|
The federal income tax consequences of the purchase, ownership, sale or other disposition of Original Issue Discount Bonds
<br />which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from
<br />those described above. All owners of Odginal Issue Discount Bonds should consult their own tax advisors with respect to the
<br />determination for federal, state and local income tax purposes of interest accrued upon redemption, sale or other disposition of
<br />such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase,
<br />ownership, sale or other disposition of such Original Issue Discount Bonds.
<br />
<br />Qualified Tax-Exempt Obligations
<br />
<br />Section 265(a) of the Code provides, in pertinent part, that interest paid or incurred by a taxpayer, including a "financial
<br />institution," on indebtedness incurred or continued to purchase or carry tax-exempt obligations is not deductible by such
<br />taxpayer in determining taxable income. Section 265(b) of the Code provides an exception to the disallowance of such
<br />deduction for any interest expense paid or incurred on indebtedness of a taxpayer which is a "financial institution" allocable to
<br />tax-exempt obligations, other than "private activity bonds," which are designated by an issuer as "qualified tax-exempt
<br />obligations." Section 265(b)(5) of the Code defines the term "financial institution" as referring to any corporation described in
<br />section 585(a)(2) of the Code, or any person accepting deposits from the public in the ordinary course of such person's trade or
<br />business which is subject to federal or state supervision as a financial institution.
<br />
<br />The issuer expects to designate the Bonds as "qualified tax-exempt obligations" within the meaning of section 265(b) of the
<br />Code. in furtherance of that designation, the Issuer will covenant to take such action which would assure, or to refrain from
<br />such act[on which would adversely affect, the treatment of the Bonds as "qualified tax-exempt obligations." Potential
<br />purchasers should be aware that if the issue price to the public (or, in the case of discount bonds, the amount payable
<br />at maturity) exceeds $10,000,000 during the same calendar year, then such obligations might fail to satisfy the
<br />$~10,000,000 limitation and the obligations would not be "qualified tax-exempt obligations."
<br />
<br />State, Local and Foreign Taxes
<br />
<br />Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the
<br />Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax
<br />consequences unique to investors who are not United States persons.
<br />
<br />CONTINUING DISCLOSURE OF INFORMATION
<br />
<br />In the Ordinance, the Issuer has made the following agreement for the benefit of the holders and beneficial owners of the
<br />Bonds. The Issuer is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds,
<br />Under the agreement, the Issuer will be obligated to provide certain updated financial information and operating data annually,
<br />and timely notice of specified material events, to certain information vendors. This information will be available to securities
<br />brokers and others who subscribe to receive the information from the vendors.
<br />
<br />AnnualReports
<br />
<br />The Issuer will provide certain updated financial information and operating data to certain information vendors annually. The
<br />information to be updated includes all quantitative financial information and operating data with respect to the Issuer of the
<br />general type disclosed in Tables 1, 2, 11, 12, 13, 22, 23, 24, 25 and 26 in Appendix A and the Issuer's audited financial report
<br />as shown in Appendix D. The issuer will update and provide this information within six months after the end of each fiscal year
<br />ending in and after 2001. The Issuer will provide the updated information to each nationally recognized municipal securities
<br />information repository ("NRMSIR") and to any state information depository ("SID") that is designated by the State of Texas and
<br />approved by the staff of the United States Securities and Exchange Commission (the "SEC").
<br />
<br />The Issuer may provide updated information in full text or may incorporate by reference certain other publicly available
<br />documents, as permitted by SEC Rule 15c2-12 (the "Rule"). The updated information will include audited financial statements
<br />for the Issuer, if the Issuer commissions an audit and it is completed by the required fime. If audited financial statements are
<br />not provided by that time, the Issuer will provide unaudited financial statements for the applicable year to each NRMSIR and
<br />any SID, and will file the annual audit report when and if the same becomes available. Any such financial statements will be
<br />prepared in accordance with the accounting principles described in the Issuer's annual financial statements or such other
<br />accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation.
<br />
<br />The Issuer's current fiscal year end is September 30. Accordingly, it must provide updated information by March 30 in each
<br />year, unless the issuer changes its fiscal year. If the Issuer changes its fiscal year, it will notify each NRMSIR and any SJD of
<br />the change.
<br />
<br />20
<br />
<br />
<br />
|