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I:ì-~ßK OFFICIAL STATEMENT Relating to $3,415,000 CITY OF SAN MARCOS, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 1993 INTRODUCTION This Official Statement, which includes the cover page and the Appendices hereto, provides certain infonnation regarding the issuan..:e by the City of San Marcos, Te:.;.as (the "City") of a series of its bonds, styled City of San Marcos, Texas General Obligation Refunding Bonds, Series 1993 (the "Bonds"). Capitalized tenDS used in this Official Statement have the same meanings assigned to such tenDS in the ordinance authorizing the issuance of the Series 1993 Bonds (the "Ordinance"), except as otherwise indicated herein. . The City is a political subdivision and municipal corporation of the State of Texas (the "State"), duly organized and existing under the laws of the State, including the City's Home Rule Charter. The Bonds an~ issued pursuant to the Constitution and general laws of the State, particularly Article 717k, Vernon's Annotated Texas Civil Statutes ("V A TCS"), as amended, to the City's Home Rule Charter and the Ordinance. There follows in this Official Statement descriptions of the Plan of Financing, the Series 1993 Bonds and certain infonnation about the City and its finances. All descriptions of documents contained herein are oruy summaries and are qualified in their entirety by rererence to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company. Austin and Dallas. Texas. PLAN OF FINANCING Purpose The B\Jnds are being issued to advance refund a portion of the City's General Obligation Bonds, Series 1985 and General Ohligation Bonds, Series 1988, in the aggregate principal amount of $2,920,000 (the "Refunded Bonds"), in order to lower the overall annual debt service requirements of the City. The City will use the proceeds of the Bonds, and other available funds, to pay the costs of issuance thereof and to purchase Federal Securities (hereinafter defined) to.£und an escrow account in an amount which, together with the inve)stment e)arnings thereon, will be sufficient to pay the principal of, premium, if any, and inte)rest on the Refunded Bonds through their first scheduled optional redemption date. Refunded Bonds The) Re)funde)d Bonds, and inte)rest due the)œon, are to be) paid on the scheduled inteœst payment dates and the maturity or redemption dates of such bonds from funds to be deposited with Escrow Agent pursuant to a certain Escrow Agreement between the City and the Escrow Agent between the) City and the Escrow Agent (the "Escrow Agreement"), Ameritrust Texas National Association (the "Escrow Agent"), in an escrow account (the "Escrow Fund") and used to purchase direct obligations of the United States of America (the "Fede)ral Securitie)s"). Under the) Escrow Agree)ment betwe)e)n the City and the Escrow Agent (the "Escrow Agreement"), the) Escrow Fund is irrevocably pledge)d to the) payment of the principal of and interest on the Refunded Bonds. KP:\IG Peat t\1arn'ick, a nationally recognized accounting firm, will verify at the time of delivery of the Series 1993 Bonds to the initial U nde)rwriters the mathematical accuracy of the Financial Advisor's schedules that demonstrate the Federal Securities will mature and pay interest in such amounts which, together with uninvested funds, if any, in the Escrow Fund, will be suftìcient to pay, when due, the principal of and interest on the Refunded Bonds. Such maturing principal of and interest on the Federal Securities will not be available to pay the Series 1993 Bonds. By the deposit of the Federal Securities with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected the det~asance of the Re)funded Bonds. It is the opinion of Bond Counsel that, as a result of such defeasance and in relianCe) on sueh aeeountant's report, the Re)funded Bonds will no longer be payable from ad valore)m taXe)S but will be) payable soldy frnm the principal of and inte)rest on the Fede)ral Securitie)s and cash held for such purpose) by the) Escrow Age)nt, and that the Refunded Bonds will be dd'ease)d and aæ not to be included in or consideæd to be indebtedness of the City for the purpose of a limitation of inde)btedness or for any other purpose. The City has cove)nante)d in the Escrow Agreement to make timdy deposits to the Escrow Fund of any additional amounts re)quiæd to pay the prineipal of and interest on the Refunded Bonds if, for any reason, the cash balances on de)posit or scheduled to be on deposit in the Escrow Fund are insuffieie)nt to make sueh payment. 7