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<br /> {ÔZÞL
<br /> PRELThIINARY OFFICIAL STATEMENT
<br /> Relating to
<br /> S8,350,OOO.
<br /> CITY OF SAJ.'If MARCOs, TEXAS
<br /> WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING AND IMPROVEl\1ENT BONDS, SERIES 1995
<br /> This Preliminary Official StAtement:, which includes the cover page, the schedule and the appendices hereto, provides certain
<br /> information regarding the issuance by the City of San Marcos, Texas of 58,350,000- Waterworks and Sewer System Revenue
<br /> Refunding and Improvement Bonds, Series 1995. Capitalized terms used in this Official StAtement have ,the same meanings
<br /> assigned to such terms in the ordinance authorizing the issuance of the Bonds, except as otherwise indicated herein.
<br /> The City is a political subdivision of the StAte of Texas (the "StAte") and a municipal corporation organized and existing under
<br /> the laws of the StAte, including the City's Home Rule Charter (see APPENDIX A - "General Information Regarding the City").
<br /> The Bonds are being issued pursuant to the constitution and general laws of the StAte of Texas, particularly Article 717k, and
<br /> Article 1111 through 1118, inclusive, YATCS, as amended, and pursuant to the Ordinance adopted by the City Council of the
<br /> City of San Marcos on the date of the sale of the Bonds.
<br /> There follo'W"S in this Official StAtement descriptions of the Plan of Financing, the Bonds, the System and certain information
<br /> about the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their
<br /> entirety by reference to each such document Copies of such documents may be obtained fÏ:"om the City's Financial Advisor,
<br /> First Southwest Company, Austin, Texas.
<br /> PLAN OF FINANCING
<br /> Purpose
<br /> The Bonds are being issued (i) to provide funds which will be sufficient to refund all of the City's outstanding Water'W-orks and
<br /> Sewer System Revenue Bonds, in the aggregate principal amount of 57,545,000, in order to lower the overall annual debt
<br /> service requirements of the City, (ii) to provide 51,000,000 to pay for improvements and extensions to the City's Waterworks
<br /> and Sewer System and (iii) to pay the costs associated with the issuance of the Bonds. .
<br /> Refunded Bonds
<br /> The principal and interest due on the Refunded Bonds are to be paid on the. scheduled interest payment dates and the
<br /> redemption date of such bonds, fÏ:"om funds to be deposited pursuant to a certain Escrow Agreement (the "Escrow Agreement")
<br /> between the City and Texas Commerce Bank National Association, Austin, Texas (the "Escrow Agent"). The Ordinance
<br /> provides that fÌom the proceeds of the sale of the Bonds, the City will deposit with the Escrow Agent the amount necessary to
<br /> accomplish the discharge and final pa)ment of the Refunded Bonds. Such funds will be held by the Escrow Agent in a special
<br /> escrow account (the "Escrow Fund") and used to purchase direct obligations of the United StAtes of America (the "Federal
<br /> Securities"). Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the pa)ment of the principal of and
<br /> interest on the Refunded Bonds.
<br /> Grant Thornton, a nationally recognized accounting flI1n, will verify at the time of delivery of the Bonds to the Underv.riter the
<br /> mathematical accuracy of the schedules that demonstrate the Federal Securities will mature and pay interest in such amounts
<br /> which, together with uninvested funds, if any, in the Escrow Fund, will be sufficient to pay, when due, the principal of and
<br /> interest on the Refunded Bonds. Such maturing principal of and interest on the Federnl Securities will not be available
<br /> to pay the Bonds (see "OTHER INFOR...'vfATION - Verification of Arithmetical and Mathematical ComputAtions").
<br /> By the deposit of the Federal Securities and cash with the Escrow Agent pursuant to the Escrow Agreement:, the City will have
<br /> effected the defeasance of all of the Refunded Bonds in accordance with the law. It is the opinion of Bond Counsel that as a
<br /> result of such defeasance and in reliance upon the report of Grant Thornton, the Refunded Bonds will be outstanding only for
<br /> the purpose of receiving pa}ments fÏ:"om the Federal Securities and any cash held for such purpose by the Escrow Agent and
<br /> such Refunded Bonds will not be deemed as being outstanding for the purpose ofIinùtAtion on debt
<br /> The City has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund, fÏ:"om lawfully available funds,
<br /> of any additional amounts required to pay the principal of and interest on the Refunded Bonds, if, for any reason, the cash
<br /> balances on deposit or scheduled to be on deposit in the Escrow Fund be insufficient to make such payment
<br /> -Preliminary, subject to change.
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