
required to levy an ad valorem tax in an amount sufficient to make such payments.
(5) Includes a portion of the Certificates.
(6) Includes a portion of the Certificates. Debt service on this portion of the Certificates will be paid from capitalized interest through July 2007.
The City expects revenues from the Lake Parks to be sufficient to pay debt service on the Certificates from that point forward. However, the City
cannot guarantee that revenues from the Lake Parks will be sufficient at that time to pay debt service on the Certificates. If revenues are
insufficient, the City is obligated to pay the debt service on the Certificates from ad valorem tax revenue.
13
FABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY
Cateeo
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
Real, Mobile Homes
Tangible Personal, Business
Tangible Personal, Commercial
Tangible Personal, Industrial
Tangible Personal, Mobile Homes
Tangible Personal, Other
Real Property, Inventory
Total Appraised Value Before Exemptions
Adjustments
Less: Total Exemption/Reductions
Taxable Assessed Value
Taxable Appraised Value for
Fiscal Year Ended September 30,
2003
Taxable Appraised
Value for Fiscal Year Ended September 30,
% of
2006
°% of
2005
Total
2004
Total
$ 1,848,342,618
31.72%
%of
30.17%
%of
4.34%
%of
Category
Amount
Total
Amount
Total
Amount
Total
Real, Residential, Single -Family
$ 2,131,544,375
33.23%
$ 2,052,562,907
32.16%
$ 1,964,374,887
33.09%
Real, Residential, Multi -Family
307,506,466
4.79%
280,451,216
4.39%
287,029,406
4.83%
Real, Vacant Lots Tracts
109,809,741
1.71%
105,098,629
1.65%
106,298,853
1.79%
Real, Acreage (Land Only)
105,828,747
1.65%
115,957,997
1.82%
126,583,447
2.13%
Real, Farm and Ranch Improvements
2,568,367
0.04%
2,417,897
0.04%
2,382,927
0.04%
Real, Commercial
1,545,597,134
24.10%
1,439,927,013
22.56%
1,254,791,876
21.14%
Real, Industrial
37,814,770
0.59%
40,705,402
0.64%
14,652,926
0.25%
Real and Tangible Personal, Utilities
184,618,607
2.88%
237,407,049
3.72%
166,164,616
2.80%
Real, Mobile Homes
7,962,774
0.12%
7,817,281
0.12%
8,176,799
0.14%
Tangible Personal, Business
-
0.00%
-
0.00%
-
0.00%
Tangible Personal, Commercial
1,799,486,983
28.05%
1,939,745,844
30.39%
1,849,545,899
3115%
Tangible Personal, Industrial
164,504,531
2.56%
143,245,651
2.24%
136,629,168
2.30%
Tangible Personal, Mobile Homes
-
0.00%
-
0.00%
-
0.00%
Tangible Personal, Other
335,159
0.01%
165,093
0.00%
1,000,000
0.02%
Real Property, Inventory
16,974,540
0.26%
17,213,150
0.27%
19,338,550
0.33%
Total Appraised Value Before Exemptions
$ 6,414,552,194
100.00°%
$ 6,382,715,129
100.00%
$ 5,936,969,354
100.00%
Adjustments
(52,543,460)
Less: Total Exemption/Reductions
(987,392,108)
(1,029,781,696)
(1,004,318,299)
Taxable Assessed Value
$ 5,427,160,086
$ 5,352,933,433
$ 4,880,107,595
Cateeo
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
Real, Mobile Homes
Tangible Personal, Business
Tangible Personal, Commercial
Tangible Personal, Industrial
Tangible Personal, Mobile Homes
Tangible Personal, Other
Real Property, Inventory
Total Appraised Value Before Exemptions
Adjustments
Less: Total Exemption/Reductions
Taxable Assessed Value
Taxable Appraised Value for
Fiscal Year Ended September 30,
2003
2002
% of
°% of
Amount
Total
Amount
Total
$ 1,848,342,618
31.72%
$ 1,673,214,512
30.17%
252,912,480
4.34%
200,728,832
3.62%
100,697,189
1.73%
104,297,996
1.88%
138,891,577
2.38°%
171,706,596
3.10°%
2,353,699
0.04%
2,160,035
0.04°%
1,198,547,815
20.57%
1,086,095,366
19.59%
14,825,922
0.25%
14,530,371
0.26%
147,113,035
2.52%
102,859,092
1.85%
8,173,982
0.14°%
9,059,623
0,16°%
-
0.00%
-
0.00%
1,966,523,825
33.75%
2,126,886,729
38.35%
138,115,671
2.37%
46,334,087
0.84%
-
0.00%
-
0.00%
-
0.00%
111,976
0.00°%
10,141,975
0.17°%
7,290,582
0.13%
$ 5,826,639,788
100.00°%
$ 5,545,275,797
100.00%
(52,070,988)
(86,019,171)
(1,008,207,220)
(685,393,608)
$ 4,766,361,580
$ 4,773,863,018
NOTE: Valuations shown are certified taxable assessed values reported by the Tarrant Appraisal District 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.
14
TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY
(1) Source: The City of Grapevine.
(2) Source: Tarrant Appraisal District.
(3) Projected, includes the Certificates.
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY
Fiscal
% Total
Collections
Collections
98.39%
Ratio
98.60%
Fiscal
99.00%
Ended
Taxable
Tax Debt
Tax Debt
Funded
Year
Rate
Taxable
Assessed
Outstanding
to Taxable
Debt
Ended
Estimated
Assessed
Valuation
at End
Assessed
Per
9/30
Population (1)
Valuation (2)
Per Capita
of Year
Valuation
Capita
2002
45,500
$ 4,773,863,018
$ 104,920
$ 157,940,000
3.31%
$ 3,471
2003
46,400
4,766,361,580
102,723
157,645,000
3.31%
3,398
2004
46,684
4,880,107,595
104,535
148,300,000
3.04%
3,177
2005
47,036
5,352,933,433
113,805
144,685,000
2.70%
3,076
2006
47,500
5,427,160,086
114,256
138,610,000 (3)
2.55%
2,918 (3)
(1) Source: The City of Grapevine.
(2) Source: Tarrant Appraisal District.
(3) Projected, includes the Certificates.
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY
Fiscal
% Total
Collections
Collections
98.39%
Year
98.60%
Distribution
99.00%
Ended
Tax
General
Interest and
Collection
9/30
Rate
Fund
Sinking Fund
Tax Levy
2002
$ 0.36600
$ 0.135924
$ 0.230076
$ 17,431,826
2003
0.36600
0.148900
0.217100
17,662,726
2004
0.36600
0.123700
0.242300
18,043,645
2005
0.36350
0.141560
0.221940
19,246,410
2006
0.36250
0.128532
0.233968
19,673,455
(1) Collections for part year only, through September 30, 2005.
TABLE 5 - TEN LARGEST TAXPAYERS (I)
Name of Taxpayer
American Airlines Inc.
Grapevine Mills Ltd. Partnership
Delta Airlines/Atlantic Southeast Airlines
V erizon/GTE
Gaylord Texan Resort & Conv. Ctr.
CAE Simuflite
General Electric Capital Corp
Quest Communications Corp.
Oncor Electric Delivery Co.
United Parcel Services Co.
% Current
% Total
Collections
Collections
98.39%
99.20%
98.60%
99.40%
99.00%
99.70%
97.62% ti)
97.98%
In Process of
Collection
(1) Top Ten Taxpayers for Tax Year 2005 not yet available.
GENERAL OBLIGATION DEBT LIMITATION ... No general obligation debt limitation is imposed on the City under current State
law or the City's Home Rule Charter (see "The Certificates — Tax Rate Limitation").
15
2004/05
% of Total
Taxable
Taxable
Assessed
Assessed
Nature of Property
Valuation
Valuation
Commercial Airline
$ 313,758,237
5.78%
Regional Shopping Mall
185,084,296
3.41%
Commercial Airline
151,545,340
2.79%
Telecommunication
149,230,493
2.75%
Hotel
113,083,186
2.08%
Simuflite Training School
88,525,738
1.63%
Financial Service Corp
57,844,570
1.07%
Telecommunication
42,721,429
0.79%
Electric Service
40,395,043
0.74%
Parcel Service
40,357,279
0.74%
$ 1,182,545,611
21.79%
(1) Top Ten Taxpayers for Tax Year 2005 not yet available.
GENERAL OBLIGATION DEBT LIMITATION ... No general obligation debt limitation is imposed on the City under current State
law or the City's Home Rule Charter (see "The Certificates — Tax Rate Limitation").
15
TABLE 6 - TAX ADEQUACY (1)
2006 Principal and Interest Requirements $ 10,439,325
$0.1943 Tax Rate at 99.00% Collection Produces $ 10,439,522
Average Annual Principal and Interest Requirements, 2006 - 2027 $ 5,123,136
$0.0954 Tax Rate at 99.00% Collection Produces $ 5,125,736
Maximum Principal and Interest Requirements, 2007 $ 10,643,128
$0.1981 Tax Rate at 99.00% Collection Produces $ 10,643,692
(1) Includes the Certificates, less self-supporting debt
TABLE 7 - ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities
on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures.
This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from information
contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating
to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely
upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional 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.
Total Direct and Overlapping Funded Debt $ 264,247,695
Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation ............................................... 4.94%
Per Capita Overlapping Funded Debt................................................................................ $ 5,563.11
(1) Includes the Certificates, less self-supporting debt.
16
2004/05
City's
Taxable
2004/05
Total
Estimated
Overlapping
Assessed
Tax
Funded
%
Funded Debt
Taxing Jurisdiction
Value
Rate
Debt
Applicable
9/1/2005
City of Grapevine
$ 5,352,933,433
$ 0.3635
$ 88,445,496 ...
100.00%
$ 88,445,496
Carroll Independent School District
4,411,336,158
1.9030
144,766,991
5.38%
7,788,464
Coppell Independent School District
5,751,081,057
1.7350
111,023,754
0.48%
532,914
Dallas County
129,617,491,048
0.2039
176,073,073
0.01%
17,607
Dallas County Community College District
134,404,944,574
0.0778
106,935,000
0,01%
10,694
Dallas County Hospital District
129,617,491,048
0.2540
-
0.01%
-
Grapevine-Colleyville Independent School District
13,159,000,737
1.7010
230,090,813
67.47° 0
155,242,272
Tarrant County
111,228,762,367
0.2725
167,040,000
5.24%
8,752,896
Tarrant County Hospital District
111,228,762,367
0.2353
-
5.24%
0
Tarrant County College District
111,228,762,367
0.1394
65,980,000
5.24%
3,457,352
Total Direct and Overlapping Funded Debt $ 264,247,695
Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation ............................................... 4.94%
Per Capita Overlapping Funded Debt................................................................................ $ 5,563.11
(1) Includes the Certificates, less self-supporting debt.
16
DEBT INFORMATION
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17
TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION
Tax Supported Debt Service Requirements, Fiscal Year Ending 9/30/2006 ............................... $ 11,224,316 p)
Interest and Sinking Fund Balance as of 9/30/2005 ................................. $ 1,510,392
Interest and Sinking Fund Tax Levy ........................................... 10,849,407
Penalty and Interest.....................................................I.1 110,000
Budgeted Transfers........................................................... 264,849 (z)
Estimated Investment Income .................................................. 80,000 12,814,648
Estimated Balance, 9/30/2006.......................................................... . ....... $ 1,590,332
(1) Excludes TIF self-supporting debt service.
(2) Includes Golf Course user fees.
TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT (1)(2)
Tax Increment Reinvestment Zone
Beginning Fund Balance, 9-30-05....................................................................... $ 13,955,989
Net Tax Increment Reinvestment Zone Revenue Available for Debt Service ................................ 9,233,988 (3>
Requirements for Tax Increment Reinvestment Zone Obligations ........................................ 4,156,473
Projected Fund Balance, 9-30-06................................................................. $ 19,033,505
Percentage of Tax Increment Reinvestment Zone Revenue Debt Self -Supporting ............................ 100.00%
Lake Enterprise Fund
Revenue Available for Debt Service from Lake Enterprise Fund, Fiscal Year Ended 9-30-05 ................. $ 698,872
Less: Revenue Bond Requirements, 2006 Fiscal Year ................................................. -
Balance Available for Other Purposes............................................................ $ 698,872
System General Obligation Bond Requirements, 2006 Fiscal Year ....................................... 595,746
Balance.................................................................................... $ 103,126
Percentage of Lake Enterprise Certificates, Self -Supporting .......................................... 100.00%
Hotel Occuoancv Tax Fund
Revenue Available for Debt Service from Hotel Occupancy Tax Fund, Fiscal Year Ended 9-30-05 .............. $ 1,192,956
Less: Revenue Bond Requirements, 2006 Fiscal Year ................................................. -
Balance Available for Other Purposes............................................................ $ 1,192,956
System General Obligation Bond Requirements, 2006 Fiscal Year ....................................... 9,677
Balance.................................................................................... $ 1,183,279
Percentage of Hotel Occupancy Tax Fund Certificates, Self -Supporting ................................... 100.00%
(1) Unaudited.
(2) Lake Parks Enterprise fund debt service will be paid from capitalized interest through July 2007. The City expects revenues
from the Lake Parks to be sufficient to pay debt service on the Certificates from that point forward. However, the City cannot
guarantee that revenues from the Lake Parks will be sufficient at that time to pay debt service on the Certificates. If revenues are
insufficient, the City is obligated to pay the debt service on the Certificates from ad valorem tax revenue.
(3) The Gaylord Opryland Hotel ("Gaylord") has entered into litigation with the Tarrant Appraisal District concerning the
appraised value of their property located in Tax Increment Reinvestment Zone No. 2. For tax year 2004, the appraisal district
has assessed the value of the Gaylord property at $266,892,918. Gaylord disputes this valuation and asserts that $130,892,918
should be the correct valuation number. Gaylord has made a partial payment of their 2004 tax liability based on a $168,550,996
appraised market value. At this time, there is no resolution to the lawsuit and the case is scheduled for trial in March, 2006. The
2005 Taxable value under protest is $289,483,130. The final resolution of the pending litigations will determine the taxable
value of the property and the amount of the available TIF Increment in that reinvestment zone.
18
TABLE 11 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
Amount
Date Amount Previously Unissued
Purpose Authorized Authorized Issued Balance
Street Improvements 12/5/1998 $ 30,245,000 $ 24,997,314 $ 5,247,686
ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT ... The City anticipates the issuance of the remaining balance of
voted general obligation debt in the first quarter of Fiscal Year 2006.
TABLE 12 - OTHER OBLIGATIONS
The City has no unfunded debt outstanding as of September 30, 2005.
PENSION FUND ... The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement
System ("TMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the
amounts accrued for pension expense. (For more detailed information concerning the retirement plan, see Appendix B,
"Excerpts from the City's Annual Financial Report".)
19
FINANCIAL INFORMATION
TABLE 13 - CHANGES IN NET ASSETS (1)
Revenues:
Program Revenues
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
General Revenues
Property Taxes
Hotel Occupancy Taxes
Sales Taxes
Mixed Beverage Taxes
Franchise Fees
Investment Earnings
Miscellaneous
Gain (Loss) on Sale/Retirement
of Fixed Assets
Total Revenues
Expenses:
General Government
Public Safety
Culture and Recreation
Public Works
Interest on Long -Term Debt
Total Expenses
Increase in Net Assets
before Transfers
Transfers
Changes in Net Assets
Net Assets - October 1
Net Assets - September 30
Fiscal Year Ended September 30,
2004 2003
$ 13,266,501 $ 13,518,121
1,813,067 1,893,118
597,366 1,108,954
23,599,775
22,768,284
4,931,201
3,380,659
17,975,926
16,040,397
685,801
578,218
5,210,589
4,944,789
619,869
1,106,609
28,788
155,158
- (58,080)
$ 68,728,883 $ 65,436,227
$ 12,382,413 $ 13,062,473
17,597,695
16,366,353
16, 090,083
14,069,760
10,363,172
14,342,030
7,682,256
7,603,547
$ 64,115, 619 $ 65,444,163
$ 4,613,264 $ (7,936)
$ 4,613,264 $ (7,936)
27, 856,441 27, 864,377
$ 32,469,705 $ 27,856,441
(1) In fiscal year ended September 30, 2003, the City implemented Government Accounting Standards Board Statement No. 34
("GASB 34").
20
TABLE 13A - GENERAL FUND REVENUES AND EXPENDITURE HISTORY
Excess (Deficiency) of Revenues
Over Expenditures
Other Financing Sources
Budgeted Transfers In
Budgeted Transfers Out
Total Transfers
$ (442,629) $ 737,469 $ (335,427) $ 821,998 $ 2,938,736
$ - $ 304,000 $ 300,000 $ 400,000 $ -
(1,101,261) (1,068,765) (1,753,450) (1,295,979) (2,098,598)
$ (1,101,261) $ (764,765) $ (1,453,450) $ (895,979) $ (2,098,598)
Net Increase (Decrease) $ (1,543,890) $ (27,296) $ (1,788,877) $ (73,981) $ 840,138
Other Miscellaneous Adjustments - - -
Residual Equity Transfer - - 262,087 - 1,172
Beginning Fund Balance 6,104,579 6,131,875 7,658,665 7,732,646 6,891,336
Ending Fund Balance $ 4,560,689 $ 6,104,579 $ 6,131,875 $ 7,658,665 $ 7,732,646
21
Fiscal Year Ended September 30,
Revenues
2004
2003
2002
2001
2000
Taxes
$ 29,941,926
$ 28,715,417
$ 27,165,580
$ 29,239,672
$ 27,051,303
Licenses and Permits
1,263,663
1,482,165
1,536,786
1,146,428
1,494,428
Intergovernmental
112,859
129,428
217,614
4,381,910
182,863
Charges for Services
5,593,257
5,784,270
5,009,819
2,984,179
3,003,353
Fines and Forfeitures
1,961,990
2,046,991
2,101,526
2,149,638
2,360,028
Interest and Miscellaneous
902,365
1,119,469
809,259
876,507
776,140
Total Revenues
$ 39,776,060
$ 39,277,740
$ 36,840,584
$ 40,778,334
$ 34,868,115
Expenditures
General Government
$ 12,897,174
$ 12,168,352
$ 11,686,622
$ 10,510,527
$ 5,683,237
Public Safety
16,167,628
15,846,568
15,532,602
17,640,884
15,404,767
Culture and Recreation
5,991,741
5,673,980
5,184,010
5,737,648
5,183,727
Capital Outlay
60,881
80,649
-
-
-
Public Works
5,101,265
4,770,722
4,772,777
6,067,277
5,657,648
Total Expenditures
$ 40,218,689
$ 38,540,271
$ 37,176,011
$ 39,956,336
$ 31,929,379
Excess (Deficiency) of Revenues
Over Expenditures
Other Financing Sources
Budgeted Transfers In
Budgeted Transfers Out
Total Transfers
$ (442,629) $ 737,469 $ (335,427) $ 821,998 $ 2,938,736
$ - $ 304,000 $ 300,000 $ 400,000 $ -
(1,101,261) (1,068,765) (1,753,450) (1,295,979) (2,098,598)
$ (1,101,261) $ (764,765) $ (1,453,450) $ (895,979) $ (2,098,598)
Net Increase (Decrease) $ (1,543,890) $ (27,296) $ (1,788,877) $ (73,981) $ 840,138
Other Miscellaneous Adjustments - - -
Residual Equity Transfer - - 262,087 - 1,172
Beginning Fund Balance 6,104,579 6,131,875 7,658,665 7,732,646 6,891,336
Ending Fund Balance $ 4,560,689 $ 6,104,579 $ 6,131,875 $ 7,658,665 $ 7,732,646
21
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 Bonds. Collections and enforcements are effected through the offices of the Comptroller of Public
Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly.
Fiscal
Year
% of
Equivalent of
Ended
Total
Ad Valorem
Ad Valorem
Per
9/30
Collected
Tax Levy
Tax Rate
Capita
2001
16,048,266
98.25%
$ 0.3670
$ 362
2002
14,939,771
85.70%
0.3129
328
2003
16,040,397
90.81%
0.3365
346
2004
17,975,926
99.62%
0.3684
385
2005 (�)
15,233,045
79.13%
0.2846
324
(1) Earned through July 31, 2005.
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 and expendable trust 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 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 balance sheet. Fund equity is segregated
into contributed capital and retained earnings components. Proprietary fund -type operating statements present increases (revenues)
and decreases (expenses) in net total assets.
The modified accrual basis of accounting is used by all governmental funds types, expendable trust funds and agency funds. 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 funds types. Under this method, revenue is recorded when earned and
expenses are recorded at the time liabilities are incurred.
The City reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meeting
both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are
received by the government before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualified
expenditures. hi subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the
resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized.
Fund Balances ... It is the City's policy regarding the General Fund and Enterprise Funds that working capital resources should be
maintained at a minimum of 10% of the Fund's operating expenditure budget. The City maintains its various debt service funds in
accordance with the covenants of the Ordinances.
Use of Bond Proceeds... The City's policy is to use bond proceeds for capital expenditures only. Such revenues are never to be used
to fund normal City operations.
22
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.
INVESTMENTS
The City invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the
City Council. Both state law and the City's investment policies are subject to change.
LEGAL INVESTMENTS. Under Texas law, the City is authorized to invest in (1) obligations of the United States or its agencies
and instrumentalities, including letters of credit; (2) direct obligations of the State of Texas or its agencies and instrumentalities;
(3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying
security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and
interest of which is guaranteed or insured by or backed by the full faith and credit of, the State of Texas or the United States or
their respective agencies and instrumentalities; (5) obligations of states, agencies, counties, cities and other political subdivisions
of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6)
bonds issued, assumed or guaranteed by the State of Israel; (7) effective September 1, 2005, certificates of deposit (i) issued by a
depository institution that has its main office or a branch office in the State of Texas, that are guaranteed or insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by
Bonds described in clauses (1) through (6) or in any other manner and amount provided by law for County deposits, or (ii)
where; (a) the funds are invested by the County through a depository institution that has a main office or branch office in this
state and that is selected by the County; (b) the depository institution selected by the County arranges for the deposit of funds in
one or more federally insured depository institutions, wherever located; (c) the certificates of deposit are insured by the United
States or an instrumentality of the United States; (d) the depository institution acts as a custodian for the County with respect to
the certificates of deposit; and (e) at the same time that the certificates of deposit are issued, the depository institution selected by
the County receives deposits from customers of other federally insured depository institutions, wherever located, that is equal to
or greater than the funds invested by the County through the depository institution selected under clause (ii)(a) above„ (8) fully
collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause
(1), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas,
(9) securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the
program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are
described in clauses (1) through (6) 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 (6) above, clauses (11) through (13) below, or an authorized investment pool; (ii) securities held
as collateral under a loan are pledged to the City, held in the City's name and deposited at the time the investment is made with
the City or a third party designated by the City; (iii) a loan made under the program is placed through either a primary
government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend
securities has a term of one year or less, (10) certain bankers' acceptances with the remaining term of 270 days or less, if the
short-term obligations of the accepting bank or its parent are rated at least "A-1" or "P-1" or the equivalent by at least one
nationally recognized credit rating agency, (11) commercial paper with a stated maturity of 270 days or less that is rated at least
"A-1" or "P-1" or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized
credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (12) no -loan
money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar
weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net
asset value of $1 for each share and (13) no-load mutual funds registered with the Securities and Exchange Commission that
have an average weighted maturity of less than two years, invest exclusively in obligations described in this paragraph, and are
continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than "AAA"
or its equivalent. In addition, bond proceeds may be invested in guaranteed investment contracts that have a defined termination
date and are secured by obligations, including letters of credit, of the United States or its agencies and instrumentalities in an
amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations
described in the next succeeding paragraph.
The City may 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 806-1 et. seq.) or with the State Security Board to provide for the investment and management of its public
23
funds or other funds under its control for a term of up to two years but the City retains ultimate responsibility as fiduciary of its
assets. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on
the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations
whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest;
(3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage
obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.
INVESTMENT POLICIES ... Under Texas law, the City is required to invest its funds pursuant to 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 Iist of authorized investments for City funds, maximum allowable stated
maturity of any individual investment and the maximum average dollar -weighted maturity allowed for pooled fund groups. All City
funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds'
investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2)
preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield.
Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of
prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for
investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment
officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers
jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending
value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the
reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each
individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment
strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council.
ADDITIONAL PROVISIONS ... Under Texas law the City is additionally required to: (1) annually review its adopted policies and
strategies; (2) adopt an order 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 said order or resolution, (3) require any investment officers'
with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a
statement with the Texas Ethics Commission and the City Council; (4) require the registered principal of firms seeking to sell securities
to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been
implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (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 Treasurer, Chief Financial Officer and investment officers; (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
repurchase agreement; (8) restrict the investment in 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 services, and to invest no portion of bond proceeds,
reserves and funds held for debt service in mutual funds; (9) require local government investment pools to conform to the new
disclosure, rating, net asset value, yield calculation, and advisory board requirements; and (10) at least annually review, revise, and
adopt a list of qualified brokers that are authorized to engage in investment transactions with the City.
TABLE 15 - CURRENT INVESTMENTS
As of September 30, 2005, the City's investable funds were invested in the categories listed above. As of such date, 41% of the
City's portfolio will mature within six months. The market value of the investment portfolio was approximately 99.7% of its
purchase price.
Book Market
Description Percent
Value
Value
Government Securities 45.77%
$ 29,053,162
$ 28,884,841
TexPool/Logic 54.23%
34,419,363
34,414,191
100.00%
$ 63,472,525
$ 63,299,032
24
TAX MATTERS
TAX EXEMPTION
In the opinion of Vinson & Elkins L.L.P., Bond Counsel, (i) interest on Bonds is excludable from gross income for federal
income tax purposes under existing and (ii) interest on the Bonds is not subject to the alternative minimum tax on individuals and
corporations, except as described below in the discussion regarding the adjusted current earnings adjustment for corporations.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes a number of requirements that must be satisfied for
interest on state or local Bonds, such as the Bonds, 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 Issuer 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 exclusion from gross income of interest on the Bonds for federal income tax purposes and, in addition,
will rely on representations by the Issuer, the Issuer's Financial Advisor and the Underwriter with respect to matters solely
within the knowledge of the Issuer, the Issuer's Financial Advisor and the Underwriters, respectively, which Bond Counsel has
not independently verified. If the Issuer should fail to comply with the covenants in the Ordinance or if the foregoing
representations should be determined to be inaccurate or incomplete, interest on the Bonds could become taxable from the date
of delivery of the Bonds, regardless of the date on which the event causing such taxability occurs.
The Code also imposes a 20% alternative minimum tax on the "alternative minimum taxable income" of a corporation if the
amount of such alternative minimum tax is greater than the amount of the corporation's regular income tax. Generally, the
alternative minimum taxable income of a corporation (other than any S corporation, regulated investment company, REIT,
REMIC or FASIT), includes 75% of the amount by which its "adjusted current earnings" exceeds its other "alternative minimum
taxable income." Because interest on tax exempt Bonds, such as the Bonds, is included in a corporation's "adjusted current
earnings," ownership of the Bonds could subject a corporation to alternative minimum tax consequences.
Except as stated above, Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting from
the receipt or accrual of interest on, or acquisition, ownership or disposition of, the Bonds.
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 Internal Revenue Service (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 Bonds is includable in gross income for federal income tax purposes. No assurance can be given whether or not the
Service will commence an audit of the Bonds. If an audit is commenced, in accordance with its current published procedures the
Service is likely to treat the Issuer as the taxpayer and the Owners may not have a right to participate in such audit. Public
awareness of any future audit of the Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the
audit regardless of the ultimate outcome of the audit.
ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS
Collateral Tax Consequences ... Prospective purchasers of the Bonds should be aware that the ownership of tax exempt Bonds
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 Bonds, taxpayers owning an interest in a FASIT that holds tax-exempt Bonds and individuals otherwise qualifying for
the earned income credit. In 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
Bonds. These categories of prospective purchasers should consult their own tax advisors as to the applicability of these
consequences. Prospective purchasers of the Bonds 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 Bonds, received or accrued during the year.
Tax Accounting Treatment of Original Issue Premium ... The issue price of all or a portion of the Bonds may exceed the
stated redemption price payable at maturity of such Bonds. Such Bonds (the "Premium Bonds") 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
25
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 Bond.
The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of Premium Bonds
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 Bonds 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 Bonds.
Tax Accounting Treatment of Original Issue Discount Bonds ... The issue price of all or a portion of the Bonds may be less
than the stated redemption price payable at maturity of such Bonds (the "Original Issue Discount Bonds"). 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 Bonds. 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 discussion regarding interest on the Bonds under the
caption " Collateral Tax Consequences " generally applies, 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 (a) the Underwriter has purchased the Bonds for contemporaneous sale to the public and
(b) all of the Original Issue Discount Bonds have been initially offered, and a substantial amount of each maturity thereof has
been sold, to the general public in arm's-length transactions for a price (and with no other consideration being included) not more
than the initial offering prices thereof stated on the cover page of this Official Statement. Neither the Issuer nor Bond Counsel
has made any investigation or offers any comfort that the Original Issue Discount Bonds will be offered and sold in accordance
with such assumptions.
Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity
thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual
anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an
initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by
such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is
equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield
to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Bond.
The federal income tax consequences of the purchase, ownership, and redemption, sale or other disposition of Original Issue
Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules
which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors
with respect to the determination for federal, state, and local income tax purposes of interest accrued upon redemption, sale or
other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences
of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds.
26
OTHER INFORMATION
RATINGS
The presently outstanding tax -supported debt of the City is rated "AI" by Moody's and "AA-" by S&P. The City also has issues
outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance
companies. Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the
significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective
views of such 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 litigation against the City that would have a material
adverse financial impact upon the City or its operations.
REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE
The sale of the Certificates has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the
exemption provided thereunder by Section 3(a)(2); and the Certificates have not been qualified under the Securities Act of Texas
in reliance upon various exemptions contained therein; nor have the Certificates been qualified under the securities acts of any
jurisdiction. The City assumes no responsibility for qualification of the Certificates under the securities laws of any jurisdiction
in which the Certificates may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of
responsibility for qualification for sale or other disposition of the Certificates shall not be construed as an interpretation of any
kind with regard to the availability of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Certificates
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political
subdivisions or public agencies of the State of Texas. In addition, various provisions of the Texas Finance Code provide that,
subject to a prudence standard, the Certificates are legal investments for state banks, savings banks, trust companies with at least
$1 million of capital, and savings and loan associations.
General Considerations. For political subdivisions in Texas that have adopted investment policies and guidelines in accordance
with the Public Funds Investment Act (Government Code, Chapter 2256), the Certificates may have to be assigned a rating of
"A" or its equivalent as to investment quality by a national rating agency before such obligations are eligible investments for
sinking funds and other public funds. The City has made no investigation of other laws, rules, regulations or investment criteria
which might apply to such institutions or entities or which might limit the suitability of the Certificates for any of the foregoing
purposes or limit the authority of such institutions or entities to purchase or invest in the Certificates for such purposes. The City
has made no review of laws in other states to determine whether the Certificates are legal investments for various institutions in
those states.
LEGAL MATTERS
The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Certificates,
including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Certificate and to the
effect that the Certificates are valid and legally binding obligations of the City, and based upon examination of such transcript of
proceedings, the approving legal opinion of Bond Counsel, to like effect and to the effect that the interest on the Certificates will
be excludable from gross income for federal income tax purposes under existing law and the Certificates are not private activity
bonds. See "TAX MATTERS" herein for a description of the opinion of Bond Counsel, including a discussion of alternative
minimum tax consequences for corporations. The customary closing papers, including a certificate to the effect that no litigation
of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates, or which would affect the
provision made for their payment or security, or in any manner questioning the validity of said Certificates will also be
furnished. Bond Counsel did not take part in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid
Form or 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 of Bond Counsel 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.
27
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from City records, audited financial statements and
other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein
will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made
subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete
statements of such provisions and reference is made to such documents for further information. Reference is made to original
documents in all respects.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the
Certificates. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the
Certificates. Under the agreement, the City will be obligated to provide certain updated financial information and operating data
annually, and timely notice of specified material events, to certain information vendors. This information will be available to
securities brokers and others who subscribe to receive the information from the vendors.
ANNUAL REPORTS ... The City will provide certain updated financial information and operating data to certain information
vendors annually. The information to be updated includes all quantitative financial information and operating data with respect
to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 15 and in
Appendix B. The City will update and provide this information within six months after the end of each fiscal year ending in or
after 2005. The City will provide the updated information to each nationally recognized municipal securities information
repository ("NRMSIR") and to any state information depository ("SID") that is designated by the State and approved by and
approved by the staff of the United States Securities and Exchange Commission (the "SEC").
The City may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the City
commissions an audit and it is completed by the required time. If audited financial statements are not available by the required
time, the City will provide unaudited financial information and operating data which is customarily prepared by the City by the
required time, and audited financial statements when and if such audited financial statements become available. Any such
financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other
accounting principles as the City may be required to employ from time to time pursuant to state law or regulation.
The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year,
unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change.
The Municipal Advisory Council of Texas ("MAC") has been designated by the State of Texas and approved by the SEC staff as
a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768-
2177, and its telephone number is 512(476-6947. The MAC has also received SEC approval to operate, and has begun to
operate, a "central post office" for information filings made by municipal issuers, such as the City. A municipal issuer may
submit its information filings with the central post office, which then transmits such information to the NRMSIRs and the
appropriate SID for filings. The central post office can be accessed and utilized at www.DisclosureUSEA.com
("DisclosureUSA"). The City may utilize DisclosureUSA for the filing of information relating to the Certificates.
MATERIAL EVENT NOTICES ... The City will also provide timely notices of certain events to certain information vendors. The
City will provide notice of any of the following events with respect to the Certificates, if such event is material to a decision to
purchase or sell Certificates: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled
draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events
affecting the tax-exempt status of the Certificates; (7) modifications to rights of holders of the Certificates; (8) bond calls; (9)
defeasances; (10) release, substitution, or sale of property securing repayment of the Certificates; and (11) rating changes. In
addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in
accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this
paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board ("MSRB").
AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID ... The City has agreed to provide the foregoing information only to
NRMSIRs and the SID. The information will be available to holders of Certificates only if the holders comply with the
procedures and pay the charges established by such information vendors or obtain the information through securities brokers who
do so.
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.
28
The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i)
the agreement, as amended, would have permitted an underwriter to purchase or sell Certificates in the offering described herein
in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment,
as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the
outstanding Certificates consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized
bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the
Certificates. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or
repeals the applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of
the SEC Rule 15c2-12 are invalid, but only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Certificates in the primary offering of the Certificates. If the City so amends the
agreement, it has agreed to include with the next financial information and operating data provided in accordance with its
agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of
the impact of any change in the type of financial information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS ... The City has compiled with all continuing disclosure agreements made by it in
accordance with SEC Rule 15c2-12.
INITIAL PURCHASER OF THE CERTIFICATES
After requesting competitive bids for the Certificates, the City accepted the bid of (the "Initial
Purchaser of the Certificates") to purchase the Certificates at the interest rates shown on the cover page of the Official Statement
at a price of % of par plus a cash premium (if any) of $ . The Initial Purchaser of the Certificates can give
no assurance that any trading market will be developed for the Certificates after their sale by the City to the Initial Purchaser of
the Certificates. The City has no control over the price at which the Certificates are subsequently sold and the initial yield at
which the Certificates will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser of
the Certificates.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Certificates. The
Financial Advisor's fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and
delivery of the Certificates. First Southwest Company may submit a bid for the Certificates, either independently or as a
member of a syndicate organized to submit a bid for the Certificates. First Southwest Company, in its capacity as Financial
Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the
information, covenants and representations contained in any of the legal documents with respect to the federal income tax status
of the Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies.
The Financial Advisor to the City has provided the following sentence for inclusion in this Official Statement, The Financial
Advisor has reviewed the information in this 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.
FORWARD-LOOKING STATEMENTS DISCLAIMER
The statements contained in this 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 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 Official Statement will prove to be accurate.
29
CERTIFICATION OF THE OFFICIAL STATEMENT
At the time of payment for and delivery of the Certificates, the City will furnish a certificate, executed by proper officers, acting
in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or
pertaining to the City contained in its Official Statement, and any addenda, supplement or amendment thereto, on the date of
such Official Statement, on the date of sale of said Certificates and the acceptance of the best bid therefore, 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 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 Purchaser.
ATTEST:
LINDA HUFF
City Secretary
30
WILLIAM D. TATE
Mayor
City of Grapevine, Texas
APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
THIS PAGE LEFT BLANK INTENTIONALLY
THE 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 497 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
1970
7,023
U.S. Census
1993
31,902
1980
11,801
U.S. Census
1994
32,727
1981
15,245
Grapevine Community Profile
1995
33,211
1982
16,183
Grapevine Community Profile
1996
34,950
1983
18,121
Grapevine Community Profile
1997
36,000
1984
19,405
Grapevine Community Profile
1998
37,946
1985
22,002
Grapevine Community Profile
1999
39,190
1986
24,493
Grapevine Community Profile
2000
39,523
1987
25,853
Grapevine Community Profile
2001
44,390
1988
27,132
City Estimate
2002
45,524
1989
27,257
City Estimate
2003
46,188
1990
29,202
U.S. Census
2004
46,684
1991
30,300
City Estimate
2005
47,036
1992
31,400
City Estimate
2006
47,500
Source
City Estimate
City Estimate
City Estimate
City Estimate
City Estimate
City Estimate
City Estimate
U.S. Census
City Estimate
City Estimate
City Estimate
City Estimate
City Estimate
City Estimate
ECONOMICS ... The proximity of the DallasrFort Worth International Airport ("DFW") greatly influences both industrial and
residential growth of the City. DFW has been and is expected to continue to be an economic generator of employment, spin-off
businesses and tax base, all of which benefit the City and the surrounding area. Approximately 65% of the airport is within the city
limits of Grapevine.
Several large business operations owe their genesis to DFW including air cargo services, flight kitchens, rent/lease car operations and
SimuFlite Training International, a company which provides jet pilot flight training in advanced flight simulators. Seven of the ten
largest taxpayers of the City are directly related to DFW either by location or primary business sources.
DFW contains approximately 18,000 acres and directly employs some 33,000 personnel. These employees have skills ranging from
custodial level to highly trained jet aircraft pilots. A number of these people have purchased homes in the City and conduct their
daily business here.
DFW has approximately 19,400 parking spaces and is currently expanding parking facilities. Sales tax from parking fees generate
about $330,000 in annual income for the City and hotels providing service for travelers at DFW and seminar space for business
meetings generate approximately $2 million in annual hotel/motel tax revenue.
EMPLOYMENT ... Employment figures furnished by Texas Employment Commission are
A - I
Annual
Annual
Annual
Annual
Annual
Annual
2004
2003
2002
2001
2000
1999
Labor Force
22,598
22,478
22,219
22,001
21,757
21,309
Employed
21,925
21,692
21,476
21,509
21,393
20,956
Unemployed
673
786
743
492
364
353
Percent of Unemployed
2.98%
3.50%
3.34%
2.24%
1.67%
1.66%
A - I
MAJOR EMPLOYERS
Company
Dallas/Fort Worth International Airport
Gaylord Texan Resort & Convention Center
G rap evine/Colley ville Independent School District
United Parcel Service
Baylor Medical Center
Gamestop
City of Grapevine
D/FW Hilton Hotel
SimuFlite Training International
Apollo Paper/John Harland
Source: City of Grapevine, Department of Development Services.
Estimated
Number of
Product
Employees
Airport
16,420
Hotel/Convention
1,800
School District
1,576
Parcel Service
1,200
Health Services
1,000
Electronic/Software Distribution
600
City Government
540
Hotel
400
Pilot Training
300
Paper Products
200
BANKING AND FINANCIAL ... Banking facilities for the City are provided by four banks, the Texas Bank of Grapevine, the First State
Bank of Grapevine, Frost Bank and a branch of NationsBank of Texas, Independent National Bank, Bank One and Bank of America.
Also located in the City is a branch of the Omni Federal Credit Union.
Source: City of Grapevine, Finance Department.
BUILDING PERMITS ... The number and value of building permits issued by the City are:
Fiscal
Commercial Permits
Residential Permits
Total
Year
Number
Number
Number
Total
Ended
of
Dollar
of
Dollar
of
Dollar
9/30
Permits
Value
Permits
Value
Permits
Value
2000
56
$ 84,742,336
211
$ 56,040,989
267
$ 140,783,325
2001
53
364,294,642
89
12,445,025
142
376,739,667
2002
23
21,888,714
183
48,911,056
206
70,799,770
2003
28
34,396,654
158
43,615,909
186
78,012,563
2004
23
32,790,990
186
40,969,517
209
73,760,507
Source: City of Grapevine records.
RECREATION ... Located approximately two miles north of the downtown area of the City lies Grapevine Lake. The lake serves as
the City reservoir and supplies approximately 50% of the water supply of the City. The lake covers a surface area of approximately
12,740 acres and has a shore line of 146 miles. The lake is 19 miles long and 2.5 miles wide at its widest point. The lake is owned
and operated by the U.S. Corps of Engineers and is a major recreation area for swimming, fishing, picnicking and camping and draws
some five million visitors each year to the area.
The City also has an extensive park system which includes tennis courts, racquetball courts, baseball and softball diamonds, football
and soccer fields, a jogging and biking trail, swimming pool and picnic areas. The City also owns and operates an 27 -hole golf
course.
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 cast/west.
There are 43 motor freight lines providing service to the City and the City is within the Dallas and Fort Worth Commercial Zone for
deliveries. Railroad service is offered by the Cotton Belt Railroad and the Southern Pacific Railroad, both with daily switching
service. Greyhound/Trailways Bus Lines provides the City with surface bus transportation.
HOTEL AND CONVENTION FACILITIES... There are four major hotels in the City and several other hotels and motels adjacent to the
City near DFW.
The Hyatt Regency DFW is located on the airport and provides 1,450 rooms, one of the largest hotels in Texas. The Hyatt provides
more than 130,000 square feet of meeting and convention facilities, five dining facilities, availability to two 18 -hole championship
golf courses, tennis courts, heated swimming pool and health spa and jogging trails.
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The D/FW Airport Hilton and Executive Conference Center is a 400 -room hotel located 2.5 miles north of DFW offering a 14,400
square foot exhibit hall and ballroom that can accommodate 900 banquet guests. Also provided are three restaurants, tennis courts,
racquetball courts, indoor and outdoor swimming pools, steam room, health club and lighted jogging trails. Adjacent to the hotel is
the Austin Ranch where horseback riding and other western events are available to hotel guests.
The Embassy Suites Conference Center is a 12 -story, 329 -room hotel located just north of DFW Airport. The Embassy Suites offers
a 12,640 square foot conference center and ballroom, a 3,432 square foot junior ballroom and 14 other meeting rooms. Also
provided is a state-of-the-art fitness center, a heated indoor swimming pool, complimentary, cooked -to -order breakfast and 24-hour
in -room dining.
The Gaylord Texan on Lake Grapevine is a 1,511 room resort and convention center located just 6 minutes north of D/FW Airport.
The Gaylord Texan provides 400,000 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 Southwestem-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.
EDUCATION ... Elementary and secondary education is provided to the City by the Grapevine-Colleyville Independent School
District (the "District"). The District pro -rides 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:
1983
3,732
1994
10,878
1984
4,037
1995
11,363
1985
4,675
1996
11,655
1986
5,617
1997
12,398
1987
6,107
1998
12,928
1988
6,604
1999
13,299
1989
7,156
2000
13,369
1990
7,984
2001
13,534
1991
8,710
2002
13,677
1992
9,435
2003
13,619
1993
10,236
2004
13,851
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
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APPENDIX B
EXCERPTS FROM THE
CITY OF GRAPEVINE, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2004
The information contained in this Appendix consists of excerpts from the City of Grapevine,
Texas Annual Financial Report for the Year Ended September 30, 2004, 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.
THIS PAGE LEFT BLANK INTENTIONALLY
APPENDIX C
FORM OF BOND COUNSEL'S OPINION
THIS PAGE LEFT BLANK INTENTIONALLY
[Form of Opinion of Bond Counsel]
[Closing Date]
CITY OF GRAPEVINE, TEXAS
COMBINATION TAX AND LAKE PARKS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2005A
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 2005A, dated October 15, 2005.
The Certificates mature, bear interest, are subject to redemption prior to maturity 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 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 exclusion 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 have also examined executed Certificate No. 1 of this issue.
Vinson & Elkins LLP Attorneys at Law Austin Beijing Dallas Trammell Crow Center, 2001 Ross Avenue, Suite 3700
Dubai Houston London Moscow New York Tokyo Washington Dallas, Texas 75201-2975 Tel 214.220.7700 Fax 214.220.7716
www.velaw.com
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 obligations of the Issuer; and
(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 net revenues of the
City's Lake Parks, as defined in the Ordinance; and the total indebtedness of the
Issuer, including the Certificates, does not exceed any constitutional, statutory or
other limitations.
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.
IT IS OUR FURTHER OPINION THAT:
(1) Interest on the Certificates is excludable from gross income for federal income tax
purposes under existing law, and
(2) The Certificates are not "private activity bonds" within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"), and interest on the
Certificates is not subject to the alternative minimum tax on individuals and
corporations, except that interest on the Certificates will be included in the
"adjusted current earnings" of a corporation (other than an S corporation,
regulated investment company, REIT, REMIC or FASIT) for purposes of
computing its alternative minimum tax.
In providing such opinions, we have relied on representations of the Issuer, the Financial
Advisor and the initial purchasers with respect to matters solely within the knowledge of the
Issuer, the Financial Advisor and the initial purchasers, respectively, which we have not
independently verified, and have assumed continuing compliance with the covenants in the
Ordinance pertaining to those sections of the Code which affect the exclusion from gross income
of interest on the Certificates for federal income tax purposes. If such representations are
determined to be inaccurate or incomplete or the Issuer fails to comply with the foregoing
provisions of the Ordinance, interest on the Certificates could become includable in gross income
from the date of original delivery, regardless of the date on which the event causing such
inclusion occurs.
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Except as stated above, we express no opinion as to any federal, state or local tax
consequences resulting from the ownership of, receipt of interest on, or disposition of the
Certificates.
Owners of the Certificates should be aware that the ownership of tax-exempt obligations
may result in collateral federal income tax consequences to financial institutions, life insurance
and property and casualty insurance companies, certain S corporations with Subchapter C
earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry
tax-exempt obligations, taxpayers owning an interest in a FASIT that holds tax-exempt
obligations and individuals otherwise qualifying for the earned income credit. In addition,
certain foreign corporations doing business in the U.S. may be subject to the "branch profits tax"
on their effectively -connected earnings and profits (including tax-exempt interest such as interest
on the Certificates).
The opinions set forth above are based on existing law which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement these opinions to reflect any facts or circumstances that may hereafter
come to our attention or to reflect any changes in any law that may hereafter occur or become
effective. Moreover, our opinions are not a guarantee of result and are not binding on the
Internal Revenue Service (the "Service"); rather, such opinions represent our legal judgment
based upon our review of existing law and in reliance upon the representations and covenants
referenced above that we deem 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 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
Issuer as the taxpayer. We observe that the Issuer has covenanted in the Ordinance not to take
any action, or omit to take any action within its control, that if taken or omitted, respectively,
may result in the treatment of interest on the Certificates as includable in gross income for
federal income tax purposes.
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