HomeMy WebLinkAboutPR 11669: $5 MIL CERT OF OBL Memorandum
City of Port Arthur, Texas
Finance Department
From:
Date:
Subject:
Steve Fitzgibbons, ~g,y~Iv~a~.
Rebecca Underhill,~ 'nance
February 12, 2002 ~t~r'ot'~inam
Proposed Resolution 11669
Presented for Council consideration and approval is PR 11669. Finance staff has worked with First
Southwest Company to prepare the preliminary official statement for $5,000,000 Certificates of Obligation,
Series 2002C. 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 finance the Port Arthur Economic Development Corporation Business Park.
The Debt Service on this issue will be funded by the PAEDC. 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 March 5, 2002..
P. R. NO. 11669
JJA 2/12/02
RESOLUTION NO.
A RESOLU'~ION APPROVING THE FORM AND CONTENT
OF THE PRELIMINARY OFFICIAL STATEMENT FOR
THE SALE OF $5,000,000 CITY OF PORT ARTHUR,
TEXAS, CERTIFICATES OF OBLIGATION, SERIES 2002C
AND AUTHORIZING FIRST SOUTHWEST COMPANY TO
PROCEED WITH THE PRINTING AND DISTRIBUTION OF
SAME IN PREPARATION FOR COMPETITIVE SALE
MARCH 5, 2002.
WHERAS, on January 15, 2002, The City Cotmcil adopted Resolution 02-14, which authorized the
Port Arthur Economic Development Corporation to finance the Business Park with Certificates of
Obligation; and
WHEREAS, on March 5, 2002, the City Council adopted Resolution 02-32 which authorized the
publication of notice of intention to issue $5,000,000 in Certificates of Obligation; and
WHEREAS, said notice will be published in the Port Arthur News on February 16, 2002; mad
February 23, 2002; and
WHEREAS, the scheduled date for selling the certificates is March 5, 2002; and
WHEREAS, the preliminary official statement is required to be prepared, 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 March 5, 2002.
Section 3. This resolution shall be effective from mad after its adoption.
READ, ADOPTED, AND APPROVED, this 19th day of February, 2002, AD, at a Regular
Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES: Mayor:
Councilmembers:
NOES:
ATTEST:
Mayor
Jan Stroder, Acting City SccretmT
APPROVED AS TO FORM:
Mark Sokolow, City Attorney
APPROVED FOR ADMINISTRATION:
Fitzgibbons, City Manager .
Rebecca Underhill, Finance Director
PRELIMINARY OFFICIAL STATEMENT
Dated January 22, 2002
NEW ISSUE - Book-Entry*Only
Ratings:
Moody's: Applied For
S&P: Applied For
See ("Other Information
Ratings" herein)
In the opinion of Bond Counsct, interest on thc Ccrtificatcs is excludable from gross income for federal income tax purposes under cxisring law and thc
Certificates arc not privatc activity bonds. Sce "TAX MATTERS - TAX EXEMPTION" hereth for a discussion of thc opinion of Bond Counscl, including a
description of aIlcmativc nllnimum tax consequences for corporations.
THE CERTIFICATES WILL NOT BE DESIGNATED AS "OUAL1F1ED T/X.X~EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$5,000,000
CITY OF PORT ARTHUR, TEXAS
(Jefferson County)
COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2002C
Dated Date: March 1, 2002 Due: February 15, as shown on inside cover
PAYI~IENT TERMS... futorest on the $5,000,000 City of Port Arthur, Texas, Combination Tax and Revenue Certifcates of Obligation, Series 2002C (thc
"Certifcatos") will accrue from March I, 2002, (the "Datcd Date") and will bc payable August 15 and February 15 of each year commcncing August i5,
2002, and will be calcuintcd on the basis of a 360-day year consisting of twelve 30-day months. The dcfnitivc Certificates will be initially registered and
delivered only to Cede & Co., the nominee of Thc Dcpoaltory Trust Company ("DTC") pursuant to the Book-Entry-Only Systcm described herein. Bcncfcial
ownership of the Certificates may be acquired in dcnominations of $5,000 or integral multiples tbcreo£ No physical dclivery of thc Certificatcs will be
made Io the beneficial owners thereof. Principal of, premium, if any, and intcrcst on the Certificates will be payable by thc Paying Agcnt/Registrar to Cede
& Co., which will make distribution of thc amounts so paid to the participating members of DTC for subsequent payment to the bcncflcial owners of the
Certificates. See "TILE CERTIFICATES - BOOK-ENTRY-ONLY SYSTEM" hcrcin. Thc initial Paying Agcat/Registrar is JPMorgan Chaae Bank, Houston,
Texas (sec "THE CERTIFICATES - PAYFNO AGENT/REGISTRY.").
AUTIIORITY FOR ISSUANCE . .. Thc Ccrtifcatos are issued pursuant to thc Constitution and gcneral laws of thc State of Texas, (thc "Statc") particularly
Subchaptcr C of Chapter 271, Texas Local Govemmcnt Code (thc Ccrtificatc of Obligatinn Act of 1971), as amended, and Chapter 1502, Texas Govermncnt
Code, as amended, and constitute direct obligations of the City of Port Arthur, Texas (the "City"), payable from a combination of (i) thc levy and collcction of
a direct and continuing ad valorem tax, withth thc limits prescribed by law, on all taxable proper~ within the City, and (ii) a subordinatc lien on net revcnues
of the City's Water and Sewer System, ~ provided in thc ordinance authorizing the Certificatcs (thc "Ordinance") (see "TIIE CERTIFICATES - AUTHOP.1TY
FOR ISSUANCE").
PURPOSE ... Proceeds from the sale of the Certificates will be used for the cost of water and sewer facilities and street and drainage improvements to serve
the Port Arthur Business Park and to pay the costs of issuance associated with the Certificates.
Sec Maturity and Pricing Schedule on thc inside cover
OPTIONAL REDEMPTION . . . The City reserves the right, at its option, to redeem Certificates having stated maturities on and after Fcbraary 15, 2013, in
whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2012, or any date thereafter, at the par value thereof plus
accrued interest to the date of redemption (see "THE CERTIFICATES - OPTIONAL P~EDEMPTION").
MANDATORY SINKING FUND REDEMPTION... In addition to the foregoing optional redemption provision, if principal amounts designated in tile serial maturity
schedule above are combined to create Term Certificates, each such Term Certificate shall be subject to mandatory sinking fund redemption commencing on
February 15 of tile first year which has been combined to form such Term Certificate and continuing on February 15 in each year thereafter until the stated maturity
date of that Terra Certificate, and thc amount required to be redeemed in any year shall be equal to thc principal amount for such 3ear set forth in the serial matority
schedule above. Tenn Certificates to be redeemed in any year by mandatory sinking fund mdemptinn sba0 be redeemed at par and shall be salccted by lot from and
among the Term Certificates then subject to redemption. Tbe City, at its option, may credit against any mandatory sinking fund rcdcmptinn requirement Term
Certificates of the maturity then subject to redemption which have been purchased and canceled by the City or have been redeemed and not thereto fore applied as a
credit against any mandatory sinking fund redemption requirement.
LEGALITY . . . The Certificates are offered for delivery when, aa and if issued and received by the initial purchaser(s) and subject to tile approving opinion of
the Attorney General of Texas and the opipinn of Vinson & EIkins L.L.P., Bond Counsel, ltouston, Texas (see Appendix C, "Form of Bond Counsel's
Opinion").
DELIVERY... It is cxpcctcd that the Certificates will be available for delivery through The Depository Trust Company on April 2, 2002.
BIDS DUE Tuesday, March 5, 2002, AT 11:00 AM, CST
Due
February 15
Principal
MATURITY SCHEDULE
Due
Yield February 15
Principal
Interest Rate
Yield
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
$ 145,000
155,000
160,o00
170,000
180,000
190,000
200,000
210,000
220,000
230,000
2013 $ 245,000
2014 260,000
2o15 270,000
2016 285,000
2017 300,000
2018 320,000
2019 335,000
2020 355,000
2021 375,000
2022 395,000
(Accrued Interest from March 1,2002 to be added)
This Of/'lcial Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the
solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale.
No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other
than those contained in this Official Statem, ent, and, if given 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 guarantee of the Financial
Advisor. This Official Statement contains, in part, estimates and matlers of opinion which are not intended as statements off act,
and no representation is made as to the correctness of such estimates and opinions, or that they will be realized.
The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of
this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been
no change in the affairs of the City or other matters described.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY ................ 4
CITY OFFICIALS, STAFF AND
CONSULTANTS ............................................. 6
ELECTED OFFICIALS .................................................... 6
SELECTED ADMINISTRATIVE STAFF ............................. 6
CONStn.x~,rrs AND A~VISORS .................................... 6
INTRODUCTION ................................................... 7
THE CERTIFICATES ............................................ 7
TAX INFORMATION .......................................... 11
TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT .......................................... 14
TABLE2 - TAXABLEASSESSEDVALUATIONSBY
C^TEaORY ...................................................... 15
TABLE3 - VALUATION AND GENERAL.OBLIGATION
DEBT HISTORY ................................................ 16
TABLE 4 - TAX RATE, LEVY AND COLLECTION
HISTORY ......................................................... 16
TABLE 5 - TEN LARGEST TAXPAYERS ...................... 16
TABLE 6 - TAX/~DEQUACY ..................................... 17
TABLE 7 - ESTIMATED OVERIakPPING DEBT ............. 17
DEBT INFORMATION ........................................ 18
TABLE8 - [NDUSTRIALDISTRICTCONTRACTS ......... 18
TABLE9 - PRo-FORMAGENERALOBLIGATION
DEBT SERVICE REQUIREMENTS ....................... 19
TABLE 10 - INTEREST AND Sn'41CdNG FUND BUDGET
PROJECTION .................................................... 19
TABLE l ] - AUTIIOPdZED BUT UNISSUED GENERAL
OBLIGATION BONDS ........................................ 19
TABLE 12 - OTItER OBLIGATIONS .............................. 20
FINANCIAL INFORMATION ............................ 21
TABLE 13 - GENEILAL FUND REVENUES AND
EXPENDITURE HISTORY .................................. 21
TABLE 14 - COMPUTATION OF SELF=SUPPORTING
DEBT .............................................................. 22
TABLE 15 - WATERWORKS AND SEWER SYSTEM
CONDENSED STATEMENT OF OPERATION ......... 22
TABLE 16- MUNICIPAL SALES TAX HISTORY .......... 22
TABLE 17 - CUP, RENT INVESTMENTS ......................... 24
TAX MATTERS .................................................... 24
OTHER INFORMATION .................................... 26
RATINGS .................................................................. 26
LITIGATION .............................................................. 26
REGISTRATION AND QUALIFICATION OF CERTIFICATES
FOR SALE ........................................................ 26
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS ................................. 26
LEGAL MATTERS ...................................................... 27
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION ................................................. 27
CONTINUING DISCLOSURE OF INFORMATION ............. 27
INITIAL PURCHASER ................................................. 28
FORWARD-LOOKING STATEMENTS DISCLAIMER ......... 29
CERTIFICATION OF THE OFFICIAL STATEMENT .......... 29
APPENDICES
GENEF, AL INFORMATION REGARDING THE CITY ......... A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT .. B
FORM OF BONO COUNSEL'S OPINION ........................ C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto,
are part of the Official Statement.
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Certificates to potential investors is made only by means of this entire Official Statement.
No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official
Statement.
TIlE CITY .....................................
The Ciiy of Port Arthur is a home rule municipality located in Jefferson County, Texas. The
City covers approximately 81.5 square miles (see "INTRODUCTION - DESCI~I~rION OF
CITY").
TIlE CERTIFICATES .....................
The Certificates are issued as $5,000,000 Combination Tax and Revenue Certificates of
Obligation, Series 2002C. The Certificates are issued as serial certificates maturing
February 15, 2003 through February 15, 2022, unless the pumhaser designates one or mom
maturities as a Term Certificate (see "THE CERTIFICATES - DESCRIPTION OF THE
CERTIFICATES").
PAYMENT OF INTEREST ..............
Interest on the Certificates accrues from March 1, 2002, and is payable August 15, 2002, and
each February 15 and August 15 thereafter until maturity or prior redemption (see "THE
CERTIFICATES - DESCmm~ON OF Th~ CERTWICATUS" and "THE CERTIFICATES -
OPTIONAL REDEMPTION").
AUTtlORITY FOR ISSUANCE .........
The Certificates are issued pursuant to the general laws of the State, particuIarly Subchapter C
of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as
amended, Chapter 1502, Texas Government Code, as amended, and an Ordinance passed by the
City Council of the City (see "THE CERTIFICATES - AUTHOmrV FOR ISSUAUCE").
SECURITY FOR TIlE
CERTIFICATES ..............................
The Certificates constitute direct obligations of the City, payable from a combination of (i) the
levy and collection ora direct and continuing ad valorem tax, within the limits prescribed by law,
on all taxable property within the City, and (ii) a subordinate lien on net revenues of the City's
Water and Sewer System (see "THE CERTIFICATES - SECURrry MD SOURCE OF P^vM~rr").
REDEMPTION ...............................
The City reserves the right, at its option, to redeem Certificates having stated maturities on
and after February 15, 2013, in whole or in part in principal amounts of $5,000 or any integral
multiple thereof, on February 15, 2012, or any date thereafter, at the par value thereof plus
ancmed ~ntercst to the date of redemption. Additionally, the Certificates may be subject to
mandatory redemption in the event the initial purchaser elected to aggregate one or more
maturities as a Term Certificate (see "THE CERTIFICATES - MANDATORY SINKING FUND
REDEIVIPTION").
TAX EXEMPTION ...........................
In the opinion of Bond Counsel, the interest on the Certificates will be excludable from gross
income for federal income tax purposes under existing law and the Certificates are not private
activity bonds. See "TAX M~I'IERS - T,~x EXEMFrlON" for a discussion of the opinion of
Bond Counsel, including a description of the alternative minimum tax consequences for
corporations.
USE OF PROCEEDS ....................... Proceeds from the sale of the Certificates will be used for the cost of water and sewer facilities
and street and drainage improvements to serve the Port Arthur Business Park and to pay the
costs of issuance associated with the Certificates.
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's Ratings Services, a Division of The
McGraw-Hill Companies, Inc. ("S&P"). The City also has five issues outstanding which are
rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial
insurance companies. Applications for contract ratings on the Certificates have been made to
.Moody's and S&P (see "OTHER INFORMATION - RATINGS").
BOOK-ENTRY-ONLY
SYSTEM ......................................
The definitive Certificates will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Certificates may be acquired in denominations of $5,000 or integral
multiples thereof. No physical delivery of the Certificates will be made to the beneficial
owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable
4
by thc Paying Agcnl/gegistrar to Ccdc& Co., which will make distribution of thc amounts so
paid to the participating members of DTC for subsequent payment to the beneficial owners of
the Certificates (see "THE CERTIFICATES - BOOK-EN'n),Y-ONLY SYsTmvf').
PAYMENT RECORD ...................... The City has never defaulted in payment of its general obligation trax debt.
SELECTED FINANCIAL INFORMATION
Ratio Trax
Fiscal Per Capita General Per Debt to
Year Estimated Taxable Taxable Obligation Capita Taxable Percent
Ended City Assessed Assessed (G.O.) G.O. Assessed Total
9/30 Population(0 Valuation(2) Valuation TaxDcbt Tax Debt Valuation Collection
1997 58,724 $2,599,279,372 $ 44,263 $ 42,005,000 $ 715 1.62% 99.39%
1998 58,724 2,563,171,174 43,648 40,725,000 693 1.59% 100.10%
1999 58,724 2,590,273,291 44,109 39,045,000 665 1.51% 99.95%
2000 57,755 2,683,062,920 46,456 39,670,000 687 1.48% 100.54%
2001 57,755 2,816,668,104 48,769 37,615,000 65 l 1.34% 99.69%
2002 57,755 3,060,493,481 52,991 82,340,000 O) 1,426 (3) 2.69% (9) (4)
(1) Source: U.S Census Bureau for 1990, held constant through 1999. Fiscal year 2000 through 2002 ~s reported by the U.S Census Bureau
for 2000 held constant.
(2) As reported by the Jefferson County and Orange County Appraisal Districts; subject to change during thc ensuing year; includes Industrial
District values.
(3) Projected; includes the Certificates; includes self-supporting debt; includes $15,000,000 Certificates of Obligation, Series 2002A being
issued through thc Tex~s Water Development Board with an expected delivery date of March 6, 2002; includes $17,000,000 Certificates of
Obligation, Series 2002B being issued by the City concurrently with the Certificates.
(4) In process of collection.
GENERAL FUND CONSOLIDATED STATEMENT SUMMARY
For Fiscal Year Ended September 30
2001 2000 1999 1998 1997
Beginning Balance $ 8,939,565 $ 7,413,647 $ 6,410,810 {0 $ 6,037,298 $ 5,937,128
Total Revenue 28,542,446 28,582,515 29,538,466 26,589,717 23,810,436
Total Expenditures 30,487,679 29,106,722 28,201,685 26,659,061 25,612,021
Other Sources (Uses) 3,143,553 2,050,125 (333,944) 589,506 16,790,775
Transfer (14,889,020)
Ending Balance $ 10,137,885 $ 8,939,565 $ 7,413,647 $ 6,557,460 $ 6,037,298
( 1 ) Restated.
(2) Bond proceeds transfer.
For additional information regarding the City, please contact:
Ms. Rebecca Underhill
Director of Finance
City of Port Arthur
444 Fourth Street
Port Arthur, Texas 77641-1089
Phone: (409) 983-8150
Fax: (409) 983-8291
Mr. Joe Morrow
First Southwest Company
or 1021 Main Street
Suite 2200
Houston, Texas 77002
Phone: (713) 651-9850
Fax: (713) 654-8658
CiTY OFFICIALS~ STAFF AND CONSULTANTS
ELECTED OFFICIALS
City Council
Member
Oscar Ortiz
Felix Barker
Craig Hannah
Thomas J. Henderson
Rev. Ronnie Linden
Bob Bowers
Robert E. Allen
Rose Mitchell Chaisson
Tom Gillam, III
Length of
Position Service (yrs) Term Expires
Mayor 5 May~04
Mayor Pro-Tern 2 May-02
Councilmember 9 mos. May-02
Councilmember 6 May-02
Councilmcmber 7 May-03
Councilmember 7 May-03
Councilmembar 13 May-02
Councilmember 3 May-02
Councilmember 6 May-02
Occupation
Retired
Retired
Funeral Home Director
Retired
Minister
Retired
Retired
Volunteer Services Coordinator
Chemical Plant Operator
SELECTED ADMINISTRATIVE STAFF
Name
Stephen Fitzgibbons
Rebecca Undarhill
Deborah Echols
Jan Stmder
Mark Sokolow
Length of
Position Service (yrs)
City Manager 5
Director of Finance 9
Asst. Director of Finance 9
Acting City Secretary 28
City Attorney 5
CONSULTANTS AND ADVISORS
Auditors ............................................................................................................................................................... Gayle Botley, CPA
Gayle BotIey & Associates
4749 Twin City Highway
Port Arthur, TX 77642
Bond Counsel ........................................................................................................................................................... Frank McCreary
Vinson&Elkins L.L.P.
1001Fannin, Suite 2300
Houston, TX 77002-6760
Financial Advisor ............................................................................................................................................................ Joe Morrow
First Southwest Company
1021 Main Street, Suite 2200
Houston, TX 77002
PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$5,000,000
CITY OF PORT ARTHUR, TEXAS
'COMBINATION TAX AND REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2002C
INTRODUCTION
Tiffs Official Stalcmcm, which includes the Appendices hcrclo, provides certain h~formallon regarding thc issuance of
$5,000,000 City of Port Arthur, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2002C. CapitaIized
Icnns used h~ this Official Statement have the same meanings assigned to such terms in thc Ordinance to be adopted on the date
of sale of the Certificates which will authorize the issuance of the Cc~ificatcs, except as othe~ise indicated bcrcin. The City
intends to issue $15,000,000 Combination Tax and Revenue Certificates of Obligatioa, Scri~ 2002A to be sold to the Texas
Water Development Board wilh an expected delivc~ date of March 6, 2002 and, concm'rcntly with thc issuance of thc
Cc~ificatcs, thc City intends to issue $17,000,000 Combination Tax and Revenue Certificates of Obligation, Series 2002B.
There Ibllows in this OfiScial Statement descriptions of the Ccrtiticates and certain intbnnation regarding the City and its
finances. All descriptions of documents contained herein are only sumntarics and are qualified in their entirety by reference to
each such document. Copies of such documents may bc obtaincd from thc City's Financial Advisor, First Southwest Company,
Houston, Texas.
DESCRII'TION OF 'FILE CITY.,. The City is a honte rule municipality, duly organized and existing under the laws of the State,
including thc City's Home Rule Charter. Thc City was incorporated in 1898, and first adopted its Home Rule Charter in 1963.
The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and eight
Councihncmbcrs. The renal of office is three years for the Mayor and six Councihncmbcrs, the remaining Cour~cihnembcrs serve
two year terms. Tile City Manager is thc chief administrative officer lbr the City. Smnc of the services that thc City provides arc:
public safety (police and tire protection), highways and streets, electric, water and sanitm¥ sewer utilities, health and social
services, culture-recreation, public transl~orlation, public improvcmems, phlnning and zoning, and general adndnistralivc
scl','ices. The 2000 Census population for thc City was 57,755. Thc Cily covers applx}ximatcly 81.5 square miles.
TIlE CERTIFICATES
DESCRIPTION OF 'rile CERTIFICATES ... Thc Certificates arc dated March I, 2002, and mature, or are subject to mandatory
redemption prior to maturity, on February J 5'in each o£ tile years and in thc amounts shown on the inside cover page hereof.
Imcrcst will bc computed on the basis of a 360-day year of twelve 30-day months, and will be payable on February 15 and
August 15, commencing August 15, 2002. The definitive Certificates will be issued only in fully registered form in any integral
nmltiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of' Tbe
Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the
Certificates will be made to the beneficial owners thereof. Principal of; prcmlun'~, if any, and interest on thc Certificates will
bc payable by thc Paying Agcnt/Registmr to Cede & Co., which will make disu'ibutlml of the amounts so paid to the participating
members of DTC for subsequent puyment to thc beneficial owners of thc Ccrtificatcs. See "BOOK-ENTRY-ONLY SYSTEM" herein.
AUTIIORI'P,' FOR ISSUANCE...The Certificates arc being issued pursuant It) the Constitution and general laws of thc State of Texas,
particularly Subchaplcr C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended,
Chapter 1502, Texas Government Code, as amended, and thc Ordinance.
SECURITY AND SOURCE OF PAYMENT... The Certificates constitute a general obligation of thc City payable from a continuing direct
annual ad valorem tax levied on all taxable properly in thc City, within tile limits prescribed by law, in an amount sufficient to
provide lbr the payment of principal of and interest oil the Certificates. Additionally, the Certificates arc payable fronl and secured by
a subordlnatc lien on net rcvcnu~ of tile City's Water and Sewer System, as provided in the Ordinance authorizing the Certificates.
TAX I{.A'I'E LIMITATION . . . All taxable property within thc City is sub. icct to thc assessment, levy and collcctlon by the City of a
continuing, direct ammal ad valorem tax, within thc limits prescribed by law, sufficient to provide tbr thc payment of principal of
and interest on all ad valorem tax debt. Article XI, Section 5, of thc Texas Conslitutlon is apl)licablc to tile City, and limits its
maxhllunl ad valol'cnl tax rate to $2.50 per $100 Taxable Assessed Valuation Ibl' all City purposes. The Ilonm Rule Charter of
the City adopls the coostitutionally authorized maximum tax rotc of $2.50 per $100 Taxable Assessed Valuation.
Admlnistrativcly, thc Attorney General of thc State o£Texas will permit allocation o1'$1.50 of the $2.50 maximum tax rotc for all
General Obligation debt service, as calculated at thc time of issuance.
OI'TIONAL REI)EMIrI'ION... The City reserves thc right, at its option, to rcdccm Certificates baying stated maturities on and
after February 15, 2013, in whole or itl part in principaI amounts of $5,000 or any integral multiple thereof; on February 15,
7
Certificates are to bc rcdcc~ncd, Ihe City may select the maturities of Certificates to be redecmcd. If less than all thc Certificates
Certificate {or thc principal amount thereof to be rcdecmed) shall become duc and payable on such redemption date and interest
~IANllA'I'ORI' SINNING I?UNI) REDEMPTION . . . Ill addition to thc foregoing optional redcmptlon provision, if principal amounts
designated in thc scl'ial malurily schedule above are combined to create Term Cc~lilicat~, ~tch such Term Curtilicatc shall be subject
lo ill;lndaloly sinking [Bnd redemption cOnllllcncing on Fcbrtlal~ 15 of thc li~[ year which has bccn combined to [[irlll such Ternl
Cc~lilicatc and conthming on Fcbrua~ 15 in each y~r tbcr~llcr until thc staled maturity date of that 'Form Cc~lilicate, and thc
anlount required to be redeemed in any year shall bc c~ual to the principal amount lbr such ymr set lb~h in thc serial maturity
sch~ulc above. Tcnn Cenificat~ to be r~m~ in any y~r by mandato~ sinking fund redemption shall be redeemed at par and
shall bc selected by lot I~om and among thc Te~ Ccflificat~s then subject to r~cmption. ~c City, at iB option, may credit against
any mandato~ sinking hnd redemption r~uimmcnt Tcnn Ccaificates of tim maturity then subject to redemption width have bcmn
purchased and cancc[~ by thc City or have ~cn redeemed and not thcmtolbm applic~ as a credit against any mandato~ sinking fBnd
redemption requirement.
Thc principal amount of Term Certificates required to be redeemed pursuant to tile operation of such mandatory redemption
provisions may be reduced, at the option of tile City, by thc principal amount of Tcnn Ccrtificatcs of thc same maturity which ti)
have bccn acquired by thc City and delivered to thc Paying Agent/Registrar for cancellation or (ii) bare bccn rcdccmcd pursuant
to thc optional redemption provisions and not thcrctoforc credited against a mandatory redemption requirement.
NOTICE OF REoE~.IpI[ION... Not I~ss than 30 days prior to a redemption date tbr tile Certificates, tile City will cause a notice of
redemption to bc sent by Unltcd States mail, first class, postage prepaid, to the registered owners of the Certificates to be
rcdccmcd, in whole or in part, at the address of thc registered owner appearing on thc registration books of tile Paying
Agcnt/Rcgistrar. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN,
WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE
CERTIFICATES CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED
REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT
BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH CERTIFICATE OR PORTION THEREOF SHALL CEASE
TO ACCRUE.
DEFEASANCE... Thc City reserves thc right t,o dcfcasc tim Certificates in any nlanocr now or hcrcatlcr as authorized by law.
BOOK-ENTRY-ONLY SYSTEM... This section deso'ibes how ownership of the Ce/'tificates are to be transfet?'ed attd bow the
prittcipal of premium, if sro,, aad briefest on the Certificates are to be paid to attd credited b), The Deposilot'y Trust Compatt),
("DTC"), New York, New York, while the Certificates are regia'tered itt ils aomiaee itame. The ittfor, tatioa hi this section
cottceraing DTC ami the Book-Entty-Oaly System has been provMed by DTC for t~se itl disclosure doctttnents stroh aa' this
OJficial Statonent. The Ci0, believes the sottrce of stroh informalion to be reliable, but takes ao respo.sibilio, for the accttl'ac),
or completeness Ihereof
The CiO, cannot and does not give any assurance Ihat (I) DTC will distribute payments of debt service on the Certificates, or
redemptioit or other notices, lo DTC Participattts, (2) DTC Participants or others will distribute debt secvice pa),tnent$ paid to
DTC or its aominee (as Iht registered owner of the Certificates). or redemptiott or other notices, to the Beneficial Owners. or
that the), ivill do so on a timel), basis, or (3) DTC will serve attd act bt the manner d'~cribcd in this Official Statement. The
cttrrettt rilles applicable to DTC are on file with the Securities and Exchange Coltltnissiott, sad the cttrretll procedure.*' of DTC to
be followed i. dealittg u'ilh DTC Parlicipallts are oaJTlc, with DTC.
DTC will act as securities depository for thc Certificates. The Certificates will bc issued as Ihlly-rcgistered securities rcglstcred
in the name of Cede & Co. (DTC's partnership nominee). One fully-registered certificate will bc issued for each maturity ol'thc
Certificates in thc aggregate principal mnount of each such maturity and will be deposiled with DTC.
DTC is a limited-purpose trust company organized under tile New York Banking Law, a "banking organization" within thc
meaning o1' thc New York Banking [..,aw, a nlenlber of tile Federal Reserve Systcnl, a "clearing corporation" within tile meaning
ol'thc New York IJnilbnn Commcmial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC bolds securities that its participants ("Direct Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-cnt~y changes in Participants' accounts, thereby clilninating thc nccd for physical
movement of securities certificates. Dircct Participants include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by thc New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and thc National Association of Sccurities Dealers, Inc. Access to thc DTC
8
system is also available ttJ others such as scour/tics broker's al~d dealers, bal~ks, ;md n est COmlm~fics Ihtlt cie;ir tlnougn or maimain
a custodial relationship with a Direct Participant, either directly or indirectly ("htdirect Participants"). The Rules applicable to
DTC and its Participants are on file with the Securities and Exchange Commission.
Purchases of Certificates undcr thc DTC system must be made by or through DTC Participants, which will reccive a credit for
such purchases on DTC's records. The ownc~;ship interest of each actual pumbaser of each Certificate ("Beneficial Owner") is in
turn to be. recorded on thc Direct or Indirect Participants' r,.'cords. Beneficial Owners will not receive written colffinnation from
DTC of their purchasc, but Beneficial Owners are cxpcctcd to receive written confirmations providing details of the transaction,
us well us periodic statements of their holdings, from thc Direct or Indirect Participant through which thc Beneficial Owner
catered into tile transaction. Transfers of ownership interest in tile Certificates are to be accomplished by entries made on the
books ol'Partieipants acting on bchall'of Bcnelicial Owners. Beneficial Owners ',viii not receive certificates representing their
mvncrship interests in the Certificalcs, except in Iht event thai usc of tine bool{-cnlry syslcm described herein is
To facilitate subsequent transl~rs, all Certificates deposited by Direct Participants with DTC arc registered in thc name of DTC's
partnership nominee, Ccdc& Co. Thc deposit of Certificates with DTC and their registration in the name of Cede & Co. effect
no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners ol*the Certificates; DTC's records
rctlcct only thc identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be. tile
Beneficial Owners. The Participants will remain responsible for keeping account ol*their holdings oil behalfof their custontcrs.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants an0 Indirect Participants to Bcncficlal Owners will be governed by arrangements among thc~n, subject
to any statutory or regulatory requirements as may bc in cfr'oct from time to tiara.
Redemption notices shall be sent to Ccdc& Co. If less than all ol'the Certificates within an issue am being rcdccmed, DTC's
practice is to dctcnnlne by lot the amount of the interest of each Direct Participant in such issue to be. redeemed.
Neither DTC nor Ccdc& Co. will consent or vote with mspcct to thc Certificates. Under its usual procedures, DTC mails an
Onmibus Proxy to the City as soon as possible al'tcr Ibc Record Date (hcrciaal~tcr defined). Thc Omnibus Proxy assigns Cede &
Co.'s conscnling or voting riglxts to Iht)se Direct Participanls to whose accounts the Ccrtific;Ucs am crcdilcd on thc Record Date
(idcntilicd iix a lisling attached to Ibc Onmibus Proxy).
Principal and intcrcst payments on thc Ccrlilicatcs will bc made to DTC. DTC's practice is to crcdit Direct Participants' accounts
on each payable date itl accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive pay~ncnt on such payable date. Paymems by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held Ibr thc accounts of customers in bearer form or registered
in "street name," and will be thc rcsponsi.biI'ity or' such Participant and not of DTC, thc Paying Agent/Registrar or the City,
subject to any statutory or regulatory requirements as may be in effect from time to time. Payment o£princlpal and interest to
DTC is the responsibility of thc City, disbursc~nent of such payments to Direct Participants shall bc the responsibility of DTC,
and disbursement o£ such payments to tile Beneficial Owners shall be thc rcsponsibilily of Direct and Indirect Participanls.
DTC may discontinue providing its scrviccs as securities depository with respect to thc Ccrtificatcs at any time by giving
reasonable notice to thc City. Under such circumstances, in thc event that a successor securities depository is not obtained,
Certificates arc required to be printed and delivered.
Thc City may decide to discontinue use ot'the system of book-entry transfers through DTC (or a successor securities dcpositoD').
In that event, Certificates will be printed and delivered.
Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood
that while thc Certificates are in the Book-Entry Only Systmn, references in other sections of this Official Statement to registered
owners should be rcad lo include the person t'or which tile Participant acquires an interest itl the Certificates, but (i) all rights of. -
ownership must bc exercised through DTC and the Book-Entry Only System, and (ii) except as described above, notices that arc
to be given to registered owners under thc Ordinance will bc given only to DTC.
Information concerning DTC and tile Book-Entry Only System has been obtained from DTC and is not guaranteed as to accuracy
or completeness by, and is not to be construed as a rcprcscntation by thc City or thc Purchasers.
Effect of Termination of Book-Eut~:y Only System. In thc event that thc Book-Entry Only Systmn is discontinued by DTC or
tile use of the Book-Entry Only System is discontinued by the City, printed certificates will be issued to thc holders and thc
Certificates will be subject to transfer, cxchange and registration provisions as scl lbrth in the Ordinance and summarized under
"THE CERTIFICATES - TRANSFER, EXCHAtqGE^ND REGISlR^T~OW' below.
I)AYI~G AGI';NT/REGISTRAll... Thc initial Paying Agcnt/Rcgistrar is JPMorgan Chase Bank, Houston, Texas. Itl thc Ordinance,
thc City retains thc right to replace the Paying AgcnffRcgistrar. Thc City covenants to maintain and provide a Paying
9
Agora/Registrar at all Ihncs umil the Ccrtilicales arc dul~ paid and any successor Paying Agcnl/P, cgish'ar shall bca conlnlcrcial
bank or trust company organized under the laws 0fthc United States or any State and duly qualiticd and legally authorizexl to
serve as and perform the duties and services of Paying Agent/Registrar for thc Certificates. Upon any change in the Paying
Agcnt/Rcglstrar for the Ccrtiticatcs, the City agrees to promptly cause a written notice thereof to be sent to each registered owner
of tUc Certificates by United States mail, first class, postage prepaid, which noticc shall also give thc address of thc new Paying
Agent/Registrar.
TRANSFER, EXCIIANGE AND REGISTRATION ... hi the event thc Book-Entry-Only Systcm should be discontinued, the
Ccrfiticates may be transferred and exchanged ell the registration books of thc Paying AgenffRegistrar only upon presentation
and surreudcr to tile Paying Ageut/R. eglstrar and such transfer or exchange shall be without expense or service charge to tile
registered owner, except ti. ir any tax or other governmental charges rcqulrcd to be paid with respect to such rcgistratkm, exchange
and {musfcr. Ccrtificalcs may be assigacd by the cxccutioa of an assignment I'onn on Ibc respective Certificates or by otbcr
instrument ol'[ransl~r and ussignmcnl acceptable to the Paying Agent/Registrar. New Certificates will be delivered hy tile Paying
Agent/Registrar, in lieu of the Certificates being transt'crrcd or exchanged, at the designated olllcc of thc Paying Agcnt/P, egistrar,
or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible,
new Certificates issued in an exchange or transfer of Certificates will bc delivered to the registered owner or assignee of thc
registered owner in not more than tbrcc business days slier thc receipt of the Certificates to be canceled, and the written
inslrmncnt of h-ansl~r or request tBr exchange duly executed by thc registered owner or his duly authorized agent, in I~.mn
satisfactory to thc Paying Agent/Registrar. New Certificates registered and dclivcrcd itl all exchange or U'ansfcr sball be iu any
integral multiple of $5,000 li~r any one maturity and for a like aggregate principal amount as the Certificates surrendered for
exchange or transfer. Sec "Book-Entry-Only System" bcrein tbr a description of the systcm to be utilized initially in regard to
ownership and transfcrabilhy of thc Certificates. Neither thc City nor the Paying Agent/Registrar shall bc rcqulred to transfer or
exchange any Certificate called for rcdcmptlon, in whole or in part, within 45 days of the date fixed for redemption; provided,
howcver, such limitation of transfer shall not bc applicable to an exchange by thc registered owner of thc uncalled balance of a
Certificate.
RECORD DATE FOR INTEREST PAYMEN [... The record date ("Record Date") for the interest payable on the Certificates on any
interest payment date means the closc of business ou the last business day of tbc preceding month.
Ill I]le CVmlt of a non-payment of interest Oil a scheduled payment date, aud for 30 days thereattcr, a new record date for such
interest payment (a "Special Record Date") will be established by tim Paying Agent/P, cgistrar, if and when funds for thc payment
of such interest havc bccn received frmn thc City. Nolice of the Special Record Date and of the scheduled payment date of thc
past duc interest {"Special Payment Date", which shall bc 15 days slier thc Special Rccord Date) shall bc scot at least five
business days prior lo thc SpcciaI Record Date by United Stales mail, first class postage prepaid, to the address of each Holder of
a Certificate appearing on the registration books of tho Paying Agent/Registrar at tim close of business on tile last business day
ucxt preceding tile date of mailing of such notice.
BONDIIOLDERS' RE*',tEDIE$ . . . The Ordinance docs not establish specific events of del'suit with respect to thc Certilicatcs.
Undcr State law there is no right to tim acceleration of maturity of tho Certificates upon thc failure of tile City to observe any
covenant under the Ordinance. Although a registered owner of Certificates could presumably obtain a judgment against thc City
ifa default occurred in the payment of principal of or interest on any such Certificates, such judgment could not be satisfied by
execution against any property of the City. Such registered owner's only practical remedy, ifa dcthult occurs, is a mandamus or
mandatory injunction procccdiug to compel the City to levy, assess and collect an annual ad valorem tax sufficient to pay
principal of and interest on Iht Certificates as it becomes due. Tbc enforcement of any such remedy may be difficult and time
consuming and a registered owner could bc required to enforce such remedy on a periodic basis. Thc Ordinance docs not
provide for tile appoinuncnt ol'a trustee to represent thc interests of tile bondholders upon any lhilure of thc City to pertBnn in
accordance with thc terms of thc Ordinance, or upon any olhcr condition. Furthermore, the City is eligible to scck relief from its
creditors under Chapter 9 of thc U.S. Bankruptcy Code. Ahhough Chapter 9 provides for the recognition ora security iatcrcst
rcprcscnled by a specifically pledged source of revenues, the pledge of taxes in support of a general obligation of a bankrupt
entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes all automatic stay provision
that w?uld prohibit, without Bankruptcy Court approval, the prosecution o£ any other legal action by crcdltors or bondholders of
an entdy xvhich bas sought protection under Chapter 9. Therct~)re, should thc City avail itself of Chapter 9 protection from'
creditors, the ability to enforce would be subject to thc approval of the Bankruptcy Court (which could require that thc action be
heard in Bankruptcy Coua iustcad of other fi:doral or state court); and thc Bankruptcy Code provides for broad discretionary
powers of a Bankruptcy Court in administering any proceeding brought belbrc it. The opinion ot' Bond Counsel will note that all
opinions relative to thc cnlbrccability of the Ordinance. and the Certificates arc. qualilicd with respect to thc customary righls of
debtors relative to their creditors.
10
USE OF CEI{'rlFICA'I'E PROCEEDS... Proceeds Ii'om the sale of thc Certiticates arc expected to be expended as follows:
Sources of Funds
Par Amount of Bonds
Accru.ed Interest
Total Sources of Funds
Uses of Funds
Deposit to Construction Fund
Deposit to I&S Fund
Costs of Issuance
Total Uses of Funds
TAX INFORMATION i
Al> V^coll£i',t TAX LAW... Thc appraisal of properly within the City is the responsibility of thc Jefferson County Appraisal District
(thc "Appraisal District"). Excluding agdcuhural and open-space land, which may be taxed on thc basis of productive capacity, tbe
Appraisal District is required under tbe Property Tax Code to appraise all properly within thc Appraisal District on tbc basis of 100%
of its market value and is prohibited from applying any assessment ratios. In determining market value of properly, diflbrcnt methods
o£appmisal may be used, including the cost method of appraisal, tile income method ol'appmisal aud market data comparison method of
appraisal, and thc method considered most appropriate by thc chief appraiser is to be used. State law lhrlher limits thc appraised value ora
r~idcncc homestead for a tax year to an amount not to exceed thc lcss of(l) thc market value of the properly, or (2) thc sum of(a) 10% of
thc appraised value of tile property lbr thc last ymr in whicb the properly ,,vas appraised Ibr taxation times tbc number of years since the
pmpcny was last appraised, pins (b) the appraised value of the property tbr tbc last ymr in which tile property was appraised plus (c) the
market value of all new improvc.nnents to the property. Thc value placed upon property within the Appmi~l District is subject to
review by an Appraisal Review Board, consisting of three mmnbcrs appointed by the Board of Directors o~' thc Appraisal District.
Thc Appmi.,u~l District is required to review thc value of properly within thc Appraisal District at least cvc~y three y,atrs. Thc City
may require atmual rcvicxv at its own expense, and is entitled Io challenge thc determination of appraised value of property within the
City by petition lilcd with thc Appraisal Review Board.
Rcli:rcncc is nladc to thc V.T.C.A., Propclly Tax Code, tbr idcntitlcation of property subject to taxation; property excmpt or which
may bc cxcntptcd from taxation, if claimed; the appraisal of properly lbr ad valorem taxation purposes; and tile procedures and
limitations applicable to thc levy and collcx:tion, o f ad valorem taxes.
Article VIII of thc State Constitution ("Article VIII") and State law provide tbr certain exemptions t?om property taxes, thc valuation
ofagricuhural and open-space lands at productivity value, and thc exemption of certain personal property from ad valorem taxation.
Under Scction I-b, Atlicle VIII, and State law, thc governing body ora political subdivision, at its option, may grant: (1) An
cxcmption of not less than $3,000 of thc market value of thc residence homestead of persons 65 years of age or older nod thc disabled
from all ad valorem taxes tbercaller levied by thc political subdivision; (2) An exemption of up to 20% of thc market value of
residence homcstcads. Thc minimum exemption under this provision is $5,000.
Itl the case of residence homestead exemptions graotcd under Section I-b, Article VIII, ad valorem taxes may continue to be
levied against thc value of bomcstcads exempted where ad valorem taxes have previously been pledged fbr thc payment of debt if
cessation of thc levy would impair tile obligation of the contract by which thc debt was created.
State law and Section 2, Article VIII, ~nandatc an additional property tax exemption tbr disabled vctcrans or thc surviving spouse or
children of a deceased veteran who died while on active duty ia thc armed forces; thc cxcmptlon applies to either real or personal
property v,.ith thc amount of assassed valuation exempted ranging ti'om $5,000 to a maxi~nunl orS12,000.
A~liclc VIII provides that eligible owners of both agrlcultuml land (Section l-d) and open-space land (Section l-d-I), including
open-space land devoted to t'am~ or ranch purposes or open-space land dcvotcd to timber production, may elect to have such properly
apph'aiscd for property taxation on thc basis o£its productive capacity. The same ]and may not bc qualified mtdcr both Section l-d
an,J l-d- I.
Nonbus ess persona] property, such as automobiles or light trucks, are exempt from ad valorem taxation un[ess thc governing body
ora political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt t?om ad valorcnn taxation.
11
goods detained in Texas lbr 175 days or less For the purpose of assembly, storage, ~nanut~cturing, processing or t'abricatloo.
Decisions to coutinue to tax may be reversed in tbe future; ~tccisions to exempt frccport property are not subject to reversal.
valucs on property in thc zone are "li-ozcn" at?m value of thc pmpcr~y at thc time of crestion oi"the zone. The City also may enter
cc~aln in~provcmcnts on its property. The City in turn agrees not to levy a tax on all or part of tile increased value attributable to thc
bnpmvcmcnls until tbe expiration oftbc agreement. Thc abatement agreement could last IBr a period o£up to I 0 ye. ars.
Council adopls a lax rale per $100 taxable value ll)r lilt: current year. Thc Cily Council will bc rc,.luircd to adopt tile annual lax
rote I'or Ibc Cily belBrc Ibc later of September 30 or tile 60I1. day after tbe date thc certified appraisal roll is received by the City.
If thc City Councit docs *lot adopt a lax rate by such required date thc tax rate IBr that tax year is thc lower of the effective tax
rate calculated for that tax year or ibc tax rate adopted by thc City l`or tile preceding tax year. Thc tax rate consists of two
components: ( 1 ) a rate l`or l`unding of maintenance and operation expenditures, aud (2) a rate for debt servicc.
Under tbe Property Tax Code, tile City must annually calculate nad publicize its "effective tax rate" and "rollback tax rate".
Efli:ctive January I, 2000, a tax ram cannot be adopted by thc City Council tbat exceeds thc lower of the rollback tax rate or 10.3
per cent o£tb¢ effcctivc tax rate until a public hearing is bald on the proposed tax rote l`ollowing a notice of such public bearing
(including thc requirement that notice be posted on thc City's websitc il'thc City owus, operates or controls all interact websitc
and public notice be given by television il' the City has t'rcc access to a television channel) and tbc City Council has otberwise
complied with tile legal requirements for thc adoption of sucb tax rate. If the adopted tax rate exceeds thc rollback tax rate tb¢
qualified voters o£ the City by petition may require that an election be bald to determine wbcthcr or not to reduce tim tax rate
adopted I'or ibc current year to tile rollback tax rate.
"Effective tax rate" means tbc rate that will produce last year's total tax levy (adjusted) from this year's total taxable values
(adjusted). "Adjusted" means lost values arc not included in the calculation ok'last year's taxes and new values are not included
in this year's taxable values.
"Rollback tax rate" means thc rate that will produce last year's maintenance an,J operation tax levy (adjusted) Ii'om this year's
values (adjusted) multiplied by 1.08 plus a rotc that will produce riffs year's debt service l`rom tbis year's values (unadjusted)
dividad by Ibc anticipatc,.I lax collection rate.
The Property Tax Code provides that certain cities and counties in tile State may submit a proposition to tbe votcrs to autborlzc
an addifional one-ball cent sales tax on mtai}'salcs o£taxablc items. If thc addifioual tax is Icvlcd, the cl`l'cctivc tax rate and thc
rollback tax rate calculations are required t,,; be offset by thc revenue tbat will be generated by tbe sales tax in thc current year.
Reference is made to tbc Property Tax Code tar definitive requirements tbr tbc levy and collection of ad valorem taxes and the
calculation el`thc various defined tax rates.
PROI'ER'r¥ ASSE$SM£NT AND TAX PAYMEN'r... Property witbin tile City is generally assessed as of January I of each year.
Business inventory may, at tbe option el' thc taxpayer, bc assessed as of September. Oil and gas reserves arc assessed on thc
basis el` a valuation process whicb uses an avcragc of thc daily price o1' oil and gas for thc prior year. Taxes become duc October
I of thc same year, and become delinquent on February I of tile following year. Taxpayers 65 years old or older arc permitted by
State law to pay taxes on homesteads in l`our instalhncnts witb the first duc oil February I ol'cacb yesr and thc final instalhncnt
ducon August I.
PENALTIES AND INTEREST... Cbargcs Ibr penalty and interest oil tile unpaid balance el`delinquent taxes arc made as lbllows:
Cumulative Cumulative
Month Penalty Interest Total
February 6% 1% 7%
March 7 2 9
April 8 3 I 1
May 9 4 13
June ' I 0 5 15
July 12 6 18
Attar July, penalty remains at 12%, and interest increases at the rate el~ 1% each month. In addition, if an account is delinquent
in July, a 15% attorney's collection fcc is added to the total tax pcnalty and interest charge. Under ccrtain circmnstanccs, taxes
whicb become delinquent on the homestesd el` a taxpayer 65 years old or older incur a penalty of 8% per annum with no
12
addili.na[ i~¢naltics or inlcrcst assessed. In gcm'a[, i'~mpctly .sutlj¢ct Itl linc Gly's lien may bc sold, hi wht~lc or iii parcels,
pursuant [o court order [o collect thc amounts duc. Federal law docs not allow lbr thc collection of pcnulty and interest aguinst
an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities,
including governmental units, goes into effect with thc filing ot* any petition in bankruptcy. The automatic stay prevents
governmental units l¥om t~,rcclosing on property and prevents liens for post-petition taxes I¥om attaching to property and
obtaining secured creditor status unlcss, in either case, an order lilting thc stay is obtained from thc bankruptcy court. In many
cases post-petition laxcs are paid as an admln[strativc expense or'thc estate in bankruptcy or by order of thc bankruptcy court.
65 years of age or older ot'$25,000; tile disabled are also grauted an exemption or' $25,000.
Thc Cily has granted an addilional exemption o1' 20% of thc market value of residence homesteads; minimum exemption of
$5,000.
Sec Table I for a listing of thc amounts of thc exemptions described above.
Ad valorem taxes arc not levied by thc City against thc exempt value of residence homesteads tbr thc payment of debt.
Thc City docs not tax nonbusincss personal property; and M iriam Johnson collects taxes for thc City.
'Die City does permit split payments, and discounts arc not allowed.
City does not tax freeport property.
Thc City does not collect thc additional onc-hal£ccnt sales tax for reduction of ad valoreln taxes.
TAX AUATEt',IF2NT POLICY... Thc City has established a tax abatement progrmn to encourage economic development. ]n order
to be considered for tax abatement, a project must meet several criteria pertaining to job creation and property value
13
2001/2002 Markct Valuation Established by Jefferson County and
Orange County Appraisal Districts (excluding totally exempt property)
Less Excnlptious/Rcductions at 100% Markct Value:
Residential Homestead Excmptiohs $ 82,784,116
Over 65 Homestead Exemptions 95,665,730
DisabIcd Homestead Excnlptions I5,241,700
Veteran Homcstead Excmpt ions 1,437,618
Plus: 2001-2002 Industrial District Values
2001/2002 Taxable Assessed Valuation
General Obligation Debt Payable from Ad Valorem Taxes (as o£03-01-02)
General Obligation Bonds $ 39,075,000
Certificates of Obligation i:~} 38,330,000
Anticipation Notes 500,000
Assumed Jefferson County FWSD gl WW & SS Bonds 335,000
Thc Certificates 5,000,000
Less Self-Supporting Debt
General Obligation Bonds $ 16,,I03,878
Total General Obligation Debt Payable from Ad Valorem Taxes
2002 Estimated Population - 57,755141
Per Capita Taxable Assessed Valuation . $52,99I
Per Capita Funded Debt - $983
$ 1,359,060,454
198,675,624
$ I, 160,384,830
1,900,108,65 I
3,060,493,481
$ 83,240,000
$ 25,498,952
$ 57,741,048
945,058
$ 56,795,990
1.86%
(2)
(4) Som'ce: U.S. Census Bureau Ibr 2000.
Sec Table 8- Industrial Dislrict Contracls.
Includes $15,000,000 Ccrlificatcs of Obligation, Series 2002A being issued through the Texas Water Development Board with an expected
dcliveq, date of March 6, 2002; includes $17,000,000 Ccrtificatc~ of Obligalion, Series 2002B being issued by tb¢ City concurrently with
thc Cctlilicates.
General obligation debt in {he amounts shown for whicb repayment is provided fi'om revenues of thc respective revenue systems. Thc
amount of self suppoaling debt is based on thc pcrcenlagcs of revenue support as shown in Table 14. It is the City's cun'cnt policy to
provide Ibcse paymcnls from rcspeclivc system revenues; this policy is subject to change in thc futm'c.
14
Taxable Appraised Value, Fiscal Year Ending September 30
2002 2001 2000
%of %of %of
Category. Amount Total Amount Total Amount Total
Real, Residential, Single-Family $ 539,696,764 39.71% $ 522,474,792
Real, Residcnlial, M ulti-Family 55.618,810 4.09% 56,614,110
Real, Vacant Lois/Tracts 25,629,289 1.89% 22,562,125
Real, Acreage (Land Only) 26.705,052 1.96% 17,683,850
Real, Oil, Gas & Other Mineral Reserves 5,258,470 0.39% 3,446,530
Real and Tang/ble Personal, U tilit les 97,166,300 7.15% 211,944,610
Tangible Personal, Commercial 142,523,110 I 0.49% 154,409,190
Tangible Personal, Industrial 83,496,790 6.14% 76,022,630
Tangible Personal, Other 969,510 0.07% 1,0l 1,480
Total Appraised Value Before Exemplions 100.00%
39.23% $ 512,250,830 39.71%
4.25% 48,522,410 3.76%
1.09% 2[,553,902 1.67%
1.33% 17,228,213 1.34%
0. ] 3% ] ,878,480 0.15%
13.62% [70,512,320 13.22%
6.19% 75,396,400 5.84%
0.26% 3,954,820 0.31%
15.91% 234,120,670 18.15%
11.59% 126,916,700 9.84%
5.71% 75,102,250 5.82%
0.08% 2,615.090 0.20%
1,359,060,454 1,331,753,637 100.00% 1,290,052,085 100.00%
198,675,624 196,058,190 194,371,654
1,160,384,830 1,135,695,447 1,095,680,431
1,900,108,651 1,680,972,657 1,587,382,489
$ 3,060,493,481 $ 2,816,668,104 $ 2,683,062,920
Taxable Appraised Value. Fiscal Year Ending
1999 1998
%of %of
Real. Residential, Single-Family
Real, Residential, M ulti-Family
Real, Vacant Lots/Tracts
Real, Acreage (Land Only)
Real, Fatal and Rallcb Ilnprovcments
Real, Con~mercial
Real, Industrial
Real, Oil, Gas & Other Mineral Reserves
Real and Tangible Personal, Utilities
Tangible Personal, Commercial
Tang/ble Personal, Industrial
Tangible Personal, Other
Total Appraised Value Before Exemptions
Less: Total Exemptions/Reductions
Taxable Assessed Value
Plus: Industrial District Values
Total
493,342,232 38.37% $ 488,663,700 44.09%
49,706,600 3.87% 50,533,140 4.56%
21,578,694 1.68% 21.466,150 1.94%
17,699,950 1.38% 17,245.670 1.56%
1,530,390 0.12% 1,730,360 0.16%
169,377,780 13.17% 167,807,620 15.14%
66,498,260 5.17% 69,927,640 6.31%
6,353,060 0.49% 7.117,920 0.64%
255,915,920 O} 19.90% 91,I35,860 8.22%
114,035,292 8.87% 102,229,920 9.22%
77,016,220 5.99% 77,271,600 6.97%
12,731,760 0.99% 13.232,340 I.I9%
1,285,786,158 100.00% 1,108,367,920 100.00%
192,492.663 197,095,704
1,093,293,495
1,496,979.796
$ 2.590,273.291
911,272,216
1,651,898,958
$ 2,563,I71,174
( I ) On April 15. 1997, the City completed mmcxation of properly that bad previously been included in
District. For Fiscal 1999, Iht value moved I¥om Industsial Dislrict to Util0ics.
the Entergy Corporation Industrial'
NOTE: Valuations shown are certified taxable assessed values rcporled by tile Jefferson Counly and Orange County Appraisal Districts to the
State Complroller of Public Accounts. Ccflified values arc subject to cbat~gc throughout the year as contested valucs are ~olved and the
Appraisal Districts update records.
15
G.O. P, atio of
Fiscal Taxable Tax Debt G.O. Tax Debt
Y~r T~blc Ass~sed Outstanding to T~ablc G.O.
Ended Estimatcd A,ssesscd ' Valuation at End Asscsscd Tax Debt
9/30 Populationm Valuation12~ Pcr Capita of Ycar Valuation Pcr Capita.
1997 58,724 $ 2,599,279,372 $ 44,263 $ 42,005,000 1.62% $ 715
1998 58,724 2,563,171,174 43,648 40,725,000 1.59% 693
[ 999 5~.724 2.590,273,291 44.109 39,045,000 1.51% 665
2000 57,755 2,683,062,920 46,456 39,670,000 1.48% 687
2001 57,755 2,816,668,104 48,769 37,615,000 1.34 % 65 I
2002 57,755 3,060,493,481 52,991 82,340,000 O} 2.69% o~ 1,426
(11 Source: U.S Census Bureau for 1990, held constant through 1999. Fiscal year 2000 through 2002 as reported by thc U.S Census Bureau
for 2000 held conslant.
(2) As reported by the JeffErson County and Orange Counly Appraisal Districts on Cily's Annual City Report of Property Value; subject to
change during the ensuing year; includes Industrial Dislrict values.
(3) Pmj~tcd; includc~ thc Ccllificatcs; includes sclf-sup~rting debt; includes $15,000,000 Ccrtifical~,~ of Obligation, Scri~ 2002A being
issued through Iht Texas Waler Dcvclopmcnt Board with an cx p,..m t cd dclivc~y date of March 6, 2002; includ~ $17,000,000 Ccrfiflcatcs of
Obligation, Series 2002B being issued by Iht City concu~n0y with Iht Ccrtillcatcs.
TABLE 4 - TAX RATE~ LEVY AND COLLECTION HISTORY
Fiscal Ymr Assessed General Interest and % Current % Total
Ended 9/30 Valuc o} Tax Rate Fund 12t Sinking Fund 12} Tax Levy 13} Collections Collations
1997 $2,599,279,372 $ 0.7750 $ 0.6190 $ 0.1560 $19,983,858 98.09% 99.39%
1998 2,563,171,174 0.7750 0.6150 0.1600 19,710,352 98.66% 100.10%
1999 2,590,273,291 0.7750 0.6689 0.106l 20,326,4 14 98.54% 99.95%
2000 2,683,062,920 0.7750 0.5351 0.2399 20,794,242 99.16% 100.54%
200l 2,816,668,104 0.7750 0.4276 0.3474 21,225,570 98.38% 99.69%
2002 3,060,493,48 ] 0.7750 0.2210 0.5540 22,107,840 ~4) t4}
(I) As re~t~cx[ by the Jcffe~on Counly and .Orange County Appraisal Dislricts on City's Annual Cily Report of ~mperty Value; subject to
change during Ibc ensuing y~r; includ~ Industrial District value.
(2} General Fund and Inter~t and Sinking Fund tax rote is based upon the taxable wflualion of Ibc City ($1,160,384,8301. I~c~ not take into
account the value of the Industrial District payment.
(3) Tax levy include Industrial District payments.
(4} In p~ess ofcolkxtion.
TABLE $ - TEN LARGESTTAXPAYERS
Name of Taxpayer {])
Entergy Gulf Statcs, Inc
Central M all Joint Venture
Restaurant M grot
Park Place Hospital
Southwestern Bell
Friede Goldman O fl~hore Texas, LP
I.Iorizon Vessels, [ne
Kansas City Southern
Equilon Pipeline Compal:-y~ LLC
KM CO Port Arthur, lnc
2001 % of Total
Taxable Taxable
Assessed Assessed
Nature of Property Valuation Valuation I~
Power Plant/Utility $ 148,289,780 12.78%
Retail M all 23,067,630 1.99%
Retail 16,655,570 1.44%
H osp ital 16,384,220 1.41%
Tclcp bone Utility 16,008,230 1.38%
hrdustrial 12,396,880 1.07%
Industrial 12.170,080 1.05%
hrdustrial 12,106,560 1.04%
Pctro-Cbemical Refining 10,347,240 0.89°/'0
Industrial 9,756,160 0.84%
$ 277,182,350 23.89%
(I) Docs not inchde Industrial District values.
(2) Calculated based upon the taxable value o f ihe Cily ($ I,135.695,447); excludes industrial District valuc~.
16
GENERAL OBLIGATION DEBT LIMITATION... No general obligation debt limitation is imposed on the City under current State
law or thc City's Home Rule Charter (see "THE CERTIFICATES - TAX RATE LtMIT^'rION").
2002 Principal and Interest Rcquircmcnt~ .............................................................................. $ 6,039,051 it~
$0.5422 Tax Rateltt 96% Cnllcction Produces ..................................................................... $ 6,039,942 ~n
Maximum Principal and Interest Requirements (2003) ............................................................... $
$0.6901 Tax Rute ut 90% Collection Produces ..................................................................... $
Average I'rillci0al and Interest I~.cquircmcnts (2002-2022) ......................................................... $
$0.5580 Tax Rate at 96% Collection Produces ..................................................................... $
7,687,445
7,687,503
6,214,842
6,215,949
(I) Projected; includes ibc Ccfli0cates; includes $15,000,000 Certificates ofObEgation, Seric~ 2002A being issued Ihrougb tbe Texas Water
Development Board with an cxp~.'ctcd delivery date of March 6, 2002; includes $17,000,000 Ccrtificales of Obligatlon, Series 2002B being
issued by 16e City concurrendy with the Ccrtificalcs.
(2) Tax levy is based on value of thc City ($1,160,384,830) and does not include ladustrial District payments.
TABLE 7 - ESTIMATEI} OVERLAPPING DEBT
Expenditures of thc various taxing entities witlfin thc territory of thc City arc paid out of ad valorem taxes levied by such entities
on properties within thc City. Such entitics are independent of thc 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 itl "Texas Municipal Reports" published by thc Municipal Advisory Council of Texas. Except for the amouats relating
to thc City, thc City has not indcpcndcntly verified thc accuracy or completeness of such in formation, and no person should rely
u0on such iaformation as being accurate or complctc. Furthermore, certain o[' thc entities listed may have issued additional
bonds since thc date hereof, and such entities may have programs requiring thc issuance of substantial amounts of additional
bonds, lilt: amount of xvlrich cunnot be dctcrntincd. Thc Ibllowing table rcflcaZls 01c cslimated share of overlapping Tax Debt of
tim City.
Total Cily's Aut horizcxl
2000/2001 G.O. Debl Estimated Overlappiag but Unissued
Taxable 2000/2001 as of % G.O. Debt as Debt as
Assessed Value Tax Rate 03/01/02 Applicable of 03/01/2002 of 03/01/2002
CityofPortArthur $1,,160,384,830 o} 0.7750 $83,240,000 t:~ 100.00% $ 83,240,000
Beaumont lSD 6,275,793,555 1.5400 50,560,000 0.06% 30,336
Bridge City ISD 424,732,290 1.5622 4,560,000 28.44% 1,296,864
Jefferson County I 1,866,488,079 0.3650 74,375,000 9.57% 7,117,688
Jefferson County DD #7 5,053,427,408 0.1705 14.64%
Nederland lSD 1,048,726,430 1.5300 16,970,000 8.42% 1,428,874
Orange County 3,470,701,248 0.4944 3,495,000 3.40% I 18,830
Port Arthur lSD 2,127,758,796 1.4881 32.24%
Port Necbcs-Grow.'s lSD 2,162,764,052 1.6841 31,500,000 3.91% 1,231,650
Port of Port A rlbur Navigation District 2,653,652,201 0.1386 29,315,000 24.18% 7,088,367
Sabine Pass ISD 446,622,506 1.6800 9,700,000 14.79% 1,434,630
Sabine Pass Port Authority 86,909,570 0.2622 1,665,000 34.47% 573,926
$ 30,385,493
4,000,000
Total Direct and Overlapp lng Funded Debt
Rario of Direct and Overlapping Funded Debt to Taxable Assessed Valuation
Per Capita Overlapp ing Funded Dcbl
$103,561,164
8.92%
$ 1,7O4
(I) Docs not include Industrial District values.
(2) Includes tile Certificate; includc~ self-supporting debt; includcs $15,000,000 Certificates ofOb0gation, Scries 2002A being issued
Ihrough thc Texas Water Dcvelopm!:nt Board with an expected delivery date of March 6, 2002; includ~ $17,000,000 Certificates of
Obligalion. Series 2002B being issued by thc Cily concurrently with Ihe Ccrti0catcs.
(3) Authorized but unissmM debt may only be used for iml)mVCmCnts within thc mmcxcd, Park Central MUD.
17
DEBT INFORMATION
TABLE 8 ~ INDUSTRIAL DISTRICT CONTRACTS
The City taxes properW within its corporate limits, but has no such power for property located outside its boundaries. From 1990
through September 30, 2001, the City has co, Ilected an aggregate of approximately $193,134,816 in annual payments from certain
corporations 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 in 1963 specifically enabling Texas cities to do so, in December 1975 thc City Council
authorized and causcd the City to enter into separate contracts ("Industrial District Contracts") with corporations which provided
that thc City would not annex such corporate properties during the term of tile contract unless the City dcterminad that such
anocxatian is reasonably necessary to promote and prolect the 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 Annual
Firm Expiration Date Payment
U.S. Intec 31 -Dec-02 43,172
BASF Corporation 31 -Dec-03 600,000
Motiva, Inc. 31 -Dec-08 3,450,000
Texaco, Inc. 31 -Dec-03 7,000
Chemical Watse Management 31 -Dec-03 150,000
Huntsman Corporation 31 -Dec-03 1,950,000
Equilon Pipeline 31 -Dec-03 26,500
Chevron, USA 31 -Dec-03 1,275,000
Huntsman Research 31 -Dec-03 15,800
Mobil Oil Corporation 3 l-Dec-06 125,000
Clark Refining and Marketing 31-Dec-08 1,825,000
Clark Refining upgrade 31-Dec-08 698,000
BASF/Fina Joint Venture new project 31 -Dec-08 720,000
Fina Oil & Chemical 31 -Dec-08 2,250,000
Great Lakes Carbon Corporation 31 -Dec-08 183,500
Colonial Pipeline 3 l-Dec-08 25,000
o)
(L)
(I) Upgrade and expansion projects have gradually increasing payments (2002-2008)
Among other things, these contracts provide that: (i) any annexation attempt by any other municipality shall result in the City's
seeking immediate injunctive relief against the other municipality and taking such legal steps as may be necessary or advisable,
with the cost of same being borne by the corporation concerned, (ii) either the City or the contracting corporation is authorized to
take whatever actions in equity necessary to enforce their rights, including asking the court to specifically enforce the contract,
(iii) "affiliates" of the contracting corporation (defined as all companies with respect to which the corporation directly or
indirectly owns or has the power to exercise control over 50% or mom of the stock having the right to vote for election of
directors) are covered by the terms &the contract.
The amounts of the annual contract payments due each October from the corporations are computed on the basis of the equalized
true and full value of certain properties owned by the corporation at the commencement of its contract (timing varies) and located
within the City's extraterritorial jurisdiction. The equalized and true value is determined in the same form and manner as ~
required by State law and City Charter for rendition of property for ad valorem tax purposes. After reduction in recognition of
municipal services provided by the corporation for themselves, the value of the eligible properties is placed on the City's
assessment tax rolls at the same assessmant ratio (now 100%) as all property within the City subject to ad valorem taxes for that
year. The City's tax rote was applied to the value to determine the annual payment under the contract.
18
TABLE 9 - PRO-FORMA GENERAL OBLIGATION DEg'r SERVICE REQUIREMrgNTS
Year % of
End Outstanding Debt Ull2~ This Issue°~ Total Pri?cipa
9/30 Principal Iatcrcst , Total Principal lntcrest Total Requirements Ret ired
2002 $ 2.825,000 $ 3,094,468 $ 5,919,468 $ $ 119,583 $ 119,583 $ 6,039,051
2003 3,490,000 3,793,751 7,283,751 145,000 258,694 403,694 7,687,445
2004 3,150,000 3,624,074 6,774,074 155,000 250,819 405,819 7,179,893
2005 3.300,000 3,454,703 6,754,703 160,000 242,550 402,550 7.157,253
2006 3.490,000 3,274,74 [ 6,764,741 170,000 233,888 403,888 7,168,629 19.83
2007 3,675,000 3,088.960 6,763,966 180,000 224,700 404,700 7,168,666
2008 3,825,000 2,901,235 6,726,235 190,000 214,988 404,988 7.131,223
2009 3,995,000 2,712,004 6,707,004 200,000 204,750 404,750 7,111,754
2010 4,170,000 2,519,175 6,689,175 210,000 I93,988 403,988 7,093,163
2011 4,560,000 2,315,769 6,875.769 220,000 182,700 402,700 7,278.469 44.75
2012 4,290.000 2,093.065 6,383.065 230,000 170,888 400,888 6,783,953
2013 4,490,000 1,879,774 6,369,774 245,000 158,419 403,419 6,773.193
2014 4,735,000 1.653,759 6,388,759 260,000 145,163 405,163 6,793,92 I
2015 3,940,000 1,415.091 5.355,091 270,000 131.250 401,250 5,756,341
2016 3,670,000 1,220,531 4,890,531 285,000 116,681 401,681 5,292,213 71.07
2017 3,885,000 1,026,285 4,911,285 300,000 101,325 401,325 5,3 I2,610
2018 4,075,000 824,146 4,899,146 320,000 85,050 405,050 5,304,196
2019 4,295,000 614,339 4,909,339 335,000 67,856 402,856 5,312,195
2020 4,520,000 392,978 4,912,978 355,000 49,744 404.744 5,317,721
2021 3,400.000 196,755 3.596.755 375,000 30,581 405,581 4,002.336
2022 2,385,000 57,094 2,442,094 395,000 IO,369 405,369 2.847,463 100.00
$80,165,000 $42,152.702 $122,317,702 S 5,000,000 $ 3,193,983 $ 8,I93,983 $130,511,686
I) "Oulstanding Debt" docs not include Icasc/purchase obligations.
(2) Includes scll~suppolring debt; includes $15,000,000 Cc:lificatcs of Obligation, Scdcs 2002A being issued through tile Texas Water
Dcvdopment Board with an expected delivery date of March 6, 2002; includes $17,000,000 Ce~lilicates of Obligation, Series 2002B being
issued by thc City concurrently with the Certificates. Interest on thc $17,000,000 Certificates of Obligation, Series 2002B has been
estimated for the propose of i0uslralion..
(3) Avcmgelil~ofthcissu¢-12.17years. IntercstontheCcrlificatcshasbecnestimatcdlbrpurposeofil[ustl,ntion.
TABLE 10 - INTEREST AND SINKING FUND BUDGET PROJECTION
Tax Supportcd Debt Service Rcquirenmnts, Fiscal Year Ending 9-30-2002m
Interest and Sinking Fund, 9-30-2001
Intcrcst and Sinking Fund Tax Levy (~ 96% Collectionst2}
Estimated Investment Income
Lease Payments
Estimated Balance. 9-30-2002
( I ) Docs ,lot include lease/purchase obligations or fiscal charges.
(2) Tax levy is based on value of the City; docs not include Industrial District values.
$ 6,039,05l
$ 945,058
6,428,532
100,000
(210,175) 7.263,415
$ 1,224,364
TABLE 11 -- AUTIIORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
Thc City ]las no authorized but unissued general obligation bonds.
ANTICIPATED ISSUANCE O1: GENERAL OBLIGATION DEBT... W}l¢ City will issuc Combination Tax and Rcvcnuc Certificates of
Obligation, Series 2002A to be I~urchased by the Texas Water Development Board in the amount of $15,000,000 with an
expected dclivet3t date of March 6, 2002. Also, concurrently with thc issuance of thc Certificates, the City will issue
Combination Tax and Revenue Certificates of Obligation, Series 2002B in the amount of $17,000,000 Ibr water system
bnprovemcms, street improvements, park improvements, renovations and improvements to City Hall and the police station and
for Ihe purchase of land and two drainage casentents lbr a sanitary landfill.
19
'[^ID,l-; |,] - 0 IIIEI,~ Onl,lt;^'l IONS
Thc City bas entered into lease agreements as Icsscc lbr financing thc acquisition of public safety communications cqulpmcnt and
a nmnagcmcnt in£onnatlon system. Thc future minimmn lcasc payments arc as lbllows:
FiscalYcar , IBM Motorola Total
2002 ' $ 86,555 $ 123,619 $ 210,174
2003 4,370 4,370
Intcrcst (2;664) (7,535~ ( I 0,199)
Net Present Value $ 88,261 $ 116,084 $ 204,345
PENSION FUND... The City provides pension bcnelits lbr all of its full-time employees through thc Texas Muaicipal Retirement
System CTMRS"), a State-wide ad~ninistcrcd pension plan. The City makes annual contributions to the plan equal to rite
amounts accrued Ibr pension expense. (For more detailed information concerning thc retirement plan, sec Appendix B,
"Excerpts £rom tile City's Annual Financial Report" - Note # IV-G)
20
FINANCIAL INFORMATION
TABLE 13 - GENERAL FUND REVENUES AND EXPENDITURE HISTORY
For Fiscal Year Ended Scptcmbcr 30
Revenues: . 2001 2000 1999 1998 1997
Taxcs '$13.028,925 ' $13.129.807 $14.715.573 $12.766,536 $ 11.933.556
Industrial Pay merits 12.503.378 12,518.019 11.897.845 I 1,351.633 9,685.850
Licenses & Permits 351.142 217,896 225,065 150,286 126,413
User Fccs 535.569 402.762 366.649 483,351 518.566
Fines and Forl'cit urcs 64 I.109 638.773 631.340 4 [ 7,227 500.918
hucrgovermncntal 744,41 I 882,299 990,632 772,720 634,400
Iht crest 616.587 645.21 I 558.979 484.621 321,640
Misccllaneous 121,325 147,748 152,383 163.343 89.093
Total Revenues $28.542.446 $28,582.515 $29,538,466 $26,589.717 $ 23,810.436
Expcnditurcs:
GcncralGovcrnment $ 7,813,492 $ 6.965.654 $ 6,806.730 $ 5.437.621 $ 4.889,837
Public Safety 16.479.589 15.831.362 15.333,933 14,721.498 13,832.521
Health & Welfare 524,646 559.536 470.044 421.218 393.061
Public Works 5.669.952 5,750,170 5,590.978 6.078.724 6.496,602
Total Expenditures $30.487.679 $29.106,722 $28,201.685 $26.659,061 $ 25.612.021
Excess (Deficit) of Revenues
Over Expenditures
(1,945.233) (524.207) 1.336,781 (69,344) (I,801.585)
Othcr Financing sources (Uses):
OpcratingTransfcrs In $ 4.436.453 $ 4.703.988
Operating Transt'crs {Out) (1.292,900) (2.653.863)
Sale of Capital Asset s
Proceeds of Debt Issuance
TotalOthcrFinancingSources{Uscs) $ 3,143.553 $ 2.050.125
$ 1.827.596 $ 1.571.386 $ 2.781.274
(2.161.540) (981.880) (931.880)
52.361
14.889.020
$ (333.944) $ 589.506 $ 16.790.775
Excess (Dclicicncy) or' Rcvcnucs and
Other Financing Sources Over
Expenditures and Other Usus
Fund Balance. October I
Equity Transl'cr to Water Fund
Prior Period Adjustments
$ 1.198.320 $ 1.525,918
$ 8.939.565 $ 7,413.647
$ 1.002.837 $ 520,162 $ 14,989,190
6.557.460 $ 6.037.298 $ 5.937.128
04.889,020)
(146.650)
$ $ $ (146.650) $ $(14,889.020)
Fund Balance. End of Year
$ 10.137.885 $ 8.939,565 $ 7.413.647 $ 6.557,460 $ 6.037.298
21
Rcvcnue Available for Debt Service from Waterworks and Sew~:r System (9/30/01)
Water and Sewer System General Obligation Bond Requirements (9/30/02)
Percantagn of Water and Sewer Syste~ General Obli~tion Bonds Self-Sup porting
Revenue Available for Debt Service I¥om Solid Waste Fund (9/30/01)
Solid Wastu General Obligation Bond Requirements (9/30/02)
Balance
Pcrccatag¢ of Solid Waste General Obligation Bonds Sell;-Supp offing
$ 1,595,190
3,799,836
$ (2,204,646)
41.98%
$ 654.697
169,300
$ 485,397
100.00%
Gross Sales Tax Receipts t¥om 4A Corporation (9/30/01)
General Obligation Bond Rcquircmcnts supported by inter-local agrccmcat (9/30/02)
Balance
Percentage Gcncral Obligation Bonds supported by inter-local agrccmcnt Sclf.-Supporting
$ 2,177,568
I 19,583
$ 2,057,985
100.00%
TABLE 15 - WATERWORKS AND SEWER SYSTEM CONDENSED STATEMENT OF OPERATION
200i 2000 1999
Operating Revenues:
Fees, Services and Sales $ I 1,592,056 $ 12,447,240
Interest Revenue 104,672 102,153
Gain on Sale of Assets
Total Operating Revenues
1998 1997
$ 10,590,755 $ 10,845,302 $ 10,415,845
102,387 40,537 71,448
605
$ 11,696,728 $ 12,549,393 $ 10,693,747 $ 10,885,839 $ 10,487,293
Operating Expeoses:
Personnel Set. ices $ 4,856,655 $ 4,266,987 $ 3,901,966 $ 3,656,350 $ 3.508,419
Ot her Op orating Expenses 4,220,124 3,902,829 4,250,507 3,478,002 3,198,848
Loss on Uncollectible Accounts 27,075 270,251 18,315 32,452 94,786
Pay ment to M U D 997,684 907.734 888.335 744,228 74(},503
Total Op crating Expenses $ 10.101,538 $ 9,353,801 $ 9,022,493 $ 7,846,128 $ 7,352,984
Net Operating Income $ .1,595,190 $ 3,195,592 $ 1,671,254 $ 3,039,711 $ 3,134,309
TABLE 16 ~ ~{UNICIPAI, SALESTAX IIISrORY
The City has adopted the Municipal Sales and Usc Tax Act, VATCS, Tax Code, Chapter 321, which grants the City thc power to
iraposc and levy a 1% Local Sales and Uso Tax within the City; tile procccds arc credited to thc General Fund and arc not pledged to
the payment of thc Certificates. Collections and onlbrccmcnts arc nfl~cted through thc offices of the Comptroller of Public Acaounts,
State of Texas, who rcraits thc proceeds of the. tax, after deduction of a 2% service fca, to thc City monthly. On November 7, 1995,
the voters of thc City approved tile. imposition of an edditiona] sales and use tax of one-half of one percent ('/:% of I%) lbr economic
dcvclopnmnt and an additkmal one-half of one percent (% of I%) for im~pcay tax reduction. Collection for thc additional tax
comracncad on April 1, 1996. Thc sales tax tbr economic development is collected solely Ibr the benefit of Port A:ihur Economic
Development Coq~oratior~ (thc "Coq¢oration"), and may be pledgc'd to secure payment of sales tax revenue bonds issued by thc
Coq~oralion.
Fiscal % of Eq.uivalcnt of
Year Total Ad Valorem Ad Valorem Per
Endcd Collected Tax Levy Tax Rate Capita
1997 $ 3,646,561 18.25% $ 0.1414
1998 3,666,686 18.60% 0.1442
1999 3,893,144 19.15% 0.1484
2000 4,048,545 19.47% 0.1509
2001 4,355,136 20.52% 0.1590
Tile salc.q tax breakdown for thc. Cit~' is as follows:
County Sales and Usc Tax ¼
Econoraic and Community Dcvclopmcnt ¼
City Sales & Usc Tax I
State Sales & Use Tax 6 ~
Total 8 'A
62
62
67
7O
75
22
Bosix of Accotttttin~...Thc City policy is to adhere to thc accounting principlcs set out by Statemcnt No. I issued by tbc Nation
Council on governmental Accounting, as amended. (See "APPENDIX 13 - AUDIIED FINANCIAL STATEMENIS FOR TIlE CITY OF
Ge.erst Fumt Bahmce...Thc City Council's financial policies require thc General Fund balance to bc maintained at a level
equal to 60 days of operating expenditures plus an emergency reserve of $1.5 million.
BudgeterT Procedttrcs...The City policy is to begin thc budgetary procedure at tim department level in June of each year. Thc
department heads submit tltcir budget request to thc Director of Finaacc who assembles and prepares a budget rcquircmcnt
workbook l~l' each deparlmcnt li.~r subltlissiolt to tile City Manager. Alter thc City Manager reviews and meets with department
hcuds, tile Cily Manager submits a proposed budget to thc City Council on or bclbrc August 31 of each year. 'llm City Council
holds public hearings and a liaal budget must be prepared and adopted by September 30.
I NVES'FblENTS
Thc City of Pon Arthur invests its invcstable funds in investments autltorized by Texas law iu eccordance with investment policies
approved by the City Council of the City of Port Arlhur. Both state law and the City's investment policies are subject to change.
LEGAL INVES'rMENIS... Under Texas law, thc City is authorized to invest in (1) obligations of thc United States or its agencies and
instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) collatemlized mortgage
obligations dircx:tly issued by a federal agency or instrumentality of tim Unitcd States, the underlying security for wltich is guaranteed
by an agency or instrumentality of the United States, {4) other obligations, the principal of and interest on wltich are unconditionally
guarantecd or insured by, or backed by thc full Ihith and credit of, tile State of Texas or thc United States or their respective agencies
and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to
investment quality by a nationally recognized investmcltt rating firm not less than A or its equivalent, (6) ccrtilicates of deposit that
arc guaranteed or insured by the Federal Deposit lnsumaec Corporation or are secured as to principal by obligations described in rite
preceding clauses or in any other manner and amount provided by law t;.~r City deposits, (7) certificates of deposit and sham
ccllilicates issued by a state or Ii:doral credit union domiciled in thc State of Texas that arc guaranteed or insured by the Federal
Deposit Insurance Coq~oration or the National Gm,lit Union Share Insurance Fund, or arc seem'ed as lo principal by obligations
described in the clauses ( I ) through (5) or in any other manner and amount pmvidcxl by law IBr City dcposils, (8) lhlly collalcralized
rcpulrhasc agreements that hilvc a d¢lincd tcmfination date, are fully scoured by obligations described in clause (1), and are placed
Ihrough a prilna~2~ govcmnlcnt securities dcalcr or a tinancial institution doing business in thc State of Texas, (9) bankers'
acccplances whh Ibc remaining tcnn of 270 days or less, if tilt: short-lcm~ obligations of thc acccpthlg bank or its imrcnt are rated at
least A-I or P-I or Ibc equivalent by at least one nationally recognizcd crmlit rating agency, (I0) commcrcial paper that is rated at
least A- I or P- I or the equivalent by either (a).two nationally recognized credit rating agenci~ or (b) one nationally recognized credit
rating agency il'the paper is Ii~lly secured by' an irrevocable letter of credit issued by a U.S. or state bank, ( I 1 ) no-load money market
mutual funds regulated by thc Securities and Exchange Conunission tltat have a dollar weighted average porttBlio ntaturity of 90 days
or less and include in dtcir investment objectives the maintenance of a stable net asset value of $1 for each share, (12) no-load nmtual
~hnds rcgistercd with thc Securities and Exchange Commission that: have an average weighted maturity of less than two yc;trs; invests
exclusively in obligations described in thc preceding clauses; and arc continuously rated as to investment quality by at least one
nationally recognized investment rating finn of not less than AAA or its equivalent, (13) bonds issued, assumed, or guaranteed by
thc State of Israel, and (14) guaranteed investment contracts secured by obligations of the United States of America or its
agencies and instrumentalities, other than thc prohibited obligations described in thc next succeeding paragraph.
Thc City may invest in such obligations dircctly or through govcmmcnt investment pools that invest solcly in such obligations
provided that the pools arc rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service.
The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the
outstanding principal balance of the undcrlying mortgage-becked security collateral and pays no principal; (2) obligations whose
payment represents the principal strcam of cash flow from the underlying mortgage-backed security and bears no interest; (3) _
collatcralizcd mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collatcralized mortgage'
obligations Iht interest rate of which is determined by an index that adjusts opposite to thc changes in a market index.
INVESTMENT POLICIES... Under Texas law, the City is required to invest its I'uuds under written investment policies that primarily
cntphasizc safely of principal and liquidity; that address investment diversification, yield, maturity, and tile quality and capability of
invcsm~c~lt management; and that includes a list of authorized investments for City liatds, maximum allowable stated maturity of any
individual invcsm~cnt and Ibc maximmn average dollm~wcighted maturity allowed lbr pooled fund groups. All City funds must be
invested consistent with a l:ommlly a'dopted 'Investment Strategy Statement" thai specifically addrcssc~ each funds' invc.stmcnt. Each
Investment Strategy Statement will describe its objectives concerning: ( 1 ) suitability of investment type, (2) prescrvation and sa fcty of
principal, (3) liquidity, (4) marketability of each investment. (5) diversification of thc portfolio, and (6) yield.
Under Texas law, City investments must be made "with judgment and care, under prevailing circmnstances, that a person of
prudence, discretion, and intelligence would exercise in thc management of thc person's own affairs, not l'br speculation, but ~br
23
investment, considering the probable salary of capital and the probable income to be derived." At least qum'tcrly the htvcstn',cnt
otliccrs of thc City shall submit an inv~tm~t rcpoa detailing: (I) thc investment position of the City, (2) that all investment officers
jointly pr~rcd and sign~ the ~oa, (3) the beginning market value, any additions and cbanges to market value and the ending
value or.ch pool~ fund group. (4) thc book value and market value of~ch separately listed a~et at tbe beginning and end of the
reporting period, (5) thc matufi~ date of each separately invited asset, (6) the account or fund or pooled fund group for which ~ch
individual invcstlncnt was acquired, and (7) th~ compliance or'the inv~tmcnt pontblio as it rclat~ to: (a) adopted investment strategy
st;aements and (b) state law. No person ma~ invest City I~nds without express written authority I~om thc City Council.
ADI:'IllONAI. I'ttOXlSlONS ... Under Texas laxv tim City is additionally required to: (1) annually review its adopted policies and
sn-atcgies; (2) require any investment officers' with personal business relationships or relatives with finns secklng to sell sccurities to
thc cndly to disclose thc rclalionship and lilt a statcntcnt with thc Texas Ethics Connnission and the City Council; (3) rcquim thc
rcglslcrcd principal of t]nns sacking to sell sccuritics to tile City to: (a) receive an.d review the City's invcsm~cnt policy, (b)
acknowh.'dgc that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c)
deliver a wrlttcn statement nrta.sting to these requirements; (4) pcrtbnn an annual audit of the management controls on invcstmcnts
and adherence to tile City's investment policy; (5) providc specific investment training for the Treasurer, Chief Financial Offiecr and
investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse
repurchase agreement funds to no greater than thc term of the reverse repurchase agreement; (7) restrict its invcstntcllt in mutual
Ihnds in tile aggregate Io no more than 15 percent of its monthly average fund balance, cxcluding bond proceeds and reserves and
other funds held Ibr debt service, and to invest no portion of bond proceeds, reserves and Ihnds held for debt service, in mutual
funds; and (8) rc'quirc local govcmntcnt investment pools to conlbnn to thc new disclosure, rating, fret assct value, yield calculation,
and advisory board requirements.
TABLE 17 - CURP, ENT INVESTMENTS
As of Dccc~nbcr 3 I, 200 I, the City's investable funds were invested in thc following categories:
Type of Investment
Purchase Markct
Price Value
Texpool $ 15,670,509 $ 15,670,509
Agency Coupon and Discount Securities 5,999,687 5,526,087
$ 21,670,196 $ 21,196,596
TcxPool is a local government investment pool under thc control of thc Tcxas Comptroller of Public Accounts. Thc
Comptroller has engaged Thc Chase Manhattan Bank, and its affiliates, to provide investment management and ii, nd accounting
services for TcxPool. First Southwest Asset Management, Inc., an affiliate of First Southwest Company, provides customer
service and marketing for thc pool. TcxPool currently maintains a AAAm rating £rom Standard & Poor's. Thc pool's investment
objectives includc achieving a stable net asset value of $1.00 per share. Daily investment or rcdcmption of funds is allowed by
thc participants.
TAX MATTERS
TAX EXEMPTION... Itl thc opinion of Vinson & Elkins L.L.P., Bond Counsel, (i) interest on thc Ccrtiticatcs is excludable from
gross income for federal income tax purposes under existing law and (ii) tbc Certificates arc not "private activity bonds" under
the Internal Rcvcnue Code of 1986, as amended (thc "Code"), and interest on thc Certificates will not bc subject to the alternative
ntinimum tax on individuals and corporations, except as described below in tile discussion rcgarding the adjusted current
tamings adjustment for corporations.
The Code imposes a number of requirements that must be satisfied for interest on state or k~cal obligations, such as thc
Ccrtilicatcs, to bc excludable from gross incmnc for federal ioconm tax purposes. These requirements include limitations on the
use of proceeds and the source of repayment, limitations on thc investment or proceeds prior to expenditure, a rcquirenmnt that
excess arbitrage tamed on tile investment of proceeds bc paid periodically to thc United States, and requirement that thc issuer
file an infonnalion report with thc Internal Revenue Service. Thc City lies covenanted in thc Ordinance that it will comply with
these requirements.
Bond Counsel's opinion will assume continuing compliance with the covenants of the Ordinance pertaining to those scctions of
thc Code which ertL'ct thc cxclusion from gross income of interest on the Certificates for federal income tax purposes and, in
addition, will rely on rcprcscntations by thc City, thc City's Financial Advisor and the Initial Purchasers of thc Certificates with
respect to matters solely within the knowledge of the City, the City's Financial Advisor and thc htitial Purchasers of the
Certificates, respectively, which Bond Counsel has not independently verified. If the City sltould fail to comply with the
covenants in the Ordinance or if tile foregoing representations should be determined to be inaccurate or incomplete, interest on
24
Iht O..:rtificutcs could become taxable I?om Iht date of delivery of thc Ccrtificales, regardless of the ,.late oil which tile evcnl
causing such laxabillty occurs.
· The Code also imposes a 20% alternative minimum tax on the "alternative minimmn taxable income" of
amounl o£ such all~rnmive minimum tax is ~reater than thc: amount of Ibc corporation's r¢§ular income lax. Generally, th~
allemative utinimum taxable income of a 9orporation (othor than any S corporation, rogulated investment company, REIT,
REMIC or FASIT), includes 75'70 of lh¢ '.hnount by which its "adjusted current earnings" exceeds its other "ultcrnativ¢ minimum
taxable [nCOlllC." Bccausc iutcrest ou tax-exempt obligations, such as thc Certificates, is included in a corporatiou's "adjusted
cm'~cn[ catni~lg~." ownership ol'the Ccrtilicatcs could subject a corporation to alternative nlitlhllulll tax consequences.
Ccrlificutcs, i'cccix cd or acc['ucd during thc year.
Except as slated above, and as stated below in "TAX ACCOUNTING TRE&TMENT OF ORIGINAL iSSUE DISCOUN'r CERTIFICATES", Bond
Counsel will express uo opinion as to any federal, statc or local tax consequences resulting from the ownership of, receipt of
interest on, or disposition of, the Certificates.
Prospective purchasers o£ thc Certificates should be aware that tile ownership of tax-exempt obligations may result in collateral
federal income tax consequences to financial institutions, life insurance and property and casualty insurance companies, certain S
corporafions with Subchaptcr C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
taxpayers who may be deemed to have iucurred or continued indebtedness to purchase or carry tax-exempt obligations, taxpayers
owning an inlcrcst in a FASIT that holds tax-exempt obligations, and individuals otherwise qualifying tbr thc earned income
crcdil. In addition, certain tbrcign corporations doing business io thc U.S. may be subjext to tile "branch prolits tax" oll their
ctt~ctively-conncclcd earnings and profits including tax-exempt interest such as interest on the Certificates. These categories of
prospcctivc purchasers should consult their own tax advisors as to the applicability of these conscqucnccs.
Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions arc I'urthcr based on Bond
Counscl's knowledge of facts as of thc date hcrcof. Bond Counsel assumes no duty to update or supplcmcut its opinions to
retlcct any Facts or circumstances that may thereafter come to Bond Counsel's attention or to reflect any changes ill any law that
nlay Ihcrealicr occur or becolllc: ct¥cctivc. Moreovcr, Bond Counsel's opinions ar,.: not a guarantee: of result and are not binding
oil Ihe Internal Revenue Service (tile "Sc:rvicc:"); rather, such opinions represent Bond Counsel's legal judglncnt based upon its
review of exislillg law and in reliance upon the representations and covenants referenced above that it dc:ems relevant to such
opinions. The Service has an ongoiug audit progranl to dcterutlnc compliance with rules that relate to whether intcrcst on state or
local obligations is includable in gross income fbr fcdcraI income tax purposes. No assurance can bc given whether or not the
Service will commence an audit of the Certificates. 1£ an audit is commenced, in accordance witll its current published
procedures thc Service is likely to treat tim City as tile taxpayer and thc Owners may not have a right to participate in such audit.
TAX ACCOUNTING TREATMENI OF ORIGINAl. ]stiUE DISCOUNT CI,;RIIFICATES... The initial public offering price fbr certain of
thc Certificates may be less than thc principal amount thereof (thc "Original Issue Discount Certificates"). In dm opinion of
Boud Counsel, under oxistiug law and based upon thc assmnptions hcrcinalicr stated:
(a) Thc difference between (i) thc amount payable at thc maturity of each Original Issue Discount Certificate, and (ii) thc initial
offering price to thc public of such Original Issue Discount Ccrtificatc constitutes original issue discount with respect to such
Original lssuc Discount Certificate in thc hands o£any owner who has purchased such Original Issue Discount Certificate iii thc
initial public of'fcring of thc Ccrtlficatcs; and
(b) Such initial owucr is cutitled to cxcludc t¥om gross incmn¢ (as dcfiucd in Scctiou 61 of thc Code) an amount of income with
respect to such Original Issue Discount Certificate equal to that portion of the amount of such original issue dlscouut allocable to
thc period that such Original Issue Discount Certificate continues to be owned by such owner.
In thc cvcnt of tbc redemption, sale or other taxable disposition of such Original Issue Discount Certificate prior to statcd.
nlaturity, however, the amount realized by such owner in excess of thc basis of such Original Issue Discount Certificate in the
hands of such owner (adjusted upward by thc portion of thc: original issue discount allocable to thc period for which such
Original Issue Discount Certificate was held by such initial owner) is includable in gross inconm. (Because original issue
discount is treated as interest tbr federal income tax purposes, thc discussion regarding interest on the Ccrtificalcs under thc:
caption "'FAX EXEMPTION" generally applies, except as otherwise provided below, to original issue discount on an Original Issue
Discount Certificate held by an owner who purchased such Certificate. at tile initial oil,:ring price in tile initial public oll~ring of
file Certificates, and should be considered in connection with thc discussion in this portion of thc Official Statement.)
In rendering thc t'orcgoing opinion, Bond Counsel will assmn¢, in reliance upon certain representations of the initial purchaser,
that (a) thc initial purchaser has purchased the Certificates for coutcmporaneous sale to dm public and (b) all of thc Original Issue
Discount Ccrtificatcs have been initially offered, and a substantial mnount o£ each maturity thercof has becn sold, to tile general
public in ann's-Icngth transactions tbr a price (aud with no other consideration being included) not more than tlt¢ initial offering
priccs thcreo£ Neither thc City nor Bond Counsel warrants that thc Original Issue Discount Certificates will be offered and sold
25
in rendering tile I'orcg0ing opinion, will be bascd on rccords or facts tile initial purchaser had no reason to believe wcrc not
Undcr cxisting law, thc original issue discount on each Original Issue Discount Certificate is accrued daily to thc stated maturity
thcruof (in amounts calculated as describgd below for each six-month period ending on thc date before thc semi-annual
anniversary dates of dtc date of thc CcrtiGcates and ratably within esch such six-month period) and thc accrued amount is added
to aa initial owner's basis tbr such Original Issue Discount Certificate for purposes of determining thc amount ol' gain or loss
recognized by such owner upml thc redemption, sale or other disposition tbcrco[ Thc amount to be added to basis for each
accrual period is equal lo (u) thc sum of Ibc issue price and thc amount of original issue discount accrued in prior pcrlods
muhiplicd by thc yield lo stated maturity (dctcnnblcd on the basis of compounding at thc close of each accrual period and
plopcrb' a~[iuslcd li.~r Ibc length ol'thc acclua[ period) less (b) thc alllotlnls payable as current intcmsl during such accrual period
on such Ccrlificate.
The Ii:dural incomc tax conscqucnccs of thc purchase, ownership, and redemption, sale or othcr disposition o1' Original Issue
Discount Certificates which arc not purchased in thc initial offering at thc btitial offering price may be dctennincd according to
rules which diffcr £rom those describcd abovc. All owncrs of Original Issue Discount Certificates should consult their own tax
advisors with respect to thc dctcmfination for fcdcral, state, and local income tax purposes of interest accrued upon redemption,
sale or other disposition of such Original Issue Discount Certificates and with rcspc'ct to thc t'cdcral, statc, local and forcign tax
consequences o£ thc purchase, ownership, redemption, sale or olhcr disposition of such Original Issue Discount Certificates.
OTItER INFORMATION
RATINGS
Thc presently outstanding tax supportcd debt of thc City is rated "A2" by Moody's and "A" by S&P. Thc City also has five issues
outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance
companies. Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the
significance of such ratings may bc obtained from thc company furnishing thc rating. Thc ratings reflect only the respective
views or'such organizations, and tile City makes no representation as to thc appropriateness of thc ratings. There is no assurance
that such ratings will con6nuc I'or any given period of tbnc or that tbcy will *lot be revised downward or withdrawn entirely by
citbcr or both o1' such rating colnpallics, if ill thc judglllcnt of clthcr or both conlpan[cs circumstances so warrant. Ally such
dowaward revision or withdrawal of such ratings may bavc an adverse ell'cut on the inarkct price ol' thc Certificates.
LITIGATION
It is thc opinion of the City Attorney and CitS' Staff'that them is no pending litigation against the City that would have a material
adverse financial bnpact upon the City or its operations.
REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE
Thc sale of thc Ccrtificates has not been registered under thc Federal Securities Act of 1933, as antcndcd, itt reliance upon thc
cxcmption provided thcruundcr by Section 3(a)(2); and the Certificates have not been qualified under thc Securities Act of Texas
in reliance upon various cxcmptioas contained therein; nor have thc Certificates been qualified under thc securities acts of any
jurisdiction. The City assumes no responsibility for qualification o£thc Certificates under thc securities laws ol'any jurisdiction
in which the Ccrtiticates may bc sold, assigned, pledged, hypothecated or otherwise translbrrcd. This disclahncr or'responsibility
I~r qualification for sale or other disposition of the Ccrtificatcs sball not bc construed as an interpretation of any kind with regard
to thc availabilily of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELI(;IBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Section 1201.041 &thc Public Security Procedures Act (Chaptcr 1201, Tcxas Govcrmncnt Codc) provides that thc Ccrtificams
arc negotiable instruments govcrncd by Cbaptcr 8, Tcxas Business and Commerce Codc, and are legal and authorized
investments for insumncc companics, tiduciaries, and trustees, and for thc sinking funds of municipalities or other political
subdivisions or public agencies of thc State of Texas. With mspcct to invcstntcnt in thc Certificates by municipalities or other
political subdivisions or public agencies of thc State of Texas, the Public Funds Invcsm~¢nt Act, Chapter 2256, Texas
Government Code, rcqub'es that thc Certificates bc assigned a rating of "A" or its equivalent as to investment quality by a
national rating agency. See "OTHER INFORMATION - RATINGS" hcrcbl. In addition, various provisions ofihc Tcxas Financc
Code provide that, subject to a prudent investor standard, tbc Ccrtiticatcs arc legal invcsmmnts Ibr state banks, savings banks,
trust companies with at capital of one million dollars or more, and savings and loan associations. The Certificates arc cligible to
secure deposits of any public funds of the State, its agencies, and its political subdivisions, and arc lcgaI security for those
deposits to thc extent of their market value. No rcvicw by thc City has been made of thc laws in other states to detcmfinc
whether thc Bonds am legal investments for various institutions in those states.
26
LEGAI, MA'IT'ERS
Thc City will furnish a complete transcript of proccedings had incident to thc authorization and issuance of the Certificates,
including thc unqualified approving legal opinion of the Attorney General of Texas approving thc Initial Certificates and to the
effect that the Certificates am valid and lcgaqy binding obligations o£the City, and based upon examination of such transcript of
proceedings, thc approving legal opinion 6f Bond Counsel, to like effect and to thc effect that thc interest on thc Certificates will
hc cxcladable J'ronl gross inconle for federal income tax purposes under existing law and tile Certificates arc not private activity
corporations. The customary closing papers, inc[udlng a certlficatc to the effect that no litigation of any nature has been fi[cd or
is then pending Io restrain Iht issuance and delivery of thc Certificates, or which would aflk:ct thc provision made Ibr their
paynlcm or sccurily, or ill any nlanlmr questioning thc validity of said Certificates will also bc furnished. Bond Counsel was not
independently to verify any of thc information contained therein, except that, in its capacity as Bond Counsel, such finn has
reviewed thc iulbnnatiml describing thc Certificates in the Official Statement to verily that such description conforms to the
provisions of the Ol'dinance. The legal ti.:e to bc paid Bond Counsel tbr services rendered ill connection witb the issuance of thc
with DTC or will bc printed on the Certificates in the event of thc discontinuaucc of thc Book-Entry-Only System.
AUTIIENTICITY OF FINANCIAl, DATA ANn OTIIER INFORMATION
Tile financial data and other information contained herein have been obtained fron~ City records, audited financial statements and
other sources which arc believed to be reliable. Tbcm is no guarantee that any of the assmnptions or estimates contaioed herein
will bc rcafizcd. All of the summaries of the statutes, docmncnts and resolutions contained in this Official Statement are made
subject to all of tbe provisions of such statutes, documents and resolutions. These smmnaries do not purport to be complete
statements of such provisions and reference is made to such documents for furtbcr information. Reference is made to original
docmncnts in all respects.
CON I'INUIN(; DISCI.OSURE OF [NFOI{blATION
In thc Ordinance, the City has made thc tbllowing agreement Ibr thc benefit of thc holders and beneficial owners o1' thc
Certificates. Thc City is required to observe tile agreement for so long as it remains obligated to advance funds to pay the
Certificates. Uodcr the agreement, the City will be obligated to provide certain updated financial information and operating data
annually, and timely notice of specified material events, to certain information vendors. This in£onnation will be available to
securities brokers and othcm who subscribe to receive the in formation from thc vendors.
ANNUAl. REPORTS ... The City will provide certain updated financial information and operating data to certain infommtion
vendors annually. The infonnatlon to bc updated includes all quantitative financial infonnatlon and operating data with respect
to tile City of the general type included in this Official Statement under Tables immbcmd I through 6 and 8 through 17 and in
Appendix B. Tim City will update and provide this information within six months after tile end of each fiscal year ending in or
after 2002. Thc City will provide thc updated information to each nationally recognized municipal securities information
repository ("NRMSIR") and to any state information depository ("SI D') that is designated by the State of Texas and approved by
the State of Texas and approved by thc staffof the United States Securities and Exchange Connnission (thc "SEC").
Thc City may provide updated intbrmatk)n in lull text or may incorporate by rcR:mncc certain other publicly available
documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if thc City
conunissions an audit and it is completed by thc required time. If audited financial statements arc not available by thc required
tlmc, thc City will provide unaudited financial statements by thc required time and audited financiaI statements when and if such
audited financial staterooms become available. Any such financial state~ncnts will be prepared in accordance with tile accounting
principles described in Appendix B or such other accounting principles as tile City may be required to employ I¥om time to time.
pursuant to state law or regulation.
The City's current fiscal year end is September 30. Accordingly, it must provide updated iMbrmation by March 31 each year,
mdess the City changes its fiscal year. If thc City changes its fiscal year, it will notify each NRMSIR and thc SID of thc cbangc.
Thc Municipal Advisory Council of Texas has been designated by thc State of Texas and approved by thc SEC staff as a
qualified SID. Thc address of the I~unicipal Advisory Council is 600 West 8'a Street, P. O. Box 2177, Austin, Texas 78768-
2177, and its telepbonc number is 512/476-6947.
MATERtAL EVENT NOTICES... The City will also provide timely notices of certain events to certain iufonnation vendors. Thc
City will provide notice of any of the following events with respect to the Certificates, if sucb event is material to a decision to
purchase or sell Certificates: (1) principal and interest payment delinquencies; (2) non-payment related dcfauhs; (3) unscheduled
draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements rcllccting fiuaucial
27
difficulties; (5) substitution of credit or liquidity providcrs, or thcir fidlurc to peri'otto; (6) adverse tax opinions or events
aft;~cting thc tax-exempt status of the Certificates; (7) modifications to rights of holders o~' the Certificates; (8) Ccrtifi~te calls;
(9) dcfmsanccs; (10) release, substitution, or sale of property securing repayment of the Ca,ideates; and (1 I) rating changes. In
addition, the City will provide timely notice of any failure by the City to provide infonnatlon, data, or financial statements in
accordance with its agreement described above under "ANNUAL REPORTS." ~c City will provide each notice described in this
paragraph to the SID and to either each NRMSIR or thc Municipal Securities Rulcmaking Board ("MSRB").
AVAILABII.I'PY OF INFORMATION FROM NRMSIRS AN~ SID... Thc City has agreed to provide thc Ibmgoing inlBrmatioa only
io NRMSIRs and thc SID. Thc intZmnation will be available to holders of Certificates only if tim holders comply with thc
procedures and pay thc charges cstabfishcd by such inlBnnation vendors or obtain thc intBrmatlon through sccurilics brokers who
do
LIM[ YA'I'IONS AND AMENDMENTS... Thc City has agreed to update inlbnnation and to provide notices of material events only as
described above. Thc City has not agreed to provide other information that may be relevant or material to a co~nplete
prcscntation of its financial results of operations, condition, or prospects or agreed to update any inBnnation that is provided,
except as described above. ~m City nlakcs no rcpr~cntation or wa~nty concerning such information or concerning its
usefulness to a decision to invest in or sell Cc~ificat~ at any lhtum date. The City disclaims any contractual or tort liability tbr
damages resulting in whole or in pa~ from any breach of its continuing disclosure agreement or from any statement made
pursuant to its agreement, although holdc~ of Ccmificates may sack a writ of maudamus to compel thc City to comply with its
agreement.
~m 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)
thc agreement, as amended, would have permitted an unde~riter to purchase or sell Cc~ificates in the offering described herein
in compliance with the Rule, taking into account any amendments or intcq~mtations of thc Rule to the date of such amendment,
as well as such changed clrcmnstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the
outslanding Ccnificatcs consent to thc amendment or (b) any pe~on unaffiliated with thc City (such as natkmally recognized
bond counsel) dctcmfincs that thc amendment will not materially impair thc interests of the holders and beneficial owners of the
Cerlificates. Tile City may also mnend or repeal the provisions of this continuing disclosure agreement if thc SEC amends or
repeals thc applicable provisions of thc SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of
ibc SEC Rule 15c2-12 arc invalid, but only if and to the extent that the provisions of this sentence would not prevent an
undcnvritcr l~Olll lawtblly purchasing or selling Cc~ificates in the prima~ ollkring of thc Certificates. IFthc City so amends the
agreement, it has agreed to include with thc next financial intbnnation and operating data provided in accordance with its
agrccnlcnt described above under "Annual Rcpo~s" an explanation, in narrative lbrm, of the reasons t~r thc mncndmcnt arid of
the impact of any change in thc type of financial in~bnnation and ope~ting data so provided.
COMPLIANCE wrrll PRIOR UNDERTAKIN~ .'.. Thc City has complied in all material respects with all continuing disclosure
agreements made by it in accordance with SEC Rule 15c2-12.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to thc City in connection with thc issuance of thc Certificates. Thc
Financial Advisor's fcc for services rendered with respect to the sale of the Certificates is contingent upon the issuance and
dclivcPy of thc Certificates. First Southwest Company has agrccd, in its Financial AdvisoE~ contract, not to bid for tile
Certificates, either independently or as a member ora syndicate organized to submit a bid for tile Certificates. First Southwest
Company, in its capacity as Financial Advisor, docs not assume any responsibility for thc infom'~ation, covenants and
representations containcd in any of tile legal docmnents with respect to thc federal incomc tax status of thc Certificates, or tile
possible impact of any present, pending or future actions taken by any legislative or judicial bodies.
Thc Financial Advisor to the City has provided thc lbllowing sentcr, cc for inclusion itl this Official Statcmcnl. Tile Financial
Advisor has reviewed tile information itl tills Official Statement in accordance with, and as part of; its responsibilities to thc City
and, as applicable, to investors under thc fcdcral securities laws as applied to thc facts and circumstances of this transaction, but
INITIAL PURCIIASER
Allot requesting competitive bids tbr thc Certificates, the City acccpted the bid of (the "Initial
Purchaser") to purchase the Ccrtificat~ at the interest rotes shown on thc (inside) cover page of thc Official Statement at a pdcc of.
{%) of par plus a casb premium (if any) of $ . The Purchaser(s) can give no assurance that any trading market will bc
developed for the Certificates after their sale by the City to the Initial Purchaser. Thc City has no control over tim price at which thc
Certificates arc subsequently sold and the initial yield at which the Certificates will bc priced and rcoffcrcd will bc established by and
will be the responsibility of thc hfitial Purchaser.
28
The statements contained in this Official Statement, and in any other information provided by thc City, that arc not purely
historical, arc forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategics
regarding thc future. Readers should not place undue reliance on £orward-looking statements. All forward-looking statements
included in this Official Statement are bascO on infomlation available to thc City on the date hereof, and thc City assumes no
obligation to update any such forward-looking statements. Thc City's actual results could differ materially frcm those discussed
Thc t~u~,vard-looking statements included herein arc necessarily based on various assumptloas and estimates and arc inherently
sut[iecl to various risks and uncertainties, including risks and uncertainties relating to thc possible invalidily of the underlying
business partners and compedtors, and legislative, judicial, and other govcrmncntal authorities and officials. Assumptions
related to the foregoing involve judgements with respect to, among other things, futurc economic, competitive, and market
conditions and future business decisions, all of which arc difficult or impossible to predict accurately aad many of which are
beyond the control of thc City. Any of such assumptions could be inaccurate and, therefore, dmrc can bc no assurance that thc
fora. etd-looking statements included in this Official Statement will prove to bc accurate.
MISCELLANEOUS
The financial data and other information contained herein have been obtained fi'om the City's records, audited financial statements
and other sources which are believed to be reliable. Thero is no guarantee that any of the assmnptions or esfimates contained herein
will be realized. All of tho summaries of the statutes, doeumonts and resolutions contained in this Official Statement are ntad¢ subject
to all of the provisions &such statutes, documents and resolutions. These summaries do not purport to be complete statements of
such provisioas and rc|'ercnce is made to such docmnents for further infonnafion. Refercnce is nlade to original docmnents in all
respects.
CERI-IFICATtON OF ]liE OFFICIAL STATEhIENT
At the tinle of payment for and delivery of tile Certificates, thc City will furnish a certificate, executed by proper officers, acting
in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or
pertaining to tile City contained in its Official Statement, and any addenda, supplement or amendment thereto, on tile date of such
Official Statement, on thc date of sale of said Certificates and tile acceptance of thc best bid therefor, and on thc date of the
delivery, were and are true and correct in all material respects; (b) insoi~ar as the City and its affairs, including its financial affairs,
are concerned, such Official Statement did not and docs/lot contain an untrue statement of a material t:act or omit to state a
material fact required to be stated thcrciq or necessary to make the statements therein, in the light of thc cirgumstances under
which they were made, not nlislcading; (c) insofar as tile descriptions and statenlcnts, including financial data, of or pertaining to
entities, olhcr than thc City, and their activities contained in such Official Statement arc concerned, such statemcats and data
have been obtained from sources which the City believes to be reliable and tile City has no reason to believe that they arc untrue
in any material respect; and (d) there has been no inatcrial adverse change in tile fiaancial condition of tile City since tile date of
thc last audited financial statements of thc City.
Thc Ordinance authorizing tile issuance of thc Certificates will also approve the form and content of this Official Statement, and
any addenda, supplement or amendment thereto, and authorize its tBrther use in tile reoffcring of the Certificates by tile
Purchaser.
ATTEST:
Mayor
City of Port Arthur, Texas
City Secretary
City of Port Arthur, Texas
29
APPENDIX A
GENERAL INFORMATION REGARDING THE CiTY
(Insert Map)
A
LOCATION AND SIZE
Tile City of Port Arthur is located in Jcffemon County on the west shore of Sabine Lake directly adjacent to thc Gulf of Mexico
in the extreme southeast comer of the State of Texas. The land area of thc City covers approximately 81.5 square miles. The
City is located along the 40-foot deep Sabin¢-Neches Ship Channel which links Jefferson and Orange Counties with the Gulf of
Mexico. The City is a component o£thc Beaumont-Port Arthur Metropolitan Statistical Ama ("MSA") comprised of Jefferson,
Hardin and Orange Counties.
ECONOMY
The econoaty of the MSA is based primarily upon petroleum refining; the produe6on of petrochemicals and othcr chemicals, the
lhbrieation of steel and steel products, shipping activity, the manuI;actum of wood, pulp, lbod and feed products, agriculture, and
health em'e services. Transportation, conmmnications and public utilities account for about 30% of area employment. Six oil
refineries located in the Comity havea combined capacity 1.142 mililon barrels per stream day ot"crude oil. Approximately 250
Fina's Port Arthur facility through a joint venture with BASF. This $ I billion project is providing 2,000 construction jobs.
When complete, later this ycar, 150 pcn~ancnt jobs will be in place. Tile Clark facility is being upgraded in its entirety. The
anticipated value of this upgrade is $775 million, has crcatcd 1,000 construction jobs and is expected to provide 50 permanent
jobs when completed late this year.
This activity is driving other devclopmcnts in thc housing and fetal[ markets. Single family housing conthmcs to grow and new
multi-family propcrtlcs arc under construction. A $35 million retail dcvclopmcnt was rcccntly announced. This complex will
I~OPULATION
City of Port Arthur 66,676 57,37 I
Jefferson County 245,659 246,402
Beamnont-Port Arthur MSA 306,016 347,568
SERS'ICI-;5 PROVII)I.;O IlS' TIlE CITY
1960 1970 1980 1990 2000
Official Official Official Official Official
Census Ccnsus Census Census Census
61,195 58,724 57,755
250,928 239,397 252,051
375,497 361,226 385.090
The City provides walcr, sanitary sewer, library and park services. Thc City also has the responsibility of maintaining its storm
drainage t3c/litics, bridges, streets aud sidewalks, providing local law enforcement activities, fire protection, solid waste disposal
sc,'vices, building inspection and civil defense services, m',d maintaining preventative health services through nmnerous health
lhcilitics within thc coxnmunity.
INCOME ST^TIS rios
City of Port Arthur
Mcdian Total
H ous chold Houschold
Calendar Estimated Total Effective Effective
Year Population Retail Sales Buying Income Buying Income
1995 58,300 $ 443,458,000 $ 21,157 $ 636,549,000
1996 58,400 431,936,000 21,845 648,641,000
1997 57,300 437,202,000 22,529 659,749,000
1998 58,300 457,567,000 22,560 678,532,000
1999 56,400 582,183,000 24,010 701,491,000
2000 57,200 685,373,000 25,616 721,184,000
Jefferson Counly
Mcdian Total
Household Household
Calendar Estimated Total Effective Effective
Year Populalion Retail Sales Buying Income Buying Income
1995 243,200 $ 2,375,385,000 $ 28,164 $ 3,322,295,000
1996 .2~5,000 2,325,696,000 29,099 3,409,512,000
1997 243,900 2,389,520,000 29,994 3,520,156,000
1998 249,800 2,530,605,000 29,706 3,663,490,000
1999 247,600 3,644,512,000 31,105 3,771,736,000
2000 250,000 3,749,898,000 31,577 3,865,316,000
A-I
Source: "Survey of Buying Power, Sal~ and Marketing Management."
MAJOR EMPLOYERS
Thc following arc thc major mnploycrs located within the Port Arthur area:
Employers
Star Er, tcq',risc
St. Mary's I tospital
AMI M id-Jcllbrson-Park Place
Amcripol/Synpol
Clark Port Arthur Rcth~cw
Texas Dp/dock
Fina Oil and Chc~nical
Sandoz Agro Inc.
LABOR STATISTICS
Type of Compaay
Oil Rclincry
Petrochemical Manufacturing
Hospital
Hospital
Chemical Production
Synthetic Rubber Manufacturing
Oil Refinery
Dpydock
Oil Refinc~y
Herbicide Manufacturing
City of Port Arthur Labor Statistics
Ycar
1996
1997
1998
1999
2000
2001
Labor
Force
Total
Employment Unemployment Rate
22,163 3,517 13.7%
22,446 3,036 11.9%
22,745 2,777 10.9%
22,410 3;313 12.9%
22,286 3,120 12.3%
22,078 2,682 10.8%
25,680
25,482
25,522
25,723
25,406
24,760
Jefferson County Labor Statistics
Labor Total
Year Force .Employment U nmnploymcnt Rate
1996 116,281 106,190 10,091 8.7%
1997 116,262 107,549 8,713 7.5%
1998 I 16,950 108,982 7,968 6.8%
1999 116,881 107,373 9,508 8.1%
2000 115,737 106,782 8,955 7.7%
2001 lo I 13,479 105,784 7,695 6.8%
Source: Texas Workforcc Cmnmission.
(I) Average through Deccmbcr.
Number of
Employees
1,300
1,290
1,200
1,085
900
860
800
650
465
323
A-2
CONSTRUCTION PERMITS
Commercial Residential
Construction Construction
Fiscal No. el' No. of
Year Ubits Value Units Value
1990 19 $ 515,000 18 $ 1,690,000
1991 25 7,196,000 26 1,742,000
1992 16 4,514,000 46 4,561,000
1993 14 1,164,000 28 2,705,000
1994 5 4,470,000 29 3,905,000
1995 64 6,796,000 50 3,596,000
1996 19 6,489,000 43 3,848,000
1997 15 2,545,000 61 4,733,000
1998 15 7,099,000 217 11,848,000
1999 34 7,647,000 71 6,890,000
2000 38 17,585,000 99 10,345,000
2001 41 18,155,000 81 9,360,000
TRANSPORTATION AND UTILITIES
ThC City is served by the Nccllcs River d~p-water ship channel raaintained by the Corps of Enginecrs at a miniraum depth of 40 feet
and width of 600 feet. The Port of Port Arthur currently operates two berths and handles principally general cargo in its thcilities
handling about 455,000 tons of cargo per year. A $34 million bond issue was approved to finance a major expansion. Thc funds
from the sale of these bonds will be used to add three new berths and 200,000 square, t~t o£ dockside transit shed space, with an
additional 100,000 square fect of back-side storage planned for long-tenn. Activity at the port continues to grow, and the Per{ of Port
Arthur remains a leading destination hi [ntcmational trade.
Kansas City Southern Railway and Southern Pacilic arc the two railroads sc~ing Port A:thur. These conqpatlie-3 mainly dircct their
se~n,icc to tile petroleum and chemical plants with pick up and delivery, tls well as mccting thc Port's cargo needs.
Jcffc~,xon Cotmty Aiq}o['t. located on U.S. Ilighway 96, adjacent to the City, is about live minutc.s fronl Ibc busin{,.-s.s district. Thc
alq*ort provides air acc,~s lo thc Ic~xding regionaI and national markets either through direct service or connections at tbc ltouslon or
Dallas aiq'~orts. U.S. Air also provides service tllrough the aiq~on.
Highway transponatlon is provided by dtrec U.S. Highways 69, 96, and 287 as well as Statc Highways 347, 87, and 73. Interstate 10
is about 20 rainutcs from Port Arthur whedl.cr heading noah to Bcaulnont, east to Orange, or west to Houston.
Port Arthur Transit System ofl~ers city-wide bus service five days a week. Parah'ansit service is available tbr the elderly and disabled
citizens via life equipped vans.
Electricity is supplied by Entergy, natural gas by Southern Union Gas and telephone service by Southwestcm Bell Telq)bone
Corapany.
]IEALTII CARE
Thc City is served by lbur hospitals: St. Mary's Hospital, AMI Park Place Medical Center, AMI Mid Jcflkrson Hospital and Doctors
Hospital. Thc combined total of beds provided by the four hospitals is 733. St. Mary's and Park Place Hospitals provide 24-hour
physician services in their emergency units and provide practically all ntedical and surgical specialties.
EDUCATION
Thc Port Arthur arcs offers education at many differealt Icvcls frora prc-kindcrgartcn to college. Thc arca has four school districts:
Port Arthur, Port Nccbes-Grovcs. Nederland and Sabine Pass. Private and parocbial educational opportunities arc also available in..
tile area.
Lamer State College at Port Arthur is a state supported two-year division of tile Texas State University System. The John Gray
Institute of the Lamer University System is a major non-profit center dedicated to thc advancement of business, industry, labor and
education in thc Gulf Coast or, cent. The Stil~vell Technical Center is a part of the Port Arthur Independent School District and
ofli:rs vocational cducation focussing on teaching students specific skills, thus enhancing their ability to compete itl the job raarkct.
Other Vtmafional Tmining/Busincs:'~.echnical Schools include: Chenlcr Business College, Dcha Carecr School, Tri-State Truck
Driving School. and Associated Builders and Contractors Training Center.
A-3
APPENDIX B
EXCERPTS FROM THE
CITY OF PORT ARTHUR, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2001
Tile inlbm',ation contain,.-d in this Appendix consists of excerpts from thc City of Port
Arthur, Texas Annual Financial Report tbr thc Year Ended September 30, 2001, and is not
intended to be a complete statement of the City's financial condition. Reference is made to
thc complete Rclx)rt I'or t'urthcr inlbnnation.
.APPENDIX C
FORM OF BOND COUNSEL'S OPINION