Ord 2017-024/authorizing the issuance and sale of City of San Marcos, Texas, Waterworks And Waste Water System Revenue Bonds, Series 2017B in the amount of $1,000,000; providing for the security for and payment of said bonds; prescribing the form of said

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Section 8.05. Reserve Fund. (a) The City hereby covenants and agrees with the holders of the Bonds that it will provide for the accumulation of, and when accumulated, will thereafter continuously maintain in the Reserve Fund an amount equal to not less than the average annual principal and interest requirements of the Parity Revenue Obligations (calculated on a fiscal year basis as of the date the last series of Parity Revenue Obligations were authorized). Immediately following the delivery of the Bonds, the appropriate City officials shall calculate and detennine the average annual principal and interest requirements for the Parity Revenue Obligations then outstanding. After deducting the amount then on deposit in the Reserve Fund from such calculation, the amount of the difference, if any, shall be deposited in the Reserve Fund in sixty (60) substantially equal monthly payments on or before the 10th day of each month; the initial monthly deposit to be made on or before the 10th day of the month next following the month the Bonds are delivered. After the total amount required to be on deposit in the Reserve Fund has been accumulated, monthly payments to said Fund may be terminated; provided, however, should the amount on deposit therein be reduced below the sum required to be maintained in said Fund after the same has been accumulated, payments to said Fund in an amount equal to the deficiency shall be resumed and continued to be made on or before the 10th day of each month until the total amount then required to be on deposit in the Reserve Fund has been fully restored. In the event money in the Reserve Fund is used for an authorized purpose while monthly payments are being made to said Fund, the amount required to restore the sum then required to be on deposit therein shall be added to the payments then being made in the following month or months until the total amount then required to be on deposit in said Fund has been fully restored. (b) Notwithstanding the requirements of subsection (a) above, and only as and to the extent permitted by law and, so long as TWDB is the registered owner of 100% in aggregate principal amount of the Bonds then outstanding, upon giving written notice to and approval by the Executive Administrator of TWDB, the City may provide a surety policy or policies issued in amounts equal to all or part (as may be specified in the ordinance authorizing any series of Parity Revenue Obligations) of the average annual principal and interest requirements of the Parity Revenue Obligations, in lieu of depositing cash into the Reserve Fund; provided, however, that no such surety policy may be so substituted unless (i) the substitution of the surety policy will not cause any ratings then assigned to the Bonds by either Moody's Investors Service or Standard & Poor's Ratings Group to be lowered and (ii) the City Council finds that the substitution of the surety policy for all or part of the average annual principal and interest requirements of the Parity Revenue Obligations is cost effective. Subject to the terms of the surety policy, the City shall apply the proceeds of the Revenue Fund prorata to (i) the reestablishment of any cash balance required to be maintained in the Reserve Fund and (ii) the payment of subrogation obligations of the City under the terms of a surety policy or surety policies with respect to Parity Obligations. (c) In the event a surety policy issued to satisfy all or part of the City's obligation with respect to the Reserve Fund causes the amount then on deposit in the Reserve Fund to exceed the average annual principal and interest requirements of all Parity Revenue Obligations, SANMARCOS/W W W SRev2017B: Ordinance 27