Ord 2014-070/Approving a petition submitted by Metcalfe, Wolfe, Stuart & Williams, LLP on behalf of Walton Texas, LP granting the consent of the City of San Marcos, Texas, to the creation of Cotton Center Municipal Utility District No. 1

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ARTICLE VI CITY'S SALES TAX REVENUE Section 6.01 City Sales Taxes. a. Imposition of Sales and Use Tax. The City shall impose a sales and use tax within the Limited Purpose Tracts upon the limited purpose annexation of such tracts pursuant to Subsection (k) of the Act. The sales and use tax shall be imposed on all eligible commercial activities at the rate of 1.5 %, or such other maximum rate allowed under Chapter 321 of the Tax Code or otherwise permitted under the laws of the State of Texas and imposed by the City within its City limits. Collection of the Sales and Use Tax Revenues shall take effect on the date described in Tax Code Section 321.102. b. Payment of Sales and Use Tax to the District. In return for the benefits received by the City pursuant to this Agreement, the City shall pay to the District an amount equal to forty percent (40 %) of the Sales and Use Tax Revenues reported on the "Confidential Local Tax Information Report" for the Limited Purpose Tract provided by the Comptroller and received by the City from the Comptroller. The City shall deliver the District's portion of the Sales and Use Tax revenues to the District within thirty (30) days of the City's receipt of that Report from the Comptroller, by regular U.S. Mail or other method of delivery mutually acceptable to the Parties. Government Code Chapter 2251 shall govern and provide the penalty if the City fails to deliver the District's portion in a timely manner. For the purposes of determining the applicable overdue date under Chapter 2251, the City is deemed to have received an invoice from the District on the date the City receives the Sales and Use Tax Revenues from the Comptroller without further action from the District. c. Amended and Supplemental Reports. If and when the Comptroller adjusts its calculations of Sales and Use Tax Revenues generated within the boundaries of the Limited Purpose Tract or issues supplemental tax reports, then any revenues reflected in such adjusted calculations or supplemental reports will be divided and paid as provided above, and the District and the City agree to pay the other any sums necessary to correct any prior over or under distributions. The City and the District agree that, for purposes of Section 321.3022 of the Tax Code, this Agreement qualifies also as a revenue sharing agreement. Section 6.02 Sales Tax Information Disclosure. Developer covenants and agrees to require landowners in the District at the time this Agreement is executed to include as a condition or covenant filed as a deed restriction, language which requires such landowners, their successors or assigns, to sign, or cause to be signed, any documentation necessary to authorize the Texas State Comptroller's Office (the "Comptroller ") to release and disclose to the City any and all sales tax information relating to any businesses generating sales and use tax within the Limited Purpose Annexed Property. Section 6.03 Use of City Sales Tax Revenues. City may use the Sales and Use Tax revenues for any lawful purpose. District may use the Sales and Use Tax revenues for any lawful purpose. M