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16-Deliberate and act on resolution directing the City Clerk to publish notice of intent to issue tax and revenue certificatesCITY COUNCIL AGENDA ITEM BRIEFING SHEET Submittal Date: Originaring Department: Presented By: Agenda Item No.: O1/22/10 Council Date: Finance Gene Anderson 16. O1/25/10 RECOMMENDED MOTION: Move to approve a resolution directing the City Clerk to publish a notice of intent of the City's plans to issue certificates of obligation to fund costs associated with the Collegiate Drive Project. POLICY ISSUE(S): Fiscal management The City plans to issue $3,005,000 in combination tax and revenue certificates of obligation for the purpose of funding the improvement and expansion of South Collegiate Drive, making improvements to the frontage access of South Collegiate Drive, and paying legal, fiscal, engineering, and architectural fees connected to the project. This resolution directs the City Clerk to publish the required notice of intent regarding this debt issue. Financial advisor Dan Almon with Southwest Securities, Inc. and bond attorney Dan Culver with McCall, Parkhurst & Horton, LLP will be present to discuss the details of this debt issue. BOARD/COMMISSION RECOMMENDATION: None EXHIBITS: Resolution ACTION: BUDGET INFO: ❑ Financial Report ❑ Minute Order Expense $NA ❑ Department Report ❑ Resolution Budgeted Amt. $NA ❑ Presentation ~ Ordinance y'I'D Actual $NA ❑ Public Hearing ❑ Other Acct. Name NA Acct. Number NA FISCAL NOTES: None REVIEWED AND APPROVED BY: * Administration E City Clerk ❑ Community Development ❑ EMS/IT E Finance ❑ Fire ❑ Municipal Court E Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities City of Paris - Revised 2/04/08 DRAFT attorney\reswork\current\CO Notice of Intent Res 2010 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, DIRECTING PUBLICATION OF NOTICE OF INTENTION TO ISSUE COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION; MAKIIVG OTHER FINDIIVGS A1VD PROVSIIOIVS RELATED TO THE SUBJECT; A1VD DECLARING AN EFFECTIVE DATE. WHEREAS, this Ciry Council deems it advisable to give notice of intention to issue certificates of obligation of the City of Paris, Texas, as hereinafter provided; and WHEREAS, it is hereby officially found and determined that the meeting at which this Resolution was passed was open to the public and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, THAT: Section 1. The findings set out in the preamble to this resolution are hereby in all things approved. Section 2. A form of the Notice of Intention to issue Certificates of Obligation is attached hereto as Exhibit "A", the form and substance of which is hereby adopted and approved. Section 3. The City Clerk shall cause said notice to be published in substantially the form attached hereto, in a newspaper of general circulation in the City, and published in the City on the same day in each of two consecutive weeks, the date of the first publication thereof to be at least 30 days prior to the time set for the first reading of the ordinance authorizing the issuance of such certificates of obligation as shown in said notice. Section 4. This resolution shall be effective immediately upon passage. DULY PASSED AND APPROVED this 25th day of January, 2010. jesse james Freelen, Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: W. Kent McIlyar, City Attorney fl, ('it17b LAW OFFICES M`-CALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 1250 ONE AMERICAN CENTER NINTH FLOOR AUSTIN, TEXAS 78701-3248 DALLAS, TEXAS 75201-6587 TELEPHONE: 512 478-3805 TELEPHONE: 214 754-9200 FACSIMILE: 512 472-0871 FACSIMILE: 214 754-9250 January 25, 2010 Mayor and Members of the City Council City of Paris 135 lst Street SE Paris, Texas 75460-5803 700 N. ST. MARY'S STREET 1525ONE RIVERWALK PLACE SAN ANTONIO, TEXAS 78205-3503 TELEPHONE: 210 225-2800 FACSIMILE:210 225-2984 Re: Proposed City of Paris, Texas General Obligation Refunding Bonds, Series 2010 Ladies and Gentlemen: The purpose of this engagement letter is to set forth certain matters concerning the services we will perform as bond counsel to the CiTy of Paris, Texas (the "Issuer") in connection with the issuance of the above-referenced bonds (the "Bonds"). We understand that the Bonds are being issued for the purpose of refunding the following series of bonds and certificates of obligation of the Issuer: Tax and Revenue Refunding Bonds, Series 1998; Combination Tax and Revenue Certificates of Obligation, Series 2000; Tax and Revenue Refunding Bonds, Series 2001; Waterworks and Sewer System Revenue Bonds, Series 1997; Waterworks and Sewer System Revenue Bonds, Series 1998; and Waterworks and Sewer System Revenue Bonds, Series 2000 (collectively, the "Refunded Obligations We also understand that the Bonds will be secured by a pledge of an ad valorem tax levied by the Issuer within the limit prescribed by law. We further understand that the Bonds will be authorized to be sold by the City Council of the Issuer (the "City Council") pursuant to an ordinance (the "Ordinance") adopted on the date hereof (the "Sale Date") in accordance with Chapter 1207, Texas Government Code, and that the Bonds will be sold by negotiation to a purchaser or purchasers (collectively, the "Underwriter") on the Sale Date. A. THE FINANCING As Bond Counsel to the Issuer, we would like for the City Council to understand how the issuance of the Bonds will be effected and the ramifications of the financing. I will briefly describe the procedures and certain applicable law that pertains to the issuance of the Bonds, below. However, you should feel free to call me at any time to discuss any questions that you or your staff may have. (1) The Bonds are being issued to provide debt service savings with respect to the Issuer's future debt service payments. You should discuss the full impact of the debt service restructuring with Southwest Securities, Inc., your financial advisor. (2) The Bonds will be "authorized to be issued" when and if the City Council approves the Ordinance. The Ordinance provides for the terms of the Bonds. Among the matters approved in the Ordinance are: (i) the terms of the Bonds, including the principal amortization schedule and interest rates and provision for certain of the Bonds to be issued as current interest bonds that pay interest semiannually; (ii) the Issuer's commitment to levy - 00017i its debt service tax each year in an amount sufficient to pay the debt service on the Bonds; (iii) the sale of the Bonds to the Underwriter; (iv) the approval of this engagement letter; (v) approval of a paying agent agreement to whom you will make semiannual payments sufficient to pay the debt service on the Bonds; (vi) instructions to the paying agent for the Refunded Obligations to give notice to the holders of the Refunded Obligations that they are being called for redemption; (vii) approval of an escrow agreement whereby the proceeds of the Bonds will be used to pay the debt service on the Refunded Obligations; and (viii) certain other covenants of the Issuer that are designed to allow the Issuer to issue the Bonds as tax-exempt obligations. As you can see from the foregoing description, the Ordinance is an omnibus undertaking of the Issuer that is intended to provide for all actions and undertakings that are required for the issuance of the Bonds. There will be other certificates and letters that will be required to be executed by officers of the Issuer on the Sale Date, but they all spring from, and are authorized by, the Ordinance. (3) As noted above, the Bonds will be sold to the Underwriter in accordance with the provisions of the Ordinance and, in addition, the Underwriter will want the Issuer to sign a Bond Purchase Contract on the Sale Date that will set forth the terms of the sale of the Bonds. We have reviewed but not drafted this Contract, and you should know that while it is a fairly routine form of document for this type of transaction, it does commit the Issuer to sell the Bonds to the Underwriter at the price to be negotiated between the Issuer and the Underwriter. In addition, it contains representations of the Issuer to the Underwriter to the effect that the Issuer is authorized to issue the Bonds and that it has made full disclosure to the Underwriter and the bond investors of all material information. As a condition to the Underwriter's payment for the Bonds, the Underwriter will require this firm to deliver our Bond Counsel opinion to them, in which we will opine that the Bonds are valid obligations of the Issuer and that, assuming ongoing compliance by the Issuer with the provisions of the Ordinance, the interest on the Bonds will be exempt from federal income taxation. The Bond Purchase Contract will also require the delivery of an opinion of the Texas Attorney General approving the Bonds, as is required by State law. We will review the Issuer's representations and agreements in the Bond Purchase Contract to ensure that it is appropriate for the Issuer to make the representations and agreements of the nature contained in the Purchase Contract. However, if there are any unusual financial or legal circumstances affecting the Issuer that would make the covenants, representations or statements made by the Issuer in the Bond Purchase Contract untrue, you should let the Underwriter, your financial advisor and/or the undersigned know about them as soon as possible. (4) You should know that the purchase price for the Bonds will be somewhat higher than the principal amount of the Bonds. This is because additional proceeds are being generated by the sale of certain of the Bonds at a premium. The premium will be used to fund the escrow fund created by the escrow agreement, mentioned above, and to pay costs of issuance of the Bonds. The premium has been taken into account in determining the savings from the refunding, which have been calculated by your financial advisor. (5) The Underwriter of the Bonds will offer the Bonds into the public debt markets prior to the time that the City Council meets to accept the Underwriter's offer for the Bonds. Through this process, the Bonds will be "priced" - i.e., interest rates and premiums or discounts, if any, for the Bonds will be established. On the Sale Date, the City Council will consider the terms offered to the Issuer by the Underwriter based upon the market conditions and other factors that determine interest rates and pricing information. In connection with the offering of the Bonds, the City Council will approve an offering document called an "Official Statement" that contains financial and operating data concerning the Issuer, and information that describes the Bonds. The Issuer is responsible for the information that is contained in the Official Statement to the extent that it describes the Bonds and the Issuer. Some information in the Official Statement has been prepared by others, including the bond insurer, if any, and the Underwriter, and the Issuer is not responsible for that information. As your Bond Counsel, we have reviewed the Official Statement to ensure that the information describing the Bonds and the Ordinance are correct. As Bond Counsel we do not review other areas of the Official Statement. If you know of any information that an investor would consider to be material in order to make an investment decision, and that information is omitted from, or incorrect in, the Official Statement, the Underwriter needs to know, so that it can correct the Official Statement. B. SCOPE OF ENGAGEMENT In this engagement, we have performed, or expect to perform, the following duties: (1) Subj ect to the completion of proceedings to our satisfaction, render our legal opinion (the "Bond Opinion"), regarding the validity and binding effect of the Bonds, the source of payment and security for the Bonds, and the excludability of interest on the Bonds from gross income for federal income tax purposes. (2) Prepare and review documents necessary or appropriate to the authorization, issuance and delivery of the Bonds, coordinate the authorization and execution of such documents, and review enabling legislation. (3) Assist the Issuer in seeking from other governmental authorities such approvals, permissions and exemptions as we determine are necessary or appropriate in connection with the authorization, issuance and delivery of the Bonds, except that we will not be responsible for any required federal or state securities law filings. In this connection, we particularly undertake to assist the Issuer in having the Bonds approved by the Public Finance Division of the Office of the Texas Attorney General, and, following such approval, registered by the Texas Comptroller of Public Accounts. (4) Review legal issues relating to the structure of the Bond issue. (5) Review those sections of the Official Statement to be disseminated in connection with the sale of the Bonds which describe the Bonds, the Ordinance pursuant to which they will be issued and the tax-exempt treatment of the interest on the Bonds for purposes of federal income taxation. (6) If requested, assist the Issuer in presenting information to bond rating organizations and bond insurers relating to legal issues affecting the issuance of the Bonds. 1~ n~l7 J"_ (7) Draft the continuing disclosure undertaking of the Issuer. Our Bond Opinion will be delivered by us on the date the Bonds are exchanged for their purchase price (the "Closing"). The Issuer will be entitled to rely on our Bond Opinion. The Bond Opinion will be based on facts and law existing as of its date. In rendering our Bond Opinion, we will rely upon the certified proceedings and other certifications of public officials and other persons furnished to us without undertaking to verify the same by independent investigation, and we will assume continuing compliance by the Issuer with applicable laws relating to the Bonds. During the course of this engagement, we will rely on you to provide us with complete and timely information on all developments pertaining to any aspect ofthe Bonds and their security. We understand that you will direct members of your staff and other employees of the Issuer to cooperate with us in this regard. Our duties in this engagement are limited to those expressly set forth above. Unless we are separately engaged in writing to perform other services, our duties do not include any other services, including the following: (1) Except as described in sections A and B above, assisting in the preparation or review of an official statement or any other disclosure document with respect to the Bonds, assisting in the preparation of, or opining on, a continuing disclosure undertaking pertaining to the Bonds or, after Closing, providing advice concerning any actions necessary to assure compliance with any continuing disclosure undertaking, or, in connection with the issuance of the Bonds, performing an independent investigation to determine the accuracy, completeness or sufficiency of any such document or rendering advice that the official statement or other disclosure document does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading. (2) Preparing requests far tax rulings from the Internal Revenue Service, or no action letters from the Securities and Exchange Commission. (3) Preparing state securities law memoranda or investment surveys with respect to the Bonds. (4) Drafting state constitutional or legislative amendments. (5) Pursuing test cases or other litigation. (6) Making an investigation or expressing any view as to the creditworthiness of the Issuer or the Bonds. (7) Representing the Issuer in Internal Revenue Service examinations or inyuiries, or Securities and Exchange Commission investigations. - Opr,18C (8) After Closing, providing continuing advice to the Issuer or any other party concerning any actions necessary to assure that interest paid on the Bonds will continue to be excludable from gross income for federal income tax purposes (e.g., our engagement does not include rebate calculations for the Bonds). (9) Negotiating the terms of, or opining as to, any investment contract. (10) Addressing any other matter not specifically set forth above that is not required to render our Bond Opinion. ATTORNEY-CLIENT RELATIONSHIP Upon execution of this engagement letter, the Issuer will be our client and an attorney-client relationship will exist between us. We further assume that all other parties in this transaction understand that we represent only the Issuer in this transaction, we are not counsel to any other party, and we are not acting as an intermediary among the parties. Our services as bond counsel are limited to those contracted for in this letter; the Issuer's execution of this engagement letter will constitute an acknowledgment of those limitations. Our representation of the Issuer will not affect, however, our responsibility to render an objective Bond Opinion. Our representation of the Issuer and the attorney-client relationship created by this engagement letter will be concluded upon issuance of the Bonds. Nevertheless, subsequent to Closing, we will mail the appropriate Internal Revenue Service Form 8038, prepare and distribute to the participants in the transaction a transcript of the proceedings pertaining to the Bonds. CONFLICTS As you are aware, our firm represents many political subdivisions and investment banking firms, among others, who do business with political subdivisions. It is possible that during the time that we are representing the Issuer, one or more of our present or future clients will have transactions with the Issuer. It is also possible that we may be asked to represent, in an unrelated matter, one or more of the entities involved in the issuance of the Bonds, including the Underwriter and the Issuer's financial advisor. We do not believe such representation, if it occurs, will adversely affect our ability to represent you as provided in this letter, either because such matters will be sufficiently different from the issuance of the Bonds so as to make such representations not adverse to our representation of you, or because the potential for such adversity is remote or minor and outweighed by the consideration that it is unlikely that advice given to the other client will be relevant to any aspect of the issuance of the Bonds. Execution of this letter will signify the Issuer's consent to our representation of others consistent with the circumstances described in this paragraph. FEES Based upon: (i) the terms, structure, size and schedule of the financing represented by the Bonds; (ii) the duties we will undertake pursuant to this engagement letter; (iii) the time we anticipate devoting to the financing; and (iv) the responsibilities we will assume in connection therewith, our fee will be $5,000 for the first $1,000,000 in proceeds of the Securities sold for the Project, plus $1 per $1,000 of Securities for all such amounts above $1,000,000. The fee includes - nnn1Rl our services rendered as Bond Counsel, but does not include client charges made or incurred on your behalf, such as travel costs, photocopying, deliveries, long distance telephone charges, telecopier charges, computer-assisted research and other expenses. Our fee will be billed after the Closing. If the financing is not consummated, we understand and agree that we will not be paid. In accordance with the terms of the Ordinance, the Issuer will provide the filing fee of the Texas Attorney General to Bond Counsel on a timely basis to permit the filing of the transcript of proceedings for the Bonds so that the Bonds may be approved by the Attorney General in time to meet the closing date set forth in the Official Statement. RECORDS At your request, papers and property furnished by you will be returned promptly upon receipt of payment for outstanding fees and client charges. Our own files, including lawyer work product, pertaining to the transaction will be retained by us. For various reasons, including the minimization of unnecessary storage expenses, we reserve the right to dispose of any documents or other materials retained by us after the termination of this engagement. If the foregoing terms are acceptable to you, please so indicate by returning the enclosed copy of this engagement letter dated and signed by an authorized officer, retaining the original for your files. We look forward to working with you. McCall, Parkhurst & Horton L.L.P. By: Dan S. Culver Accepted and Approved City of Paris, Texas By: Its: Date Mayor January 25, 2010 AFFIDAVIT OF PUBLICATION THE STATE OF TEXAS § COUNTY OF LAMAR § CITY OF PARIS § BEFORE ME, a Notary Public in and for the State of Texas, on this day personally appeared the person whose name is subscribed below, who, having been duly sworn, says upon oath that she is a duly authorized officer or employee of the , publishers of the The Paris News, which is a newspaper of general circulation in the above named City, and (2) said newspaper is a"newspaper" as described in Sections 2051.044 and 2051.048 of the Texas Government Code; and that a true and correct copy of the NOTICE OF INTENTION TO ISSUE COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, a clipping ofwhich is attached to this Affidavit, was published on the following dates: January 2010 and February 2010 Signature:_ Printed Name: Title: SUBSCRIBED AND SWORN TO BEFORE ME, this the day of February, 2010. Notary Public (NOTARY PUBLIC SEAL) CITY OF PARIS, TEXAS NOTICE OF INTENTION TO ISSUE COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION The City of Paris does hereby give notice of intention to issue one or more series of Combination Tax and Revenue Certificates of Obligation, in the maximum principal amount not to exceed $3,005,000, for paying all or a portion of the City's contractual obligations incurred in connection with improving and expanding South Collegiate Drive and making improvements to the frontage access for South Collegiate Drive and paying legal, fiscal, engineering and architectural fees in connection with such project. The City proposes to adopt an ordinance that will provide for the Certificates of Obligation to be secured by a pledge of funds received from the levy and collection of ad valorem taxes in the City, as provided by law, and from a pledge of the surplus net revenues of the City's water and sewer system (the "System") that remain after payment of all operation and maintenance expenses thereof, and after all debt service, reserve, and other requirements in connection with all revenue bonds or other obligations (now or hereafter outstanding) of the City have been met, to the extent that such obligations are payable from all or any part of the net revenues of the System. The City Council intends to consider for passage at a meeting to be held at 5:30 P.M. on March 8, 2010, at the Paris City Hall, 135 1 st Street SE, Paris, Texas, an ordinance authorizing the issuance of Combination Tax and Revenue Certificates of Obligation. CITY OF PARIS, TEXAS By: Jesse James Freelen. Mayor EXHIBIT -L ri