HomeMy WebLinkAboutPR 15660: FIRST SOUTHWEST COMPANY (GENERAL OBLIGATION BONDS)Memorandum
City of Port Arthur, Texas
Finance Department
To: Steve Fitzgibbons, City Manager
From: Rebecca Underhill, Assistant City a ger-A inistration
Date: December 7, 2009
Subject: Proposed Resolution 15660
Presented for Council consideration and approval is PR 15660. Finance staff. has worked with First
Southwest Company to prepaze the preliminary official statement for $8,000,000 General Obligation
Bonds, Series 2010. The purpose of the preliminary official statement is to provide financial information
concerning the City and the upcoming bond issue. This preliminary official statement is ready to be
printed and distributed to potential investors and other interested parties.
The purpose of this issue is to fund the following activities, as approved at the November 6, 2007 election.
On April 8, 2008, the first phase of the total bond authorization was issued. The 2010 issue will complete
the sale of the authorized bonds and enable us to complete the projects.
Proposition No. -1 -Water
Proposition No. 2 -Public Safety
Proposition No. 3 -Drainage
Proposition No. 4 -Streets
Proposition No. 5 -Business Park
Proposition No. 6 -Parks
Total
Authorization 2008 GO 2010 GO
$ 4,000,000 $ 1,700,000 $ 2,300,000
3,000,000 1,500,000 1,500,000
2,000,000 400,000 1,600,000
3,000,000 1,600,000 1,400,000
3,000,000 3,000,000 -
2,000,000 800,000 1,200,000
$ 17,000,000 $ 9,000,000 $ 8,000,000
This resolution is presented for Council to approve the preliminary official statement and authorize the
printing and distributing of the document. The sale is scheduled for January 12, 2010.
S:\FinanceV2esolu[ions\Genernl Obligation, Series 2010, $8 million.doc
P. R. NO. 15660
JJA 12/7/09
RESOLUTION NO.
A RESOLUTION APPROVING THE FORM AND CONTENT
OF THE PRELIMINARY OFFICIAL STATEMENT FOR.
' THE SALE , OF $8,000,000 CITY OF PORT ARTHUR,.
_ TEXAS, GENERAL OBLIGATION BONDS, SERIES 2010
AND AUTHORIZING FIRST SOUTHWEST COMPANY TO
PROCEED WITH THE PRINTING AND DISTRIBUTION OF
' SAME IN PREPARATION FOR. COMPETITIVE SALE
JANUARY 12, 2010.
WHEREAS; on November 6, 2007; the voters approved propositions one through. six authorizing
$17 million of General Obligation debt; and
WHEREAS; the City Council issued $9 million ofthe-authorized debt on April 8, 2008; and.
WHEREAS, the City Council desires to issue the remaining. $8 million of authorized debt on
January 12, 2010; and
WHEREAS, the preliminary official statement is required to be prepazed, published and distributed
to potential investors and other interested parties; NOW THEREFORE;
BE IT. RESOLVED BY THE CITY COUNCIL OF THE. CITY OF PORT ARTHUR:
Section 1. 'The City hereby approves the content of'the preliminary official statement .in
substantially the same form as attached hereto, as Exhibit "A":
Section 2. The City authorizes First. Southwest Company to proceed with the printing and
distributing of the same in preparation for competitive sale January 12, 2010.
Section 3. This resolution shall be effective from and after its adoption.
READ, ADOPTED, AND APPROVED, this day of December, 2009; AD,. at a Regular
Meeting of the City Council of the City of Port Arthur, Texas by the Following vote:
AYES: Mayor:
Councilmembers:
NOES:
Mayor
S:\FinancelResolu[ions\Geneal Obligation, Series 2010, S8 million.doc
ATTEST:
Terri Hanks, City Secretary
APPROVED AS TO FORM:
^, ~ ~~
Vl~
Val Tizeno, Acting Cit Attorney
APPROVED FOR ADMINISTRATION:
Steve Fitzgibbons, City Manager
Rebecca Underhill, Assistant City Manager -Administration
S:\Finance\Resolutions\Geneml Obligation, Series 2010, $8 million.doc
EXHIBIT ~~A"
WILL BE PRESENTED.
AT THE COUNCIL MEETING
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PRELIMINARY OFFICIAL STATEMENT
Dated January 5, 2010
NEW ISSUE -Book-Entry-Only
Ratings:
Moody's: Applied For
S&P: Applied For
See ("OTHER INFORMATION
RATINGS° and "MUNICIPALBOND
INSURANCE" herein)
In the opinion of Bond Cbunsel, under existing law interest on [he Bonds is excludable from gross income for fedeml income tax purposes,
subject to the matters described under "TAX MATTERS" herein, and is not a specific preference item or included in a corporation's
adjusted current earnings for purposes of the federal alternative minimum income tax. See "TAX MATTERS" herein far a discussion of
the opinion of Bond Counsel. - ~ ~ - -
THE BONDS HAVE BEEN DESIGNATED AS"QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FI~NyANCIAL INSTITUTIONS
$8,000,000 - -
- CITY OF PORT ARTHUR, TEXAS
- _ - (Jeffersortand Orange County)
GENERAL OBLIGATION BONDS, SERIES 2010
Dated Date: February 1, 2010 _ ~ Due: February 15, as shown on inside cover
PAVrvtRNT TRRMS .:.Interest on the $8,000,000 City of Port Arthur, Texas, General Obligation Bonds, Series 2010 (the "Bonds") will
accrue from February I, 2010, ([he "Dated Date") and will be payable February IS and August 15 of each yearcommencing August 15,
2010, and will be calculated on the basis of a 360-day year consisting of hvelve 30-day months. The definitive Bonds will be initially
registered and delivered only to Cede & Co.; the nominee of The Depository Trust Company ("DTC') pursuant [o the Book-Entry-Only
System described herein. Beneficial ownership of the Bonds may-be acquired in denomihations of $5,000 or integral multiples thereof.
No physical delivery of the. Bonds will be made to the beneficial owners thereof. Principal. of, premium, if any, and interest ort the
Bonds will be payable by the Paying Agent/Registmr to Cede & Co, which will make distribution of the-amounts so paid to the
participating members of DTC for subsequent payment to the beneFcial owners of the Bonds. See "THE BONDS -Boots-EMRY-ONLY
SvsTeM" herein. The initialPaying AgenURegistrar is. Wells Fargo"Bank. N.A, Houston, Texas (see "THE BONDS -PAYING
AGEM/I2EGIS7RAR°).
AUTHORFFY FDR IssuANCe ...The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, (the "State")
including particularly Chapter 1331, Texas Government Code, as amended, and an election held by theCity on November 6, 2007, and are
direct obligations of the City payable from a continuing, direct, annual ad valorem tax levied, within the limits prescribed by law, on all
taxable property within the City as provided in [he ordinance authorizing the Bonds (the "Ordinance") (see "THE BONDS - AUTHORFFY
FOR ISSUANCE").
Ptmpose ...Proceeds from the sale of the Bonds will be used (i) to make improvements to drainage; parks and recreation; public safety;
water system; streets and sidewalks, and (ii) [o pay the costs associated with [he issuance of the Bonds.
SEE INSIDE COVER PAGE FOR MA'I"IJRITY SCHEDULE
OPTIONAL RenemPTtoN..: The City reserves the right, at its option, [o redeem Bonds having stated maturities on and after February IS
2020, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February I5, 2019, or any date thereafter, at
the par value thereof plus accrued interest to the date of redemption (see "THE BONDS - OertoxAL REDEMPTION").
MANDATORY SINKING FUND ReneMPTION ... In addition to the foregoing optional redemption provision, if principal amounts designated
in the serial maturity schedule above are combined to create Term Bonds, each such Term Bond shall be subject to mandatory sinking fund
redemption commencing on February l5 of the first year which has been combined [o form such Term Bond and continuing on February
IS in each year thereafter until thestated maturity date of [hat Term Bond, and the amount required to be redeemed-in any yeaz shall be
equal to the principal amount for such year set forth in the serial maturity schedule above. Tenn Bonds to be redeemed in any year by
mandatory sinking fund redemption shall be redeemed a[ par and shall be selected by lot from.and among [he Tertn Bonds [hen subject [o
redemption. The City,. at its option, may credit against any mandatory sinking fund redemption requirement Term Bonds of the maturity
then subject to redemption which have been purchased and canceled by the City or have been redeemed and not theretofore. applied as a
credit against any mandatary sinking fund redemption requirement. - -
LEGALITY ...The Bonds are offered for delivery when, as and if issued and received by .the initial purchaser(s) and subject to the
approving opinion of the Attorney General of Texas and the opinion of Vinson & Elkins, L.L:P., Houston, Texas; Bond Counsel (see
APPENDIX C, "FORM OF BOND CouNSEL's OPINION"). - - - `
Der.rvERY. It is expected that the Bonds. will be available for delivery through The Depository Trust Company on Febmary 9, 2010
BIDS DUE JANUARY 12, 2010, AT 2:00 PM, COST
MATURITY SCHEDULE
Due Interest CUSIP
Feb. I S Principal Rate Yield l0 Number f~1
2011 $275,000
2012 285,000
2013 290,000
2014 300,000 - -~ - -
2015 310,000 _
2016 320,000 - -, ~ ~.
2017 330,000
2018 340,000
2019 350,000
2020 (3) 365,000 _
2021 (3l -380,000
2022 [t) .400,000 '
2023 t}1 425,000 ~ ~ _
2024 (3) 445,000 _ - -
2025 - (37 465.000 - - - ~ -
2026 t31 490.000- - ~ - ~ -
2027 (t> 515,000 - -
202$ l3) 545,000
2029 ts7 570,000 - -
'. 2030 [t] 600,000 - -
(Accrued Interest from February 1, 2010 to be added)
(]) The initial reoffering prices or yields on the Bonds are famished by the Initial Purchaser (az defined herein) and represent the initial offering prices or yields
[o the public, which may be changed by the Initial Purchazer at any time. ~ -
(2) CUSIP is a registered trademark of [he 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 no[ intended to create a database and does no[ serve-in any way az asabs[i[ute for the CUSIP
Services.
_ (3) The Bonds maturing on or after Febmary 15, 2020 are subject [o7edemplioq a[ the op[ionof the City, on February 15, 2019, or any dale [hereafter, at [he par
value thereof plus accmed interest [o the date of redemption. See "THE BONDS - GPCIONAL REDeManoN."
2
For purposes ojcompliance with Rule 15c2-12 of the Securities and Exchange Commission, this document constitutes an octal statement ojthe
City with respect to Jhe Bonds that has been deemed "finaY' by the Ctty as ojthe date except far the omission of no more than the information
permitted by Rule I Sc2-12.
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell ar-the solicitation aJan
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, tfgiven or made, such other information or representations must not be relied upon. ~ _
The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is.not
guaranteed as to accuracy or completeness and is not to be construed as the promise or guaramee of the Financial Advisor. This .Official
Statement contains, in part, estimates and matters. ojopinion which are-not intended as statements ojfact, and no representation is made as to
the correctness ojsuch estimates and opinions, ar that they wit! be realized.
The information and expressions ojopinion contained herein are subject to change without-notice, and neither the deliveryof thrs OJfrcia[
Statement nor any sale made hereunder shall, under arty circumstances, create any implication that there has been no change in the affairs of
the City or other matters described. _
TABLE OF CONTENTS
MATURITY SCHEDULE ................:.:.......:...............:..................2
OFFICIAL STATEMEN°I'SUMMARY.:........_ ..........................4
CITY OFFICIALS, STAFF AND CONSULTANTS ....... ..........6
ELECTED OFFICIALS .................................................... ..........6
SELECTED ADMINISTRATIVE $TAFF _ .:....................._. .._......6
CONSULTANTS AND ADVISORS ................::............._.. ..........6
INTRODUCTION ....:........................................................... ..........7
DESCRIPTION OF THE CITY ............._..................._...... ...._.... 7
TFIE BONDS .............................:......................:.:................... ......._7
DESCRIPTION OF THE BONDS ................_..:......._.......... ..._....7
AUTHORITY FOR ISSUANCE ................:......................... ......... 7
SECURITY AND SOURCE OF PAYMENT .....................:.... ......... 7
TAX RATE L1,N7TATION__ ................................... _._._. _....._.7
OPTIONAL REDEMPTION ........................... _....__.......... .........8
' MANDATORY SINKLNG FUND REDEMPTION ........:........ .._._..8
NOTICE OF REDEMPTION ...............:.............................. ......... $
- DEFEASANCE......._....._ ..........::...................._...._........ .........8
BOOK ENTRY-0NLY SYSTEM ...:...................:............... .........8
PAYING AGENT/REGISTRAR .............._........_.:...... _..... ....... I O
TRANSFER, EXCHANGE AND REGISTRATION ................ .......10
- RECORD DATE FOR INTEREST PAYMENT ................. _.... ...... 11
BONDHOLDERS' REMEDIES ........................................... ...... I I
- USE OF BOND PROCEEDS.._........_ ................................. ......I1
TAX INFORMATTON ...........................:............................... ...._ 12
AD VALOREM TAX LAW ................._.............._............. ...... I2
EFFECTI VE TAX RATE AND ROLLBACK TAX RATE ....... ...... 13
- ~ PROPERTY ASSESSMENT AND TAX PAYMEM ............... ...... 14
PENALTIES AND INTEREST.._ ........::...................__........ ._...14
CITY APPLICATION OF TAX CODE ................................. ...... I $
TAX ABATEMENT POLICY ...._ .................._........._........ _.... I $
TAX INCREMENT FINANCING ZONE ...................._......... _.._ I $
TABLE 1 - VALUATTON, EXEMPTIONS AND GENERAL
OBLIGATION DEBT........_........._ .............._.......... ..... 16
TABLE 2 -TAXABLE ASSESSED VALUATTONS BY
CATEGORY ..........................................................: ..... 17
TABLE 3 -VALUATION AND GENERAL OBLGATTON DEBT
HIS TORY......... _.. _ ...........................:....:.'. . ..... I S
- 7ABI:E4-TAX RATE, LEVYAND COLLECTION HISTORY.18
TABLES-TEN LARGEST TAXPAYERS........._ ............... .....I$ '
Taace6 - TAx ADEQUACY_ ..........................._......: _..: ..... 19
TABLE 7 -. ESTIMATED OVERLAPPMG.DEBT ................. ..... 19
TABLES --INDDSTRIAL DISTRICT GDNTRACT7 S......._..... ..._20
DEBT INFORMATION ..............._..............._............_.....:... .._.22
- TABLE9 -PRO-FORMA GENERAL OBLIGATION DEBT
SERVICE REQUIREMENTS .................:.................... ....22
.TABLE 10 -INTEREST AND $MKING FUND BUDGET
PROJECTION ..........................:................................... 22
TABLE l l -COMPUTATION OF SELF-SUPPORTMG DEBT .. 23
TABLE I2-AUTHORIZEDBUT UNISSUED GENERAL
OBLIGATION-BDND3 ......................_.........._.._...... _.23
TABLE 13 -OTHER OBLIGATIONS .............._....................... 24
FINANCIAL INFORM1LITION .......................:...:.................. .:..25
TABLE 14 - CHARGES IN NET ASSETS .._ ......................... ... 2$
TABLE 14 -A -GENERAL FUND REVENUES AND
EXPENDITURES HISTORY ....................................... ... 26
TABLE I S -MUNICIPAL SALES TAX HISTORY .............._ ... 27
TABLE 16 -CURRENT INVESTMENTS ..........:.......:............. ... 29
TAX MATTERS .......:.....:..:..............................:............._........ ...29
TAx ExenaPrlDN......._ ........................._..._..........._......... ...29
PURCHASE OF TAX-EXEMPT OBLIGATTONS BY FMANCIAL
INSnTUrloNS._._:._ ......................._..................... _.30
- ADDITIONAL FEDERAL INCOb1E TAXCONSIDERATION5. ...30
CONTINUING DISCLOSURE OF INFORM1fATION ......... ...31
ANNUAL REPORTS ..............:..............................:..............: .. 31
MATERIAL EVENT Nonces :....._ ................._...._...........:. .. 37
AVAILABILITY OF INFORMATION ......._ ............................. .. 32
LIMITATIONS AND AMENDMENTS ..:.................................. ..32
COMPLIANCE WITH PRIOR UNDERTAKINGS:......:...._....._. .. 32
OTHER INFORMATION :........................:.............................. ..33 -
RATINGS ......................._.._........_......... _........ _...._......._. .. 33 -.
U TTGATIDN .....:....... _....................................:. _....... _........ .. 33
REGISTRATTON AND QUALIFICATION OF BONDS FOR SALE 33
LEGAL INVESTMEMS AND ELIGIBB.ITY TO SECURE PUBL IC
FUNDS w TEXAS ................................:.................... ..33
LEGAL MATTERS......._ ........:....................._.............._...... ..33
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION .........................................:................ . 34
FINANCIAL ADVISDR .......................................................... .34
.INITIAL PURCHASER ........................._...._........_.....:........_ .34
FORWARD-LOORMG STATEMENTS DISCLAIMER..._........_. . 34
CERTIFICATION OF THE OFFICIAL STATEMENT .................. .35
APPENDICES
- GENERAL INFORMATION REGARDING THE CITY _...._....J...A
EXCERPTS FROM THE ANNUAL FMANCIAL REPORT._....... $
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 Bonds 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 i[ without the entire Official
Statement. '
THE CITY ........:.................:.......:.. The City of Port Arthur (the "City") is a political subdivision and municipal corporation of
the Slate, located in Jefferson and Orange County, Texas. The City covers approximately
87.96 square miles (see "INTRODUCTION - DeseRlPTTOx of CITY").
THE-BoNDS .......:...:................. ..... The Bonds are issued as $S,OOQ000 General Obligation Bonds,. Series 2010. The Bonds are
_ ~ issued as serial bonds maturing February 15, 2011 through 2030, unless the initial purchaser
designates one or more maturities as a Tenn Bond (see "THE BONDS -DESCRIPTION of THE
BONDS").
PAYMENT of INTEResT ......... ..... Interest on the Bonds accrues from February I, 2010, and is payable August 15, 2010; and
each August 15 and February IS thereafter until maturity or prior redemption (see "THE
- BONDS - DESCRIPTION OF THE BONDS" and "THE BONDS -OPTIONAL REDEMPTION").
AUTHORITY FoR ISSUAAICE..... ..... The Bonds are issued pursuant [o the general laws of the State, including particularly Chapter -
1331, Texas Government Code, an election held by theCity on November 6, 2007; andan
- Ordinance passed by'the City Council of [he City (see "THE.-BONDS - AUTHORTTY Foe
= IssuAxcE"). -
$ECORII'Y FOR THE BONDS .:... ..... The Bonds constitute direct and voted obligations of the City, payable from [he levy and
collection of a continuing, direct; annual ad valorem [ax, within the limits prescribed by law,
-
on all taxable
property located within the City (see "THE BONDS - SECURITY Arro SOURCE of
- PAYMENT").
REDEMrrION ........................... .... The City reserves the right at its option, to redeem Bonds having stated maturities on and
;after February I5, 2020, in whole or in part in principal amounts of $5,000 or any integral
multiple thereof; on February 15, 2019, or any date thereafter, a[ the par value -thereof plus
accrued interest to the date of redemption (see "THE BONDS - OPTIONAL REDEMPTION").
TAX EXEMPTION ....................... ..... In the opinion of Bond Counsel, under existing law, the interest on the Bonds will be excludable
from gross income for federal income tax purposes; subject to the matters described under "fAX
MATTERS" herein, and is nota specific preference item or included th a corporation's adjusted
current earnings for purposes of the.federal alternative minimum [ax. See "TAX MATTERS"
fora discussion of the opinion of Bond Counsel
U5E of PROCEEDS ................... .... Proceeds from [he sale of the Bonds will be used (i) to make improvements to drainage,parks
and recreation; public safety, water system, streets and sidewalks, and (ii) to pay the costs
associated with [he issuance of the Bonds.
RATINGS .................................. .... The presently outstanding tax supported debt of the City is rated "A2"by Moody's Investors
- ~ Service; Inc. ("Moody's") and "A" by Standard & Poor'sRatings Services, A Division oBThe
- - McGraw-Hill Companies, Inc. ("S&P"); without regard to credit-enhancement. Applications
for contract ratings on the Bonds have been made [o Moody's and S&P (see "OTHER
INFORMATION - RATnaGS"). - -
BOOK-ENTRY-ONLY
$YSTEN .................................:... :.. The definitive Bonds will be initially registered and delivered only [o Cede- & Co., tfie
-
' nominee of DTC pursuant
to the Book-Entry-Only System described herein. Beneficial
ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples
thereof. No physical delivery of the. Bonds will be made [o the beneficial owners thereof.
Principal of, premium, if any, and interest on the Bonds will be payable by [he Paying
- Agent/Registraz to Cede & Co, which-will make distribu[ion~of the amounts so paid [o the
- _ ~ participating members of DTC for subsequent payment to the beneficial owners of the Bonds
_ - ~ - - -(see "THE BONDS - Boox-ENrev-ONLY SYSTEM") . ~-
QUALIFIED TAX-EXEM1IPr
OHLIGATIONS :........................... ... The City will designate the Bonds as "Qualified Tax-Exempt Obligations' for financial
inStltullODS (see "TAX MATTERS -'PURCHASE OF TAX-EXEMPT OBLIGATIONS BY FINANCIAL
- INSTITUTIONS").
PAYMenT RECORD .........:.......... ... The City has never defaulted in payment of its general obligation tax debt.
SELECTED FINe6NCIAL INFORMATION
- - ~ Raiio Tax
Fiscal _ -_ - Per Capita .General -_ Per Debi[o
Yeaz Estitnated Taxable Taxable Obligation - Capita Taxable Percent
Ended City Assessed Assessed ~ (G.O.) , _ G.O. Assessed ~ Total
-. 9/30 Populationi~l Valuationlzl ~ Valuation Tax Debt Tax Debt Valuation Collection.
- 2005 57,755. $ 1.418;923 933 $ 24,568 $ 72,555,000 $ 1,256 ~ 5.11% 98.57%
- .2006- .57,755 1,527,385,850 26,446 69,080;000 1,196 ~ 4.52% 100.54%
2007 57.755 1,431,012,945 P) 24,777
- 66,29Q,000 1,148 - 4.63% 100.03%
2008 -
57,755 1,731,296,115 29,977 82,000,000 1,420 - - '.. 4.74% 98.51%
- 2009 - 57,755 -1,970,913,867 34;125 77;725,000 1,346 - 3.94% 94.73%
-- 2010 57,755 2,054,959,972 35,581 - -89,31Q,000 1<l ],546 141 4.35% 1°I In
• (l) Source: 2000 U. 5. census held constant
(2) As reported by [tie Jefferson County and Orange County appraisal Districts on City's annual report of pro perty value; subject to change
during the ensuing year. - ~ _
(3) Change in value due [o losses from propertydamage caused by Hurr icane Rita in 2005.
(4) Projected, includes the Bonds.
(5). In the pracessofcollection. - --
_ GENERAL FUND CONSOLIDATED STATEMENT SUM11M1fARY ~
For additional information regarding [he City, please contact:
Rebecca Underhil6 - - -- - Joe Morrow
Assistant City Manager-Administration ~ or Senior Vice President
City of Port Arthur ~ - First Southwest Company -
444 4a' Street -1021 Main Street, Suite 2200 -.
_ Port Arthur, TX 77640 ~ Houston, Texas 77002
- (409) 983-8150 - (713) 654-8690- - -
Rebecca@portarthur.net ~ jmorrow@firstsw.com
5
CITY OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Length of
City Council Service ~ ~ ~ '
Member Position (yrs) (mos) Term Expires -Occupation .
Deloris Prince Mayor 2 6 May-10 Retired.
~- Liz Segler Mayor Pro-Tem 1 7 May-ll Retired
lack Chatman, Jr. Councilmember 2 7 May-I 1 Office Clinic Manager
Morris Albright III Councilmember 1 7 May-1 I Port Iron Ltd. President -
Martin Flood Councilmember - 5 7 May-1 I Estimator
John Beard, Jr. Councilmember 5 7 May-12 Process Operator
- Robert E. Williamson Councilmember 3 7 May-12 Retired
D. Kay Wise Councilmember 1 7 May-11 Human Resources Manager
Thomas E. Henderson Councilmember - l 6 May-11. Retired
SELECFED ADMINISTRATIVE STAFF '
- - Length of
_ Service -
-~ Name Position
~ (yrs) (mos)
Stephen Fitzgibbons City Manager I3 8
,Rebecca Underhill Asst. City Manager-Admini stration 17 ]0
John Comeaux Asst. City Manager -Operati ons 5 9
Deborah Echols Director of Finance 17 4
Terri Hanks - - - City Secretary ~ 7 2
- Valecia Tizeno Acting City Attorney .S 10 --
CONSULTANTS AND ADVISORS -
Auditors..__ ...:...................:...:................:....:......... ......................................... _.... ................._.. ....... Edwards Tale & Fontenot, LLP
- ~ ~ Beaumont, Texas
Bond Counsel ...................:...................,................ ................:.:.................-:.... ...... .........:........... .................... Vinson & Elkins L.L.P.
- ~ - Houston, Texas
Financial Advisor ..................................................
- ......................................... ...... ..................... .........'..:... First Southwest Company
' Houston, Texas
6
PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$5,000,000
CITY OF PORT ARTHUR, TEXAS
GENERAL OBLIGATION BONDS, SERIES 2010
INTRODUCTION
This Official Statement, ,which includes the Appendices hereto, provides certain information regarding [he issuance of
$8,000,000 City of Port Arthur, Texas, General Obligation Bonds, Series 2010 (the "Bonds'"). Capitalized terms used in this
Official Statement have the same meanings assigned to such terms in the ordinance authorizing the issuance of the Bonds -
adopted by the City Council of Port Arthur ([fie "Ordinance'), except as otherwise indicated herein.
There follows in this Official Statement descriptions of the Bonds and certain information regarding the City and its finances. All
descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each. such
document. Copies of such documents may be obtained from [he City's Financial Advisor, First Southwest Company, Houston,
Texas.
DESCRIPTION OF THE CITY
The City is a home rule municipality, duly organized and existing under the laws of the State, including the City's Home Rule
Charter. The City was incorporated in 1898; and first adopted its Home -Rule Charter in 1963-. -The Ci[y operates under. a
CounciUManager form of govemment with a City Council comprised of the Mayor and eight Councilmembers. The term of
office is three years for the Mayor and six Councilmembers, and the remaining Councilmembers serve two-year terms. The City
Manager is the chief administrative officer for the City. Some of the services that the City provides are: public safety (policeand
fire protection), highwaysand streets, electric, water and sanitary sewer utilities,health andsocia6 services, culture-recreation;
public tmnsporta[ion, public improvements, planning and zoning, and general adminis[mtive services. The 2000 Census
population for the City was 57,755. The City covers approximately 87.96 square miles. ~ _
THE BONDS
DESCRIPTION OF THE BONDS
The Bonds are dated February 1, 2010, and mature on February I S in each of the years and in the amounts shown on the inside
cover page hereof. Interest will be computed on [he basis of a 360-day year of twelve 30-day months, and wilPbe payable on
February 15 and August IS,.commencing August ~15, 2010. The definitive Bonds will be issued only in fully registered form in
any-integral multiple of $5,000 for any onematarityand will be initially registered and delivered only to Cede & Co, [he
nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein,. No physical
delivery of the Bonds will be made to [he owners thereof. Principal of, premium, if any, and interest on [he Bonds 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 forsubsequent payment to the beneficial owners of the Bonds. See "BODE-ENTRY-ONEV $YSTEM" herein.
AUTHORITY FORTSSUANCE
The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, including particularly Chapter
1331, Texas Government Code, as amended, an election held by the City on November 6, 2007, and the Ordinance.
SECHRrrY AND SOURCE OF PAYMENT
All taxable property within the City is subject to a continuing, dirAcf annual ad valorem tax levied; within the limits prescribed
by law, by theCity sufficient to provide for the payment of principal of and interest on all Bonds.
TAX RATE LIMITATION
All taxable property within [he City is subject to the assessment, levy and collection by the City of a continuing; direct annual ad
valorem tax sufficient to provide for the payment of_principal of and interest on all ad' valorem tax debt within the limits
prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable [o-the City, and limits its maximum ad valorem
tax rate to $2.50 per $100 Taxable Assessed Valuation for all City purposes, The HomeRule Charter of the City adopts the
constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. ?.rlministratively, the Attorney
General of the State of Texas has adopted rules that limit the amount of taxes to $1.50 per $100 Taxable Assessed Valuation for
the payment of deb[ service. - ~ '_
OPTIONAL REDEMPTION
The City reserves [he right, a[ its option, to redeem Bonds having stated maturities on andafter Febmary 15, 2020, in whole or in
part in principal amounts of $5,000 or any integral multiple thereof, on February I5, 2019; or any date thereafter, at the par value
thereof plus accrued interest to-the date of redemption. If less thah all of the Bonds are to be redeemed, the City may select the
maturities of Bonds to be redeemed. If a Bond (or any portion of the principal sum [hereof) shall have been called for
redemption and notice of such redemption shall have been given, such Bond (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 [he payment of the redemption price and accrued interest thereon are held by the Paying AgenURegistrar
on [he redemption-date. - ~ - -
MANDATORY SINKING FUND REDEMPTION. - -
In addition to [he foregoing optional redemption provisions, if principal amounts designated in the serial maturity schedule above
are combined to create Term Bonds, each such. Term Bond shall be subject to mandatory sinking fund redemption commencing
on Febmary I S of the first yearwhich has been combined to form such Term Bond and continuing on February 15 in each year
thereafter until [he stated maturity date of thafTerm Bond, and the amount required to be redeemed in any year shall be equal to
the principal amount for such year se[ forth in the serial maturity schedule above. Tenn Bonds to be redeemed in any year by
mandatory sinking fund redemption sfiall be redeemed at par and shall be selected by lot from and among the Term Bonds then
subject to redemption. The City, a[ its option. may credit against any mandatory sinking fund redemption requirement Term
Bonds of the maturity [hen subject to redemption which have been purchased and canceled by [he City or have been redeemed
and no[ theretofore appliedas a credit against any mandatory sinking fund redemption requirement..
The principal amount of Term Bonds required to be redeemed pursuant to the operation of such mandatory redemption
provisions may be reduced, a[ the option of the City, by the principal amount of Term Bonds of the same maturity which(i) shall
have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accmed interest to [he
date of purchase and delivered to the Paying Agent/Registtar for cancellation or (ii) shall have been redeemed pursuant to the
optional redemption provisions and no[ theretofore credited against a mandatory redemption requirement-
NOTTCE OF REDEMPTION
Not less than 30 days prior to a redemption date for the Bonds, [he City shall cause a notice of redemption [o be sent.by United- -
States mail. first class, postage prepaid, to the registered owners of the Bonds to be redeemed, inwhole orin part, at the address
of the registered owner appearing on the registration books of the Paying AgenURegis[rar 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 BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON
THE SPECIFIED REDEMPTIONDATE, AND NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS
NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BONDOR PORTION THEREOF SHALL CEASE
TO ACCRUE. ~ - - - - - -
DEFEASANCE
The City reseryesthe right [o defease the Bonds in any manner now or hereafter prescribed by law.
BOOK EN'TRV-ONLY SYSTEDr
This section describes how ownership of the Bonds is to be transferred and how the principal of, premium,.if any, and interest on
the Bonds are to be.paid to and credited by The Depository Trust Company ("DTC"), New York, New York, while the Bonds~aze
registered in its nominee name. The information in this section concemimg DTC and the Book-Entry-Only System has been
provided by DTC for use in disclosure documents such as thi50fficialStatement. 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 doesnot give any assurance that (1) DTC will distribute payments of debt service on the Bonds, 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 Bonds);or redemption or other notices, to the Beneficial Owners; or that they
will do so ono timely basis, or (3) DTC will serve and act in the manner described in this Official Sfatement. The current roles
applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed
in dealing with DTC Participants are on file with DTC. -
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be
issued as fully-registered certificates registered in the name of Cede & Co. (DTC's partttership nominee) or such other name as
'may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for the Bonds,
in the aggregate principal amount of such issue, and will be deposited with DTC. -
DTC, theworld's largest securities depository, is a limited-purpose-tmst company organized underthe New York Banking Law,
a "banking organization" within the meaning of [he New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the.meaningof the New York Uniform Commercial Code, and a"clearing agency" registered
pursuant [o the provisions of Section 17A of the Securities Exchange Ac6 of 1934. DTC holds and-provides asset servicing for -
over 3.5 million issues of U.S. and non U.S. equity, corporate and municipal debt issues, and-money market instrument (from
over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC_ also facilitates the post-trade
settlement among. Direct Participants of sales and other certificates 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 awholly-owned subsidiary of The Depository
Trust & Clearing Corporation (`'DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and
Fixed Income Clearing Corporation all of which are registered clearing agencies.. DTCC is owned by the users of its regulated
subsidiazies. 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 thatclear 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 aze on file with [lie Securities and Exchange Commission. More information about DTC can be
_ found at www.dtcc.com and www.d[c.org. ~ - -
..Purchases of Bonds under the C)TC system must be made by or through Direct Participants, which will receive a credit for [he
Bonds on'DTC's records. The ownership interest. of each actual purchaserof each Bond ("Beneficial Owner") is in fora [o be
recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC, of
their purchase. Beneficial Owners aze, 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 Bonds 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 representing4heir
ownership interests in Bonds, except in the even[ that use of the book-entry system for the Bonds is discontinued. -
To facilitate subsequent transfers, all Bondsdeposited 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 Bonds with DTC and their. registration in the name of Cede & Co. or such other nominee do not effect. any change in
beneficial ownership. DTC has no knowledge ofthe actual Beneficial Owners of the Bonds; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may od may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of [heir holdings on behalf of their customers.
Cpnveyance 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,subjec[
to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take
certain steps to augment transmission to them of notices of significant events with respect to the Bonds; such as redemptions;
tenders, defaults, and proposed amendments to the certificate documents. For example, Beneficial Osmersof Bonds may wish to
ascertain that the nominee holding the Bonds 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 [hat copies of the
notices be provided directlyYo them.,
Redemption notices shall be sent to DTC. Ifjess than all of the Bonds within an issue are beingredeemed, DTC's practice is'to
determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consenfor vote with respect to the Bonds unless authorized by
a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to
Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede &-Co.'s consenfing or voting rights to those
Direct Participants-to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy) .. -
Principal and interest payments on the Bonds will be made [o Cede & Co., or such-other nominee as may be requested by an
authorizedrepresentative.of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and
corresponding detail information fiom the City or Paying AgenURegistrar 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 instmctionsand
customary practices, as is the case with certificates held for the accounts of customers in bearer form or.registered in "street
name; and wil4 be the. responsibility of such Participant and not of DTC nor its nominee, the City. or Paying AgenURegistrar,
subject to any statutory or regulatory requirements as may be~in effect from time to time. Payment of redemption proceeds,
distributions; and dividend 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 AgenURegistrar, disbursement of such payments [o Direct Participants will be -
the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants -
DTC may discontinue providing its services as securities depositary with respect to the Bonds at any time by giving reasonable
notice to the City or Paying AgenURegistraz. Under such circumstances; in the event that a successor securities depository is not
obtained, Bond certificates are required to be printed and delivered. -
The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities
depository). In [hat event, Security certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the City
- - believes to be reliable; but the City takes no responsibility for the accuracy thereof.
EFFECT-oF TERMINATION of Boon-ENTRY-ONrv $vsTEat In the event that the Book-Entry-Only System is discontinued by
DTC or the use of the Book-Entry-Only Systemis discontinued by the City, printed Bonds will be issued to the holders and the
Bonds will be subject to transfer, exchange and registration provisions as set forth imthe. Ordinance and'summarized under "-
- ~ THE BONDS - TRAxseett, EXCHANGE Arm RECtsTRnnox"below. - - - -
PAYING AGENT/REG[STRAR
The initial Paying AgenURegistrar is Wells Fargo Bank, N.A.; Houston, Texas. In [he Ordinance, the City retains the right to
replace the Paying AgenURegistrar. The City covenants [o maintain and provide a Paying Agent/Begistrar atoll times until the
Bonds aze duly paid and any successor Paying AgentBegis[rar shalCbe a commercial bank or trust company organized under the
laws of the State of Texas or other entity duly qualified and legally authorized toserve as and perform [he duties and services of
Paying AgentRegistrar for the Bonds. Upon 'any change in the Paying Agent/Registrar for the Bonds, the -City agrees to
promptly cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first class,
postage prepaid, which notice shall also give [he address of the new Paying Agent/Registrac _ _
TRANSFER, EXCHANGE AND REGISTRATION
In the even[ the Book-Entry-Only System should be discontinued, the Bonds may be transferred and exchanged on the
registration books of the Paying AgenURegistrar only upon presentation and surrender [o the Paying AgenURegistrar 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 t6 be paidwith respect to such registration, exchange and transfer Bonds may be assigned by the execution of -
an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying
AgentBegistrar. 'New Bonds will be delivered by tfie Paying Agent/Begistrar, in lieu of the Bonds being transferred or
exchanged; at the designated office of the Paying AgenURegistrar, or sent by United States mail, firsTClass, postage prepaid, to
the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds 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
Bonds to be canceled, and the written ins[mment of transfer or request for exchange duly executed by the registered~owner or his
duly authorized agent, in forth satisfactory to the Paying AgenURegistraz. New-Bonds registered and delivered in an exchange or
transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Bonds
- -surrendered for exchange or transfer See "BOOK-ENTRY-Ox[.Y SYSrEM" herein for a description of the system to be utilized
initially in regard to ownership and transferability of the Bonds. Neither the City nor the Paying AgenURegistraz shall be - -
required to transfer or exchange any Bond called for redemption, ~in whole or.in part, within 45 days bf the date fixed for.
redemption; provided, however, sdch limitation of transfer shall not be applicable to an exchange by the registered owner of the.
uncalled balance of a Bond. ~ - ,
10
RECORD DATE FOR INTEREST PAYMENT
The record date ("Record Date") for the interest payable on [he Bonds on any interest payment date means the close of business
on the last business day of the preceding month.
In the event of anon-payment-pf interest on a scheduled payment date, and far 30 days thereafter, a new record date for such
interest payment (a "Special Record Date') will be established by [he Paying Agent/Regis[rar, if and when funds for the payment
of such interest have been received from the City. Notice of the Special Record Dale and of the scheduled payment date of the
past due interest ("Special Payment Date",.which shall be I S days after the Special Record Dale) shall be sent at IeasC 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 Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next
precedingthe date of mailing of such notice. ~ -
BONDHOlDERS'REMEDIES
The Ordinance does not provide for the appointment of a trustee [o represent the interestsof [he Bond holders upon any failure of
[he City to perform N accordance with[he terms of the Ordinance or upon any other condition and in the event of any such -:
failure to perform, the registered owners would be responsible for the initiation and cost of any legal action to enforce
performance of the Ordinance. Furthermore, the Ordinance does not establish specific events of default with. respect to [he
Bondsand, under Stale law, there is no right to the acceleration of maturity of the Bonds upon the failure~of the City to observe
any covenant under the Ordinance. A registered owner of Bonds could seek a judgment against the City if a default occurred in
the payment of principal of or interest on any such Bonds; however, such judgment could no[ be satisfiedby execution against
any property of [he City and- a suit for monetary damages could be vulnerable to the defense of sovereign immunity. A
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 Bonds as it becomes
due or perform other material terms and covenants contained in [he Ordinance. In general, Texas courts have~heldthat a writ of
mandamus may be issued [o require a public official to perform legally imposed ministerial duties necessary for the performance
of a valid contract, and Texas law provides that: following [heir approval by the Attorney General and issuance,- [he Bonds are
valid and' binding obligations for all purposes according to their terms. However, 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 City is also eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although
Chapter 9 provides for [he recognition of a security interest represented by a specifically pledged source of revenues, [he pledge
of taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a. security imerest under Chapter
9. Chapter 9 alsoincludes an automatic stay provision that would prohibit, without Bankruptcy Court approval [he prosecution
of any other legal action by creditors or Bond holders 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 heazd in Bankmptcy Court instead of other federal or state court); and.
the Bankruptcy Code provides-forbroad 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 Bonds
are qualified with respect to the customary rights of debtors relative to their creditors; including rights afforded to creditors under
the Bankmptcy Code.
USE OF BOND PROCEEDS
Proceeds from the sale of the Bonds are expected to be expended as follows:
Deposit to Construction $ -
Costs of Issuance -- -
Total Sources of Funds $ ~ - - -
ll
TAX INFORMATION
AD VALOREM TAX LAW
The appraisal of property within the City is the responsibility of the Jefferson and Orange County Appraisal Districts (the "Appraisal
Districts"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal
Districts aze required under the Property Tax Code to appraise all property within the Appraisal Districts on the basis of 100% of its
market value and is prohibited from applying any assessment mhos. In determining market value of property, different methods of
appmisal_may be used including the cost method of appraisal, the income method of appmisal and market data comparison method
of appmisal, and the method considered most appropriate by the chief appraiser is to~be used. The-appmised value of a residence
homesteadfor a tax year may no[ exceed the lesser of (1) the most recent market value of the residence homestead as determined by
the appmisal entity or (2) the sum of (a) ]0 percent of the appmised value of the property for the preceding tax year; (b) the appraised
value of the property for the preceding tax year; and (c) the market value of all new improvements to the property. The value placed
upon property within the Appraisal Districts is subject to review by an Appraisal Review Boazd of each individual Appraisal District,
consisting of three members appointed by the Boazd of Directors of the Appmisal Districts. The~Appraisal Districts are required to
review the value of property within the Appmisal Districts at ]east every three years. The Citymay require annual review at its awn
expehse. ~ -
Reference is made to Title I of [he Texas 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 appmisal 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 Stale Constitution ("Article' VIII") and State law provide for certain exemptions fmm property taxes, the valuation
of agricultural and open-space,lands at productivity value; and [he exemption of certain personal property from ad valorem taxation..
Under Section 1-b, Article VllI, and State law, the governing body of apolitical 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; or (2) an exemption of up to 20% of the market value of
residence homesteads. The minimum exemption under this provision is $5,000.
In the case of residence homestead exemptions granted under Section I-b. Article VIII, ad valorem taxes may continue to be levied
against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation
of the.levy would impair [he obligation of the contract by which the deb[ was created.
State law and Section 2, Article VIII, mandate an additional. property tax exemption for disabled veterans or [he surviving spouse or
children of a deceased veteran who died while on active duty in the armed forces: -the exempfion applies to either real or personal
property with the amount of assessed valuationexempted ranging from-$5,000 to a maximum of $12,000. - -
Effective January 1, 2004, under Article VIII and State law, the governing body of a county, municipality ocjunior college district,
may provide [hat the total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons.65 years of
age or older will not be increased above the amount of taxes imposed in the year such residence qualified for such limitation. 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 paidon residence homesteads of
persons 65 years of age or older or who are disabled. Upon providing for such exemption, such Freeze on ad valorem [axes is
transferable to a different residence homestead within [he taxing unit and to a surviving spouse living in such homestead who is
disabled or is a[ 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 curent tax rate, and [he total amount of taxes imposed is increased to reflect the view
improvements with the new amount of faces [hen serving as the ceiling on taxes for the following-years. Once estallished, the4ax
mte limitation may not be repealedor rescinded. The City has established such a ]imitation on ad valorem taxes.
Article VIII provides that eligible owners of both agricultural land (Sectionl-d) and open-space land (Section I-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 taxarion onthe basis of its productive capacity. The same land may not be qualified-under both Section 1-d
and 1-d-1. ' - - - - .-
12
Nonbusiness personal properly, such as automobiles or light tacks, are exempt from advalorem taxation unless [he governing body
of a political subdivision elects [o tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation. State
law additionally provides for one motor vehicle owned by an individual and used in thecourse of the owner's occupa[ionor
profession and also for personal activities of the owner to be exempted from ad valorem taxation.
Article VIII,. Section ly, provides far- `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, manufachming processing or fabrication.
Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are no[ subject to reversal In
addition, under Section 1 ].253 of the TexasProperty Tax Code, "Goads-in-transit" aze exempt from taxation unless a taxing unit opts
out of the exemp[idn: Goods-in-transit are defined-as tangible persona] property that: (i) is acquired in or imported into [he state to be
.forwarded to another location in the state or outside the state; a is detained ar a location in the state in which the owner of the.
property does not have a direct or ~indvect ownership interes[(for assembling, storing, manufacturing processing, or fabricating
purposes by the person who acqured or importedthe property; (iii) is transported to another location in the state or outside the state
not later than 175 days after the date the person acquired the property in or imported the property into the state; and (iv) does not
include oih natural gas, petroleum products, aircraft, dealer's motor vehicle inventory,~dealer's vessel and outboard motor inventory;
dealer's heavy equipment inventory, or retail manufactured housing inventory. -
Article Vlll, section 1-n of the Texas Constitution provides for the exemption from taxation of"goods-in-transit." "Goods-in-transit"
isdefined by a provision of the Property Tax Code, which is effective for tax years 200Sand thereafter; as personal property acquired
or imported into Texas and transported to another location in the State or outside of the Slate within 175 days of the date the property
was acquired or imported into Texas., The exemption excludes oil; natural gas; petroleum products, aircraft and special inventory,
including motor vehicle, vessel and out-board motor, heavy equipment and manufactured housing inventory. The Property Tax Code
provision permits local governmental entities; on a local option basis, to take official action byJanuary l.of the yeaz preceding atax
year,. after holding a public hearing m tax goods-in-transit during the following tax year. A taxpayer.may receive only one of the
freeport exemption or [he goods-in-transit exemption for items of personal property.
The City may create one or more tax increment financing zones, under which the tax values on property in the zone are "frozed' a[
the value of the property at the time of creation of the zone. Other overlapping taxing units may agree to contribute all or part of
future ad valorem taxes levied and collected against the value of property in the zone in excess of the "frozen value' [o pay or finance
the costs of certain public improvements in thezone. Taxes levied by the City against thevalues-of real property in the zone in excess
of the "frozen value" are no[ available for general city use but are restricted to paying or financing "project costs" within the zone.
Currently; [he City has created a tax increment fmancing zone..
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE - - .
By each September I or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the
current year. The City Council will be required to adopt the annual tax rate for the City before the later of September 30 or the
60'" day afterthe date the certified appraisal roll is received by the City. If the City Council does not adopt a tax~rate by such
required date the fax Yale for that tax year is theiower of the effective tax rate calculated-for that tax year or the tax rate adopted
by the City for the preceding tax year. The [ax rate consists of rivo components: (1) a rate for funding of maintenance and
operation expenditures, and (2) a rate for deb[ service. - - ~ ~ ~ -
Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate".
Effective 2005; a tax rate cannot be adopted by the City Council that exceeds the lower of the rollback tax rate or the effective
tax rate until two~public hearings have been held on the proposed tax rate following.notice~of such public hearings (including the
requirement that notice be posted on the City`s website if the City owns, operates or controls an intemet website and public
notice be given by television if the City has free access to a television channel) and [he CityCouncil has otherwise complied
with the legal requirements for the adoption of such tax rate. If the adopted tax rate exceeds therollback tax rate the qualified _
voters of the City by petition may 7equire that an election be held to determine whether or not to reduce the [az rate adopted for
the current year to the rollback tax rate: - ~ -
"Effective tax rate" means the rate that will producelast year's total tax levy (adjusted) from this year's total. taxable values
(adjusted). "Adjusted" means lost values are no[ included in the calculation of last year's taxes and new values are not included
in this year's taxable values. -
13
"Rollback tax rate" means the rate that will produce last year's maintenance and operation tax lery (adjusted) from this year's
values (adjusted) multiplied by 1.08 plus a-rate that will produce this year's debt service from this~yeai's values (unadjusted)
divided by the anticipated tax wllection 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-Ralf 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-[he 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 [ax rates. ~ -
- PROPERTY ASSESSMENT AND TAR PAYMENT .
Property within the City is generally assessed ~as of Ianuary 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 I of the same year, and become
delinquent on.February 1 of the following year. -Taxpayers 65 years oldor older are permitted by Slate law to pay [axes on -
homesteads in four installments with-the first due on February I of each year-and the final installment due on August L -
PENALTIES AND INTEREST '~ -
Charges for penalty and interest on the unpaid balance of delinquent taxes are made-as follows: -
Cumulative Cumulative -
Month ~ ~ Penalty Interest Tbtal
February 6% 1% o
March ~ ~/°
7 2 9
- April ~ 8 _
3 11
.May y - 4. -
- June 10 - 13
5 15
- - July - - 12 6, 18
After July, penalty remains at 12°/q and interest increases at the rate of 1% each month. In addition, if an account is delinquent
in7uly, a IS% attorney's collection fee is added to the totaftax penalty and interest chazge. Under certain circumstances, taxes
which becomedelinquent on [he 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 ]aw does not allow.for the collection of penalty and interest against
'anestate in bankmptcy. Federal bankruptcy law provides [hat an automatic stay of action-by creditors and other entities,
including governmental units, goes into etPect with [he filingof any petition iD 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-cr8ditorstatus unless; in either case, an order lifting_the stay is obtained from the bankmptcy court. In many
cases post-petition taxes are paid as an administrative expense of the estate in bankmptcyor 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 $25,000; the
disabled are also granted an exemption of $25,000.
The City has granted an additional exemption of 20% of the market value of residence homesteads; minimum exemption of
$5,000.
See "Taste 1 - VALOA7iON, EXEMPTIONS AA'D GENEEAL OBLIGATWN DeDT" for a lisiingof [he amounts of the. exemptions .
described above. -
The City has 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 oDJanuary I, 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; and Miriam Johnson collects taxes for the City:
The City does pertni[ split payments, and discounts are not allowed. -
The City does tax goods in transit.
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 hasestablished a tax .abatement program tomencourage economic-development In order to beconsidered for [ax
abatement; a project must meet several criteria pertaining to job creation and property value enhancement. Currently, there are
no abatement agreements in effect. -
TAX INCREMENT FINANCING ZONE - - - -
The City may create a Tax Increment Reinvestment Zone. Any value. within such a zone would not be available to tax and pay
debt service on the Bonds.
15
TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT'
- 2009/2010 Market Valuation Established~by JeffersonCounty and
Orange County Appraisal Districts (excluding totally exem t roe -
-- P P P rt3')t~l $ 2.406,181,293
-
Less Exemptions/Reductions at 100%Market Value:. - ~ -
Charity
Loss Due to Value Limit $ 201,550
Abatement - - ~ 56,492,790 ~ -
- Over 65 Exemptions ~ 33;112,800
Disabled Persons Exemptions - - ~ 91,291;780
Homestead Exemptions - _ 26,132,850 -
Veteran Homestead Exemptions - - 137,252,226
Productivity Loss _ - ~ -
~ 3,019;802
- -Pollution Control ~
- ~ -
- 212,809
~
2009/2010 Taxable Assessed FValuation, ~ - - ~
- 351,221.321
- - ~ - - $ 2,054,959,972 '
-General Obligation Deb[Payable from Ad Valorem Taxes (as of 2/1/2010) ~ - -
Geneml Obligation Bonds
Certificates of Obligation - - $. 45,980,000
- Plus: The Bonds _
~~ 31,745;000.
- - ~~
- Less: Self-Supporting Debt t~? ~ ~ •000,000 85,725,000
~ -
Total General Obligation Debt Payable from Ad Valorem Taxes ~ -. ~ $ 6,743,333
- Interest and Sinking Fund Balance as of 9/30/2009['1 ~ $ 78,981,667 -
- Ne[ Geneml Obligation Debt Payable from Ad Valorem Taxe
- - - ~ $ ~ 3,900,329
s
Ratio of Net General Obligation Debt to Taxable.Assessed Valuation
- $ 75,081,338
- ~ ~ 3.65%
- - - - 2000 U.$. Census Population - 57,755 - -
Per Capita Taxable Assessed Valuation - $35,581 ~ -
_ _ Per Capita Funded Net Debt - $1,300
(I) As reported by the Jefferson County and Orange County Appraisal Districts; subject [o change dur
(2) Represents the City's Combination Tax & Revenue Certific
t
o ing [he ensuing year
a
es
f Obligation, Series 2002C and
Sands, Series 2008.
(3) Unaudited. - -
a portion of [he C .
ity's General Obligation
16
TABLE 2 -TAXABLE ASSESSED VALUATIONS BY CATEGORY
Taxable A raised Value. Fiscal Yeaz Endin S -tember 30
2010 2009
2008
- -Cate ory -
Amount %of
Total ~ ~
Amo
t %nf %of
Real, Restdential; Single-Family
$ 987
199
100
41 un Total Amount
TO~
-Real, Residential, Multi-Family ~ ,
,
- 86
003
300 .03%
3
5 $ 971,237,950 41.95% o
$ - 821,567,120 - 40.70%
Real, Vacant Platted Lots/Cmcts ,
,
51
326
302 .
7%
- 91,515;590 °
3.95/0 78;344,950 3.gg%,
Real, Acreage (Land Only) ,
,
41
842
158 2.13%
- 1
74 49,036,216 2.12%
- 47,913,320 2.37%
Real, Farm and Ranch lm mvemen[s
P .
,
-
1
849
380 .
%
0
44,873,998
1.94%~
32,116,390 ~ 1.59%
-
Real, Commercial and Industrial - ,
.
599
096
880 .08%
24
90 2,330,530 0.10% o
- 2,445,760 0.12 /o
Real, Oil, Gas & Other Mineral Reserves ;
,
36
171
180 .
%
- °
~ 1 554,489,290
- o
23.95 /o 590.306,340 29.24%
Real and Intangible Personal, Utilities ,
,
231
726
113 .50/0
9 25,084,790 1.08% 13,137,020 0
0.65/0
Tangible Personal, Business ,
;
- 358
409
150 .63/0
14
9 227,092753 9.81% 102;028;205 5.05%
Tangible Personal, Other - ,
,
- 428
950 .
0%
0 342,456,420 .14.79% o
329,732,930 ~ 16.34/0
Real, Inventory
- - ,
12;128,780 .02%
3
45%
- -7,326;260 °
- 0.32/0 .
944,560 -0.05%
Total Appraised Value Before£xemptions
~ 2
406
181
293 .
99
50% 0.00% o
Less: -Total Exempfions/Reduc[ions ;
;
,
351
221
321 . 2,315,443.797 100.00% 2,018,536,595 100.00%
Net Taxable Assessed Value ,
,
$ 2
054
959
972
- 344.529,930. -
- 287,240,480
_ ,
,
. $ 1,97Q,9I3,867 - $ 1,731,296.115
Taxable Ap praised Value Fiscal Year Ending
2007 2006 - -
Category
-Amount %nf
Total.
Amount %of
-T
t
l
Real; Residential, Sin le-Famil
g Y
R $ 620,903,940 37.92% $ 697;349
693 - o
a
eal, Residential, Multi-Family
46
586
550
2
85% ; 39.54%
Real, Vacant Platted LotsCfracts - ,
. .
65,241y940 0
~ 3.70%
Real, Acreage (Land Only) 38,6(6,599 - 2.36% 37,190,451 2.11%
- ~
Real, Farm and Ranch Im rovements
P 43,493;680 1.43%
23,466,980
133% -
- -
Real, Commercial and Industrial 2,047,370
- 0.13% 2,644;950 0.15%
Real, Oil, Gas & Other Mineral Res 465,479;656
- 28.43%
521,896,851 o
29.59 /o
- - -
erves
Real and Intangible Personal, Utilities 65,007,550 °
3.97/0 46,733,920 2.65%
Tangible Personal
Business - 96,621,122 5.90%
100,169,927
5.68%
,
Tangible Personal
Other 277,732,310
- 16.96% 267,981,260 15.19%
,
Real, Inventory - 736,270 - 0.04% _
995,190 o
0.06/°
- .
Total Appraised Value Before Exemptions 1,637;225
047 n) 100
00% 7 %
Less: Total Exemptions/Reductions ;
~ 206
212
102 . 1,
63,671,162. 100.00
Net Taxable Assessed Value ,
,
$1
431
012
945 236,285,312 -
,
,
, $1,527,385,850
(1) - Changein Taxable Assessed Valuation due [o losses in value from p roperly dama e
d
g
cause
by Hurricane Rita in 2005.
NOTE: Valuations shown are certified taxable assessed values reported by the Jefferson and Orange County Appraisal
Comptroller of Public Accounts. Certified values are subject [o chan
e thr
h District [o the S[a[e
District updates recoFds. g oug
out [h e year as contested valu es are resolve d and [he Appraisal
TABLE $ -VALUATION AND GENERAL O
BLIGATION DEBT HISTORY
Fiscal ~ G.O. Ratio of
- - Taxable Tax Deb[ G.O. Tax Debt ~
- Yeaz' -
. Taxable
Ended Assessed Outstanding - to Taxable
Estimated
G
O
Assessed
Valuation at End
9/30 Populationlll Valuationl~1 Assessed T .
.
ax Debt
2005 Per Capita of Yeaz Valuation
57,755 - $1,418,923;933 Per Ca ita
$24
568
,
$72,555,000 5.11%
2006' -
57,755 L527,385;850 26
446 6 (L
,
9,080,000 0
2007 57;755 1,431,012,945 (s] - 4.52/0
24
777
1,196
,
66,290;000 4.63% -
2008 57,755 - - 1,731,296,115 29
977 1,148
,
82,000,000 0
2009 57,755 1,970,913;867 4.74/0
34
125
1,420
;
77,725,000 3.94%
- 2010 - - -
57;755 2,054.959,972
35
581
141
1,346
. ..
,
89,310;000
4.35% t4) - 1,546 t°1
(1) Source: 2000 U.S. Census held constant
(2) As reported by the Jefferson County and Omnge County Appraisal Districts; subject to change during the ensuin
- (3) Change in Taxable Assessed Valuatio
d
g year.
n
ue to losses in value from property damage caused by Hurricane Rita in 2005.
(4) Projected, includes the Bonds_
-
- TABLE 4 -_ TAX RATE
LEVY AND CO
,
LLECTION HISTORY
Fiscal Year Assessed .~ Total - General - -
Interes[ and =
~
0
Ended 9/30 -Value (0.
- /0 Current
~ Tax Rate Fund t~/ Sinking Fund (Z] = Tax Lev ta]
2005
C
l
- % Total
-
.
o
lections
$1,418923,933 Y
$0.77500 $0.26033 $0
51467 Collections
.
$ 10;768,223 95.71%
2006 1;527,385,850 0.77500 0
28664 ~ 0
98.57/0.
.
' 2007 0:48836 - 11,860,399 95.46%
1;431,012,945 0.77500
0
30920
- 100.54% -
.
.
0.46580
2008 1,731,296,115 - - - 11,127,311- 95.91%-
0.76000 0
46560 - 700.03%
.
0.29440 12,807,492 9g,7q%
2009 1,970,913,867 0.76000 0
35799 'o -
98.51 /o
.
2010 2,054,959,972 0:40201 - 14,978,945 -.98.38%_
-
.0.79200 ~ 0
40450 (°]~ 94:73%101
_
.
0.38750 ~ 15,944,577 (sl. ts]
. (1) As reported by the Jefferson County and Orange County Appraisal Districts; subject to change during the ensuin
(2) General Fund and Inters[ and Sinkin
ear
F
d
t
g y
g
.
un
[ax ra
e is based upon [he taxable valuation of the City. Does not take into account the value of
the IndLLStrldl DISlrlet$. $ef "TABLE $-INpUSTR1A{
DISTRICT V
"
,
ALUES.
(3) The [ax levy is adjusted for additions and corteUions throughout [he course of th
a
m
t
p
y
en
s. -
e year. The tax levy-does no[ include In
'
-
dustrial District
.~ (4) Unaudited. - ~ -
- (5)- [n process of collection. - - ~ - -
TABLE 5 -TEN LARGEST TAXPAYERS
-. - 2009/10
~ %ofTotal
. Taxable Taxable
. Name of7axpayer
.
Nature of Pro
ert Assessed. Assessed
Entergy Texas Inc. -
Southeast Texas Hospital LP p
y
~~
Power Plant/Utility - Valuation
$ 162,104,286
-
-Valuation
7.89%
GG&A CentraCMall Partners LP Medical
-Retail Mall 73,692,300 - 3.59%
- Wal-Mart Stores lnc.
Retail - - 33,269,320
~ 0
- 1'62/0
Rowan Companies Inc. - - ~ -
-Offshore Drilling ~ 33,090;230
0 1.61%
- Horizon Vessels Inc.
Offshore Drillin
g 2
,823,290
- ].Ol%.
Motiva Refinery ~
Oil & Gas Refinery 19,662,990 `
(0 0.96%
$outhwestem Bell Telephone Co.
.Telephone Utility 17,545,120 0.85%
Ballard Exploration Co. Inc.
- Oil & Gas Ex Mratioh
P 16,775,080 0
0.82/
-
Ldwe's Home Centers Inc. -
-Retail 16,628,100 -
0.81%
. 14,496,630 ' o
0.71 /o
$ 139;021,440- 6.77%
(I) Represents only the portion of [he MotiVa Refinery located within the City limits and subject tc taxati
b
on
y [he C iTy.
1$
GENERAL OBLttiATtON DEBT LIMITATION ... NO general Obligation debt ]ImitahOn is imposed on the City under cUlTent State
law or the City's Home Rule Charter (see "THE BONDS -Tax RATE LIMITATION").
TABLE 6 -TAx ADEQUACY - '
2010 Net Principal and Interest Requirements ........:.... ~.
$0.4198 Tax Rate at 96%CollectionProduces ~ ~~~~~~~~-~~~~~~~~~-~'~""'"``°""" $ 8,281,422 III
....:............._..:........... -. ........ $ 8,281,6$3 t~I
_ Maximum Net Principal and Interest Requirements{201 I )........:..
$0.4757 Tax Rate at 96%-CollectionProduces .....:..:. ~~~~~~~~~~~~~~~~~~-'~~'~"~"' $ 9,383,149 (II
..........:...... ......... $ 9384,427» RI
- Average NM principal and Interest Requirements (2010-2030) ................ .
$0:2858 Tax Rate at 96%CollectionProduces ............. ~~~~ ~~~"'~""~'" $ 5,636,760 III
..............:....... .........:...$ 5;638,153 aI
(1) Includes the Bonds. Does no[include self-supporting deb[.
(2). Tax lery is based on the taxable assessed value of the City ($2;054,959,972) and does not include Industrial District payments,
TABLE 7 - ESTLNATED 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 [he City, the City has not independently verified the accuracy or completeness of such informa[ioq and no
should rely upon such information as being accurate or complete. Furthermore; certain of the entities listed may have issued.
additional bonds since the date.hereof, andsuch entities may have ro Person
P grama requiring the issuance ~of substantial amounts of
additional. bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping
Tax Debt of the City.
2009/2010 Total City's
Taxable -
2009/2010 -G.O. Debt Estimated
-- Overlapping
City of Port Arthur - Assessed-Value
~~ Tax Rate as of. ~
12/31/2009- %
Applicable G.O. Debt as of
12/31/2
Beaumont ISD -
_ $ 2.054,959,972
$ 0.7920
$ 78
981
667
tI? o
100 009 -
~
Bridge City ISD 8,998,443,769 1.2625 ,
,
' 304
545
000 .00% $ 78,981,667.
Jefferson County ~ ~
587,940,234
1.2900 ,
,
25,367,744 0.05%
0
16
87/
~ 152,273
Jefferson County DD #7 21,138,044,986
-
0.3650
68,325,000 .
0
8
89% 4,279,538
Nederland ISD 10,607,829,460
- 0.1390 .
. 6,074;093
Orange County
~ 1;925,634,710
1,2150 _.
40,805,000 17 SI%
°
8
09/ _
-
.Port Arthur lSD ~ 4,316,498,712
0.5647
1
145
000 .
0
" 874,125
Port Neches-Groves ISD ~
4,919,818,596
-
- 1.3460 ,
,
243,555;000 2.7]
/0
0
30
81 /
31,030
Port of Port Arthur Navigation District
6
230
484626
1.4550.
138,080,730 .
°
o
4.58/° 75,039,296
6
324
097
Sabine Pass ISD ~ ,
,
627
189
118 0.1282
1 36,070,000 ~ 34.57% ,
,
12
469
399
Sabine Pass Port Authority
- ,
'
268
236;198 .1162
- 13,979,278 - °
15.69/0 ,
,
-2
193
349
_ , 0.2045 1,265,000 56.62% ,
,
Total Direct and Overlapping Funded Debt - - -
Ratio of Direct and Overlapping Funded Debt to TaxableAssessed Valuation
Per Capita Overlapping Funded Debt -
(1) .Includes the Bonds. Does not include self-supporting debt.
$ 187;135,108
- 9.11%
$ - 3,240
19
TABLE $ -INDUSTRIAL DISTRICT CONTRACTS '
The City taxes property within its corporate limits; but has no such power for property located outside its boundaries. From 1987
through September 30, 2009 the City has collected an aggregate of approximately $313,865,142 iri annual payments from certain-
cdrpora[ions whose properties are located outside the City's boundaries but within the City's extra-territorial jurisdiction pursuant _
to contracts with such corporations for such payments (essentially the. contracts have been in lieu of annexation~and taxation).
Pursuant to a Texas statute adopted m 1963 specifically enabling Texas cities to do so, in December 1975 the City Council
authorized and caused the City to enter into separate contracts ("Industrial DistricfContmc[s") with corporations which provided
that the City would not annex such corporate properties during. the term of the contract unless the City determined that such .
annexation is reasonably necessary [o promote and protecCthe general health, safety and welfare of the persons residing within
the City (but that annexation would not'be made for revenue purposes only). The City has contracts with the following-
corporations expiring as shown:
- _ Contract
Ftrm
-Air Products - _ Expirntion Date
BASF Corporation ~ - December 31, 2010
BASF/Fina joint Venture December 31, 2013
-
BASF/Sabina/A[ofina December 31, 2013
Chevron -Phillips Chemical Co
LLP December31, 2012
,
Chevron USA ~ December 31, 2013
Colonial Pipeline-Co: December 31; 2010
Equilon Pipeline ~ ~ December 31, 2011
Exxon Mobil Corporation December 37, 2005
Exxon Mobil Golden Pass LNG December 31, 2011
Flint Hill Resources - - December 31, 2015
Ineas Phenol December 31; 2013
~
Motiva, Inc. ~ December 31, 20 ] 3
Onyx Environmental Decemba3l, 2019
OxBow Calcining Decemba3l, 2010
Port Aithur Steam Energy December31, 2010
Praxair December 37, 2010
-
PremwrFeedand DecokerProject l6) December 31; 2010
-
Premcor Hydroheater 161
Decemba3l, 2014 -
Premcor Tier B Diesel Project 161 ..December 31, 2010
Premcor, inc. 161 ~ ~ December 31, 2009
Premcor
Inc HOOP 16) December 31, 2013.
.
,
TOTAL -Deep Conversion Project - (s7
December 31
2021
TOTAL petrochemicals, [nc. - ,
December 31, 2013
Contractual
Payment Prepayment
in FY 2009 in FY 2009191
$ 287,570 n) -
518,379 10 500,000
900,000 1') 5,000,000
315,000 lZl
I,IS5,000 10
150,000 0] -
25,000
26,500
125,000
500,000 01
2,050,000 1'? 2,300,000
(al
3.700
000 lsi ,
135;000
183,500 -
15,468 10
200,000 10
832;776 to ~_ -
288,912 n)
265,717 - 10 - -
2,029,654 lrl 6,000,000
872,000
(a)
- 10 3,600,000.00
$ 14,605;506 $ 17,400,000
Tofal
Paymem
$ 287,570
- - LO1S,379
5,900,000
315.000
-- 1;185,000
!50,000
25.000
26,500
125,000
500,000
. 4,35Q,000-
3,700,000
.135,000
I83,S00
15,468
200,000
832,776
288,912
265,717
8,029,684
872,000
3,600,000.00
$ 32,005,506
(I) Payments are 75% of City property taxes thaz would have. been paid ifthe-facilities were located within City limits.
(2) Payments increase [o $315,000 in fiscal years 2009-2013.
(3) Payments begin in fiscalyear 2009 and will be $500,000, $2,100,000 th fiscalyears 2010.2013, and.$2~00;000 in fiscal years 2014-2016.
(4) Payments begin in fiscal year 2010 and will be 75% of City property taxes that would have been paid if the facilities were located within
City limits.
(5) Payments increase to $4,700,000 in fiscal years 2010.2012 and $7,70Q000 in fiscal years 2013-2020.
(6) . Premcor Corporation is doing business as Valero Refinery.
(7) Payments are 65 % of City property [axes that would have been paid if [he facilities were located within City limits:
(8) Payments begin in fiscal year 2013, starting at $500,000 and grndually increase thereafter to a payment of $4,250,000 in fiscal years 2021
and4022.
(9) In December 2008, [he City entered into new five year agreements with the five industries listed in the [able below. These agreements
require that [he companies make an advance payment a[ the execution of the contract, and [haz [he advance payment wouldbe credited with
interest against the future payments over [he term of the agreement In Fiscal Year2009, the City received $] 7,400,000 as payments in
advance andwill recognize the revenue over the. five year term.
20
- - Fiscal Gross Receipts from Ad Valorem - -
Year Valueof Industrial -Tax Comparison -
Ended Industrial District Tax -- Tax Rate ~ %ofActual -
9/30 Districts Contracts Year Equivalent Tax Levy
2005 $ 3,566,837,470 $ 14,179,684 2004 $ 0.3975 13 L68% -.-
2006 3,694,594,650 - 14,898,245 2005 0.4032 -125.61%
2007 5,418,344,930 - 15,259,988 2006. 0.2816 137.14%
.2008 6,527,539,250 -. 16.212,456 2007 02484 -. 126.59%
.2009 6,988,468,270- - 32.005,506 tel.. 2008 0.4580 (A - 213.67%
- - Q) Budgeted. Increase fiom prior years attributed to a prepayment of $17,400,000 as several contracts were renegotiated. Total estimated
- - _ - future payments for the next 5 years range from approximately $22.700;000 to $26,500,000.
- - (2) Tax rate equivalent based on fiscal 2009 budgeted receipts.
In December 2008, the Ciry entered into new five year agreements with the five industries listed in the table below. These
agreements require [hat the companies make an advance payment at the execution of the contract, and that the advance payment
would be credited with interest against [he future payments over the term of [he agreement. In-Fiscal Year 2009, the City
received $17,400,000 as payments in advance and will recognize the revenue over the five year term:
.Annual.
- Amortization - -
- - - - - - Prepayment of Prepayment
- ~ -- in FY 2009 through FY 2013
- - ~ - - -. • BASF Corporation - $ - 500,000 $ . - 100,000
BASFffina Joint Venture 5,000.000 1,000,000
Flint Hill Resources 2,300.000 460,000
Premcor, Inc. 6,000,000 1,20Q,000
TOTAL Petrochemicals, Inc. 3,600,000 720,000
~. ~ Total $ 17,400;000 $- 3,480,000
21
- ~ - DEBT INFORMATION - -
TABLE 9' -PRO-FOR~W GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS -
- -Fiscal
- ~ - .Yeaz Outstanding (t) Less: - - ,.Total
.. ~ . ~ Ended Debt Service Self-Supporting- - Plus: The Bonds I'1 Debt Service
9/30 Requirements 2
Debt(I
Principal
-Interest
Total .
Requirements
.2010 $ - 8,705,679 ' $ 609,635- - - $ 185,378 $ 185;378 $ 8;281,422
2011 - 9,375,091 606,818 '$ 275,000 339;875 - 614,875 9;383,149
2012 8,887,568 605.143 285,000 331,475 616,475 8,898;900
2013 8,882,431 -608,622. 29Q,OD0 322;850 - 612,850 8,886,659
2014 8,914,324 611,738 300,000 314,000 614.000 8;916,586
- - 2015 7,875,332 608,734 310,000 304,850 614,850 7,881,448
- 2016 7;416,611 611,271 320,000 295,400 615;400 7,420;740
- 2017 - 7,439,118 ~ ~ 611,220 330,000 285,650 615,650 7;443,548
- - - ~ - 2018 7,440,649 617,507 340,000- 275,600 - ' 615,600 7,438,742
2019 7.456,076 616,549. 350,000 265,250 615,250 7,454.776
2020 7,469,053 - 620;781 365,000 250,875 615,875 7,464.147 -
2021 6,273,733 623,397 ~ 380,000 232,250. 612,250 6,262;586.
2022. 5,130,158 626,323 40Q,000 212,750 ~ 612,750 5,116,584
2023 2,086,429 221,551 425.000 192,125 _ 617;125 _2,482,003
2024 2,092,050 222,949 445,000 .170,375 '615,375 - 2;484,476
- - - 2025. 2,094,313 - 223,982 465,000 147,625 612,625 - ~ 2,482,955
2026 2,093,210 ~ 224,648 490;000 723,750 613,750 2,482;313.
2027 2,103,080 - 226;467 ~ 515,000 - - 98,625 613;625 2,490,238 -
2028 2,098,779 226,100. 545,000 72,125 617,125 2,489,804
2029 689,750 - 570,000 44,250 614,250 1,304;000
2030 691,875 600,000 15,000 615,000 1,306,875
Total 115,215,306 9,323,433 8,000;000 4,480,078 12,480;078 118,371,951
(1) "Outstanding Debt" does no[ include lease/purchase obligations.
- (2) Represents the debt serviceon the City's Combinatio n Tax & Revenue Certificates of Obligation; Series 2002C anda portion of the debt
service on the City's General Obligation Bonds, Series 2008.
- - (3) Average life of [he issue- 11.903 years. Interest on [he Bonds has been es timated for purposes of illustration. ~ -
- TABLE IO -INTEREST AND SINKING FUND BUDGET PROJECTION -
Tax Supported Debt Service Requirements, Fiscal Y eaz Ending 9/30/2010 $ 8,281,422
Estimated Lease-Payments ~ _ 477;876_ - - -
Interest and Sinking Fund, 9/30/2009 - ~ ~ $ 3 ,900,329 -
Interest and Sinking Fund Tax L evy @ 96% Collecti ons 7,644,451 (D _
- Estimated Investment Income - ~ - ~ 45,000 11 ,589,780
Estimated Balance, 9/30/2010 - $ 2,830,482 _
(1) The lery is based on the value o f the City; does not include Industrial District values. - - - - -
22
TABLE 11 -COMPUTATION OF SELF-SOPPORTING DEBT
Revenue Available for Deb[ Service from Waterworks and Sewer System (9/30/09)12) ~ $ 4,411,966 -
- Water and Sewer System General Obligation Bond Requirements (9/30/10) ~ 3,224,586 _
- Balance - - - ~ ~ - $
- 1,187,380 0) '
Percentage of Water and Sewer System General Obligation Bonds Self-Supporting 100.00%
Revenue Available for Deb[ Service from Solid Waste Fund (9/30/09)121 - $ - 579,082
Solid Waste General Obligation Bond Requirements (9/30/10) -
~ 44,624
Balance ~
- -$ 534,458
Percentage of Solid Waste General Obligation Bonds Self-Supporting - 100.00%
Grass Sales Tax Receipts from 4A Corporation (9!30/09)12) - $ 4,135,092.
Sales Tax Revenue Bond Requirements (9/30/10) - 573,741
Balance Available for General Obligation Requirements - - ~ $ 3,561,351
Generaf Obligation Bond Requirements Supported by inter-Local Agreement (9/30/10)
~ 609,635
- .Balance - ~
$ 2,951,716
`Percentage General Obligation Bonds Supported by Inter-Local Agreement Self-Supporting 100.00%
(1) The City also~haz certain outstanding general obligation bands of which some proceeds were used for waterworks and sewer system
improvements or for the purpose-ofrefinancing obligafions incurredfor such purpose.
(2) Unaudited fihancials as of July 31; 2009.
TABLE IL - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS - -
Amount
Dale of - Amount Previously Amount Authorized
Authorization Purpose Authorized Issued This Issue- Bul Unissued
.01/20/79 .Water and Sewer $ ~ 6,SOQ,000 $ 784,507 - $ 5,715,493 (q
01/17/81 Water and Sewer 24,67Q,000 - 24,670,000 (0
- 11/06/07 _ Water 4,000,000 ~ 1,700,000 - $ 2,30Q,000 -
- - 11/06/07 - - .Public Safety Improvements 3,000,000 1,500,000. 1,500,000 -
11/06/07 Drainage Improvements 2,1100,000 400,000- ' 1,600,000 -
11/06/07 .Street &.Drainage - 3,000;000 3,000,000 - - -
11/06/07 SVeets& Sidewalks 3,000,000 1,600,000 1,400,000 -
11/06/07 Parks&Recrea[ion 2,000,000 - SOQ000- .1,200,000
~ -
Totals ~
$ 48,170,000 $ 9,784,507 $ 8,000,000 $ 30,385,493
(I) Such authorized but unissued-debt may only be used for improvements within [he previous bdundaries of Park Central MUD, whichwaz
annexed effective September 30, 200E -
ISSUANCE OE ADDITIONAL GENERAL OBLIGATION DEBT ... The .City dneS ^Ot. anllelpate the issuance of.additional general
obligation debt within the next twelve months. - - '
23
TABLE J3 -OTHER OBLIGATIONS
Fiscal Year Computer Telephone Fire
_ Ended 9/30 System System - Equipment Appazams Total
: 2010 $ 52,433 - $ 84,051 - - $ 287,087 $ 54,305 $ 477,876
- ~ 2011 - 84,051 - 287,087 ~ ~ 54,305 425,443
..:. 2012 ~ - ~- - 71,772. 54,305 126,077
,2013 ,- - - - .54,305 54,305
- 2014 - - - - 54,306 54,306 -
2015 - ~ ~ 54,306 54,306
2016 - ~ _ 54,306 54,306-
' - 2017 - - 54,306 54,306.
- 2018 - - - - - 54,306 54,306
Total _ 52;433 ~ 168,102 -645,946- ~ ~ 488,750 ~ _ - 1,355,231
Interest ~ 5,217. (19,163) 59,040) (93,911 (177,331)
Ne[ Present Value $ 47,216 $ t48,939 $ 586,906 $ 394.839 $ 1,177;900
STATE MABINe SueeBEUrvH $tT&.. By letter dated February 12, 1999, the City of Port Arthur received a Request for
Information from the U.S. Environmental Protection Agency ("EPA") conceming the Slate Marine of Pots Arthur Superfund site
locatd on Pleasure Isle[ adjacent to Sabine Lake. The site was the location of afotmer municipal solid waste landfill operated by.
the City from 1967 to 1974, at which time the landfill was closed in' accordance with then applicable Texas Departrnent of
Health standards. The City then contracted with the Mid-South Jefferson County Economic Development Corporation to
develop Pleasure Islet, and Mr..Chester Slay leased the property from [he Mid-South Jefferson County Economic Development
Corporation to operate abarge-cleaning company (State Marine,.Inc.). In August 1981, the City sold the majority of Pleasure
Islet to Pleasure Islet Associates, an entity headed by Mc- Slay. The barge maintenance operations allegedly caused
environmental contamination on the property to which the State of Texas and EPA subsequently responded.- The site was
formally listed on the Superfund National Priorities List on July 28, 1998. -
The City responded to EPA's request for information in a letter dated April 30, 1999 and, by letter dated July 5, 2000, the City
was notified by EPA that it was considered a potentially responsible party ("PRP") focenvironmental response activities taken at
the site. EPA asserted that the City was a PRP due to its prior ownership of the site during barge maintenance operations. .
In October 2001,-EPA proceeded with a government funded remedial investigation and removal action, employing private
contractors. Following initial waste removal activities and extensive environmental sampling, EPA ultimately signed a "No
Further Action Necessary" -Record of Decision for the site on April l8, 2007, with the Texas Commission on Environmental
Quality ("TCEQ") concurring in the decision. As previously reported [o counsel for the City, EPA's last itemized cos[ summary
of incurred costsfor thesite totals $2,262;625. This amount continues [o accrue due to ongoing EPA oversigfif charges. EPA
has indicated -that it intends to seek cost recovery for its incurred costs against identified PRPs. At this time, the only identified
PRPs are a bankrupt barge company, Chester.Slay andthe City,-although EPA has continued its -investigation to identify
additional PRPs, including former customers of State Marine, Inc. No formal claim has been asserted against the.City as of this
date. ~ - -
PENSION Foxo ...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 accmed -for pension expense. (For more detailed information concerning the retirement plan, see Appendix B,
"Excerpts from the City's Annual Financial Report" -Note # DJ ~ -.-
~OTHEB PosT-EhIPLOVNENT BENEEtTS ... In addition to providing pension benefits through the Texas Municipal Retirement
System, the City has opted to provide eligible retired employees with the following past-employment benefits:. -
- Eligible retirees may purchase health insurance from the City's healthcare provider at the City's cost to cover
current employees ~ - ~ - . - ~.-
Eligible retirees may purchase health insurance from the City's healthcare provider. atapproximately 50-75
percent of the City's cost to cover current employees for dependents if the dependents were covered at the point
of retirement - ~ .. ~ ~ - -
The~City recognizes its share of the costs of providing these benefits when paid, on a "pay-as-you-go" basis. These payments are - -
budgetedannually. The amount budgeted for the fiscal year ending September 3Q 2010 is $1,000,000. The expenditure forthe --_
fiscal year ending September 3Q 2009 was $1,000,000. At September 3Q 2009, there were approximately 124 participants,
- retirees anddependents, eligible to receive such benefits. - - - -
24
^
Commencing in fiscal 2009, the City will implement GASB Statement No. 45- Accounting and Financial Reporting by
Employers jor Post-employment Renefrts Other Than Pensions." In connection-with such implementation, anactuarial study is
in progress. City Staff has received a Preliminary Draft of such actuarial study from an outside consultant regarding the City's
OPEB obligations. The Draft indicates~an Actuazial Accrued Liability as of September 3Q, 2007 in the range of $51,368,695
million to $93.760,224 million. City Staff has not completed their review of the analysis and assumptions contained in [he Dratl.
The results of this review will be presented to the City Council in4fie next few months.
For more information concerning the City'spost-employment benefits; see [he City's Comprehensive Annual Financial
Statements and the notes thereto ("Appendix B"). - ~ _
FINANCIAL INFORMATION
TABLE I4-CHANGESINNET ASSETS -
Revenues
Program-Revenues:
Charges for services
Operating grants
Capital grants
General Revenues:
Ad valorem taxes
-Industrial revenue
Gross receipts [axes
-.Sales tax -
- - Other taxes
Investment earnings
Miscellaneous
Total Revenues
Expenses
General government
Public safety
Public works
- Community development
Culture and recreation
Health and welfare
Public transportation .
Interest on long-term debt
Total Expenses
- -Increases (decreases) in net
- assets before transfers
Transfers
Increases in net assets
Net assets -beginning of year
Net assets -end of year
(1) -Restated.
For Fiscal Yeaz Ended September 30,
2008 2007 2005 2005
$ - 2,423,716 $ 3,341,887 $ 2,460,838- -.$ .2;063,159
11,064,309, 9.666,676 12,003,439 5,701,339
9,897 - 80,551 4,146,167 ~ 1,784,209
13,139,237 11,424,235 - 12,432,896 11,102,923
16,238;958 15,259,988 ---- 14,898,245 14,179,684
4,251:127 3,933,880 - - 3,219,599 2,858,715
8;248,052.. 7,288,008 6,939,254 5,651,775
1,083,948_ 793,620 667,218 496.789 _
692,378 .1,221,857 971,310 815,493
2,192,092 ~ 3,885,701 7,942,824 1.066,517
$ 59,343,714- $ ~ 56,896,403 $ 65,681,810 $ 45;720,603
$ 13,332,504 $ 15,620,967 $ 20,165,793 $ 6,826,332
25,025,968 22,822,830 - 21,074,558 --21;583,467
- 14,038,090 1 L859,564 11,348,530 - 71,677,900
- 1,543,713 L453,406 ~ 1;565,422 1,526,504
4,351,668 ~ 5;824,415 2,993,539 3,432,762
4,349,172 2,106,857 1,831,279 2,024.499
2,361,839- 2,122,404 1,938,632 1,604,625
2,944,208' - 2,753,310 3,002,311 3,325,994
$ 67,947,167 $ 64,563,753- - ~ $ 63,92Q064 - $ 52,002.083
$. (8,603,448) $ (7,667,350) $. 1,761,746 $. -.(6,281,480)
.~ (4,003,613) 7,224,926 - 6,245,740 6,082,634
$ (12,607,061) $- (442,424) $ 8,007,486 $ (198.846) -.
28,674,403 - 29,116,827- ~ 21,109,341 f1 21,939.148 (D
$ 16,067,342 $ 28,674,403 $ 29,116,827 $ 21,740.302
TABLE 14 -A -GENERAL FOND'REVENUES AND EXPENDITURES HISTORY
For Fiscal Year Ended September 3Q
-Revenues: - - 200911 2008 2007 2006 2005 -
Taxes ~ $ 16,582;942 $20,376,699 $ 16,020,891 $ 15,196;087 $ 12,650,425 -
Industrial district payments 31,665,506 - 16,238,958 15,259,988 14,898,245 14,179,684. - -
Licenses and.permits 622,565 679,444 1,152.675 668;483 - 276,052.
User fees _ .288,684 354,811 ,301,775 337,018 -_ - - 368,885
Fines and forfeitures 1,584,770 1,255,744 1,091,252 748,423 - 707,951
Intergovernmental- - - - 418,149 219,285 215,963 - -195,564 - ~ 501,664-
Interest revenue - - ~ - 123,522 337,283 446,802 - - - 347,541 - 20Q C35
Miscellaneous - - 436,652 - 680,051 1,416,310 - - 217.962 • _ - 256,286
Total revenues-- - - .$51,722,790 $40,142,275 $35,905,656 $32,609,323 '$29,141,082.
Expenditures: ~-.~
General government $ 6,694,444 $, 8,472,050. $. 7,849,285 $ 6,505,418 $ 5.994,196
Culture and recreation 2.543,928 3,248.707 2;929,124 2,503;076 2,793,563
Public safety - - ~ 18.039,172 22,723,173 -.21,890,906 20,257,087 19,790,565
Health and welfaze , 612,506 894,392 873,228 821,389 813,301
Public works 5,648_,482 7,018,114 .-- b,866,478 5,905,021 - 6,308,724
-Capital outlay ~ - - - - - -
Total expenditures $ 33;538,532 $ 42,356,436 $ 40,409,021 $ 35,991,991 $ 35,700,349
Excess (deficiency) ofrevenues - _
over expenditures. ~ .18,184,258 . (2,214,161) (4,503,365) (3,382,668): -. (6,559,267)
Other financing sources (uses): ~ - - - -
-Transfers in - - $ 6,592,805 $ 7; 132,646 $ 8,006,457 $-.7,178;378 ~$ 7,321,063
Transfers out (2,858,600) (2,318,867) (2,548.499) - (1,317,235) (1.790,468) -
Total other financing sources (uses) $ 3.734,205_ $ 4,813,779. $ 5,457,958 - $ -5,861,143 $ 5.530.595
Net change in fundbalance ~ $21,918,463 $.2,599,618 $ -954,593 -$-2,478,475 $(1,028,672)
Fund balance, beginning of year -$ 14,508,096 $ 11,908,478 $ 10,953,885. - $ 8,921,563 $ 9,950,235
Print period adjustment - - - (446,153)
Fund balance, end of year $ 36,426,559 $ 14,508,096 $ 11,908,478 $ 10,953,885 -$ :8,921,563
(1) Unaudited. -
TABLE IS -MUNICIPAL SALES TAX HISTORY - -
The City has adopted the Municipal Sales and' Use Tax Act, VATCS, Tax Code, Chapter 321, which grants the City the power to
impose and ]ery a l% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged [o
the payment of the Bonds: Collections and enforcements are effectedthrough 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 Lery Tax Rate. Capita
- - 2004 - $ 5,323,127 55.21% $ 0.4278 - $ 9T - -
20055,651,775, 52.49% 0.4068 98
2006 .6,939,254 58.51% 0.4534 120
2007 7,288,008 65.50% 0.5076 126
2008 8,248;052 64.40% 0.4894 143
2009 9,801,360 (0 65.43% - 0.4973 170
(1)- As of September 3Q 2009. - _. - ~ ~.. - '
The-sales [ax breakdown for the City is as follows: - -
- Economic and Community Development - 0.50% - :.
County Sales & Use Tax - 0.50%
City Sales & Use Tax - 1.00%
' ' - State Sales & Use Tax _ _ - - .6.25%
- Total 8.25%
FINANCIAL POLICIES ,
Basis ofAccounrin~ The City policy is to adhere to the accounting principles set out by Statement No. 1 issued by the National '
Council on Govemmen[al Accounting, as amended. (See APPENDIX B - "AUDITED FINANCIAL STATEtvffiNTS eon rxE CITY o_ F
PORT ARTHUR FOR THE PERIOD ENDED SEPTEMBER 3O, 2008.").
General Fund Balance: TheCity Council's financial policies require the General Fund balance to be maintained at_a level equal
to 60 daysof operating expenditures plus an emergency reserve of $1.5 million. -
Bu~erarV Procedures The City policy is to begin the budgetary procedure at the department level in June. of each year.. The
departrnent heads submit [heir budget request-to the Director of Financial who assembles and prepares abudge[-requirement
workbook for each department for submission to the City Manager. After [he City Manager reviews and meets with departrnent --
heads, the City Manager submits a proposed budge[ to the City Council on ocbefore August 31 of each year. The Council holds
public hearings and a final budget must be prepared and adopted by-September 30. ~ .
INVESTMENTS
The City of Port Arthur invests its investable funds in investments authorized by Texas law in acwrdance with investment policies
approved by the City Council of the City of Port Arthur. Both state law and the City's investment policies are subject to change.- - '
.LEGAL INVesTMeNTS...Available City funds are invested asauthorized by Texas law and in accordance with investment policies
approved by the Ciry Council. Both state law and the City's investment policies aresubject to change. Under Texas law, the City
is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities, including letters of ciedit; (2)
direct obligations bf 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 whick 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 gdalityby a -
' ~ nationally recognized investment rating firm not less than A. or its equivalent. (6) bonds issued, assumed or guaranteed by the
Stale of Israel; (7) certificates of deposit that are issued byor through an institution that either has its main office or a branch. in
- Texas, and are guaranteed or insured by theFederal Deposit Insurance Corporation or the National Credit Union Share Insurance
_ - Fund, or are secured as to principal by' obligations described in clauses (1)-through (6) ~or in-any-other manner and amount
provided by law far City deposits; (8) fully collateralized. repurchase agreements that have a defined termination date, are fully,~~
secured by obligations describedin clause {I),and are placed through aprimary government securities dealer or a financial
27
institution doing business in the State of Texas, (9) securities lending programs if (i) the securities loaned under the program are
100% collateralized, aloan made under the program allows for termination at any time and a loan made under the program is
either secured by (a) obligations that aze 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 (l l) throug}i (13) below, or an
authorized investment pool; (ii) securities held as collateral under a loan are pledged to the City, held inthe 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 [he
program is placed through either a prunary government securities dealer or a financial institution doing business in the Sate of
Texas; and (iv) the agreement [o 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, (I1) 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-load money market mutual funds registered with and regulated by [he Securities and Exchange Commission
that have a dollar weighted average stated maturity of 90 days or less and include in [heir investment objectives the maintenance
of a stable net asset value of Sl 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 hvo years, invest exclusively in obligations described in the 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 ofbond proceeds investedunder such contract, other than [he
.~ prohibited obligations described in the next succeeding paaagraph.
The City may invest in such obligations directly or through government investment pools that invest solely in such. obligations
provided [hat the pools are rated n6 lower than AAA or AAAm or an equivalent by a[ ]east 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 Securities Board to provide for [he investment and management of its public
funds or other funds under its control for a term up to two years, but the City retains ultimate responsibility as fiduciary of its
assets. In order to renew or extend such a contract, the City must do so by order, ordinance, or resolution. The City is
specifically prohibited from investing in: (1) obligations whose payment represents the coupon-payments bn the outstanding
principal balance of the underlying mortgage-backed security collateral and pays no principah (2). obligations whose payment
represents the principal stream of cash flow from theunderlying mortgage-backed security-and bears no interest: (3)
collateralized mortgage obligations [hat have a stated final maturity of greater than 10 years; and (4) colla[emlized mortgage
obligations the interest rate of which is determined by an index that adjusts opposite [o the changes in amarket index.
IrvvesT+isrvT POLICIFS ...Under Texas law, the City is required to invest its funds under written-investment policies that primarily
emphasize safety of principal and liquidity; thafaddress investment diversification yield, maNrity; andthe quality and capability of
investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any
individual investment and the maximum avemge-dollar-weighted maturity allowed for pooled fund groups. Al] City funds must be
invested consistent with a formally adopted "Inyestment Strategy Statement' that specificalty addresses each funds' investment. Each
Investment Shategy Statement will describe its objectives concerning: (l) suitability of investment type, (2) preservation and safety of
principal, (3) liquidity, (4) marketability of eachinvestment, (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) [hat 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 assek (6}the account or fund or pooled fundgroup for which each
individual investment was acquired, -and (7) the wmpliance of the investment portfolio as it relates to: (a) adopted investment
-strategy statements and (b) state law. No person may invest City funds without expresswritten authority from the City Council.
28
ADDITIONAL PROVISIONS ...Under Texas law the City is additionally required tot (1) annually reviev6 its adopted- policiesand --
strategies; (2) requve any investrnent officers' with personal business relationships or relatives with firms seeking m~sell securities-to ---
the entity.m disclose the relafionship and file a statement with the Texas Ethics Commission and the City Council; (3) require the
registered principal of fnms seeking to sell securities to the Cityto; (a) receive and review the City's investment policy, (b)
acknowledge that reasonable controls and procedures have been implemented to preclude impmdent investment activities, and (c)
deliver a written sfatemenfattesting to these requirements; (4) perfoml an annual audit of the management controls on investments and
adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer. and
investment officers; (~ restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse
repurchaseagreemen[ funds to no greaser than the lean of the reverse repurchase agreement; (7) resrict its investment in mutual
funds in the aggregate to no more than 15 percent bf its monthly average fund balance, excluding bond proceeds and reserves
and other funds held for debt service, and to invest no portion of bond proceeds, reserves and funds held for debt service, in
mama( funds; and (8) require local government-investment pdols to conform [o the new disclosure, rating, net asset value, yield
calculation, and advisory board requirements. -
TALE I6-CURRENTINVESTMENTS
As of October 31, 2009, the City's investable funds were invested in the following categories:
%of - - Book Market
Total - Value Value
High Yield Savings 4.98%. ~ $ 2,003,280 $ 2.003,280
TexPool - 67.07% $ 26,988,023 $ 26,988,023
Federal Securities 27.34% $ 11,000,000 $ 11,065,950 - .
Certificates of Deposit 0.62% 250,000 -250,000
100.00% $ 40,241.303 - $ 40,307,253
TAX MATTERS -
TAX EXEMPTION
In [he opinion of Vinson & Elkins L.L.P., Bond Counsel, under existing law; (i) interest on the Bonds is excludable from gross income
for federal income tax purposes aqd (ii) interest on the Bonds is no[ (a) a specific preference itemsubject to the alternative minimum tae
on individuals or corporations or (b) included in a corporation's adjusted current earnings for purposes of the alternative minimum taz.
The Internal RevenueCode of 1986, as amended (the "Code'), imposes a number of requirements that must be satisfied for interest on
state or local obligations, such as the Bonds, to be excludable from gross income for federal income tax-purposes: These requirements
include limitations on the use of band proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds
prior to expenditure, a requirement that excess azbitmge earned on the investment of bond proceeds be paid periodically to the United
Stales and a requirement that'tFie issuer file an information report with the Internal Revenue Service (the "Service"). The City has
covenanted in the Ordinance. that it will comply with these requirements. - -
-Bond Counsel's opinions will assume continuing compliance with the covenants of the Ordinance pertainingto those sections of the
Code that affect the exclusion from gross inwme of interest on the Bonds for federal income tax purposes and, in addition, will rely on
representations by the City, the City's Financial Advisor and the Initial Purchaser with iespect to matters solely within the knowledge-
of the City, the City's Finazrcial Advisor and the Underwriter, respectively, which Band Counsel has not independently-verified. Bond
Counsel will further rely upon the report of Gran[ Thornton, LLP, certified public accountants, regarding the mathematical accuracy of
certain wmputations. [f the City~should fail to wmply 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 includable in gross income from the date of delivery
of the Bonds, regardless of thedate on which the event causing such indudability occurs.
-Except as stated above, Bond Counsel will express no opinion as to any federal, state or local [ax consequences resulting from
the receiptor accmal of interest on, or acquisifion,-ownership or disposition of, the Bonds.
29
Bond. Counsel's opinions aze based on existing law, which is subject [o change. Such opinions are further based on Band
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 came tb Bond Counsel's attention or[o reflect any changes in any law that.
may thereafter occur or become effective: Moreover, Bond Counsel's opinions are not a guarantee of resultand are not binding
on [he Service; rather, such. opinions represent Bqnd Counsel's legal judgment based upon its review of existing law and in
reliance upon the representations and covenants. referenced above that it deems relevantto such opinions. The Service has an
ongoing audit program to determine compliance with rules [ha[ relate tp'whether interest on state or local obligations is
includable in gross income for fedeml income tax purposes. No assurance can be given asao whether or not the.Service will
commence an audit of the Bonds. ~If an audit is commenced, in accordance with its curent published procedures the Service is
likely to treafthe City as [he taxpayer and the Owners may not have a right to participate in such audit. Public awareness of any
future audit of [he Bonds could adversely affect the value and liquidity of the Bonds regardless.of the ultimate outcome of the
audit. ~- - - - -
PURCHASE OFTAX-EXEMPT OBLIGATIONS BY FINANC4IL INSTITUTIONS
Section ~265(a) of the Code provides, in general, that a deduction for interest on indebtedness incurred [o acquire or carry tax-
exempt obligations is disallowed. Section 265(6) of the Code provides a specific complete disallowance of any deduction. by a
financial institution of its pro rata-interest expense to reflect such financial institution's investment in [ax-exempt obligations
acquired after August 7, 1986. Section 265(6) of the Code provides a-limited exception for a limited amount of new money tax-
exempt obligation holdings if such obligations are issued in 2009 and 2010. In additioq Section 265(6) also provides an
exception for financial institutions for tax-exempt obligations that are properly designated by the issuer as "qualified tax-exempt
.obligations."
The Bonds have been designated as "qualified tax-exempt obligations" based, in party onthe City's representation that [he
amount of the Bonds when added to The amount of all other tax-exempt obligations (not includingprivate activity bonds other
than qualified 501(c)(3) bonds) issuedor reasonably anticipated to be issued by the City during 2010 is not expected to exceed
$3Q,000,000. The City and entities aggregated with the City under the Code have not designated more than $30,000.000 in
"qualified tax-exempt obligations" (including the Bonds) during 2010.
No[withstanding~the designation of [he Bonds as "qualified tax-exempt obligatioriS" under [his exception, Fnancial institutions -
acquiring the Bonds will be subject ro a 20% disallowance of allocable interest expense. -
ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS
.Collateral Tax Consequences... Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt
obligations may result in collateral federal income tax consequences [o 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 incured or continued indebtedness to purchase
or carry taxexempt obligations, and individuals otherwise qualifying for theeamed income credit. In additioq certain foreign
corporations doing .business in the United States may be subject to the "branch profits tax" on their effectively connected- '
earnings andprofits, including tax exempt interest such as interest on the Bonds. These categories of prospective purchasers
should consul[ 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 amoun[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 pricenf all or a portion of the Bonds may exceed the stated
redemption price payable at mamrity 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 [he 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 ofany gain or
decrease the amount of anyloss 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 m 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 [he initial offering price of such Bond. - - -
The federal income tax consequences of [he purchase, ownership and redemption, sale or other disposition of Premium Bonds -
that are not purchased in [he initial offering a[ the initial offering puce may be determined according to rules that differ from
those describedabove. All owners of Premium Bonds should consult [heir own tax advisors with respect to the determinatiortfor
federal, state, and local income tax purposes of amortized bond premium-upon [he redemption, sale or other disposition of a~
Premium Bond and with respect fq the fedeml, state, local, and foreigmtax consequences of [he purchase, ownership, and sale.
redemption or other disposition of such Premium Bonds. -
30
Tax Accounting Treatment of Original Issue Discount Bonds.-..The issue-price of all or a portion ofYhe 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 beriveen (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 [he amount of such. original issue
-discount allocable to the period that such Original Issue Discount Bondcontinues to be owned by such owner. Because original
issue discount is treated as interest for federal income tax purposes, the discussion regazding interest on the Bonds under the
captions "TAX MATTERS -TAX EXEMPTION" and "TAX MATTERS -ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS -
Collateral Tax Consequences' generally applies, and should be considered in connection with [he 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 b}• the portion of the original issue discount allocable Yo the period for which such Original Issue
Discount Bond was held by such initial owner) is includable in gross income. -
The-foregoing discussion assumes that (i) the Initial Purchaser has purchased the Bonds for cori[empomneous sale to the public
and (ii) 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 City nor Bond
Counsel has made any investigation or offers any-comfort that the Original Issue Discount Bonds wil6 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 Bond and ratably within each such six-month period).andthe accrued amounF is added to an
initial owner s basis for such Original Issue Discount Bond foi 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 acemal period is
equal to (i) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to
stated maturity (determined on the basis of compounding at the close of each. accrual period and properly adjusted for the length -
of the accrual period) less (ii) the amounts payable as current interest during such accrual period on such Bond:
The federal income tax consequences of the purchase, ownership,. and redemption, sale or other disposition of Original Issue
Discount Bonds which aze not purchased in the initial offering at the initial offering price may be determined according to rules
which differ from [hose described above. All owners of Original Issue Discount Bonds sfiould consult their own tax advisors-
with respect to tFie 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 respectto the federal, state, local and foreign [ax consequences
of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds.
CONTINUING DISCLOSUREOFINFORMATION. -
In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds.
The~City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. 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 [he Municipal Securities Rulemaking Board (the "MBAR"). This infonna[ion will be
available free of charge from the MSRB viathe Electronic Municipal Market Access ("FNMA") system a[ www.emma.msrb.org
<http://www.emma.msrb.org/~. -
ANNUAL REPORTS
The City will provide certain updated financial informationand operating data to-the MSRB. 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 the heading "TAX DATA", "FINANCIAL INFORMATION"; "DEBT BVFORMATION" and in
APPENDLX B. The City will update and provide this information within six months after the end of each fiscal year ending on
and after September 30, 2009. ~ _
31
The financial information and operating data to be provided may be set forth in full in one or more documents or may 6e
included by specific reference to any document available tothe public on the MSRB's Ihtemet Web site ocfiled with the United -
States Securities and Exchange Commission (the "SEC"), as permitted by SEC Rule 15e2-12 (the "Rule"). The updated
information will include audited financial statemen[s,if the City commissions an addif and it is completed by [he required time.
If audited financial statements are not available by the required time, the City will provide unaudited financial statements by the
required time and audited financial statements when and if such audi[edfinancial statements become available.. Anysuch
financial statements will be prepared in accordance-wi[h.theaccounting principles described in Appendix B or such other
accounting principles as-the City may be required [o 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 ineach year,
unless the City changes its fiscal year. If the City changes its fiscal year, it will notify the MSRB of the change.
MATERIAL EVENT NOTICES
- The City will also provide timely notices of certain events [o the MSRB. The City will provide-notice of any of the following
events with respect to the Certificates, if such even[ is material [o a decision to purchase or sell Certificates: (1) principal and
interest payment delinquencies;-(2) non-pa}'ment related defaults, (3) unscheduled draws on deb[ service reserves-reflecting
financial difficulties; (4) unscheduled draws on credit enhancements reflecting 5nancial difficulties;. (5) subs[imtion of credit or
liquidity providers, or [heir failure [o perform, (6) adverse tax opinions or events affecting the tax-exempt slams of [he
Certificates; (7) modifications to rights of holders of the Certificates; (g) Bond calls; (9) defeasances; (10) release, substitution,
or sale of property.securing repayment of[heCerti£cates; and-(Il) rating changes. In addition; [he City will provide timely
notice of any failure by-the City to provideinformation; data, or financial statements in accordance-with its agreement described
above under"-At m~uA1, REPORTS"
AVAILABILITY OF INFORMATION
Effective July 9, 2009 (the "EMMA Effective Date"), the SEC implemented amendments [o the -Rule which approved the
establishment by the MSRB of EMMA, which is now [he sole national municipal securities information repository with respect
[o filingsmade in connection with undertakings made under the Rule after the EMMA Effective Date: Commencing with the
EMMA Effective Date, alt information-and documentation filing required to be made by the City in accordance with its
undertaking made for the Bonds will be made with the MSRB'in electronic format in accordance with MSRB guidelines. Access
to such filings will be provided, without charge to the general public, by the MSRB. The City will continue [o make information
filings, including material event notices, with the Texas state information repository (the "SID") so long as i[ is required to do so
pursuant [o the terms of any undertakings made.under the Rule prior to [he EMMA Effective Date. -
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, br prospects or agreedtb upda[eany information that is provided, except as described above. TheCity
- - ~ makes no representation or waranty concerning such information or concerning its usefulness to a decision to invest in or sell
- bonds at any furore.date. The City disclaims any contmcmal or tort liability for damages resulting in whole or in part from a
-breach of its continuing disclosure agreement or from any statementmade pursuant to its agreement,. although holders of Bonds
may seek a writ of mandamus tD compel the City to~comply with its agreement.
The City may amend its continuing disclosure agreement from time to time to adapt to changed-circumstances that arise from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City; if (i)
- - .the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in
compliance with the Rule, taking into account any amendments or interpretations of [he 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
Bonds wnsent to [he~amendment or (b) any, person unaffiliated with the City (such asnationally recognized bond counsel)
determinestha[ the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. The
City may also amend or repeal the provisions of [his continuing disclosure agreement if the SEC amends or~repeals [he
applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgmeht that such provisibns~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 Bonds m the primary offering of [he Bonds. 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 desdribed above under - _
- ~ "Annual Reports' an explanation, in narrative fonn,.of the reasons-for theamendment and of the impact of any change in the -
- type~of financial information and operating data so provided. - -. -
COMPLIANCE WITH PRIOR UNDERTAKE\GS - ' '
The City has complied in al] material respects with all continuing disclosure agreements made by it iii accordance with SEC Aule
15c2-12. ~ -
32
OTHER INFORMATION
RATINGS
The presently.outstanding tax sppported debt of the City is rated-"A2" by Moody's and. "A" by S&P, without regard to credit
enhancement: Applications for contract ratings on this issue-have been made to. Moody's and S&P. An explanation of [he
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 [he appropriateness of the ratings. There is no assurance
that such ratings wile continue for any given period of time or that [hey will not be revised downward or withdrawn entirely by
either or botfi 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
Bonds. ~ -
LITIGATION
It is the opinion of the City Attorney and City Staff that [here is no pending litigation against [he City that would have a material
adverse financial impact upon the City or its operations. ~ - -
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE
.:. The sale of the Bonds has not been registered under the.Federal Securities Act of 1933, as amended, iti reliance upon the
exemption provided thereunder by:Section 3(a)(2); and the Bonds have not been qualified under the Securities Ac[ of Texas in
reliance upon various exemptions contained therein;-nor have .the Bonds been qualified under. the securities acts of any
jurisdiction. The City assumes no responsibility for qualification of the Bonds under [he securities laws of any jurisdiction in
which the Certificates may be sold, assigned; pledged, hypothecated or otherwise transferred. This disclaimer of responsibility
for qualification forsale or other disposition of the Bonds shall not be construed as an interpretation of any kind. with regard to
_ the availability of any exemption from securities registration provisions.
LECAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 of the Public Security Procedures Act (Chapter 1301, Texas Government Code) provides [hat: the Bonds aze.
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. Wiffi respect to investment in [he Bonds by municipalities or other political subdivisions
or public agencies of the State of Texas. [he Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that
the Certificates be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency. See "OTHER
INFORMATION -RATINGS" herein. In addition, various provisions of the Texas Finance Code-provide that, subject [o a
prudent investor standard; the Bonds are legal investments for state banks, savings banks, tmst companies with at capital of one
million dollars. or more, and savings and loan associations. The Bonds are eligible. to secure deposits of any public funds of the
State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of [heir market value. No
review by the City has been made of the laws in other states [o determine whether the Bonds are legal investments for various
institutions in those states. ~ - - - ~ - - ~.
LEGAL MATTERS
The City will fuinish a complete transcript of proceedings incident to the authorization and issuance of the Bonds,-including [he
unqualified approving legal opinion of [ne Attorney General of Texas approving the-Initial Bonds and ro [he effect that the
Bonds are valid and legally binding obligations of the City, and based upon examination of such franscrip[ of proceedings, the
approving legal opinion of Bond Counsel, to like effect and to the effect that the interest onthe Bonds will be excludable from - ~ -
gross income for federal income tax purposes under existing law and the Bonds azenot private activity bonds, subject to the
matters described under "TAX MATTERS" herein, including alternative minimum tax consequences for corporations. The
customary closing papers, including a certificate to the effect that no litiga[ionof any nature has been filed or is then pending to
restrain theissuance and delivery of the Bonds, or which would affect [he provision madefor their payment or security, or in any
manner gbestioning the validity:of said Bonds will also be furnished: Bond Counsel was not requested to participate, and did not
take part, in the preparation of the Notice of Sale and Bidding Instmctions, the Official Bid Form~and the Official Statement, and
such firm has not assumed any responsibility. with respect thereto or undertaken independently to verify any of the information
contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the statements and information contained
in the Official. Statement under the captions and sub-captions"THE BONDS" (except for the information under the sub-captions
"BOOK-ENTRY-ONLY SYSTEM" and "USE-0F BOND PROCEEDS," a5 t0 which no opinion is expressed) and "CONTINUING
DISCLOSURE OF INFORMATION" (except for the information under the. sub caption-"COMPLIANCE Wtrx PRIOR
UNDEeTAKINGS", as [o which noopinion is expressed),.and Bond Counsel is bf the opinion that the statements and information
contained therein fairly andaccurately reflect the provisions of [he Ordinance; further, Bond. Counsel fins reviewed [he
statements and infdrmation contained id the Official Statement under [he. captions and sub-captions "TAX MATTERS,"~.
33
"OTHER INFORMATION -LEGAL MATTERS," "OTHER INFORMATION - REGisTRATION AND Quv.glCATioN of BoxDS FOR
SALE" and "OTHER INFORMATION -LEGAL INVESTMENTS AND ELiGBILITY TO SECURE PORLIC FONDS IN TEXAS" and Bond
Counsel is of the opinion that the statements and information contained [herein are correct as to matters of ]aw. The legal fee to
be paid Bond Counsel for services rendered in connection with the issuance of the Bands is contingent on the sale and delivery
of the Bonds. The legal opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in-[he event of -- ~.
the discontinuance of the Book-Entry-Only System. ~ - -
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been bbtained from City records, audited financial statements and
.other sources which are believed [o 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 Officia] Statement are made
subject to all of the provisions of such statutes, documents and. resolutions. These summaries do not purport~[o 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. - - _
FINANCIACADVISOR -
The~Financial Advisor [o the City has provided the following sentencefor inclusion in this Official Statement The Financial
_ _ - Advisor has reviewed [he information in [his Official Statement in accordance with and as part of, its responsibilities [o the City -
- and, as applicable, [o investors under [he federal securities lawsas applied to the facts and circumstances of this transaction, but
the FinanciaLAdvisordow not guarantee the accuracy or completeness of such information. ~ .
INITIAL PDRCHASER -
After requesting competitive bids far the Bonds, the City accepted the bid of ~ ~ (the "Initial Purchaser") to
purchase the Bonds at the interest rates shown on the inside cover page bf [he Official Statement at a price of % of par plus a
cash premium (if any) of $ .The Initial Purchaser can give no assurance that any trading market will be developed for
- the Bonds .after their sale by the City to the Initial Purchases The City has no control over the price a[ which the Bonds are
subsequently sold and the initial yield at which the Bonds will be priced and reoffered will be established by and will be the -
responsibility of [he Initial Purchaser.
FORWARD-LOOKING STATEMENTS DISCLAIMER
The statements contained in this Official Statement, and in anyother 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. Alf forward-looking statements
included in this Official Statement are based on information available [o 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 7isks and uncertainties, including risks and uncertainties relating to [he 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 bsomitted 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 Yo, among other things, future economic, competitive, and market
conditionsand future business decisions, al] of which are difficult or impossible-fo predict. accurately ahdmany 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 inthis Official Statement will prove to be accurate. - _ -
34
CERTIFICATION OF THE OFFICIi1L STATEMENT- ~ - - - -~ ~ ~ ~'
At the time of payment for and' delivery of the Bonds, the City -will famish a certificate, executed.by proper officers, acting in .
- _- their official capacity, to the effect that to the best oftheir knowledge and belief: (a) the descriptions and statements of or
_ pertaining. [o the City contained id its Official Statement, and any addenda, supplement. or amendment thereto, on the date of
such Official .Statement on the-date of-sale bf said Bonds and the acceptance of the best bid therefor;. and on the date'of the
delivery, were and are [rue and correct in all material.respects; (b).insofar as the City and its affairs,. including its financial
affairs,.are concemed, such Official Statement did not and does not contain. anuntrue statement of a material fact or omit to state -
a material fact required to be stated therein'or necessary to make [he statements therein: irtthe light of the circumstances under
which they-were made, not misleading; (c) insofar as the descriptions and statements, including financial data,. of orper[aining 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 [he City has no reason to believe that they aze untrue -
_ in any material respect; and (d) there has been no material adverse changein the financial condition of the:City since the date of .' -
the last audited financial statements of the City. ~ ~ ~ '
-_ - The Ordinance authorizing the issuance of the Bonds will also approve the form andcontent of this Official Statement, and'any
- addenda, supplemenCOr amendment thereto, and authorize its further use in the reoffering of [he Bonds by [he Initial Purchaser.
/~
_ _ - - -Mayor. -
- - - _ _ _ - - City of Port Arthur, Texas-.,
ATTEST: - - - .. - - - -
-City Secretary.. - - . - :.
35,
THE CITY
The City of Port Arthur is located in Jefferson County and Orange County on the west shore of Sabine Lake directly adjacent to~
the Gulf of Mexico in the extreme southeast comer of the State of Texas.. The land area of [he City covers approximately 81.5
squaze miles. The City is located along the 40-foot deep Sabine-Neches Ship Channel which links Jefferson and Orange
Counties with the Gulf of Mexico. She City is a component of the Beaumont-Port Arthur Metropolitan Statistical Area ("MSA") -
comprised of Jefferson, HardiD and Orange Counties. - - _ -
EcorvoMv
The economy of the MSA is based primarily upon petroleum refining; [he production of petrochemicals and o[}ierchemicals, the --
fabrication of steel-and steel products, shipping activity, themanufac[ure of wood, pulp, food and feed products, agriculture, and
health caze services- Transportation, communications and public utilities account for about 30% of area employment. Siz oil -
refineries located in the County have a combined capacity 1.142 million barrels per stream day of crude oil. -Approximately 250
manufacturing firms are located iri the MSA. -
The City is experiencing a tremendous economic expansion in the industrial district. The world's lazgest steam cracker was
recently completed at Tina's Part Arthur facility through a joint venture with BASF: This $l billion project is providing 150
permanent jobs. The Clark facility has recently been upgraded in its entirety. The approximate value of this upgrade is $775
million and created 50 permanentjobs. Motiva is constructing new facilities with an estimated cost of $4-5 billion. ExxonMobil
has begun consWCtion of itsnew Golden Pass Liquid Natural Gas plant: Total has recently reached an abatement agreement
with Jefferson County for a new cracker unit with an estimated cost of $1 billion. - Sempm is in the permitting process for a
proposed Liquid Natural Gas facility. Valero is planning a $1 billion expatsion of [heir refining capacity-
This activity is driving other developments in the housing and retail markets. Single family housing continues to grow and new
multi-family properties are under construction. A $35 million retail development was recently announced. This complex will
include three large retail stores and up to five restaurants. The mall is undergoing major renovations and consideringexpansion.
POPULATION
City of Port Arthur
Jefferson County
Beaumont-Port Arthur MSA
SERVICES PROVIDED BY THE CITY
1960 1970 1980 - 1990 2000
Of5cial Official - Official Official Official
Census Census Census ~ - Census Census
66,676 57,371 61,195 58,724 ~ 57;755
245;659 246,402 ~ -250,928 ~ 239,397 252,051
306,016 - 347,568. 375.497 361,226 385,090
The City provides water, sanitary sewer, library and park services. -The City also has the responsibility of maintaining its storm
drainage facilities, bridges, streets and sidewalks, providing local law enforcement activities, fire protection, solid waste disposal
services, building inspection and civil defense services, and maintaining preventative health services through numerous health
facilities within the community. -
MAJOR EMPLOYERS
The following are the major employers located within the Port Arthur area:
Employers
Part Arthur ISD
Huntsman Corp - - -
Medical Center - -
Motiva - -
Christus St Mary
Wal Mart
Valero ~ -
City of Port Arthur
Client Logic
Total
Type of Company
Education
Petrochemical Manufacturing
Medicate
Petrochemical Manufacturing
Medical ~... -
Retailer - -
Petrochemical Manufacturing
Local Ggvernment -
Call Center
Petrochemical Manufacturing
A-1
Number of
-' Employees --
1,301
1,101
900
900
850
816
750
658
612
450
LABOR STATISTICS - ~ - -
City of Port Arthur Labor Statistics .-
Labor ~ To[al
.. -. Year Force Employment Unemployment Ra[e
.~ 2005 - ~ 22,712 20,480 ~ 2,232 9.8%
2006 22;552 20,831 1,721 7.6%
2007 22;672 _ 21,039 - 1,633 - 7.2%
2008 23,129 20,963 2,166 9:4%
.. ~ 2009 23,768. 20,496 ~ 3,273 13.8% `
- Jefferson County Labor Statistics
Labor Total
Year Force -~
~ ~ Employment Unemployment Rate
- - - - - 2005 112,011 103,320 8,691 7:8%
2006 112,101 105,276 6;825 6.1% '
2007 112,551 106,343 6;208 5.5%
2008 113,734 105,960 7,774 6.8%
2009 114,560 103,598 1Q,961 9.6%
Source: Tezas Workforce Commission.
Q) .Average through September. _ _ - - - - - -
APPENDIX B
~. -EXCERPTS FROM THE
CITY OF PORT ARTHUR, TEXAS
ANNUAL FINANCIAL REPORT -
_ For the Year Ended September 3Q, 2008 _
The information contained in this Appendix consists of excerpts from the City of Port
Arthur, Texas Annual Financial Report for the Year Ended September 3Q 2008, and is not ~ .
intended to be a complete statement of [he City's financial condition. Reference is made to
' the complete Report for further information.