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<br /> (OZF
<br /> PRELIMlNARY OFFICIAL STATEMENT
<br /> RELATING TO
<br /> 511,240,000"
<br /> CITY OF SAN MARCOs. TEXAS
<br /> GENERAL OBLIGATION REFUNDING BONDS, SERIES 1995
<br /> INTRODUCTION
<br /> This Preliminary Official Statement, which includes the cover page and the Schedule and Appendices hereto, ~vides certain information
<br /> .- regarding the issuance by the City of San Marcos, Texas of a series of Bonds styled City of San Marcos, Texas General Obligation
<br /> Refunding Bonds, Series 1995. Capitalized terms used in this Preliminary Official Statement have the same meanings assigned to such
<br /> terms in the Ordinance authorizing the issuance of the Bonds adopted by the City Council of the City (the "City Council"), except as
<br /> otherwise indicated herein.
<br /> The City is a political subdivision and municipal corporation of the State of Texas (the "State") duly organized and existing under the laws
<br /> of the State, including the City's Home Rule Charter. The Bonds are issued pursuant to the Constitution and general laws of the State,
<br /> particularly Articles 717k, V.A T.C.S., as amended, and additionally pursuant to the City's Home Rule Charter and the Ordinance.
<br /> There follows in this Preliminary Official Statement descriptions of the Plan of Financing, the Bonds and certain information regarding the
<br /> City and its finances. All descriptions of documents contained herein are only sununaries and are qualified in their entirety by reference to
<br /> each such document Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Austin,
<br /> Texas. The City will use a portion of the proceeds of the Bonds to purchase Federal Securities, as hereinafter derIDed, to fund an escrow
<br /> account in an amount which, together with the investment earnings thereon, will be sufficient to pay the principal of an interest on the
<br /> Refunded Bonds through their first scheduled optional redemption date. See 'SCHEDULE I - Schedule of Refunded Bonds" for a detailed
<br /> listing of the Refunded Bonds and their redemption date at par.
<br /> PLAN OF FINAi"{CING
<br /> Purpose .
<br /> The Bonds in the principal amount of $11,240,000. are being issued to refund a portion of the City's Series 1991, Series 1992 and Series
<br /> 1992-A General Obligation Bonds, Series 1988 Combination Ta.'C & Revenue Certificates of Obligation, Series 1987 Combination Ta.'C &
<br /> Revenue Refunding Bonds and Series 1987 Certificates of Obligation and to pay the costs of issuance associated with the issuance of the
<br /> Bonds. The City will use a portion of the proceeds of the Bonds to purchase Federal Securities, as hereinafter defined, to fund an escrow
<br /> account in an amount which, together with the investment earnings thereon, will be sufficient to pay the principal of and interest on the
<br /> Refunded Bonds through their first scheduled optional redemption date. See "Schedule I - Schedule of Refunded Bonds" for a detailed
<br /> listing of the Refunded Bonds and their redemption date at par.
<br /> Refunded Bonds
<br /> The Refunded Bonds, and the interest due thereon, are to be paid on the scheduled interest payment and redemption dates of such bonds
<br /> from funds to be deposited pursuant to a certain Escrow Agreement (the "Escrow Agreement") between the City and Texas Commerce
<br /> Bank National Association, Austin, Texas (the "Escrow Agent"). The Ordinance provides that from the proceeds ofllie sale ofllie Bonds to
<br /> the Underwriters, the City will deposit with the Escrow Agent in an escrow fund (the "Escrow Fund") the amount necessary to accomplish
<br /> the discharge and final payment of the Refunded Bonds. Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the
<br /> payment of the principal of and interest on the Refunded Bonds.
<br /> Grant Thornton, a nationally recognized accounting firm, will verifY at the time of delivery of the Bonds to the Underwriters the
<br /> mathematical accuracy of the schedules that demonstrate that the federal securities to be acquired and held under the Escrow Agreement
<br /> (the "Federal Securities") will mature and pay interest in such amounts which, together with uninvested funds, if any, in the Escrow Fund
<br /> will be sufficient to pay, when due, the principal of and interest on the Refunded Bonds. Such verification shall be based upon information
<br /> supplied to Grant Thornton by the Financial Advisor on behalf of the City. The Escrow Fund and the matùring principal of and
<br /> interest on the Federal Securities will not be available to pay the Bonds.
<br /> By the deposit of the Federal Securities and cash with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected
<br /> firm banking and financing arrangements for the final payment and discharge of the Refunded Bonds in accordance with applicable law.
<br /> Based on the accountants Verification Report and the Escrow Agreement, Bond Counsel is of the opinion that, as a result of such firm
<br /> banking and financing arrangements, the Refunded Bonds will be outstanding only for the purpose of receiving payments from the Federal
<br /> Securities and cash held for such purpose by the Escrow Agent and such Refunded Bonds will not be deemed as being outstanding for the
<br /> purpose of any limitation on debt or the assessment of taxes.
<br /> The City has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund of any additional amounts required to pay
<br /> the principal of and interest on the Refunded Bonds if, for any reason, the cash balances on deposit or scheduled to be on deposit in the
<br /> Escrow Fund are: insufficient to make such payment.
<br /> -Preliminary, subject to change.
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